Term
3. Which of the following statements concerning cash values is/are true?
1. Cash values are a liability to the insurance company.
2. Cash values are an asset to the insurance company.
3. Cash values are an asset to the policyowner.
4. Cash values are a liability to the policyowner.
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Definition
3. Cash values are an asset to the policyowner.
Cash values represent an asset to the policyowner, whether the policy is owned by a business or an individual. Reserves are treated as a liability on the insurance company's balance sheet. |
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Term
Under certain circumstances, an agent is allowed to place business and be paid commissions by an insurance company without actually being licensed by that company. Which law allows for this? |
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Definition
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the exchange of business law
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If the agent's own company rejected a piece of business or if the insurance amount being applied for is more than what the company will agree to insure, then, under what is called a single case agreement, an agent may place business without being appointed by that company. page 418.
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Term
| The type of health care provider that provides both the health care services and the health care coverage is a: |
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Definition
| Health Maintenance Organization |
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Term
The minimum grace period in a health insurance
policy paid on a quarterly basis is: |
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Definition
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31 days
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The grace period is not less than, 7 days for weekly premiums, 10 days for monthly premiums, and 31 days for all others. pg 491
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Term
| Which of the following is true about coinsurance? |
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Definition
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It helps control overutilization of benefits.
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Higher deductibles and higher co-insurance equals lower premiums.
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Term
| Wilma the widow is receiving payments under the fixed period settlement option. The company is currently paying the payments at an interest rate of 5%. If, in the future, the company elects to raise the interest rate to Wilma, what effect would this have on her payout? |
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Definition
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Her payments would be higher.
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A fixed period is what it says - a fixed period. The payments would be higher. If she were receiving the payments under the fixed amount option, then her payout period would be longer.
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Term
| Forrest owns a 30-Pay Life policy that he purchased at the age of 30. The cash value will equal the face amount of the policy when he reaches the age of: |
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Definition
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100
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Paid-up and endow are two different things. Endow means the cash value has reached the death benefit. Paid up means the policy is paid up.
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Term
| All of the following might be found in a prospectus except: |
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Definition
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past annual returns of the general account
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The prospectus must accompany or precede the offering of the security, the variable annuity. Variable products are invested in the company's seperate account, not the general account.
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Term
Munch withdraws $2,000 of accumulated dividends from his life insurance policy. What will be the TAX RESULT?
I. Accumulated dividends & any interest credited will be tax exempt.
II. Accumulated dividends will be taxable income to Munch.
III. The dividends are exempt from income tax, but any interest credited will be taxable.
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Definition
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Term
| ANNUITIES can be designed to provide all the following EXCEPT: |
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Definition
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A predictable death benefit to a beneficiary.
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There are no death benefits with an annuity. Only before the annuity has been annuitized (the accumulation period) will the annuity pay a death benefit.
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Term
| The certificate that each member receives under an employee group insurance contract is a |
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Definition
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Document that identifies the employees as an insured under the master contract
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The master contract is indeed a contract between the insurance company and the employer. But, the certificate each employee receives simply identifies the employee as being covered under the master contract.
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Term
| Health insurance may be written by all the following types of companies except: |
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Definition
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Surety
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Surety companies "Bond" those who deal in money. Such as a surety bond which guarantees performance. All the others may write health insurance. Chapter 16, pg..286
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Term
| When insuring substandard life insurance risks, provision is usually made for the expected higher death rate by: |
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Definition
| Charging an additional premium |
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Term
| Which of the following death benefit settlement options is true? |
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Definition
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Benefits are tax free unless they are paid in installments.
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If paid in a lump sum, the benefit is tax free unless there has been interest added to it. This happens if the death benefit has been left with the insurance company. Then, only the interest is taxable. Benefits paid out under the installment method will be taxed according to the annuity rule. "The amount invested divided by the expected return." So, the portion representing the death benefit is received tax free, the portion representing interest will be taxable.
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Term
| How long is the waiting period before a person may file a claim for Social Security Disability benefits? |
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Definition
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Term
| The transfer of the insured's rights to receive benefits of a Health Insurance policy for a particular claim is known as |
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Definition
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Term
| Statements made by an applicant for a life insurance policy which are supposed to be true are referred to as: |
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Definition
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Term
A Single-Employer based, fully self insured health
plan covering the employers, employees and their
dependents is directly regulated by: |
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Definition
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The Federal Government
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ERISA states that a fully self-insured plan would be regulated by the Federal government. However, if the plan was in any way insured, then it would be regulated by both the Feds and the States. Pg. 407-408.
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Term
| A prospect's statements made in the application for insurance constitute a part of which of the following? |
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Definition
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Term
| As compared to individual disability income policies, group disability income policies are generally: |
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Definition
| less costly and have more liberal provisions |
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