Life & Health Insurance


Life & Health Insurance


1) A provision contained in most group medical expense policies that applies when a claim is covered by more than one policy is known as:

A:Utilization Management
B: Coordination of Benefits(COB)
C: Case Management
D: Retrospective Review

2) What are the tax implications when an annuitant elects to take cash surrender of a deferred annuity during the accumulation period at age 56:

A: Only the interest is taxable as ordinary income, plus a 10% early withdrawal penalty
B: All the funds distributed are taxable as ordinary income
C: All of the funds distributed are taxable as a capital gain
D: Only the interest is taxable as ordinary income

3) Which life insurance rider allows policy proceeds to be paid out prior to the insured’s death:

A: Accelerated benefits
B: Cash surrender
C: Paid up additions
D: Automactic premium loan

4) An insured paid $4,000 in premiums on his whole life policy over a period of time. When his cash value equaled $6,500, he elected to take cash surrender. How much is taxable:

A: $2,500
B: $4,000
C: None, life insurance benefits are never taxable
D: $6,500

5)An annuitant has paid monthly premiums into a deferred annuity over a period of time totaling $20,000. Due to tax deferred earnings in the account, his account balance at age 60 is $30,000. If he now takes a partial withdrawal of

$5,000, how much is taxable:
C:None, since he withdrew less than his cost basis
D: None, since benefits of life insurance products are never taxable

6)Premiums paid by self employed sole proprietors or partners for medical expense insurance are:

A: Partially tax deductible
B: Totally tax deductible
C: Not tax deductible
D: Taxable

7) All of the following are true about immediate annuities EXCEPT:

A: They are often used in structured settlements
B: There is no beneficiary
C: They pay for the lifetime of the annuitant
D: There is no accumulation period

8) The penalty for taking a policy loan as a premature distribution on a life insurance policy that has been classified as a Modified Endowment Contract (MEC) is:

A: 10%
B: 7 and 1/2%
C: 5%
D: None, life insurance policies are not subject to early withdrawal penalties

9) A health insurance claim occurs on May 30th, but the policy lapses on June 1st. If the claim is not turned in until June 8th, what will the insurer do:

A: Pay the claim
B: Deny the claim
C: Pay the claim, but subtract the overdue premium
D: Pay the claim, but send a bill for the overdue premium

10) When an insurer requires pre-authorization prior to hospitalization, all are true EXCEPT:

A: Overall insurer expenses will probably increase
B: Unnecessary hospitalization may be avoided
C: Specifically, pre-authorization is a form of prospective review
D: Pre-authorization is a form of Utilization Management

11) All of the following are true regarding the tax implications of health insurance EXCEPT:

A: Premiums paid by the employer for a group health policy are not tax deductible
B: Benefits received from an individual Disability Income policy are not taxable
C: Benefits received by an employer from a Key Person disability policy are not taxable
D: Medical expense premiums paid by a sole proprietor are partially tax deductible

12) Disability Income (DI) benefits are not subject to income taxation EXCEPT for:

A: Individual DI
B: Partnership Buy Out DI
C: Group DI
D: Key Person D

13) Mr. Baugh elects to make a direct rollover of his traditional IRA from one trustee to another trustee at age 35. How is this taxed:

A: Income taxes are incurred, but the 10% IRS penalty is waived
B: All is taxed as capital gain in the year of the rollover
C: All is taxed as ordinary income in the year of the rollover
D: There is no current tax implication

14) A rider added to a life policy to create coverage for the entire family is called a:

A: Family income rider
B: Family term rider
C: Family maintenance rider
D: Other insured rider

15) If a subscriber goes out of network for PPO (Preferred Provider Organization) services:

A: Only emergencies are covered
B: There is no coverage
C: Coverage is not affected
D: The amount of coverage may be reduced

16) All of the following are true regarding Key Employee Disability Income insurance, EXCEPT:

A: The employer owns the policy
B: Premiums are not tax deductible for the employer
C: Benefits are taxable to the employer
D: Benefits are payable to the employer to retrain a new person

17) An HMO utilization management technique known as “concurrent review” requires:

A: A second opinion
B: Assignment of a case worker to an ongoing claim
C: Pre-authorization
D: An initial consultation with a primary care physician

18) Annuities are underwritten by:

A: Securities firms
B: Insurance companies
C: Banks
D:Insurance Agents

19) All of the following are true about Medicaid EXCEPT:

A: It is based upon financial need, regardless of age
B: It is subsidized by both state and federal monies
C: It is sold by private insurers
D: It is not part of Medicare

20) All of the following are true regarding PPOs EXCEPT:

A: The amount of coverage is reduced for out of network services
B: Employers may offer a PPO as well as a traditional indemnity plan to employees
C: They may only be operated by hospitals
D: They may be operated by insurance companies

21) If an insurer allows an insured to violate one of the conditions of the policy, they cannot at a later time void the policy because the condition was violated, under the doctrine of:

A: Alienation
B: Adhesion
C: Estoppel
D: Evidence

22) Medical expense benefits received by a partner or sole proprietor are:

A: Partially taxable
B: Proportionately taxable
C: 100% taxable
D: Not taxable

23) An employee pays that portion of the group disability premium attributable to Residual Disability benefits and the employer pays the balance. If the employee has a claim for Residual Disability, how will the benefits paid out be taxed to the employee:

A: 100% taxable to the employee, since this is a contributory plan
B: 100% taxable to the employee, since this is a group disability income plan
C: Taxable as ordinary income, based upon a proportionate IRS formula
D: Not taxable, since the employee paid for that portion of the coverage

24) A “cancelable” policy of health insurance may be cancelled by:

A: The insurer only
B: The insured only
C: Either the insurer or the insured
D: The agent, insurer or the insured

25) A client wishing to take cash surrender on a deferred annuity during the accumulation period would be exercising a required contractual provision known as:

A: Right of exchange
B: Non-forfeiture
C: Settlement option
D: Loan privilege

26) Which life insurance rider allows the insured to purchase additional amounts of insurance at specified intervals in the future without a physical exam:

A: Paid up option
B: Accidental death benefit
C: Guaranteed insurability
D: Extended term option

27) All of the following could disqualify you from group insurance eligibility EXCEPT:

A: Attaining age 65
B: Labor Union membership
C: Independent contractor status
D: Part time employment

28) If a person exiting a streetcar elects to leap down the steps and breaks his ankle:

A: The broken ankle would be considered intentional and foreseen
B: The leap was intentional, but the injury was unforeseen
C: The resulting injury would be covered only by an A/D and D policy
D: The would be no coverage, since the leap was intentional

29) On life insurance, the Misstatement of Age clause permits:

A: The premium to be adjusted to reflect the correct age
B: The insurer to void a claim during the first 2 years due to misrepresentation
C: The face amount to be paid at death, less any overdue incorrect premiums
D: The face amount to be adjusted to what the correct premium would have purchased

30) The amount of annuity benefits included in the value of the estate of a deceased “life income only” annuitant is:

A: Zero
B: The amount of future benefits to be paid
C: The interest earned in the annuity account
D: The amount of the premium paid

31) On a Major Medical plan, all are true about co-insurance EXCEPT:

A: It helps hold down the cost of insurance premiums
B: It prevents over utilization of insurance coverages
C: It requires the insured to pay a portion of the claim, after the deductible
D: It requires the insured to pay a portion of the claim, before the deductible

32) All of the following are true about a Multiple Employer Trust (MET) EXCEPT:

A: The trustee is the policyholder
B: Enrollees are given a “Joinder Agreement”
C: Employees must purchase all coverages offered by the trust
D: They are for small employers in the same type of business

33) Annuities are commonly used for all of the following EXCEPT:

A: To provide income in the event of total disability
B: To fund structured settlements
C: To supplement retirement income
D: To fund deferred compensation plans





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