state practice
Jerry was injured in an accident and was hospitalized for 50 days at $250 per day. His basic hospital expense indemnity policy pays a benefit of $250 per day for up to 45 days. How much of the hospital expenses will Jerry pay? $0 $1,250 $1,250, plus the policy's co-payments $1,250, plus the policy's coinsurance amount
$1,250
After it issues an insurance policy, how long does the insurance company have to void the policy due to fraud in the application? 6 months 12 months 18 months 24 months
24 months
How long must the free-look period be for long-term care insurance policies sold in California? 7 days 10 days 20 days 30 days
30 days
Which statement about health insurance waiting periods is correct? All potential plan participants must have the same waiting period, regardless of their health conditions. Waiting periods and pre-existing exclusion periods do not have to run concurrently. A waiting period is the time that must pass before an employer offers health benefits to its employees. A waiting period is also called an elimination period.
All potential plan participants must have the same waiting period, regardless of their health conditions.
A disability income policy will typically pay benefits for disability arising from: acts of war accidental injuries self-inflicted injuries pre-existing conditions
accidental injuries
All of the following are standard life insurance policy nonforfeiture options EXCEPT: cash surrender option accumulate at interest option reduced paid-up insurance option extended term option
accumulate at interest option
An agent for ABC Insurance Company meets with a client. The agent shows the client ABC's sample policies, refers to the ABC rate book, and gives the client an ABC business card. The client assumes that ABC has appointed the agent to represent it. What kind of authority does the agent have? implied authority apparent authority express authority imputed authority
apparent authority
For a life insurance policy, when must insurable interest exist? at the inception of the policy throughout the term of insurance coverage at time of claim before the application for insurance is made
at the inception of the policy
At what point do insurers need to decide if insurable interest exists? when they issue a policy before the applicant submits an application before the insured dies before entering into the contract
before entering into the contract
Which statement is correct about the types of insurance sales systems? Captive agents may represent any number of insurance companies. Direct response companies sell insurance to consumers without the use of a licensed producer. General agencies sell insurance only through independent brokers. To sell for another insurer, independent brokers must get permission from the primary company they represent.
Direct response companies sell insurance to consumers without the use of a licensed producer.
Which one of the following most correctly describes the tax treatment of withdrawals from a modified endowment contract (MEC)? The 20 percent tax penalty is waived if the policyowner is disabled. It is also waived if the withdrawal is taken in a lump sum. Withdrawals from an MEC are considered to be withdrawals of premiums first, which are taxable; only after all premiums have been distributed (and taxed) are withdrawn amounts deemed a non-taxable return of earned interest. Full withdrawals and policy loans from a MEC are taxable; in addition to income tax, MEC withdrawals taken before the owner's age 59' are subject to a 10 percent penalty. Withdrawals from an MEC are treated on a LIFO (last in, first out) basis; in addition to income tax, MEC withdrawals taken before the owner's age 62 are subject to a 20 percent penalty.
Full withdrawals and policy loans from a MEC are taxable; in addition to income tax, MEC withdrawals taken before the owner's age 59' are subject to a 10 percent penalty.
Mark and Melanie are a young married couple who own permanent life insurance policies. Expecting their family to grow, they want to increase their insurance protection without having to prove their insurability. Which of the following riders should their agent recommend? Cost-of-living adjustment (COLA) rider Term rider Accidental death & dismemberment (AD&D) rider Guaranteed insurability rider
Guaranteed insurability rider
What impact did the Patient Protection and Affordable Care Act (PPACA, or ACA) have on the pre-existing conditions restriction found in most health insurance policies? It eliminated the use of pre-existing condition restrictions on all types of health insurance. It ended the use of pre-existing condition restrictions in long-term care and medical expense insurance. It ended the use of pre-existing condition exclusions in medical expense insurance only. It expanded the use of pre-existing conditions restrictions in health insurance policies.
It ended the use of pre-existing condition exclusions in medical expense insurance only.
Which of the following presents a situation of pure risk? Knowing that his family depends on his income, Franklin wants to insure his life. Wanting to increase his retirement savings, Saul invests his life savings in the stock market. Ralph takes a second mortgage on his house and uses the proceeds to gamble. Wanting better job security, Ron cashes in his life insurance policy to start a business.
Knowing that his family depends on his income, Franklin wants to insure his life.
Leslie, Leah, and Lori, each of whom have children, are the daughters of Bill and have been named primary per stirpes beneficiaries under his life insurance policy. If Leslie dies before Bill, which of the following will apply when he dies? Leah and Lori will split the death benefit equally. Leah and Lori will each receive one-third of the death benefit, and the remaining third will be paid to Leslie's children. Leah and Lori will each receive one-third of the death benefit, and the remaining third will be paid to Bill's estate. All the proceeds will be paid to Bill's estate.
Leah and Lori will each receive one-third of the death benefit, and the remaining third will be paid to Leslie's children.
All the following statements about variable annuity accumulation units are correct EXCEPT: The value of accumulation units rises and falls with the performance of the subaccounts' underlying investments. The value of a variable annuity contract's funds rises and falls, so at any one time, the contract's value is the sum of the current value of the accumulation units in the subaccounts. Like a fixed annuity, a variable annuity's growth is guaranteed. The owner assumes the risk of the contract's investment. For this reason, a variable annuity owner also subjects his or her principal to risk.
Like a fixed annuity, a variable annuity's growth is guaranteed.
Are group medical expense insurance benefits paid to employees taxable income to the employer who pays the premium? Yes, employers pay income tax on these benefits. No, benefits paid to an employee are not taxable income to the employer. Yes, both employers and employees pay income tax on these benefits. No, only employees pay income tax on these benefits.
No, benefits paid to an employee are not taxable income to the employer.
Larry has health insurance coverage with Company A and Company B. He has not notified either insurer of the duplicate coverage. If Larry has a claim, what recourse do these insurers have under the Other Insurance with Other Insurer provision? Both carriers can determine by mutual agreement which one will pay the claim. Both carriers will pay equal amounts of Larry's claim. One of the insurers can prorate the amount of benefit it will pay for an expense-covered loss if the other insurer is covering losses from the same event, which keeps Larry from receiving benefits in excess of his loss. One of the insurers can add a predetermined additional amount to the benefit it will pay to the amount the other insurer is covering.
One of the insurers can prorate the amount of benefit it will pay for an expense-covered loss if the other insurer is covering losses from the same event, which keeps Larry from receiving benefits in excess of his loss.
All of the following statements regarding health care flexible spending accounts (FSAs) are correct, EXCEPT: Participants may make claims against their accounts for up to six months after the end of their benefit year. FSAs are funded solely by employee contributions. Maximum annual contribution levels to an FSA for medical expense reimbursements are set by individual employers but are subject to federal limits. An FSA is not tied to a high-deductible health plan.
Participants may make claims against their accounts for up to six months after the end of their benefit year.
If an applicant for health insurance includes the first premium with the application , which of the following statements is correct? The applicant has made an offer to the insurer. The applicant is inviting the insurer to make an offer. The applicant is inviting the insurer to make a counteroffer. The insurer must make a counteroffer.
The applicant has made an offer to the insurer.
Which statement about disability reducing term insurance policies is NOT correct? The business owner typically buys a policy to cover the term of a loan. The policy pays off the loan balance if the business owner becomes disabled during the policy term. The benefit payment under such policies increases over the policy's term. Reducing term insurance is fairly inexpensive.
The benefit payment under such policies increases over the policy's term.
Edgar is insured under a $1 million life insurance policy and dies during the grace period. What happens if Edgar had not yet paid the premium at the time of his death? The death benefit will be paid with no reduction. The death benefit will be paid after the premium due is subtracted from it. The death benefit will be paid after the premium owed plus a 10 percent penalty fee is deducted from it. The death benefit will be paid only after the beneficiary pays the premium that is owed.
The death benefit will be paid after the premium due is subtracted from it.
Who or what defines the probationary period used in group insurance? The state insurance department defines this period. The employee union or collective bargaining group defines this period. The insurer sets the period used in the group policy. The employer sets the period used in the group policy.
The employer sets the period used in the group policy.
All the following statements about family term riders with life insurance are correct, EXCEPT: A family term rider is an alternative to either a separate spousal rider or separate children's rider. The family term rider covers multiple family members (spouse plus children) with term insurance based on their ages. The policyowner can add or drop insureds on this type of policy at any time but must prove insurability if adding insureds. Children covered by this rider can convert their coverage to permanent coverage at age 21 without proof of insurability.
The family term rider covers multiple family members (spouse plus children) with term insurance based on their ages.
When may an Insurance company call a consumer on the Do Not Call list? The DNC listing is in error. The insurer has an existing relationship with the consumer. The insurer has never sold a product to the consumer. The insurer did business with the consumer within the last two years.
The insurer has an existing relationship with the consumer.
Under a disability income insurance policy's social insurance supplement rider, what happens to the policy's benefit payments if the disabled insured qualifies for Social Security disability benefits? There is no change to the policy rider's benefit payment. The policy rider's benefit payments are increased. The policy rider's benefit payments are decreased or terminated. The policy rider's benefits are used to reduce the policy's premium.
The policy rider's benefit payments are decreased or terminated.
Which statement about survivorship life insurance policies is NOT correct? They pay the death benefit only when the second insured dies. They insure two persons under one policy. The premiums are about the same as for two comparable single-life policies. They are also known as second-to-die policies.
The premiums are about the same as for two comp
All the following statements regarding the "spendthrift clause" of a life insurance policy are correct EXCEPT: The spendthrift clause keeps the beneficiary's creditors from forcing the insurer to pay them the death benefit. The spendthrift clause keeps beneficiaries from claiming any death benefits until the insurer checks their personal and business credit histories. The spendthrift clause only protects death benefits until they are paid to the beneficiary. The spendthrift clause keeps the beneficiary from changing the settlement option or alienating the funds.
The spendthrift clause keeps beneficiaries from claiming any death benefits until the insurer checks their personal and business credit histories.
Which statement about health savings accounts is correct? They are available from federal agencies. They are available on an individual or group basis. They are available through an HMO or PPO. They are available on a tax-exempt basis.
They are available on an individual or group basis.
All the following statements comparing variable life insurance (VLI) and variable universal life insurance (VUL) are correct EXCEPT: VLI policies have fixed premiums while VUL policies feature premium flexibility. VLI policy cash values are accessible only through policy loans while VUL policy cash values are accessible only through partial surrenders. VLI policies generally offer a wide variety of subaccounts to choose from while VUL policies are typically based on a single investment account of mixed stocks. VLI policies provide a minimum guaranteed death benefit while VUL policies have no death benefit amount guarantees.
VLI policies generally offer a wide variety of subaccounts to choose from while VUL policies are typically based on a single investment account of mixed stock
A health insurance policy that includes a cancellation provision allows the insurer to: cancel the policy with only five days' notice cancel the policy with as little as 10 days' notice, but only for a misrepresentation in the application cancel the policy with as little as 10 days' notice, but only for nonpayment of premium cancel the policy with as little as 30 days' notice for any reason
cancel the policy with as little as 10 days' notice, but only for nonpayment of premium
Which is NOT a factor states use to determine eligibility for Medicaid? disability or age citizenship income assets
citizenship
A typical errors and omissions (E&O) policy covers all the following , EXCEPT: completing and signing an application for an applicant without that person's knowledge professional negligence failing to perform due diligence placing insurance with insurers who are not authorized to conduct business in the state
completing and signing an application for an applicant without that person's knowledge
An agent who recommends the replacement of an insurance policy with another is not required to discuss which of these with the prospect? the terms of the new policy Notice Regarding Replacement of life insurance cost of similar policies from competing insurers policy comparison statement
cost of similar policies from competing insurers
Harvey's health insurance policy covers only treatment for cancer. What type of insurance policy does he have? basic medical expense policy restricted policy dread disease policy major medical policy
dread disease policy
Under a fee-for-service major medical policy, the insurer pays the claim to the: health care provider hospital insurer insured
insured
Which level of long-term care provides ongoing care that is necessary to address a person's condition but is not needed 24 hours a day? remedial care skilled nursing care intermediate care custodial care
intermediate care
Actuaries calculate net single premiums based on which of the following? mortality and dividend assumptions morbidity and expense assumptions mortality and interest assumptions expense and mortality assumptions
mortality and interest assumptions
With respect to the insurance contract, the insurance company and the applicant are, respectively, the: issuee and issuer promisor and promisee client and agent offeree and offeror
offeree and offeror
Which began the use of risk pools and community ratings, by which an insured group is quoted an identical rate and each member is charged the same premium in advance for medical care? PPOs Blue Cross/Blue Shield plans PSOs HMOs
pso's
What practice do insurance underwriters use to evaluate the risk that a proposed insured presents? risk tolerance risk selection adverse selection reinsurance
risk selection
What must employer group plans offer enrollees who are over 65 years old? lower premiums subsidies for Medicare supplement plans same coverage offered to younger employees Medicaid
same coverage offered to younger employees
The federal Risk Retention Act of 1986 applies to which businesses? self-insuring businesses re-insurers credit life insurance companies high-risk business insurers
self-insuring businesses
Which of the following features of major medical policies protects the insured by limiting the out-of-pocket dollar amount the insured must pay? stop-loss provision pre-existing conditions provision co-payment provision relation of earnings to insurance provision
stop-loss provision
Which of the following optional provisions limits the total coverage that the insurer will permit a disability income insurance policyowner to have with that insurer? the other insurance in this insurer provision the other insurance with other insurer provision the other insurance with other insurers provision the relation of earnings to insurance provision
the other insurance in this insurer provision
What is the purpose of a disability reducing term insurance policy? to cover any outstanding loans a business might have if the business owner becomes disabled to reimburse a business for overhead expenses it incurs if the business owner becomes disabled to provide funds to a business when a key employee becomes disabled to provide funds to buy the interest of a business owner if he or she becomes disabled
to cover any outstanding loans a business might have if the business owner becomes disabled
Why would a business self-insure instead of buying an insurance policy? to avoid having to comply with state insurance laws to cover against an occasional high-severity loss to insure against frequent low-severity losses to reduce its tax liabilities
to insure against frequent low-severity losses
Under a traditional split-dollar arrangement, what does the employer typically receive when the insured employee dies? an amount equal to the policy's cash value one-half of the policy's death benefit all of the death benefits none of the death benefits
an amount equal to the policy's cash value
After Bob and Karen won the lottery, their state lottery board offered them a choice in how to receive their winnings. Instead of a lump sum, Bob and Karen chose to receive the funds in installment payments over a 10- to 20-year period. In this case, what is the state lottery board most likely to do? buy a deferred annuity from an insurance company to pay the lottery winners a stream of payments over the specified period pay Bob and Karen a stream of payments over the specified period using state funds buy an indexed annuity from an insurance company to pay the lottery winners a stream of payments over the specified period buy a structured settlement annuity from an insurance company to pay a stream of income to the lottery winners over the specified period
buy a structured settlement annuity from an insurance company to pay a stream of income to the lottery winners over the specified period
In California, all of the following are considered transacting insurance for which a license is required EXCEPT: soliciting applications for insurance effecting and placing insurance contracts determining premium rates for specific classes of insureds paying an insurance claim
determining premium rates for specific classes of insureds
Which term applies to an insurance company domiciled in one state but operating in another, from the perspective of the state in which it operates? alien company foreign company unauthorized company domestic company
foreign company
Patty worked full-time for the past 20 years and has obtained 40 quarters of coverage for Social Security benefit purposes. She is now eligible for full death, retirement, and disability benefits under Social Security, which means that she is considered which of the following? completely insured fully insured currently insured partially insured
fully insured
A declared-rate fixed annuity maintains what two interest rate levels? guaranteed minimum rate and current declared rate fixed minimum rate and guaranteed renewal rate guaranteed minimum rate and variable renewal rate fixed minimum rate and variable renewal rate
guaranteed minimum rate and current declared rate
The federal government's contribution to the control of health care costs includes: Medicare supplement policies comprehensive major medical plans preferred provider organizations (PPOs) health savings accounts (HSAs)
health savings accounts (HSAs)
Which is not among an agent's responsibilities to an applicant? recommending insurance products that are suitable for the customer's needs disclosing all important information about a proposed policy helping write an applicant's insurance policy replacing an insurance policy only when it benefits the applicant
helping write an applicant's insurance policy
Under what basis is a false representation grounds for an insurer to rescind an insurance contract? if the falsity is determined before the contract is issued if the misrepresentation is material if the representation is expressly warranted at any time, for any reason
if the misrepresentation is material
Your client is interested in purchasing an annuity that will provide interest rates tied to a stock index, tax-deferred earnings, and a guarantee of principal. Which of the following annuities could you recommend to meet her investment objectives? variable deferred annuity indexed deferred annuity fixed deferred annuity market-value adjusted deferred annuity
indexed deferred annuity
An employer's plan has a two-month waiting period. It also has 'grandfather' status under the Affordable Care Act and a pre-existing condition exclusion period. How many months after the waiting period ends will benefits begin? two months three months four months insufficient information
insufficient information
An employer establishes flexible spending accounts for its employees. Which expenses will the accounts NOT cover? prescription medicines and medical supplies insurance policy premiums non-prescription medicines and medical supplies durable medical equipment
insurance policy premiums
An applicant for an insurance policy submits an application without the first premium. By doing so, what has the applicant done? made an offer to the insurer invited the insurer to make an offer made an offer to the applicant prevented the insurer from making a counteroffer to the applicant
invited the insurer to make an offer
When they annuitize their deferred annuity contract, a couple receives a monthly income of $1,200. Under which of the following annuity settlement options would a reduced payment of $600 continue to the survivor for life upon the first annuitant's death? joint and 100 percent survivor option joint and two-thirds survivor option joint and one-half survivor option fixed period option
joint and one-half survivor option fixed period option
ABC Supply, Inc. has applied for, owns, and is the beneficiary of a policy on one of its employees. What type of insurance is this generally called? deferred compensation split-dollar life insurance key person life insurance business overhead expense insurance
key person life insurance
Belinda's health insurance policy offers a $1 million lifetime benefit limit and covers hospital, surgical, and physician expenses. Each year, she pays a $500 deductible before benefits begin and 20 percent of all covered costs. What type of policy is Belinda covered by? major medical policy basic medical policy HMO catastrophic medical policy
major medical policy
Bob applied for a health insurance policy but did not submit the premium with his application. If the insurer issues the policy as applied for, the producer must then take all of the following actions, EXCEPT: deliver the policy collect the initial premium obtain a written statement from Bob attesting to his continued good health provide a binding receipt
provide a binding receipt
Which entity spreads the cost of losses among its members by having each member pay a pro-rata share of these losses? risk retention group reciprocal insurer reinsurer self-insurer
reciprocal insurer
Many insurance companies set up a special account that acts like a checking account for beneficiaries who want to control when and how much of a policy's death benefit is distributed. These accounts are called: general account settlement account retained asset account separate account
retained asset account
Which level of long-term care provides continuous, 24-hour care delivered by licensed medical professionals, under the direct supervision of a doctor or physician? remedial care skilled nursing care intermediate care custodial care
skilled nursing care
Jill, age 60, owns a deferred annuity. If she withdraws funds from the annuity within a set period after buying the contract, she may be forced to pay which of the following, imposed by the insurer? surrender charges annuitization charge capital gains tax income tax penalty
surrender charges
A life insurance policy that offers coverage for a specified, limited period with no cash value building up is called a: term life insurance policy whole life insurance policy graded premium whole life policy limited pay life insurance policy
term life insurance policy
The amount of an employer's annual contribution to a defined benefit plan is determined by which of the following? the amount of employee contributions to the plan the annuity settlement option selected by plan participants the market performance of the underlying accounts the amount of future benefits provided to retirees through the plan
the amount of future benefits provided to retirees through the plan
Which of the following states that the applicant must provide both a signed application and payment of the first premium for the policy to become effective? the insuring clause the consideration clause the payment of premium provision the incontestability provision
the consideration clause
From an income tax perspective, funds withdrawn from a non-MEC life insurance policy's cash value are considered first to be a non-taxable withdrawal of: the policy's accrued interest the policy's accumulated dividends the premiums paid into the policy the policy's loan value
the premiums paid into the policy
Which of the following provisions provides a way for a policyowner to reactivate a health insurance policy that has lapsed? the payment of claims provision the reinstatement provision the incontestable clause the grace period
the reinstatement provision
Why does an insurance company issue a conditional receipt to a new policyowner? to show that the application was completed properly to cover the proposed insured before the policy is issued to confirm that the application was sent to the insurance company to confirm that the insurance company has made the required disclosures
to cover the proposed insured before the policy is issued
All the following statements regarding a life insurance policy's accelerated benefits provision are correct EXCEPT: they allow a payout of some portion of the policy's face amount while the insured is alive accelerated benefit proceeds can be used for any purpose to qualify for accelerated benefits, the insured must be certified as having a terminal illness payment of an accelerated benefit reduces the death benefit that is paid out at the insured's death
to qualify for accelerated benefits, the insured must be certified as having a terminal illness
Deferred annuities accumulate funds for future distribution. Under what circumstances are these funds forfeitable to the insurer? only if the owner stops paying premiums only at the annuitant's death, if it occurs before the annuity starting date under no circumstances only if the owner is convicted of a felony
under no circumstances
What is another name for the insured in a viatical settlement? viator viatical settlement broker viatical settlement provider viatical settlement purchaser
viator
Margaret enters a skilled nursing facility after being released from the hospital. Medicare will fully cover her costs for how long? 45 days 60 days 30 days 20 days
20 days
With respect to variable annuity annuitization, which of the following statements is NOT correct? Annuitization under a variable annuity contract provides for income payments that are fixed and unchanging, like a fixed annuity. Variable annuity income payments change in response to the performance of the contract's underlying subaccounts. The payout options for a variable annuity are the same as for a fixed annuity: straight life, life with period certain, joint life, period certain, etc. Determining the amount of each variable annuity income payment is very different from determining fixed annuity income payments.
Annuitization under a variable annuity contract provides for income payments that are fixed and unchanging, like a fixed annuity.
Which of the following employees of ABC Computers could NOT convert their group life coverage to an individual policy? Paul, who retired this month Sue, who quit to work for a competitor Bill, who switched to part-time status Emily, who was laid off from her job
Bill, who switched to part-time status
Which of the following statements comparing annuities and life insurance is correct? Both products distribute funds tax-free at death. Both products are primarily designed to liquidate sum of money. Both products are based on the actuarial principles of mortality, interest and expenses. Both products can be promoted as insurance against living too long.
Both products are based on the actuarial principles of mortality, interest and expenses.
All the following statements regarding Simplified Employee Pension (SEP) plans are correct EXCEPT Employers are required to contribute to a SEP every year. All contributions made by the employer on behalf of employees vest immediately. SEP plans do not accept employee contributions. Under a SEP plan, an employer sets up individual retirement accounts for each participating employee.
Employers are required to contribute to a SEP every year.
Which of the following statements regarding the tax treatment of endowment contracts is correct? Endowment contracts no longer get the good tax treatment given to life insurance policies. Endowment contracts are treated like other life insurance policies for tax purposes. Congress has given endowment contracts the best tax status of all types of insurance policies. Endowment contracts are still popular today because of their good tax treatment.
Endowment contracts no longer get the good tax treatment given to life insurance policies.
Jason has a group point-of-service (POS) plan and wants to use an out-of-network provider. Which statement is correct? He cannot use an out-of-network provider. He must pay a higher co-payment and deductible. He must pay the cost for any out-of-network providers that he uses. The POS plan will pay the cost for any out-of-network providers if Jason has met his deductible.
He must pay a higher co-payment and deductible.
With respect to a $75,000 ten-year level term policy, all the following statements are correct EXCEPT: If the insured lives beyond the ten-year period, the policy expires and no benefits are payable. During the ten-year term of coverage, neither the premium nor the death benefit will change. The policy gives a level $75,000 of coverage for ten years. If the insured dies after ten years, only the policy's cash value will be paid to the beneficiary.
If the insured dies after ten years, only the policy's cash value will be paid to the beneficiary.
Which of the following statements is correct regarding coverage for experimental medical treatment in California? Insurers can deny coverage. Insurers must provide coverage in all cases. Insurers must provide coverage to terminally ill insureds. Insurers can exclude coverage for nonterminally ill insureds.
Insurers can deny coverage.
Which statement is NOT correct about the use and investment of health insurance premiums? A portion of each premium is set aside as a reserve. The expense factor is used to calculate premiums. Interest is included with expense to calculate premiums. Insurers cannot invest health insurance premiums.
Insurers cannot invest health insurance premiums.
Tandy Enterprises pays $25,000 in premiums each year for its group term life insurance plan, which covers all of its rank-and-file employees. When filing its income tax return, what can (or cannot) Tandy Enterprises do? It can take a partial deduction for the premiums. It can take a deduction for the entire premium paid. It cannot take a deduction for the premium. It can take a deduction only if it also pays the premium for a group plan covering highly compensated employees.
It can take a deduction for the entire premium paid
Which correctly describes a health savings account (HSA)? It pays for health-care services. It is a tax-exempt account that eligible people can set up in their names. People can make tax-free contributions to these accounts. The contributions are taxed as they grow. When withdrawn to pay for qualified medical expenses, the distributions are taxed. It provides a full range of health-care services. It is a taxable account that anyone can set up in his or her name. People can make taxable contributions to these accounts. Their contributions grow on a taxable basis but, when withdrawn to pay for qualified medical expenses, the distributions are tax deferred. It finances the costs of health-care services. It is a tax-exempt account that eligible people can set up in their names. People can make tax-deductible contributions to these accounts. The contributions grow tax free. When withdrawn to pay for qualified medical expenses, the distributions are tax free. It finances the costs of health-care services. People can make tax-exempt contributions into these accounts. The contributions grow tax deferred. When withdrawn to pay for qualified medical expenses, the distributions are taxed.
It finances the costs of health-care services. It is a tax-exempt account that eligible people can set up in their names. People can make tax-deductible contributions to these accounts. The contributions grow tax free. When withdrawn to pay for qualified medical expenses, the distributions are tax free.
Lydia annuitizes a deferred annuity and selects a 100 percent joint and survivor annuity with John as the joint annuitant. If Lydia dies before John after annuity payments have begun, which one of the following most correctly describes how the annuity payments will be taxed when they are paid to John? John will have to include 100 percent of all future annuity payments in his taxable income. John will be able to exclude more of each payment from income. John's exclusion ratio will be recalculated and the tax-free portion of future payments will be changed. John will continue to exclude from income the same portion of each payment as originally excluded by Lydia.
John will continue to exclude from income the same portion of each payment as originally excluded by Lydia.
Core benefits that must be covered in all 10 standardized Medicare Supplement policies include all the following EXCEPT: Medicare Part A coinsurance Medicare Part B deductible Medicare Part B coinsurance after the annual deductible is met Medicare Parts A and B blood coverage for the first three pints of blood per calendar year
Medicare Part B deductible
Which of the following statements about life insurance policy dividends is correct? Policy dividends are considered a return of unearned premium. Both participating and nonparticipating life insurance policies pay dividends. Dividends must be guaranteed. Dividends are subject to income tax when paid.
Policy dividends are considered a return of unearned premium.
With respect to the tax treatment of a disability buyout insurance policy, which of the following statements is correct? Policy premiums are tax deductible to the business, and benefit payments are tax-free. Policy premiums are tax deductible to the business, and benefit payments are taxable. Policy premiums are not tax deductible to the business, and benefit payments are tax-free. Policy premiums are not tax deductible to the business, and benefit payments are taxable.
Policy premiums are not tax deductible to the business, and benefit payments are tax-free.
Under a basic medical expense policy, how does the insurer reimburse covered medical expenses? Reimbursement will be paid up to 80 percent of covered expenses. Reimbursement will be based on a fee schedule. Reimbursement will be based on the maximum costs per visit, injury, or illness. Reimbursement will be paid up to 100 percent of covered expenses, or up to a specified maximum amount.
Reimbursement will be paid up to 100 percent of covered expenses, or up to a specified maximum amount
Which statement about return of premium riders is NOT correct? Return of premium riders are available in all states. They allow the insured to get back part of the premium if the insured's claims are below a certain level. They allow the insured to get back part of his or her premium payments if he or she has no claims against the policy. The policyowner pays an additional premium when a return of premium rider is added to a policy.
Return of premium riders are available in all states.
Monica wants to take a second loan against her life insurance policy. She has not fully repaid the first loan. Which of the following describes what Monica will find when she attempts to take another loan against the policy? She will not be able to take another loan until the first loan has been repaid. She can borrow up to the cash surrender value, less her outstanding obligation. She can borrow against the policy, but she will pay a higher rate of interest on the second loan. Because she has taken out one policy loan, she will never again be allowed to borrow from the policy.
She can borrow up to the cash surrender value, less her outstanding obligation.
Fallon is self-employed and has an medical savings account (MSA). Which is correct about the account? She cannot take the MSA funds if she changes employers. Contributions are not deducted from taxable income. Funds in the account must be depleted by Dec. 31. She must maintain a high-deductible health insurance plan.
She must maintain a high-deductible health insurance plan.
Cindy owns a $100,000 straight whole life insurance policy. If she paid the required premiums and lived to age 120, which of the following statements best describes what will happen? She would get $100,000 as an endowment. She would get nothing. She would receive no benefits, but she would be able to renew the policy for an extended term, for additional premiums. She would get double the face amount, or $200,000.
She would get $100,000 as an endowment.
With respect to an employee's participation in an employer qualified plan, which of the following statements is correct? The employee-participant must pay federal income tax on the earnings in the year earned. Employer contributions are taxable to the employees in the year when they are made. The employee's contributions are made with after-tax dollars. The employee's account grows tax deferred until funds are distributed.
The employee's account grows tax deferred until funds are distributed.
All the following statements regarding the role of interest in life insurance premium calculations are correct EXCEPT Interest is the income the insurance company can expect to earn on premiums it receives. Policyowner premium payments are invested in the market to earn interest and grow. Because of the need for adequate financial safety margins, an insurer commonly assumes for purposes of developing traditional life insurance premiums that it will earn only 2 percent or 3 percent on the premiums it receives. The higher the interest rate assumed by the actuary in calculating premiums, the higher the premium is likely to be.
The higher the interest rate assumed by the actuary in calculating premiums, the higher the premium is likely to b
A joint and survivor income option can allow the joint payees to choose a period certain. Suppose the joint payees choose a ten-year period certain. If the second of the joint payees dies before ten years of income payments are made, then what happens? The insurer pays the contingent payee for ten years. The insurer pays the contingent payee for the balance of the ten-year period. The insurer pays the contingent payee for five years. The insurer stops payments.
The insurer pays the contingent payee for the balance of the ten-year period.
The death benefit amount under a children's term rider may be limited to a specified amount and/or: the face amount of the base policy a small percentage of the base policy's face amount up to five times the base policy's face amount any amount selected by the base policy's owner
a small percentage of the base policy's face amount
In addition to offering basic, major, and comprehensive medical plans as well as HMO plans, Blue Cross and Blue Shield organizations: administer Medicaid programs for the federal government provide traditional medical expense insurance plans administer Medicare programs for the federal government in many states administer basic surgical expense insurance for the federal government in many states
administer Medicare programs for the federal government in many states
Blackstone Insurers is incorporated in New York, where it also has a certificate of authority to transact insurance. What type of insurer is Blackstone in New York? certified insurer alien insurer foreign insurer admitted insurer
admitted insurer