Ins. Exam: Practice Questions

An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy?

$100,000

An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy?

10 days

Periodic payments of accumulated funds best describes

An annuity

If a business owner becomes totally disabled, a Business Overhead Expense policy will pay all of the following EXCEPT A. Loss of the owner's income B. Rent C. Utilities D. Employee payroll

Answer: A

All of the following are personal uses of life insurance EXCEPT A. Estate creation B. Cash accumulation C. Buy-sell agreement D. Survivor protection

Answer: C

Which of the following riders would NOT increase the premium for a policyowner? A. Payor benefit rider B. Waiver of premium rider C. Multiple indemnity rider D. Impairment rider

Answer: D

An agent is ready to deliver a policy to an applicant but has not yet received payment. Upon delivery, the agent collects the applicant's premium check, answers any questions the applicant may have, and then leaves. What did he forget to do?

Ask her to sign a statement of good health

An insured's premium increases as a result of her age. Which type of policy does she have?

Attained age

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is

Conditional

What provision states the insurer's rights to change premium amounts?

Continuation Provision

The term "fixed" in a fixed annuity refers to all of the following EXCEPT

Death benefit

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)

Equity Indexed Annuity Interest rates of Equity Indexed Annuities are tied to the Standard and Poor's index

In the Executive Bonus plan, who is the owner of the policy, and who pays the premium?

Executive is the owner, and the executive pays the premium

An agent selling variable annuities must be registered with

FINRA; because variable annuities are considered to be securities, a person must be registered with the FINRA (formerly NASD) and hold a securities license in addition to a life agent's license in order to sell variable annuities

What policy component decreases in decreasing term insurance?

Face amount Decreasing term policies feature a level premium and a death benefit that decreases each year over the duration of the policy term

When an employee terminates coverage under a group insurance policy, coverage continues in force

For 31 days

If a life policy allows the policy owner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a

Guaranteed insurability rider

The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the

Incontestability clause

Annually renewable term policies provide a level death benefit for a premium that

Increases annually; Annually renewable term policies provide a level death benefit for a premium that increases each year with the age of the insured

A Return of Premium term life policy is written as what type of term coverage?

Increasing ROP life insurance is an increasing term insurance policy that pays an additional death benefit to the beneficiary equal to the amount of the premiums paid

The primary eligibility requirement for Medicaid benefits is based upon

Need Medicaid is a program operated by the state, with some federal funding to provide medical care for those in need

Medicare Part D provides:

Prescription drug benefit The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) was passed in November 2003. This act implemented a plan to add a Part D - Prescription Drug Benefit to the standard Medicare Coverages

Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insured for full disability benefits. Which disability policy provision does this describe?

Presumptive disability

When an insurer combine two periods of disability into one, the insured must have suffered a

Recurrent disability second period of disability from the same disability that occurred prior

The Federal Fair Credit Reporting Act:

Regulates consumer reports

An insured has endured multiple surgeries and hospitalizations for an illness during the summer months. Her insurer no longer bills her for medical expenses. What term best describes the condition she has met?

Stop-Loss Limit

What protects consumers against the circulation of inaccurate or obsolete personal or financial information?

The Fair Credit Reporting Act

The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?

The annuitant must be a natural person; owners of annuities can be individuals or entities like corporations and trusts, but the annuitant must be a natural person, whose life expectancy is taken into consideration for the annuity

The policy owner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as

The policy contains sufficient cash value to covert the cost of insurance

What is the purpose of settlement options?

They determine how death proceeds will be paid

Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated

Those who have been insured under the plan for at least 5 years

What product requires a securities license?

Variable annuity; a variable annuity is considered to be a security and is regulated by the Securities Exchange Commission (SEC) in addition to state insurance regulations. For that reason, a person must hold a securities license in addition to a life agent's license in order to sell variable annuities

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?

$50,000 The face of the term policy would be the same as the face amount provided under the whole life policy

Who is a third-party owner

A policy owner who is not the insured

Which of the following is INCORRECT concerning Medicaid? A. It is solely a federally administered program B. It provides medical assistance to low-income people who cannot otherwise provide for themselves C. It pays for hospital care, outpatient care, and laboratory and X-ray services D. The federal government provides about 56 cents for every Medicaid dollar spent

Answer: A Medicaid is assistance program for persons with insufficient income and/or resources to pay for health care. States administer the program that is financed by federal and state funds

Which of the following is TRUE for both equity indexed annuities and fixed annuities? A. Both are considered to be more risky than variable annuities B. They invest on a conservative basis C. They have a guaranteed minimum interest rate D. They are both tied to an equity index

Answer: C While equity indexed annuities earn higher interest rates than fixed annuities, both types of annuities guarantee a specific minimum interest rate

The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called

Joint and survivor

What is the other term for the cash payment settlement option?

Lump sum

What is the name of a clause in a policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military?

Military service or war

An applicant is discussing his options for Medicare supplement coverage with his agent. The applicant is 65 years old and has just enrolled in Medicare Part A and Part B. What is the insurance company obligated to do?

Offer the supplement policy on a guaranteed issue basis

How do employer contributions to a health savings account affect the insured's taxes?

The employer contributions are not included in the individual insured's taxable income

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

The insured's age at death

A medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographic area is known as

usual, customary and reasonable The usual, customary and reasonable approach for determining insurance benefits is based upon the fees normally charged for specific procedures in the geographic location where the services are provided.

An insurance contract must contain all of the following to be considered legally binding:

1. Offer and acceptance: must be a definite offer by one party, and the other party must accept this offer in its exact terms; applicant makes the offer when submitting the application and acceptance takes place when an insurer's underwriter approves the application and issues a policy 2. Consideration: binding force in any contract; something of value that each party gives to the other; consideration on the part of the insured is the payment of premium and the representations made in the application; consideration on the part of the insurer is the promise to pay in the event of loss 3. Competent parties: parties to a contract must be capable of entering into a contract in the eyes of the law; requires that both parties be of legal age, mentally competent to understand the contract, and not under the influence of drugs/alcohol 4. Legal purpose: purpose of the contract must be legal and not against public policy; to ensure legal purpose of a Life insurance policy, it must have both: insurable interest and consent; a contract without a legal purpose is considered void, and cannot be enforced by any party

For how many days of skilled nursing facility care will Medicare pay benefits?

100 Treatment in a skilled nursing facility is covered in full for the first 20 days. From the 21st to the 100th day, the patient must pay the daily copayment. There are no Medicare benefits provided for treatment in a skilled nursing facility beyond 100 days.

If a person is disabled at age 27 and meets Social Security's definition of total disability, how many work credits must he/she have earned to receive benefits?

12 credits Persons disabled between 24-31 can qualify for benefits if they have credit for having worked half of the time between age 21 and the start of the disability. For example, if Joe becomes disabled at age 27, he would need 12 credits (or 3 years' worth) out of the prior 6 years (between ages 21 and 27).

Which of the following disability income policies would have the highest premium? A. 15-day waiting period/5-year benefit period B. 15-day waiting period/10-year benefit period C.30-day waiting period/10-year benefit period D. 30-day waiting period/5-year benefit period

15-day waiting period/10 year benefit period

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?

5 days

All of the following are general requirements of a qualified plan EXCEPT: A. The plan must be permanent, written and legally binding B. The plan must provide an offset for social security benefits C. The plan must be communicated to all employees D. The plan must be for the exclusive benefits of the employees and their beneficiaries

Answer: B Plans must meet the general requirements established by IRS

All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT A. Funds accumulate on a tax-deferred basis B. Employee and employer contributions are not counted as income to the employee for income tax purposes C. At distribution, all amounts received by the employee are tax free D. Employer contributions are tax deductible as ordinary business expense

Answer: C

Fixed annuities provide all of the following EXCEPT A. Minimum guaranteed rate of interest B. Future income payments C. Hedge against inflation D. Equal monthly payments for life

Answer: C

Which of the following is NOT true regarding uniform mandatory provisions concerning claims? A. If the insured is several days late in filing proof of loss form, the claim cannot be denied if the insured can show good cause B. The insured is customarily required to give notice of claim within 20 days C. If the insured is 2 years late in filing a proof of loss, the claim can be denied D. An insured must notify the insurer of a claim on forms prescribed by the insurer

Answer: D

Which of the following is true about the requirements regarding HIV exams? A. Results may be disclosed to the agent and the underwriter B. Prior informed oral consent is required from the applicant C. HIV exams may not be used as a basis for underwriting D. The applicant must give prior informed written consent

Answer: D A separate written consent form must be obtained prior to an HIV exam. HIV exam results may be disclosed to underwriters, but not agents

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? A. Concealment B. Indemnity C. Representation D. Warranty

Answer: D A warranty in insurance is a statement guaranteed to be true. When an applicant is applying for an insurance contract, the statements he/she makes are generally not warranties but representations. Representations are statements that are true to the best of the applicant's knowledge

In which of the following instances would the premium be tax deductible ? A. Premiums paid by an individual on his/her own life insurance B. Premiums paid by a mother on her son's policy C. Premiums paid by an employer on the life of a key person D. Premiums paid by an employer on a $30,000 group term life insurance plan for employees

Answer: D As a general rule, premiums paid for life insurance are not tax deductible. The exception to this rule is when an employer buys group term life insurance for his employees since it is considered a business expense

A tax-sheltered annuity is a special-tax favored retirement plan available to

Certain groups of employees only (nonprofit charitable, educational, religious, and other 501c(3) organizations, including all employees in public education)

What is an important feature of a dental expense insurance plan that is NOT typically found in a medical expense insurance plan?

Diagnostic and preventive care

A man purchased a $90,000 annuity with a single premium, and began receiving payments 2 months after that. What type of annuity is it?

Immediate; with an immediate annuity, distribution starts within 1 year of purchase

Issue age policy premiums increase in response to which of the following factors?

Increased benefits

Who makes up the Medical Information Bureau (MIB)?

Insurers; made up of insurers so the companies can compare the information they have collected on a potential insured with information other insurers may have discovered

When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income?

Interest only

In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium?

It will likely be higher because the applicant is a substandard risk; applicants are considered substandard risks because of physical condition, personal or family history of disease, occupation, or dangerous habits. Substandard risks are usually issued a higher premium than standard risks

A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that?

Joint Life Policy

Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his/her report, the reporting agency must

Respond to the consumer's complaint; the consumer has the right to request the information on the report, the reasons for turn down and any adverse underwriting decisions; reporting agency is required to respond to the consumer's complaint, and, if necessary, to reinvestigate the report

What best details the underwriting process for life insurance?

Selection, classification, and rating of risks

The premiums paid by the employer in a business life insurance policy are

Tax deductible by the employer

What kind of policy allows withdrawals or partial surrenders?

Universal Life

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

interest-sensitive whole life

Which of the following provisions would prevent an insurance company from paying a reimbursement claim to someone other than the policy owner?

payment of claims

Equity indexed annuities

seek higher returns; they are not securities, but they invest on a relatively aggressive basis to aim for higher returns. Life a fixed annuity the equity indexed annuity has a guaranteed minimum interest rate; current interest rate that is actually credited is often tied to a familiar index like the Standard and Poor's 500

For an individual who is NOT covered by an employer-sponsored plan, IRA contributions are

tax deductible

According to the entire contract provision, what document must be made part of the insurance policy?

Copy of the original application

What is considered a qualifying event under COBRA>

Divorce Other qualifying events include the voluntary termination of employment; an employee's change from full time to part time; or the death of the employee

What is a definition of a unilateral contract

One-sided: only one party makes an enforceable promise

The death protection component of Universal Life Insurance is always

Annually Renewable Term Universal Policy has two components: an insurance component and a cash account; insurance component (or the death protection) of ULP is always annual renewable term insurance

Which of the following is NOT covered under Plan A in Medigap insurance? A. The Medicare Part A deductible B. Approved hospital costs for 365 additional days after Medicare benefits end C. The 20% Part B coinsurance amounts for Medicare approved services D. The first three pints of blood each year

Answer: A

Which of the following CANNOT be included along with illustrations used to sell life insurance? A. Rating information B. Original death benefit C. Vanishing premium information D. Name of the insurer

Answer: C

Which of the following is true regarding health insurance underwriting with HIV? A. The person may not be declined for medical coverage solely based on HIV status. B. A person may be declined for HIV but not AIDS C. The person may be declined D. The person may only be declined if he/she has symptoms

Answer: A

All of the following are true of key person insurance EXCEPT: A. The plan is funded by permanent insurance only B. There is no limitation on the number of key employee plans in force at any one time C. The employer is the owner, payor and beneficiary of the policy D. The key employee is the insured

Answer: A Key Person coverage may be funded by any type of life insurance

Which one of the following is an eligibility requirement for Social Security disability income benefits? A. Fully insured status B. Experiencing at least one year of disability C. Being at least 50 years of age D. Currently employed status

Answer: A Social Security Disability benefits are available only if the worker is fully insured. Benefits are provided only after a 5-month waiting period

Which of the following is TRUE about nonforfeiture values? A. Policyowners do not have the authority to decide how to exercise nonforfeiture values B. They are required by state law to be included in the policy C. They are optional provisions D. A table showing nonforfeiture values for the next 10 years must be included in the policy

Answer: B

If an annuitant dies before annuitization occurs, what will the beneficiary receive?

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

If a policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a

Guaranteed insurability rider

A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits?

Immediate annuity; An annuity purchased with a single lump-sum payment, with a 25-year fixed-period distribution will be most suitable for this arrangement

When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In the case, the insurance company will

Issue the policy anyway and pay the face value to the beneficiary

A policy will pay the death benefit if the insured dies during the 20-year premium paying period, and nothing if death occurs after the 20-year period. What type of policy is this?

Level term

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

Limited pay whole life; Premium payments will cease at her age 65, but coverage will continue until her death or age 100

Which of the following information about the applicant is NOT included on Part 1 of the application for insurance?

Medical background

Which Universal Life option has a gradually increasing cash value and a level death benefit?

Option A

The part of Medicare that helps pay for inpatient hospital care, inpatient care in a skilled nursing facility, home health care and hospice care, is known as

Part A It pays for these services, subject to copayments and limitations on the number of days of care

Prior to purchasing a Medigap policy, a person must be enrolled in which of the following?

Parts A and B of Medicare

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?

Principal Sum; accidental death and dismemberment coverage only pays for accidental losses and is thus considered a pure form of accident insurance. The principal sum is paid for accidental death. In case of loss of sight or accidental dismemberment, a percentage of that principal sum will be paid by the policy, often referred to as a capital sum

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?

Probationary period

What is the purpose of a fixed-period settlement option?

To provide a guaranteed income for a certain amount of time

The term "fixed" in a fixed annuity refers to all of the following EXCEPT: A. Death benefit B. Guaranteed rate of interest C. Equal annuity payments D. Amount and length of payments

Answer: A provides a guaranteed minimum rate of interest and income payments that do not vary from one to the next; company also guarantees the specified dollar amount for each payment and the length of the payout period; annuities do not provide a death benefit

All of the following are characteristics of a Universal Life policy EXCEPT A. Universal Life is a combination of term insurance and a separate savings account joined in a single contract B. The planned premium pays for mortality charges and expenses and any excess is returned to the policy owner C. The insurance company reserves the right to adjust the mortality charges and/or interest rate D. The cash account accumulates on a tax-deferred basis

Answer: B Any premium amounts not required to pay for mortality and expenses, create the cash account

Medicare Part A services do NOT include which of the following? A. Hospitalization B. Hospice care C. Outpatient Hospital Treatment D. Post hospital skilled nursing facility care

Answer: C Outpatient treatment is covered under Part B

Which of the following is NOT covered under Plan A in Medigap Insurance? A. The first three pints of blood each year B. The Medicare Part A deductible C. Approved hospital costs for 365 additional days after Medicare benefits end D. The 20% Part B coinsurance amounts for Medicare approved services

Answer: B Medicare Supplement Plan A provides the core, or basic, benefits established by law. All of the above are part of the basic benefits, except for the Medicare Part A deductible, which is a benefit offered through nine other plans.

Which of the following statements is TRUE concerning the Accidental Death Rider A. The rider is only available to insureds over the age of 65 B. It is only available in group insurance C. It will pay double or triple the face amount D. It is also known as a triple indemnity rider

Answer: C The Accidental Death Rider pays 2 or 3 times the face amount if death is the result of an accident as defined in the policy and occurs within 90 days of such an accident

Which of the following is NOT true regarding Equity Indexed Annuities? A. They have guaranteed minimum interest rates B. They are less risky than variable annuities C. They earn lower interest rates than fixed annuities D. The insurance company keeps a percentage of the returns

Answer: C Equity Indexed Annuities invest on an aggressive basis in order to yield higher returns. Like a fixed annuity, Equity Indexed Annuities have guaranteed minimum interest rates. The insurance company often keeps a predetermined percentage of the return and pays the rest to the annuity owner. Equity Indexed Annuities are less risky than variable annuities and earn higher interest rates than fixed annuities

Medicaid provides all of the following benefits EXCEPT: A. Home health care services B. Eyeglasses C. Family planning services D. Income assistance for work-related injury

Answer: D Medicaid covers a variety of medical costs, from eyeglasses to hospitalization

What do individuals use to transfer their risk of loss to a larger group

Insurance

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

Insuring clause

During partial withdrawal from a universal life policy, which portion will be taxed?

Interest

In which Medicare supplement policies are the core benefits found?

All plans The benefits in Plan A are considered to be the core benefits and must be included in the other types. Therefore, all types contain the core benefits offered by Plan A.

Which of the following is INCORRECT regarding a $100,000 20-year level term policy? A. At the end of 20 years, the policy's cash value will equal $100,000 B. The policy premiums will remain level for 20 years C. If the insured dies before the policy expired, the beneficiary will receive $100,000 D. The policy will expire at the end of the 20-year period

Answer: A Term policies do not develop cash values.

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it is

A Modified Endowment Contract; Any cash value insurance policy that develops cash value faster than a seven-pay whole life contract is called a Modified Endowment Contract. It loses the benefits of a standard life contract.

What best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company?

Aleatory; an insurance contract is an aleatory contract in that it requires a relatively small amount of premium for a large risk

What would be considered a nonmedical insurance application?

An application on which the medical information is completed by the applicant and the agent only; no medical questions on the application need to be completed by medical professionals, only the applicant and agent

Which of the following statements is NOT true concerning insurable interest as it applies to life insurance? A. A debtor has an insurable interest in the life of a lender B. Business partners have an insurable interest in each other C. A husband or wife has an insurable interest in their spouse D. An individual has an insurable interest in his/her own life

Answer: A A lender has an insurable interest in the life of a debtor, but only to the extent of the debt. The debtor does not have an insurable interest in the life of the lender

All of the following are true of key person insurance EXCEPT A. The plan is funded by permanent insurance only B. There is no limitation on the number of key employee plans in force at any one time C. The employer is the owner, payor, and beneficiary of the policy D. The key employee is the insured

Answer: A May be funded by any type of life insurance

Which of the following statements is correct? A. All HMOs and PPOs charge premiums beyond what is paid by Medicare B. HMOs may pay for services not covered by Medicare C. HMOs do not pay for services covered by Medicare D. Medicare Advantage is Medicare provided by an approved Health Maintenance Organization only.

Answer: B The advantages of an HMO or PPO for a Medicare recipient may be that there are no claims forms required, almost any medical problem is covered for a set fee so health care costs can be budgeted, and the HMO or PPO may pay for services not usually covered by Medicare or Medicare supplement policies, such as prescriptions, eye exams, hearing aids, or dental care

SIMPLE Plans require all of the following EXCEPT: A. No more than 100 employees B. Employees must receive a minimum of $5,000 in annual compensation C. At least 1,000 employees D. No other qualified plan can be used

Answer: C A SIMPLE Plan is available to small businesses that employ not more than 100 employees receiving at least $5,000 in compensation from the employer during the previous year

All of the following are business uses of life insurance EXCEPT: A. Funding against financial loss caused by the death of a key employee B. Funding business continuation agreements C. Funding against general company financial loss D. Compensating executives

Answer: C; Both life and health insurance can be used for a variety of purposes in a business setting, including the funding of business continuation agreements, compensating executives, and protecting the firm against financial loss resulting from death or disability of key employees

Which of the following describes the tax advantage of a qualified retirement plan? A. Employer contributions are deductible as a business expense when the employee receives benefits B. Employer contributions are not taxed when paid out to the employee C. The earnings in the plan accumulate tax deferred D. Distributions prior to age 59 1/2 are tax deductible

Answer: C; Contributions are tax deferred, and earnings on the money in the plan accrue on a tax-deferred basis

Which of the following is TRUE regarding variable annuities? A. The company guarantees a minimum interest rate B. A person selling variable annuities is required to have only a life agent's license C. The annuitant assumes the risks on investment D. The funds are invested in the company's general account

Answer: C; The payments that the annuitant invests into the variable annuity are invested in the insurer's separate account. The separate account under many annuities provides the annuitant with a dozen or more investment options ranging from "money market funds" to "growth stock funds" to "precious metal funds". Therefore, the annuitant assumes the risk of the investment.

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

Answer: D

An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin 2 years after the annuity was purchased. What type of annuity is it?

Deferred; Deferred annuities may be purchased with either a single lump sum or periodic payments, but they do not begin the income payments until sometime after 1 year from the date of purchase

In a direct rollover, how is the money transferred from one plan to the new one?

From trustee to trustee

If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a

Settlement option; A settlement option is exercised when an immediate annuity is purchased with the face amount at death or with the cash value at surrender

Which of the following would help prevent a universal life policy from lapsing? A. Target premium B. Face amont C. Adjustable premium D. Corridor of insurance

Answer: A The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.

If a settlement option is not chosen by the beneficiary or policyowner, which option will be used?

Lump sum Upon the death of the insured, or endowment, the contract is designed to pay the proceeds in cash, called a lump sum, unless the recipient chooses an optional mode of settlement

Which type of care is NOT covered by Medicare? A. Hospital B. Long-term care C. Hospice D. Respite

Answer: B Hospice care, which includes respite care, and hospital care are included in Medicare Part A

A husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouse's coverage. If one of them incurs hospital expenses, how will those expenses likely be paid?

The benefits will be coordinated

In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?

The customer's associates, friends, and neighbors provide the report's data

What is the purpose of establishing the target premium for a universal life policy?

To keep the policy in force; Target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its life time