REVIEW

Which of the following describes coverage for the Medicare Part B coinsurance?

A Medicare Supplement core benefit

John received a one-time distribution of $50,000 from his modified endowment contract (MEC). Prior to that, the contract's cash value was $150,000, the contract investment amount was $100,000, and the death benefit was $500,000. What percentage of the $50,000 distribution was taxable as ordinary income?

100%

Part A Medicare includes coverage for all of the following services EXCEPT

120 days of Skilled Nursing Facility care

How long can an insurer legally defer paying the cash value of a surrendered life insurance policy?

6 months

How long do most states allow an insurance company to delay the payment of a cash surrender under the Delayed Payment provision?

6 months

Which of the following is NOT a reason for a business to buy key person life insurance?

An increased pension liability if the key employee dies

Which is an accurate description of the premium in a graded premium life insurance policy?

Annual increases in premium for a stated number of years then remains level

The Change of Occupation provision in a Disability Income policy states that, in the event the insured changes to a less hazardous occupation, which of the following may apply?

Benefits can be increased in the event of a covered claim

An accident and health insurance policy defines an injury as "bodily injury by accidental means". For an injury to be covered on this policy, what is required?

Both the cause and resultant injury must be accidental

An accident and health insurance policy's premium requirements are set forth in which of the following provisions?

Consideration clause

What does a Mandatory Second Surgical Opinion provision provide to an employer-paid health insurance plan?

Containment of the employer's premium cost

Which of the following is NOT an intended use of an annuity?

Create new funds upon the death of a wage-earner

What kind of life policy typically offers mortgage protection?

Decreasing term

Which of the following is generally a form of group credit life insurance?

Decreasing term insurance

Which annuity allows contributions to an IRA?

Deferred

Individuals covered with employer-paid group health plans will normally receive tax-free benefits under all of these plans EXCEPT

Disability income

Which of these noncontributory group plans would a claim likely result in the payment of federal income taxes?

Disability income

When using the needs approach for life insurance planning, a lump sum may be created to provide for all of the following EXCEPT

Employee benefits

Which statement concerning an adjustable life insurance policy is FALSE?

Evidence of insurability is required when there is a change in premium

How are benefit payments from individually-owned medical expense policies treated for tax purposes?

Exempt from income taxes

Long Term Care policies will usually pay for eligible benefits using which of the following methods?

Expense incurred

Which of the following are used by most insurers when determining the premiums for large groups?

Experience Rating

Which life insurance settlement option pays a stated monthly benefit until both principal and interest are exhausted?

Fixed amount installment option

Which of the following contracts offer deferred taxation, flexible payments, a guaranteed interest rate, and death benefits equal to the cash value?

Flexible premium fixed annuity

Which of the following statements is NOT true concerning the relationship between group health insurance plans and Medicare? (assuming the business has more than 20 employees)

Group health coverage is NOT available for workers over the age of 65

Dan owns a disability income insurance policy which provides ONLY nonoccupational coverage. Which of the following circumstances would likely NOT be covered under his plan?

He falls and breaks his hip at work

A family counseling benefit is typically offered under which of these coverages?

Hospice care

Which of the following is NOT subject to the promise to pay in an insuring clause?

How the premium is calculated

A single premium deferred annuity sometimes contains a bailout feature. Which statement regarding this feature is correct?

If the interest rate falls below a specified level, the surrender charge is waived

Which health policy clause specifies the amount of benefits to be paid?

Insuring

Which statement is INCORRECT about the interest-only settlement option in a life insurance policy?

Interest on proceeds must be paid by the beneficiary

Which of these statements is NOT true regarding a cash value loan against a life insurance policy?

Interest payments made by policyowner are deductible

When compared to a fixed annuity, a variable annuity has what distinguishing feature?

Investment risk is assumed by the purchaser

Which of these would NOT be a valid reason to add the waiver of premium rider to a life insurance policy?

It allows a policy loan to cover premium payments if the policyowner becomes totally disabled

How much is normally paid to a policyowner in a life (viatical) settlement?

Less than the death benefit

How can a group dental insurer discourage adverse selection?

Limit the duration of coverage

Respite Care coverage is typically found in a(n)

Long Term Care policy

Custodial care is normally covered under

Long-term care insurance

Medicare Part A coinsurance payments are covered by

Medicare Supplement Plan A

Medicare Supplement insurance requires an individual to be at least how old for open enrollment?

No minimum age

Which of these plans allow a participant to choose either a network or non-network provider at the time when medical care is needed?

Point-of-service

Straight whole life insurance can be accurately described in all of these statements EXCEPT

Policy protection normally expires at age 65

Tim is in need of surgery. Before being hospitalized, he is referred to an outpatient clinic for diagnostic tests. What is this an example of?

Pre-admission testing

How is the insured protected if a payor benefit rider is attached to the life insurance policy?

Premium payments are waived in the event the premium payor dies or becomes disabled

Elimination periods typically apply to

disability policies

How are level term policies able to provide level premiums?

Premiums are averaged over the term of the policy

A Medicare Supplement policy is required to do which of the following?

Provide a 30 day free-look period

What could be the potential result of taking out a cash value loan under a life insurance policy?

Reduces the amount receivable upon surrender of the contract

A life insurance policyowner would like a dividend option that results in a limited current outlay of funds. Which dividend option would be chosen?

Reduction of premium payment

All parts of the Medicare program (except for public information and enrollment) are administered by which federal agency?

The Centers for Medicare and Medicaid Services

What is payable to the policyowner if a whole life policy is surrendered prior to its maturity date?

The cash value

When disability buy-sell insurance benefits exceed a partner's cost basis, which of the following is correct?

The full amount is non-taxable to the partner

Which of the following is true regarding a person receiving a waiver of premium benefit?

The insured must be disabled for a period of time

Which statement concerning a deferred annuity contract is correct?

The owner can be the beneficiary, annuitant, or neither

What happens when a policyowner borrows against the cash value of his life insurance policy?

The policy proceeds would be reduced by the outstanding loan balance

When does the owner's contractual rights begin under an individual annuity contract?

Time of purchase

A life insurance policy that includes a return of premium rider will pay the beneficiary how much upon the insured's death?

Total premiums paid plus the policy face amount

Which of the following does medical expense insurance NOT typically cover?

Treatment in a government facility

Which of the following statements about universal life insurance is NOT true?

Universal life insurance normally has a minimum guaranteed cash value for duration of the policy

Which type of life insurance policy allows a policyowner the choice of investments along with flexible premium payments?

Variable universal life

Under which circumstance is the interest rate guaranteed within a market value adjusted annuity?

When the contract has been held for the period specified in the policy

Which life insurance policy would be eligible to include an automatic premium loan provision?

Whole life

A health plan offered by private insurance companies is

a Medicare Supplement

Emergency health care coverage for Medicare enrollees traveling abroad is

a Medicare Supplement additional benefit

Medicare can be described as

a federal health insurance program for individuals over the age of 65 or permanently disabled

The surrender charge on many deferred annuity contracts are waived when the

annuitant dies or becomes disabled

Employer-paid qualified long-term care insurance premiums are typically

excluded from the employee's gross income

When an insured dies, proceeds of a life insurance policy paid as a lump-sum death benefit to a beneficiary are

exempt from federal income tax

Health care costs can be better controlled by utilizing preadmission testing. Preadmission testing can reduce the

length of hospitalization

After the extended term life nonforfeiture option is chosen, the available insurance will be

level term for a stated period of time

Sarah, age 88, is a life annuitant who has lived beyond her life expectancy. The funds for additional benefit payments will be derived primarily from funds that were

not distributed to life annuitants who died before life expectancy

A physician who accepts assignment on all Medicare claims is called a(n)

participating provider

Under a long-term care inflation rider, the benefit levels

periodically increase without proof of insurability

A Guaranteed Renewable provision allows

premiums which can only be increased per rate class

The automatic premium loan provision can be accurately described as a

provision that provides a policy loan to pay any premiums by the end of the grace period

During an annuity's liquidation phase, the annuitant normally

receives benefit payments at regular intervals

Ron recently purchased an immediate, straight life fixed annuity. His benefit payments will

remain a constant dollar amount for the duration of the annuity period

Sylvia purchased an annuity for $100,000 from the proceeds of an inheritance. No further payments are permitted and the income stream begins in 15 years. This contract is a(n)

single premium deferred annuity

Christine is receiving benefits provided from her disability income insurance. As compared to her previous earnings, the disability benefits should be

somewhat less

An immediate annuity is commonly used to

structure payments coming from an initial large sum.

The interest credited to the cash values of personally-owned non-qualified annuities is considered

tax-deferred

The major medical deductible carryover period normally applies to expenses incurred during the last ___ months of the plan year.

three