EXAMFX Life and Health Insurance (Combined) 2 — Questions and Answers
Question 1: A policy owner who is also the insured names their spouse as beneficiary. The insured dies in an accident. Before the insurer pays the claim, the spouse also dies. To whom does the death benefit go?
- The insured's estate
- The spouse's estate
- The contingent beneficiary (Correct answer)
- It is forfeited to the insurer
Correct answer: The contingent beneficiary
If the primary beneficiary predeceases (or dies simultaneously with) the insured, the death benefit passes to the contingent beneficiary named in the policy.
Question 2: Under HIPAA, how long must an employer-sponsored group health plan allow a terminated employee to maintain creditable coverage through COBRA?
- 12 months
- 18 months (Correct answer)
- 24 months
- 36 months
Correct answer: 18 months
COBRA generally provides up to 18 months of continuation coverage for employees who lose group health benefits due to termination or reduction in hours.
Question 3: Which life insurance dividend option uses the dividend to reduce the policy owner's next premium payment?
- Paid-up additions
- Accumulate at interest
- Reduction of premium (Correct answer)
- Extended term
Correct answer: Reduction of premium
The reduction of premium dividend option applies the dividend directly toward the next scheduled premium, lowering the out-of-pocket cost for the policy owner.
Question 4: A health insurance policy's 'coordination of benefits' (COB) provision is designed to:
- Prevent the insured from receiving more than 100% of covered expenses when covered by two plans (Correct answer)
- Allow the insured to choose which plan pays first regardless of rules
- Require both insurers to split all claims equally
- Eliminate the deductible under the secondary plan
Correct answer: Prevent the insured from receiving more than 100% of covered expenses when covered by two plans
COB prevents over-insurance by ensuring total reimbursement from all plans combined does not exceed 100% of actual covered expenses.
Question 5: A universal life insurance policy's 'corridor' requirement ensures that:
- Cash value never exceeds the face amount
- The death benefit always exceeds the cash value by a required minimum amount (Correct answer)
- Premiums are paid consistently every month
- The policy cannot lapse within the first 10 years
Correct answer: The death benefit always exceeds the cash value by a required minimum amount
The corridor (or 'required corridor') keeps the death benefit above the cash value by a percentage mandated by federal tax law to qualify as life insurance.
Question 6: Which of the following best describes a 'waiver of premium' rider on a life insurance policy?
- Premiums are permanently forgiven after age 65
- Premiums are waived if the insured becomes totally disabled for a specified period (Correct answer)
- The insurer pays the premium back at death
- Premiums are reduced if the insured stops smoking
Correct answer: Premiums are waived if the insured becomes totally disabled for a specified period
A waiver of premium rider keeps the policy in force without premium payments during periods of total disability, usually after a waiting period of 3–6 months.
Question 7: Under the Affordable Care Act, young adults can remain on a parent's health insurance plan up to age:
- 21
- 23
- 26 (Correct answer)
- 30
Correct answer: 26
The ACA requires individual and group health plans that offer dependent coverage to extend eligibility to adult children up to age 26.
EXAMFX Life and Health Insurance (Combined) 2
A policy owner who is also the insured names their spouse as beneficiary.
The insured dies in an accident.
Before the insurer pays the claim, the spouse also dies.
To whom does the death benefit go?