Part 8

#74. Which of the following is true regarding taxation of dividends in participating policies? a) Dividends are not taxable. b) Dividends are taxable only after a certain amount is accumulated annually. c) Dividends are taxable in some life insurance policies and nontaxable in others. d) Dividends are considered income for tax purposes.

a) Dividends are not taxable. Dividends are not considered to be income for tax purposes, since they are the return of unused premiums. The interest earned on the dividends, however, is subject to taxation as ordinary income.

All of the following are advantages of an HMO or PPO for a medicare recipient EXCEPT: a) Elective cosmetic procedures are covered b) Prescriptions might be covered, unlike Medicare c) Health care costs can be budgeted d) There are no claims forms required

a) Elective cosmetic procedures are covered

All of the following statements concerning dividends are true except: a) Favorable investment results generate high dividends b) Dividend amounts are guarantee in the policy c) Lower insurance company costs generate higher dividends d) They stem from a favorable underwriting experience

b) Dividend amounts are guarantee in the policy

Which of the following is true regarding health insurance underwriting for a person with HIV? a) The person may only be declined if he/she has symptoms b) The person may not be declined for medical coverage solely based on HIV status c) The person may be declined for HIV but not AIDS d) The person may be declined

b) The person may not be declined for medical coverage solely based on HIV status

In classifying a risk, the Home Office underwriting department will look at all of the following EXCEPT: a) Applicant's present physical condition b) Applicant's present occupation c) Applicant's past income d) Applicant's past medical history

c) Applicant's past income

An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation? a) Universal life b) Whole life c) Decreasing term d) Variable life

c) Decreasing term

Which of the following best describes annually renewable term insurance? a) Neither the premium nor the death benefit is affected by the insured's age b) It provides an annually increasing death benefit c) It is level term insurance d) It requires proof of insurability at each renewal

c) It is level term insurancec) It is level term insurance

#73. Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process? a) Insurance Index b) Policy Summary c) Illustrations d) Buyer's Guide

d) Buyer's Guide The Buyer's Guide is a consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process. It is a generic guide that does not address the specific policy of the insurer, instead explaining life insurance in a way that the average consumer can understand.

In long-term care insurance, what type of care is provided with intermediate care? a) Nonmedical daily care b) Daily care, but not nursing care c) Intensive care d) Occasional nursing, or rehabilitative care

d) Occasional nursing, or rehabilitative care

The free-look provision allows for which of the following? a) Immediate coverage when the application is submitted b) A guarantee that the policy will not lapse if the premium is overdue c) A guarantee that the policy will be issued d) a right to return the policy for a full premium refund

d) a right to return the policy for a full premium refund