Life 4

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Life 4 1. For a group life plan to receive favorable tax treatment, the government imposes certain requirements to ensure that the rank-and-file employees are not discriminated against. Which of the following statements regarding eligibility requirements is not correct? The plan must benefit at least 70% of all employees. At least 85% of participating employees must not be key employees. The life insurance must be the same amount for all. The cost for the first $50,000 of coverage is not included in the employee's salary. 2. Which is not considered a group permanent plan? group paid-up group universal life group credit life group ordinary life 3. After a GROUP LIFE master policy has been issued, what action may the insurer take on future policy anniversaries? The insurer may cancel the insurance of any group members who have become seriously ill or impaired. The insurer may adjust the premium to bring it in line with current mortality and operating expenses. The insurer can not make any changes in the contract or in the enrollees. The insurer may refuse to insure covered members with excessive claims. 4. Which of the following describes the favored tax treatment to the business of Key Employee life insurance Premiums are tax deductible to the business. Death proceeds are received by the business tax free. Premiums and death proceeds are tax deductible. Death proceeds are tax free to the insured's family survivors. 5. What is a franchise policy also known as? A sports team group policy A retail policy A wholesale policy A small business policy 6. Types of groups approved for group insurance include: I. Labor unions and trusteeships II. Debtors of one lender III. Association Groups I II I & II all the above 7. All of the following statements concerning group credit life are true except: The creditor must have a minimum of 100 debtors per year. The amount of insurance may not exceed the amount of the loan. Premiums are paid entirely by the creditor. Debtors can not be forced to obtain coverage from the creditor. 8. What is/was the maximum age the earnings test for social security retirement benefits can be applied? 62 65 70 70 1/2 9. Karen is 30 years old. She has a daughter age 10. If Karen's husband were to die, the blackout period would last how long? 6 years 20 years 24 years 29 years 10. Ways in which employees may be classified for group life insurance include all of the following EXCEPT: By department By union or non-union status By sex or age By duties 11. Which of the following pertaining to Group Credit Life Insurance is correct? It is a form of whole life insurance. The insurance amount may exceed the amount of debt. Premiums are paid wholly by the insured. Policy proceeds are paid to the insured's spouse or other beneficiary. 12. In a typical split dollar policy the employer and the employee split the cost of the insurance. On an annual basis, the employer's outlay is equal to the: cash value half of the premium increase in cash value full premium 13. Florida Law requires what percentage of participation in a non-contributory plan? 0% 25% 75% 100% 14. All of the following would be considered an employee benefit except: Spilt-Dollar Life Insurance Deferred Compensation Plans Salary Continuation Plans Key Person Life Insurance 15. Which of the following is/are true about GROUP LIFE? 1. Group life is not concerned with the selection of individual risks, but rather the selection of risks by classification. 2. The group life policy must be incidental to the group's purpose. 3. Each insured receives his/her policy as proof of insurance. 1 only 2 only 2 & 3 1 & 2 16. An employer is paying $450 for $75,000 of group life insurance on it's employees, broken down as follows: The cost for the first $50,000 is $300, the cost for the next $25,000 is $150. Which of the following statements are true? None of the premium will be included as employee compensation All of the premium will be included as employee compensation $300 will be included as compensation $150 will be included as compensation 17. All the needs that arise when a breadwinner dies arise when the breadwinner becomes disabled except: The final expense fund The education fund The monthly income fund The housing fund 18. Which of the following statements is true concerning split dollar insurance? It is a qualified plan. It is a method of purchasing insurance. It protects the employer against loss of a key employee. It uses term insurance as the funding method. 19. In a three-person partnership, a buy/sell Cross-Purchase plan requires how many different life insurance policies? two policies three policies six policies nine policies 20. Which of the following statements concerning social security benefits is true? Ben, a fully insured worker under social security died leaving a wife age 35 and a son age 12. The son will receive benefits until he is 18 (or 22 if in college) and the wife will receive benefits until the child is 16. Michael retired at age 65. He has a 15 year old totally disabled daughter and a wife, age 45. The child will receive income for life. The wife also will receive a monthly benefit, even though she is under age 62. Toomer became disabled at age 64. He had taken early retirement benefits at age 62. His disability benefit will be no less than if he had he not taken early retirement benefits. Social security benefits are completely taxable. 21. What is the minimum number of employees required in Florida for group insurance? 1 3 5 8 22. Which of the following statements concerning social security disability benefits is true? The disability must be expected to last at least 5 months. There is a 5 month waiting period to apply for benefits. Benefits are not retroactive. It does not pertain to mental impairments. 23. Floyd, who has $2,000 of group life insurance, has just terminated his employment. Floyd has how many days in which to convert his group coverage to individual coverage? 15 21 28 31 24. Which of the following statements concerning deferred compsensation and salary continuation plans are correct? The employee funds the salary continuation plan, the employer funds the deferred compensation plan. The employer funds the salary continuation plan, the employee funds the deferred compensation plan. The employee funds both the salary continuation and the deferred compensation plans. The employer funds both the salary continuation and the deferred compensation plans. 25. Social Security dependent survivor benefits are: restricted to people over age 64. a type of government life insurance. generally reduced to disabled dependent children who reach 21. available to all, but only after 12 quarters of gainful employment. 26. Which of the following best describes the normal conversion benefit available to terminated employees under a group life insurance policy? The employees may convert to an individual term policy within 31 days by submitting evidence of insurability. The employee may convert to an individual whole life policy within 31 days by submitting evidence of insurability. The employee may convert to an individual term policy within 31 days without submitting evidence of insurability. The employee may convert to an individual whole life policy within 31 days without submitting evidence of insurability. 27. Which of the following is not true concerning the FICA tax? It is a tax used to partially fund the medicare system. After one's salary has reached the maximum taxable wage base, only a portion of the FICA tax will be applied. There is no cap on the medicare portion of the FICA tax. The FICA tax has no limits as to the retirement portion. 28. The following types of GROUP LIFE plans are available EXCEPT: Group paid up plans Group term life Level premium plans Group deferred life plans 29. The period of time following the death of a breadwinner during which the children are living at home is a/an: Loss of use period Income Period Blackout Period Dependency period 30. Shaka Kahn, who has $20,000 of group life insurance, has just terminated his employment. The maximum amount that Mr. Kahn will be able to convert is: $500 $1,000 $1,500 $20,000 31. Lightning Joe died leaving behind a wife, Thunderhead, age 35, and their 12 year son, Cumulonimbus. Thunderhead's blackout period will be for how long? 30 years 21 year 24 years 40 days and 40 nights 32. With a blanket policy, individuals receive neither a policy or a certificate. true false 33. A plan, usually funded by life insurance, to purchase a deceased partner's share of a business is known as a: deferred compensation plan qualified retirement plan key employee life policy buy / sell agreement 34. Which of the following is true concerning key person life insurance? The policy is listed as an asset on the company's balance sheet. The premiums, if paid entirely by the business, are a deductible business expense. It may be funded with a spilt dollar life insurance policy. The cash values are listed as an asset on the company's balance sheet. 35. All the following statements concerning deferred compensation plans are correct except: They receive favorable tax treatment from the IRS. They allow employers to pick and choose any employee they want to reward. They are more flexible than a qualified plan. They are usually funded with cash value insurance. 36. All of the following are covered under the social security system except: civil service workers hired after 1984 certain railroad workers elected federal officials retired military personnel 37. What type of benefits does a Multiple Employer Welfare Association provide? PEO EPO Unemployment Insurance 38. The human life value tried to measure what a life was worth in economic value to a family. Which of the following statements would be true of this approach? It replaced the needs approach as a more accurate measuring stick. It calculated other sources of income. Inflation was not taken into account. It is still one of the mose widely used formulas in the financial services arena. 39. Life insurance can be used in businesses for all the following ways except: as a funding medium as a form of business interruption as tax deductible savings plans as an employee benefit 40. The minimum number of employees who may constitute a group for insurance purposes is specified under which law(s) or rule(s)? I. Federal Laws II. State Laws III. Life insurance company underwriting rules I only II only II & III III 41. The lump sum death benefit payable under social security is: $250.00 $255.00 $2500.00 $5500.00 42. A Coverdell Savings Account is: A means of saving for education with pre-tax dollars A retirement account funded with pre-tax dollars An after tax savings vehicle for education A retirement account covering Dell employees 43. Once upon a time there was a $300,000 partnership with 3 equal partners. A buy/sell agreement was established. Assuming a cross-purchase agreement, which of the following statements is true? The partnership purchases 6 policies for $50,000. The partners purchase 6 policies for $100,000. The partnership purchases 6 policies for $100,000. The partners purchases 6 policies for $50,000. 44. Most business assignments of life insurance policies are made in order to protect the: insured's insurability lender's financial interest in the insured beneficiary from the claims of creditors insurance company from fraudulent claims 45. Under SOCIAL SECURITY, a covered worker's P.I.A. is: an amount equal to the worker's retirement benefit at age 62. equal to the full retirement benefit at age 65. is not used as a base to calculate other benefit levels. is equal to a percentage of the insured's death benefit. 46. With a Key Employee insurance policy, who is normally the beneficiary? the family of the insured the business the insured's estate the key employee 47. All the following are examples of non-qualified plans except: simple plans salary continuation plans deferred compensation plans split dollar plans 48. Which of the following statements regarding Coverdell Education Savings Accounts are true? Contributions are tax deductible Contributions must be made before the beneficiary turns 18 Maximum contribution limits are $4000 per beneficiary When beneficiary turns 25 any remaining funds will be taxable 49. In the "needs approach" where do you account for "my roof is leaking"? mortgage fund education fund emergency fund housing fund 50. Which is not the primary purpose of Key Person insurance? business indemnification preserves business credit creates reserve fund tax deductible premiums 51. Lanny, covered under his company's group life plan, was terminated June 1. He died June 15. His life insurance policy will pay: nothing return premiums full benefit pro-rated benefit 52. Concerning Buy/Sell Plans in a corporation, with 3 equal stockholders, how many policies would be needed? Entity Arrangement - 6 policies Stock Redemption - 3 policies Entity Arrangement - 1 policy Stock Redemption - 1 policy 53. In order to qualify for favorable tax treatment, group life policies: must benefit 100% of employers. must have 70% participation. must have at least 85% of the participants be non-key employees. must be contributory. 54. Which type of group coverage would give the individual a policy? franchise insurance employer group blanket group group credit life 55. All of the following statements concerning Deferred Compensation plans are correct except: They may be used by businesses to discriminate in favor of key employees. Contributions may be tax deducted. They do not receive favorable tax treatment. May be set up at the employee's request. 56. For whom is the entity plan best suited? a partnership with many partners stock redemption a corporation with many stock holders a corporation with fewer stock holders 57. Which of the following statements concerning Multiple Employer Trusts (METs) are true? 1. They are designed for employers with a large number of employees. 2. They may be self-funded or funded with contracts from insurance companies. 3. The employer must join the trust. 4. Employees receive a policy. 1, 2, & 3 2 & 3 2, 3, & 4 All the above 58. Which of the following might not be covered by Social Security? 1. Railroad workers covered under the Railraod Retirement System 2. Civil Service workers hired after 1984 3. Approximately 25% of state & local government employees 1 only 2 only 1 & 2 1 & 3 59. A M.E.W.A is not: a type of Multiple Employer Trust fully insured fully self-insured taxd exempt 60. Which of the following concerning deferred compensation plans are correct? 1. Life insurance may be used as a funding vehicle. 2. They are qualified plans. 3. They are non-qualified plans. 4. They are regulated by ERISA. 1, 2, & 4 1, 3, & 4 1 & 3 2 & 4

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Health 2

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Health 2 1. The purpose of Disability Income insurance is to provide: protection against economic death unemployment income surgical expense reimbursement hospitalization expense reimbursement 2. A recurrent disability is normally considered: I. to be a problem that the insurance company cannot be expected to cover over and over II. for repeat coverage if the insured has worked a specified period after completing a previous indemnity period I only II only I and II Neither I nor II 3. Regarding disability, a disability that is a permanent physical impairment leaving the individual incapable of performing the previous regular occupation, but capable of performing some other type of work, is a: permanent total disability permanent partial disability temporary total disability temporary partial disability 4. Disability Income payments must be paid at least: Weekly Monthly Quarterly Annually 5. An insured's disability income policy defines total disability as the insured's inability to perform the duties of any occupation for which he or she is reasonably qualified by education, training or experience. Which of the following is true about this definition? This is known as the own occupation definition and is more restrictive than other definitions. It is the any occupation definition and is more restrictive than other definitions. This is known as the own occupation definition and is less restrictive than other definitions. This is the any occupation definition and is less restrictive than other definitions. 6. Before Crankston was disabled, he was a fulltime grave digger earning about $70,000 annually. Now, two years later, he is only able to work part time, earning about $25,000 annually. Under a Residual Disability policy it is likely that Crankston would be classified as: totally and permanently disabled recurrently disabled partially disabled not disabled at all 7. Which of the following statements about Medicaid is/are true? I. It is one of the major parts of Medicare. II. It is intended to provide medical assistance for certain categories of people who are needy. III. It supplements Medicare for those over age 65, who qualify. IV. It is funded entirely by the State Government. II, III, and IV I and II only II & lll IV only 8. Which of the statements below about Medicare Part B are true? I. There is an annual deductible. II. There is coinsurance of 80% - 20% after the deductible is met. I only II only I and II Neither I nor II 9. Which of the following statements concerning Accidental Death and Dismemberment coverage is/are true? 1. Death benefits are paid only if death occurs within 60 days of an accident. 2. Dismemberment benefits may be paid for loss of use. 3. Accidental death benefits are paid only if death results from an accidental bodily injury as defined in the policy? 1 & 2 1 & 3 2 & 3 1, 2, & 3 10. Regarding Limited Risk, Special Risk, and Disability Income policies, which statement is true? Accidental means are more limiting than accidental results. Accidental results is more limiting than accidental means. Accidental results and accidental means do not apply to these types of policies. My interest in this subject matter is about shot. 11. The time period specified in the Free Look provision begins: when the policy is issued when the policy is delivered when the application is signed when the application is approved 12. Which of the following may normally be used as a definition of total disability? I. house-confined II. inability to perform the duties of any occupation III. inability to perform the duties of the insured's own occupation I only I and II only II and III only I and III only 13. Eustis Toolis had a $2000 per month disability policy with a benefit period to age 65 and a 6 month waiting period. She became disabled at age 64 1/2. How much would she receive? $2000 $1000 $12000 Nothing 14. An agent takes an application for health insurance on Bone and Marrow Lykes and their family. When the agent returns to her office she discovers two unanswered questions on the application. Which action should she take? Call the Lykes and get the information over the telephone. Reconstruct the sales interview and answer the questions based on the information she can remember. Submit the application to her company as is. Go back to the Lykes and have them complete the unanswered questions. 15. When completing an application for medical insurance, an agent should do which of the following? 1. The agent should review the applicant's health statement and bind the coverage. 2. The agent should complete the Medical Information Bureau report. 3. The agent should witness the applicant's signature. 4. The agent should sign the applicant's name if the applicant lives out of state. 1, 2 & 3 1 & 3 2 only 3 only 16. The purpose of the optional elimination (waiting) period is: It provides a trial period of coverage for the insured at little cost. It limits the insurer's risk related to accidental injuries. It gives the insured an opportunity to cancel the policy and obtain a refund if not entirely satisfied. It helps the insured to reduce the cost of the policy by accepting the risk of a short term disability. 17. A health insurance policy includes an endorsement indicating the insurer will allow the policy to continue in force without further premiums if the insured is totally and permanently disabled. What endorsement is attached to this policy? Guaranteed insurability Impairment Rider Multiple indemnity Waiver of premium 18. A health insurance policy includes an endorsement indicating the insurer will allow the policy to continue in force without further premiums if the insured is totally and permanently disabled. What endorsement is attached to this policy? Guaranteed insurability Imapairment rider Multiple indemnity Waiver of premium 19. Examples of those covered under a Limited Risk Plan are I. Chopin's Hands ( if living) II. Dread Diseases III. A Test Pilot IV. Airplane Passengers I II I & IV II & IV 20. Which of the following describes a representation? An insurance company guarantees that policy benefits will be paid promptly on receipt of a Proof of Loss. An insurance company guarantees that premiums paid will be refunded within 30 days after the policy's effective date if an insured is dissatisfied with the policy. When a prospect's statement on an application is held to be substantially true. When a prospect's statement on an application is held to be absolutely true. 21. Dread disease, a travel accident, vision care, and hospital indemnity policies are all examples of: LTC policies Limited policies Special risk Blanket policies 22. Johnson was covered under a residual individual disability income plan with a benefit period to age 65. The policy had a six month elimination period and a 14 day probationary period. Johnson suffered a heart attack 10 days into the policy's effective date. The earliest the benefits would become payable would be: after the six month waiting period after the 14 day elimination period immediately never 23. There are _____ standard Medicare supplement policies. 5 10 12 14 24. The non-disabling injury benefit pays: I. a flat amount equal to the insured's salary II. a percentage amount equal to the insured's salary III. the actual cost of medical treatment IV. a percentage amount equal to the weekly or monthly benefit I II & III III & IV IV 25. Which of the following statements about Medicare is true? I. Payments are made directly to the hospital, not to the Medicare recipient. II. Home health care benefits and skilled facility care are provided under Part A. . I only II only I and II Neither I nor II 26. Which of the following statements about the total disability provision of health insurance policies is true? It is a uniform policy provision regulated by state law. It is a uniform policy provision spelled out by federal regulations. It is a provision that may vary from policy to policy. It is a provision that can be changed only by an agent of an insurance company after a policy is issued. 27. A limited risk policy covers: risks not covered by accident and health policies specific risks all risks unusual types of risks 28. Which of the following provisions in a disability policy protects an insurance company against pre-existing conditions? Recurrent Disability Probationary Period Elimination (Waiting) Period Residual Disability 29. Robert was insured under an own occupational residual disability policy which had a 5 year benefit period along with a six month elimination period. He was totally disabled by a chicken bone. He received disability payments for 2 years after which he returned to work on a full time basis. Five months later he was disabled by the same chicken bone. Which of the following statements is correct? It is a recurrent disability and the policy will pick up where it left off. There is no waiting period and it will pay for 3 years. It is a new disability and will require a new elimination period, but it will pay for 5 more years. It is a recurrent disability and it will pay for 5 years. None of the above. Chicken bone disabilities are never covered. 30. Which of the following statements is true about the conditional receipt issued to an applicant for an individual disability income policy? Coverage begins immediately as of the date of the conditional receipt. An agent should give an applicant the conditional receipt after taking an application, even if the applicant has not been paid the premium. If an applicant is an acceptable risk, the conditional receipt binds the insurance company as of either date of the receipt or date of the medical exam, whichever is later. If unfavorable information is discovered during the underwriting process, the conditional receipt guarantees standard coverage. 31. Which is true about Medicare? Part A is optional. Part B is mandatory. Both part A and part B are optional. Part A is mandatory and part B is optional. 32. A guaranteed insurability rider may be attached to: a basic dental hospital plan dental plans disability plans major medical plans 33. All of the following usually pertain to the probationary period on a disability policy EXCEPT: It is found in the insuring clause. It is one of the 12 mandatory clauses. It requires a certain waiting period for illness. It requires no waiting period for accidents. 34. An agent has just taken an application for an Individual Disability Income policy and has received the initial premium. She has given the prospect a conditional receipt. At this time it would be appropriate for her to tell the prospect which of the following? I. A medical examination may be required. II. An investigative report may be required. III. The Medical information Bureau (MIB) will send its report directly to the prospects. I and II only I and III only II and III only I, II, and III 35. In a disability income policy, there is a period during which no benefits will be paid for illness of any kind. This period usually does not apply to accidents, but only to illness. The term that describes this interim is the: elimination period benefit period waiver period probationary period 36. All of the following are true of Medicaid EXCEPT: Medicaid is operated by the State and subsidized by the Federal Government. Medicaid covers the total cost of visiting nurses to the home. Medical assistance is provided to the aged, blind, disabled, and families with dependent children who are financially poor. Anyone who cannot get Health Insurance coverage due to poor health can quality for Medicaid. 37. A doctor who is receiving Disability Income benefits is unable to return to work full-time, but continues her practice on a part-time basis. Which of the following would allow the doctor to continue to receive benefits? A Residual Benefit clause A Contingent Benefit clause A Concurrent Benefit clause A Guaranteed Insurability clause 38. Which of the following statements about a dismemberment provision in a health insurance policy is true? It provides benefits for the loss of specific parts of the body. It lists the ways in which a policy can be dismembered. It is included in all health policies. It provides coverage only for work-related accidents. 39. Under some policies, an injury that DOES NOT QUALIFY the insured for monthly disability income benefits may make the insured eligible for: outpatient compensation an emergency room benefit medical expense reimbursement a non-disabling benefit 40. An applicant for insurance may pay the initial premium and receive a document from the agent indicating that if the policy is issued as requested, coverage begins on the date of the document. What is this document called? Executing agreements Conditional receipt Warranty Notice of inspection 41. Which part of Medicare requires premium payments by the most eligible participants? Part A, basic hospital insurance Part B, supplementary medical insurance Respite care All of the above 42. A 35 year old male computer programmer and his 35 year wife, also a computer programmer, apply for disability insurance. Which would pay the higher monthly premium? The male programmer The female programmer They would both pay the same Not enough info 43. Which part of Medicare requires premium payment by most eligible participants? Part A, basic hospital insurance Part B, supplementary medical insurance Respite Care All of the above 44. The dismemberment benefit (the capital sum) is an Accidental Death and Dismemberment policy and will pay for which of the following? 1. loss of hands above the wrist 2. loss of 3/4 of the foot 3. loss of an eye 4. all fingers (including the thumbs) on both hands 2 & 4 1, 2, & 3 1 & 3 all the above 45. Which of the following accurately describes the 'free look' provision? It allows the proposed insured to look over a policy carefully before applying for it. It allows the proposed insured to look over the application carefully before completing it. It allows the insured to look over the issued policy for a specific number of days and return it for a premium refund if desired. It allows the insurance company to obtain an inspection report and medical examination on the proposed insured prior to issuing the policy. 46. Under the typical health insurance policy, which of the following would qualify as dismemberment? I. Sally loses all the fingers on her left hand except the thumb. II. Right handed Ed permanently loses the use of his right hand and arm in an auto accident. I only II only I and II Neither I nor II 47. When individual disability benefits are paid directly to the individual who has paid the premium, a question of taxation arises. Which would be the most appropriate response? The premium was tax deductible, the benefit will be considered as taxable income. An exclusion ratio is used to determine the amount of benefit considered taxable. The premium was tax deductible, therefore the benefit will be considered tax-free. The premium was not tax deductible and the benefit is tax free. 48. The basic Hospital Insurance (Part A) of Medicare covers: I. hospital expenses II. physicians fees and services I only II only I and II Neither I nor II 49. Which of the following statements is not correct concerning Medicaid? 1. To be eligible, one must be poor or become poor. 2. Medicaid provides for custodial care in a nursing home. 3. It is a federally administered program. 4. It is available to people of all ages. 1 2 3 4 50. Which is true about Part A of Medicare? I. The insured must pay a premium. II. The insured must pay a deductible. I only II only I and II Neither I nor II 51. A Guaranteed Insurability clause can be attached to which of the following types of health policies? A Hospital Indemnity policy Disability income policy Major Medical policy Cancer Policy 52. The lifetime reserve for Medicare is: 30 days 60 days 90 days 120 days 53. When an application for health insurance is submitted without an initial premium, the earliest effective date is: The date the application is taken by the agent. The date the insurance company issues the policy. The date the policy is received by the agent. The date the policy is delivered to the prospect by the agent and the premium is collected.

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