ALL Q's
A nonparticipating whole life insurance policy was surrendered for its $20,000 cash value. The total premiums paid had totaled $16,000. What were the federal income tax consequences to the policyowner on receipt of the cash value?
$16,000 was received tax-free and $4,000 as ordinary income
A teacher recently retired at age 63 and has a tax sheltered annuity (TSA). Periodic deposits total $120,000 and the value of the contract is now worth $200,000. How much is taxed if the current value is surrendered today?
$200,000
An insured has a $25,000 whole life insurance policy with $6,000 cash value available. Under the extended term nonforfeiture option, what is the amount of insurance available to the insured?
$25,000
An individual is insured under a major medical plan with a $1,000,000 lifetime benefit. The plan has a $500 deductible and an 80% coinsurance. If the insured suffers a $50,500 medical expense during the calendar year, what is the remaining lifetime benefit?
$960,000
Home health care benefits typically do NOT include coverage for
Prescription medication
The licensing period for a producer's license is a
2-year term
What is a Pap test designed to detect?
Cervical cancer
What does a fixed life annuity offer protection against?
Savings depletion because of longevity
Which of these must be disclosed in a universal life policy?
The surrender charges
A false written or oral statement made by a producer for the purpose of replacing an existing policy to the detriment of the insured is
twisting
In Oklahoma, claims for a medical expense health plan may be denied due to a material misrepresentation within
two years of issue
An insurance policy that can also be classified as a securities product is called
variable life
A terminally ill policyowner decides to sell his life insurance policy at a discount to help support his family. This sale is called a(n)
viatical settlement
A policyowner with a terminal illness who sells his life insurance policy to a third party is called a
viator
A health insurer MUST provide a proof of loss form
within 15 days of receipt of the notice of loss
An insurance producer MUST notify the Insurance Commissioner of a change in legal name or address
within 30 days of the change
The highest mortality rate belongs to which group?
Age 70 males
A producer's license may be renewed prior to the renewal date or for how long after the actual renewal date?
12 months
A "premature" distribution from a modified endowment contract (MEC) incurs a penalty tax of
10%
Medicare will cover a maximum of how many days per benefit period in a skilled nursing facility?
100 days
What is the maximum Social Security Disability benefit amount an insured can receive?
100% of the insured's Primary Insurance Amount (PIA)
The health insurance premiums paid for by each partner in a partnership is considered to be
100% tax deductible
Part A Medicare includes coverage for all of the following services EXCEPT
120 days of Skilled Nursing Facility care
Any person of competent legal capacity may contract for life and health insurance at a minimum age of
15
A temporary producer's license issued by the Insurance Commissioner without examination is valid for a period of no longer than
180 days
A life insurance policy becomes incontestable after it has been in force for
2 years
An insured must notify an insurer of a medical claim within how many days after an accident?
20
When a life insurance or annuity replacement policy is sold, the policyowner has a right to return the policy for a full refund of premium within
20 days
Under an Unfair Claims Settlement Practices Act, an insurer CANNOT request a refund of an overpayment paid to a claimant after
24 months
How long must a life insurance policy be in effect before the policyowner may use the nonforfeiture provision?
3 years
Following military service, an insured must submit a request for reinstatement to a private health insurer no later than how many days following the deactivation?
30
Which type of life insurance policy is best suited for paying off the outstanding balance of a 30-year mortgage in the event of the insured's death?
30-year decreasing term
Additional premiums or contributions are required to make coverage effective for a newborn infant from the moment of birth to how many days after the birth?
31
Group and individual health insurance policies that provide coverage to women must cover annual mammography screenings for women aged:
40 and older
A health benefit plan that provides maternity benefits must provide at least how many hours of inpatient care for the mother and newborn infant following delivery?
48 hours for vaginal birth or 96 hours for caesarean section
An insurance producer is required to maintain the usual and customary records pertaining to authorized transactions for how long?
5 years
The Oklahoma Insurance Commissioner is REQUIRED to examine domestic insurers AT LEAST every
5 years
In Oklahoma, a small employer may not consist of more than how many eligible employees?
50 employees
How long do most states allow an insurance company to delay the payment of a cash surrender under the Delayed Payment provision?
6 months
At what age do most people become eligible for Medicare?
65
A life insurance policy loan shall bear interest at a specified rate, NOT in excess of
8%
In Oklahoma, a life insurance policy loan shall bear interest at a specified rate, NOT in excess of
8%
FILTER Which of the following describes coverage for the Medicare Part B coinsurance?
A Medicare Supplement core benefit
Which of these is NOT an advantage of term life insurance?
A cash benefit will be provided if the insured is alive at the end of the policy period
An insured may be required to sign which document at policy delivery to ensure there has not been any adverse medical conditions since the time of the application?
A good health statement
Which of the following is NOT a qualification to be licensed as a producer or adjuster?
A high school diploma
What is a juvenile life insurance policy?
A life policy that covers the life of a minor
Which of the following best describes a point-of-service (POS) plan?
A plan which combines indemnity plan features with those of an HMO
Which of these is an accurate statement regarding the fixed period settlement option on a life insurance policy?
A portion of the payments paid to the beneficiary comes from interest calculated on the proceeds of the policy
What does the term "field underwriting" refer to in the health insurance industry?
A producer's contact with the applicant
What is normally the consequence for NOT obtaining preadmission certification prior to receiving inpatient medical care?
A reduction in benefits
What is a "functional assessment" for long-term care benefits?
A review of the insured's ability to perform the activities of daily living
Which benefit is normally payable to a life insurance policyowner when the insured's life expectancy has been severely limited?
Accelerated (living) benefit
In long-term care insurance, what is an "ADL"?
Activities of daily living
Which of the co-annuitants listed below would receive the largest monthly benefit payments in a joint and 100% survivor annuity?
Ages 71 and 73
According to Oklahoma law, which of the following must include coverage for equipment, supplies, and related services for the treatment of Type I and Type II diabetes when prescribed by a physician or other licensed health care provider?
All individual or group health contracts or agreements
Which of the following is NOT a valid contract exchange?
An annuity exchanged for a life insurance policy
When a large sum of money is used to structure monthly payments, which product is typically used?
An immediate annuity
Rick is a disabled worker receiving Social Security benefits. What benefits are his wife and dependent children eligible for?
An income benefit which is a percentage of his primary insurance amount
Which is an accurate description of the premium in a graded premium life insurance policy?
Annual increases in premium for a stated number of years then remains level
Which statement is INCORRECT concerning a tax-sheltered annuity (TSA)?
Annual investment gains are included in participant's gross income
During the liquidation phase of an annuity contract, to whom are the income benefits normally payable to?
Annuitant
According to HIPAA regulations, which of the following may reduce a medical plan's pre-existing conditions exclusion?
Any period of prior coverage
Use of XYZ Insurance Company brochures, business cards, and rating guides is an example of
Apparent authority
An applicant submits a life insurance application where an investigative consumer report is used in the underwriting process. Which of these statements is true?
Applicant has a right to receive a copy of the report
In what situation could an insurance policy's coverage be modified?
Applicant is a substandard risk
How may an insurance company classify an accidental death benefit on a life policy?
As an optional policy rider
Who normally pays the premiums for group credit life insurance?
Borrower
In the event of premium default, which life insurance provision will use the cash value to keep the policy in force?
Automatic premium loan
A policyowner pays the first annual premium for a $50,000 life insurance policy and dies one month after the policy effective date. Which of these statements is normally true?
Beneficiary receives $50,000 income tax-free
What is the tax treatment of benefit payments for a non-qualified annuity?
Benefit payments are always fully taxable
In long-term care insurance, what is the length of time for which claims will be paid?
Benefit period
What is the federal income tax liability of a death benefit paid from a health insurance policy to a named beneficiary?
Benefits are not taxable
Which of these statements regarding Major Medical Expense insurance is NOT true?
Benefits are paid on a capitation basis
The Change of Occupation provision in a Disability Income policy states that, in the event the insured changes to a less hazardous occupation, which of the following may apply?
Benefits can be increased in the event of a covered claim
For employees covered in multiple states under a group health plan, jurisdiction rules cannot alter
COBRA laws
Which of the following is considered a Limited accident and health plan?
Cancer plan
Which of the following is NOT an allowable exclusion for long-term care insurance policies?
Care for incurable conditions
Which statement regarding the waiver of premium rider is accurate?
Cash payment is not directly provided to the policyowner
Which of the following is NOT a condition that must be met for an accidental death benefit to be paid?
Cause of death must be from a job-related injury
Which would be described as a beneficiary designation by class?
Children of the insured
What type of employee welfare plans are not subject to ERISA regulations?
Church plans
Which of the these is NOT a true statement of the war exclusion?
Civil insurrections apply
For violating the Unfair Claims Settlement Practices Act, the Insurance Commissioner may subject an insurer to which of the following penalties?
Civil penalty of not less than $100 and not more than $5,000
Which of the following statements is true regarding accident and health insurance claims that reimburse on an indemnity basis?
Claims can be sent directly to the insured
What must be given to a life insurance applicant when the agent receives an application and the initial premium?
Conditional receipt
Which report contains information regarding an individual's general reputation and credit standing?
Consumer report
What does a Mandatory Second Surgical Opinion provision provide to an employer-paid health insurance plan?
Containment of the employer's premium cost
Each of the following is required of continuing education in the State of Oklahoma EXCEPT
Continuing education is NOT required for a producer's first renewal
Which of the following is NOT true regarding producer license renewal?
Continuing education is not required for first renewal
What type of doctor-ordered care assists an individual with performing basic daily activities such as bathing, dressing, and eating?
Custodial care
Mike applied for life insurance and was issued a conditional receipt. He is later found to be insurable and is issued a policy. When does his coverage become effective?
Date of issuance of the conditional receipt
All of these are used to prevent adverse selection in a group dental plan EXCEPT
Decreased participation
What kind of life policy typically offers mortgage protection?
Decreasing term
Which of these life insurance policies does NOT contain a cash value provision?
Decreasing term life
Which annuity allows contributions to an IRA?
Deferred
Individuals covered with employer-paid group health plans will normally receive tax-free benefits under all of these plans EXCEPT
Disability Income
Which of these noncontributory group plans would a claim likely result in the payment of federal income taxes?
Disability Income
If the Insurance Commissioner finds that a producer has violated the Oklahoma Insurance Code, the producer's license could be subject to any of the following EXCEPT
Discrimination
Which of the following is NOT guaranteed in a whole life policy?
Dividend scale
For purposes of disability income insurance, earned income would include all of the following EXCEPT
Dividends
Which of these is NOT considered a type of limited payment whole life insurance?
Endowment at age 70
Which of the following health insurance provisions requires that the application becomes part of the policy?
Entire contract clause
Which statement concerning an adjustable life insurance policy is FALSE?
Evidence of insurability is required when there is a change in premium
A Fraternal Benefit Society has each of the following characteristics EXCEPT
Exists For profit
Long Term Care policies will usually pay for eligible benefits using which of the following methods?
Expense incurred
Which of the following are used by most insurers when determining the premiums for large groups?
Experience rating
Which life insurance policy option allows the policyowner to have coverage equal to the net death benefit of the lapsed policy?
Extended term nonforfeiture option
Which statement concerning a decreasing term life policy is accurate?
Face amount decreases over the policy period
Which benefit supplement added to a life insurance policy insures an entire family?
Family term rider
Which tax is normally associated with an individual's death?
Federal estate tax
Where does the primary funding for Medicare Part A come from?
Federal payroll and self-employment taxes
Which of these may NOT be deducted from premium payments or the cash value of a variable life insurance policy?
Federal premium taxes
When an annuity contract has been fully surrendered, how will the surrender charges affect the final contract settlement?
Final contract settlement will be reduced
Which life insurance settlement option pays a stated monthly benefit until both principal and interest are exhausted?
Fixed amount installment option
Tori has an annuity that pays her a $500 per month income benefit for life or for ten years, whichever is longer. What kind of annuity is this?
Fixed life annuity with period certain
An applicant for health insurance deliberately lies in order to obtain a lower premium rate. This is an example of
Fraud
What is considered a valid reason for small corporations to insure the lives of its major stockholders?
Fund a buy-sell agreement
When the disclosure of an insured's nonpublic information is involved, what is the insurer obligated to do?
Give notice, explain, and allow opting out
Under the Oklahoma Insurance Code, a licensed insurance producer is prohibited from which of the following?
Giving a gift of more than $100 value to a client as an inducement to purchase insurance
All of these are considered features of whole life insurance EXCEPT
Initial premium is lower than for an equivalent amount of term insurance
The administrator for a corporate pension plan bought an accumulation annuity contract for its 2,000 employees. All 2,000 participating employees received certificates of participation. What kind of contract is this?
Group deferred annuity
Bryce purchased a disability income policy with a rider that guarantees him the option of purchasing additional amounts of coverage at predetermined times without requiring to provide evidence of insurability. What kind of rider is this?
Guaranteed insurability rider
What is the name of the rider that provides an additional purchase option in a life insurance policy?
Guaranteed insurability rider
Which of the following health plans pay benefits on a pre-paid service basis?
HMO
An agent who misrepresents a life insurance product in the state of Oklahoma
Has committed an illegal act
The Oklahoma Life and Health Insurance Guaranty Association provides financial policyholder protection for all of the following EXCEPT
Health Maintenance Organizations (HMOs)
A family counseling benefit is typically offered under which of these coverages?
Hospice care
Which of the following is NOT subject to the promise to pay in an insuring clause?
How the premium is calculated
When an individual is planning to protect his family with life insurance, one method of doing so is called needs analysis. What exactly does needs analysis involve?
Identifies the needs of the individual and his/her dependents
A characteristic of preferred provider organizations (PPO) is
If service is obtained outside the PPO, benefits are reduced and costs increase
All of the following are true regarding required immunization benefits for each child listed as a dependent on a health benefit plan EXCEPT:
Immunization benefits may not be subject to a schedule
Which of the following plans require a replacement disclosure notice be given to the applicant in the event of policy replacement?
Individual Major Medical Expense policy
What happens when an initial offer is answered with a counteroffer?
Initial offer is void
Which health policy clause specifies the amount of benefits to be paid?
Insuring
Which statement is INCORRECT about the interest-only settlement option in a life insurance policy?
Interest on proceeds must be paid by the beneficiary
Andy is in need of health care performed by skilled medical practitioners, but only on an intermittent basis. What level of care will his doctor likely prescribe?
Intermediate care
When compared to a fixed annuity, a variable annuity has what distinguishing feature?
Investment risk is assumed by the purchaser
When a policy loan is requested by a policyowner and it requires the consent of the beneficiary, what kind of beneficiary designation is this?
Irrevocable beneficiary
An accelerated (living) benefit rider in a life insurance policy may provide funds to an insured who
Is expected to remain in a nursing home for life
Upon receiving a complaint that a producer has violated the insurance statutes, the Insurance Commissioner may take which of the following actions?
Issue a cease and desist
Which of these would NOT be a valid reason to add the waiver of premium rider to a life insurance policy?
It allows a policy loan to cover premium payments if the policyowner becomes totally disabled
Which statement regarding the certificate of insurance is accurate?
It indicates evidence of an employee's insurance coverage
Ken is age 65 and has 2 years until he receives Social Security retirement income benefits. At his current age, which is true about Medicare Part A Hospital Insurance coverage?
It is available through application to Social Security
The initial premium for a life insurance policy is typically paid in what way?
It is typically obtained by the producer and forwarded to the insurer
Joe is a military retiree after having served 20 years of active duty. Upon retiring, he requests reinstatement of his lapsed individual health policy and is denied. Which of the following is correct?
Joe cannot be denied reinstatement to his original individual health plan
Which life insurance settlement option pays lifetime benefits to two or more people?
Joint and survivor
Which of these pays an income to two or more annuitants until the death of the last annuitant?
Joint and survivor annuity
A life insurance beneficiary died after receiving only six payments under the policy's life income settlement option. What happens with the remaining balance of the death proceeds?
Kept by the insurance company
Which of the following is associated with an immediate annuity?
Lack of an accumulation period
An arrangement where an individual is authorized to act on behalf of another person or company is established through
Law of Agency
How much is normally paid to a policyowner in a life (viatical) settlement?
Less than the death benefit
A policyowner has a life insurance policy where she had listed her age on the application as 5 years younger than her actual age. If she dies and the insurer discovers the misstatement of age, how much will the insurance company pay?
Less than the face amount
During the early years of a whole life insurance policy, the cash value will normally be
Less than the total premiums paid
What type of premiums are associated with individual mortgage protection life insurance policies?
Level premiums
Laura added a children's rider to her life insurance policy. What type of coverage was added?
Level term
According to Oklahoma Statute, commissions may be paid to
Licensed and duly appointed producers
What is another term used for a "pure" life annuity?
Life income
Which of these is NOT a common life insurance nonforfeiture option?
Life income annuity
What is covered under a limited accident and health insurance policy?
Limited perils and amounts
Which of the following is a syndicate established by a group of insurers to share underwriting duties?
Lloyd's organization
Joe is a life insurance policyowner who has failed to pay interest on his policy loan. What will result from this nonpayment?
Loan amount is increased to reflect the amount of interest due
Respite Care coverage is typically found in a(n)
Long Term Care policy
Tim is confined to a nursing home but doesn't have a terminal illness. Which life insurance rider is designed to help pay for this type of expense?
Long-term care benefit rider
Each of the following will trigger a benefit under the presumptive disability provision, EXCEPT
Loss of any one limb
Which of these policies is considered to be a comprehensive health policy?
Major Medical policy
What would be a valid reason for naming a trust as the beneficiary of a life insurance policy as opposed to naming an individual?
Management of proceeds would be provided
A MET third-party administrator may NOT perform which of the following functions?
Marketing the plan
John bought a deferred annuity on Mary. John amends the contract years later to name Tom as the recipient of the proceeds if Mary dies. Who is the annuitant for this contract?
Mary
When considering the replacement of an individual health insurance policy, a pre-existing conditions exclusion in the new contract
May reduce the insured's benefits
A health plan offered by private insurance companies is
Medicare Supplement
Which of these is a type of private insurance that covers the cost-sharing amounts under Medicare?
Medicare Supplement
Which individual would be best suited for Medicare Supplement insurance?
Medicare enrollee
What is considered a valid reason for an insurer's refusal to pay policy proceeds directly to a minor?
Minors are normally not capable of handling money in a reasonable manner
A life policy that has premiums that are lower than normal during the early years is called
Modified life
Life insurance premiums are computed on what three factors?
Mortality, interest, expenses
What is the eligibility requirement for Medicare Part B?
Must be eligible for Medicare Part A
Which of the following does NOT meet the requirements of "skilled nursing care"?
Must be provided exclusively in a hospital
Medicaid will pay for nursing home expenses under what condition?
Must have financial need
Wyatt is shopping for life insurance and is mainly concerned with the policy's death benefit. Which index should he be looking at when making comparisons?
Net payment cost index
When must a producer provide a replacement notice on life insurance?
No later than at the time of taking an application
Medicare Supplement insurance requires an individual to be at least how old for open enrollment?
No minimum age
The disability income policy most likely to have been issued on a substandard basis is
Non-cancelable with a health condition exclusion rider
A Medicare Supplement policy may be cancelled for which of the following reasons?
Non-payment of premium
Which of the following health insurance plans charges a premium that cannot be increased?
Noncancelable
Jerome is covered by a disability income policy that does NOT provide benefits for losses occurring as the result of his employment. What kind of coverage is this?
Nonoccupational coverage
Long-term care policies normally cover expenses associated with
Nursing homes
The responsibility for regulating the insurance continuing education requirements and approving insurance continuing education courses belongs to the
Oklahoma Insurance Department
Which one of the following is a domestic insurer?
One formed under the laws of Oklahoma
Most prepaid dental plans cover
Oral examinations
If group Health benefit levels are too high, what could be the end result?
Overutilization of the plan
Which would NOT be a location where skilled nursing care is provided?
Personal residence
Which of these plans allow a participant to choose either a network or non-network provider at the time when medical care is needed?
Point-of-service
Which of these statements accurately portrays an adjustable life insurance policy?
Policy can alternate between forms of term and whole life insurance
Which of the following is a TRUE statement regarding universal life insurance?
Policy indicates how much of each premium is used toward company expenses
Which statement regarding an adjustable life insurance policy is NOT true?
Policy loans are not permitted
Straight whole life insurance can be accurately described in all of these statements EXCEPT
Policy protection normally expires at age 65
What happens to a life insurance policy when the policy loan balance exceeds the cash value?
Policy will no longer be in force
If an insured dies during the grace period without having paid the premium, how much will the insurer pay?
Policy's face amount minus any premiums due
Dividends from a mutual insurance company are paid to whom?
Policyholders
The beneficiary of a life insurance policy is normally selected by whom?
Policyowner
A disability income insurance policy was recently issued with a rating. What does this mean?
Policyowner will be charged an additional premium
Which of the following accurately describes a participating insurance policy?
Policyowners may be entitled to receive dividends
Which of the following guidelines does NOT apply under the pregnancy provision of the Civil Rights Act?
Post-termination extensions of medical benefits must apply equally to pregnancy
Tim is in need of surgery. Before being hospitalized, he is referred to an outpatient clinic for diagnostic tests. What is this an example of?
Pre-admission testing
Which statement regarding the life insurance premium for a children's rider is true?
Premium remains the same no matter how many children
How are level term policies able to provide level premiums?
Premiums are averaged over the term of the policy
How is the insured protected if a payor benefit rider is attached to the life insurance policy?
Premiums are waived in the event the payor becomes disabled or dies
Which of the following does NOT fall under "hospital care" in a typical health maintenance organization (HMO) plan?
Private duty nursing
What is the name of the period of time during which a new employee is ineligible for group Health insurance coverage?
Probationary period
When a producer submits an application that discloses personal information regarding the applicant, who supplies the privacy notice?
Producer
Which benefit can be found in an equity indexed annuity, but not in a fixed annuity?
Protection against long-term inflation
A Medicare Supplement policy is required to do which of the following?
Provide a 30 day free-look period
Which of the following would NOT be a reason for purchasing life insurance on a child's life?
Provide benefits for the child if the parents die
Which of the following could be a future use of the cash value that builds in a recently-purchased whole life insurance policy?
Provide supplemental income in 35 years
What is considered interstate travel under the Federal Fraud and False Statements Act?
Puerto Rico
Which of these occurrences could improve an insurer's ability to reduce premiums?
Rate of earnings on investments increase
Insurance producer Karey offers insureds a $250 shopping card if they purchase an insurance product through her. What is this an example of?
Rebating, which is an unfair trade practice
An insured covered under a Disability Income policy is disabled and collecting benefits for a period of two months. He returns to work and is again disabled from the same cause, whereupon benefits continue to be paid. This is an example of which of the following?
Recurrent disability
What happens to the death benefit of a life insurance policy if the insured elects a partial payment from the accelerated (living) benefit provision?
Reduced
What effect can a long-term care benefit rider have on a life insurance policy?
Reduced death benefit
Which of the following statements BEST describes the HIPAA portability rules for an individual who changes from one group medical plan to another?
Reduces or eliminates any pre-existing conditions excluded under the new plan
What could be the potential result of taking out a cash value loan under a life insurance policy?
Reduces the amount receivable upon surrender of the contract
Which of the following is NOT a basic underwriting action for accident and health insurance?
Removing uniform policy provisions
What is the term used when exchanging a new policy for one already in force?
Replacement
HIV disclosure for an insurance applicant may include which of the following?
Request for a blood test to detect presence of HIV virus
T is covered by an Accidental Death and Dismemberment (AD&D) policy that contains an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?
Request of the change will be refused
Mary is an employee who is covered with a disability income policy through her employer. She pays for the portion of the premium attributable to the cost of residual disability benefits, while her employer pays for the remainder. What are the tax implications of this policy?
Residual benefits will be received income tax-free
What kind of arrangement gives the policyowner the right to change the beneficiary?
Revocable designation
Security laws passed by Congress are enforced by which Federal agency?
Security and Exchange Commission
Which of these is NOT considered the responsibility of a producer during the underwriting process?
Selecting the final approval date
Long-term care insurance policies may exclude coverage for all of the following EXCEPT
Senile dementia
Assets that back the non-guaranteed values of variable life insurance products are held in which account?
Separate account set up by the insurer
A source of supplemental income for a life insurance policyowner can be derived from the
Shareholders
Laura is a new employee and will be obtaining non-contributory group Major Medical insurance from her employer. Which of the following actions must she take during the open enrollment period?
Sign an enrollment card
Which of these policies is considered a whole life policy?
Single premium life
Medicare Part A covers which type of care?
Skilled nursing facility care
Which of the following does a Medicare Advantage enrollee typically pay for?
Small co-pay per visit or per service
Which life insurance policy provision prohibits a beneficiary from "commuting, encumbering, withdrawing, or assigning" any portion of the proceeds prior to actual receipt from the company?
Spendthrift Clause
Steve has a group disability income policy where the premiums are paid by his employer. He elected to pay for additional residual disability coverage. Which of the following statements is true?
Steve will pay taxes on the disability benefit received from his employer, but will receive any residual disability benefits tax-free
An insurer will typically assess a back-end load on a deferred annuity that is cancelled during the early contract years. What is this back-end load referred to as?
Surrender charge
Which of these annuity contract features is meant to discourage withdrawals and exchanges?
Surrender charges
How does the cost for a survivorship life policy compare to the cost of combining two separate individual life insurance policies?
Survivorship life policy is lower
A copy of all Medicare Supplement advertisements must be submitted for approval to
The Insurance Commissioner
Which statement regarding the joint and survivor life insurance settlement option is NOT true?
The amount of each installment is larger than the single life income option
Which factor determines the maximum disability income benefit that can be purchased by an applicant?
The applicant's income
What is payable to the policyowner if a whole life policy is surrendered prior to its maturity date?
The cash value
K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective?
The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured
Which of the following would be the advantage of replacing an existing health insurance policy with a new one?
The existing policy no longer meets the needs of the insured
Peter, age 50, surrenders his modified endowment contract (MEC). How is the gain treated in terms of federal income taxes?
The gain is treated as taxable income and a penalty tax is imposed on the gain
What would be considered an advantage of purchasing term life insurance?
The initial premium is lower compared to an equivalent amount of whole life coverage
Which of the following is true regarding a person receiving a waiver of premium benefit?
The insured must be disabled for a period of time
What is taken into consideration when defining "total disability" in a disability income insurance policy?
The insured's education, training, and experience
What determines how much an annuitant is paid for a variable annuity?
The market value variations of the securities backing it
Which of the following statements about the installments for a fixed period settlement option in life insurance policies is NOT true?
The periodic payment amount is determined by the beneficiary's age
Under an adjustable life insurance policy, which of the following may NOT be changed without further underwriting?
The person insured
What happens when a policyowner borrows against the cash value of his life insurance policy?
The policy proceeds would be reduced by the outstanding loan balance
What is considered the collateral on a life insurance policy loan?
The policy's cash value
Inflation protection must be included in all long-term policies delivered in Oklahoma UNLESS
The policyholder rejects the coverage in writing
A life insurance illustration showing future premiums being paid out of nonguaranteed values must disclose that
The policyowner may need to resume premium payments depending on actual results
Which of these statements regarding the extended term insurance nonforfeiture option in a life policy is accurate?
The premium to purchase the coverage comes from the policy's cash value
Compensation for a new Medicare Supplement policy that replaces an existing policy cannot exceed
The renewal commission of the original policy
How is a community rating used for underwriting purposes?
The same rates are charged for individual and group plans in the same geographical area
Who is the beneficiary in a life insurance policy?
The stated person or entity who is designated to receive the death proceeds
How does a continuous premium whole life policy differ from a limited payment whole life policy?
The time period in which premiums will be paid
How is an insured's accident and health claim handled by an insurer if it occurs during the policy's grace period?
The unpaid premium may be subtracted from the reimbursement
An insurance producer whose license has been revoked continues to provide insurance services. Which of the following is TRUE?
This violation is a felony and can result in a fine of up to $5,000
Why does Oklahoma law require an insurance producer to examine the existing Medicare Supplement policies of a prospective insured?
To determine the suitability of potential changes
A life insurance policy that includes a return of premium rider will pay the beneficiary how much upon the insured's death?
Total premiums paid plus the policy face amount
Which of the following does medical expense insurance NOT typically cover?
Treatment in a government facility
What would be the disadvantage of naming a trust as beneficiary of a life insurance policy?
Trust administration fees would reduce policy proceeds
Insurance crimes which affect interstate commerce are prosecuted by the
US Attorney General
What is the face amount of a $50,000 graded death benefit life insurance policy when the policy is issued?
Under $50,000 initially, but increases over time
Which of the following statements about universal life insurance is NOT true?
Universal life insurance normally has a minimum guaranteed cash value for duration of the policy
How long does protection normally extend to under a limited pay whole life policy?
Until age 100
When does interest income for a flexible premium deferred annuity get reported for federal income taxes?
Upon receiving distributions from the contract
Which type of life insurance policy allows a policyowner the choice of investments along with flexible premium payments?
Variable universal life
Under which circumstance is the interest rate guaranteed within a market value adjusted annuity?
When the contract has been held for the period specified in the policy
At what point are death proceeds paid in a joint life insurance policy?
When the first insured dies
A policyowner is permitted to take out a policy loan on a whole life policy at what point?
When the policy has a cash value
Which life insurance policy would be eligible to include an automatic premium loan provision?
Whole life
When an insured under a group life insurance plan in Oklahoma elects the conversion option, the new policy is issued
Without requiring evidence of insurability
According to federal fraud and false statements regulation, what is required for a prohibited person to transact insurance business in this state?
Written consent from the state insurance regulatory agency
Emergency health care coverage for Medicare enrollees traveling abroad is
a core benefit under a Medicare Supplement
After an applicant reads and signs an insurance application, he/she should be conscious of the fact that
a false statement could lead to loss of coverage
The coinsurance for skilled nursing facility services covered by Medicare after the 100% Medicare coverage ends is
a flat dollar amount per day
Proceeds payable under a life insurance contract to a policyowner in anticipation of death or upon the occurrence of specified life-threatening conditions as defined by the policy are best described as:
accelerated benefits
Which of the following is NOT covered by a comprehensive long-term care policy?
acute care
An insured is covered under a group long-term disability policy. Under this type of policy, the definition of disability based on any occupation typically applies
after two years of disability
Medicare Supplement coverage permits an open enrollment period on a guaranteed issue basis upon reaching
age 65
A producer may begin to solicit insurance ONLY when
appointed by an insurer
When there is a named beneficiary on a life insurance policy, the death benefits
are paid directly to the beneficiary without interference from the insured's creditors
Insurers do business in Oklahoma only after a thorough financial review. MOST insurance policies written in Oklahoma are protected by the Guaranty Association established to protect policyowners in the event an admitted company
becomes financially insolvent
Pat is covered by a disability income insurance policy that covers disabilities arising from a work-related illness or injury. The amount of his disability income payments for an on-the-job injury may be reduced by
benefits paid under workers compensation
The insurer's obligation to pay a claim depends on whether the insured or beneficiary has complied with all policy conditions. This makes the policy a(n)
conditional contract
An annuity's accumulation period may
continue after the purchase payments stop
Al surrenders his life insurance policy for its cash value. The total of premiums paid into the policy minus total dividends received in cash or used to offset premiums is referred to as the
cost basis
Reductions in coverage are one feature of _______ in Health insurance policies.
cost containment
According to the needs approach, an emergency reserve fund's primary purpose is to
cover the cost of unexpected expenses
The main purpose of an annuity is to
create a stream of income
Insurance that is designed to pay the balance of a loan if the insured dies before the loan has been repaid in full is
credit life
The requirements for continuing education apply to all of the following EXCEPT
customer service representatives
What happens to the purchasing power of benefit payments from a fixed life annuity when the cost of living goes up?
decreases
The Insurance Commissioner has all of the following powers and duties EXCEPT
enact legislation dealing with insurance
The benefit period of Medicare Part A begins on the first day the insured
enters a hospital
Scott has a life insurance policy in which the dividends are left with the insurance company. This particular policy may be paid up when the cash value plus accumulated dividends
equal the net single premium for the same face amount at the insured's attained age
Employer-paid qualified long-term care insurance premiums are typically
excluded from the employee's gross income
Death benefits from a life insurance policy are normally considered to be
exempt from federal income tax
When determining the accumulation value of a deferred annuity, the total is calculated by taking the premiums paid plus interest earned minus
expenses and withdrawals
An appointed producer's implied authority is derived from
express authority
Which settlement option makes minimum guaranteed dollar payments over a stated number of years?
fixed period
Death proceeds from a life insurance policy are typically included in a deceased insured's gross estate
for federal income tax reasons
A foreign insurance company is defined as one that is
formed under the laws of a state other than Oklahoma
A deliberate lie by an insured to the insurer to obtain a lower premium is an example of
fraud
Insurable interest in one's own life is legally considered as
generally unlimited
An insurance producer would be found guilty of inducing a customer to purchase insurance in all of the following situations EXCEPT:
giving the applicant merchandise worth $75 for the purchase of insurance
A medical fee schedule shows the amount an insurer will pay for a given procedure. This amount is considered to be the
highest amount payable
To legally receive a sales commission from an insurance company, an individual MUST
hold the appropriate license
A health insurance underwriter will most likely view alcohol abuse as a(n)
increased exposure to risk
The type of health insurance in which underwriting procedures are the most restrictive is
individual
Medicare Part A typically covers
inpatient drugs
Who is protected with the "other insurance with this insurer" provision?
insurance company
A life insurance policy that contains an accelerated (living) benefit rider will provide funds if the
insured is expected to be confined to a nursing home for life
When premiums are determined, one factor would be the expenses of the
insurer
After an insurance application has been originated, the producer normally
is the major personal contact to the insured
If the Commissioner has received a complaint that an individual has committed an Unfair Trade Practice, the Commissioner may immediately
issue a cease and desist order
The insurance coverage in a variable life insurance policy may vary based on the value of
its underlying investments
After the extended term life nonforfeiture option is chosen, the available insurance will be
level term for a stated period of time
Which of the following financial products creates an instant estate, no matter when the date of death?
life insurance
In a disability income contract, an insured is considered to be totally disabled under the presumptive disability provision if he/she
loses the ability to speak
Employees generally receive workers compensation benefits for
lost wages and medical expenses due to occupational accidents
A life policy's spendthrift clause would have no effect if the beneficiary is paid the proceeds as a
lump-sum payment
The annuitant in a single premium deferred annuity (SPDA)
makes only one premium payment
Periodic health claim payments MUST be made at least
monthly
A producer who is licensed in Oklahoma but resident in another state is called a
nonresident producer
Sarah, age 88, is a life annuitant who has lived beyond her life expectancy. The funds for additional benefit payments will be derived primarily from funds that were
not distributed to life annuitants who died before life expectancy
A life insurance company just paid a $100,000 death benefit to a beneficiary. When the insured died, the cash value was $15,000 and the total premiums-paid equaled $10,000. How much of the proceeds will be added to the beneficiary's gross income for federal income tax purposes?
nothing
An insured is covered with a health insurance policy. If the insured would like to cancel the policy, he/she must
notify the insurance company in writing
Upon surrender of a whole life policy, which has been in force for AT LEAST 3 full years, and within 60 days after the date the premium payment is due and unpaid, the insurer will
pay a cash surrender value
A life annuity feature which provides benefit payments for a minimum number of years, no matter when the annuitant dies, is
period certain
A life insurance guaranteed insurability rider gives the insured the right, without proving insurability, to
periodically purchase additional insurance
A signed good health statement may be requested by a life producer at the time of
policy delivery
The standard provisions of an accident and health insurance policy require that the
policy, attached papers, and endorsements constitute the "entire contract"
What typically changes at the re-entry option date found in some term life policies?
premium
Where is the difference between a standard risk and a substandard risk reflected?
premium charges
A pre-existing condition exclusion in an accident and health insurance policy pertains to
prior health matters
Pointing out to a prospective client that the life insurance policy you are presenting is covered by the Oklahoma Life and Health Insurance Guaranty Association is
prohibited by law
The PRIMARY purpose of the Fair Credit and Reporting Act is to
protect consumers with guidelines regarding credit reporting and distribution
The automatic premium loan provision can be accurately described as a
provision that provides a policy loan to pay any premiums by the end of the grace period
During an annuity's liquidation phase, the annuitant normally
receives benefit payments at regular intervals
When a lapsed policy's premium has been paid current, it has the potential of being
reinstated
A life insurance policy's waiver of premium rider has the ability to
relieve the insured of premium payments following an initial waiting period after the insured becomes totally disabled
Ron recently purchased an immediate, straight life fixed annuity. His benefit payments will
remain a constant dollar amount for the duration of the annuity period
Third-party administration has become fairly common in accident and health insurance due to the growth of
self-funding of benefits
When issuing disability income coverage to a substandard risk, an insurance company may
shorten the benefit period
Sylvia purchased an annuity for $100,000 from the proceeds of an inheritance. No further payments are permitted and the income stream begins in 15 years. This contract is a(n)
single premium deferred annuity
Kelly purchases a health insurance policy issued on a conditionally renewable basis. The insurance company has a right to refuse renewal of the policy for
specific reasons stated in the contract
The interest credited to the cash values of personally-owned non-qualified annuities is considered
tax deferred
Qualified long-term care premiums are treated for tax purposes as
tax-deductible to the extent they exceed 7 1/2% AGI
The interest paid during an annuity's payout period is considered
taxable as ordinary income
A form of an accelerated death benefit is a
terminal illness settlement benefit
If a licensee is suspended for non-renewal, the licensee may apply for reinstatement within
the 12 month period following the date when the license should have been renewed
The exclusion ratio determines
the amount of an annuity payment subject to income tax
In order to contribute to a Health Savings Account (HSA),
the applicant must be enrolled in a High Deductible Health Plan (HDHP)
Medicare Part A does NOT provide coverage for
the first 3 pints of blood
The insured's consideration given for a health insurance policy is
the first premium payment and the application
James is covered with health insurance by two different insurers. The "insurance with other insurers" provision in an individual health insurance policy allows an insurer to pay benefits to the insured on a pro-rata basis when
the insurer was not notified prior to the claim that the insured has other health coverage
The reason for backdating a policy is
to obtain a premium rate based on an earlier age
The owner's cost basis for a non-qualified deferred annuity is typically the same as the
total premiums paid