AD Banker life and health comp exam pt. 1

After enrolling in Medicare and purchasing a supplement, Rachel withdrew $2,000 from her HSA. She used $600 to pay her Medicare Supplement premium, $200 for out-of- pocket medical expenses, and the remaining $1,200 on a trip to celebrate her retirement. When preparing her taxes for the year, she discovered that:

$1,200 was subject to income tax

Z elects the life refund settlement option for a $250,000 death benefit. Z lives long enough to recover $150,000 of the $250,000 death benefit. How much does his beneficiary receive?

$100,000

Evelyn paid a $700 annual premium for a business overhead expense policy that paid a monthly benefit of up to $4,000 for a benefit period of 6 months. When Evelyn became disabled she used the entire benefit for 3 months, which covered $8,000 of employee salaries, as well as $3,000 in rent and utilities. This means that the amount of the benefits which was reported as income equaled:

$12,000

Nathan is insured under a group disability plan which requires that he pay 1/3 of the premium. Nathan is currently drawing a $6,000 monthly benefit from the plan. How much of the $6,000 is subject to income tax?

$4,000

All employer-paid premiums for amounts of group life insurance over $__________ are reported as taxable income to the employee.

$50,000

A small business owner used her life insurance policy as collateral for a bank loan. The face amount of the whole life policy was $100,000 and the original amount of the loan was $20,000. If the outstanding loan balance at the time the small business owner died was $10,000, how much will the policy's named beneficiary receive?

$90,000

In Colorado, if death is due to suicide, benefits will be payable only if the policy has been in force for how long?

1 year

At what age does the cash value equal the face amount of a traditional whole life policy issued 25 years ago?

100

Hicks Corp. wants to install a contributory group plan. It employs 200 people. How many employees must participate in order to install the plan?

150

In Colorado, how long is the free look period for Medicare Supplement policies?

30 days

The premium for an insured's newborn child, if due, must be paid within _________ of birth in order to continue coverage.

31 days

Which of the following traditional whole life policies has the lowest first-year annual premium?

40-pay life

Unless an exception applies, a tax penalty is assessed for withdrawals from annuities of tax-deferred earnings prior to age ______.

59 1/2

Continuation of group health coverage applies to employees who have had continuous coverage under the policy for what period of time?

6 months

The employee or the beneficiary must notify the employer within ______ days if they elect to continue coverage under COBRA.

60

Small employer health benefit plans may not apply any waiting periods that exceed:

90 days

All of the following become part of the entire contract, except:

A copy of the check

Part B of Medicare excludes which of the following medical expenses?

A regular dental checkup

When a life insurance policy's ownership is changed from the original owner to a new owner without payment, this is known as a(n) ___________.

Absolute assignment

If a premium was not submitted with the application, the producer must deliver the policy, explain the benefits, and collect the premium. The issued policy is the Offer and the premium becomes the:

Acceptance

Which type of rider pays out a capital sum in case an insured loses a limb or their eyesight?

Accidental Death and Dismemberment

The period of time over which a single sum or periodic deposits grow within an annuity is referred to as the:

Accumulation Period

Confidential information shared by the producer to the insurer and does not become part of the policy is the __________.

Agent's Report

Under a Key Employee Disability Income Policy, the employer is the:

All of the answers listed As in Key Employee (or Key Person) life insurance, the employer is the owner, premium payor, and recipient of the proceeds. The key employee or person is the insured.

All states have adopted the Uniform Individual Accident and Sickness Policy Provision Law. If an insurer changes any of these provisions, they must make sure it does not:

Alter the minimum requirements of any provision

Which product, offered by insurers is specifically designed to allow an individual's savings to be distributed to him/her periodically over his/her entire life, regardless of how long he/she lives?

Annuities

An employee leasing company is defined as:

Any business that provides services and workers to a work-site employer through a contract

Insurable interest for life insurance is necessary only at the time of:

Application

Group long-term disability benefits are paid for:

As long as the policy specifies

Each person applying for an insurance license in Colorado must complete:

At least 50 hours of an approved course including 3 hours of ethics

Which underwriting source is primarily used when an application reveals conditions for which more medical information is required?

Attending Physician's Statement

If an individual starts receiving Social Security retirement benefits at age 62, when are they eligible for Part A benefits?

Automatically at age 65

How does life insurance reduce financial loss upon the insured's death?

By transferring the risk to the insurer

Which of the following causes of death is covered by an Accidental Death & Dismemberment policy?

Commercial airline crash

When a group member terminates employment, he or she has 31 days to purchase an individual policy without proof of insurability. This is referred to as the:

Conversion Privilege

The deductible that applies after the Basic Plan is exhausted and before the Supplemental Major Medical Coverage begins is called:

Corridor Deductible

The Social Security Survivor Benefit is based on the Primary Insurance Amount of the:

Deceased

When an insured decides to change her mode of premium payment from monthly to annually, the total premium due would:

Decrease

Which of the following is not a mandated benefit for health plans issued in Colorado?

Elective cosmetic surgery

The insurer's underwriter may find information about an applicant's moral character, hobbies, work and general reputation from a:

Eligible small employers in the state

What provision describes the parts of the life insurance contract?

Entire Contract

Once issued, the application becomes part of the ___________, when attached.

Entire contract

The difference between Estate Creation and Estate Conservation is that

Estate creation occurs when policy proceeds are paid to survivors. Estate conservation occurs when those proceeds are used to pay estate taxes

Concerning the Paid-Up Additions Dividend Option, all of the following are true, except:

Eventually, no more premiums will be due on the policy

The Minimum Benefit Standards under a qualified LTC policy include all of the following, except:

Every LTC policy must be issued as noncancellable

Which Settlement Option pays for a specified period, regardless of who may receive the payments?

Fixed Period

All the following qualify for Medicare Part A, except:

Healthy individuals who are under age 65 and not covered by Social Security, but are willing to pay the Part A premium

What is an insurer permitted to do if and when it discovers during the underwriting process that a proposed insured has AIDS?

Insurers may refuse to issue a policy to individuals based on positive HIV test results

Which clause in a contract would state that Jim is covered by XYZ insurer for a monthly benefit of $2,000 in the event of disability?

Insuring Clause

No assignment of a policy will be binding on the insurer, unless:

It is in writing and received at the insurer's home office

All of the following statements regarding an insurance application are correct, except:

It is not included as part of the contract

Which of the following life insurance policies is ideally suited for estate planning purposes?

Joint Survivorship

K has a $10,000 traditional whole life policy with a loan outstanding of $1,000 and a 5% interest charge. At the end of the first year of the loan, K

K's new loan balance is $1,050

All of the following are Optional Uniform Provisions, except:

Legal Actions

What is the penalty for violating a cease and desist order?

License suspension or revocation, and a fine up to $500 per violation

Which of the following is a common exclusion in a medical expense plan:

Loss due to Workers' Compensation

Which one of the following is not a factor when an insurer underwrites a policy?

Marital status

The difference between a misrepresentation and a material misrepresentation is:

Material misrepresentations are issues that affect policy issuance

Group health plans in Colorado cannot exclude maternity and childbirth coverage unless which of the following occurs?

Maternity and childbirth coverage cannot be excluded in any circumstance

H has an individual standalone vision plan, in addition to his health insurance. During an annual examination, it is discovered that H has cataracts. Which plan will cover the cost of the treatment for cataracts?

Medical expense insurance

Which provision is an Optional Uniform Provision?

Misstatement of age

In regard to the sales and marketing of life insurance and annuities, an insurer must do which of the following?

Notify its agents annually of the procedures for attaining pre-approval for the use of advertisements

An insurer offering Medicare Supplements to senior clients must:

Offer Core Benefit Plan A if it sells any of the other plans

Frank has a life insurance policy in which he chooses to have the dividends increase the death benefit. Which Dividend Option did he select?

Paid-Up Additions

All of the following are TRUE of Policy Loan Rate provisions, except:

Policies with fixed interest loan rates have a maximum interest rate of 10%

The ________ decides which dividend option is in effect and can change his/her election at any time.

Policyowner

Any transaction in which a new life policy or annuity is to be purchased, and the producer knows, or should know, that existing contract(s) will be: lapsed, forfeited, surrendered, terminated, reduced in value, amended with a reduction in benefit or term, have a reduced cash value, or is subjected to borrowing, is best known as a __________.

Replacement

Which of the following is not a factor in premium determination?

Reserves

____________ individuals pay a FICA tax amount equal to the total of an employer and employee payment.

Self-employed

X retired 6 months before becoming eligible for Medicare. To fill in the gap of coverage during the interim before enrolling in Medicare, X can purchase which of the following limited policies to cover medical expenses?

Short-Term Medical

Medicaid is a federal program that is administered by the _______ government.

State

Which of the following types of coverage has a corridor deductible?

Supplemental major medical

K needs funds and needs to maintain the life insurance she has at the same time. Which of the following should K do with her traditional whole life policy?

Take out a policy loan

Which of the following is designed for someone with a large insurance need but with limited cash flow?

Term Life Insurance

Harry's father purchases a life insurance rider with a Payor Benefit Rider on his 12-year old son Harry. If Harry's mother di

The Payor Benefit rider will pay nothing

Which statement is false concerning Social Security disability benefits?

The employee must only be unable to engage in his/her own occupation to be considered disabled

When an insurer wishes to implement changes to a group life policy, whom must it notify?

The group sponsor

All life insurance policies issued in Colorado must contain a prominent notice that states that:

The insured can return the policy within 15 days for a full refund

All of the following are risks to the life settlement purchaser, except:

The insured dies sooner than expected

An insured purchased an ordinary life policy 15 years ago, and at that time listed her husband as the only beneficiary. Her husband died 2 years ago but she never changed the beneficiary. She dies, leaving one surviving adult child. Who receives the death benefit?

The insured's estate

Sandra owns a Medical Expense Plan that contains a 60/40 Participation (Coinsurance) Provision and a $200 deductible. How much will Sandra and the insurer each pay under the coinsurance provision if Sandra's first medical claim for the year totals $10,200?

The insurer would pay $6,000, and Sandra would pay $4,200

Universal Life and Variable Universal Life share all of the following characteristics, except:

The investment risk

Who retains all of the rights in a life insurance policy?

The policyowner

On a variable universal life policy what is the difference between the cash value and the cash surrender values?

The surrender charge

Which of the following is the reason why premiums paid on personal life insurance are not deductible?

They are considered a personal expense

Which of the following is true of traditional commercial insurers?

They traditionally market reimbursement-type contracts that pay directly to the insured

Compelling insureds to sue by offering substantially less than what a lawsuit would award is an example of which of the following?

Unfair claims practices

Which of the following pays a current interest rate and also guarantees a minimum interest rate that will be credited to the cash values of the life insurance policy?

Universal Life

When it comes to life insurance, insurable interest on one's own life is:

Unlimited

Which of the following is not a mandated health coverage in Colorado?

Vision

An insured with a participating life insurance policy receives an annual dividend check in the mail. He must have selected which Dividend Option:

cash

The Commissioner will issue which of the following to all insurance companies that have complied with Colorado laws therefore authorizing them to do business?

certificate of authority

All of the following are examples of insurable interest between the insured and policyowner, except

college roommates

Part A of Medicare is known as:

hospital insurance

Attaching a(n) ___________ rider excludes coverage for a condition that would otherwise be covered.

impairment

Which principle states that an insured may be reimbursed up to the amount of the actual loss?

indemnity

Which of the following identifies the parties to the contract and the perils it covers and the circumstances under which the insurer will pay a life insurance policy claim?

insuring clause

Contributions to a nonqualified plan are:

not tax deductible

The nonforfeiture option that provides coverage for the longest period of time is:

reduced paid up

The contract type in which only one party is legally bound to its contractual obligations after a premium is paid is a(n)_______ contract.

unilateral