Exam - Missed Questions

A Return of Premium term life policy is written as what type of term coverage?

Return of premium (ROP) life insurance is an increasing term insurance policy that pays an additional death benefit to the beneficiary equal to the amount of the premiums paid.

If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a

A settlement option is exercised when an immediate annuity is purchased with the face amount at death or with the cash value at surrender.

An association could buy group insurance for its members if it meets all of the following requirements EXCEPT

All of the above characteristics would make an association group eligible for buying group insurance, except the group must have at least 100 members.

Which of the following is a short-term annuity that limits the amounts paid to a specific fixed period or until a specific fixed amount is liquidated?

Annuity certain option allows the annuitant to select the time period or the amount of the benefits to be paid out. Under the installments for a fixed period, distribution begins on a specific date and stops on a specific date.

An insurer wants to obtain information from investigators regarding an applicant for insurance. What must the insurer do in order to legally acquire this information?

Before an insurer can obtain information from investigators regarding an applicant, it must first present the insured with a Disclosure Authorization Notice. This notice states the insurer's information collection practices and how the information will be used.

An agent voluntarily surrendered her license. How soon after this surrender can her license be reinstated?

Both a lapse and voluntarily surrendered license may be reinstated within 1 year of the day it becomes inactive.

Which of the following best describes the tax advantage of a qualified retirement plan?

Contributions are tax deferred, and earnings on the money in the plan accrue on a tax-deferred basis.

A producer must do all of the following when delivering a new policy to the insured EXCEPT

Disclose Commissions earned from the sale of the policy. A producer must explain policy provisions, exclusions, and riders at the time of delivery, as well as the rating procedures, especially if the policy is rated differently than applied for. The producer must also collect any due premium and have the insured sign the statement of continued good health.

An insured owes his insurer a premium payment. Since then, he incurs medical expenses. The insurer deducts the unpaid premium amount from the claim amount and pays the insured the difference. What provision allows for this?

If a premium is past due and the insurer owes claim payment, the amount of the premium will be deducted from the amount of the claim. For example, if a claim is worth $500 and the premium costs $200, the insured would receive the net total of $300 from his insurer.

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?

If the company acknowledges receipt of the premium with a conditional receipt, the policy is in effect on the date of the application or the date of the medical exam (whichever is later), provided that the applicant is found insurable at the rate applied for.

When would life insurance policy proceeds be included in the insured's taxable estate?

If the insured were the owner of the policy at the time of death or possessed any incidents of ownership at the time of death, the value of the policy will be included in the insured's taxable estate. If the insured, as policyowner, assigns or transfers ownership of the policy or makes a gift of the policy within 3 years prior to his or her death, the entire face amount of the policy will be included in his or her taxable estate.

An insurer has filed a new rate with the Commissioner, and is waiting for a reply. The Commissioner hasn't responded yet. After how many days can the insurer apply the new rate?

If the rate is filed, but is not disapproved within 10 days, the higher rate may be applied.

An insured is receiving hospice care. His insurer will pay for painkillers but not for an operation to reduce the size of a tumor. What term best fits this arrangement?

In a cost-containment setting, daily needs and pain relief are provided for hospice patients, but curative measures are not.

An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of

In insurance, concealment is the withholding of information that will result in an imprecise underwriting decision.

Who can make a fully deductible contribution to a traditional IRA?

Individuals who are not covered by an employer-sponsored plan may deduct the amount of their IRA contributions regardless of their income level.

Which of the following is the most common time for errors and omissions to occur on the part of an insurer?

Insurers are encouraged to document all conversations and correspondence that occurs with an insured, in the event that crucial errors and omissions should occur. The most common times for these errors are during the sales interview and policy delivery. It is essential to have proof of these interactions, in the events that an insured would sue the insurer.

Which of the following may NOT be included in an insurance company's advertisement?

It is illegal for insurers to state that their policies are guaranteed by the existence of a Guaranty Association.

All of the following are Nonforfeiture options EXCEPT

Nonforfeiture values include cash surrender, extended term and reduced paid-up. Interest only is a settlement option.

All of the following would be different between qualified and nonqualified retirement plans EXCEPT

Taxation on accumulation is deferred in both types of plans. The rest of the characteristics would differ.

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

The Notice of Claim Provision spells out the insured's duty to provide the insurer with reasonable notice in the event of a 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?

The Time of Payment of Claims provision specifies that claims are to be paid immediately upon written proof of loss.

The primary beneficiary of her husband's life policy found that no settlement option was stated in the policy on the date of her husband's death. Who will select the settlement option in this case?

The beneficiary; If a settlement option is not selected by the policyowner before the insured dies, then the beneficiary can choose the option.

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 in a freak accident on June 1. Which of the following statements best describes what will happen?

The employee usually has a period of 31 days after terminating from the group in order to exercise the conversion option. During this time, the employee is still covered under the original group policy.

To be eligible under HIPAA regulations, for how long should an individual converting to an individual health plan have been covered under the previous group plan?

Under HIPAA regulations, to be eligible to convert health insurance coverage from a group plan to an individual policy, the insured must have 18 months of continuous creditable health coverage.

Which of the following is NOT a feature of a guaranteed renewable provision?

The insurer can increase the policy premium on an individual basis. Guaranteed renewable provision has all the same features that the noncancellable provision does, with the exception that the insurer can increase the policy premium on the policy anniversary date. However, the premiums can only be increased on a class basis, not on an individual policy.

According to OBRA, what is the minimum number of employees required to constitute a large group?

There must be at least 100 employees in order to qualify for OBRA large-group status. The act states that plans must provide primary coverage for disabled individuals under age 65 who are not retired

How many days does an insurer have to file a notice of appointment for a producer?

To appoint a producer, an insurer must file a notice of appointment within 15 days of the appointment.

When is the insurability conditional receipt given?

Under the terms of the insurability conditional receipt, the insurance coverage becomes effective as of the date of the receipt, provided the application is approved. This receipt is generally provided to the applicant when the initial premium is paid at the time of application.

When is the earliest a policy may go into effect?

When the application is signed and a check is given to the agent. The policy can be effective as early as the date of the application, if the premium is submitted with the application and the policy is issued as applied for.