Licensing Exam Simulated Questions Flashcards
One becomes eligible for social security disability benefits after having been disabled for how long?
A. 3 months
B. 5 months
C. 6 months
D. 12 months
B. 5 months
Disability income benefits are paid to the covered worker in the amount of the PIA after a 5-month waiting period.
A return of premium Life insurance policy is:
A. A non forfeiture option
B. Whole life and increasing term
C. Interest-sensitive
D. Variable life
B. Whole life and increasing term
A return of premium life insurance policy is whole life insurance with a death benefit rider of increasing term insurance equal to the amount of premiums paid. If the insured dies within the period of term, the beneficiary will receive face amount plus the value of all paid premiums.
Which statement is true regarding a minor beneficiary?
A. Normally the deaf proceeds are required to be held in trust until the beneficiary reaches the age of 21
B. Normally, a guardian is required to be appointed in the beneficiary clause of the contract
C. The minor must pay the debts of the insured’s estate before receiving any of the proceeds
D. The minor is entitled to receive the death proceeds immediately
B. Normally, a guardian is required to be appointed in the beneficiary clause of the contract
In most cases, insurers require that a guardian be appointed in the beneficiary clause of the policy or that a guardian be designated in the will.
Which of these is not considered to be a cost connected with an individual’s death?
A. Funeral expenses
B. Tax liability
C. Business expenses
D. Probate costs
C. Business expenses
How are policyowner dividends treated in regards to income tax?
A. Dividends are not taxable
B. Interest on accumulations is taxed
C. Taxed as ordinary income
D. Taxed as capital gains
B. Interest on accumulations is taxed
If dividends exceed the total premium payments for the insurance policy, the excess dividends are considered taxable income.
If a retiree on Medicare required five hospital stays in one year, which policy would provide the best insurance for excess hospital expenses?
A. Long-term care
B. Indemnity
C. Medicare supplement
D. Medicaid
C. Medicare supplement
The federal income tax treatment of employer provided group medical expense insurance can be accurately described as:
A. Employees coverage paid for by the employer is considered taxable income to the employee
B. Employees premiums paid by the employer is tax deductible to the employer as a business expenditure
C. Employer is given tax credits for contributions made to an employer provided group health plan
D. Benefits are taxable to the employee
B. Employees premiums paid by the employer is tax deductible to the employer as a business expenditure.
The fundamental reason for regulation of insurance is to:
A. Create revenue
B. Maintain status
C. Create jobs
D. Protect consumers
D. Protect consumers
What is the basic function of an annuity?
A. The systematic liquidation of accumulated funds
B. The guarantee of a specific sum of money to a designated beneficiary upon the death of the insured
C. The protection against loss of income due to partial or total disability
D. The accumulation of funds to pay for life insurance premiums during retirement years
A. The systematic liquidation of accumulated funds
What type of deductible provision states that “should more than one family member be involved in a common accident or suffer the same illness, only one individual deductible amount shall be applied”?
A. Individual deductible
B. Corridor deductible
C. Family maximum deductible
D. Common accident deductible
D. Common accident deductible
An employee requested that the balance of her 401k account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately has the funds rolled over into an IRA. What is the tax consequence of the distribution sentence employee?
A. Distribution is subject to capital gains tax
B. Distribution is subject to ordinary income tax
C. Distribution is subject to a tax penalty
D. Distribution is subject to federal income tax withholding
D. Distribution is subject to federal tax withholding
A participant must complete a rollover to another qualified plan within 60 days or the distribution is considered a non-qualified distribution and a subject to taxes and penalties. A planned sponsor must withhold 20% of the distribution for federal taxes on a rollover. Once the rollover takes place to the new custodian, the remainder of the distribution is released.
Quarterly premium payments increase the annual cost of insurance because:
A. Insurer risk exposure is greater
B. Interest in the insurer is increased while administrative costs are decreased
C. Mortality costs are greater
D. Interest to the insurer is decreased while the administrative costs are increased
D. Interest to the insurer is decreased while the administrative costs are increased
The higher the frequency of payments, the higher the premiums
A multiple employer welfare arrangement (MEWA) provides what type of benefits?
A. Unemployment
B. Banking
C. Retirement
D. Insurance
D. Insurance
Peter owns a $25,000 life policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before age 70. What kind of policy does Peter own?
A. Straight life
B. Modified life
C. Whole life paid up at age 70
D. Endowment at age 70
D. Endowment at age 70
An endowment policy is characterized by cash values that grow at a rapid pace so that the policy matures or endows at the specified date (before age 100).
A person insured under a health policy is required to give the insurance company a notice of claim within how many days after a covered loss?
A. 5
B. 10
C. 20
D. 30
C. 20
Additional coverage can be added to a whole life policy by adding a(n):
A. Payor Rider
B. Accelerated benefit Rider
C. Decreasing term Rider
D. Automatic premium loan rider
C. Decreasing term rider
Within how many days after receiving notice of loss must an insurer provide an insured with claim forms?
A. 5
B. 10
C. 15
D. 20
C. 15
