CHAPTER 15
In addition to the instructor, who must visually monitor a classroom continuing education course at all times?
A disinterested third party
What type of retirement plan is not required to have a vesting schedule, is not approved by the IRS, can discriminate in favor of highly compensated employees, and can benefit the employer?
A non-qualified plan
Part B of Medicare excludes which of the following medical expenses?
A regular dental checkup
In the event a policy is delivered by an agent to the insured, and the premium payment is to be collected at the time of this delivery, normally what else must the agent obtain to make the delivery complete?
A statement of good health
Which of the following is not a prohibited marketing practice for the small employer insurer?
Agree to compensate an agent for selling plans that vary in number of participants
Which of the following types of limited policies would a common carrier purchase to provide medical and surgical benefits in excess of any primary coverage?
Blanket Plan
All of the following types of qualified plans provide an employee with a retirement benefit based on the value of the employee's account at retirement, except:
Defined Benefit
A life insurance policy must have a grace period of at least ___ months?
1
The Time Limit on Certain Defenses (Incontestable) period is _____ years under individual health and disability contracts.
2
General life, accident, and health agents must complete ______ continuing education every 2 years.
24 hours
The grace period for an HMO policy is for how many days?
30
What is the initial coverage of a newborn children must continue for at least ___ days?
31
The grace period for an individual health insurance policy being paid on a quarterly basis is:
31 days
Who among the following are NOT exempt from continuing education requirements?
An agent licensed for limited lines
A policy is issued with a rider. Years later the policyowner would like to drop the rider in order to save some money. Who has the authority to effect that policy change?
An executive officer of the insurer
Who of the following must approve a change in coverage for it to be valid?
An officer of the HMO
Which of the following is correct with regard to Medicare Select policies?
An updated list of network providers must be filed with the Commissioner at least quarterly.
Which of the following statements regarding Roth IRAs is FALSE?
As long as the account owner is under age 59 1/2 there is no maximum contribution limit
Which of the following is an acceptable underwriting practice regarding individuals of the same class?
Asking an applicant if he or she has ever been diagnosed as having a sexually transmitted disease
Which of the following accurately describes a small business during last year?
At least 2 employees but not more than 50 eligible employees
Which of the following accurately describes a small business during the preceding calendar year?
At least 2 employees but not more than 50 eligible employees
With a Contributory Group Life Plan, what percentage of the employees must participate?
At least 75%
The ____________ provision prevents a Whole Life Policy from lapsing, as long as there is adequate cash value, if the insured/policyowner forgets to pay the premium by the end of the grace period.
Automatic Premium Loan
A licensed agent is required do which of the following before transacting insurance in Texas?
B Obtain an appointment from an insurer
If a premium is collected at the time of the application, the producer will issue a:
CONDITIONAL RECEIPT
What document is provided to group health insurance members instead of an insurance policy?
Certificate of Coverage
Activities of Transacting Insurance:
Collecting an insurance payment Delivering an insurance contract Providing an insurance proposal
Which of the following is false regarding provisions for life policies?
The policy may not include a provision for reinstatement
One of your clients just reinstated his health insurance plan. When is coverage effective for sickness and accident?
10 days for sickness, and immediately for accidental injuries
Which of the following does not describe an eligible group for group life insurance?
2 or more employers in the same industry and 1 or more labor unions
When establishing a SIMPLE, what two different types of qualified plans must employers choose between?
401(k) or IRA
Medical advice given __________ prior to the effective date of coverage defines a preexisting condition.
6 MONTHS
Under the Legal Actions Mandatory Uniform Provision, an insured must wait at least _____ days after providing proof of loss before he or she can take legal action against the insurer.
60 DAYS -
If the Department issues a temporary agent license, for how many days is it valid?
90 days
Which of the following does not qualify for the local HMO program?
A 15-year old girl who lives with her mother out of the service area, but whose dad is a subscriber
Which of the following Annuities can it be said that it has 'upside potential, but no downside risk' when it comes to the stock market overall?
Indexed - the interest credited can be higher if the index the policy is linked to goes up, but just in case the index goes down it does not affect the cash values of the policy in a negative way.
Which of the following scenarios will trigger an income tax due?
Interest earned on dividends left on deposit with the insurer
A Certificate of Authority is issued to an insurer for which of the following reasons?
It certifies the insurer is authorized to transact insurance in this state
John has had his individual Health and Disability Income policies for many years. While intoxicated, he was injured as the driver in a single car accident. Who covers the medical expenses for John?
John is liable for all expenses - According to the Intoxicants and Narcotics Provision (an Optional Uniform Provision), the insurer may deny coverage for John's injuries, making John liable for all expenses.
An HMO may not cancel a group for which of the following reasons?
Late payment of premium
Which of these is a Mandatory Uniform Provision?
Legal Actions
A life insurance applicant wants a combination of savings and insurance protection with guarantees. If the applicant is willing to pay premiums only until the age of 65, at which time the policy is fully paid-up, which of the following should he/she purchase?
Limited Pay Whole LIfe-Age to age 65
The specified period that must elapse before new coverage is effective for nonaccidental losses is known as which of the following?
Probationary period
In the event that an insured receives a periodic benefit as the result of exercising the Accelerated Death Benefit Rider, what information must the insurer provide to the insured?
The amount of the accelerated payment, the remaining death benefit and cash values
A universal life policy has a death benefit of $125,000 and a cash accumulation value of $15,000. Generally, what will happen to the policy if there is a $5,000 partial withdrawal?
The death benefit and cash accumulation will be reduced by the partial withdrawal
Which of the following scenarios will cause the value of a life insurance policy death benefit to be included in the insured's estate?
The insured is also the policyowner and at death no beneficiaries are alive
All of the following statements are true of a juvenile policy, except:
The insured is the premium payor
Ultimately, who will be responsible for proving that a policy was delivered, if not accomplished through reasonable means?
The insurer
All of the groups are considered to be exempt from the Affordable Care Act's requirement to purchase coverage, except:
Those who must pay less than 9.5% of their income for health insurance
Brendon, whose license expired 30 days ago more than 90 days, retake exam
Which of the following persons may renew his insurance license?
An insured forgets to pay his insurance premium. Instead of the policy lapsing, the premium is paid by the company. This would suggest that a __________ policy was purchased.
Whole Life
Franchise insurance is also know as _________ insurance.
Wholesale - the reduced cost to the individual insured as the employer picks up the plan administration expenses.
Sherman is the custodian at an elementary school and participates in its qualified retirement plan. This describes a:
403(b) Tax-Sheltered Annuity
The Department must examine each insurance company at least once every _____ years.
5
A procedure used by dental insurance carriers to determine the benefit to be paid is known as:
Precertification
Which of the following is not a valid reason to terminate an HMO subscriber's coverage?
Diagnosed with a serious disease
An annuity held within a traditional IRA ____________.
Does not provide any additional tax-deferral benefit
Which of the following statements about continuing education is true?
Every licensee must complete 2 continuing education hours on the topic of ethics
_____________ insurance allows for insurance coverage to be obtained when not available from admitted carriers.
Surplus lines
Which of the following may the Commissioner NOT do if he/she cancels or revokes an insurance license?
Suspend the license for up to 5 years **The Commissioner may suspend the license for up to 1 year.
Residual Disability Income pays funds to the insured, to make up for what the insured would have earned after returning to work, and while recovering from ___________.
TOTAL DISABILITY
Which of the following statements is true?
The Department may deny a license application or discipline a license holder if they misappropriate or convert funds for their own use or illegally withhold money
A SEP uses employer funded _______ accounts.
IRA
Which of the following is not a condition that would apply to an accelerated death benefit?
A benign tumor For the accelerated benefit to apply, the insured must have a terminal illness, a long-term care illness, or an illness or physical condition that is likely to cause permanent disability or premature death.
When the death of an insured occurs within a specified period, causing the policy to pay double or triple benefits, this policy must have which of the following riders?
Accidental Death Rider
Who does not qualify for exemption from continuing education requirements necessary to maintain an insurance license?
Agent who serves in the Army Reserves
In order to receive credit for attending a classroom insurance continuing education course, how much of the course must a student attend?
At least 90% of the course
To reduce its exposure to claims from a substandard disability risk, an insurer may take all of the following actions, except:
Remove all of the exclusion riders
An automatic fine of $50 per credit hour applies if a licensee fails to comply with what continuing education requirement?
Complete the required number of continuing education hours during a licensing period
Which of the following is not a valid nonforfeiture benefit option required when the nonforfeiture provision is included in a life insurance policy?
Contingent paid-up
Which of the following qualified plans puts the investment risk entirely on the employer sponsoring the plan?
Defined Benefit - the sponsoring employer takes on the responsibility for making sure the money will be available to fund the pension retirement checks for retired employees.
The exclusion ratio states that once the entire cost basis has been recovered from a non-qualified annuity income benefit payout then any further payments are __________.
Fully taxable since the excess payments must represent only earnings
Which of the following is true of Medicare Part A, in terms of coverage?
Helps pay for hospital care and skilled nursing facility care as an inpatient plus home or hospice care
Which rider would eliminate coverage for a preexisting condition?
Impairment Rider
Which of the following is an example of what an advertisement cannot do?
Imply that an insurer is endorsed by a government entity
Which of the following life insurance policies has a current and guaranteed maximum premium stated in the policy?
Indeterminate Premium Life
Which of the following is NOT a duty the Commissioner must administer?
Make state insurance laws
A Medicare supplement policy may be cancelled for which of the following reasons?
Material misrepresentation
What prohibited trade practice does an agent commit when he lies about policy terms in order to convince a policyholder to cancel an existing policy in order to buy a new policy?
Misrepresentation
Loading includes all of the following, except:
Mortality
When employers who self-fund their employee benefits form a larger group in order to offer health insurance benefits to each employer's workers, it is called a (an):
Multiple Employer Welfare Association (MEWA)
Which Act was implemented in order to protect consumers from questionable Medicare Supplement Policy marketing practices?
NAIC Model Law NAIC Model Law requires all Medicare Supplement policies to be standardized.
A licensed agent is required do which of the following before transacting insurance in Texas?
Obtain an appointment from an insurer
Which of the following is not covered with Medicare Part A?
Outpatient hospital care
Managed Health Care attempts to contain costs by controlling the behavior of participants in all of the following ways, except:
PARTIAL CASE MANAGEMENT
Which of the following is considered not to be an Essential Health Benefit?
Personal care
All of the following are coverages provided under a Basic Hospital Expense Policy, except:
Physician/Surgeon expenses
Which of the following Medicare Supplement policies have Core Benefits?
Plans A through N
The ___________ decides which dividend option is in effect and can change their election at any time.
Policyowner
ERISA sets minimum standards for pension plans primarily in the ______ industry.
Private
Guaranteed Renewable means:
Renewable with adjustable premiums, by classification only, NOT on an individual basis
Policy __________ are the net premiums paid plus interest earned and reflect potential insurance contract obligations.
Reserves
A _______________ discloses the HMO right to change the rate charged.
Schedule of Charges
If the insurer issues a health insurance policy without an initial premium, the producer must obtain a signed:
Statement of Good Health
Clayton is asking his life insurance producer about any potential taxation issues related to his $100,000 personal Whole Life policy. All of the following are TRUE, except:
The interest that he pays on policy loans is tax-deductible The interest on policy loans is not tax-deductible.
Which statement concerning individual A&H policy renewal provisions is most correct from the perspective of the insured?
The more favorable the renewal provision to the insured, the higher the cost
All of the following are times in which life insurance policy cash values can become taxable, EXCEPT:
When a policy loan is taken out