simulation 5

An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n) a) Equity Indexed Annuity. b) Variable Annuity. c) Flexible Annuity. d) Immediate Annuity

a

At what age may an individual make withdrawals from an HSA for nonhealth purposes without being penalized? a) 55 b) 59 1/2 c) 62 d) 65

d

Which of the following would be required to be licensed as an insurance producer? a) A person whose activities are limited to producing insurance advertisements b) A salaried full-time employee who furnishes information for group insurance c) An insurance company director who performs executive, administrative and managerial duties d) A salaried employee who advertises and solicits insurance

d

Who is a third-party owner? a) An insurer who issues a policy for two people b) An employee in a group policy c) An irrevocable beneficiary d) A policyowner who is not the insured

d

f a settlement option is not chosen by the beneficiary or policyowner, which option will be used? a) Life income b) Fixed period c) Fixed amount d) Lump sum

d

Who chooses a primary care physician in an HMO? a) The individual member b) HMO subscribers do not have a primary care physician c) The insurer d) A referral physician

a

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

b

Which of the following statements is NOT correct? a) Medicare Part B provides physician services. b) Medicare Advantage must be provided through HMOs. c) Medicare Advantage may include prescription drug coverage at no cost d) Medicare Part A provides hospital care.

b

All of the following are correct about the required provisions of a health insurance policy EXCEPT a) A reinstated policy provides immediate coverage for an illness. b) Proof-of-loss forms must be sent to the insured within 15 days of notice of claim. c) A grace period of 31 days is found in an annual pay policy. d) The entire contract clause means the signed application, policy, endorsements, and attachments constitute the entire contract.

a

Chuck is issued an insurance policy in which his insurance agency holds the right to cancel. By state law, Chuck's insurer must notify him of their right to cancel through which method? a) On the face of the policy b) His insurer is not required to notify Chuck. The cancellation option is implied in the policy's literature. c) By certified mail, within 30 days d) By verbal notification

a

The type of dental plan which is incorporated into a major medical expense plan is a/an a) Integrated dental plan. b) Supplemental dental plan. c) Stand-alone dental plan. d) Blanket dental plan.

a

Which of the following is true of a children's rider added to an insured's permanent life insurance policy? a) The policy covers only the natural children of the insured. b) Each child covered must show evidence of insurability. c) It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age. d) It is permanent insurance.

c

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

An individual wants to purchase a life insurance policy. His agent asks if the transaction will involve replacing any existing life insurance policies. If the customer replies, "Yes," which of the following best describes the agent's next step? a) The agent must collect the existing policies and turn them over to the replacing insurer. b) The agent must get his supervisor involved in the transaction. c) The agent has no further duties. d) The agent must provide a replacement notice to the applicant.

d

For an individual who is NOT covered by an employer-sponsored plan, IRA contributions are a) Deducted based on the income level. b) Never tax deductible. c) Partially tax deductible depending on the income level. d) Tax deductible.

d

Under the Accidental Death and Dismemberment (AD&D) coverage, what type of benefit will be paid to the beneficiary in the event of the insured's accidental death? a) Capital sum b) Double the amount of the death benefit c) Refund of premiums d) Principal sum

d

When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer? a) Domestic b) Alien c) Nonadmitted d) Foreign

d

All of the following entities regulate variable life policies EXCEPT a) The Insurance Department. b) The Guaranty Association. c) Federal government. d) The SEC.

b

What is a foreign insurer? a) An insurer with licensed agents doing business in other countries b) An insurer with licensed agents who are citizens in more than one country c) An insurer with a home office in another state d) An insurer with a home office in another country

c

How soon following the occurrence of a covered loss must an insured submit written proof of such loss to the insurance company? a) As soon as possible b) Within 20 days c) Within 60 days d) Within 90 days or as soon as reasonably possible, but not to exceed 1 year

d

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered a) A misrepresentation. b) A required disclosure. c) A legal representation of the Association. d) An unfair trade practice.

d

The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT a) The beneficiary's life expectancy. b) Projected interest rates. c) Face amount of the policy. d) The insured's age at death.

d

The premiums paid by the employer in a business life insurance policy are a) Tax deductible by the employee. b) Always taxable to the employee. c) Never taxable to the employee. d) Tax deductible by the employer.

d

The sole beneficiary of a life insurance policy dies before the insured. If the policyowner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to a) Probate. b) The state. c) The beneficiary's estate. d) The insured's estate.

d

Which of the following is NOT true regarding a nonqualified retirement plan? a) Contributions are not currently tax deductible. b) It can discriminate in benefits and selecting participants. c) Earnings grow tax deferred. d) It needs IRS approval.

d

Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid? a) Insuring clause b) Entire contract clause c) Beneficiary clause d) Consideration clause

a

A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium? a) If the daughter is disabled for more than 3 months b) If the daughter is disabled for any length of time c) If the father is disabled for more than 6 months d) If the father is disabled for at least a year

c

Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit? a) Universal Life- Option A b) Universal Life- Option B c) Equity Indexed Universal Life d) Variable Universal Life

a

All of the following are business uses of life insurance EXCEPT a) Funding business continuation agreements. b) Funding against general company financial loss. c) Compensating executives d) Funding against financial loss caused by death of a key employee##

b

An insured loses her left arm in an accident that is covered by her Accidental Death and Dismemberment policy. What kind of benefit will she most likely receive from this policy? a) The principal amount in monthly installments b) The capital amount in a lump sum c) The principal amount in a lump sum d) The capital amount in monthly installments

b

Candidates for either a Property license or a Casualty license must complete how many hours of prelicensing education? a) 15 b) 20 c) 5 d) 10

b

If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select? a) Interest only b) Fixed period c) Life with period certain d) Fixed amount

b

Insurers may change which of the following on a guaranteed renewable health insurance policy? a) No changes are permitted. b) Rates by class c) Coverage d) Individual rates

b

The mode of premium payment a) Does not affect the amount of premium paid. b) Is defined as the frequency and the amount of the premium payment. c) Is the factor that determines the amount of dividends in a policy. d) Is the method used to compute the cash surrender value of the policy.

b

The paid-up addition option uses the dividend a) To accumulate additional savings for retirement. b) To purchase a smaller amount of the same type of insurance as the original policy. c) To purchase a one-year term insurance in the amount of the cash value. d) To reduce the next year's premium.

b

What is a material misrepresentation? a) Concealment b) A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company c) Any misstatement made by an applicant for insurance d) Any misstatement by the producer

b

Which of the following would help prevent a universal life policy from lapsing? a) Corridor of insurance b) Target premium c) Face amount d) Adjustable premium

b

According to the rights of renewability rider for cancellable policies, all of the following are correct about the cancellation of an individual insurance policy EXCEPT a) Claims incurred before cancellation must be honored. b) An insurance company may cancel the policy at any time. c) Unearned premiums are retained by the insurance company. d) The insurer must provide the insured a written notice of the cancellation.

c

All of the following are true about variable products EXCEPT a) The cash value is not guaranteed. b) Policyowners bear the investment risk. c) The premiums are invested in the insurer's general account. d) The minimum death benefit is guaranteed.

c

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) As high b) Half the amount c) Lower d) Higher

c

An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy? a) She can only convert her coverage without proof of insurability if she has the master policy. b) She must apply for a new policy, which requires her to provide proof of insurability. c) She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan. d) She will still be covered under the group plan, but will have to pay an individual policy premium.

c

How many credit hours of excess continuing education are producers allowed to carry over to the next renewal cycle? a) None b) 3 hours c) 12 hours d) 24 hours

c

If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back? a) The policy beneficiary takes over the loan payments. b) The policy is rendered null and void. c) The balance of the loan will be taken out of the death benefit. d) The policy beneficiary receives the full death benefit.

c

The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose? a) Joint and survivor b) Fixed amount option c) Interest only option d) Life income with period certain

c