Life & Health Insurance Exam Life and Health Insurance Guide Exam 2

Question 1

A policyholder converts a term life insurance policy to a permanent policy without providing evidence of insurability. This right is known as:

Accepted Answer

Conversion privilege

Answer

The conversion privilege allows a term policyholder to convert to permanent coverage without proving insurability, typically within a specified period.

Question 2

Under the Affordable Care Act, what is the maximum percentage of household income that an individual's health insurance premium can cost before subsidies apply (affordability threshold)?

Accepted Answer

9.12%

Answer

The ACA affordability threshold is 9.12% of household income for 2023; if employer coverage exceeds this, employees may qualify for marketplace subsidies.

Question 3

A disability income policy pays 60% of pre-disability earnings. This percentage is referred to as the:

Accepted Answer

Replacement ratio

Answer

The replacement ratio is the proportion of pre-disability income that a disability policy replaces, typically ranging from 50–80%.

Question 4

Which Medicare part covers outpatient prescription drugs?

Accepted Answer

Part D

Answer

Medicare Part D is the voluntary prescription drug benefit program administered through private insurance plans.

Question 5

An insured under a whole life policy borrows against the cash value and dies before repaying the loan. The insurer will:

Accepted Answer

Deduct the outstanding loan balance plus interest from the death benefit

Answer

Policy loans reduce the death benefit paid to beneficiaries by the amount of the unpaid loan plus any accrued interest.

Life & Health Insurance Exam Practice Test

Life & Health Insurance Exam Practice Test

Life & Health Insurance Exam Life and Health Insurance Guide Exam 2