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Accident and Sickness Insurance Mock Exam 1 Questions
with Detailed Verified Answers
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 Ans: ✓ ✓ ✓ (corrct)
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)
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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 Ans: ✓ ✓ ✓ (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)
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?
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a) First day hospitalization rider
b) Hospital indemnity rider
c) Waiver of premium rider
d) Hospital expenses rider Ans: ✓ ✓ ✓ (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)
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?
a) Own occupation
© Get it right 2025 Getaway - Stuvia US All rights reserved
Accident and Sickness Insurance Mock Exam 1 Questions
with Detailed Verified Answers
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 Ans: ✓ ✓ ✓ (corrct)
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)
© Get it right 2025 Getaway - Stuvia US All rights reserved
,Click here for more: Scholars nexus
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 Ans: ✓ ✓ ✓ (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)
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?
© Get it right 2025 Getaway - Stuvia US All rights reserved
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a) First day hospitalization rider
b) Hospital indemnity rider
c) Waiver of premium rider
d) Hospital expenses rider Ans: ✓ ✓ ✓ (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)
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?
a) Own occupation
© Get it right 2025 Getaway - Stuvia US All rights reserved
