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MISSED AND GUESSED QUESTIONS FROM TEXAS LIFE AND HEALTH INSURANCE EXAM QUESTIONS AND ANSWERS
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MISSED AND GUESSED QUESTIONS FROM TEXAS LIFE AND HEALTH INSURANCE EXAM QUESTIONS AND ANSWERS
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MISSED AND GUESSED QUESTIONSFROM TEXAS LIFE AND HEALTH
INSURANCE EXAM QUESTIONS AND
ANSWERS
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) created which
two categories of long-term care policies? - Answer-tax-qualified and non-tax-qualified
LTC policies. The Health Insurance Portability and Accountability Act of 1996 (HIPAA)
created two categories of long-term care policies: tax-qualified and non-tax-qualified
LTC policies.
Bob was reading an advertisement for a long-term care policy which stated that the
policy had a level premium, which means the policy is - Answer-noncancellable
The term "level premium" can only be used to describe long-term care coverage that is
noncancellable.
At age 49, Caleb took a $15,000 distribution from his deferred annuity. In addition to
paying income tax on the $15,000 withdrawal, what else will Caleb probably have to
pay? - Answer-a penalty tax of $1,500
In addition to paying income tax on the $15,000 withdrawal, Caleb also pays a 10
percent penalty, or $1,500.
Mary and her new husband Mark are covered by a group health insurance policy that
provides health coverage for newborn children. Mary has a baby on March 1. Which of
the following correctly describes the policy's coverage of the child? - Answer-The baby
is covered by the policy from the time of birth.
Mark and Mary's child is covered from the time of birth and for 31 days after rather than
for six months. To continue coverage, they must pay a premium to cover the baby.
Under the Age Discrimination in Employment Act, an employer that reduces group
health benefits for older employees must: - Answer-maintain equal contributions for all
employees.The cost of reduced benefits for older employees is similar to the cost of full
benefits for younger workers. Therefore, the employer must maintain equal
contributions for all employees.
Jackie Jones is the CFO of Delta Industries and has been instrumental in the company's
growth and success over the years. Because of the significant financial loss that it
would suffer if she died, Delta purchased a key person insurance policy covering Jackie.
All the following statements regarding this scenario are correct EXCEPT: - Answer-If
Jackie ends her employment, she can demand that Delta surrender the policy and give
her the cash value.
,If Jackie ends her employment, Delta can continue to own the policy even though it no
longer has an insurable interest in her.
Life insurance has been purchased by ABC Company on the lives of two partners, Hugh
and Danny, and three key employees Eileen, Vern, and June. Which of the following
would apply if Hugh and June were to leave the business? - Answer-The company
could keep the life insurance it has on both Hugh and June, even though both are no
longer employed there.
The company does not have to drop its coverage for either Hugh or June.
John, a Texas resident, is covered under a credit life insurance policy while he pays off
a car loan. Coverage is paid through December, when his loan is scheduled to be paid
off. If John pays off the car loan in September (3 months early), which of the following
describes what the credit life insurance company must do with respect to a premium
refund? - Answer-It must refund the premium for the three-month period following the
date John paid off the loan.
A credit life insurance company is required to refund the unearned premium that was
paid for the period following the loan pay-off.
To renew a term life insurance policy at a lower re-entry rate than the guaranteed rate,
what must the insured prove? - Answer-his or her insurability
The insured is not required to prove his or her attained age in order to renew a term life
insurance policy at a lower rate than the guaranteed rate.
When a person retires before full retirement age, what happens to the monthly income
amount of his or her Social Security retirement benefits? - Answer-It is permanently
reduced.
A worker's primary insurance amount (PIA) is paid only if the worker retires at full
retirement age (FRA). Retiring before FRA permanently reduces the amount of Social
Security retirement benefit that is paid each month.
Under a joint life insurance policy, when does the insurer pay the death benefit? -
Answer-upon the death of the insured who dies first
In a survivorship (second-to-die) life insurance policy, the insurer pays the death benefit
when the second insured dies.
What does the unpaid premium provision let the insurer do about overdue premiums
when paying a claim? - Answer-The insurer can deduct the premium amount from the
benefit payment.
The unpaid premium provision lets the insurer deduct the amount of the premium from
the benefit it pays the insured.
Which statement is correct about the taxation of premiums for business disability
income insurance? - Answer-Premiums for key person disability income insurance are
not deductible by the business. Disability buy-out insurance is a discretionary expense,
so premiums cannot be deducted. However, benefits are not taxable income.
,Partial withdrawals from a non-MEC universal life insurance policy are taxable: -
Answer-when withdrawals exceed the sum of the premiums paid into the policy
As long as the policy is not a modified endowment contract (MEC), partial withdrawals
are not taxable until they exceed the dollar amount of premiums that were paid into the
policy. At that point, the withdrawals are taken from the interest earnings, which are
taxable.
All of the following statements regarding the annuity purchase rate (APR) are correct
EXCEPT: - Answer-At any age, the APR is the same for every annuity settlement
option.
Women's longer life expectancy translates into a smaller payment amount for any
settlement option involving a life contingency. The two are considered actuarially
equivalent.
If an insured wants to avoid paying taxes on the interest earned on AD&D benefits, how
should the insured receive the benefits? - Answer-in a lump sum
If AD&D benefits are received quarterly, any interest earnings paid may be taxed.
A key person disability income policy cannot be used to meet which of these needs? -
Answer-Replacing the key person's lost wages while disabled.
A key person disability income policy pays benefits only the business that owns the
policy. These benefits can replace some of the profits lost due to the key person's
disability. The funds can also be used to attract and train a replacement for the disabled
key person. The policy does not pay any benefits to the key person.
Life insurance waiver of premium riders most commonly require the insured to be
disabled for a waiting period before premiums will be waived. How long is the typical
waiting period? - Answer-6 months
Most waiver of premium riders require that the insured be to totally disabled for six
months before the waiver begins.
In setting premiums for a new policy, when do actuaries assume those premiums will be
paid? - Answer-They will be paid in full at the beginning of the policy year.
Actuaries do not assume premiums will be paid monthly.
Mary lost her job on June 15. She wants to convert her group life insurance policy to an
individual policy. To do so, Mary must apply for a conversion policy by: - Answer-July 16
Mary probably must apply for a conversion policy within 31 days after June 15, the date
she lost her job. If she fails to do so within this period, she will not be able to convert to
an individual policy.
, All of the following statements about indexed life insurance are correct EXCEPT: -
Answer-The insured bears all of the investment risk with an indexed life insurance
policy.
This would be describing variable life insurance. Indexed universal life insurance offers
the potential for higher rates with the protection of a guaranteed minimum interest rate.
George purchased an annuity that will provide his wife, Anna, with monthly income
payments for as long as she lives. In this scenario, what is Anna called? - Answer-the
annuitant
An annuity's beneficiary is the person the owner chooses to receive the contract's
values if either the owner or the annuitant dies before annuitization.
The tax-free exchange of a life insurance policy for an annuity is sometimes called a: -
Answer-Section 1035 exchange
Section 403(b) of the Tax Code deals with the qualified retirement plans for employees
of non-profit organizations.
Which of the following is true regarding life insurance illustrations in Texas? - Answer-
Guaranteed values must be shown separately and before non-guaranteed values.
If Harry, age 58, withdraws funds from his annuity, the taxable portion of the withdrawal
may also be assessed which of the following? - Answer-10 percent penalty
If a person withdraws funds from an annuity before age 59 1/2, the taxable portion of
the withdrawal is charged a 10 percent penalty.
Which of the following statements best describes how employer-paid premiums for a
nondiscriminatory group life insurance plan are treated for tax purposes? - Answer-
Employers can deduct premiums paid on a group life insurance plan.
Before revoking an insurer's certificate of authority in Texas, the TDI commissioner must
first give the insurer notice of at least: - Answer-10 days
What health insurance policy supports and improves Medicare coverage? - Answer-
Medicare supplement policy
Accidental death and dismemberment policies provide a benefit if the insured dies or is
severely injured because of an accident.
Which statement correctly describes how corporate-owned deferred annuities are
taxed? - Answer-Income tax is payable annually on that year's gain in the contract.
Unlike personally owned annuities, corporate-owned annuities are not taxed deferred.
Interest is taxable in the year earned.
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