Life and Health Insurance (Combined) Flashcards
7 cards from real EXAMFX practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Life and Health Insurance (Combined) flashcards as text
A hospital indemnity policy pays benefits:
Answer: A fixed daily or weekly amount regardless of actual costs
Hospital indemnity (or hospital confinement) policies pay a flat per-day or per-week benefit regardless of actual medical expenses incurred.
Which settlement option provides a life insurance beneficiary with income for a guaranteed period AND for life, whichever is longer?
Answer: Life income with period certain
Life income with period certain guarantees payments for life but also ensures a minimum number of years of payments even if the beneficiary dies early.
An insurer that is incorporated in another state but licensed to do business in your state is called a/an:
Answer: Foreign insurer
A foreign insurer is one that is incorporated in a different state from where it is currently operating and selling policies.
Under a disability income policy, the 'elimination period' functions most like a:
Answer: Deductible measured in time rather than dollars
The elimination period is a waiting period before benefits begin—similar to a time-based deductible—during which the insured receives no benefit payments.
A policyowner surrenders a whole life policy that has accumulated significant cash value. The IRS taxes the gain as:
Answer: Ordinary income on the amount exceeding the policy's cost basis
When a life policy is surrendered, any gain (cash value minus premiums paid) is taxed as ordinary income; no capital-gains rate applies.
A 'guaranteed renewable' health insurance policy means the insurer:
Answer: Must renew the policy but may increase rates for the insured's rate class
Guaranteed renewable policies must be renewed at the insured's option, but the insurer may raise premiums on a class-wide basis—not singling out the individual.
Which type of annuity allows the owner to participate in market gains while protecting against market losses through a 'floor' guarantee?
Answer: Equity-indexed (fixed-indexed) annuity
An equity-indexed annuity credits interest based on an external index (e.g., S&P 500) but guarantees the account will not lose value due to market downturns.