Insurance MCQ

Which of the following meets the criterion for being a natural group for group life insurance purposes? A All members of the group live within the same zip code B Members of the group all have a college degree C The group has at least 500 members D The group was formed for a purpose other than for procuring or reducing the cost of insurance Answer: D

Who is generally named as the beneficiary when a credit life insurance policy is issued? A Debtor B Estate of the insured C Creditor D Spouse of insured Answer: C

A mandatory participation rate for noncontributory group plans is designed to: A Allow the employer to obtain the greatest premium discount B Reduce adverse selection C Achieve economies of scale D Maximize the premium an insurer collects Answer: B

A partnership has 3 partners who each have an equal ownership interest in their $3,000,000 business. How many policies would have to be purchased under a traditional cross purchase buy-sell agreement plan? A 9 B 3 C 6 D 1 Answer: C

In which market are Certificates of Insurance issued to insured individuals? A Group B Individual C Industrial D Franchise Answer: A

The advantage of an insurance funded buy-sell agreement is: A The surviving spouse becomes the new partner in the firm B The estate transfer may be delayed due to forced business liquidation C Assets are forced to be sold to generate cash to pay for the business interest of the deceased partner D It is a legally enforceable agreement, which pre-establishes the value of the business, and provides the funds for an efficient method of transferring the deceased's business interest Answer: D

All of the following are correct regarding Key Person Insurance, except: A The policy is owned by the employer B The policy primarily insures the employee's retirement plan C The policy can be term or permanent D The policy is source of funds to replace any lost revenue Answer: B

_______ restrict the insurer's underwriting criteria for group policies. A State laws B Federal laws C State and federal laws D NAIC and Insurance Department rules and regulations Answer: C

All are correct statements concerning noncontributory group life, except: A The Conversion Period is 31 days B If employer-sponsored, an employee must work a minimum number of hours per week to be eligible C Only the plan sponsor is responsible for paying premiums D Premiums are calculated by underwriting each individual in the group Answer: D

Which of the following is the least important when it comes to determining the cost of the group life insurance plan? A The nature of the work involved B The group' claims C The health of each member of the group D Size of the group Answer: C

A key person is typically all of the following, except: A More highly paid B Not directly involved in sales, production, or service C Part of the management team D Respected by customers, creditors, suppliers, or vendors Answer: B

How is the funding for Social Security provided? A Through FICA taxes that are paid by employees B Through the PIA C Through FICA taxes that are paid by employers D Through FICA taxes that are paid by both employers and employees Answer: D

When is an entity buy-sell agreement plan used? A When the entity needs an additional tax deduction B When the owners are not in the financial position to buy the policies on their own C When insurability is an issue D When the entity buys life insurance on each of the owners Answer: D

With a Contributory Group Life Plan, what percentage of the employees must participate? A At least 60% B At least 75% C A full 100% D At least 50% Answer: B

After the blackout period has ended, the widow or widower may receive a Social Security income benefit based on the ___________. A FICA taxes that are paid by employers B FICA taxes that are paid by the employees C PIA of the deceased spouse D Social Security Death Benefit Answer: C

The 31 days in which the employee may change his/her group policy to an individual policy upon termination and without evidence of insurability, is known as: A The Contestable Period B The Conversion Period C Ownership Rights Provision D Change of Policy Provision Answer: B

A Social Security retirement benefit recipient will receive the greatest benefit starting at which of the following ages? A 63 1/2 B 65 C 60 D 62 Answer: B

Buy-Sell agreements are used for all of the following entities, except: A Sole Proprietorships B Large Public Corporations C Partnerships D Closely held businesses Answer: B

The widow or widower's Social Security blackout period lasts until a surviving, non-remarried spouse reaches age ________. A 60 B 65 C 62 D 50 Answer: A

If an employee does not enroll during open enrollment and they still want coverage, what happens? A They pay more in premiums than those who enrolled during the open enrollment B They cannot obtain as much coverage as those who enrolled during the open enrollment C The forms of insurance are more limited when they do apply for coverage D They must provide proof of insurability Answer: D