LH Exam 3

In a Long Term Disability Income policy, the benefit term typically extends beyond:

5 years

What is the primary purpose of life contingency options in annuity benefit payments?

To ensure that payments continue to the beneficiary upon the annuitant's death

As a life insurance broker, withdrawals from policies and annuities are taxed using a method considering premiums first, making them non-taxable. This method is called:

FIFO (First In, First Out)

In an annuity contract, who is entitled to receive regular income payments during the payout phase?

Annuitant

What does the term "Life Contingency Options" in annuity benefit payment options refer to?

Options that base annuity payments on the lifespan of the annuitant

Which rider allows maintaining life insurance coverage without additional premium?

Automatic Premium Loan

Which disability income insurance policy allows an employer to deduct premiums as a business expense?

Business Overhead Expense

A 55-year-old with terminal cancer needs $75,000 for hospice care and has a $100,000 Term to 65 policy. Which option would best help cover the costs?

Sell the policy to a Viatical Settlement company

Which term refers to a life insurance policy providing additional benefits by paying a multiple of the coverage amount for specific accidents?

Multiple Indemnity

Which features should you expect in a Major Medical insurance policy?

Deductible, coinsurance, reimbursement benefits

In a group life insurance policy, what critical right does an employee have?

Designating a beneficiary

Which rider will NOT have any impact on a policy's death benefit?

Payor Benefit

Which activity is NOT typically excluded from coverage in individual disability income policies?

Misdemeanor involvement

When would you recommend an immediate annuity to a client?

Receiving a large insurance payout

An individual purchases a Life Annuity with 10 Years Certain at age 60 and begins receiving income benefits. What happens if the annuitant is still alive at age 70?

Benefits continue until death

What is the primary concern regulators have with specified disease insurance policies?

Misconception of coverage scope

Which is NOT considered a settlement option for life insurance policy proceeds?

One-year term

Which settlement option would you recommend for a client seeking flexibility and capital conservation?

Interest Only

In an insurance contract with ambiguous language, who is typically favored when resolving the issue?

Insured based on contract drafters

Which dividend option allows the policyholder to apply dividends toward premium payments, potentially suspending payment if the dividend equals or exceeds the premium?

Reduction of Premium

To qualify for coverage of a preexisting condition under a Medicare Supplement policy, the condition must have occurred and/or been treated within what time frame before the effective date?

6 months

Which statement about Qualified Retirement Plans is incorrect?

Full vesting occurs after 5 years

Which life insurance policy requires a securities license to sell?

Variable Universal Life

How would you describe the payout option for a Variable Annuity Life Only policy?

Guaranteed annuity units monthly

A Canadian insurer that benefits shareholders and is approved to operate in a U.S. state is classified as:

Admitted Alien Stock Company

In a Fixed Dollar Life Annuity, who assumes the investment risk and inflation risk?

Insurance company assumes investment risk; annuitant assumes inflation risk

Which is NOT a characteristic of an uninsurable risk?

Premiums are affordable

If two family members insured under the same Major Medical policy are injured in a single accident, how many individual deductibles are typically required?

One individual deductible

When should an unmarried dependent child's Social Security disability benefits cease?

When the dependent turns 18 or 19 if still in high school

Which type of policy renewal guarantees coverage until a specific date or age, but does NOT guarantee the premium?

Guaranteed Renewable

What is the primary benefit of reinstating a life insurance policy instead of obtaining a new one?

Maintains original issue age

How many days does an insured have to submit written notice of loss under the Notice of Claim provision?

20 days

To avoid new preexisting-condition limitations when transitioning between employer-sponsored Group Major Medical plans, an individual must enroll in the new plan within:

63 days