insurance test
if the commissioner is scheduling a hearing for a potential violation of the insurance code, what is the minimum required notice A. 10 days B. 15 days C. 30 days D. 45 days
A. 10 days
within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained? A. 3 days B. 5 days C. 10 days D. 14 days
A. 3 days
Which of the following statements is correct concerning taxation of long-term care insurance? A. Excessive benefits may be taxable B. Benefits may be taxable as ordinary income C. Premiums may be taxable as income D. Premiums are not deductible in any case
A. Excessive benefits may be taxable
Which of the following entities can legally bind coverage? A. Insurer B. The insured C. Federal insurance board D. Agent
A. Insurer
A 37-year-old owns a policy with a Guaranteed Insurability Rider. The policyowner would like to increase the benefit amount offered by the policy. What documentation will be required? A. No documentation B. Proof of insurability C. Medical records D. Attending physician's report
A. No documentation
In an individual long-term care insurance plan, the insured is able to deduct the premiums from taxes. What income taxation will be imposed on the benefits received? A. No tax B. Tax deductible C. State income tax D. Federal income tax
A. No tax
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled? A. Payor benefit B. Jumping Juvenile C. Juvenile Premium Provision D. Waiver of Premium
A. Payor benefit
Regarding the taxation of Business Overhead policies, A. premiums are deductible, and benefits are taxed B. premiums are not deductible, and benefits are taxed C. Premiums are not deductible, but benefits are deductible D. Premiums are not deductible, but expenses paid are deductible
A. Premiums are deductible and benefits are taxed.
All statements of the insured in any application for a policy of insurance are deemed A. Representations B. Either warranties or representations dependent upon the context in which they were written C. Contractual considerations and must be unilaterally binding for the insured D. Warranties
A. Representations
All of the following are considered unfair trade practices in the business of insurance EXCEPT A. Sharing commissions B. Boycott C. Rebating D. Defamation
A. Sharing commissions
If an insurer becomes insolvent, which of the following would pay benefits to policyholders? A. The Guaranty Association B. The NAIC fund C. The state D. A federal reserve fund
A. The Guaranty Association
under which condition would an employee's group medical benefits be exempt from income taxes? A. an employee's group medical benefits are generally exempt from taxation as income B. an employee's group medical benefits are never exempt from taxation as income C. when the premiums and other unreimbursed medical expenses exceed 5% of the employee's adjusted gross income D. when the premiums and other unreimbursed medical expenses exceed 10% of the employee's adjusted gross income
A. an employee's group medical benefits are generally exempt from taxation as income
Under a Key Person disability income policy, premium payments A. are made by the business and are not tax deductible B. are made by the employee and not tax deductible C. are made by the employee and are tax free D. are made by the business and are tax deductible
A. are made by the business and are not tax deductible
which describes the features of a comprehensive major medical policy A. basic medical expense benefits are provided in a single package B. the deductible is always expressed as deferred amount C. it is the same as major medical insurance D. there is no coinsurance
A. basic medical expense benefits are provided in a single package
a business wants to make sure that if a key employee becomes disabled, the business will be protected from any resulting loss. What kind of insurance will protect the business? A. business disability B. individual disability C. management loss D. business loss
A. business disability
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as A. coercion B. rebating C. misleading advertising D. defamation
A. coercion
the Patient Protection and Affordable Care Act includes all of the following provisions EXCEPT A. individual tax deduction for premiums paid B. right to appeal C. no lifetime dollar limits D. coverage for preventive benefits
A. individual tax deduction for premiums paid
which of the following is NOT true of a major-medical health insurance policy? A. it is designed to pay on a first dollar of expense basis B. it usually has a maximum benefit amount C. the benefits are subject to deductibles D. it is designed to cover hospital and medical expenses of a catastrophic nature
A. it is designed to pay on a first dollar of expense basis
In order to be eligible for group health insurance, all of these are conditions an employee must meet EXCEPT A. must have dependents B. must be working in a covered classification C. must be actively at work D. must be a full-time employee
A. must have dependents
when an insurance producer conducts business under any name other than the producer's legal name, they must A. notify the commissioner before using the assumed name B. notify the commissioner within 10 days of using the assumed name C. notify the commissioner within 30 days of using the assumed name D. notify the appointing insurance company within 30 days of using the assumed name
A. notify the commissioner before using the assumed name
when an insurer combines two periods of disability into one, the insured must have suffered a A. recurrent disability B. partial disability C. residual disability D. presumptive disability
A. recurrent disability
Benefit periods for individual short-term disability policies will usually continue from A. 3 months to 3 years B. 6 months to 2 years C. 2 years to age 65 D. 1 week to 4 weeks
B. 6 months to 2 years
Which of the following is NOT true about the Conversion Privilege under a group health insurance policy? A. The premium for an individual health insurance policy can be higher than that of the group policy B. An individual policy must provide the same benefits as the group insurance policy C. An employee does not need to prove evidence of insurability D. An employee can convert from group to individual insurance within 31 days of termination
B. An individual policy must provide the same benefits as the group insurance policy
Which of the following would allow the spouse of an insured under a group health policy to continue receiving coverage after the spouse and insured divorce? A. Nonforfeiture Provision B. Conversion Provision C. Reinstatement Provision D. Guaranteed Issue Provision
B. Conversion Provision
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT A. An offer to share in commissions generated by the sale B. Dividends from a mutual insurer C. An offer of employment D. Stocks, securities, or bonds
B. Dividends from a mutual insurer. Dividends paid to policyholders of a mutual insurer are not considered to be a rebate because the policy specifies that they might be paid.
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of? A. Rebating B. Misrepresentation C. Concealment D. Unfair claim practice
B. Misrepresentation
Premium payments for personally-owned disability income policies are A. Tax deductible to the extent that they exceed 10% of the adjusted gross income of those itemizing deductions B. Not tax deductible C. Eligible for tax credits D. Tax deductible
B. Not tax deductible
Insurers may change which of the following on a guaranteed renewable health insurance policy? A. No changes are permitted B. Rates by class C. Coverage D. Individual rates
B. Rates by class
In major medical insurance policies, when the insured's share of coinsurance reaches a certain amount, the insured is no longer obliged to pay it. This feature is known as A. Coordination of benefits B. Stop-loss C. Maximum Benefits D. Deductible
B. Stop-loss
Which of the following is NOT the consideration in a policy? A. The promise to pay covered losses B. The application given to a prospective insured C. Something of value exchanged between parties D. The premium amount paid at the time of application
B. The application given to a prospective insured
all of the following are correct about the required provisions of a health insurance policy EXCEPT A. the entire contract clause means the signed application, policy, endorsements, and attachments constitute the entire contract B. a reinstated policy provides immediate coverage for an illness C. proof-of-loss forms must be sent to the insured within 15 days of notice of claim D. a grace period of 31 days is found in an annual pay policy
B. a reinstated policy provides immediate coverage for an illness
What does the Guaranty Association guard against? A. rebating B. insurer insolvency C. insurance fraud D. double indemnity
B. insurer insolvency
What is the initial period of time specified in a disability income policy that must pass, after the policy is in force, before a loss can be covered? A. grace period B. probationary period C. contestable period D. elimination period
B. probationary period
which of the following would basic medical expense coverage NOT cover? A. hospice B. surgeon's services C. mental illness D. maternity
B. surgeon's service
insurable interest can best be described by which of the following? A. it is not necessary for the insured to be aware of the insurable interest or give permission for the insurance that is to be written B. the applicant must experience a financial loss due to an accident or sickness that befalls the insured C. the insured must be genuinely interested in the life of the applicant D. all beneficiaries need to have notification of their status
B. the applicant must experience a financial loss due to an accident or sickness that befalls the insured
in a disability policy, the elimination (or waiting) period refers to the period between A. during which any specific illness or accident is excluded from coverage B. the first day of disability and the day the insured starts receiving benefits C. the effective date of the policy and the date the first premium is due D. coverage under a disability policy and coverage under social security
B. the first day of disability and the day the insured starts receiving benefits
all of the following identify purposes of the insurance information and privacy act EXCEPT A. to limit the disclosure of information collected in connection with insurance B. to establish fair and marketable advertisement procedures C. to establish standards for collection, use and disclosure of information D. to minimize intrusiveness of insurance collection practices
B. to establish fair and marketable advertisement procedures
An insured has a primary group health plan and an excess plan. each covering losses up to $10,000. The insured suffered a loss of $15,000. Disregarding any copayments or deductibles, how much will the excess plan pay? A. $10,000 B. $7,500 C. $5,000 D. $0
C. $5,000
The required privacy disclosure notice must be provided by insurer to current policyholders at least once in any period of A. 3 months B. 6 months C. 12 months D. 24 months
C. 12 months
A licensee who ceases to maintain residency in NC is required to deliver any insurance licenses to the Commissioner by mail or in person within how many days after terminating residency? A. 10 days B. 21 days C. 30 days D. 90 days
C. 30 days
If the commissioner denies an initial application for an agent, how long does the applicant have to request a review after receiving notification of the denial? A. 10 days B. 20 days C. 30 days D. 45 days
C. 30 days
How many eligible employees must be included in a contributory plan? A. 100% B. 50% C. 75% D. 90%
C. 75%
Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within A. 30 days of a loss B. 60 days of a loss C. 90 days of a loss D. 20 days of a loss
C. 90 days of a loss
The purpose of managed care health insurance plans is to A. Give the insured an unlimited choice of providers B. Coordinate benefits C. Control health insurance claims expenses D. Provide for the continuation of coverage when an employee leaves the plan
C. Control health insurance claims expenses
If an employee terminated her employment, which of the following provisions allow her to continue health coverage under an individual policy, if requested within 31 days? A. Grace period B. Renewable provision C. Conversion provision D. Reinstatement provision
C. Conversion provision
a policy which covers medical costs related to a specific condition is called a A. specific condition policy B. limited coverage policy C. dread disease policy D. condition-specific policy
C. Dread disease policy
Circulating deceptive sales material to the public is what type of Unfair Trade Practice? A. Coercion B. Misrepresentation C. False advertising D. Defamation
C. False advertising
The Medical Information Bureau (MIB) was created to protect A. Insureds from unreasonable underwriting requirements by the insurance companies B. Medical examiners that perform insurance physical examinations C. Insurance companies from adverse selection by high risk persons D. Insurance departments from lawsuits by policyowners
C. Insurance companies from adverse selection by high risk persons
The mode of premium payment A. Is the method used to compute the cash surrender value of the policy B. Does not affect the amount of premium paid C. Is defined as the frequency and the amount of the premium payment D. Is the factor that determines the amount of dividends in a policy
C. Is defined as the frequency and the amount of the premium payment.
all of the following statements describe a MEWA EXCEPT A. MEWA employers retain full responsibility for any unpaid claims B. MEWAs can be self insured C. MEWAs are groups of at least 3 employers D. MEWAs can be sponsored by insurance companies
C. MEWAs are groups of at least 3 employers
A private investigator has been hired by an insurance company to obtain a character report on an insurance applicant. The investigator contacts the applicant and requests an interview stating that he is conducting a research for a publication. The applicant permits the interview and unknowingly gives information that will be used in the underwriting decision. Which of the following does the scenario describe? A. Insurance information investigation B. Misrepresentation C. Pretext interview D. Investigative consumer report
C. Pretext interview
which of the following answers does NOT describe the principal goal of a preferred provider organization? A. provide the subscriber a choice of hospitals B. provide medical services at a reduced cost C. Provide medical services only from physicians in the network D. provide the subscriber a choice of physicians
C. Provide medical services only from physicians in the network
what is a foreign insurer? A. an insurer with licensed agents doing business in other countries B. an insurer with licensed agents who are citizens in more than one country C. an insurer with a home office in another state D. an insurer with a home office in another country
C. an insurer with a home office in another state
To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested? A. when the policy is delivered B. at the initial interview C. at the time of application D. when the applicant's credit is checked
C. at the time of application
all of the following are true about group disability income insurance EXCEPT A. the waiting period starts at the onset of the injury or sickness B. the longer the waiting period, the lower the premium C. coverage applies both on and off the job D. benefits are usually short term
C. coverage applies both on and off the job
in a disability policy, the probationary period refers to the time A. between the 10th day of an illness-related disability & the first payment B. between the 1st day of disability and the actual receipt of payment for the disability incurred C. during which illness-related disabilities are excluded from coverage D. between the first day of disability & the day the disability must continue before the insured receives any benefits
C. during which illness-related disabilities are excluded from coverage
in disability income insurance, the time between the onset of an injury or sickness and when benefits begin is known as the A. enrollment period B. probationary period C. elimination period D. qualification period
C. elimination period
Circulating deceptive sales material to the public is what type of Unfair Trade Practice? A. coercion B. misrepresentation C. false advertising D. defamation
C. false advertising
An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act? A. illegal until endorsed by the Guaranty Association B. legal, provided that the other insurers are paid royalties for the usage of their names C. illegal under any circumstance D. legal, provided that the information can be verified
C. illegal under any circumstance
if the commissioner of insurance is unable to complete their term A. they name a successor before leaving office B. the chief deputy commissioner steps up C. the governor appoints a replacement D. a new commissioner is chosen in a special election within 2 weeks
C. the governor appoints a replacement
premiums paid by self-employed sole proprietors or partners for medical expense insurance are A. not tax deductible B. partially tax deductible C. totally tax deductible D. taxable
C. totally tax deductible
which characteristic does NOT describe managed care? A. Shared risk B. preventive care C. unlimited access to providers D. high-quality care
C. unlimited access to providers
The commissioner must examine every domestic insurer at least once every A. Year B. 2 years C. 3 years D. 5 years
D. 5 years
In order to maintain coverage under COBRA, how soon from termination of employment must an employee exercise extension of benefits A. 7 days B. 10 days C. 30 days D. 60 days
D. 60 days
Any agent, broker or limited representative who acts for a person other than himself negotiating a contract of insurance, for the purpose of receiving the premium, is deemed to be A. A designated representative of the agent B. A managing partner of the insured C. In violation of the free credit act D. An agent of the company
D. An agent of the company
Which of the following provisions specifies the policyowner's right to transfer the policy's ownership? A. Right to examine B. Consideration C. Modifications D. Assignment
D. Assignment
Which of the following statements regarding Business Overhead Expense policies is NOT true? A. Premiums paid for BOE are tax deductible B. Any benefits received are taxable to the business C. Leased equipment expenses are covered by the plan D. Benefits are usually limited to 6 months
D. Benefits are usually limited to 6 months
An insured is involved in an accident that renders him permanently deaf, although he does not sustain any other major injuries. The insured is still able to perform his current job. To what extent will he receive Presumptive Disability benefits? A. Partial benefits B. Full benefits for 2 years C. No benefits D. Full benefits
D. Full benefits
With respect to the Consideration Clause, which of the following would be considered consideration on the part of the applicant for insurance? A. Promise to renew the policy at the end of the policy period B. Providing warranties on the application C. Notice of policy cancellation D. Payment of premium
D. Payment of premium
which of the following riders would NOT cause the Death Benefit to increase? A. Guaranteed Insurability Rider B. Cost of Living Rider C. Accidental Death Rider D. Payor Benefit Rider
D. Payor Benefit Rider
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? A. Dismemberment disability B. Partial disability C. Residual disability D. Presumptive disability
D. Presumptive disability
In a group policy, who is issued a certificate of insurance? A. The health care provider B. The insurance company C. The employer D. The individual insured
D. The individual insured
Under what condition are group disability income benefits received by an employee NOT taxable as income? A. When the employer makes all the premium payments B. When the employee is 59 1/2 C. When the amount of the benefit is equal or less than the amount of contributed by the employer D. When the benefits received are equal or less than the employee's percentage of the contribution
D. When the benefits received are equal or less than the employee's percentage of the contribution
Stating that an insurer's policies are guaranteed by the existence of the Life and Health Guaranty Association is A. mandatory B. only required of some lines of insurance C. permitted D. an unfair trade practice
D. an unfair trade practice
the proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract? A. adhesion B. personal C. unilateral D. conditional
D. conditional
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 A. insuring clause B. pre-existing conditions clause C. eligibility clause D. consideration clause
D. consideration clause
If an insured is not required to pay a deductible, what kind of coverage does he/she have? A. corridor B. major medical C. comprehensive D. first dollar
D. first dollar
which of the following is INCORRECT concerning taxation of disability income benefits? A. if the employee paid the premiums, income benefits are taxable to the insured as ordinary income B. if the insured paid the premiums, any disability income benefits are tax free C. if the benefits are for a permanent loss, the benefits paid to the employee are not taxable D. if paid by the individual, the premiums are tax deductible
D. if paid by the individual, the premiums are tax deductible
which of the following is correct regarding the taxation of group medical expense premiums and benefits? A. premiums are not tax deductible & benefits are taxed B. premiums are not tax deductible & benefits are not taxed C. premiums are tax deductible & benefits are taxed D. premiums are tax deductible & benefits are not taxed
D. premiums are tax deductible & benefits are not taxed
Who pays the annual agent appointment fee? A. the commissioner B. the policyowner who hires the agent C. the agent D. the insurer
D. the insurer
