Exam simulator

An insured may assign up to ___ of policy ownership under an individual life insurance policy.

100%

What is the Minimum benefit period that must be offered by a Long-Term Care policy?

12 months

A 15-year mortgage is best protected by what kind of life policy?

15-year decreasing term

A new agent must complete at LEAST_ hours of continuing education within 24 months of initial licensure.

24

How long is the typical free look period for Long Term care insurance policies?

30 days

The Insurance Commissioner must give how many days notice prior to holding a hearing regarding an agents unfair or deceptive practice?

30 days notice

According to the Mandatory Uniform Policy Provisions, what is the maximum amount of time after the premium due date during which the policy remains in force even though the premium has not been paid?

31 days

An insured pays premiums on an annual basis for an individual health insurance policy. What is the MINIMUM number of days for the Grace Period provision?

31 days

In Texas, an individual life insurance policy is REQUIRED to have a grace period of

31 days

S is employed by a large corporation that provides group health coverage for its employees and their dependents. If S dies, the company must allow his surviving spouse and dependents to continue their group health coverage for a maximum of how many months under COBRA regulations?

36 months/ 2 years

Limited Liability Company

A business organization in which the business (not the owner) is liable for the company's debts

Insuring Clause

A general statement that identifies the basic agreement between the insurance company and the insured, usually located on the first page of the policy.

Which statement is TRUE regarding a Variable Whole Life policy?

A minimum guaranteed Death benefit is provided

P received Disability income benefits for 3 months then returns to work. She is able to work one month before her condition returns, leaving her disabled once again. What would the insurance company most likely regard this second period of disability as?

A recurrent disability

A policyowner may generate taxable income from which of the following Dividend Options?

Accumulation at Interest

Which of the following actions does the Commissioner of Insurance NOT have the power to conduct?

Activate insurance companies 'financial reserves'

Under a Long Term Care policy, which benefit would be typically excluded or limited?

Alcohol rehabilitation

Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features?

Aleatory: in that the amount the insured will pay in premiums is un

The Consideration clause in a Life insurance contract contains what pertinent information?

Amount of a premium payments and when they are due

The Consideration clause in a life insurance contract contains what pertinent information?

Amount of premium payments and when they are due

Contingent Beneficiary

An alternate beneficiary designated to receive the policy proceeds in the event that the primary beneficiary dies before the insured.

Fixed Annuity

An annuity that offers fixed payments and guarantees a minimum rate of interest to be credited to the purchase payment or payments.

An example of false advertising would be

An insurer exaggerating its dividends in a magazine advertisement

In Texas, which of these statements regarding the Suicide clause is TRUE?

An insurer may not use the suicide as a defense against payment after the second year

Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?

Annuity

With whom may an agent legally share commissions?

Another agent with the same line of insurance

When a policyowner cash surrenders a Universal Life insurance policy in it's early years, this may be considered a red flag for a(n)

Anti-Money Laundering violation

A plan through Marketplace may be purchased by

Any legal resident (except those imprisoned)

A certificate of_____ permits an insurance company to transact business in Texas.

Authority

A student pilot can pay regular premium costs for her life insurance policy with the addition of which of the following?

Aviation exclusion

Which of the following is a requirement for obtaining a Texas insurance agent's license?

Be honest, trustworthy and reliable

I is the policyowner for a Life insurance policy with an Irrevocable beneficiary designation. If T wishes to change the beneficiary, T must obtain permission from the:

Beneficiary

What is considered to be a characteristic of an immediate annuity?

Benefits payments start within one payment period of purchase

Accident Death coverage is provided to commercial airline passengers in which of the following types of policies?

Blanket Accident Policy

G is an accountant who has ten employees and is concerned about how the business would survive financially if G became disabled. The type of policy which BEST addresses this concern is

Business Overhead Expense

Many small business owners worry how their business would survive financially if the owner becomes disabled. The policy which BEST addresses this concern is

Business Overhead Expense

P loses an arm in a farm accident and is paid $10,000 from his Accidental Death and Dismemberment policy. This benefit is known as the

Capital Sum

A policy loan is made possible by which of these life insurance policy features?

Cash value provision

When an insured changes to a more hazardous occupation, which disability policy provision allows an insurer to adjust policy benefits and rates?

Change of occupation provision

A company that owns a life insurance policy on one of its key employees may do all the following EXCEPT

Change the policy's interest rate

S is covered by a whole life policy. Which insurance product can cover his children?

Child term rider

The combination of Whole Life and _____ Term insurance is referred to as a Family Income Policy

Decreasing: A Family Income Policy is a combination of Whole Life and Decreasing Term insurance

A CEO's personal assistant suffered inquires at home and as a result, was unable to work for four months. Which type of policy will pay a monthly benefit to the personal assistant?

Disability income

K becomes ill after traveling overseas and is unable to work for 3 months. What kind of policy would cover her loss of income?

Disability income: would reimburse insured for loss of earning if the insured became sick

Which of the following statements BEST describe the intent of a Coinsurance clause in a Major Medical policy?

Discourage overutilization of the insurance coverage

Which of the following does Social Security NOT provide benefits for?

Dismemberment

Which of the following does Social Security Not Provide a benefit for?

Dismemberment

What type of policy would only provide coverage for specific types of illnesses (cancer, stroke, etc)?

Dread disease insurance

Company Z has a Cross Purchase Buy-Sell Agreement in place among its three founding partners. If the agreement is funded with individual life insurance, what would it require?

Each partner must own a policy on the other partner

In a Disability Income Policy, which of these clauses acts as a deductible?

Elimination Period

The federal income tax treatment of employer-provided group Medical Expense insurance can be accurately describes as:

Employee's Premiums paid by the employer is tax-deductible to the employer as a business expenditure

A producer does not have the authority to change a policy or waive any of the provisions. The health provision that best describes this statement is called?

Entire Contract

Which of the following policy provisions prohibits an insurance company from incorporating external documents into an insurance policy?

Entire Contract

An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period?

Full face amount minus any past due premiums

How does an indexed annuity differ from a fixed annuity?

Indexed annuity owners may receive credited interest tied to the fluctuations of the linked index. An indexed annuity differs from a fixed annuity in that indexed annuity owners may receive credited interest tied to the fluctuations of the linked index.

Which of the following groups may NOT be insured by a group life insurance policy?

Individuals who are related by blood

D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?

Level Term

A whole life insurance policyowner does not wish to continue making premium payments. Which of the following enables the policyowner to sell the policy for more than its cash value

Life settlement contract

Life insurance that covers an insured's whole life with level premiums paid over a limited time is called:

Limited pay life

In a Major Medical Expense policies, what is the objective of a Stop loss Provision?

Limits an insured's out-of-pocket medical expenses

The Accelerated Death Benefits provision in a life insurance policy is also known as a(n)

Living Benefit

An insurance company would MOST likely pay benefits under an Accidental Death and Dismemberment policy for which of the following losses?

Loss of eyesight due to an accidental injury

Which of the following types of health coverage frequently uses a deductible?

Major Medical policy

Which type of plan normally includes hospice benefits?

Managed care plans

Z owns a Disability Income policy with a 30-day Elimination period. Z contracts pneumonia that leaves him unable to work from January 1 until January 15. Z then becomes disabled from an accident on February 1 and the disability lasts until July 1 the same year. Z will become eligible to receive benefits starting on

March 1: the elimination period of time between onset of a disability, and the time you are eligible for benefits. It is best thought of as a deductible period for your policy. After a 30 day Elimination period, Z will become eligible for receiving benefits on March 1

The health insurance program which is administered by each state and funded by both the federal and state governments is called:

Medicaid: is funded by both the federal and state governments and administered by the individual states

An applicant MUST receive an Outline of Coverage when an application is taken for a(n)

Medicare Supplement policy

Which Unfair Trade Practice involves an agent telling a prospective client that a policy's dividends are guaranteed?

Misrepresentative

When a life insurance policy exceeds certain IRS table values, the result would create which of the following?

Modified Endowment Contract (MEC)

According to the Time Payment of Claims provision, the insurer must pay Disability Income benefits no less frequently than which of the following options?

Monthly

Which of the following BEST describes a short-term medical expense policy?

Nonrenewable

Generally, how long is a benefit period for a Major Medical Expense Plan?

One year

P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to

P only

M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?

Pay face amount minus the past due premium

The provision that defines to whom the insurer will pay benefits to is called:

Payment of claims

Which life insurance rider typically appears on a Juvenile life insurance policy?

Payor Benefit rider

Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled?

Payor clause

The underwriting process involves all of these, EXCEPT for:

Policy loan

A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the:

Policy loan provision

On a life policy, who is qualified to change the beneficiary designations?

Policy owner

When an employee is terminated, which statement about a group term life conversion is true?

Policy proceeds will be paid if the employee dies during the conversion period.

On a Life insurance policy, who is qualified to change the beneficiary designation?

Policyowner

Which is true concerning a Variable Universal Life policy?

Policyowner controls where the investment will go and selects the amount of the premium payment. Which Variable Life, the policyowner controls the investment of cash values and chooses the timing and amount of premium payments.

Which of these options can an individual use their medical flexible spending account to pay for?

Prescription drugs

What is the purpose of the Time of Payment Claims provision?

Prevents delayed claim payments made by the insurer

K is the insured and P is the sole beneficiary on a life insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true?

Proceeds will be payable to K's estate if P dies within a specified time

What is the consideration given by an insurer in the Consideration clause of a life policy?

Promise to pay a death benefit to a named beneficiary

When an insured has the same disability within a specified time period and the insurance company provides the same benefits without a new waiting period, the second disability is covered under which of the following benefits?

Recurrent Disability

K failed to pay a renewal premium within the time granted by the insurer. K then sends in a payment which the insurer subsequently accepts. Which policy provision specifies that coverage may be restored in this situation?

Reinstatement

The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called:

Reinstatement

T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this?

Renewable

Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called

Representations

T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?

Request of the change will be refused

Which of the following is considered to be the time period after a Health Policy is issued, during which are provided for illness?

The Probationary Period

Who is liable when an insured suffers a loss on a policy sold by an agent through an insurer not authorized to conduct business in Texas?

The agent and the company

The Common Disaster clause provides that if both the insured and the sole named beneficiary were to die in a common accident, which of the following statements are TRUE?

This clause provides the payment proceeds to the insured's estate

The policy provision that entitles the insurer to establish conditions the insured must meet while a claim is pending is:

Time Limit on Certain Defenses

Which of the following benefits is NOT required under a group health plan for drug and alcohol treatment?

Transportation to and from a treatment facility

Which of the following is considered an element of a Variable Life Policy

Underlying equity investment

Life and health insurance policies are

Unilateral contracts. (Life and health insurance policies are considered unilateral contracts because one party makes a promise, and the other party can only accept by performance.)

At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit Reporting Act?

Upon completion of the application

R becomes disabled and owns an individual Disability Income policy. When is R eligible to receive disability benefits?

Upon satisfying the elimination period requirement

A Business Overhead Expense policy would cover which of the following if a business owner becomes disabled?

Utilities and office rent

A(n) _____ Life policy offers the owner investment in products such as money-market funds, long-term bonds and equities.

Variable Life Policy

A(n) _____ _____ Life policy combines investment choices with a form of Term coverage

Variable Universal

Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?

Variable Universal Life

A life policy that contains a monthly mortality charge as well as self-directed investment choices is called a(n)

Variable Universal Life policy

S owns a life insurance policy with cash values that fluctuate according to the underlying investment performance of common stocks. Which of these policies does S own?

Variable Whole Life insurance policy in which the cash values are determined by the performance of the underlying securities in the policy.

Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?

Variable life

When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take?

Void the policy only if it is discovered during the Contestable period and proven to be material

What is the primary factor that determines the benefits paid under a disability income policy?

Wages

The provision in a health policy that suspends premiums being paid to the insurer while the insured is disabled is called

Waiver of Premium

When does a life insurance contract become effective if the initial premium is not collected during the application process?

When producer deliveries policy and collects initial premium

At what point does a Whole Life insurance policy endow?

When the cash value equals the death benefit

An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?

When the conditions of the receipt are met

When is the face amount of a Whole Life policy paid?

When the insured dies or at the policy's maturity date, whichever happens first

What kind of life policy either pays the face value upon death of the insured or when the insured reaches age 100?

Whole life

A Return of Premium life insurance policy is:

Whole life and Increasing term

All students attending a large university could be covered by

a blanket policy

variable term

a term that contains a variable

B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of

additional Whole Life coverage at specified times

A contract where one party either accepts or rejects the terms of a contract written by another party is called a contract of

adhesion

To be eligible for Social Security disability, an employee must be unable to perform:

any occupation

Under a Graded Premium policy, the premiums

are lower during the policy's early years

When does a Guaranteed Insurability Rider allow the insured to buy additional coverage?

at future dates specified in the contract with no evidence of insurability required

Under an interest sensitive whole life policy

cash values are determined by interest rates

B the insurance agent tells his clients that their rights may be impaired if they fail to complete a release form within a given period of time. B may be found guilty of

coercion

The phrase "transacting business" includes

collecting premiums

A prospective insured completes and signs an application for health insurance but intentionally conceals information about a pre-existing heart condition. The company issues the policy. Two months later, the insured suffers a heart attack and submits a claim. While processing the claim, the company discovers the pre-existing condition. In this situation, the company will:

continue coverage but exclude the heart condition

An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be

converted to an individual permanent policy at an individual rate

A Business Overhead Expense policy

covers business expenses such as rent and utilities

What is the purpose of the U.S.A Patriot Act?

detect and deter terrorism". The purpose of the U.S.A. Patriot Act is to detect and deter terrorism.

An agent takes an individual Disability Income application, collects the appropriate premium, and issues the prospective insured a conditional receipt. The next step the insurance company will take is to

determine if the applicant is an acceptable risk by completing standard underwriting procedures

T purchased a $100,000 single premium, Straight Life annuity 5 years ago. He has received monthly payments since the inception of the annuity. If T dies, the insurance company

does NOT have to make any further payments. (with a straight life annuity, the insurer does not have to make further payments after the annuitant dies)

A variable insurance policy:

does not guarantee a return on its investment accounts

1035 exchange is for

exchanging your life insurance policy tax free. Can only be done once every 3 years

Health insurance benefits NOT covered due to an act of war are:

excluded by the insurer in the contract provisions

A(n) ___ contained in a life insurance policy states that the policy will NOT cover certain risks.

exclusion

Variable Life products require a producer to

hold a Life Insurance license and a Securities license

In Life insurance, the needs approach is used mostly to establish:

how much life insurance a client should apply for

The type of annuity that can be purchased with one monetary deposit is called a(n)

immediate annuity

T sends proof of loss to her insurer for an acceptable medical expense claim under her individual Health Insurance policy. Upon receipt, the insurer must pay the benefits

immediately

A 55 year old recently received a $30,000 distribution from a previous employer's 401k plan, minus $6,000 withholding. Which federal taxes apply if none of the funds were rolled over?

income taxes plus 10% penalty tax on $30,000: All withdrawals from a qualified retirement plan are taxable as current income. In addition, any withdraws made before age 59 1/2 is subject to an additional tax penalty of 10% of the amount withdrawn

If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of?

insured

The clause in an Accident and Health policy which defines the benefit amounts the insurer will pay is called the:

insuring clause

Quarterly premium payments increase the annual cost of insurance because

interest to the insurer is decreased while the administrative costs are increased

Which of these types of coverage is best described as a short term medical policy?

interim coverage

The Accidental Death and Dismemberment (AD&D) provision in a life insurance policy would pay additional benefits if the insured

is blinded in an accident

A license may be denied, suspended, or revoked if the license

is found guilty of misrepresentation in obtaining the license

Dividends paid from a life insurance policy are

issued by the insurer

Dental care coverage is designed to cover the costs of all of the following EXCEPT:

loss of income

During a sales presentation for a participating life insurance, policy, an agent MUST

make a prospect understand that dividends are NOT guaranteed

A disability Income policy that only the policyowner can terminate and which the rates will never go up is considered to be

noncancelable

When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld?

none

Which of the following is a valid reason for an enrollee be cancelled by a Health Maintenance Organization (HMO) plan?

nonpayment of coverage

In an individual retirement account (IRA), rollover contributions are

not limited by dollar amount

An accident policy will most likely pay a benefit for a(n)

off-the-job accident

Non Forfeiture Options

options available only to policy owner and only if there is cash value in the policy - Surrender for Cash - The amount of value that exceeds premium payment is taxable

An insurance agent has a fiduciary responsibility to all of the following EXCEPT

other agents

M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the

policy proceeds

The ____ is authorized to assign Life insurance policy collateral for a loan.

policyowner

Who has the right to change life insurance policy beneficiaries?

policyowner

Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?

policyowner (investor)

Domestic Society

political, economic, and other social processes within nation-states that provide inputs into decision making

A statement made by an insured in an insurance application that must be true to the best of one's knowledge and which becomes a part of the contract is known as

representation

An example of rebating would be

returning a portion of a premium as inducement to purchase insurance

What is the Suicide provision designed to do?

safeguard the insurer from an applicant who is contemplating suicide

Typically a life insurance death benefit is paid by a lump-sum payment. A(n) __________ option is a method of distributing a Life Insurance policy's death benefit OTHER than by a lump sum payment.

settlement

payment clause

states the manner in which payment is to be received and the currency in which it is made

Which of the following services is NOT included under hospitalization expense coverage?

surgical fees

The investment gains from a Universal Life Policy usually go towards

the cash value

The most important factor to consider when determining weather to convert term insurance at the insured's attained age or the insured's original age is:

the cost

A contract owner terminates an annuity before the income payment period begins. The owner will then receive

the current contact surrender value

The amount of coverage on a group credit life policy is limited to:

the insured's total loan value

Rebating

the practice of giving an individual a premium reduction or some other financial advantage not stated in the policy as an inducement to purchase the policy

Under a Renewable Term policy,

the renewal premium is calculated on the basis of the insured's attained age

The reason for backdating a policy is

to obtain a premium rate based on an earlier age

A Business Disability Buyout plan policy is designed:

to pay benefits to the Corporation or other shareholders

All of these are considered to be a benefit under Social Security, EXCEPT for:

unemployment

ABC insurance Company is actively engaging in boycott, coercion, and intimidation that results in the unreasonable restraints of trade. ABC is committing a prohibited act under Texas insurance laws covering

unfair methods of completion

When is the face amount paid under a Joint Life and Survivor policy?

upon death of the last insured

What does the ownership clause in a life insurance policy state?

who the policyowner is and what rights the policyowner is entitled to

Variable Universal Life

- Death Benefit is Variable & Adjustable - Two death benefit options - Premium is Flexible - Mortality Rates are current & guaranteed maximum - Cash Value is variable, and no Guarantee - Yes, investment options - Yes, partial surrenders

___ of personal life insurance premiums is usually deductible for federal income tax purposes.

0%: in general, personal life insurance premiums are NOT deductible for federal income tax purposes

G purchased a Family Income policy at age 40, The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income?

10 years

What is an organization that solicits insurance only to its members

Fraternal benefit society

Which of the following may NOT charge fees for insurance advise?

Legal reserve agents

Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it? -Modified whole life -20-Pay Life -Decreasing Term -Endowment

Decreasing term

P is self-employed and owns an Individual Disability Income policy. He becomes totally disabled on June 1 and receives $2,000 a month for the next 10 months. How much of this income is subject to federal income tax?

$0, disability income benefits that derive from an individual policy which was paid entirely by the policyowner is not subject to a federal income tax.

An insured owns an individual Disability Income policy with a 30-day Elimination Period for sickness and accidents and a monthly indemnity benefit of $500. If the insured is disabled for 3 1/2 months, what is the MAXIMUM amount he would receive for an approved claim?

$1,250 because 30-day elimination period. 2 1/2 months

Q is hospitalized for 3 days and receives a bill for $10,100. Q has a Major Medical policy with a $100 deductible and 80/20 coinsurance. How much will Q be responsible for paying on this claim?

$2,100

J has an Accidental Death and Dismemberment policy with a principal sum of $50,000. While trimming the hedges, J cuts off one of his fingers. What is the MAXIMUM J will receive from his policy?

$25,000

An insured covered by a group Major Medical plan is hospitalized after sustaining injuries that resulted from an automobile accident. Assuming the plan had a $1,000 deductible and an 80/20 Coinsurance clause, how much will the INSURED be responsible to pay with $11,000 in covered medical expenses?

$3,000 the insured is responsible for $1,000 deductible + 20% of the remaining bill = $3,000

B has a $100,000 Accidental Death and Dismemberment policy that pays triple indemnity for common carrier death. If B is killed from an accident on a commercial flight, what will the policy pay B's beneficiary?

$300,000

S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary?

$50,000

T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?

$50,000: The suicide occurred outside the Suicide clause period (normally 1-2 years), thus the face amount will be paid.

How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period?

Claims are denied under the Suicide clause of the policy

As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of?

Coercion

Which of these actions is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan?

Collateral assignment

On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his Doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take?

Collect initial premium along with a signed health statement

Which of the following organizations would make reimbursement payments directly to the insured individual for covered medical expenditures?

Commercial insurer

An Evidence of Coverage form may be issued by a Health Maintenance Organization (HMO) after being approved by the

Commissioner

Which of the following is NOT included in a life insurance illustration?

Company's mortality table

The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers (and their familiar) whose employment has been terminated the right to:

Continue group health benefits

Which of the following consists of an offer, acceptance, and consideration?

Contract

Insurance policies are offered on a "take it or leave it" basis, which make them:

Contracts of Adhesion

What type of group insurance plan involves employees sharing the cost?

Contributory plan

Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability?

Conversion privilege

When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?

Conversion provision

Which of the following statement about health coverage for newborns is NOT true?

Coverage is limited to only congenital defects

Which statement regarding Misstatements of Age provision is considered to be true?

Coverage will be adjusted to reflect the insured's true age if a misstatement of age us discovered

An insurance company receives E's application for an individual health policy. E did not complete all of the medical history questions because she could not remember the exact dates. E signed the policy and submitted it to the insurance company anyway. A few weeks later, E suffers a heart attack and is hospitalized without completing the medical history questions and paying the initial premium. E is not insured. Which of the following clauses details the conditions that E did not meet?

Entire Contract clause

Which of these statements is INCORRECT regarding the federal income tax treatment of life insurance?

Entire cash surrender value is taxable: the total cash surrender value is NOT taxable. The interest gain is taxable.

How often must an insurance agent license normally be renewed?

Every two years

Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE

Evidence of insurability is required when the option is exercised

N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot?

Exclusion: are specified hazards listed in a policy for which benefits will not be paid.

The sections of an insurance contract which limit coverage are called:

Exclusions

An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the

Fair Credit Reporting Act

What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?

Family Maintenance Policy

What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years?

Family Maintenance Policy

Which of these is NOT a source of funding for Social Security benefits?

Federal Government

Which of these is NOT a reason for purchasing life on the life of a minor?

If both parents were to die, it would provide death benefits to the child

In regards to representations or warranties, which of these statements is TRUE?

If material to the risk, false representations will void a policy

How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy?

If the primary dies beneficiary dies before the insured

When must insurable interest exist for a life insurance contract to be valid?

Inception of the contract

indexed annuity

Insurance product offering a minimum guaranteed rate of return and some participation in an underlying index usually the S&P 500

The ___ clause identifies which losses resulting from an accident or sickness are insured by the policy.

Insuring clause

A policyowner would like to change the beneficiary on a Life insurance policy and make the change permanent. Which type of designation would fulfill this need?

Irrevocable

A policyowner's rights are limited under which beneficiary designation?

Irrevocable

What is the purpose of a Policy Summary?

It highlights the critical parts of the policy issued

What type of life policy covers 2 lives and pays the face amount after the first one dies?

Joint Life Policy

K's whole life insurance policy lapsed two months ago due to nonpayment. She would now like to reinstate the policy. All of these statements are correct about the policy's reinstatement EXCEPT

K will forfeit the right to use automatic loan provision upon reinstatement

K, age 45, and his wife, age 43, have three children. They purchase a Family Policy that covers K's wife to age 65. All of these situations will pay a death benefit EXCEPT

K's wife dies at age 66

When advertising, an insurance company MUST use its

Legal corporate name

A(n) _ beneficiary may be changed by the policyowner WITHOUT the consent of the beneficiary.

Revocable

M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son?

Revocable

Which of the following is NOT a required provision in a group life policies?

Right to Loan

Which of these is NOT an example of doing insurance business?

Selling shares and stock

Which of the following statements BEST describes dental care indemnity coverage?

Services are reimbursed after insures receives the invoice

P is an employee who quits her job and wants to convert her group health coverage to an individual policy. After the expiration of COBRA laws, which of the following statements is TRUE?

She DOES need to provide evidence of insurability: this only applied during the COBRA period. Once COBRA laws expire, enrollment in an individual policy requires evidence of insurability .

P 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 mode of payment is NOT used by health insurance policies?

Single premium

The percentage of an individual's Primary Insurance Amount (PIA) determines the benefits paid in which of the following programs?

Social Security Disability Income

Why must an insurance applicant answer all questions on the application?

Statements and representation on the application are part of the consideration for issuing a policy

What should an insured do if the insurer does not send claims forms within the time period set forth in a health policy's Claims Forms provision?

Submit the claim in any form

Which of the following statements about accumulated interest earned on dividends from an insurance policy is true?

Taxed as ordinary income

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.

What is the underlying concept regarding level premiums?

The early years are charged more than what is needed

Which statement is TRUE regarding a group accident & health policy issued to an employer.

The employer receives the policy and each employee is issued a certificate

Upon policy delivery, a signed good health statement is requested from the applicant. Why would this be necessary?

The initial premium was NOT submitted with the application

Why would the Insurance Commissioner examine the records of an insurance company?

The insurance commissioner may examine the records of an insurance company in order to determine the SOLVENCY of the company

G is involved in an automobile accident as a result of driving while intoxicated and suffers numerous injuries. According to the Intoxicants and Narcotics exclusion in G's policy, who is responsible for paying the medical bills?

The insured

J, an Accidental Death and Dismemberment (AD&D) policy holder, dies after injuries sustained in an accident. J's age as stated on the application five years ago was found to be understated by ten years. Which of the following actions will the insurance company take?

The insurer will adjust the benefit to what the premiums would have purchased at the insured's actual age

T was insured under an individual Disability Income policy and was severely burned in a fire. As a result, T became totally disabled. The insurer began making monthly benefit payments, but later discovered that the fire was set by T in what was described as arson. What actions will the insurer take?

The insurer will rescind the policy, deny the claim, and recover all payments made.

T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?

The mother receives $0 because T is still alive and the sole primary beneficiary, while the mother is still the contingent beneficiary

dividend

The portion of corporate profits paid out to stockholders

A Medicare Supplement policy may be cancelled for which of the following reasons?

The premium has not been paid by the insured

A Medicare supplement policy may be cancelled for which of the following reasons?

The premium has not been paid by the insured

All of these statements about Equity Indexed Life Insurance are correct EXCEPT

The premiums can be lowered or raised, based on investment performance

What is the basic function of an annuity?

The systematic liquidation of accumulated funds