Final practice exam
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following terms best describes what the insurer has violated?
Consideration
The entire contract includes one of the following
The Life Insurance Policy
Which of the following statements is correct?
HMOs may pay for services not covered by Medicare such as prescriptions or eye exams.
A projection of insurance needs that is based upon the capitalization of an applicant's future earnings is
Human Life value approach
When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?
Fixed amount
How long will a life annuity with an installment refund pay?
Until the balance of the initial premium is paid out in continued payments to the beneficiary after the annuitant dies.
Carol is insured under her employer's group life insurance plan at her place of employment. which of the following statements is true
Carol would not need to prove insurability for a conversion policy, Of carol quits, she may, within 31 days, request that her coverage be converted to an individual policy
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash option
Mortality-Interest+Expense=
Gross premium
Which one of the following services will be provided by HMO?
Inpatient hospital care outside the service area
Elaine's Basic Hospital Expense policy has a $500 per day limit for room and board in a hospital for a maximum of 5 days. Elaine's for sick and had to spend 3 days in the hospital at $650 a day. How much will Elaine have to pay to cover the rest of her room and board charges?
$450
When a corporation has a legal agreement where the corporation bus out the stock of a decreased stock holder, it is called
A stock redemption plan
When a corporation has a legal agreement where the corporation buys out the stock of a deceased stock holder, it is called
A stock redemption plan
Premiums paid into a variable annuity purchase which of the following?
Accumulation Units
What type of insurer uses a formal sharing agreement?
Reciprocal Insurers
Which of the following is true regarding the annuitant?
The annuitant can be the same person as the annuity owner.
How long does the law require an agent to maintain records of transactions pertaining to premium payments?
5 years
Which of the following provisions would prevent an insurance company from paying a reimbursement claim to someone other than the policyowner?
Proof of Loss
The purpose of the Fair Crediting Act is to
Protect consumers against the circulation of inaccurate or obsolete information
An employee's job is terminated. How long will the employee be covered under the employer's life insurance policy thru COBRA?
0 months
How long is the grace period for an individual life policy?
1 month
In some cases in order for an insurer to legally disclose privileged information to appropriate sources the insured must sign an authorization form. What is the maximum amount of time that can legally pass between the completion of the form and the disclosure of information?
1 year
With respect to a Variable Annuity, when is the number of annuity units determined?
At the time of the initial payout.
Which of the following describes relationship between a capital sum and a principal sum?
Capital sums are percentages of principal sums
Which type of authority given in writing to the agent in the contract of the agency?
Express
Which nonforfeiture option has the highest amount of insurance protection?
Extended Term
An agent is trying to convince a potential insured to buy a policy from him, so he misrepresents the benefits of the policy. This is an example of
Fraud
Which of the following types of insurance companies is an incorporated insurer without capital stock or shares?
Mutual
In a defined contribution plan,
The contribution is known and the benefit is unknown
According to the life insurance replacement regulations, replacement of life insurance is defined as a process in which
An ordinary life policy is converted to a universal life policy
When applying for an individual life insurance policy, an applicant states that he went to the doctor for nausea, but fails to mention that he was also having severe chest pains. What is this act called?
Fraud
What insurance concept is associated with the words "Weiss and 'Fitch'?
Guides describing company financial integrity
Which of the following statements is correct concerning Medicare part B coverage?
Participants are responsible for an annual deductible, part B will pay 80% of covered expenses, subject to Medicare's standards
All of the following would be considered an insurance transaction
-Soliciting a policy -Advising a policyholder regarding a claim -Inducing a customer
An employee is insured by a group major medical plan that is provided through her employer. The employer contributes 75% of the premium and the employee contributes the remaining 25%. If the insured received a benefit from this policy in the amount of $1,000, how much of this benefit would be taxed as income?
$0
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. What would be the face value of the new term policy?
$50,000
Lyle has a $10,000 term life policy. He paid his annual premium on February 1. Lyle fails to renew the policy and dies on February 28 of the following year. Accounting for the $200 of earned premium, how much will the beneficiary receive from Lyle's insurance company?
$9,800
All of the following are considered to be supplemental benefits under an HMO plan
-Prescription drugs -Long-term care -Mental health care
Which of the following would benefit the most from a straight life immediate annuity
A 60-year old man who needs as much retirement income as possible
Which of the following is not necessary for a producer who is actively selling variable annuities?
A professional designation
In reference to the standard Medicare Supplement benefits plans, what does the term standard mean?
All providers will have the same coverage options and conditions for each plan.
Which of the following pays a beneficiary a death benefit that is double or triple the face amount of the insured's death was caused by an accident as defined in the policy?
An accidental death rider
Which type of authority is based on the actions, words, or deeds of the principal?
Apparent
Sometimes an HMO will pay a medical group a fee for a fixed monthly amount per member of the HMO. What is the name of this fee?
Capitation
An agent delivers a policy to an applicant, who pays the initial premium but refuses to submit a Statement of Good Health. Which of the following best describes what the applicant has violated?
Consideration
The rider that may be added to a Disability Income policy that allows for an increase in the benefit amount under certain conditions is called
Cost of Living (COLA)
Which of the following losses would likely be covered under the accidental death rider?
Death caused by a head on collision
In Florida, retirement plans are regulated by
Employee Retirement Income Security Act of 1974 (ERISA).
Which of the following is one of the categories of basic health coverage?
Disability income Insurance
All else being equal, which of the following would be considered unfair discrimination by insurers?
Discriminating in benefits and coverages based on the insured's habits and lifestyle
The entity within the Office of Insurance Regulation responsible for oversight of policy forms and rates, market conduct performance and new company entrants to the Florida market, is the
Division of Insurer Services
Which of the following is an example of a non-qualified retirement plan?
Executive bonus plan
A Universal Life Insurance policy is best described as
Flexible Premium Variable Life policy
In what class of life insurance are individual life insurance policies issued to members of a group, with an employee or other body collecting our remitting the premiums to the insurer?
Franchise insurance
According to the fair credit reporting act, all of the following statements are true EXCEPT
If an applicant is declined for an insurance policy, he/she had no right to know what is in the report
When would a 20‐pay whole life policy endow?
In 20 years
Which of the following best describes the difference between joint life and joint and survivor annuity payment options?
In joint life option, the benefits stop after the first death
What type of annuity guarantees to pay an income to the annuitant each year as long as he lives, and upon death, the annuity will refund the remaining payments to a beneficiary?
Installment refund annuity
Under which of the following types of receipts will the coverage begin immediately even if the applicant is later found uninsurable?
Insurability Conditional
Which of the following best describes a Major Medical Expense policy?
It provides catastrophic medical coverage beyond basic benefits on a usual, customary and reasonable basis
Ray's HMO operates as an open-panel medical group. This means
It provides services to HMO members and to other's nonmember patients
A married couple owns a permanent policy which covers both of their lives and pays the face amount of the policy only upon the death of the first. Which policy is that?
Joint Life Policy
A married couple owns a permanent policy which covers both of their lives and pays the face amount of the policy only upon the death of the first. Which policy is that?
Joint Life Policy.
Premium payments for personally‐owned disability income policies are
Not tax deductible
Which of the following allows the dividend to be used to pay up policy premiums sooner than originally planned?
Paid-up insurance option.
In a group life policy with a death benefit of more than $50,000
Premium cost above $50,000 is taxable as income to the employee
Are IRAs and Profit -Sharing plans Qualified or Nonqualified Plans?
Qualified Plans
Which of the following would make a child over the age of 5 INELIGIBLE for Florida Healthy Kids Coverage?
Qualifying for Medicaid
Todd has been informed that he has a hernia which requires repair. When Todd researches the cost, he learns that his insurance plan will cover 200 points worth of surgical expenses. each point represents $10. Which means that $2,000 of his surgery will be covered by his insurance plan. What system is Todd's insurance company using?
Relative value
An insured had a heart a attack while jogging, but is expected to return to work in approximately 6 weeks. The insured's Disability Income policy will
Replace a percentage of his lost income
When Ted purchased a health insurance policy with a large deductible, other than transfer, what risk management technique was he practicing?
Retention
Without creating a formal corporate insurance structure, what could a group of individuals form to help share their losses?
Risk‐sharing pool
Upon policy delivery, the agent must make sure that all of the following are obtained from the applicant EXCEPT
Signed waiver of premium
If a basic medical insurance plan's benefits are exhausted, what type of plan will then begin covering those losses?
Supplementary major medical
Which of the following types of insurance products would be appropriate for an individual with a low income and high insurance needs?
Term Insurance
Peril is most really defined as
The cause is loss insured against
Which of the following is true regarding closed panel HMOs
These HMOs have greater control over costs than open panel HMOs
How long will a life annuity with an installment refund pay?
Until the balance of the initial premium is paid out in a lump sum to the beneficiary after the annuitant dies
Under which of the following types of receipts will the coverage begin immediately even if the applicant is later found uninsurable?
Unconditional
Which of the following provisions says that if the insured and the beneficiary are in the same accident and the beneficiary dies within the 30 days following the insured, the proceeds will go to the insured's estate if no contingent was named?
Uniform Simultaneous Death with a Common Disaster provision
Core benefits are included in all Medicare supplemental policies. What percentage of Part B coinsurance is required?
20%
Every time an agent makes an insurance transaction that relates to premium payments, related records must be kept for
3 years
Concerning the Family Protection Policy, all of the following statements, which one is true
This type of policy consists of whole life on the base insured and riders on the others
A viatical settlement contract will contain all of the following
-An agreement to transfer ownership -An agreement to change the beneficiary designation -The terms under which the viatical settlement provider will pay compensation
An elimination (waiting) period may NOT have to be satisfied for a disability in which of the following
An insured suffers a relapse of a prior disability within 6-months of the initial covered disability
Which option allows the insurer to retain policy proceeds and pay interest on the proceeds to the beneficiary at regular intervals, with guaranteed interest rates?
Interest Only
An applicant who knowingly fails to communicate a fact that would help an underwriter make a sound decision regarding coverage is guilty of
Misrepresentation
What is the purpose of the gatekeeper in an HMO?
Controlling costs
Which statement best describes agreement as it relates to insurance contracts?
One party accepts the exact terms of the other party's offer
An insured wants to cancel her health insurance policy. Which portion of the contract would explain cancellation rights?
Renewal Provision
Which of the following determines the length of time that benefits will be received under the Fixed Amount settlement option?
Amount of interest.
Who can make fully deductible contribution to a traditional IRA?
An individual not covered by an employer-sponsored plan whose earned income is below a required limit
Which of the following statements concerning buy-sell agreements is true?
Buy-Sell agreements pay in the event of a medical emergency.
An insurer recently collected information from a senior consumer, and used that information to make recommendations regarding insurance transactions. For how many years must this information be maintained after the transaction has been completed?
3 years
If the consumer requests additional information concerning an Investigative Consumer Report, how long does the insurer or reporting agency have to comply?
5 days
The Florida Employee Health Care Access Act defines a small employer as an employer with no more than employees
50
When John's wife died he started receiving benefits on a fixed amount of his choice. He was told that he would receive payments of this amount until the proceeds are gone and that, if he should die, the contingent beneficiary would receive the rest of the payments at the same amount. What settlement option did John use?
Fixed amount
Are Section 162 executive bonus plans and Split-dollar insurance arrangements Qualified or Nonqualified Plans?
Nonqualified Plans
Peril is most easily defined as
The cause of loss insured against
When is the company responsible for actions of its agents?
Whenever the agent is acting within the conditions of the contract
An insurer issued a binding receipt for 60 days to an applicant for a life insurance policy. The applicant was killed in an accident 10 days after the binding receipt was issued. Thirty days late after the underwriting process, the insurer declined the application for coverage. Will the insurance company be required to pay the death benefit?
Yes, a binding receipt guarantees acceptance of the insured application
In order to perform the functions of a viatical settlement broker, a life insurance agent must meet at least one of the following situations
Use an approved viatical settlement contract
When a replacement is involved, a replacing insurance company is responsible for all of the following
-Include a policy summary on the proposed life insurance in the communication with the existing company -Obtain from the producer a list of the applicants life insurance or annuity contracts to be replaced -Send the existing insurance company a written notice of replacement
An insured is issued a life insurance policy in Florida and wishes to return it for a refund. How many days doe the insured have for such action?
14
What is called when a doctor accepts the Medicare approved amount?
Assignment
If am applicant submits the initial premium with an application, which action constitutes acceptance?
The underwriters approve the application
All of the following statements concerning dividends are true except
Dividend amounts are guaranteed in the policy
What is necessary in order to be eligible to receive benefits from a long-term care policy?
The insured must be unable to perform some activities of daily living
Which of the following is TRUE regarding a deferred annuity?
-The annuity grows tax deffered -It is used to accumulate funds for retirement -It can be purchased with a single lump sum
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will take place?
3 days
Which of the following is an accurate comparison between network and group HMO models?
Network models contract with more medical groups than the group models
Which of the following is a component of an Insurance policy premium?
Mortality cost
Authority not specifically granted to the agent in the contract of an agency, but which common sense dictates the agent has. It enables the agent to carry out routine responsibilities
Implied authority
In which type of HMO model are physicians actually paid employees of the HMO, practicing in the HMOs own facility?
Staff
Together with the completed application, the premium made by the applicant and accepted by the insurer is known as
the consideration
Which of the following is one of the categories of basic health coverage?
Accidental Death and Dismemberment insurance
An applicant who knowingly fails to communicate a fact that would help an underwriter make a sound decision regarding coverage is guilty of
Misrepresentation.
Cash values guarantees in a whole life policy are called
Nonforfeiture values
When classifying a risk, the underwriting department will look at the applicant's past medical history, present physical condition, occupation, habits and morals. The applicant can be given which of the following classifications?
Standard
An agent's appointment has been denied. Which of the following is true?
State taxes may be refunded upon a written request
All of the following statements concerning Waiver of Premium riders are correct
There is a maximum age limit for the Waiver of Premium rider to activate, Waiver of premium riders require that disablement needs to last for a certain period of time
Waiver of cost rider is found in what type of insurance?
Whole Life
All of the following are true of a non-qualified deferred compensation plan EXCEPT
It is a contractual agreement whereby the employees agrees to defer receipt of a portion of his compensation until retirement, disability, or death
Under an individual policy, the MINIMUM schedule of time in which claim payments must be made to an insured is
Monthly
In the state of Florida, adjustable rates for life insurance policy loans are based on
Moody's Corporate bond index.
What is the benefit of experience rating?
helps employers with low claims experience because they get lower premiums