Final Exam

Under which of the following circumstances will the benefits under COBRA continuation coverage end?

All group health plans are terminated by the employer

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

Which of the following is the best description of 'insurer'?

Any person, corporation, association, or society that writes insurance contracts

Which of the following is the MOST important factor when deciding how much Disability Income coverage an applicant should purchase?

Applicant's monthly income

Which of the following medical expenses does Cancer insurance NOT cover?

Arthritis

When does a Probationary Period provision become effective in a health insurance contract?

At the policy's inception

According to Florida law, when must an agent deliver the Outline of Coverage to a Medicare Supplement applicant?

At the time of application

T is an agent and when hired, is reminded that he has a responsibility to handle clients' funds in an honest and ethical manner. This responsibility is referred to as

fiduciary responsibility

M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect, EXCEPT:

free-look period has expired

With Disability Income insurance, an insurance company may limit the monthly benefit amount a prospective policy holder may obtain because of the insured's:

gross income at the time of purchase

Basic Medical Expense insurance:

has lower benefit limits than Major Medical insurance

T applied for a Disability Income policy and has a history of back injuries. The insurer issued the policy with a statement that excludes coverage for back injuries. This statement is called a(n)

impairment rider

When determining the monthly benefit amount for a Disability Income policy, the factor that limits the amount a prospective insured may purchase is:

income

When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have:

insurable interest in the proposed insured

A policyowner would like to change the beneficiary on an Accidental Death and Dismemberment (AD&D) insurance policy and make the change permanent. Which type of designation would fulfill this need?

irrevocable

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

Credit Life insurance is:

issued in an amount not to exceed the amount of the loan

Who is a mutual insurance company owned by?

its policyholders

With a medical discount plan, how often would a person generally pay a fee to get discounts on specific services?

monthly

An example of unfair discrimination would be

offering different premiums for individuals of the same risk classification

An immediate annuity consists of a:

single premium

Which of the following types of care is typically not covered in a Long-Term Care policy?

Acupuncture

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?

$1,000 deductible + 20% of Remaining bill

In Florida, monthly-premium health insurance policies must provide a grace period of at least

10 days

Florida requires that coverage for newborns begins "from the moment of birth" and continues for

18 months

What is the MINIMUM number of Activities of Daily Living (ADL) an insured must be unable to perform to qualify for Long Term Care benefits?

2

Within how many days after policy delivery can a Medicare Supplement policy be returned for a 100% premium refund?

30

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

J's Major Medical policy has a $2,000 deductible and an 80/20 Coinsurance clause. If J is hospitalized and receives a bill for $10,000, J would pay:

3600

Max amount of controlled business

50%

The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n):

Accidental Death and Dismemberment (AD&D) rider

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

Accumulation at Interest

Disability policies do NOT normally pay for disabilities arising from which of the following?

Act of war

All of the following are Nonforfeiture Options EXCEPT

Automatic Premium Loan Option

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

Benefit payments start with one payment period of purchase

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

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

Cash value provision

P is a Major Medical policyowner who is hospitalized as a result of injuries sustained from participating in a carjacking. How will the insurer most likely handle this claim?

Claim will be denied

Which of the following types of organizations are prepaid group health plans, where members pay in advance for the services of participating physicians and hospitals that have agreements?

HMO

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 the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy?

Complete the application and Review the information with the customer prior to obtaining the customers signature, then send the application off to the insurance company

All of the following are eligibility requirements for an association group EXCEPT

Contributory plans require a minimum of 25 participants

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

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

P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase?

Deferred

In Florida, which employee is eligible for an employer's group term life plan?

Employee who works more than 40 hours per week

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

Joint Life Policy

Which of these statements describe a Modified Endowment Contract (MEC)?

Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract

A life insurance application may be rejected on the basis of all of these factors EXCEPT

Gender

Which type of renewability best describes a Disability Income policy that covers an individual until the age of 65, but the insurer has the right to change the premium rate for the overall risk class?

Guaranteed REnewable

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

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

Who has the option to renew a Renewable Term policy?

Insured

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

Insuring clause

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 the automatic loan provision upon reinstatement

Which of the following situations does a Critical Illness plan cover?

Leukemia

If an agent would like to sell Variable annuities, which state examination must the agent pass?

Life and Variable COntracts

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

Medicaid

Which of these life products is NOT considered interest-sensitive?

Modified While Life

J has a Disability Income policy that does NOT provide benefits for losses occurring as the result of his employment. What kind of coverage is this?

Nonoccupational coverage

In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy?

Owner's Rights

Which of these statements is INCORRECT regarding a Preferred Provider Organization (PPO)?

PPO's are NOT a type of managed care systems

Which statement is TRUE in regards to a policy loan?

Past-due interest on a policy loan is added to the total debt

Which of these factors does NOT influence an applicant's need for life insurance?

Self-maintenance expenses

A prepaid application for individual Disability Income insurance was recently submitted to an insurer. When the insurer received the Medical Information Bureau (MIB) report, the report showed that the applicant had suffered a stroke 18 months ago, something that was not disclosed on the application. Which of the following actions would the insurance company NOT take?

Send a notice to the MIB that the applicant was declined

T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase?

Ten-Year Endowment

A(n) _____ rider may be used to include coverage for children under their parents' life insurance policy.

Term

Which of the following factors is NOT considered when the Department of Financial Services determines if an agent's home is an insurance agency?

The amount of premium collected at this location

Which statement regarding a Key Employee Life policy is NOT true?

The beneficiary is named to be the key employee

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 paid would have purchased at the insured's actual age

Which of the following MUST be included in a Medicare Supplement policy's Outline of Coverage?

The policy's limitations and exceptions

Medicare is intended for all of the following groups, EXCEPT:

Those enrolled as a full-time student

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

Why is an applicant's signature required on a life insurance application?

To attest that the statements on the application are accurate to the best of the applicant's knowledge

A person insured under a health policy is required to give the insurance company a Notice of Claim within how many days after a covered loss?

Twenty

J is an agent who has induced an insured through misrepresentation to surrender an existing insurance policy. What is J guilty of?

Twisting

In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?

Unilateral

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

The provision in a Group Health policy that allows the insurer to postpone coverage for a covered illness 30 days after the policy's effective date is referred to as the:

Waiting Period

Which parts of a life insurance policy are guaranteed to be true?

Warranty

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

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:

a representation

T cash surrenders a recently-issued whole life policy. He also requests that the proceeds be payable to an unrelated third party. T would likely be red-flagged for violation of

anti-money laundering rules

Group/voluntary long-term care policy premiums are typically deducted from the employee's income and,

are less costly as compared to individual long term care coverage

Under a Graded Premium policy, the premiums

are lower during the policy's early years

The coordination of benefits (COB) provision exists in order to

avoid duplication of benefit payments

Variable Whole Life Insurance can be described as:

both an insurance and securities product

An individual covered under a Group Life insurance policy is considered to be a(n)

certificate holder

The policy summary contains specific information on all of the following, EXCEPT:

commission

T is given a receipt after completing a life insurance application and paying the initial premium. Under this situation, T's coverage is

conditional, depending ont he insurer's underwriting guidelines

D the agent met with a prospect and ended up selling an insurance policy. While filling out the insurance application, D makes a mistake. In this situation, D MUST

correct the information and have the prospect initial the change

A(n) __________ term life policy is normally used when covering an insured's mortgage balance.

decreasing

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

exclusion

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

exclusions

If a policyowner does not pay the premium by the due date, the

policyowner can make the premium payment during the grace period

What is the Suicide provision designed to do?

safeguard the insurer from an applicant who is contemplating suicide

The premiums paid by an employer for his employee's group life insurance are usually considered to be:

tax-deductible to the employer

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

the cost

According to Florida's life insurance replacement laws, a policyowner must be provided with a written Comparison and Summary Statement when it's requested by

the policyowner

The free-look provision begins

upon receipt of the policy by the policyowner

Term Life Policies that have the ability to be converted to permanent coverage may do so during a specific time period. This conversion period

varies according to the contract