ExamFX Focus Review

An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy? a) 7 days b) 10 days c) 31 days d) 60 days

10 days

What is the waiting period on a Waiver of Premium rider in life insurance policies? a) 30 days b) 3 months c) 5 months d) 6 months

6 months

Individuals who itemize deductions can claim deductions for medical expenses not covered by health insurance that exceed what percent of their adjusted gross income? a) 5% b) 7% c) 7.5% d) 15%

7.5%

Unreimbursed medical expenses paid for the insured may be claimed as deductions if the expenses exceed what percentage of the adjusted gross income? a) 3.5% b) 5% c) 7.5% d) 15%

7.5%

Which of the following is a feature of a disability buyout plan? a) A lump-sum benefit payment option b) Tax deductible premiums c) Taxable benefits d) A short elimination period

A lump-sum benefit payment option

Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under an accident and health policy must contain a) A statement that is sufficiently clear to identify the insured and the nature of the claim. b) A statement from the insured's employer showing that the insured was unable to work. c) An estimate of the total amount of medical and hospital expense for the loss. d) A complete physician's statement.

A statement that is sufficiently clear to identify the insured and the nature of the claim

Which statement accurately describes the Change of Beneficiary provision? a) Spouses are automatically irrevocable beneficiaries, with the exception of divorce or death. b) Beneficiaries can only be changed in the event of divorce, death, or severe psychiatric disorders. c) Changing beneficiaries requires the consent of the original beneficiary. d) Any policy that has a death benefit must also have a Change of Beneficiary provision.

Any policy that has a death benefit must also have a Change of Beneficiary provision

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

Are subject to vesting requirements

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective? a) As of the policy delivery date b) As of the first of the month after the policy issue c) As of the policy issue date d) As of the application date

As of the application date

Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? a) Automatic premium loan b) Extended term c) Reinstatement d) Reduced paid-up option

Automatic premium loan

What type of insurance would be used for a Return of Premium rider? a) Annually Renewable Term b) Increasing Term c) Level Term d) Decreasing Term

B) Increasing term.

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

Benefits are considered taxable income to the business (Buy-sell coverage benefits are tax free)

An insured receives an annual life insurance dividend check. What term best describes this arrangement? a) Accumulation at Interest b) Cash option c) Reduction of Premium d) Annual Dividend Provision

Cash option

The provision that provides for the sharing of expenses between the insured and the insurance company is a) Deductible. b) Divided cost. c) Coinsurance. d) Stop-loss.

Coinsurance

The purpose of managed care health insurance plans is to a) Control health insurance claims expenses. b) Provide for the continuation of coverage when an employee leaves the plan. c) Give the insured an unlimited choice of providers. d) Coordinate benefits.

Control health insurance claims expenses

The gatekeeper of an HMO helps a) Determine who will be allowed to enroll in an HMO program. b) Prevent double coverage. c) Determine which doctors can participate in an HMO plan. d) Control specialist costs.

Control specialist costs

What is the main difference between coinsurance and copayments? a) With copayments, the insured pays all of the cost. b) With coinsurance, the insurer pays all of the cost. c) Coinsurance is a set dollar amount. d) Copayment is a set dollar amount.

Copayment is a set dollar amount

A partnership buy-sell agreement in which each partner purchases insurance on the life of each of the other partners is called a a) Stock redemption plan. b) Cross-purchase plan. c) Key person plan. d) Split-dollar plan.

Cross-purchase plan

Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled? a) Absolute assignment b) Transfer of Ownership c) Disability Buy-Sell d) Proprietary Transfer

Disability Buy-Sell

Other than for a qualified life event, when can a change be made in benefits for a Flexible Spending Account (FSA)? a) At any time as necessary b) Within 3 months of the cause of the change c) No changes can be made once the policy is issued d) During the open enrollment period

During the open enrollment period

If an annuitant dies before annuitization occurs, what will the beneficiary receive? a) Cash value of the plan b) Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount c) Either the amount paid into the plan or the cash value of the plan, whichever is the lesser amount d) Amount paid into the plan

Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount

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) Variable Annuity. b) Flexible Annuity. c) Immediate Annuity. d) Equity Indexed Annuity.

Equity Indexed Annuity

When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n) a) Key person policy. b) Fraternal association. c) Aleatory contract. d) Executive bonus.

Executive bonus

In a direct transfer, how is money transferred from one retirement plan to a traditional IRA? a) From the participant to the new plan b) From the original plan to the original custodian c) From trustee to trustee d) From trustee to the participant

From trustee to trustee

Which is TRUE about the cash surrender nonforfeiture option? a) The policy remains active for some time after the policyholder opts for cash surrender. b) The policyholder receives the original cash value of the policy. c) Funds exceeding the premium paid are taxable as ordinary income. d) After the cash surrender, the insured is covered for a grace period of one month.

Funds exceeding the premium paid are taxable as ordinary income

Medicaid provides all of the following benefits EXCEPT a) Eyeglasses. b) Family planning services. c) Income assistance for work-related injury. d) Home health care services.

Income assistance for work-related injury

An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an a) Interest-sensitive Whole Life. b) Credit Life. c) Annual Renewable Term. d) Adjustable Life.

Interest-sensitive whole life

Which of the following is TRUE regarding the accumulation period of an annuity? a) It is a period of time during which the beneficiary receives income b) It is limited to 10 years. c) It is a period during which the payments into the annuity grow tax deferred. d) It is also referred to as the annuity period.

It's a period during high the payments into the annuity grow tax deferred

Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die? a) Joint Life b) Decreasing Term c) Whole Life d) Ordinary Life

Joint Life

The premium of a survivorship life policy compared with that of a joint life policy would be a) Lower. b) Higher. c) As high. d) Half the amount.

Lower

Which of the following is a feature of a disability buyout plan? a) Tax deductible premiums b) Taxable benefits c) A short elimination period d) A lump-sum benefit payment option

Lump-sum benefit payment option

The primary eligibility requirement for Medicaid benefits is based upon a) Number of dependents. b) Need. c) Whether the claimant is insurable on the private market. d) Age.

Need

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the a) Juvenile rider. b) Payor rider. c) Other-insured rider. d) Change of insured rider.

Other-insured rider

Which of the following is another term for the accumulation period of an annuity? a) Pay-in period b) Premium period c) Liquidation period d) Annuity period

Pay in period

Which of the following riders would NOT cause the Death Benefit to increase? a) Guaranteed Insurability Rider b) Cost of Living Rider c) Accidental Death Rider d) Payor Benefit Rider

Payor benefit rider

All of the following are covered by Part A of Medicare EXCEPT a) Post-hospital nursing care. b) Home health services. c) Physician's and surgeon's services. d) In-patient hospital services.

Physician's and surgeon's services

What is the initial period of time specified in a disability income policy that must pass, after the policy is in force, before a loss can be covered? a) Probationary period b) Contestable period c) Elimination period d) Grace period

Probationary period

When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to a) Purchase a term rider to attach to the policy. b) Pay back all premiums owed plus interest. c) Receive payments for a fixed amount. d) Purchase a single premium policy for a reduced face amount.

Purchase a single premium policy for a reduced face amount

Which of the following terms describes the specified dollar amount beyond which the insured no longer participates in the sharing of expenses? a) First-dollar coverage b) Corridor deductible c) Stop-loss limit d) Probationary limit

Stop-loss limit

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as a) Survivorship insurance. b) Juvenile protection provision. c) Survivor protection. d) Life planning.

Survivor protection

Children's riders attached to whole life policies are usually issued as what type of insurance? a) Term b) Variable life c) Adjustable life d) Whole life

Term

A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums? a) The insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums. b) The insured's premiums will be waived until she is 21. c) The premiums will become tax deductible until the insured's 18th birthday. d) Since it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected.

The insured's premiums will be waived until shit is 21

Which of the following is NOT a feature of a guaranteed renewable provision? a) The insured has a unilateral right to renew the policy for the life of the contract. b) Coverage is not renewable beyond the insured's age 65. c) The insured's benefits cannot be reduced. d) The insurer can increase the policy premium on an individual basis.

The insurer can increase the policy premium on an individual basis

Which of the following is NOT a feature of a noncancellable policy? a) The insured has the right to renew the policy for the life of the contract. b) The insurer may terminate the contract only at renewal for certain conditions. c) The premiums cannot be increased beyond the amount stated in the policy. d) The guarantee to renew coverage usually applies until the insured reaches certain age.

The insurer may terminate the contract only at renewal for certain conditions

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT a) Any type of insurance policy may be used. b) The employer pays a bonus to a selected employee to fund the policy. c) It is considered a nonqualified employee benefit. d) The policy is owned by the company.

The policy is owned by the company (The policy is owned by the employee.)

Why should the producer personally deliver the policy when the first premium has already been paid? a) To ensure the producer gets paid commission b) To find out how the family has been doing since the initial presentation c) To make sure the policy is not stolen or lost d) To help the insured understand all aspects of the contract

To help the insured understand all aspects of the contract

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

To purchase a one-year term insurance in the amount of the cash value

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

To purchase a smaller amount of the same type of insurance as the original policy

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

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