Health insurance simulator
An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction?
20% is withheld for income taxes
K owns a Whole Life policy. If K wants an increasing Death Benefit to protect against inflation, which Dividend Option should she choose? A. Paid-Up Additional Insurance B. Cash Option C. Reduced Premiums D. Accumulate with interest
Answer: A
Which of the following statements about noncontributory employee group insurance is FALSE? A. A minimum amount of employees is required to participate B. All eligible employees must be covered C. No evidence of insurability is required D. Must have conversion rights
Answer: A
An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be: A. converted to an individual policy at an individual rate B. converted to an individual policy at a group rate C. continued at an individual rate D. continued at a group rate
Answer: A, converted to an individual policy at an individual rate
Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy? A. increase face amount B. decrease face amount C. increase premium-paying period D. decrease premium payment
Answer: A, increase face amount
In life insurance, the needs approach is used mostly to establish: A. which type of life insurance a client should apply for B. how much life insurance a client should apply for C. which company a client should use when applying for life insurance D. what the minimum amount the client can spend on life insurance
Answer: B
Life insurance that covers an insured's whole life with level premiums paid over a limited time is called
Limited Pay Life
An individual working part-time has an annual income of $25,000. If this individual has an IRA, what is the MAXIMUM deductible IRA contribution allowable?
$2,500
Group life insurance policies are generally written as:
Annually renewable term
Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?
Annuity
In a qualified retirement plan, the yearly contributions to an employee's account:
Are restricted to MAXIMUM levels set by the IRS
What action can a policyowner take if an application for a bank loan requires collateral?
Assign policy ownership to the bank
A Disability Income policy that only the policyowner can terminate and which the rates will never go up is considered to be...
Noncancellable
The provision that defines to whom the insurer will pay benefits to is called
Payment of claims
B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of...
additional Whole Life coverage at specified times
S is covered by a whole life policy. Which insurance product can cover his children?
child term rider
A term life insurance policy matures:
upon the insured's death during the term of the policy
Within how many days must an insurer provide an insured with claim forms after receiving notice of a loss?
15. Under the Claims Forms provision, an insurer has 15 days MAX to provide an insured with claim forms after receiving notice of a loss.
What is medicare?
A hospital and medical expense insurance program
Which of the following statements does NOT accurately describe the tax treatment of premiums and benefits of individual Accident and Health insurance? A. disability income policy premiums are NOT tax-deductible B. disability income policy premiums are tax-deductible C. major medical policy benefits are normally not taxed D. disability income policy benefits are normally not taxed
Answer: B
Which of the following is NOT a limited benefit plan? A. dental policy B. life insurance policy C. critical illness policy D. cancer policy
Answer: B, life insurance policy
Which of the following statements about a Guaranteed Renewable Health Insurance policy is CORRECT? A. premiums normally decrease at time of renewal B. premiums normally increase at time of renewal C. policy can be renewed at any time by the company D. policy can be cancelled at any time by the company
Answer: B, premiums normally increase at time of renewal
A Limited-Pay Life policy has: A. graded death benefits B. no cash value C. premium payments limited to a specified number of years D. premium payments that are paid to age 100
Answer: C
M applies for a health insurance policy and pays the initial premium. When the agent completes the application, a conditional receipt is left with the applicant. The insurance company's underwriting department request's M's medical records and determines that M has had asthma for many years. All of the following are probable underwriting outcomes, EXCEPT: A. deny coverage B. approve with a higher premium C. changing the policy's provisions D. attach a rider excluding specified coverages
Answer: C
Which of these statements is INCORRECT regarding the federal income tax treatment of life insurance? A. premiums are normally not tax deductible B. cash dividends are normally not taxed C. entire cash value is taxable D. proceeds are received tax-free if there is a named beneficiary
Answer: C
Dividends paid from a life insurance policy are A. guaranteed B. non-taxable C. issued by the insurer D. issued by the Department of Insurances
Answer: C, issued by the insurer
Which of the following combination plans is designed to protect an insured from an unpaid mortgage balance upon premature death? A. survivorship life B. family plan C. joint life D. whole life and level term rider
Answer: C, joint Life
K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this? A. variable life B. adjustable life C. graded premium whole life D. modified whole life
Answer: D
Which of the following is NOT included in an annuity contract? A. nonforefeiture benefit B. free-look provision C. benficiary D. AD&D rider
Answer: D
N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take?
Claim will be denied
K completes an application for a disability policy but does not pay the initial premium. The company approves the policy standard and the agent delivers the policy. K then pays her initial premium 3 days later. At what point does K's policy take effect?
Date the initial premium is collected
When does the Free-Look provision for health insurance begin?
Date the policy is delivered to the insured
The combination of Whole Life and _______ Term insurance is referred to as a Family Income Policy
Decreasing
What action should the producer take if the initial premium is NOT submitted with the application?
Forward the application to the insurer without the initial premium
What is considered a valid reason for a small business to insure the lives of its major shareholders?
Fund a buy-sell agreement
Health Reimbursement Arrangement (HRA)
If the employee paid for qualified medical expenses, the reimbursements may be tax-free
The type of annuity that can be purchased with one monetary deposit is called a(n)
Immediate annuity
What is being delivered during a policy delivery?
Insurance contract to the proposed insured
An insurance company normally has 2 years to contest information provided on an accident and health application. This 2 year period begins on the date that the:
Insurer dates the policy
What does Medicare Parts A and B cover?
Medicare Part A covers hospital benefits. Part B covers physician's services
Which type of policy is considered to be overfunded, as stated by IRS guidelines?
Modified Endowment Contract
In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and to be the recipient of any financial benefits from the policy?
Owners rights
What type of policy covers two people and pays upon the death of the last insured?
Survivorship
What type of life insurance incorporates flexible premiums and an adjustable death benefit?
Universal Life
What policy is characterized by a flexible premium and death benefit and allows the policyowner control of the investment aspect of the plan?
Variable Universal Life
A life policy that contains a monthly mortality charge as well as self-directed investment choices is
Variable Universal Life Policy
A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as
Variable life
Why do quarterly premium payments increase the annual cost of insurance?
because interest to the insurer is decreased while the administrative costs are increased
T purchased a $100,000 single premium, Straight Life annuity 5 years ago. He has received monthly payments since the inception of the annuity. If T dies, the insurance company...
does NOT have to make further payments. With Straight Life Annuity, the insurer does not have to make further payments after the annuitant dies.
What do the investment gains from a Universal Life Policy usually go toward?
the cash value
