Alabama Life and Health (Exam FX Simulation - attempt 1)

Attempting to determine how much insurance an individual would require based upon their financial objectives is known as

Needs Approach

Which provision of a life insurance policy states the insurers duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?

Insuring clause

All the following are Nonforfeiture options EXCEPT

Interest only

When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will

Issue the policy anyways

All of the following statements about Medicare Part B are correct EXCEPT

It is a compulsory program

Which of the following best describes annually renewable term insurance?

It is level term insurance

Which of the following is not true regarding a non-qualified retirement plan?

It needs IRS approval.

Insured buys a 5 year level premium term policy with a face amount of $10000. Policy also contains renewability and convertibility options. When insured renews in 5 years, what happens to the premium?

It will increase because the insured will be 5 years older than when the policy was originally issued.

What law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?

Law of large numbers

Variable life insurance is based on what kind of premium?

Level Fixed

According to the entire contract provision, what document must be made part of the insurance policy?

Copy of the original application

In a basic expense policy, after the limits of the basic policy are exhausted, the insured must pay what kind of deductible?

Corridor

Which of the following is not true of basic medical expense plans?

Coverage for catastrophic medical expenses

If an IRA annuitant dies after the annuity has been paid up, what effect will this have on the annuitant's estate?

The entire value of the contributions and benefits will be included

An insurance advertisement exaggerates the benefits of an insurance policy, due to human error at the insurer's advertising agency. Who will the Department of Insurance hold responsible for the exaggeration?

The insurer

An applicant is considered to be high-risk, but not so much that the insurer wants to deny coverage. Which of the following is NOT true?

The insurer will issue a conditional coverage

Your customer doesn't mind paying a higher premium as long as he gets a life insurance product that would allow for a faster growth of the cash value. What kind of policy would you recommend?

An endowment policy

Which of the following would be the basic source of information used by the company in the risk selection process?

Application

What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident?

Common Disaster Clause

An insurance producer who is late in filing an application for license renewal will be charged a fee of

$50

A person who fails to segregate premium monies from his own personal funds is guilty of

Commingling

When the insurer stipulates the time period for payment of claims, how soon must the insurer pay a death benefit claim after receiving the proof of death?

2 months

Insurance policies are incontestable if they have been in effect for at least

2 years

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?

$50,000

The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case what will the policy beneficiary receive?

$100,000

The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years?

2 years

What is a penalty tax for non qualified distributions from a health savings account

20%

A producer licensed in Alabama must notify the Insurance Department of any change of address in his or her residence or business address within how many days?

30 days

When an employee terminates coverage under a group insurance policy, coverage continues in force for

31 days

In order to quality for conversion from a group life policy to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?

5 years

Jason is insured under his employers group health insurance he splits the cost of the premiums with his employer this is an example of

A Contributory plan

Underwriting for disability insurance is unique due to the type of risk involved. Which of the following situations illustrates this?

A construction worker pays a higher premium and receives a poorer classification of disability.

All of the following are correct about the required provisions of health insurance policy EXCEPT

A reinstated policy provides immediate coverage for an illness

Which of the following is NOT an allowable 1035 exchange

A whole life insurance policy is exchanged for a term insurance policy.

When transacting business in this state an insurer formed under the laws of another country is known as a/an

Alien Insurer

which term describes a situation in which people who are the most likely to have claims are the most likely to seek insurance

Adverse Selection

How often must the Commissioner or an examiner designated by the Commissioner examine domestic insurance companies?

As often as the commissioner deems necessary, but not less frequently than once every 5 years

At what point must an outline of coverage be delivered

At the time of the application or upon delivery of the policy

Insurance policies ensure that after a loss proceeds will go to the

Beneficiary

A man bought an individual health insurance policy for himself. Which of the following roles does he now legally have?

Both subscriber and insured

Who must sign the "Notice Regarding Replacement"?

Both the applicant and agent

A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?

Collateral assignment??

How many pints of blood will be paid for by medicare supplement core benefits?

First 3

As deductible amounts increase premium amounts change in what way

Decrease

Which of the following statements about occupational vs nonoccupational coverage is true

Disability insurance can be written as occupational or nonoccupational

An insured has medical insurance coverage through 2 different providers, both covering the same expenses on an expense-incurred basis. Neither company knows in advance that the insured has coverage through any other insurers. The insured submits a claim to both insurers. How should the claim be handled?

Each insurer should pay a proportionate share of the claim

Which of the following entities is not an insurer but organization formed to provide insurance benefits for members of an affiliated lodge or religious organization?

Fraternal Benefit Society

Which of the following is NOT a type of information that needs to be gathered in order to determine the value of someone's life when using the needs approach?

Estimated longevity

All of the following actions can be described as twisting EXCEPT

Explaining to client the advantages of permanent insurance over term and suggesting changing policies.

Using names or titles that have tendency to misrepresent the true nature of a policy is an example of what illegal practice?

False Advertising

The requirement that agents not commingle insurance monies with their own funds is known as

Fiduciary responsibility

Most LTC plans have which of the following features?

Guaranteed renewability

What is the proposal used in the selling of life insurance that depicts the non-guaranteed elements of the policy over a period of time?

Illustration

What type of annuity can be purchased with a single premium and provides benefits payments immediately?

Immediate

The form of life annuity which pays benefits throughout the lifetime of the annuitant and also guarantees payment for a minimum number of years is called

Life income with period certain

If a settlement option is not chosen by the beneficiary or policyowner, which option will be used?

Lump Sum

In group insurance, what is the policy called?

Master Policy

Which of the following statements is correct?

Medicare will cover nursing home care if it is part of the treatment for a covered illness

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of?

Misrepresentation

Which provision concerns the insured's duty to provide the insurer with reasonable notice in the event of a loss?

Notice of Claim

During replacement of life insurance, a replacing insurer must do which of the following?

Obtain a list of all life insurance policies that will be replaced

An applicant is discussing his options for Medicare supplement coverage with his agent. The applicant is 65 years old and has just enrolled in Medicare Part A and Part B. What is the insurance company obligated to do?

Offer the supplement policy on a guaranteed issue basis

Medicare Part A services do NOT include which of the following?

Outpatient Hospital Treatment

What is the major difference between a stock company and a mutual company?

Ownership

Which of the following provisions is mandatory for health insurance policies?

Physical examination and autopsy

All of the following are true regarding insurance policy loans EXCEPT

Policy loans can be made on policies that do not accumulate cash value

What universal life option has a gradually increasing cash value and a level benefit?

Single Life

underwriting is a major consideration when an insured wishes to replace her current policy for all of the following reasons EXCEPT

Premiums always stay the same

A medical insurance plan in which the health care provider is paid a regular fixed amount for providing health care to the insured and does not receive additional amounts of compensation dependent upon the procedure performed is called

Prepaid plan??

Which of the following statements is an accurate comparison between private and government insurers?

Private insurers may be authorized to transact insurance by state insurance departments.

Pertaining to insurance, what is the definition of a fiduciary responsibility?

Promptly forwarding premiums to the insurance company

Paul is a producer in Louisiana and wants to become a producer in Alabama. The Commissioner will waive certain examination requirements, provided that louisiana would waive these same requirements if an alabama producer sought licensure in Louisiana. What term is used to describe this phenomenom?

Reciprocity

Following a career change, and insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe?

Reduction

Disability income policies can provide coverage for a loss of income when returning to work only part-time after recovering from total disability. What is the benefit that is based on the insured's loss of earnings after recovery from a disability

Residual disability

annuities can be used to fund which of the following

Retirement Plans

Which is the appropriate action by the insurer if a prospective insured submitted an incomplete application?

Return the application to the applicant for completion

A formal arrangement of providing health care benefits without providing any financial protection to the principal is referred to as what type of plan?

Self-Insurance

Which of the Statements below does NOT describe a Blue Cross Blue Shield Plan?

Services are paid for at the time of use

Methods used to pay death benefits to a beneficiary upon the insured's death

Settlement Options

Which of the following would an accident-only policy NOT cover?

Surgery to repair a wrist damaged by tendonitis

nonforfeiture values guarantee which of the following for the policyowner

That cash will not be lsot

before transacting insurance under an assumed or artificial name, a license must first obtain approval from

The Commissioner

Which of the following entities was created to protect insureds against an insurer's insolvency?

The Life and Disability Insurance Guaranty Association

The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?

The annuitant must be a natural person

If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back?

The balance of the loan will be taken out of the death benefit

An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. if the applicant is killed in an automobile accident the next day, which of the following is true

The beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy

An employee quits his job on May 15 and doesn't convert his group life policy to an individual policy for 2 weeks. he dies an accident on June 1. which of the following statement best describes what will happen?

The insurer will pay the full death benefit from the group policy to the beneficiary

Which of the following entities will most likely regulate an insurer's advertisement on local tv station

The marketing department of the insurance company

An insured notifies the insurance company that he has become disabled. What provision states that claims must be paid immediately upon written proof of loss?

Time of payment of claims

The paid-up addition option uses the dividend

To purchase a smaller amount of the same type of insurance as the original policy

A medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographic area is known as

Usual, customary and reasonable.

Which of the following would be least likely to be considered a legitimate need that would be paid by insurance proceeds?

Vacation travel expenses

All of the following cases show when a Small Employer Medical plan cannot be renewable EXCEPT

When the employer chooses to renew the plan

When would a 20-pay whole life policy endow?

When the insured reaches age 100

what is the contract provision that allows the insurer to nonrenew health coverage if certain events occur?

conditionally renewable

In health insurance, if a doctor charges $50 more than what the insurance company considers usual, customary and reasonable, the extra cost

is not covered

If an insured continually uses the automatic premium loan option to pay the policy premium

the policy will terminate when the cash value is reduced to nothing

which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE?

withdrawals are not taxable