1. Which of the following statements concerning the designation of a beneficiary for a life insurance policy is correct?
A. A revocable beneficiary must consent before the policyowner can designate another beneficiary.
B. Insurers often limit the use of class designations because they present problems of identifying who is in the class.
C. A policyowner can exercise all policy ownership rights without notifying the irrevocable beneficiary.
D. Naming the insured's e’tate as primary beneficiary avoids transfer taxes.
2. When Doug purchased his $100,000 life insurance policy 5 years ago, he indicated in the application that his age was 35. He has been paying a premium of $900 ($0.90 per $1,000 of insurance) each year. When Doug committed suicide this year, the insurance company learned that he was actually 40 years old when he completed the application and thus should have been paying a premium of $1,000 ($1 per $1,000 of insurance) each year. Which of the following statements concerning the payment of the death benefit to Doug's beneficiary is correct?
A. Because Doug committed suicide, only the $4,500 of premiums that he paid will be paid to the beneficiary.
B. The beneficiary will be paid $90,000.
C. The insurer will pay the beneficiary $99,500.
D. The insurer will have to pay $100,000 to the beneficiary because the policy is incontestable.
3. For a 35-year-old individual, which of the following types of whole life insurance would currently provide the greatest amount of permanent insurance protection per dollar of premium outlay?
A. Life paid-up at 65
B. Endowment life insurance
C. 10-pay life insurance
D. Ordinary life insurance
4. Which of the following is a basic benefit that must be included in all Medicare supplement (medigap) policies?
A. limited long-term care benefits
B. full payment of the first $2,500 of prescription drug charges each calendar year
C. payment for preventive care
D. 365 additional days of hospitalization coverage after Medicare ends
5. Which of the following statements concerning disability benefits under Social Security is correct?
A. There is a one-year waiting period before benefits are payable.
B. In addition to the worker's full primary insurance amount, benefits can be paid to eligible dependents.
C. Benefits are payable as long as the disabled worker is unable to perform his or her regular occupation.
D. Benefits are payable only if the condition causing the disability is expected to result in death prior to age 65.