Insurance Exam Questions

How many inpatient treatment periods must be included in coverage for alcoholism during the lifetime of the policy? 0 1 2 3

Basic coverage for the treatment of alcoholism includes coverage for primary and outpatient treatment. The coverage must provide for at least 30 days of inpatient coverage for the primary treatment of alcoholism in any 365-day benefit period with at least 2 inpatient treatment periods available during the lifetime of the policy, and 60 outpatient treatment visits during the lifetime of the policy.

Which of the following does the Insuring Clause NOT specify? The insurance company The name of the insured A list of available doctors Covered perils

List of available doctors

What happens when a policy is surrendered for its cash value? The policy can be converted to term coverage. Coverage ends and the policy cannot be reinstated. Coverage ends but the policy can be reinstated at any time. The policy can be reinstated by paying back all policy loans and premiums.

Coverage ends and the policy cannot be reinstated

if an insurer becomes insolvent, which of the following would pay the benefits to policyholders

Guaranty Association

Stock insurance companies are required to maintain a minimum of 500k $1 mil $3 mil $5 mil

$1 mil; if sell either life or variable life it is $2 mil

An insured is covered under 2 group health plans - under his own and his spouse's. He had suffered a loss of $2,000. After the insured paid the total of $500 in deductibles and coinsurance, the primary insurer covered $1,500 of medical expenses. What amount, if any, would be paid by the secondary insurer?

$500; Once the primary insurer has paid the full available benefit, the secondary insurer will cover what the first company will not pay, such as deductibles and coinsurance. The insured will, then, be reimbursed for out-of-pocket costs.

What percentage of individually-owned disability income benefits is taxable? 0% 50% 100% Amount paid by insured

0% Premiums are paid with after tax dollars. Benefits are not income taxable.

A Director denies a license application. 15 days later, the applicant notifies the Director that he wants a hearing to be conducted regarding the decision. Within how many days must the hearing be held? 10 15 20 30

30; within 30 days of the applicants receipt notice, the applicant may make written demand to the director for hearing, hearing will be convened within 30 days of the directors receipt of the demand.

All of the following qualify for Medicare Part A EXCEPT Anyone who is at the end stage of renal disease. Anyone who is over 65, not covered by Social Security, and is willing to pay premium. Anyone who is willing to pay a premium. Anyone that qualifies through Social Security.

Anyone willing to pay a premium: Medicare Part A, a person must be age 65 or otherwise qaulify

It is mandatory for all new policies to include surgical and nonsurgical treatment for all of the following EXCEPT Fractured wrist. Shattered pelvis. Broken bones of the foot. Broken cervical vertebrae.

Broken cervical vertebrae.

Which of the following is NOT the purpose of HIPAA? To limit exclusions for pre-existing conditions To provide immediate coverage to new employees who had been previously covered for 18 months To guarantee the right to buy individual policies to eligible individuals To prohibit discrimination against employees based on their health status

HIPAA does not prohibit employers or providers from establishing waiting periods or pre-existing conditions exclusions, in which case the coverage to new employees would not be immediate.

Which of the following is NOT true regarding a Certificate of Authority? It is equivalent to an insurance license. It is issued by the state department of insurance. It is issued to group insurance participants. It may be necessary for transacting business in a specific state.

It is issued to group insurance participants Group insurance participants receive a Certificate of Insurance

All of the following are true regarding Key Employee Disability Income insurance EXCEPT The employer owns the policy. Benefits are paid to the employer to retrain a new person. Premiums are not tax deductible for the employer. Benefits are taxable to the employer.

Key person disability income premiums are not deductible to the business, but the benefits are received income tax free by the business.

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 Survivorship insurance Juvenile protection provision Survivor protection Life planning

Life insurance can provide funds necessary for the survivors of the insured to be able to maintain their lifestyle in the event of the insured's death. This is also known as SURVIOR PROTECTION

If an immediate annuity is purchased with the face ammount at death or with the cash value at surrender, this would be considered a Nonforfeiture option. Rollover. Settlement option. Nontaxable exchange.

Settlement Option baby;

All of the following would be eligible to establish a Keogh / HR-10 retirement plan EXCEPT A sole proprietor of film development store with no employees. A hair dresser who operates her business at her house. The president and employee of a family corporation. A sole proprietor of a service station who employs four employees.

The president and employee of a family corporation. Keogh plans are for self-employed individuals and their employees.

An employee is insured under her employer's group life plan. If she terminates her coverage which of the following statements is INCORRECT? The premium for individual coverage will be based upon the insured's attained age. The insured may choose to convert to term or permanent individual coverage. The insured would not need to prove insurability for a conversion policy. The insured may convert coverage to an individual policy within 31 days.

When group coverage is converted to an individual policy, the insurer will determine the type of coverage, usually permanent insurance.

Which of the following describes the taxation of an annuity when money is withdrawn during the accumulation phase? Withdrawn amounts are taxed on a last in, first out basis. Withdrawn amounts are taxed on a first in, last out basis. Taxes are deferred on withdrawn amounts, but a flat penalty is charged. Taxes are deferred on withdrawn amounts.

When money is withdrawn from the annuity during the accumulation phase the amounts are taxed on a last in first out basis (LIFO). Therefore, all withdrawals will be taxable until the owner's cost basis is reached. After all of the interest is received and taxed the principal will be received with no additional tax consequences.

a hospital indemnity policy will pay for? income lost while the insured is in the hospital all expenses incurred by the stay in the hospital any expense incurred by the stay in the hospital minus coinsurance and deductibles a benefit for each day the insured is in a hospital

a benefit for each day an insured is in the hospital

Which of the following would a disability income policy NOT require in order to qualify? under physicians care confined to house proof disability a specified income status prior to the disability

a specified income status prior to the disability: Some Disability Income policies require that the insured must be under the care of a physician and possibly confined to his/her house in order to be eligible for disability benefits. Even though disability income benefits are limited to a percentage of earned income, to qualify for benefits, a person must meet the disability definition.

Which of the following is the closet term to an authorized insurer?

admitted and authorized are synonymous terms in insurance

If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant's Prior insurance. Ancestry. Credit history. Habits.

ancestry

In a replacement situation all of the following must be considered except? limitations exclusions assets benefits

assets

Which of the following is NOT a characterstic or service of an HMO plan? contracting with insurance companies providing free annual checkups encouraging early treatment providing care on an outpatient basis

contracting with insurance companies; contracts are between the INSURED and HMO

Which of the following is NOT a cost-saving service in a medical plan? second surgical options risk sharing denial of coverage preventive care

denial of coverage: Cost-saving services, also known as case management provisions, include: controlled access of providers, large claim management, preventive care, hospitalization alternatives, second surgical opinions, preadmission testing, catastrophic case management, risk sharing, and providing high quality of care.

which of the following documents must be provided to the policyowner or applicant during policy replacement? policy illustrations notice regarding replacement disclosure authorization form buyers guide and policy summary

notice regarding replacement

All of the following are examples of risk retention EXCEPT Self-insurance. Premiums. Deductibles. Copayments.

premiums

Medical insurance plan in which the health care provider is paid a regular fixed amount prepaid indemnity reimbursement fee-for-service

prepaid

If a producers allows his license to laspe, within what maximum time period may the same license be reinstated? 30 days 6 months 12months 2 years

12 months

HIPAA applies to groups of? 10 100 2-50 2 or more

2 or more

What is the maximum penalty for habitual willful noncompliance with the fair credit reporting act? revocation of license 2,500 1,000 100 per violation

2,500

Which of the following best describes the aleatory nature of an insurance contract? Policies are submitted to the insurer on a take-it-or-leave-it basis Exchange of unequal values Only one of the parties being legally bound by the contract Ambiguities are interpreted in favor of the insured

An aleatory contract is a contract in which unequal amounts or values are exchanged. The amount of premium the insured pays is much less than the potential loss assumed by the insurer.

In comparison to a policy that uses the accidental means definition, a policy that uses accidental bodily injury definiton would cover what? More limited in general. More limited in duration. Broader in duration. Broader in general.

Broader in general;A policy that uses the accidental bodily injury definition will provide broader coverage than a policy that uses the accidental means definition.

Which of the following is NOT considered to be a basic service, under a nonscheduled plan? Oral surgery Fillings Dentures Endodontics

Dentures There are two types of services under nonscheduled plans: basic and major. Basic includes fillings, oral surgery, periodontics, and endodontics, while major services include treatments such as inlays, crowns, dentures and orthodontics.

If a policy includes a free-look period of at least 10 days, the Buyer's Guide must be delivered to the applicant: Upon issuance of the policy. Prior to accepting an initial premium. Prior to filling out an application for insurance. With the policy.

If a life insurance policy contains a free-look period of at least 10 days, the buyer's guide can be delivered with the policy. If it doesn't, the buyer's guide must be delivered prior to accepting the initial premium.

If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept? Nonforfeiture Indemnity Reasonable expectations Cease and desist

Reasonable expectations

Which of the following are responsible for making premium payments in an HMO plan? Producers Insureds Payors Subscribers

Subscribers are people in whose name the contract is issued. They would be responsible for making premium payments.

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a cost of living provision nonforfeiture option guaranteed insurability rider paid-up additions option

The Guaranteed Insurability rider allows the policyowner to purchase specific amounts of additional insurance at specific dates or events, without proving continued insurability. Rates for the additions are based upon attained age.

All of the following entities regulate variable life policies EXCEPT The Insurance Department. The Guaranty Association. Federal government. The SEC.

Variable life insurance is regulated by both the state and federal government, as well as the Insurance Department, and the SEC.

An insured was involved in an accident and could not perform her current job for 3 years. If the insured could reasonably perform another job utilizing similar skills after 1 month, for how long would she be receiving benefits under an "own occupation" disability plan? 2 years 1 month no benefits 3 years

2 years; Under an Own Occupation plan, if the insured cannot perform his/her current job for a period of up to two years, disability benefits will be issued, even if the insured would be capable of performing a similar job during that two-year period. After that, if the insured is capable of performing another job utilizing similar skills, benefits will not be paid.

Medicare supplement renewal comissions paid in the third year must be as high as the comission of which year? 1st 2nd 3rd 4th

2nd

Within how many days of requesting an investigate consumer report must an insurer notify the consumer in writing that the report will be obtained days 3 5 10 14

3 days

An employee quits her job where she has a balance of $10,000 in her qualified plan. The balance was paid out directly to the employee in order for her to move the funds to a new account. If she decides to rollover her plan to a Traditional IRA, how much will she receive from the plan administrator and how long does she have to complete the tax-free rollover? $10,000, 60 days $10,000, 30 days $8,000, 60 days $8,000, 30 days

8,000 60 days Generally, IRA rollovers must be completed within 60 days from the time the money is taken out of the first plan. If the distribution from the first plan is paid directly to the participant, 20% of the distribution must be withheld by the payor.

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

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.

Which of the following is TRUE of a qualified plan? It may discriminate in favor of highly paid employees. It may allow unlimited contributions. It has a tax benefit for both employer and employee. It does not need to have a vesting schedule.

A qualified plan is approved by the IRS, which then gives both the employer and employee benefits in deductibility of contributions and tax deferral of growth.

What is the duration of the free-look period for Medicare supplement policies? 10 20 30 60

All Medicare Supplement policies must contain a 30-day free look period where the insured may return the policy for a complete refund for any reason.

What is a penalty tax for nonqualified distributions from a health savings account? 8% 10% 12% 20%

An HSA holder who uses the money for a nonhealth expenditure pays tax on it, plus a 20% penalty.

A Universal Life Insurance policy is best described as?

Annually renewable term policy with a cash value account

All of the following are duties and responsibilities of producers at the time of application EXCEPT Check to make sure that there are no unanswered questions on the application. Change any incorrect statement on the application by personally initialing next to the corrected statement. Explain the nature and type of any receipt the producer is giving to the applicant. Probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information.

Any changes to information on an application must be initialed by the applicant.

Every small employer carrier must actively offer to small employers at least how many health benefit plans? 1 2 3 no minimum

As a condition of transacting business in this state with small employers, every small employer carrier is required to actively offer to small employers at least 2 health benefit plans. One plan offered by each small employer carrier must be a basic health benefit plan, and one plan must be a standard health benefit plan.

Which of the following Life Insurance policies would be considered interest sensitive? Adjustable life Whole life Increasing term Universal life

As well as being a flexible premium policy, universal life is also an interest-sensitive policy. The insurer credits the cash value in the policy with a current (nonguaranteed) interest rate and backs the cash value with a contract (lower guaranteed) rate of interest.

When must the Medicare Supplement Buyer's Guide be prepared? When the policy is delivered Within 30 days of policy delivery When the prospective policyholder inquires about a policy or at the time of application, depending on which occurs first. At the time of application

At the time of application

An insurer invests the money it receives from premiums paid by its insureds. Which of the following is TRUE regarding the interest earned on these investments? It is used to lower premiums. It is paid out as dividends. It is used to fund executive bonuses It is used to increase the death benefit.

Because insurers receive premiums before they must pay out benefits, they can invest the premium money and use the interest to lower premium amounts charged to insureds.

What is franchise insurance? It is group insurance It is blanket insurance It is health coverage for small groups whose numbers are too small to qualify for true group insurance It provides insurance for franchises, such as a restaurant or hotel chain

Franchise insurance provides health coverage for small groups whose numbers are too small to qualify for true group insurance. Franchise insurance is not group insurance, since individual policies are issued for each participant. Individual underwriting is done for each person, submitting his or her own application and medical history. Premiums charged are generally less than for an individual policy, but more than group coverage.

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

HMOs may pay for services not covered by Medicare;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.

Which clause allows both the insured and dentist to know in advance which benefits will be paid? Preadmission Advanced Benefit Notification Fixed Rate Precertification

Precertification "Predetermination of Benefits Clause" Prior Authorization

An individual has been contributing to a retirement account after taxes are taken out of his paycheck. His financial advisor told him that he will be allowed to make contributions after age 70½. The account owner does not have to pay taxes on the growth of his account. What type of retirement account is it? Roth IRA 403(b) plan Simplified Employee Pension Plan Traditional IRA

Roth IRAs have several distinguishing features. Unlike traditional IRAs, the account owner can continue beyond age 70½, and distributions do not have to begin at age 70½. The contributions are not tax-deductible.

which of the following is an example of a peril covered in an accident and health insurance policy? smoking death sickness alcholosim

Sickness

When an annuity is written, whose life expectancy is taken into account?

The annuitant receives payments from an annuity and is the person whose life expectancy is considered when writing the contract. The annuitant and annuity owner are often the same person but do not have to be.

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 Relative-value schedule. Benefit schedule. Gatekeepers. Usual, customary and reasonable.

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.

If an employee terminates her employement, which of the following provisions would allow her to continue health coverage under an individual policy, if requested within 31 days? grace period renewability conversion replacement

conversion

Under a pure life annuity, an income is payable by the company For as long as either the annuitant or a named beneficiary is alive. Only for the life of the annuitant. Until the principal and interest are exhausted. For a guaranteed period of time, whether or not the annuitant survives to the end of that period.

only for the life of the annuitant With pure life annuity, income payments cease at the annuitant's death and there is no refund or payments to survivors. This type of annuity is also referred to as Life Only or Straight Life.

Which of the following is true regarding a safe harbor 401(k) plan? The plan is subject to annual nondiscrimination tests. Contributions may be granted on behalf of all eligible employees. Safe harbor plans are for small employers only. Employer contributions are fully vested after 7 years.

A safe harbor 401(k) plan is similar to a traditional 401(k) plan except it provides employer matching contributions that are fully vested. These contributions may be granted to either employees who defer, or on behalf of all eligible employees. A safe harbor plan is not subject to annual nondiscrimination tests, and is available for employers of any size and can be combined with other retirement plans.

A Universal Life Insurance policy is best described as a/an Variable Life with a cash value account. Whole Life policy with two premiums: target and minimum. Flexible Premium Variable Life policy. Annually Renewable Term policy with a cash value account.

A universal policy has two components: an insurance component and a cash account. The insurance component (or the death protection) of a universal life policy is always annual renewable term insurance.

Which of the following is INCORRECT concerning taxation of disability income benefits? If the insured paid the premiums, any disability income benefits are tax-free. If the benefits are for a permanent loss, the benefits paid to the employee are not taxable. If paid by the individual, the premiums are tax deductible. If the employer paid the premiums, income benefits are taxable to the insured as ordinary income.

If an individual purchases his or her own disability insurance with before-tax dollars, any benefits paid are tax free, but the premium is not tax deductible. If an employer pays the premium, the employer may deduct the premium as a business expense. Any benefits paid to an employee are taxable, unless it is for the permanent loss of a body part, or loss of use of a body part.

A father owns a life insurane policy on his 15 yr old daughter. The policy contains the optional payor benefit rider. if the father becomes disabled, what will happen to the life insurance premiums?

If the payor (usually a parent or guardian) becomes disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age, such as 21.

Which of the following is NOT true regarding the Needs Approach method of determining the value of an individual's life? Need is predicted using the number of years until the insured's retirement. Coverage is based on the predicted needs of that family. The death of an insured must be premature. It must be assumed that the death of the insured will occur immediately.

In the Needs Approach method, need is determined by the predicted needs of the family after the premature death of the insured, which must be assumed will happen immediately. The policy allows for benefits to be collected upon the insured's death.

The following are features of the Indexed Universal Life EXCEPT? Flexible premium. Adjustable death benefit. Policy's cash value is dependent on the performance of the equity index. Sale of this product requires a securities license.

Indexed Universal Life policies have name of the same features as the Universal Life: flexible premiums, adjustable death benefits, and an investment component. However, the policy's cash value is dependent upon the performance of the equity index. Sale of the Indexed Universal Life products does not require a securities license.

The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the Incontestability clause. Consideration clause. Probationary period. Insuring clause.

Insuring Clause. The insuring clause is a provision on the first page of the policy that states the coverage and when it applies.

All of the following statements about Medicare supplement insurance policies are correct EXCEPT They are issued by private insurers. They cover the cost of extended nursing home care. They cover Medicare deductibles and copayments. They supplement Medicare benefits.

Medicare supplement policies (Medigap) do not cover the cost of extended nursing home care. Medigap plans are designed to fill the gap in coverage attributable to Medicare's deductibles, copayment requirements, and benefit periods. These plans are issued by private insurance companies.

Which of the following is NOT true regarding policy loans? Policy loans can be repaid at death. An insurer can charge interest on outstanding policy loans. A policy loan may be repaid after the policy is surrendered. Money borrowed from the cash value is taxable.

Money borrowed from the cash value is not taxable. Policy loans can be repaid at any time, including surrender and death. An insurer can charge interest on outstanding policy loans.

What is necessary in order to be eligible to receive benefits from a long-term care policy? Age is the only requirement; upon reaching age 65, LTC benefits are available. The insured must be unable to perform some activities of daily living. The insured must meet certain economic standards. The insured must have been receiving disability benefits for 6 months.

Normally to be eligible for benefits from a long-term care policy, the insured must be unable to perform some of their activities of daily living (ADLs). ADLs include bathing, dressing, toileting, transferring, continence, and eating.

An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase? Payments for 20 years Payments for life Nothing Payments for 15 years

Payments for 15 years With any period certain, death of the annuitant within the stated period will provide payments to the beneficiary only for the remainder of the period certain.

An insured is involved in an accident that renders him permanently deaf, although he does not sustain any other major injuries. The insured is still able to perform his current job. To what extent will he receive Presumptive Disability benefits? Partial benefits Full benefits for 2 years No benefits Full benefits

Presumptive Disability plans offer full benefits for specified conditions. These policies typically require the loss of at least two limbs (Loss of use does not qualify in some policies.), total and permanent blindness, or loss of speech or hearing. Benefits are paid, even if the insured is able to work.

Which of the following would be considered an unfair claims settlement practice? Requesting the insured swear under oath concerning the facts of the claim The settlement of the claim is delayed for 30 days in order for the insured to conduct an investigation A claims adjuster advises the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered Requesting the insured to submit a signed, proof of loss statement, after the insured has already verbally advised the insurer of the claim

Requesting the insured to submit a signed, proof of loss statement, after the insured has already verbally advised the insurer of the claim ff

An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy? She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan. She will still be covered under the group plan, but will have to pay an individual policy premium. She can only convert her coverage without proof of insurability if she has the master policy. She must apply for a new policy, which requires her to provide proof of insurability.

She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan.

In major medical insurance policies, when the insured's share of coinsurance reaches a certain amount, the insured is no longer obligated to pay it. This feature is known as? Coordination of benefits. Stop-loss. Maximum benefits. Deductible.

Stop-loss

Another name for a substandard risk classification is Declined. Elevated. Rated. Controlled.

Substandard risk classification is also referred to as "rated" since these policies could be issued with the premium rated-up, resulting in a higher premium.

During the accumulation period in a nonqualified annuity, what are the tax consequences of a withdrawal? Both interest and principal are taxed; no other penalties are imposed. Neither interest nor principal is taxed, but penalties may be imposed. Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 ½. Nontaxable principal may be withdrawn first, but the 10% penalty will be imposed if under age 59 ½.

Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 1/2; When money is withdrawn from the annuity during the accumulation phase, the amounts are taxed on a last in first out basis (LIFO). Therefore, all withdrawals will be taxable until the owner's cost basis is reached.

All of the following would be different between qualified and nonqualified retirement plans except Taxation on accumulation Taxation on withdrawals Taxation on contributions IRS approval requirments

Taxation on accumulation is deferred in both types

Which of the following is TRUE regarding the annuity period? It may last for the lifetime of the annuitant. During this period of time the annuity payments grow interest tax deferred. It is also referred to as the accumulation period. It is the period of time during which the annuitant makes premium payments into the annuity.

The "annuity period" is the time during which accumulated money is converted into an income stream. It may last for the lifetime of the annuitant or for a shorter specified period of time depending on the benefit payment option selected.

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

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.

What is the maximum period that an insurer would pay benefits in accordance with an Additional Monthly Benefit rider? For the duration of the disability or the contract, depending on which ends first 1 month 1 year 2 years

The Additional Monthly Benefit rider stipulates that the insurer will pay benefits comparable to what Social Security would pay. After a year's time, the insurer ends the benefit and assumes that Social Security will then begin benefit payment.

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

The Return of Premium Rider is achieved by using increasing term insurance. When added to a whole life policy it provides that at death prior to a given age, not only is the original face amount payable, but also all premiums previously paid are payable to the beneficiary.

How is the amount of Social Security disability benefits calculated?

The amount of Social Security disability benefits is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over their highest 35 years. The lowest 5 years of income may be deleted from calculation.

What is the elimination period for Social Security disability benefits? 5 months 6 months 12 months 3 months

The elimination period for Social Security disability benefits is 5 months.

J transferred his life insurance policy to his son two years before his death. Which of the following is true? The interest portion of the policy will be included in J's taxable estate. The unpaid premiums on the policy will be deducted from J's taxable estate. Because the policy has been transferred, it will not be included in J's taxable estate. The entire face value of the policy will be included in J's taxable estate.

The entire face value of the policy will be included in J's taxable estate

The Patient Protection and Affordable Care Act mandates that insurers provide coverage for adult children of the insured up to the age of 19. 21. 26. 30.

The law extends coverage for children of the insured to age 26, regardless of their marital status, residency, financial dependence on their parents, or eligibility to enroll in their employer's plan.

The market value adjustment in modified guaranteed annuities refers to which of the following? The difference between the contracted interest rate and the rate at surrender The penalty for a premature surrender of the annuity The performance of the annuity investments The percentage the insurer keeps for its services

The market value adjustment in a modified guaranteed annuity is usually a percentage of the difference between the contracted rate of interest in the annuity and the current rate at surrender.

What is the number of credits required for fully insured status for Social Security disability benefits? 4 10 30 40

The term "fully insured" refers to someone who has earned 40 quarters of coverage (10 years of work times 4 maximum annual credits).

The term "illustration" in a life insurance policy refers to A presentation of nonguaranteed elements of a policy. A depiction of policy benefits and guarantees. Pictures accompanying a policy. Charts and graphs.

The term "illustration" means a presentation or depiction that includes nonguaranteed elements of a policy of individual or group life insurance over a period of years.

In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT The premium. The amount of insurance. The type of investment. The length of coverage.

Typically, the owner of an adjustable life policy has the following privileges: increasing or decreasing the premium, changing the premium-paying period, increasing or decreasing the face amount of coverage, or changing the period of protection. Type of investment

An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision? Common Disaster Accidental Death Survivor Life Second-to-Die

Under the Uniform Simultaneous Death Law, Common Disaster provision, the law will assume that the primary beneficiary dies first in a common disaster as long as the beneficiary dies within this specified period of time following the death of the insured (usually 30 days). This provides that the proceeds will be paid to either the contingent beneficiary or the insured's estate, if no contingent beneficiary is designated.

Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount? Flexible life Variable life Adjustable life Universal life

Universal Life. The policyowner has the flexibility to increase the amount of premium going into the policy and to later decrease it again. In fact, the policyowner may even skip paying a premium and the policy will not lapse as long as there is sufficient cash value at the time to compensate for the nonpayment of premium.

When the insured has the right to continue the policy by making timely premium payments, and the insurer has no right to change any provision or the rate of the premium, the policy is Nonmodifiable. Noncancellable. Guaranteed renewable. Permanent.

When the insured has the right to continue the policy by making timely premium payments during which period the insurer has no right to change any provision or the rate of the premium, the policy is noncancellable.

The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose? Joint and survivor Fixed amount option Interest only option Life income with period certain

With the interest-only option, the insurance company retains the policy proceeds and pays interest on the proceeds to the recipient (beneficiary) at regular intervals.

An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use? Paid-up option One-year term Reduction of premium Accumulation at interest

With the paid-up option, the insurer can accumulate dividends at interest and then use them, in addition to interest and the policy's cash value, to pay the policy earlier than planned. This is different from paid-up additions, in which the dividends are used to buy additional policies that increase the face amount of the original policy.

Your client is planning to retire. She has accumulated $100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent, you should recommend Installment refund. Joint and survivor. Straight life. Life income with period certain.

With the straight life option, the annuity payments cease at death. However, because there are no other guarantees that might incur additional charges, this option provides the highest monthly benefits for an individual annuitant.