HEALTH/LIFE EXAM Q'S

All of the following are general requirements of a qualified plan EXCEPT a) The plan must be permanent, written and legally binding. b) The plan must provide an offset for social security benefits. c) The plan must be communicated to all employees. d) The plan must be for the exclusive benefits of the employees and their beneficiaries.

B Plans must meet the general requirements established by IRS

The insuring clause of a disability policy usually states all of the following EXCEPT a) The types of losses covered. b) The method of premium payment. c) The identities of the insurance company and the insured. d) That insurance against loss is provided.

B The insuring clause, usually on the first page of the policy, is the general statement that defines the insurance agreement and identifies the insured and the insurance company and states what kind of loss (peril) is covered.

Under the mandatory uniform provision "Notice of Claim", written notice of claim must be admitted to the insurer within what time parameters? A) Within 10 Days B) Within 20 Days C) Within 30 Days D) Within 60 Days

B) 20 Days

When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option? A) Reduced paid up B) Extended Term C) Paid up additions D) Cash surrender value

B) Extended term

Which of the following is the legal name of a corporation or partnership under which a licensee conducts insurance business? a) Legal name b) Name of reference c) Business name d) Assumed name

C A business name is the legal name of a corporation or partnership or any trade of fictitious name under which a licensee conducts insurance business.

Policies written on a third-party ownership basis are usually written to cover A) Policy holders who are not the insured B) Insureds estate C) Policyowners estate D) Policyowner's minor children or business associates

D

Which of the following entities has the authority to make changes to an insurance policy? a) Insurer's executive officer b) Department of Insurance c) Broker d) Producer

a Only an executive officer of the company, not an agent, has authority to make any changes to the policy. The insurer must have the insured's written agreement to the change.

Which of the following is NOT a feature of a guaranteed renewable provision? a) Coverage is not renewable beyond the insured's age 65. b) The insured's benefits cannot be reduced. c) The insurer can increase the policy premium on an individual basis. d) The insured has a unilateral right to renew the policy for the life of the contract.

c Guaranteed renewable provision has all the same features that the noncancellable provision does, with the exception that the insurer can increase the policy premium on the policy anniversary date. However, the premiums can only be increased on a class basis, not on an individual policy.

In forming an insurance contract, when does acceptance usually occur? a) When an insurer delivers the policy b) When an insurer receives an application c) When an insured submits an application d) When an insurer's underwriter approves coverage

d In insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy.

Which of the following would be considered a nonmedical insurance application? a) An application on which the medical information is completed by the applicant and the agent only b) An application that does not ask any questions about the applicant's medical history c) An application submitted with the Agent's Report d) Any application for life insurance

A An application on which all of the questions, including medical history questions, do not need to be completed by medical professionals, and may be completed by the applicant and the agent.

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the a) Payor rider. b) Other-insured rider. c) Change of insured rider. d) Juvenile rider.

B) Other insured rider The other-insureds rider is useful in providing insurance for more than one family member. The type of insurance offered by this rider is usually term insurance, with the right to convert to permanent insurance.

In New Jersey, the minimum age at which a person can purchase a life insurance policy on his or her own life is a) 13. b) 15. c) 16. d) 18

B) 15

The guaranteed purchase option is also referred to as the A) Evidence of Insurability Rider B) Future Increase Option C) Multiple Indemnity Rider D) Impairment Rider

B) Future Increase Option

All of the following are the most common variations in a Long-Term Care policy EXCEPT a) Number of family dependents. b) The amount paid for nursing home care. c) Number of days of confinement covered. d) Number of home health visits covered.

A Long-Term Care policies can vary in the number of days of confinement covered, the number of home health visits covered, the amount paid for nursing home care, and other contract provisions.

An insurer must notify the consumer in writing that an investigative consumer report has been requested, within how many days of the initial request? A) 3 days B) 5 days C) 10 days D) 30 days

A) 3 days

Riley reads an agreement on the first page of her policy which includes a list of losses that will be covered by her insurer. What is the name of this agreement? A) Insuring Clause B) Coverages Provision C) Statement of Loss Coverage D) Consideration Clause

A) Insuring clause The insuring clause lists the insured, insurance company, what kind of losses are covered, and how much the losses will be compensated.

Life income joint and survivor settlement option guarantees a) Income for 2 or more recipients until they die. b) Payment of interest on death proceeds. c) Payout of the entire death benefit. d) Equal payments to all recipients.

A) income for 2 or more recipients until they die The Life Income Joint and Survivor option guarantees an income for two or more recipients for the duration of their lives. Most contracts stipulate that the surviving partner will receive a reduced payment after the other dies, although some will continue to pay the same amount. There is no guarantee that all the life insurance proceeds will be paid out.

HIPAA applies to groups of a) More than 2, fewer than 50. b) 2 or more. c) At least 10. d) At least 100.

B

If an individual willfully violates provisions of the Fair Credit Reporting Act, what is the maximum civic penalty? A) 1000 B) 2500 C) 5000 D)10000

B

A core Medicare supplement policy (Plan A) will cover all of the following expenses EXCEPT a) Part A deductible b) The first 3 pints of blood c) 20% if Part B coinsurance amounts for Medicare-approved services d) Part A coinsurance

A) Part A deductible Plan A is the core benefits only and does not include coverage for part A deductibles.

The Federal Fair Credit Reporting Act a) Regulates consumer reports. b) Protects customer privacy. c) Regulates telemarketing. d) Prevents money laundering.

A) Regulates consumer reports The Federal Fair Credit Reporting Act regulates consumer reports, also known as consumer investigative reports, or credit reports.

Which of the following is provided by skilled medical personnel to those who need occasional medical assistance or rehabilitative care? A) Skilled Care B) Intermittent Care C) Custodial Care D) Home Health Care

B) Intermittent Care Intermittent care is occasional nursing and rehabilitative care that is ordered by a physician and provided by skilled medical personnel for such things as changing a bandage or administering medications

Which type of Medicare policy requires insureds to use specific healthcare providers and hospitals (network providers), EXCEPT in emergency situations? a) Medicare Part A b) Preferred c) Medicare SELECT d) Medicare Advantage

C Medicare SELECT policies require insureds to use specific healthcare providers and hospitals, except in emergency situations. In return, the insured pays lower premium amounts.

Under an extended term nonforfeiture option, the policy cash value is converted to a) A lower face amount than the whole life policy. b) A higher face amount than the whole life policy. c) The same face amount as in the whole life policy. d) The face amount equal to the cash value.

C Under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy.

Which of the following riders is often used in business life insurance policies when the policyowner needs to change the insured under the policy? a) Guaranteed insurability rider b) Payor benefit rider c) Substitute insured rider d) Term rider

C) substitute insured rider The substitute insured rider, or change of insured rider, allows the policyowner to change the insured listed under the policy, subject to insurability. This rider is often used in business life insurance policies.

If an insurer and insured have a dispute about whether a particular loss is covered under a policy, which authority will settle the dispute? a) Commissioner b) Federal Insurance Regulation Board c) Consumer Protection Agency d) Court system

D) Court system If an insurer and insured have a dispute about whether a particular loss is covered under a policy, the court system is asked to interpret the contract.

Which of the following is INCORRECT concerning Medicaid? a) It pays for hospital care, outpatient care, and laboratory and X-ray services. b) The federal government provides about 56 cents for every Medicaid dollar spent. c) It is solely a federally administered program. d) It provides medical assistance to low-income people who cannot otherwise provide for themselves.

c Medicaid is assistance program for persons with insufficient income and/or resources to pay for health care. States administer the program that is financed by federal and state funds.

The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose? a) Interest only option b) Life income with period certain c) Joint and survivor d) Fixed amount option

A) Interest only With the interest-only option, the insurance company retains the policy proceeds and pays interest on the proceeds to the recipient (beneficiary) at regular intervals.

All of the following would be different between qualified and nonqualified retirement plans EXCEPT a) Taxation on accumulation b) Taxation of withdrawals c) Taxation of contributions d) IRS approval requirements

A) Taxation on accumulation Taxation on accumulation is deferred in both types of plans. The rest of the characteristics would differ.

A participating insurance policy may do which of the following? a) Require 80% participation b) Pay dividends to the policyowner c) Provide group coverage d) Pay dividends to the stockholder

B) pay dividends to the policy owner

What is the purpose of a disclosure statement in life insurance policies? a) To protect agents and insurers against lawsuits b) To explain features and benefits of a proposed policy to the consumer c) To obtain important underwriting information from the applicant d) To help consumers compare policy prices

B) to explain features and benefits of a proposed policy to the consumer Disclosure statements will help the applicants to make more informed and educated decisions about their choice of insurance.

Which statement accurately describes group disability income insurance? a) There are no participation requirements for employees. b) Short-term plans provide benefits for up to 1 year. c) The extent of benefits is determined by the insured's income. d) In long-term plans, monthly benefits are limited to 75% of the insured's income.

C Group plans usually specify the benefits based on a percentage of the worker's income. Group long-term plans provide monthly benefits usually limited to 60% of the individual's income.

The responsibility of making certain that an application for insurance is filled out completely, correctly, and to the best of his or her knowledge is the responsibility of whom? a) The applicant b) The producer c) The beneficiary of the applicant d) The insurance company

B) Producer

Under the New Jersey Temporary Disability Law, a "covered individual" is any person who is employed by a covered employer, or who has been out of work for less than a) 4 weeks. b) 1 week. c) 2 weeks. d) 3 weeks.

c Under the New Jersey Temporary Disability Law, a "covered individual" is any person who is employed by a covered employer, or who has been out of work for less than two weeks.

Which of the following types of insurance policies is most commonly used in credit life insurance? a) Equity indexed life b) Decreasing term c) Increasing term d) Whole life

B) decreasing term Credit insurance is a special type of coverage written to insure the life of the debtor and pay off the balance of a loan in the event of the death of the debtor. It is usually written as decreasing term insurance.

An applicant for a health insurance policy returns a completed application to her agent, along with a check for the first premium. She receives a conditional receipt two weeks later. Which of the following has the insurer done by this point? a) Approved the application b) Issued the policy c) Neither approved the application nor issued the policy d) Both approved the application and issued the policy

c When the agent receives the application and issues a conditional receipt, the insurer has not yet approved the application and issued the policy.

A life insurance policy does not have a war clause. If the insured is killed during a time of war, what will the beneficiary receive from the policy? a) The policy's cash value b) A refund of premiums c) Nothing, since the insured was killed as a result of a war d) The full death benefit

d) the full death benefit War or Military Service Clause specifically excludes or limits the insurer's liability for losses caused by war or active military service. If a life insurance policy does not have that exclusion, the benefits are paid to the beneficiary, as if the insured died of any other cause.

Which of the following would be true of the fixed-period/fixed-amount settlement options? A) Both guarantee that the principal and interest will be fully paid out B) The amount of payments is based on the recipients life expectancy C) The size of installments decreases after a certain period of time D) Both guarantee payments for the life of the beneficiary

A Neither of these settlement options guarantee income for the life of the beneficiary; however they both guarantee that the entire portion of principal/interest will be paid out.

What is the purpose of a benefit schedule? A) To list the insured copayments and deductibles B) To state what and how much is covered in the plan C)To include the average charges for procedures D) To provide for the dates and payments of benefits

B

An insurer cancelled a contract with a producer on April 1st. By what date must the insurer notify the Commissioner of this action? a) April 11th b) April 15th c) April 30th d) April 5th

B If an insurer cancels an agency contract, it must notify the Commissioner in writing within 15 days.

All of the following are unfair claims settlement practices EXCEPT a) Failing to adopt and implement reasonable standards for settling claims. b) Failing to acknowledge pertinent communication pertaining to a claim. c) Suggesting negotiations in settling the claim. d) Refusing to pay claims without conducting a reasonable investigation.

C When settling claims, negotiation can come into play.

During policy replacement, the replacing insurer must notify existing insurers within what time period? a) 30 days b) 90 days c) 5 business days d) 10 calendar days

C) 5 business days When a replacement is being recommended by an agent, a replacing insurer has a duty to notify any existing insurer within 5 business days that a replacement may be in order for an existing policy and mail a copy of the illustration or policy summary for the replacement policy.

An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy? a) 7 days b) 10 days c) 31 days d) 60 days

b The grace period is 7 days if the premium is paid weekly, 10 days if paid monthly, and 31 days for all other modes.

What are the 2 types of Flexible Spending Accounts? a) Medical Savings Accounts and Health Reimbursement Accounts b) Health Care Accounts and Dependent Care Accounts c) Health Care Accounts and Health Reimbursement Accounts d) Medical Savings Accounts and Dependent Care Accounts

b There are 2 types of Flexible Spending Accounts: a Health Care Account for out-of-pocket health care expenses, and a Dependent Care Account to help pay for dependent care expenses which make it possible for an employee and his or her spouse, if applicable, to work.

Most policies will pay the accident death benefits as long as the death is caused by the accident and occurs within a) 30 days. b) 60 days. c) 90 days. d) 120 days.

c Most policies will pay the accidental death benefit as long as the death is caused by the accident and occurs within 90 days.

Presenting any written or oral statement in support of or in opposition to a claim payment, while knowing that the statement contains false or misleading information material to the claim, would be best considered a) Grounds for license revocation. b) A violation of the "Unsatisfied Claim and Judgment Fund Law." c) A violation of the New Jersey Insurance Fraud Prevention Act. d) A permissible act.

c Presenting false written or oral statements is considered fraud under the New Jersey Fraud Prevention Act. The penalty for a violation of the Act is no more than $5,000 for the first violation, $10,000 for the second violation, and $15,000 for each subsequent violation.

What happens when a policy is surrendered for its cash value? a) The policy can be converted to term coverage. b) Coverage ends and the policy cannot be reinstated. c) Coverage ends but the policy can be reinstated at any time. d) The policy can be reinstated by paying back all policy loans and premiums.

B Once the cash surrender value option is selected, the coverage is terminated and the policy cannot be reinstated.

The Commissioner believes that a licensee has violated an insurance regulation and decides to conduct a hearing. How long of a notice must the Commissioner provide the licensee? a) 20 days b) 31 days c) 10 days d) 14 days

c When the Commissioner believes that an insurance rule or regulation has been violated, he or she has the right to call a disciplinary hearing. The person or company charged must be given 10 days written notice of the hearing date and time.

An organization licensed as a producer business entity based in New York would like to transact insurance in New Jersey. Which of the following is true? a) The organization will need to obtain a nonresident business entity license, and its producers will need to obtain nonresident licenses b) The organization will not have to obtain a nonresident license, unless more than 50% of its business is conducted in New Jersey. However, its producers will need to obtain nonresident licenses. c) The organization will not have to obtain a nonresident license, since it is a business entity. However, all of its producers will need to have nonresident licenses. d) The organization will need to obtain a nonresident business entity license, which will secure nonresident status for the business itself and all of its producers.

A Nonresident producer business entities can obtain nonresident licenses as long as they meet all of the qualifications (other than location) required of resident producer business entities. They, too, must already possess resident licenses in their home state of residency.

Which of the following describes the tax advantage of a qualified retirement plan? a) Employer contributions are not taxed when paid out to the employee. b) The earnings in the plan accumulate tax deferred. c) Distributions prior to age 59½ are tax deductible. d) Employer contributions are deductible as a business expense when the employee receives benefits. Contributions are tax deferred, and earnings on the money in the plan accrue on a tax-deferred basis.

B Contributions are tax deferred, and earnings on the money in the plan accrue on a tax-deferred basis.

The company has issued a policy and delivered it to Producer B on May 1st, Monday. By what date must the policy be delivered to the insured? a) May 31st (within a month) b) May 10th (within 10 calendar days) c) May 12, Friday (within 10 business days) d) May 2nd (immediately)

B All policies, certificates or other evidence of insurance that are received by an insurance producer must be delivered or mailed to the insured within 10 calendar days of the receipt by the producer.

Who can make a fully deductible contribution to a traditional IRA? a) A person whose contributions are funded by a return on investment b) An individual not covered by an employer-sponsored plan who has earned income c) Anybody: all IRA contributions are fully deductible regardless of income level d) Someone making contributions to an educational IRA

B Individuals who are not covered by an employer-sponsored plan may deduct the amount of their IRA contributions regardless of their income level.

A licensee violates an insurance regulation. A hearing is held, and the person is found guilty. If this is the person's first offense, the penalty is no more than a) $3,000. b) $5,000. c) $1,000. d) $1,500.

B The penalty for a first offense violation of insurance laws is no more than $5,000. The penalty for each subsequent violation is no more than $10,000

An employee quits her job where she has a balance of $10,000 in her qualified plan. The balance was paid out directly to the employee in order for her to move the funds to a new account. If she decides to rollover her plan to a Traditional IRA, how much will she receive from the plan administrator and how long does she have to complete the tax-free rollover? a) $10,000, 30 days b) $8,000, 60 days c) $8,000, 30 days d) $10,000, 60 days

B) 8000, 60 days Generally, IRA rollovers must be completed within 60 days from the time the money is taken out of the first plan. If the distribution from the first plan is paid directly to the participant, 20% of the distribution must be withheld by the payor.

According to life insurance replacement regulations, which of the following would be an example of policy replacement? A) A lapsed policy is reinstated within a specific time frame B) A policy is reissued with a reduction in cash value C) A term policy expires, and the insured buys another term life policy. D) Term insurance is changed to a Whole Life policy

B) A policy is reissued with a reduction in cash value Replacement means any transaction in which new life insurance or a new annuity is to be purchased and it is known or should be known to the proposing producer that by reason of the transaction, existing life insurance/annuity contracts have been or will be converted to reduced-paid up insurance, continued as term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values.

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? a) The date of application b) The date of medical exam c) The date of policy delivery d) The date of issue

B) Date of the medical exam If the company acknowledges receipt of the premium with a conditional receipt, the policy is in effect on the date of the application or the date of the medical exam (whichever is later), provided that the applicant is found insurable at the rate applied for.

Which of the following terms refers to solicitation, negotiation, effectuation, or advising relating to insurance contracts? A) Insurable Interest B) Insurance Transaction C) Advertising D) Recession

B) Insurance transaction

Which of the following policy components contains the company's promise to pay? a) Entire contract provision b) Insuring clause c) Premium mode d) Consideration clause

B) Insuring clause

Which of the following riders would NOT cause the Death Benefit to increase? a) Accidental Death Rider b) Payor Benefit Rider c) Guaranteed Insurability Rider d) Cost of Living Rider

B) Payor Benefit Rider Payor Benefit Rider does not increase the Death Benefit; it only pays the premium if the payor is disabled or dies. With Guaranteed Insurability Rider, the policy owner can increase DB at specified ages or events, i.e. marriage or birth of a child; Cost of Living Rider increases DB to keep pace with inflation; in Accidental Death Rider, if the insured dies from an accident, DB is a multiple of the Face Amount.

In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to a) The insurance company. b) The contingent beneficiary. c) The insured's spouse. d) The policyowner.

B) The contingent beneficiary A contingent beneficiary receives the death benefit if the primary beneficiary predeceases the insured. If there are no designated beneficiaries surviving the insured, the benefits are paid to the estate of the insured.

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective? a) As of the first of the month after the policy issue b) As of the policy issue date c) As of the application date d) As of the policy delivery date

C If the full premium was submitted with the application and the policy was issued as requested, the policy coverage effective date would generally coincide with the date of application.

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy? a) $20,000 b) $25,000 c) $50,000 d) The face amount will be determined by the insurer.

C) 50,000 The face of the term policy would be the same as the face amount provided under the whole life policy.

The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT a) Projected interest rates. b) Face amount of the policy. c) The insured's age at death. d) The beneficiary's life expectancy.

C) insured's age at death The insured's age at death will not be considered, but the longer the life expectancy of the recipient, the lower the payments will be.

When an employee terminates coverage under a group insurance policy, coverage continues in force a) For 60 days. b) Until the employee can obtain coverage under a new group plan. c) Until the employee notifies the group insurance provider that coverage conversion policy is issued. d) For 31 days.

D An employee has 31 days under the conversion privilege to convert to an individual policy.

If an insurer requires an application in order to renew a life insurance policy, it is the insurer's responsibility to send one to the insured a) Within 10 days of the insured's request. b) 30 days in advance of renewal. c) 90 days in advance of renewal. d) Within 30 days of the insured's request.

D If, in order to renew or reinstate a life insurance or annuity policy, an insurer must first receive an application, the insurer must supply this application to the insured within 30 days, upon the insured's request.

All of the following are true of Credit Life EXCEPT.. A) The death benefit cannot exceed the amount of the loan B) The premium payment is included in the loan payment C) The creditor is the policy owner D) The insured names the beneficiary

D With credit life, the lending institution is the owner and names the beneficiary

Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement? a) Term insurance only b) Permanent insurance only c) Universal life insurance only d) Any form of life insurance

D) Any form of life insurance

An insurer mails a policy to a new policy owner. When the insurer relinquishes control of the policy, the policy is considered A) Mailed B) Issued C) Relinquished D) Delivered

D) Delivered `