LOMA 281 Module 2 questions with answers, Exams of Insurance law

Download LOMA 281 Module 2 questions with answers and more Exams Insurance law in PDF only on Docsity! LOMA 281 Module 2 questions with answers Which type of whole life insurance policy will best be able to give Arabella lifetime protection without straining her retirement income? Single-premium whole life policy Limited-payment whole life policy Continuous-premium whole life policy - ANSWER: ✔✔B Financial needs life insurance can meet - ANSWER: ✔✔- paying household expenses - covering outstanding debts - Paying outstanding medical, hospital, and funeral expenses, - providing financial support for the family - funding a child's education Term Life Insurance - ANSWER: ✔✔Life insurance that provides a death benefit only if the insured dies during the period specified in the policy. level term life insurance - ANSWER: ✔✔Term life insurance that provides a policy benefit that remains the same over the term of the policy. Decreasing Term Life Insurance - ANSWER: ✔✔Term life insurance that provides a policy benefit that decreases in amount over the term of coverage Mortgage Insurance - ANSWER: ✔✔A plan of decreasing term insurance designed to provide a benefit amount that corresponds to the decreasing amount owed on a mortgage loan. When Michael bought a house, he obtained a mortgage loan from the Archway Bank. He also bought a mortgage insurance policy from Able Life. Is Archway Bank a party to Michael's mortgage insurance contract with Able Life? a. yes b. no - ANSWER: ✔✔B. Who can Michael name as the beneficiary of his mortgage insurance policy? a. His Wife Only b. Archway Bank Only c. His Wife, Archway Bank, or Someone Else - ANSWER: ✔✔C. If Michael names his wife as the policy beneficiary, does she have to use the policy proceeds to repay the mortgage loan? a. yes b. no - ANSWER: ✔✔B. Credit Life Insurance - ANSWER: ✔✔A type of term life insurance designed to pay the balance due on a loan if the borrower dies before the loan is repaid. Family Income Coverage - ANSWER: ✔✔A plan of decreasing term life insurance that provides a stated monthly income benefit amount if the insured dies during the term of coverage. Increasing Term Life Insurance - ANSWER: ✔✔Term life insurance that provides a death benefit that starts at one amount and increases by some specified amount or percentage at stated intervals over the policy term. attained age conversion - ANSWER: ✔✔A conversion of a term life insurance policy to a cash value life insurance policy in which the premium rate for the cash value policy is based on the insured's age at the time the policy is converted. Contrast with original age conversion. Original age conversion - ANSWER: ✔✔A conversion of a term life insurance policy to a cash value life insurance policy in which the premium rate for the cash value policy is based on the insured's age when the original term life insurance policy was issued. Contrast with attained age conversion. antiselection - ANSWER: ✔✔ When a term life insurance policy is RENEWED, the amount of coverage under the policy can ... a. increase b. decrease c. remain the same - ANSWER: ✔✔B & C When a term life insurance policy is RENEWED, the coverage period can ... a. increase b. decrease c. remain the same - ANSWER: ✔✔B & C When a term life insurance policy is RENEWED, the premium rate (for the same amount of coverage) can ... a. increase b. decrease c. remain the same - ANSWER: ✔✔A. When a term life insurance policy is RENEWED, the type of coverage ... a. changes b. remains the same - ANSWER: ✔✔B. When a term life insurance policy is CONVERTED, the amount of coverage can ... a. increase b. decrease c. remain the same - ANSWER: ✔✔B & C When a term life insurance policy is CONVERTED,the coverage period can .. a. increase b. decrease c. remain the same - ANSWER: ✔✔A. When a term life insurance policy is CONVERTED, the premium rate can ... a. increase b. decrease c. remain the same - ANSWER: ✔✔A. When a term life insurance policy is CONVERTED, the type of coverage .... a. changes b. remains the same - ANSWER: ✔✔A. Carlos mendoza purchased a 250k insurance policy on his life that requires him to pay equal annual premium payments. If Mr. Mendoza keeps the policy in force by paying the annual renewal premiums, and if he dies anytime within 20 years after purchasing the policy, then the policy will provide a 250k death benefit. The policy provides no coverage beyond the 20 - year period, and Mr. Mendoza will not receive anything if he lives to the end of the policy term. This information indicates that the type of insurance policy Mr. Mendoza owns is a. an increasing term life insurance policy b. a level term life insurance policy c. a decreasing term life insurance policy d. an attained age conversion term life insurance policy - ANSWER: ✔✔B. Dolly Varden purchased a new home and obtained a 30-year mortgage loan from the sanguine bank. To insure her mortgage loan. Dolly purchased from the Valiant Insurance Company a mortgage insurance policy that named her husband, William, as the beneficiary. The following statements are about this situation select the answer choice containing the correct statement. a. In the event of dolly's death, William is required to use the policy proceeds of the mortgage insurance policy to repay the mortgage loan b. the amount of the policy benefit payable at any given time under dolly's mortgage insurance policy generally equals the amount owed on the mortgage c. The sanguine bank is a party to the mortgage insurance contract that dolly purchased d. Valiant is a party to the mortgage loan contract that dolly obtained. - ANSWER: ✔✔B. The following statements are about credit life insurance and family income coverage. Select the answer choice containing the correct statement. a. The proceeds of a credit life insurance policy may be paid to a beneficiary other than the lender, or creditor, if the insured borrower dies during the policy's term. b. The amount of the benefit payable under a credit life insurance policy usually remains level over the duration of the loan c. Family income coverage provides a stated monthly income benefit amount to the beneficiary if the insured dies during the term of coverage d. Family income coverage is a plan of increasing term life insurance - ANSWER: ✔✔C. Caitlin Miller, age 35, purchased a $ 150,000 20-year return of premium (ROP) term insurance policy from the Karat insurance company. Ms. Miller paid annual premiums of $300. Ms. Miller paid all required premiums and was alive at the end of the 20-year term when the policy expired. This information indicates that a. Ms. miller's policy expired without Karat making any payment to anyone b. Karat paid $ 6,000 to Ms. miller c. Karat paid $ 150,000 to <s. Miller - ANSWER: ✔✔B. Which type of whole life insurance policy will provide Kimiko with the most insurance coverage for the most affordable premium? a. Single-premium whole life policy b. Limited-payment whole life policy c. Continuous-premium whole life policy - ANSWER: ✔✔C. Carter is considering purchasing either a traditional whole life insurance policy or a modified-premium whole life insurance policy. If the initial annual premium for both policies is $2,000, which policy do you think will provide Carter with the most life insurance coverage? a. The traditional whole life policy b. The modified-premium whole life policy c. Both policies will provide the same amount of coverage - ANSWER: ✔✔B. Modified-premium whole life policy - ANSWER: ✔✔A whole life insurance policy for which the annual premium amount changes after a specified initial period (typically 5 or 10 years). How do you think the annual premium for Carter's modified coverage policy would compare to the annual premium for a $250,000 traditional whole life policy? a. The premium would be less for the modified coverage policy b. The premium would be more for the modified coverage policy c. The premium would likely be the same for both policies - ANSWER: ✔✔A. modified coverage whole life policy - ANSWER: ✔✔A whole life insurance policy under which the amount of insurance provided decreases by specific percentages or amounts either when the insured reaches certain stated ages or at the end of stated time periods. joint whole life insurance - ANSWER: ✔✔A plan of whole life insurance that has the same features and benefits as individual whole life insurance, except that it insures two people under the same policy; the death benefit is payable when the first insured dies.\ Also known as first-to-die life insurance. last survivor life insurance - ANSWER: ✔✔A variation of joint whole life insurance under which the policy benefit is paid only after both people insured by the policy have died. Also known as second-to-die life insurance. Most basic type of cash value policy; level death benefit, level premium rate a. Modified coverage whole life insurance b. Last survivor life insurance c. Traditional whole life insurance d. Joint whole life insurance e. Modified premium whole life insurance - ANSWER: ✔✔C. Smaller premium for an initial period, followed by a larger premium for the remainder of the insured's lifetime; death benefit remains the same a. Modified coverage whole life insurance b. Last survivor life insurance c. Traditional whole life insurance d. Joint whole life insurance e. Modified premium whole life insurance - ANSWER: ✔✔E. Insures two lives with one policy, for one premium; death benefit payable upon the death of the first insured a. Modified coverage whole life insurance b. Last survivor life insurance c. Traditional whole life insurance d. Joint whole life insurance e. Modified premium whole life insurance - ANSWER: ✔✔D. The face amount of coverage changes at stated intervals; usually highest face amount in early policy years, and lowest face amount in later policy years. The premium amount remains the same. a. Modified coverage whole life insurance b. Last survivor life insurance c. Traditional whole life insurance d. Joint whole life insurance e. Modified premium whole life insurance - ANSWER: ✔✔A. Insures two or more lives with one policy, for one premium. The death benefit is payable upon death of the last insured. a. Modified coverage whole life insurance b. Last survivor life insurance c. Traditional whole life insurance d. Joint whole life insurance e. Modified premium whole life insurance - ANSWER: ✔✔B. Universal life (UL) Insurance - ANSWER: ✔✔A form of cash value life insurance that is characterized by its flexible premiums, its flexible face amount and death benefit amount, and its separation of the three primary policy elements. What happens if Ethan fails to pay a renewal premium for his UL policy? a. The policy could remain in force b. The policy will lapse immediately for nonpayment of premium - ANSWER: ✔✔A. Flexibilty to his death benefit for UL - ANSWER: ✔✔- An increase in face amount generally requires evidence of insurability, because it increases the insurer's risk on the policy. - A decrease in face amount requires verifying that the policy still qualifies as life insurance and not as an investment. section 7702 corridor - ANSWER: ✔✔In the United States, the difference between an insurance policy's death benefit and the policy's cash value. This amount is used to determine whether the policy qualifies as a life insurance policy rather than an investment product under federal tax laws. Mortality charges - ANSWER: ✔✔The insurer periodically deducts from the cash value an amount to cover the mortality risk the insurer assumed by issuing the policy. Fixed Premiums a. UL b. IUL c. VL d. VUL - ANSWER: ✔✔C. Select the type of policy based on the description. Choose all that apply. separate pricing factors a. ul b. IUL c. VL d. VUL - ANSWER: ✔✔A,B, & D Select the type of policy based on the description. Choose all that apply. Policy owner assumes investment risk a. UL b. IUL c. VL d. VUL - ANSWER: ✔✔C & D Select the type of policy based on the description. Choose all that apply. Death benefit can remain level or vary with changes to cash value a. UL b. IUL c. VL d. VUL - ANSWER: ✔✔A, B, & D Select the type of policy based on the description. Choose all that apply. Death benefit varies according to investment perfomrance a. UL b. IUL c. VL d. VUL - ANSWER: ✔✔C & D In comparing cash value life insurance coverage and term life insurance coverage, the following statments(s)can correctly be made: a. both cash value life insurance and term life insurance provide a savings element b. Cash value life insurnace provides coverage for the insured's lifetime, whereas term life insurance provides coverage for a specified term only a. both a and b b. a only c. b only d. neither a nor b - ANSWER: ✔✔C. The policyowner of a cash value life insurance policy can borrow against the policy by taking out a policy loan. Such a policy loan (does/does not) reduce policy values. Another option that the policyowner has is to elect to receive the policy's entire cash surrender value. In such a circumstance, the policy coverage (continues / terminates) a. does/continues b. does/terminates c. does not/continues d. does not/ terminates - ANSWER: ✔✔B. Gabriel Haredale purchased a whole life insurance policy that insures both him and his wife, Martha. The policy specifies that the death benefit will be paid only after both Gabriel and Martha have died. This information indicates that the type of insurance policy Gabriel purchased is a. family income coverage b. a joint whole life insurance policy c. a last survivor life insurance policy d. a first to die life insurance policy - ANSWER: ✔✔C. one true statement about universal life insurance policy is that - ANSWER: ✔✔policyowner decides, within certain limits, what the policy's face amount will be, the amount of the death benefit payable, and the amount of premiums he will pay for that coverage The following statements are about variable universal life (VUL) insurance in the US. Select the answer choice contain the correct statement a. most customer choose vul insurance polices for the guaranteed investment earrings provided by those polices b. the insurance company alone assumes the investment risk of a vul insurance policy c. vul insurance policyowners are allowed to invest part of their premiums in a fixed fund d. the death benefit provided by a vul insurance policy remains constant thought the life of the policy. - ANSWER: ✔✔C. Insurers sell an annuity product, which pays income to the contract owner in exchange for a premium. Do you think annuities are life insurance products according to U.S. regulations? The parties to the annuity contract are: a. only elisa b. only abc insurance company c. only armando d. Elisa, abc insurance company, and armando - ANSWER: ✔✔D. Under the terms of her annuity contract, Elisa will pay $1,000 a year for the next 15 years to the ABC Insurance Company. Elisa wants to start receiving monthly annuity payments when her son, Armando, turns 18, and payments will continue for the rest of her life. ABC will use Elisa's expected remaining lifetime to calculate the amount of her monthly annuity payment. the annuitant is: a. elisa b. abc insurance company c. armando - ANSWER: ✔✔A. Under the terms of her annuity contract, Elisa will pay $1,000 a year for the next 15 years to the ABC Insurance Company. Elisa wants to start receiving monthly annuity payments when her son, Armando, turns 18, and payments will continue for the rest of her life. ABC will use Elisa's expected remaining lifetime to calculate the amount of her monthly annuity payment. the payee of this annuity contract is: a. Elise b. ABC insurance company c. Armando - ANSWER: ✔✔A. Under the terms of her annuity contract, Elisa will pay $1,000 a year for the next 15 years to the ABC Insurance Company. Elisa wants to start receiving monthly annuity payments when her son, Armando, turns 18, and payments will continue for the rest of her life. ABC will use Elisa's expected remaining lifetime to calculate the amount of her monthly annuity payment. the owner of this annuity contract is: a. elisa b. ABC insurance company c. Armando - ANSWER: ✔✔A. Decide whether each statement is true or false. Immediate annuities are purchased with a single premium payment. a. true b. false - ANSWER: ✔✔A. Deferred annuities have an accumulation period but not a payout period. a. True b. False - ANSWER: ✔✔B. The time span between each annuity payment is the payout period. a. True b. False - ANSWER: ✔✔B. The accumulation value of an annuity equals the premiums paid, plus investment earnings, less withdrawals and fees. a. True b. false - ANSWER: ✔✔A. Fixed annuity - ANSWER: ✔✔An annuity contract under which the insurer guarantees the minimum interest rate that will be applied to the annuity's accumulation value during the accumulation period and the minimum amount of the periodic income payments that will be made during the payout period. Who assumes the investment risk for a fixed annuity? a. The insurer b. The contract owner c. The beneficiary - ANSWER: ✔✔A. variable annuity - ANSWER: ✔✔An annuity under which the amount of the accumulation value and the amount of the periodic income payments fluctuate in accordance with the performance of one or more specified fund options. the owner of a variable annuity general can - ANSWER: ✔✔- Allocate a percentage of each premium payment to a number of fund options - Change the percentage of premium allocations to different fund options Transfer money to different fund options the owner of a fixed annuity has - ANSWER: ✔✔- The minimum interest rate that it will apply to any accumulation value - The minimum amount of the annuity payments that it will pay money market - ANSWER: ✔✔us treasury bills bond (international) - ANSWER: ✔✔Bonds issued by foreign governments and corporations stock (growth) - ANSWER: ✔✔Stocks of U.S. corporations that demonstrate strong potential for growth value - ANSWER: ✔✔Stocks of U.S. corporations that may be priced below market value The type of annuity contract under which the insurer guarantees at least a minimum interest rate and a payment amount that won't change is known as a a. Variable annuity b. Fixed annuity - ANSWER: ✔✔B. Premiums paid for a variable annuity typically are placed in the insurer's a. General account b. Separate account - ANSWER: ✔✔B. In this exercise, you will match each variable annuity contract feature with its name. Guarantees a minimum protected accumulation value—usually the principal or the principal plus a modest growth factor—if the contract remains in force for a specified period of time. a. Guaranteed minimum accumulation benefit (GMAB) b. Guaranteed lifetime withdrawal benefit (GLWB) c. Guaranteed minimum withdrawal benefit (GMWB) d. Guaranteed minimum income benefit (GMIB) e. Guaranteed minimum death benefit (GMDB) - ANSWER: ✔✔A. Guarantees a minimum protected value and a guaranteed minimum income payment amount. a. Guaranteed minimum accumulation benefit (GMAB) b. Guaranteed lifetime withdrawal benefit (GLWB) c. Guaranteed minimum withdrawal benefit (GMWB) d. Guaranteed minimum income benefit (GMIB) e. Guaranteed minimum death benefit (GMDB) - ANSWER: ✔✔D. If the contract owner dies before annuity payments begin, the beneficiary will receive the greater of the contract's accumulation value or a protected amount. a. Guaranteed minimum accumulation benefit (GMAB) b. Guaranteed lifetime withdrawal benefit (GLWB) c. Guaranteed minimum withdrawal benefit (GMWB) d. Guaranteed minimum income benefit (GMIB) e. Guaranteed minimum death benefit (GMDB) - ANSWER: ✔✔E. Guarantees up to a certain percentage of a designated amount can be withdrawn annually for life, even if subaccount investments perform poorly. a. Guaranteed minimum accumulation benefit (GMAB) b. Guaranteed lifetime withdrawal benefit (GLWB) c. Guaranteed minimum withdrawal benefit (GMWB) d. Guaranteed minimum income benefit (GMIB) e. Guaranteed minimum death benefit (GMDB) - ANSWER: ✔✔B. Guarantees up to a certain percentage of a designated amount can be withdrawn until the designated amount reaches zero, even if subaccount investments perform poorly. a. Guaranteed minimum accumulation benefit (GMAB) b. Guaranteed lifetime withdrawal benefit (GLWB) c. Guaranteed minimum withdrawal benefit (GMWB) d. Guaranteed minimum income benefit (GMIB) e. Guaranteed minimum death benefit (GMDB) - ANSWER: ✔✔C. Withdrawal Provisions - ANSWER: ✔✔A deferred annuity contract provision that gives the contract owner the right to withdraw all or part of the contract's accumulation value during the accumulation period. Do insurers place any limits on withdrawals? a. Yes b. No - ANSWER: ✔✔A. withdrawal charge - ANSWER: ✔✔A charge imposed on the owner of a deferred annuity when the owner withdraws more than a stated percentage of the annuity contract's accumulation value in one year. Does a withdrawal terminate the contract? a. Yes b. No c. Sometimes - ANSWER: ✔✔B. surrender value - ANSWER: ✔✔The accumulation value of a deferred annuity less any surrender charges included in the contract. the accumulation value less surrender charges. - ANSWER: ✔✔- Surrender terminates the annuity contract - After surrender, no annuity payments are made - Surrender charges, which are calculated as a percentage of the accumulation value, are usually highest during the early contract years and gradually decrease. A surrender charge is also known as a back-end sales charge or a contingent deferred sales charge. surrender charges - ANSWER: ✔✔A fee typically imposed if a deferred annuity contract is surrendered within a stated number of years after it was purchased. Also known as back-end sales charge and contingent deferred sales charge. a. Periodic fees b. Service fees c. Front-end sales charge d. Back-end sales charge e. Mortality and Expense (M&E) f. risk charge g. Fund operating expense charge - ANSWER: ✔✔A. This annuity charge covers a one-time fee charged for specific services. a. Periodic fees b. Service fees c. Front-end sales charge d. Back-end sales charge e. Mortality and Expense (M&E) f. risk charge g. Fund operating expense charge - ANSWER: ✔✔B. For variable annuities, this annuity charge covers various risks and expenses assumed by the insurer, including the risk involved in providing the annuity death benefit and certain other guarantees. a. Periodic fees b. Service fees c. Front-end sales charge d. Back-end sales charge e. Mortality and Expense (M&E) risk charge F. Fund operating expense charge - ANSWER: ✔✔E. or variable annuities, this annuity charge covers the costs of managing and operating the investment funds underlying the variable fund options. a. Periodic fees b. Service fees c. Front-end sales charge d. Back-end sales charge e. Mortality and Expense (M&E) risk charge F. Fund operating expense charge - ANSWER: ✔✔E. payout options - ANSWER: ✔✔The choices an annuity contract owner has as to how the insurer will distribute the funds in an annuity during the payout period. Two broad categories of payout options: - ANSWER: ✔✔- Payouts that are linked to the life expectancy of a named annuitant - Payouts that are not linked to any life expectancy life annuitites - ANSWER: ✔✔An annuity that provides periodic income payments for at least the lifetime of a named individual. straight life annuity - ANSWER: ✔✔A life annuity which provides periodic income payments for only as long as the annuitant lives. Also called single life annuity or life only annuity. life income with refund annuity - ANSWER: ✔✔A life annuity that provides periodic income payments throughout the lifetime of the annuitant and guarantees that at least the purchase price of the annuity will be paid out. Also known as single life with refund annuity or refund annuity. Life income with period certain annuity - ANSWER: ✔✔A life annuity which guarantees that the insurer will make periodic income payments throughout the annuitant's life and guarantees that the payments will be made for at least a certain period, even if the annuitant dies before the end of that period. Also called single life annuity with period certain. A life income with period certain annuity (also called a single life annuity with period certain) guarantees that - ANSWER: ✔✔(1) The insurer will make annuity payments throughout the annuitant's life AND (2) Payments will continue for a specified period of time, even if the annuitant dies before the end of the period. Suppose Carla buys a life annuity with a 10-year period certain. She is the annuitant and the payee, and her son William is the beneficiary. What will happen if Carla dies 7 years after annuity payments begin? a. income payments will end when carla dies b. william will receive annuity payments for 3 years after carla's death c. william will receive annuity payments for 10 years after carla's death - ANSWER: ✔✔B. joint and survivor life annuity - ANSWER: ✔✔A life annuity that provides periodic income payments to two or more annuitants, and those payments continue until both or all of the annuitants die. -Whether annuity payment amounts remain the same or decrease after the death of the first annuitant depends on the terms of the contract. lump-sum distribution - ANSWER: ✔✔The distribution of the accumulation value of an annuity in a single payment. fixed period option - ANSWER: ✔✔An annuity contract payout option under which the insurer makes annuity payments for a specified period of time. fixed amount option - ANSWER: ✔✔An annuity contract payout option under which the insurer provides periodic income payments of at least a specified minimum amount for as long a period as the annuity's accumulation value will provide, regardless of whether the annuitant lives or dies. traditional IRA - ANSWER: ✔✔A type of tax-deferred individual retirement account into which a qualified person or spouse with taxable compensation can make contributions that may be tax deductible up to specified limits. For deductible contributions, the account owner does not pay taxes on the contributions in the account, including investment earnings, until withdrawn. - Contributions, up to a stated maximum, usually are tax-deductible - investment earnings are tax-deferred Roth IRA - ANSWER: ✔✔In the United States, a type of individual retirement arrangement that permits people within certain income limits to make nondeductible contributions and to withdraw money on a tax-free basis, provided certain requirements are met. - Contributions are not tax-deductible, and they are not taxed when withdrawn from the IRA - Investment earnings accumulate; qualified withdrawals are distributed on a tax-free basis Contributions to a Roth IRA are tax-deductible. a. True b. False - ANSWER: ✔✔B. A traditional IRA owner may defer paying taxes on the IRA's investment earnings until money is withdrawn from the contract. a. True b. False - ANSWER: ✔✔A. By definition, the person whose lifetime is used to determine the amount of benefits payable under an annuity contract is known as the a. payee b. annuitant c. contract owner d. contingent payee - ANSWER: ✔✔B. At age 55, Lucy warwick used a lump-sum distribution from her retirement plan to purchase a fixed annuity from the park insurance company. this annuity began making payments of $1,000 a month to Ms. warwick when she reached age 65, and these payments continued until her death at age 77. One true statement about this annuity contract is that it a. is an example of a deferred annuity b. has an annuity period of 12 years c. has an accumulation period of 12 years d. has a payout period of one month - ANSWER: ✔✔ Abigail foster is comparing these features of a fixed annuity and a variable annuity. If ms. foster wants principal and interest-rate guarantees, she should consider purchasing a (fixed/variable) annuity. If she purchases a (fixed/variable) annuity. all of her premiums will be invested in the insurer's general account a. fixed/fixed b. fixed/variable c. variable/fixed d. variable/ variable - ANSWER: ✔✔A. The folowing statemtn(s) can be correctly made about equity-indexed annuities (EIA) and market value adjusted MVA anuities: a. an eia contact does not guarantee a specified minimum value for the annuity b. in the united states EIa and MVA annuities can be registered as securities or non-registered depending on ow they are structured a. both a and b b. only a c. only b d. neither a nor b - ANSWER: ✔✔C. Miguel sandoval owns a $100,000 single-premium variable annuity that includes an enhand benefit. This benefita llows him to withdraw up to 3,000 annually throught his lifetime even if subaccount investments preform poorly. Mr sandoval's variable annuity contains the type of enhanced benefit known as a. GMIB b. GMDB c. GLWB D. GMAB - ANSWER: ✔✔C. Deferred annuity contracts include provisions relating to withdrawals and surrenders. The following statements are about these withdrawals and surrenders: a. withdrawals reduce the annuity contract's accumulation value, but they don't terminate the contract b. surrender charges for deferred annuities are usually lowest during the contract's early years and then gradually increase over time a. Both a and b b. a only c. b only d. either a nor b - ANSWER: ✔✔b. Jocelyn picard purchaed a varibale annuity from the redwood insurance company. Ms. Picard's annuty incldes a charge that covers redwood's costs of managing and operating the invesstment funds underlying the variable fund options. This fee is expressed as a percentage of the accumualtion value of s. picard's annuity. This type of charge is know as a a. perodic fee b. mortality and expesne (M&E) risk charge Coverage must be provided for at least the following ten essential services: - ANSWER: ✔✔- Ambulatory patient services, also known as outpatient care - Emergency services - Hospitalization - Maternity and newborn care - Mental health and substance use disorder services, including behavioral health treatment - Prescription drugs - Rehabilitative and habilitative services and devices—habilitative services are health care services that help you keep, learn, or improve skills and functioning for daily living - Laboratory services - Preventive and wellness services and chronic disease management - Pediatric services, including oral and vision care Marissa Barbosa bought an individual medical expense policy in January. The policy includes a $500 calendar-year deductible and a 20% coinsurance requirement. Marissa incurred $800 in allowable medical expenses in May. How much of this amount will she have to pay? a. $500 b. $560 c. $800 - ANSWER: ✔✔B. Now suppose Marissa incurs an additional $400 in allowable medical expenses in June. How much of this amount will Marissa have to pay? a. $80 b. $100 c. $400 - ANSWER: ✔✔A. Dental expense coverage - ANSWER: ✔✔Medical expense insurance coverage that provides benefits for routine dental examinations, preventive dental work, and dental procedures needed to treat tooth decay and diseases of the teeth and jaw. Vision care coverage - ANSWER: ✔✔Medical expense coverage that provides the insured with benefits for expenses incurred in obtaining eye examinations and corrective lenses. eye exams dread disease (DD) coverage - ANSWER: ✔✔Supplemental medical expense insurance coverage that provides benefits in a lump-sum or installments for medical expenses incurred by the insured who has contracted a specified disease. Also known as critical illness (CI) coverage. Select the medical expenses that are typically excluded under a major medical insurance policy. (Choose all that apply.) a. intentionally self-inflicted injuries b. basic hospital expenses c. basic surgical expense d. elective cosmetic surgery e. services related to illness or injury f. physicians expenses g. some preventive care h. routine eye exams and corrective lenses - ANSWER: ✔✔A, D, F, G, & H Select the major medical policy feature based on its correct description. A flat dollar amount of eligible expenses that the insured pays before the insurance begins paying benefits a. coinsurance b. deductible c. maximum out of pocket provision - ANSWER: ✔✔B. Select the major medical policy feature based on its correct description. A percentage of the allowable expenses in excess of the amount already paid by the insured a. coinsurance b. deductible c. maximum out of pocket provision - ANSWER: ✔✔A. Select the major medical policy feature based on its correct description. A limit on the amount the insured must pay out of pocket per year a. Coinsurance b. Deductible c. Maximum out-of-pocket provision - ANSWER: ✔✔C. The type of supplemental coverage that pays for medical expenses incurred by the insured who has contracted a specified disease is dread disease (DD) coverage. a. True b. False - ANSWER: ✔✔A. managed care features - ANSWER: ✔✔- Contracting with provider networks of doctors and health care facilities to deliver medical services for negotiated fees - Requiring or financially motivating insureds to obtain care from network providers - Using primary care providers (PCPs) to coordinate insured's' medical care and access to specialists provider networks - ANSWER: ✔✔A group of physicians, hospitals, and ancillary services providers that a specific managed care plan has contracted with to deliver health care services to plan insureds for negotiated fees. primary care providers (PCPs) - ANSWER: ✔✔A member of a provider network who coordinates insureds' medical care and treatment. Also known as a primary care physician. Two common benefit triggers are: - ANSWER: ✔✔An inability to complete activities of daily living (ADLs) Cognitive impairment activities of daily living (ADLs) - ANSWER: ✔✔The activities of eating, bathing, dressing, continence, toileting, or transferring into or out of a bed, chair, or wheelchair. Cognitive impairment - ANSWER: ✔✔In long-term care (LTC) insurance underwriting, a mental incapacity that prevents a person from performing activities of daily living (ADLs) or from living safely. See also activities of daily living. Long-term care is provided in an insured's home or in a qualified facility. Qualified facilities may include - ANSWER: ✔✔- Nursing homes - Rehabilitation facilities - Inpatient behavioral health facilities—a behavioral health facility is involved in the care and treatment of persons with mental disorders and addiction disorders - Hospices—a hospice focuses on making life comfortable for those confronting a terminal illness by providing medical care, managing pain, and provided emotional and spiritual support - Assisted living facilities - Adult daycare centers Care paid for by LTC coverage may include - ANSWER: ✔✔1. diagnostic services 2. preventive services 3. therapeutic services 4. rehabilitative services 5. maintenance services 6. personal care services benefit period - ANSWER: ✔✔The time during which the insurer agrees to pay income benefits to the insured under a disability income or long-term care insurance policy. total disability - ANSWER: ✔✔A disability that meets the requirements of a disability benefit provision in an insurance policy or policy rider and that qualifies insured covered person to receive disability income benefits current usual - ANSWER: ✔✔Divides the definition of total disability into two parts: At the start of disability—the disability prevents the insured from performing the essential duties of his regular occupation. At the end of a specified period (usually two to five years)—The disability prevents the insured from working at any occupation for which he is reasonably suited by education, training, or experience. own previous occupation - ANSWER: ✔✔Defines total disability as the insured's inability to perform the essential duties of his own previous occupation. income loss - ANSWER: ✔✔Defines total disability in terms of income loss rather than the insured's inability to work. The policy specifies a maximum benefit amount while the insured is completely unable to work. After that, the benefit is based on the difference between the insured's original income and his new income. presumptive disabilities - ANSWER: ✔✔A stated condition that, if present, automatically causes the insured to be considered totally disabled. Presumptive disabilities include - ANSWER: ✔✔Total and permanent blindness Loss of the use of any two limbs Loss of speech or hearing Marissa suffered a disability that meets her policy's definition of total disability. Will she start receiving disability income benefits on the first day of her disability? a. Yes b. No - ANSWER: ✔✔B. elimination period - ANSWER: ✔✔The specific amount of time that the insured must be disabled before becoming eligible to receive disability income benefits or the specific amount of time the insured must be receiving long-term care before becoming eligible to receive long-term care benefits. Also known as a waiting period. After the elimination period passes, Marissa begins receiving disability income benefit payments. How will the amount of these payments compare to her pre-disability income? a. Disability income benefits will be higher than her pre-disability earnings b. Disability income benefits will be lower than her pre-disability earnings c. Disability income benefits will be the same as her pre-disability earnings - ANSWER: ✔✔B. partial disability - ANSWER: ✔✔A disability that prevents the insured either from performing some of the duties of his usual occupation or from engaging in that occupation on a full-time basis. cost-of-living adjustment (COLA) benefit - ANSWER: ✔✔A disability income insurance benefit that provides for periodic increases in the disability income benefit amount that the insurer will pay to a disabled insured; these increases usually correspond to increases in the cost of living. Supplemental Security Income (SSI) - ANSWER: ✔✔U.S. federal program that provides periodic benefit payments to people with limited incomes who are disabled, blind, or age 65 or older. Social Security Disability Income (SSDI) - ANSWER: ✔✔A U.S. federal program that provides disability income benefit payments to qualified individuals. workers' compensation programs. - ANSWER: ✔✔Medical expense benefits Wage replacement benefits David, an architect, purchased disability income insurance through his employer. Six months later, he lost the use of his right arm in an accident while on vacation. For two years, he was unable to work while he underwent physical therapy and learned to use a prosthesis. He then found a job teaching at a local college. His salary, which was $150,000 as an architect, dropped to $50,000 as a teacher.