Accident and Sickness Insurance Mock
Exam 1 fully solved to pass
(correct) Purchase a $1,500,000 disability buyout policy on each of their lives and a business
overhead expense policy of $10,000 per month on each of them
Rationale:
Rhonda and Karl each own $1,500,000 of the business and are liable for $10,000 per month of
the business expenses. (Refer to Section 5.4) - correct answer ✔✔Rhonda and Karl are equal
partners of an accounting business. Their business is currently worth $3,000,000, and their
annual business expenses are $240,000. They share the business expenses equally. The couple
wants to have a buy-sell agreement in place in the event that one of them is disabled for more
than one year. Rhonda and Karl also state that they are each responsible for 50% of their clients.
If one of them were to become disabled, the clients would move over to another accounting
business. This would lead to a loss of revenue as the business is totally dependent on their
expertise in accounting to generate revenue.
Which of the following recommendations best meets the couple's needs?
a) Purchase a $3,000,000 disability buyout policy on each of their lives and a business overhead
expense policy of $10,000 per month on each of them
b) Purchase a $3,000,000 disability buyout policy on each of their lives a
(correct) Add a comment in the agent's comment section
,Rationale:
The agent's comment section is a useful tool that ensures the company possesses all the
information that the agent is privy to. (7.2.2.1) - correct answer ✔✔Vince is helping his client,
Charlie complete an application for a disability policy. Charlie claims that she is a non-smoker,
yet she smells mildly of cigarettes. Vince is willing to give Charlie the benefit of the doubt until
she reaches into her purse to take out her driver's license as proof of address, and he catches a
glimpse of a pack of cigarettes.
What should Vince do under the circumstances?
a) Add a comment in the agent's comment section
b) Tell the client that she is lying about her smoking status
c) Order a medical exam to determine the client's smoking status
d) Order an inspection report to determine the client's tobacco usage
(wrong) Hospital expenses rider
Rationale:
The hospital indemnity rider provides a daily benefit between $50 and $250 a day to cover
expenses incurred as a consequence of hospitalization. (Refer to Section 2.2.4.9) - correct
answer ✔✔Tina purchases a disability insurance policy on the advice of her aunt. Her insurance
representative convinces Tina to add an inexpensive rider to the policy which guarantees her a
daily cash benefit of $100 to cover expenses incurred as the result of hospitalization, such as
babysitting or daycare.
, What rider does Tina have on her disability policy?
a) First day hospitalization rider
b) Hospital indemnity rider
c) Waiver of premium rider
d) Hospital expenses rider
(correct) Total disability
Rationale:
Total disability is the definition used by CPP. It defines total disability as the inability to perform
the functions of any occupation for which the insured is suited by education or experience. It
also entails that the insured will never recover and be able to return to employment and, in fact,
will likely eventually die from the cause of the disability. Such a drastic definition is seldom used
in individual or group disability insurance (DI) policies but may be found more often in creditor
insurance coverage. (Refer to Section 2.2.3.3) - correct answer ✔✔Albert fell down a staircase
and fractured his leg. He was immobilized for three months as his leg was in a cast. He received
disability benefits from his individual disability policy for two months following the waiting
period of one month. He had creditor disability insurance on his credit card, but the credit card
company did not consider Albert disabled.
What definition of disability governed his creditor disability insurance?
Exam 1 fully solved to pass
(correct) Purchase a $1,500,000 disability buyout policy on each of their lives and a business
overhead expense policy of $10,000 per month on each of them
Rationale:
Rhonda and Karl each own $1,500,000 of the business and are liable for $10,000 per month of
the business expenses. (Refer to Section 5.4) - correct answer ✔✔Rhonda and Karl are equal
partners of an accounting business. Their business is currently worth $3,000,000, and their
annual business expenses are $240,000. They share the business expenses equally. The couple
wants to have a buy-sell agreement in place in the event that one of them is disabled for more
than one year. Rhonda and Karl also state that they are each responsible for 50% of their clients.
If one of them were to become disabled, the clients would move over to another accounting
business. This would lead to a loss of revenue as the business is totally dependent on their
expertise in accounting to generate revenue.
Which of the following recommendations best meets the couple's needs?
a) Purchase a $3,000,000 disability buyout policy on each of their lives and a business overhead
expense policy of $10,000 per month on each of them
b) Purchase a $3,000,000 disability buyout policy on each of their lives a
(correct) Add a comment in the agent's comment section
,Rationale:
The agent's comment section is a useful tool that ensures the company possesses all the
information that the agent is privy to. (7.2.2.1) - correct answer ✔✔Vince is helping his client,
Charlie complete an application for a disability policy. Charlie claims that she is a non-smoker,
yet she smells mildly of cigarettes. Vince is willing to give Charlie the benefit of the doubt until
she reaches into her purse to take out her driver's license as proof of address, and he catches a
glimpse of a pack of cigarettes.
What should Vince do under the circumstances?
a) Add a comment in the agent's comment section
b) Tell the client that she is lying about her smoking status
c) Order a medical exam to determine the client's smoking status
d) Order an inspection report to determine the client's tobacco usage
(wrong) Hospital expenses rider
Rationale:
The hospital indemnity rider provides a daily benefit between $50 and $250 a day to cover
expenses incurred as a consequence of hospitalization. (Refer to Section 2.2.4.9) - correct
answer ✔✔Tina purchases a disability insurance policy on the advice of her aunt. Her insurance
representative convinces Tina to add an inexpensive rider to the policy which guarantees her a
daily cash benefit of $100 to cover expenses incurred as the result of hospitalization, such as
babysitting or daycare.
, What rider does Tina have on her disability policy?
a) First day hospitalization rider
b) Hospital indemnity rider
c) Waiver of premium rider
d) Hospital expenses rider
(correct) Total disability
Rationale:
Total disability is the definition used by CPP. It defines total disability as the inability to perform
the functions of any occupation for which the insured is suited by education or experience. It
also entails that the insured will never recover and be able to return to employment and, in fact,
will likely eventually die from the cause of the disability. Such a drastic definition is seldom used
in individual or group disability insurance (DI) policies but may be found more often in creditor
insurance coverage. (Refer to Section 2.2.3.3) - correct answer ✔✔Albert fell down a staircase
and fractured his leg. He was immobilized for three months as his leg was in a cast. He received
disability benefits from his individual disability policy for two months following the waiting
period of one month. He had creditor disability insurance on his credit card, but the credit card
company did not consider Albert disabled.
What definition of disability governed his creditor disability insurance?
