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FX Texas Health and Life Insurance
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A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of A. Defamation. B. Twisting. C. Coercion. D. Loading. - ✔✔C Coercion A brain surgeon has an accident and develops tremors in her right arm. Which disability income policy definition of total disability will cover her for all losses? A. "Any occupation" - less restrictive than other definitions B. "Any occupation" - more restrictive than other definitions C. "Own occupation" - less restrictive than other definitions D. "Own occupation" - more restrictive than other definitions - ✔✔C"Own occupation" - less restrictive than other definitions In theory, the brain surgeon could find other work, but because her disability income policy specifies that she is covered for her own occupation, she would be wholly covered. A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then
A. The benefit is subject to the exclusionary rule. B. IRS has no jurisdiction. C. The benefit is received as taxable income. D. The benefit is received tax free. - ✔✔D The benefit is received tax free. A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums? A. The insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums. B. The insured's premiums will be waived until she is 21. C. The premiums will become tax deductible until the insured's 18th birthday. D. Since it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected. - ✔✔B. The insured's premiums will be waived until she is 21. A health insurance policy that pays a lump sum if the insured suffers a heart attack or stroke is known as A. Major medical. B. AD&D. C. Medical expense. D. Critical illness. - ✔✔D Critical Illness
C. Loss of personal income D. Workers compensation - ✔✔B Cost of training a replacement A life insurance policy used to fund an agreement that contractually establishes the intent of someone to purchase a business upon the insured business owner's death is a A. Key person policy. B. Split-dollar plan. C. Stock redemption plan. D. Buy-sell agreement. - ✔✔D buy-sell agreement A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy A. Required a premium increase each renewal. B. Built cash values. C. Required proof of insurability every year. D. ecreased death benefit at each renewal. - ✔✔ARequired a premium increase each renewal. A Medicare supplement plan must have at least which of the following renewal provisions? AGuaranteed renewable BConditionally renewable CNonrenewable
DNoncancellable - ✔✔A Guranteed Renewable A partnership buy-sell agreement in which each partner purchases insurance on the life of each of the other partners is called a ASplit-dollar plan. BStock redemption plan. CCross-purchase plan. DKey person plan. - ✔✔C Cross-purchase plan A partnership buy-sell agreement in which each partner purchases insurance on the life of each of the other partners is called a AStock redemption plan. BCross-purchase plan. CKey person plan. DSplit-dollar plan. - ✔✔B Cross-purchase plan A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as AJuvenile protection provision BSurvivor protection CLife planning DSurvivorship insurance - ✔✔B. Survivor Protection
CDisability buy-sell agreement DBusiness disability policy - ✔✔A Business overhead expense policy A typical Accidental Death & Dismemberment policy covers all of the following losses EXCEPT AIncome. BEyesight. CLimb. DLife. - ✔✔A Income According to the rights of renewability rider for cancellable policies, all of the following are correct about the cancellation of an individual insurance policy EXCEPT AUnearned premiums are retained by the insurance company. BThe insurer must provide the insured a written notice of the cancellation. CClaims incurred before cancellation must be honored. DAn insurance company may cancel the policy at any time. - ✔✔A Unearned premiums are retained by the insurance company All of the following are business uses of life insurance EXCEPT AFunding business continuation agreements. BFunding against general company financial loss.
CCompensating executives. DFunding against financial loss caused by the death of a key employee.
- ✔✔B Funding against general company financial loss All of the following are characteristics of group life insurance EXCEPT ACertificate holders may convert coverage to an individual policy without evidence of insurability. BPremiums are determined by the age, sex and occupation of each individual certificate holder. CAmount of coverage is determined according to nondiscriminatory rules. DIndividuals covered under the policy receive a certificate of insurance.
- ✔✔BPremiums are determined by the age, sex and occupation of each individual certificate holder. All of the following are correct about the required provisions of a health insurance policy EXCEPT AA reinstated policy provides immediate coverage for an illness. BProof-of-loss forms must be sent to the insured within 15 days of notice of claim. CA grace period of 31 days is found in an annual pay policy. DThe entire contract clause means the signed application, policy, endorsements, and attachments constitute the entire contract. - ✔✔AA reinstated policy provides immediate coverage for an illness.
DAn insured couple purchases a life insurance policy insuring the life of their grandson. - ✔✔CAn insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan. All of the following are examples of third-party ownership of a life insurance policy EXCEPT AWhen an insured purchased a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company. BAn insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan. CAn insured couple purchases a life insurance policy insuring the life of their grandson. DA company purchases a life insurance policy on their manager, who is an important part of the operation. - ✔✔ All of the following are examples of third-party ownership of a life insurance policy EXCEPT AWhen an insured purchased a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company. BAn insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan. CAn insured couple purchases a life insurance policy insuring the life of their grandson.
DA company purchases a life insurance policy on their manager, who is an important part of the operation. - ✔✔B An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan All of the following are grounds for cancellation of an HMO plan EXCEPT ANot residing in the HMO service area. BMisconduct. CMisstatement of age on the application. DNonpayment of premium. - ✔✔C Misstatement of age on the application All of the following are mandatory life insurance policy provisions EXCEPT AGrace period. BPolicy backdating. CMisstatement of age. DIncontestability. - ✔✔B Policy Backdating All of the following are personal uses of life insurance EXCEPT ACash accumulation. BBuy-sell agreement. CSurvivor protection.
DThe key employee is the insured. - ✔✔A The plan is funded by permanent insurance only All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT AFunds accumulate on a tax-deferred basis. BEmployee and employer contributions are not counted as income to the employee for income tax purposes. CAt distribution, all amounts received by the employee are tax free. DEmployer contributions are tax deductible as ordinary business expense. - ✔✔CAt distribution, all amounts received by the employee are tax free. All of the following are true regarding a decreasing term policy EXCEPT AThe contract pays only in the event of death during the term and there is no cash value. BThe face amount steadily declines throughout the duration of the contract. CThe payable premium amount steadily declines throughout the duration of the contract. DThe death benefit is $0 at the end of the policy term. - ✔✔C. The payable premium amount steadily declines throughout the duration of the contract. All of the following are true regarding a decreasing term policy EXCEPT
AThe payable premium amount steadily declines throughout the duration of the contract. BThe death benefit is $0 at the end of the policy term. CThe contract pays only in the event of death during the term and there is no cash value. DThe face amount steadily declines throughout the duration of the contract. - ✔✔A. The payable premium amount steadily declines throughout the duration of the contract. All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT AMost term policies contain a convertibility option. BUpon conversion, the premium for the permanent policy will be based upon attained age. CUpon conversion, the death benefit of the permanent policy will be reduced by 50%. DEvidence of insurability is not required. - ✔✔C. Upon conversion, the death benefit of the permanent policy will be reduced by 50% All of the following are unfair claims settlement practices EXCEPT ASuggesting negotiations in settling the claim. BRefusing to pay claims without conducting a reasonable investigation. CFailing to adopt and implement reasonable standards for settling claims.
DA healthy person age 65. - ✔✔ All of the following information must be included in the evidence of coverage for an HMO plan EXCEPT AExamples of information to appear in the blanks. BHMO's toll-free telephone number. CThe insurance agent's name and license number. DA schedule of benefits. - ✔✔C The insurance agent's name and license number All of the following qualify for Medicare Part A EXCEPT AAnyone who is at the end stage of renal disease. BAnyone who is over 65, not covered by Social Security, and is willing to pay premium. CAnyone who is willing to pay a premium. DAnyone that qualifies through Social Security. - ✔✔C Anyone who is willing to pay a premium All of the following statements about equity index annuities are correct EXCEPT AThe annuitant receives a fixed amount of return. BThey have a guaranteed minimum interest rate. CThe interest rate is tied to an index such as the Standard & Poor's 500.
DThey invest on a more aggressive basis aiming for higher returns. - ✔✔AThe annuitant receives a fixed amount of return. All of the following statements are correct regarding Credit Life Insurance EXCEPT ABenefits are paid to the borrower's beneficiary. BThe amount of insurance permissible is limited per borrower. CPremiums are usually paid by the borrower. DBenefits are paid to the creditor. - ✔✔A Benefits are paid to the borrower's beneficiary. In Credit Life Insurance, the creditor is the beneficiary for the amount of benefit equal to the outstanding balance of the loan. All of the following statements concerning Accidental Death and Dismemberment coverage are correct EXCEPT AAccidental death and dismemberment insurance is considered to be limited coverage. BDeath benefits are paid only if death occurs within 24 hours of an accident. CAccidental death benefits are paid only if death results from accidental bodily injury as defined in the policy. DDismemberment benefits are paid for certain disabilities that are presumed to be total and permanent. - ✔✔BDeath benefits are paid only if death occurs within 24 hours of an accident.
AThe employer pays a bonus to a selected employee to fund the policy. BIt is considered a nonqualified employee benefit. CThe policy is owned by the company. DAny type of insurance policy may be used. - ✔✔C The policy is owned by the company The policy is owned by the employee All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT AThe policy is owned by the company. BAny type of insurance policy may be used. CThe employer pays a bonus to a selected employee to fund the policy. DIt is considered a nonqualified employee benefit. - ✔✔A The policy is owned by the company All of the following statements concerning workers compensation are correct EXCEPT AA worker receives benefits only if the work related injury was not his/her fault. BWorkers compensation laws are established by each state. CAll states have workers compensation.
DBenefits include medical, disability income, and rehabilitation coverage. - ✔✔A A worker receives benefits only if the work related injury was not his/her fault An advertisement must accurately represent which of the following? AThe insurer's assets BThe insurer's corporate structure CThe insurer's financial standing DAll of the above - ✔✔D All of the above An agent is ready to deliver a policy to an applicant but has not yet received payment. Upon delivery, the agent collects the applicant's premium check, answers any questions the applicant may have, and then leaves. What did he forget to do? AAsk the applicant to sign a statement that acknowledges that the policy had been delivered BCollect a late payment fee CAsk her to sign a statement of good health DOffer her a secondary policy - ✔✔C. Ask her to sign a statement of good health An agent is ready to deliver a policy to an applicant but has not yet received payment. Upon delivery, the agent collects the applicant's premium check, answers any questions the applicant may have, and then leaves. What did he forget to do?
