Accumulative 1-19 Flashcards
(32 cards)
Which of the following statements regarding deferred annuities is not correct?
A. They typically have a surrender charge that is assessed with contract surrender during the first 2 to 12 years or more. Typically up to 10% of the contract value can be withdrawn free of surrender charge in any 1 year.
B. They generally permit contract owners to withdraw a specified percentage annnually tax-free and without a surrender charge.
C. The owner is not required to annuitize the contract.
D. They may be funded with a single premium payment or with periodic premium payments.
B
Which of the following statements best describes the nature of a cash value loan?
A. It is a financial transaction in which the cash value is unaffected but the face amount is reduced by the amount of the loan plus interest.
B. It is a financial transaction in which future growth of the cash value is suspended until the loan amount plus interest is recovered.
C. It is a financial transaction in which the cash value is reduced by the amount of the loan.
D. It is a financial transaction in which the insurer loans the money and attaches a comparable portion of the cash value as collateral.
D
Which of the following statements regarding annuities is not correct?
A. Annuities that pay benefits in specified dollar amounts are fixed annuities; annuities that pay benefits in relation to units are variable annuities.
B. An installment refund annuity guarantees a specific amount of benefits, payable to the annuitant only; if death occurs before total payout, an amount equal to all premiums is refunded to the annuitants estate or beneficiary.
C. An annuity can be classified as immediate or deferred, depending on when benefit payments begin.
D. Pure life annuities provide income as long as the annuitant lives; benefits terminate at death.
B
Which of the following is not a cost containment method used to reduce hospital care costs?
A. Preauthorization
B. Indemnification of medical expenses
C. Mandatory second opinions
D. Outpatient benefits
B
An example of a state-administered disability program is
A. Medicare
B. Workers compensation
C. Social Security
D. Medigap
B
Which of the following statements regarding current assumption whole life insurance is not correct?
A. During a period of relatively high interest rates the premiums could be reduced.
B. Premium adjustments are usually made on an annual basis.
C. It is also known as interest-sensitive whole life.
D. During a period of relatively high interest rates the premiums could be increased.
D
Which of the following statements concerning qualified retirement plans is not correct?
A. Employer-sponsored IRAs are considered qualified retirement plans.
B. Employer contributions to a qualified plan are tax deductible as a business expense.
C. Employer contributions to a qualified plan on behalf of its employees are taxable income to the employees when they are made.
D. The earnings of a qualified plan are not taxed until they are distributed.
C
Which of the following statements about a Roth IRA is correct?
A. The Roth IRA was introduced in 1980.
B. Only individuals younger than age 72 can contribute.
C. Distributions must begin at age 72.
D. Contributions are not tax deductible.
D
All of the following are examples of medical cost management except
A. Denying claims
B. Precertification review
C. Mandatory second opinion
D. Ambulatory surgery
A
An individual life insurance policy must include all of the following except
A. A 1-month grace period
B. An entire contract provision
C. An incontestability provision
D. A table showing the annual loan values of the policy for at least 30 years
D
Which of the following is not an essential health benefit found in qualified plans?
A. Rehabilitative services
B. Dental services
C. Emergency services
D. Pediatric services
B
Since the obligations of the insurance company hinge on certain acts of the policyowner, beneficiary, or both, the insurance contract is termed
A. Conditional
B. Aleatory
C. Unilateral
D. Bilateral
A
Which of the following statements pertaining to a whole life policy is not correct?
A. It is designed to mature or endow at the insured’s age 100
B. It provides both insurance protection and living values.
C. The face amount may be paid as a lump sum at the policyowner’s selected retirement age.
D. The policy offers insurance protection to age 100
C
Excepted benefits are not included as minimum essential coverage. Which of the following is not an excepted benefit?
A. Worker’s compensation insurance
B. Medicare
C. Disability income insurance
D. Accident-only insurance
B
Under Social Security; a worker’s primary insurance amount (PIA) is
A. The total benefits received during the first year of retirement.
B. Larger than the combined insurance benefit payable to the worker and the worker’s spouse at age 62.
C. An amount equal to the worker’s full retirement benefit at the full retirement age or disability benefit.
D. The amount the worker’s surviving spouse will receive upon the worker’s death.
C
Which of the following is a promise in exchange for an action?
A. a condition contract
B. a contract of adhesion
C. an aleatory contract
D. a unilateral contract
D
Which of the following statements about variable universal life insurance is not correct?
A. It guarantees a minimum cash value in the investment account.
B. It allows the insured to make withdrawals or to borrow from the policy during the insured’s lifetime.
C. It pays a death benefit to a named beneficiary and offers the insured tax-deferred cash value investment options.
D. It offers flexibility in premium payments and face amounts dependent on investment performance.
A
Under a group health insurance plan, a terminated employee may have which of the following options?
A. To convert the coverage to an individual plan at the same premium.
B. To continue the identical coverage at the same premium.
C. To continue reduced-benefit coverage under the group plan at an adjusted premium.
D. To convert the coverage to an individual plan at an adjusted premium.
D
Which of the following is the most valid reason for a person to purchase a specified (dread) disease health insurance policy?
A. She wants to make sure that she and her family are protected against a major illness.
B. She wants coverage against the risk of illnesses such as aids, tuberculosis and diabetes.
C. She has been diagnosed with heart disease.
D. Her family has a history of cancer, and she is concerned that she might contract the disease.
D
One characteristic that the capitation, schedule of allowances, and usual reasonable and customary methods of dental benefit determination have in common is that all 3 methods
A. Determine benefits on some form of scheduled basis.
B. Are available only with indemnity plans.
C. Require that the insured select a dentist from a specific list of approved providers.
D. Generally involve high deductibles and coinsurance requirements.
A
The calendar year deductible provision of a major medical policy stipulates that
A. The deductible is applied only once during the calendar year.
B. The insurer pays a higher percentage of the medical expenses than the insured.
C. All claims submitted during the calendar year are subject to the amount of the deductible.
D. The deductible is applied against each claim during the first calendar year the policy is in effect.
A
Ralph owns a $50,000 nonparticipating whole life policy. Its cash value has accumulated to $15,000, and he has paid a total of $9,500 in premiums. If he surrenders the policy for its cash value, how will it be taxed?
A. Ralph will receive $5,500 tax-free; the $9,500 balance is taxable as income.
B. Ralph will receive the $15,000 as taxable income.
C. Ralph will receive the $15,000 tax-free.
D. Ralph will receive $9,500 tax-free; the $5,500 balance is taxable as income.
D
Benefit periods for short-term disability income policies typically range from
A. 1 to 5 years
B. 1 to 12 months
C. 3 months to 3 years
D. 6 months to 2 years
D
Under what system do a group of doctors and hospitals in a designated area contract with an insurer to provide medical services at a prearranged cost to the insured?
A. MIB
B. HMO
C. PPO
D. DPO
C
