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Question 1 of 10
1. Question
What law states that the continued regulation and taxation of the insurance industry by the states are in the public interest, and federal antitrust laws apply to insurance only to the extent that the insurance industry is not regulated by state law?
Correct
Under the McCarran-Ferguson Act, as long as state regulation is in effect, federal antitrust laws will not apply to insurance. However, the exemption from antitrust laws is not absolute.
Incorrect
Under the McCarran-Ferguson Act, as long as state regulation is in effect, federal antitrust laws will not apply to insurance. However, the exemption from antitrust laws is not absolute.
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Question 2 of 10
2. Question
The policy reserve is defined as the difference between the present value of the future benefits and the present value of future premiums. Which of the following are types of reserves based on the time of valuation?
I. Retrospective reserve
II. Prospective reserve
III. Terminal reserve
IV. Initial reserveCorrect
Policy reserves can be classified based on the time of valuation. At the time the reserves are valued, they can be classified as terminal, initial, and mean.
(1) A terminal reserve is a reserve at the end of any given policy year.
(2) The initial reserve is the reserve at the beginning of any policy year.
(3) Finally, the mean reserve is the average of the terminal and initial reserves.Incorrect
Policy reserves can be classified based on the time of valuation. At the time the reserves are valued, they can be classified as terminal, initial, and mean.
(1) A terminal reserve is a reserve at the end of any given policy year.
(2) The initial reserve is the reserve at the beginning of any policy year.
(3) Finally, the mean reserve is the average of the terminal and initial reserves. -
Question 3 of 10
3. Question
What do you call a person who receives periodic payments that continues for a fixed period or the duration of a designated life or lives?
Correct
An annuity provides protection against living too long and exhausting your savings while you are still alive. Annuitants tend to be healthy individuals who generally live longer than most persons. Because of the higher life expectancy of annuitants, actuaries use special mortality tables to calculate annuity premiums.
Incorrect
An annuity provides protection against living too long and exhausting your savings while you are still alive. Annuitants tend to be healthy individuals who generally live longer than most persons. Because of the higher life expectancy of annuitants, actuaries use special mortality tables to calculate annuity premiums.
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Question 4 of 10
4. Question
A deferred annuity provides periodic income payments at a future date. Which of the following are types of a deferred annuity?
I. Flexible-premium annuity
II. Longevity annuity
III. Joint life annuity
IV. Joint-and-Survivor annuityCorrect
A fixed annuity that defers the income payments until a future date can be purchased with a lump sum or the contract may permit flexible premium payments.
Deferred annuities include the following:
(1) A single-premium deferred annuity is purchased with a lump sum, but income is deferred until some future date.
(2) A flexible-premium annuity allows the annuity owner to vary the premium payments; there is no requirement that a specified amount must be deposited each year.
(3) A longevity annuity is a single premium deferred annuity that begins paying benefits only at an advanced age, such as age 85.Incorrect
A fixed annuity that defers the income payments until a future date can be purchased with a lump sum or the contract may permit flexible premium payments.
Deferred annuities include the following:
(1) A single-premium deferred annuity is purchased with a lump sum, but income is deferred until some future date.
(2) A flexible-premium annuity allows the annuity owner to vary the premium payments; there is no requirement that a specified amount must be deposited each year.
(3) A longevity annuity is a single premium deferred annuity that begins paying benefits only at an advanced age, such as age 85. -
Question 5 of 10
5. Question
The Affordable Care Act provides tax credits to small business firms, which is available for two consecutive years. What is the eligibility requirement for the full tax credit?
I. Employers that have 25 full-time employees or fewer
II. Employers pay average annual wages of less than $55,000
III. Employers that have 10 full-time employees or fewer
IV. Employers pay average annual wages of less than $25,000Correct
The full tax credit is available to employers that have 10 or fewer full-time equivalent employees and pay average annual wages of less than $25,000. The maximum tax credit is phased out as the number of employees and average annual wages increase.
Incorrect
The full tax credit is available to employers that have 10 or fewer full-time equivalent employees and pay average annual wages of less than $25,000. The maximum tax credit is phased out as the number of employees and average annual wages increase.
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Question 6 of 10
6. Question
A renewal provision refers to the length of time that an individual policy can remain in force. What is this type of renewal provision, wherein the policy cannot be canceled, and renewal of the policy is at the insured’s sole discretion?
Correct
A guaranteed renewable policy is one in which the insurer guarantees to renew the policy at each anniversary date. However, the insurer has the right to increase the premium rates for the underwriting class in which the insured is placed.
Incorrect
A guaranteed renewable policy is one in which the insurer guarantees to renew the policy at each anniversary date. However, the insurer has the right to increase the premium rates for the underwriting class in which the insured is placed.
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Question 7 of 10
7. Question
What is law is enacted in 1996, which placed restrictions on the right of insurers and employers to deny or limit coverage for preexisting conditions?
Correct
Under the Health Insurance Portability and Accountability Act, the employer-sponsored group health insurance plan could not exclude or limit coverage for a pre-existing condition for more than 12 months. After the initial 12-month period expires, no new preexisting condition period may be imposed on workers who maintained continuous coverage with no more than a 63-day gap in coverage, even if the workers changed jobs or healthcare plans.
Incorrect
Under the Health Insurance Portability and Accountability Act, the employer-sponsored group health insurance plan could not exclude or limit coverage for a pre-existing condition for more than 12 months. After the initial 12-month period expires, no new preexisting condition period may be imposed on workers who maintained continuous coverage with no more than a 63-day gap in coverage, even if the workers changed jobs or healthcare plans.
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Question 8 of 10
8. Question
What is this type of retirement plan, wherein the retirement benefit is known in advance, but the contributions will vary depending on the amount needed to fund the desired benefit?
Correct
In a defined-benefit plan, the benefit amount can be based on career-average earnings, which is an average of the worker’s earnings while participating in the plan, or it can be based on final average pay, which generally is an average of the worker’s earnings over a 3-to-5-year period just before retirement.
Incorrect
In a defined-benefit plan, the benefit amount can be based on career-average earnings, which is an average of the worker’s earnings while participating in the plan, or it can be based on final average pay, which generally is an average of the worker’s earnings over a 3-to-5-year period just before retirement.
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Question 9 of 10
9. Question
In a defined-contribution plan, the contribution rate is fixed, but the actual retirement benefit varies. Which of the following are types of defined-contribution plans?
I. Money purchase plan
II. Section 401(k) plan
III. Profit retirement plan
IV. Generic pension planCorrect
The different types of defined-contribution plans include the following:
(1) Money purchase plan
(2) Section 401(k) plan
(3) Section 403(b) plan
(4) Profit-sharing plan
(5) Retirement plans for self-employed (Keogh plans)
(6) Simplified employee pension (SEP)
(7) SIMPLE IRA planIncorrect
The different types of defined-contribution plans include the following:
(1) Money purchase plan
(2) Section 401(k) plan
(3) Section 403(b) plan
(4) Profit-sharing plan
(5) Retirement plans for self-employed (Keogh plans)
(6) Simplified employee pension (SEP)
(7) SIMPLE IRA plan -
Question 10 of 10
10. Question
A simplified employee plan is a retirement plan in which the employer establishes and contribute to an IRA for each eligible employee. What are the eligibility requirements for a simplified employee plan?
I. The employee must be at least 18 years old
II. The employee must have worked for the employer in at least 3 of the immediately preceding 5 years
III. The employee must have received at least $1000 from the employer in compensation during the tax year
IV. The employee must have received at least $600 from the employer in compensation during the tax yearCorrect
A simplified employee plan must cover all qualifying employees who are at least age 21, have worked for the employer in at least 3 of the immediately preceding 5 years, and have received at least $600 from the employer in compensation during the tax year.
Incorrect
A simplified employee plan must cover all qualifying employees who are at least age 21, have worked for the employer in at least 3 of the immediately preceding 5 years, and have received at least $600 from the employer in compensation during the tax year.