PFFP 314
Andrea owns and runs a printing company that is organized as an S corporation. Unfortunately, she has an accident with a printing press and is rendered disabled. She receives $4,000 per month in disability payments. The S corporation had paid the premiums on the policy, but reported the payments on her W-2. How much of the benefit is subject to income tax? a) $0 b) $2,000 c) $3,000 d) $4,000
a) $0
Fred is 30 years old and recently began a job with a salary of $60,000. He is single but has been dating Lisa for 3 years. He expects to marry her within the next 5 years. Fred lives with his parents. What is the amount of life insurance Fred currently needs? a) $0 b) $100,000 c) $60,000x6= $360,000 d) $60,000x10= $600,000
a) $0
Mr. Johns has a major medical insurance policy with a $1,000 deductible, an 80% coinsurance clause, and an out-of-pocket maximum of $4,000. He becomes ill and is admitted to the hospital for several days. When he is discharges, his hospital bill is $5,000, and his doctor bills are $2,500. What is the amount that his insurance co-pay will pay? a) $5,200 b) $6,000 c) $6,500 d) $7,500
a) $5,200 (7500-1000=6500x.8)
Betty owns a $150,000 whole life participating insurance policy that she purchased ten years ago. She has paid premiums of $4,000 each year since she bought the policy, and the current cash surrender value is $60,000. Betty has received $10,000 in paid dividends since the policy inception. Which of the following statement(s) is/are correct regarding Betty's policy? 1. If Betty surrenders the policy now, she will have a taxable gain of $30,000 taxed as ordinary income. 2. The dividends that were paid on Betty's policy were subject to ordinary income tax treatment. a) 1 only b) 2 only c) both 1 and 2 d) neither 1 nor 2
a) 1 only
Which of the following statements regarding loss frequency is true? 1) Loss frequency is the expected number of losses that will occur within a given period 2) Loss frequency is the potential size or damage of a loss a) 1 only b) 2 only c) both 1 and 2 d) neither 1 nor 2
a) 1 only
How long would someone have to wait to receive Social Security disability benefits if they qualify? a) 5 months b) 6 months c) 12 months d) benefits are paid immediately if eligible
a) 5 months
For a short-term disability policy, what is the typical elimination period? a) 5-30 days b) 30-45 days c) 45-60 days d) 1-2 years
a) 5-30 days
Medical insurance is commonly known as health insurance and can be purchased from private insurance companies. Which of the following best describes the classes of medical insurance? a) Coverage for hospital expense, surgical expense, physician expense, and major medical expense b) coverage for hospital expense, nonmajor medical expense, surgical expense, and physician expense c) coverage for hospital expense, comprehensive major medical expense, nonmajor medical expense and physician expense d) coverage for comprehensive major medical expense, nonmajor medical expense, surgical expense, and physician expense
a) Coverage for hospital expense, surgical expense, physician expense, and major medical expense
Marsha, age 35, is a single mother of one daughter, Skyler, age 9. Marsha is a secretary with annual income of $35,000 and a negative net worth. Marsha has 2 objectives: 1) to protect Skyler in the event of her untimely death and 2) to save for her own retirement. Which of the following life insurance policies should she buy? a) a 20-year term insurance policy b) an ordinary whole life insurance policy c) a variable universal policy d) a universal policy
a) a 20-year term insurance policy
Marsha, age 35, is a single mother of one daughter, Skyler, age 9. Marsha is a secretary with annual income of $35,000 and a negative net worth. Marsha has two objectives: (1) to protect Skyler in the event of her untimely death and (2) to save for her own retirement. Which of the following life insurance policies should she buy? a) a 20-year term insurance policy b) an ordinary whole life insurance policy c) a variable universal policy d) a universal policy
a) a 20-year term insurance policy
The principle of indemnity requires that: a) a person is entitled to compensation only to the extent that financial loss has been suffered b) insured cannot indemnify himself from both the insurance company and a negligent third party for the same claim c) the insured must be subject to emotional or financial hardship resulting from the loss d) the insured and insurer must both be forthcoming with all relevant facts about the insured risk and coverage provided for that risk
a) a person is entitled to compensation only to the extent that financial loss has been suffered
When must an insurable interest exist for a property insurance claim? a) at the policy inception and time of loss b) at the policy inception only c) at the time of the loss d) either at the policy inception or at the time of the loss
a) at the policy inception and time of loss
Indemnity health insurance plans are one of the ____ flexible types of insurance policies, in terms of having the freedom to pick your own providers, but participants pay some of the ___ premiums a) most; highest b) most; lowest c) least; highest d) least; lowest
a) most; highest
Disability policies have many characteristics and provisions. Which of the following is correct regarding policies that are guaranteed renewable versus non-cancelable? a) non-cancelable prevent the insurance company from cancelling the policy as long as the premiums are paid b) guaranteed renewable and non-cancelable disability policies often have policy increases c) guaranteed renewable and non-cancelable disability policies always provide protection for the insured until age 65 d) guaranteed renewable policies can experience premium increases based on the health conditions of the insured
a) non-cancelable prevent the insurance company from cancelling the policy as long as the premiums are paid
Sean has a disability policy and was injured during a workplace accident. As a result of Sean's accident, he is no longer able to perform all of the requirements of his prior job. His new job pays 30% less than his previous salary before the accident. Which of the following provisions in his disability policy would provide continuing benefits to Sean to offset his loss in income? a) residual benefit provision b) elimination period provision c) partial disability provision d) COLA rider
a) residual benefit provision
Which of the following life insurance policies provides the highest benefit for the lowest premium and is simply a pure death benefit policy? a) term b) whole life c) universal life d) all of the above
a) term
Donna owns a house with a replacement cost of $500,000. She purchases $300,000 of insurance with a coinsurance requirement of 80% and a $500 deductible. If Donna's house is hit by a hurricane and she suffers a $150,000 loss, what will the insurer pay? a) $74,500 b) $112,000 c) $119,000 d) $149,000
b) $112,000 (AMT Purchased/coinsurance) x loss ($300,000/($500,000x.80)x $150,000= $112,500-500= $112,000
Which of the following is a characteristic of guaranteed renewability? 1. The insurer guarantees to renew the policy to a stated age 2. The policy is noncancelable and the premium may not be increased 3. Renewable is solely at insurer's discretion 4. The insurer has the right to increase the premium rates for the underlying class in which the insured is placed Note: not for a single individual a) 1 only b) 1 and 4 c) 1,2, and 4 d) 1,2,3, and 4
b) 1 and 4
Which of the following statement(s) is/are correct regarding buy-sell arrangements? 1. Entity purchase arrangements increase the income tax basis for some survivors upon the death of another owner. 2. Cross-purchase arrangements increase the income tax basis for all survivors upon the death of another owner. a) 1 only b) 2 only c) both 1 and 2 d) none of the above
b) 2 only
Which of the following statements regarding loss severity is true? 1) Loss severity is the expected number of losses that will occur within a given period. 2) Loss severity is the potential size or damage of a loss a) 1 only b) 2 only c) both 1 and 2 d) neither 1 nor 2
b) 2 only
Short-term disability provides coverage for up to: a) 1 year b) 2 years c) 5 years d) 10 years
b) 2 years
A grace period is granted to the insured in the event that he or she is late making a premium payment. In a traditional health insurance policy, the grace period is: a) 15 days b) 31 days c) 60 days d) 90 days
b) 31 days
A subrogation clause means that: a) a person is entitled to compensation only to the extent that financial loss has been suffered b) Insured cannot indemnify himself from both the insurance company and a negligent third party for the same claim c) the insured must be subject to emotional or financial hardship resulting from the loss d) the insured and insurer must both be forthcoming with all relevant facts about the insured risk and coverage provided for that risk
b) Insured cannot indemnify himself from both the insurance company and a negligent third party for the same claim
Which of the following is correct regarding a peril and hazard? a) A hazard is the proximate or actual cause of a loss b) a peril is the proximate or actual cause of a loss c) a peril is the condition that creates or increases the likelihood of a loss occurring d) none of the above
b) a peril is the proximate or actual cause of a loss
Cate is an inquisitive person and wants an explanation of the legal characteristics of an insurance contract. All of the following statements are correct, EXCEPT: a) an insurance contract is a contract of adhesion where the insured accepts the contract as written b) an insurance contract is aleatory in the sense that equal monetary values are exchanged c) an insurance contract is unilateral, where only one party agrees to a legally forceable promise d) an insurance contract is conditional in terms of claim payment if certain conditions are met by the insured
b) an insurance contract is aleatory in the sense that equal monetary values are exchanged
When must an insurable interest exist for a life insurance claim? a) at the policy inception and time of loss b) at the policy inception only c) at the time of the loss d) either at the policy inception or at the time of the loss
b) at the policy inception only
Joe walks into his insurance agent's office and notices his agent's name on a business card and the insurer's name on letterhead. If an agency agreement exists, what type of authority does joey believe his agent has to enter into an insurance contract? a) express authority b) implied authority c) apparent authority d) none of the above
b) implied authority
Joe, age 33, is married and has a newborn son. Joe is concerned about providing for his family in the event of his premature death. He is concerned about the long-term affordability of life insurance but is able to budget a fixed amount for a period of time. Which of the following policies would you recommend? a) annually renewable term b) level-premium term c) whole life insurance d) single-premium annuity
b) level-premium term
Which of the following policies provides the greatest degree of protection to the insured? a) conditionally b) noncancelable c) guaranteed renewable d) optionally renewable
b) noncancelable
Which of the following is the most favorable definition of total disability in a disability insurance policy? a) any occupation b) own occupation c) modified own occupation d) split definition
b) own occupation
A health savings account HSA) and a flexible savings account (FSA) have several similarities including: a) all funds carry over from year to year b) pre-tax contributions c) funds are invested d) all of the above
b) pre-tax contributions
Frank has a disability policy and was recently injured, causing him to permanently lose the sight in both of his eyes. Which of the following provisions might come into play causing Frank to receive disability benefits quicker than a normal disability claim? a) own-occupation policy b) presumptive total disability c) residual benefit provision d) waiver of premium rider
b) presumptive total disability
Ryan and Jody are age 68 and 72, respectively, and are married. They have significant assets that will be subject to estate taxes upon the second spouse's death. Which of the following life insurance policies would you recommend? a) annually renewable term b) second-to-die whole life policy c) first-to-die whole life policy d) first-to die whole life policy
b) second-to-die whole life policy
Drew has a disability income policy that pays a monthly benefit of $3,000. Drew has been disabled for 60 days, but he only received $1,500 from his disability insurance. Which of the following is the probable reason that he only received $1,500? a) the policy has a deductible of $1,500 b) the elimination period is 45 days c) the policy has a 50% coinsurance clause d) Drew is considered to be only 50% disabled
b) the elimination period is 45 days
Jack has a disability income policy that pays a monthly benefit of $2,400. Jack has been disabled for 60 days, but he only received $1,200 from his disability insurance. Which of the following is the probably reason that he only received $1,200? a) the policy has a deductible of $1,200 b) the elimination period is 45 days c) the policy has a 50% coinsurance clause d) Jack is considered to be only 50% disabled
b) the elimination period is 45 days
Insurance regulation is primarily conducted by? a) the securities and exchange commission b) the state insurance commissioner c) the federal insurance commission d) the FDIC
b) the state insurance commissioner
Which of the following provisions may not increase the cost of the policy? a) COLA b) waiver of premium rider c) automatic increase rider d) SIS benefit
b) waiver of premium rider
Which of the following life insurance policies contains a cash-value savings component that reaches the face value of the policy at age 100-120? a) term b) whole life c) universal life d) lifetime annuity
b) whole life
Lucy, an ER surgeon, buys a disability policy with a base benefit of $6,000 and an SIS benefit of $1,200. Lucy becomes disabled and eventually receives $1,000 in Social Security benefits. How much will she receive from the insurance company after Social Security benefits begin? a) $4,800 b) $6,000 c) $6,200 d) $7,200
c) $6,200
The Watson family has a family medical policy that provides the following coverage for all four family members: $1000 per person deductible (4 person max) $4000 out-of-pocket limit per person 80/20 coinsurance provision On a family trip, the Watsons were involved in a car accident when a deer ran into their car while they were driving 75 mph. All four family members were hurt. Each person incurred medical expenses of $21,000. How much will the insurance company pay? a) $64,000 b) $67,200 c) $68,000 d) $84,000
c) $68,000 (21000-1000=20000, 4000 out-of-pocket max, 21,000 x4 = 84,000- 16000 (4,000x4))
Malinda is a participant in her employer's group comprehensive major medical insurance plan. The plan has a $500 deductible, a $2,500 out-of-pocket maximum, and has 80% coinsurance. If Malinda is injured in an accident, resulting in $2,000 in medical costs, how much will Malinda need to pay for the medical bills? a) $0 b) $400 c) $800 d) $2,000
c) $800
Which of the following is needed to calculate the client's human-life value? 1. average annual earnings to the age of retirement 2. estimated annual Social Security benefits after retirement 3. Costs of self-maintenance 4. Number of years from the client's present age to the contemplated age of retirement a) 3 and 4 b) 1,2, and 4 c) 1,3, and 4 d) 1,2,3, and 4
c) 1,3, and 4
The Affordable Care Act (ACA) requires large employers to provide a minimum level of health insurance coverage to employees or face significant tax penalties. According to the ACA, a large employer is a company who, at any point during the year, employs at least: a) 25 people b) 40 people c) 50 people d) 100 people
c) 50 people
Stephanie works for Blizzard Coolers Inc, which provides disability insurance for its employees, but only pays 60% of the premium. Stephanie pays the remaining 40% of the premium with after-tax dollars. If Stephanie is disabled, what percentage of her benefits is taxable? a) 0% b) 40% c) 60% d) 100%
c) 60%
Due to a recession, Pat has voluntarily changed her status from full-time to part-time with her employer. Prior to the change, she and her husband were covered under the company health plan. Which statement regarding COBRA is correct? a) because her change is voluntary, COBRA rules do not apply b) COBRA rules allow continuation of health coverage in this situation for up to 36 months c) COBRA rules allow continuation of health coverage in this situation for up to 18 months d) COBRA rules allow continuation of health coverage in this situation for 29 months
c) COBRA rules allow continuation of health coverage in this situation for up to 18 months
Ralph is an engineer at RTQ Enterprises. The firm does not offer disability policies to employees. Therefore, Ralph is considering purchasing a policy of his own. What percent of his salary will an insurance company typically offer as a benefit? a) no more than 1.5 times his salary b) no more than 100% of his salary c) approximately 60% of his salary d) no more than 33 1/3 percent since he is covered under Social Security
c) approximately 60% of his salary
When the insured is silent to a fact that is material to the risk being insured, what has occurred? a) Breach of Warranty b) misrepresentation c) concealment d) breach of indemnity
c) concealment
Olivia, age 52, purchased a life insurance policy on her own life. All the necessary legal elements of a contract including, (1) offer and acceptance, (2) consideration, (3) competent parties, and (4) legal purpose were met. However, Olivia lied that her age was 42 on the insurance application, and is receiving a premium commensurate with that age. Olivia died two years later in an automobile accident. Her certified death certificate indicated that she was 54 at the time of her death, and that she was 52 when she purchased the policy. Which of the following statement(s) is/are correct regarding this scenario? a) the policy could not be voided because her death was two years after the issuance of the insurance of the policy b) the beneficiary can pay in the correct but unpaid premiums and collect the full death benefit c) her beneficiary will receive a reduced death benefit to reflect her actual age d) all of the statements are correct
c) her beneficiary will receive a reduced death benefit to reflect her actual age
All of the following are true regarding Health Savings Accounts (HSAs) EXCEPT: a) HSA funds can be invested b) contributions made to the HSA by the plan participant are tax-deductible as an adjustment to gross income (above the line) c) if an employer makes a contribution to an HSA on behalf of an employee, the employer contributions are included in the taxable income of the employee d) to be eligible to make HSA contributions, an individual must be covered by a high deductible health insurance plan
c) if an employer makes a contribution to an HSA on behalf of an employee, the employer contributions are included in the taxable income of the employee
Which of the following is true as it related to disability insurance? a) from a risk perspective, short-term disability coverage is far more important than long-term coverage b) as a general rule, an individual's mortality risk is usually much higher than morbidity risk c) most individuals should have a minimum of 60-70% of their gross income protected with a disability insurance policy d) all of the above
c) most individuals should have a minimum of 60-70% of their gross income protected with a disability insurance policy
Noncancelable health insurance contracts are different from guaranteed renewable contracts because: a) noncancelable policies are not guaranteed renewable b) noncancelable policies cannot be canceled in mid-term c) noncancelable policies cannot have a premium change d) noncancelable policies have more liberal disability benefits
c) noncancelable policies cannot have a premium change
Jennifer is applying for life insurance, with her two children as the beneficiary. Jennifer has always been told she looks young for her age and although she is 58, she stated that she is 28 on her life insurance application. What would the insurer be most likely to do if Jennifer's beneficiaries attempt to collect on the life insurance policy? a) void the policy b) require payment on premiums for a 58-year-old insured c) recalculate the face value of the policy based on actual premiums paid d) bring a lawsuit against the estate
c) recalculate the face value of the policy based on actual premiums paid
Terry has been advised by his insurance agent to purchase a variable universal life insurance policy. He has sought your advice regarding this purchase. All of the following are characteristics of a variable universal policy, except: a) the policy features increasing or decreasing death benefits and flexibility of variable premium payments b) the policy owner has exclusive investment control over the cash value of the policy c) the death benefit is guaranteed to be equal to the face value d) the cash value of a variable universal life policy is dependent on premiums and investment returns
c) the death benefit is guaranteed to be equal to the face value
Which of the following statements regarding the characteristics of an insurance contract is false? a) they are a contract of adhesion, which means the insured must accept it or leave it b) they are aleatory contracts, which means amounts exchanged may be unequal c) they are unilateral, meaning there is only one promise, which is a promise by the insured to pay the premium d) the contracts are conditional, which means the terms are under the condition that premiums are paid
c) they are unilateral, meaning there is only one promise, which is a promise by the insured to pay the premium
What is the purpose of the disability income insurance? a) to provide a one-time payment for the insured while they are injured or ill b) to provide regular income for the insured while they are working and when they are unable to work due to injury on the job c) to provide a regular income while the insured is unable to work due to illness or injury d) to provide a one-time payment for the insured while they are working and when they are unable to work due to illness or injury
c) to provide a regular income while the insured is unable to work due to illness or injury
Which of the following life insurance policies has a fixed premium, a cash value, and a death benefit that can fluctuate based on investment performance? a) annually renewable term b) variable renewable term c) variable whole life d) variable lifetime annuity
c) variable whole life
Which one of the following statements concerning whole life insurance is false? a) level-premium whole life insurance accumulates a cash value that eventually reaches the face value of the policy at age 100-120 b) whole life insurance offers permanent protection throughout the insured's lifetime c) whole life insurance can be participating, which means the insured must participate in self-directed investments for the cash value d) whole life insurance premiums paid throughout the insured's lifetime are ordinary life policies
c) whole life insurance can be participating, which means the insured must participate in self-directed investments for the cash value
Allison is a news reporter with a local station. The news station does not provide disability insurance. She purchases a policy through a local insurance agent that provides a benefit of $3,000 per month. If she is in the 30 percent tax bracket, what will her benefits equal after-tax? a) $0 b) $900 c) $2,100 d) $3,000
d) $3,000
Diane, an ER surgeon, buys a disability policy with a base benefit of $6,000 and an SIS offset benefit of $1,200. Diane becomes disabled and eventually receives $1,000 in Social Security disability benefits. How much will she receive from the insurance company initially? a) $4,800 b) $6,000 c) $6,200 d) $7,200
d) $7,200
Black Smith is an employee of ABC Corporation. He has just divorced Phyllis who was on all of his group health plan coverages. Phyllis wants to know to what COBRA coverage she is entitled. The following is a list of Black's group health plan benefits, all of which are integral parts of the plan. Which of Black's benefits is/are subject to COBRA rules?1. Medical expense plan.2. Dental plan.3. Vision care plan.4. Prescription care plan. a) 1 only b) 1 and 4 c) 2,3, and 4 d) 1,2,3, and 4
d) 1,2,3, and 4
COBRA coverage is available for which of the following persons? 1) a retiring employee 2) an employee who is terminated 3) spouses and dependents of a deceased employee 4) an employee no longer able to work due to disability a) 3 only b) 3 and 4 c) 1,2, and 3 d) 1,2,3, and 4
d) 1,2,3, and 4
In which of the following events would COBRA rules apply for the benefit of the covered employee, employees spouse, or dependent child? 1. The death of a covered employee 2. The covered employee is fired for incompetence 3. The employee changes status from full-time to part-time and, as a result, loses coverage 4) the covered employee gets a divorce a) 1 only b) 1 and 4 c) 2,3, and 4 d) 1,2,3, and 4
d) 1,2,3, and 4
When utilizing the needs approach in the determination of the amount of life insurance, which factors should be considered? 1. the family expenses that will remain after the wage earner dies 2. the value of the wage earner's life in the event he or she dies 3. the income that can be generated by the surviving spouse 4. the number of dependents a) 1 only b) 3 only c) 1,2, and 3 d) 1,3, and 4
d) 1,3, and 4
Watson, Inc. has four equal partners. All four partners are interested in entering into a buy-sell arrangement. How many life insurance policies would be purchased to properly fund using a crosspurchase agreement? a) 4 policies b) 6 policies c) 8 policies d) 12 policies
d) 12 policies 4(4-1)=12
Allison, an employee at Initech Software Solutions, recently divorces her husband, Tony. Initech has provided group health insurance coverage to Allison and her family since she began working for the company. Tony is unemployed, but is entitled to COBRA continuation coverage for: a) 12 months b) 18 months c) 29 months d) 36 months
d) 36 months
Which of the following statements regarding disability insurance is false? a) the longer the elimination period, the less expensive the policy b) an own-occupation policy will provide disability benefits if the insured is unable to perform the duties of his or her own occupation c) an any-occupation policy is less expensive than an own-occupation policy d) a residual benefit clause provides the insured with benefits that extend beyond the disability period
d) a residual benefit clause provides the insured with benefits that extend beyond the disability period
The risk that individuals of higher than average risk will seek out of purchase insurance policies is called? a) peril b) hazard c) law of large numbers d) adverse selection
d) adverse selection
All of the following are correct regarding group disability coverage EXCEPT: a) premiums for group disability coverage are typically lower than premiums for individual policies b) employer-sponsored group disability coverage is usually coordinated so that there is continuous income coverage between short-term and long-term policies c) employers may pay premiums on behalf of the employees or allow the employees to pay the premium directly through payroll deductions d) all of the above are correct
d) all of the above are correct
Jared is a university professor who teaches three classes. He developed throat cancer and can no longer lecture. His disability policy is not covering him due to his sickness. What type of policy does he likely have? a) own occupation policy b) split definition policy c) modified own occupation policy d) any occupation policy
d) any occupation policy
An individual has decided to purchase life insurance and comes to you as his agent. In order to propose a plan of life insurance to meet his individual needs, your first step would be to: a) review his will or have him write a will if he does not have one b) select an insurance company c) select the policy type he wants to purchase d) conduct a needs analysis
d) conduct a needs analysis
Many disability policies that are provided on a group basis have a split definition. Which of the following describes such a definition? a) disability will be defined based on the duties of the insured b) disability will be defined based on any occupation that the insured is qualified for based on experience or training. c) disability will be defined based on the specific duties of the insured d) disability will be defined based on the duties of the insured for a period of time and then based on any occupation that the insured is qualified for based on experience or training
d) disability will be defined based on the duties of the insured for a period of time and then based on any occupation that the insured is qualified for based on experience or training
Roger has a disability policy with a 12-month elimination period. He was in a bizarre accident involving a crane falling on a building causing part of the building's exterior wall to fall on his van. He lost the use of both of his legs in the accident. If his policy has a presumptive total disability coverage provision, when will he begin receiving benefits? a) immediately b) after 6 months as the provision accelerates the waiting period c) after a one month statutory administrative time period d) he will have to wait 12 months
d) he will have to wait the 12 months
What type of hazard results from the indifference that a person has to be potential loss because he or she has insurance? a) peril b) physical hazard c) moral hazard d) morale hazard
d) morale hazard
Which of the following is true of group health insurance? a) employer group insurance plans that require all employees be eligible for the plan pose the greatest adverse selection risk b) group policies are underwritten by accessing specific health risks of the individuals in the group c) one of the downfalls of group health insurance is the high administrative costs for each of the participants d) none of the above
d) none of the above
Which of the following method(s) is/are appropriate to evaluate a person's life insurance needs?1. The human life approach to evaluate life insurance needs takes into consideration the income replacement needs of a person's survivors including income during the readjustment period, income to widow(er), and educational funds for dependents.2. The needs approach evaluates the estimated present value of income generated over a person's work-life expectancy that is needed and then adjusts for the expected consumption of the person and for taxes. a) 1 only b) 2 only c) 1 and 2 d) none of the above
d) none of the above
Beth is an associate at GWC Attorneys at Law. The firm has a contributory long-term group disability policy. She is required to pay 60% of the premiums. If she becomes disabled, her benefits would equal $4,000 per month. Based on this type of plan, which of the following is correct if she were to become disabled? a) she will only receive a benefit of $2,400 b) the entire benefit will be taxable c) the entire benefit will not be taxable d) she will receive a benefit of $4,000 but $1,600 will be taxable
d) she will receive a benefit of $4,000 but $1,600 will be taxable
Which of the following statements concerning universal life insurance is false? a) the insured has the flexibility to adjust premiums, face value and cash value of the policy b) the insured has flexibility without the investment responsibility of the cash value c) the cash value of the policy can be used to pay the premiums d) the death benefit of a universal life insurance policy is fixed
d) the death benefit of a universal life insurance policy is fixed
Which of the following is not a requisite for an insurable risk? a) a large number of homogeneous exposure units must exist b) insured losses must be accidental c) insured losses must be measurable and determinable d) the loss must not pose a catastrophic risk for the insured
d) the loss must not pose a catastrophic risk for the insured
The blackout period is: a) the period of time immediately following the death of the wage earner b) the period of time after the death of a wage earner when the family is adjusting to life without the individual c) the period of time when the widow of widower and dependents receive Social Security benefits d) the period of time when the dependents have reached age 18 and the spouse's Social Security retirement benefits have not started
d) the period of time when the dependents have reached age 18 and the spouse's Social Security retirement benefits have not started