Reference no: EM13794148

Part 1

1. Which of the following statements concerning the usual coordination-of-benefits (COB) provision in group medical expense plans is (are) correct?

I. Coverage as a retired employee is primary to coverage as an active employee.

II. Coverage as an active employee is primary to coverage as a dependent.

A I only

B. II only

C. Both I and II

D. Neither I nor II

2. Which of the following statements concerning sick-leave plans is (are) correct?

I. Most plans provide benefits equal to 100 percent of an employee's regular pay.

II. Most plans contain a waiting period of 3 to 6 weeks before benefits start.

A I only

B. II only

C. Both I and II

D. Neither I nor II

3. Which of the following statements concerning business overhead insurance is (are) correct?

I. These policies provide funds that can be used to cover many of the ongoing costs of operating a business while the owner is totally disabled.

II. These policies tend to have benefit durations of 5 years or more and have fairly long waiting periods.

A. I only

B. II only

C. Both I and II

D. Neither I nor II

4. Which of the following statements concerning a deferred annuity is (are) correct?

I. Deferred annuities must be purchased with periodic premiums paid over a period of time.

II. Because of the delay feature, a deferred annuity is unsuitable as a vehicle to accumulate a sum for old age.

A. I only

B. II only

C. Both I and II

D. Neither I nor II

55. Which of the following statements concerning a joint-and-last survivor annuity is (are) correct?

I. It must be sold as an immediate annuity.

II. Annuity payments cease upon the first death of an annuitant.

A. I only
B. II only
C. Both I and II
D. Neither I nor II

6. Which of the following statements concerning a term life insurance policy's convertibility feature is (are) correct?

I. When the attained age method is used, the insured's age on the date of the conversion determines the premium rate for the new coverage.

II. When the retroactive (original age) method is used, the new coverage uses the insurer's contract that is effective on the date of the conversion.

A. I only
B. II only
C. Both I and II
D. Neither Inor II

7. Which of the following statements concerning insurers' use of probability concepts is (are) correct?
I. Using probability concepts enables an insurer to predict losses for its entire group of insured persons with complete accuracy.
II. Using probability concepts enables an insurer to eliminate the possibility that its losses and expenses will exceed its revenues.

A. I only
B. II only
C. Both I and II
D. Neither I nor II

8. Which of the following statements concerning the settlement options in a whole life insurance policy is (are) correct?
I. The policyowner must select a settlement option when applying for insurance.
II. Settlement options provide alternative methods for distributing the policy's death benefit.

A. I only
B. II only
C. Both I and II
D. Neither I nor II

9. In addition to most persons over age 65, which of the following persons is (are) eligible for Medicare Part A benefits?

I. Persons under age 65 who have been entitled to Social Security disability benefits for at least 24 months
II. Persons under age 65 who need long-term kidney dialysis treatment or a kidney transplant
A. I only
B. II only
c. Both I and II
D. Neither I nor II

10. Which of the following statements concerning optional life insurance policy provisions is (are) correct?

I. The accelerated benefits provision allows for withdrawal of a portion of a policy's death benefit if the insured is terminally ill.
II. The assignment provision describes the conditions under which the policyowner may have the right to transfer some or all ownership rights to another person.

A. I only
B. II only
C. Both I and II
D. Neither I nor II

11. Beth faces the risk that her car could run into someone else's car as a result of her negligence. If that happens, Beth would have to pay the costs of repairing the other car.

This risk can be categorized as which of the following?

I. A liability risk
II. A speculative risk
A. I only
B. II only
C. Both I and II
D. Neither I nor II

12. Which of the following statements concerning annuities utilized in structured settlements is (are) correct?
I. If the claimant is expected to have a shorter life expectancy due to the injuries, the cost of a life annuity will be at rates higher than standard.
II. If the claimant is expected to have no reduction in life expectancy due to the injuries, the cost of a life annuity will be at standard rates.
A. I only
B. II only
C. Both I and II
D. Neither I nor II

13. The key employees of a sole proprietorship are logical choices to be purchasers of the business at the sole proprietor's death for which of the following reasons?
I. They are familiar with the business.
II. They want to protect their own future employment.
A. I only
B. II only
C. Both I and II
D. Neither I nor II

14. Which of the following statements concerning the use of Medicaid to meet long-term care needs is (are) correct?
I. It is available only if a person is poor or has a low income and has exhausted most other assets.
II. It eliminates the social stigma of accepting welfare.
A. Ionly
B. II only
C. Both I and II
D. Neither I nor II

15. Which of the following statements concerning the trust endorsement to a personal auto policy (PAP) is (are) correct?
I. The endorsement modifies the PAP to handle situations in which the vehicle is titled solely in the name of a trust.
II. A client who establishes a revocable living trust for estate planning reasons may need to add this endorsement to his or her PAP.
A. Ionly
B. II only
C. Both I and II
D. Neither I nor II

16. A client who goes on a whitewater rafting trip is asked to sign a hold-harmless agreement.
Which of the following statements about hold-harmless agreements is (are) correct?
I. A hold-harmless agreement is a type of noninsurance transfer.
II. A person signing a hold-harmless agreement promises to assume responsibility
for losses that might otherwise be somebody else's responsibility.
A. I only
B. II only
C. Both I and II
D. Neither I nor II

17. Which of the following statements concerning the damages involved in liability claims is (are) correct?
Compensatory damages are designed to financially compensate a claimant who has suffered a loss.
II. Punitive damages are designed to indemnify a claimant for pain and suffering.
A. I only
B. II only
C. Both I and II
D. Neither I nor II

18. Which of the following statements concerning state high-risk pools for individual medical expense coverage is (are) correct?
I. As a result of state subsidies, premiums tend to be much lower than in the regular market place.
II. Benefits for preexisting conditions are often subject to a waiting period.
A. I only
B. II only
C. Both I and II
D. Neither I nor II

19. Which of the following statements concerning coinsurance under group major medical plans is (are) correct?
I. Different coinsurance percentages may apply to different categories of medical expenses.
II. The coinsurance percentage typically is applied to a person's covered expenses prior to subtracting the deductible amount.
A. I only
B. II only
C. Both I and II
D. Neither I nor II

20. All the following statements concerning the financing of Social Security and Medicare are correct EXCEPT:
A. Payroll taxes are deposited into trust funds from which benefits and administrative costs are paid.
B. The tax rate for self-employed persons is one-half of the combined tax rate for employees and employers.
C. The earnings base on which taxes are paid increases annually based on changes in the national level of wages.
D. The program uses a system of partial advance funding.

21. All the following statements concerning the federal income tax treatment of insured group medical expense plans are correct EXCEPT:
A. Contributions by the employer for an employee's coverage are generally tax deductible to the employer.
B. Contributions by the employer for an employee's coverage create an income tax liability for the employee.
C. A portion of employee contributions under a contributory plan may be deductible to the employee as a medical expense.
D. Benefits are taxable to an employee to the extent they exceed any medical expenses incurred.

22. Financial advisors often recommend a life insurance policy gifting program to their clients for all the following reasons EXCEPT:
A. A gift of life insurance usually has little effect on the donor-insured's financial position.
B. A gift of life insurance immediately removes the policy's proceeds from the donor-insured's federal taxable estate.
C. Potential federal estate tax savings are significant.
D. The recipient is less likely to dispose of the policy foolishly than he or she would if receiving a gift of cash.

23. All the following statements concerning the findings of behavioral psychologists on the subject of risk tolerance are correct EXCEPT:
A. People are more likely to be risk averse if the major impact of a loss would fall on them rather than on strangers.
B. People tend to overestimate low-probability risks and underestimate higher probability risks.
C. Most people have a greater fear of unfamiliar risks than familiar risks.
D. Most people are more risk tolerant than they are risk averse.

24. While Ruth was on a winter vacation, somebody stole the large outdoor propane tank that fuels her furnace. She returned home to find severe plumbing damage because many frozen pipes burst when her furnace stopped operating. The fish in her aquarium also died because of the lack of heat. She rented a hotel room, because her house cannot be occupied without heat or plumbing. Ruth has an H0-3 policy with adequate limits. All the following statements concerning her homeowners insurance coverage for this incident are correct EXCEPT:
A. It will pay the additional cost of living in a hotel while her house is being repaired.
B. It will pay the cost of repairing her plumbing.
C. It will pay to replace her fish.
D. It will pay to replace the stolen tank and its contents.

25. Every insurance contract has a set of declarations. The declarations of a typical insurance policy include all the following information EXCEPT
A. exclusions
B. name of the insured
C. name of the insurer
D. effective date

Part 2

1. In Chapter 9, the _________________ clause/provision states that the policy (including any riders) and the application constitute the entire contract.

2. Which of the following statements concerning assignment of a life insurance policy is (are) correct?

I. The assignment provision in the policy specifies the conditions under which the policyowner may assign the policy.
II. The policyowner may assign the policy to someone who lacks an insurable interest in the insured's life.
A. I only
B. II only
C. Both I and II
D. Neither I nor II

3. What is a key requirement for applying for a life insurance policy loan?

4.T/F Misstatement of age on an insurance application voids the policy

5. Concerning the settlement options in a whole life insurance policy, is the policyowner required to select a settlement option when applying for insurance?

6. Nonforfeiture options in a whole life insurance policy include all of the following EXCEPT
A. Accumulation at interest
B. Extended term insurance
C. Cash surrender
D. Reduced paid-up insurance

7. Every insurance contract has a set of declarations. The declarations of a typical insurance policy include all of the following information EXCEPT
A. exclusions
B. name of the insured
C.name of the insurer
D. effective date

Part 3

1. T/F The face amount of a survivorship insurance policy is paid upon the death of the last of two or more lives insured under the single contract.

2. T/F First-to-die policies are sometimes used for funding business buy-sell agreements.

3. The social security tax rate for self employed persons is different from W-2 employees in what way?

4. T/F The social security earnings base on which taxes are paid increases quarterly based on changes in inflation.

5. T/F Variable life insurance policies are fixed-premium contracts.

6. T/F In all cases, variable universal life insurance policies link the death benefit directly to investment performance.

7. T/F Medicare may cover home health care services up to certain limits.

8. All of the following are examples of social insurance EXCEPT

A. Medicare supplement insurance
B. Workers' compensation insurance
C. Social Security
D. Unemployment insurance

9. As of this year, Brad, aged 35, has 36 credits of covered employment under the Social Security program. These credits were all earned in the last 40 calendar quarters. What is Brad's insured status under the program?
a) He is currently, fully, and disability insured
b) He is disability insured, but neither fully nor currently insured
c) He is currently and fully insured, but not disability insured
d) He is currently insured, but neither fully nor disability insured

10. Where must Medicare prescription drug plans allow for participants to fill their prescriptions?

11. True/False Under a Medicare Advantage Plan, beneficiaries may receive coverage that is broader than original Medicare.

Part 4

1. A state requires prior approval of proposed rate changes only if they exceed 5 percent of existing rates. No prior approval is needed for proposed rate changes at 5 percent or less. This is an example of:

a) A use-and-file law
b) A file-and-use law
c) A flex-rating law
d) Open competition

2. In a certain insurance policy, although the insurer cannot terminate the policy during its annual term, the insurer has the right to refuse to renew a contract and the right to alter policy provisions if the contract is renewed. This type of renewable provision is referred to as _____________________ .

3. In a valued insurance contract the amount of recovery depends on
a. amount awarded by the courts
b. amount necessary to indemnify the policyholder
c. financial value of the contract
d. amount specified in the contract

4. You are an insurance agent working for an insurer that has not yet gained approval from the dept of insurance where you will be selling insurance. Your company is known as
a. Alien insurer
b. Unregistered party
c. Unapproved firm
d. Unauthorized entity

5. In an insurance policy, the principle of _______________ ensures that there is no gain from a loss, rather the insured is made whole. Provide an example of how you've experienced this either through business or personal insurance and risk management.