Exam Questions

What is the civil penalty for violating a cease and desist order of the Commissioner?

$10,000

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

2 years.

Prior to license renewal, all insurance producers must successfully complete how many hours of continuing education?

24 credit hours.

If an insurer terminates a producer's appointment, the Commissioner must be notified within how many days?

30 days

Licensees must make a report, of any action taken against them in another jurisdiction or by another governmental agency in Pennsylvania within how many days of the final disposition of the matter?

30 days

A Straight Life policy has what type of premium? A: An increasing annual premium for the life of the insured B: A decreasing annual premium for the life of the insured C: A variable annual premium for the life of the insured D: A level annual premium for the life of the insured

A level annual premium for the life of the insured

What is an adjustable life policy?

Adjustable Life policies allow for increases and decreases in the face amount or premium, so long as the premium is sufficient to pay for the mortality. Any increase in face amount requires proof of insurability.

While a claim is pending, an insurance company may require

An independent examination as often as reasonably required.

Annually Renewable Term policy

Annually Renewable Term policies' premiums are adjusted each year to the insured's attainted age(required a premium increase each renewal); however, the policy may be guaranteed renewable. Death benefits remain level, and as with any term policy, there are no cash values.

What is the maximum age for qualifying for a catastrophic plan?

Answer: 30. Young adults under the age of 30 and individuals who cannot obtain affordable coverage(have a hardship exemption) may be able to purchase individual catastrophic plans that cover essential benefits.

For the purpose of examination by the department, insurers must keep a record of all financial files for at least how many years?

Answer: 5 years.

Which of the following is true about a class designation?

Beneficiaries are not identified by name. A class of beneficiary is using a designation such as "my children." This can be a vague term which is why the insurers encourage the insured to name each child specifically and to state the percentage of benefit they are to receive.

Which of the following options best depicts how the eligibility of members for group health insurance is determined?

By conditions of employment

Which of the following premium modes would result in the highest annual cost for an insurance company? A: Monthly B: Quarterly C: Semi-Annual D: Annual

Correct Answer is A: Monthly

Which of the following products requires a securities license?

Variable Annuity

A person who gives money as a consideration for a life insurance policy or interest in the death benefits of a life insurance policy is called a

Viatical settlement purchaser

Reduced Paid-up nonforfeiture policy/option

the original policy's cash value is used as a single premium to pay for a permanent policy with a reduced face amount from the original. The new policy accumulates in cash value until its maturity or the insured's death.

In long-term insurance care, what type of care is provided with intermediate care? A: Occasional nursing or rehabilitative care B: Non-medical daily care C: Daily care, but not nursing care D: Intensive Care

Correct answer is A: Occasional nursing or rehabilitative care. Intermediate care is nursing and rehabilitative care provided by medical personnel for stable conditions that require assistance on a less frequent basis than skilled care.

The provision that states both the printed contract and a copy of the application form the contract between the policyowner and the insurer is called the A: Master policy B: Entire Contract C: Certificate of Insurance D: Aleatory contract

Correct answer is B: The Entire Contract provision

What is NOT a benefit of a POS plan? A: It allows the employee to use a doctor not covered under the HMO. B: With the Point-of-Service plan the employees do not have to make decisions between the HMO or PPO plans that lock them in. C: It allows guaranteed acceptance of all applicants. D: It allows the employee to use an HMO provided doctor.

Correct answer is C: It allows guaranteed acceptance of all applicants.

In the event of a loss, business overhead insurance will pay for A: Loss of profits B: Salary of the business owner C: Medical bills of the business owner D: Rent

Correct answer is D: Rent. Can also pay the salary of employees

Which of the following is NOT true regarding the annuitant? A: The annuitant's life expectancy is taken into consideration for the annuity. B: The annuitant receives the annuitant benefits. C: The annuitant must be a natural person. D: The annuitant cannot be the same person as the the annuity owner.

Correct answer is D: The annuitant cannot be the same person as the annuity owner.

Which of the following is true regarding benefits paid to disabled employees? A: They are exempt from taxation if any portion of the premium was paid by the employee B: Tax withholding is required if the employee paid the premium C: Disability benefits are not taxed D: They may be subject to taxation if the premium was paid by the employer.

Correct answer is D: They may be subject to taxation if the premium was paid by the employer. Any portion of the benefit payed for by the employer will be considered taxable income to the employee.

Which of the following is an example of peril covered in an accident and health insurance policy? A: Sickness B: Alcoholism C: Smoking D: Death

Correct answer is a: Sickness There are two major causes of loss (or perils) covered under a health insurance policy: sickness and accident. Smoking and alcoholism would be considered hazards that may cause a loss.

Under the Accidental Death and Dismemberment (AD&D) coverage, what type of benefit will be paid to the beneficiary in the event of the insured's accidental death?

Principal Sum. The Principal Sum is payed for accidental death. In case of loss of sight or accidental dismemberment, a percentage of that principal sum will be paid by the policy, often referred to as the capital sum.

Annuities can be used to fund which of the following?

Retirement plans

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as what?

Survivor protection

An insurer wishes to compare the information given in an insurance application with previous insurance applications by the same applicant but for different companies. What organization can help the insurer accomplish this?

The Medical Information Bureau

If the annuitant dies during the accumulation period, who will receive the annuity benefits? A: The annuitant's estate B: The beneficiary C: The annuity owner D: The insurance company

The beneficiary

Peril is most easily defined as

The causes of loss insured against

How many pints of blood will be paid for by Medicare Supplement Core benefits?

The first 3

A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?

The insured's premiums will be waived until she is 21.

Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same of the same coverage once the plan is terminated?

Those who have been insured under the plan for at least 5 years.

All of the following are TRUE statements regarding the accumulation at interest option EXCEPT A: The annual dividend is retained by the company B: The interest is credited at a rate specified by the policy C: The policyholder has the right to withdraw the accumulations at any time D: The interest is not taxable since it remains inside the insurance policy

Correct answer is d: The interest is not taxable since it remains inside the insurance policy. The interest credited under this option is TAXABLE, whether or not the policyowner receives it.

What happens if a deferred annuity is surrendered before the annuitization period? A: The owner will only receive a refund of premium B: The insurer can only apply the surrender value toward another annuity C: Deferred annuities cannot be surrendered prior to the annuitication period D: The owner will receive the surrender value of the annuity.

Correct answer is d: The owner will receive the surrender value fo the annuity.

What is an important feature of a dental expense insurance plan that is NOT typically found in a medical expense insurance plan?

Diagnostic and preventative care

Which of the following is true regarding taxation of dividends in participating policies?

Dividends are not taxable

Which type of dental treatment involves the dental pulp within the teeth?

Endodontics involves the treatment dental pulp within natural teeth.

When an employer offers to give an employee a wage increase in the amount fo the premium on a new life insurance policy, this is called an

Executive Bonus

The automatic premium loan provision is activated at the end of the...

Grace Period. Provided that there is sufficient cash value in the policy, this provision triggers a loan at the end of the grace period to keep a policy in force.

Under which of the following circumstances can financial institutions share insurance coverage information with third parties, for the purpose of soliciting the purchase of insurance? A: Under no circumstances; nonpublic personal financial information cannot be shared with third parties. B: If a consumer decides to opt out C: If a consumer does not sign and return the notice of disclosure within 30 days D: Whenever it is requested by the Commissioner

If a consumer does not sign and return the notice of disclosure within 30 days.

The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the ________ clause.

Insuring Clause. The insuring clause is a provision on the first page of the policy that states the coverage and when it applies.

What is Medicaid?

Medicaid is a government funded (both state and federal) program designed to provide health care to poor people of all ages.

Medical Reimbursement Benefit

Medical Reimbursement Benefit help to pay medical costs for accidental injuries that are not considered to be disabling.

Medicare Advantage is also known as...

Medicare Part C. Medicare consists of Hospital Insurance protection (Part A), Medical Insurance protection (Part B), and Medicare Advantage (Part C) (formerly known as Medicare+Choice). Medicare Part D is a "stand alone" drug insurance policy for persons who need the coverage and are eligible for Medicare Part A and/or Part B.

Moral Hazard

Moral hazards refer to those applicants that may lie on an application for insurance, or in the past, have submitted fraudulent claims against an insurer.

What was created to keep telemarketers from calling consumer who do not wish to be contacted?

National Do Not Call Registry