Insurance MCQ

Which of these factors help determine an insured's life insurance premium? insured's salary marital status place of residence avocation (hobby) Answer: avocation (hobby)

What happens to the total amount of premium paid for an insurance policy when the payment frequency increases? No difference in cost Decreases Increases Depends on the type of coverage Answer: Increases

What does a life insurance policy guarantee to the stated beneficiary upon the death of the insured? Policy Dividend Specified amount of money Policy's cash value Funeral expense fund Answer: Specified amount of money

What is the primary feature of a viatical settlement? No interest on policy loans Reduced death benefit prepayment Longer contestable period Lower premiums Answer: Reduced death benefit prepayment

A beneficiary has just received a claim payment for a life insurance policy. Which of the following is TRUE regarding the federal income tax liability owed? A flat tax of 10% is owed on all proceeds Federal income tax is owed if proceeds exceed $250,000 No federal income tax is owed on life insurance proceeds Tax liability owed depends on the type of life insurance policy Answer: No federal income tax is owed on life insurance proceeds

Which of these is affected by the frequency of an insurance policy's premium payments? Settlement options Cash value Death benefit Cost Answer: Cost

The premium payment mode that results in the least overall cost would be monthly quarterly semi-annual annual Answer: annual

A tax-free Section 1035 Exchange of a life insurance policy to a different policy is permitted if it occurs in the same state as the original transaction within a 12 month period from insurer to insurer and no cash is received by the policyowner from agent to agent as long as the agents are licensed in the same line Answer: from insurer to insurer and no cash is received by the policyowner

Which of the following enables a life policy to be replaced with another life policy and results in the postponement of the tax consequence? Section 1040 exchange Section 1035 exchange Nonforfeiture Option Spendthrift Option Answer: Section 1035 exchange

Which of these premium payment frequencies is not typically available to a policyowner? Bi-weekly Monthly Quarterly Semi-annual Answer: Bi-weekly

Proceeds from a life insurance policy are protected from the beneficiary's creditors by which clause? protection clause creditor clause spendthrift trust clause beneficiary trust clause Answer: spendthrift trust clause

How is the cost of a policy affected when a policyowner pays premiums more frequently? Not affected Increases Decreases Depends on the type of coverage Answer: Increases

What would be an expense factor in an insurance program? Premiums collected Mortality costs Opportunity costs Investment interest Answer: Mortality costs

Mortality is calculated by using a large risk pool of hobbies and time people and time family history and geographical area insurance companies and agents Answer:  people and time.

Where would policy proceeds be paid if both the insured and primary beneficiary were killed in the same accident? primary beneficiary's estate contingent beneficiary insured's estate children of the insured Answer: contingent beneficiary

Which of these is considered a major tax advantage of life insurance? Tax credits are available for life insurance premiums paid Annual earnings are tax free Premiums are tax deductible by an employee if paid for by an employer Income tax is typically not owed on proceeds paid directly to a beneficiary Answer: Income tax is typically not owed on proceeds paid directly to a beneficiary

Which of these ensures that proceeds of a life insurance policy will be free from attachment or seizure by the beneficiary's creditors? Spendthrift Clause Protection Clause Viatical Clause Settlement Clause Answer: Spendthrift Clause

Pat is insured with a life insurance policy and Karen is his primary beneficiary. They are both involved in an automobile accident where Pat dies instantly and Karen dies 5 days later. Which policy provision will protect the rights of the contingent beneficiary to receive the policy benefits? Nonforfeiture clause Common disaster clause Spendthrift clause Accident indemnity clause Answer: Common disaster clause

A policyowner can receive a percentage payment of the death benefits prior to death by using what kind of contract? Viatical settlement agreement Funding medium agreement Split dollar plan Buy-sell plan Answer: Viatical settlement agreement

An example of naming a beneficiary by class would be "To the children born of my union with Ned Jackson: David Jackson, Jennifer Jackson, and Scott Jackson" "To the child born of my union with Ned Jackson: Scott Jackson" "To the children born of my union with Ned Jackson" "To Ned Jackson" Answer: "To the children born of my union with Ned Jackson"

A policyowner can receive an immediate payment before the insured dies by using a(n) viatical settlement contract buy-sell arrangement adhesion agreement spendthrift plan Answer: viatical settlement contract

A policy owner is prohibited from making any changes to the policy without the beneficiary's written consent under which beneficiary designation? Contingent beneficiary Tertiary beneficiary Revocable beneficiary Irrevocable beneficiary Answer: Irrevocable beneficiary

Purchasing a life insurance policy in order to avoid the forced sale of assets upon death is called estate funding capital withholding capital gains estate conservation Answer: estate conservation

What is created after policy proceeds are obtained in a lump sum and then immediately invested? Viatical Settlement Emergency Fund Lump Sum Fund Estate Answer: Estate

Which type of beneficiary should be named if the insured wants to give explicit directions on how the policy proceeds should be paid? Individual Group Class Estate Answer: Individual

Naming a contingent beneficiary as "all surviving children" is described by which term? Contingent designation Primary designation Class designation Tertiary designation Answer: Class designation

How does life insurance create an immediate estate? Cash value may be borrowed upon at any time Nonforfeiture options are immediately available The insured's estate receives the death benefit After first premium is paid, the face amount may be available to the beneficiary Answer: After first premium is paid, the face amount may be available to the beneficiary

The premium payment mode that results in the highest overall cost would be monthly quarterly semi-annual annual Answer: monthly

If the beneficiary dies from the same accident as the insured individual, the insurer will proceed as if the insured outlived the beneficiary the beneficiary outlived the insured both the insured and beneficiary died at the same time the estate was listed as beneficiary Answer: the insured outlived the beneficiary

Which settlement option involves having the proceeds remain with the insurer and earnings paid on a monthly basis to the beneficiary? interest only dividends only extended interest fixed period Answer: interest only

Level premium term life insurance policies build cash value in a separate account automatically convert to permanent insurance at a predetermined date automatically renew at predetermined dates have premiums that are averaged over the policy period Answer: have premiums that are averaged over the policy period

Sharon is the policy owner of a $50,000 life insurance policy. Her son, Mike, is the beneficiary. If Sharon MUST obtain Mike's signature in order to change the beneficiary, what kind of beneficiary designation is this? Tertiary Contingent Revocable Irrevocable Answer: Irrevocable

Over the course of a year, which premium payment mode is most expensive? Monthly Quarterly Semi-Annually Annually Answer: Monthly

Which of these is NOT a qualifying event for Medicare? On Social Security disability for over 2 years Kidney failure Age 65 or older Falling below the federal poverty level Answer: Falling below the federal poverty level

A 70-year old insured individual has suffered from kidney failure for the past 24 months. She is covered by her spouse's large-group employer plan. How will Medicare be utilized in this situation? Will be the primary insurer and pay for 100% of covered expenses Will be the secondary insurer and pay for claims not fully covered by the group plan Will not pay for any of the covered expenses Will be the primary insurer and the group plan will be secondary Answer: Will be the secondary insurer and pay for claims not fully covered by the group plan

The open enrollment period for Medicare Part B is January 1 through March 31 January 1 through April 30 January 1 through May 31 January 1 through June 30 Answer: January 1 through March 31

An individual covered under a Blue Cross Blue Shield plan is called a(n) participant subscriber policyowner insured Answer: subscriber

Medicare Part A does not pay for medical benefits provided for treatment in a skilled nursing facility beyond 30 days 60 days 100 days 120 days Answer: 100 days

When a preferred provider organization (PPO) insured goes out-of-network, which of the following actions occur? The insured will pay a reduced amount The benefits are taxable The insured has lower out-of-pocket expenses The insurer will pay a reduced amount Answer: The insurer will pay a reduced amount

Medicare Part A covers outpatient services doctor's fees inpatient hospital stay prescription drugs Answer: Inpatient Hospital Stay

Which of the following is NOT taken into consideration when determining eligibility for Medicare benefits? Chronic kidney disease Income Age Social Security disability Answer: Income

Paul is an employee who caught a disease unique to the trade in which he was exposed to. Paul has a(n) genetic predisposition worksite malady contagious disease occupational disease Answer: occupational disease

What type of injury would NOT be covered under a health insurance policy? Accidental Work-related Sports-related Recreational Answer: Work Related

Which of the following is Medicare Part B also known as? Hospital insurance Medical insurance Long-term care insurance Medigap Answer: Medical Insurance

A health care provider claim may be settled using which of the following payment methods? Litigation Unfair claim settlement Fee-for-service Prepaid expense Answer: Fee-for-service

Medicaid is intended for people with kidney failure people aged 65 and older unemployed people poverty stricken people Answer: 4

Which of these will typically authorize treatment from a specialist? Administrator Policyowner Insurance company Gatekeeper Answer: 4

An individual can enroll in a Part C Medicare Advantage Plan at what time? When becoming eligible for Medicaid At age of retirement Age 59 1/2 When becoming eligible for Medicare Answer: 4

Medicare Part B covers long-term care hospital room and board doctor's charges prescription drugs Answer: 3

How is Medicare Part B funded? Employer taxes Payroll taxes User premiums General tax revenue and user premiums Answer: 4

The role of the federal government was expanded when Medicaid was established by allowing the state to Form a large PPO on a statewide level Purchase health insurance from the federal government Receive matching funds to expand public assistance programs Defer all costs to the federal government for public assistance programs Answer: 3

How does one become eligible for Part D: Prescription Drug coverage? Must meet certain underwriting guidelines Must have a valid prescription Must have Medicare coverage Must have Medicaid coverage Answer: 3

At what age will a person normally enroll with an insurance carrier under a Part C Medicare Advantage Plan? Age 59 1/2 Age 60 Age 62 Age 65 Answer: 4

Social Security disability income benefits are payable to individuals who sustain disabilities which are expected to result in death, or last at least: 1 month 3 months 6 months 12 months Answer: 4

Under Medicaid, which is an eligibility requirement for the payment of nursing home expenses? Age 65 or older Enrollment in Medicare Part P Permanent kidney failure Financial need Answer: 4

When a group of doctors and hospitals in a designated area contract with an insurer to provide health care at a prearranged figure to the insured, the arrangement is known as Preferred Provider Organization (PPO) Health Maintenance Organization (HMO) Designated Provider Organization (DPO) Professional Service Organization (PSO) Answer: 1

What is the name of a health care delivery system involving private insurers who contract with doctors and hospitals to provide services at set prices and allows insureds to choose among designated doctors and hospitals when medical treatment and care is needed? Preferred provider organization Administrative services organization Health care service organization Health maintenance organization Answer: 1

What is the name of a health care delivery system providing prepaid doctor and hospital care, emphasizing preventive care, and charging a fixed periodic fee to its enrolled members? Preferred provider organization Administrative services organization Health care service organization Health maintenance organization Answer: 4

Jerry is injured while working. Under state workers' compensation laws, we can assume that His employer will not be liable for Jerry's work related disabilities if the employer's negligence did not contribute to the injuries Jerry will probably receive workers' compensation benefits on a monthly or weekly basis Jerry must sue his employer to receive workers' compensation benefits Both Jerry and his employer are required to contribute to the cost of workers' compensation coverage Answer: 2

Which of the following statements pertaining to health maintenance organizations is CORRECT? An insurance company that also markets group health insurance is known as an HMO. If a person joins an HMO and undergoes a physical examination, she will be billed for the exam and each subsequent medical service as it is performed. An insurance company may sponsor an HMO or assist an HMO by providing contractual services. Like commercial insurers, HMOs generally assess deductibles. Answer: 1