PSI: LIFE, ACCIDENT, AND HEALTH PRACTICE EXAM Games and activities

PSI: LIFE, ACCIDENT, AND HEALTH PRACTICE EXAM __________ life insurance policies are usually less expensive than ____________ policies. - Because the risk is spread out among a larger number of people, the premiums for group life insurance are typically cheaper than the premiums for individual coverage (for a comparable amount of death benefit). ____________ is the number one reason why people buy life insurance. - The primary reason that people purchase life insurance is for income replacement. This is because those who are left behind will need funds to continue paying ongoing expenses, without having to bear undue financial hardship. ____________ life insurance policies are considered to be interest rate sensitive because the policy's cash value is used to purchase short-term interest bearing instruments. - With a universal life insurance policy, the cash value in the plan is used for purchasing short - term interest bearing investments. However, with this type of policy, there is also a minimum guaranteed interest rate in the cash value portion. . __________ plans combine the features of an HMO and PPO. - POS, or point-of-service, plans are a type of managed care option that combines features from HMOs and PPOs. With a POS plan, participants are required to designate an in-network physician to be their primary health care provider. The participant may go out-of-network if they choose, however, if they do so, they will have to pay most of the cost out-of-pocket - unless the PCP refers them to that specific provider. . Robert is considering purchasing life insurance as part of his retirement planning. He is questioning how he will take care of himself and his wife if they become ill or need long-term care services. How will they afford it if a catastrophic event occurs? As Robert's agent, what rider should you discuss with him? - Accelerated death benefit rider - With this rider, the insured may collect some or all of the face amount of their life insurance policy provided that they meet the illness or long-term care qualifications. The death benefit on the life insurance policy will subsequently be reduced by the amount that insured withdraws. .Death benefit claims from life insurance policies are not subject to income taxation. - True - Life insurance policy death benefits are not subject to income taxation to the beneficiary. This is because the IRS deems that income taxation could cause undue financial hardship to the beneficiary. It is important to note that such proceeds may be subject to estate taxes. .In most cases, death benefit claims that are the result of an insured's suicide that arise within ____________ of policy purchase are not normally paid. - 2 years -Most insurers will not pay out life insurance claims due to an insured's suicide within two years of policy purchase. This helps in preventing individuals from purchasing coverage for loved ones and then immediately committing suicide to allow payment of funds to their loved ones. A __________ is a type of managed care plan that essentially combines the characteristics of both an HMO and a PPO. - A POS, or point of service, plan offers more flexibility than an HMO but less flexibility than one will have with a PPO. Participants have a primary care physician, yet there is a broad base of medical providers in the network that typically covers a wide geographic area A __________ whole life insurance policy will share in the insurance company's excess profits in the form of dividends. - Participating whole life insurance policies will share in the issuing insurance company's excess profits in the form of dividends. These dividend payments will typically go into the policy's cash value component, adding to the amount of funds in this account. A 1035 exchange applies to: - Annuities and Life Insurance A 1035 exchange applies to annuities, life insurance and other long-term care products, and provides that the exchange of an annuity for another annuity will not result in a taxable gain. Outdated and underperforming products can be exchanged for new ones with better features A 35-year old client wants to put a retirement plan in place. It is not necessary to consider life insurance needs when creating a retirement plan - FALSE Life insurance should be considered as an essential part of all financial plans. One reason for this is that it can provide liquidity for survivors should the income of the insured suddenly disappear. Proceeds from a life insurance policy can also go toward funding specific financial goals such as a child's future college education. A basic term life insurance policy provides a death benefit if the insured dies with a specified period of time (10, 15, 20, 30 years). If the client survives the term, no benefit is paid, and no premiums are returned. What insurance rider allows for premiums to be paid back to the insured at the end of a specified period of time? - As the name indicates, premiums are returned to the insured at the end of the specified term of the contract. Another benefit is if the insure