Insurance License Exam
A hospital indemnity insurance policy may be recommended to a client for all the following reason EXCEPT A) the policy will pay the full amount of a hospital stay B) benefits are paid directly to the insured and may be used for any purpose C) the premiums are affordable D) the policy can be an ideal supplement to other health insurance
A
A long-term care policy will cover all of the following EXCEPT A) emergency hospital care B) nursing care C) custodial care D) home health care
A
A stop-loss feature in a major medical policy specifies the maximum A) amount the insured must pay toward covered expenses B) benefit amount the policy provides in a lifetime C) benefit amount the policy provides each year D) amount the insured must pay in premiums
A
Alabama's life insurance solicitation regulations apply to which of the following? A) Fraternal benefit society insurance policies B) Credit life insurance C) Annuities D) Group life insurance
A
All Medicare supplement policies must cover 100% of the Part A hospital coinsurance amount for each day used from A) the 61st through the 90th day in any Medicare benefit period B) the 45th through the 90th day in any Medicare benefit period C) the 30th through the 90th day in any Medicare benefit period D) the 1st through the 60th day in any Medicare benefit period
A
All of the following are basic premium factors EXCEPT: A) the insured's annual income B) interest earnings C) the mortality rate D) the insurer's expenses
A
All of the following are factors that determine the annuity benefit amount EXCEPT: A) the annuitant's tax bracket B) the annuitant's sex C) the annuitant's age D) the company's expense (loading) factor
A
An accident and health insurance policy that provides for monthly payments has a grace period of: A) 10 days B) 31 days C) 14 days D) 7 days
A
An option whereby additional insurance may be purchased at various times without evidence of insurability is known as: A) guaranteed insurability B) payor benefit C) waiver of premium D) constructive delivery
A
An unincorporated group of subscribers who operate through an attorney-in-fact to provide indemnity insurance for each other is called A) a reciprocal exchange B) an unauthorized insurer C) a surplus lines insurer D) a fraternal benefit society
A
Arnold buys a $25,000 participating whole life policy. He has a definite need for more life insurance, but believes he cannot afford it. Which of the following dividend options would help to solve this problem automatically? A) Using dividends to buy paid-up additions B) Leaving dividends to accumulate at interest C) Taking dividends in cash D) Applying dividends against premium payments
A
Cal, age 57, owns a whole life insurance with a $750,000 face amount that was paid for in 2002 with a single premium of $100,000. The current cash value is $125,000. If he were to borrow $30,000 from this policy today, which of the following choices best describes the tax treatment this transaction will receive? A) $25,000 of the loan is subject to income taxation plus an additional 10% penalty tax B) The loan is income tax C) The first $25,000 of the loan is tax-free, but the remaining $5,000 is subject to income taxation D) The first $5,000 of the loan is tax-free, and the remaining $25,000 is subject to income taxation
A
Coverage for a health insurance policy will take effect just as if the policy had already been issued if all of the following conditions have been met EXCEPT: A) the policy has been legally delivered to the applicant B) the policy is eventually issued as applied for C) the initial premium was paid with the health application D) the applicant satisfies all of the conditions of the conditional receipt
A
Decreasing term insurance could be recommended for all of the following EXCEPT A) to build a retirement fund B) for mortgage protection C) for protection while a business loan is outstanding D) to protect a family while children are growing up
A
Lynn is insured under Medicare Part A and enters the hospital for surgery. Assuming that Lynn has not yet tapped into her lifetime reserve, what is the maximum number of days that Medicare will pay for her hospital bills? A) 150 days. B) 90 days. C) 60 days. D) 120 days.
A
Malik works as a dentist and mountain climbs, skis, and flies airplanes in his spare time. When he applies for a life insurance policy, the agent's and Malik's signatures will be required on all of the following documents EXCEPT? A) the report issued by the Medical Information Bureau B) a form authorizing the insurer to obtain investigative consumer reports C) a questionnaire regarding Malik's aviation activities D) the application
A
Nonqualified withdrawals from a health savings account are subject to income taxes and a penalty of: A) 20% B) 10% C) 15% D) 25%
A
Of the following, which best describes a need that decreasing term insurance is often used to meet? A) Providing funds to pay off an outstanding loan at a reasonable premium B) Providing funds to pay off an outstanding loan at a high premium C) Providing funds for final expenses at a reasonable premium D) Providing long-term coverage at a reasonable premium
A
The Alabama Life and Disability Insurance Guaranty Association can provide all of the following services impaired domestic insurers EXCEPT: A) cover a policy issued by a fraternal benefit society B) loan money to the impaired insurer C) provide pledges needed to assure payment of the impaired insurer's contractual obligations D) re-insure any of the impaired insurer's covered policies
A
The advantages of qualified retirement plans to employers include all of the following EXCEPT A) rewarding a few employees rather than many B) allowing the employer to attract and keep talented employees C) favorable tax rules D) increased employee productivity
A
The calendar year deductible provision of a major medical policy stipulates that A) the deductible is applied only once during the calendar year B) the deductible is applied against each claim during the first year the policy is in effect C) the insurer pays a higher percentage of the medical expenses than the insured D) all claims submitted during the calendar year are subject to the amount of the deductible
A
The mode of premium payment refers to A) the frequency of the payment B) the amount of the payment C) the number of payments in total D) the type of payment
A
The premium for transferring a risk should be A) affordable B) nominal C) discounted D) standard
A
The settlement option that will pay the largest amount to the beneficiary regardless how long he lives is A) the life only or straight life option B) the life with period certain option C) the life with refund option D) the interest only option
A
Under Medicare Part A, the participant must pay his deductible A) once per benefit period B) monthly C) annually D) twice per benefit period
A
Upon the issuance of a life insurance policy, an insurable interest must exist between: A) the applicant and the insured B) the insured and the beneficiary C) the applicant and the beneficiary D) the agent and the applicant
A
Which of the following describes facultative reinsurance? A) The reinsurer considers each risk before allowing the transfer to be made from the ceding company B) The reinsurer rejects most risks from the ceding company C) The reinsurer accepts all risks from the ceding company D) The reinsurer accepts all risks of a certain type from a ceding company
A
Which of the following is a goal of managed care plans? A) To apply financial incentives that reduce the quantity and cost of services B) To provide low-cost health care to people who could not ordinarily afford health insurance C) To protect insureds from insolvency of health insurers D) To fight fraud in the insurance business
A
Which of the following policies endows at age 100? A) Whole life and limited-pay life B) endowment and decreasing term C) Any endowment policy D) Level term and whole life
A
Which of the following required provisions in INCORRECT? A) Medicare supplement policies must have a 10-day free look period B) Pre-existing conditions limitations may not last longer than six months from the date of issue C) Medigap policies must be at least guaranteed renewable D) Medigap policies may not duplicate benefits provided by Medicare
A
Which of the following statements about Medicare supplement policies is CORRECT? A) Medicare supplement policies cannot be canceled or nonrenewed by the insurer solely on health status grounds. B) There are 3 basic supplement policies that are considered core plans. C) Medicare Supplement Plan A provides coverage for skilled nursing facility care. D) Medicare supplement policies can duplicate benefits provided under medicare if an extra premium is charged.
A
Which of the following statements about Medicare supplement policies is NOT correct? A) they may indemnify against losses resulting from sickness on a different basis than losses resulting from accidents B) They cannot terminate a spouse's coverage solely because of an event that terminates the insured's coverage, other than nonpayment of premiums C) Benefits must be adjusted automatically to coincide with changes in Medicare deductibles and copayments D) They cannot cancel or refuse to renew a policy for any reason other than material misrepresentation of nonpayment of premiums
A
Which of the following statements about life insurance is NOT correct? A) A policyowner must notify the beneficiary before transferring ownership B) A policyowner must notify the insurer in writing to transfer a policy C) If a policy is transferred, the new owner receives all of the rights of policy ownership D) Life insurance is not a person contract between the insurer and insured
A
Which of the following statements is CORRECT? A) After a policy is delivered to and accepted by the policyowner, it cannot be changed in any way, except in accordance with terms stated in the contract B) Misrepresentations made in an application are always considered grounds for voiding an insurance contract C) If an insuring company revises its bylaws or practices, any life insurance contract issued before the change must be modified to reflect the company's new policies D) If a premium deposit is not paid with the application the policy will be valid if the applicant is acceptable to the insurer's underwriters
A
Which of the following statements pertaining to life insurance premiums is NOT correct? A) The interest factor is a premium charge based on assumed lost earnings after claims. B) An insurance company invests the premium money it collects to earn interest C) The expense factor in premium ratemaking frequently is referred to as loading D) For an insurance company, the costs of doing business must be reflected in its premiums
A
Which of the following statements regarding a traditional individual retirement account (IRA) is NOT correct? A) A 10% penalty is assessed on any distribution from an IRA before age 59 1/2 B) Assuming that only tax-deductible contributions were made into the IRA, 100% of distributions from it are treated as taxable income C) Distributions must begin from an IRA by April 1 of the year following the IRA owner's attainment of age 70 1/2 D) IRAs are available to anyone younger than age 70 1/2 with earned income, but deductible contributions are limited for individuals who are also covered under an employer-sponsored retirement plan
A
Which of the following statements regarding exposure is NOT true? A) it is measured in degrees B) it is the risk assumed by the insurer C) it is used to determine insurance premiums D) It is measured in units
A
Which of the following statements regarding long-term care insurance is NOT true? A) Long-term care insurance requires a prior 3-day hospital stay in order to receive skilled care in a nursing home. B) Long-term care insurance assists individuals in planning for future needs C) Care for physical safety and mental cognition is provided by long-term care insurance policies. D) The amount and type of policy benefits are chosen by the individual
A
Which of the following would NOT be a criterion for group underwriting? A) Education level of the group members B) Ages of the group members C) Income level of the group members D)Sex of the group members
A
Which provision of a life insurance policy states that "no statement shall void this policy or be used in defense of a claim under it unless contained in the application"? A) Entire contract clause B) insuring clause C) Incontestable clause D) Consideration clause
A
With employer-paid group health insurance, premiums are A) not taxable for employees B) taxable for employees C) not taxable for employers D) not deductible for employers
A
Which of the following individuals investigates, settles, and provides reports involving claims arising under insurance contracts? A) Counselor B) Adjuster C) Producer D) Subagent
B
A life insurance gross premium is A) net single premium plus mortality B) net single premium plus expense C) mortality costs plus loading D) interest plus expense less mortality
B
All of the following are annuity premium factors EXCEPT A) assumed interest rate b) medical history C) age D) sex
B
All of the following are required policy provisions of individual life insurance policies in Alabama EXCEPT: A) 30-day grace period B) provision that all statements in the application are warranties C) incontestable period of 2 years D) statement about the rate of insurer may charge for loans against the cash value
B
An applicant determined by underwriting to be declined would be A) instructed to submit a new application for reconsideration B) uninsurable at any price C) provided a counteroffer at a higher premium D) offered reduced coverage by the insurer
B
An executive bonus plan is an employee benefit arrangement in which A) an employer contributes to a 401(k) plan B) an employer pays the premiums on a permanent life insurance policy that is owned by the employee C) an employer contributes to a variable annuity D) an employer contributes to a deferred compensation plan
B
As it pertains to group health insurance, COBRA stipulates that A) group coverage must be extended for terminated employees up to a certain period of time at the employer's expense B) group coverage must be extended for terminated employees up to a certain period of time at the employee's expense C) retiring employees must be allowed to convert their group coverage to individual policies D) terminated employees must be allowed to convert their group coverage to individual policies
B
Assume 4 individuals, all age 30, purchase the following life insurance policies. If all policies are still in force 10 years later, who will have the largest cash value in his policy? A. Jack, who has a $100,000 life paid-up at 55 policy B. Rajesh, who has a $100,000 20-pay life C. Dennis, who has a $100,000 life paid-up at 65 policy D. Luis, who has a $100,000 straight whole life policy
B
In major medical and comprehensive medical expense policies, a coinsurance provision A) helps satisfy the deductible amount B) provides for percentage participation by the insured C) has no effect on claims D) does not apply until benefit amounts exceed $2,000
B
Lee has a Social Security PIA of $800 at the time of his death. How much is payable to his surviving spouse, who is caring for an unmarried child under the age of 16? A) $160 B) $400 C) $640 D) $800
B
Maureen, age 62, owns a non-MEC whole life insurance policy with a death benefit of $200,000 and a cash value of $40,000. Her basis in the policy is $25,000. If she were to borrow $30,000 from this policy and then die immediately thereafter (without having repaid any portion of the loan), which of the following best describes the resulting tax treatment that of the policy's death benefit? A) $170,000 will be paid to the beneficiary, but $5,000 of that amount will be subject to income taxation B) $170,000 will be paid to the beneficiary, all of which is income tax-free C) The full $200,000 will be paid to the beneficiary, but $30,000 of that amount will be subject to income taxation D) the full $200,000 will be paid to the beneficiary, all of which is income tax-free
B
Most participating whole life insurance policies allow the following uses of standard life insurance dividends EXCEPT: A) to purchase additional units of paid-up life insurance B) to increase the policy's face amount C) to purchase 1-year term insurance D) to reduce future premium payments
B
Related costs associated with a surgical expense policy do NOT include A) surgeons' fees B) room and board C) assistant surgeon D) operating room
B
Sidney, age 58, owns a deferred variable annuity that he purchased 15 years ago and into which he has paid $25,000 in the form of periodic premiums. Today its cash value is $37,000. If he dies today, which of the following statements best describes the tax treatment this transaction will receive? A) Of the cash value, $25,000 is payable to the beneficiary income tax-free, $12,000 is subject to income taxation, and there is a penalty tax B) Of the cash value, $25,000 is payable to the beneficiary income tax-free and $12,000 is subject to income taxation C) of the cash value, $12,000 is payable to the beneficiary income tax-free and $25,000 is subject to income taxation D) The full $37,000 is payable to the beneficiary income tax-free
B
Susan is the receptionist at an insurance agency. She is currently studying for her life insurance license. One day at lunchtime, Carla comes in the office to pay her auto insurance premium. Susan talks to her about the importance of life insurance, and carla immediately completes an application and gives Susan a check for the premium. Carla leaves the agency believing she is covered by life insurance. Susan has acted with A) implied authority B) apparent authority C illegal authority D) express authority
B
Under the COBRA rules for employer group health insurance, which of the following statements is CORRECT? A) Coverage may be continued for up to 18 months for a qualified beneficiary and 36 months for a terminated employee B) Coverage may be continued for up to 36 months for a qualified beneficiary and 18 months for a terminated employee C) Coverage may be continued for up to 36 months for both a qualified beneficiary and a terminated employee D) Coverage may be continued for up to 18 months for both a qualified beneficiary and a terminated employee
B
What is the default nonforfeiture option? A) Surrender value B) Extended term C) Reduced paid-up D) Interest only
B
When does coverage begin for children under family health insurance policies? A) When the family notifies the insurer of the birth B) At birth C) At one year D) At 24 hours
B
Which is NOT a life insurance policy provision? A) endorsements B) cancellation C) reinstatement D) consideration
B
Which of the following descriptions of life insurance policy settlement options is CORRECT? A) Glenn chooses a life-income-only option, and Jeri chooses a life-income-with-cash-refund option. Jeri's income is based on the higher rate per $1,000 of proceeds B) Under an installment refund option, if the primary beneficiary dies, payment of the same amount continue to the secondary beneficiary until all installments to both beneficiaries equal the original amount of proceeds C) Under a life-income-only option, if a primary beneficiary dies after receiving income payments for only 3 months, the balance of the proceeds will be paid in a lump sum to the secondary beneficiary D) Today, most life insurance proceeds are not paid out as lump sums
B
Which of the following entities would NOT be offered a blanket health insurance policy? A) A college B) The employees of a factory C) A soccer team D) An airline
B
Which of the following statements about a modified whole life policy is NOT correct? A) Cash value builds until the insured reaches age 100 so long as the policy is in force B) it is basically an endowment policy C) Premiums are uniformly lower during the early years of the contract D) The premium paying period continues to age 100
B
Which of the following statements about participating and nonparticipating life insurance policies is NOT correct? A) An extra charge to cover unexpected contingencies is built into the premiums of participating policies B) Policy dividends are considered taxable income C) Participating policy premiums are normally slightly higher than nonparticipating policy premiums D) Policy dividend payments cannot be guaranteed
B
Which of the following statements best describes the nature of a cash value loan? A) It is a financial transaction in which the cash value is reduced by the amount of the loan B) it is a financial transaction in which the insurer loans the money and attaches a comparable portion of the cash value as collateral C) It is a financial transaction in which future growth of the cash value is suspended until the loan amount plus interest is recovered D) It is a financial transaction in which the cash value is unaffected but the face amount is reduced by the amount of the loan plus interest
B
Which of the following statements pertaining to variable life insurance is CORRECT? A) With a variable life insurance policy, the insurance company assumes the investment risk B) Variable life insurance cannot be proposed in a sales situation unless the proposal is preceded or accompanied by a prospectus. C) In variable life insurance policy, cash values and the death benefit are not guaranteed. D) The benefits of variable life insurance vary according to the amount of premiums paid.
B
Which of the following types of plans integrates its coverage with basic medical expense coverage, providing benefits in excess of those specified in the basic plan? A) basic umbrella B) Supplementary major medical C) Hospital indemnity D) Comprehensive major medical
B
Which provision of a life insurance policy states that "no statement shall void this policy or be used in defense of a claim under it unless contained in the application"? A) Consideration clause B) Entire contract clause C) Incontestable clause D) Insuring clause
B
While a policy loan is generally an available option with any form of permanent life insurance, a partial withdrawal of cash value from the policy is available only with which of the following types of life insurance? A) Modified premium whole life B) Universal life C) Straight whole life D) Variable life
B
With regard to insurable risks, which of the following statements is NOT correct? A) a type of risk B) a cause of loss C) a moral hazard D) an exposure
B
A life insurance policy may pay death benefits before the insured dies for all of the following reasons EXCEPT A) eligibility for long-term care B) catastrophic illness C) financial difficulties D) terminal illness
C
All of the following are examples of medical cost management EXCEPT A) ambulatory surgery B) precertification review C) denying claims D) mandatory second opinion
C
All of the following are penalties for violating the Fair Credit Reporting Act EXCEPT A) reasonable attorney's fees B) punitive damages awarded by a court C) loss of license indefinitely D) either fines or imprisonment
C
An assignment in which the assignee receives full control over the policy is called: A) a revocable assignment B) a guaranteed assignment C) an absolute assignment D) a collateral assignment
C
An insurance contract is prepared by one party, the insurer, rather than through negotiation between the contracting parties. Which of the following statements explains this characteristic of insurance contracts? A) The insurance contract is unilateral contract B) The insurance contract is a conditional contract C) The insurance contract is a contract of adhesion D) The insurance contract is an aleatory contract
C
An insured defaults on premium payments for a life insurance policy. How many days does he have to request the nonforfeiture benefit? A) 90 days B) 365 days C) 60 days D) 180 days
C
Bill is insured under an individual life insurance policy. His next premium is due April 1, but he forgets to pay it and then dies on April 15. Which of the following statements is CORRECT? A) Bill's heirs must pay a reinstatement penalty before receiving the insurance proceeds B) Bill's heirs will receive only half of the insurance proceeds C) Bill's heirs will receive the insurance proceeds D) Bill's heirs will not receive any insurance proceeds
C
Jay has a $50,000 life insurance policy with an accidental death benefit that pays triple the face amount. If Jay commits suicide three years after purchasing the policy, how much will his beneficiary receive? A) $150,000 B) $100,000 C) $50,000 D) $0
C
Kurt's medical expense policy states that it will pay him a flat $50 a day for each day he is hospitalized. The policy pays benefits on which basis? A) reimbursement B) Partial C) Indemnity D) service
C
Leland elects to surrender his whole life policy for a reduced paid-up policy. The cash value of his new policy will A) decrease gradually B) remain the same as in the old policy C) continue to increase D) decrease by 50% immediately
C
Mark purchased a 20-year, $100,000, level term life insurance policy and a $250,000 straight whole life insurance policy. Which of the following statements is CORRECT? A) The whole life insurance policy will mature when mark reaches age 65; the term life insurance policy will expire in 20 years B) Mark can take a policy loan from either policy, provided the loan is paid back within the 20-year period C) Premiums for both policies are set at the time of policy issue and remain level throughout the term of the policies D) If Mark takes a loan from either policy that is still outstanding when he dies, the amount of the loan plus interest due will be subtracted from the death benefit
C
Maynard earns $70,000 a year. Under his disability income policy, the maximum amount of monthly benefit he will receive is $7,000 a month. Under the relation of earnings to insurance provision, his disability income benefit will be A) reduced, and all premiums paid to date will be considered earned premiums B) prorated, and he will receive $7,000 a month for a limited time period C) reduced, and he will be refunded for any premiums he paid for excess coverage D) Paid in full
C
Medicare supplement (or Medigap) policies pay A) benefits to those who cannot afford Medicare part B coverage B) medical costs arising from extended custodial (nursing home) care C) all or most of Medicare's deductibles D) benefits provided under Medicare Part A
C
Monica is covered under Medicare Part A. She spends 9 days in the hospital for back surgery and is released on August 22nd. It was the first time she ever had to stay overnight in the hospital. When the bill arrives, she pays her deductible, and Medicare pays the balance. She is admitted to the hospital again on November 14th of that same year for additional surgery. Which of the following statements is CORRECT? A) She need not pay the Part A deductible, but she must make a daily co-payment B) She will not have to pay the Part A deductible again C) It will be considered the start of a new benefit period D) She will have to pay the Part A deductible again only if the second surgery is unrelated to the first surgery.
C
Steve is diagnosed with inoperable cancer and learns that he has only a few months to live. He wants to take an extended vacation with his wife and needs some immediate funds. He has held a whole life insurance policy for many years. Which of the following options would be the BEST source of funds, if Steve wants a lump sum payment? A) Policy loan B) Steve cannot withdraw any cash value C) Accelerated benefit rider D) Policy surrender
C
The abbreviation PDP refers to which part of Medicare? A) Part C B) Part B C) Part D D) Part A
C
The insurer is generally required to pay the death benefit claim within: A) 30 days B) 90 days C) 60 days D) 45 days
C
Under what system do a group of doctors and hospitals in a designated area contract with an insurer to provide services at a prearranged cost to the insured? A) HMO B) DPO C) PPO D) MIB
C
What disability policy can be used to fund buy-sell agreements between partners or stockholders in a closely held corporation? A) Key-person disability policy B) Business overhead expense policy C) Disability buyout policy D) Long-term care disability policy
C
What is an authorized insurer? A) agent who has the authority to represent an insurance company B)Policy owner who has a legal contract with an insurance company C) Company that is authorized by the commissioner to transact insurance business in Alabama D) Agent who is authorized by the commissioner to transact insurance business in Alabama
C
When separate deductibles are required for each illness or accident, what kind of deductible is in effect? A) Revolving B) Flat C) Per cause D) Per benefit
C
Which of the following criteria used in group health insurance underwriting reduces the risk of adverse selection? A) Administrative capability B) Size of the group C) Flow of members through the group D) Persistency
C
Which of the following events would NOT terminate Brian's COBRA before the 18-month time limit? A) the day he becomes eligible for Meidcare B) the day his former employer goes bankrupt C) the fifth day his premium is overdue D) the day his coverage is effective at the new job
C
Which of the following falls under the definition of a limited policy? A) Accidental death and dismemberment (AD&D) insurance B) Long-term care insurance C) A prescription drug plan D) A flat-benefit disability policy
C
Which of the following statements about Medicare supplement policies is CORRECT? A) Medicare Supplement Plan A provides coverage for skilled nursing facility care. B) Medicare supplement policies can duplicate benefits provided under Medicare if an extra premium is charged C) Medicare supplement policies cannot be canceled or non-renewed by the insurer solely on health status grounds D) There are 3 basic supplement policies that are considered core plans
C
Which of the following statements regarding a spousal rider to a life insurance policy is NOT correct? A) This rider usually consists of level term life insurance B) This is a form of other insureds rider C) This rider usually provides coverage that lasts as long as the coverage D) There is a premium for this coverage in addition to the base policy premium
C
Which of the following statements regarding insurers is CORRECT? A) If a life insurance company is owned by its policyowners, it is a stock company B) A stock company that issues both participating and nonparticipating life insurance policies is classified as a full lines company C) The primary purpose of an insurance company that is organizaed as a stock insurer is to earn a profit for its stockholders D) Mutual insurance companies sell insurance to insurers
C
Which of the following types of life insurance riders is NOT based on term life insurance? A) Cost-of-living B) Return-of-premium C) Waiver of premium D) Spousal
C
A 65-year-old employee of a company with 90 employees suffers aheart attach and, as a result, becomes totally disabled. Which of the following statements describes how his health benefits will be paid? A) As an active employee, his employer-sponsored health insurance will pay all benefits B) Medicare pays most of the benefits. After that, his employer-sponsored health insurance pays the remainder C) Because he is over age 65, Medicare is responsible for paying all benefits D) his employer is the primary payer and Medicare pays the remaining eligible expenses
D
A Medicare supplement policy that contains restricted network provisions is known as A) a long-term care policy B) an individual health policy C) an HMO D) a Medicare SELECT policy
D
A policy that covers one specific type of life-threatening or serious condition is known by all of the following names EXCEPT A) dread disease policy B) specified disease policy C) critical illness plan D) obscure disease policy
D
After a proof of loss is submitted, legal action may be taken to recover on an individual health insurance policy only during what time period? A) between 30 days and 10 years B) between 30 days and 1 year C) Between 30 and 60 days D) Between 60 days and 3 years
D
All individual health insurance policies must include a notice of claim provision requiring that a written notice of claim must be given to the insurer within how long after the occurrence of the loss? A) 10 days B) 24 hours C) 5 days D) 20 days
D
All of the following are required provisions of accident and health insurance policies EXCEPT A) notice of claim B) reinstatement C) grace period D) inflation protection
D
All of the following are underwriting criteria for group health insurance EXCEPT A) persistency B) composition of the group C) size of the group D) geographic location of the group
D
All of the following statements regarding a hospital indemnity plan are correct EXCEPT A) payment is made directly to the insured, not the insurer B) the plan pays a flat dollar amount as a daily benefit each day the insured is hospitalized C) the benefits from the policy may be used toward deductibles and coinsurance payments D) another name for the plan is a hospital expense plan
D
Disability income benefits for partial disability typically are payable to eligible insureds for a maximum of A) 2 years B) 1 to 3 months C) 1 year D) 3 to 6 months
D
Endorsements or modifications to a contract A) must be signed by the insured's agent B) are requested by the agent/producer C) require the signature of an executive officer of the insurance company D) must be in writing and agreed to by both the insurer and the policyowner
D
Generally speaking, how many days does a certificate holder have to convert to an individual policy? A) 60 B) 45 C) 10 D) 31
D
If a policyowner purchases a $150,000 single premium whole life insurance policy and needs additional funds for retirement 6 months later, A) he can take a withdrawal but not a loan from the policy B) he cannot access the policy's cash value because there has not been enough cash value accumulation buildup in the policy C) he can take a loan from the policy to supplement his retirement income but must repay it within 1 year D) he can draw on the cash value to supplement his retirement income
D
Individual accident and health insurance policies must contain all of the following provisions EXCEPT A) change of beneficiary provision B) proof of loss provision C) time limit on certain defenses provision D) change of occupation provision
D
Life insurance advertisements must include all of the following information EXCEPT: A) an explanation that policy issuance may depend on answers to health questions in the application, if terms such as "nonmedical" or "non medical examination required" are used. B) the words "life insurance" or "annuity" in the policy name C) the source of any statistical information used to advertise a policy D) a table that includes the policy's guaranteed dividends
D
Matteo Owns a nonqualified deferred annuity that has a current value of $50,000. He has 2 children, ages 11 and 17. If he decides to devote this annuity solely to help pay for their college education, and his goal is to maximize the annuity income payments, which of the following is the best option? A) Convert to an immediate annuity with an installment refund annuity income option B) Convert to an immediate annuity using a straight life annuity income option C) Convert to an immediate annuity using a 10 year period certain and life annuity income option D) Convert to an immediate annuity using a 10-year period certain annuity option
D
The first page of a Medicare supplement policy must contain all of the following EXCEPT A) the policy's renewal provision, including a description of any premium increases that may be involved B) the Notice to Buyer - this may not cover all of your medical expenses C) highly visible notice of the 30-day free look period D) the producer's commission and the policy's premium
D
To be considered currently insured, and therefore eligible for disability benefits under Social Security, a worker must have earned a minimum of A) 40 credits in the last 10 years B) 40 credits in the last 13 quarters C) 6 credits in the last 10 years D) 6 credits in the last 13 quarters
D
To reinstate a lapsed policy, all of the following are required EXCEPT A) submit a written application B) pay all back premiums C) produce evidence of insurability, if required by the insurer D) sign a Notice to the Applicant regarding Replacement
D
Under an executive bonus plan, the amount of premium paid is A) taxable to the business and the employee B) taxed as a corporate business expense C) not taxed and treated as deferred income D_ taxable income for the employee
D
Under an executive bonus plan, the amount of premiums paid is A) not taxed and treated as deferred income B) taxed as a corporate C) taxable to the business and the employee D) taxable income for the employee
D
What is the maximum number of days of skilled nursing facility care for which Medicare will pay beenfits? A) 75 days B) 60 days C) 25 days D) 100 days
D
Which of the following individuals can access the cash value of her life insurance policy to provide extra retirement income? A) Rosa, who owns a $50,000 25-year level term policy B) Mai, who owns a $200,000 decreasing term policy C) Judith, who is covered by a $500,000 key-person life insurance policy D) Harriet, who owns a $100,000 single premium whole life policy
D
Which of the following is NOT covered by Medicare Part A? A) Hospice care B) skilled nursing facility C) home health care D) An outpatient medical facility
D
Which of the following is NOT one of the requirements for a policy to be considered "Qualified"? A) Policies must state renewal conditions (guaranteed renewable) on the first page. B) Insureds must be given a 30-day free look period. C) Insureds must have a chonic illness that is expected to last for a minimum of three months D) Policies may include optional coverage for reimbursement of certain Medicare expenses.
D
Which of the following is the best reason to purchase a vision care policy? A) To obtain coverage that will pay 100% of routine vision care B) To help pay the cost of medically necessary eye surgery C) To obtain coverage that will pay for corrective surgery D) To supplement existing major medical coverage
D
Which of the following renewability provisions is the least favorable provision for the insured? A) Conditionally renewable B) Noncancelable C) Guaranteed renewable D) Optionally renewable
D
Which of the following statements regarding Social Security disability is NOT true? A) A spouse caring for the disabled worker's unmarried child under age 16 or disabled before age 22 receives a benefit equal to 50% of the worker's PIA B) the total family benefit is capped by a family maximum benefit amount based on the worker's average earnings. C) A disabled worker receives benefits equal to her primary insurance amount D) Benefits are based on the U.S. average monthly income, indexed for inflation
D
Which of the following statements regarding a disability income rider is NOT correct? A) A disability income rider is a form of health insurance B) Most of disability income riders do not cover disabilities that develop after age 60 or 65 C) A disability income rider does not provide benefits for partial or temporary disability D) The only way to provide disability benefits in a life insurance policy is through a disability income rider.
D
Which of the following statements regarding how to fix a mistake in an insurance application is NOT correct? A) if the insurer discovers an incorrect application before the policy is issued, the insurer may cancel the contract B) If the insurer discovers a mistake, it usually returns the application to the agent who, with the applicant, corrects the application. C) if the agent fixes the mistake in the application, the applicant must initial the correction. D) Under no circumstances may an agent correct information on an insurance application once it has been completed by the applicant.
D
Which of the following statements regarding mutual insurers is TRUE? A) Mutual insurers are also known as reciprocal iinsurers B) The board of directors oversees the operations of the company C) If a mutual insurer is profitable, it may issue taxable dividends to its policyholders D) Mutual insurers issue participating policies
D
Which of the following statements regarding policy dividends is CORRECT? A) Though they may vary from year to year, they are guarantee to be paid each year B) they are not available to insureds after a specified age, such as 60. C) they are issued on nonparticipating policies D) They are the difference between the gross premium charged and the actual experience of the insurer.
D
Which statement regarding health savings accounts (HSAs) is NOT correct? A) An individual may not establish an HSA if she is covered by Medicare B) Withdrawals for nonqualified medical expenses are subject to taxation C) contributions to an HSA are tax deductible D) Individuals that set up HSA accounts are not required to be enrolled in a high-deductible health plan (HDHP)
D
With what provision of a standard health insurance policy would the following clause be associated: "The insured and the insurer shall have the same rights thereunder as they had under the policy immediately before the due date of the defaulted premium."? A) Grace period provision B) cancellation provision C) Time limit on certain defenses provision D) Reinstatement provision
D
