Life and Health Insurance 5

Reductions in coverage are one feature of _______ in Health insurance policies.

a. optional provisions

b. mandatory provisions

c. cost containment

d. the insuring clause

The standard provisions of an accident and health insurance policy require that the

a. policy, endorsements, and attached papers constitute the "entire contract"

b. policy summary, conditional receipt, and initial premium constitute the "entire contract"

c. change of occupation provision is mandatory

d. grace period be no shorter than 60 days

Linda is covered with long-term care insurance and has early-stage Alzheimer's. She is still able to reside in her home while receiving primary care, as opposed to moving into a nursing home. All of the following long-term benefits encourage home health care EXCEPT

a. Custodial care

b. Home health care

c. Adult day care

d. Respite care

What minimum percentage of all eligible employees must participate in a group life insurance plan if the premiums are completely paid for by the employer?

a. 0%

b. 50%

c. 75%

d. 100%

Federally qualified HMO's must offer

a. dental coverage

b. urgent care

c. family planning services

d. custodial care

Social Security disability income requirements state that in order to become fully insured on a permanent basis, you must have worked in a covered occupation for

a. 10 quarters

b. 20 quarters

c. 30 quarters

d. 40 quarters

What is the tax treatment of benefit payments for a non-qualified annuity?

a. Benefit payments are always taxable

b. Benefit payments are subject to taxes only prior to age 70 1/2

c. Benefit payments must begin at age 59 1/2 to avoid a penalty

d. Benefit payments received after 70 1/2 are always tax-exempt

With life insurance, the needs approach is used primarily in determining

a. which insurance company to purchase the coverage from

b. how much life insurance a client should apply for

c. the type of life insurance that should be purchased

d. a budget for the surviving dependents to follow in the event of the client's death

Which of the following statements BEST describes the HIPAA portability rules for an individual who changes from one group medical plan to another?

a. Reduces or eliminates any pre-existing conditions excluded under the new plan

b. Requires that an employer pays for health coverage

c. Reduces or eliminates the deductible under the new plan

d. Allows the employee to convert to individual coverage

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

a.  Delayed

b. Fee for service

c. Expense incurred

d. Respite

Darrell has a group long-term disability income policy paid by his employer. Which of these statements is true?

a. Any benefits received will be tax-free

b. The premiums paid by the employer are not tax-deductible

c. The specified benefit amount is a percentage of his wages

d. Long-term policy benefits are not coordinated with Social Security benefits

How does the cost for a survivorship life policy compare to the cost of combining two separate individual life insurance policies?

a. Survivorship life policy is lower

b. Survivorship life policy is higher

c. Depends on the investment performance of the underlying accounts

d. Both have the same actuarial costs

Every producer licensed in Arizona must notify the Director within how many days of any change of residential, business or e-mail address?

a. 10 days

b. 30 days

c. 60 days

d. 90 days

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

a. Provide a 10 day free-look period

b. Provide a 20 day free-look period

c. Provide a 30 day free-look period

d. Provide a 60 day free-look period

Peter, age 50, surrenders his modified endowment contract (MEC). How is the gain treated in terms of federal income taxes?

a. The gain is treated as taxable income and a penalty tax is imposed on the gain

b. The gain is treated as taxable income but no additional penalties are applied

c. The gain is not taxable but a penalty is assessed

d. Surrendering an MEC is considered a tax and penalty-free transaction

Which of these statements regarding Major Medical Expense insurance is NOT true?

a. Benefits are paid typically after the coinsurance provision has been satisfied

b. Policies normally have a high maximum benefit

c. Policies typically include a deductible

d. Benefits are paid on a capitation basis

When a ten year renewable term life insurance policy issued at age 45 is renewed, the premium rate will be the current rate for

a. Ten year term insurance for a person aged 55

b. Ten year term insurance for a person aged 45

c. Yearly renewable term insurance for a person aged 55

d. Yearly renewable term insurance for a person aged 45

Which action will trigger a penalty tax on premature distributions from a modified endowment contract (MEC)?

a. policy loans

b. claim on a death benefit

c. extended term settlement option

d. policyowner reaching the age of 70 1/2

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

a. Policy protection normally expires at age 65

b. Nonforfeiture values are available to the policyowner

c. Provides level protection with level premiums

d. Cash value loans are permitted

Wyatt is shopping for life insurance and is mainly concerned with the policy's death benefit. Which index should he be looking at when making comparisons?

a. Net gain index

b. Net payment cost index

c. Cost surrender index

d. Guaranteed renewable index

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

a. Paid-up additions

b. Accumulation at interest

c. 1-year term

d. Reduction of premium payment

What is considered the collateral on a life insurance policy loan?

a. No collateral is needed

b. The policy's cash value

c. The policy's face value

d. The equity in a policyowner's home

Which of the following would permit an insurer to delay a covered disability policy claim?

a. Probationary period

b. Service Waiting period

c. Elimination period

d. Grace period

Bryce purchased a disability income policy with a rider that guarantees him the option of purchasing additional amounts of coverage at predetermined times without requiring to provide evidence of insurability. What kind of rider is this?

a. Guaranteed insurability rider

b. Additional coverage rider

c. Paid-up option rider

d. Extended insurability rider

Taxable income may be the result from all of these modified endowment contract (MEC) transactions EXCEPT for

a. A cash value loan is taken out

b. Automatic premium loan provision is utilized

c. The policy is surrendered for less than what was paid into it

d. Dividend is issued

The contractual rights which allow the owner of a deferred annuity to surrender the cash value several years before the annuity date are called

a. nonforfeiture options

b. settlement options

c. conversion options

d. surrender options

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

a. How the premium is calculated

b. Policy provisions

c. Policy conditions

d. Policy exclusions

Which of the following is NOT a valid contract exchange?

a. An annuity exchanged for a life insurance policy

b. An annuity exchanged for another annuity

c. A life insurance policy exchanged for another life insurance policy

d. A life insurance policy exchanged for another annuity

Which of the following guidelines does NOT apply under the pregnancy provision of the Civil Rights Act?

a. A pregnant woman is entitled to sick-leave under the same guidelines as any other type of disability

b. Pregnancy must be covered under medical benefits the same as any other illness

c. Post-termination extensions of medical benefits must apply equally to pregnancy.

d. Abortion complications are covered if the woman's life is in danger

The inability to perform SOME of the duties of one's own occupation is known as a 

a. Recurrent Disability

b. Total and permanent disability

c. Residual disability

d. Presumptive disability

Which of these statements regarding the extended term insurance nonforfeiture option in a life policy is accurate?

a. Evidence of insurability is required

b. Coverage remains until death of the insured

c. The premium to purchase the coverage comes from the policy's cash value

d. Cash value will continue to grow