Insurance questions
Select the appropriate response An insured must notify an insurer of a medical claim within how many days after an accident? 10 20 30 40
20
How many employees must an employer have for the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to apply? At least 10 At least 15 20 or more 100 or more
20 or more
Mary has a Health Savings Account (HSA). Distributions that she has made for anything other than qualified medical expenses are considered taxable and subject to a penalty of 10% 20% 30% 50%
20%
Nonqualified medical expense distributions from a Health Savings Account (HSA) have a tax penalty of 7.5% 10% 20% 30%
20%
Kate received a group accident and health termination notice. How many days does she have to apply for a converted policy? 30 31 60 90
31
The grace period for a life insurance policy with an annual premium is usually 10 days 15 days 31 days 60 days or 2 months
31 days
What is the MAXIMUM number of employees an employer may have for qualified medical savings accounts? 20 employees 30 employees 40 employees 50 employees
50 employees
What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan? 30% 40% 50% 60%
50%
How long can an insurer exclude coverage for a preexisting condition on a Medicare Supplement Policy? 6 months 12 months 18 months 24 months
6 months
At what age do most people become eligible for Medicare? 59 1/2 62 65 72
65
A temporary producer license may be initially issued for a maximum period of 30 days 45 days 60 days 90 days
90 days
During the liquidation phase of an annuity contract, to whom are the income benefits normally payable to? Trustee Beneficiary Policyowner Annuitant
Annuitant
How long is individual medical expense insurance normally written for? 1 year 2 years 3 years 4 years
1 year
What is covered under a limited accident and health insurance policy? Losses that occur only in limited occupations Limited pre-existing conditions Losses that occur only in limited age groups Limited perils and amounts
Limited perils and amounts
Respite Care coverage is typically found in a(n) HMO PPO Long Term Care policy Major Medical Expense policy
Long Term Care policy
A teacher recently retired at age 63 and has a tax sheltered annuity (TSA). Periodic deposits total $120,000 and the value of the contract is now worth $200,000. How much is taxed if the current value is surrendered today? $200,000 $80,000 $120,000 $0
$200,000
What does a fixed life annuity offer protection against? Inflation Premature death Inadequate retirement planning Savings depletion due to longevity
Savings depletion due to longevity
What does the acronym in "SHOP exchange" stand for? Social Health Operational Program Single Pay Health Option Plans Small Business Health Options Program Standard Health Option Plans
Small Business Health Options Program
Which of the following does a Medicare Advantage enrollee typically pay for? Retainer fee Annual deductibles Small co-pay per visit or per service Capitation
Small co-pay per visit or per service
Christine is receiving benefits provided from her disability income insurance. As compared to her previous earnings, the disability benefits should be the same less than 50% somewhat less somewhat more
Somewhat less
Which life insurance policy provision prohibits a beneficiary from "commuting, encumbering, withdrawing, or assigning" any portion of the proceeds prior to actual receipt from the company? Insuring clause Spendthrift clause Nonforfeiture provision Collateral Provision
Spendthrift clause
Contributions made by an employee to a qualified retirement plan are required to be subject to income taxes fully refundable nonforfeitable subject to a vesting schedule
Subject to a vesting schedule
The standard provisions of an accident and health insurance policy require that the policy, endorsements, and attached papers constitute the "entire contract" policy summary, conditional receipt, and initial premium constitute the "entire contract" change of occupation provision is mandatory grace period be no shorter than 60 days
Policy, endorsements, and attached papers constitute the "entire contract"
Which of these statements is NOT a characteristic of the law of large numbers? Individual losses can be predicted based on past experience Group losses can be predicted based on past experience Losses can be predicted in large groups with a higher degree of accuracy Rates can be calculated to compensate for losses
Rates can be calculated to compensate for losses
What could be the potential result of taking out a cash value loan under a life insurance policy? Death benefit will be subject to income taxes if insured dies with an outstanding loan balance Interest that accrues on policy loan is tax-deductible to the policyowner Loan amount will be added to the policyowner's gross income Reduces the amount receivable upon surrender of the contract
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? Paid-up additions Accumulation at interest 1-year term Reduction of premium payment
Reduction of premium payment
Which of the following is NOT included as a hospice benefit under a major medical plan? Home-based services Counseling Rehabilitation Pain management
Rehabilitation
An insurer has a contractual agreement which transfers a portion of its risk exposure to another insurer. What type of contractual arrangement is this? Coinsurance contract Mutuality agreement Reinsurance contract Reciprocity arrangement
Reinsurance contract
What is the accounting measurement of an insurance company's future obligations to its policyowners? Credits Reserves Surplus account Retention fund
Reserves
Taxable income may be the result from all of these modified endowment contract (MEC) transactions EXCEPT for A cash value loan is taken out Automatic premium loan provision is utilized The policy is surrendered for less than what was paid into it Dividend is issued
The policy is surrendered for less than what was paid into it
Which type of life insurance policy allows a policyowner the choice of investments along with flexible premium payments? Variable universal life Modified endowment contract Adjustable life Graded premium whole life
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 For the entire length of the contract Never When the cash value has reached a stated minimum amount
When the contract has been held for the period specified in the policy
Which event triggers a deferred annuity to start making benefit payments to the annuitant? When the owner dies When the contract's cash value exceeds the cost basis When the contract is annuitized Cash surrender of the annuity
When the contract is annuitized
At what point are death proceeds paid in a joint life insurance policy? When the first insured dies When the second insured dies Only after insurable interest has been confirmed to still exist If both insureds die from the same accident
When the first insured dies
A signed good health statement may be requested by a life producer at the time of policy issue application policy delivery physical examination
policy delivery
The interest credited to the cash values of personally-owned non-qualified annuities is considered a tax credit tax-deferred tax-deductible tax-exempt
tax-deferred
All of these are considered to be a violation of the Federal Fraud and False Statements Act EXCEPT Overvaluing land Abstracting funds False entries on reports Claims reimbursement
Claims reimbursement
Prepaid dental plans differ from most other types of dental plans in what way? X-rays and teeth cleanings are fully covered Possible exclusion of pre-existing conditions Closed panel of dentists can only be used Deductibles may have to be met
Closed panel of dentists can only be used
Mike applied for life insurance and was issued a conditional receipt. He is later found to be insurable and is issued a policy. When does his coverage become effective? Date of issuance of the conditional receipt Date the policy was approved Date of policy delivery Date the insurer received the application
Date of issuance of the conditional receipt
What effect does interest income have upon insurance premiums? Increases premium Decreases premium Levels the premium Adjusts premium on a quarterly basis
Decreases premium
Which type of group plan is excluded from HIPAA rules? PPOs Disability income HMOs Major medical
Disability Income
Which of the following would permit an insurer to delay a covered disability policy claim? Probationary period Service Waiting period Elimination period Grace period
Elimination period
The benefit period of Medicare Part A begins on the first day the insured notices symptoms enters a hospital becomes eligible for Medicare is diagnosed of an illness
Enters a hospital
Select the appropriate response When determining the accumulation value of a deferred annuity, the total is calculated by taking the premiums paid plus interest earned minus bailout option charge surrender charges taxes owed expenses and withdrawals
Expenses and withdrawals
Medicare will cover a maximum of how many days per benefit period in a skilled nursing facility? 10 days 30 days 60 days 100 days
100 days
Mary is the sole proprietor of her business and has a family health plan. She would like to deduct the premiums from her taxes. What percentage of her premiums are tax deductible? 0% 50% 75% 100%
100%
Which of these may NOT be deducted from premium payments or the cash value of a variable life insurance policy? Mortality costs Administrative charges Investment management fees Federal premium taxes
Federal premium taxes
Major Medical policies are typically characterized by which of the following? Corridor deductible Flat deductible Probationary period First dollar coverage
Flat deductible
Which of these is NOT a common life insurance nonforfeiture option? Reduced paid-up insurance Extended term option Cash surrender option Life income annuity
Life income annuity
Rick owns a variable universal life policy and chooses a variable death benefit option. What will typically happen to the death benefit as a result of this selection? Remain the same Decrease but never increase Increase but never decrease Fluctuate with changes in the cash account
Fluctuate with changes in the cash account
The IRS has a "minimum coverage" rule regarding qualified retirement plans. This rule states that each qualified plan is required to benefit a broad cross-section of employees benefit a minimum number of employees provide a minimum amount of income per year provide benefits to a company's executive team
Benefit a broad cross-section of employees
Which of the following combinations best describe a universal life insurance policy? A mutual fund and an endowment policy A term insurance policy and a whole life policy A modified endowment policy and an annual term insurance policy A flexible premium deposit fund and a monthly renewable term insurance policy
A flexible premium deposit fund and a monthly renewable term insurance policy
In New York, a group accident and health certificate of insurance must contain A copy of the group contract A list of all participating physicians The insurer's financial statement A summary of policy features and benefits
A summary of policy features and benefits
A life insurance policy provision that has the ability to reduce the death benefit is called the accelerated (living) benefit insuring clause payor benefit spendthrift clause
Accelerated (living) benefit
Which of the following is NOT covered by a comprehensive long-term care policy? Custodial care Acute care Physical therapy Skilled nursing care
Acute care
All of the following are unfair claims settlement practices EXCEPT Misrepresentation of policy provisions to an insured An unreasonable delay in the payment of a claim An attempt to settle a claim by arbitration Failure to give a reasonable explanation for denying a claim
An attempt to settle a claim by arbitration
When a large sum of money is used to structure monthly payments, which product is typically used? A 401(k) plan A 403(b) plan A deferred annuity An immediate annuity
An immediate annuity
Which is an accurate description of the premium in a graded premium life insurance policy? Level premium for a stated number of years then increases annually for the remainder of the contract Level premium for a stated number of years then decreases annually for the remainder of the contract Annual decreases in premium for a stated number of years then remains level Annual increases in premium for a stated number of years then remains level
Annual increases in premium for a stated number of years then remains level
Use of XYZ Insurance Company brochures, business cards, and rating guides is an example of Expresses authority Implied authority Apparent authority Fiduciary duty
Apparent authority
When does the insured stop making payments under a thirty-payment whole life policy? At the time of death or 30 years after the policy's inception, whichever comes first It depends on the performance of the underlying investment account When the cash value surpasses the face amount At age 100
At the time of death or 30 years after the policy's inception, whichever comes first
In the event of premium default, which life insurance provision will use the cash value to keep the policy in force? Waiver of premium Automatic premium loan Reinstatement Policy loan
Automatic premium loan
Which of the following statements BEST describes a double indemnity provision in travel accident insurance? Benefits are doubled under certain circumstances stated in the policy If the claim is disputed in court and the insurer loses, the face amount will be doubled Benefits cover two people when travelling Accidents and illnesses are covered while the insured is travelling
Benefits are doubled under certain circumstances stated in the policy
Which of these statements regarding Major Medical Expense insurance is NOT true? Benefits are paid typically after the coinsurance provision has been satisfied Policies normally have a high maximum benefit Policies typically include a deductible Benefits are paid on a capitation basis
Benefits are paid on a capitation basis
Which of the following is considered a Limited accident and health plan? HMO PPO Cancer plan Major medical plan
Cancer plan
Which of the following types of insurers limits the exposures it writes to those of its owners? Restricted insurer Limited insurer Confined insurer Captive insurer
Captive insurer
A source of supplemental income for a life insurance policyowner can be derived from the cash value payor benefit consideration face amount
Cash Value
Which statement regarding the waiver of premium rider is accurate? Policy loans are used to keep the policy active Cash payment is not directly provided to the policyowner Insurance companies are required to offer this to all policyowners Premiums are waived in the event of bankruptcy
Cash payment is not directly provided to the policyowner
The insurer's obligation to pay a claim depends on whether the insured or beneficiary has complied with all policy conditions. This makes the policy a(n) agency agreement aleatory agreement contract of good faith conditional contract
Conditional contract
Which of the following can be used to avoid the mandatory withholding tax on qualified plan distributions? Qualified plan waiver Trustee-to-trustee transfer Conduit IRA 1035 exchange
Conduit IRA
An accident and health insurance policy's premium requirements are set forth in which of the following provisions? Insurance clause Entire Contract clause Consideration clause Premium mode
Consideration clause
Which of the following disability buy-sell agreements is best suited for businesses with a limited number of partners? Split dollar plan Entity agreement Cross-purchase agreement Key person plan
Cross-purchase agreement
What type of doctor-ordered care assists an individual with performing basic daily activities such as bathing, dressing, and eating? Custodial care Respite care Family care Domestic care
Custodial care
With regard to the use of nonpublic personal information, the phrase opt out means Agents have no obligation to notify customers Customers can ignore insurance company notices Agents must discontinue using private information Customers must be given the chance to stop disclosure
Customers must be given the chance to stop disclosure
Which of the following is NOT guaranteed in a whole life policy? Settlement options Nonforfeiture options Dividend scale Policy loan values
Dividend scale
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 Group health coverage is available to workers over the age of 65 An active employee's group health plan is primary and Medicare is secondary, unless the employee chooses otherwise Group health coverage is available to an employee's spouse that also happens to be Medicare-eligible
Group health coverage is NOT available for workers over the age of 65
A medical fee schedule shows the amount an insurer will pay for a given procedure. This amount is considered to be the negotiated amount payable average amount payable lowest amount payable highest amount payable
Highest amount payable
Some standard Medicare Supplement policies include which benefit? Hospice care Respite care Vision care Custodial care
Hospice Care
Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted? 20% of the funds are subject to taxes 80% of the funds are invested in a separate account If Tom's employment is terminated, 20% of the funds could be forfeited If Tom's employment is terminated, 80% of the funds could be forfeited
If Tom's employment is terminated, 20% of the funds could be forfeited
A characteristic of preferred provider organizations (PPO) is PPOs operate like an HMO on a prepaid basis If service is obtained outside the PPO, benefits are reduced and costs increase PPOs are generally public in nature rather than private Health care providers themselves are barred from forming a PPO due to conflict of interest
If service is obtained outside the PPO, benefits are reduced and costs increase
Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2? 10% tax penalty for early withdrawal Capital gains tax Income tax and penalty tax Ordinary income tax
Income tax and penalty tax
A business may purchase an annuity for all of the following reasons EXCEPT Structuring a liability settlement payment informally funding a non-qualified deferred compensation plan Accumulating assets on a tax-deferred basis Providing a pension to employees
Informally funding a non-qualified deferred compensation plan
All of these are considered features of whole life insurance EXCEPT Cash value accumulation Permanent coverage Initial premium is lower than for an equivalent amount of term insurance Policy loans are allowed
Initial premium is lower than for an equivalent amount of term insurance
Medicare Part A typically covers inpatient drugs custodial care disability income respite care
Inpatient drugs
When compared to a fixed annuity, a variable annuity has what distinguishing feature? Flexible premiums according to a stock index Investment risk is assumed by the purchaser Investment risk is assumed by the insurer Payout option can be changed after the accumulation phase
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? Prevents a policy from lapsing in the event of total disability Premiums waived by the insurer do not have to be repaid by the policyowner Policy's cash value would still increase as policy premiums are being waived It allows a policy loan to cover premium payments if the policyowner becomes totally disabled
It allows a policy loan to cover premium payments if the policyowner becomes totally disabled
The initial premium for a life insurance policy is typically paid in what way? The applicant mails it to the insurer after the policy has been approved It is typically obtained by the producer and forwarded to the insurer It is typically forwarded to the insurer by the applicant The producer pays it from any commissions received
It is typically obtained by the producer and forwarded to the insurer
After the initial enrollment period for Medicare Part B has expired, when may an individual purchase again? January through March of each year October through December of each year Six months after the individual's birthday month of each year Three months after the individual's birthday month of each year
January through March of each year
What type of life insurance policy covers two or more persons and pays the face amount upon the death of the first insured? Joint and survivorship Survivorship life Universal life Joint life
Joint life
A life insurance beneficiary died after receiving only six payments under the policy's life income settlement option. What happens with the remaining balance of the death proceeds? Transfers to the insured's estate Transfers to the beneficiary's estate Donated to charity Kept by the insurance company
Kept by the insurance company
All of these are duties that a producer may be required to perform when delivering an insurance policy EXCEPT Acquire a statement of good health signature Gather the initial premium Review policy with applicant Leave a conditional receipt with client
Leave a conditional receipt with client
The death proceeds of a credit life insurance policy are typically paid to the borrower lender annuitant borrower's dependents
Lender
What is the guaranteed cash value of a whole life insurance policy when the insured turns 65 years old? Greater than the policy's face amount Less than the policy's face amount Depends on the performance of the separate underlying investment account Equal to the policy's face amount
Less than the policy's face amount
Employees generally receive workers compensation benefits for only medical expenses due to occupational accidents employment termination lost wages and medical expenses due to occupational accidents only lost wages due to accidents that occur on the job
Lost wages and medical expenses due to occupational accidents
What would be a valid reason for naming a trust as the beneficiary of a life insurance policy as opposed to naming an individual? Avoiding probate Management of proceeds would be provided Trustee can pay off any existing policy loans More settlement options available with a trustee
Management of proceeds would be provided
A MET third-party administrator may NOT perform which of the following functions? Claims processing Marketing the plan Underwriting the plan Insuring the plan
Marketing the plan
Skilled nursing facility expenses are sometimes covered by _____, but ONLY if the insured was hospitalized prior to entering the facility. HMOs Medicare Medicaid Medicare Supplements
Medicare
Which of these is a type of private insurance that covers the cost-sharing amounts under Medicare? Major medical insurance Medicaid Disability income Medicare Supplement
Medicare Supplement
Why do insurers require a minimum number of employees participate in a group insurance plan? Efficiency is maximized Minimize adverse selection Profits are maximized Claims are minimized
Minimize adverse selection
A life policy that has premiums that are lower than normal during the early years is called Decreasing term Modified life Variable life Limited-pay life
Modified life
Which of the following is TRUE about a qualified retirement plan that is "top heavy"? More than 30% of plan assets are in key employee accounts More than 40% of annual additions are for key employee accounts More than 50% of plan assets are in key employee accounts More than 60% of plan assets are in key employee accounts
More than 60% of assets are in key employee accounts
Medicare Supplement insurance requires an individual to be at least how old for open enrollment? 59 1/2 years old 65 years old 70 1/2 years old No minimum age
No minimum age
The disability income policy most likely to have been issued on a substandard basis is Non-cancelable with a 60-day elimination period Conditionally renewable Non-cancelable with a health condition exclusion rider Guaranteed renewable with an inflation rider
Non-cancelable with a health condition exclusion rider
Which of the following health insurance plans charges a premium that cannot be increased? Guaranteed renewable Cancelable Noncancelable Conditionally renewable
Noncancelable
The contractual rights which allow the owner of a deferred annuity to surrender the cash value several years before the annuity date are called nonforfeiture options settlement options conversion options surrender options
Nonforfeiture options
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 obtained from the state's Guaranty Association accumulated from the invested principal given up by the annuitant's refund beneficiary not distributed to life annuitants who died before life expectancy
Not distributed to life annuitants who died before life expectancy
Which is an example of an unfair claims settlement practice? Attempting to negotiate the payment of claims where coverage or liability is in question Denying claims on the basis of specific policy provisions Including an arbitration provision in the insurer's policies Offering settlements that are less than the fair value to offset insurer expenses
Offering settlements that are less than the fair value to offset insurer expenses
When a deferred annuity is surrendered, who must sign the authorization to do so? Owner Annuitant and beneficiary Annuitant All parties involved
Owner
A life insurance guaranteed insurability rider gives the insured the right, without proving insurability, to purchase life insurance policies on his children as they are born purchase life insurance on a spouse after becoming married purchase additional life insurance at anytime periodically purchase additional insurance
Periodically purchase additional insurance
Which of these plans allow a participant to choose either a network or non-network provider at the time when medical care is needed? HMO Medicare Supplement Point-of-service Limited benefit
Point-of-Service
Benefits are taxable to the business entity Premiums are typically tax-deductible Policy proceeds are typically received income tax-free Benefits are paid to the disabled insured
Policy proceeds are typically received income tax-free
Which of the following guidelines does NOT apply under the pregnancy provision of the Civil Rights Act? A pregnant woman is entitled to sick-leave under the same guidelines as any other type of disability Pregnancy must be covered under medical benefits the same as any other illness Post-termination extensions of medical benefits must apply equally to pregnancy Abortion complications are covered if the woman's life is in danger
Post-termination extensions of medical benefits must apply equally to pregnancy
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 Capitation Mandatory second opinion Concurrent review
Pre-admission testing
What typically changes at the re-entry option date found in some term life policies? beneficiary amount of coverage premium contestable period
Premium
How are level term policies able to provide level premiums? Policy dividends Yearly policy fees Yearly reductions in face amount Premiums are averaged over the term of the policy
Premiums are averaged over the term of the policy
Qualified long-term care policies must include all of the following provisions EXCEPT Nonforfeiture option Inflation protection Prior hospitalization Guaranteed renewability
Prior hospitalization
Pointing out to a prospective client that the life insurance policy you are presenting is covered by the New York Life and Health Insurance Guaranty Association is an excellent sales idea prohibited by law encouraged by the state Department of Insurance required to be part of every sales presentation allowed if the producer gives the Buyer's Guide
Prohibited by law
Which benefit can be found in an equity indexed annuity, but not in a fixed annuity? Protection against living too long Equity loans A fixed rate of return Protection against long-term inflation
Protection against long-term inflation
Which of these is a true statement regarding survivor benefits under a qualified retirement plan? Survivor benefits can only be waived with the written consent of a married employee's spouse Survivor benefits CANNOT be waived with the written consent of a married employee's spouse Survivor benefits are rarely included in small company plans Survivor benefits do not apply to divorced employees
Survivor benefits can only be waived with the written consent of a married employee's spouse
All parts of the Medicare program (except for public information and enrollment) are administered by which federal agency? The ACA The Social Security Administration The Department of Homeland Security The Centers for Medicare and Medicaid Services
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 loan value The cash value The face amount minus any past due premiums and outstanding loans Nothing
The cash value
When disability buy-sell insurance benefits exceed a partner's cost basis, which of the following is correct? The excess is taxed as a capital gain to the partner The excess is taxed as ordinary income to the partner The excess is partially taxable to the partner The full amount is non-taxable to the partner
The full amount is non-taxable to the partner
Select the appropriate response What would be considered an advantage of purchasing term life insurance? Cash value can be borrowed against The coverage is permanent Nonforfeiture values are available The initial premium is lower compared to an equivalent amount of whole life coverage
The initial premium is lower compared to an equivalent amount of whole life coverage
Under the Law of Agency, the principal is considered to be the producer the insurer the plan administrator the insured
The insurer
What determines how much an annuitant is paid for a variable annuity? Varies according to how many outstanding annuity units Payments fluctuate as annuitant gets older The market value variations of the securities backing it Varies according to the insurer's investments in its general account
The market value variations of the securities backing it
Darrell has a group long-term disability income policy paid by his employer. Which of these statements is true? Any benefits received will be tax-free The premiums paid by the employer are not tax-deductible The specified benefit amount is a percentage of his wages Long-term policy benefits are not coordinated with Social Security benefits
The specified benefit amount is a percentage of his wages
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 Face amount plus interest accrued Interest accrued plus total premiums paid Face amount minus any outstanding loan balances
Total premiums paid plus the policy face amount
What is the effect of the market value adjustment in a market value adjustment annuity? Transfers the tax liability to the owner Allows owner to periodically adjust the investment risk Transfers some of the investment risk to the policyowner No effect
Transfers some of the investment risk to the policyowner
How is a collateral assignment used in a life insurance contract? Transfers permanent ownership rights to a creditor Assigns complete ownership rights to a creditor Transfers specific ownership rights to a creditor Assigns ownership rights to the primary beneficiary
Transfers specific ownership rights to a creditor
What would be the disadvantage of naming a trust as beneficiary of a life insurance policy? Trusts cannot be formed for life insurance purposes Trust administration fees would reduce policy proceeds Trusts cannot be used if a minor is the beneficiary Trustee must be a bank or brokerage
Trust administration fees would reduce policy proceeds
An agent's license in New York must be renewed every Year Two years Three years Four years
Two years
Insurance crimes which affect interstate commerce are prosecuted by the US Attorney General Governor FBI Department of Homeland Security
US Attorney General
Which of the following BEST describes a "partial disability"? Becoming deaf in one ear Unable to perform all job duties due to a short-term disability Unable to perform one or more job duties When a disability recurs from a previous illness or accident
Unable to perform one or more job duties
Which life insurance policy would be eligible to include an automatic premium loan provision? Increasing term Level term Decreasing term Whole life
Whole life
A health plan offered by private insurance companies is Social Security Medicaid Medicare a Medicare Supplement
a Medicare Supplement
Emergency health care coverage for Medicare enrollees traveling abroad is excluded from a Medicare Supplement a core benefit under a Medicare Supplement a Medicare Supplement additional benefit a Medicare Part D benefit
a Medicare Supplement additional benefit
When there is a named beneficiary on a life insurance policy, the death benefits are directed to a trustee if the insured has any outstanding debts are paid directly to the insured's creditors, with any remaining balance forwarded to the beneficiary are paid directly to the beneficiary, minus any debt claims by the insured's creditors are paid directly to the beneficiary without interference from the insured's creditors
are paid directly to the beneficiary without interference from the insured's creditors
Any employee insured under a group life insurance plan is normally given a master certificate covered on a noncontributory basis required to show proof of insurability covered with term life insurance
covered with term life insurance
Scott has a life insurance policy in which the dividends are left with the insurance company. This particular policy may be paid up when the cash value plus accumulated dividends equal the net single premium for the same face amount at the insured's attained age can purchase extended term coverage for a period of two years or more equal the nonforfeiture value of the policy can purchase a paid-addition
equal the net single premium for the same face amount at the insured's attained age
Federally qualified HMO's must offer dental coverage urgent care family planning services custodial care
family planning services
Third-party administration has become fairly common in accident and health insurance due to the growth of the Affordable Care Act self-funding of benefits health savings accounts Medicaid
self-funding of benefits
Qualified long-term care premiums are treated for tax purposes as Qualified Retirement plans always non-deductible 100% tax-deductible tax-deductible to the extent they exceed 7 1/2% AGI
tax-deductible to the extent they exceed 7 1/2% AGI
In an individual retirement account (IRA), rollover contributions are subject to capital gains tax subject to ordinary income tax partially limited by dollar amount unlimited by dollar amount
unlimited by dollar amount
A nonparticipating whole life insurance policy was surrendered for its $20,000 cash value. The total premiums paid had totaled $16,000. What were the federal income tax consequences to the policyowner on receipt of the cash value? $16,000 was received as ordinary income and $4,000 as tax-free $20,000 was received as a capital gain $20,000 was received as ordinary income $16,000 was received tax-free and $4,000 as ordinary income
$16,000 was received tax-free and $4,000 as ordinary income
An insured has a $25,000 whole life insurance policy with $6,000 cash value available. Under the extended term nonforfeiture option, what is the amount of insurance available to the insured? $6,000 $19,000 $25,000 $31,000
$25,000
An individual working part-time has a gross income of $5,000 for the year. If this individual has an IRA, what is the maximum deductible IRA contribution allowable? No deduction allowed $5,000 $2,000 $1,000
$5,000
An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction? 10% is withheld for income taxes 20% is withheld for income taxes 30% is withheld for income taxes Nothing is withheld
20% is withheld for income taxes
How many days notice does the Affordable Care Act require insurers to give before rescinding coverage? 10 20 25 30
30
What is the length of the free look period when a Medicare Supplement insurance policy is replaced? 10 days 20 days 30 days 40 days
30 days
How long do most states allow an insurance company to delay the payment of a cash surrender under the Delayed Payment provision? 1 month 2 months 4 months 6 months
6 months
ERISA requires that a Summary Plan Description must be provided to a new plan member within how many days following the new member's eligibility date? 30 45 90 120
90
Which of the following describes coverage for the Medicare Part B coinsurance? Only a Long-term care policy will cover Medicare Part B coinsurance A Medicare Supplement optional benefit A Medicare Supplement core benefit Medicare Part B does not require a coinsurance so no additional coverage is needed
A Medicare Supplement core benefit
Which of these is NOT an advantage of term life insurance? The greatest amount of coverage can be provided for the initial premium paid It can be provided as a rider to another policy A cash benefit will be provided if the insured is alive at the end of the policy period Temporary insurance needs can be met
A cash benefit will be provided if the insured is alive at the end of the policy period
Which of these is an accurate statement regarding the fixed period settlement option on a life insurance policy? A portion of the payments paid to the beneficiary comes from interest calculated on the proceeds of the policy Payment can be adjusted monthly by the beneficiary A portion of the payments paid to the beneficiary comes from interest generated from policy loans Payments are normally guaranteed for 10 years or more
A portion of the payments paid to the beneficiary comes from interest calculated on the proceeds of the policy
What is a "functional assessment" for long-term care benefits? An assessment of the insurer's financial solvency A review of the insurer's ability to pay long-term care benefits A review of the insured's ability to perform the activities of daily living An assessment of the quality of care given in a long-term care facility
A review of the insured's ability to perform the activities of daily living
Which of the following statements accurately describes the "time limit on certain defenses"? After a stated period of time, claims cannot be denied due to material misrepresentation on the application All claims can be disputed after two years An insured cannot file a lawsuit within 90 days of the claim being filed The right to return an accident and health policy must be within 10 days of policy delivery
After a stated period of time, claims cannot be denied due to material misrepresentation on the application
Which of the following is NOT a valid contract exchange? An annuity exchanged for a life insurance policy An annuity exchanged for another annuity A life insurance policy exchanged for another life insurance policy A life insurance policy exchanged for another annuity
An annuity exchanged for a life insurance policy
Misrepresenting pertinent policy provisions relating to coverage after a loss is A concealment in insurance application An unfair claims settlement practice An unfair discrimination between individuals A violation of the principle of adhesion
An unfair claims settlement practice
A description of a qualified plan's insurance contract may be found in which ERISA reporting form? Annual return/report (Form 5500) Shareholder's report IRS Form 1040 Summary report (Form 6500)
Annual return/report (Form 5500)
Traditional individual retirement annuity (IRA) distributions must start by age 59 1/2 age 65 April 1st of the year following the year the participant attains age 59 1/2 April 1st of the year following the year the participant attains age 70 1/2
April 1st of the year following the year the participant attains age 70 1/2
Which statement regarding the cash value of a whole life insurance policy is correct? Can be borrowed against, starting in the policy's fifth year Cash value accumulation is based on the performance of a separate investment account Available to the policyowner when policy has been surrendered Starts growing with the initial premium
Available to the policyowner when policy has been surrendered
ABC Corporation purchases and is beneficiary of an individual disability income insurance policy on a key employee. Which of the following statements is true? Premiums paid by the company are tax-deductible Benefits are taxable to the key employee Benefits are received tax-free by the company Premiums paid by the company are tax-deductible to the key employee
Benefits are received tax-free by the company
A preferred provider plan and an indemnity plan are similar in what way? Only select providers may be used Both pay on a fee-for-service basis Any provider may be used Both operate on a prepaid basis
Both pay on a fee-for-service basis
Tina is insured under a business overhead expense insurance policy. Which of the following would be covered if she were to become disabled? A decrease in the company's valuation Business property rental expense Tina's salary Dividends owed to shareholders
Business property rental expense
Which statement regarding universal life insurance is correct? Cash value accumulations have a guaranteed minimum interest rate Policyowner can change the face amount but not the premium Policyowner can change the premium but not the face amount Partial withdrawals cannot be made from the policy's cash value
Cash value accumulations have a guaranteed minimum interest rate
Which of the following statements is true regarding accident and health insurance claims that reimburse on an indemnity basis? No proof of loss is needed Claims can be sent directly to the insured Claims are required to be sent to the health provider No claim form is needed
Claims can be sent directly to the insured
Which report contains information regarding an individual's general reputation and credit standing? Credit report Consumer report MIB report Agent's report
Consumer report
Which of the following is NOT an intended use of an annuity? Obtain income benefits for a stated period of time for more than one person Accumulate assets on a tax-deferred basis Create immediate lifetime income benefits Create new funds upon the death of a wage-earner
Create new funds upon the death of a wage-earner
ABC Partnership is a business with a limited number of partners. Which disability buy-sell agreement is best suited for this business? Optional buy-back agreement Entity purchase agreement Cross purchase agreement Organizational group agreement
Cross purchase agreement
What kind of life policy typically offers mortgage protection? Whole life Decreasing term Increasing term Level term
Decreasing term
Which annuity allows contributions to an IRA? Single Premium Immediate Annuity (SPIA) Annuity certain Deferred Life with period certain
Deferred
Health Maintenance Organization (HMO) wellness programs may include each of the following EXCEPT Stress reduction Routine physicals Smoke cessation programs Diagnostic testing services
Diagnostic testing services
New York law requires the Human Immunodeficiency Virus (HIV) consent form to State that all positive test results will be reported to the New York Department of Insurance Be signed by both the applicant and the first beneficiary Disclose the types of individuals or organizations that may receive a copy of the test results Describe the specific types of tests that will be performed
Disclose the types of individuals or organizations that may receive a copy of the test results
An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately had the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee? Distribution is subject to capital gains tax Distribution is subject to ordinary income tax Distribution is subject to a tax penalty Distribution is subject to federal income tax withholding
Distribution is subject to federal income tax withholding
For purposes of disability income insurance, earned income would include all of the following EXCEPT Salary Commissions Bonus Dividends
Dividends
An officer for a corporation takes out numerous unsecured loans from the company's qualified retirement plan. Which of these rules is the plan in violation of? Key employee rule Top heavy rule Vesting rule Exclusive benefit rule
Exclusive benefit rule
Which life insurance policy option allows the policyowner to have coverage equal to the net death benefit of the lapsed policy? Reduced paid-up nonforfeiture option Accelerated benefits option Extended term nonforfeiture option Cash surrender option
Extended term nonforfeiture option
Which tax cost is normally associated with death? Federal excise tax Sales tax Federal estate tax Payroll
Federal estate tax
Which of the following contracts offer deferred taxation, flexible payments, a guaranteed interest rate, and death benefits equal to the cash value? Variable life policy Modified life policy Flexible premium fixed annuity Immediate fixed annuity
Flexible premium fixed annuity
Which of the following health plans pay benefits on a pre-paid service basis? Medicare Medicaid Group medical expense plans HMO
HMO
A 55 year old recently received a $30,000 distribution from a previous employer's 401k plan, minus $6,000 for income tax withholding. Which federal taxes apply if none of the funds were rolled over? Only income taxes on $30,000 Only income taxes on $24,000 Income taxes plus a 10% penalty tax on $30,000 Income taxes plus a 10% penalty tax on $24,000
Income taxes plus a 10% penalty tax on $30,000
Which life insurance clause prohibits an insurance company from questioning the validity of the contract after a stated period of time has passed? Entire contract provision Grace period provision Incontestable clause Insuring clause
Incontestable clause
Which health policy clause specifies the amount of benefits to be paid? Insuring Consideration Free-look Payment mode
Insuring
Which statement regarding the certificate of insurance is accurate? It is an insurance contract between the employer and insurer It indicates evidence of an employee's insurance coverage Each certificate of insurance is underwritten on an individual basis It is issued by the employer to the employee
It indicates evidence of an employee's insurance coverage
Which of these pays an income to two or more annuitants until the death of the last annuitant? Joint life annuity Deferred survivor annuity Joint and survivor annuity Survivorship annuity
Joint and survivor annuity
Which of the following is associated with an immediate annuity? Tax-free benefit payments Installment premium payments Lack of an accumulation period Lump-sum benefit
Lack of an accumulation period
An existing life insurance policy is sold by the policyowner to help finance the cost of a terminal illness. This is an example of a(n) Nonforfeiture option Accelerated death benefit Life settlement Survivorship policy
Life settlement
An association which maintains a facility that displays offers and counteroffers for purchasers or sellers of life settlement contracts is known as a Life settlement intermediary Life settlement broker Life settlement provider Life settlement marketplace
Life settlement intermediary
Medicare Part B excess charges are covered by long-term care policies respite care Medicare Part A Medicare Supplemental insurance
Medicare Supplemental insurance
Medicaid will pay for nursing home expenses under what condition? Must have permanent kidney failure Must be age 65 or older Must be receiving Social Security disability benefits Must have financial need
Must have financial need
Specialty care is provided by which of the following health maintenance organization (HMO) providers? Neurologist HMO administrator HMO director Gatekeeper
Neurologist
When funds are transferred directly from one IRA to another IRA, what percentage of the tax is withheld? 10% 20% 30% None
None
Which of the following is NOT an example of risk retention? Becoming aware of a risk and taking no action Self-insuring a given risk Deciding a business deal is risky but going through with it anyways Not doing a business deal after deciding it would be too risky
Not doing a business deal after deciding it would be too risky
Which statement is true regarding hospital preadmission certification for emergency situations? Notification is not required for emergency situations Insured cannot be admitted without preadmission certification Notification is required to be given before insured is admitted to the hospital Notification is required to be given after insured is admitted to the hospital
Notification is required to be given after insured is admitted to the hospital
These are all accurate statements regarding universal life insurance EXCEPT Mortality charge is deducted from the policy's cash value each month Policy loans are not permitted Flexible premiums as long as the cost of insurance protection is covered Policy states what percentage of the premium is contributed to the cash value and which pays for the cost of insurance
Policy loans are not permitted
What happens to a life insurance policy when the policy loan balance exceeds the cash value? Nonforfeiture options are offered Policy becomes paid-up Automatic premium loan provision is utilized Policy will no longer be in force
Policy will no longer be in force
If an insured dies during the grace period without having paid the premium, how much will the insurer pay? Policy's face amount Total premiums paid will be returned Policy's face amount minus any premiums due Nothing
Policy's face amount minus any premiums due
How is the insured protected if a payor benefit rider is attached to the life insurance policy? Premiums are waived if the payor becomes financially insolvent Policy loan will automatically cover the premiums if payor becomes disabled or dies Premium payments are waived in the event the premium payor dies or becomes disabled Policy loan will automatically cover the premiums if payor becomes financially insolvent
Premium payments are waived in the event the premium payor dies or becomes disabled
Home health care benefits typically do NOT include coverage for Nursing care Wheelchairs Physical therapy Prescription medication
Prescription medication
Which of the following outlines the authority given to the producer on behalf of the insurer? Rebating arrangement Commingling contract Controlled business clause Producer contract
Producer contract
In New York, reducing benefits for a newborn child under an accident and health plan is Allowed with the policyowner's consent Allowed for prescription drug benefits only Prohibited in any form Permitted for the first 10 days following birth
Prohibited in any form
The Healthy New York Program is designed to Provide life insurance to large group employers Provide affordable health insurance coverage to small employers Generate revenues for New York State Government Promote good nutrition in New York State schools
Provide affordable health insurance coverage to small employers
Which of the following is NOT a reason the government provides insurance? Stimulate economic development Reduce fraudulent claims Ensure social needs are being met Increase availability of health coverage
Reduce fraudulent claims
Jim is covered under a disability income policy. He is hurt while engaged in an occupation that is more hazardous than the occupation he specified in the policy. What action will the insurer likely take? Decrease the premium Reduce the benefit level Increase the benefit level Increase the premium
Reduce the benefit level
How can an insurance company minimize exposure to loss? Risk concealing Reinsuring risks Reissuance Risk assumption
Reinsuring risks
Statements made by an insured on an accident and health insurance application are considered to be representations warranties conditional aleatory
Representations
Which of these factors does NOT influence an individual's need for life insurance? Lifestyle of the applicant Number of dependents Future educational costs of the dependents Self-maintenance expenses
Self-maintenance expenses
How does the cost for a survivorship life policy compare to the cost of combining two separate individual life insurance policies? Survivorship life policy is lower Survivorship life policy is higher Depends on the investment performance of the underlying accounts Both have the same actuarial costs
Survivorship life policy is lower
The interest paid during an annuity's payout period is considered nontaxable taxable as ordinary income taxable as capital gains tax-deductible
Taxable as ordinary income
Jonas is covered with disability insurance through his employer. The employer pays 75% of the premium, while Jonas pays the other 25%. What is Jonas' tax liability for any benefits paid from the disability plan? Taxes must be paid on all benefits received No taxes are payable on any benefits received Taxes must be paid on 25% of the benefits received Taxes must be paid on 75% of the benefits received
Taxes must be paid on 75% of the benefits received
When a ten year renewable term life insurance policy issued at age 45 is renewed, the premium rate will be the current rate for Ten year term insurance for a person aged 55 Ten year term insurance for a person aged 45 Yearly renewable term insurance for a person aged 55 Yearly renewable term insurance for a person aged 45
Ten year term insurance for a person aged 55
Which statement regarding the joint and survivor life insurance settlement option is NOT true? Age of the beneficiaries plays a factor when determining the payment amounts Income continues until the last beneficiary dies Two or more beneficiaries can be paid The amount of each installment is larger than the single life income option
The amount of each installment is larger than the single life income option
Under the Fair Credit Reporting Act, which statement is true? The consumer who was investigated must be advised that credit, insurance, or employment was denied because of the unfavorable report Disclosure of the name of the reporting agency is prohibited The consumer must initiate legal action to remove unfavorable information from the report A reporting agency must furnish an investigative report to any person who requests the information
The consumer who was investigated must be advised that credit, insurance, or employment was denied because of the unfavorable report
All of these statements concerning group credit life insurance are false EXCEPT Cash value loans are allowable Dividends can reduce the premium payments The face amount and premiums are flexible The face amount is based on the outstanding loan balance
The face amount is based on the outstanding loan balance
Which of the following is true regarding a person receiving a waiver of premium benefit? The insured must expect a total recovery within 2 years The insured will not qualify for short-term disability The insured will not qualify for workers compensation The insured must be disabled for a period of time
The insured must be disabled for a period of time
What is taken into consideration when defining "total disability" in a disability income insurance policy? Number of days spent in the hospital The amount of additional coverage the insured has The insured's education, training, and experience The elimination period
The insured's education, training and experience
Which of these is a typical result of a concurrent review? The deductible amount is increased The length of time spent in the hospital is monitored The insured's premiums usually increase The coinsurance is waived
The length of time spent in the hospital is monitored
Who is normally considered to be the owner of a 403(b) tax-sheltered annuity? The 403(b) custodian The financial institution The employer The participating employee
The participating employee
Why does New York law require an insurance agent to examine the existing Medicare Supplement policies of a prospective insured? To uncover instances of unfair trade practices To increase the agent's practical knowledge of insurance To monitor insurance company compliance To determine the suitability of potential changes
To determine the suitability of potential changes
Which of the following does medical expense insurance NOT typically cover? X-rays Treatment in a government facility Hospitalization Diagnostic testing
Treatment in a government facility
When would evidence of insurability be required for a person already covered with a variable universal life policy? When the premium is increased When the policy has renewed When the death benefit is increased When policy is being converted to permanent coverage
When the death benefit is increased
When does the producer give a premium receipt for a life insurance application? When the application has been approved When the initial premium has been paid with the application During the medical exam When the completed application has been collected
When the initial premium has been paid with the application
Does the Superintendent have the ability to examine the business records of insurance companies and agencies? Yes, because the records are available to the public Yes, but only at the request of a dissatisfied customer Yes, because of the powers granted through state statutes No, the Superintendent does not have the ability to examine the business records of authorized insurers
Yes, because of the powers granted through state statutes
A reciprocal insurer typically has an administrator who manages the premiums collected from the group's members. This administrator is called a(n) reciprocal commissioner attorney general attorney-in-fact reciprocal director
attorney-in-fact
Christopher is issued an insurance policy that contains an attached agreement which alters the terms of the policy. This attached agreement is called a(n) extension endorsement sanction restriction
endorsement
Employer-paid qualified long-term care insurance premiums are typically deducted from the employee's net income included in the employee's gross income included as a dividend to the employee excluded from the employee's gross income
excluded from the employee's gross income
A comprehensive major medical health insurance policy contains an Eligible Expenses provision which identifies the types of health care services that are covered. All of the following health care services are typically covered EXCEPT for hospital charges physician fees experimental and investigative services nursing services
experimental and investigative services
The insurance coverage in a variable life insurance policy may vary based on the value of the AM Best rating the company has received its underlying investments the consumer price index the total premiums paid
its underlying investments
A life insurance producer's underwriting duties may include approving or declining a life insurance application seeking additional information requested by the insurance company ordering an MIB report determining the rate classification of the applicant
seeking additional information requested by the insurance company
In order to contribute to a Health Savings Account (HSA), the applicant must have no sickness & accident coverage the applicant must be enrolled in a High Deductible Health Plan (HDHP) the applicant must be at least 55 years of age the applicant must be at least 65 years of age
the applicant must be enrolled in a High Deductible Health Plan (HDHP)
James is covered with health insurance by two different insurers. The "insurance with other insurers" provision in an individual health insurance policy allows an insurer to pay benefits to the insured on a pro-rata basis when the policy's maximum lifetime benefit level has been paid the policy is beyond the incontestable period the insurer was not notified prior to the claim that the insured has other health coverage the policy is beyond the free-look period
the insurer was not notified prior to the claim that the insured has other health coverage
Under HIPAA requirements, eligibility for the pre-existing conditions exclusion waiver under new coverage is lost if there is a break in coverage of more than 33 days there is a break in coverage of more than 43 days there is a break in coverage of more than 53 days there is a break in coverage of more than 63 days
there is a break in coverage of more than 63 days
A business becoming incorporated is an example of risk ____. reduction severance retention transfer
transfer
An insurance policy that can also be classified as a securities product is called variable life modified life universal life a Modified Endowment Contract
variable life
An insurance company can be liable for a producer's unauthorized acts only when a felony is involved when the agency contract is unclear concerning the authority given at anytime only if the agency contract is unilateral
when the agency contract is unclear concerning the authority given
