PSI TERMS

Issue age policy premiums increase in response to which of the following factors? a) Increased benefits b) Increased deductible c) Inflation d) Age

a) Increased benefits

Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to the insured is A. Within 45 Days B. Weekly C. Biweekly D. Monthly

D. Monthly If a claim involves disability income benefits, the policy must pay those benefits not less frequently than monthly. In all other cases, the company may specify the time period of 45 or 60 days for payment of claims.

Cancellation

Since premiums are paid in advance, cancellation by either party triggers a refund of unearned premium. The insurance company may cancel the policy by giving a notice of at least 5 days to the insured, if it is not in conflict with the minimum notice of cancellation of the state's statute, and premium refunded on a pro rata basis. On the other hand, if the insured initiates the cancellation, it will be handled on a short rate basis which incorporates a cancellation fee before the refund.

Claim

a request filed with an insurance company asking for payment according to the terms of an insurance policy

What is the shortest possible elimination period for group short-term disability benefits provided by an employer? a) 0 days b) 30 days c) 60 days d) 90 days

a) 0 days If an employer provides short-term disability benefits for its employees, the elimination period can be nonexistent, and the benefits can last as long as two years. The benefit typically spans 70-80% of the insured's income.

A hospital indemnity policy will pay a) A benefit for each day the insured is in a hospital. b) Income lost while the insured is in the hospital. c) All expenses incurred by the stay in the hospital. d) Any expenses incurred by the stay in the hospital, minus coinsurance payments and deductibles.

a) A benefit for each day the insured is in a hospital.

All of the following actions can be described as twisting EXCEPT a) Explaining to client the advantages of permanent insurance over term and suggesting changing policies b) Misrepresenting the terms and conditions of the existing policy to make the new one more attractive c) Embellishing the terms of the proposed policy in order to convince the insured to switch d) Making an incomplete comparison between the existing and proposed policies

a) Explaining to client the advantages of permanent insurance over term and suggesting changing policies Twisting is a misrepresentation, or incomplete or fraudulent comparison of insurance policies that persuades an insured/owner, to his or her detriment, to cancel, lapse, or switch policies from one to another.

Which of the following entities has the authority to make changes to an insurance policy? a) Insurer's executive officer b) Department of Insurance c) Broker d) Producer

a) Insurer's executive officer

Which of the following statements is TRUE about a policy assignment? a) It transfers rights of ownership from the owner to another person. b) It is the same as a beneficiary designation. c) It permits the beneficiary to designate the person to receive the benefits. d) It authorizes an agent to modify the policy.

a) It transfers rights of ownership from the owner to another person. The policyowner may assign a part of the policy (collateral assignment) or the entire policy (absolute assignment).

Which of the following must the patient pay under Medicare Part B? a) A per benefit deductible b) 20% of covered charges above the deductible c) 80% of covered charges above the deductible d) All reasonable charges above the deductible according to Medicare standards

b) 20% of covered charges above the deductible

Employer contributions made to a qualified plan a) Are taxed annually as salary. b) Are subject to vesting requirements. c) May discriminate in favor of highly paid employees. d) Are after-tax contributions.

b) Are subject to vesting requirements.

The insuring clause of a disability policy usually states all of the following EXCEPT a) The types of losses covered. b) The method of premium payment. c) The identities of the insurance company and the insured. d) That insurance against loss is provided.

b) The method of premium payment.

Insuring clause

basic agreement between the insurer and the policyowner

What is the maximum period that an insurer would pay benefits in accordance with an Additional Monthly Benefit rider? a) For the duration of the disability or the contract, depending on which ends first b) 1 month c) 1 year d) 2 years

c) 1 year

According to OBRA, what is the minimum number of employees required to constitute a large group? a) 20 b) 50 c) 100 d) 15

c) 100

Insurers are required to give the insured converting to an individual policy notice of their conversion privilege a) Within 60 days of the conversion. b) 7 days after the group policy expires. c) 15 days prior to group policy expiration. d) 30 days in advance.

c) 15 days prior to group policy expiration.

Employer health plans must provide primary coverage for individuals with end-stage renal disease before Medicare becomes primary for how many months? a) 12 months b) 24 months c) 30 months d) 36 months

c) 30 months

According to the privacy of consumer financial information regulation, if a consumer decides to opt out, this means a) The consumer has chosen not to participate in insurance contracts with the insurer. b) The consumer has declined the nonforfeiture options available in the policy. c) The consumer directs the licensee not to disclose the consumer's nonpublic personal financial information to a third party. d) The consumer gives the licensee an unconditional right to share the consumer's nonpublic financial information with a third party.

c) The consumer directs the licensee not to disclose the consumer's nonpublic personal financial information to a third party.

Which of the following is the best reason to purchase life insurance rather than annuities? a) To create regular income payments b) To liquidate a sum of money over a lifetime c) To create an estate d) To liquidate a sum of money over a period of years

c) To create an estate

Conformity with state statutes

conflicting policies are automatically amended to meet state requirements

Within how many days must a producer respond to an inquiry from the Commissioner? a) 3 days b) 10 days c) 15 days d) 30 days

d) 30 days

After three years of making payments into a flexible premium deferred annuity, the owner decides to surrender the annuity. The insurer returns all the premium payments to the owner, except for a predetermined percentage. What is this percentage called? a) Termination penalty b) Bail-out charge c) Inflation adjustment d) Surrender charge

d) Surrender charge

In order to become licensed to become a viatical settlement provider, an application must be made with a) The Viatical Settlement Association b) The Governor's Office c) The NAIC d) The Insurance Department

d) The Insurance Department

Probationary Period

is another type of waiting period that is imposed under some disability income policies. It does not replace the elimination period, but is in addition to it. The probationary period is a waiting period, often 10 to 30 days, from the policy issue date during which benefits will not be paid for illness-related disabilities. The probationary period applies to only sickness, not accidents or injury. The purpose for the probationary period is to reduce the chances of adverse selection against the insurer. This helps the insurer guard against those individuals who would purchase a disability income policy shortly after developing a disease or other health condition that warrants immediate attention.

Other insurance in this insurer

pro rata benefit reduction in response to overinsurance

Insurance with other insurers

separate insurers pay proportionate benefits for any one claim

The notice of claim provision

spells out the insured's duty to provide the insurer with reasonable notice in the event of a loss. Notice is required within 20 days of the loss, or as soon as reasonably possible. Notice to the agent equals notice to the insurer.

Probationary period provision

states that a period of time must lapse before coverage for specified conditions goes into effect. This provision is most commonly found in disability income policies. The probationary period also applies to new employees who must wait a certain period of time before they can enroll in the group plan. The purpose of this provision is to avoid unnecessary administrative expenses in cases of employee turnover.

Conditionally Renewable

the insurer may terminate the contract only at renewal for certain conditions that are stipulated in the contract. For example, one condition may be that the insured must be employed to collect disability payments. In addition, the policy premiums may be increased. The company may not deny renewal due to claims experience.

Elimination Period

type of deductible that is commonly found in disability income policies. It is a period of days which must expire after the onset of an illness or occurrence of an accident before benefits will be payable. The longer the elimination period, the lower the cost of coverage.

After a loss occurs, the claimant must submit proof of loss within

90 days of the loss or as soon as reasonably possible, but not to exceed one year. However, the 1- year limit does not apply if the claimant is not legally competent to comply with this provision.

Nonrenewable (Cancellable, Term)

In some cases, an individual may need health insurance for a specified period of time. Coverage is then considered a term health policy, which is not renewable. When the term expires, the insured must purchase another policy. These policies are also called period of time policies as they are only effective for a specific period of time, and will be cancelled by the company at the end of the term. Examples of term health policies are travel accident policies, short term health plans, or accident only policies. Policies which cover specific events, such as school functions, summer camp, or athletic events, are other examples. Once the event is over, coverage is no longer in place.

Cancellation

insurer may cancel policy after 30-days written notice

Which of the following entities has the authority to make changes to an insurance policy? A Producer B Insurer's executive officer C Department of Insurance D Broker

B Insurer's executive officer

All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy? a) Lower b) Higher c) As high d) Half the amount

a) Lower Survivorship Life is much the same as joint life in that it insures two or more lives for a premium that is based on a joint age. The major difference is that survivorship life pays on the last death rather than upon the first death. Since the death benefit is not paid until the last death, the joint life expectancy in a sense is extended, resulting in a lower premium than that which is typically charged for joint life.

Which of the following is NOT true regarding an annuity certain? a) It is a short-term annuity. b) Benefits stop at the annuitant's death. c) It will pay until a fixed amount is liquidated. d) There are no life contingencies.

b) Benefits stop at the annuitant's death. Annuities Certain are short-term annuities which limit the amount paid to a certain fixed period or until a certain fixed amount is liquidated. There are no life contingencies.

Which of the following are the main factors taken into account when calculating residual disability benefits? a) Employee's full-time status and length of disability b) Present earnings and standard cost of living c) Present earnings and earnings prior to disability d) Earnings prior to disability and the length of disability

c) Present earnings and earnings prior to disability

All of the following are true regarding a decreasing term policy EXCEPT a) The contract pays only in the event of death during the term and there is no cash value. b) The face amount steadily declines throughout the duration of the contract. c) The payable premium amount steadily declines throughout the duration of the contract. d) The death benefit is $0 at the end of the policy term.

c) The payable premium amount steadily declines throughout the duration of the contract.

If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary? a) A death benefit equal to the cash value of the policy b) 50% of the death benefit c) The face amount minus the premiums that would have been collected until the insured reached the age of 100 d) A full death benefit

d) A full death benefit

Consideration Clause

usually located on the first page of the policy, makes it clear that both parties to the contract must give some valuable consideration. The payment of the premium and the statements in the application are the consideration given by the applicant. The insurer's consideration is the promise to pay in accordance with the contract terms.

How are the variable annuities regulated? a) By state and federal agencies b) By the National Association of Securities Dealers c) By the Commissioner of Insurance d) By the Department of Insurance

a) By state and federal agencies Variable annuities are considered securities and are regulated by various state and federal agencies, including the SEC, the FINRA (formerly NASD) and the state Department of Insurance.

Which of the following is an example of an agent's fiduciary responsibilities? a) Offering additional coverage to a client b) Forwarding premiums to the insurer c) Helping clients to file claims d) Performing a review of clients' coverage

b) Forwarding premiums to the insurer

The death benefit under the Universal Life Option B a) Increases for the first few years of the policy, and then levels off. b) Remains level. c) Gradually increases each year by the amount that the cash value increases. d) Decreases by the amount that the cash value increases.

c) Gradually increases each year by the amount that the cash value increases.

Which health insurance provision describes the insured's right to cancel coverage? A Policy duration provision B Insuring clause C Cancellation provision D Renewal provision

D Renewal provision

Which of the following statements is true concerning the alteration of optional policy provisions? A An insurer may change the wording of optional policy provisions that would adversely affect the policyholder but must first receive state permission before the change goes into effect. B Once any kind of provision is written, it cannot be changed. C An insurer may change the wording of optional provisions, as long as the change does not adversely affect the policyholder. D An insurer may change the wording of optional provisions, regardless of its effect on the policyholder. Optional policy provisions can be changed by an insurer, as long as the changes do not adversely affect the policyholder.

C An insurer may change the wording of optional provisions, as long as the change does not adversely affect the policyholder.

The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this? a) Reduction of premium b) Paid-up addition c) Accumulation at interest d) Cash option

a) Reduction of premium

Which of the following determines the cash value of a variable life policy? a) The performance of the policy portfolio b) The company's general account c) The policy's guarantees. d) The premium mode

a) The performance of the policy portfolio

At what point must an Outline of Coverage be delivered? a) Upon delivery of the policy only b) At the time of application or upon delivery of the policy c) At any point up to 30 days after policy delivery d) At the time of application only

b) At the time of application or upon delivery of the policy

According to the Fair Credit Reporting Act, all of the following would be considered negative information about a consumer EXCEPT a) Failure to pay off a loan. b) Disputes regarding consumer report information. c) Tax delinquencies. d) Late payments.

b) Disputes regarding consumer report information.

When a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount a) The same as the original policy minus the cash value. b) Equal to the original policy for as long a period of time that the cash values will purchase. c) In lesser amounts for the remaining policy term of age 100. d) Equal to the cash value surrendered from the policy.

b) Equal to the original policy for as long a period of time that the cash values will purchase.

If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a a) Nonforfeiture option. b) Rollover. c) Settlement option. d) Nontaxable exchange.

c) Settlement option.

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT a) An offer of employment. b) Stocks, securities, or bonds. c) An offer to share in commissions generated by the sale. d) Dividends from a mutual insurer.

d) Dividends from a mutual insurer.

What is the advantage of having a qualified annuity? a) No filing with the IRS b) Receiving a lump-sum settlement tax free c) Higher dividends d) Favorable tax treatment

d) Favorable tax treatment

The provision which prevents the insured from bringing any legal action against the company for at least 60 days after proof of loss is known as A Payment of claims. B Proof of loss. C Legal Actions D Time limit on certain defenses.

C Legal Actions This mandatory provision requires that no legal action to collect benefits may be started sooner than 60 days after the proof of loss is filed with the insurer. This gives the insurer time to evaluate the claim.

The insuring clause of a disability policy usually states all of the following EXCEPT A That insurance against loss is provided. B The types of losses covered. C The method of premium payment. D The identities of the insurance company and the insured.

C The method of premium payment. The insuring clause, usually on the first page of the policy, is the general statement that defines the insurance agreement and identifies the insured and the insurance company and states what kind of loss (peril) is covered.

Coinsurance

Most major medical policies include a coinsurance provision that provides for the sharing of expenses between the insured and the insurance company. After the insured satisfies the policy deductible, the insurance company will usually pay the majority of the expenses, typically 80%, with the insured paying the remaining 20%. Other coinsurance arrangements exist such as 90/10; 75/25; or 50/50. The larger the percentage that is paid by the insured, the lower the required premium will be. The purpose of the coinsurance provision is for the insurance company to control costs and discourage overutilization of the policy.

An insured has a major medical policy with a $500 deductible and a coinsurance clause of 80/20. If he incurs medical expenses of $4,000, the insurer would pay a) $2,800. b) $3,200. c) $3,500. d) $2,500.

a) $2,800. The insurer would pay 80% of covered expenses after the $500 deductible is satisfied. 4,000-500 = 3500 * .8 = 2800

Which of the following is not true of Disability Buy-Sell coverage? a) The policies provide funds for the business organization to purchase the business interest of a disabled partner. b) Benefits are considered taxable income to the business. c) It is typically written to cover partners or corporate officers of a closely held business. d) Premium payments are not deductible to the business.

b) Benefits are considered taxable income to the business.

Which of the following is an example of an unfair claims settlement practice? a) Using arbitration when the insured and insurer cannot reach agreement b) Failure to promptly settle a claim when liability has been clearly established c) Denying coverage after a reasonable investigation has been conducted d) Making claims payments which clearly indicate under which coverage payment has been made

b) Failure to promptly settle a claim when liability has been clearly established

While a claim is pending, an insurance company may require a) The insured to be examined only once annually. b) An independent examination only once every 45 days. c) An independent examination as often as reasonably required. d) The insured to be examined only within the first 30 days.

c) An independent examination as often as reasonably required.

All of the following information about a customer must be used in determining annuity suitability EXCEPT a) Financial experience. b) Annual income. c) Beneficiary's age. d) Tax status.

c) Beneficiary's age.

Which of the following statements concerning buy-sell agreements is true? a) Benefits received are considered income taxable. b) Buy-sell agreements pay in the event of a medical emergency. c) Buy-sell agreements are normally funded with a life insurance policy. d) Premiums paid are deductible as a business expense.

c) Buy-sell agreements are normally funded with a life insurance policy.

The insurance code identifies all of these as prohibited acts that can cause suspension, revocation or denial of an insurance producer license for a licensee or applicant, with the exception of a) Failing to pay child support obligations. b) Commission of a felony or its equivalent. c) Commission of any misdemeanor. d) Failing to pay state income taxes.

c) Commission of any misdemeanor. Only the commission of misdemeanors that involve the misuse or theft of money or property belonging to others will affect the maintenance or obtaining of an insurance producer license.

Which of the following statements is TRUE concerning the Accidental Death Rider? a) This rider is only available to insureds over the age of 65. b) It is only available in group insurance. c) It will pay double or triple the face amount. d) It is also known as a triple indemnity rider.

c) It will pay double or triple the face amount. The Accidental Death Rider pays 2 or 3 times the face amount if death is the result of an accident as defined in the policy and occurs within 90 days of such an accident.

Every insurer marketing Long-Term Care insurance must establish marketing procedures to ensure all of the following EXCEPT a) Excessive insurance will not be sold. b) Every reasonable efforts is made to identify an applicant's other insurance. c) LTC policies are marketed effectively to prospective insureds. d) Comparisons of policies are fair and accurate.

c) LTC policies are marketed effectively to prospective insureds.

All of the following statements describe a MEWA EXCEPT a) MEWA employers retain full responsibility for any unpaid claims. b) MEWAs can be self-insured. c) MEWAs are groups of at least 3 employers. d) MEWAs can be sponsored by insurance companies.

c) MEWAs are groups of at least 3 employers. MEWAs are groups of at least 2 employers who pool their risks to self-insure. MEWAs can be sponsored by an insurance company, an independent administrator, or another group established to provide group benefits for participants.

All of the following are unfair claims settlement practices EXCEPT a) Failing to adopt and implement reasonable standards for settling claims. b) Failing to acknowledge pertinent communication pertaining to a claim. c) Suggesting negotiations in settling the claim. d) Refusing to pay claims without conducting a reasonable investigation.

c) Suggesting negotiations in settling the claim. When settling claims, negotiation can come into play.

Your client has a Social Insurance Supplement (SIS) rider on his disability policy. After he becomes disabled, he receives payments from the company. Shortly thereafter, he also begins receiving Social Security benefit payments. Which of the following will happen? a) The SIS rider will discontinue paying benefits. b) Both plans will continue to pay fully. c) The SIS payment will be reduced dollar-for-dollar by the Social Security benefit payment. d) Social Security will discontinue benefits until the SIS rider expires.

c) The SIS payment will be reduced dollar-for-dollar by the Social Security benefit payment.

When a fixed annuity owner pays his/her insurance company a monthly annuity premium, where is this money placed? a) Each contract's separate account b) The annuity owner's account c) The insurance company's general account d) Forwarded to an investor

c) The insurance company's general account Fixed annuities guarantee a minimum amount of interest to be credited to the purchase payment. The insurance company can afford to make guarantees because the money of a fixed annuity is placed in the general account of the insurance company, which is part of its investment portfolio. The company makes conservative enough investments to insure a guaranteed rate to the annuity owners.

Which of the following statements is correct regarding a whole life policy? a) The policy premium is based on the attained age. b) The death benefit may increase or decrease during the policy period. c) The policyowner is entitled to policy loans. d) Cash values are not guaranteed.

c) The policyowner is entitled to policy loans. Whole life policies offer level premium based on the issue age, guaranteed, level death benefit, cash value that is scheduled to equal the face amount at the insured's age 100, and living benefits, which include policy loans.

If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined? a) The surrender charge is a flat fee determined by the annuity owner when the annuity is purchased. b) The surrender charge will increase as the accumulation period increases. c) The surrender charge is a percentage of the cash value and decreases over time. d) The surrender charge is always 7% of the cash value.

c) The surrender charge is a percentage of the cash value and decreases over time. If a deferred annuity is surrendered prematurely, a surrender charge is imposed. The charge is generally a percentage that reduces over time until it ends.

What is the main purpose of a Retained Asset Account? a) To allow the insurer to retain the policy proceeds until all loans are paid up by the insured b) To maintain life policy's cash value c) To serve as a temporary storage of funds for the beneficiary d) To allow the death benefit to accumulate interest

c) To serve as a temporary storage of funds for the beneficiary A Retained Asset Account (RAA) is an interest-bearing money market checking account that is established for the beneficiary of a life insurance policy. The purpose of creating an RAA is to serve as a temporary repository of funds to allow the beneficiary time to consider available financial options.

When must the Medicare supplement policy issued provide the applicant the Guide to Health Insurance for People with Medicare? a) When the policy is delivered b) Within 30 days of policy delivery c) When the prospective policyholder inquires about a policy or at the time of application, depending on which occurs first. d) At the time of application

d) At the time of application

If an insurer changes a form that it uses to transact insurance, it must do which of the following? a) File the form with the NAIC for approval b) Submit it to the Department of Insurance so it can be kept in the insurer's official records c) Nothing, as long as the insurer has a Certificate of Qualification. d) File the form with the Commissioner for approval

d) File the form with the Commissioner for approval All forms, including changes to previously approved forms, must be filed with the Commissioner. The Commissioner will approve or disapprove the form. If 30 days after the form is filed no action is reported, the insurer can assume that the form is approved.

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin? a) On the designated effective date b) On the application date c) When the agent submits the application to the company and the company issues a conditional receipt d) When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

d) When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

Under what condition are group disability income benefits received by an employee NOT taxable as income? a) When the employer makes all the premium payments. b) When the employee is 59 ½. c) When the amount of the benefit is equal or less than the amount of contributed by the employer. d) When the benefits received are equal or less than the employee's percentage of the contribution.

d) When the benefits received are equal or less than the employee's percentage of the contribution.

Optional renewability

is similar to conditional renewability, except that the insurer may cancel the policy for any reason, on certain homogeneous classes (not individuals within a class). Renewability is at the option of the insurer. The insurer can only decide not to renew a policy on the policy anniversary or premium due date (renewal date). If the insurer elects to renew coverage, it may also increase the policy premium.

Guaranteed renewable provision

is similar to the noncancellable provision, with the exception that the insurer can increase the policy premium on the policy anniversary date. The insured, however, has the unilateral right to renew the policy for the life of the contract. The insurer may increase premiums on a class basis only and not on an individual policy. As with the noncancellable policy, coverage generally is not renewable beyond the insured's age 65. Medicare Supplements and long-term care policies must be written as guaranteed renewable contracts, and cannot be cancelled by the company at the insured's age 65.

The insuring agreement or clause

is usually located on the first page of the policy. It is simply a general statement that identifies the basic agreement between the insurance company and the insured. It identifies the insured and the insurance company and states what kind of loss (peril) is covered.

Which renewal option does NOT guarantee renewal and allows the insurance company to refuse renewal of a policy at any premium due date? A Optionally renewable B Conditionally renewable C Guaranteed renewable D Noncancellable

A Optionally renewable In an optionally renewable policy, it is the insurer's option as to whether to renew or not.

Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be? a) Installments for a fixed amount b) Installment refund c) Cash refund d) Installments for a fixed period

d) Installments for a fixed period Under the "installments for a fixed period" option, the annuitant selects the time period for the benefits, and the insurer determines how much each payment will be. This option pays for a specific period of time only, and there are no life contingencies.

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

d) It is level term insurance. Annually renewable term is a form of level term insurance that offers the most insurance at the lowest cost.

Which of the following is TRUE regarding the annuity period? a) During this period of time the annuity payments grow interest tax deferred. b) It is also referred to as the accumulation period. c) It is the period of time during which the annuitant makes premium payments into the annuity. d) It may last for the lifetime of the annuitant.

d) It may last for the lifetime of the annuitant. The "annuity period" is the time during which accumulated money is converted into an income stream. It may last for the lifetime of the annuitant or for a shorter specified period of time depending on the benefit payment option selected.

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are a) Paid at a fixed rate every year. b) Taxable as ordinary income. c) Guaranteed. d) Not taxable since the IRS treats them as a return of a portion of the premium paid.

d) Not taxable since the IRS treats them as a return of a portion of the premium paid.