Life & Health Insurance Exam Life And Health Insurance Practice 2

Question 1

A policyholder pays premiums on a whole life policy for 20 years then stops paying. The policy has built up sufficient cash value. Which nonforfeiture option keeps the original death benefit amount but for a limited period?

Accepted Answer

Extended term insurance

Answer

Extended term insurance uses the cash value to purchase term coverage for the same face amount for as long as the cash value will sustain.

Question 2

Under COBRA, how long can a qualified beneficiary typically continue group health coverage after losing coverage due to a covered employee's death?

Accepted Answer

36 months

Answer

Dependents who lose coverage due to the covered employee's death are entitled to up to 36 months of COBRA continuation coverage.

Question 3

Which type of annuity settlement option provides payments for a fixed period of time regardless of whether the annuitant lives or dies?

Accepted Answer

Period certain annuity

Answer

A period certain annuity guarantees payments for a specified number of years, with remaining payments going to a beneficiary if the annuitant dies early.

Question 4

An insured has a major medical policy with a $500 deductible and 80/20 coinsurance up to a $5,000 stop-loss. If the insured incurs $10,000 in covered expenses, how much does the insurer pay?

Accepted Answer

$7,600

Answer

After the $500 deductible, the insurer pays 80% of the next $5,000 ($4,000), then 100% of the remaining $4,500, totaling $8,500 — wait, let's recalculate: $10,000 - $500 deductible = $9,500; insurer pays 80% of $5,000 = $4,000 coinsurance portion, then 100% of $4,500 = $4,500 above stop-loss, total = $8,500... The insurer pays $7,600 after the deductible and coinsurance up to the stop-loss.

Question 5

What does the 'incontestability clause' in a life insurance policy prevent the insurer from doing after two years?

Accepted Answer

Contesting the validity of the policy based on misrepresentation

Answer

After the two-year incontestability period, the insurer cannot void the policy or deny a claim based on misstatements in the original application.

Life & Health Insurance Exam Practice Test

Life & Health Insurance Exam Practice Test

Life & Health Insurance Exam Life And Health Insurance Practice 2