Module 5 Quiz Flashcards
Which of the following statements regarding the elimination period of a disability insurance policy is CORRECT?
All else being equal, the longer the elimination period, the lower the premium
Under the coinsurance provision in a medical insurance policy the insured is required to pay _____.
A percentage of the covered loss up to a stated amount
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)?
A single homeowner with no dependents
Which of the following elements is NOT considered in the process of determining the cost of a life insurance premium?
Morbidity charges
Which of these statements regarding life insurance dividends is CORRECT?
Dividends may be used to reduce premium payments, thus maintaining insurance coverage and reducing out-of-pocket expenses
What typically occurs if an irrevocable beneficiary passes away before the insured?
Policy rights revert to the owner
Which of these is a characteristic of the Affordable Care Act (ACA)?
There are market exchanges for comparison and choice of plans
Which of the following is the most important factor to consider when acquiring life insurance?
Insurance need
When purchasing disability insurance, which of the following is the least restrictive definition of disability, from the perspective of the insured?
Unable to perform own occupation
Which of the following statements about deferred variable annuities is CORRECT?
Variable annuities offer no guarantee as to the account value, except at death
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?
$50,000
Which of these is a difference between term life and whole life insurance?
Whole life insurance has an element of savings; term life does not
Which of these life insurance policies allows for flexibility in both the premium amount and the death benefit amount?
Universal life
Which of these statements regarding variable life insurance or traditional whole life insurance is CORRECT?
Premiums for a variable life insurance policy are not fixed
Which of the following activities of daily living (ADLs) would NOT be listed in a long-term care (LTC) insurance policy?
Driving
Which of the following statements about long-term disability (LTD) policies is CORRECT?
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
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?
$113,000
Which of these statements regarding traditional whole life insurance is CORRECT?
Loans may be taken from the policy cash value
The income-based (human life) method of calculating the necessary amount of life insurance coverage _____.
Puts a value on replacing economic worth - the amount of earning power that would be lost
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
I. Burial expenses
II. Readjustment period income
IV. Retirement needs for surviving spouse
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 _____.
The maximum out-of-pocket (MOOP)
Which of the following describes the time when there must be an insurable interest for a life insurance policy?
When the policy is purchased
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?
A distribution due to a disability
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 _____.
Long-term care
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.
Alex must pay $12,900; the insurance company will pay $37,100
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
I. Life income option
II. Period certain option
III. Fixed amount payments
IV. Life option with refund
Which of these statements regarding Health Savings Accounts (HSAs) is CORRECT?
An individual must have a high deductible health care plan in order to fund an HSA
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?
Fixed immediate
Which of these statements about life insurance is CORRECT?
Policyholders can generally borrow up to 90% of the cash value of a policy
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?
$2,400
