health and life insurance questions

To engage or participate in the insurance business, a prohibited person must first apply for a(n)

1033 waiver for consent to work

When withdrawing cash from a cash value life insurance policy, the amount of the withdrawal up to the policy's cost basis is tax-free. This tax accounting rule is referred to as:

First-In, First-Out (FIFO)

Term

Lowest of premium outlay and designed for someone with a large insurance need but with limited cash flow. This coverage is often referred to as temporary, as it is written to cover a short time period.

"A primary purpose of key person life insurance is to:"

Provide the business with money to recruit and train a replacement employee

Key Employee Policy

Provides a benefit to the employer to help pay for a replacement, train a new employee,or for loss of revenue if a valuable employee becomes disabled

In a long-term care policy transaction, when must the outline of coverage be provided to the applicant?

At the time of initial solicitation and prior to the application

An individual owns a variable annuity. Upon annuitization, the number of Annuity Units on which the benefit amount is based will __________ from month to month.

Remain the same

To reduce the risk of insuring a substandard disability applicant, an insurer may take all of the following actions, except:

Remove all of the exclusion riders

"Which of the following is not an example of a cost containment measure?"

Replacement

Mode of Premium

This provision addresses the frequency of premium payments (monthly, quarterly, semiannually or annually), and to whom the premiums are payable. The more frequent the payment the greater the cost.

When the owner and annuitant is the same person, a spouse beneficiary is permitted what choice under the Internal Revenue Code if the annuitant dies prior to annuitizing the contract?"

To adopt the annuity as his/her own and become the annuitant or to name another annuitant

Why were industrial policies written?

To offset consumer expenses

Which of the following is not a Mandatory Uniform Provision of an Accident and Health policy?

Waiver premium

Paul is the insured and policyowner. Paul named Danny and Kayla as co-primary beneficiaries of Paul's $100,000 policy. Danny is to receive 70% and Kayla is to receive 30%, therefore Danny gets $________ and Kayla gets $______ when Paul dies.

70,000/30,000

Physical hazard

A physical condition that increases the likelihood or probability of loss; may include the use, condition, or occupancy of property.

Nonparticipating

A policy marketed by a stock insurer.

"When may an employer deduct the premiums it pays for an employee's life insurance benefit?"

As long as the business does not derive a direct benefit from the policy

Which of the following is needed to qualify for a Social Security Disability Benefit?

Be either currently or fully insured

"In which ONE of the following situations would an insurance company most likely use an impairment rider?"

G is looking to obtain a health insurance policy, but is concerned about a current heart condition

"Which principle of insurance restores the insured to the same economic condition that existed before the loss?"

Indemnity

"The punishment for fraud or making false statements may include:"

Fines, imprisonment and/or hard labor

"In an Accidental Death & Dismemberment policy, the capital sum provides benefits for which of the following losses?"

Loss of limb or eyesight from accidental causes

Medicare Part B

Medical insurance and outpatient expenses provided by the federal government

Which of the following is required to sign the application for insurance?

Producer and the applicant

Rider:

an added benefit attached to the policy that modifies existing coverage. A rider is usually added at the time of application and typically requires an increase in premium.

death benefit option a

pays the face amount of the policy and provides a level death benefit. As the cash value increases, the company's risk decreases.

A Medicare supplement policy that provides only the basic 'core' benefits is known as:

plan a

Ordinary whole life insurance

provides insurance protection to age 100, cash value accumulation to age 100, and fixed-level premium payments.

A Medical Expense Policy's list of the amounts the insurer will pay for each medical service is known as a(n) __________.

schedule of benefits

Blue Cross and Blue Shield have traditionally offered benefits under the form of:

service contracts

If the Insured cancels.

short rate return

Once the out-of-pocket limit has been reached, the _________ provision kicks in and the policy will cover 100% of covered losses for the balance of the year.

stop loss

Whole life policies

stretch the cost of insurance over a longer period of time in order to level out the otherwise increasing cost of insurance. Under some policies, premiums are required to be paid for a set number of years such as 10, 20 or to a specified age, for example age 65 or 80.

Renewable

A benefit that will renew the contract on the renewal date without evidence of insurability.

Agents

ALWAYS represent the insurance company

Which of the following is correct concerning an LTC policy? It may define a preexisting condition as a condition for which advice or treatment was recommended or received within 6 months of the effective date of coverage All the following qualify for Medicare Part A, except: Healthy individuals who are under age 65 and not covered by Social Security, but are willing to pay the Part A premium Which of the following provides coverage for low income families? Medicaid For which of the following reasons may an insurer cancel or non-renew a Medicare supplement policy? Nonpayment of premium A Medicare supplement policy that provides only the basic 'core' benefits is known as: Plan A Part B of Medicare excludes which of the following medical expenses? A regular dental checkup Which of the following exclusions applies to Long-Term Care coverage? Rest Cures Medicare Part D provides prescription drug coverage that requires the insured to pay all of the following, except: Medicare Part A premium As long as the premium is paid, a Medigap policy is __________ renewable. Guaranteed No insurer or agent may unnecessarily replace a policyholder's Long-Term Care insurance policy or replace it with a policy that offers: Fewer benefits and a greater premium An insured is hospitalized for at least 3 days. How long will Medicare pay for confinement in a skilled nursing facility? Up to 100 days Overseas foreign travel emergency coverage is a Medicare supplement: Additional benefit 00:0201:461.00 Upgrade to remove ads Only $2.99/month How long is the free look period for a Medicare Supplement policy? 30 days Which of the following is not true of Medicare Part B? All retirees are automatically covered A Medicare supplement policy may not limit benefits for losses incurred more than ________ from the effective date of coverage because they involve a preexisting condition. 6 months Which of the following statements is FALSE regarding Medigap policies? A Medigap policy provides the same coverage as a Medicare policy All of the following are exclusions under an LTC policy, except: Chemical dependency on one's own prescription drugs Select the correct statement about long-term care policies. Present policies are more likely to pay benefits regardless of the level of care required by the insured Which of the following is NOT one of the core benefits included in any Medicare supplement policy? Part A deductible for each benefit period In order to purchase a Medicare Supplement, an eligible individual usually must have Medicare Parts __________. A and B An institution that is organized primarily for the purpose of providing support services to terminally ill patients and their families is a: Hospice The annual general enrollment period for Medicare Part B ends on: March 31 Which of the following types of care is covered by Medicare Part A? Skilled nursing care Originally, Medicare was for U.S. citizens age _______ and over. 65 With _______, the patient must pay 20% of covered charges plus the deductible. Medicare Part B What do ADLs trigger?(acts of daily living) Long-Term Care Insurance Medicare supplement policies must provide a 'free look' period of: 30 days Which of the following will cover the cost of inpatient blood transfusions after the first 3 pints? Medicare Part A Medicaid is a federal program that is administered by the _______ government. State A long-term care policy typically provides daily benefits? For 2 years, 5 years, to age 65 or lifetime A qualified Long-Term Care Policy may exclude losses incurred from preexisting conditions for no longer than ______ months from the effective date of coverage. 6 Core Benefits of Medicare Supplement policies cover ____ pints of blood. 3 Which type of LTC coverage is designed to provide relief for the primary caregiver of a long-term care patient? Respite Care ... ... A Medicare Supplement or LTC policy's free look period is: 30 days Which of the following are NOT eligible for Medicare coverage? People suffering from liver cancer Part A of Medicare is known as: hospital insurance Which of the following requires an annual deductible and coinsurance? Medicare Part B medical After the deductible has been satisfied, Medicare pays the full cost of up to: 60 days of inpatient hospital care The most important rating factor in a LTC policy is: Whether or not an individual can perform activities of daily living A Medicare SELECT policy differs from a regular Medicare Supplement (Medigap) policy in that it: Is a managed care version of the traditional Medicare Supplement policy

All of the following are examples of cost containment and managed health care, except: Experimental drug treatment Which of the following allows reimbursement benefits to be paid directly to medical providers? Assignment of benefits Required Provision 'Reinstatement' addresses reinstatement of a lapsed policy. According to this provision, when an insured applies for reinstatement and receives a conditional receipt, how long does the insurer have to approve or deny reinstatement before the policy will be automatically reinstated? 45 days from the date of the conditional receipt An insured's accident policy uses the phrase 'accidental bodily injury' to define what constitutes accidental injury and/or resulting death. This phrase: Is less restrictive than the phrase 'accidental means' An insurer has the right to request a physical exam or an autopsy to determine its liability to pay benefits. This request may be made under which provision? Physical Exam & Autopsy Managed Health Care attempts to contain costs by controlling the behavior of participants in all of the following ways, except: Partial Case Management When an insurance company cancels a policy, the unearned premium is: Returned in full to the insured in a pro rata return Precertification, Mandatory Second Surgical Opinion, and Concurrent Review are provisions in health insurance policies known as: Case Management Provisions Albert owns a printing business in which he, at times, prints counterfeit money. One day while processing counterfeit bills, his arm is severely damaged. His insurance will: Not cover the claim since he was involved in an illegal act at the time of injury The Insuring Clause under an individual A&H policy would contain all the following, except: Premium or rate calculations What is an impairment rider? It excludes specific conditions that normally would cause the entire policy to be declined A certain health insurance policy states that the insurer will not refuse to renew the policy and furthermore, the insurer may not cancel the policy. However, the insurer may change the premium by classes of insureds. This policy is: A guaranteed renewable policy 00:0201:461.00 Upgrade to remove ads Only $2.99/month Three years ago, Charles purchased a health policy from the QRS Company; he has purchased two additional contracts from the same insurer since. Each contract contains the Other Insurance With This Insurer Provision. What happens if Charles has a claim? Only one policy will pay, the premiums for the other contracts will be returned Optional Uniform Provisions are included in the contract at the _______ option. Insurer's Which of these is a Mandatory Uniform Provision? Legal Actions The Time Limit on Certain Defenses (Incontestability) period is _____ years under individual health and disability contracts. 2 Required Provision 10 'Physical Exam and Autopsy', indicates that if the insurer wants to have an autopsy performed while a claim is pending, the insurer: May do so if it is not forbidden by law and if the insurer pays for it Policies are considered incontestable after: 2 years One of your clients just reinstated his health insurance plan. When is coverage effective for sickness and accident? 10 days for sickness, and immediately for accidental injuries Optional Provisions 'Changes of Occupation' and 'Misstatement of Age', permit the insurer to do which of the following? Pay indemnities equal to benefits that would have been purchased at the premium paid had the insurer known the facts when the premium was established All of the following statements about noncancellable policies are true, except: The insurer may choose not to renew the policy, but only on the policy renewal or anniversary date Which of the following best describes the consideration on the part of an insurer? The promise to pay in the event of a covered claim Kirk has just reinstated an individual A&H policy that had lapsed and wants to know how soon coverage will be in effect for any accident or sickness. You, the agent, would say: Accidents immediately, sickness after 10 days Beth has a contract stating she must be disabled for 3 months before benefits will begin to be paid. This 3-month period is known as the: Elimination Period Which clause in a contract would state that Jim is covered by XYZ insurer for a monthly benefit of $2,000 in the event of disability? Insuring Clause Examples of preventative care include all of the following, except: Restricting travel to within 5 miles of home` An insurer has the right to request a physical exam or an autopsy to determine its liability to pay benefits. This request may be made under which provision? Physical Exam & Autopsy Kirk has just reinstated an individual A&H policy that had lapsed and wants to know how soon coverage will be in effect for any accident or sickness. You, the agent, would say: Accidents immediately, sickness after 10 days Three years ago, Charles purchased a health policy from the QRS Company; he has purchased two additional contracts from the same insurer since. Each contract contains the Other Insurance With This Insurer Provision. What happens if Charles has a claim? Only one policy will pay, the premiums for the other contracts will be returned Under the unpaid premium provision, if an insured owes a past due premium payment at the same time a claim is filed: The insurer may deduct the amount of the premium from the claim paid The 'Other Insurance with this Insurer' Provision allows an insurer to control: Overinsurance Notice of claim is required within _____ days of loss. 20 Upgrade to remove ads Only $2.99/month Precertification, Mandatory Second Surgical Opinion, and Concurrent Review are provisions in health insurance policies known as: Case Management Provisions Under the Entire Contract provision, all of the following may be part of the agreement between the insured and the insurer, except: Statements made to the applicant by the producer during the application process All of the following are Optional Uniform Provisions, except: Legal Actions ... ... Which of the following is not a Mandatory Uniform Provision? Conformity with State Statutes Which of the following is not a Mandatory Uniform Provision of an Accident and Health policy? Waiver of Premium Second surgical opinions, precertification, concurrent reviews, and outpatient/ambulatory services are elements of a cost containment system commonly known as: Case management

All of the following are characteristics of Franchise Insurance, except:

Certificates of Insurance are issued

Pro Rata Return

If the Insurance Company cancels.

All of the following are Optional Provisions, except:

Legal Actions

Which provision is an Optional Uniform Provision?

Relation of Earnings to Insurance

"Industrial life insurance is typically sold in face amounts of :"

$1,000 or less

"The minimum capital required to form and organize a new domestic stock life insurance company in Alabama is:"

$1,000,000

"A person may not fund an HSA unless they also do which of these?"

Purchase a High Deductible Health Plan

"From the insured's perspective, which of the following types of disability coverage would be the most restrictive when considering qualification for benefit payments?"

Any occupation

The LMC Partnership has 3 partners and is concerned about what would happen to their $300,000 business if one of the partners should die. If they consider a buy-sell agreement, then each partner would have to buy a policy in the amount of $__________ on the other partners.

$50,000

"An annuitant contributed $50,000 to her nonqualified annuity, and when she annuitized the policy, the insurance company determined that, based on her life expectancy, she will receive $100,000 in payments. If her initial monthly payment was $1,000, how much of that payment was taxable?"

$500

A family has a $1,000 annual family deductible with a coinsurance provision of 80/20. The family's claims for the year are $200, $300, $400, $500, $300, and $300, totaling $2,000. The insurer is responsible for paying:

$800

*Pre-existing condition that occurred 1 month ago - Excluded Pre-existing condition that occurred 3 months ago - Excluded*

*Pre-existing condition that occurred 6 months ago - Excluded Pre-existing condition that occurred 7 months ago - NOT EXCLUDED(occurred over 6 months ago).*

A convertible term life insurance policy may be converted _____ time(s) for a permanent life policy based on the original or attained age.

1

Which of the following elimination periods found in a disability income policy will result in the highest premium?

1 month

The time limit to bring legal action against an insurer cannot be less than _______ after the act occurs.

12 months

"The Time Limit on Certain Defenses generally terminates the insurance company's right to deny a claim more than _________ years from the date of policy issue if a misstatement was made on an application."

2

Generally, Universal Life has how many death benefit options to choose from?

2

HIPAA defines a pre-existing condition as one for which the insured received medical advice, diagnosis, care, or treatment within the past _____ months.

6

Which provision allows an insurer to borrow from the cash value of a policy in order to pay premiums due and prevent a lapse in coverage?

Automatic Premium Loan

The cash value accumulation in a life insurance policy:

Can be used for loans or later as retirement income

Principal

Is the Insurance Company

Annuities are classified in all of the following ways, except:

Issuer of the annuity

A Medicare SELECT policy differs from a regular Medicare Supplement (Medigap) policy in that it:

Is a managed care version of the traditional Medicare Supplement policy

"What is the purpose of a probationary period in a disability income policy?"

It allows the insurance company to avoid illness claims made in the first 10-30 days of the policy

All else being equal, which of the following will receive the largest income benefit payment from an annuity?

Male age 80

Which of the following is not provided under Part A of Medicare?

Outpatient Medical Treatment

"Which of the following is a sound legal method of minimizing adverse selection? "

Quality underwriting practices

"The factors necessary for an insurer to calculate a Net Premium are:"

Rate of interest assumed and mortality rate

Speculative Risk

Situations where there is a chance or possibility for loss, no loss or gain

"Which of the following best describes producer field underwriting?"

Taking the time to probe beyond the stated questions on the application based upon the applicant's responses

*Mark has a disability plan with a 30 day waiting period and a 6 month recurrent disability period that pays $5,000 per month in benefit. Here is his scenario: He becomes disabled for 4 months Returns to work a month later and reinjures the previous injury He is out of work 2 more months*

The Claim Pays a total of $25,000: Pays 0 for the 1st 30 days - Waiting Period Pays $5,000 per month the next 3 months Injury reoccurs within the 6 month recurrent period It pays the next 2 months for the 2nd injury - No Waiting Period

Increasing

The death benefit increases over the life of the policy while the premiums remain level. This type of term is normally written as a rider for the return of premium on a permanent policy over a set number of years.

"Policy loan provisions include all of the following, EXCEPT:"

The death benefit of a policy is automatically reduced when a loan is requested

When an insured is discharged from the military, what happens to health insurance coverage that was in place prior to being called up for active military service?

The insured will be permitted to resume coverage and premiums without any waiting periods

Residual Disability Income pays funds to the insured, to make up for what the insured would have earned after returning to work, and while recovering from ___________.

Total disability

For an accidental means policy to pay a claim, the injury must be an:

Unintentional in both the cause and the result of the injury

"A Taft-Hartley Trust would be formed to provide health and welfare benefits to which of these employees?"

Union-represented

Flexible

Universal and Variable Universal Life policies have given the policyowner more flexibility in terms of premiums, investment objectives and other policy benefits.

When a surgery schedule includes a specific dollar amount that will be provided for a major type of surgery, this is called:

absolute value

Every LTC Policy that provides benefits of homecare or community-based services shall provide all of the following, except:

acute

Insurance

consists of companies, agencies, producers, consumers, and organizations that provide information and support to the private firms and persons who buy and sell insurance.

A person with a legal or ethical relationship of trust with another party is a:

fiduciary

Which of the following is an insurance company that is organized under the laws of a different state within the United States

foreign

A condition or behavior that increases the chance of premature death would be considered a ______

hazard

Face amount:

he death benefit amount payable on a life insurance policy. In other words, the amount of coverage the policy provides. This is sometimes referred to as the limit of liability.

Group Insurance Market

insures a group of people under a single contract. State and federal laws restrict the insurer's underwriting criteria for group policies. For those who don't qualify for an individual policy because of age or health reasons, group life coverage might be a good option.

"Which of the following IS NOT part of the definition of "insurable risk"?"

loss must be preventable

insurance companies

manufacture and sell insurance coverage in the form of insurance policies or contracts of insurance.

"Each of the following is a factor considered by an underwriter, except:"

marital status

Insurance is designed to provide protection against which of the following?

pure risk

"A ________ is usually treated as an insurance company liability."

reserve

"Which type of insurance provides coverage when insurance is not available from an admitted carrier?"

surplus

Which statement is incorrect regarding COBRA?

the employee or beneficiary must respond to the notification of his/her right to continue coverage within 90 days, if he/she wants to continue the coverage

an insured:

the person or entity that is covered by the Insurer, which covers losses due to loss of life, health, property, or liability.

Which insurance company department accepts the insurance risk?

underwriting

"A policyowner has the right to cancel the policy at any time, and for any reason, because insurance contracts are ____________. "

unilateral

*Shorter Life Expectancy = Greater Benefit Longer Life Expectancy = Lower Benefit*

*Older = Greater Benefit Male = Greater Benefit*

Core Benefits of Medicare Supplement policies cover ____ pints of blood.

3

The difference between a customer and a consumer under the Gramm-Leach-Bliley Act is:

A customer has an ongoing relationship with the insurer, a consumer does not

"All of the following are scenarios in which an insured would automatically qualify for total disability benefits whether or not they could actually continue working EXCEPT:"

A dancer slips and falls and sprains an ankle

"What must an insurance producer have in order to market variable annuities?"

A securities license as a variable contracts and investment company representative in addition to a life agent license

Which of the following persons may contribute to an HR-10 Keogh Plan?

A self-employed musician

Re-Entry Term

An existing term life insurance policy may be exchanged typically one time for a new term life policy on the re-entry date. The new policy's premiums will be based on the insured's attained age, the rates in effect by the insurer at the time of re-entry, and the premium class approved by the company.

Which of the following individuals is not eligible to establish a Health Savings Account?

Anne, who is covered through a traditional HMO

The benefits of an individual disability income policy:

Are received tax-free and generally limited to a percentage of monthly income

Concerning PPOs, which is a true statement? The insured has a financial incentive to use providers who have agreed to predetermined reimbursements for medical services rendered Which of the following are NOT typically covered under HMOs: Private hospital rooms Bill is a retired military officer suffering from complications caused by Agent Orange exposure during his military service. He incurs $54, 510 in medical expenses during hospitalization at the local Veterans Administration Hospital. The private health insurance he now owns will likely pay: Nothingmilitary is covered by TRICARE All of the following are typical accident and health insurance policy exclusions, except: Nonoccupational injuries Joe purchased a policy that includes a Common Accident, Recurrent Hospitalization, Restoration of Benefits, and Accumulation Provision, as well as a Family Deductible. He purchased a _________ Policy. Major Medical Blue Cross and Blue Shield have traditionally offered benefits under the form of: Service contracts Hank was in the hospital last month for 2 days for which he received a check for $200. This month Hank was in the hospital for 5 days for which he received a check for $500. These checks are most likely: Benefit payments from a Hospital Income or Indemnity Policy Under what circumstances do major medical policies usually provide for restoration of benefits? Restoration usually occurs after a specified dollar amount of benefits has been exhausted and after the insured has proven insurability When a surgery schedule includes a specific dollar amount that will be provided for a major type of surgery, this is called: Absolute value If Jane has a new baby born under a Medical Expense policy, the baby is covered: From the moment of birth Which of the following is the best definition of a Limited Accident Policy? Provides specific benefits for specific injuries from specific causes A type of provider that consists of employers who pay claims out of their own funds instead of funding claims as an insurer is known as what type of provider? Self-Insured 1.00 Upgrade to remove ads Only $2.99/month All of the following are considered specialty physicians, except: Hospital administrator Which major medical plan deductible will result in the lowest premium? $2,500 (highest option) Which type of Accident and Health policy would provide reimbursement for expenses involved with a broken hip? Medical Expense Policy When a Health Maintenance Organization chooses a limited number of health care providers to provide services to its subscribers, this is known as: A closed panel The usual payment arrangement under a Preferred Provider Organization (PPO) contract is: A fee for each service Which statement is incorrect regarding Blue Cross and Blue Shield? Blue Cross and Blue Shield have traditionally offered benefits in the form of indemnity Which of the following types of limited policies would a common carrier purchase to provide medical and surgical benefits in excess of any primary coverage? Blanket Plan All of the following are true of Blue Cross and Blue Shield Associations, except: They specialize only in sponsoring group plans When payment under a Medical Expense policy is based on the average fee charged by all doctors in a given geographical area, and the balance of any overcharges or costs of any disallowed services are the insured's responsibility, the payment is known as: Usual, customary, reasonable (UCR) payment If an insured has a policy with 80/20 coinsurance, how is payment split? The insurer pays 80% and the insured pays 20% Upgrade to remove ads Only $2.99/month Which of the following is NOT a common exclusion for a dental expense policy? The preventative care exclusionits usually encouraged All of the following are common exclusions typically found in a medical expense policy, except: Dependent child coverage HMOs are established as either ________, which means the doctor can work with anyone, including HMO members, or ________, which means the doctor can only work with HMO members. Open panel, closed panel Which of the following is true concerning a Medical Expense Policy for a family? It will continue to cover their unemployed 25-year-old child who is habitually unemployed When a Medical Expense plan pays eligible expenses directly to the hospital, physician, or surgeon, it is paying on a: Service basis Which of the following is true of traditional commercial insurers? They traditionally market reimbursement-type contracts that pay directly to the insured Raymond owns an Accidental Death and Dismemberment Policy with a principal sum of $50,000, and a capital sum of $25,000. After owning the policy for several months, Raymond dies as the result of coronary artery disease. Lynn, his beneficiary, can expect to receive what amount of benefit from the policy? None ___________ is a cost sharing feature and is stated as a percentage of sharing between the insurer and the insured, such as 80/20. Coinsurance Dread disease, travel accident, vision care, and hospital indemnity policies are all examples of: Limited policies Which of the following insurance policies may be written in conjunction with a Basic Medical Expense Coverage and utilizes a Corridor Deductible after the basic plan benefits have been exhausted? Supplementary Major Medical Upgrade to remove ads Only $2.99/month Vision Care covers which of the following? Eye exams, eye glasses, contacts Under a credit health policy, what is the maximum amount of any accidental death benefit included? The amount of outstanding indebtedness at any given time The type of health care provider that provides both the health care services and the health care coverage is a/an: health maintenance organization The main purpose of requiring a Gatekeeper is to: Reduce costs within the plan Benefit payments made on a ____________ basis are not scheduled, but are based on the average fee charged by all doctors in a given geographical area. Usual, customary, and reasonable (UCR) Many insurers pay benefits based on the average fee charged in a geographical area. This is referred to as: Usual, Customary, and Reasonable A Medical Expense Policy's list of the amounts the insurer will pay for each medical service is known as a(n) __________. Schedule of Benefits Comprehensive dental plans usually provide: Routine dental care services without deductibles or coinsurance Sylvia is a participant in a Preferred Provider Organization and finds that if she opts to use a provider outside the network: Her PPO will pay a reduced amount with Sylvia paying the balance All of the following are types of dental care, except: Podiatry Which is correct concerning Blue Cross and Blue Shield Plans? They are service plans with benefits paid directly to the hospital or physician

Attaching a(n) ___________ rider excludes coverage for a condition that would otherwise be covered. Impairment What type of disability income insurance provides funds to cover business expenses when the business owner becomes disabled? Business overhead expense Which of the following will be covered under a business owner expense (business overhead) policy? Business property rental Which optional disability income insurance rider waives the elimination period if the insured is hospitalized and pays only when the insured is being treated as an inpatient. hospital confinement Which of the following is NOT classified as an occupational disease under Workers' Compensation? Michael, an insurance salesperson who gets the flu from one of his clients while visiting the client's home during a service call How are disability income benefit claims paid? Weekly or monthly _______________ is insurance provided by an employer to cover injuries that occur on the job only. Workers' Compensation A court reporter develops arthritis making it impossible to continue this employment. The reporter now has other employment at a reduced salary and receives a monthly benefit from an insurance contract due to which of the following policy provisions? Residual Disability With a Business Overhead Expense Policy, all of the following are claims that are covered, except: The salary or profit of the business owner Loss of the use of two limbs is one condition that generally will automatically qualify the victim for what type of total disability? Presumptive disabilitytotally disabled Which of the following is needed to qualify for a Social Security Disability Benefit? Be either currently or fully insured If a disability insurance applicant is insurable, but not at a standard rate, all of the following are actions an underwriter can take, except: Reduce the dividends the policy is eligible for 00:0201:461.00 Upgrade to remove ads Only $2.99/month In the event total disability continues beyond a specified period of time, future premiums will not be required to be sent in to the insurer for the duration of the disability. This optional rider is called the _________ rider. Waiver of premium All of the following are correct concerning partial disability, except: Partial disability payments are usually 75% of the total disability benefit Which statement is false concerning Social Security disability benefits? The employee must only be unable to engage in his/her own occupation to be considered disabled Luis and Margarita Rodriguez have a family health policy that includes two riders. One rider excludes coverage for Margarita's existing diabetes. The other rider indicates that the couple may purchase additional disability income coverage at specified dates in the future without proving insurability. What two riders are attached to this policy? Impairment and guaranteed insurability riders Under Workers' Compensation, a disability that is a permanent physical impairment leaving the individual incapable of performing the previous regular occupation, but capable of performing some other type of work, is a: Permanent partial disability In Individual Disability Income underwriting, the single most important rating factor from an underwriting standpoint is the applicant's: Occupation Which measure could an underwriter use to reduce the risk when underwriting a Disability Income Policy? Shorten the benefit period and increase the elimination periodtotal claims exposure is reduced If a disabled worker is eligible for a Social Security disability benefits, his or her spouse and children may each also be eligible for a benefit in the amount of ____% of the disabled worker's benefit. 50 What type of disability income insurance pays a benefit to a business to help in the search, cost, and hiring of a replacement when an employee becomes disabled and is unable to work for the company? key employee Which of the following is NOT a reason that insurers limit disability income benefits to a percentage of the insured's past earnings? To keep their expenses down Upgrade to remove ads Only $2.99/month Joan was told she could only expect about 70% of her weekly salary on a disability check if she was ever disabled. The reason for this is to reduce _________. Malingering(lying about one's disability) or a morale hazard (a person chooses not to work because they have some income available). Which of the following is NOT one of the categories of benefits incorporated by State Workers' Compensation Laws? Long-term care coverage Social Security disability benefits become available to eligible workers after a waiting period of: 5 months Group Disability Income is usually offered only on a nonoccupational basis, which will not cover work-related disabilities, because: Work related injuries are normally covered under Workers' Compensation Under the Coordination of Benefits provision, if an insured is disabled due to a work-related loss, the primary payer is Workers' Compensation Own occupation is the: Inability to perform all duties of one's own occupation To reduce the risk of insuring a substandard disability applicant, an insurer may take all of the following actions, except: Remove all of the exclusion riders Josh is a concert pianist and earns a very good living with his talent. He was in a car accident and broke his arm. His disability is considered: Total, temporary Regarding disability income policies, which of the following benefit periods would have the lowest premium? 6 weeks Which statement is false concerning Social Security disability benefits? The employee must only be unable to engage in his/her own occupation to be considered disabled The Age Discrimination in Employment Act (ADEA) affects both the short- and long-term group disability benefits for people employed after age _______. 65 Ole Olson owns a Business Overhead Expense Policy whereby if he should become disabled, the policy will continue to cover most business expenses in his absence. The policy would cover all of the following, except: Ole's personal lost income Own occupation is the: Inability to perform all duties of one's own occupation In disability insurance, if a person is unable to perform their current job duties due to a disability, this definition is known as the: Own occupation, less restrictive definition Which provision provides a loss of earnings benefit to an employee who returns to work after sustaining a total disability, if the insured's earnings are less than they were before the disability. Residual Disability Which of the following waives the elimination period in a disability policy? hospital confinement rider What is the function of disability income insurance? To replace income when disability prevents a person from working to earn a living If a disability insurance applicant is insurable, but not at a standard rate, all of the following are actions an underwriter can take, except: Reduce the dividends the policy is eligible for Under the Coordination of Benefits provision, if an insured is disabled due to a work-related loss, the primary payer is workers compensation An insured's disability income policy defines total disability as 'the insureds inability to perform the duties of any occupation for which he or she is reasonably qualified by education training or experience.' This definition is known as the: 'Any occupation' definition and is more restrictive than other definitions

Consultants

Charge a fee, give advice

Level, decreasing and increasing term refer to which policy feature?

Death benefit

Which of the following would be considered a pre-existing condition?

Diabetes

"Active duty members of the military are required to enroll in which TRICARE plan?"

Prime

If Alvin purchases a Variable Universal Life Policy with a face amount of $250,000, and chooses death benefit Option B, upon his death the amount of the benefit payable to the beneficiary would be _________ if the policy had $25,000 in cash values. 275,000 Which of the following best describes an Annual Renewable Term Policy? A policy with a level death benefit, but with increased premium at each renewal All of the following are true regarding Current Assumption Whole Life, except: If current rates decrease, the policyowner pays reduced premiums, or the cash values will grow faster Should an insured become totally and permanently disabled two months before the cut-off date for the waiver of premium rider: The insured remains eligible for all provisions In the event a parent becomes disabled or dies while paying premiums on a life insurance policy for a minor child, which provision would allow the policy to continue in force until the child reaches a predetermined age? Payor Benefit (Waiver of Payor Premium)waives the policy premium in the event of the death or total disability of the premium payor. Usually found in policies covering children to the child's age 21 or 25. Universal Life is similar to Whole Life in all of the following ways, except: The timing and amount of premium is flexible exclusions ______________ are conditions stipulated in the contract for which the insurer will not provide coverage. All of the following are situations in which the insurer is obligated to pay out a death benefit after the insured has died, except: The premiums have not been paid and have been overdue for 3 years Under what conditions can a producer alter, change, modify or waive any policy provisions? never The ___________ clause allows the insurer to pay a relative or anyone deemed entitled to the death proceeds when there are no living beneficiaries, often to reimburse them for the funeral costs. facility of payment The ____________ provision prevents a Whole Life Policy from lapsing, as long as there is adequate cash value, if the insured/policyowner forgets to pay the premium by the end of the grace period. Automatic Premium Loan If no money is involved when the ownership of a policy changes, this is referred to specifically as a(n) __________. Absolute assignment 00:0201:461.00 Upgrade to remove ads Only $2.99/month An insured purchased an ordinary life policy 15 years ago, and at that time listed her husband as the only beneficiary. Her husband died 2 years ago but she never changed the beneficiary. She dies, leaving one surviving adult child. Who receives the death benefit? the insured's estate Which of the following nonforfeiture options would you use to cancel the entire policy and receive all values in the policy? cash surrender option Sylvia was the insured and owner of a policy that named her husband as the beneficiary. Upon her husband's death, she decided to change the beneficiary designation to her best friend since she has no close living relatives. The insurance company will: Accept the beneficiary change A policyowner allows a policy to lapse and the insurance company converts the policy to the extended term option. Which of the following from the original policy will automatically carry over into the new policy? face value Which of the following terms means that the policyowner can change the beneficiary designation at any time and for any reason? Revocable Which of the following two documents always constitutes part of the entire contract? The application and policy George has named each of his three sons as per capita primary beneficiaries of a $30,000 life insurance policy. If all three sons are living at the time of George's death, which statement best describes the amount each will receive? all sons get 10,000 Mona let her permanent policy lapse. She discovered there was $2,498 in cash value remaining in the policy and decided to pay off some of her credit card debt. She exercised which Nonforfeiture Option? cash surrender The Mode of Premium provision addresses: frequency of premium payment Which statement best describes the provisions of the Uniform Simultaneous Death Act? If the insured and the primary beneficiary should die immediately in the same accident, the proceeds are paid as if the primary beneficiary had died first Upgrade to remove ads Only $2.99/month What is a material misstatement? One which would have caused the insurer to not issue the policy had it been known Jeanne has a $100,000 whole life insurance policy that has $1,000 of dividend additions, a $6,000 outstanding loan that includes unpaid interest, and a monthly premium of $500. If she dies during the grace period, which of the following insurance settlements would be permitted? $94,500It is prohibited for any settlement to be less than the amount of the death benefit, PLUS dividends, less policy loans and loan interest outstanding, less any unpaid premium. When there is enough cash value within a life policy to pay the premium, the Automatic Premium Loan provision prevents the policy from: Lapsing If a beneficiary has the choice and is interested in capital conservation, then which of the following settlement options should be chosen? Interest Only Turning over all rights in a life policy to an assignee is referred to as: An absolute assignment Each of the following statements about policy loans is correct, except: policy loans may be made on any type of policy The provision which denies the beneficiary the right to commute, alienate, or assign his/her interest in the policy proceeds is: The Spendthrift Clause As a general rule, most insurance companies will allow the insured to change to another type of insurance policy without a medical examination if the: New premium is higher than the original Which provision allows an insurer to borrow from the cash value of a policy in order to pay premiums due and prevent a lapse in coverage? Automatic Premium Loanenables the insurer to borrow automatically from the policy's cash value, at the end of the grace period, to cover a premium payment to prevent the policy from lapsing. If the premiums are not paid on a Traditional Whole Life policy that has been in force for decades with no loan outstanding, what happens? Unless specified otherwise, the cash values buy extended term Upgrade to remove ads Only $2.99/month Which provision requires the application, the contract itself and any riders to be attached to establish a complete contract? The Entire Contract Provision When a producer is made aware of an insured's death, the first task is to: notify the insurance company The policy loan amount cannot exceed the ____________. Available cash surrender value A partial withdrawal is considered ______________. A partial surrender of the policy The company will normally pay the face amount of the policy to the beneficiary of an insured who commits suicide after the policy has been in effect for:A 2 years How long, typically, is the reinstatement period from policy lapse? 3 years Using the policy dividends as a single premium to buy additional life insurance is called the: Paid-up additions option Cranston wants a Settlement Option for his beneficiary that will guarantee the beneficiary an income as long as the beneficiary lives. Cranston should choose: Life Income Only Not studied (24) You haven't studied these terms yet! Select these 24 The nonforfeiture option that, if exercised, terminates all coverage is: Cash Surrender Which of the following two documents always constitutes part of the entire contract? The application and policy Upgrade to remove ads Only $2.99/month All of the following are Settlement Options, except: Reduced Paid-Up A settlement option that guarantees a payment for a specified period of time and that liquidates both principle and interest is which of the following? Fixed Period The nonforfeiture option that provides coverage for the longest period of time is: Reduced Paid-Up The owner's rights include all of the following, except: Selection of mortality table to use Once a policy has lapsed, the insured usually can reinstate the policy, provided proof of insurability is shown, if: All back premiums due plus interest have been repaid and less than 3 years have elapsed The collateral used in a Collateral Assignment of a policy is the policy's: Cash value If the policyowner specifies the time over which all settlement option installments are to be paid, he/she has chosen which Settlement Option? Fixed Period State law may vary, but life insurance policies GENERALLY cannot be backdated more than ______ months. 6 Each of the following is a source of life insurance policy dividends, except: Guaranteed cash value accumulations Once issued, if the application is attached to the policy itself, it then becomes part of the ___________. entire contract Upgrade to remove ads Only $2.99/month ______________ are conditions stipulated in the contract for which the insurer will not provide coverage. exclusions All of the following are common exclusions, except: driving When can a policyowner make a change in the policy's coverage or other benefits if an irrevocable beneficiary has been named? after irrevocable beneficiary dies Which of the following provisions is NOT a standard provision? backdating Which nonforfeiture option would you use to keep your policy in force, but with a smaller face amount of the same type, and would eliminate any further premium payments? Reduced paid-up option The payment of the proceeds of a policy in other than a lump-sum cash payment is called a: Settlement option B's policy had a $1,000 annual premium. B has not paid it for 2 years and wants to put the policy back in force. The insurer charges 10% interest on overdue premiums. What does B have to pay in order to reinstate their policy? 2 years of premiums, plus interest due on overdue premiums amounts How are settlement options paid? A lump sum or a mode of equivalent value Which of the following is FALSE about the Automatic Premium Loan Provision (APL)? For it to be included in the policy, there is an additional premium charge A life Insurance policyowner receives an annual dividend. One option for this dividend is to use it to offset the annual obligation to the insurer. What is this option called? Premium Reduction The interest earned on dividends is: taxable Why should a policyowner be especially careful when deciding to increase the amount of an outstanding policy loan? If the outstanding loan balance, plus interest, equals or exceeds the cash value of the policy, the company could cancel the insurance

K has a loan of $5,000 outstanding against her $25,000 traditional whole life policy. If K dies, how much will her beneficiaries receive? 20,000 When can a policyowner make a change in the policy's coverage or other benefits if an irrevocable beneficiary has been named? after irrevocable beneficiary dies The annuity __________ option selected can provide a temporary or lifetime payment. Settlement All of the following are ways in which an annuity can be classified based on its premium funding method, except: reinvestment If an annuity uses units instead of dollars to determine the value of the policy, then it is a(n) _________ annuity. Variable Upgrade to remove ads Only $2.99/month A(n) __________ annuity has its interest credit linked to the positive performance of a stock market index. equity-indexed An insurer considers all of the following when determining the fixed annuity payments, except: Stock market value Annuities and life insurance are similar in all of the following ways, except: Both use the same term to identify the person whose life is the subject of the contract If interest rates have fallen since a market value adjustment annuity (MVA) was purchased, what impact will this have on the annuity? In effect, the account values would have increased A(n) ________ has all of the contractual rights in an annuity contract. Owner Which product, offered by insurers is specifically designed to allow an individual's savings to be distributed to him/her periodically over his/her entire life, regardless of how long he/she lives? Annuities Which of the following annuities does not have a traditional accumulation phase? Single premium immediate If the policyowner can withdraw funds from an annuity without surrender charges in the event interest crediting rates fall by more than a specific amount, this is referred to as a(n) ____________ provision. Bailout Harry, the annuitant of a non-qualified tax deferred annuity with $40,000 cash value chooses the Life Income with Refund Payment Option when he annuitizes to policy. After receiving $1,000 each month for 80 months, Harry suddenly dies. How much will his beneficiary, his wife Lucille, receive? zeroreturns the remaining unpaid principal, since Harry lived well beyond the refund (principal amount) there would be no residual values remaining on the payment option selected. The insurer generally assumes the investment risk in all of the following annuities, except: Variable Upgrade to remove ads Only $2.99/month In which of the following circumstances is an annuity's tax-deferral benefit lost? The annuity is owned by a corporation Under an annuity with a Joint Life Payment Option, what will the survivor receive upon the death of the first annuitant? nothingceases all distributions at the first death of any of the annuitants. This would not be the case if a Life Income Joint and Survivor Option were chosen. The pay-out period of an annuity is also referred to as the ______ period. Annuity ... ... With a Life Income Payment Option, what happens at the annuitant's death? All payments cease Which of the following Annuities can it be said that it has 'upside potential, but no downside risk' when it comes to the stock market overall? ... An individual owns a variable annuity. Upon annuitization, the number of Annuity Units on which the benefit amount is based will __________ from month to month. Remain the same What type of annuity is designed to start benefit payments many years from now and subjects the owner to investment risk? Deferred variable G is concerned about the future and living a comfortable retirement. Which of the products listed below is ideally suited to help G prepare for his retirement goal? an annuity Which of the following annuities uses unit values rather than dollars to account for its value? Variable The annuity pay-in period is also referred to as the ________ period. Accumulation Before taking an application for an annuity, it is important to: Determine the suitability of the product to the intended purchaser What do both life insurance and annuities have in common? Both are products based on a mortality tableannuities are sold primarily to supplement income at retirement. Life insurance is primarily used to create funds upon the death of the insured for surviving family members. Sam wants to know at what age he should annuitize in order to receive the highest monthly income benefit payment: Age 70 A deferred annuity pays a death benefit to a beneficiary: When the annuitant dies before receiving any annuity payments F has an annuity with $50,000 of cash value. F needs life insurance but does not currently have it in his budget to pay for it. What is another option for F to consider to obtain the much needed life insurance F needs? Use some of the annuity funds either through systematic withdrawal or a settlement option to pay the life insurance premiums Which of the following is TRUE regarding Indexed Annuities? Values and benefits may increase, but not decrease _____________ are allowed as a way to access annuity values without having to elect a settlement option or surrender the contract. Systematic withdrawals All of the following are true regarding annuities, except: They are similar to life insurance One of the benefits of an annuity in regards to taxes is: Earnings are tax deferred during the accumulation phase Upgrade to remove ads Only $2.99/month All of the following are traits of a Fixed Annuity, except The actual rate of interest credited will be based on the state-published interest rate index All of the following are benefits an annuity can provide that other investment or savings products cannot, except: Tax-free distributions Mr. Zamboni is the owner and the annuitant of an annuity. Mrs. Zamboni, the designated beneficiary, will be able to assume all ownership rights and tax-deferral if Mr. Zamboni should die ___________. During the Accumulation Period K owns a variable annuity with an assumed interest rate of 4%. If the actual performance of the separate account(s) is 5%, the effect on this month's income benefit check will be such that it: it will go higher.if the actual return is greater than the assumed interest rate, then it will increase the next month Harry, the annuitant of a non-qualified tax deferred annuity with $40,000 cash value chooses the Life Income with Refund Payment Option when he annuitizes to policy. After receiving $1,000 each month for 80 months, Harry suddenly dies. How much will his beneficiary, his wife Lucille, receive? zero James is nearing retirement and has accumulated $175,000 in an annuity. He wants the largest possible monthly benefit for as long as he lives. Which option should he choose? Life Income All of the following terms are the same regardless if the policy is life insurance or an annuity, except: Annuitant

"A(n) _________________ is issued to the sponsor of the group, and employees receive an outline of coverage or other summary of benefits, which offers information about the plan's major benefits and principal exclusions."

Master policy

Cash value (living benefit):

Money accumulated in a permanent policy which the policyowner may borrow as a policy loan or receive if the policy is surrendered before it matures.

Accident and Health insurers would use which of the following formulas in determining premium rates?

Morbidity - Interest + Expenses

"A "level term" policy means that the _____________ remains the same throughout the lifetime of the policy."

Policy proceeds

To help protect against ___________, group plans have a probationary period set by the group sponsor.

Preexisting conditions and immediate claims

Under medicare Part D individuals MUST pay:

Premiums Annual Deductibles Co-Pays per prescription filled

if the Insurance Company cancels.

Pro Rata Return

When, Peter, an independent contractor, purchased his own personal medical and dental insurance, he discovered that:

Self-employed persons may deduct up to 100% of the cost of health insurance for themselves and their dependents

An insurer considers all of the following when determining the fixed annuity payments, except:

Stock market value

To encourage annuity holders to leave funds in the policy until retirement, insurance companies can assess a(n) __________ for withdrawals.

Surrender charge

Industrial

Synonymous with debit life insurance and makes up only about .03% of the life insurance today.

If a change or correction must be made on the application for insurance, which of the following applies?

The Producer can make the change and have the insured initial the change

When calculating premium of life insurance policies, insurers assume all of the following, except:"

The actual life expectancy of each group of insured's

When an employee pays part of the premiums for group disability insurance:

The benefits are received tax free to the extent that the employee paid the premiums

Viatical Settlement Purchaser

The company or person that purchases the life policy for the insured.

"What "jumps" in a jumping juvenile policy?

The face amount jumps one time, usually to five times the amount of insurance, at age 21 or 25

Which rating classification is typically used in the senior marketplace so that policies can be issued without a medical exam?

The lien plan

H is employed by a company that provides group life insurance. How much of the employer-paid premiums for H's $150,000 coverage, if any, is going to be reported as taxable income to H?

The premium paid for $100,000

Adverse Selection

The tendency of more bad risks than good risks to purchase and maintain insurance.

benefit period

The time period the insured is eligible to receive payments after the elimination period has been met.

"What advantage do persons have when applying for a Medicare Supplement insurance plan at the same time they are first eligible for Medicare?"

They cannot be declined for the insurance

Family Dependency Period

When the survivor has 1 or more children with the youngest child under age 16.

Retirement Period

When the survivor reaches retirement age.

"T owns his own insurance agency and is authorized to represent 12 different insurers. T must be: "

an independent agent

insurance producers

licensed individuals representing and appointed by an insurance company when transacting insurance business.

an owner:

not necessarily the insured under the policy but is responsible for paying the policy's premium and has various rights as specified in the contract.

Alma, age 35, earns $50,000 a year and expects to retire when she is 65. What is Alma's human life value?"

$1.5 million

Jack has a variable annuity in a separate account that has a portfolio valued at $5 million. There are 500,000 outstanding accumulation units for the account. What is the value of one unit?

$10

"A minor domiciled in Alabama who is 18 years old is competent to receive payments of up to _________ in any one year from a life insurance company, provided the insurer has not been notified of a guardian."

$3,000

A $500,000 policy is sold for $50,000. After the sale, the new owner pays $10,000 in life insurance premiums while the insured is alive. Upon death of the insured, how much of the death benefit is taxable?

$440,000

Albert owned a $100,000 policy that had accumulated a cash value of $20,000, against which he had borrowed $10,000. If he dies with this loan outstanding, his beneficiary will receive which of the following amounts?

$90,000

*Know that the Commissioner can grant or deny an agent request for an extension to comply with the continuing education requirements. The following time limits to comply would apply:*

*90 days if granted, 30 days if denied Know the following CE Common Test Point: 24 hours CE required every 2 years, 3 must be in ethics*

*Current interest is credited to the cash value account*

*Cost of insurance is charged to the cash value account*

*COBRA Who is covered and when. (18 months, 29 months, 36 months) Qualifying events for dependent coverage*

*Dependent coverages and how they carry over 2 times that notification must be provided*

*The greatest advantages of term insurance are the Convertible and Renewable provisions that may be exercised without any proof of insurability.*

*Group life is usually written as term and is both renewable and convertible. A term policy that does not contain these two options would cost less than one that does. Conversion periods vary among insurance companies.*

*Know the effective date of the policy is ALWAYS going to be the date indicated on the policy*

*Know that the Policy takes effect on the Effective Date indicated on the policy.* *The date when insurance coverage begins (may also be known as inception date)*

*Know that you MUST have a High Deductible Health Plan (HDHP) in order to have a Health Savings Account (HSA).*

*Know the 15% penalty tax and when it is applied. 75% Contribution Limit for employees with families 65% Limit for single employees*

*Types of exchanges the IRS will allow on a tax-free basis are from:*

*Life insurance to life insurance Life insurance to an annuity Annuity to an annuity Life insurance or annuity to long-term care But NEVER an annuity to life insurance

*Insurer is fined up to 3 times the premiums paid for accepting business from a non-licensed producer*

*Producer is fined up to 3 times the commissions paid for violating this regulation*

*Podiatry has nothing to do with dental. Beware; sometimes other types of care are inserted in exam questions.*

*STOP LOSS is NOT used as a means to control costs because this is the part of the plan that, upon reaching the stop loss limit, the insurer pays 100% of the remaining expenses up to the policy limit.*

*Policy ownership, the business owners own Cross Purchase*

*The Entity Plan is owned by the business itself*

*Employer probationary periods are typically 90 days for both contributory and non-contributory plans.*

*The underwriter focuses on the group as a whole rather than individual members.*

*(A $500,000 policy is transferred to a new owner and sold for $50,000. After the sale the new owner pays $10,000 in life insurance premiums while the insured is alive.

*Upon the death of the insured $60,000 ($50,000+$10,000) of the death benefit is received income tax free to the beneficiary, while $440,000 is taxable ($500,000 - $60,000).)

W has a health insurance policy with an 80/20 coinsurance, a $1,000 deductible. If in January W goes into the hospital for an overnight stay, the bill coming to $2,000, what will W pay?

1,200

An insured purchases a disability income policy with a 90-day elimination period. If a disability lasts 100 days, the insured would be entitled to receive benefits for:"

10 days

"In noncontributory group health plans, how many eligible employees must be covered by the plan?"

100%

An applicant for a resident insurance producer license must complete a pre-licensing course consisting of at least ______ classroom hours or equivalent individual instruction, per line of authority.

20

"To be considered terminally ill, federal law defines a terminal illness as one which is expected to result in the person's death within how many months?"

24

An evaluation of Simon's past earnings reveals his average earned monthly income to be about $4,000 monthly. The greatest amount of benefit that Simon will likely be able to purchase under a Disability Income Policy, in order to reduce malingering in the event of a claim, is:

2500 monthly

"One of the changes to take effect following passage of the PPACA was to allow children to remain covered under a parent's policy to age:"

26

"Under Alabama law, you cannot pay any valuable consideration to a person if they are not licensed as a producer. If a producer violates this provision, they are subject to a fine of up to:"

3 times the commission paid

Under Alabama law, you cannot pay any valuable consideration to a person if they are not licensed as a producer. If a producer violates this provision, they are subject to a fine of up to:

3 times the commission paid

"An insurer that issues a health insurance policy must pay for services rendered by Alabama health care providers within ______ calendar days upon receiving a clean electronic claim."

30

An individual long-term care insurance policy may not be terminated for nonpayment of premium unless the insurer has give notice to the insured and any designated persons at least _____ days before the effective date of the termination.

30

FREE LOOK PERIODS throughout this book are as follows:

30 Day - Replacement policies 30 Day - Senior products such as: LTC and Medicare Supplement policies 10 Day - For all other policies

Policies that are replacing existing contracts must have a Free Look period of how long?

30 days

An applicant who fails two examinations for the same line of authority must wait ______ to take another examination for that line of authority

3months

"In order for a worker to be qualified for all of the benefits available from Social Security how many credits must be earned?"

40 credits

Distributions from a Modified Endowment Contract (MEC) made on or after age _____ are not subject to any tax penalties.

59 ½

"An insurer may reserve the right to defer the payment of a cash surrender value for up to _________ months after demand is made and the policy is surrendered."

6

An individual purchased a fixed annuity with flexible premiums. When she annuitized the policy, she chose the Life Income 10-Year Certain option. What would the beneficiary receive if the annuitant dies 4 years after the annuity payout began?

6 more years of payments

Regarding disability income policies, which of the following benefit periods would have the lowest premium?

6 weeks

The widow or widower's Social Security blackout period lasts until a surviving, non-remarried spouse reaches age ________.

60

How much time after a qualifying event has occurred and notice is given of their right to continue insurance does an employee or dependent have to elect continuation of the group health plan under COBRA?"

60 days

What percentage of employee participation is required for a contributory employer group plan?

75

Proof of loss is required within _____ days of loss.

90

"According to the Proof of Loss provision, an insured must furnish the insurer with written evidence of a claim within:"

90 days of the loss

participating

A class of policy marketed by a mutually owned company.

The entire contract typically consists of all of the following, except:

A copy of the cancelled check and receipt

*A fine of 3 times the Premiums paid—applies to an insurer accepting business from a person that is not properly appointed and/or not licensed in the state*

A fine of 3 times the Commissions paid—applies to producers that are paid commissions while not properly licensed

T has some heart health issues, but needs some additional life insurance coverage. What options should T consider?

A group life insurance plan

A payor benefit rider is used to keep what type of policy in force?

A jumping juvenile policy

Permanent

A life insurance policy that remains in force to age 100 or beyond. It does not require to be renewed.

Single Premium

A lump sum payment is made into an annuity.

"A Tax Sheltered Annuity may be established and funded by which of the following?"

A not-for-profit community hospital association

Producer (agent)

A person or agency appointed by an insurance company to represent it and to sell policies on its behalf. A producer acts with one or more of the following three types of authority:

Variable

A policy introduced in the 1970s that uses separate account(s) for the cash value accumulation.

Which of the following best describes an Annual Renewable Term Policy?

A policy with a level death benefit, but with increased premium at each renewal

"Which of the following describes group life insurance?

A single policy issued to a business to cover the lives of employees

"Which of the following is true about a stock insurance company?"

A stock insurance company is run by officers and directors and has a stated amount of capital stock owned by stockholders

"While life insurance may accumulate money that a person could use in retirement, none promise the same long term benefit of a non-qualified annuity, which is ________________."

A stream of income the annuitant cannot outlive

Brokers

ALWAYS represent the insured's

If, as the result of an injury or illness, the insured is deemed to be terminal (i.e., expected to die within 1 or 2 years), what rider added to a life insurance policy would advance a portion of the face value?

Accelerated Benefit (Living Need)

Sylvia was the insured and owner of a policy that named her husband as the beneficiary. Upon her husband's death, she decided to change the beneficiary designation to her best friend since she has no close living relatives. The insurance company will:

Accept the beneficiary change

Timothy owns an individual A&H policy, and in the event of an accident, he is required to prove only that the injury itself is unforeseen and unintended. Tim's policy is based on which of the following definitions of accident?

Accidental Bodily Injury

The cash value of a permanent life insurance policy can be used for all of the following, except:

Accidental death benefits

All are true regarding funding of Social Security, except:

Actuarial value of contributions is related to actuarial value of benefits

"What is meant when a life insurance policy becomes incontestable?"

After 2 years, the insurer will not refuse to pay a death claim based on misinformation in the original application for insurance

underwriting factors

Age Gender Tobacco use Occupation and hobbies Physical condition Moral hazard/financial hazard Health history Foreign travel/residence Other insurance Plan applied for

A Child Rider that is added to an insured's permanent policy includes which of the following features?

All children (beyond 14 or 15 days of age) are covered, and the rider may be converted to permanent coverage at a specified age without evidence of insurability

What will cause the time period of the fixed amount settlement option to be extended? An increase in interest credited Primarily, the _________ is the person who will receive any residual contract benefits after the annuitant has died. beneficiary A lump sum of money is placed into an account from which the annuitant will draw periodic benefits beginning more than a year from the date of purchase. This describes a: Single Premium Deferred Annuity Jasmine has deposited $100,000 into a single premium immediate annuity. If Jasmine were to die before receiving $100,000 in payments, the balance of the $100,000 would be paid to her sister. Jasmine has selected the: Life Income with Refund Option Annuities may be funded with either a lump sum or a ______ premium basis. Flexible Mastered (12) You've been getting these terms right! Select these 12 Concerning the Paid-Up Additions Dividend Option, all of the following are true, except: Eventually, no more premiums will be due on the policy A trust is established where the grantor can change the trustees whenever they want. Which of the following would best describe the type of trust that was set up? revocable trust The period of time over which a single sum or periodic deposits grow within an annuity is referred to as the: Accumulation Period Which annuity is the only one regulated by the SEC, FINRA, and State insurance departments? variable Annuities are classified in all of the following ways, except: Issuer of the annuitybased on (single, flexible, and periodic), funding (fixed vs. variable), when income benefits are payable (immediate vs. deferred), and the payout option selected (life only vs. annuity certain). Generally, which of the following Annuities is not designed to guarantee the principal value of the policy in stable interest rate environments? Variable If an annuity is purchased in December and monthly benefits begin in January of the following year, what type of annuity is it? Single Premium Immediate Annuity 1.00 If a lump sum from a lawsuit, a lottery winning, or inheritance, is used to purchase a guaranteed lifetime income. It is referred to as a ___________. Structured settlement The type of annuity in which the values grow according to the performance of the investment medium, and in which benefits may fluctuate according to market performance, is called: A variable annuity Annuity income benefit payments are based on all of the following, except: education level All else being equal, which of the following will receive the largest income benefit payment from an annuity? MALE AGE 80 (older male) The _________ gives the owner of a variable annuity the ability to withdraw a maximum percentage of the annuity value until the initial investment amount has been recouped. Guaranteed minimum withdrawal benefit

All of the following regarding credit life are true, except: Usually the creditor pays the premium(debtor pays) An application for group coverage is signed by the: Employer, who then receives and retains a master policy Which of the following is the least important when it comes to determining the cost of the group life insurance plan? The health of each member of the group An individual has secured a $12,000 loan from the bank to purchase a boat, which is scheduled for repayment in monthly installments over 48 months. Which life insurance would be most efficient at protecting the lender should the borrower die prior to retiring the debt? Decreasing Term Steve begins work on March 18 at the Riviera Electric Company. Riviera offers noncontributory group life insurance to its employees after a probationary period and provided the other usual requirements are met. If the probationary period is the usual length, Steve will be eligible for group life insurance on: June 18(group life insurance is usually 90 days) Which of the following is a major risk to an employee covered under an employer's group life insurance plan? The sponsor can elect to discontinue the plan A split-dollar plan: Divides the cost of additional insurance for an employee between that employee and the company Each of the following pertaining to group life insurance is true, except: Group members are required to prove insurability Mastered (13) You've been getting these terms right! Select these 13 With a Contributory Group Life Plan, what percentage of the employees must participate? At least 75% If an employee does not enroll during open enrollment and they still want coverage, what happens? They must provide proof of insurability Social Security pays an eligible surviving spouse (or minor child) a one-time benefit upon the death of a covered worker. Which of the following is the amount of that benefit? $255 T has some heart health issues, but needs some additional life insurance coverage. What options should T consider? A group life insurance plan Upgrade to remove ads Only $2.99/month The __________ allows an insurer to pay death benefits anyone it deems to be entitled in the absence of a designated beneficiary. Facility of Payment Clause ABC Enterprises is worth $300,000. There are 3 shareholders and each shareholder is an equal owner of the company. If they establish an entity buy-sell agreement, the entity would have to buy policies in the amount of $____________ on each of the owners. $100,000 The primary purpose of a Section 303 redemption is: To provide liquidity to pay estate taxes and administration and funeral costs A Taft-Hartley Trust is established by one or more: Labor unions or associations Which of the following concerning Noncontributory Group Life insurance is FALSE? An employer pays 75% of the premium The Social Security Survivor Benefit is based on which of the following? PIA When an insurer wishes to implement changes to a group life policy, whom must it notify? The group sponsor All of the following are examples of third-party ownership, except: A mother buys a policy for herself and names her son as beneficiary ____________ individuals pay a FICA tax amount equal to the total of an employer and employee payment. self employed Not studied (32) You haven't studied these terms yet! Select these 32 To help protect against experiencing immediate claims, group plans have a(n) _______ period set up by the group sponsor. Probationary Upgrade to remove ads Only $2.99/month All of the following are advantages of having a Buy-Sell Agreement in place, except: Premiums are tax-deductible The Allied Stove company applies for life insurance on its key vice president, Harold. Allied Stove company is the premium payer and beneficiary, and controls all rights to the policy. Which of the following is true? Harold is the proposed insured; his company is the applicant, policyowner, and beneficiary After the blackout period has ended, the widow or widower may receive a Social Security income benefit based on the ___________. PIA of the deceased spouse A certificate of insurance: Is issued to each individual covered by the group life insurance When a group plan is contributory, what percentage of employees must want and be willing to pay for coverage? 75% Which of the following is a major risk to an employee covered under an employer's group life insurance plan? The sponsor can elect to discontinue the plan L is no longer eligible for the employer's $50,000 group life insurance plan. L dies 28 days later without sending in the required conversion paperwork. What will their beneficiaries receive? $50,000, less any premiums due Why were industrial policies written? To offset funeral expenses Which of the following is true in regard to an Entity Purchase Plan? The business enters into an agreement to purchase the deceased's interest in the business Under an Entity Purchase Plan form of a Buy-Sell Agreement, the business is all of the following, except: Insured Upgrade to remove ads Only $2.99/month The 31 days in which the employee may change his/her group policy to an individual policy upon termination and without evidence of insurability, is known as: The Conversion Period In those instances in which the death of a valued employee could cause financial hardship for a company, the company might acquire additional funds through which type of coverage? Key Person An agreement that establishes a price with the intent to purchase the assets of a business should one of the parties to the agreement predeceases the other is called a ___________. Buy-Sell Agreement Regarding Social Security survivor benefits, when the youngest child reaches age 16, the _________ period begins and continues until the surviving spouse reaches age 60. blackout How are employee FICA taxes collected? The employer withholds the employee's tax and pays it along with the employer's portion The Social Security System is funded through: Federal Insurance Contribution Act (FICA) taxes When converting a group life policy to an individual policy, the departing group member's new policy must be a: Permanent or whole life policy How is the funding for Social Security provided? Through FICA taxes that are paid by both employers and employees The principal difference between an entity purchase and a cross purchase buy-sell agreement is: The identity of the policyowner Which of the following IS true regarding key person insurance? The employer is the policyowner, premium payor, and usually the beneficiaryProvides for the cost of replacing or training a new employee in the event of the death of the key employeeIt is written for the benefit of the employer, not the employee's family ________ Insured under Social Security means that a worker has at least 6 work credits during the 13-quarter period ending with the quarter in which the worker dies, becomes disabled, or reaches retirement age. Currently Which of the following meets the criterion for being a natural group for group life insurance purposes? The group was formed for a purpose other than for procuring or reducing the cost of insurance If a buy-sell agreement were not in place, all of the following could happen, except: The estate transfer may be sped up due to emergency business liquidation Open enrollment periods are offered on a(n) ______ basis that allows individuals to enroll without evidence of insurability or to make changes. Annual The 31 days in which the employee may change his/her group policy to an individual policy upon termination and without evidence of insurability, is known as: The Conversion Period Buy-sell agreement life insurance premiums are: Not deductible and proceeds are income tax free The Kalamazoo Stove and Screen Door Company applies for life insurance on its key vice president, Harold. Kalamazoo Stove and Screen Door Company is the premium payer and beneficiary, and controls all rights to the policy. Which of the following is true? Harold is the proposed insured; his company is the applicant An employee who is covered under an employer group life insurance plan may assume all of the following are TRUE of the opportunity of conversion, except: The employee chooses which type of insurance to convert to All of the following are characteristics of Franchise Insurance, except: Certificates of Insurance are issued All of the following are true regarding credit life, except: The amount of coverage can exceed the debt Which of the following policies is issued without medical exams required? industrial

"A contract that is designed to accumulate value over time with the intent to distribute the funds over the lifetime of an individual is called _________________."

An annuity

"All of the following are correct regarding an annuity, EXCEPT:"

An immediate annuity must start providing income within 3 years of the first premium payment

Which of the following IS true regarding COBRA coverage?

An insured must be notified under COBRA when a qualifying event occurs Employees must be notified of their right to continue coverage immediately upon termination If an employee carried dependant cover on the group plan, dependant coverage must be made available on the COBRA continuation policy

Domestic insurer

An insurer organized under the laws of this state, whether or not it is admitted to do business in this state.

The two primary definitions of disability are "any occupation" and "own occupation." Which of these statements best describes the difference between the two definitions?"

An own occupation policy is less restrictive because it is easier to qualify for benefits

Which of these modes would result in the insured paying the least amount per year for life insurance?"

Annual

Which of the following IS NOT a type of illustration under the Alabama regulation governing life insurance illustrations?

Annualized Illustration

"All of the following tax-free exchanges of life insurance and annuities are permitted, EXCEPT:"

Annuity to life insurance

Insurable Events

Any event, past or present, which may cause loss or damage, or create legal liability on the part of an insured.

Ordinary Life Insurance

Any type of life insurance that is not group, industrial or government insurance

Capital Liquidation

Assumes both principal (capital) and interest are liquidated over the relevant time period to provide the required income for the dependents.

Capital Retention/Conservation

Assumes the desired income will be generated by the investment earnings only, thus retaining or conserving the principal or capital invested.

If the policyowner can withdraw funds from an annuity without surrender charges in the event interest crediting rates fall by more than a specific amount, this is referred to as a(n) ____________ provision.

Bailout

a producer must

Be licensed for a line of insurance to solicit or negotiate that line of insurance Be appointed by an insurer in order to act on its behalf

jane pulled money out of her Medical Savings Account (MSA) at age 62 to be used for something other than a medical expense. The money she pulls out will:

Be taxed as any other income with an additional 15% penalty

Primarily, the _________ is the person who will receive any residual contract benefits after the annuitant has died.

Beneficiary

What is the name of the person named in the annuity contract to potentially receive any residual benefits?

Beneficiary

"What does it mean if dental benefits are scheduled?"

Benefits are limited to specified maximums per procedure

Which is not correct concerning a Blue Cross and Blue Shield Plan?

Benefits are paid directly to the insured individual

Which statement is incorrect regarding Blue Cross and Blue Shield?

Blue Cross and Blue Shield have traditionally offered benefits in the form of indemnity

Which of the following is an example of a producer cooperative?

Blue Cross/Blue Shield organizations

benefit plans

Bronze Plan Covers 60% of the benefit cost of the plan Silver Plan Covers 70% of the benefit cost of the plan Gold Plan Covers 80% of the benefit cost of the plan Platinum Plan Covers 90% of the benefit cost of the plan

Which of the following plans could generate a taxable event to the recipient?

Business overhead expense

A general description of the basic types of life insurance used to assist prospective purchasers can be found in the:

Buyer's guide

A producer is explaining the concept of limited-pay life insurance to her client. Which of these statements is incorrect?"

By paying over a shorter period of time, each of the payments will be lower

J took out a life policy when he was 35. It had a conversion feature that he exercised at age 45. Age 45 is referred to as his ____ age. Attained If a client is unsure about whether or not he/she can obtain coverage or how much it would cost, what can the producer suggest to see what the insurer can do without tying up any of the client's funds? Submit a trial application A producer must include their name and address on which of the following? A policy summary What should an agent tell the insured when the insured asks when will his health plan take effect? The effective date indicated on the policy In order to receive a policy dividend, the policyowner must own a/an __________ policy. Participating Generally speaking, straight whole life is classified as which of the following? Ordinary The term 'mode' refers to the: Frequency of premium payments All of the following are reasons an application is important, except: Statements made on the application are considered to be warranteed statements, guaranteed to be true in all respects Which of the following policies offers the least guarantees? Variable Universal Life If a client chooses to pay premiums other than annually, what can he or she expect? Additional charges to offset lost interest, earnings, and increased administrative costs Debit life insurance is classified as which of the following? industrial A personalized computer-generated illustration detailing premiums, cash values, interest rates, and surrender values is called __________. A policy summary Upgrade to remove ads Only $2.99/month A producer submits a completed application to the insurer along with the premium check after giving the applicant a conditional receipt. If the applicant completes the required medical exam, but dies prior to the insurer issuing a policy as applied for, what is the insurer's responsibility? To pay the claim in full as long as the conditions of the receipt were fully satisfied by the insurer When an insured decides to change her mode of premium payment from annually to monthly, the total premium due would: Increase The date on which insurance coverage is no longer in effect is referred to as the _________ date. expiration A (an)_________ is used when the insured's age, medical history, or amount of coverage does not require a medical exam for underwriting purposes. nonmedical application If the producer discovers that the applicant is not in good health at time of policy delivery, what should the next step be? The policy should be returned to the insurer, or the deliver the policy only after the insurer grants permission Industrial Life Insurance is also referred to as a: Debit Policyare also known as home service and debit policies where premiums are collected by a Debit Agent. What is the primary reason why States have 'outlawed' Stranger/Investor Originated Life Insurance (STOLI) transactions? At policy inception there is a lack of insurable interest _______________ is the process of selection, classification and rating, and determining if someone is insurable. home office underwriting If it is known or should be known by the agent that an existing policy is going to be lapsed, forfeited, surrendered or terminated in favor of a new policy, the agent must submit a: Notice Regarding Replacement When an applicant does not smoke, exercises regularly, seldom drinks, and eats moderately and is considered to be a better-than-average risk, they would likely qualify for: Preferred status and pay a lower premium Upgrade to remove ads Only $2.99/month The factor in premium computation that has to do with the recordkeeping and statistical analysis insurance companies perform is: Experience If after a policy has been issued and delivered, the insurer discovers unanswered questions on the application, what can the insurer legally do at this point? Nothing, the insurer has waived its right to that information When an applicant completes the insurance application in its entirety and provides the producer with a premium check, what in effect has taken place? The applicant is making an offer to the insurer In determining the proper amount of life insurance coverage for an insured, the ________ approach measures the projected future earnings and the value of the insured's services in the event of his or her premature death. Human Life Value The mortality rate is based on mortality tables which show life expectancy and the death rate per _______ people living in the U.S. 1,000 Insurance covering the liability of a producer or agency is called _______. Errors and Omissions In a replacement transaction, the insurer that is having its policy replaced is known as the _______ insurer. Existing All of the following signatures would be required on a life insurance application for an adult, except that of the: beneficiary Industrial insurance is also known as: home service When are Errors and Omissions claims filed? When clients file a report or a complaint Upgrade to remove ads Only $2.99/month Medical exams are requested in all of the following situations, except: low amount of premium Which of the following would be considered a good result from an underwriter's action when an individual Life Insurance Policy is issued as applied for? issued standard The premium that reflects mortality rates, assumed interest, and the policy's share of the company's operating expenses is called the: Gross premium Which of the following types of policies is eligible for policy dividends? participatingare issued by mutual companies and are eligible for policy dividends if and when declared by the company's board of directors. Not studied (21) You haven't studied these terms yet! Select these 21 Which statement best describes the term reserve? That amount that, when increased by future premiums on outstanding policies, and interest on those premiums will enable the company to meet future death claims A Consumer Investigative Report is not completed by ___________. producer The HIV Consent Form specifies which types of individuals may receive __________. test results The person who submits an application for insurance is always referred to as the _______. Applicant A participating policy is likely to have which of the following? A higher premium than a nonparticipating policy All of the following are living benefits of life insurance, except: Burial expenses Upgrade to remove ads Only $2.99/month There are ______ methods available to determine the income objective after the death of the client for planning purposes. 2 Under the Do Not Call Registry, telephone solicitation calls before _____ or after _____ are prohibited. 8am, 9pm The applicant, if other than the proposed insured, must have: An insurable interest in the life of the insured In a STOLI/IOLI transaction, what are the insureds basically doing? Selling their mortality to another for up-front cash The Medical Information Bureau is a nonprofit organization supported by: the insurance companies J buys a life insurance policy specifically intending for the death benefit to be used to cover estate taxes. What is the correct term for using life insurance in this way? Estate conservation The most effective way to ensure that the applicant will accept the policy when it is issued is: To have the applicant pay the initial premium at the time of application Loading includes all of the following, except: Mortality Policy __________ are the net premiums paid plus interest earned and reflect potential insurance contract obligations. Reserves __________ life insurance is when an insured is induced into purchasing life insurance with the sole intent of selling that policy once issued to third party investors for an amount less than the death benefit, but greater than its cash values. stranger oriented

By what means does the client acknowledge that an insurer may use services and information provided by third parties to gather information during the underwriting process? By signing the application Why have many states prohibited STOLI/IOLI transactions? It is a violation of the insurable interest rule Part 2 of the application consists of all of the following information, except: Date of birth, gender Which of the following is standard industry practice for producers in order to prove that they delivered the policy mailed to them from the insurer? Obtain a policy delivery receipt from the applicant whenever and wherever policy delivery takes place Once the gross amount of dollars required to fund an insured's needs has been determined using the needs analysis approach, what is the next step? Subtract any assets available to fund financial needs after death

'Other Insurance with This Insurer', 'Insurance with Other Insurers', and 'Relations of Earnings to Insurance' are all Optional Provisions which deal with situations where an insured can receive more money from 'loss of time benefits' Disability than from working, or more for reimbursement of medical expenses than these services actually cost. This is:

Called 'overinsurance' and can be remedied by each insurer's paying proportionate benefits or a single insurer allowing the insured to choose the policy from which benefits will be paid

Dividends left to accumulate at interest:

Can be withdrawn without affecting the cash value of the policy

"Rank the following renewability provisions in order from least favorable to most favorable in terms of benefit to an insured:"

Cancellable, conditionally renewable, guaranteed renewable

If an insurer cancels a contract, written notice must be provided to the insured within a certain period of time. This is a requirement under which of the following provisions?

Cancellation

"Which of the following is not a feature of term life insurance?"

Cash value guarantees

"The Master Policy for a group life plan goes to the employer. What does a participating employee receive?"

Certificate of Insurance

Individuals covered by a group plan receive:

Certificates of insurance

All of the following are required uniform provisions in individual health insurance policies EXCEPT:

Change of occupation

Which of the following is/are true regarding a Medicare Supplement policy?

Changes in a Medicare Supplement plan that are made to mirror Medicare are subject to premium increases all medicare plans are designed to reflect and adjust any changes made to the medicare

Which of the following might be eligible to participate in an MSA?

Charles, who works for a small bakery with only 15 employees

"Before telephoning a prospect for the first time, a producer must do which of the following?"

Check the company and national Do Not Call lists to be sure the phone number is not restricted

"In a group life insurance plan, the employee has control over which of the following?"

Choice of beneficiary

Which type of insurance policy combines Basic Medical Expense Coverage with Major Medical Coverage?

Comprehensive Major Medical

"Health Savings Accounts and Health Reimbursement Arrangements are both types of what form of health insurance?"

Consumer-driven health plans

An applicant for life insurance realizes several days after completing the application that she may have answered a medical question incorrectly. She should do which of the following?

Contact either her agent or the insurance company and make sure they have the correct information

"In a replacement transaction, all of the following are insurer duties and responsibilities, except:"

Contact the client to assure that they understand the transaction

What benefit does COBRA provide to employees when an employee is terminated?"

Continuation of health insurance at the employee's expense for up to 18 months

Every Health and Disability Income Policy must express the conditions and provisions for _______.

Continuation of the contract

Level Premium

Continuous premiums paid into the contract made on a regular basis, before being annuitized.

"A Roth IRA is unique for which of the following reasons?"

Contributions are nondeductible and distributions are nontaxable

Which of the following statements about a Roth IRA is FALSE?

Contributions are tax-deductible

When a group member terminates employment, he or she has 31 days to purchase an individual policy without proof of insurability. This is referred to as the:

Conversion privilege

"Basic health care expense plans are frequently referred to as "first dollar" plans. This means _______________________."

Coverage is provided, often at 100% of the expense, from the first day of the plan year, up to a stated maximum benefit and without a deductible

"Which of the following is a personal use of life insurance?"

Creating an immediate estate

"The spendthrift laws of each state protect life insurance proceeds against the claims of which of the following?"

Creditors of any beneficiary

Term life insurance will not pay out a death claim in which of the following situations?

Death after the term expires

"Which of the following are characteristics of universal life insurance?"

Death benefit options, death benefit, and premiums may be changed

Which of the following is a type of life insurance that provides an amount of coverage that diminishes while the policy is in effect and is most often used to pay an outstanding loan or mortgage balance upon the death of the insured?

Decreasing Term

This type of coverage is used for replacing the insured's loss of earnings.

Disability income

___________ are not taxable because they are considered a return of excess premium.

Dividends

When advertising you may NOT imply that:

Dividends are anything other than a refund or a return of part of the paid premium Dividend payments are guaranteed Illustrated dividends will be enough to fully pay for the policy

There are 3 different LTC Partnership plans:

Dollar for Dollar Asset Protection Plan (Alabama) Total Asset Protection Plan Combination Hybrid Plan

"Self-funded employee health care benefit plans which are not fully insured are governed under which of the following federal acts?"

ERISA

"The federal law that governs the rights of plan participants and beneficiaries of most employer-sponsored benefit plans is ____________."

ERISA

"All of the following are common exclusions found in dental insurance plans EXCEPT:"

Emergency dental treatment

"All of the following are correct regarding employer group health insurance plan's eligibility requirements EXCEPT:"

Employees can enroll at any time without restrictions

"When a group insurance plan is identified as contributory, it means all of the following, EXCEPT:"

Employers must enroll 100% of eligible employees

A(n) __________ annuity has its interest credit linked to the positive performance of a stock market index.

Equity indexed

Concerning the Paid-Up Additions Dividend Option, all of the following are true, except:

Eventually, no more premiums will be due on the policy

Employers are obligated to provide notification statements to individuals eligible for COBRA continuation under all of the following circumstances, except:

Every time a claim is filed

The insurance company must meet requirements under the _____ when gathering information about an applicant from a third party.

FCRA

"A producer may have his or her license revoked or suspended for all of the following reasons, except:"

Failing to pay a traffic ticket on time

Information from a third party collected by the insurance company in the application for insurance and during underwriting of the policy may be subject to the jurisdiction of the:

Fair Credit Reporting Act

The Social Security System is funded through:

Federal Insurance Contribution Act (FICA) taxes

COBRA

Federal law requiring employers with 20 or more employees to provide continuation of the group plan to all employees and dependents losing coverage due to a qualifying event

HIPAA

Federal law that allows for portability of coverage for persons with preexisting conditions

Flexible Premium

Flexible contributions may be made as often and in whatever amount the contract owner desires. However, most insurers do set a minimum and a maximum dollar amount they will accept.

Right to Examine is the same as:

Free look period

The exclusion ratio states that once the entire cost basis has been recovered from a non-qualified annuity income benefit payout then any further payments are __________.

Fully taxable since the excess payments must represent only earnings

Actuarial Department

Gather and interpret statistical information used in rate making. An actuary determines the probability of loss and sets premium rates.

"What is the purpose of a respite care benefit in a Long-Term Care policy?"

Gives a primary care giver a break

"Rebating occurs when a producer:"

Gives a prospect a discount or kickback in order to induce a sale

All of the following are characteristics of Group Life Insurance, except:

Group is typically written utilizing Permanent Insurance

All of the following groups are eligible for group rates, except:

Groups formed to reduce premiums

"What law provides the right of employees to continue health insurance coverage when changing employers by removing any restrictions against waiting periods and coverage in a new group health plan, as long as the employee has had creditable coverage?"

HIPAA

Andrew discovered that the consumer directed health plan he had established was subject to new contribution limits when he switched the Tier 1 payment mechanism from a/n:

HRAs to an HSA

When Harold became no longer eligible for coverage under his employer's group benefit program, which of the following statements accurately reflects the conversion privilege defined by his group contract?

Harold had 31 days to convert his policy to an individual plan

The type of health care provider that provides both the health care services and the health care coverage is a/an:

Health Maintenance Organization

What is the purpose of an 'Income Replacement' Pure Loss of Income Disability Policy?

Helps the insured maintain their standard of living

Part A of Medicare is known as:

Hospital insurance

Medicare Part A

Hospital insurance provided by the federal government

"All of the following statements regarding a Modified Endowment Contract are correct, EXCEPT:"

If a policy is deemed a MEC, the owner has 7 years to receive a refund of excess premiums and remove the MEC status

Tertiary Beneficiary

If named, the tertiary beneficiary receives policy proceeds if both the primary and the contingent beneficiaries predecease the insured.

"Under what circumstance would a policy loan in a life insurance policy be taxable?"

If the policy lapses or is surrendered, any loan amount in excess of cost basis is taxable

Luis and Margarita Rodriguez have a family health policy that includes two riders. One rider excludes coverage for Margarita's existing diabetes. The other rider indicates that the couple may purchase additional disability income coverage at specified dates in the future without proving insurability. What two riders are attached to this policy?

Impairment and guaranteed insurability riders

Which of the following policies is issued without medical exams required?

Industrial life

"What is the requirement for inflation protection in an LTC policy?"

Inflation protection must be offered

Under an Entity Purchase Plan form of a Buy-Sell Agreement, the business is all of the following, except:

Insured

"What is different about a corporate-owned nonqualified annuity compared to an individually owned nonqualified annuity?"

Interest or gains are taxable as income in the year earned

An insured's accident policy uses the phrase 'accidental bodily injury' to define what constitutes accidental injury and/or resulting death. This phrase:

Is less restrictive than the phrase 'accidental means'

Know the following key points, BC/BS:

Is set up as not-for-profit Is government regulated Pays directly to the providers Pays on a fee for service basis Is considered to be a producer cooperative

All of the following are alternatives an insurer may have when asked to insure a substandard risk, EXCEPT:"

Issue the policy with a waiting period after which the insurer may cancel the policy

"What is a High Deductible Health Plan?"

It is a health plan which requires the insured to absorb a relatively high deductible in exchange for a greatly reduced out-of pocket-premium

What is the Health Insurance Marketplace?

It is a resource where consumers can learn about their health insurance coverage options and compare plans

"How may the premium in a guaranteed renewable policy be increased?"

It may be increased for all similarly situated insureds based on age

Which of these is a qualified plan designed specifically for unincorporated self-employed individuals?

Keogh plan

The annuity benefit or payment option requiring the greatest amount of capital per $1,000 of benefit is:

Life Income Joint and Survivor 100%

"Which of these annuity distribution options promises the largest possible payment to a single annuitant?"

Life income only

If a(n) ________ does not pass the 7-pay test, it will be deemed a Modified Endowment Contract (MEC).

Life insurance policy

Any policy designed to provide coverage for not less than 12 consecutive months for diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital is the definition of:

Long term care

What health insurance product is designed to provide coverage for necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital?

Long term care

"Medical exams are requested in all of the following situations, except:"

Low amount of premium

"Replacement of health or disability insurance generally requires that the new policy must do which of these?"

Materially improve the insured's position in all or nearly all respects

Under ERISA qualified plans must meet all of the following requirements, except:

May discriminate in favor of highly compensated employees

A program designed to provide increased assistance to those who are unable to pay for their medical needs is known as:

Medicaid

In order for a claimant to be eligible for _______ benefits, they must qualify based

Medicaid

"How does Medicaid differ from Medicare?"

Medicaid is a federal-state partnership providing health care benefits for low income persons

There are 4 "statutory claims" for benefits under most states' Workers' Compensation laws:

Medical Disability Death/Survivor Rehabilitation

Medicare Part C

Medicare Advantage managed care plan offered by private insurance providers

"Which of the following statements is not true?"

Medicare Part A pays for outpatient hospital expenses such as Emergency Room

The insured may select a managed care version of a traditional Medicare Supplement Policy at a lower premium by choosing a policy that limits care to a specific list of hospitals and physicians. This would be called a:

Medicare Select Policy

"Which of the following is not government-funded health insurance?"

Medicare Supplement

"A Medicare beneficiary enrolled in a Medicare Advantage plan may have any of these other insurance plans except which one?"

Medicare supplement

Nonduplication and Coordination of Benefits:

Method of determining the primary and secondary coverage when an insured is covered by more than one group plan

The mathematical probability table used by insurance companies to determine loss due to sickness or injury is the:

Morbidity table

Mortality Cost Formula

Mortality Cost - Interest (investment return) = Net Premium (pure rate)

"Which of the following is included in Part I of a Life Insurance Application?"

Name and Occupation

Michelle's corporation chose a high-deductible health plan (HDHP) because it:

Needed an HDHP to coordinate with the HSA they intended to offer its 700 full time employees

Gross Premium

Net Premium (pure rate) + Loading (insurer expenses)

As a general rule, most insurance companies will allow the insured to change to another type of insurance policy without a medical examination if the:

New premium is higher than the original

When group health insurance is being replaced, ongoing claims under the former policy must continue under the new policy, overriding any preexisting condition exclusion. This is a requirement under which of the following?

No Loss - No Gain Statutes

Provisions and clauses, unlike riders, are included in the contract for:

No additional charge

Group health plans usually cover:

Nonoccupational injury or disease

"When an individual pays the full cost of disability income insurance, a disabled employee's benefit will be ____________________."

Nontaxable in full, regardless of the employee's wage

"When the employer pays some or all of the cost of medical insurance for its employees, the annual amount of each employee's claims is _______________________."

Not taxable to the employee

What is the additional premium cost to have the automatic premium loan provision included in a permanent policy?

Nothing

"Which statement is correct with regard to notifying the insurance company of a loss under a disability policy?"

Notice of claim must be filed within 20 days of the loss, or as soon as possible

"One of the most important underwriting factors in disability income insurance is ________."

Occupation

It is illegal for most telemarketers or sellers to call a number listed _____________.

On the National Do Not Call Registry

Which of the following policies cannot have a premium payment period of less than to age 100?

Ordinary Straight Whole Life

When the annuitant dies during the accumulation phase of the annuity, the beneficiary receiving the death benefit must pay income tax on any gain from the policy at _________ tax rates.

Ordinary income

"All the following are types of dental treatment, EXCEPT:"

Orthotics

The 'Other Insurance with this Insurer' Provision allows an insurer to control:

Overinsurance

When an individual carries more accident and health insurance than he/she would need for a loss, it is called:

Overinsurance

Executives

Oversee the operation of the business.

In disability insurance, if a person is unable to perform their current job duties due to a disability, this definition is known as the:

Own occupation, less restrictive definition

"A Business Overhead Expense policy, as a form of disability insurance, provides payments for all of the following except _________________________."

Owner's income

Before Cranston was disabled, he was a full time engineer earning about $70,000 annually. Now, two years later, he is able to work part-time, earning about $25,000 annually. It is likely that Cranston would be classified as:

Partially disabled

Medicare supplement insurance is designed to:

Pay at least some of the health care costs that Medicare will not pay

"Which of these best describes a disability income rider?"

Pays a percentage of the death benefit as monthly income to the insured when totally disabled

death benefit option b

Pays the face amount stated in the contract, which is level term plus any cash values accumulated over the years. This provides for an increasing death benefit.

When an applicant does not smoke, exercises regularly, seldom drinks, and eats moderately and is considered to be a better-than-average risk, they would likely qualify for:

Preferred status and pay a lower premium

Which of the following best describes the general tax rules regarding employer sponsored group disability income insurance plans?

Premiums are deductible, the benefits are taxable

The Alabama Health Insurance Plan (AHIP) provides all of the following, except:

Premiums are only 75% of standard rates

When an agent misleads the public in an advertisement, who is held accountable? Both the insurer and agent Which is not a qualifying event for the continuation of dependent coverage under the Consolidated Omnibus Budget Reconciliation Act? Termination of the employee for theft All of the following are requirements that insurers may place on a group plan to avoid adverse selection, except: Proof of insurability from each employee COBRA is a federal law requiring employers with _____ or more employees to provide the option of continuing the employee's existing health coverage for dependents for up to _____ months following qualifying events. 20, 36 Select the correct statement. cobra COBRA protects dependents of employees by mandating for them the same extension and conversion privileges available to employees covered by group plans Which of the following is correct pertaining to underwriting a group health policy? Premiums are generally re-evaluated annually and may be based upon prior claims Which of the following types of policies would a sports team purchase to obtain coverage for a season? Blanket COBRA applies to employers with: 20 or more employees All of the following are ways in which an employee will lose their employer sponsored group health insurance, except: Becoming too old while still on the job Which is true regarding the advertising of Accident and Sickness Insurance? When insurers advertise that a group endorses a certain health product, the public must be made aware of any control the insurer may have regarding the group Which provision of group health plans is used to determine primary and secondary coverage when an insured is covered by more than one insurance plan? Coordination of Benefits When a group is covered by a MET, who is issued the Master Policy? The trust 00:0201:461.00 Upgrade to remove ads Only $2.99/month A carrier replacing employer group coverage is not required to cover all employees and dependents covered by, or eligible for, coverage under the previous policy if the replacement takes place more than _____ days after of the previous policy's termination. 60 A firm with 50 employees replaces its existing group health plan. With regard to ongoing existing claims, the replacing insurer will be: Required to continue paying them under the No Loss-No Gain law HIPAA defines a pre-existing condition as one for which the insured received medical advice, diagnosis, care, or treatment within the past _____ months. 6 Which of the following individuals would probably NOT be a qualified beneficiary under COBRA? Any dependent not covered under the employee's health coverage prior to a qualifying event Oswald changes jobs in June. He had been covered by group health for two years at his previous job. His new job offers group health coverage with a six month exclusion for pre-existing conditions. Assuming that Oswald enrolls at the earliest opportunity in the group health program at his new job, when will any pre-existing conditions Oswald may have be covered in his new group health plan? Immediately Under COBRA, coverage for dependents of an employee may continue up to 36 months for any of the following events, except: Termination of the employee Which action would not render a small employer's health benefit plan nonrenewable? Frequent claims Coordination of Benefits is a provision designed to reduce ________ when an insured is covered under multiple health plans. Overinsurance Which statement is incorrect regarding COBRA? The employee or beneficiary must respond to the notification of his/her right to continue coverage within 90 days, if he/she wants to continue the coverage When an individual converts from a group health policy to an individual policy: The new plan will not provide the same benefits as the group plan Upgrade to remove ads Only $2.99/month Hicks Corp. wants to install a contributory group plan. It employs 200 people. How many employees must participate in order to install the plan? 150 What percentage of employee participation is required for a contributory employer group plan? 75% Which of the following is NOT a method of reducing adverse selection in group health insurance? Establishing a maximum number of participants for coverage under the plan All of the following are a prohibited form of advertising, except: When an insurer excludes coverage for preexisting conditions, an advertisement of the policy that implies that the applicant's medical condition or history will not affect eligibility or payment When Harold became no longer eligible for coverage under his employer's group benefit program, which of the following statements accurately reflects the conversion privilege defined by his group contract? Harold had 31 days to convert his policy to an individual plan When an individual carries more accident and health insurance than he/she would need for a loss, it is called: Overinsurance The main benefit of a 501(c)9 trust is that: Contributions to these trusts may be deducted immediately, instead of when benefits are distributed Which is true regarding the advertising of Accident and Sickness Insurance? When insurers advertise that a group endorses a certain health product, the public must be made aware of any control the insurer may have regarding the group When employers who self-fund their employee benefits form a larger group in order to offer health insurance benefits to each employer's workers, it is called a (an): Multiple Employer Welfare Association (MEWA) Under COBRA, coverage for dependents of an employee may continue up to 36 months for any of the following events, except: Termination of the employee Upgrade to remove ads Only $2.99/month Regarding group health insurance, which is true? The plan sponsor is issued the Master Policy Until yesterday, J. J. worked for his father's company and was covered by the company's large group health plan. He stopped working to go to college. He is 26 years of age and wants to keep the same coverage until he earns his degree in approximately 24 months. Which of the following statements is true? A good option for J.J. is to exercise the COBRA option under his father's group plan A carrier replacing employer group coverage is not required to cover all employees and dependents covered by, or eligible for, coverage under the previous policy if the replacement takes place more than _____ days after of the previous policy's termination. 60 Small employer plan preexisting conditions may not be excluded for any longer than _____ months. 12 Which of the following statements is NOT true concerning a coordination of benefits situation? Where children are involved, the primary group insurer is the insurer for the parent who is oldest by age at the time of claim Which of the following IS true regarding COBRA coverage? If an employee carried dependent coverage on the group plan, dependent coverage must be made available on the COBRA continuation policyEmployees must be notified of their right to continue coverage immediately upon terminationAn insured must be notified under COBRA when a qualifying event occurs Which of the following is consistent with group health underwriting? Each member of the group is covered regardless of his or her health history Experience rating utilizes _______ in determining the rate the insurer will charge for group coverage in each year of coverage. Actual loss experience of the group The pregnancy discrimination act applies to groups with ______ or more employees. 15

Premiums paid by employees for group health insurance are only deductible to the extent that ______________________. They exceed 7.5% of adjusted gross income When an individual pays the full cost of disability income insurance, a disabled employee's benefit will be ____________________. Nontaxable in full, regardless of the employee's wage Which of the following might be covered by an FSA, but not an HRA? Eyeglasses Gary participates in a group long-term care insurance program through his employer. The employer pays for a standard level of coverage for all employees, and Gary pays for an additional voluntary amount of coverage. In all, Gary's employer pays two thirds of the cost and Gary pays the remaining one third of the cost. If Gary makes a claim under this policy, what percentage of his benefits would be taxable based on the premium structure? 0% Under which of the following business-related plans are benefits taxable as income to the owner? Business Overhead Expense Karen, age 50, withdraws $1,000 from her Health Savings Account (HSA) for a purpose other than a qualified medical expense. As a result of this action: The $1,000 is taxed as ordinary income, with an additional $200 penalty tax applied Which of the following might be eligible to participate in an MSA? Charles, who works for a small bakery with only 15 employees Which of the following statements is false regarding the Affordable Care Act? It requires all employers to provide health insurance to their employees Which of the following covers the greatest percentage of the benefit cost of the plan under the Affordable Care Act? Platinum Harry and Sally were equal partners in a catering business worth $400,000. They entered into a buy-sell agreement that provided funding whether one of them died or was disabled. The annual premium for each of the disability insurance policies was $2,000. All of the following statements are correct, except: The premiums are tax deductible What taxes apply to the benefits under an individual Disability Income Policy on which the insured has paid the premiums? No tax What is the difference between a Health Reimbursement Account (HRAs) and a Health Savings Account (HSA)? HRAs are owned by the employer, and are not portable when an employee leaves Upgrade to remove ads Only $2.99/month When are disability income benefits received as nontaxable income to the recipient? When the employee has paid the premium There are ____ different 'Metal Plans' offered through the health insurance exchanges. 4 In which of the following circumstances was the small business owner able to deduct the premiums they paid for insurance? The sole proprietor of a small firm buys an overhead expense policy When an individual is covered by a three-tiered, consumer driven health plan, the second source or tier of payment usually comes from a/an: Out-of-pocket funds Which of the following programs provides health insurance that supplements Medicare for military retirees? TRICARE for Life On which of the following policies would any proceeds be taxable? Business overhead expense insurance The cost-sharing provisions of TRICARE Standard include: A $12 co-pay for office visits and 25% co-pay for procedures Under the ACA, group health insurance plans apply which of the following restrictions to dependent coverage on children of the primary insured? They must be under age 26 Ashley wanted to establish her company benefit plan so that it could cover her individual health insurance premiums and out-of-pocket expenses without group insurance or loss of unused benefits. After some research, she established a: HRAs Which of the following disability income benefits would be received free of federal income tax? A personal disability income insurance policy benefit Upgrade to remove ads Only $2.99/month Andrew discovered that the consumer directed health plan he had established was subject to new contribution limits when he switched the Tier 1 payment mechanism from a/n: HRAs to an HSA Victoria, age 62, calculated last year's gross income to be $60,000. When she totaled up the cost of individual Medical and Long-term Care insurance, as well as her various out-of-pocket medical costs, she discovered the total was $7,500, which meant she could deduct _______ from her taxable income. $3,000 Which of the following statements IS true regarding the taxation of individual long-term care insurance policies? Individual long-term care policies are treated the same for tax purposes as accident and health policies only if the policy is qualified according to federal law Jay receives an annual disability benefit of $10,000. His employer contributed 75% of the premium. How much of Jay's benefit is subject to income tax? $7,500 Which of the following best describes the general tax rules regarding individual disability health insurance plans? Premiums are not deductible, the benefits are not taxable Employer-paid premiums for employee group health insurance are generally: Nontaxable to the employeesTax-deductible to the employer All of the following are primary plans, EXCEPT: TRICARE for Life What is the Health Insurance Marketplace? It is a resource where consumers can learn about their health insurance coverage options and compare plans Which of the following statements is false regarding the Affordable Care Act? It requires all employers to provide health insurance to their employees Which of the following statements regarding coverage for emergency care under the Affordable Care Act is correct? Plans must do so regardless of network affiliation without requiring prior approval Upgrade to remove ads Only $2.99/month The cost-sharing provisions of TRICARE Standard include: A $12 co-pay for office visits and 25% co-pay for procedures Karen, age 50, withdraws $1,000 from her Health Savings Account (HSA) for a purpose other than a qualified medical expense. As a result of this action: The $1,000 is taxed as ordinary income, with an additional $200 penalty tax applied(20%) Which of the following is considered not to be an Essential Health Benefit? Personal care What is the maximum annual contribution to an FSA, which is allowed by law? $2,550 Health Savings Accounts (HSAs) must be accompanied by a: High Deductible Health Plan (HDHP) Which of the following statements regarding TRICARE is correct? TRICARE Prime is mandatory for active duty members The benefits of an individual disability income policy: Are received tax-free and generally limited to a percentage of monthly income Which of the following is not a Metal plan category? copper All of the following are primary plans, EXCEPT: TRICARE for Life The Bronze plan covers _______ of medical expenses. 60% All of the following are ways consumers can insure themselves with 'minimum essential coverage' without having to pay a penalty under the Affordable Care Act, except: Be self-insured Which of the following might be covered by an FSA, but not an HRA? Eyeglasses

The following statement is true concerning the income received from an individually owned disability income policy:

Premiums paid with after tax dollars, Income benefit not taxable

rider has a 3-month waiting period. Which of the following best describes the benefits of the waiver of premium rider?"

Premiums will be waived retroactively to the beginning of the disability

Medicare Part D

Prescription drug coverage offered by private insurance providers

"HMOs usually require patients to select a _____________________ as the person who will oversee and direct their basic health care in most cases."

Primary Care Physician

Upon joining an HMO, the plan will require the subscriber to select a:

Primary Care Physician

To help protect against experiencing immediate claims, group plans have a(n) _______ period set up by the group sponsor.

Probationary

The specified period that must elapse before new coverage is effective for nonaccidental losses is known as which of the following?

Probationary period

Business Disability Buyout

Provides a lump sum benefit to nondisabled business partners to fund the buyout of a disabled partner's share of the business

Business Overhead Expense

Provides the funds to cover the expenses of running a business when the owner becomes disabled

"A disability that is presumed to result from the same or a related cause of prior disability is a ________________."

Recurrent disability

"An insured took out a disability income policy while working in a low hazardous occupation. When filing a claim for disability income benefits, after a job related accidental injury, the insurance company discovered the insured changed jobs 2 years prior to the loss. The new job would have been classified as more hazardous. The insurance company will most likely:"

Reduce the benefit to an amount the actual premium paid would have purchased under the proper job classification

"Which of the following are alternatives for an insurer to issue disability income coverage for a substandard risk?"

Reduce the benefit, increase premiums, apply an impairment rider

Which of the following is/are considered common exclusions in Dental Insurance?

Replacement of dental work within a 5 year period Cosmetic - Teeth whitening Duplicate dentures (ALL THE ABOVE)

The statements and descriptions in an application for a life insurance policy or annuity are:

Representations and not warranties

"A nonexclusive agent:"

Represents more than one insurance company

A firm with 50 employees replaces its existing group health plan. With regard to ongoing existing claims, the replacing insurer will be:

Required to continue paying them under the No Loss-No Gain law

Noncontributory

Requires 100% participation of eligible employees

"Which of the following describes why Alabama encourages the purchase of Long-Term Care Insurance through its LTC 'Partnership Program'?"

Requires Medicaid to disregard some or all of your assets during estate recovery

Which of the following describes why Alabama encourages the purchase of Long-Term Care Insurance through its LTC 'Partnership Program'?

Requires Medicaid to disregard some or all of your assets during estate recovery Provides you with asset protection Allows Medicaid to disregard some or all of your assets for Medicaid eligibility

Accidental Means

Requires both the injury and the cause of the injury to be unintended and unforeseen; considered more restrictive. This definition is not allowed in some states.

Accidental Results

Requires only that the injury be unintended and unforeseen

Underwriting Department

Responsible for the selection of risks (persons and property to insure) and rating that determines actual policy premium.

Examples of preventative care include all of the following, except:

Restricting travel to within 5 miles of home

At the time of policy delivery, the producer has been informed there is a change in the insured's health status. If the premium has not been collected, the producer should:

Return the policy to the insurer for further underwriting

"The elimination period in a disability income insurance policy:"

Serves as a time deductible before benefits are payable

"Interest only, life income with refund, lump sum, and life income only are all forms of which of these life insurance policy options?"

Settlement options

What type of disability plan only provides coverage for 2 years or less?

Short term disability income

Y just received an inheritance and instead of spending the money right now, decides to put it away for the future. What annuity premium funding would be best in this situation?

Single

Pure Risk

Situations where there is no chance for gain; the only outcome is for nothing to occur or for a loss to occur.

Eligibility Period

Specified period of time that follows an employer's waiting period where an employee must choose to enroll or decline coverage. This would only apply in a contributory type plan. This does not require evidence of insurability.

"A warranty is defined as"

Statement in the application that is guaranteed to be true

If the insurer issues a health insurance policy without an initial premium, the producer must obtain a signed:

Statement of Good Health

"Managed health care plans generally refer to covered persons as ____________."

Subscribers

J is named in a policy as the individual who is entitled to receive the policy proceeds upon the death of T. Which of the following statements best applies to this scenario?"

T is the insured in the policy and J is the named beneficiary

The health care system operated by the Department of Defense to cover the active and retired military personnel and their families is known as:

TRICARE

The Initial Enrollment Period for Medicare is 7 months in length. Which of the following are the start and stop dates for this period?

The 1st day of the 3rd month before the individual turns age 65 and the last day of the 3rd month after the month the individual turns age 65

The 31 days in which the employee may change his/her group policy to an individual policy upon termination and without evidence of insurability, is known as:

The Conversion Period

"All of the following statements about the future increase option rider are true EXCEPT:"

The additional coverage is available at each option date regardless of the insured's current earned income

When an applicant completes the insurance application in its entirety and provides the producer with a premium check, what in effect has taken place?"

The applicant is making an offer to the insurer

In order to convert a term policy to a permanent policy as of the original issue age, all of the following must occur, except:

The cash values will have to be paid out first before the conversion can be effected

Decreasing

The death benefit decreases, but premiums usually remain level for the policy term; often utilized to pay off outstanding mortgage balances.

David withdrew the money from his tax-deductible Traditional IRA and reinvested it 90 days later in another IRA. Which of the following statements is true regarding this transaction?

The distribution from the former IRA is fully taxable

What should an agent tell the insured when the insured asks when will his health plan take effect?"

The effective date indicated on the policy

"When a whole life policy endows, what happens to the policy's cash value?"

The face amount of the policy is paid to the policyowner

All of the following are true regarding industrial life insurance, except:

The grace period is 1 week

Grace Period

The grace period is the time period provided after the premium due date before a policy lapses. If the insured dies during this period, the death benefit is payable minus any premiums or loans due.

"A 67-year-old individual works for a large company and plans on working until at least age 70. The individual signed up for Medicare at age 65 and the employer has a group health insurance plan. If a loss occurs, how will the claim be handled?"

The group health plan will be the primary payor while Medicare will be the secondary payor

Immediate Annuity

The immediate annuity does not have an accumulation period and is used to generate immediate income within 1 year from issue date.

Beneficiary

The individual or person named in the contract to potentially receive benefits if the owner and/or annuitant die prior to annuitization or if the settlement option selected offers any residual benefit after the annuitant's death.

Annuitant

The individual whose life the contract is based upon. Upon a lifetime annuitization, payments will be made to the annuitant based upon the annuitant's age, gender, settlement option selected, and dollar amount used to fund the income benefit payments.

"Who pays for any reports or Medical Exams required as part of the underwriting process for insurance?"

The insurance company

All of the following are risks to the life settlement purchaser, except:

The insured dies sooner than expected

Which of the following describes the Free Look provision?

The insured has 10 days upon receiving the policy to look it over and return it for a full premium refund if not satisfied

All of the following statements about noncancellable policies are true, except:

The insurer may choose not to renew the policy, but only on the policy renewal or anniversary date

"If an insured changes occupations and the new occupation is in a higher risk class than the former occupation, what does the change of occupation provision allow the insurance company to do in the event a disability claim is presented, but the insured failed to inform the insurer of the change?"

The insurer will reduce the benefit proportionally in relation to the actual premium paid based on the higher risk classification

"An individual is approved for a health insurance policy effective March 1. On March 4, the insured breaks his arm playing basketball with some friends, is treated at the local emergency room, and submits a bill for $2500 to his insurance company. On March 9, the insured decides to cancel the insurance and requests a refund of the $3000 annual premium he has paid. What will the insurance company do?"

The insurer will refund the insured's $3,000 and has no responsibility to pay his claim

Sandra owns a Medical Expense Plan that contains a 60/40 Participation (Coinsurance) Provision and a $200 deductible. How much will Sandra and the insurer each pay under the coinsurance provision if Sandra's first medical claim for the year totals $10,200?

The insurer would pay $6,000, and Sandra would pay $4,200

"Which of the following can be listed on an illustration?"

The insurer's name, producers name, address, and the policy generic name. The proposed insured's name, age, gender, and the initial death benefit. The dividend option selected or any non guaranteed elements

"What is "fixed" in a fixed annuity?"

The interest crediting rate

"The face amount of insurance is also referred to as the:"

The limit of liability

Endow

The maturity date or time at which the policy's cash value equals the face amount and the proceeds are paid to the policyowner.

Annual Limit

The maximum a policy will for covered losses per year.

Which statement concerning individual health policy renewal provisions is most correct?

The more favorable the renewal provision to the insured, the higher the premium

The insuring agreement in a life insurance policy states which of the following?"

The obligation of the insurance company to pay the policy proceeds upon presentation of valid proof of the death of the insured which occurred while the policy is in force

Viator

The owner of the life policy who seeks to sell it to the viatical company.

"What is "defined" in a defined contribution plan?"

The percentage or amount of an employee's deposits to the plan

policyowner

The person who controls the policy and maintains the right to make all decisions regarding coverages

3 parts to the entire contract:

The policy The riders Any attached papers such as the application

Fixed

The policy has a fixed amount of coverage, benefits and premium.

All of the following are correct regarding regulatory jurisdiction over group insurance, except:

The policy only needs to provide benefits as required by the state in which the insurer is incorporated

"A contingent beneficiary has the right to which of the following?"

The policy proceeds only when there is no primary beneficiary

"What is the primary advantage to the policyowner in the reinstatement of a life insurance policy?"

The policyowner continues to enjoy the benefits that were provided in the original policy, including the original premium

If the insurance company accepts a special class risk:

The premium will be higher than for a normal risk

Primary Beneficiary

The primary beneficiary is the first in line to receive the death benefit upon the death of the insured.

"To what does the statement 'spreading the result of financial loss created by an individual's death among many persons, so the cost for each individual is small' refer?"

The principle of life insurance

"Which of the following is needed to receive a producer's license after passing the state licensing exam?"

The producer must submit a uniform application for licensure with the Commissioner

Convertible

The right to convert the existing term policy to a permanent policy without evidence of insurability during the conversion period specified in the contract. The premium can be based upon attained age or issue age.

With a Business Overhead Expense Policy, all of the following are claims that are covered, except:

The salary or profit of the business owner

Annually Renewable Term

The simplest form of term life insurance is for a term of one year. The death benefit remains level and the premiums increase yearly as the policy renews.

Insurer (principal)

The source of authority the producer must allow. The insurer appoints the producer to act on its behalf in transacting the business of insurance. It is responsible for all acts of its producers when a producer is acting within the scope of their authority. A producer may be personally liable when their actions exceed the authority of their contract.

A viatical settlement is made between the purchaser of a person's life insurance policy and ____________________."

The terminally ill insured who must receive at least as much as would be available from the insurance company under any full cash surrender or living needs rider

When a group is covered by a MET, who is issued the Master Policy?

The trust

Who pays the premium once the viatical agreement is entered into?

The viatical company.

"A comprehensive Long-Term Care policy will provide benefits in each of the following settings except _________________."

Therapeutic care in an acute care hospital

"Which of the following is a reason why "class" designations of beneficiaries may be a problem?"

They are vague descriptions of beneficiaries that could result in a court having to decide which person(s) will or will not receive the policy proceeds

"Premiums paid by employees for group health insurance are only deductible to the extent that:"

They exceed a certain percentage of adjusted gross income

What is one of the main reasons for a Universal Life policy to have a surrender charge?

This provides a means for the insurer to recapture their upfront expenses involved in issuing the policy

By what means is a transfer for value made?

Through an absolute assignment

What is the main purpose of backdating a policy?

To save age

"In addition to language similar to the any occupation definition of total disability, Social Security's definition of disability also includes which of the following statements?"

Unable to perform any substantial gainful activity

An insured is hospitalized for at least 3 days. How long will Medicare pay for confinement in a skilled nursing facility?

Up to 100 days

"Which of the following is not a core benefit in a Medicare Supplement policy?"

Up to 365 days of long-term care expenses after three days of hospitalization

"Certain disability and health care insurance products may be subject to specific advertising regulations. In general, insurance producers should do which of these?"

Use company-provided advertisements for each product they wish to market

F has an annuity with $50,000 of cash value. F needs life insurance but does not currently have it in his budget to pay for it. What is another option for F to consider to obtain the much needed life insurance F needs?

Use some of the annuity funds either through systematic withdrawal or a settlement option to pay the life insurance premiums

"What can an employee do in order to obtain coverage when they have a preexisting condition and find that their job was just eliminated?"

Utilize the group plan's conversion privilege

Which of the following annuities offers the best opportunity to offset the effects of purchasing power loss over the long-run?

Variable

"A _______________ policy has a death benefit that can increase or decrease over time based on stock market performance, a guaranteed minimum death benefit, a choice of subaccounts in which cash value may be allocated, and a fixed premium."

Variable Life

Which of the following policies requires a producer to have both a life and securities license to sell?

Variable Universal

What is the 'waiver of premium' called on a Universal Life insurance policy?

Waiver of Cost of Insurance

A health insurance policy includes an endorsement indicating the insurer will allow the policy to continue in force without further premiums if the insured is totally and permanently disabled. What endorsement is attached to this policy?

Waiver of Premium Rider

ACA Insurance plans must include coverage for preventive health services including all of the following, except:

Well-child care up to the age of 26

"A "Joint and ½ Survivor" distribution option means which of the following statements is correct?"

When one of the joint annuitants dies, the survivor's continuing payments will be one-half of the total payment both were receiving

Widow's/Widower's Blackout Period

When the youngest child reaches age 16 until the surviving spouse reaches retirement age.

All of the following are required to sign an application for insurance except: beneficiary A transaction in which a life policy is purchased when an existing policy is surrendered is called: replacement Statements made by the applicant on a life or health insurance application are true to the best of one's knowledge are considered to be: representations Which of the following statements regarding insurable interest is not correct? insurable interest only applies to individuals related by blood A substandard risk may be issued based on any of the following except: longer than expected life expectancy Evidence of group life insurance coverage provided to an employee is the: certificate of insurance The insured cannot borrow against the loan value of the policy without the permission and consent of which of the following, if named? irrevocable beneficiary The Waiver of Premium rider will waive the premium after a specified waiting period if the: insured becomes disabled The insuring clause found in a life insurance contract states the: insurer's promise to pay death benefits as long as all conditions are met A lump sum of money is placed into an account from which the annuitant will draw periodic benefits the following month. This describes a: single premium deferred annuity All of the following are correct regarding taxation of individual life insurance except: policy loans are considered an investment and are always taxable Which of the following policies will provide for a flexible premium, adjustable death benefit, and a guaranteed minimum interest to be credited to the general account if the current rate falls to the minimum rate? variable universal life Upgrade to remove ads Only $2.99/month If a change or correction must be made on the application for insurance, which of the following applies? the producer can make the change and the applicant must initial the change Variable whole life includes all of the following features except: annual renewable term insurance All of the following are correct regarding Annual Renewable Term except: it matures at age 100 Which of the following is not one of the 4 elements of valid legal contract? incompetent parties The owner's rights include all of the following except: choose the mortality rate A receipt issued at the time of application upon the payment of premium that provides coverage effective as of the date of the application or medical exam, as long as the policy is issued as applied, is referred to as a: conditional receipt If the primary beneficiary predecreases the insured, the death benefit is payable to the the contingent (or secondary) beneficiary The settlement option under which payments totaling the death benefit are guaranteed for a specific number of years is referred to as: fixed period Which provision will assure that the life insurance policy premiums are deducted from the cash value if the premiums are not paid directly by the owner at the end of the grace period? automatic premium loan An Ordinary Straight Whole Life policy provides for: a level premium, level face amount, and cash accumulation until the policy matures Upgrade to remove ads Only $2.99/month A business is concerned that if its top sales producer dies suddenly, the company will suffer a loss due to this loss in expertise, productivity, revenue, and the costs associated with finding a replacement. Which of the following will meet this business use of life insurance? key person life insurance If an insured commits suicide while the suicide clause is in effect, the insurance company will: refund the amount of premiums paid The permanent transfer of ownership in a policy is called: absolute assignment

Which of the following is an example of risk reduction? Taking action to minimize the severity of a potential loss What is the purpose of the Fair Credit Reporting Act? To give the consumer recourse if the insurance is denied on the basis of a credit report Insurance is designed to provide protection against which of the following? pure risk Insurance is an example of which type of risk management technique? Transfer of risk If you have a map to find the exact location of a treasure, what type of risk would this be? Speculative risk Paul is an agent for ABC Insurance Company, which has just issued a life insurance policy to Maria. Who is the "principal" in this transaction? ABC Insurance Company what are the three hazards when it comes to insurance underwriting? physical, moral, and morale. A company that has not received permission from an Insurance Commissioner to do business in his or her state is called a/an: non-admitted All of the following are responsibilities the producer owes to the applicant, EXCEPT: Only offering policies with the lowest possible premium In a reinsurance transaction, the company that wishes to transfer all or a portion of the financial risk of loss is known as the _______ company. ceding When an insurance company uses another company to cover part of the risk it is called: Reinsurance All of the following are characteristics of a Mutual Insurance Company, except: Stockholders have ownershipis owned by its policyholders, and does not have stockholders 1.00 Upgrade to remove ads Only $2.99/month A policyowner has the right to cancel the policy at any time, and for any reason, because insurance contracts are ____________. Unilateral The_______ department of an insurance company is responsible for providing service to policyholders at the time of a loss. claims An applicant inaccurately representing information on the application is guilty of: misrepresentation What is the term for the idea that some risks are less desirable than average risks, and that these risks tend to seek coverage to a greater extent than more favorable risks? adverse selection A hazard is best defined as: Something that increases the chance of a loss Under the Fair Credit Reporting Act, which of the following statements is correct? If an individual is denied coverage, they can request a copy of the report what is the definition of fraud? Intentional deceit with the intent to gain The State's __________ branch enforces the existing statutes that have been put in place. executive ________ is generally an option only for large corporations who may want to limit their risk up to a certain dollar amount, then buy insurance above and beyond that amount. Self-insurance A mutual insurance company is owned by its: policyholders Upgrade to remove ads Only $2.99/month What is the correct insurance term for a statement that is guaranteed to be true? warranty Which of the following would be considered a speculative risk? The possibility the painting you bought might be a long-lost masterpiece The ___________ branch writes and passes state insurance laws, or statutes, to protect the insuring public. Legislative Not studied (33) You haven't studied these terms yet! Select these 33 Insurers that are incorporated in another state, but doing business in this state, are considered: foreign What gives an insurer the authority to operate within this state? A Certificate of Authority domicile _________ refers to the jurisdiction where an insurer was formed or incorporated. All of the following statements regarding financial rating services are correct, except: Agents and producers must place business through an insurer with the lowest rates J and his insurance company disagree over some ambiguous language in J's life insurance policy. If the parties end up in court, which principle would direct the court to rule in favor of J? Adhesion If an insurer is incorporated in Rhode Island, but primarily does business in New York, what type of insurer would it be considered in New York? foreign What is the name for an insurer organized in the same state in which it is authorized to do business? domestic Upgrade to remove ads Only $2.99/month Apparent authority is: The demonstrated general appearance that authority exist Which kind of agent enters into agreements with more than one insurer? independent If a producer is acting as an agent, whom do they represent? always the insurer All of the following are Anti-Money Laundering 'red flags', except: Paying annual policy premiums When two parties rely upon the statements and promises of the other and assume no attempt to conceal or deceive was made, this means the contract was entered into on the basis of: Utmost good faith A ____________ agreement is a reinsurance agreement that allows the reinsurance company an opportunity to reject coverage for individual risks, or price them higher due to their substandard (higher risk) nature. Facultative Dividends issued by stock insurers are paid to: Stockholders The relationship of a person who acts on behalf of a company whereby the person's actions can bind the company is known as: The law of agency An insurer with capital that is divided into shares, and is owned by shareholders, is considered a: stock company All of the following are elements of an insurable risk, except: The loss may be catastrophic Upgrade to remove ads Only $2.99/month Which statement defines a peril? It is the specific cause of loss Where can an insured find insurance coverage after being rejected by Insurer A due to claims history? residual market When both parties must perform certain duties and follow certain rules of conduct to make a contract enforceable, this is known as a(n) __________ contract. conditional Which of the following terms refers to the risk management technique of assuming the responsibility for a loss? Retention Which term refers to a contract in which only one party is legally bound to contractual obligations after the premium is paid? unilateral contract The principle that states that an insured should be restored to approximately the same financial position after a loss as before is known as: Indemnity Which of the following is NOT true about social insurances? Social insurance provides equal benefits to all citizens that contribute An insurer that is authorized to do business in this state MUST be _____. admitted insurer The ___________ branch is responsible for interpreting and determining the constitutionality of the statutes. judicial If incorrect or unverifiable information is found on an applicant's Credit Report, the Fair Credit Reporting Act requires the reporting agency to: Send the correct information to all parties who received a report within the prior 24 months Which of the following IS NOT part of the definition of "insurable risk"? The loss must be preventable The Principle of Indemnity helps avoid which of the following? Overpayment of a claim A life insurance applicant's answers on the application indicate that they in good health. In fact, the applicant actually has a disease that they are not aware of. The statement on the application is considered: A representation A life insurance policy is a unilateral contract, because: Only one party can be charged with breach of contract A(n) ____________ is responsible for paying the policy's premium and has various rights as specified in the contract. owner The Fair Credit Reporting Act guarantees which of the following? Applicants' right to information held about them by any reporting agency

If a proposed insured dies before the policy is issued, but while in possession of a conditional receipt, the company:

Will pay the policy proceeds only if it would have issued the policy to the proposed insured had he or she been living

_______________ is insurance provided by an employer to cover injuries that occur on the job only.

Workers' Compensation

"Answers to questions in applications for health and disability insurance are considered representations and not warranties. If an applicant later realizes he/she answered a question incorrectly, how may the answer be changed?"

Wrong information may be corrected at any time prior to issuance of the policy

ERISA requires which of the following? Qualified plans must meet certain minimum standards If an accelerated death benefit is in effect, how often must the insurer provide a report showing the amount paid and the amount of the remaining benefit? Monthly What is the key difference between a qualified plan and a nonqualified plan? Qualified plans are eligible for favorable tax treatmentNonqualified plans are not required to meet ERISA requirements and are not eligible for the same favorable tax treatment as qualified plans. A person may contribute to a Traditional IRA if they ________. Have taxable income In the event that an insured receives a periodic benefit as the result of exercising the Accelerated Death Benefit Rider, what information must the insurer provide to the insured? The amount of the accelerated payment, the remaining death benefit and cash values Which is true regarding the taxation of the cash value in a Universal Life Policy prior to withdrawal? Tax deferred ____________ do not meet requirements of federal law to be eligible for favorable tax treatment. Nonqualified retirement plans Which of the following would NOT be permitted as a Section 1035 policy exchange? An annuity contract exchanged for a life contract Paul surrenders a life policy and receives a lump sum of $30,000. Premiums totaled $25,000 on the policy. How is the surrender treated for tax purposes? $25,000 is received tax-free, and $5,000 is taxed at ordinary income rates With a Profit Sharing Plan contributions must generally be made in at least ________ consecutive years. 3 out of the last 5 If a policyowner paid $18,000 in premiums for a policy that is cashed in for $21,000, how much of the policy's cash surrender value would be subject to federal income tax? $3,000 All of the following are the benefits of having an employer sponsored retirement plan be ERISA qualified, except: Plan withdrawals are tax free Upgrade to remove ads Only $2.99/month SIMPLE plans are only available to companies that have ______ employees or less, and must be the only type of plan the company has available for the employees. 100 Keogh Plans are NOT available to: Employees of large companies presently participating in a qualified retirement plan which are not self employed What happens if the owner of a Traditional IRA fails to take an RMD for the required amount? There is a 50% tax penalty The exception to the rule concerning the non-deductibility of life insurance premiums is: All employer paid group life insurance premiums All of the following are true regarding IRA transfers, except: They can only take place once a year What is the main purpose that IRC section 1035 was enacted? To allow for continued tax-deferral on any gains in an existing policy when a policyowner moves into a new one There are ____ broad categories of qualified retirement plans. 2 All of the following are TRUE regarding non-qualified retirement plans, except: Contributions are immediately tax deductible Why are dividends not taxable as income when paid out to a participating policyholder? They represent a return of a portion of the premium paid Generally, the ________ is the amount of premiums paid into the policy less any dividends or withdrawals previously taken. Cost basis Upgrade to remove ads Only $2.99/month A Section 1035 Exchange is permitted in each of the following transactions, except: An annuity is exchanged for a Whole Life Policy If a policyowner of a life insurance policy accidentally pays in premiums in excess of the MEC guidelines, the insurer can refund the excess within ______ days of the end of the contract year. 60 Death benefits paid from an employee group life insurance plan to an employee's named beneficiary are received __________. Income tax-free An insured has paid $1,000 in annual premiums for her permanent life insurance policy for 12 years. Now upon surrendering the policy she is due to receive $15,000 of cash value. How much of this cash value is taxable? $3,000 If money is paid when a change of ownership in a life insurance policy takes place, this is generally known as a ____________. Transfer for value Which of the following plans provides employees with a fixed and known benefit at retirement, the amount of which generally depends upon length of service and highest attained salary? Defined benefit Nancy has an IRA and wants to move her funds directly from one financial institution to another while still maintaining the assets within an IRA account. How many times can she do this? As often as she likes Unless an exception applies, life insurance proceeds are income taxable in which of the following circumstances? When a transfer of ownership takes place while the insured was alive Life insurance policy premiums establish a _________ in the policy for tax purposes. cost basis When a life insurance policy does not pass the ______-pay test, it becomes classified as a MEC. 7 The cost recovery rule states: That the excess cash value over premiums paid is considered taxable income when withdrawn All employer-paid premiums for amounts of group life insurance over $__________ are reported as taxable income to the employee. $50,000 ___________ are not taxable because they are considered a return of excess premium. Dividends H owns a nonqualified variable annuity that has a separate account invested in the stock market. If H withdraws funds from the annuity, the earnings on the withdrawal will be taxed as: Ordinary income In a SIMPLE plan, employer contributions vest: Immediately at 100% If a non-qualified variable annuity owned for 15 years is surrendered, what is the income tax consequence? Any amount received in excess of its cost basis is taxable as ordinary income An insured has paid $1,000 in annual premiums for her permanent life insurance policy for 12 years. Now upon surrendering the policy she is due to receive $15,000 of cash value. How much of this cash value is taxable? $3,000 A public school teacher may contribute part of his or her paycheck income into a ____ plan and defer income taxes on not only the contribution but also the growth in the plan. 403(b) Which of the following Is the reason why premiums paid on personal life insurance are not deductible? They are considered a personal expense What is "defined" in a defined contribution plan? The percentage or amount of an employee's deposits to the plan Upgrade to remove ads Only $2.99/month SIMPLE plans are only available to companies that have ______ employees or less, and must be the only type of plan the company has available for the employees. 100 A $500,000 policy is sold for $50,000. After the sale, the new owner pays $10,000 in life insurance premiums while the insured is alive. Upon death of the insured, how much of the death benefit is taxable? $440,000 All of the following are transactions that qualify as a 1035 exchange, except: A fixed annuity into an adjustable life insurance policy What type of retirement plan is not required to have a vesting schedule, is not approved by the IRS, can discriminate in favor of highly compensated employees, and can benefit the employer? A non-qualified plan Incidental limitations refer to which of the following? The amount of life insurance that may be included in a qualified retirement plan A Section 1035 Exchange is permitted in each of the following transactions, except: An annuity is exchanged for a Whole Life Policy What is the name of the plan that is very popular with self-employed individuals and uses employer funded IRA's for their employees? SEP Cash values within an ordinary straight whole life insurance policy _______ over time. Increase A person who wishes to open an IRA must: Have taxable income erisa is a ------ law Federal Once a policy is classified as a MEC, it will maintain that classification for ____________. The life of the policy All of the following are TRUE regarding non-qualified retirement plans, except: Contributions are immediately tax deductible Failure to take a required minimum distribution (RMD) can result in a ________ tax penalty. 50% The exception to the rule concerning the non-deductibility of life insurance premiums is: All employer paid group life insurance premiums

____________ is the initial step of the total process of insuring a health risk. Field underwriting Accidental Injury is a: Sudden, unexpected and unforeseen event Accident and Health Insurance provides coverage for two major categories of perils. They are: Accidental injury and sickness All of the following statements regarding advertising are correct, except: Advertisements do not include radio scripts Angela's health policy was considered a limited insurance policy because it: Only covered specific losses named in the policy for limited dollar amounts If the insurer issues a health insurance policy without an initial premium, the producer must obtain a signed: Statement of Good Health Upon receipt of an application, the insurer's underwriter may issue the contract with exclusions or limitations. This means that: Coverage is issued, but there are limits on the insurer's obligation to pay Health insurance is purchased to deal with all of the following risks, except: Third party liability claims This type of policy covers various expenses that an insured may incur due to a routine accident or sickness. Medical expense Accident and Health policies provide coverages for all, except: Workers' Compensation claims Howard talks to his agent Jane about buying a critical illness policy from the XYZ insurance company to cover his wife Deborah, and naming his daughter Mary as the beneficiary in case of death. Jane told him that she would need signatures from all of the following, except: mary The agent's primary underwriting role is: To make sure the application provides the proper information 00:0201:461.00 Upgrade to remove ads Only $2.99/month Timothy owns an individual A&H policy, and in the event of an accident, he is required to prove only that the injury itself is unforeseen and unintended. Tim's policy is based on which of the following definitions of accident? accidental bodily injury All of the following are classifications of substandard risks, EXCEPT: Declined The __________ is the person applying for insurance coverage and is responsible for completing an application. Policyowner Edward applies for a disability insurance policy. He pays the initial premium at the time of application and receives a conditional receipt. Three days after the insurance company conducts a medical examination, but before it issues a policy, Edward suffers a stroke. Upon reviewing the results of his medical exam, the company discovers that Edward has been diagnosed with high blood pressure and atherosclerosis. Under the terms of the conditional receipt, the insurance company: Denies the claim because the insurer would not have issued the policy as applied for as standard or better This type of policy covers the treatment and care of the insured's teeth. Dental expense An applicant determined to have below average risk of loss would be: Issued a preferred policy Which of the following terms and definitions do not match? Long-Term Care - Contract that pays weekly or monthly benefits if an insured is unable to perform the duties of their job If the insurer issues a policy after receiving an application for health insurance in which preexisting conditions were inadvertently omitted, what would be the consequence to the insured's coverage if a preexisting condition caused a claim shortly after being issued? Coverage would be as stipulated in the policy because the company issued the policy even though the question was left blank Which of the following types of care is excluded in a Long-Term Care policy? Hospitalization in the Intensive Care Unit Which of the following products replaces lost income when one is unable to work due to a condition for which therapeutic and rehabilitative care services is often necessary? Disability Insurance Upgrade to remove ads Only $2.99/month Accident and Health insurers would use which of the following formulas in determining premium rates? Morbidity - Interest + Expenses If a change or correction must be made on the application for insurance, which of the following applies? The Producer can make the change and have the insured initial the change The chart that shows the chance of a disability at any given age is called a: Morbidity Table What health insurance product is designed to provide coverage for necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital? Long-Term Care Select the correct statement about converting from a family policy to an individual policy. Usually, conversion may be made without evidence of insurability if the individual does so within 31 days after the family coverage ends A specified period that must elapse before new coverage goes into effect for a given condition is known as which of the following? probationary period Home health care provides benefits for all of the following, except: Vocational or job rehabilitation W has a health insurance policy with an 80/20 coinsurance provision and a $1,000 deductible. If W has an outpatient procedure that cost $900, how much will W have to pay? $900 Which of the following describes the possibility of someone becoming disabled at any given age? Morbidity All of the following are classifications of substandard risks, EXCEPT: Declined Upgrade to remove ads Only $2.99/month All of the following are sources that insurers may look at for information regarding the insurability of a prospective insured, except: College Degree Which of the following terms and definitions do not match? Long-Term Care - Contract that pays weekly or monthly benefits if an insured is unable to perform the duties of their job The tendency for poor risks to seek and be covered for insurance more than average risks is known as: Adverse selection Consumers must be made aware of all of the following in a replacement sale, except: The financial ratings from each rating service If an application is submitted with a question left unanswered, which of the following should occur? The insurer would require an answer before issuing a policy If the insurance company accepts a special class risk: The premium will be higher than for a normal risk Policy replacement is the process of: Cancelling an existing policy and issuing a new policy The _________ was created in order to alert insurer home office underwriters of errors, omissions, or misrepresentations made on insurance applications. MIB All of the following practices may never be used when advertising health insurance, except: Advertising a group's product endorsement, if the insurer has any control over the group Which of the following has primary responsibility for ensuring that the application is filled out completely? producer All of the following are factors used in the calculation of health insurance premiums, except: morality table Between the ages of 19 and 65, an America worker is more likely to be disabled than to die. This is a comparison of: Morbidity to Mortality

If an insurance company accepts business from a person that is not currently appointed and who is not licensed for that line of business, which of the following applies? Insurer may be fined up to 3 times the premium received An individual long-term care insurance policy may not be terminated for nonpayment of premium unless the insurer has give notice to the insured and any designated persons at least _____ days before the effective date of the termination. 30 Which of the following may an insurer purchase for its separate account? More than 10% of the total issued and outstanding voting securities of any single issuerSecurities of a subsidiary of the insurerneither answer is correct A life insurance policy is incontestable, except for nonpayment of premiums, after it has been in force during the lifetime of the insured for ______ from its date of issue. 2 TEFRA is intended to: Prevent group plans from discriminating in favor of key employees Which of the following acts established the Federal Government's right to regulate the insurance industry in situations involving fraud and false statements made in insurance transactions which might lead to jeopardizing the financial soundness of an insurance company? McCarran-Ferguson Act All of the following would be considered replacement in life insurance and subject to replacement guidelines, except: A term policy converted to whole life insurance In the context of replacement, the term 'conservation' means any attempt by the: Existing insurer or its agent to continue existing life insurance in force When advertising you may NOT imply that: Illustrated dividends will be enough to fully pay for the policyDividends are anything other than a refund or a return of part of the paid premiumDividend payments are guaranteed An annuity or pure endowment contract may be reinstated within __________ from the default in premium payments, unless the cash surrender value has been paid. 1 year Industrial life insurance is a form of life insurance written under policies with face amounts of: $2,500 or less A producer is subject to maintain continuing education requirements and must complete _________ classroom hours of continuing education or its equivalent on a biennial basis, 3 of which must be on ethics or business practices. 24 Upgrade to remove ads Only $2.99/month When replacement is involved, an agent must present the applicant with a Notice Regarding Replacement of Life Insurance no later than: The time of taking the application The Commissioner can extend the time you have to complete your continuing education requirements for up to how long? 90 days The Alabama Life and Disability Insurance Guaranty Association provides protection for all of the following, except: Pay the insurer's creditors when facing insolvency Medicare supplement policies and Long-Term care policies must provide a 'free look' period of: 30 days Twisting involves which of the following? Policy replacement Assets in a separate account are valued at: Their market value on the date of valuation What is the primary purpose or function of a Long-Term Care Partnership policy? It helps with the spending down of assets for Medicaid eligibility If a company wishes to share information about a customer's health with a third party: The customer must actively opt-in to allowing the disclosure A health benefit plan that provides coverage for surgical services for a mastectomy must provide screening mammography for women age 50 or older at least every: Year What is the underlying purpose of a second injury fund? To promote the employment of previously injured or physically handicapped workers Upgrade to remove ads Only $2.99/month All of the following are true regarding advertising in life insurance, except: Premiums cannot be mentioned in an advertisement at all Which of the following can be listed on an illustration? The dividend option selected or any nonguaranteed elementsThe insurer's name, producers name, address, and the policy generic nameThe proposed insured's name, age, gender, and the initial death benefit Which of the following is needed to receive a producer's license after passing the state licensing exam? The producer must submit a uniform application for licensure with the Commissioner All of the following are reasons that the Commissioner may suspend a producers license, except: Conviction of a misdemeanor When using an illustration to sell a life policy, an agent may NOT: Falsely represent that premium payments are not requiredImply that nonguaranteed elements are guaranteed or misleadingly use nonguaranteed elementsRepresent the policy as anything other than a life policy Which of the following describes why Alabama encourages the purchase of Long-Term Care Insurance through its LTC 'Partnership Program'? Provides you with asset protectionAllows Medicaid to disregard some or all of your assets for Medicaid eligibilityRequires Medicaid to disregard some or all of your assets during estate recovery Death benefits paid under Workers' Compensation: Include both a one-time burial allowance and a weekly benefit for a surviving spouse and /or children A minor domiciled in Alabama who is 18 years old is competent to receive payments of up to _________ in any one year from a life insurance company, provided the insurer has not been notified of a guardian. $3,000 Which of the following is/are required when reinstating a life insurance policy after a default in premiums? Evidence of insurabilityA reinstatement applicationPayment of overdue premiums An insurance company, upon receiving proof of death, may not delay a death claim settlement beyond a period of: 2 months Under Alabama law, you cannot pay any valuable consideration to a person if they are not licensed as a producer. If a producer violates this provision, they are subject to a fine of up to: 3 times the commission paid What is the youngest age a minor may contract for insurance on his or her own life? 15 An insurer that issues a health insurance policy must pay for services rendered by Alabama health care providers within ______ calendar days upon receiving a clean electronic claim. 30 A producer can reinstate their license once it has lapsed without retaking a prelicensing course and without taking a new license exam within: 12 months If an insurance company accepts business from a person that is not currently appointed and who is not licensed for that line of business, which of the following applies? Insurer may be fined up to 3 times the premium received

a

The usual payment arrangement under a Preferred Provider Organization (PPO) contract is:

a fee for each service

Residual markets

a last resort private coverage source for businesses and individuals who have been rejected by voluntary market. Coverage is typically written as Workers' Compensation, personal auto liability or property insurance on real property.

All of the following are common exclusions, except:

aviation

"Which of the following is NOT required to sign a completed application?"

beneficiary

insurance agencies

captive or independent organizations that recruit, contract with, train, and support insurance producers.

Community rating

determines premiums by examining a particular geographic region of all insureds in a group.

"Which of the following IS required when an application for an annuity is taken?"

if the application is taken over the phone, the applicant must be provided an Annuity Disclosure document no later than 5 days after completing the application

"Which of the following type of authority does the public assume an agent has when quoting insurance?"

implied

Credit Life Insurance

is a special form of decreasing term. Unlike the standard decreasing term policy, credit life automatically names the creditor as the beneficiary. There is no option.

Experience rating

is determined by examining the history of claims a particular group experiences. The insurer uses past experience to predict future cost.

Term insurance

is temporary life insurance protection for a specified period of time. This period could be as short as one year, or provide coverage for a specific number of years such as 5, 10, 20 years. It also could be up to a specified age. The premium is level for the duration of the stated term, which represents the average level of risk over the course of the policy.

Savings Incentive Match Plan for Employees (S.I.M.P.L.E.)

may be established either as an IRA or a 401(k) plan. The employer's contribution must be immediately vested at 100%. This means that the employee is entitled to all the employers' contributions immediately.

A Primary Care Physician (Gatekeeper)

monitors health care needs and helps to control costs by not recommending unnecessary services (including referrals to other physicians and specialists)

"Dishonest tendencies that increase the probability of loss are what types of hazard?"

moral

When determining an appropriate amount of life insurance, a producer takes into consideration the existing mortgage and other debt, future education expenses for the client's children and continuing income for his surviving spouse. This approach is known as:

needs analysis

Common exclusions in accident and health insurance policies include all of the following, except:

new born baby

"All disability policies cover ___________________________ disabilities, which are those occurring outside work."

nonoccupational

F has a $100,000 face amount term life policy for which F paid $10,000 in premium to date. F dies and the benefit is paid out to G, the beneficiary. What amount of the death benefit received is taxable as income to G?

nothing

What must an individual have to do to begin receiving Medicare Part A benefits?

nothing its automatic

Victor, age 59, calculated last year's gross income to be $100,000. When reviewing the cost of his various personal insurance policies, he found that his disability income policy annual premium was $3,500, his long-term care insurance annual premium was $4,000, and the total annual cost of his individual Medical insurance premiums and out-of-pocket medical expenses came to $5,500. Based on this information, he could deduct ______ from his taxable income for that year.

platinum

Contingent Beneficiary

receives the death benefit only if there is no primary beneficiary alive following the death of the insured. In other words, the benefit is payable to the contingent beneficiary only if the primary beneficiary predeceases the insured.

"Lloyd's of London is not an insurance company, but consists of groups of underwriters called _________, each of which specializes in insuring a particular type of risk."

syndicates

"Which one of the following is the initial source of underwriting information?"

the application

Specialist Physician

will treat a member if the primary Care Physician has made a referral, usually after all other treatments have been exhausted.

"A health benefit plan that provides coverage for surgical services for a mastectomy must provide screening mammography for women age 50 or older at least every:"

year

A life insurance policy is being applied for on Z's life. In order for the contract to be valid, all of the following have an insurable interest and could be the owner of the policy, except

z's neighbor