Final XCEL Study guide
An insured may assign up to _ of policy ownership under an individual life insurance policy
100%
Under the USA Patriot act, insurers are required to report receipt of cash paymenta in excess of:
$10,000
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
An employee is covered under a company group life plan with a $50,000 death benefit. What is the MAXIMUM amount a spouse may be insured for under this program?
$25,000
An example of false advertising would be *Paid testimonials from celebrity endorsements *An insurer exaggerating its dividends in a magazine advertisement *An agent spending more than $25 on marketing gifts for a client *An insurer advertising in an insurance trade journal
*An insurer exaggerating its dividends in a magazine advertisement (An insurance company may be judged guilty of false advertising if it exaggerates its dividends in a magazine advertisement.)
Which Unfair Trade Practice involves an agent telling a prospective client that a policy's dividends are guaranteed? *Coercion *Fraud *Misrepresentation *Sliding
*Misrepresentation (An agent who tells a client that dividends are guaranteed may be guilty of misrepresentation.)
What is the MINIMUM benefit period that must be offered by a long-term care policy?
12 months/ one year
An insurer must provide an insured with claim forms within __ days after receiving notice of a loss.
15 days
In Texas, how long must a policy be in force before an insurance company has to pay the death benefits for suicide?
2 years
Insurers may request a hearing with ___ if their policy is rejected
20 days
A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?
20-Pay Life accumulates cash value faster than Straight Life
A new agent must complete ______ hours of continuing education every ______ year(s).
24
How long is a typical free look period for Long Term care insurance policies?
30 days
The insurance companies must give how many days notice prior to holding a hearing regarding an agents unfair or deceptive practice
30 days
In Texas, an individual life insurance policy is required to have a grace period of
31 days
What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan?
50%
A temporary agent's license issued by the commissioner of insurance is valid for up to _ days.
90 days
If X wants to buy $50,000 worth of permanent protection on his/her spouse and $25,000 worth of 10-year Term coverage on X under the same policy, the applicant should purchase
A Whole Life Policy with an Other Insured Rider
What is Medicare?
A hospital and medical expenses insurance program
Which of the following statements describes what an accident and health policyowner may NOT do?
Adjust the premium payments
Under which of the following circumstances will the benefits under COBRA continuation coverage end?
All group health plans are terminated by the employer
An annuity promises that, if the annuitant dies before receiving payments equal to the correct value, the payments will be continued to a beneficiary until an amount equal to the contract value has been paid. This type of annuity is called
An installment Refund annuity
A plan through the marketplace may be purchased by
Any legal resident (expect those imprisoned)
Before a life insurance policy is issued, which of these components of the contract is required?
Applicant's signature on application
Which of the following is a requirement for obtaining a Texas insurance agent's license
Be honest, trustworthy and reliable
A policy loan is made possible by which of these life insurance policy features?
Cash value provision
What an insured changes to a more hazardous occupation, which disability policy provision allows an insurer to adjust policy benefits and rates?
Change of occupantion 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
B the insurance agent tells his clients that their rights may be impaired if they fail to complete a release form within a given amount of time. B may be found guilty of
Coercion
Which of the following organizations would make reimbursement payments directly to the insured individual for covered medical expenditure
Commercial insurer
An evidence of coverage form may be issued by HMO after being approved by the
Commissioner
This type of deductible provision states that should more than one family member be involved in a common accident, or suffer the same illness, only one individual deductible amount shall be applied
Common accident deductible
Insurance policies are offered on a "take it or leave it" basis, which makes them:
Contracts of Adhesion
What kind of life insurance starts out as a temporary coverage but can be later modified to permanent coverage without evidence of insurability?
Convertible Term
Which of the following BEST describes a Hospital Indemnity policy
Coverage that pays a stated amount per day of a covered hospitalization
Business Overhead Expense policy
Covers business expenses such as rent and utilities
Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?
Decreasing term
Which of the following statements does NOT accurately describes the tax treatment of premiums and benefits of individual accident and health insurance?
Disability income policy premiums are tax deductible
Two partners own equal shares in a business worth a total of $1,000,000. If they both commit to the purchase of a life insurance policy that will fund a Buy-Sell Agreement, which of the following is TRUE?
Each partner owns a $500,000 policy on their partner's life
Which of the following is NOT included in the policy face?
Exclusions
Which Federal law allows an insurer to obtain an inspection report on a potential insured?
Fair Credit Reporting Act
After an insured gives notice of loss, what must he/she do if the insurer does not furnish forms?
File written proof of loss
An insurance company organized under New York Laws and licensed to do business in Texas is considered a(n)
Foreign company
With Accidental Death and Dismemberment policies, what is the purpose of the Grace Period?
Gives the policyowner additional time to pay overdue premiums
How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy?
If the primary beneficiary dies before the insured
T owns an Accident & Health policy and notifies her insurance company that she has chosen a less hazardous occupation. Under the Change of Occupation provision, which of the following actions may her insurance company take?
Increase her policy's coverage amount
How does an indexed annuity different from a fixed annuity?
Indexed annuity owners receive credited interest tied to the fluctuations of the linked index
What is being delivered during a policy delivery?
Insurance contract to the proposed insured
Credit Life Insurance
Insurance issued on a debtor to cover outstanding loan balance
Variable Annuities may invest premiums in each of the following, EXCEPT
Insurer's corporate business account
In a life insurance contract, an insurance company's promise to stated benefits is called the:
Insuring clause
The clause in an Accident and Health policy which defines the benefit amounts the insurer will pay is called the
Insuring clause
When advertising, a insurance company must us it's
Legal corporate name
Which of these would be considered a limited-pay life policy?
Life Paid-Up at Age 70
Which of these is NOT relevant when determining the amount of personal life insurance needed?
Local unemployment rate
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
A policyowner's rights are limited under which beneficiary designation?
irrevocable
an applicant MUST receive an Outline of Coverage when an application is taken for a(n)
Medical Supplenent policy
Which of the following is NOT managed care organizations?
Medical insurance bureau (MIB)
Which of these is NOT considered to be an element of the insurance contract?
Negotiating
Which of the following is a valid reason for an enrollee to be cancelled by a HMO plan?
Non payment of coverage
A Medicare Supplement policy may be cancelled for which of the following reasons?
Non-payment of premium
Which statement regarding the change of beneficiary provision is TRUE?
The policyowner can change the beneficiary
Which statement is true regarding a minor beneficiary?
Normally, a guardian is required to be appointed in the Beneficiary clause of the contract
Generally, how long is a benefit period for a Major Medical Expense Plan?
One year
Which of these is considered a mandatory provision
Payment of Claims
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?
Policyowner
Which Long Term Care insurance statement is true?
Pre-existing conditions must be covered after the coverage has been in force for six months
How does group insurance differ from individual insurance?
Premiums are lower
Which of these statements accurately describes the Wavier of premium provision in the accident and health policy?
Premiums are waived after the insured has been totally disabled for a specific amount of time
What is considered to be a characteristic of a Conditionally Renewable Heath Insurance policy
Premiums may increase at time of renewal
A medical information report (MIB) may disclose which of the following:
Prior use of Marjuana
An insured covered by accidental death and Dismemberment insurance just died. What will happen if the primary beneficiary had already died before the insured and contingent beneficiary
Proceeds will go the the contingent beneficiary
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?
Recurrent Disability
R had received full disability income benefits for 6 months. When he returns to work, he is only able to resume half his normal daily workload. Which provision pays reduced benefits to R while he is not working at full capacity?
Residual disability
Post-tax dollar contributions are found in
Roth IRA investments
Which of these is NOT an example of doing insurance business?
Selling shares of stock
To terminate an agent's appointment, an insurance company msut
Send a termination notice to the TDI
The insuring clause
States the scope and limits of the coverage
Which of the following statements is correct about an agent who is taking an insurance application?
The agent should have the applicant initial any changes made on the application
On delivery of a policy, a signed statement of good health is typically requested if:
The application was submitted without the initial premium
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
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
How does a typical Variable Life Policy investment account grow?
Through mutual funds, stocks, bonds
Which of the following benefits is NOT required under a group health plan for drugs and alcohol treatment?
Transportation to and from a treatment facility
Which of these types of life insurance allows the policyowner to have level premium and to also choose from a selection of investment options?
Variable life
What is required for an agent whose license has been revoked?
Wait at least five years before applying for a new license
A foreign insurance company conducting insurance business in Texas
Was formed under the laws of another state.
What does the ownership clause in a life insurance policy state?
Who the policyowner is and what rights the policyowner is entitled to
A Return of Premium life insurance policy is:
Whole life and Increasing term
Q would like to purchase $100,000 of permanent protection on his wife and $50,000 of Term coverage on himself under the same policy. What kind of policy should Q purchase?
Whole life policy with other insured rider
When can a policyowner change a revocable beneficiary?
anytime
Which of the following medical expenses does Cancer insurance NOT cover?
arthritis
Variable Whole Life Insurance can be described as
both an insurance and securities product
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
Insurance contracts are known as _ because certain future conditions or acts must occur before any claims can be paid.
conditional
K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used?
conditional
What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability?
conversion
Under a trustee group life policy, who would be eligible for a certificate of coverage?
employee
Non-occupational disability coverage is designed for:
employees who suffer non-work related disabilities, since work-related disabilities are covered by Workers' Compensation
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
Taking receipt of premiums and holding them for the insurance company is an example of
fiduciary responsibility
The reason for a business having a Business Overhead Expense Disability Plan is to cover
fixed business expenses
J is a subscriber to a plan which contracts with doctors and hospitals to provide medical benefits at a preset price. What type of plan does J belong to?
health maintenance organization
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 policy of adhesion can only be modified by whom?
insurance company
A renewable term policy is renewable at the option of the:
insured
Quarterly premium payments increase the annual cost of insurance because
interest to the insurer is decreased while the administrative costs are increased
The phrase "this policy will only pay for a semi-private room" is an example of a(n):
internal limit
A license may be denied, suspended, or revoked if the licensee
is found guilty of misrepresentation
Basic hospital and surgical policy and benefits are:
lower than the actual expenses incurred
Which type of plan normally includes hospice benefits?
managed care plans
Which of the following BEST describes a short-term medical expense policy
nonrenewable
Which of these is not a type of agent authority
principal
What is the suicide provision designed to do?
safeguard the insurer from an applicant who is contemplating suicide
What is Old Age and Survivors Health Insurance (OASDHI) also known as?
social security
An individual Disability Income insurance applicant may be required to submit all of the following information EXCEPT
spouse's occupation
An example of an unfair claims settlement practice is
turning down a claim without providing the basis of denial
Every 12 months after the initial enrollment period, an HMO must hold an open enrollment period of
31 Days
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
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
ABC Insurance Company has accepted a life insurance application which contains unanswered questions. The company then makes the application part of the life contract. In this situation, the insurer has
waived one of its legal rights
What type of insurance offers permanent life coverage with premiums that are payable for life?
whole life
Who is NOT required to sign a life insurance application?
Beneficiary
In Texas, which of these statements regarding the Suicide clause is TRUE?
An insurer may not use suicide as a defense against payment after the 2nd year
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
An incomplete life insurance application submitted to an insurer will result in which of these actions?
Application will be returned to the writing agent
Which statement about a whole life policy is correct?
Cash value may be borrowed against
Which health policy clause stipulates that an insurance company must attach a copy of the application to the policy to ensure that it is part of the contract?
Entire Contract
When an insurance company sends a policy to the insured with an attached application, the element that makes the application part of the contract between the insured and the insurer is called the
Entire Contract provision
Long Term Care policies will usually pay for eligible benefits using which of the following methods?
Expense incurred
Which of these is NOT required in life insurance policies?
Extended term
What is an organization that solicits insurance only to it's members?
Fraternal benefit society
T was treated for an ailment 2 months prior to applying for a health insurance policy. This condition was noted on the application and the policy was issued shortly afterwards.How will the insurer likely consider this condition?
Insurer will likely treat as a pre-existing condition which may not be covered for one year
The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insurer's death is called a(n):
Insuring agreement
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
P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability?
P will still receive declared dividends
Under what system do a group of doctors and hospitals in a designated area contract with an insurer to provide services at a prearranged cost to the insured?
PPO
The provision that defines to whom the insurer will pay benefits to is called:
Payment of Claims
An example of rebating would be
Returning a portion of a premium as inducement to purchase insurance
Which of the following is NOT a required provision in group life policies
Right to loan
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
Who is liable when an insured suffers a kiss on a policy sold by an agent through an insured not authorized to conduct business in Texas?
The agent and the company
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 the claim is pending is:
Time Limit on Certain Defenses
A 42-year-old executive wants to purchase life insurance that will allow for increases or decreases to coverage as his/her needs change. Which of the following policies will best meet this need?
Universal Life
