Life Insurance and Health Insurance Practice Test Questions and Answers, Exams of Finance

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Travel accident is essen.ally ad&d to go. If you die in the plane crash, the company needs to know where to send the check. It's too late to ask you. An insured owns a $10,000 life policy with cash value of $2000 and a loan interest rate of 5%. On january 1, the owner/insured borrows $500 and pays one year's interest in advance. During the year the insured does not repay any part of the loan. If the insured dies on december 31, the beneficiary will be en.tled to a maximum of _________________. A) $12, b) $11, c) $10, d) $9, D) $9, the $500 loan reduces the $10,000 death benefit to $9,500. A proposed insured submits an applica.on for life insurance without a premium payment, and the policy is delivered to the applicant. Who made the offer?

L&H PRACTICE TEST

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A) applicant b) producing agent c) policy owner d) insurance company D) insurance company an app without money is an invita.on to make an offer. The offer is made when the policy is presented to the applicant. The producer is an agent of the company, so ac.ons of the producer are ac.ons of the company. Applica.on only = invita.on app + $$$$$$$ = offer Which condi.on does not qualify a person for medicare? A) living in poverty b) being age 65 or older c) suffering from renal impairment d) receiving social security disability income benefits for two or more years A) living in poverty living in poverty qualifies one for medicaid, not medicare. The primary

C) benefits from an employer paid group disability income policy begin answering this ques.on by elimina.ng the two medical expense policy answers. You will never pay taxes on the benefits of a medical expense policy because the benefits do not go to you...they go to the doctors and hospitals. With disability income, the rule is simple: if u-pay, the irs got you paying in, your premiums were a^er tax $s, so you do not pay taxes on any benefits; if employer-paid, the irs got nothing going in, your employer deducted his costs as a business expense. Soooo, your benefits will be taxable. Shortcut: the irs will get you coming or going; but not both You take a prepaid applica.on on a major medical policy from cecil and kerry on october 1st. They sail through underwri.ng and a policy with an effec.ve date of october 15 arrives in your office on october 17. When you deliver the policy, you should do which of the following? A) explain that the 10-day free look will expire on october 25 b) obtain a statement of con.nued good health c) review the policy benefits, exclusions and riders d) collect the premium due C) review the policy benefits, exclusions and riders

you should obviously review the policy. The free look countdown starts on the date of delivery. Since the policy is already in effect, a statement of con.nued good health is of no value...it's too late for the company to back out. Since the applica.on was prepaid, there is no premium due A variable annuity life only payout op.on is expressed as __________. A) a dollar amount each month for life. B) a guaranteed number of annuity units each month for life. C) a guaranteed interest rate for life. D) a guaranteed number of payments for life. B) a guaranteed number of annuity units each month for life. A variable annuity life only contract promises a guaranteed number of annuity units each month for life. A conven.onal annuity payout might promise $ per month for life. A variable annuity payout would promise 300 units per month for life. If the value of a unit is $10, then the amount would be $3000. If the fund increases in value and a unit is worth $12, then the payout is $3600. A decrease in the fund might reduce the value to $9 and the payout to $2700...it is, a^er all, variable. The coordina.on of benefits clause found in group major medical policies is used to: a) integrate disability income benefits with major medical benefits

If you own a term policy which can be converted within the first 5 years, your health (insurability) is simply not a factor. (but since your age cannot be frozen, your new policy will be based upon your acained age at conversion). The term managed care includes all of the following except: a) primary care physicians ac.ng as gatekeepers b) u.liza.on reviews c) fee for service coverage d) outpa.ent treatment C) fee for service coverage managed care includes all the various acempts by insurance companies to get costs under control. The "fee for service" approach of the 1950's, '60's and '70's was essen.ally the villain, and it not a part of managed care. Fee for service contracts said, "go wherever you like for medical treatment and whatever fees you are charged, we will reimburse." What policy element remains level in a level term policy? A) gross premium b) net premium c) cash value

d) death benefit D) death benefit level term = level death benefit level premium term = level premium payments Group life insurance reduces the impact of _______________. Adverse selec.on The buyer's guide is _________ and the policy summary is __________ Generic; specific A short term disability income policy is one that pays benefits for ____________________. Less than 2 years Don qualifies for medicaid even though he has assets of $250,000. For this to happen, don must have had a _____________________. Long term care partnership policy What is the most important ra.ng factor in disability income coverage? Occupa.on What are the par.cipa.on requirements for a group life plan? Contributory - 75% non-contributory - 100% Except in the case of bankruptcy, credit informa.on may be retained no longer than _____ years. 7 years A long term disability income policy is one that pays benefits for ______________. More than 5 years

A renewable term policy guarantees _______________. Insurability When you are fully vested in your company's re.rement plan, you are: The 100% owner of your re.rement account A dividend paid to a policy owner by a mutual insurance company is _________________. Not taxable A health savings account can only be used with a(n) __________. High deduc.ble health plan Maternity benefits are mandated for health insurance groups of _____ or more par.cipants. 15 When it is said that a policy is rated, we would expect that the proposed insured is _________________________. A substandard risk Which non-forfeiture op.on would permit coverage to con.nue un.l age 100? Reduced paid-up The use of which dividend op.on would create a taxable event? Accumulate at interest Jim's beneficiaries, joe and janet were named as "children of the insured." if either joe or janet predecease jim, their share is to be divided among their own children. Jim has designated his beneficiaries on a ____________ basis. Per s.rpes Does a variable whole life policy guarantee cash value growth? No Non-forfeiture benefits are available in.... Policies that develop cash value

What best describes the tax consequences of a group disability income policy in which the premiums are paid by the employer? Premiums are tax deduc.ble, and benefits are taxed What is the automa.c non-forfeiture op.on? Extended term This exchange could be considered a gain and would, therefore, be subject to taxa.on? An annuity for a life policy Under the individual health insurance policy provisions law, a no.ce of claim must be provided by the insured within ____ days of the loss or as soon therea^er as reasonably possible. 20 Who assumes the investment risk in a variable whole life policy? The policy owner The primary qualifier for medicaid is: Financial need Benefits paid to you under social security are based upon your _____. Primary insurance amount (pia) Medicare supplement policies can exclude coverage on preexis.ng condi.ons for up to ____ months. 6 How does a tradi.onal ira differ from a roth ira? Roth iras are funded with a^er-tax dollars Disability income benefits are based upon: Earned income Under hipaa if mark loses his longstanding group major medical at abc corp, but makes .mely entry into the group major medical plan offered by his new

Ron and don are iden.cal twin brothers who buy a $100,000 whole life policy at age 20. Ron chooses straight life and don chooses a 20-pay contract. If each lives to age 100 and pays premium as agreed, whose cash value is greater? The cash value of the two policies will be the same. This is because ron's caught up to don's at age 100. At any age earlier, don's would be greater. Assume that you meet the requirements for social security disability benefits on the day you are terminated by xyz industries. You may con.nue your group major medical coverage for up to ____ months under cobra un.l you become eligible for medicare. 29 A policy owner who wishes to retain all rights of ownership should name his beneficiary as a(n) Revocable beneficiary Dental coverage plans which list all covered dental procedures and the price the coverage will pay for each procedure are known as_______ plans Scheduled A seclement op.on which will pay principle and interest for 20 years and then stop regardless of the life or death of the beneficiary is known as... Annuity certain Permanent par.al disability is best covered by_______________. Residual disability benefit The gross premium is calculated in which way? Risk plus expense minus interest What is true concerning a proba.onary period? It reduces adverse selec.on

A juvenile life policy would likely be modified by which rider? Payor benefit Ambulatory care is also known as ______________. Outpa.ent care If you are terminated from your employment at xyz industries, you can con.nue your group major medical coverage under cobra for ___ months 18 In life insurance, insurable interest must exist _________. At the .me of applica.on Assume you cover yourself and your spouse under your group major medical at xyz industries and your spouse loses coverage following your divorce. Your spouse can con.nue coverage under cobra for ____months. 36 You must deliver a prospectus to a proposed insured when selling which policies? Variable life Put the forms of renewability of a health policy in order from most favorable to least favorable for the insured/policy owner Non-cancellable, guaranteed renewable, condi.onally renewable, op.onally renewable. Accident only coverage known as a blanket health policy is _____. Coverage in which the insureds are not named individually Medicare prescrip.on drug coverage is known as ____ of medicare. Part d What is the primary purpose of disability income benefits? Serve as a subs.tute paycheck Which life rider does not require addi.onal premium?

The loss ra.os used to regulate the sale of ltcs and msps are a way of controlling_______________. Price At age 55, janet's husband dies and she chooses to take the death benefit of his life insurance policy in the form of a life annuity with 20 years certain. If janet lives to be 76, will her payments con.nue? Yes A major medical policy whose coverage is triggered by one disease is known as a __________________. Dread disease policy Under a family medical expense policy, adopted children are covered ___________. From the date of placement (in other words, the day they are adopted) J and m are both insureds under a policy which will pay when the last of the two dies. They are insured under a ____________________. Survivorship life policy An annuity that pays only as long as the annuitant lives is called ____. Straight life annuity Cobra applies to medical expense insurance sold to groups with more than ___ insureds. 20 M and j are both insureds under a policy which will pay when the first of the two dies. They are insured under a ______________________. Joint life policy Blue cross and blue shield provides health insurance on what basis? Service What would be most appropriate to use as a mortgage protec.on policy?

Decreasing term policy What is the most generous defini.on of totally disabled? Own occupa.on What is the primary purpose of a medicare supplement policy? To fill in the gaps of medicare A life policy that builds cash value faster than a 7-pay whole life contract is considered to be a(n) _________________. Modified endowment contract To reinstate a lapsed whole life policy, is a reinstatement fee necessary? No. David owns a major medical policy and pays his premiums quarterly. The uniform health provisions law requires that his policy contain a minimum grace period of ____ days. 31 Do long term care policies cover alzheimer's? Yes Ron and don are iden.cal twin brothers who buy a $100,000 whole life policy at age 20. Ron chooses straight life and don chooses a 20-pay contract. If each lives to age 100 and pays premium as agreed, who will pay the most over the life of the contract? Ron How does a group medical expense policy respond to an occupa.onal injury loss? It will exclude coverage The cash value of a life insurance policy belongs to ___________. The policy owner Are dividends guaranteed in a whole life insurance policy?

C) the policy may be wricen with a 20-day free look. D) the policy may be issued on a guaranteed renewable basis. D) the policy may be issued on a guaranteed renewable basis. Ltcs can be issued on only a guaranteed renewable or non-cancellable basis...the best two forms of renewability. The policy may not require a prior hospital stay (most of these people are not sick or hurt, they are merely old). In most states, at least 3 levels of nursing care must be covered by an ltc...the idea being that we should provide the least invasive amount of care. And, every state requires a minimum free look of 30 days. Some require more. Which factor is used in calcula.ng an individual's social security primary insurance amount (pia)? A) gender b) earned income during the working years c) the number of employers during the working years d) occupa.on during the working years B) earned income during the working years earned income determines contribu.on to social security and contribu.on determines the benefit

You purchased a $100,000 life paid at 65 policy from a mutual insurance company. At age 65, you discover that you you have $135,000 of paid-up life insurance. Which dividend op.on did you u.lize? A) paid-up life b) accumulate at interest c) paid-up addi.ons d) reduc.on of premium C) paid-up addi.ons with your selec.on of paid-up adds, you instructed the company to use your dividend as a single-premium to purchase addi.onal amounts of whole life each year. (paid-up life would have caused your $100,000 policy to be paid up sooner than your age 65, but it would not affect the amount of the death benefit). Which health policy provision permits an insurance company to refuse the payment of a claim? A) unpaid premium b) misstatement of age c) rela.on of earnings to insurance