L&H PRACTICE TEST
QUESTIONS AND CORRECT
ANSWERS (LATEST UPDATE
2024-2025)
Travel accident is essen.ally ad&d to go. If you die in the plane crash, the
company needs to know where to send the check. It's too late to ask you.
An insured owns a $10,000 life policy with cash value of $2000 and a loan
interest rate of 5%. On january 1, the owner/insured borrows $500 and pays
one year's interest in advance. During the year the insured does not repay any
part of the loan. If the insured dies on december 31, the beneficiary will be
en.tled to a maximum of _________________ .
A) $12,000
b) $11,500
c) $10,000
d) $9,500
D) $9,500
the $500 loan reduces the $10,000 death benefit to $9,500.
A proposed insured submits an applica.on for life insurance without a
premium payment, and the policy is delivered to the applicant. Who made the
offer?
,A) applicant
b) producing agent
c) policy owner
d) insurance company
D) insurance company
an app without money is an invita.on to make an offer. The offer is made when
the policy is presented to the applicant. The producer is an agent of the
company, so ac.ons of the producer are ac.ons of the company.
Applica.on only = invita.on
app + $$$$$$$ = offer
Which condi.on does not qualify a person for medicare?
A) living in poverty
b) being age 65 or older
c) suffering from renal impairment
d) receiving social security disability income benefits for two or more years
A) living in poverty
living in poverty qualifies one for medicaid, not medicare. The primary
,requirement for medicare is being age 65 or older. You can also qualify if you
suffer from renal impairment (you need dialysis for kidney failure) or if you
have been collec.ng ssdi benefits for 2 years or more.
Which statement is true about non-qualified re.rement plans?
A) they are designed to provide tax-free income at re.rement.
B) they may discriminate in favor of certain employees.
C) they are eligible for favorable tax treatment.
D) the plans cannot be funded by life insurance.
B) they may discriminate in favor of certain employees.
Since these are non-qualified plans, all the normal rules vanish. They can
discriminate...they can be funded with life insurance, but, they receive no
favorable tax benefits
Which of the following health insurance benefits is taxable?
A) benefits from an employer paid group medical expense policy
b) benefits from an individually purchased medical expense policy
c) benefits from an employer paid group disability income policy
d) benefits from an individually purchased disability income policy
, C) benefits from an employer paid group disability income policy
begin answering this ques.on by elimina.ng the two medical expense policy
answers. You will never pay taxes on the benefits of a medical expense policy
because the benefits do not go to you...they go to the doctors and hospitals.
With disability income, the rule is simple:
if u-pay, the irs got you paying in, your premiums were a^er tax $s, so you do
not pay taxes on any benefits;
if employer-paid, the irs got nothing going in, your employer deducted his costs
as a business expense. Soooo, your benefits will be taxable.
Shortcut: the irs will get you coming or going; but not both
You take a prepaid applica.on on a major medical policy from cecil and kerry
on october 1st. They sail through underwri.ng and a policy with an effec.ve
date of october 15 arrives in your office on october 17. When you deliver the
policy, you should do which of the following?
A) explain that the 10-day free look will expire on october 25
b) obtain a statement of con.nued good health
c) review the policy benefits, exclusions and riders
d) collect the premium due
C) review the policy benefits, exclusions and riders
QUESTIONS AND CORRECT
ANSWERS (LATEST UPDATE
2024-2025)
Travel accident is essen.ally ad&d to go. If you die in the plane crash, the
company needs to know where to send the check. It's too late to ask you.
An insured owns a $10,000 life policy with cash value of $2000 and a loan
interest rate of 5%. On january 1, the owner/insured borrows $500 and pays
one year's interest in advance. During the year the insured does not repay any
part of the loan. If the insured dies on december 31, the beneficiary will be
en.tled to a maximum of _________________ .
A) $12,000
b) $11,500
c) $10,000
d) $9,500
D) $9,500
the $500 loan reduces the $10,000 death benefit to $9,500.
A proposed insured submits an applica.on for life insurance without a
premium payment, and the policy is delivered to the applicant. Who made the
offer?
,A) applicant
b) producing agent
c) policy owner
d) insurance company
D) insurance company
an app without money is an invita.on to make an offer. The offer is made when
the policy is presented to the applicant. The producer is an agent of the
company, so ac.ons of the producer are ac.ons of the company.
Applica.on only = invita.on
app + $$$$$$$ = offer
Which condi.on does not qualify a person for medicare?
A) living in poverty
b) being age 65 or older
c) suffering from renal impairment
d) receiving social security disability income benefits for two or more years
A) living in poverty
living in poverty qualifies one for medicaid, not medicare. The primary
,requirement for medicare is being age 65 or older. You can also qualify if you
suffer from renal impairment (you need dialysis for kidney failure) or if you
have been collec.ng ssdi benefits for 2 years or more.
Which statement is true about non-qualified re.rement plans?
A) they are designed to provide tax-free income at re.rement.
B) they may discriminate in favor of certain employees.
C) they are eligible for favorable tax treatment.
D) the plans cannot be funded by life insurance.
B) they may discriminate in favor of certain employees.
Since these are non-qualified plans, all the normal rules vanish. They can
discriminate...they can be funded with life insurance, but, they receive no
favorable tax benefits
Which of the following health insurance benefits is taxable?
A) benefits from an employer paid group medical expense policy
b) benefits from an individually purchased medical expense policy
c) benefits from an employer paid group disability income policy
d) benefits from an individually purchased disability income policy
, C) benefits from an employer paid group disability income policy
begin answering this ques.on by elimina.ng the two medical expense policy
answers. You will never pay taxes on the benefits of a medical expense policy
because the benefits do not go to you...they go to the doctors and hospitals.
With disability income, the rule is simple:
if u-pay, the irs got you paying in, your premiums were a^er tax $s, so you do
not pay taxes on any benefits;
if employer-paid, the irs got nothing going in, your employer deducted his costs
as a business expense. Soooo, your benefits will be taxable.
Shortcut: the irs will get you coming or going; but not both
You take a prepaid applica.on on a major medical policy from cecil and kerry
on october 1st. They sail through underwri.ng and a policy with an effec.ve
date of october 15 arrives in your office on october 17. When you deliver the
policy, you should do which of the following?
A) explain that the 10-day free look will expire on october 25
b) obtain a statement of con.nued good health
c) review the policy benefits, exclusions and riders
d) collect the premium due
C) review the policy benefits, exclusions and riders
