Insurance Life & Health Insurance 4

Question 1

Which of the following correctly describes an 'irrevocable beneficiary' designation?

Accepted Answer

The policyowner cannot change the beneficiary or assign the policy without the beneficiary's consent

Answer

An irrevocable beneficiary has a vested interest in the policy, so the policyowner cannot change beneficiaries, take loans, or assign the policy without that beneficiary's written consent.

Question 2

Under a 'key person' life insurance arrangement, who is the applicant, owner, premium payer, and beneficiary?

Accepted Answer

The employer (business)

Answer

In key person insurance, the business is the applicant, owner, premium payer, and beneficiary; it insures an employee whose death would cause significant financial loss to the company.

Question 3

What distinguishes a 'non-participating' life insurance policy from a 'participating' policy?

Accepted Answer

Non-participating policies do not pay policy dividends to policyowners

Answer

Participating policies are eligible to receive dividends (a return of excess premium) from the insurer, while non-participating policies are not, typically resulting in lower initial premiums.

Question 4

A 'stop-loss' provision in a major medical health insurance policy:

Accepted Answer

Caps the insured's out-of-pocket coinsurance payments so that the insurer pays 100% above a specified threshold

Answer

The stop-loss (or coinsurance cap) provision protects the insured by limiting how much they pay in coinsurance after the deductible, after which the insurer covers 100% of eligible expenses.

Question 5

What is the primary difference between 'own-occupation' and 'any-occupation' disability definitions?

Accepted Answer

Own-occupation pays if the insured cannot perform their specific job; any-occupation pays only if unable to work at any job for which they are qualified

Answer

Own-occupation (own-occ) is the more liberal definition: the insured is considered disabled if they cannot perform the duties of their specific occupation, even if they can work elsewhere.

Insurance Practice Test

Insurance Practice Test

Insurance Life & Health Insurance 4