Utah Insurance Test Questions and
Answers19
whole life insurance - ANSWERS-Contracts which provide payments based on investment return
of a segregated asset account are called:
Reinstatement provision - ANSWERS-provides that when a policy lapses due to nonpayment of
premium, but the insured subsequently pays the renewal premium (which the insurer accepts
without requiring an application for a new policy), the policy will be reinstated with the same
provisions and rights as before (with the exception of coverage for sickness-related losses within
the first ten days after
Section 529 Plans - ANSWERS-In establishing this plan, the owner must designate a beneficiary.
This selection can be changed. The owner controls the money at all times and decides when
withdrawals are taken and for what purpose. If there is money left over or if the beneficiary
does not attend college, the owner can change the beneficiary without penalty to an eligible
member of the current beneficiary's family, which includes first cousins.
limited policy - ANSWERS-ecample: Prescription drug policies may be sold as supplements to
individual policies or as stand-alone
buy-sell plans - ANSWERS-offers several advantages to the partners while they are all living. The
partners know they will have a legal right to buy a deceased partner's share of the business, and
the family and heirs of the partners know that the partnership interest will be disposed of at a
fair price. Further, the money needed to purchase the deceased partner's interest will be
available when needed.
unilateral contract. - ANSWERS-since only one party-the insurer-makes any kind of enforceable
promise. The insurer promises to pay benefits if and when certain events, such as death or
,disability, occur. The insured's act of paying the premium is given in exchange for this promise.
However, the insured is not obligated to make these payments and can let the policy lapse.
18 months - ANSWERS-When an employee's coverage terminates under a group health policy,
the employee must be offered continuation coverage for:
Graded premium whole life - ANSWERS-policy in which the premium at the inception of the
policy is lower than the continuous premium whole life rate and then increases each year for
the first five years of the policy period. After five years, the premium levels off.
state guaranty associations - ANSWERS-All states have established one, funds or associations. If
an insurer becomes financially unable to pay its claims, this will cover the consumers' unpaid
claims. Insurance companies fund this associations through assessments.
managed care plans - ANSWERS-HMOs, PPOs, and POS plans, offer comprehensive medical
services to their members. They also apply financial incentives that encourage providers to keep
both the quantity and cost of services in check and motivate members to select cost-effective
providers.
lump-sum cash payment settlement option - ANSWERS-Most life insurance polices are
distributed under this. The life insurance proceeds received under this settlement option are
generally received income tax free and can be distributed between 2 or more beneficiaries in
any proportion selected by the policyowner. The proceeds paid under this it would include the
base policy death benefit, paid-up insurance additions, any accumulated dividends, and any
applicable riders such as term insurance, accidental death, etc.
When determining the amount of tax deduction that can be taken for unreimbursed medical
expenses - ANSWERS-premiums paid for group AD&D coverage are not considered qualifying
medical expenses. The deduction is limited to the amount exceeding 10% of adjusted gross
income,
, variable life or annuity - ANSWERS-Unlike conventional life insurance, which is classified as a
fixed product with a specific (guaranteed) benefit, this products provide insurance and benefits
that vary according to the investment experience of their underlying accounts. These underlying
accounts, which are separate accounts the insurer establishes and maintains, typically are made
up of equities such as stocks, the values of which rise and fall and cannot be guaranteed. A
purchaser of this incurs a degree of risk not associated with a fixed whole life policy.
needs approach - ANSWERS-is not limited to fulfilling objectives in the event of death only, such
as final expenses and immediate debts that need to be paid. It also considers a family's (or
business's) living needs, such as maintenance income for the family, providing for a child's
education, and planning for the surviving spouse's retirement income. Replacement of the
breadwinner's projected increasing annual salary is a factor that is taken into account when
using the human life value approach to determine how much life insurance is needed.
flexible spending accounts - ANSWERS-benefit provided by an employer that allows an
employee to deposit a certain amount of his or her paycheck into an account before paying
income taxes. During the year, the employee is then directly reimbursed from this account for
eligible health care and dependent care expenses. Only qualified medical expenses are
reimbursable, not all medical expenses. Eligible expenses include certain medical expenses,
health care plan deductibles, and co-payments.
Joint life - ANSWERS-one policy that covers two people. Using some type of permanent
insurance, it pays the death benefit when the first insured dies. The survivor then has the option
of purchasing a single individual policy without evidence of insurability.
deferred annuities - ANSWERS-Surrender charge-free withdrawals are generally permitted up to
a specified percentage. (A common percentage is 10%.) Although these free withdrawals may
escape the contract's surrender charge, they are subject to income taxation. If the contract
owner is younger than age 59½, the tax may include a 10% penalty.
Group medical expense plans. - ANSWERS-Prescription drug coverage can be offered as an
optional benefit under which of the following arrangement
Answers19
whole life insurance - ANSWERS-Contracts which provide payments based on investment return
of a segregated asset account are called:
Reinstatement provision - ANSWERS-provides that when a policy lapses due to nonpayment of
premium, but the insured subsequently pays the renewal premium (which the insurer accepts
without requiring an application for a new policy), the policy will be reinstated with the same
provisions and rights as before (with the exception of coverage for sickness-related losses within
the first ten days after
Section 529 Plans - ANSWERS-In establishing this plan, the owner must designate a beneficiary.
This selection can be changed. The owner controls the money at all times and decides when
withdrawals are taken and for what purpose. If there is money left over or if the beneficiary
does not attend college, the owner can change the beneficiary without penalty to an eligible
member of the current beneficiary's family, which includes first cousins.
limited policy - ANSWERS-ecample: Prescription drug policies may be sold as supplements to
individual policies or as stand-alone
buy-sell plans - ANSWERS-offers several advantages to the partners while they are all living. The
partners know they will have a legal right to buy a deceased partner's share of the business, and
the family and heirs of the partners know that the partnership interest will be disposed of at a
fair price. Further, the money needed to purchase the deceased partner's interest will be
available when needed.
unilateral contract. - ANSWERS-since only one party-the insurer-makes any kind of enforceable
promise. The insurer promises to pay benefits if and when certain events, such as death or
,disability, occur. The insured's act of paying the premium is given in exchange for this promise.
However, the insured is not obligated to make these payments and can let the policy lapse.
18 months - ANSWERS-When an employee's coverage terminates under a group health policy,
the employee must be offered continuation coverage for:
Graded premium whole life - ANSWERS-policy in which the premium at the inception of the
policy is lower than the continuous premium whole life rate and then increases each year for
the first five years of the policy period. After five years, the premium levels off.
state guaranty associations - ANSWERS-All states have established one, funds or associations. If
an insurer becomes financially unable to pay its claims, this will cover the consumers' unpaid
claims. Insurance companies fund this associations through assessments.
managed care plans - ANSWERS-HMOs, PPOs, and POS plans, offer comprehensive medical
services to their members. They also apply financial incentives that encourage providers to keep
both the quantity and cost of services in check and motivate members to select cost-effective
providers.
lump-sum cash payment settlement option - ANSWERS-Most life insurance polices are
distributed under this. The life insurance proceeds received under this settlement option are
generally received income tax free and can be distributed between 2 or more beneficiaries in
any proportion selected by the policyowner. The proceeds paid under this it would include the
base policy death benefit, paid-up insurance additions, any accumulated dividends, and any
applicable riders such as term insurance, accidental death, etc.
When determining the amount of tax deduction that can be taken for unreimbursed medical
expenses - ANSWERS-premiums paid for group AD&D coverage are not considered qualifying
medical expenses. The deduction is limited to the amount exceeding 10% of adjusted gross
income,
, variable life or annuity - ANSWERS-Unlike conventional life insurance, which is classified as a
fixed product with a specific (guaranteed) benefit, this products provide insurance and benefits
that vary according to the investment experience of their underlying accounts. These underlying
accounts, which are separate accounts the insurer establishes and maintains, typically are made
up of equities such as stocks, the values of which rise and fall and cannot be guaranteed. A
purchaser of this incurs a degree of risk not associated with a fixed whole life policy.
needs approach - ANSWERS-is not limited to fulfilling objectives in the event of death only, such
as final expenses and immediate debts that need to be paid. It also considers a family's (or
business's) living needs, such as maintenance income for the family, providing for a child's
education, and planning for the surviving spouse's retirement income. Replacement of the
breadwinner's projected increasing annual salary is a factor that is taken into account when
using the human life value approach to determine how much life insurance is needed.
flexible spending accounts - ANSWERS-benefit provided by an employer that allows an
employee to deposit a certain amount of his or her paycheck into an account before paying
income taxes. During the year, the employee is then directly reimbursed from this account for
eligible health care and dependent care expenses. Only qualified medical expenses are
reimbursable, not all medical expenses. Eligible expenses include certain medical expenses,
health care plan deductibles, and co-payments.
Joint life - ANSWERS-one policy that covers two people. Using some type of permanent
insurance, it pays the death benefit when the first insured dies. The survivor then has the option
of purchasing a single individual policy without evidence of insurability.
deferred annuities - ANSWERS-Surrender charge-free withdrawals are generally permitted up to
a specified percentage. (A common percentage is 10%.) Although these free withdrawals may
escape the contract's surrender charge, they are subject to income taxation. If the contract
owner is younger than age 59½, the tax may include a 10% penalty.
Group medical expense plans. - ANSWERS-Prescription drug coverage can be offered as an
optional benefit under which of the following arrangement
