EXAMFX Life and Health Insurance (Combined) 3

Question 1

A hospital indemnity policy pays benefits:

Accepted Answer

A fixed daily or weekly amount regardless of actual costs

Answer

Hospital indemnity (or hospital confinement) policies pay a flat per-day or per-week benefit regardless of actual medical expenses incurred.

Question 2

Which settlement option provides a life insurance beneficiary with income for a guaranteed period AND for life, whichever is longer?

Accepted Answer

Life income with period certain

Answer

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.

Question 3

An insurer that is incorporated in another state but licensed to do business in your state is called a/an:

Accepted Answer

Foreign insurer

Answer

A foreign insurer is one that is incorporated in a different state from where it is currently operating and selling policies.

Question 4

Under a disability income policy, the 'elimination period' functions most like a:

Accepted Answer

Deductible measured in time rather than dollars

Answer

The elimination period is a waiting period before benefits begin—similar to a time-based deductible—during which the insured receives no benefit payments.

Question 5

A policyowner surrenders a whole life policy that has accumulated significant cash value. The IRS taxes the gain as:

Accepted Answer

Ordinary income on the amount exceeding the policy's cost basis

Answer

When a life policy is surrendered, any gain (cash value minus premiums paid) is taxed as ordinary income; no capital-gains rate applies.

(EXAMFX) Exam FX Insurance Practice Test

(EXAMFX) Exam FX Insurance Practice Test

EXAMFX Life and Health Insurance (Combined) 3