WLAH - Wyoming Life & Accident and Health

Question 21: A beneficiary receives a lump-sum death benefit from an individual life insurance policy shortly after the named insured dies. Under current federal tax rules, how is that particular lump-sum death benefit generally treated for the beneficiary's own federal income tax purposes?

Taxed fully as ordinary income

Taxed only above the premiums paid

Received free of federal income tax

Taxed at long-term capital gains rates

Question 22: A policyowner surrenders a permanent life insurance policy for its cash surrender value, and the amount received exceeds the total premiums the policyowner had paid into the contract over the years. How is that excess amount generally treated under federal income tax rules?

Entirely tax free to the owner

Taxed as a capital loss

Taxed only to the named beneficiary

Taxed as ordinary income to the owner

Question 23: An employee covered under a noncontributory group term life plan receives employer-paid coverage with a face amount well above the federal threshold that triggers taxable imputed income under the tax code's group term life provision. What must the employee report as taxable income because of that excess coverage?

The value of coverage above the threshold

The entire premium the employer paid

The full face amount of coverage

Nothing, since employer-paid premiums are exempt

Question 24: A life insurance policy fails the federal seven-pay test because the policyowner paid in premiums too quickly relative to the death benefit, causing the contract to lose favorable tax treatment on lifetime withdrawals and loans. What is this reclassified contract called?

A single-premium deferred annuity

A Modified Endowment Contract

A variable universal life rider

A guaranteed universal life policy

Question 25: A policyowner takes a loan against a life insurance policy classified as a Modified Endowment Contract, and the policy holds a gain above the premiums paid into it. Compared with a loan against an otherwise identical policy that is not a Modified Endowment Contract, how is this loan generally taxed?

Never taxed regardless of any gain

Taxed identically to a non-endowment loan

Taxed as income up to the gain

Taxed only when the policyowner dies

Question 26: An insured with a residual disability rider returns to work part time after an injury and earns income that is measurably lower than his prior earnings, even though he no longer meets the definition of totally disabled. How is the residual disability benefit typically calculated for this insured?

A fixed benefit regardless of income earned

Equal to the full total disability benefit

Based solely on hours worked weekly

Proportional to the percentage of income lost

Question 27: Under a residual disability provision, an insurer calculates the benefit by comparing the insured's current monthly earnings while partially disabled against his prior indexed monthly earnings before disability began, then applies that percentage of income loss to the full monthly benefit. What purpose does indexing the prior earnings figure serve?

Adjusts for inflation over time

Guarantees a fixed dollar minimum payout

Eliminates the need for proof of loss

Shortens the required elimination period

Question 28: A policyowner of an individual health insurance policy wants to change the beneficiary designation, request a change in the mode of premium payment, and review the policy's provisions at any time while the contract remains in force. Which party generally holds these contractual rights and privileges?

The insured, if different from the owner

The policyowner

The insurer's home office underwriter

The producer who sold the policy

Question 29: A policyowner who is not the insured under an individual health insurance policy wants to name a new beneficiary without needing the insured's consent, unless the original beneficiary designation was made irrevocable. Under standard policy provisions, what determines whether the insured's consent is required for this change?

Whether the insured is a minor

Whether the policy is guaranteed renewable

Whether the beneficiary was named irrevocably

Whether premiums are currently past due

Question 30: A family health insurance policy automatically covers the policyholder's newborn child from the moment of birth for a specified initial period, even before the parent formally notifies the insurer of the birth. Which provision requires this automatic initial coverage for a newborn child?

The dependent conversion privilege

The coordination of benefits provision

The pre-existing condition limitation

The newborn coverage provision

Question 31: A dependent child covered under a parent's family health insurance policy reaches the age limit the policy sets for dependent coverage, but the child is unmarried, incapable of self-support, and permanently disabled due to a condition that began before that limit was reached. What must the insurer generally do here?

Continue coverage beyond the age limit

Terminate coverage automatically at the limit

Convert the child to an individual policy

Transfer the child to a group plan

Question 32: A policyowner names his spouse to receive policy proceeds first if he dies, but also names his adult daughter to receive the proceeds only if the spouse does not survive him. What is the adult daughter's designation called in this arrangement?

The primary beneficiary

The contingent beneficiary

The irrevocable beneficiary

The third-party owner

Question 33: An insured dies, and it is later discovered that the named primary beneficiary died before the insured did, with no contingent beneficiary ever named on the policy. In the absence of any named contingent beneficiary, where do the policy proceeds generally go?

The insurer's general account permanently

The producer who sold the policy

The insured's estate

The state's unclaimed property fund immediately

Question 34: A policyowner may choose to pay her health insurance premium once per year, or instead choose to spread the same annual cost across smaller payments made every month, every quarter, or every half year. What is this choice of payment frequency generally called?

The grace period

The waiver of premium provision

The reinstatement provision

The mode of premium payment

Question 35: A policyowner switches from paying her health insurance premium annually in one payment to paying the same coverage's cost in twelve smaller monthly installments instead. Compared with the single annual payment, what is generally true about the total amount paid over the year under the monthly mode?

The total is somewhat higher overall

The total is always exactly identical

The total is always somewhat lower

The total depends on claims experience

Question 36: An insured is covered under two separate group health plans at once, and a provision in each plan determines which insurer pays its full benefits first and which insurer pays only remaining eligible expenses afterward, preventing the insured from collecting more than actual expenses incurred. What is this provision called?

Subrogation

Coordination of benefits

Nonduplication of individual coverage

Guaranteed renewability

Question 37: Under a typical coordination of benefits provision, when an insured is covered as an employee under one group plan and also as a dependent under a spouse's group plan, which plan generally pays benefits first as the primary plan for that insured's own claims?

The plan with the higher premium

The plan issued most recently

The plan covering the person as employee

The plan the insured designates yearly

Question 38: A supplemental health policy contains a provision stating that it will pay benefits only after all other applicable insurance, including any primary group health plan, has paid its share, and only for expenses that remain unpaid. What type of coverage provision does this describe?

A primary coverage provision

A first-dollar coverage provision

A guaranteed issue provision

An excess coverage provision

Question 39: A disability income policy specifically excludes coverage for any injury or sickness arising out of and in the course of the insured's employment, since such work-related losses are intended to be covered under a separate program instead. What term describes this type of limited coverage?

Non-occupational coverage

Occupational coverage

Twenty-four hour coverage

Blanket accident coverage

Question 40: A self-employed insured purchases an individual disability income policy providing occupational coverage, meaning the policy pays benefits for a qualifying disability regardless of whether the disabling injury or sickness happened on the job or away from work. Why might a self-employed individual specifically prefer this broader coverage?

Receives automatic government disability coverage

Lacks employer-provided workers compensation protection

Pays no premium for broader protection

Qualifies for coverage without any underwriting

WLAH Wyoming Life & Accident and Health - Set 5 - Part 2