AC CFP 311 pt. II

According to the life-cycle approach to insurance planning, which of the following clients has the greatest need for life insurance? A) A client who must support a young child and a stay-at-home spouse B) A client in a high tax bracket who is looking for ways to avoid taxation C) A client whose youngest child has just graduated from high school D) A young client who is considering having children soon

A

All the following are appropriate recommendations for someone trying to establish credit EXCEPT: A) Open a credit card, but do not make purchases with it. B) Pay all accounts on time to avoid late penalties and interest. C) Avoid closing unused accounts. D) Get free credit reports at least annually.

A

All the following are indexing methods of equity-indexed annuities EXCEPT A) the oscillation neutrality method. B) the annual reset (ratcheting method). C) the high watermark method. D) the point-to-point method.

A

All the following conditions will automatically trigger presumptive total disability coverage EXCEPT A) the loss of speech. B) the loss of sight. C) the loss of use of both feet. D) the loss of use of both hands.

A

All the following property is typically covered on a homeowners policy as a scheduled endorsement EXCEPT A) clothing. B) antiques. C) guitars. D) stamp collections.

A

All the following statements about insurance are true EXCEPT: A) Insurance companies pass on financial uncertainty to the insureds in exchange for premiums. B) Insurance allows individuals to transfer risk to an insurance company. C) Insurance companies set their premiums based on the expected claims to be paid. D) Individuals pool their premium dollars so a few insureds can partially recoup losses.

A

All the following statements about medical expense insurance are correct EXCEPT: A) The most common types of medical expense insurance are dental insurance and vision insurance. B) These plans may either pay for actual expenses incurred or pay a lump sum after a given health event occurs. C) Compared to the limits on other health insurance policies, the limits on medical expense insurance are relatively low. D) Medical expense insurance is similar to group basic medical expense coverage.

A

All the following statements concerning Social Security benefits are correct EXCEPT: A) In order to obtain SSI benefits, an individual must be 65 years old or older and must be disabled. B) The number of days that Medicare covers care in hospitals and skilled nursing facilities is measured in what is termed benefit periods. C) The definition of disability is that the individual is unable to engage in any substantial gainful activity due to a physical or mental problem expected to last at least a year or expected to result in death. D) Benefits are payable at any age to workers who have enough Social Security credits and who have a severe physical or mental impairment that is expected to prevent them from doing "substantial" work for a year or more or who have a condition that is expected to result in death.

A

All the following statements concerning the Social Security system are correct EXCEPT: A) The Social Security retirement benefit is payable at normal retirement age, with reduced benefits available as early as age 59 1/2, to anyone who has obtained at least a minimum amount of Social Security benefits. B) Disability benefit recipients must have a severe physical or mental impairment that is expected to either prevent them from performing a "substantial" amount of work for at least a year or result in death. C) The family benefit is provided to certain family members of workers eligible for retirement or disability benefits. D) Survivors' benefits apply to those family members listed for family benefits, and these may also include the worker's parents if the worker was their primary means of support.

A

An insurer files a rate increase with the state insurance commissioner's office. Before the insurer implements the rate change, the commissioner must approve or deny the increase. What insurance rate regulation law regime is in place in this insurer's state? A) Prior approval B) File-and-use C) Use-and-file D) Open competition

A

Betty owns a $150,000 whole life participating insurance policy that she purchased 10 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 statements is (are) correct regarding Betty's policy? I. If Betty surrenders the policy now, she will have a taxable gain of $30,000 taxed as ordinary income.II. The dividends that were paid on Betty's policy were subject to ordinary income tax treatment. A) I only B) II only C) Both I and II D) Neither I nor II

A

Carl has an HO-3 policy that provides $300,000 of insurance on his dwelling, which has a current replacement value of $500,000. Ignoring any deductible, how much will Carl collect if he suffers a covered loss to the dwelling with a replacement value of $100,000 but an actual cash value of $90,000? He has an 80% coinsurance clause. A) $75,000 B) $80,000 C) $90,000 D) $100,000

A

Cross-purchase agreements usually are preferred from a tax planning perspective because A) they permit the surviving shareholders to increase their basis in the business interest. B) they will never result in a transfer for value if the owners transfer existing policies to one another. C) the premiums paid by each owner are tax deductible. D) the death benefits are taxable to the policy owner but are then deducted as a business expense.

A

Inflation risk is defined as A) the loss of purchasing power due to an increase in the general price level of goods and services. B) the risk of outliving one's money. C) the loss of capital due to a decrease in the value of an investment. D) a risk with no chance of gain.

A

The "unholy trinity" in which life insurance benefits may be subject to gift taxation can occur when A) the owner, the insured, and the beneficiary on a life insurance policy are three different people. B) one person owns at least three life insurance policies on other people. C) one person is named the beneficiary of at least three life insurance policies. D) one person is insured by at least three life insurance policies.

A

The capitalized earnings approach to estimating a life insurance death benefit is a simplification of the human life value approach. Its formula can be described as A) dividing the insured's income net of living expenses and taxes by a real rate of return. B) dividing the insured's gross income by a real rate of return. C) dividing the insured's income net of living expenses and taxes by an expected investment return. D) dividing the insured's gross income by an expected investment return.

A

The purpose of the National Flood Insurance Program is to A) provide subsidized flood insurance to property owners in qualified areas B) create model flood insurance riders for homeowners insurance companies to add to their policies. C) provide reinsurance to homeowners insurance companies when a major flood occurs. D) fulfill all of the above.

A

Tom is 63 years old and decides to retire. His normal Social Security retirement age is 66. If he retires today and his normal age retirement PIA is $2,000, how much can Tom expect to receive as a monthly retirement benefit? A) $1,600 B) $1,750 C) $1,800 D) $2,000

A

Under which of the following circumstances must the HSA account owner pay a 20% penalty on their distribution? A) A 45-year-old makes a distribution to pay for qualified education expenses. B) A 45-year-old makes a distribution to pay for qualified medical expenses. C) A 45-year-old makes a distribution and, within 60 days, rolls the distribution into another HSA. D) A 65-year-old makes a distribution to pay for qualified education expenses.

A

When using a debit card, how much time can pass before the user must pay for their purchase? A) None; with a debit card, the user must pay for the purchase immediately B) Up to 3 business days C) Up to 30 days D) Except for a minimum payment, there is no time limit, but unpaid balances accrue interest.

A

Which of the following can be excluded in a tax-qualified long-term care insurance policy? A) Alcoholism B) Schizophrenia C) Alzheimer's D) Major depression disorders

A

Which of the following forms of care attempts to treat or cure illnesses? I. Traditional medical careII. Long-term care A) I only B) II only C) Both I and II D) Neither I nor II

A

Which of the following statements about the default risk for annuities is correct? I. The guaranty fund acts as a payer of last resort if an annuity company fails.II. While rare, each year a few annuity contracts fail and do not provide a promised payment. A) I only B) II only C) Both I and II D) Neither I nor II

A

Which of the following statements about the tax treatment of policy dividends from a whole life insurance policy is correct? A) Policy dividends are treated as taxable income to the extent they exceed total premiums paid. B) In general, policy dividends are subject to long-term capital-gains rates. C) Policy dividends may be received tax-free if they are added to the death benefit. D) When an insured surrenders a policy, dividends must be added to the owner's basis to determine the taxable gain.

A

Which of the following statements concerning skilled nursing care is (are) correct? I. Medicare fully covers skilled nursing care for the first 20 days of coverage.II. After the first 20 days, there is no coverage for skilled nursing care. A) I only B) II only C) Both I and II D) Neither I nor II

A

Which of the following statements concerning yearly renewable term insurance is correct? A) The premium is recalculated each year based on the current age of the insured. B) It may be renewed each year with proof of insurability. C) It is renewable indefinitely, regardless of the insured's age. D) If the insured declines to renew, the cash value is distributed to them.

A

A new financial planner is considering business and professional insurance. Which of the following coverages is (are) most likely appropriate? I. Malpractice insuranceII. Errors and omissions insurance A) I only B) II only C) Both I and II D) Neither I nor II

B

All the following are needed to calculate the client's human life value EXCEPT A) average annual earnings to the age of retirement. B) estimated annual Social Security benefits after retirement. C) costs of self-maintenance. D) number of years from the client's present age to the contemplated age of retirement.

B

All the following statements about insurance contract riders are true EXCEPT: A) They are written additions to a contract. B) They typically provide discounts on the premium. C) They make it possible to customize an insurance contract. D) They take precedence over conflicting terms specified elsewhere in the policy.

B

All the following statements concerning term life insurance are correct EXCEPT: A) Because death rates rise at an increasing rate as ages increase, the mortality cost for term insurance also rises at an increasing rate. B) Term insurance has a cash value. C) Term insurance is a form of life insurance in which the death proceeds are payable in the event of the insured's death during a specified period and nothing is paid if the insured survives to the end of that period. D) The mortality cost for term insurance is determined by the death rate for the attained age of the individual involved.

B

Barney has paid $80,000 in premiums on a whole life policy with a $1,000,000 death benefit. The policy has paid a dividend of $2,000 per year for the past 5 years. If Barney surrenders the policy today for its cash value of $100,000, what will be the amount of gain subject to taxation? A) $10,000 B) $30,000 C) $70,000 D) $80,000

B

Benjamin retired at age 62 and began to collect Social Security retirement benefits. After a year of playing three rounds of golf per day, Ben is bored and decides to go back to work part-time. This year, he earns $10,000 over the earnings limit at his part-time job. His Social Security benefit before any adjustments this year is $18,000. What will his actual Social Security benefit be for this year? A) $10,000 B) $13,000 C) $14,667 D) $18,000

B

Cory has an HO-3 policy that provides $250,000 of insurance on his dwelling, which has a current replacement value of $400,000. Ignoring any deductible, how much will Cory collect if he suffers a covered loss to the dwelling with a replacement value of $50,000 but an actual cash value of $40,000? He has an 80% coinsurance clause. A) $31,000 B) $39,000 C) $40,000 D) $50,000

B

For a 30-year-old, what is the relative risk of becoming disabled versus dying? A) About 40 to 1 B) About 4 to 1 C) About 1 to 1 D) About 1 to 4

B

Harry purchased a life insurance policy with a face value of $100,000. When he later died, the life insurance policy had a cash value of $40,000. The beneficiary was his wife, Barbara. Barbara has a life expectancy of 40 years and decided to take the single life annuity option with the life insurance proceeds. This option will pay her $500 per month for the rest of her life. How much of the monthly payment is taxable? A) $208 B) $292 C) $500 D) None, as life insurance proceeds are almost always tax-free to the beneficiary.

B

In general, which of the following statements about the cost of long-term care is correct? A) The cost of receiving care at home is higher than the cost of receiving care at a facility. B) The most expensive form of long-term care is a room at a private nursing home. C) The annual cost for most forms of long-term care is between $2,000 and $10,000. D) Health insurance can pay for most of the costs associated with long-term care.

B

In terms of security of the Social Security system, which of the following statements is most accurate? A) Although Social Security is a federal program, it is administered by the individual states, and therefore its security is very dependent on the state. B) Social Security will face long-term financing shortfalls under currently scheduled benefits and financing. C) The security of the Social Security system is stable because the benefits paid out in any one year are financed by the payroll taxes being paid in. D) It is estimated that the Social Security trust fund will be exhausted in the year 2023, and that will result in the elimination of Social Security benefits.

B

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 Joe 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

Medicaid planning occurs when individuals reduce their assets so that they can qualify for benefits under the Medicaid system. All the following are correct regarding Medicaid planning EXCEPT: A) Medicaid planning is often engaged in for the purpose of preserving assets for family members while attempting to qualify for benefits under the Medicaid program. B) Transferring assets for more than FMV results in individuals being subject to penalties under the Medicaid system. C) The penalty period imposed for transferring assets at less than the FMV begins at the later of the time of the transfer or upon entering a nursing home. D) The look-back period for Medicaid planning is 60 months.

B

When Art was 45 years old, he invested $60,000 in an annuity. Ten years later, the value of the annuity was $180,000. He took a withdrawal from the annuity in the amount of $10,000. How is the withdrawal taxed? A) The $10,000 is taxable as ordinary income. B) The $10,000 is taxable as ordinary income and is subject to the 10 percent early withdrawal penalty. C) $6,666 of the $10,000 is taxable as ordinary income. D) $6,666 of the $10,000 is taxable as ordinary income and is subject to the 10 percent early withdrawal penalty.

B

Which of the following describes the concept of adverse selection? A) The insurer's financial results will be improved. B) Persons most likely to suffer losses are also most likely to seek insurance. C) Costs are reduced. D) Premiums will decline.

B

Which of the following property is covered under the personal property coverage (Coverage C) of HO-3? A) A bird owned by the named insured B) A skateboard owned by a stepchild living with the named insured C) CDs located in the named insured's automobile D) Jewelry insured under a separate floater

B

Which of the following statements about defined-contribution and defined-benefit plans is (are) correct? I. The number of defined-contribution plans has dropped since the 1980s.II. The number of defined-benefit plans has dropped since the 1980s. A) I only B) II only C) Both I and II D) Neither I nor II

B

Which of the following statements about the transfer-for-value rules for a life insurance contract are correct? A) If the rules are violated, the entire death benefit is subject to tax. B) One exception to the transfer-for-value rule is when a policy is transferred to a corporation in which the insured is a shareholder. C) These rules limit the ability of the owner of a policy to transfer the policy to the named insured. D) Whether a seller pays tax on the sale of life insurance policy depends on whether the sale was to a handful of exceptions to the transfer-for-value rule.

B

Which of the following statements is (are) correct regarding buy-sell arrangements? I. Entity-purchase arrangements are especially popular with small partnerships.II. Cross-purchase arrangements increase the income tax basis for all survivors upon the death of another owner. A) I only B) II only C) Both I and II D) Neither I nor II

B

A married couple wants an annuity that can meet two goals. First, they want it to pay benefits until both of them have passed away. Second, they want it to pay benefits for at least the next 10 years to help provide for their youngest grandchild, even if they both pass away. Which type of annuity would meet these goals? A) A single life annuity with 10-year term certain B) A single-premium annuity with 10-year term certain C) A joint life annuity with 10-year term certain D) A joint immediate annuity with a 10-year term

C

A married couple wants life-long assurance that if one passes away before the other, the surviving spouse will have their financial needs met. Which of the following policies would be most appropriate for meeting this goal? A) A level term life insurance policy B) A renewable term life insurance policy C) A first-to-die whole life insurance policy D) A second-to-die whole life insurance policy

C

A policyowner who wishes to receive pull cash from a whole life policy without triggering an income tax consequence can achieve this by I. withdrawing from their cash value an amount up to their basis in the policy.II. taking loans against the cash value of the policy, provided that the policy has not been deemed a modified endowment contract (MEC). A) I only B) II only C) Both I and II D) Neither I nor II

C

All the following are common risk exposures a life insurance underwriter considers when determining whether to insure an individual EXCEPT A) general health. B) occupation. C) number of dependents. D) age.

C

All the following are generally excluded from a personal liability umbrella policy (PLUP) EXCEPT A) professional liability. B) liability arising from a rental operation C) libel or slander. D) intentional bodily injury.

C

All the following are potential sources of disability income benefits EXCEPT A) Social Security. B) workers' compensation. C) long-term care insurance. D) sick leave provided by an employer.

C

All the following features can be included in an immediate annuity EXCEPT A) a life annuity with period certain payment plan. B) coverage for more than one life. C) periodic premium payments. D) variable benefit payments.

C

All the following statements about the use of Medicare to help pay for long-term care services are true EXCEPT: A) The recipient must have had a recent prior hospital stay of at least 3 days. B) The recipient must be at least 65 years old or disabled. C) The recipient must have already paid for the first 100 days of care. D) Medicare does not usually cover long-term care services.

C

All the following statements concerning assignment of a life insurance policy are correct EXCEPT: A) Under collateral assignment, the insurance policy may be used as collateral on debt obligations. B) Under an absolute assignment, the owner transfers all policy ownership rights; this often occurs during a divorce. C) Most policy assignments occur after the death of the insured. D) The policyowner may assign the policy to someone who lacks an insurable interest in the insured's life.

C

All the following statements regarding the characteristics of an insurance contract are true EXCEPT: A) They are contracts 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) They are conditional, which means the terms are under the condition that premiums are paid.

C

An owner-insured of a viatical settlement is not subject to income tax on the capital gains of the policy if A) the death benefit is less than $1 million. B) the individual is less than 65 years of age. C) the individual is terminally ill. D) Viatical settlements are never tax-free.

C

Annuities provide many benefits and have many advantages over other alternative investments. All the following are advantages of a single life annuity EXCEPT: A) The annuity mitigates the risk of superannuation. B) Earnings within the annuity are tax deferred. C) Distributions receive favorable capital-gain treatment. D) It provides some protection from creditors.

C

Broad named perils in homeowners policies include all the following EXCEPT A) falling objects. B) sudden bursting of appliances. C) damage caused by a riot. D) freezing of systems or appliances.

C

Dan has a group medical policy that has a $1,000 per person deductible, a $4,000 out-of-pocket limit per person, and a 75/25 coinsurance provision. On a trip, Dan was involved in a car accident and incurred medical expenses of $17,000. How much will the insurance company pay? A) $11,750 B) $12,750 C) $13,000 D) $16,000

C

FICO scores are an indication of a person's credit worthiness. Payment history is one of the factors that impacts a person's FICO score. What approximate percent of the FICO score does payment history account for? A) 75% to 100% B) 50% to 75% C) 30% to 50% D) 15% to 30%

C

If a policyowner surrenders a whole life insurance policy prior to death, all the following will be taxed at ordinary income rates EXCEPT A) the portion of an installment payment that is deemed to be interest. B) the portion of a lump sum that is greater than their premiums paid. C) the portion of a lump sum that is the policyowner's basis. D) the entire amount of income received from an interest only option.

C

In order to qualify for Medicaid, a person must A) be disabled. B) have children. C) have low income and few assets. D) be over age 65.

C

Jackie has a long-term care policy with a total maximum benefit of $100,000. She has already received $30,000 in benefits. Her remaining benefit maximum is $70,000. If she does not receive additional benefits for a specified period of time, the company may restore her maximum benefit back to $100,000. What is this type of optional long-term care insurance benefit called? A) Waiver of premium B) Delayed restoration C) Restoration of benefits D) Refund of premium

C

Jennifer is applying for life insurance with her two children as the beneficiaries. Jennifer has always been told she looks young for her age, and although she is 58, she stated that she is 48 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

Loss frequency is the A) probability that a liability judgment may exceed the individual's net worth. B) probability that any particular property may be totally lost or destroyed. C) probable number of losses that may occur during a period. D) probable size of the losses that may occur.

C

May has a property insurance policy covering her home with an 80 percent coinsurance clause. If the replacement cost of the building is $800,000 and May has it insured for $600,000 on a replacement cost basis, about how much would the insurance company pay (ignoring any deductible) if the building suffered fire damage that cost $150,000 to repair? A) $113,000 B) $120,000 C) $141,000 D) $150,000

C

Paul has a group medical policy with a $1,000 annual deductible, an 80/20 coinsurance provision, and a $2,500 out-of-pocket limit on covered losses. Paul breaks his leg and has surgery that costs $7,000. How much will he need to pay for the surgery? A) $1,000 B) $1,200 C) $2,200 D) $2,500

C

The key difference between universal life insurance Option A and Option B is that A) only Option B allows for flexible premiums. B) only Option B allows for adjustable death benefits. C) with Option A, the beneficiary receives either the cash value or the death benefit. D) with Option B, the insured directs the cash value into investments that may vary in value.

C

Today, many long-term care policies are treated as tax-qualified contracts. Which of the following statements regarding tax-qualified long-term care contracts is true? A) Tax-qualified long-term care policies may provide benefits besides long-term care services. B) These policies can be provided under an employer-sponsored cafeteria plan. C) These policies allow employers to provide this benefit and take a current income tax deduction, and the policies allow the employee to avoid income inclusion. D) The premiums for these policies are not tax deductible.

C

When must an insurable interest exist for a life insurance policy? A) Both at the time of death and at the inception of the policy B) At the time the beneficiary is paid C) At the inception of the policy D) At the time of death

C

Which of the following fees is unique to a variable annuity and covers the cost of managing investment accounts within the annuity? A) Mortality charges B) Annual fees C) Subaccount fees D) Surrender charges

C

Which of the following is secured debt? A) Personal loans B) Credit cards C) Home mortgages D) Student loans

C

Which of the following statements concerning policy loans in a life insurance policy is correct? A) If a loan is outstanding when the insured dies, any indebtedness is forgiven. B) Policy loans are typically interest-free as long as a policy remains in force. C) Policy loans enable the policyowner to access the accumulated cash value without terminating the policy. D) Policy loans are always received income tax-free by insureds.

C

Which of the following statements is correct about paying for long-term care services? A) Medicare provides adequate long-term care benefits as long as the person is fully insured and over the age of 65. B) Medicaid provides for care for those with limited assets and income and requires a look-back period of 10 years. C) Special needs trusts can be established to provide for benefits while maintaining eligibility for federal and state benefits. D) Paying for long-term care services out-of-pocket is a viable option for most married individuals.

C

A borrower's credit score may be checked and used by which of the following? Incorrect Response A) Employers B) Life insurance providers C) Landlords Correct Answer D) All of the above

D

A buy-sell agreement may be triggered by which of the following? A) The death of the insured B) The divorce of the insured C) The retirement of the insured D) All of the above

D

A client with a very high income is a single parent of one child. Despite her young age, this client has accumulated a high net worth and has already created a living trust for the benefit of her child. She asks her financial planner for advice on how much life insurance she should purchase. She's surprised to hear the advisor recommend not to purchase any life insurance. Which of the following methods for estimating an appropriate life insurance death benefit is her financial planner most likely using? A) The capitalized earnings approach B) The human life value approach C) The life-cycle approach D) The needs approach

D

A pure risk is where there is A) a possibility of either profit or loss. B) a possibility of neither profit nor loss. C) only the possibility of profit. D) only the possibility of loss or no loss.

D

All life insurance contracts name three persons. Each of the following is one of those persons, EXCEPT A) the beneficiary. B) the insured. C) the owner. D) the underwriter.

D

All the following are consequences of the Affordable Care Act (ACA 2010) EXCEPT: A) Large employers must provide health insurance to their employees or face tax penalties. B) The lifetime benefits cap for all new policies was removed. C) Health insurers must make it easier and more affordable for people with pre-existing conditions to find coverage. D) Health insurance policies were required to include dental and vision coverage.

D

All the following statements are correct regarding a Personal Auto Policy Part D (Coverage for Damage to Your Auto) coverage EXCEPT A) collision applies when your car hits another vehicle. B) comprehensive covers fire, theft, or vandalism. C) collision covers damages to a borrowed or rented vehicle. D) collision coverage includes contact with an animal or bird.

D

Amy purchased an immediate life annuity many years ago. Unfortunately, a medical emergency occurred and her bill is $100,000. Which of the following options might she consider? A) Surrendering the annuity B) Taking a policy loan C) Performing a 1035 exchange for a life insurance policy D) Selling the annuity on the secondary market

D

Andrea is an associate at BMC Attorneys at Law. The firm has a contributory long-term group disability policy. She is required to pay 60 percent 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 would be correct if Andrea were to become disabled? A) She would only receive a benefit of $2,400. B) The entire benefit would be taxable. C) The entire benefit would not be taxable. D) She would receive a benefit of $4,000, but $1,600 would be taxable.

D

Common signs of identity theft include: A) Unexpected calls from a debt collector. B) An IRS alert of multiple tax return filings. C) New accounts sporadically appear on one's credit report. D) All of the above.

D

For part of the summer in the current year, Jordan worked full-time at a local accounting firm. Jordan is a 19-year-old accounting student who attends a state university and does not work during the rest of the year. Over the summer, Jordan earned a total of $9,500. How many quarters of coverage has Jordan attained for Social Security purposes based only on this year's earnings? A) None, since she did not work a full calendar quarter B) 1 quarter, the maximum she can earn in a 3-month period C) 2 quarters D) 4 quarters

D

Holmes, 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 a cross-purchase agreement? A) 4 policies B) 6 policies C) 8 policies D) 12 policies

D

Individual health insurance policies generally cover which of the following procedures? I. Routine dental examsII. Routine eye exams A) I only B) II only C) Both I and II D) Neither I nor II

D

John, who has retired to Miami, decided to purchase a condominium unit on the beach. Which of the following homeowners policies would be most appropriate for John to purchase? A) HO-3 B) HO-4 C) HO-5 D) HO-6

D

Katy, who recently retired, no longer wants to pay the premiums on her whole life insurance policy, which has been in force for the past 40 years. However, she expects to live a long time and would like to keep some coverage in force until her death to help pay her estate costs. Which of her policy's nonforfeiture options would be most appropriate? A) An annuity option B) A cash surrender option C) An extended term insurance option D) A reduced paid-up insurance option

D

Lower premiums are associated with all the following health insurance plans EXCEPT A) group health insurance (vs. individual health insurance). B) high deductible plans (vs. low deductible plans). C) Bronze ACA plans (vs. Platinum ACA plans). D) COBRA plans vs. group health insurance.

D

Modified adjusted gross income (MAGI), used when determining how much of an individual's Social Security benefit is subject to taxation, is calculated by combining all the following EXCEPT A) adjustable gross income (AGI). B) nontaxable interest from municipal bonds. C) foreign earned income. D) the Social Security benefit.

D

Quincy is 90 years old. He never expected to live this long, and he is, by far, older than anyone in his family history. He has almost exhausted his savings. Even though almost all of his costs are fixed, he isn't sure how he will afford to live when his savings are gone. Which of the following risks is Quincy most concerned with? A) Human capital risk B) Speculative risk C) Purchasing power risk D) Superannuation risk

D

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) After 12 months

D

Section II of the HO-3 policy provides coverage for which of the following? A) Loss of use B) Personal property C) Other structures D) Medical payments

D

The Qualified State Long-Term Care Partnership program is designed to encourage more people to purchase long-term care insurance. Which of the following statements is incorrect regarding Partnership-qualified (PQ) long-term policies? A) PQs include inflation protection, so the dollar amount of benefits received can be higher than the amount of insurance coverage purchased. B) PQs allow people to apply for Medicaid under modified eligibility rules if there is continued need for long-term care after the policy maximum is reached. C) PQs include a special "asset disregard" feature that allows individuals to keep assets like personal savings above the usual $2,000 Medicaid limit. D) PQs allow people to receive a tax credit that equals up to 80 percent of the policy premiums.

D

The benefits of all the following products are generally received tax-free EXCEPT A) life insurance. B) health insurance. C) automobile insurance. D) annuities.

D

Which of the following statements about Medicare and Medicaid is (are) correct? I. Both programs may provide health care support to low-income individuals of all ages.II. Both programs may provide extended long-term care benefits. A) I only B) II only C) Both I and II D) Neither I nor II

D

Which of the following statements about how insurance contracts specify the valuation of insured losses is correct? A) Almost all auto policies use replacement value. B) Art and antiques are typically insured with actual cash value. C) Replacement cost factors in depreciation of the insured property. D) Actual cash value can impose a serious financial burden on the insured.

D

Which of the following statements concerning uninsured motorists coverage (Part C) of a PAP is correct? A) Uninsured motorists coverage is mandatory in all states. B) Uninsured motorists coverage makes allowances for punitive and exemplary damages. C) Uninsured motorists coverage is available for automobiles used in the insured's business. D) For uninsured motorists coverage to pay on a claim, the uninsured/underinsured driver must be at fault.

D

Which variable annuity guaranteed living benefit rider allows a certain percentage of the amount invested to be distributed annually until the entire original investment is recovered, regardless of performance? A) The guaranteed minimum accumulation benefit (GMAB) B) The guaranteed minimum cash benefit (GMCB) C) The guaranteed minimum income benefit (GMIB) D) The guaranteed minimum withdrawal benefit (GMWB)

D