Health and life insurance 2022 QUESTIONS WITH COMPLETE SOLUTIONS
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Health and life insurance
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Health And Life Insurance
Health and life insurance 2022 QUESTIONS WITH COMPLETE SOLUTIONS
Carla has written life insurance policies on the lives of her children. What type of business is this considered? Correct Answer: Controlled
John knowingly made an inaccurate comparison of coverage in order to induce his client...
health and life insurance 2022 questions with complete solutions
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Health and life insurance 2022 QUESTIONS
WITH COMPLETE SOLUTIONS
Carla has written life insurance policies on the lives of her children. What type of
business is this considered? Correct Answer: Controlled
John knowingly made an inaccurate comparison of coverage in order to induce his
client to replace existing life insurance for a new policy John hoped to sell him.
Which unfair trade practice did John commit? Correct Answer: Twisting
Which type of agent works exclusively for an insurance company and normally
does not solicit for other companies? Correct Answer: Captive agent
Which of the following is not a duty of a state's Insurance Commissioner? Correct
Answer: Write the states insurance laws
Shirley's universal life insurance policy has a $100,000 death benefit. Her cash
value is equal to $25,000. What term is used to describe the other $75,000? Correct
Answer: The net amount at risk
Bridget's life insurance policy provides $500,000 of coverage for a period of ten
years, and she pays the same premium each year. At the end of the ten-year term,
the policy will no longer provide any coverage, unless renewed or converted.
Which type of policy does Bridget own? Correct Answer: Level term
Which of the following types of life insurance involves a cash value whose
accumulation depends, in part, on the investment performance of a portfolio of
securities? Correct Answer: Variable life insurance
Sharon, an applicant for life insurance, is interested in obtaining immediate
coverage but wants the permanent insurance protection to begin four months from
now. Which of the following types of term life insurance is likely to best meet her
objectives? Correct Answer: Interim term insurance
Which of the following death benefit options may be found on universal life
insurance policies? Correct Answer: Both a level death Benefit and a generally
increasing death benefit
, Helen requested a $20,000 cash value withdrawal from her universal life insurance
policy, which has a $100,000 death benefit. What would her death benefit be
immediately following her cash value withdrawal? Correct Answer: $80,000
$100,000-$20,000=$80,000
Arthur paid total net premiums of $20,000 for his universal life insurance policy,
which has a cash value of $24,000. Assuming the policy is not a modified
endowment contract and Arthur has never previously received a cash value
withdrawal or a dividend, how much income would he be required to recognize if
he took a $5,000 cash value withdrawal? Correct Answer: $0.
a withdrawal is considered a tax-free recovery of the policyowner's cost basis until
the policyowner's entire cost basis has been fully withdrawn. At this point, any
further withdrawals are deemed to consist of taxable gain. Since Arthur's cost basis
is $20,000 at the time of his cash value withdrawal, he is not required to recognize
any income as a result of the withdrawal. His cost basis is simply reduced by
$5,000.
John requested a partial surrender of his $100,000 whole life insurance policy in
order to access funds in his policy's cash value. The cash value was $50,000 just
prior to the partial surrender and John received $20,000 from the cash value. What
would be the new face amount of the policy? Correct Answer: $60,000
$20,000 of $50,000 is 40%, therefore the payout decreases by 40%; $100,000 -
40%=$60,000
Lee has a terminal illness and has taken a $100,000 viatical loan under his
$150,000 life insurance policy. The provider imposed $5,000 in fees for the loan.
The loan also accrued interest of $8,000, and $12,000 in premiums were paid for
the policy after the loan was made. How much of the death benefit, if any, will
Lee's beneficiary receive upon his death? Correct Answer: $25,000
$100,000+$5,000+$8,000+$12,000=$125,000
$150,000 payout-$125,000 loan and fees/interest=$25,000 left over
Susan's universal life insurance policy is a modified endowment contract. She paid
premiums amounting to $15,000, and never received a dividend or previously took
a distribution. What amount of income would she be required to recognize if she
took a $10,000 cash value withdrawal when the cash value was $23,000? Correct
Answer: $8,000
Policy distributions from a life insurance policy that is deemed a MEC receive
"last-in, first-out" (LIFO) tax treatment. Under LIFO tax treatment, the first
element deemed to be distributed is the taxable gain under the life insurance
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