Life Insurance Practice

Revocable beneficiary

Ben has a life insurance policy with his brother named as the beneficiary. A couple years have passed since first obtaining the policy, and now Ben has a new wife he wants listed as the beneficiary instead of his brother. Ben can make this change without informing the brother because his policy has what type of beneficiaries?

The remaining loan and interest accrued will be deducted from the amount the claim would pay.

Bill was interested in borrowing money from his life insurance policy. If Bill borrows money, what will happen if he does not pay back the full amount by the time of his death?

Grace period

Brian had his life insurance plan set up so that he paid the premium on a monthly basis. One month Brian forgot to pay his bill and sent it in twenty-three days late after receiving a notice from his carrier. Brian was able to avoid the policy lapsing because he paid during what is known as what period of time?

Contingent beneficiary

Brian has a life insurance policy in place that names his son Alex as the beneficiary. Alex passed suddenly, and Brian passed a month later. When Brian's life insurance policy paid out, the benefits went to Brian's brother Robert. Robert was most likely named as what in Brian's life insurance policy?

Other insured's option

Erin was in the process of shopping for a life insurance policy. She was interested in also including her husband Chris as an insured but did not know if this would be allowed. What type of rider would her agent suggest to make sure Chris had coverage as an insured on Erin's policy?

The face value of the policy plus the premium amount paid for the one monthly payment

Felix purchased a life insurance policy for himself just last month from his local agent. Felix passed away very suddenly. Even though Felix had only paid a month of premium on this policy, how much will the beneficiary receive?

70%

For an employer to be eligible to tax deduct premiums paid, how many employees must be enrolled in the group life insurance plan?

Free-look provision

Frank and Gale purchased a life insurance policy that they believed would best fit the needs of their family. Shortly after purchasing this policy, Frank and Gale were told by a friend about a different type of policy that seemed to have better benefits and a better price than the policy they just purchased. Frank and Gale would be able to return their policy for a full refund if their policy has what provision?

At the employee's request

Health Reimbursement Accounts are funded by employers to help with the costs of uncovered medical expenses. When is an employer allowed to cancel the Health Reimbursement Account?

No, Maggie would not be eligible due to having Medicare.

Maggie was an elderly woman who needed help with paying for medical expenses that her current policies did not cover. Maggie has Medicare as well as an additional plan that had a high deductible. Would Maggie be eligible for a Health Savings Account (HSA)?

Annual renewable term

Margaret is 23 years of age and new to the workforce. She was approached by her human resources department to purchase life insurance. Margaret thought at her age she would just get a basic policy and wanted to pay the lowest amount possible for coverage. She also, however, knew that she would want to up her coverage as she got older. What would be a good option for Margaret?

Increasing term life insurance

Mary and John are a newly married couple who are meeting with an agent to purchase a life insurance policy. The couple wants to pay a low premium for now because they are young with no dependents. Mary and John, however, plan to one day have children and want a policy whose coverage will grow as their lives change. What policy may Mary and John's agent suggest for their needs?

Modified endowment contract

Maurice was in the process of obtaining a life insurance policy. He was looking for a policy that would be a good investment and would help his beneficiary avoid taxes on the payout. Maurice also has no intention of taking money or loans from this policy. What type of policy may Maurice's agent suggest he purchase?

Flexible spending accounts

Medical costs for individuals can become quite costly if the individual requires extensive care and doctor visits. What is one way to save on the cost of approved medical care by setting aside money from your paycheck?

Prescription drugs

Medicare Part D adds what coverage to the original Medicare plan?

Consideration clause

Mrs. Smith is reading his insurance policy to make sure she knows exactly what is expected of her during the policy period. She is reading the section that states how much her premium payments will be and when they will be due. Which part of the insurance policy is Mrs. Smith reading?

The employee retires.

Nonqualified retirement plans allow employees to defer taxes until what event?

The primary payor

Often individuals may have more than one type of health care insurance policy in place. Which party is known as the one who pays first in the event of a claim?

Conditional renewal

Oftentimes claims, accidents, or other factors occur during a policy term. Insurers reviewing an account at renewal may decide they still can renew with the new claims details but want to limit the coverage limits. Notice will be sent to the insured stating he or she can renew their policy but with a limit to the coverage as opposed to the year before. This notice is known as what?

COBRA

Patricia had health coverage through her employer. Patricia was notified that her health coverage through her employer would be ending, and she would need to obtain coverage elsewhere. What is a health care coverage plan that will continue her employer's coverage temporarily?

Business overhead expense insurance

Payroll, taxes, utilities, accounting fees, rent, office supplies, and legal fees are all expenses that what type of disability income insurance is designed to cover?

Term life

Ralph obtained a very basic life insurance policy from his local agent. His policy will expire on a set date, and his benefits from the policy are determined at the date he purchased coverage. What type of life insurance policy did Ralph purchase?

Nonforfeiture options

Reduced paid-up insurance, cash surrender, and extended term insurance are all options the insured has if he or she would like to discontinue his or her life insurance policy. What is the term used for these options?

Decreasing term insurance

Richard is 58 years of age and is looking for a new life insurance policy. Richard's future plans are to retire in 3 years and downsize his house to better suit his needs as his children are all out of house. What type of policy may Richard be interested in purchasing?

Yes, they will if Robert is still eligible for the coverage.

Robert had a life insurance policy for which he paid a premium due every month. One month Robert forgot to pay his premium due, and the policy lapsed. If Robert went back to his carrier and asked to have coverage back, would they let him reinstate his policy?

Waiver of premium rider

Ryan was severely injured in a motorcycle accident and told by doctors he would be permanently disabled. Ryan's insurance company told him he no longer needed to make premium payments due to his disability because what rider was on his policy?

Payor benefit rider

Sally had a life insurance policy in place at the time of her death at age forty-five. Sally left behind two children, age fourteen and twelve. Sally's children would not be responsible to pay any owed premium on her policy due to what rider?

Noncontributory coverage

Samuel has a life insurance policy through his work. Samuel does not need to contribute to the premium; his work pays 100% of the premium due. What type of policy does Samuel have through his work?

Level premium term

Sara was researching life insurance policies to see which was best to fit her needs. She was interested in a premium that would not change over time but also wanted to avoid the hassle of having to search for a new policy each year. What type of policy would fit Sara's needs?

The employer

Stop-loss coverage is a benefit to which party?

Universal life insurance

Tamara was tight with money one month due to unforeseen bills. She was worried she would not be able to pay her life insurance premium that month and risk coverage being cancelled. Tamara could use the interest gained on the policy to pay this premium due if she had what type of life insurance?

Coverage continues even when payment is not made.

The automatic premium loan is a provision found in some life insurance policies. What makes this provision a great benefit to the insured?

Evidence of insurability

The guaranteed insurability rider allows a policyholder the option to purchase specified additional limits of insurance at specified time throughout the policy without providing what to the insurance company?

Defined-contribution plan

The two types of qualified retirement plans are defined benefit and defined contribution. Money-purchase pension plans, 401(K) plans, and profit sharing plans are all examples of what type of qualified retirement plan?

Limited-pay life insurance

There are several types of life insurance products available to insureds. Which type of policy should an insured obtain if he or she does not want to continue making premium payments after a set number of years?

It is for the entire life of the insured.

Traditional whole life policies are a type of insurance policy that will provide coverage only under what circumstance?

Annuity

Trevor and Jane are in the process of purchasing a life insurance policy for themselves. Jane told her agent she has a concern with cash flow once they hit retirement age. Which type of policy could Trevor and Jane's agent suggest they purchase?

Irrevocable beneficiary

Trevor has a life insurance policy with his mother named as the beneficiary. A couple years have passed since first obtaining the policy, and now Trevor has a new wife he wants listed as the beneficiary instead of his mother. Trevor cannot make this change without informing the mother because his policy has what type of beneficiaries?

An adjustable life insurance policy

Tyler is a newly married 33-year-old who is talking to an agent about purchasing a life insurance policy for him and his wife. Tyler is nervous to commit to a policy as he is young and unsure of how much he can afford to pay in premiums in case of a job or life change. What type of policy may Tyler's agent suggest to help ease Tyler's fear of committing to a policy for life?

At a variable rate that is adjusted monthly

Universal life insurance is different from whole life in a couple areas. One important difference potential insureds should be aware of is that with universal life, the cash value from investments grows at what rate?

Fair Credit Reporting Act

What act was passed in 1970 to protect the accuracy and privacy of a person's credit report and credit information?

The insurance policy's cash value is not able to be forfeited.

What does the term nonforfeiture values mean?

Deductible

What is known as the fixed dollar amount the insured is responsible for during the insurance policy year before the insurance provider will begin to cover costs for medical services?

Stranger-owned life insurance

What is the term given to a type of life insurance policy that is bought, but the intention is to sell the policy to an investor?

Social Security disability

What is the type of insurance policy that an individual may make contributions to through his or her entire working career to pay in the event the insured cannot work due to a disability that may not even be work related?

Noncancelable

What policy provision protects the rights of an insured for being cancelled due to a new illness during the policy term?

Entire contract provision

What provision was established to protect the insured from the insurance company making changes or amendments to the insurance contract without the insured's knowledge or consent?

The insured would collect part of the premium already paid to the carrier.

What will happen if an insured decides he or she no longer would like to make payments on a traditional whole life policy and ask the carrier to cancel the policy?

HIPAA

Which federal law was enacted to not only protect patient's privacy rights but also to allow patients more access to their medical records?

Employee bonus plans

Which of the below is NOT an example of a nonqualified retirement plan?

Intent to murder, intent to steal, and impersonation

Which of the following are reasons why the incontestable clause would NOT apply?

Part A

Which part of Medicare will provide coverage for necessary hospice care?

Part B

Which part of Medicare will provide coverage for preventive services?

The named insured

Which party in an insurance contract needs to sign the insurance application?

Incontestable provision

Which policy provision prevents an insurance company from contesting any claims during a specific time period?

Conversion policy

Which provision do some policies contain in which the insured is allowed to change the type of policy he or she owns?

Single-premium deferred annuity

Which type of annuity is obtained through a single lump-sum payment by the insured?

Variable annuity

Which type of annuity typically is invested in equity securities, and the amount of return is dependent on how well these securities perform?

Point of service plan

Which type of health care plan combines aspects of both the health maintenance organization (HMO) and preferred provider organization (PPO)?

Worksite insurance plan

Which type of insurance plan can be offered on an individual or group basis and may be offered at no cost to the employer?

Variable life insurance

Which type of life insurance policy has the key advantage of being able to take premium dollars and invest it in multiple types of investment options?

Preferred provider organization

Which type of medical expense insurance plan is very appealing to insureds who do not want to deal with the sometimes hassle of getting referrals to see a specialist?

High-deductible health plan

Which type of medical expense insurance plan was designed with the hopes of making policyholders more conscious of the expenses associated with medical care?

The secondary beneficiary

Who would receive the benefits from a life insurance policy if the primary beneficiary passes away before the policy ends?

Because they have contracts with providers and direct their insureds to those providers

Why are health maintenance organization (HMO) insurance plans typically lower in premium as compared to other insurance plan options?

Because it may eliminate the insurer from having to cover the hospitalization

Why is it so important to obtain a preadmission certification prior to a planned hospitalization if the insurance provider requires it?

Equity-indexed universal life policy

less expensive than a variable policy? This type of life insurance policy also offers the benefit of higher security against a decline in stock market values.

Settlement options

A lump-sum payment, collecting only interest with the right to take from the principal amount, scheduled payments, and selecting payments to go to the beneficiary over time are all examples of what policy provision in a life insurance policy?

Assignment

A policyholder has the right to transfer his or her policy to another person. The process of transferring the insurance policy is known as what provision?

Premium plus interest

A provision common to life insurance policies is the suicide provision. With this provision, if the insured commits suicide during a specified time frame after the policy begins, the beneficiaries are able to collect only what amount of coverage?

Ninety

Accidental death can be described as a death resulting from bodily injury from an outside force that was purely unintentional. The death must occur usually within how many days after the incident?

Adjustable life insurance policies do not require the insured to purchase additional coverage or cancel when they have a life change.

Adjustable life insurance policies differ from other life insurance policies in what way?

A copy of the payment made

All of the following documents make up an insurance contract except which one?

individuals who cannot obtain health care coverage through their employers.

All of the following groups are eligible for Medicare coverage EXCEPT

There are caps on the maximum amount of interest owned.

An insurance carrier often will offer a guaranteed return minimum on an indexed annuity despite how the stock performs. Why, if there is a guaranteed return minimum, could the annuity's owner still receive less than the amount guaranteed?

Representations and warranties

An insured is required by most insurance companies to provide a signature stating that all applications, statements, questionnaires, and so on are accurate. What is the correct term for this promise that there are no misrepresentations?

The value of the policy would be amended to the correct amount it would have paid at that premium for that age.

Applications are a key source of information underwriters use to accurately quote a risk. What would happen in the event that the insured marked his or her age incorrectly on an application?

No, because it is a personal expense

Are policyholders allowed to deduct premiums paid for life insurance policies on their tax returns?

Yes, both insured and insurer can cancel but the insurer has a set number of days within which it must give notice to the insured before cancelling.

Aside from life insurance policies and new illness provisions, can an insurance policy typically be cancelled at any time?

Fixed annuity

Barbara is very conservative with her money. She wants to invest but also wants a guarantee on how much her return will be once the policy is over. What type of annuity may Barbara be interested in purchasing?

No, eligible immigrants with disabilities are able to obtain Medicaid coverage.

Barry was suffering from a disability, and his disability is eligible for coverage under the Medicaid plan. Barry is hesitant to apply for Medicaid because he is an immigrant and thinks because of being an immigrant, he will be denied coverage. Is Barry correct?

Dividend options

Cash, reduced premium, accumulation at interest, term equal to the current cash value, and paid-up additions make up what policy options?

The insured

Coinsurance is a way to share in the cost of medical payments between the insured and the insurer. Once the deductible is paid, which party is responsible for a stated percentage of the expenses known as the coinsurance rate?

Other partners or shareholders

Disability buyout insurance allows the shares of totally disabled shareholders or partners to be purchased by what group of individuals?

Monthly

Disability income insurance usually pays out its benefits on what basis?

Reinstatement clause

Each insurance policy contains three clauses on the first page of the policy. Which clause is NOT listed?

Key person insurance

David was the chief executive officer (CEO) of a major Fortune 500 Company. David possessed the knowledge and skill to run his company far greater than any other employee. What type of insurance would be taken out to ensure that if something were to happen to David, the company would still survive?

The care provided or expenses during the hospital stay

Hospital indemnity coverage is a type of coverage which pays out regardless of what?

75%

If a company only pays a portion of its employees life insurance premiums, what percentage of employees must be enrolled at all times?

75%

If a policyholder is diagnosed with a terminal illness or suffers from a debilitating injury, what benefit would he or she receive from the life insurance policy?

The Medicare Advantage Plan

If an individual obtains a Medicare Advantage Plan, which plan—the Medicare Advantage Plan or the original Medicare plan—provides the coverage for Medicare services?

A lump sum or structured payments

If coverage is triggered under the critical illness insurance plan, how does the insurance company pay out the benefit to the insured?

No, in all cases

If your health insurance policy contains the optionally renewable provision, are you allowed to cancel midterm?

The secondary payor

In the event there are multiple insurance policies in place, which party is the one to pay after the primary payor has provided payment?

Insuring clause

In which part of the insurance policy or document can you find how much the insurer will pay in the event of the insured's death?

Potential insureds requiring permanent insurance and desire a fixed premium

Interest-sensitive whole life insurance is appropriate life insurance coverage for which group of individuals?

Yes, if the policy contains the guaranteed renewable policy feature, they must renew.

Is the insurer ever obligated to renew a policy despite claims or other factors that may have occurred during the policy term?

Co-payment

Landon went to the doctors to have his routine physical exam. When Landon went to check in with the front desk, he was asked to pay $30 for his visit. What is this $30 payment known as?

Change of plan provision

Life comes with changes, many of which cannot be foreseen. What policy provision included in a life insurance policy allows for the policyholder to make changes to his or her policy to keep up with his or her needs?

Preexisting condition

Lisa was in search of a new health care plan after being dropped by her current provider. Lisa suffered from cystic fibrosis and disclosed this information on all of her applications. Some providers may not offer Lisa coverage due to this illness. To the provider, Lisa having cystic fibrosis is classified as what term?