Module 5 Quiz

Question 1

Which of the following statements regarding the elimination period of a disability insurance policy is CORRECT?

Answer 1

All else being equal, the longer the elimination period, the lower the premium

Question 2

Under the coinsurance provision in a medical insurance policy the insured is required to pay _____.

Answer 2

A percentage of the covered loss up to a stated amount

Question 3

Which of the following situations would be best suited for a decreasing term insurance policy (a policy that provides a lower death benefit each passing year)?

Answer 3

A single homeowner with no dependents

Question 4

Which of the following elements is NOT considered in the process of determining the cost of a life insurance premium?

Answer 4

Morbidity charges

Question 5

Which of these statements regarding life insurance dividends is CORRECT?

Answer 5

Dividends may be used to reduce premium payments, thus maintaining insurance coverage and reducing out-of-pocket expenses

Question 6

What typically occurs if an irrevocable beneficiary passes away before the insured?

Answer 6

Policy rights revert to the owner

Question 7

Which of these is a characteristic of the Affordable Care Act (ACA)?

Answer 7

There are market exchanges for comparison and choice of plans

Question 8

Which of the following is the most important factor to consider when acquiring life insurance?

Answer 8

Insurance need

Question 9

When purchasing disability insurance, which of the following is the least restrictive definition of disability, from the perspective of the insured?

Answer 9

Unable to perform own occupation

Question 10

Which of the following statements about deferred variable annuities is CORRECT?

Answer 10

Variable annuities offer no guarantee as to the account value, except at death

Question 11

What is the maximum amount of group term life insurance coverage an employer can provide on the life of an employee without income tax consequences to the employee?

Answer 11

$50,000

Question 12

Which of these is a difference between term life and whole life insurance?

Answer 12

Whole life insurance has an element of savings; term life does not

Question 13

Which of these life insurance policies allows for flexibility in both the premium amount and the death benefit amount?

Answer 13

Universal life

Question 14

Which of these statements regarding variable life insurance or traditional whole life insurance is CORRECT?

Answer 14

Premiums for a variable life insurance policy are not fixed

Question 15

Which of the following activities of daily living (ADLs) would NOT be listed in a long-term care (LTC) insurance policy?

Answer 15

Driving

Question 16

Which of the following statements about long-term disability (LTD) policies is CORRECT?

Answer 16

If premiums for an LTD policy are paid by the insured with after-tax dollars, then any benefit from the policy would be received tax free

Question 17

George has $125,000 whole life policy, with his wife Betty as the sole beneficiary. The cash value of the policy is $35,000, and George has an outstanding policy loan of $12,000. George died in a hunting accident, and Betty has asked how much she will collect from the policy. What is the life insurance death benefit payable to Betty?

Answer 17

$113,000

Question 18

Which of these statements regarding traditional whole life insurance is CORRECT?

Answer 18

Loans may be taken from the policy cash value

Question 19

The income-based (human life) method of calculating the necessary amount of life insurance coverage _____.

Answer 19

Puts a value on replacing economic worth - the amount of earning power that would be lost

Question 20

Which of the following are possible financial considerations used to determine required life insurance through the needs-based method?

I. Burial expenses
II. Readjustment period income
III. Charitable bequest
IV. Retirement needs for surviving spouse

Answer 20

I. Burial expenses
II. Readjustment period income
IV. Retirement needs for surviving spouse

Question 21

Your clients are considering which type of health insurance policy would be best for their family. They are most concerned about how much they would potentially be liable for if a catastrophic event were to occur. You would advise them that the amount they should consider most is _____.

Answer 21

The maximum out-of-pocket (MOOP)

Question 22

Which of the following describes the time when there must be an insurable interest for a life insurance policy?

Answer 22

When the policy is purchased

Question 23

Assume your client, Stephanie, age 50, takes a distribution of her Roth IRA assets six tax years after she funded her account. Which of the following distributions will be income tax free and free from the 10% early withdrawal penalty?

Answer 23

A distribution due to a disability

Question 24

Under the Affordable Care Act, all plans in the marketplace must offer the same set of essential health benefits, which includes all of the following except _____.

Answer 24

Long-term care

Question 25

Alex, Megan, and their child, Joey, have a health care plan that includes
- a $4,000 individual deductible
- 80% coinsurance percentage, after the deductible is met; and
- a MOOP limit of $12,900
If Alex has a sudden illness and must be hospitalized for five days at a total cost of $50,000, how much will Alex have to pay for this illness? Use the information provided above.

Answer 25

Alex must pay $12,900; the insurance company will pay $37,100

Question 26

Which of the following are payout options offered by fixed annuities?

I. Life income option
II. Period certain option
III. Fixed amount payments
IV. Life option with refund

Answer 26

I. Life income option
II. Period certain option
III. Fixed amount payments
IV. Life option with refund

Question 27

Which of these statements regarding Health Savings Accounts (HSAs) is CORRECT?

Answer 27

An individual must have a high deductible health care plan in order to fund an HSA

Question 28

For the rest of his life, Thomas wants to receive an income stream that does not vary. He has a lump sum to fund such an annuity and wants the income payments to start as soon as possible. Which of the following annuities should he consider?

Answer 28

Fixed immediate

Question 29

Which of these statements about life insurance is CORRECT?

Answer 29

Policyholders can generally borrow up to 90% of the cash value of a policy

Question 30

Pedro has a major medical policy with a $500 deductible and an 80% coinsurance clause, and a maximum out of pocket (MOOP) of $6,500. Assuming Pedro has recently incurred a medical expense of $10,000, what is his out-of-pocket expense?

Answer 30

$2,400