Insurance Part 3

#7. During replacement of life insurance, a replacing insurer must do which of the following? a)Send a copy of the Notice Regarding Replacement to the Department of Insurance b)Obtain a list of all life insurance policies that will be replaced c)Guarantee a replacement for each existing policy d)Designate a new producer for a replaced policy

b)Obtain a list of all life insurance policies that will be replaced

#96. An insured purchased a life policy in 2010 and died in 2020. The insurance company discovers at that time that the insured had misstated information about her insurance history on the application. What will the insurer do? a)Sue for the right to not pay the death benefit b)Pay the death benefit c)Refuse to pay the death benefit because of the misstatement on the application d)Pay a decreased death benefit

b)Pay the death benefit

#46. Using a class designation for beneficiaries means a)Naming an estate as the beneficiary. b)Naming each beneficiary by his or her name. c)Naming beneficiaries as a group. d)Not naming beneficiaries.

c)Naming beneficiaries as a group.

#37. It would be considered unfair discrimination to ask an insurance applicant about which of the following and then use that information as a rating factor to determine insurability? a)Occupation b)Address c)Sexual orientation d)Age

c)Sexual orientation

#13. The maximum number of employees that a small employer can have is a)50 b)100 c)25 d)30

a)50

#47. Which of the following is NOT fundable by annuities? a)Death benefits b)Cash accumulation for any reason c)A person's retirement d)Estate liquidation

a)Death benefits

#111. If an insured changes his payment plan from monthly to annually, what happens to the total premium? a)Decreases b)Stays the same c)Doubles d)Increases

a)Decreases

#39. Which of the following is an eligibility requirement for all Social Security Disability Income benefits? a)Have attained fully insured status b)Be disabled for at least 1 year c)Have permanent kidney failure d)Be at least age 50

a)Have attained fully insured status

#24. Which authority is NOT stated in an agent's contract but is required for the agent to conduct business? a)Implied b)Apparent c)Assumed d)Express

a)Implied

#2. Combination plans are comprised of two types of plan features: basic and a)Expanded. b)Limited. c)Comprehensive. d)Scheduled.

c)Comprehensive.

#25. What documentation grants express authority to an agent? a)Fiduciary contract b)State provisions c)Agent's contract with the principal d)Agent's insurance license

c)Agent's contract with the principal

#55. What size companies are eligible for health reimbursement accounts (HRAs)? a)Sole proprietors only b)Companies with at least 100 employees only c)Companies of all sizes d)Small employers only

c)Companies of all sizes

#143. Who determines the eligibility and contribution limits of an HRA? a)The employer b)The employee c)The state d)The insurer

a)The employer

#110. All of the following statements are true of a Combination Dental Plan EXCEPT a)It covers diagnostic and preventive care on the usual, customary, and reasonable basis. b)It uses a fee schedule for other dental services. c)It is also known as the Superimposed Plan. d)It is basically a combination of a scheduled and nonscheduled dental plan.

c)It is also known as the Superimposed Plan.

#106. A policyowner is reading a statement on the first page of his health insurance policy, which says "this is a limited policy." What is the name of this statement? a)Limited Policy Notice b)Policy Limitation Notice c)Statute of Limitations d)Limited Benefit Statement

a)Limited Policy Notice

#112. All of the following types of distributions are considered exceptions to the early distribution rule and, therefore, are not subject to the penalty tax EXCEPT a)Participant's debt. b)Participant's disability. c)Death of participant. d)A loan from the plan.

a)Participant's debt.

#146. Which renewability provision are you most likely to see on a travel accident policy? a)Period of time b)Noncancellable c)Optionally renewable d)Conditionally renewable

a)Period of time

#51. Which of the following statements about HRAs is TRUE? a)The account allows roll-over of unused balances at the end of the year at the employer's discretion b)The account allows roll-over of unused balances at the end of the year at the employee's discretion c)The account only allows roll-over of half the unused balances at the end of the year d)The account does not allow roll-over of unused balances at the end of the year

a)The account allows roll-over of unused balances at the end of the year at the employer's discretion

#3. What is the purpose of the buyer's guide? a)To allow the consumer to compare the costs of different policies b)To provide the name and address of the agent/producer issuing the policy c)To list all policy riders d)To provide information about the issued policy

a)To allow the consumer to compare the costs of different policies

#1. Disability income coverage specifies that the policy covers the insured if he is unable to perform any job for which he is qualified. In this case, total disability is defined as a)Own occupation - less restrictive than other definitions. b)Any occupation - more restrictive than other definitions. c)Any occupation - less restrictive than other definitions. d)Own occupation - more restrictive than other definitions.

b)Any occupation - more restrictive than other definitions.

#43. When contributions to an immediate annuity are made with before-tax dollars, which of the following is true of the distributions? a)There are no distributions. b)Distributions are taxable. c)Distributions are nontaxable. d)Distributions cannot begin prior to age 72.

b)Distributions are taxable.

#33. Which of the following statements about the reinstatement provision is true? a)It guarantees the reinstatement of a policy that has been surrendered for cash. b)It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated .c)It permits reinstatement within 10 years after a policy has lapsed. d)It provides for reinstatement of a policy regardless of the insured's health.

b)It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated.

#41. Which of the following information regarding an insured is NOT included in an Investigative Consumer Report, which is requested by an underwriter? a)General reputation b)Medical history c)Applicant's character d)Personal habits

b)Medical history

#86. Which of the following is monitored by ERISA? a)Severance pay of less than 2 years b)Stock profit-sharing plans c)Cash bonus plans d)Cash profit-sharing plans

b)Stock profit-sharing plans

#137. An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a Traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer? a)$8,000, tax on growth only b)$10,000, tax on growth only c)$10,000, no tax consequence d)$8,000, no tax consequence

c)$10,000, no tax consequence

#114. If during the underwriting process an insurer obtains personal information about an applicant from the applicant, when must the insurer provide notice of its information practices? a)At the time of application b)At the time the insurer first collects the information c)At the time of policy delivery d)Never, since the information was obtained from the applicant

c)At the time of policy delivery

#120. All of the following violations may result in an agent's imprisonment EXCEPT a)Knowingly obtaining information about a consumer under false pretenses .b)Engaging in the business of insurance after being convicted of breach of trust. c)Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction. d)Embezzling funds from the insurer.

c)Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction.

#75. All of the following are characteristics of a Major Medical Expense policy EXCEPT a)Blanket coverage. b)Coinsurance. c)Low maximum limits. d)Deductibles

c)Low maximum limits.

#103. A guaranteed renewable health insurance policy allows the a)Policy to be renewed at time of expiration, but the policy can be canceled for cause during the policy term. b)Insurer to renew the policy to a specified age. c)Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class. d)Policyholder to renew the policy to a stated age and guarantees the premium for the same period.

c)Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class.

#22. When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to a)Pay back all premiums owed plus interest. b)Receive payments for a fixed amount. c)Purchase a single premium policy for a reduced face amount. d)Purchase a term rider to attach to the policy.

c)Purchase a single premium policy for a reduced face amount.

#9. Which settlement option provides a single beneficiary with income for the rest of his/her life? a)Lump Sum b)Retained Assets c)Single Life d)Fixed Amount

c)Single Life

#147. What determines the penalty for surrendering a market value adjusted annuity prematurely? a)There are no penalties imposed for surrendering annuities prematurely. b)The guaranteed minimum interest rate provided in the contract c)The current interest rate at the time of surrender d)The flat fee determined by an index of interest gains and the amount of time the annuity would take to mature

c)The current interest rate at the time of surrender

#73. When employees are actively at work on the date coverage can be transferred to another insurance carrier, what happens to coinsurance and deductibles? a)Coinsurance carries over, but deductibles are generally higher .b)Deductibles carry over, but coinsurance is generally higher. c)They carry over from the old plan to the new plan. d)They have to be reevaluated.

c)They carry over from the old plan to the new plan.

#66. In the event a policy lapses due to nonpayment of premium, within how many days would the policy be automatically reinstated once the outstanding premium is paid? a)10 days b)25 days c)30 days d)45 days

d)45 days

#12. Which of the following is TRUE about credit life insurance? a)Debtor is the annuitant. b)Creditor is the insured. c)Debtor is the policy beneficiary. d)Creditor is the policyowner.

d)Creditor is the policyowner.

#48. Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity? a)Investment performance of the company b)Investment performance of the insured c)Statewide predetermined annual interest rate d)Insurer's guaranteed minimum rate of interest

d)Insurer's guaranteed minimum rate of interest

#81. All of the following statements describe a MEWA EXCEPT a)MEWAs can be sponsored by insurance companies. b)MEWA employers retain full responsibility for any unpaid claims. c)MEWAs can be self-insured. d)MEWAs are groups of at least 3 employers.

d)MEWAs are groups of at least 3 employers.

#121. Which of the following programs expands individual public assistance programs for people with insufficient income and resources? a)Medicare b)Social Security c)Unemployment compensation d)Medicaid

d)Medicaid

#141. Which of the following is NOT true regarding policy loans? a)Policy loans can be repaid at death b)An insurer can charge interest on outstanding policy loans. c)A policy loan may be repaid after the policy is surrendered. d)Money borrowed from the cash value is taxable.

d)Money borrowed from the cash value is taxable.

#82. Under the Physical Exam and Autopsy provision, how many times can an insurer have the insured examined, at its own expense, while a claim is pending? a)None at all b)1 examination per week of the claim processing period c)2 examinations per week of the claim processing period d)Unlimited

d)Unlimited

#127. Which of the following is true regarding benefits paid to disabled employees? a)Tax withholding is required if the employee paid the premium. b)Disability benefits are not taxed. c)They may be subject to taxation if the premium was paid by the employer. d)They are exempt from taxation if any portion of the premium was paid by the employee.

c)They may be subject to taxation if the premium was paid by the employer.

#42. Which of the following is a key distinction between variable whole life and variable universal life products? a)Variable whole life allows policy loans from the cash value. b)Variable universal life has a fixed premium. c)Variable whole life has a guaranteed death benefit. d)Variable universal life is regulated solely through FINRA.

c)Variable whole life has a guaranteed death benefit.

#15. An individual purchased a Medicare supplement policy in March and decided to replace it 2 months later. His history of coronary artery disease is considered a pre-existing condition. Which of the following is true? a)The pre-existing condition waiting period fulfilled in the old policy will be transferred to the new policy, the new one picking up where the old one left off. b)Coronary artery disease coverage will be permanently excluded from the new policy. c)In replacement, pre-existing conditions must be waived, so sickness relating to coronary artery disease will be covered upon the policy's effective date. d)Because this is a new policy, the pre-existing condition waiting period starts over.

a)The pre-existing condition waiting period fulfilled in the old policy will be transferred to the new policy, the new one picking up where the old one left off.

#70. All of the following statements are correct regarding credit life insurance EXCEPT a)Benefits are paid to the borrower's beneficiary. b)The amount of insurance permissible is limited per borrower. c)Premiums are usually paid by the borrower. d)Benefits are paid to the creditor.

a)Benefits are paid to the borrower's beneficiary.

#57. Maximum benefits for a major medical plan are usually lifetime a)Closed panel. b)Minimums. c)Maximums. d)Open panel.

c)Maximums.

#140. How is the amount of Social Security disability benefits calculated? a)It is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over their highest 30 years. b)It is based on age, number of quarters worked in the last 25 years (minimum of 80) and the number of health claims made during that period of time. c)It is based on age, number of quarters worked in the last 20 years (minimum of 60) and the number of health claims made during that period of time. d)It is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over their highest 35 years.

d)It is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over their highest 35 years.

#50. If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age, what type of policy is this? a)Limited pay whole life policy b)Modified life insurance policy c)Single premium policy d)Jumping juvenile policy

d)Jumping juvenile policy

#14. What is the difference between the Medicare approved amount for a service or supply and the actual charge? a)Coinsurance b)Excess charge c)Actual charged d)Limiting charge

b)Excess charge

#27. How long will the beneficiary receive payments under the single life settlement option? a)Until the insured's age 100 b)Until the beneficiary's death c)Until the insured's death d)For a specified period of time

b)Until the beneficiary's death

#98. Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT a)Alcohol and tobacco consumption. b)Recent surgeries. c)Other insurance coverages. d)Family health history.

c)Other insurance coverages.

#83. An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? a)Dividend options b)Guaranteed renewable option c)Nonforfeiture options d)Guaranteed insurability option

d)Guaranteed insurability option

#93. Which of the following is available to employers of all sizes? a)MSAs b)LPAs c)HSAs d)HRAs

d)HRAs

#77. What is the waiting period on a Waiver of Premium rider in life insurance policies? a)30 days b)3 months c)5 months d)6 months

d)6 months

#40. An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries? a)One of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies. b)The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive. c)The beneficiary will receive 2/3 of the lump sum up front, and the remaining 1/3 will be paid over time. d)The beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies.

b)The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.

#135. Can an individual who belongs to a POS plan use an out-of-network physician? a)Yes, but they must use the HMO physician first b)Yes, and they may use any preferred physician, even if not part of the HMO c)No d)Yes, but they must use the POS physician first

b)Yes, and they may use any preferred physician, even if not part of the HMO