LAH Final Exam 4

Accident and health policies issued in most states must include twelve required uniform policy provisions. Which of the following is not one of the required uniform A&H policy provisions?

Misstatement of age

Premiums paid on individual forms of life insurance are:

Not tax-deductible

A married couple jointly own a business. The wife decides to purchase life insurance on her husband and names herself as the primary beneficiary. What type of life insurance has the wife purchased?

Ordinary life

A residual disability benefit may be added to an individual disability income policy. This benefit would provide coverage for which of the following?

Partial disability

A mutual insurer is defined as an insurance company that is owned by its policyholders. These types of insurers may pay dividends to policyholders since they issue which of the following types of policies?

Participating

When a producer collects premiums from an insured and commingles them with his or her personal funds, which of the following has occurred?

Larceny

Which of the following protects an individual against superannuation?

Life annuity

If an individual desires permanent life insurance protection and desires to fund the policy for no more than a decade, which of the following has he or she purchased?

Limited pay life

If an individual desires life insurance protection and cash value buildup and is willing to pay premiums until retirement, what type of policy would he or she purchase?

Limited payment life

Oscar is insured under an AD&D policy with a capital sum of $10,000. He has named Joan as primary beneficiary and his son James as contingent beneficiary. If Oscar and his son are killed in a plane crash, what action will the insurer take?

Pay $20,000 to Joan.

All of the following are provisions that are automatically included in a life insurance policy, EXCEPT:

Payor benefit

A review of suggested dental treatments to ensure that such treatment is reasonable and necessary describes:

Pre-certification, Pre-determination, Pre-authorization

What health insurance provision allows an insurer to deny a claim if it finds that the insured concealed information about his health?

Time limit on certain defenses

Which of the following best describes the primary purpose of managed care?

To control health insurance claim expenses

Which of the following best describes a producer providing an incomplete comparison of policies in order to persuade an individual to lapse an existing policy voluntarily?

Twisting

Non-forfeiture options provide a policyowner with all, EXCEPT:

Using the cash value to fund the automatic premium loan

Non-forfeiture options provide a policyowner with all

Using the cash value to purchase extended term insurance; Using the cash value to buy paid-up insurance; Taking the policy's surrender value

All of the following are reasons for the revocation of an insurance license

Violations of insurance law; Rebating; Embezzlement of premiums

If the occupation is changed to a more hazardous one, the insurer will

keep the premium the same and reduce the monthly benefit.

Dick has a disability income policy with an AD&D rider. The rider includes a capital sum of $5,000. Six months after the policy was purchased, Dick is killed in an auto accident. What amount will be paid to his beneficiary?

$10,000

Once issued, a long-term care policy must provide benefits for a minimum period of:

12 months

In most states, a temporary license may be issued by the Commissioner or Superintendent of Insurance to eligible individuals for an initial period of up to:

180 days

According to the mandatory Accident & Health provision "Notice of Claim," once an insured suffers an accident or illness, he or she must notify the insurer within what period of time?

20 days

An insured suffers a covered illness. He or she must notify the insurer of the loss within:

20 days

When an insured covered by an accident and health policy suffers an accident or illness, he or she must notify the insurer of the loss within:

20 days

A family owned firm is operated by three brothers who each hold an equal share in the multi-million dollar business. Their financial planner convinces them to enter into an entity buy-sell plan funded by life insurance. How many life insurance policies must be purchased in order to support this entity plan ?

3

Generally, in a disability income plan, payment of claims must be paid monthly within:

30 days of receiving proof of loss

The grace period in an individual health insurance policy with an annual premium is:

31 days

A grace period is included in all policies of health insurance. This period shall be allowed for payment of a premium in default. If a policy is paid with weekly premiums, its grace period will be not less than:

7 days

Which of the following is the participation requirement in a contributory plan of group health insurance?

75%

Which of the following is provided to an applicant when a premium is collected along with an application for life insurance?

A conditional receipt

An individual holding a producer's license may represent which of the following?

A sponsoring insurer

Which of the following does not provide a living benefit?

Accidental death rider

Which of the following are required signatures that must appear on an insurance application?

Agent and applicant

Policies providing hospice care benefits are required to cover:

Ambulance expenses; Psychological treatment benefits; Care for terminally ill persons

An insurer that is chartered and domiciled outside the U.S. is known as

An alien company

A whole life policy combines permanent protection and cash savings. Which of the following is characterized by the quickest cash value buildup?

An endowment

An insurer which does not hold a certificate of authority and is not permitted to conduct insurance business in this State, best describes:

An unauthorized insurer

Insurable interest in health insurance must generally exist:

At the time of application

When must a Buyer's Guide be provided to an insurance applicant?

At time of application prior to premium collection

The death benefit in a life insurance policy is also called the face amount. All of the following will reduce the face amount of this type of policy

Automatic premium loan outstanding at the policy maturity; Unpaid loan interest at the time the policy matures; An unpaid loan at the time of death

A universal life insurance policy provides a combination of term insurance protection and:

Cash savings plan

All of the following are optional health insurance policy provisions

Change of occupation; Misstatement of age; Conformity with state statutes

All of the following are reasons for the revocation of an insurance license, EXCEPT:

Changing company affiliations

An applicant for a life insurance policy is found to be a substandard risk. If the insurance company's underwriting department approves the application, it will also most likely:

Charge a higher premium

All of the following are examples of unfair trade practices

Coercion; Unfairly discriminating with regard to premium rates and plans of insurance; Making misleading statements with respect to the business of insurance

Which of the following provides for the sharing of medical expenses as dictated by a medical insurance policy?

Coinsurance

Which of the following provisions stipulates that an insured and insurer will share incurred medical expenses?

Coinsurance clause

All of the following are considerations that need to be reviewed carefully when replacing an insurance policy, EXCEPT:

Commissions

A disability income policy must include twelve uniform policy provisions. An insurer may also include in a disability policy any of several optional uniform policy provisions or clauses. Which of the following is an optional uniform provision that may appear in such a policy?

Conformity with state statutes clause

When an employee is terminated, he or she has 31 days to change group insurance coverage to an individual plan if desired. This 31-day period is known as the:

Conversion period

It is the fiduciary responsibility of a producer to account for all funds collected from a consumer. If a producer does not remit a renewal premium to the insurer, which of the following will occur?

Coverage will not lapse since payment to a producer is payment to the insurer

For a universal life policy's cash value accumulations to receive favorable tax treatment, a specific percentage of premiums must be used to purchase:

Death benefit

Two agencies are competing for a new client. Agency A mentions to the prospective client that all of the companies with which they do business are licensed in all U.S. States. It also mentions that Agency B may not be dependable since they are only licensed in forty-two States. Therefore, Agency A may have engaged in:

Defamation

If an insured is covered by an accident and health policy and is injured while engaging in an illegal occupation, what action will the insurer take?

Deny the claim

What type of insurer has its principal office in the state where it is licensed?

Domestic insurer

A rider or amendment attached to a life insurance policy is part of the:

Entire contract

All of the following are considerations that need to be reviewed carefully when replacing an insurance policy

Exclusions; Premiums; Benefits

John owns a ten pay life plan. Premiums for this policy must be paid:

For ten years or until death, whichever occurs first

An insurer that is headquartered and licensed to conduct business in Massachusetts would be considered what type of company when it later becomes approved to sell insurance in Vermont?

Foreign company

An insured submits a claim form that has been intentionally and falsely altered in order to receive a benefit. Which term best describes this submission?

Fraud

All of the following are optional health insurance policy provisions, EXCEPT:

Grace period

What type of disability income policy may have its premiums increased for an entire class of policies?

Guaranteed renewable

A major medical policy provides coverage for medical expenses and hospital care. Each of the following is a characteristic of this type of insurance, EXCEPT:

Home health care

Policies providing hospice care benefits are not required to cover:

Home health care

Which of the following statements is true regarding a market value adjusted annuity?

It is not linked to an index

Which of the following annuities promises to pay the annuitant monthly income for life with no minimum guaranteed amount of payments?

Life annuity

Several settlement options are available for the recipient of annuity proceeds. What is the principal difference between the life income and life income with period certain settlement options?

Life income payments end with the death of the recipient whereas life with period certain provides income to someone for the period certain

Jack owns a life insurance policy that requires that he pay premiums for a specified period only or until he dies, assuming this occurs prior to the end of the specified period. Which of the following types of policy does Jack possess?

Limited pay life

An illegal sales practice where a producer induces a client to lapse or surrender a policy as a result of an unfair comparison of policies best describes:

Misrepresentation

What type of life insurance policy may a person purchase to make sure that a debt or loan will be paid off in case of his or her premature death?

Mortgage redemption insurance

Which of the following types of insurers issues participating life insurance policies?

Mutual insurer

Medicare coverage includes hospital insurance and supplementary medical insurance as well as other coverages. Each of the following is excluded by Part B of Medicare, EXCEPT:

Office visits

Part A of Medicare provides hospital insurance. All of the following are covered benefits under Part A of Medicare, EXCEPT:

Out-patient hearing exams

What provision appearing in a life insurance policy allows the insurer to charge an extra amount if the premium is paid on an other than annual basis?

Premium payment provision

Accident and health insurance policies include a one-time period following the effective date of the contract before certain illness coverage becomes available. This is known as the:

Probationary period

A producer offering something of value to an insurance applicant that is not specified in the policy in order to induce the applicant to purchase an insurance policy has engaged in:

Rebating

Which of the following involves relief or time off for a primary caregiver ?

Respite care

An agent fills out an application but neglects to list the beneficiary designation. What will the insurer do when it receives the incomplete application?

Return the application to the agent

The outline of coverage for an A&H policy must include all but:

Riders

Medicare coverage includes hospital insurance and supplementary medical insurance as well as other coverages. Each of the following is excluded by Part B of Medicare

Routine foot care; Dentures; Fluoride treatments

Which of the following long-term care insurance benefits provides twenty-four hour nursing care ?

Skilled nursing care

Part A of Medicare provides hospital insurance. All of the following are covered benefits under Part A of Medicare

Skilled nursing care; Hospice care; In-patient hospital care

A life insurance policy is comprised of numerous provisions. Which of the following protects a beneficiary from creditors when proceeds at death are left with the insurer?

Spendthrift provision

Major medical insurance includes a policy feature which states that the insurer will pay 100% of covered medical expenses once an insured's out-of-pocket expenses equal a predetermined amount. This feature is known as a:

Stop loss limit

A whole life policy is characterized by a level death benefit, a level premium, and a cash savings value. This type of life insurance plan is also known as

Straight life

An annuity that makes payments for life but also guarantees benefits for a specific number of years is known as a:

Straight life annuity with period certain

An insured who is covered by a Blue Cross and Blue Shield plan is also known as a:

Subscriber

Jerry has a whole life policy with a death benefit of $100,000. The cash value that increases each year is:

Tax-deferred

The accident and health provision which allows a policyowner to return the policy to the insurer within a certain period of time and receive a full refund of premium is the:

Ten-day free-look provision

Nonforfeiture Values in a whole life insurance policy may be used when a policyowner surrenders the contract. One option available is the reduced paid-up insurance option. The amount of insurance that one may purchase under this option is based upon the insured's attained age and which of the following?

The amount of the cash value

When purchasing LTC coverage an individual selects the level of benefit he or she desires. Most plans offer at least three daily benefits such as $100, $150 or $200. Most policies also provide the same level of benefits for institutional care but only a percentage of that benefit for home health care. Which of the following is true with regard to such benefits ?

The benefit for skilled nursing care is greater than that provided for home health care

Which of the following will occur if an application for insurance includes some unanswered questions and the policy is still issued?

The insurer has waived the right to require an answer to the questions

Joan is covered by a disability policy in her occupation as an inside salesperson. One of her hobbies is white water rafting. She later leaves her job and becomes a paid instructor at a white water rafting school. How will this affect her disability policy?

The monthly benefit will be reduced

Dependent benefits provided by a group major medical policy would terminate for which of the following reasons?

The premium is not paid

The Z Tech Partnership is comprised of four partners. Unanimously they decide to enter into a cross-purchase type of buy-sell agreement. If this agreement is funded by life insurance, how many total policies will be purchased?

Twelve

An individual has applied for life insurance and given the producer the initial premium. The producer provides the applicant with a receipt which specifies that the individual is covered immediately for 60 days from the date of the application. Which type of receipt was issued?

Unconditional

Which of the following insurance plans allows the policyowner to increase coverage every year?

Universal life

The death benefit in a life insurance policy is also called the face amount. All of the following will reduce the face amount of this type of policy, EXCEPT:

Waiver of premium rider

When does the free look period begin in health insurance?

When the policyowner receives the contract

If a premium is not paid at the time an application for life insurance is completed, when will coverage go into effect?

When the producer delivers the policy and collects the premium

Is there any taxation benefit to an employer that pays employee medical benefit premiums?

Yes, employer paid premiums for employee benefits are tax deductible to the employer

If an insured's 20-year-old son drops out of college, can he continue to be covered under his parent's major medical policy?

Yes, up to age twenty-six.

An endowment has a quicker cash value buildup than other permanent insurance plans except for

a single premium life insurance policy

A universal life policy allows the policyowner to

adjust the death benefit each year, subject to demonstrating insurability.

A market value adjusted annuity is a contract where

an insurer pays a fixed rate of return for a specified period known as a guaranteed period. If the owner withdraws funds before the end of the guarantee period, he or she may get more or less of what was invested. This product is not linked to an index of any sort.

Respite care allows occasional full-time care for a person (senior citizen) who is receiving home health care from a family member or friend who is the primary caregiver and this individual needs a

break or "respite" from providing such care. Respite care may be provided at the senior's home or at a nursing facility for a short stay.

Skilled nursing care, also referred to as "skilled care", consists of

daily nursing and rehabilitative care that can be performed only by, or under the supervision of, skilled medical personnel such as registered nurse, and must be based upon physician's orders. Daily care means "round the clock" or twenty-four (24) hour care.

Replacement regulations do not generally apply to

group or credit life insurance plans. They do apply to whole life and term life policies.

Part A of Medicare covers

in-patient hospital expenses, skilled nursing care, home health care and hospice benefits.

Part B of Medicare covers physician services including

office visits, house calls (although these are infrequent) and other doctor's fees. Part B is subject to a deductible and coinsurance amount

Ten pay life is a type of Limited Payment whole life insurance. The title informs you the maximum time for which premiums will be paid. Once this period ends so do the premiums. Coverage is provided for life. However, if the insured dies within this period, the death benefit is

paid to the beneficiary (while coverage and premium payments cease).

Participating or "par" policies are issued by mutual insurers. They allow

policyowners to share in the surplus of the insurer by paying dividends to policyowners.

Applications for insurance coverage must be completed fully and accurately. If an underwriter receives an incomplete application, he or she will

return it to the producer to be completed.

Life income pays monthly benefits for the rest of the recipient's life without a refund. Period certain indicates

that there will be a refund to a beneficiary if the recipient dies within a guaranteed period.

The Notice of Claim provision stipulates that

the insured must notify the insurer of an accident or illness within twenty days of the loss.

A Buyer's Guide must be provided to an applicant at

time of application and prior to the acceptance of policy premium. It is designed to provide a generic description of the various types of policies, outlining the possible advantages and disadvantages of insurance contracts in general.

The death benefit, known as the principal sum, is

twice the capital sum amount. If the capital sum is $10,000 this means that the principal sum / death benefit is $20,000.

A Business Overhead Policy provides benefits when an owner is totally disabled. Which of the following is covered by this policy?

Labor or utility costs

In order for a life insurance contract to be legal and valid both parties must exchange something of value. In other words, the policyowner must give something of value to the insurer and the insurer must provide something of value to the policyowner. This exchange of "value" is known as a consideration. The policyowner provides the insurer with two items of value:

(1) the premium that is due and payable; and (2) the statements recorded on the application by the applicant regarding the proposed insured's health.

Most accident and health policies include a cancellation provision. This provision states that the insurer must provide what amount of written notice in order to legally cancel the policy?

5 days

The waiver of premium benefit included in a disability income policy waives premiums if the policyowner / insured is disable for how many consecutive days?

90

An insurance adviser may also be referred to as:

A consultant

An insurer incorporated, chartered or formed under the laws of this State is referred to as:

A domestic insurer

Which of the following best describes an organization that offers life insurance products to its members only?

A fraternal

Which of the following authorized insurance organizations offers insurance products exclusively to its members?

A fraternal organization

In which of the following situations would insurable interest exist?

A married couple who is wealthy

An Individual Retirement Account (IRA) provides a mechanism for a person to set aside funds for retirement. Each of the following is true regarding an IRA, EXCEPT:

A penalty is assessed for withdrawals after age 59 ½

An increasing term rider is characterized by which of the following?

An increasing face amount

A major medical policy provides coverage for medical expenses and hospital care. Each of the following is a characteristic of this type of insurance

An initial deductible, Larger limits of insurance, Coinsurance

A producer may be a licensed individual who represents himself or herself and acts on behalf of:

An insured

Applications for life insurance must be signed by the appropriate parties. Which of the following are required to sign a life insurance application?

Applicant and producer

Which of the following is true regarding dividends paid by a permanent life insurance policy?

Interest earned on dividends is taxable

Which of the following agency names may be used by a licensee who wishes to open his or her own office?

John J. Smith Insurance

All of the following are examples of unfair trade practices, EXCEPT:

Furnishing required disclosure information

All of the following are provisions that are automatically included in a life insurance policy

Grace period; Right to examine; Assignment provision

Which of the following are not generally governed by replacement regulations?

Group life insurance

A licensed producer who engages in material misrepresentations in such volume as to threaten the solvency of the insurer which sponsored him or her may be subject to which of the following?

Imprisonment

An Individual Retirement Account (IRA) provides a mechanism for a person to set aside funds for retirement. Each of the following is true regarding an IRA

Income received in later years is taxable as ordinary income; Contributions are deductible for qualified persons; An IRA is used primarily for retirement income

According to model legislation for long-term care insurance, insurers must offer an applicant the right to purchase coverage that allows for the increase in the amount of benefits based on reasonable anticipated increases in the cost of services covered by the policy. This coverage is known as:

Inflation protection

A producer completes an application but does not collect an initial premium. He later finds out that the proposed insured has been diagnosed with a serious illness after the application was completed. The producer should:

Inform the insurer of this new information immediately

Which of the following would qualify someone for medical care benefits under Medicaid?

Insufficient income

An insured covered by a life insurance policy dies. Policy proceeds are payable to the beneficiary. The beneficiary is receiving $1,200 per month for an indefinite period of time. This is an example of which of the following?

Predetermined income amount settlement option aka fixed amount

Which of the following risk classifications is characterized by a lower annual premium?

Preferred risk

Insurers utilize reputable people to make complimentary statements on behalf of the policies which they market. These statements are sometimes referred to as testimonials. Testimonials are generally used to accomplish which of the following?

Promote an insurer's products

The purpose of a straight life annuity is to:

Protect an individual against superannuation

Jocko owns a disability income policy. When it was originally purchased, Jocko was a police officer. Seven years later, he changed jobs and became a librarian. This change of occupation will allow the insurer to engage in which of the following?

Reduce the premium

Nonforfeiture options are available to the owner of a cash value life insurance policy. Which of the following options provides the insured with life insurance for the greatest length of time?

Reduced paid-up insurance

What answer below depicts the statement "A policy that is lapsed or surrendered, or one that is converted into a reduced paid-up contract"?

Replacement

Cash value life insurance includes nonforfeiture benefits. Which of the following is such a benefit that appears in a permanent life insurance plan, whether issued to cover an individual or an eligible group ?

Surrender for cash

Medical Information Bureaus store and provide information to insurers. Which of the following statements pertaining to the Medical Information Bureau (MIB) is correct?

The MIB helps insurers avoid risk applicants

An annuity grows tax-deferred during:

The accumulation period

Which of the following best describes a pure or straight life annuity with ten years certain?

The annuitant or his survivor is guaranteed ten years of payments and if the annuitant survives ten years, payments continue for the lifetime of the annuitant

Unlike individual insurance, group credit plan benefits are always payable to:

The bank or creditor

A consumer's statements recorded on an application constitute a part of:

The consideration

All of the following statements are TRUE concerning a cease and desist order that's violated by an insurance producer or agent

The producer may be assessed a monetary penalty.; The producer may have his insurance license suspended.; The producer may have his insurance license revoked.

All of the following statements are TRUE concerning a cease and desist order that's violated by an insurance producer or agent, EXCEPT:

The producer may have his insurance license revoked without a hearing

Which of the following is true regarding an irrevocable beneficiary?

This beneficiary has the right to receive a copy of the policy

Which rider may be added to a life insurance policy to make sure that a policy will not lapse if the insured is totally disabled?

Waiver of premium

The spendthrift clause also prevents any entity from

attaching a lien or any other encumbrance to the policy proceeds when the beneficiary leaves proceeds with the insurer.

When an insured is covered by a disability policy and later changes occupations to a less hazardous one, the insurer will

keep the monthly benefit constant and reduce the premium.

An accidental death benefit rider may also be attached to a life insurance policy for an additional premium. This benefit is sometimes referred to as a

multiple indemnity rider and provides an additional face amount of insurance if the insured dies as a result of an accident. Death must occur within 90 days of the accident in order to be covered. It does not provide a benefit while the insured is alive. It pays a death benefit when an insured dies. All the other choices listed provide some sort of benefit while the insured is alive.

Premiums paid for individual types of insurance policies such as life insurance, disability income insurance, auto and homeowners insurance and the like are

not tax deductible. Benefits paid out from these policies are also not taxable as income.

The conformity with state statutes provision is an

optional provision. It states that a health insurance policy provisions must conform with the state law where the policy is issued.

This cancellation provision provides the insurer the

right to cancel the contract at any time with at least 5 days written notice to the insured. All claims originating prior to the cancellation will be paid. This clause generally appears in cancelable contracts. Other renewability provisions included in a policy may supersede this clause.

An increasing term rider can be added to a life insurance policy. This rider provides an increasing amount of death protection each year. There are two types of increasing term riders including

the return of premium rider and the return of cash value rider.

The free-look period begins when the policy is delivered to the policyowner. It then ends ten days later, except with regard to Medicare Supplement and Long-Term Care insurance which include a

thirty (30) day free-look period.