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What distinguishes a deferred annuity from an immediate annuity? - Correct Answers ✅The time at which benefit payments start Cindy buys a 10-year certain annuity with an installment refund. After receiving monthly payments for 5 years, Cindy dies. How many remaining payments will the insurer make to her beneficiary? - Correct Answers ✅ 60 payments What is a common reason people purchase an annuity? - Correct Answers ✅To protect against the risk of outliving their financial resources What kind of annuity pays income to two annuitants until their deaths? - Correct Answers ✅Joint and survivor annuity What is a joint and survivor annuity? - Correct Answers ✅Provides payments the annuity to two people. If either person dies, the same income payments continue to the survivor for life. When the surviving annuitant dies, no further payments are made to anyone.
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Victoria owns a life annuity and elects to receive annuity payments monthly for the remainder of her life with "ten years certain". Her annuity will make payments - Correct Answers ✅for a minimum of 120 months and a maximum of the remainder of her life Which of the following statements regarding a life insurance policy dividend is TRUE? - Correct Answers ✅It is the distribution of excess of funds accumulated by the insurer on participating policies. An insured owned by its policyholders is called a - Correct Answers ✅mutual insurer An insurer enters into a contract with a third party to insure itself against losses from insurance policies it issues. What is the agreement called? - Correct Answers ✅Reinsurance What is reinsurance? - Correct Answers ✅An arrangement by which an insurance company transfers a portion of a risk it has assumed to another insurer
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Which of the following is NOT a provision in a disability income policy? - Correct Answers ✅Deductible and coinsurance provision Which of these statements is NOT true concerning recurrent disabilities? - Correct Answers ✅The insurer continues coverage after a new elimination period Kim is insured under a disability income insurance policy with an "own- occupation" clause. She was recently injured in an automobile accident and can no longer perform the tasks of her job. Kim is now considered to be - Correct Answers ✅totally disabled What percentage of eligible employees must participate in a noncontributory group health plan before it can be put in effect? - Correct Answers ✅100% Business Overhead Expense Insurance pays for - Correct Answers ✅business expenses when a business owner becomes disabled
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Minimum participation standards exist for group health insurance plans in order to - Correct Answers ✅prevent adverse selection The problem of overinsurance is addressed in which health insurance provision? - Correct Answers ✅Coordination of benefits What is the purpose of the coordination of benefits (COB) provision? - Correct Answers ✅To avoid duplication of benefit payments and overinsurance when an individual is covered under more than one group health plan Who is financially liable for the payment of covered claims in a fully insured group health plan? - Correct Answers ✅Insurer The insurer has the option of terminating a health insurance policy on a date stated in the contract. What type of policy is this? - Correct Answers ✅Optionally renewable
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The conditions, times, and circumstances under which an insured is NOT covered by a health policy are called? - Correct Answers ✅exclusions What are exclusions in a health policy? - Correct Answers ✅Specified hazards listed in a policy for which benefits will not be paid Under a health insurance policy, the provision that states the kind of benefits provided and the circumstances under which they will be paid is called the? - Correct Answers ✅insuring clause What does an insuring clause state? - Correct Answers ✅Under a health insurance policy, the provision that states the kind of benefits provided and the circumstances under which they will be paid Which of these is NOT a relevant factor in the health insurance principle of morbidity? - Correct Answers ✅Intelligence
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How does rising morbidity rates affect health insurance? - Correct Answers ✅Increased premiums In health insurance, morbidity rates show - Correct Answers ✅the expected incidence of sickness or disability within a given group during a given period of time Which of the following factors is NOT used in underwriting health insurance policies? - Correct Answers ✅Intelligence Which of the following is NOT a requirement of a contract? - Correct Answers ✅Equal consideration is required between the involved parties Which of the following statements correctly describes a contract of indemnity? - Correct Answers ✅One party is restored to the same financial position the party was in before the loss occurred
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Which of the following is NOT an insurer policy expense? - Correct Answers ✅Premiums A beneficiary receives only the death benefit earnings in which settlement option? - Correct Answers ✅Interest option Which of these is the automatic mode of settlement for life insurance policy proceeds? - Correct Answers ✅Lump-sum A spendthrift clause in a life insurance policy - Correct Answers ✅restricts the ability of the beneficiary to sign benefits Premiums are best described as - Correct Answers ✅the amount an insured pays per unit of coverage
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What does the grace period allow a life insurance policy owner to do? - Correct Answers ✅Make a premium payment after the due date without any loss of coverage Which of the following does a policyowner NOT have a right to change? - Correct Answers ✅Dividend schedule When does a life insurance policy's waiver of premium take effect? - Correct Answers ✅Insured becomes totally disabled What are collateral assignments normally associated with? - Correct Answers ✅Bank loans Jerry is an insured who understated his age on his life insurance application, paying $12 per $1,000 of insurance instead of $15 per $1,000. If he dies, how will the adjusted death benefit be calculated? - Correct Answers ✅12/15th of the policy's face amount
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A life insurance policy's limit of liability would be - Correct Answers ✅the policy's face amount Tom is shopping for a policy that covers two people and would pay the face amount ONLY when the first person dies. The type of life policy he is looking for is called a - Correct Answers ✅Joint life policy What is a joint life policy? - Correct Answers ✅It covers two or more people and pays the face amount at the first insured's death Which of the following types of life insurance combines a savings element along with a flexible premium option? - Correct Answers ✅Universal life An insurance policy written after 1988 that fails to pass the seven-pay test is known as - Correct Answers ✅a modified endowment contract
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A life insurance policy where the insured can choose where the cash value can be invested is called - Correct Answers ✅variable life Scott has just purchased a new house. He is now shopping for a life insurance policy that provides a death benefit that matches the projected outstanding debt of his mortgage. Which life policy would best suit his needs? - Correct Answers ✅Mortgage redemption A life insurance policy that pays the face amount if the insured survives to a specified period of time is called - Correct Answers ✅endowment insurance Which of the following is NOT a risk classification that an underwriter would use? - Correct Answers ✅Dividend risk When an applicant applies for insurance, the process by which he insurer determines whether to issue a policy is called - Correct Answers ✅underwriting
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Which of the following does specified disease insurance NOT cover? - Correct Answers ✅costs covered by medical expense insurance Major medical expense plans typically use a cost containment measure for emergency hospital care. This is referred to as a(n) - Correct Answers ✅deductible At what point does a self-insured group qualify for stop-loss coverage? - Correct Answers ✅When claims exceed a specified limit in a set period of time What does a Hospital Confinement indemnity policy pay for? - Correct Answers ✅Pays a specified daily amount while the insured is confined to a hospital Medical expense policies will typically cover which of the following? - Correct Answers ✅Injuries caused by accidents
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All of these are examples of cost sharing in a health insurance policy EXCEPT
- Correct Answers ✅Coordination Wat is considered the most common type of specified disease insurance policy? - Correct Answers ✅Cancer Moral hazard is described as - Correct Answers ✅increased chance of a loss because of an insured's dishonest tendencies Which of the following is any situation that presents the possibility of a loss?
- Correct Answers ✅Loss exposure Which of the following is a situation where there is a possibility of either a loss or a gain? - Correct Answers ✅Speculative risk Which of these statements correctly describes risk? - Correct Answers ✅Pure risk is the only insurable risk
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Retirement plans are prevented from favoring highly compensated employees under which government regulation? - Correct Answers ✅Nondiscrimination What doe ESOP stand for? - Correct Answers ✅Employee Stock Ownership Plan ESOPs are typically invested in - Correct Answers ✅employer stock What type of coverage pays a benefit for part-time nursing care that can be provided in a patient's home? - Correct Answers ✅Home health care What portion does an insured pay for covered expenses under Medicare Part B after the deductible? - Correct Answers ✅20% Rating an individual's need for long-term care benefits can be measured by - Correct Answers ✅activities of daily living
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Which of the following plans will cover medical costs that Medicare doesn't cover? - Correct Answers ✅Medicare supplement Which Social Security status does a worker with 6 quarters of coverage during the last 13-quarter period have? - Correct Answers ✅Currently insured The "blackout period" affects whose benefits? - Correct Answers ✅Surviving spouse At what age is a surviving spouse without dependents eligible for Social Security survivor benefits? - Correct Answers ✅ 60 According to Social Security, an individual with 6 credits of coverage during the previous 13-quarter is considered to be: - Correct Answers ✅currently insured
