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MN Life and Health Insurance Exam
With 104
The Notice of Replacement provides all of the following pieces of information to the life insurance applicant EXCEPT:
a. ) a list of any life insurance policies that will be replaced
b.) whether an existing policy will fund the new policy
c.) the insurer's identity
d.) the role of the Department of Insurance in regulating replacement transactions -Correct Answer โ โ d.) the role of the Department
of Insurance in regulating replacement transactions
If an employer sets up a profit-sharing plan, which one of the following statements is most correct?
a.) It must contribute the same amount to the plan each year.
b.) It must allow employees to contribute up to $15,000 to the plan each year.
c.) It must allow employees to make elective deferrals to plan accounts and to adjust their contribution levels at any time.
d.) It must establish individual accounts for each participant. -Correct Answer โ โ d.) It must establish individual accounts for each
participant.
From a life insurance regulatory perspective, the primary problem with stranger-originated life insurance (STOLI) is that it is: -Correct Answer โ โ essentially wagering on a stranger's life
Who is the contingent beneficiary in the following beneficiary designation: "Sally Grant, wife of the insured, if she survives the insured; otherwise to Frank Grant, brother of the insured; otherwise to the ASPCA." -Correct Answer โ โ Frank Grant
Alex owns a "home service" life insurance policy, which means he most likely pays his premiums in which way? -Correct Answer โ โ
weekly or monthly by mail, automatic deduction from a bank account, or personally to the agent
Cathy took out a $100,000 decreasing 20-year term life insurance policy. In the middle of year ten, when the death benefit on her policy equals $50,000, Cathy dies. What will Cathy's beneficiary get? -Correct Answer โ โ $50,
U.S. tax law requires that retirees begin taking distributions from their qualified plans no later than April 1 of the year following the year the participant turns -Correct Answer โ โ age 70
Natasha is insured under a $500,000 universal life insurance policy. Her son, Todd, is the beneficiary. On October 1, Natasha took a $15,000 loan from the policy and died six months later without paying it back. What amount will Todd receive? -Correct Answer โ โ
$485,000 less any interest owed on the loan
To qualify for Social Security disability benefits, a worker must satisfy a waiting period of how many months? -Correct Answer โ โ five
months
A financial product that lets consumers save money in a tax-deferred manner and may eventually be used to provide income that is guaranteed for life best describes a(n): -Correct Answer โ โ deferred annuity
To be considered permanently insured for OASDI purposes, a worker must have how many quarters of coverage? -Correct Answer โ โ
40
As distribution vehicles, annuities are useful for all the following reasons EXCEPT:
a.) be structured to fit almost any payout period or term
b.) ensure that income continues for the lives of two people
c.) protect against the financial impact of dying too soon
Correct Answer โ โ using life insurance for wagering or betting
purposes
Derek buys an individual life insurance policy after he loses his job and is no longer covered by his former employer's group plan. However, he dies during the conversion period and before the policy takes effect. Which of the following statements is true?
a.) A death benefit will not be paid.
b.) A death benefit will be paid under the group plan.
c.) A death benefit will be paid under the individual plan.
d.) A death benefit will be paid by both the group and individual plans. -Correct Answer โ โ b.) A death benefit will be paid under
the group plan.
Protection from damages resulting from a lawsuit brought by an insurance customer against an insurance producer for breach of
fiduciary duties would be covered under what kind of policy? -Correct Answer โ โ errors and omissions insurance
Nadir Insurance instructs its producers to omit certain information from their records of insurance transactions for the previous year. This information would give the Department of Insurance reason to expand any routine examination of Nadir if the Department knew about it. Nadir's instructions are -Correct Answer โ โ prohibited
How long must insurers keep files of advertisements used to sell insurance policies in Minnesota? -Correct Answer โ โ 3 years
The interest rate that is credited to an indexed universal life policy is based on: -Correct Answer โ โ changes in an equity index like the
S&P 500
Policyowners who buy a life insurance policy issued in Minnesota are entitled to review the policy without obligation for at least how many days after it is delivered? -Correct Answer โ โ 10 days
Actuaries calculate net single premiums based on which of the following? -Correct Answer โ โ mortality and interest
assumptions
At age 49, Caleb took a $20,000 distribution from his deferred annuity, of which $9,000 represents interest earnings. In addition to paying income tax, what else will Caleb probably have to pay? - Correct Answer โ โ a penalty tax of $
Tandy Enterprises pays $25,000 in premiums each year for its group term life insurance plan, which covers all of its rank-and-file employees. When filing its income tax return, what can (or cannot) Tandy Enterprises do? -Correct Answer โ โ It can take a deduction for the entire premium paid
Which of the following is NOT considered a standard life insurance nonforfeiture option?
a.) policy loan
b.) cash surrender
c.) extended term insurance
d.) reduced paid-up insurance -Correct Answer โ โ a.) policy loan
Which of the following do variable life insurance premiums generally include to cover the cost of collecting and processing premiums?
a.) maintenance fee
b.) compensation fee
c.) premium surcharge
d.) quarterly administrative fee -Correct Answer โ โ a.)
maintenance fee
When an insured dies, what are the two main categories of needs that arise? -Correct Answer โ โ lump-sum needs and ongoing income needs
d.) The interest rate paid by the insurer is the lesser of the current rate or guaranteed rate -Correct Answer โ โ d.) The interest rate
paid by the insurer is the lesser of the current rate or guaranteed rate
James owns a variable annuity. Where will his premiums and contract values be maintained? -Correct Answer โ โ in subaccounts selected by the policyowner that are managed within the insurer's separate account
George's wife, Ellen, will receive income payments from George's annuity when he dies. Under the annuity contract, what is Ellen? - Correct Answer โ โ The beneficiary
What is the type of insurance used most often in group life insurance plans? -Correct Answer โ โ annually renewable term
All of the following statements about aviation and hazardous occupation and hobbies exclusions in life insurance are correct EXCEPT:
a.) Insurance companies always exclude aviation and hazardous occupations and hobbies.
b.) If the aviation exclusion is included, then the insurer will not pay a death claim if the insured was serving as an aircraft crew member.
c.) The hazardous occupations or hobbies exclusions exclude a death benefit if the insured dies as a result of his or her occupation or hobby.
d.) Some policies allow coverage of these risks, but they would likely charge an additional premium if the insured engages in these activities. -Correct Answer โ โ a.) Insurance companies always exclude aviation and hazardous occupations and hobbies
In most states, if a new life insurance policy is replacing an existing policy, the 'free look' period for the replacement policy is: -Correct Answer โ โ 30 days
a.) Prepaid tuition plans allow parents to lock in the cost of today's tuition, even if inflation or tuition increases.
b.) Prepaid tuition plans are typically open to both state residents and non-residents.
c.) Prepaid tuition plans typically limit a child's choice of colleges to in- state schools.
d.) Amounts contributed to prepaid tuition plans are available tax free when used to pay for qualified tuition costs. -Correct Answer โ โ b.) prepaid tuition plans are typically open to both state residents and non-residents
Brian's required minimum distribution from his traditional IRA was $6,000 this year. However, he only took a $2,000 distribution. What tax penalty will Brian have to pay? -Correct Answer โ โ $2,
(Failure to take the required minimum distribution results in a 50 percent penalty tax, which is applied to the difference between the
amount taken and what should have been taken. As a result, Brian will have to pay a $2,000 penalty tax.)
An employer establishes flexible spending accounts for its employees. Which expenses will the accounts NOT cover? -Correct Answer โ โ
insurance policy premiums
Benefits under a long-term care policy can be triggered by all of the following, EXCEPT:
a.) the insured becoming hospitalized
b.) the insured's loss of cognitive ability that limits his or her ability to care for himself or herself without help or supervision
c.) medical necessity
d.) the insured's inability to perform two or more activities of daily living (ADLs), such as bathing, eating, dressing, transferring (i.e., mobility), toileting, and continence -Correct Answer โ โ a.) the
insured becoming hospitalized
submitted to it by one insurer is available for review by other insurers.
How does a health insurance policy's illegal occupation provision protect the insurer? -Correct Answer โ โ It lets the insurer deny
liability when the insured's claim arises from an illegal activity in which he or she participated
An insured reports a claim for a covered loss more than three weeks after the loss occurred. What should the agent do when reporting the claim to the insurer? -Correct Answer โ โ Determine the reason
for the delay and report it to the insurer
Who is the primary care physician (PCP) in a managed care plan? - Correct Answer โ โ insured's physician who controls access to specialists
Why does an individual health insurance policy include a probationary period? -Correct Answer โ โ It helps the insurer avoid adverse
selection
Why would a basic medical expense policy not be a good form of coverage for a person who visits his doctor very often? -Correct Answer โ โ It primarily covers hospital-related expenses.
Gene is injured while on vacation. His employer's group disability plan pays benefits for over two years but reduces the amount paid by the benefits he receives under an individual disability policy. What kind of group coverage does Gene have? -Correct Answer โ โ group long-
term disability plan
Anne lives in State A and buys a health insurance policy issued by an insurer domiciled in State B. How does the conformity with state statutes provision resolve provisions in the policy that conflict with the laws of State A? -Correct Answer โ โ The policy will
