Life Settlements and Life Insurance Planning: Regulations, Features, and Exceptions, Exams of Socialization and the Life Course

Download Life Settlements and Life Insurance Planning: Regulations, Features, and Exceptions and more Exams Socialization and the Life Course in PDF only on Docsity! A producer has indicated to a potential client that the proposed life insurance is covered by the Connecticut Life and Health Insurance Guaranty Association. This action taken by the producer is Answer - "Prohibited by law". Pointing out to a prospective client that the life insurance policy you are presenting is covered by the Connecticut Life and Health Guaranty Association is prohibited by law. Which of the following does NOT involve a life settlement transaction? Answer - Converting term life coverage to whole life insurance. the business of life settlements includes all of these except "Converting term life coverage to whole life insurance. Life settlement brokers are NOT allowed to Answer - Complete transactions prior to being approved for a license. Life settlement brokers need to be licensed before conducting any life settlement transactions. the exception to this would be certain eligible financial professionals. A producer must complete credit hours of continuing education for each licensing period. Answer - 24 hours. All insurance agents must successfully complete 24 credit hours of continuing education every 2 years, prior to license renewal. Three of those hours must be in ethics. A life insurance policy provision that has the ability to reduce the death benefit is called the Answer - Accelerated (living) benefit. Whatever amount is withdrawn from an accelerated benefit will be deducted from the face amount when death occurs. An officer for a corporation takes out numerous unsecured loans from the company's qualified retirement plan. Which of these rules is the plan in violation of? Answer - Exclusive benefit rule. The assets held in a company's qualified retirement plan must be maintained for the exclusive benefit of the employees and their beneficiaries. Connecticut Life and Health Insurance Exam (CT Life and Health Exam Practice) 150 Questions With Complete Answers. A source of supplemental income for a life insurance policyowner can be derived from the Answer - Cash value. Cash value may be used as a source to supplement a policyowner's income. Purchasing insurance is an example of risk Answer - Transference. Purchasing insurance is an example of risk transference. Which statement best describes a single premium whole life policy? Answer - Paid- up policy that offers lifetime protection. A single premium whole life policy provides protection for life as a paid-up policy. Which of the following situations would allow funds to be deposited into a rollover IRA? Answer - An employee quits her job and receives $50,000 from her qualified plan. Medical costs in birthing centers are lowered by using Answer - Certified nurse midwives. Birthing centers reduce medical costs through the use of certified nurse midwives. What is a a "functional assessment" for long-term care benefits? Answer - A review of the insured's ability to perform the activities of daily living. A "functional assessment" determines the insured's ability to perform the activities of daily living (ADLs) John bought a deferred annuity on Mary. John amends the contract years later to name Tom as the recipient of the proceeds if Mary dies. Who is the annuitant for this contract? Answer - Mary. In this situation, Mary is the annuitant because that is where the proceeds of the annuity will be directed. When does the producer give a premium receipt for a life insurance application? Answer - "When the initial premium has been paid with the application". A premium receipt is given to an applicant when the initial premium is paid with the application . Which statement is true regarding hospital preadmission certification for emergency situations? Answer - Notification is required to be given after insured is admitted to the hospital. Hospital preadmission certification typically requires notification to be given after the patient is admitted to the hospital for an emergency situation. For nonemergency situations, notification is to be given BEFORE admission. interest due. When an interest payment is not made, the policy loan is increased to reflect the amount of interest due. A description of a qualified plan's insurance contract may be found in which ERISA reporting form? Answer - Annual return/report (Form 5500). Form 5500 is a disclosure document that employee benefit plans use to satisfy annual reporting requirements under ERISA. When does a family health policy's coverage for a newborn child begin? Answer - At the moment of birth. If additional children are born to the family, the health insurance policy must cover the children at the moment of birth. XYZ Corp gives money to an employee to purchase a life insurance policy and allows the employee to select the beneficiary. What kind of plan is this? Answer - Split-dollar. A split-dollar plan is an arrangement where an employee and an employee share in the cost of purchasing a life insurance policy on the employee. The employee is also allowed to name the beneficiary. In long-term care insurance, what is an "ADL"? Answer - Activities of daily living Medicare Supplement insurance requires an individual to be at least how old for open enrollment? Answer - No minimum age. An accident and health insurance policy's premium requirements are set forth in which of the following provisions? Answer - Consideration clause. A producer MUST notify the Commissioner for Answer - conducting business under an assumed name. What determines how much an annuitant is paid for a variable annuity? Answer - The market value variations of the securities backing it. The amount of each variable annuity benefit paid to an annuitant varies according to the market value of the securities backing it. A producer sold a life insurance policy but did NOT provide the applicant with a basic illustration. In this situation, the insurer is REQUIRED to provide the applicant with a policy summary no later than the Answer - Policy delivery date. Which of the following statements accurately describes the "time limit on certain defenses"? Answer - After a stated period of time, claims cannot be denied due to material misrepresentation on the application. Time limit on certain defense provision limits the time an insurer can void a contract or deny a claim for material misrepresentation on the application. During the application process, a statement made by an applicant that becomes part of the contract is considered to be a(n) Answer - Warranty. a statement made by the applicant that is guaranteed to be true in every respect and becomes part of the contract. A policyowner pays the first annual premium for a $50,000 life insurance policy and dies one month after the policy effective date. Which of these statements is normally true? Answer - Beneficiary receives $50,000 income tax-free. A(n) insurer is incorporated and formed in Connecticut Answer - domestic. In CT, a domestic insurance company is defined as a company that is incorporated and formed in CT. The health insurance premiums paid for by each partner in a partnership is considered to be Answer - 100% tax deductible. In a business partnership. The inability to perform SOME of the duties of one's own occupation is known as a Answer - Residual disability. Which of the following would most likely purchase an immediate annuity? Answer - Retiree having a lump sum to invest. Who is required to notify the producer in the event of appointment termination? Answer - Insurer. The insurer is responsible for reporting an producer's termination of appointment. All of these are considered features of whole life insurance EXCEPT Answer - initial premium is lower than for an equivalent amount of term insurance. The initial cost of whole life insurance is actually HIGHER than the equivalent amount of term insurance. Which of these statements is NOT a characteristic of the law of large numbers? Answer - Rates can be calculated to compensate for losses. The law of large numbers states that larger groups provide better loss predictions. The higher the exposure, the more likely the event can be predicted. When must a producer provide disclosure about information practices to an applicant? Answer - Prior to or at the time of signing the application Which of the following describes the act of insuring a risk against possible loss? Answer - Risk transfer In regards to technology and the ACA, which of the following statements is correct? Answer - States which operate with an Exchange must offer an internet-based-portal Which of the following is NOT a valid reason for an insurer to contest a life insurance policy during the policy's first two years of existence? Answer - Misstatement of age. During the first two years a life insurance policy is in force, the insurer may contest a policy for all of these reasons EXCEPT misstatement of age in the application. A group health certificate for coverage issued in Connecticut MUST contain a(n) Answer - Summary of policy features and benefits. Which parties are directly involved in a group accident and health insurance contract? Answer - Employer and insurer. The contract for coverage in a group health plan is between the insurance company and the employer. Which of the following incidents would NOT be covered by an Accidental Death and Dismemberment policy? Answer - Suicide. Suicide is not covered by AD&D policies. How long is individual medical expense insurance normally written for? Answer - 1 year. An accident and health insurance policy defines an injury as "bodily injury by accidental means". For an injury to be covered on this policy, what is required? Answer - Both the cause and resultant injury must be accidental. Accidental means is a requirement of an accident based policy that the cause of the mishap must be accidental for any claim to be payable. (HIV) consent form to disclose the types of individuals or organizations that may receive a copy of the test results. When a producer submits an application that discloses personal information regarding the applicant, who supplies the privacy notice? Answer - Producer. For employees covered in multiple states under a group health plan, jurisdiction rules cannot alter Answer - COBRA laws. COBRA is a federal law and cannot be altered by any state jurisdiction. An Individual is insured under a major medical plan with a $1,000,000 lifetimes benefit. The plan has a $500 deductible and an 80% coinsurance. If the insured suffers a $50,000 medical expense during the calendar year, what is the remaining lifetime benefit? Answer - $960,000. $50,000 - $500 deductible = $50,000. $50,000 x 80% = $40,000. $1,000,000 lifetime benefit - $40,000= $960,000 remaining. An insured has been ordered by the court to provide a child's health insurance. Upon this order, the insurer must allow the enrollment of this child Answer - At any time with no open enrollment restrictions. A life annuity feature which provides benefit payments for a minimum number of years, no matter when the annuitant die, is called Answer - period certain. Which of these statements accurately portrays an adjustable life insurance policy? Answer - Policy can alternate between forms of term and whole life insurance. Adjustable life insurance allows the policyowner to adjust the policy's face amount, premium, and type of protection without having to complete a new application or exchange policies. Example: converting a term policy to whole life or vice versa. A producer's license may only be suspended or revoked if the producer Answer - Has been afforded a right to a hearing. No existing insurance license will be revoked until the license has been afforded a right to a hearing on the charges If an individual would like to enroll in Medicare or seek public information about Medicare, which federal agency handles this? Answer - Social Security Administration. Handles enrollment for Medicare program and provides information about medicare to the public. Which of the following would NOT have a restricted ability to enter into a contract? Answer - Small employer. Small employers do not have a restricted ability to enter in a contract. Which of the following would prevent a person from obtaining a Connecticut resident producer license? Answer - Residing in a state outside of Connecticut. You must be a resident of Connecticut. Which of these situations would NOT potentially involve a prison sentence under Federal law? Answer - Selling insurance with a nonresident license. Selling insurance with a nonresident license is not a Federal violation. The standard provisions of an accident and health insurance policy may require that the Answer - Policy, endorsements, and attached papers constitute the "entire contract" James the producer has sold a life insurance contract to a client without using an illustration, even though his insurer offers one. For this particular transaction, the applicant Answer - Must sign a statement that no illustration was provided. Which of the following does a Medicare Advantage enrollee typically pay for? Answer - Small co-pay per visit or per service. In addition to the premium. Which life insurance settlement option pays a stated monthly benefit until both principal and interest are exhausted? Answer - Fixed amount installment option. The fixed amount installment option pays a predetermined amount of income at specific intervals until the proceeds and any interest earned are exhausted. Laura added a children's rider to her life insurance policy. What type of coverage was added? Answer - Level term. Is provided by adding a children's rider to the life insurance policy. An insurance policy may be issued with a preferred insurance premium in all of these situations EXCEPT Answer - Living in a rural area. Where an applicant lives is not a factor in determining preferred rates. Which tax is normally associated with an individual's death? Answer - Federal estate tax. When does the insured stop making payments under a thirty-payment whole life policy? Answer - At the time of death or 30 years after the policy's inception, whichever comes first. Stops paying premiums. Major Medical policies are typically characterized by which of the following? Answer - Flat deductible. Major Medical policies are typically characterized by flat deductibles. Which of the following best describes the tax treatment of medical expense policies for the self-employed? Answer - 100% of medical expense plan premiums are tax deductible. A consumer who has been recently denied insurance, credit, or employment based on an unfavorable consumer report MUST be advised as such, Which of the following does this statute originate from? Answer - Fair Credit Reporting Act. A consumer being investigated must be advised of any denial based on an unfavorable report. Home health care benefits typically do NOT include coverage for Answer - Prescription medication. Home health care benefits usually include coverage for all of these except prescription drugs. Which of the following is the BEST candidate for a temporary insurance license? Answer - The executor of the estate of a deceased licensed producer. My be issued without examination. Most prepaid dental plans cover Answer - Oral examinations. Oral examinations are covered in most prepaid dental plans. Jerome is covered by a disability income policy that does NOT provide benefits for losses occurring as the result of his employment. What kind of coverage is this? Answer - Nonoccupational coverage. All of the following are covered under most dental plans EXCEPT for Answer - Mouth cancer. Dental expense insurance typically provides benefit payments for all of these EXCEPT oral cancer. An accident and health insurer has just received written proof of loss from one of its insureds. The insured must now wait 60 days before Answer - Bringing legal action against the insurer. In accident and health insurance, 60 days must pass after written proof of loss has been received by an insurer before the insured can bring legal action against the insurer. All of these are common limiting factors with dental insurance EXCEPT for Answer - Limit placed on number of teeth that may be treated annually. All of these are typical limiting factors with dental plans except for the number of teeth that can be treated annually. During the sale of a life insurance policy, a producer may provide an incomplete illustration Answer - Never. In the sale of a life insurance policy, it is never permissible for a producer to provide an incomplete illustration. What is the name of the rider that provides an additional purchase option in a life insurance policy? Answer - Guaranteed insurability rider. An additional purchase option in a life insurance policy is also known as a guaranteed insurability rider. Which of the following health plans pay benefits on a pre-paid service basis ? Answer - Health Maintenance Organizations (HMO's) are contracted on a pre-paid service basis, NOT a fee-for-service or reimbursement basis. They offer a wide range of health care services for member subscribers. For a fixed periodic premium, the subscriber is entitled to medical services of certain physicians and hospitals contracted that work with the HMO. HMO's are pre-paid medical service plans. To secure authority for soliciting insurance products in the State of Connecticut, an insurance company must secure a certificate of authority from Answer - The Connecticut Insurance Commissioner. An insurance company must secure a certificate of authority from the Commissioner before transacting insurance in this state. Terry suffers an injury at his workplace which is covered by workers compensation. Terry also has a medical expense insurance policy. Under medical expense insurance policies, losses that are covered by workers compensation are typically Answer - Excluded from coverage. Under medical expense insurance policies, losses that are covered by workers compensation are generally excluded from coverage. Which of the following contracts offer deferred taxation, flexible payments, a guaranteed interest rate, and death benefits equal to the cash value? Answer - Flexible premium fixed annuity. Offers flexible deposits, deferred taxation, a guaranteed minimum interest rate, and death benefits equal to the cash value. A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid Answer - Mandatory income tax withholding on the amount transferred. There is no federal tax withholding involved in a transfer of funds from one qualified plan into another. Rollovers, however, involve a 20% withholding. Once the rollover takes place to the new custodian, the remainder of the distribution is made. What is the name of the period of time during which a new employee is ineligible for group Health insurance coverage? Answer - Probationary period. How do benefit payments fluctuate over time in a variable life annuity? Answer - Reflects changes in the market value of assets in a separate account. At what point are death proceeds paid in a joint life insurance policy? Answer - When the first insured dies. A joint life policy covers two or more lives and provides for the payment of the proceeds at the death of the first among those insured, at which time the policy terminates. The reason for backdating a policy is Answer - To obtain a premium rate based on an earlier age. The purpose of backdating a life insurance policy is to use premiums based on an earlier age. Which of the following statements regarding hospital pre-admission authorization is NOT true? Answer - It encourages weekend admission. All of these statements about hospital pre- admission authorization are true EXCEPT "it encourages weekend admission. An annuitant is paid $495 per month until the contract value is exhausted at some undetermined date in the future. Which type of annuity payout option is this? Answer - Fixed amount. Under the fixed amount option, the annuitant receives a fixed payment until the contract value is exhausted, regardless of when that will be. If the annuitant dies before the contract is depleted, the beneficiary receives the remainder. A group health plan covers employees in Connecticut, Massachusetts, and Rhode Island. The state regulatory jurisdiction established for this plan does NOT affect which plan aspect? Answer - COBRA continuation of coverage. All of these aspects may be affected EXCEPT for "COBRA continuation coverage". Which individual would be best suited for Medicare Supplement insurance? Answer - Medicare enrollee. Medicare Supplement insurance is designed for individuals who are enrolled in Medicare. Security laws passed by Congress are enforced by which Federal agency? Answer - Security and Exchange Commission. The Security and Exchange Commission enforces the security laws enacted by Congress. Which of the following relationships demonstrates insurable interest in the absence of economic interest ? Answer - Marriage partners. Insurable interest may exist in marriage partners while absent of the economic interest. A handicapped child is covered under an individual health policy. If continuation of coverage is needed beyond the policy's age limit, which of the following is required? Answer - Proof of incapacity and dependency upon reaching the age limit. In Connecticut, continuation of medical plan coverage for a handicapped child beyond the age limit stated in the policy may require proof of the child's incapacity and dependency upon reaching the age limit. Laura is a new employee and will be obtaining non-contributory group Major Medical insurance from her employee. Which of the following actions must she take during the open enrollment period? Answer - Sign an enrollment card. A new employee must sign an enrollment card during the open enrollment period. Which life insurance clause prohibits an insurance company from questioning the validity of the contract after a stated period of time has passed? Answer - Incontestable clause. The incontestable clause prohibits the insurer from questioning the validity of the contract after a stated period of time has passed. What is another term used for a "pure" life annuity? Answer - Life Income. A "pure" life annuity (also known as "life income") provides the highest monthly income benefit. Upon the death of the annuitant, however, all remaining funds are lost to the insurer.