Insurance

Question 1

Insurance risk are:

Answer 1

CHAD: not catastrophic, homogeneous exposure units, accidental, and measurable and determinable

Question 2

A legal contract required:

Answer 2

COALL: competent parties, offer and acceptance, legal consideration, and lawful purpose

Question 3

Indemnity:

Answer 3

an insured is only entitled to compensation to the extent of the insured’s financial loss

Question 4

Subrogation

Answer 4

the insured cannot receive compensation from both the insurer and a 3rd party for the same claim

Question 5

Concealment:

Answer 5

when the insured is silent about a material fact that is material to the risk

Question 6

Adhesion:

Answer 6

insurance contracts are “take it or leave it”

Question 7

Alegtory:

Answer 7

the money exchanged may be unequal

Question 8

Unilateral

Answer 8

only one promise is made by the insurer which is pay in the event of a loss

Question 9

Express authority:

Answer 9

given through an agency or written agreement

Question 10

Implied authority:

Answer 10

authority that the public perceives, and a valid agency agreement exists

Question 11

Apparent authority:

Answer 11

when the insured believes that the agent has authority to act on behalf of the insurer. when in fact, no authority exists

Question 12

Dividend options

Answer 12

CRAP-O

Cash options, reduced prem, Accumulate at Int., Paid-up Additions, One Year Term

Question 13

Nonforfeiture Options

Answer 13

(1) Cash (2) Reduced Paid-Up Insurance (3) Extended Term Insurance

Question 14

Catch-up contributions for HSAs:

Answer 14

age 55 and older

Question 15

Penalty for non-qualified medical expense distributions from an HSA:

Answer 15

ends at age 65

Question 16

COBRA:

Answer 16

18 months for a reduction in hours or normal termination & 36 months for all others

Question 17

A rule of thumb is that covered losses must result from something:

Answer 17

that is “sudden and accidental”

Question 18

Structures that are used for business purposes:

Answer 18

are not covered under a homeowners policy

Question 19

HO-4:

Answer 19

renters insurance

Question 20

HO-6:

Answer 20

condominium owners

Question 21

Medicare Part B does not cover:

Answer 21

dental care, dentures, cosmetic surgery, hearing aids, eye exams

Question 22

Coverage F:

Answer 22

Medical Payments to Others

Question 23

Comparative Negligence

Answer 23

allocates negligence and loss proportionately

Question 24

Floods are:

Answer 24

excluded from homeowners insurance

Question 25

Absolute liability:

Answer 25

a situation where someone has undertaken activities or actions that bring about extraordinary hazardous circumstances

Question 26

Irrevocable beneficiaries on life insurance contracts:

Answer 26

have all of the rights of the policy owner

Question 27

Life Insurance contracts, even a MEC:

Answer 27

no income taxes levied on the proceeds to the beneficiary, while the proceeds must be included in the gross estate

Question 28

Conversion privileges are generally part of the:

Answer 28

term insurance policy that allows them to be changed over to a cash value insurance without proof of insurability

Question 29

The incontestable clause:

Answer 29

prevents an insurer from canceling a life insurance policy after a 1 or 2 year period

Question 30

Under no circumstances does a variable policy:

Answer 30

guarantee cash value

Question 31

If one is on disability and the company cancels the policy:

Answer 31

coverage is still continued

Question 32

Paid-up additions:

Answer 32

is a dividend option that represents an inexpensive way to add coverage without concern to health risks or ratings

Question 33

A testamentary trust:

Answer 33

will provide the surviving spouse w. access to the proceeds. Any amount remaining in the trust at the death of the surviving spouse will pass to the children

Question 34

Annuities:

Answer 34

avoid probate and pay proceeds to a named beneficiary

Question 35

Immediate annuities are not subject to a:

Answer 35

premature distribution penalty tax. The 10% penalty only applies to deferred annuities.

Question 36

Group term insurance:

Answer 36

minimum size is 10, unless specific requirements are met.

Question 37

Personal auto policies:

Answer 37

are the only ones that offer coverage for flooding

Question 38

Employees are allowed to borrow or withdraw cash from:

Answer 38

a group universal life insurance plan

Question 39

If a client wants to use an annuity to purchase life insurance,

Answer 39

begin taking annuity payments & use the cash to pay premiums on a permanent life insurance policy.

Question 40

Decreasing need for coverage over time:

Answer 40

decreasing term policy

Question 41

Disability premiums paid by an individual are received:

Answer 41

tax-free ; disability benefits paid by the C Corp are fully taxable upon receipt

Question 42

Medicare:

Answer 42

is an 80 / 20 split without stop-loss limits

Question 43

If a non-qualified distribution is made from an HSA:

Answer 43

the distribution will be subject to income tax and a 20% penalty. The penalty is waived if the individual has attained age 65.

Question 44

Social security survivor benefits (widow benefits) are available to a surviving spouse beginning at age:

Answer 44

60, whether they are divorced or not. The benefits are available to a former spouse, if the marriage lasted at least 10 years, and the surviving spouse has not remarried.

Question 45

Insurance premiums to fund buy-sell agreements in a cross-purchase plan are:

Answer 45

buy-sell agreements in a cross-purchase plan are:

not tax deductible.