FiCEP Insurance Planning 4

Question 1

A client with a $500,000 whole life policy wants to stop paying premiums but keep some coverage. Which nonforfeiture option provides paid-up coverage for a reduced face amount?

Accepted Answer

Reduced paid-up insurance

Answer

Reduced paid-up insurance uses the cash value to purchase a smaller whole life policy requiring no further premiums.

Question 2

Which Medicare supplement (Medigap) plan is the only one that covers the Medicare Part B deductible for policies sold after January 1, 2020?

Accepted Answer

Plan G

Answer

After January 1, 2020, Plans F and C were eliminated for new enrollees, making Plan G the most comprehensive available Medigap plan.

Question 3

A 45-year-old client is considering a variable annuity with a guaranteed minimum income benefit (GMIB). What is the PRIMARY risk this rider is designed to mitigate?

Accepted Answer

Longevity risk combined with poor market performance

Answer

The GMIB guarantees a minimum income stream regardless of account performance, protecting against outliving assets in a down market.

Question 4

Under the concept of subrogation in insurance, after an insurer pays a claim, the insurer has the right to:

Accepted Answer

Pursue a third party responsible for the loss

Answer

Subrogation allows the insurer to step into the insured's shoes and recover the paid claim amount from the negligent third party.

Question 5

Which disability income policy provision specifies that the insurer cannot cancel coverage or raise premiums as long as the insured pays premiums on time?

Accepted Answer

Non-cancelable

Answer

Non-cancelable policies lock in both the right to renew and the premium rate, offering the strongest consumer protection available.

FiCEP - Financial Counseling Certification Program Practice Test

FiCEP - Financial Counseling Certification Program Practice Test

FiCEP Insurance Planning 4