Exam FX Life and Health Insurance Practice Exam: Learning Mode
The type of investment (Typically, the owner of an adjustable life policy has the following privileges: increasing or decreasing the premium, changing the premium-paying period, increasing or decreasing the face amount of coverage, or changing the period of protection>)
In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT
Stock
Which of the following types of insurers is owned by stockholders?
Mutual (Funds not paid out after paying claims and other operating costs are returned to the policy owners in the form of a dividend. If all funds are paid out, no dividends are paid.
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?
Reinstatement Provision
An insured will be allowed to reactivate her lapse life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this?
The time of initial solicitation (An outline of coverage must be delivered to a prospective applicant for a long-term care insurance contract or certificate at the time of initial solicitation.)
An outline of coverage must be given to the applicant for a long-term care policy no late than
Insurer's executive officer (Only an executive officer of the company, not an agent, has authority to make any changes to the policy. The insurer must have the insured's written agreement to the change.)
Which of the following entities has the authority to make changes to an insurance policy?
A lump-sum benefit payment option
Which of the following is a feature of a disability buyout plan?
Buyer's Guide. (The Buyer's Guide is a consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process. It is a generic guide that does not address the specific policy of the insurer, instead explaining life insurance in a way that the average consumer can understand.)
Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process?
Have attained fully insured status
Which of the following is an eligibility requirement for all Social Security Disability Income benefits?
They are required by state law to be included in the policy.
Which of the following is true about nonforfeiture values?
That its policies are covered by a state Guaranty Association
Which of the following may NOT be included in an insurance company's advertisement?
A person who negotiates insurance contracts (Persons who perform clerical tasks that are not related to soliciting or negotiating insurance contracts are not required to be licensed.)
Which of the following person is required to hold a producer license?
Reduction of Premium (The Reduction of Premium option allows the policyholder to apply policy dividends toward the next year's premium. The dividend is subtracted from the premium amount, yielding the new premium due for the next yet.)
An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe?
Those who have been insured under the plan for at least 5 years
Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated?
A person who negotiates insurance contracts (Persons who perform clerical tasks that are not related to soliciting or negotiating insurance contracts are not required to be licensed.)
Which of the following persons is required to hold a producer license?
Stop-loss limit (A "stop-loss limit" is a specified dollar amount beyond which the insured no longer participates in the sharing of expenses)
Which of the following terms describes the specified dollar amount beyond which the insured no longer participates in the sharing of expenses?
Home health care (Home health care is given in the home.)
Which of the following types of LTC is NOT provided in an institutional setting?
Whole Life
Which of the following types of policies will provide permanent protection?
Surgeon's services
Which of the following would basic medical expense coverage NOT cover?
Confirming future dividends in a life insurance proposal (A participating life insurance policy may pay a portion of its net earnings to a policyholder, but dividends cannot be guaranteed.)
Which of the following would be considered an illegal inducement to purchase insurance?
Advising the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered (This act is a violation as defined in the Unfair Settlement Practices.)
Which of the following would be considered an unfair claims settlement practice?
The extent of benefits is determined by the insured's income.
Which statement accurately describes group disability income insurance?
15 days (A probationary period refers to the amount of time that coverage is not available for illness-related disabilities, so it would not apply to a broken leg. The elimination period, however, is the time that must elapse between the onset of the disability and when benefits will start being paid. In this case, the individual is considered disabled for 45 days, and the benefits will start to be paid after 30 days. So, the client will receive benefits for 15 days.)
A client has a new individual disability income policy with a 20-day probationary period and a 30-day elimination period. Ten days later, the client breaks their leg and is off work for 45 days. How many days of disability benefits will the policy pay?
Disclose commissions earned from the sale of the policy.
A producer must do all of the following when delivering a new policy to the insured EXCEPT
Pay the policy proceeds only if it would have issued the policy. (The conditional receipt says that coverage will be effective either on the date of the application or the date of the medical exam, whichever occurs last, as long as the applicant is found to be insurable as a standard risk, and policy is issued exactly as applied for.)
A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will
Monthly premium waiver and monthly income
After a back injury and insured is disabled for year his insurance policy carries a disability income benefit Rider which of the following benefits will he receive?
At distribution, all amounts received by the employee are tax free.
All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT
A reinstated policy provides immediate coverage for an illness
All of the following are correct about the required provisions of a health insurance policy EXCEPT
Buy-Sell Agreement (Personal uses of life insurance include survivor protection, estate creation and conservation, cash accumulation, and liquidity. A buy-sell agreement is for business uses of life insurance.)
All of the following are personal uses of life insurance Except
The premiums are invested in the insurer's general account.
All of the following are true about variable products EXCEPT
The Guaranty Association (Variable life insurance is regulated by both the state and federal government, as well as the Insurance Department, and the SEC.)
All of the following entities regulate variable life policies EXCEPT
The policy is owned by the company. (The policy is actually owned by the employee.)
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT
The coverage period
An Adjustable Life policy owner can change which of the following policy features?
When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health
An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will the coverage begin?
Always representing the insured (An agent will always be deemed to represent the insurer, not the insured.)
An agent is acting ethically in all of the following situations EXCEPT
Profit sharing plan
An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called?
Decreasing term (A decreasing term policy's face amount decreases as the amount of debt is reduced.)
An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?
10 days
An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy?
Nothing; illness is not covered during the first 20 days of the contract.
An insured purchased a disability income policy with a 10-year benefit period. The policy stated a 20-day probationary period for illness. If the insured is hospitalized with an illness 2 weeks after the policy was issued, how much will the policy pay?
The capital amount in lump sum
An insured who has accidental death and dismemberment policy loses her left arm in an accident. What type of benefit will she most likely receive from the policy?
Adjustable Life
At an 30, an applicant wants to start an insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. Which of the following policies would most likely fit his needs?
Any occupation - more restrictive than other definitions.
Disability income coverage specifies that the policy covers the insured if he is unable to perform any job for which he is qualified. in this case total disability is defined as?
The employer (In key person disability insurance purchased by a business, the business is the policyowner and the beneficiary, and key person is the insured.)
If a business wants to buy a disability income policy on a key employee, which of the following is considered the beneficiary?
12 credits
If a person is disabled at age 27 and meets Social Security's definition of total disability, how many work credit must he/she have earned to receive benefits?
The agent
If an applicant does not receive a copy of the new insurance policy, who would be held responsible?
Upon the last death
In a survivorship life policy, when does the insurer pay the death benefit?
Rent (Business overhead insurance is designed to pay the ongoing business expenses of a small business owner while they are disabled and unable to work. It does not pay the salary of the business owner or their loss of profits. However, it will provide the funds needed to pay the salary of employees other than the owners and their other ongoing business expenses, such as rent.)
In the event of a loss, business overhead insurance will pay for
Waiver of premium rider.
Manny has been injured in an accident although she is still receiving benefits for her policy, she does not have to pay premiums. Her policy includes?
Medicare Part C
Medicare Advantage is also known as
attending physician
Occasional visits by which of the following medical professionals will not be covered under LTC's home health care?
Sleeping
Regarding long-term policies, which of the following would NOT be included in activities of daily living?
The chief officer of the Department of Insurance
The Commissioner of Insurance is
Annually Renewable Term (Annually renewable term is the purest form of term insurance. The death benefit remains level, but the premium increases each year with the insured's attained age. In decreasing policies, while the face amount decreases, the premium remains constant throughout the life of the contracts. In level term and increasing term policies, the premium also remains level for the term of the policy. Therefore, in the other types of level policies, the first-year premium would not be different from any other year.)
The LEAST expensive first-year premium is found in which of the following policies?
Gradually increases each year by the amount that the cash value increases
The death benefit under the Universal Life Option B
6 credits. (To be considered partially insured, an individual must have earned 6 credits during the last 13-quarter period.)
The minimum number of credits required for partially insured status for Social Security disability benefits is
Entire contract clause.
The provision in a health insurance policy that ensures that the insurer cannot refer to any document that is not contained inthe contract is the
Control health insurance claims expenses (Managed care is a system of delivering health care and health care services, characterized by arrangements with selected providers, programs of ongoing quality control and utilization review and financial incentives for members to use providers and procedures covered by the plan.)
The purpose of managed care health insurance plans is to
$10,000 (Anyone who violates a cease and desist order may be subject to a fine of up to $10,000 for each violation.)
The violation of a cease and desist order may result in a fine of
Face Amount
What does "level" refer to in level insurance?
Current assumption life (Interest-sensitive whole life, also referred to as current assumption life, is a whole life policy that provides a guaranteed death benefit to age 100.)
What is another name for interest-sensitive whole life insurance?
Foreign
When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer?
Replacement
Whenever agents submit applications to insurers, they must also submit statements, signed by the applicant disclosing the involvement of
Making derogatory oral statements about another insurer's financial condition (Making oral or written statements directly or indirectly which are derogatory or maliciously critical of another insurer would be an example of the unfair trade practice of defamation.)
Which of the following best describes the unfair trade practice of defamation?
Counteroffer
Which of the following is NOT an essential element of an insurance contract?
It is a period during which the payments into the annuity grow tax deferred. (The "accumulation period" is the period of time over which the annuitant makes payments (premiums) into an annuity. This is the period of time during which the payments earn interest and grow tax deferred.)
Which of the following is True regarding the accumulation period of an annuity?
Suicide is excluded for a specific period of years and covered thereafter.
Which of the following statements about a suicide clause in a life insurance policy is TRUE?
To be eligible, one must meet certain requirements.
Which of the following statements is correct about social security?
An independent examination as often as reasonably required.
While a claim is pending, an insurance company may require
8%
What is the maximum allowed rate of interest on policy loans from life insurance?
A salaried employee who advertises and solicits insurance
Which of the following would be required to be licensed as an insurance producer?
0%
An insured owns a general disability policy and is injured during a war, rendering him disabled. What will be the extend of benefits that he will receive?
Conditional (A conditional contract requires both the insurer and policyowner to meet certain conditions before the contract can be executed, unlike other types of policies which put the burden of condition on either the insurer or the policyowner.)
An insurance contract requires that both the insured and insurer meet certain condition in order for the contract to be enforceable. What contract characteristic does this describe?
Refund the premiums paid
An insured died by suicide one year after the life insurance policy was issued. The insurer will
Stop-loss limit
An insured has endured multiple surgeries and hospitalizations for an illness during the last few months. Her insurer no longer bills her for medical expenses. Which of the following allows for that?
No coverage will apply, since the injury could have been foreseen
An insured is covered by a disability income policy that contains an accidental means clause. The insured exits a bus by jumping down the steps and breaks an ankle. What coverage will apply?
Time of Payment of Claims (The Time of Payment of Claims provision specifies that claims are to be paid immediately upon written proof of loss.)
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?
$50,000 (The face of the term policy would be the same as the face amount provided under the whole life policy.)
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?
Pure life provides payments for as long as the annuitant is alive
Which of the following best describes a pure life annuity settlement option?
It is fully funded by Social Security taxes (FICA). (Part B is funded by monthly premiums and from the general revenues of the federal government.)
Concerning Medicare Part B, which statement is INCORRECT?
The insured is not required to pay a deductible
Which of the following best describes the "first-dollar coverage" principle in basic medical insurance?
Lump sum (Upon the death of the insured, or endowment, the contract is designed to pay the proceeds in cash, called a lump sum, unless the recipient chooses an optional mode of settlement.)
If a settlement option is not chosen by the policyowner or the beneficiary, which option will be used?
5 months (If a LTC policy lapses as a result of the policyowner having a cognitive impairment or loss of functional capacity, the policyowner may request reinstatement within 5 months of the lapse.)
If an insured's cognitive impairment results in the lapse of a long-term care policy, how long from the policy lapse of a long-term care policy, how long from the policy lapse may the insured request reinstatement?
All providers will have the same coverage options and conditions for each plan.
In reference to the standard Medicare Supplement benefits plans, what does the term standard mean?
Insurer to the insured. (Upon receipt of a notice of claim, the company must supply claims forms to the insured within a specified number of days.)
In the event of loss, after a notice of claim is submitted to the insurer, who is responsible for providing claims forms and to which party?
Outpatient Hospital Treatment (Outpatient treatment is covered under Part B.)
Medicare Part A services do NOT include which of the following?
Settlement options
Methods used to pay the death benefits to a beneficiary upon the insured's death are called?
guaranteed renewability
Most LTC plans have which of the following features?
5 months (Under Social Security disability benefits, a person will have to wait five months before any benefits will be paid. Actual benefit payments start with the sixth month of disability.)
Once the person meets the stringent requirements for disability benefits under Social Security, how long is the waiting period before any benefits will be paid?
The insured (Payments for loss of life benefits are to be made to the designated beneficiary. If no beneficiary has been named, payment proceeds are to be paid to the deceased insured's estate. Claims other than death benefits are to be paid to the insured or the insured's estate, unless otherwise assigned by the insured.)
Under a health insurance policy, benefits, other than death benefits that have not otherwise been assigned, will be paid to
90 days of a loss
Under the uniform required provisions, proof of loss under a health insurance policy normally should be filled within
Installments for a fixed period (Under the "installments for a fixed period" option, the annuitant selects the time period for the benefits, and the insurer determines how much each payment will be. This option pays for a specific period of time only, and there are no life contingencies.)
Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be?
The insured must be unable to perform some activities of daily living. (Normally to be eligible for benefits from a long-term care policy, the insured must be ab..
What is necessary in order to be eligible to receive benefits from a long term-care policy?
As long as the policy is in force
What is the maximum period of time during which an insurer may contest fraudulent misstatements made in a health insurance application?
To help the insurance company to prevent the overutilization of the policy. (The purpose of the coinsurance provision is for the insurance company to control costs and discourage overutilization of the policy.)
What is the purpose of coinsurance provisions?
To allow the consumer to compare the costs of different policies (The buyer's guide provides generic information about life insurance policies and allows the consumer to compare the costs of different policies. The policy summary provides specific information about the issued policy, as well as the insurer's information)
What is the purpose of the buyer's guide?
Interest only
When a beneficiary receives payments consisting of both principal and interest portions, which part are taxable as income?
Option A
Which Universal Life option has a gradually increasing cash value and a level death benefit?
Single payment or periodic payments (Annuities are characterized by how they can be paid for: either a single payment (lump sum) or through periodic payments in which the premiums are paid in installments over a period of time. Periodic payment annuities can be either level, in which the annuitant/owner pays a fixed installment, or the payments can be flexible, in which the amount and frequency of each installment varies.)
Which two terms are associated directly with the way an annuity is funded?
The insurance company
Who bears all of the investment risk in a fixed annuity?
To help the insured understand all aspects of the contract (It is the producer's responsibility to make sure that the policy is understood by the insured and all of their questions are satisfied, and the delivery receipt is signed.)
Why should the producer personally deliver the policy when the first premium has already been paid?