FX Exam
According to the PPACA rules, what percentage of health care costs will be covered under a bronze plan?
60%
According to the PPACA metal levels classification, if a health plan is expected to cover 90% of the cost for an average population, and the participants would cover the remaining 10%, what type of plan is that?
Platinum (Bronze pays 60%, silver pays 70%, gold 80%, platinum 90%)
To be eligible under HIPAA regulations, for how long should an individual converting to an individual health plan have been covered under the previous group plan?
18 months
The Waiver of Cost of Insurance is found in what type of insurance?
Universal Life
Issue age policy premiums increase in response to which of the following factors?
Increased benefits
What is NOT a benefit of a POS plan?
It allows guaranteed acceptance of all applicants.
Which of the following insurance options would be considered a risk-sharing arrangement?
Reciprocal
All of the following would be different between qualified and nonqualified retirement plans EXCEPT
Taxation on accumulation
Within how many days must the insurer acknowledge communication regarding an insurance claim?
15 days
Which of the following would be a typical maximum benefit offered by major medical plans?
$1 million
What is the shortest possible elimination period for group short-term disability benefits provided by an employer?
0 days
Which of the following would qualify for a single (K) plan?
An owner-only business
An individual purchased a life insurance policy on his life naming his wife as primary beneficiary, and their daughter as contingent beneficiary. Under what circumstance could the daughter collect the death benefit?
If the primary beneficiary predeceases the insured
Which of the following is true regarding a term health policy?
it is nonrenewable
For how many days of skilled nursing facility care will Medicare pay benefits?
100
In a noncontributory health insurance plan, what percentage of eligible employees must participate in the plan before the plan become effective?
100%
Producers must notify the Director of an address change within how many days?
30
In underwriting a substandard risk, which of the following is INCORRECT?
A discounted premium would be charged
A tornado that destroys property would be an example of which of the following?
A peril
Most health insurance policies exclude all of the following EXCEPT
Accidental injury
All of the following statements about Medicare Part B are correct EXCEPT
It is a compulsory program
Which of the following is an example of a limited-pay life policy?
Life Paid-up at Age 65
The responsibility of making certain that an application for insurance is filled out completely, correctly, and to the best of his or her knowledge is the responsibility of whom?
The producer
If a policy includes a free-look period of at least 10 days, the Buyer's Guide must be delivered to the applicant no later than
With the policy
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of
Misrepresentation
Which of the following is a key distinction between variable whole life and variable universal products?
Variable whole life has a guaranteed death benefit
Which of the following groups would probably be covered by blanket insurance?
A university's sports team
In the event a divorce, which of the following would allow a divorcee to continue receiving group health coverage under an insured spouse's plan for an additional 36 months?
COBRA
An insured's disability income policy includes an additional monthly benefit rider. For how many years can the insured expect to receive payment from the insurer before Social Security benefits begin?
1
Controlled business cannot exceed 30% of a person's commissions earned in what time period?
1 year
What is the maximum period that an insurer would pay benefits in accordance with an Additional Monthly Benefit rider?
1 year
In all health care plans under the Affordable Care Act (ACA), how many essential benefit categories are there?
10
Any licensed person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to
10 years
According to OBRA, what is the minimum number of employees required to constitute a large group?
100
A group insurance is converted to an individual policy. The insured is eligible for individual life insurance coverage without any evidence of insurability. Within how many days of the first premium the insurer notify the insured of his eligibility?
15
The relation of earnings to insurance provision allows the insurance company to limit the insured's benefits to his/her average income over what period of time?
2 years
A Director denies a license application, 15 days later, the applicant notifies the Director that he wants a hearing to be conducted regarding decision. Within how many days must the hearing be held
30
In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?
5
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
5 days
One of the differences between group and individual underwriting is that there is little or no medical information required regarding plan participants in groups of
50 or more
All of the following statements concerning workers compensation are correct EXCEPT
A worker receives benefits only if the work related injury was not his/her fault
The insured's health policy only pays for medical costs related to accidents. Which of the following types of policies does the insured have?
Accident-only
Who would be the insured under a COLI policy?
All employees
If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been approved, the report may contain all of the following EXCEPT the applicant's
Ancestry
Under a Key Person disability income policy, premium payments
Are made by business and are not tax-deductible
SIMPLE Plans require all of the following EXCEPT
At least 1,000 employees.
What process will the insurance company use to monitor the insured's hospital stay to make sure that everything is proceeding according to schedule?
Concurrent review
What is the contract provision that allows the insurer to nonrenew health coverage if certain events occur?
Conditionally renewable
Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as
Contracts of adhesion
Which of the following is used to compare the costs of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced?
Cost comparison methods
All of the following violations may result in an agent's imprisonment EXCEPT
Failing to report to the department a criminal prosecution against the agent in another jurisdiction
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a
Guaranteed Insurability Rider
In which of the following situations is it legal to limit coverage based on marital status?
It is never legal to limit coverage on marital status
Which law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?
Law of large numbers
The provision which prevents insured from bringing any legal action against the company for at least 60 days after proof of loss is known as
Legal actions
Which of the following settlement options in life insurance is known as straight life?
Life income
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?
Life income with period certain
A policyowner is reading a statement on the first page of his health insurance policy, which says "this is a limited policy." What is the name of this statement?
Limited Policy Notice
All of the following statements describes a MEWA EXCEPT
MEWAs are groups of at least 3 employers
Which of the following information regarding an insured is NOT included in an Investigative Consumer Report, which is requested by an underwriter
Medical history
Under the Affordable Care Act, which classification applies to health plans based on the amount of covered costs?
Metal level classification
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report
Must be informed of the source of the report
A long-term care insurance shopper's guide must be provided in the format developed by which of the following
NAIC
A long-term care insurance shopper's guide must be provided in the format developed by which of the following?
NAIC
An insured is involved in a car accident. In addition to general, less serious injuries, he permanently loses the use of his leg and is rendered completely blind. The blindness improves a month later. To what extent will he receive Presumptive Disability benefits?
No benefits
In an individual long-term care insurance plan, the insured is able to deduct premiums from taxes. What income taxation will be imposed on the benefits received?
No tax
An insured does not have to pay coinsurance or deductibles on a full-series mouth x-ray, but does have to pay a deductible to get his cavities filled. Which dental plan does he have?
Nonscheduled
Which of the following can surrender a deferred annuity contract?
Only the annuity owner
Traditional IRA contributions are tax deductible based on which of the following?
Owner's income
A guaranteed renewable health insurance policy allow the
Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class
If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?
Policyowner
All of the following are examples of risk retention EXCEPT
Premiums
Which of the following are the main factors taken into account when calculating residual disability benefits?
Present earnings and earnings prior to disability
Which of the following is NOT among the goals of a Medicare supplement application
Presuming the applicant is eligible for Medicaid, based on the nature of the policy
Under the Accidental Death and Dismemberment (AD&D) coverage, what type of benefit will be paid to the beneficiary in the event of the insured's accidental death?
Principal Sum
The Federal Fair Credit Reporting Act
Regulates consumer reports
All of the following are marketing arrangements used by insurers EXCEPT
Reinsurance System
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy
Required a premium increase each renewal
Equity Indexed annuities
Seek higher returns
In a disability policy, the elimination (or waiting) period refers to the period between
The first day of disability and the day the insured starts receiving benefits
An employee insured under a group health policy is injured in a car wreck while performing her duties for her employer. This results in a long hospitalization period. Which of the following is true?
The group plan will not pay because the employee was injured at work
Which of the following is NOT a feature of a noncancelable policy?
The insurer may terminate the contract only at renewal for certain conditions
Regarding the return of premium option for LTC policies, what happens to the premium if the policy lapses?
The insurer will return a percentage of the premiums paid
The insuring clause of a disability policy usually states all of the following EXCEPT
The method of premium payment
What happens if a deferred annuity is surrendered before the annuitization period?
The owner will receive the surrender value of the annuity
If an insured continually uses the automatic premium loan option to pay the policy premium,
The policy will terminate when the cash value is reduced to nothing.
Which of the following statements regarding conditional receipts is true?
They are temporary insuring agreements
What is the contact provision that allows the insurer to nonrenew health coverage if certain event occur?
conditionally renewable
All of the following could own group life insurance EXECPT
A group needing low-cost life insurance
In disability income insurance, if an insured is considered disabled if they cannot perform any job they are suited for by prior education, training or experience, they fall under which definition of total disability?
Any occupation
Employees actively at work on the date coverage is transferred to another insurance carrier are
Automatically covered and exempt from any probationary period
Because of the history of cancer in her family, Julie purchased a policy that specifically covers the expense of treating cancer. Her policy would be classified as what type of policy?
Dread Disease Policy
What is the benefit of experience rating?
It allows employers with low claims experience to get lower premiums.
Which of the following is true regarding health insurance?
It could provide payments for loss of income
In health underwriting, it would be inappropriate to decline a risk using any of the following factors EXCEPT
Mental illness
If one takes Social Security retirement benefits at age 62, what needs to be done at age 65 to qualify for Medicare?
Nothing
The advantage of qualified plans to employers is
Tax-deductible contributions
Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to
The insured
The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT
The insured's age at death
which of the following statements is correct regarding whole life policy?
The policyowner is entitled to policy loans
Each of the following factors is a significant consideration in the underwriting of individual health insurance risks EXCEPT
Applicant's geographic location
The Insurance Fraud Division of the Department of Insurance is supplied with information given by the
FBI
Which of the following insurers are owned by stockholders?
Stock
Within how many days must an insurer acknowledge communication regarding an insurance claim?
15 days
A small employer must have at least 2 but no more than 50 workers actively engaged in business for at least how many of the working days during the preceding calendar quarter?
50%
What is the amount a physician or supplier bills for a particular service or supply?
Actual charge
If the insured under a disability income insurance policy changes to a more hazardous occupation after the policy has been issued, and a claim is filed, the insurance company should do which of the following?
Adjust the benefit in accordance with the increased risk
Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company?
Aleatory
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash option
An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristics does this describe?
Conditional
Which of the following is the term for the specific dollar amount that must be paid by an HMO member for a service?
Copayment
The provision that states that both the printed contract and a copy of the application form the contract between the policyowner and the insured is called the
Entire contract
Which of the following notifies the applicant that an investigative consumer report will be made?
Fair Credit Reporting Act Disclosure
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid
For 20 years or until death, whichever occurs first
Which is TRUE about cash surrender nonforfeiture option?
Funds exceeding the premium paid are taxable as ordinary income
An insured is not allowed to amend or refuse to renew which of the following types of policies?
Guaranteed Renewable
Most LTC plans have which of the following features?
Guaranteed renewability
An association could buy group insurance for its members if it meets all of the following requirements EXECPT
Has at least 50 members
To be eligible for a Health Savings Account, an individual must be covered by a
High-deductible health plan
which statement regarding insurable risk is NOT correct?
Insureds cannot be randomly selected
During partial withdrawal from a universal life policy, which portion will be taxed?
Interest
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT
It is a life contingency option
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?
Level term
All of the following are characteristics of a Major Medical Expense policy EXCEPT
Low maximum limits
If a dental plan is integrated, it is combined with what type of plan?
Medical
What type of benefit helps to pay for accidental injuries that are not severe enough to qualify as disabilities?
Medical Reimbursement Benefit
On participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are
Not taxable since the IRS treats them as a return of a portion of the premium paid
Which renewal option does NOT guarantee renewal and allows the insurance company to refuse renewal of a policy at any premium due date?
Optionally renewal
Which act bars agents, brokers, and companies from disclosing health, financial, or other information gathered in the underwriting process about the consumer to any 3rd party without the consent of the consumer?
Privacy of Insurance Consumer Information Act
In respect to the consideration clause, which of the following is consideration on the part of the insurer?
Promising to pay in accordance with the contact terms
All of the following are true regarding rebates EXCEPT
Rebates are allowed if it's in the best interest of the client
Which nonforfeiture option provides coverage for the longest period of time?
Reduced paid-up
Which type of retirement account does not require the owner to start taking distributions at age 72?
Roth IRA
Group life insurance policies issued in Nebraska must contain all of the following provisions EXCEPT
Statements of the applicant are considered warranties
In major medical insurance policies, when the insured's share of coinsurance reaches a certain amount, the insured is no longer obligated to pay it. This feature is known as
Stop-loss
Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?
The beneficiary will only receive payments of the interest earned on the death benefit.
The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE?
The beneficiary will receive the greater of the money paid into the annuity or the cash value
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT
The interest is not taxable since it remains inside the insurance policy
What happens if a deferred annuity is surrendered before the annuitization period?
The owner will receive the surrender value of annuity
Which of the following is TRUE regarding the premium in term policies?
The premium is level
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?
The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive
How long is the open-enrollment period under an employer group health insurance plan?
30 days
Employer health plans must provide primary coverage for individuals with end-stage renal disease before Medicare becomes primary for how many months?
30 months
In the event a policy lapses due to nonpayment of premium, how soon would the policy be automatically reinstated following the inured paying the outstanding premium?
45 days
If a new individual long-term care policyholder is not satisfied with a new policy, within how many days can the insured return the policy for a full premium refund?
30
If the appointment of any insurance producer is to be terminated, the Director must be notified by the insurer within how many days of that termination?
30
Which of the following determines the cash value of a variable policy?
The performance of the policy portfolio
All of the following are true regarding the guaranteed insurability rider EXCEPT
The riders is available to al insureds with no additional premium
What documentation grants express authority to an agent?
Agent's contract with the principal
Bob purchased a policy to provide coverage on himself, his wife Linda, and their two children, John and Kristen. All of them would need to prove insurability EXCEPT
Any children born to them after inception of the contract
Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement?
Any form of life insurance
When must an insurance company present an outline coverage to an applicants for a Medicare supplements policy?
At time of application
Which of the following is not true of Disability Buy-Sell coverage?
Benefits are considered taxable income to business
Which of the following is NOT true regarding an annuity certain?
Benefits stop at the annuitant's death
All of the following are personal uses of life insurance EXCEPT
Buy-sell agreement
Which of the following statements concerning buy-sell agreements is true?
Buy-sell agreements are normally funded with a life insurance policy
When an insurer offers services like preadmission testing, second opinions regarding surgery, and preventative care, which term would best apply?
Case management provision
Prior to issuance of a Long-Term care policy to an applicant age 80 or older, the insured must obtain all of the following EXCEPT
Date of previous doctor visit.
When must an IRA be completely distributed when a beneficiary is not named?
December 31 of the year that contains the fifth anniversary of the owner's death
Which of the following is NOT a duty of the Director of the Nebraska Department of Insurance?
Develop Insurance rates
If a producer's address changes, what authority must he/she notify?
Director
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT
Dividends from a mutual insurer
Concerning group Medical and Dental insurance, which of the following statements is INCORRECT?
Employee benefits are tax deductible the year in which they were received
Which type of dental treatment involves the dental pulp within the teeth?
Endodontics
When must producers renew their licenses?
Every 2 years by the last day of their birth month
Which of the following best describes the aleatory nature of an insurance contract?
Exchange of unequal values
Which nonforfeiture option has the highest amount of insurance protection?
Extended Term
All of the following are dividend options EXCEPT
Fixed-period installments
A new employee who meets HIPAA eligibility requirements must be issued health coverage on what basis?
Guaranteed
If the insured has the right to keep a long-term care insurance policy in force by making timely premium payments, and the insurer may not make any change to the policy or decline to renew it, the policy is
Guaranteed renewable
An association could buy group insurance for its members if it meets all of the following requirements EXCEPT
Has at least 50 members
All of the following would fall under the definition of Durable Medical Equipment EXCEPT
Hospital blankets
A Health insurance policy lapses but is reinstated within an acceptable timeframe. How soon from the reinstatement date will coverage for accidents become effective?
Immediately
When a person applies for Medicare supplement insurance, whose responsibility is it to confirm that the applicant does not already have accident or sickness insurance already in force?
Insurer
If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined?
It is a percentage of the cash value and decreases over time
If a health care plan has characteristics of an HMO and PPO, what type of plan is it?
POS
An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called
Paid-up additions
A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will
Pay the policy proceeds only if it would have issued the policy
Which of the following types of annuities will generally provide the highest monthly income?
Straight life
What would a physician utilize if he/she wanted to know if a treatment is covered under an insured's plan and at what rate it will be paid?
Prospective review
In what way can an agent demonstrate a high standard of ethics?
Putting the client's best interest before their own
Another name for a substandard risk classification is
Rated
Which type of care re-establishes functional use to natural teeth?
Restorative
The following are features of the indexed Universal Life EXCEPT
Sale of this product requires a securities license
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a
Settlement option
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT
Signed waiver of premium
Which of the following applicants would NOT qualify for a Keogh Plan?
Someone who works 400 hours per year
An employee becomes insured under a PPO plan provided by his employer. If the insured decides to go to a physician who is not a PPO provider, which of the following will happen?
The PPO will pay reduced benefits
Your client has a Social Insurance Supplement (SIS) rider on his disability policy. After he becomes disabled, he receives payments from the company. Shortly thereafter, he also begins receiving Social Security benefit payments. Which of the following will happen?
The SIS payment will be reduced dollar-by-dollar by the Social Security benefit payment
A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true?
The amount of the distribution is reduced by the amount of a 20% withholding tax
In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment?
The annuitant will receive the higher of either the guaranteed minimum rate or current rate
Which of the following would qualify as a competent party in an insurance contract?
The applicant has a prior felony conviction
Which of the following is NOT the consideration in a policy?
The application given to a prospective insurer
Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?
The beneficiary will only receive payments of the interest earned on the death benefit
Which of the following is NOT a characteristic of a group long-term disability plan?
The benefit can be up to 50% of one's yearly income
For how many years is the Director appointed?
There is no set limit
Which of the following is TRUE about nonforfeiture values?
They are required by state law to be included in the policy
An insured notifies the insurance company that he has become disabled. What provision states that claims must be paid immediately upon written proof of loss?
Time of Payments of Claims
Which provision states that the insurance company must pay Medical Expense claims immediately?
Time of Payments of Claims
Why should the producer personally deliver the policy when the first premium has already been paid?
To help the insured understand all aspects of the contract
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?
Universal Life - Option A
In forming an insurance contract, when does acceptance usually occur?
When an insurer's underwriting approves coverage
All of the following cases show when a Small Employer Medical plan cannot be renewable EXCEPT
When the employer chooses to renew the plan
Are insurance company underwriters allowed to discriminate?
Yes, but not unfairly
How long is an open enrollment period for Medicare supplement policies?
6 months
An insured has a major medical policy with a $500 deductible and a coinsurance clause of 80/20. If he incurs medical expenses of $4,000, the insured would pay
$2,800
Coverage for alcoholism must provide for at least how many days of inpatient coverage for the primary treatment of alcoholism in any 365-day benefit period?
30
What is the maximum age for qualifying for a catastrophic plan?
30
Which of the following is NOT covered under a long-term care policy?
Acute care in a hospital
In which Medicare supplemental policies are the corer benefits found?
All plans
A universal Life Insurance policy is best described as a/an
Annually Renewable Term policy with a cash value account
Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?
Apparent (perceived authority)
Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium?
Automatic premium loan
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 policies would be classified as a traditional level premium contract?
Straight life
Which of the following is true regarding inpatient hospital care for HMO members?
can be provided outside of the service area
An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay?
50% tax on the amount not distributed as required
For how long is an insurance company allowed to defer policy loan requests?
6 months
Assuming that all of the following people are covered by a High Deductible Health Plan and are not claimed as dependents on anyone's tax returns, which would NOT be eligible for a Heath Savings Account?
Amanda is 67 and is covered by a basic medical expense policy
The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the
Insuring Clause
In a Disability Income policy, all of the following are considered presumptive disabilities EXCEPT
Loss of one eye
Which part of an insurance application would contain information regarding the cause of death of the applicant's deceased relatives?
Medical information
Which of the following statements is NOT correct regarding Medicare?
Medicare Advantage must be provided through HMOs
