2-15 Final Exam, 2-15 Insurance Course Chapters 24 - 30, 2-15 Insurance Course Chapters 15 - 23, 2-15 Insurance Test Chapter 10 - 14, 28, 2-15 Insurance Course (Chapters 5 - 9), 2 - 15 License Course (Chapters 1-4)
"Annuity payments are taxable to the extent that they represent interest earned rather than capital returned." When an annuitized payout option is chosen, what method is used to determine the taxable portion of each payment? a. Exclusion ratio b. Marginal tax formula c. Surtax ratio d. Annuitization ratio
a
1. A life insurance company is organized in Orlando where it maintains its home office. In Florida, the company is classified as a a. domestic company b. local company c. foreign company d. preferred company
a
104. Under the Affordable Care Act, which of the following may an insurance company increase and still maintain grandfathered status for a health insurance plan? a. premium amount b. deductible amount c. coinsurance amount d. copayment amount
a
106. Florida law requires annual reports for variable products be given to consumers and that the reports contain: a. Dollar value of each unit b. Current income tax implication of units c. Current capital gains tax implication of units d. Anticipated annual value of payout
a
113. At what point does a whole life policy mature or endow? a. When the policy's cash value equals the face amount b. When the premiums paid equal the policy's face amount c. When premiums paid equal the policy's cash value d. When the policy's cash value equals the loan amount
a
123. Which of the following is an optional health insurance policy provision? a. change of occupation b. entire contract c. grace period d. reinstatement
a
129. A licensed agent legally represents a. the insurer b. the applicant/insured c. the state insurance department d. himself or herself
a
130. The period of time immediately following a disability during which benefits are not payable is the a. elimination period b. probationary period c. residual period d. short-term disability period
a
131. An individual with no health insurance paid $5,000 in medical expenses this year. With an adjusted gross income of $50,000, how much if any of the medical expenses can be deducted this year? a. $0 b. $100 c. $2,500 d. $5,000
a
138. Workers' compensation covers income loss resulting from a. work-related disabilities b. plant and office closings c. job layoffs d. job terminations
a
142. To whom does the cash value of a life insurance policy belong? a. Policy owner b. Insured c. Insurer d. Beneficiary
a
16. Regular notices sent to policy-owners for payment of their life insurance policy premiums reflect a. gross premium b. net level premium c. net single premium d. none of the above
a
26. Frank is the insured in a $40,000 five-year level term policy issued in 2000. He died in 2006. His beneficiary received a. nothing b. $20,000 c. $40,000 d. the cash value of the policy
a
31. What constitutes "consideration" for a life insurance policy? a. Application and initial premium b. Agent's commission c. Adhesion feature of the contract d. Policy's benefits
a
32. Health maintenance organizations are known for stressing the provision of a. preventive care b. health care and services on a fee-for-services-rendered basis c. reimbursement approach d. right of assignment approach
a
33. Trudy, age 53, owns both a traditional IRA and a Roth IRA. All of the following are possible contribution combinations EXCEPT a. $5,500 into the traditional IRA and $5,500 into the Roth IRA b. $5,500 into the traditional IRA and $0 into the Roth IRA c. $0 into the traditional IRA and $5,500 into the Roth IRA d. $0 into the traditional IRA and $0 into the Roth IRA
a
44. When surrendering whole life for a reduced paid-up policy, the cash value of the new policy will: a. mature at age 100 b. mature at the end of the term c. be the same amount as the old policy d. there is no cash value in the new policy
a
47. Statements made by an applicant for life insurance that are guaranteed to be true are a. warranties b. material statements c. representations d. declarations
a
52. What formula is used to determine what portion of an annuity payout is taxable? a. amount invested divided by expected return b. expected return divided by the amount invested c. interest divided by principal d. principal divided by interest
a
56. Which of the following violates the controlled business law? a. More than half of an agent's new business is written on employees of a business owned by his or her mother. b. More than half of an agent's new business is written on employees of a business owned by his or her friend. c. More than half of an agent's new business is written on employees of a business owned by his or her neighbor. d. More than half of an agent's new business is written on employees of a business owned by his or her college roommate.
a
66. Which is NOT correct regarding reinstatement? a. Suicide exclusions renew when a policy is reinstated. b. Contestable periods renew when a policy is reinstated. c. Interest on past-due premium will be owed. d. Past-due premium will be owed.
a
71. Paul is hospitalized with a back injury and, upon checking his disability income policy, learns that he will not be eligible for benefits for at least 60 days. This would indicate that his policy probably has a 60-day a. elimination period b. probationary period c. disability period d. blackout period
a
76. Which definition of total disability creates the highest premium for the insured? a. Own occupation b. Any occupation c. Occupational disability d. Partial disability
a
81. Which of the following risks are insurable? a. Pure risks b. Gambling c. Speculative risks d. Investing
a
82. Which of the following types of agent authority is specifically set forth in writing in the agent's contract? a. Express b. Implied c. Apparent d. Personal
a
95. When a group disability insurance plan is paid entirely by the employer, benefits paid to disabled employees are a. taxable income to the employee b. deductible income to the employee c. deductible business expenses to the employer d. taxable income to the employer
a
98. A child may receive Social Security benefits after a parent dies until any of the following ages EXCEPT a. 16 b. 18 c. 19 d. 22
a
99. All of the following benefits are available under Social Security EXCEPT a. welfare benefits b. death benefits c. old-age or retirement benefits d. disability benefits
a
A life insurance policy paid $500,000 to a beneficiary and the total premiums paid were $2500. Which of the following terms defines this type of contract? a. Aleatory b. Unequal c. Disproportionate d. Adhesion
a
A partnership owns, pays for and is the beneficiary of the life insurance policies on the lives of its individual partners. This is known as a(n) a. entity buy-sell plan b. stock redemption plan c. cross-purchase plan d. Keogh plan
a
A policy that pays double or triple the face amount if death occurs during a specified period is a a. multiple protection policy b. credit life policy c. family policy d. joint policy
a
After retirement starts which of the following is true? a. The number of annuity units stays the same b. The value of each annuity unit stays the same c. The dollar amount of monthly payments stays the same d. The value is adjusted to accommodate inflation
a
Agnes purchases a round-trip travel accident policy at the airport before leaving on a business trip. Her policy would be which type of insurance? a. Limited risk b. Business overhead expense c. Credit accidental death d. Industrial health
a
All of the following are involved in a product presentation EXCEPT a. pressure b. education c. discussion d. disclosure
a
All of the following are primary risk factors in underwriting individual health insurance policies EXCEPT a. geographical location b. moral hazard c. occupation d. physical condition
a
All of the following are required uniform provisions in individual health insurance policies EXCEPT a. change of occupation b. grace period c. entire contract d. reinstatement
a
All of the following provisions are required by the Florida Employee Health Care Access Act except: a. coverage must always be renewed by carriers b. carriers must use a "modified community rating" methodology c. all small group health benefit plans must be issued on a "guaranteed -issue" basis d. small employer means an employer with 1-50 employees
a
All of the following statements about facility of payment provisions are correct EXCEPT a. they are often found in group life policies b. the permit an insurer to pay all or part of the proceeds to a party who is not named in the contract c. they are typically found in industrial policies d. they permit insurance proceeds to be paid to someone not named in the policy when the named beneficiary is a minor
a
All of the following statements about the classification of applicants are correct EXCEPT a. a substandard applicant can never be rejected outright by the insurer b. applicants who are preferred risks have premium rates that are generally lower than standard rate risks c. an individual can be rated as a substandard risk because of a dangerous occupation d. a standard applicant fits the insurer's guidelines for policy issue without special restrictions
a
All of the following statements about the taxation of insurance proceeds are correct EXCEPT a. interest earned on policy dividends is exempt from income tax b. a beneficiary will not be taxed on insurance proceeds paid as a lump sum death benefit c. a policy owner who receives the cash value for a surrendered policy must pay taxes on any gain d. generally, no gain or loss is recognized when one insurance policy is exchanged for another
a
All of the following statements correctly describe the purpose of Social Security EXCEPT a. it provides a source of income for a meaningful standard of living during retirement b. it provides basic protection against financial problems accompanying death, disability and retirement c. it augments a sound personal insurance plan d. it provides retirement and survivor benefits to a worker and his or her family
a
All of the following statements pertaining to reinstatement of a life insurance policy are correct EXCEPT a. a suicide exclusion period is renewed with a reinstated policy b. when reinstating a policy, the insurer will charge the policy owner for past-due premiums c. when reinstating a policy, the insurer will charge the policy owner for interest on past-due premiums d. a new contestable period becomes effective in a reinstated policy
a
All of the following statements regarding annuities are correct EXCEPT a. generally, annuity contracts issued today require fixed, level funding payments b. annuities are sold by life insurance agents c. an annuity is a periodic payment d. annuitants can pay the annuity premiums in lump sums
a
All of the following statements regarding group health insurance are correct EXCEPT a. Coordination of benefits is required between group policies and Medicare supplements b. Coordination of benefits helps to reduce costs c. Duplication of benefits result in overpayment d. Coordination of benefits is permitted so long as the insured is completely reimbursed for covered expenses
a
All of the following statements regarding survivor financial needs are correct EXCEPT a. the term "dependency period" refers to the 20-year period immediately following the insured's death during which the widowed spouse must depend on Social Security b. the period for which there are no Social Security benefits for the surviving spouse is known as the blackout period c. a final expense fund addresses a deceased breadwinner's last illness and funeral costs, death taxes, outstanding debts and more d. a housing fund addresses a family's rental or home mortgage needs
a
All of the following types of plans are reserved for small employers EXCEPT a. 401(k)s b. SARSEPs c. SIMPLE IRAs d. SIMPLE 401(k)s
a
An HMO contract must contain all of the following EXCEPT a. a listing of the surgical schedules by which surgeons are paid b. the premium, since it is subject to change c. the length of the grace period d. procedures to be followed for emergencies
a
An applicant, in good health, completed the application without the premium. Upon delivery of the policy the agent noticed the applicant's health had changed. The agent is to do which of the following? a. return the policy to the insurance company b. deliver the policy, obtain a check, and a signed statement of the insured's good health c. collect the additional premium d. start the underwriting process over again
a
An insured has a basic hospital/surgical expense policy, which provides benefits of $50 per day for up to 30 days of hospitalization and $750 for miscellaneous charges. It bases its surgical benefits on a schedule approach. The insured is hospitalized for a severely broken leg that requires surgery. The surgical procedure has been assigned $500 by the policy, though the customary charge in the area is $600. The insured incurs the following covered expenses: $80 per day for seven days hospital charge $675 for the surgical procedure $800 for miscellaneous expenses The insured's policy will pay a. $1,600 b. $1,700 c. $1,810 d. $2,035
a
Art, the owner and insured under a $75,000 life policy, is killed in an accident. He had paid total premiums of $26,000. How much of the $75,000 death benefit that was paid to Art's wife in a lump sum is taxable income to her? a. $0 b. $26,000 c. $49,000 d. $75,000
a
Assume the following persons buy identical life insurance policies from the same company. Generally speaking, who will pay the lowest premium, if all have standard ratings? a. Linda, age 28 b. Thomas, age 28 c. Louise, age 40 d. Joe, age 45
a
Common stocks are used in the investment portfolio underlying variable annuities because common stocks a. usually provide a hedge against inflation b. guarantee a minimum interest rate c. are based on the full faith and credit of the insurer d. are insured by the federal government
a
Florida law requires insurers to distribute to each policy owner an annual report that contains which of the following? a. Dollar value of each unit b. Anticipated increase in number of units by the next anniversary c. Forecast of the value of the unit by the next anniversary d. Amount of tax on each unit reported to the IRS
a
Florida's Long Term Care Partnership Program provides which of the following? a. Asset protection b. Medicare coverage c. Inpatient hospital treatment d. Medicaid medical expense coverage
a
HMOs are known for stressing a. preventive care and early intervention b. state-=sponsored health plans c. outpatient care and services d. coverage of government employees
a
HMOs are known for stressing a. preventive medicine and early treatment b. state-sponsored health care plans c. in-hospital care and services d. health care services for government employees
a
How many hours of continuing education in law and ethics does an agent need every two years? a. five hours b. seven hours c. 20 hours d. 24 hours
a
How will a beneficiary naming a former spouse on a preexisting insurance contract be changed by the divorce? a. the beneficiary designation is voided by the divorce b. there will be no change allowed under Florida law c. the beneficiary change requires a court order d. insurer policy rules will determine the result
a
If a consumer is harmed by an insurer or agent who violates Florida laws relating to annuity sales, all of the following actions may be ordered by the OIR except a. immediate surrender of all licenses b. monetary restitution of all costs to the consumer by the agent c. contract rescission by the insurer d. refund of premium or account value, whichever is larger
a
If a health insurance company tests a person for AIDS/HIV which of the following must be signed? a. notice of informed consent b. AIDS/HIV rate disclosure form c .AIDS/HIV underwriting disclosure form d. outline of coverage
a
If an application is missing answers to certain questions and the policy is issued, the company can take which course of action? a. The company may rescind the policy b. The company may demand the applicant answer the questions and there would be no coverage during this period c. The company can take no action, as it was the agent's responsibility to complete the application d. The company can contest the validity of the policy
a
If an error is discovered while the insured is living and the insured is older than the policy states, the insurance company can a. increase the premium b. reduce the premium c. waive the difference d. increase the benefits
a
In an insurance transaction, licensed agents legally represent which of the following? a. insurer b. applicant and insured c. state office of insurance regulation d. themselves
a
Insurers selling variable annuities are subject to a. state regulation b. Federal Trade Commission regulation c. bank examiners' scrutiny d. municipal regulation
a
Jan, a single, working mother, dies at age 40. Dave, her only son, would receive a one-time lump-sum benefit of a. $255 b. $500 c. $1,000 d. $2,555
a
Jim gives Bill a couple of tickets to a Florida Marlins game to thank him for purchasing a policy. This is an example of a. rebating b. twisting c. replacement d. churning
a
Leland elects to surrender his whole life policy for a reduced paid-up policy. The cash value of his new policy will a. continue to increase b. decrease gradually c. remain the same as in the old policy d. be forfeited
a
Of the following terms, which best describes the act of replacing existing life insurance with a new life insurance policy based upon incomplete or incorrect representation? a. Twisting b. Rebating c. Embezzlement d. Concealment
a
Savings of the HMO system are based on all of the following EXCEPT a. keeping the premium high enough to net a profit b. volume discounts with hospitals c. capitation arrangements with physicians d. encouraging members to see their doctors early
a
Separate account values and variable account values fluctuate a. daily b. weekly c. monthly d. at the insurers discretion
a
The cash values of insurance policies belong to which of the following? a. Policy owner b. Insured c. Insurer d. Beneficiary
a
The core policy (Plan A) developed by the NAIC as a standard Medicare supplement policy includes all of the following EXCEPT a. the Medicare Part A deductible b. Part A coinsurance amounts c. the first three pints of blood each year d. the 20 percent Part B coinsurance amounts for Medicare-approved services
a
The grace period for paying premiums on an HMO is a. 10 days b. 30 days c. 60 days d. There is no grace period for HMO contracts.
a
The major areas of regulation by the Office of Insurance Regulation include which of the following? a. Policing against unauthorized insurance activities b. Proposing legislation to regulate the insurance industry c. Enacting new insurance laws d. Issuing certificates of authority to insurers
a
The method used today to change beneficiaries is known as the a. recording method b. beneficiary alteration method c. assignment method d. change of designation method
a
The term copayment means a. a fixed amount per visit or per service the subscriber must pay b. the amount the HMO pays the subscriber if he or she secures service outside the service area c. the amount the physician receives from the HMO for each patient treated d. the premium the subscriber pays
a
The type of insurance most frequently used in group life plans is a. annually renewable term b. ten-year renewable term c. limited pay whole life d. single-premium whole life
a
Under group life insurance, which of the following statements is CORRECT? a. If cancelled, the members must be notified b. There must be at least 25 lives in the group c. A group member cannot name a beneficiary d. Any group of individuals is eligible for group life
a
Violation of the controlled business statute occurs if an agent sells most of his or her business to a. employees of a business owned by his or her father b. members of his or her civic club c. city and county employees d. members of the local medical society
a
What is the professional organization whose code of ethics has been incorporated into Florida insurance law? a. National Association of Insurance & Financial Advisors (NAIFA) b. National Association of Life Underwriters (NALU) c. Association of Chartered Life Underwriters (ACLU) d. National Association of Insurance Commissioners (NAIC)
a
When annuitized, which of the following is true? a. The number of annuity units stays the same. b. The value of each annuity unit stays the same. c. The dollar amount of monthly payments stays the same. d. The value is adjusted to accommodate cost-of-living changes.
a
Which definition of total disability is more favorable to the insured? a. "Own occupation" is more favorable b. "Any occupation" is more favorable c. They are the same in terms of benefits to the insured d. There is no way to determine from the information provided
a
Which of the following allows 30 days during which premiums may be paid to keep policies in force? a. Grace period b. Reinstatement clause c. Incontestable clause d. Waiting period
a
Which of the following applies to the 10-day free-look privilege in a health insurance contract? a. It permits the insured to reject the policy within 10 days of policy delivery and receive a full refund. b. It allows the insured 14 days to pay the initial premium. c. It can be waived only by the insurance company. d. It is granted only at the option of the agent.
a
Which of the following is (are) a common life insurance policy exclusion? a. Death from war b. Death from accidental means c. Death by commercial aviation d. All of the above
a
Which of the following is considered a "cost containment" measure of health policies? a. Coordination of benefits b. Duplication of benefits c. Full coverage for inpatient treatment d. Elimination of all deductibles
a
Which of the following is correct about the Department of Financial Services' right to examine an agent's records? a. An examination can be conducted at any time to discover any unfair trade practices. b. An agent's records involving a premium transaction are confidential and not subject to examination. c. The Chief Financial Officer may examine an agent's records only once per year, unless good cause is shown for more frequent examinations. d. The statutes do not give the Department an absolute right to examine the affairs of insurance licensees to discover unfair trade practices.
a
Which of the following is not true concerning a Risk Retention Group? a. it insures a group of separate businesses b. is insures members of the same occupation c. is a mutual company d. all insureds own the company
a
Which of the following is the goal of a sales presentation? a. To educate the client so the client can make his or her own decision about what's right for him or her b. To sell the client as many products as possible c. To convince the client that the producer's recommendations are best d. To explain the rules and regulations governing particular insurance products
a
Which of the following persons may solicit applications for HMO coverage? a. Licensed health agent b. Consulting actuary c. Company attorney d. Financial adviser
a
Which of the following statements about COBRA is CORRECT? a. The premium for continued group medical coverage may be up to 102 percent of the premium that would otherwise be charged. b. The employer must pay the cost of the continued group coverage. c. The schedule of benefit during the continuation period may be different than those provided under the group plan. d. COBRA permits an employee to convert group certificate to an individual policy.
a
Which of the following statements about Medicare Part B is NOT correct? a. It is a compulsory program. b. It covers services and supplies not covered by Part A. c. It is financed by monthly premiums. d. It is financed by tax revenues.
a
Which of the following statements does NOT describe an element of an insurable risk? a. The loss must not be due to chance. b. The loss must be definite and measurable. c. The loss cannot be catastrophic. d. The loss exposures to be insured must be large.
a
Which of the following statements is correct about group life insurance? a. It is written with a master policy for members of qualified groups b. A group member is prohibited from assigning incidents of ownership c. Group life rates are generally higher than those for individual policies d. Only the group member can pay the premiums for the group policy
a
Which of the following statements pertaining to a life insurance policy application is CORRECT? a. The names of both the insured and the beneficiary are indicated on the application. b. If an applicant's age is shown erroneously on a life insurance application as 28 instead of 29, the result may be a premium quote that is higher than it should be. c. The size of the policy being applied for does not affect the underwriting process. d. The agent's report in the application must be signed by the agent and the applicant.
a
Which of the following statements regarding the Fair Credit Reporting Act (FCRA) is CORRECT? a. Applicants must be notified within a short period of time that their credit report has been requested. b. If an applicant for insurance is rejected based on a consumer report, the name of the reporting agency must be kept confidential. c. If requested to do so, the insurance company must provide the actual consumer report to the applicant. d. Consumer reports are final in nature and cannot be disputed by an applicant.
a
Which of the following statements regarding the National Association of Insurance Commissioners (NAIC) is NOT correct? a. the NAIC is empowered to prosecute and punish criminal violators in the insurance industry. b. the NAIC seeks to preserve state rather than federal regulation of the insurance industry. c. the NAIC promotes uniformity in state insurance laws and regulations. d. the NAIC seeks to promote efficient administration of insurance laws and regulations.
a
Which of the following statements regarding types of insurers is NOT correct? a. Reinsurers usually deal with group policy owners. b. Mutual insurance companies are "owned" by their policy owners. c. Stock insurance companies seek a profit for their shareholders. d. Fraternal benefit societies must be nonprofit organizations.
a
10. The surviving spouse may begin receiving retirement benefits as early as what age? a. 59 1/2 b. 60 c. 62 d. 65
b
103. A life insurance policy is generally delivered through a. the Commissioner's Office b. the agent c. the agency office d. the insurance company's home office
b
105. How are annuity withdrawals taxed? a. LILO b. LIFO c. FILO d. FIFO
b
108. Alice has a major medical policy with a $500 deductible and an 80/20 coinsurance provision. If she receives a hospital bill for $7,500 of covered expenses, how much of that bill will she have to pay? a. $1,400 b. $1,900 c. $2,000 d. $2,400
b
112. The minimum number of persons to be insured under a group health insurance plan is established by a. the NAIC b. state law c. federal law d. the employer
b
114. An Outline of Coverage for health insurance policies outlines all the following EXCEPT a. basic benefits b. premium rates c. principal exclusions d. cancelation provision
b
116. Bill's medical expense policy states that it will pay him a flat $50 a day for each day he is hospitalized. The policy pays benefits on which basis? a. Reimbursement b. Indemnity c. Service d. Partial
b
118. Jerry has just purchased a life insurance policy and is taking time to review the policy's provisions. He will find that his policy excludes death by all of the following means EXCEPT a. suicide b. accident c. aviation d. war
b
12. Which of the following constitutes an insurable interest? a. The policy owner must expect to benefit from the insured's death. b. The policy owner must expect to suffer a loss when the insured dies or becomes disabled. c. The beneficiary, by definition, has an insurable interest in the insured. d. The insured must have a personal or business relationship with the beneficiary.
b
124. Which of the following statements regarding morbidity tables is correct? a. They indicate the average number of individuals from a given group who will die in a given year. b. They indicate the average number of individuals from a given group who will become disabled. c. They indicate the gender and number of individuals from a given group who will die in a given year. d. They indicate the gender and number of individuals from a given group who will become disabled in a given year.
b
127. Which of the following statements pertaining to life insurance premiums is CORRECT? a. Loading charges have the greatest effect on premium rates. b. Participating premiums are higher than non-participating premiums. c. Men pay lower rates on average than women. d.Past health problems determine insurability, but if insurable they will not affect premium rate.
b
132. A reinsurer a. charges no premium b. assumes a portion of the risk from another insurer c. cedes the risk to a ceding company d. takes no risk
b
133. Medicaid provides a. funds to states for the provision of medical care to the aged b. funds to states to assist their medical public assistance programs c. funds to charitable organizations for providing medical benefits to poor people d. medical benefits to those who contributed to its funding through payroll taxes
b
136. Florida law defines all of the following as a "physician" under Florida law EXCEPT a. Optometrist at an eye clinic b. Massage therapist c. Surgeon in an outpatient surgical center d. Dentist performing dental surgery
b
140. All of the following statements describe qualified retirement plans EXCEPT a. Employer contributions are taxed as income when they are paid out to the employee. b. Employer contributions are included in the employee's income in the year they are contributed. c. Employer contributions are not included in the employee's income in the year they are contributed. d. Employer contributions are tax-deductible to the employer.
b
147. All of the following statements about Medicare supplement (Medigap) policies are correct EXCEPT a. Medigap policies supplement Medicare benefits b. Medigap policies cover the cost of extended nursing home care c. Medigap policies pay most, if not all, Medicare deductibles and copayments d. Medigap policies pay for some health care services not covered by Medicare
b
148. All of the following statements are true of preferred provider organizations EXCEPT a. a PPO is a group of health care providers, such as doctors, hospitals and ambulatory health care organizations, that contracts with a group to provide their services b. PPOs operate on a prepaid basis c. PPO members select from among the preferred providers for needed services d. groups that contract with PPOs are employers, insurance companies or other health insurance benefits providers
b
15. All of the following are features of an equity indexed product EXCEPT: a. Equity index products are usually invested in the S&P 500. b. Equity index products allow the contract holder to direct the investments. c. Equity index products are primarily for accumulation. d. Equity index products guarantee a minimum interest rate.
b
19. Leonard owns a major medical health policy which requires him to pay the first $200 of covered expenses each year before the policy pays its benefits. The $200 is the policy's a. coinsurance amount b. deductible c. stop-loss amount d. annual premium
b
22. Individual health insurance policies are typically written on which basis? a. Participating b. Nonparticipating c. Experience-rated d. Claims-rated
b
23. The State Guaranty Association a. guarantees issuance of policies b. guarantees claims are paid if an insurer becomes insolvent c. guarantees dividends d. guarantees the rate of return on a policy
b
28. Mr. A purchased a Hospital Indemnity policy to protect against catastrophic medical expenses. This would be an example of: a. risk avoidance b. risk transference c. risk reduction d. risk retention
b
29. Mr. Ritchie, a taxidermist, is insured under a business overhead expense policy that pays maximum monthly benefits of $2,000. Mr. Ritchie becomes disabled. His actual monthly expenses are $2,700. The monthly benefits payable under his policy will be a. $1,300 b. $2,000 c. $2,350 d. $2,700
b
34. Which of the following legal terms indicates that a life insurance contract contains the enforceable promises of only one party? a. Adhesion b. Unilateral c. Conditional d. Aleatory
b
35. All of the following are characteristics of group health insurance plans EXCEPT a. their benefits are more extensive than those under individual plans b. the parties to a group health contract are the employer and the employees c. employers may require employees to contribute to the premium payments d. the cost of insuring an individual is less than what would be charged for comparable benefits under and individual plan
b
39. Which renewability provision allows an insurer to terminate a health insurance policy on any date specified in the policy and to increase the premium for any class of insureds? a. Conditionally renewable b. Optionally renewable c. Guaranteed renewable d. Cancellable
b
40. When an insured dies, who stands first to receive the policy's proceeds? a. Policy owner b. Primary beneficiary c. Insured's creditors d. Insured's estate
b
46. On August 1st, Robert completed an application for a major medical policy, gave his agent a check for the initial premium and received an insurability receipt from the agent. On August 3rd, the agent submitted Roger's application and premium to the insurance company. On August 6th, Roger was involved in an accident and admitted to a hospital. On August 12th, the agent received Roger's policy from the insurance company. Which of the following statements concerning this situation is CORRECT? a. Roger's coverage will begin when he receives the policy from the agent. b. Roger's coverage began when he received the insurability receipt. c. Roger's coverage began the day the insurance company received the application and premium from the agent. d. Roger's coverage began the day the agent sent the application and premium to the insurance company.
b
51. Roy has a renewable five-year $100,000 decreasing term policy. Which of the following statements about the policy's renewability is CORRECT? a. The renewal premium will be the lower than the initial premium. b. The renewal premium will be higher than the original premium. c. The insurance company will factor declining health into the renewal premium. d. The renewal premium will be the same as the initial premium.
b
53. Who designates the beneficiary of a life insurance policy? a. Insured b. Policy owner c. Underwriter d. Fiduciary
b
54. Florida law requires that all of the following be coverages be offered in health insurance policies EXCEPT a. Coverage for diabetes equipment and self-management training b. Coverage for women who have had a breast biopsy that reveals breast cancer c. Osteoporosis coverage d. Newborn child of a covered family member for 18 months
b
55. Which of the following factors determine whether policy dividends will be paid on a participating policy? a. Reserves and experience b. Expenses and claims costs c. Interest and benefits d. Premiums and renewability
b
57. Which of the following statements about assignment is NOT correct? a. The policy owner must notify the insurer in writing of the assignment. b. The insured must approve an assignment. c. The insurance company will not require the signature of the beneficiary for the assignment. d. The policy owner may temporarily assign ownership to a lender.
b
58. Under the notice of claims provision of a health insurance policy, a policy owner must provide notification of loss within a reasonable period of time, usually a. 10 days after an occurrence or a commencement of a loss b. 20 days after an occurrence or a commencement of a loss c. one month after an occurrence or a commencement of a loss d. no later than three months after an occurrence or a commencement of a loss
b
59. The time of payment of claims provision requires that a. claims must be paid after the insurer is notified of a loss b. claims must be paid after the insurer is notified and receives proof of loss c. the insured must submit proof of loss within a specified time, or the claim may be denied d. the insured must periodically submit proof of loss in order to receive the claim
b
7. After a family's breadwinner dies, the "blackout period" generally can be defined as the period a. during which children are living at home b. that begins with the youngest child turns 16 and ends with the surviving parent retires c. during which children are in school d. from the surviving parent's retirement to death
b
70. Joy has not yet paid her premium and dies during the grace period. What happens? a. The policy is cancelled because the premium has not been paid. b. The policy pays the death benefit less the premium. c. A prorated death benefit is paid based on the amount of premium the insurance company received. d. The death benefit is paid.
b
78. Which of the following is CORRECT about the Fair Credit Reporting Act? a. It applies to reports that are made by insurance companies to credit reporting agencies. b. It provides insurance companies the ability to view consumers' credit history. c. It prohibits credit reporting agencies from sharing consumer information with insurance companies. d. It prohibits insurance companies from making contact with credit reporting agencies.
b
8. All of the following approaches are used by insurers to determine benefits payable under basic surgical expense insurance EXCEPT a. relative value scale approach b. traditional net cost method c. reasonable and customary approach d. surgical schedule method
b
85. In which of the following situations would the premium payor of a life insurance policy be able to deduct the premium payments for tax purposes? a. Joe, the sole proprietor of a grocery store, purchases and pays premiums on a $75,000 term life policy on his life and names his wife as beneficiary. b. Leland, a local board member of the United Way, assigns his $25,000 whole life policy to that organization, but continues to make the premium payments. c. Michelle, the legal guardian of five-year-old Angela, makes the premium payments on Angela's $5,000 juvenile life insurance policy. d. Bob takes over the premium payments on his son's $30,000 whole life policy after his son declares bankruptcy.
b
87. Jackie and her husband, Bruce, have an annuity that pays them $2,200 a month. Under a joint and full survivor payout option, if Jackie dies first which of the following will occur? a. Bruce will receive payments for the rest of Jackie's life expectancy. b. Bruce will receive payments for the rest of his lifetime. c. Bruce will receive payments until the principal is exhausted. d. Bruce will receive payments until he turns 100.
b
94. The amount of money an insurer sets aside to pay future claims is called a(n) a. premium b. reserve c. dividend d. accumulated interest
b
97. Which is the purpose of insurance? a. It is an opportunity to gamble. b. It spreads financial risk over a large group. c. It protects against physical hazards. d. It creates risk avoidance.
b
A group credit disability policy may be issued to a creditor if the expected new entrants into the plan a. are more than 25 b. are at least 100 persons yearly c. are about the same each year d. are subject to insurability
b
A health maintenance organization provides which of the following? a. Free health care for Medicare patients b. Preventive health care for its members c. A program of "pay as you go" medicine d. An extension of VA hospital treatment for veterans
b
A reinsurer is a company that a. accepts all the risk from another insurer b. assumes a portion of the risk from another insurer c. cedes the risk d. does not take any risk
b
A variable annuity agent must notify the Department of Financial Services within 30 days of any of the following changes EXCEPT a. change of the agent's name b. change of the agent's company c. change of the agent's residence address d. change of the agent's mailing address
b
According to the notice of claims provision in a health insurance policy, a claimant must normally notify the insurance company of loss within how many days after the loss occurs? a. 10 b. 20 c. 40 d. 60
b
All of the following activities could result in the suspension of an agent's license EXCEPT a. misrepresenting the financial condition of an insurance company b. selling any replacement policy that causes an insured to lapse an existing policy c. attaining a license for the sole purpose of handling controlled business d. demonstrating incompetency to transact business as an insurance agent
b
All of the following are basic forms of health insurance coverage EXCEPT a. medical expense b. limited pay health c. disability income d. accidental death and dismemberment
b
All of the following are reasons why it is seldom in the best interest of a policyholder to replace a life insurance policy with a new one EXCEPT a. most of the first year premium is swallowed up in commission b. replacement policies are never in the best interest of the policy owner c. the premium is higher because the insured is older d. waiting periods begin anew
b
All of the following are standard life insurance policy nonforfeiture options EXCEPT a. cash surrender option b. one-year term insurance option c. extended term insurance option d. reduced paid-up (permanent) insurance option
b
All of the following statements about accelerated death benefits and viatical settlements are correct EXCEPT a. a terminally ill person receives accelerated death benefits tax-free b. an insured who sells an insurance policy to a viatical company usually receives 100 percent of the policy's face value c. the maximum amount of accelerated benefits that a chronically ill person can exclude from income is limited d. accelerated benefit provisions are standard in most individual and group life insurance policies
b
All of the following statements about beneficiary designations are correct EXCEPT a. when a charity is named beneficiary, the policy owner's heirs cannot contest the gift b. minors cannot be named life insurance beneficiaries c. a business may be designated as a beneficiary d. when a trust is named beneficiary, a trustee will manage the insurance proceeds
b
All of the following statements about life insurance benefits are correct EXCEPT a. Benefits designated for a named beneficiary are protected from the insured's creditors b. Benefits payable to the insured's estate are protected from the creditors c. The cash surrender value of a life insurance policy is subject to garnishment if the policy was taken out for the creditor's benefit d. Benefits designated for a named beneficiary are protected from the beneficiary's creditors
b
All of the following statements about the Outline of Coverage for health insurance policies are correct EXCEPT a. it must be provided at the time of application or delivery of policy b. principal benefits also shown on the policy need not be included c. it is to include a summary statement of principal exclusions d. it must include any right the insurer reserves to change premiums
b
All of the following statements are correct about group life insurance EXCEPT a. A member can assign his or her incidents of ownership b. Certificate holders need not be notified if the policy expires c. Rates are typically more favorable than individual policies d. It is generally written as a one-year renewable term plan
b
All of the following statements concerning a common disaster provision are correct EXCEPT a. the provision activates when the insured and primary beneficiary die as a result of the same accident b. the provision stipulates that if the insured and the primary beneficiary die in the same accident, it is presumed that the insured died last c. the provision gives a policy owner assurance that proceeds will be distributed according to his or her wishes d. the provision stipulates that if the primary beneficiary outlives the insured by more than 48 hours, then the proceeds will be paid to the primary beneficiary's estate
b
All of the following statements pertain to the conversion privilege of group term life insurance are correct EXCEPT a. an insured employee typically has 31 days following termination of employment in which to convert the group insurance b. an insured employee must convert to the same type of coverage as was provided under the group plan (that is, term) c. insureds who convert their coverage to individual plans pay a premium rate according to their attained age d. an insured employee may exercise the conversion privilege regardless of his or her insurability
b
All of the following statements regarding assignment of a life insurance policy are correct EXCEPT a. to secure a loan, the policy can be transferred temporarily to the lender as security for the loan b. the policy owner must obtain approval from the insurance company before a policy can be assigned c. the life insurance company assumes no responsibility for the validity of an assignment d. the life insurance company must be notified in writing by the policy owner of any assignment
b
All of the following statements regarding term life insurance are correct EXCEPT a. a three-year renewable policy allows a term policy owner to renew the same coverage for another three years b. a three-year renewable policy allows a term policy owner to increase coverage for the next three years c. an option to convert provides that a term life insurance policy can be exchanged for a permanent one d. both the option to renew and the option to convert relieve the insured from furnishing evidence of insurability
b
All of the following statements regarding the life insurance policy summary are correct EXCEPT a. It must illustrate all guaranteed cash surrender values b. It must illustrate all guaranteed policy dividend values c. It must present the generic name of the policy as well as the company's name for it d. It must be given to each new policy owner no later than policy delivery
b
All statements on an application are considered to be a. warranties b. representations c. parole evidence d. binding
b
An individual purchased group credit accident and health insurance to cover a car loan. Following an accident, the individual was disabled for eight months. Which of the following benefits were paid under the policy? a. Monthly income benefits to the insured b. An amount equal to eight months of the loan payment to the insured's creditor c. An amount equal to 10 months of the loan payment to the insured's creditor d. Monthly income benefits to the insured and an amount equal to eight months of the loan payment to the insured's creditor
b
An insurance company has how many years to challenge the validity of a life insurance contract? a. one b. two c. three d. four
b
An insurer is considered competent if it a. is registered with NAIC b. is licensed or authorized by the state with a certificate of authority c. follows the Code of Ethics of the state Office of Insurance Regulation d. is registered with the Securities and Exchange Commission
b
Are investment gains in the accumulation unit values subject to current income taxation? a. Yes, but only to the extent of the gain. b. No, they are not currently taxable. c. Yes, but the gain is paid by the company. d. Yes, but the gain can be offset by any losses.
b
Arthur incurs total hospital expenses of $9,500, all of which are covered by his major medical policy. The policy includes a $500 deductible and a 75/25 coinsurance feature. Of the total expense, how much will Arthur have to pay? a. $2,375 b. $2,750 c. $2,875 d. $6,675
b
Assume a health insurance contract states that it will pay $350 a month to the insured, should he or she become totally disabled. Which term most aptly defines this kind of contract? a. Participating b. Valued c. Inclusive d. Reimbursement
b
Assume an insurer will issue a maximum monthly disability income benefit of $5,000, provided the total of such benefits payable by all companies does not exceed 60 percent of the insured's monthly income. Ted earns $4,500 per month and has no existing disability income policy. The maximum disability income benefit this insurer would issue Ted is a. $2,500 b. $2,700 c. $4,500 d. $5,000
b
Before he died, Gary received a total of $9,200 in monthly income payments from his $15,000 straight life annuity. He also was the insured under a $25,000 life insurance policy that named his wife, Darlene, as primary beneficiary. Considering the two contracts, Darlene would receive death benefits totaling a. $15,000 b. $25,000 c. $30,000 d. $40,000
b
Before selling a variable annuity, the agent must furnish the prospect with a(n) a. outline of coverage b. prospectus c. consumer's buying guide d. table of guaranteed values
b
Buying insurance is one of the most effective ways of a. avoiding risk b. transferring risk c. reducing risk d. retaining risk
b
Clarence is to enter the hospital for a thyroidectomy. His basic medical expense policy includes a relative value schedule for surgical expense. The schedule lists 55 units for a thyroidectomy and a conversion factor of $8. How much will the policy pay? a. $400 b. $440 c. $540 d. $550
b
Dan is participating in his company's group health plan. One of the plan's provisions specifies that, in the event he is eligible for benefits under another policy, his group plan will serve as the primary plan. What is this provision called? a. Excess coverage provision b. Coordination of benefits provision c. Other insurance with this insurer provision d. Double indemnity provision
b
During what period is a new life insurance policy owner entitled to review a policy and return it for a full refund? a. During the 14 days prior to its effective date b. Within 14 days after delivery of the policy c. Within 30 days of purchase d. After receipt, but only with the prior approval of the agent
b
Elaine signs an application for a $50,000 non medical life policy, pays the first premium and receives a conditional insurability receipt. If Elaine were killed in an auto accident two days later a. the company would reject the application on the basis that death was accidental b. her beneficiary would receive $50,000, if Elaine qualified for the policy as applied for c. the premium would be returned to Elaine's family because the policy had not been issued d. the company could reject the death claim because the underwriting process was never completed
b
For an individual life insurance contract on an insured 64 years of age or older, the insurer must advise the applicant a. Of their right to a large print copy of the policy if required b. Of their right to designate a secondary addressee to receive a copy of any policy lapse notice c. Of an extended free look period d. Of their right to name a trustee to exercise ownership rights under the policy
b
Fred owns a small hardware store and is covered under a business overhead expense policy. If he becomes disabled, he can expect all of the following expenses to be covered EXCEPT a. his employees' salaries b. his salary c. utility bills d. property and liability insurance premiums
b
Generally, the party who delivers the insurance policy to the new policy owner is the a. insurance company's home office b. sales agent c. state chief financial officer d. underwriter
b
Group insurance plans that require employees to pay a portion of the premium are called a. underwritten b. contributory c. participatory d. shared
b
How soon after an administrative action is taken against a licensee by any governmental or regulatory agency regarding fraud, dishonesty, or untrustworthiness, must the licensee submit copies of the report to the Department? a. Within 90 days b. Within 30 days c. Within 60 days d. Within 45 days
b
If a medical report is required on an applicant, it is completed by a. a home office underwriter b. a paramedic or examining physician c. the agent d. the home office medical director
b
If an agent changes his or her residence address, he or she must notify the Department of Financial Services within a. 15 days b. 30 days c. 60 days d. A change of residence address does not require notification.
b
If an agent signs up an HMO subscriber who is eligible for Medicare a. Medicare will pay what the HMO does not b. the subscriber is disenrolled from Medicare c. the subscriber becomes eligible for Medicare d. the subscriber can decide whether or not to keep both HMO and Medicare coverage
b
In Florida, properly licensed and appointed agents may act as brokers in insurance transactions, in which case they may legally represent a. the insurer b. the applicant and insured c. the state office of insurance regulation d. themselves
b
In order to sell HMO contracts, an agent must do all of the following EXCEPT a. keep and renew his or her appointment b. maintain a bond not less than $10,000 c. abide by the Unfair Trade Practices Act d. obey all regulations of the Department of Financial Services
b
In what phase of the selling process are serious problems of misrepresentation likely to occur? a. Approach b. Presentation and recommendations c. Fact finding and needs analysis d. Policy delivery and ongoing service
b
Individual and group health insurance policies and HMO contracts can be canceled for all of the following reasons EXCEPT a. Failure to pay premiums b. The insured develops a serious illness c. The insurer ceases to offer coverage in the market d. Fraud or intentional misrepresentation of a material fact
b
James died after receiving $180 monthly for six years from a $25,000 installment refund annuity. His wife, Lucy, as beneficiary, now will receive the same monthly income until her payments total a. $2,160 b. $12,040 c. $12,960 d. $25,000
b
Jerry is injured while working. Under state workers' compensation laws, we can assume that a. His employer will not be liable for Jerry's work-related disabilities if the employer's negligence did not contribute to the injuries b. Jerry will probably receive workers' compensation benefits on a monthly or weekly basis c. Jerry must sue his employer to receive workers' compensation benefits d. Both Jerry and his employer are required to contribute to the cost of workers' compensation coverage
b
Joanna and her husband, Tom, have a $40,000 annuity that pays them $200 a month. Tom dies and Joanna continues receiving the $200 monthly check as long as she lives. When Joanna dies, the annuity payments cease. This is an example of a(n) a. installment refund annuity b. joint and full survivor annuity c. life annuity d. cash refund annuity
b
Kevin, the insured under a $200,000 life insurance policy, and his sole beneficiary, Lynda, are killed instantly in a car accident. Under the Uniform Simultaneous Death Act, to whose estate will the policy proceeds be paid? a. Lynda's estate b. Kevin's estate c. Both Kevin's and Lynda's estate, equally d. The proceeds will escheat to the state
b
Mrs. Williamson purchases a five-year $50,000 level term policy with an option to renew. At the end of the five-year term, she renews the policy. Which of the following statements is CORRECT? a. The premium for the renewal period will be the same as the initial period. b. The premium for the renewal period will be higher than the initial period. c. The premium for the renewal period will be the same as the initial period, but a one-time service charge will be assessed upon renewal. d. The premium for the renewal period will be lower than the initial period.
b
Rick, who has no health insurance, experienced $3,000 in medical expenses this year. Assuming his adjusted gross income was $29,000, how much of those medical expenses can he deduct from his adjusted gross income, if any? a. $0 b. $100 c. $825 d. $3,000
b
Rolland is 45 years old and married. He has a son, age 19, a freshman at a local university and a daughter, age 8. Decreasing term insurance would be recommended for Rolland in order to accomplish which of the following reasons? a. Supplement retirement income b. Guarantee a college education for the son c. Provide payment protection d. Provide a college education fund for the daughter
b
Ron, the insured under a $100,000 life insurance policy, dies during the grace period. What happens, considering that the premium on the policy had not been paid? a. The premium is cancelled because the insured died during the grace period. b. The amount of the premium is deducted from the policy proceeds paid to the beneficiary. c. The premium due, plus a 10 percent penalty, is charged against the policy. d. The beneficiary must pay the premium after the death claim is paid.
b
Sarah, age 65, owner of a $150,000 whole life policy, decides to surrender the policy and take the $90,000 cash value in a lump sum. Over the years she has paid a total of $54,000 in premiums. How much, if any, of the payment will be taxed? a. $0 b. $36,000 c. $54,000 d. $90,000
b
Selling variable universal life insurance policies as mutual funds is an example of a prohibited practice called a. twisting b. misrepresentation c. replacement d. rebating
b
Sidney has a monthly benefit of $2,500 for total disability under a residual disability income policy. If Sidney suffers a 40 percent loss of his pre-disability income, how much will his benefit be? a. $0 b. $1,000 c. $1,500 d. $2,500
b
Skilled nursing care differs from intermediate care in which of the following ways? a. It must be performed by skilled medical professionals whereas intermediate care does not require medical training. b. It must be available 24 hours a day while intermediate care is daily, but not 24-hour care. c. It is typically given in a nursing home, while intermediate care is usually given at a home. d. It encompasses rehabilitation, while intermediate care is for meeting daily personal needs, such as bathing and dressing.
b
The State Guaranty Association guarantees a. that a policy will be issued b. that the claim will be paid if the insurer becomes insolvent c. that dividends will be paid d. the rate of return on a policy
b
The authority that an insurer gives to its agent by means of the agent's contract is known as a. implied authority b. express authority c. fiduciary responsibility d. general authority
b
The beneficiary on Walter`s life insurance reads, "Children of the Insured." Which of the following phrases best describes this type of beneficiary designation? a. Juvenile beneficiaries b. Class beneficiaries c. Generational beneficiaries d. Attractive nuisance beneficiaries
b
The notice to the insurance company of a health insurance claim must include a. estimated amount of claim b. name of insured c. nature of sickness or injury d. date of loss
b
The period of time from a variable annuity contract's issue date and the start of payments is known as the a. deductible period b. accumulation period c. probationary period d. funding period
b
The pre-licensing education requirement for a life insurance agent's license is a. 30 hours b. 40 hours c. 20 hours d. 24 hours
b
The primary distinction between the insurability and approval types of conditional receipts is when the a. applicant pays the initial premium b. coverage goes into effect c. medical exam is given d. applicant proves insurable
b
The purpose behind full disclosure requirements is to a. makes sure a client is told everything there is to know about a product b. help a client make an informed decision c. makes sure agents comply with the letter of the law d. help a client distinguish one insurer's product from a similar offering from another insurer
b
The purpose of COBRA requirements concerns a. coordination of health benefits b. continuation of health insurance c. Medicare supplement coverage d. nondiscrimination in group health plans
b
The rider that provides for a waiver of premiums on a juvenile policy if the adult payor dies or becomes disabled is a a. guaranteed insurability rider b. payor rider c. waiver of premium rider d. automatic premium loan rider
b
The term capitation means a. premium for the HMO coverage b. amount paid to the physician for each member c. amount of capital the HMO possesses d. value of the HMO capital improvements and buildings
b
The waiting period before qualifying for Social Security disability benefits is how many months? a. 3 b. 5 c. 6 d. 12
b
To be licensed in the state of Florida as a resident producer, all of the following must be completed except a. A criminal background check b. Paying an application fee that is refundable c. The pre-licensing education requirements d. Providing any other information required by the state
b
Tom buys his wife Mary a $50,000 diamond ring. When she is not wearing the ring, she keeps it in a safe deposit box at a local bank. This is an example of risk a. avoidance b. reduction c. retention d. transference
b
Under Medicare Part B, the participant must pay all of the following EXCEPT a. an annual deductible b. a per benefit deductible c. 20 percent of covered charges above the deductible d. a monthly premium
b
Under which option does the in insurer hold the death proceeds for a specified period of time and, at regular intervals, pay the beneficiary interest on the proceeds? a. Fixed-period b. Interest-only c. Fixed-amount d. Life-income
b
Variable contracts include all of the following except a. variable annuities b. variable term life c. variable whole life d. variable universal life
b
What annuity payout option provides for lifetime payments to the annuitant but guarantees a certain minimum term of payments, whether or not the annuitant is living? a. Installment refund option b. Life with period certain c. Joint and survivor d. Straight life income
b
What is the initial period of time specified in a disability income policy that must pass, after a policy is in force, before a loss due to sickness can be covered? a. Preexisting term b. Probationary period c. Temporary interval d. Elimination period
b
What kind of table reflects the average number of disabilities due to sickness or accidents at various ages? a. Mortality b. Morbidity c. Claims underwriting d. Underwriting
b
What type of policy would be best used when the need for protection declines from year to year? a. Level term b. Decreasing term c. Whole life d. Universal life
b
When a cash value life insurance policy is converted into an annuity in a nontaxable transaction, that event is generally known as a a. rollover b. 1035 exchange c. modified endowment d. pension enhancement
b
When an agent spreads a false story that damages a competing agent's reputation, the offense is called a. twisting b. defamation c. disclosure d. rebating
b
Which kind of health insurance policy assures renewability up to a specific age of the insured, although the company reserves the right to change the premium rate on a class basis? a. Noncancellable b. Guaranteed renewable c. Optionally renewable d. Cancellable
b
Which of the following applies when an insured wishes to convert industrial insurance policies for an ordinary policy? a. This is not permitted under Florida law. b. It is possible to convert $3,000 or more of industrial insurance. c. Any such conversion requires a physical examination. d. The multiple policies can only be reissued as one industrial policy.
b
Which of the following best describes the function of insurance? a. It is a form of legalized gambling. b. It spreads financial risk over a large group to minimize the loss to any one individual. c. It protects against living too long. d. It creates and protects risks.
b
Which of the following characteristics is associated with disability buy-out plans? a. A short elimination period b. The option to elect a lump-sum payment c. Provisions to cover the business overhead expenses d. Irrevocable agreements
b
Which of the following examples pertaining to accidental death and dismemberment insurance is CORRECT? a. Merrill is the insured under a $50,000 AD&D policy and dies unexpectedly of a heart attack. His beneficiary will receive $50,000 as the death benefit. b. Linda has a $40,000 AD&D policy that pays triple indemnity. If she should be killed in a train wreck, her beneficiary would receive $120,000. c. Paula has an AD&D policy that pays $15,000 for the loss of one hand or foot or the sight of one eye. That benefit is called the principal sum. d. Eric has an AD&D policy. He is killed in an auto accident. The $30,000 his beneficiary receives as a death benefit is the policy's capital sum.
b
Which of the following is NOT a provision of NAIC's Model Regulation on Illustrations? a. Each policy illustration must be accompanied by a written explanation or policy summary. b. Each policy illustration should use the words "vanish" and "vanishing premium" sparingly. c. Each policy illustration must show that cash values and coverage vary depending on changes in the insurer's costs and dividends. d. Each policy illustration must be complete.
b
Which of the following is NOT considered to be an element of replacement? a. The agent knows a new policy will take the place of an existing policy. b. An existing policy is subjected to a loan of 10 percent of its value. c. An existing policy is allowed to lapse. d. An existing policy is reissued with a reduced cash value.
b
Which of the following is NOT part of a product presentation? a. Explaining policies b. Asking for referrals c. Motivating the client d. Discussing a policy's limitations
b
Which of the following is NOT required when a group life insurance policy is canceled? a. The insurance company must notify the group policy owner. b. The policy owner must notify the department of the cancellation. c. The insurance company must notify the group members (but request this to be done by the policy owner) d. The policy owner must notify the group members.
b
Which of the following is a distinguishing element of an insurance contract? a. Offer and acceptance b. Conditional c. Consideration d. Competent parties
b
Which of the following is an objective of the NAIC? a. To promote federal legislation of the insurance industry b. To encourage uniformity in state insurance laws and regulations c. To develop continuing education courses for insurance providers d. To develop model insurance policies for adoption by insurers
b
Which of the following organizations would make reimbursement payments directly to the insured individual for covered medical expenditures? a. Administrative-services-only plan b. Commercial insurer c. Preferred provider organization d. Health maintenance organization
b
Which of the following phrases could agents avoid using when explaining policies to prospective applicants or clients? a. Cash value b. Vanishing premium c. Flexible premium d. Death benefit
b
Which of the following riders provides for changes in the benefit payable based on changes in the consumer price index (CPI)? a. guaranteed insurability rider b. cost of living adjustment rider c. Social Security rider d. waiver of premium rider
b
Which of the following should a producer NOT do during a presentation? a. Explain and educate b. Sell a policy c. Motivate the client d. Openly discuss a policy`s limitations
b
Which of the following statements about a life insurance policy's cash value is CORRECT? a. In many states (but not all), policy owners are entitled to the accrued cash values of their whole life policies. b. When a whole life insurance policy is active, the owner can borrow against the cash value. c. Owners of both term and whole life insurance are entitled to the cash surrender value when a policy is lapsed or surrendered. d. If a policy owner lets his or her whole life policy lapse, the beneficiary will be entitled to part of the policy's cash value.
b
Which of the following statements about authority is NOT correct? a. Express authority is granted by means of the agent's contract. b. Express authority is determined by a principal's conduct. c. Implied authority is not overtly extended to the agent's contract, but does permit many of the agent's operations. d. Apparent authority can be assumed from the actions of the principal.
b
Which of the following statements about elimination periods in disability income policies is NOT correct? a. Elimination periods may apply to disabilities due to sickness and not accidents. b. Benefits are not payable during an elimination period, but are paid retroactively to the beginning of the period if the insured remains disabled throughout the period. c. An elimination period follows the start of a disability. d. Elimination periods help keep premiums down.
b
Which of the following statements about group health insurance is CORRECT? a. A group health insurance contract is between the insurance company and the employee. b. Group health plans provide more extensive benefits than individual health plans. c. If a group plan provides medical expense benefits, it must be with a comprehensive policy. d. COBRA requirements are directed at employers with 20 or fewer employees.
b
Which of the following statements about the Fair Credit Reporting Act is CORRECT? a. It prohibits insurance companies from obtaining reports on applicants from outside investigative agencies. b. It provides that consumers have the right to question reports made about them by investigating agencies. c. It applies to reports about applicants that are made by insurance agents to their companies. d. It prohibits insurance companies from rejecting an application based on a credit report.
b
Which of the following statements applies to the rights of a surviving spouse under a group insurance policy? a. Coverage continues at the same rate and premium b. Conversion privileges must be provided for dependents c. Conversion privileges extend to the spouse, but not not the children. d. Conversion rights of the surviving spouse are less than those which the insured employee possessed
b
Which of the following statements correctly describes the tax advantage of a qualified retirement plan? a. Employer contributions are not taxed when they are paid out to the employee. b. Earnings of the plan are taxable to the employee only when he or she receives benefits. c. Earnings of the plan are only taxable if the employee voluntarily terminates participation in the plan. d. Employer contributions are deductible business expenses when the employee receives the benefits.
b
Which of the following statements describes an insurable interest? a. The policy owner must expect to benefit from the insured's death. b. The policy owner must expect to suffer a loss when the insured dies or becomes disabled. c. The beneficiary, by definition, has an insurable interest in the insured. d. he insured must have a personal or business relationship with the beneficiary.
b
Which of the following statements is CORRECT? a. Only speculative risks are insurable. b. Only pure risks are insurable. c. Both pure risks and speculative risks are insurable. d. Neither pure risks nor speculative risks are insurable.
b
Which of the following statements is correct about coverage for a handicapped member who reaches adulthood? a. Coverage ceases for the family member at the limiting age in the policy b. Coverage continues if the member is chiefly dependent on the policyholder c. Group health policies must continue coverage, unlike individual policies d. Coverage automatically ceases when the family member obtains employment
b
Which of the following statements pertaining to life insurance premiums is CORRECT? a. Premium rates usually are lower for men than women. b. Harold and Billy, both age 25, each buy a whole life policy from the same company. However, Harold has a participating policy, while Billy's policy is nonparticipating. Harold will pay a higher premium. c. The most significant factor in premium rate calculation is interest. d. Lucy, who is substantially overweight, has applied for a life insurance policy. Her weight may affect her insurability, but not the amount of premium on her policy.
b
Which of the following statements regarding Social Security survivor benefits is NOT correct? a. A surviving widow, age 66, will be entitled to a life income equal to her husband's PIA. b. A healthy dependent child of a deceased worker will be entitled to an income benefit until age 18, or to age 22, if he or she attends college. c. A surviving widower, age 47, has a 13-year-old child who was also a dependent of the deceased worker. The widower is entitled to monthly income until the child becomes 16, at which time benefits will cease to the widower until he reaches at least age 60. d. A deceased covered worker was providing one half of the support for a 62-year-old parent who is confined to a nursing home. The parent is entitled to a survivor's benefit.
b
Which of the following statements regarding a cost of living (COL) rider on a life insurance policy is CORRECT? a. A cost of living rider provides for a level premium even if the cost of living increases. b. An inflation index, usually the Consumer Price Index, determines the amount of inflation adjustment that is made to the policy up to a maximum percentage increase. c. To require additional amounts of life insurance under a COL rider, evidence of insurability must be provided. d. Declines in the CPI cause corresponding declines in the amount of insurance coverage.
b
Which of the following statements regarding annuity payout options is NOT correct? a. Under a straight life annuity option, all annuity payments stop when the annuitant dies. b. In a cash refund annuity, the annuitant's beneficiary always receives an amount equal to the beginning annuity fund plus all interest. c. A period certain annuity guarantees a definite number of payments. d. Joint and survivor annuities guarantee payments for the duration of two lives.
b
Which of the following statements regarding insurable interest is NOT correct? a. Insurable interest exists when the applicant is the insured. b. A policy obtained by a person without an insurable interest in the insured can be enforced. c. The applicant must be subject to loss upon the death, illness or disability of the insured. d. Generally, the person to be insured must give his or her consent before a policy is issued, even if the applicant has an insurable interest.
b
Which of the following types of health insurance policies prevents the company from changing the premium rate or modifying the coverage in any way? a. Optionally renewable b. Noncancellable c. Guaranteed renewable d. Cancellable
b
Which type of policy allows for flexible premiums and an adjustable death benefit? a. indeterminate whole life b. universal life c. interest sensitive whole life d. variable whole life
b
With three partners in a business, how many life insurance policies would be required to insure a cross-purchase buy-sell plan? a. 3 b. 6 c. 9 d. 12
b
"An insurance contract is prepared by one party, the insurer, rather than by negotiation between the contracting parties." Which of the following statements explains this characteristic of insurance contracts? a. The insurance contract is an aleatory contract. b. The insurance contract is a contract of acceptance. c. The insurance contract is a contract of adhesion. d. The insurance contract names only the insurer as the competent party.
c
"When level premium insurance is renewed, the premium amount rises to reflect the increased mortality risk of the insured's older age." What phrase best describes this approach to increasing premiums? a. Variable rate b. Targeted rate c. Step rate d. Seniority rate
c
100. Which of the following oversees the Bureau of Unclaimed Property? a. Office of Insurance Regulation b. Office of Financial Regulation c. Chief Financial Officer d. Financial Services Commission
c
101. Which of the following describes equity index contracts? a. Cash value amounts follow changes in the stock market. b. A securities license is required to sell indexed products. c. Time frames for the product, such as five and seven years, are common. d. Cash value amounts follow changes in the bond market.
c
102. Which of the following may qualify as sliding: a. Recommending that a client cancel a policy and use the cash value to make other investments. b. Taking a client out to a very expensive restaurant after the client purchases an expensive policy. c. Adding additional coverage to a policy and indicating that it is included in the original premium. d. Recommending that a client take cash value from one policy to make other investments.
c
107. Michael has a $50,000 life insurance policy and has named Jackson as the only beneficiary. They are both killed together instantly in a car accident. The Uniform Simultaneous Death Act states that the proceeds will be paid to whose estate? a. Neither estate b. Both estates equally c. Michael's estate d. Jackson's estate
c
110. After a week in the hospital, Lola receives a bill for $9,000 of covered expenses. Her major medical policy has a $250 deductible and a 75/25 coinsurance feature. How much of the total expense will Lola's policy cover? a. $2,063 b. $6,063 c. $6,563 d. $8,753
c
111. Which of the following is an objective of Florida's Long Term Care Partnership Program? a. To get all long-term care paid for by insurance companies b. To get all long-term care paid for by Florida Medicaid c. To contain the growth of public expenditures by encouraging consumers to purchase long-term care coverage d. To contain the growth of public expenditures by encouraging consumers to use Florida Medicaid
c
115. Which provision of a life insurance policy states that nothing in the policy may be "incorporated by reference"? a. Consideration clause b. Insuring clause c. Entire contract clause d. Incontestable clause
c
117. Randy's premium payment was due on June 1, but the company did not receive it until June 28. Which policy provision kept Randy's policy from lapsing? a. Reinstatement b. Facility-of-payment c. Grace period d. Automatic premium loan
c
119. As it pertains to group health insurance, COBRA stipulates that a. retiring employees must be allowed to convert their group coverage to individual policies b. terminated employees must be allowed to convert their group coverage to individual policies c. group coverage must be extended for terminated employees up to a certain period of time at the employee's expense d. group coverage must be extended for terminated employees up to a certain period of time at the employer's expense
c
12. Regarding landmark cases and laws involving the regulation of insurance, which of the following statements is NOT correct? a. Insurers are required to disclose when an applicant's consumer/credit history is being investigated. b. the Securities and Exchange Commission (SEC) may regulate insurers that sell variable annuities and variable life insurance. c. the Federal Trade Commission (FTC) directly supervises all insurance marketing activities. d. the McCarran-Ferguson Act (1945) led directly to our current understanding that the insurance industry is predominantly regulated by the states
c
122. A whole life policy expires when? a. an outstanding loan equals the death benefit b. at the end of the term c. when the insured is age 100 d. when the insured is age 95
c
125. Which of the following is known for stressing preventive health care? a. Administrative-services-only providers b. Blue Cross/Blue Shield c. Health maintenance organizations d. Commercial insurers
c
128. Which of the following terms best describes risk as it pertains to the insurance industry? a. sharing the possibility of a gain b. uncertainty regarding financial gain c. uncertainty regarding financial loss d. uncertainty regarding how death will occur
c
13. Which of the following is NOT included in the definition of "transacting insurance"? a. issuing an insurance policy b. accepting an insurance application c. underwriting a policy d. accepting a premium payment
c
137. All of the following are primary health insurance factors EXCEPT a. interest b. expense c. policy benefits d. morbidity
c
139. Which of the following statements regarding he needs approach in determining the appropriate amount of life insurance is CORRECT? a. Family survivors have substantially larger cash needs following the death of a breadwinner than they do following the disability of a breadwinner. b. The needs approach is not as popular today as the Human Life Value approach. c. The needs approach considers long-range financial goals for the family, such as retirement and college planning. d. The needs approach takes legacy planning, such as charitable and philanthropic donations into account.
c
141. A universal life policy expires when a. an outstanding loan equals the death benefit b. a regularly scheduled premium payment is missed c. the cash value becomes too small to pay the cost of insurance d. the cash value equals the death benefit
c
143. Basic hospital expense insurance provides coverage for all of the following EXCEPT a. hospital room and board b. anesthesia and use of the operating room and supplies c. physician services d. drugs and X-rays
c
144. An employer pays $90 of a $100 group disability premium, and the employee pays the other $10. The disability benefit under the plan is $1,000/month. If the employee becomes disabled and receives the full benefit, how much, if any, of the monthly benefit would be taxable income? a. $0 b. $100 c. $900 d. $1,000
c
145. Which of the following is CORRECT regarding taxation of life insurance premiums? a. Premium for joint life insurance is tax-deductible. b. Business buy-sell agreements are tax-deductible. c. Premium for life insurance used to secure a business loan is tax-deductible. d. Key-person insurance premiums are tax-deductible.
c
146. Jack bought $200,000 of five-year level term insurance. Which of the following is correct of Jack's coverage? a. The policy will endow for $200,000 in five years. b. If Jack dies within five years, the death benefit plus the cash values will be paid to the beneficiary tax free. c. The policy will pay $200,000 tax free if Jack dies within five years. d. If Jack lives beyond five years the $200,000 will be payable to him (the policy owner) with a tax on any gain.
c
149. A company with three partners is considering a buy-sell plan. All of the following statements pertaining to buy-sell plans and this partnership are correct EXCEPT a. an insured entity buy-sell agreement designates the partnership as the beneficiary b. if they choose a cross-purchase plan, each partner would have to purchase two policies for a total of six plans c. no benefits will accrue to the partnership from the buy-sell agreement until one of the partners dies d. if they choose an entity buy-sell agreement, the business would by party to the agreement
c
150. Which of the following may qualify for Social Security disability benefits? a. Janet, who has been a high-income earner the entire eight years that she has worked. b. Doug, whose disability is expected to last nine months. c. Susan, whose disability resulted in her inability to work at all for at least 18 months. d. Paul, who has a severely broken leg that will require surgery and rehab.
c
17. Which of the following is NOT true of term insurance? a. Cash values do not accumulate with term insurance. b. Coverage under term insurance is temporary. c. Cash values build during the specified period of temporary coverage. d. Benefits are payable if death occurs during a specific time period.
c
18. The parole evidence rule says a. Oral evidence is accounted for before written evidence. b. Signed contracts cannot be changed. c. Written contracts cannot be changed by oral evidence. d. Oral contracts cannot be changed by written contracts.
c
21. A basic surgical expense policy that covers surgeons' fees per a schedule approach a. bases its benefits on what is customary for a particular area b. assigns a set of points to each surgical procedure c. assigns a dollar amount to each surgical procedure d. bases its benefits on a percentage of hospital room and board expenses
c
24. All of the following are elements of an insurable risk EXCEPT a. the loss must be due to chance b. the loss must be predictable c. the loss must be catastrophic d. the loss must have a determinable value
c
27. If a life insurance applicant is given a binding receipt, when does his or her coverage become effective? a. Date the policy is issued b. Date the applicant proves to be insurable c. Date the receipt is given d. Date the policy is delivered
c
3. With ten partners in a corporation, how many life insurance policies would be required to insure a cross-purchase buy-sell plan? a. 1 b. 10 c. 90 d. 100
c
30. A waiver of premium provision may be included with which kind of health insurance policy? a. Hospital indemnity b. Major medical c. Disability income d. Basic medical
c
36. Which of the following statements regarding policy assignments is correct? a. The policy owner must notify the insurer of the assignment and receive the insurer's permission. b. The procedure required for policy assignment is explained in the policy's insuring clause. c. A policy that has named an irrevocable beneficiary cannot be assigned without that beneficiary's agreement. d. Insurable interest must exist between the insured and the assignee at the time of assignment.
c
37. Which is not a primary premium factor? a. expense b. interest c. dividends d. mortality
c
38. Assume a home catches fire after it is struck by lightning and the fire destroys the structure and contents. By insurance definition, the fire is the a. risk b. hazard c. peril d. proximate cause
c
4. All of the following statements about variable annuities are correct EXCEPT a. Variable products are regulated by the SEC and the Office of Insurance Regulation. b. The consumer directs the investments of the product. c. An annuitized variable annuity will provide a level income amount to the annuitant for life. d. Variable annuities are sold by insurance companies.
c
41. Which of the following is NOT a typical type of long-term care coverage? a. Skilled nursing care b. Home health care c. Hospice care d. Residential care
c
42. All statements made by an applicant in an application for life insurance are considered to be a. warranties b. affirmation c. representations d. declarations
c
43. Which of the following reimburses its insureds for covered medical expenses? a. Health maintenance organizations b. Preferred provider organizations c. Commercial insurers d. Blue Cross/Blue Shield
c
45. What is the basic source of information for life insurance underwriting and policy issue? a. Consumer reports b. Medical Information Bureau c. Application d. Physician reports
c
48. Which of the following would NOT be able to contribute to a Traditional IRA? a. Sally, age 26, who already contributed $1,000 this year into her Roth IRA. b. Dave, age 40, a dentist who has an annuity. c. Darlene, age 72, a flight attendant with a Roth IRA. d. Boris, age 60, a carpenter who made $250,000 last year.
c
49. A life insurance company organized in Mississippi, with its home office in New Jersey, is licensed to conduct business in Wisconsin. In Wisconsin, this company is classified as a(n) a. domestic company b. alien company c. foreign company d. regional company
c
50. Which of the following is true about elimination periods and/or probationary periods in disability income policies? a. Elimination periods may apply to disabilities due to accidents and not sickness. b. Probationary periods may apply to disabilities due to accidents and not sickness. c. An elimination period follows the start of a disability. d. A probationary period follows the start of a disability.
c
61. The Office of Insurance Regulation's major areas of regulation include all the following EXCEPT? a. Agent and agency licensure b. Insurance marketing c. Enacting insurance laws d. Enforcement against unauthorized insurers
c
64. Which of the following correctly describes a corridor deductible? a. The insured pays the entire deductible for both the basic medical expense and major medical expense policies. b. The insured pays only the basic medical expense deductible and the insurance company covers the major medical expense deductible. c. The insured has both basic medical expense and major medical expense. There is no deductible for the basic medical expense, and the insured pays the deductible for the major medical expense. d. The insured has both basic medical expense and major medical expense. There is no deductible for the basic medical expense, and the insurer pays the deductible for the major medical expense.
c
68. Basil purchased a life insurance policy from a mutual insurer that has a low premium and a face amount that diminishes after a few years. Policy dividends are used to buy paid-up additions to keep insurance equal to the amount of the reduction. What type of policy has Basil purchased? a. Indeterminate premium whole life b. Minimum deposit whole life c. Economatic whole life d. Indexed whole life
c
69. Jane, age 35, has just purchased a 20-pay whole life policy. When she turns 55, she will a. receive the policy's face amount benefit b. have a fully matured policy c. cease paying premiums d. no longer being covered by the policy
c
72. Which of the following is CORRECT? a. The MIB reports to doctors. b. The MIB will share information with a consumer, but only with the insurer's consent. c. The MIB assists in the underwriting and claims of life insurance. d. The MIB gets all of its information directly from doctors.
c
77. Major risk factors in health insurance underwriting include all of the following EXCEPT a. physical condition b. habits or lifestyle c. marital status d. occupation
c
79. Under which of the following beneficiary designations would a policy owner be limited to exercising rights which are only consented by the beneficiary? a. primary b. revocable c. irrevocable d. absolute
c
80. What does the consideration clause identify? a. Benefit amounts b. Interest rates c. Premium schedule d. Risk classification
c
84. On August 9, Albert made an application for life insurance that his agent submitted a day later without a premium payment. On August 21, the insurer issued the policy as applied for and on August 24, the agent delivered the policy and collected the initial premium. On what day was the contract offer made? a. August 9 b. August 10 c. August 21 d. August 24
c
88. Assume four individuals, all age 30, purchase the following life insurance policies. If all policies are still in force ten years later, who will have the largest cash value in his policy? Bob $100,000 straight whole life Dennis $100,000 life paid-up at 65 Ralph $100,000 20-pay life Jack $100,000 life paid-up at 55 a. Bob b. Dennis c. Ralph d. Jack
c
9. When may a health insurance company change the wording of a uniform policy provision? a. It may only be changed if approved by the Office of Insurance Regulation. b. It may only be changed if the new wording is not less favorable to the insurer. c. It may only be changed if the new wording is not less favorable to the insured. d. It may only be changed if the new wording is more favorable to the insurer.
c
92. Which of the following statements regarding the National Association of Insurance Commissioners (NAIC) is correct? a. the NAIC is empowered to prosecute and punish criminal violators in the insurance industry. b. the NAIC seeks to preserve federal rather than state regulation of the insurance industry. c. the NAIC promotes uniformity in state insurance laws and regulations. d. the NAIC seeks to promote federal administration of insurance laws and regulations.
c
A clause that states that policy distributions payable to the beneficiary after the insured dies are not assignable or transferable and may not be attached in any way is called a a. facility-of-payment clause b. debtors protection clause c. spendthrift trust clause d. assignment clause
c
A life insurance company, organized in Illinois, with its home office in Philadelphia, is licensed to conduct business in Florida. In Florida, this company is classified as a(n) a. domestic company b. alien company c. foreign company d. regional company
c
A mortality table reveals which of the following? a. There is no death rate for persons age 99. b. The people who will die in any given year. c. The average number of deaths that will occur each year in an age group. d. The death rate normally is higher in the lower age groups.
c
A tornado is an example of a a. physical hazard b. speculative risk c. peril d. moral hazard
c
A vacation cruise line that wants group health coverage for its passengers would purchase what kind of insurance? a. Franchise health insurance b. Wholesale health insurance c. Blanket health insurance d. Credit health insurance
c
Albert has purchased an annuity that will pay him a monthly income for the rest of his life. If Albert dies before the annuity has paid back as much as he put into it, the insurance company has agreed to pay the difference to Albert's daughter. What annuity payout option did Albert select? a. a straight-life income b. a life income with period certain c. a cash refund d. a fixed annuity
c
All of the following actions are examples of risk avoidance EXCEPT: a. Bill won't fly in an airplane b. Wendy keeps her money out of the stock market c. Pat pays his insurance premium d. John never drives a car
c
All of the following activities violate the Florida Insurance Code EXCEPT a. dividing commission on a life insurance policy with any licensed agent b. dividing commission on a life insurance policy with a licensed health agent c. dividing commission on a life insurance policy with another agent who is licensed and appointed to sell the same line of insurance d. dividing commission on a life insurance policy with a licensed life insurance broker who regularly transacts life insurance
c
All of the following are considered unfair trade practices with regard to HMOs EXCEPT a. defamation b. misrepresentation c. conversion d. twisting
c
All of the following are correct about the required provisions of a health insurance policy EXCEPT a. A grace period of 31 days is found in an annual pay policy b. The entire contract clause means the policy, endorsements and attachments constitute the entire contract c. A reinstated policy provides immediate coverage for an illness d. Proof-of-loss forms must be sent to the insured within 15 days of claim
c
All of the following are methods of keeping premium costs to a minimum in a health policy EXCEPT a. modifying benefit amounts b. increasing the deductible c. waiving the right to receive benefit payments when due d. extending the elimination period
c
All of the following are primary premium factors EXCEPT a. expense b. interest c. dividends d. mortality
c
All of the following conditions are typically covered in a long-term insurance policy EXCEPT a. Alzheimer's disease b. senile dementia c. alcohol dependency d. Parkinson's disease
c
All of the following employed persons who have no employer-sponsored retirement plan would be eligible to set up and contribute to a traditional IRA EXCEPT a. Miriam, age 26, secretary b. Brent, age 40, medical technician c. Edna, age 72, nurse d. Jack, age 60, plumber
c
All of the following provisions are mandatory in health insurance policies EXCEPT a. Time limit on certain defenses b. Grace period c. Change of Occupation d. Time of payment of claims
c
All of the following statements about SIMPLE plans are correct EXCEPT a. an employer may establish a SIMPLE plan if another qualified plan is not already in place b. they can be structured as an IRA or as a 401(k) cash or deferred arrangement c. an employer must make a nonelective contribution of 2 percent of compensation on behalf of each eligible employee d. only employers with no more than 100 employees can establish SIMPLE plans
c
All of the following statements about term insurance are correct EXCEPT a. it pays a benefit only if the insured dies during a specified period b. level, decreasing and increasing are basic forms of term insurance c. cash values build during the specified period d. it provides protection for a temporary period of time
c
All of the following statements about variable annuities are correct EXCEPT a. individuals who sell variable annuities must be registered with the FINRA b. the contract owner bears the investment risk rather than the insurance company c. once a variable annuity has been annuitized, the amount of monthly annuity income cannot fluctuate d. during the accumulation period, the contract owner's contributions to the annuity are converted to accumulation units and credited to his or account
c
All of the following statements about variable insurance are correct EXCEPT a. they are considered insurance contracts b. sellers must hold a state insurance license c. they are not considered securities contracts d. sellers must hold a registered representative license from FINRA
c
All of the following statements about variable insurance policies are correct EXCEPT a. sales presentations must be preceded or accompanied by a prospectus b. state laws protect consumers and promote meaningful communication c. materials used in selling variable policies must be approved only by the state Office of Insurance Regulation d. full and fair disclosure must be provided to prospective policy owners
c
All of the following statements are correct about the law for conversion (change of plan) EXCEPT a. It applies to the conversion of industrial life insurance policies b. Conversion is permitted without evidence of insurability c. The maximum amount of face value that can be converted is $2,000 d. An insured can convert several industrial life insurance policies into one ordinary life insurance policy
c
All of the following statements regarding Roth IRAs are true EXCEPT a. they provide for tax-free accumulation of funds b. they limit contribution each year c. they mandate distributions no later than age 70 1/2 d. they are not available to those in the upper-income tax brackets
c
All of the following statements regarding basic forms of whole life insurance are correct EXCEPT a. generally, straight life premiums are payable, at least annually, for the duration of the insured's life b. the owner of a 30-pay life policy will owe no more premiums after the 30th year the policy is in force c. limited payment life provides protection only for the years during which premiums are paid d. a single-premium life policy is purchased with a large one-time only premium
c
All of the provisions are required by Florida law for group health insurance policies EXCEPT a. Coverage for mental and nervous disorders must be available to the group policyholder b. A newborn child is to be provided coverage from the moment of birth c. Coverage must continue until age 25 for a handicapped child that is a family member d. A newborn child of a covered family member is to be provided coverage for 18 months
c
An error in age is discovered after the death of an insured but before any policy death proceeds are distributed. The insured was older than previously assumed. How would an insurance company handle such a situation? a. No adjustment would be made because the contestable period has passed. b. The amount of death proceeds would be reduced to reflect the statistically diminished mortality risk. c. The amount of death proceeds would be reduced to reflect whatever benefit the premium paid would have purchased at the correct age. d. The beneficiary would be required to pay all underpaid back premiums before the death benefit received.
c
An individual who buys a membership in a prepaid health clinic because the premium is less than the HMO should be aware that the clinic cannot provide a. outpatient service b. emergency care c. hospitalization d. ambulatory diagnostic services
c
An insurer must establish a suitability supervision system including all of the following EXCEPT a. Reasonable procedures to inform agents of suitability requirements b. Product-specific training for agents explaining all material annuity features c. Limiting annuity replacements to agents with two or more years field experience d. Reasonable procedures to detect unsuitable recommendations
c
At what point in time can a policyholder file suit against a health insurance company for failure to pay a claim? a. 60 days from date of loss b. 120 days from date of loss c. 60 days after filing proof of loss d. 120 days after filing proof of loss
c
Before VA benefits can be paid out, the accumulation units in a participant's account must be converted to a. investment units b. statistical units c. annuity units d. optional units
c
Benefit periods for individual short-term disability policies typically vary from a. 1 to 12 months b. 3 months to 3 years c. 6 months to 2 years d. 1 to 5 years
c
Bill names his church as the beneficiary of his $300,000 life insurance policy. When Bill dies, who is responsible for the income taxes payable on the lump-sum proceeds received by the church? a. His estate. b. His church. c. No income tax is payable on the death proceeds. d. His estate and the beneficiary share the tax liability equally.
c
Bob purchases a $50,000 five-year level term policy. All of the following statements about Bob's coverage are correct EXCEPT a. the policy provides a straight, level $50,000 of coverage for five years b. if the insured dies at any time during the five years, his beneficiary will receive the policy's face value c. if the insured dies beyond the specified five years, only the policies cash value will be paid d. if the insured lives beyond the five years, the policy expires and no benefits are payable
c
Bob, age 43, owns a traditional IRA and a Roth IRA. What is the maximum amount that he can contribute to both accounts in 2013 without being penalized? a. $2,000 b. $4,000 c. $5,500 d. $6,000
c
Diana, the beneficiary under her husband's AD&D policy, submits an accidental death claim May 1, 2010, following his death. However, the company denies the claim on the basis that death was due to natural causes. She decides to talk to her attorney. What is the earliest date for taking legal action against the insurer? a. May 2, 2010 b. June 1, 2010 c. July 1, 2010 d. May 1, 2011
c
Diverting insurance funds for personal use is an example of a. replacement b. rebating c. misuse of premiums d. misrepresentation
c
During the accumulation period of a deferred variable annuity, the value of the individual account rises or falls based on the a. variable premiums b. number of annuitants c. investment results d. company expenses
c
Ethics is best described as a. laws and statutes enacted by duly elected representatives b. religious rituals and ceremonies c. instructions on how to interact with fellow members of a group or community d. a society's laws and regulations
c
Felony convictions on an applicant to be licensed as an agent may a. Cause the licensing fee to be increased b. Require the applicant to sign a nolo contendere plea c. Cause the license application to be refused d. Be disregarded if the applicant has a licensed sponsor approved by the state of Florida
c
Florida's "mini-COBRA" applies to employers with a. five or more employees b. 20 or more employees c. less than 20 employees d. less than five employees
c
Florida's Long Term Care Partnership Program must provide which of the following coverage? a. Medical expense coverage b. Disability coverage c. Inflation coverage d. Outpatient hospital treatment
c
How often must HMOs file a report of their activities to the Office of Insurance Regulation? a. Every three years b. Every three months c. Within three months after the close of a fiscal year d. At the end of each calendar year
c
If an irrevocable beneficiary dies before the policy owner, who of the following gains control of a life insurance policy with a reversionary irrevocable clause? a. Insured b. Irrevocable beneficiary's children c. Policy owner d. Insurer
c
If the coinsurance feature in a major medical insurance policy is 75/25 with a $100 deductible, how much of a $2,100 bill would the insured pay? a. $100 b. $500 c. $600 d. $1,500
c
In a viatical, who benefits from the policy's death benefit? a. the person buying the policy b. the insured c. the beneficiary d. the viator
c
In addition to the state, the organization that regulates variable life and variable annuities is the a. Federal Trade Commission (FTC) b. National Association of Insurance Commissioners (NAIC) c. Securities and Exchange Commission (SEC) d. Federal Communications Commission (FCC)
c
In contrast to traditional whole life insurance policies, with variable life insurance products a. premiums are invested in an insurer's general account b. investments match the insurer's contractual guarantees and liabilities c. contract cash values are not guaranteed d. the insurer assumes the investment risk
c
In determining Social Security retirement benefits, which of the following statements is CORRECT? a. Average monthly wages (AMW) are adjusted for inflation. b. The primary insurance amount (PIA) determines the worker's average indexed monthly earnings (AIME). c. The PIA is a determination of the amount equal to the worker's full retirement benefit at his or her full retirement age. d. Workers retiring past age 59 1/2 can receive 100 percent of their PIA.
c
In the insurance business, risk can best be defined as: a. sharing the possibility of loss b. uncertainty regarding the future c. uncertainty regarding financial loss d. uncertainty regarding when death will occur
c
In what way must the "Notice to Buyer" be conveyed to an HMO subscriber who is eligible for Medicare? a. Printing, typing or stamping the notice on the first page of the HMO contract b. Stamping the notice to the application c. Typing the notice on the first page of the application and the contract d. Reading the notice to the subscriber and having the subscriber sign an acknowledgment form
c
In which of the following ways is a beneficiary protected from the creditors of the deceased insured? a. The proceeds of an insurance policy can always be claimed by the deceased insured's creditors. b. When the policy is made payable to the estate, the proceeds are protected from the creditors. c. If the policy is made payable to a named beneficiary, then the creditors can make no claim to the proceeds. d. The cash surrender value of a life insurance policy can be attached by an ordinary creditor.
c
Legal action may not be taken after how many years from filing a health insurance claim proof of loss? a. One year b. Four years c. Five years d. Two years
c
Life insurance premiums are typically based on what increment of the face value? a. $10 b. $100 c. $1,000 d. $10,000
c
Marty just received his first Social Security disability payment. From this, we can assume a. he had previously applied for Medicaid b. he is at least 65 years of age c. his disability is expected to last 12 months d. his disability commenced three months ago
c
Mary names her husband, Rick, as primary beneficiary of her life insurance policy and her two children, Pam and Matt, as contingent beneficiaries. Rick dies in March. Pam and Matt are killed simultaneously in a car accident later that month. Hearing the news, Mary has a fatal heart attack. In this case, Mary's life insurance will be paid a. one-half to Rick's estate and on-quarter each to Pam and Matt's estates b. to Rick's estate c. to Mary's estate d. in equal shares to Rick, Pam and Matt's estates
c
Mr. Williams names his son John a beneficiary of his life insurance policy. What designation should he use if he wants to make sure that John's children would receive John's share of the life insurance policy proceeds should John predecease his father? a. Per capita b. All my children c. Per stirpes d. Grandchildren
c
Producers are expected to adhere to all of the following standards to protect consumers and promote suitable sales EXCEPT a. selling to customers' needs b. determining the suitability of recommended products c. assessing prospects financial ability to pay commissions d. full and accurate disclosure
c
Robert and his employer agree on the purchase of split-dollar life insurance policy and the usual split-dollar approach to premium payments. Each year, the employer will contribute to the premium an amount equal to a. one-half the premium b. the annual dividend c. the increase in the policy's cash value d. two-thirds of the premium
c
Rudy is eligible for full death, retirement and disability benefits under Social Security. His worker status is a. completely insured b. currently insured c. fully insured d. partially insured
c
The Legislature stated that the purpose of HMOs is to do all of the following EXCEPT a. delivers high-quality health care b. provide an alternative method of health care c. replaces the existing system of health care delivery d. control the escalating cost of health care
c
The Office of Insurance Regulation will NOT issue a Certificate of Authority to an HMO until it has a. 500 prospective members b. deposited capital and surplus in the amount of $1 million c. received a valid Health Care Provider Certificate from the Agency for Health Care Administration of Florida d. been inspected and approved by the Florida Medical Association
c
The conformity with state statutes provision in a health insurance policy stipulates that any policy provision that is in conflict with the statutes of the state where the insured resides is a. to be submitted to the chief financial officer for approval b. cause for the insured's policy to be voided c. automatically amended to conform to the minimum requirements of the state's statutes d. to be rewritten if the policy is returned to the company
c
The definition of "transacting insurance" includes all of the following EXCEPT a. soliciting a contract of insurance b. negotiating a contract of insurance c. underwriting a contract of insurance d. effectuating a contract of insurance
c
The individual who sits on the Financial Services Commission and supervises the insurance function in Florida is called the a. Chief Insurance Commissioner b. Director of Financial Regulation c. Chief Financial Officer d. Director of Financial Regulation
c
The major difference between producers acting as agents and producers acting as brokers is that a. agents represent the client; brokers represent the company b. brokers are not subject to the same laws and regulations as agents c. agents represent the company; brokers represent the client d. only agents can solicit prospects for the purpose of selling insurance
c
The miscellaneous expense benefit in a basic hospital expense policy normally will cover a. physicians' bedside visits b. the administering of anesthesia c. drugs and medicine administered in the hospital d. hospital room and board
c
The most common guaranteed insurability riders allow additional life insurance to be purchased on the insured within a range of ages. The common age range in which guaranteed insurability is available is from a. age 16 to age 65 b. age 21 to age 59 1/2 c. age 25 to age 40 d. age 30 to age 70 1/2
c
The state Life & Health Guaranty Association covers all of the following insurance contracts except a. annuity contracts b. health insurance contracts c. insurance contracts used by fraternal benefit societies d. Medicare supplement insurance
c
The use of preprinted material in a sales presentation is recommended for which of the following reasons? a. The agent doesn't have to know exactly how a product works. b. It saves a lot of time and explanations. c. Such material generally has been reviewed for compliance. d. The agent can give it to the client instead of answering the client's questions.
c
Theodore received a $15,000 cash benefit from his $50,000 accidental death and dismemberment policy for the accidental loss of one eye. The amount he received could be identified as the policy's a. principle sum b. secondary sum c. capital sum d. contingent amount
c
Three business partners individually agree to acquire the interest of a deceased partner and own life insurance on each of the other partners in the amount of his or her share of the business's buyout value. What is described here is a(n) a. entity buy-sell plan b. stock redemption buy-sell plan c. cross-purchase buy-sell plan d. 401(k) plan
c
To comply with disclosure requirements, producers must deliver which of the following documents to all insurance applicants? a. Policy guidelines & proposal form b. Policy summary & policy receipt c. Buyer's Guide & policy summary d. Proposal form & Buyer's Guide
c
Under the misstatement of age provision in a health insurance policy, what can a company do if it discovers that an insured gave a wrong age at the time of application? a. Cancel the policy b. Increase the premiums c. Adjust the benefit d. Assess a penalty
c
Variable life insurance and variable annuities derive their product values largely from a. insurer guarantees b. general account performance c. separate account performance d. equity index performance
c
What is the effect of an impairment rider attached to a health insurance policy? a. To increase the premium charged b. To decrease the amount of benefits provided c. To exclude from coverage losses resulting from specified conditions d. To increase the policy's waiting period
c
When a medical expense policy pays benefits on a fixed-rate basis, it pays a. a certain percentage of whatever the hospital room charges are b. for total hospital expenses, less a deductible c. a flat amount per day for hospital room and board d. only for surgery and miscellaneous hospital expenses
c
When a policy owner cannot exercise his rights of ownership without the policy beneficiary's consent, the beneficiary is designated a. vested b. contractual c. irrevocable d. primary
c
Which of the following actions accurately portrays the limit Florida insurance regulations set for the combining of advertising for insurance policies with association membership? a. By forbidding these two to be sold together b. By requiring the insurance solicitation to come at least 30 days after the association membership c. By requiring separate applications and separate signatures d. By requiring a signed statement of understanding by the applicant
c
Which of the following activities is NOT a violation of the Insurance Code? a. Charging a fee that is more than the premium stated in the policy b. Collecting premiums and depositing them in the agent's personal account c. Writing as much non-controlled insurance business as controlled business d. Offering a premium rebate if the insured contracts for other insurance business
c
Which of the following can an individual include as qualifying expenses for purposes of determining a medical tax deduction? a. Premium contributions paid by the employer to a group medical expense plan b. Premium contributions paid by the employer to a group disability plan c. Premium contributions paid by the individual to a group medical expense plan d. Premium contributions paid by the individual to a group disability plan
c
Which of the following examples pertaining to Social Security benefits is CORRECT? a. Simon has a Social Security PIA of $700 at the time of his death. His surviving spouse will receive a lump-sum death benefit of $2,250. b. Lola, age 30, has a daughter, age 10. Her husband, who is covered under Social Security, died last month following surgery. Both Lola and her daughter are entitled to receive monthly survivor benefits until her daughter reaches age 18. c. Mason, who is married with one son, age 16, is a fully insured retired worker receiving Social Security benefits. In addition, his spouse is eligible for benefits at age 62 and his son, normally, is eligible for benefits until he is 18 years old. d. Arlene, the 20-year-old daughter of a fully insured retired worker, becomes totally and permanently disabled from a car accident. Because her disability occurred after age 16, Arlene is not eligible for her father's Social Security benefits.
c
Which of the following examples pertaining to major medical policy deductibles is CORRECT? a. Eric's major medical policy has a $500 flat deductible provision. He incurs covered expenses totaling $350. He will pay nothing and his major medical expense policy will pay $350. b. Sarah has a major medical expense policy with a $500 flat deductible and an 80/20 coinsurance provision. Her covered expenses total $1,800. Of that amount, she will pay $500 and her insurance will pay $1,300. c. Valerie incurs a hospital bill of $8,300. Her basic medical expense insurance pays $2400. Valerie pays a $200 deductible and her major medical plan takes care of the balance of covered expenses. Her deductible would be classified as a corridor deductible. d. An integrated deductible amount is $2,000. With this deductible, after the basic policy benefits are exhausted, the insured pays the full $2,000 deductible and then the major medical expense benefits are payable.
c
Which of the following factors is most important when computing basic premiums for life insurance? a. Expense b. Interest c. Mortality d. Reserves
c
Which of the following four steps is NOT part of a sales presentation? a. Review and reestablish the client-producer relationship b. Introduce the recommended policy c. Review the product application d. Review the client's needs and priorities
c
Which of the following is NOT part of the home office underwriting process? a. Credit report b. Medical Information Bureau report c. Applicant's analysis report d. Inspection report
c
Which of the following is NOT provided in a proof-of-loss form? a. A statement of the occurrence of accident of sickness b. The extent of the loss for which the claim is made c. A statement from the attending physician d. Information that identifies the claimant
c
Which of the following is a serious condition from which a patient can fully recover with proper medical attention? a. Chronic illness b. Long-term illness c. Acute illness d. Severe illness
c
Which of the following is an example of churning a. Illegally inducing a person to drop existing insurance to purchase similar coverage with another agent or company b. Rephrasing a policy provision in such a way that it says just the opposite of the original c. Replacing a policy for another with the same insurer with the intent of earning additional premiums or commissions d. Representing an insurance policy as a retirement plan
c
Which of the following is correct about the replacement rule? a. The replacement rule applies only to health insurance policies. b. The agent has 90 days from the effective date to deliver a Buyer's Guide. c. Instructions regarding the rule are available from appointed life insurers. d. Up to 30 days is allowed for a full refund of premium.
c
Which of the following is not a service provider? a. HMO b. Benefit plans offering medical services to subscribers c. Lloyd's of London d. PPO
c
Which of the following is stated in the consideration clause of a life insurance policy? a. Insured's risk classification b. Insured's general health condition c. Amount and frequency of premium payments d. Benefits payable upon the insured's death
c
Which of the following is the purpose of medical cost management? a. To influence hospital charges and doctor's fees. b. To discourage individuals from utilizing health care services. c. To control health claims expenses. d. To encourage individuals to seek medical help only as a last resort.
c
Which of the following is the usual grace period for a semi-annual premium policy? a. 7 days b. 20 days c. 31 days d. 60 days
c
Which of the following premium factors is unique to health insurance (as opposed to life insurance)? a. Age b. Sex c. Morbidity d. Interest
c
Which of the following rules would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance? a. Conversion rule b. Disclosure rule c. Replacement rule d. Reinstatement rule
c
Which of the following scenarios pertaining to IRAs is NOT correct? a. June has accumulated $30,000 in her IRA. At age 53 she withdraws $2,500 to take a vacation. She will have to include the $2,500 in her taxable income for the year and pay a $250 penalty. b. Bradly, age 72, is covered by an employer-sponsored retirement plan. He cannot establish a traditional IRA. c. Peter inherits $15,000 in IRA benefits from his father, who died in 2008. Peter can set up a tax-favored rollover IRA with the money and defer current income tax on the benefits received. d. Walter is age 60. He may take his distribution from his IRA without having to worry about an early withdrawal penalty.
c
Which of the following statements about deductible provisions in medical insurance policies is NOT correct? a. They help to eliminate small claims. b. They provide that initial expenses up to a specified amount are to be paid by the insured. c. They are most common in basic medical expense policies. d. They help to hold down premium rates.
c
Which of the following statements best describes life insurance policy dividends? a. Policy dividends represent earnings to shareowners who hold stock in insurance companies. b. Policy dividends affect the cost of virtually all insurance policies issued today. c. Policy dividends are an intentional return of a portion of the premiums paid. d. Policy dividends provide policy owners with a level, known as annual cash inflow.
c
Which of the following statements concerning workers' compensation is NOT correct? a. Workers' compensation laws are designed to return injured persons to work. b. Benefits include medical care costs and disability income. c. A worker receives benefits only if the work-related injury was not his or her fault. d. All states have workers' compensation laws.
c
Which of the following statements describe the parol evidence rule? a. A written contract cannot be changed once it is signed. b. An oral contract cannot be modified by written evidence. c. A written contract cannot be changed by oral evidence. d. An oral contract takes preference over any earlier written contracts.
c
Which of the following statements describes equity index contracts? a. Equity index contracts are always backed by investments in stocks. b. Selling equity index contracts never requires a license for variable products. c. Most of the investments backing equity index contracts are similar to those for non-index contracts. d. Cash values of equity index contracts mirror all changes in stock market values.
c
Which of the following statements describing whole life insurance is CORRECT? a. The face amount of the policy gradually increases the longer the policy remains in force. b. The shorter the premium period, the slower the cash value will grow. c. Whole life insurance is designed to mature at age 100. d. The policy's cash value decreases each year the policy is in force.
c
Which of the following statements is CORRECT? a. A per capita distribution is the most common method of distributing proceeds to beneficiaries. b. If the policy owner designates a per stirpes distribution of the proceeds, the designation becomes irrevocable once a beneficiary predeceases the policy owner. c. A per stirpes distribution means that a beneficiary's share of a policy's proceeds will be passed down to his or her living child or children if the named beneficiary predeceases the insured. d. A per capita distribution ensures that an insured's surviving family will share in the insurance proceeds.
c
Which of the following statements pertaining to health maintenance organizations is CORRECT? a. An insurance company that also markets group health insurance is known as a HMO. b. If a person joins an HMO and undergoes a physical examination, he or she will be billed for the exam and each subsequent medical service as it is performed. c. An insurance company may sponsor an HMO or assist an HMO by providing contractual services. d. Like commercial insurers, HMOs generally assess deductibles.
c
Which of the following statements pertaining to life insurance premiums is CORRECT? a. The premiums for a policy that insures a spouse are tax deductible. b. A company may purchase key-person life insurance and deduct the premiums as a business expense. c. Premiums for group term insurance covering employees are tax deductible, assuming certain requirements are met. d. Premiums for policies in which the insured is someone other than the policyowner are tax deductible.
c
Which of the following statements pertaining to the Medical Information Bureau (MIB) is CORRECT? a. The MIB is operated by a national network of hospitals. b. Information obtained by the MIB is available to all physicians. c. The MIB provides assistance in the underwriting of life insurance. d. Applicants may request that MIB reports be attached to their policies.
c
Which of the following statements pertaining to the grace period and reinstatement provisions in health insurance policies is NOT correct? a. Craig's health policy has a grace period of 31 days. He had a premium due June 15 while he was on vacation. He returned home July 7, mailed his premium the next day and the insurer received it on July 10. His policy would have remained in force. b. Warren's medical expense policy was reinstated on September 30 and he became ill and entered the hospital on October 5. His hospital expense will not be paid by the insurer. c. Under a health policy's reinstatement terms, insured losses from accidental injuries and sickness are covered immediately after reinstatement. d. States may require grace periods of 7, 10 or 31 days, depending on the mode of premium payment or term of insurance, however, many states require a 31-day grace period in any case.
c
Which of the following statements regarding deferred compensation plans is CORRECT? a. A deferred compensation plan must always be designed as a qualified plan. b. Life insurance is not a permissible funding vehicle, but annuities are. c. They permit a business to provide extra benefits to officers, executives and other highly paid employees. d. A deferred compensation plan must be available to all employees who are at least 21 years old and have one year of service to the business.
c
Which of the following statements regarding group disability income plans is NOT correct? a. Benefits are specified in terms of a percentage of the participant's earnings. b. Benefits paid under the group plan are supplemental to workers' compensation plans. c. Employees covered under both a short-term and long-term plan collect benefits from each simultaneously. d. A minimum length of service may be required before an employee is eligible to participate in the plan.
c
Which of the following statements regarding health insurance is CORRECT? a. Once issued, health insurance policies cannot be cancelled by the insurer. b. There are many premium-payment options available with health insurance policies. c. Medical expense policies reimburse the insured for the cost of medical care. d. Disability income policies are designed to pay the medical expenses associated with a disability.
c
Which of the following statements regarding modified endowment contracts (MECs) is CORRECT? a. A 1988 revenue act, commonly known as TAMRA, greatly increased the popularity of MECs. b. Congress has granted the MEC the most favorable tax status among all life insurance policies. c. To avoid being classified as an MEC, a life insurance policy must satisfy the "7-pay test". d. According to the "7-pay test", if the total amount a policy owner pays into a life contract during the first seven years is less than the sum of the net level premiums that would have provided paid-up future benefits in seven years, the policy is an MEC.
c
Which of the following terms best describes a life insurance policy that provides a straight $100,000 of coverage for a period of five years? a. Permanent level b. Whole term c. Level term d. Variable term
c
Which of the following terms is used for the voluntary relinquishment of a known right? a. Estoppel b. Adhesion c. Waiver d. Unilateral
c
Which of the following terms relates to disability income insurance? a. Service basis b. First-dollar c. Residual amount benefits d. Coinsurance
c
Which of the following whole life insurance policies attempts to make insurance premiums more manageable by offering lower premiums during the first few years following issue? a. Minimal deposit whole life b. Indexed whole life c. Modified whole life d. Indeterminate premium whole life
c
Which provision of a life insurance policy states that the application is part of the contract? a. Consideration clause b. Insuring clause c. Entire contract clause d. Incontestable clause
c
Wilbur`s basic medical expense policy limits the miscellaneous expense benefit to 20 times the $90 daily room and board benefit. During his recent hospital stay, miscellaneous expenses totaled $2,100. How much, if any, of this amount will Wilbur have to pay? a. $0 b. $210 c. $300 d. $2,100
c
With regard to group insurance plans, which of the following statements is CORRECT? a. Employees generally pay for the entire premium. b. The sponsoring employer of a group insurance plan is given a master certificate of insurance that lists the names of all employees covered by the plan. c. Per unit of benefits, group insurance generally is available at rates lower than those for individual plans. d. Group insurance plans are a means for employers to provide a benefit for their key employees, without having to include all employees.
c
"If an insurance company determines that the insured is totally disabled, the policy owner is relieved of paying the policy premiums as long as the disability continues." This statement describes the a. premium suspension clause b. waiting period exemption c. disability income rider d. waiver of premium rider
d
11. Beth's health insurance policy contains a provision that allows her to renew coverage up to age 65. However, the policy also states that should Beth lose her job, the insurance company will cancel the policy, regardless of Beth's age. In terms of renewability, what type of policy does Beth have? a. Cancellable b. Optionally renewable c. Guaranteed renewable d. Conditionally renewable
d
120. By most insurers' definitions, "partial disability" is the a. loss of one or more limbs b. ability of a disabled insured to work at any job for which he or she is reasonably suited c. inability of the insured to work at his or her own job d. inability of the insured to perform certain important duties of his or her job
d
121. Which of the following best describes a vested employee? a. An employee who has contributed the maximum allowable contribution from his/her earnings for the year. b. An employee entering the employer-sponsored retirement plan immediately following the probationary period of a new job, often also called the open enrollment period. c. An employee who meets the mandatory distribution age to begin receiving deferred retirement funds, typically 70 1/2. d. A former employee who has been allowed to keep all of the employer's contributions, typically due to continued employment with that employer for a number of years.
d
126. Basic surgical expense policies generally provide coverage for all of the following EXCEPT a. anesthesiologist services b. surgeon services c. postoperative care d. miscellaneous expenses, such as lab fees and X-rays
d
134. All of the following are mandatory provisions in health insurance policies EXCEPT a. proof of loss b. entire contract c. change of beneficiary d. misstatement of age
d
135. Which of the following is a standard optional provision for health policies? a. Grace period b. Physical exam and autopsy c. Change of beneficiary d. Misstatement of age
d
2. With regard to life insurance, all of the following statements are correct EXCEPT a. all individuals are considered to have insurable interests in themselves b. spouses are automatically considered to have insurable interest in each other c. a creditor has an insurable interest in a debtor d. insurable interest must be maintained throughout the life of the contract
d
20. Mary is enrolled in Medicare Parts A and B. She is hospitalized for two weeks and sent home. Four weeks later she is readmitted to the hospital for a separate issue and stays in the hospital for a week. Under her Medicare benefits, which of the following will happen during her second stay of a week? a. She will pay a deductible. b. She will pay a deductible and daily coinsurance amount. c. She will pay no deductible but will pay a daily coinsurance amount. d. She will pay neither a deductible nor a daily coinsurance amount.
d
25. Which of the following best describes underwriting? a. Evaluating and classifying risk categories. b. Risk selection and policy issue. c. Risk selection, reporting of medical information, and rejection or policy issue. d. Risk selection, classification and rating.
d
5. All of the following statements regarding policy replacement are correct EXCEPT a. replacement involves convincing a policyholder to lapse or terminate an existing policy and to purchase another b. interrupting one cash value insurance plan to begin another could cause serious financial problems for the policy owner c. even if the customer wants to replace his or her existing policy, an agent can effect a policy replacement only by following the replacement regulations in his or her state d. premiums for replacement policies are generally lower than premiums for the existing policy they replace
d
6. How are accumulation unit gains taxed? a. Gains in accumulation units are taxed as ordinary income. b. Gains in accumulation units are taxed as capital gains. c. Gains in accumulation units are taxed using the exclusion ratio. d. Gains in accumulation units are not taxed
d
60. A stop-loss feature in a major medical policy specifies the maximum a. benefit amount the policy provides each year b. benefit amount the policy provides in a lifetime c. amount the insured must pay in premiums d. amount the insured must pay toward covered expenses
d
62. Which of the following insurance companies is owned by its policyholders? a. Service insurer b. Stock insurer c. Reinsurer d. Mutual insurer
d
63. Which of the following is NOT correct about the incontestable clause of a whole life insurance policy? a. Most incontestable clauses become effective two years after the effective date of the policy. b. The clause states that after a certain time, the insurer cannot deny the claim. c. The clause states that the insurer may only contest the statements in the application after a certain time. d. If an insurer can prove the policy was purchased fraudulently, the contract may be voided at any time.
d
65. Which of the following is true regarding the Florida Life and Health Guarantee Association? a. The Association is federally funded. b. The Association is state funded. c. The Association is state and federally funded. d. The Association is funded by insurance company assessments.
d
67. What does the Buyer's Guide do? a. It helps buyers choose the cheapest plan. b. It explains specific product features. c. It provides premium schedules about the recommended policy. d. It helps buyers choose the most suitable plan.
d
73. What is the time limit that most insurers impose for reinstating a surrendered policy? a. six months b. one year c. two years d. three years or as long as seven years
d
74. Which of the following accurately describes the reimbursement approach? a. Insurance companies contract with doctors for set monthly fees. b. Insurance companies contract with doctors for prenegotiated fees for services rendered. c. Insurance companies contract with service provider organizations for set monthly fees. d. Insurance companies reimburse insureds for hospital and doctor expenses.
d
83. Which of the following would probably NOT be considered in underwriting a health insurance risk? a. Hobbies b. Consumer reports c. Age d. Marital status
d
86. Which of the following is the basis for the values of variable life insurance and variable annuities? a. investment company projections b. insurer investment performance c. general account guarantees d. separate account investments
d
89. Who performs the function of risk selection determining an individual's insurability for policy issue? a. Actuary b. Agent c. Fiduciary d. Underwriter
d
90. Jill names her university alumni association (a non-profit organization) the irrevocable beneficiary of her life insurance policy. When Jill dies, how will the lump-sum benefit be taxed, and who will pay the taxes? a. Jill's estate will be taxed on the entire amount. b. Jill's estate will be taxed on the earnings. c. The alumni association will be taxed on the entire amount. d. There will be no tax implication.
d
91. Which of the following would NOT apply when a life insurance policy is reinstated after a lapse? a. All back premiums must be paid. b. All outstanding loans must be paid. c. A new contestable period goes into effect. d. A new suicide exclusion period goes into effect.
d
93. A retirement plan that is not employer-sponsored allows single workers who earn up to $25,000 a year to contribute up to $5,000 every year and deduct the contribution from their taxes. The plan described is a(n) a. 401(k) plan b. SEP plan c. HR-10 plan d. IRA plan
d
96. Judy suffers an occupational injury. Which of the following statements is correct? a. Worker's compensation will not pay a benefit if Judy's employer was negligent. b. Judy's group disability income policy will pay first, and worker's compensation will pay second if the disability policy does not pay everything. c. Judy's group medical expense policy will pay first, and worker's compensation will pay second if the medical expense policy does not pay everything. d. Coverage under a group or individual plan may be reduced or excluded if worker's compensation benefits are paid.
d
A company may change the wording of a uniform policy provision in its health insurance policies only if the a. company's board of directors approves the change b. modified provision is not less favorable to the insurer c. applicant directs that it be changed d. modified provision is not less favorable to the insured
d
A distribution received from an employer-sponsored retirement plan or from an IRA is eligible for a tax-free rollover if it is reinvested in an IRA within how many days after the distribution? a. 20 b. 30 c. 45 d. 60
d
A grandfathered health plan means a health plan that was issued on or prior to a. March 23, 2011 b. March 23, 2013 c. March 23, 2012 d. March 23, 2010
d
A policy covering two lives that only pays a death benefit when the second injured person dies is a a. joint life policy b. family policy c. family maintenance policy d. joint and last survivor policy
d
All of the following are correct about the policy loan interest rate EXCEPT a. An adjustable rate of interest can be charged b. An insurance company can charge a fixed rate of up to 10 percent c. Adjustable interest rates are based on a published index d. There are no restrictions or limitations on policy loan interest rates
d
All of the following are correct insurance agent marketing responsibilities EXCEPT a. An agent must inform a prospect, prior to the presentation, that she is a life insurance agent and provide the name of her insurer b. Any reference to policy dividends must include a statement that such dividends are not guaranteed c. Any presentation comparing two or more life insurance policies must recognize the time value of money using interest adjustments d. A presentation may not include references to life insurance policy cost indexes
d
All of the following are duties of the replacing insurer EXCEPT a. Maintain copies of every Notice Regarding Replacement, all sales proposals, and a register cross-indexed by replacing agent and existing insurer for three years b. Immediately send a copy of the Notice Regarding Replacement to the existing insurer c. Require a statement, signed by the replacing agent, acknowledging such replacement d. Insure that all appointed agents take a 2-hour course on replacement annually
d
All of the following are eligible groups under Florida law EXCEPT a. associations of licensed professionals b. debtors of a single creditor c. members of a credit union d. groups established to buy insurance
d
All of the following are types of deductible provisions associated with major medical policies EXCEPT a. corridor b. integrated c. flat d. stop-loss
d
All of the following factors would affect a health insurance policy's premium rate EXCEPT a. age of the insured b. occupation of the insured c. type of benefit provided d. residential address of the insured
d
All of the following groups are eligible for group life insurance EXCEPT a. employer and employee groups b. labor unions c. trustee groups d. social clubs
d
All of the following information and much more must be gathered from an annuity applicant in order to determine the suitability of the sale EXCEPT a. General financial information, including income, assets, and net worth of the applicant b. Tax status of the applicant c. Personal information, including age and sex of the annuitants and dependents d. Membership in any civic clubs or organizations by the applicant
d
All of the following methods support the sale of insurance through agents and brokers EXCEPT a. independent agency system b. personal producing general agency system c. career agency system d. direct selling system
d
All of the following should be eligible to establish a Keogh retirement plan EXCEPT a. a dentist in private practice b. partners in a furniture store c. a sole proprietor of a jewelry store d. a major stockholder-employee in a family corporation
d
All of the following statements are correct about policy loan interest rates EXCEPT a. An insurance company can charge a fixed rate of interest up to a maximum of 10 percent, with some restrictions. b. An adjustable interest rate can be used if the insurance company follows a national corporate bond index. c. An adjustable interest rate can be used if the limit is based on the average monthly published interest rate set by Moody's. d. Policy loan interest rates were set by the Office of Insurance Regulation in 1933 and may not be changed.
d
An application for a variable annuity contract must show which of the following on the first page? a. Agent's name b. Agent's license identification number c. Name of the insurer d. All of the above
d
An increasing term policy's death benefit may increase each year. The amount of the increase could be tied to all of the following except: a. The consumer price index (CPI) b. A flat amount c. A per centage of the face amount d. A guaranteed minimum amount each year
d
An insurance company organized and headquartered in Florida can be described as what type of company in Florida? a. Alien b. Home-based c. Foreign d. Domestic
d
An insurance salesperson who offers a $100 gourmet dinner in exchange for the purchase of a life insurance policy would be considered to have violated ethical sales practices by a. twisting b. replacement c. churning d. rebating
d
Art, the owner and insured under a $75,000 life policy, is killed in an accident. He had paid total premiums of $26,000. How much of the death benefit will be included in the gross estate for estate tax purposes? a. $0 b. $26,000 c. $49,000 d. $75,000
d
Assume the following individuals are issued health insurance policies with varying renewability provisions. All other factors being equal, who would pay the highest premium? a. Dan - cancellable b. Jim - optionally renewable c. Henry - conditionally renewable d. Jack - noncancellable
d
Beth, age 50, the beneficiary of her late husband's life insurance policy, has elected to receive the proceeds in monthly installments over the next five years. Due to the insurer's interest earnings, Beth notices that the amount of the payments is often more than what she was guaranteed. What kind of settlement option did Beth select? a. Life-income b. Fixed-amount c. Cash-value d. Fixed-period
d
Bill is self-employed. The FICA tax rate for Bill is a. 6.2 percent b. 7.65 percent c. 15 percent d. 15.3 percent
d
Christine's policy has a clause that reads as follows, "Should the primary beneficiary and the insured die in the same accident and the primary beneficiary fails to survive the insured by 14 days, it will be assumed that the beneficiary predeceased the insured." Which of the following phrases best describes this clause? a. Secondary beneficiary provision b. Facility-of-payment provision c. Uniform Simultaneous Death Act d. Common disaster provision
d
Competent parties who can enter into insurance contracts are a. applicants b. trusts and estates c. business entities d. all of the above
d
Each of the following statements about the incontestable clause in a life insurance policy is correct EXCEPT a. the clause gives people assurance that when their policies become claims, they will be paid without delays or protests b. the incontestable clause means that after a certain period, an insurer cannot refuse to pay the proceeds of a policy or void the contract c. incontestable clauses usually become effective two years from the issue date of the policy d. insurers can void a contract even after the specified period, provided they can prove the policy was purchased fraudulently
d
Ellen works part time to supplement her family's income. Last year she earned $6,500 and worked at least part of every month. With how many quarters of coverage will she be credited? a. one b. two c. three d. four
d
Group health insurance policies are required to provide all of the following EXCEPT a. Coverage for hospitalization during disability b. Coverage for a newborn child of a family member c. Coverage for a newborn child from the moment of birth d. Coverage for dental expenses
d
HMOs offering group coverage must have an open enrollment at least a. once a year b. for 18 days every 30 months c. for 1 month every 3 years d. for 30 days every 18 months
d
Herbert ad Olga, both age 48, have been married for 10 years. They have no children, and each has a well-paying job. However, neither is covered by an employer retirement plan. What is the maximum amount they may set aside together in tax-deductible, traditional IRA funds in 2013? a. $4,000 b. $5,000 c. $8,000 d. $11,000
d
How many days of skilled nursing facility care will Medicare pay benefits? a. 25 b. 60 c. 75 d. 100
d
If David sets up a traditional IRA, what is the maximum contribution he can make and deduct from taxes in 2013? a. $1,000 b. $3,000 c. $4,000 d. $5,500
d
If a health insurance policy-owner changes jobs to a more hazardous occupation, which of the following could apply? a. Benefits could be increased if the policy so provides b. Premiums would be increased and collected from date of change to more hazardous occupation c. Premiums would be decreased and refunded from date of change to more hazardous occupation d. Benefits could be reduced if the policy so provides
d
If an error is discovered after an insured dies and the insured was younger than the insurance policy stated, the insurance company will a. reduce the death benefits b. reduce premiums c. waive the difference d. increase the death benefits
d
If the insurance company requests an inspection report, which of the following would require notice to be given to the applicant? a. The Freedom of Information Act b. The Office of Insurance Regulation Information Act c. The Health Insurance Portability & Accountability Act (HIPAA) d. The Fair Credit Reporting Act
d
In which of the following situations does the incontestable clause apply? a. Impersonation of the applicant by another b. No insurable interest c. Intent to murder d. Concealment of smoking
d
In which of the following situations is a group health insurance policy NOT required to provide coverage? a. Qualified services performed in an ambulatory surgical center b. Outpatient services that would have been paid if rendered for an inpatient c. Specified services by a licensed podiatrist d. Treatment for an occupational illness or injury
d
John stopped paying premiums on his permanent life insurance policy eight years ago though he never surrendered it. He is still insurable and has no outstanding loan against the policy. The company probably will decline to reinstate the policy because the time limit for reinstatement has expired. The limit usually is a. six months b. one year c. two years d. three years or as long as seven years
d
Keeping premium money separate from personal accounts is a a. reinsurance regulation b. replacement regulation c. duty of the insurer d. fiduciary responsibility of the agent
d
Melanie is a newly licensed producer. A customer calls and asks for some product recommendations, but Melanie thinks that she is not yet qualified to help the customer. Therefore, Melanie has an ethical responsibility to a. answers the customer's questions on the basis of her current knowledge and then send a letter confirming their conversation b. assures the customer that because she is licensed, there is a presumption that the advice Melanie gives is reliable c. refuses to speak to the customer d. seeks help from a more experienced colleague or other professional before responding to the customer's questions
d
Producers must retain records of insurance transactions pertaining to premium payments for at least a. 10 years b. 2 years c. 5 years d. 3 years
d
Sally is covered by her employer's noncontributory group disability income plan, the premium for which is $50 a month. If she were to become disabled and receive $1,000 a month, how much of each benefit payment would be taxable income to her? a. $0 b. $50 c. $950 d. $1,000
d
Sandra has a life insurance policy that states that her husband, Gerald, is to receive the full death benefit. If he predeceases her, their three children are to share the benefit equally. If her husband and all three children predecease her, the benefit is payable to the First Community Church. All of the following statements are correct EXCEPT a. Gerald is the primary beneficiary b. the three children are all secondary beneficiaries c. the First Community Church is the tertiary beneficiary d. the designation of the First Community Church can be contested by any of Sandra's relatives who survive the children
d
Sliding consists of all the following activities except: a. telling an applicant that certain ancillary coverage is required by law when it is not b. advising a client that certain ancillary coverage is included at no additional charge when such a charge is required c. charging an applicant for ancillary coverage over the cost of coverage applied for without the applicant's consent d. recommending that a client take cash value from one policy to make other investments
d
Solicitation of insurance includes a. inviting prospective purchasers to enter a contract for an insurance product b. making general or specific recommendations concerning insurance products c. comparing insurance products, advising on insurance matters, or interpreting policies or coverages d. all of the above
d
Suitability information gathered from consumers must be retained for review by the department a. For 3 years by the agent only b. For 4 years by the insurer only c. By neither agents nor insurers d. By both agents & insurers for 5 years
d
Susan is covered under her employer-sponsored disability group plan. The premium is $50 a month: Susan pays $10 and the employer pays $40. Assuming Susan were to become disabled and receive monthly disability benefits of $700 from the plan, how much, if any, of the monthly benefit would be taxable income? a. $0 b. $70 c. $140 d. $560
d
The Affordable Health Care Act mandates that children of the insured are eligible for health insurance coverage until they attain age a. 20 b. 21 c. 22 d. 26
d
The Buyer's Guide is intended to accomplish all of the following EXCEPT a. helps buyers choose the most suitable plan b. explain basic product features c. provide information about the recommended policy d. ensures that buyers obtain the lowest price for insurance
d
The Florida HMO Consumer Assistance Plan serves to a. helps low income families secure HMO coverage b. assists consumers in understanding their HMO coverage c. adjudicate contested claims by subscribers against HMOs d. provide coverage for subscribers to HMOs that become insolvent
d
The amount payable as a death benefit in an accidental death and dismemberment policy is known as the a. primary amount b. capital sum c. indemnity amount d. principal sum
d
The basis for many state statutes regulating insurance advertising is the NAIC's a. McCarran-Ferguson Act b. Fair Credit Reporting Act c. Ethics in Advertising Act d. Unfair Trade Practices Act
d
The difference between scheduled premium and flexible premium variable life insurance policies will include a. the insurer expenses b. mortality rates c. different separate account portfolios to choose from d. a guaranteed minimum death benefit versus only a variable death benefit
d
The first page of the application for an annuity contract must display? a. the insurer's name and state of domicile b. the insurer's name and the agent's name c. the agent's name and license number d. the insurer's name, the agent's name, and the agent's license number
d
The head of a state office of insurance regulation is generally responsible for all the following EXCEPT a. licensing and supervising agents and brokers b. overseeing insurance companies' marketing practices c. issuing rules and regulations d. making insurance laws
d
The owner of a camera store is worried that her new employees may help themselves to items from inventory without paying for them. What kind of hazard is described? a. Physical hazard b. Ethical hazard c. Morale hazard d. Moral hazard
d
The written agreement between the subscriber and the HMO is called a a. health care contract b. health insurance policy c. health maintenance agreement d. health maintenance contract
d
To what period would a 14-day free-look apply in Florida? a. The first 14 days after the application has been signed by the applicant. b. The first 14 days after the application has been received by the insurer. c. The first 14 days after the policy has been issued by the insurer. d. The first 14 days after the issued policy has been received by the insured.
d
Underwriting is a process of a. selection and issue of policies b. evaluation and classification of risks c. selection, reporting, and rejection of risks d. selection, classification and rating of risks
d
What is the beneficiary designation that can only be changed with the beneficiary's written agreement? a. Revocable beneficiary b. Wife of the insured c. Per stirpes d. Irrevocable beneficiary
d
What is the income tax consequence if Marie's employer pays for her group disability income coverage? a. Marie must pay taxes on the premium payments. b. Marie can deduct the premium payments. c. The employer receives the disability income benefits tax free. d. The employer can deduct the premium payments.
d
When values of an insurance policy are used to purchase another policy with the same insurer for the sole purpose of earning additional premiums or commissions, this practice is called a. replacement b. misalliance c. rebating d. churning
d
Which life insurance provision allows the policyholder to inspect and, if dissatisfied, to return the policy for a full refund? a. Waiver of premium b. Facility of payments c. Probationary period d. Free look
d
Which of the following individuals would probably qualify for Social Security disability benefits? a. George, a ski instructor who breaks his leg b. Carl, who becomes ill with a viral infection and is not expected to be able to work for the next six months c. Mike, a mechanic who loses his dominant hand in an accident d. John, who experiences serious early-onset Alzheimer's & is unable to remember how to get to work
d
Which of the following insurance concepts is founded on the ability to predict the approximate number of deaths or frequency of disabilities within a certain group during a specific time? a. Principle of large loss b. Quantum insurance principle c. Indemnity law d. Law of large numbers
d
Which of the following is CORRECT? a. Applicants cannot dispute their consumer reports. b. Applicants will be notified by the credit reporting agency that the application for life insurance has been rejected. c. If the applicant requests their credit report, the insurance company must provide a copy of one. d. Insurance companies have to notify applicants within a few days that a consumer report has been requested.
d
Which of the following is NOT a basis for occupational suitability when determining total disability? a. Education b. Training c. Experience d. Job interest
d
Which of the following is the correct number of lives required in Florida for a group life insurance policy? a. Three b. Eight c. Ten d. No minimum
d
Which of the following must be given to an insured when a replacement occurs? a. Notice regarding replacement b. Valued policy provisions c. Termination notice d. Notice regarding insurer insolvency
d
Which of the following phrases best describes vesting? a. The time at which the worker meets the eligibility requirements for plan participation b. The age at which an employee must begin to make withdrawals from retirement plans c. The right of a worker's spouse to be considered in retirement income needs d. The employee's right to funds or benefits, contributed by the employer, should he or she leave that employer
d
Which of the following practitioners is NOT defined as a "physician" under Florida law? a. Surgeon in an ambulatory surgical center b. Dentist performing surgery in a office c. Optometrist rendering services at an eye clinic d. Sports therapist performing services in a health club
d
Which of the following premiums modes would have the lowest cost? a. direct deposit b. quarterly c. monthly d. annually
d
Which of the following provides level premiums for the life of the contract? a. annual renewable term b. modified whole life c. indeterminate whole life d. A 30 year decreasing term policy
d
Which of the following statements about 401(k) plans is CORRECT? a. All of a company's employees must participate in the plan. b. An employees deferred contributions become nonforfeitable according to the plan's vesting schedule. c. Employer contributions are included in the employee's income for the year. d. There is a limit on employee deferrals
d
Which of the following statements about key-person insurance is CORRECT? a. The key employee's family is the beneficiary of the policy. b. The death proceeds are taxable. c. The business may take a tax deduction for premiums paid. d. Because the business has complete control over the policy, it can be considered a business asset.
d
Which of the following statements about long-term care insurance policies is NOT correct? a. Maximum coverage periods generally extend from two to six years. b. Long-term care policies sold today must be guaranteed renewable. c. A long-term care policy with a long probationary period will have a lower premium than one with a shorter probationary period. d. Premiums for a long-term care policy are based solely on the insured's age, health and the type of benefits provided.
d
Which of the following statements about waiver of premium in health insurance policies is NOT correct? a. It exempts an insured from paying premiums during periods of permanent and total disability. b. It may apply retroactively. c. It generally drops off after the insured reaches age 60 or 65. d. It normally applies to both medical expenses and disability income policies.
d
Which of the following statements is correct about a group health insurance policy? a. It cannot exclude coverage from an occupational accident b. It can exclude newborn children from coverage c. It cannot exclude coverage for VA hospital treatment d. It can provide coverage for handicapped children
d
Which of the following statements is true? a. The company cannot guarantee a specific interest yield from investments. b. Investment results are usually geared to a portfolio of common stocks. c. The value of accumulation units fluctuates. d. All of the above statements are true.
d
Which of the following statements is(are) true? a. Insurers selling VA are subject to regulation by the state Office of Insurance Regulation. b. Variable annuities and variable life are considered investments c. The common stocks backing VA accounts fall under the purview of the Securities and Exchange Commission. d. All of the above statements are true.
d
Which of the following statements most aptly describes health insurance benefits? a. Each policy offers a single type of benefit. b. Claims, not benefits, affect premium rates. c. Policyowners who have policies with identical benefits pay the same premiums. d. The greater the benefits, the higher the premium.
d
Which of the following statements pertaining to Medicaid is NOT correct? a. It provides federal matching funds to states for medical public assistance plans. b. Its purpose is to help eligible needy persons with medical assistance. c. Medicaid benefits may be used to pay the deductible and coinsurance amounts of Medicare. d. It limits financial assistance to persons age 65 or over who are in need of medical services they cannot afford.
d
Which of the following statements pertaining to Medicare is CORRECT? a. Bob is covered under Medicare Part B. He submitted a total of $1,100 of approved medical charges to Medicare after paying the required deductible. Of that total, Bob must pay $880. b. Each individual covered by Medicare Part A is allowed one 90-day benefit period per year. c. For the first 90 days of hospitalization, Medicare Part A pays 100 percent of all covered services, except for a individual deductible. d. Medicare Part A is automatically provided when a qualified individual applies for Social Security benefits.
d
Which of the following statements pertaining to health insurance policy premium factors is CORRECT? a. A "policy fee" is another term for policy premium. b. A policy owner has an individual health plan; therefore, the policy is most likely a participating policy. c. Age and sex of the individual insureds would have the most influence on a group health insurance policy's experience rating refund credit. d. Health insurance policies are paid for on a year-by-year basis and are subject to periodic increases.
d
Which of the following statements pertaining to life insurance policy settlement options is NOT correct? a. By using the interest-only option, two or more settlement options can be combined for added flexibility. b. Payments under the interest-only option may be made at a rate higher than the guaranteed minimum. c. Diane and Rhonda each are receiving monthly income from their deceased husbands' identical life policies under the fixed-period option. Diane's payments are to be made for 15 years and Rhonda's for 20 years. Diane receives the larger monthly payments. d. Under the fixed-period option, the payment of excess interest will lengthen the payment period.
d
Which of the following statements regarding equity index contract factors is most CORRECT? a. Equity index contracts usually follow all stock market changes exactly. b. All equity index contracts guarantee that cash values will grow a minimum amount each year. c. Most equity index contracts are backed by separate accounts and are variable products. d. Cash values of equity index contracts usually grow at a minimum interest rate.
d
Which of the following statements regarding key-person insurance is NOT correct? a. Key-person life insurance indemnifies a business for financial loss caused by the death of a key employee or key executive. b. The business may borrow from the cash value of a permanent key-person life insurance policy. c. The policy's death proceeds received by the business are not taxable. d. Premiums for a key-person life insurance policy are a tax-deductible expense to the business.
d
Which of the following statements regarding the assignment of a life insurance policy is NOT correct? a. Absolute assignment involves a complete transfer, giving the assignee full control over the policy. b. Under a collateral assignment, a creditor is entitled to be reimbursed out of the policy's proceeds only for the amount of the outstanding credit balance. c. Under a collateral assignment, policy proceeds in excess of the collateral amount pass to the insured's beneficiary. d. All beneficiaries must expressively approve any assignments of life insurance policies.
d
Which of the following statements regarding the utmost good faith in insurance contracts is CORRECT? a. The concept of utmost good faith - that there is no attempt to conceal, disguise, or deceive - applies only to the insurer. b. Although a warranty is a statement, it is not technically part of the contract. c. A representation is a statement that the applicant guarantees to be true. d. Most state insurance laws consider statements made in an application for an insurance policy to be representations, not warranties.
d
Which of the following statements regarding ways to determine the proper amount of life insurance is CORRECT? a. The most popular method today for determining the proper amount of life insurance is the human life approach. b. When using the needs approach to determine the proper amount of life insurance to purchase non-insurance-type assets, such as pension benefits or personal savings, are not factors in the calculation. c. The needs approach considers only the most immediate financial concerns, without regard for family financial goals such as college education for children or retirement income for a surviving spouse. d. There are two basic approaches to determining the amount of life insurance that is needed: the human life value approach and the needs approach
d
Which of the following would probably NOT be considered in underwriting a health insurance risk? a. Personal habits b. Credit rating c. Medical history d. Marital status
d
Which section of a health insurance policy specifies the condition, times and circumstances under which the insured is NOT covered by the policy? a. Coinsurance provision b. Coverages c. Insuring clause d. Exclusions
d
Which type of group health coverage typically does NOT contain a conversion privilege? a. Basic medical expense b. Comprehensive medical expense c. Disability income d. Accidental death and dismemberment
d
Which type of policy allows for flexible premiums and an adjustable death benefit while allowing the policy owner to choose the investments of the cash values? a. variable whole life b. universal life c. indexed whole life d. variable universal life
d
Who is responsible for reporting suspicious activity concerning money laundering? a. the insurance company b. the producer c. no one d. the producer and the company
d
Who regulates a variable universal life policy? a. The Office of Insurance Regulation & FINRA b. The Department of Insurance & the SEC c. The Department of Insurance & FINRA d. The Office of Insurance Regulation & The SEC
d
With an irrevocable beneficiary named, a policy owner may do which of the following without the beneficiary's permission? a. take a loan b. increase the amount c. reduce the amount d. change the premium mode
d
With life and health contracts, when must an insurable interest exist? a. After the policy is issued b. Before the beneficiary is named c. While the policy is in force d. At the inception of the policy
d
With regard to health insurance policies, which of the following statements is CORRECT? a. A major medical plan with a $100 deductible is less expensive than one with a $500 deductible. b. More Americans are covered by an individual medical expense policy than a group policy. c. The appropriate benefit payable under a disability income policy should equal the insured's monthly gross income. d. A disability policy with a six-month elimination period is less expensive than one with a 60-day elimination period, all other factors being equal.
d
