2-15 Final Exam Questions And Answers
1. An employer pays $90 of a $100 group disability premium, and the employee pays
the other $10. The disability benefit under the plan is $1,000/month. If the employee
becomes disabled and receives the full benefit, how much, if any, of the monthly benefit
would be taxable income? - CORRECT ANSWER-900
2. Basic surgical expense policies generally provide coverage for all of the following
EXCEPT - CORRECT ANSWER-miscellaneous expenses, such as lab fees and X-rays
3. When surrendering whole life for a reduced paid-up policy, the cash value of the new
policy will: - CORRECT ANSWER-mature at age 100
4. On August 9, Albert made an application for life insurance that his agent submitted a
day later without a premium payment. On August 21, the insurer issued the policy as
applied for and on August 24, the agent delivered the policy and collected the initial
premium. On what day was the contract offer made? - CORRECT ANSWER-August 21
5. Jackie and her husband, Bruce, have an annuity that pays them $2,200 a month.
Under a joint and full survivor payout option, if Jackie dies first which of the following will
occur? - CORRECT ANSWER-Bruce will receive payments for the rest of his lifetime.
6. All of the following statements regarding policy replacement are correct EXCEPT -
CORRECT ANSWER-premiums for replacement policies are generally lower than
premiums for the existing policy they replace
7. Which of the following is CORRECT regarding taxation of life insurance premiums? -
CORRECT ANSWER-Premium for life insurance used to secure a business loan is tax-
deductible.
8. Which is not a primary premium factor? - CORRECT ANSWER-dividends
9. All of the following are characteristics of group health insurance plans EXCEPT -
CORRECT ANSWER-the parties to a group health contract are the employer and the
employees
10. Assume four individuals, all age 30, purchase the following life insurance policies. If
all policies are still in force ten years later, who will have the largest cash value in his
policy? Bob $100,000 straight whole life Dennis $100,000 life paid-up at 65 Ralph
$100,000 20-pay life Jack $100,000 life paid-up at 55 - CORRECT ANSWER-Ralph
, 11. Roy has a renewable five-year $100,000 decreasing term policy. Which of the
following statements about the policy's renewability is CORRECT? - CORRECT
ANSWER-The renewal premium will be higher than the original premium.
12. Health maintenance organizations are known for stressing the provision of -
CORRECT ANSWER-preventive care
13. A universal life policy expires when - CORRECT ANSWER-the cash value becomes
too small to pay the cost of insurance
14. As it pertains to group health insurance, COBRA stipulates that - CORRECT
ANSWER-group coverage must be extended for terminated employees up to a certain
period of time at the employee's expense
15. Which of the following statements regarding policy assignments is correct? -
CORRECT ANSWER-A policy that has named an irrevocable beneficiary cannot be
assigned without that beneficiary's agreement.
16. Jane, age 35, has just purchased a 20-pay whole life policy. When she turns 55, she
will - CORRECT ANSWER-cease paying premiums
17. The time of payment of claims provision requires that - CORRECT ANSWER-claims
must be paid after the insurer is notified and receives proof of loss
18. The State Guaranty Association - CORRECT ANSWER-guarantees claims are paid
if an insurer becomes insolvent
19. Which of the following is NOT included in the definition of "transacting insurance"? -
CORRECT ANSWER-underwriting a policy
20. Which of the following statements regarding the needs approach in determining the
appropriate amount of life insurance is CORRECT? - CORRECT ANSWER-The needs
approach considers long-range financial goals for the family, such as retirement and
college planning.
21. The period of time immediately following a disability during which benefits are not
payable is the - CORRECT ANSWER-elimination period
22. All of the following are elements of an insurable risk EXCEPT - CORRECT
ANSWER-the loss must be catastrophic
23. Which of the following describes equity index contracts? - CORRECT ANSWER-
Time frames for the product, such as five and seven years, are common.
1. An employer pays $90 of a $100 group disability premium, and the employee pays
the other $10. The disability benefit under the plan is $1,000/month. If the employee
becomes disabled and receives the full benefit, how much, if any, of the monthly benefit
would be taxable income? - CORRECT ANSWER-900
2. Basic surgical expense policies generally provide coverage for all of the following
EXCEPT - CORRECT ANSWER-miscellaneous expenses, such as lab fees and X-rays
3. When surrendering whole life for a reduced paid-up policy, the cash value of the new
policy will: - CORRECT ANSWER-mature at age 100
4. On August 9, Albert made an application for life insurance that his agent submitted a
day later without a premium payment. On August 21, the insurer issued the policy as
applied for and on August 24, the agent delivered the policy and collected the initial
premium. On what day was the contract offer made? - CORRECT ANSWER-August 21
5. Jackie and her husband, Bruce, have an annuity that pays them $2,200 a month.
Under a joint and full survivor payout option, if Jackie dies first which of the following will
occur? - CORRECT ANSWER-Bruce will receive payments for the rest of his lifetime.
6. All of the following statements regarding policy replacement are correct EXCEPT -
CORRECT ANSWER-premiums for replacement policies are generally lower than
premiums for the existing policy they replace
7. Which of the following is CORRECT regarding taxation of life insurance premiums? -
CORRECT ANSWER-Premium for life insurance used to secure a business loan is tax-
deductible.
8. Which is not a primary premium factor? - CORRECT ANSWER-dividends
9. All of the following are characteristics of group health insurance plans EXCEPT -
CORRECT ANSWER-the parties to a group health contract are the employer and the
employees
10. Assume four individuals, all age 30, purchase the following life insurance policies. If
all policies are still in force ten years later, who will have the largest cash value in his
policy? Bob $100,000 straight whole life Dennis $100,000 life paid-up at 65 Ralph
$100,000 20-pay life Jack $100,000 life paid-up at 55 - CORRECT ANSWER-Ralph
, 11. Roy has a renewable five-year $100,000 decreasing term policy. Which of the
following statements about the policy's renewability is CORRECT? - CORRECT
ANSWER-The renewal premium will be higher than the original premium.
12. Health maintenance organizations are known for stressing the provision of -
CORRECT ANSWER-preventive care
13. A universal life policy expires when - CORRECT ANSWER-the cash value becomes
too small to pay the cost of insurance
14. As it pertains to group health insurance, COBRA stipulates that - CORRECT
ANSWER-group coverage must be extended for terminated employees up to a certain
period of time at the employee's expense
15. Which of the following statements regarding policy assignments is correct? -
CORRECT ANSWER-A policy that has named an irrevocable beneficiary cannot be
assigned without that beneficiary's agreement.
16. Jane, age 35, has just purchased a 20-pay whole life policy. When she turns 55, she
will - CORRECT ANSWER-cease paying premiums
17. The time of payment of claims provision requires that - CORRECT ANSWER-claims
must be paid after the insurer is notified and receives proof of loss
18. The State Guaranty Association - CORRECT ANSWER-guarantees claims are paid
if an insurer becomes insolvent
19. Which of the following is NOT included in the definition of "transacting insurance"? -
CORRECT ANSWER-underwriting a policy
20. Which of the following statements regarding the needs approach in determining the
appropriate amount of life insurance is CORRECT? - CORRECT ANSWER-The needs
approach considers long-range financial goals for the family, such as retirement and
college planning.
21. The period of time immediately following a disability during which benefits are not
payable is the - CORRECT ANSWER-elimination period
22. All of the following are elements of an insurable risk EXCEPT - CORRECT
ANSWER-the loss must be catastrophic
23. Which of the following describes equity index contracts? - CORRECT ANSWER-
Time frames for the product, such as five and seven years, are common.
