Insurance Simulation examination test
-premium
Which of the following terms describes the fee a person pays an insurance company to receive coverage ?
-apparent
Which of the following type of agent authority is also called "perceived authority"?
-notice of claim
Which provision concerns the insureds duty to provide the insurer with reasonable notice in the event of a loss?
-cost of living rider
A long stretch of national economic hardship causes a 7% rate of inflation. A policy owner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change?
-both subscriber and insured
A man bought an individual health insurance policy for himself. Which of the following roles does he now legally have?
-claim is denied if his policy contains the illegal occupation provision
A man is injured while robbing a convenient store. How does his major medical policy handle the payment of his claim?
-obtain a list of all life insurance policies that will be replaced
During the replacement of life insurance, a replacing insurer must do one of the following?
-retirement
During which income period does the surviving spouse's working income ceases and social security benefits begin
-agree to follow the PPO standards and charge the appropriate fees
How can a new physician be added to the PPOs approved list?
-all providers will have the same coverage options and conditions for each plan
In reference to the standard Medicare Supplement benefits plan, what does the term standard mean?
-generally not taxed as income
Life insurance death proceeds are what?
-gross premium
Mortality-Interest+Expense=
-gradually increases each year by by the amount that the cash value increases
The death benefit under the Universal Life Option B
-lower
The premium of a survivorship life policy compared with that of a joint life policy would be?
-Universal life
The waiver of cost of insurance rider is found in what type of insurance?
-replacement rule
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase a new insurance?
-the extent of benefits is determined by the insureds income
Which statement accurately describes group disability income insurance?
-single payment -periodic payments
Which two terms are associated directly with the way an annuity is funded?
-both the applicant and the agent
Who must sign the notice regarding replacement?
-avoidance
The risk management technique that is used to prevent a specific loss by not exposing oneself that activity is called
-20 years or until death, whichever occurs first
Under a 20 pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premium must be paid
-level term
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if the death occurs after the 20-year period. What type of policy is this?
-survivor protection
A producer is helping a married couple determine the financial needs of their children in the event that one or both should die prematurely. This is a personal use of life insurance known as
-small employer
If a firm has 30 employees that were actively engaged in business 75% of working days during the preceding calendar quarter, what is its classification?
-incontestability clause
The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as
-the Policyowner can specify the way proceeds are split in the policy
The owner of a life insurance policy wishes to name two beneficiaries for the policy proceeds. What will the soliciting insurance producer say?
-universal life (option A)
-Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?
-proof not required
A couple owns an insurance policy with a children's term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to identify proof of insurability?
-Attained age
An employee quits his job and converts his group policy to an individual policy, the premium for the individual policy will be based on his what?
-the insurer will pay the full death benefit from the group policy to the beneficiary
An employee quits his job on may 15 and doesn't convert his group life insurance policy to an individual policy for two weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?
-90 days
Most policies will pay the accidental death benefits as long as the deaths caused by the accident and occurs within
-fiduciary capacity
Producers are responsible to collect and disperse premiums, and return premiums or other funds. Which term is associated with this?
-becomes terminally ill
The accelerated benefits provision will provide for an early payment of the death benefit when the insured
-exchange of unequal values
Which of the following best describes the aleatory nature of an insurance contract?
-aleatory
Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company?
-insurance commissioner or director
Which of the following entities must approve all medicare supplement advertisements?
-owners rights
Which of the following explains the policy owners right to change beneficiaries , choose options, and receive proceeds of a policy?
-policyowner
Which of the following individuals must have insurable interest in the insured?
-the application given to a prospective insured
Which of the following is NOT the consideration in a policy?
-making comparisons between different policies
Which of the following is not considered misrepresentations it pertains to unfair trade practices?
-minors at the age of 14 can purchase
Which of the following is not true about minors purchasing insurance?
-admitted
Which of the following is the most precise synonym for an "authorized" insurer?
-remains the same no matter how many children are added to the policy
Which of the following is true about the premium of the children rider on a life insurance policy?
-thats its policies are covered by a state guaranty association
Which of the following may not be included in an insurance company advertisement?
-certificate of authority
Which of the following must an insurer obtain in order to transact insurance within a given state?
-endowment at age 65
Which of the following policies typically combine insurance and savings with a date of maturity earlier than age 100 at great expense to the policyholder?
-straight life
Which of the following policies will be classified as a traditional level premium contract?
-term life
Which of the following policies would not have a policy loans provision?
-automatic premium loan
Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium?
-suicide is excluded for a specific period of years and covered thereafter
Which of the following statements about a suicide clause in a life insurance policy TRUE?
-the cost of coverage is based on the ratio of men and women in the group
Which of the following statements about group life is correct?
-conviction of a felony -failure to pay state income tax -taking money from insurance company or insured
All of the following may cause the commissioner to revoke or suspend your license
-there is a requirement to prove insurability on the part of the participants
All of the following of characteristics of a group life insurance plan EXCEPT
-consideration clause
An applicant for an individual health policy failed to complete the application properly. Before being able to complete the application and pay the initial premium, she is confined to a hospital. This will not be covered by insurance because she has not met the conditions specified in the
-dread disease coverage
An applicant has a history of heart disease in his family, so he would like to buy a health insurance policy that strictly covers heart disease. What type of policy is this?
-direct response marketing
An insurance company sells an insurance policy over the phone in response to a tv ad. Which of the following best describes this Act?
-beneficiary's consent
An insurance contract must contain all of the following to be considered legally binding except what?
-common disaster
An insured and his wife are both involved in a head-on collision. The husband dies instantly, the wife dies 15 days later. The insurance company pays the death benefit to the estate. This indicates that the life insurance policy had what provision?
-limited-pay life
An insured has a life insurance policy that requires him to only pay premiums for a specific number of years until the policy is paid up. What kind of policy is this?
-universal life
An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?
-$100,000
An insured purchased a 15 year level term life policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receive as a settlement ?
-material misrepresentation
An insured stated on her life insurance application that she's never had a heart attack. When in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied?
-65
At what age does an individual qualify for medicare?
-100% of participation of members is required in noncontributory plans
Group life insurance is a single policy written to provide coverage to members of a group. Which statement concerning group life is true?
-the employer
If a business wants to buy a disability income policy on a key employee. Which of the following is considered he beneficiary?
-change must be reported to the commissioner
If a licensee wants to transact insurance under a different name than that listed on his producers license, which of the following must occur?
-return the application to the applicant for a signature
If an agent fails to obtain an applicants signature on the application, the agent must what?
-an unfair trade practice
If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered what?
-fully insured
If an insured worker has earned 40 quarters of coverage, the workers status under social security disability is what?
-can assume the form is approved
If the commissioner has not approved or disapproved any insurance form by the end of the judgment period, the insurer
-handling insurer funds in a trust capacity
In insurance transactions, fiduciary responsibilities means
-the policy contains sufficient cash value to cover the cost of insurance
The policy owner of a universal life policy may skip paying the premium and the policy will not lapse as long as
-joint life
Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die?
-the same face amount as in the whole life policy
Under an extended term nonforfeiture option, the policy cash value is converted to what?
-legal benefits
Under workers compensation, which of the following benefits are not included?
-cash values can be borrowed at any time
What does "liquidity" refer to in a life insurance policy?
-license remain in effect unless revoked or suspended as long as the license renewal fee is paid and continuing education requirements for the license are maintained by the due date
What is the duration of an insurance producer or service representative's license?
-early detection through regular checkups
What is the goal of the HMO?
-to provide a guaranteed income for a certain period of time
What is the purpose of a fixed-period settlement option?
-to help consumers compare life insurance products in regard to their relative cost
What is the purpose of life insurance solicitation regulations?
-concurrent review
What process will the insurance company use to monitor the insured's hospital stay to make sure everything is proceeding according to schedule?
-medical reimbursement benefit
What type of benefit helps pay for accidental injuries that are not severe enough to qualify for disability?
-procedures for filing a claim -length of coverage -policy benefits and exclusions
What type of information is included in a certificate of insurance?
-Limited
What type of license is needed to transact non-major lines of insurance like baggage and accident only insurance?
-insurance company's general account
When a fixed annuity owner pays a monthly annuity premium to the insurance company, where is this money placed?
-reimbursement
When benefits are paid directly to the insured under a health insurance policy, the policy provides benefits on what type of basis?
-carry over from old plan to new plan
When employees are actively at work on the date coverage can be transferred to another insurance carrier, what happens to coinsurance and deductibles ?
-paid up option
Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early?
-After more than one year
With a Single Premium Deferred Annuity (SPDA), when are the benefits paid?
-policy summary and the buyers guide
According to the regulations on life insurance policy solicitation, what two documents must be presented to an applicant during the application process?
-investing in the stock market
All of the following actions by a person could be described as risk avoidance except what?
-an applicant for a dealers license
All of the following applicants for an insurance producer license are exempt from prelicensing education requirements EXCEPT
-Consideration, legal purposes, offer and acceptance
Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements?
-yes, and they may used any preferred physician, even if not part of the HMO
Can an individual who belongs to a POS plan use an out-of-network physician?
-presumptive disability
Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insured for full disability benefits. Which disability policy provision does this describe?
-policy loans can be made on policies that do not accumulate cash values
All of the following are true regarding insurance policy loans except
-signed waiver of premium
Upon policy delivery, the producer may be required to obtain any of the following except what?
-agents contract with the principal
What documentation grants express authority to an agent?
-20
What is the maximum age for qualifying for a catastrophic plan?
-viator
What is the name of the insured who enters into a viatical settlement?