Life and Health Insurance Exam with Correct Answers
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Life and health insurance
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Life And Health Insurance
Life and Health Insurance Exam with Correct Answers
What is the penalty for IRA distributions that are below the required minimum for the year?
a) 10%
b) 25%
c) 50%
d) 60% - Answer-c) 50%
If there are no distributions at the required age, or if the distributions are not large enough, the ...
Life and Health Insurance Exam
with Correct Answers
What is the penalty for IRA distributions that are below the required minimum for the
year?
a) 10%
b) 25%
c) 50%
d) 60% - Answer-c) 50%
If there are no distributions at the required age, or if the distributions are not large
enough, the penalty is 50% of the shortfall from the required annual amount.
A corporation is the owner and beneficiary of the key person life policy. If the
corporation collects the policy benefit, then
a) IRS has no jurisdiction.
b) The benefit is received as taxable income.
c) The benefit is received tax free.
d) The benefit is subject to the exclusionary rule. - Answer-c) The benefit is received tax
free.
Should a key person die, the benefit is treated as a reimbursement to the business for
loss of services from that key person.
Creditable coverage includes
a) Credit-only insurance
b) Coverage only for accident or disability income insurance.
c) Coverage under a state health benefits risk pool.
d) Workers compensation. - Answer-c) Coverage under a state health benefits risk pool.
Creditable coverage also includes, but is not limited to, coverage provided under any
individual or group policy; coverage under Medicare Parts A or B, and Medicaid; or
health plans under the Federal Employees Health Benefits Program.
Why do group health providers usually require a certain amount of participation in the
plan by eligible employees?
a) To ensure a higher profit for the insurer
b) To ensure the employer is being fair to employees
c) To guard against adverse selection and reduce cost
,d) To promote preventive care - Answer-c) To guard against adverse selection and
reduce cost
The reason for the minimum participation requirement is to guard against adverse
selection and to reduce administrative costs for the insurer.
The president of a company is starting an annuity and decides that his corporation will
be the annuitant. Which of the following statements is true?
a) A corporation can be an annuitant as long as the beneficiary is a natural person.
b) The contract can be issued without an annuitant
c) The annuitant must be a natural person.
d)A corporation can be an annuitant as long as it is also the owner. - Answer-c) The
annuitant must be a natural person.
Which of the following will vary the length of the grace period in health insurance
policies?
a) The mode of the premium payment
b) The length of any elimination period
c) The length of time the insured has been insured
d) The term of the policy - Answer-a) The mode of the premium payment
The grace period is 7 days on a policy with a weekly premium mode; 10 days if a
monthly premium mode; 31 days on other premium modes.
What is the "elimination period" under a long term care policy?
a) The amount of time that benefits can be received tax-free.
b) The amount of time during which no benefits will be paid.
c) The amount of time that the insured will have to review the policy and return it for a
full refund.
d) The amount of consecutive days during which the benefits will be paid. - Answer-b)
The amount of time during which no benefits will be paid.
The elimination period starts on the day that the policy goes into effect. This is the
amount of time (usually 0-365 days) that no benefits will be paid. LTC policies typically
have a 30-day elimination period.
The dividend option in which the policyowner uses dividends to purchase a term policy
for one year is referred to as the
a) One-year term option.
b) Paid-up option.
c) Accelerated endowment.
d) Paid-up additions. - Answer-a) One-year term option.
,The dividend is utilized to purchase one year term insurance.
Which of the following is INCORRECT concerning a noncontributory group plan?
a) They help to reduce adverse selection against the insurer.
b) They require 100% employee participation.
c) The employer pays 100% of the premiums.
d) The employees receive individual policies. - Answer-d) The employees receive
individual policies.
The employer receives a master policy, and employees receive a certificate of
insurance.
Which of the following is considered a qualifying event under COBRA?
a) Marriage
b) Relocation
c) Promotion
d) Divorce - Answer-d) Divorce
Other qualifying events include the voluntary termination of employment; an employee's
change from full time to part time; or the death of the employee.
Susan has a short-term disability income policy with an "integration of benefits"
provision. If she becomes disabled and is also eligible to receive benefits from the state
disability insurance program, her policy will
a) Pay the full benefits. She cannot collect state disability payments if she has a
personal disability policy.
b) Waive premium payments after the state disability payments begin.
c) Reduce its benefits by an amount equal to her state disability payments.
d) Not pay until her state disability benefits have been exhausted. - Answer-c) Reduce
its benefits by an amount equal to her state disability payments.
The "integration of benefits" provision is designed to prevent a duplication of benefits or
"overinsurance."
All of the following are examples of risk retention EXCEPT
a) Premiums.
b) Deductibles.
c) Copayments.
d) Self-insurance. - Answer-a) Premiums.
, Retention is a planned assumption of risk, or acceptance of responsibility for the loss by
an insured through the use of deductibles, copayments, or self-insurance.
"A physical or mental impairment which substantially limits one or more major life
activities, or a record of such impairment, or being considered as having such an
impairment," is the definition of a disability according to
a) COBRA
b) ERISA
c) ADL
d) ADA - Answer-d) ADA
This is the definition of the Americans with Disabilities Act.
Signing and dating a delivery receipt for a life insurance policy helps to establish all of
the following timeframes EXCEPT
a) The Grace Period.
b) The Incontestability Period.
c) The Free-Look Period.
d) The Right of Rescission. - Answer-a) The Grace Period.
When the customer signs and dates the policy delivery receipt, the exact date of
acceptance is established, which starts the incontestability period. The client also has
between 10 to 30 days to review the policy and return for a full refund, called the Right
of Rescission, or Free Look Period. The grace period refers to the time period allowed
after subsequent premium payments during which a policy will not lapse.
When a life insurance policy stipulates that the beneficiary will receive payments in
specified installments or for a specified number of years, what provision prevents the
beneficiary from changing or borrowing from the planned installments?
a) Accelerated benefit provision
b) Loan provision
c) Spendthrift provision
d) Settlement option - Answer-c) Spendthrift provision
When a life insurance policy contains a spendthrift provision, all rights of the beneficiary
to change time of payment or amount of installments, surrender for cash, borrow
against, or assign for any purpose, are withdrawn and those parts of the policy that may
give the beneficiary such rights are declared inoperative and void.
Qualified medical expenses paid for participants in a Medical Savings Account (MSA)
are
a) Taxable for up to 50% of benefits paid.
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