LAH mastery exam

Concerning a group life insurance policy, the person responsible for applying for the policy, maintaining the policy, and paying the premium is known as which of the following? A) The master policyowner B) The company attorney, on behalf of the employees C) The union shop steward, on behalf of all covered union members D) The insurer who provides the policy

A) The master policyowner

Which of the following individuals must have an insurable interest in the insured? A) The policyowner B) A named beneficiary C) A collateral assignee D) The insurer

A) The policyowner

An insurer's license to transact insurance business in the state is called A) a certificate of authority B) a sales authorization permit C) a business entity license D) a certificate of convenience

A) a certificate of authority

Jeff has a policy that will pay expenses he incurs as the result of in-hospital medical treatment, as well as some of the expenses he incurs on an outpatient basis. Jeff probably has A) a medical expense policy B) a limited risk policy C) an accidental death and dismemberment policy D) a disability income policy

A) a medical expense policy

A group plan that permits insureds to receive dental care from any dentist is called A) an open panel B) a closed panel C) a nonprofit D) an MSA

A) an open panel

Conservation is A) any attempt by an insurer or an agent to discourage a client from replacing current coverage B) when the Insurance Commissioner prescribes required language for new policies C) when premium amounts due are subtracted from the policy cash value to avoid lapse D) the term used when a producer license is made inactive

A) any attempt by an insurer or an agent to discourage a client from replacing current coverage

Under the Uniform Individual Accident and Sickness Provisions Law, all of the following provisions are included in all health insurance policies EXCEPT A) change of occupation B) notice of claim C) physical exam and autopsy D) the grace period

A) change of occupation

An agent license is renewed by paying the applicable renewal fee and completing A) continuing education B) professional development C) prelicensing education D) designation credit

A) continuing education

Dread disease policies A) cover diseases that are named in the policy, such as cancer B) are a good alternative to more expensive major medical expense policies C) are illegal in many states D) cover illnesses that occur frequently but are relatively inexpensive to treat

A) cover diseases that are named in the policy, such as cancer

All of the following are managed care hospital cost containment strategies EXCEPT A) financial planning certification B) concurrent review C) second surgical opinions D) preadmission certification

A) financial planning certification

A principal function of annuities is to A) liquidate a principal sum B) provide for surviving dependents C) create an estate D) reduce income taxes

A) liquidate a principal sum

All of the following statements regarding specialized forms of life insurance are correct EXCEPT A) a joint life insurance policy is a form of term life insurance that covers 2 individuals and pays the death benefit when the first insured dies B) juvenile life insurance is a form of permanent life insurance in which a parent is the policyowner and a child is the insured C) survivorship life insurance is a form of permanent life insurance that covers 2 individuals and pays the death benefit when the second insured dies D) with a jumping juvenile life insurance policy, the face amount typically increases (up to 5 times the original face amount) when the insured child reaches either age 18 or age 21

A) a joint life insurance policy is a form of term life insurance that covers 2 individuals and pays the death benefit when the first insured dies

Benefits received from a medical expense plan are A) not taxable B) fully taxable C) taxable to the extent that they exceed premiums paid D) taxable to the extent that they exceed the actual cost of medical care

A) not taxable

Which of the following terms describes an insurance company that has been organized outside the United States or its possessions? A) Remote B) Alien C) Foreign D) Reciprocal

B) Alien

In an employer-paid group disability policy, if the employee becomes disabled and the benefit is $2,000/month, which of the following is CORRECT? A) Benefits are tax deductible to the employer. B) Benefits are not taxable to the employee. C) Benefits are taxable to employees. D) Premiums are taxable to employer.

B) Benefits are not taxable to the employee.

Which rider provides for an automatic increase in benefits to offset the effects of inflation? A) Annuity rider B) Cost of living adjustment C) Additional premium D) Waiver of premium

B) Cost of living adjustment

Which of the following would NOT be part of the duties of the state Insurance Commissioner? A) Conduct financial examinations of domestic insurers B) Create new insurance laws C) Adopt new rules and regulations D) Conduct hearings on unfair trade practices

B) Create new insurance laws

Which of the following contracts would NOT be subject to the life insurance replacement laws? A) Term life insurance B) Credit life insurance C) Individual annuity contracts D) Whole life insurance

B) Credit life insurance

The penalty for early withdrawals from an IRA or other qualified retirement plan is A) 10% of the amount withdrawn B) 12% of the amount withdrawn C) 20% of the amount withdrawn D) 6% of the amount withdrawn

A) 10% of the amount withdrawn

All other factors being equal, which of the following premium payment modes is the least expensive for the policyowner? A) Annual B) Weekly C) Semiannual D) Monthly

A) Annual

The insurance company that Alan represents has just been placed into rehabilitation, but Alan continues to tell his clients the company is "financially strong" and he uses an outdated financial rating to back up his claim. What unfair trade practice has Alan committed? A) False financial statements B) Defamation C) Unfair comparison D) Rebating

A) False financial statements

Which of the following health insurance providers is most commonly associated with pre-paid plans for subscribers? A) Health maintenance organizations B) Insurance companies C) State and federal government health programs D) Multiple employer trusts

A) Health maintenance organizations

Which of the following would NOT be considered when underwriting a health insurance risk? A) Highest degree of education B) Occupation C) Physical condition D) Moral hazards

A) Highest degree of education

Which provision includes the insurance company's promise to pay the claim? A) Insuring agreement B) Consideration clause C) Entire contract clause D) Ownership clause

A) Insuring agreement

The Fair Credit Reporting Act plays a central role in which of the following aspects of the application process? A) Investigation report B) Agent's report C) MIB report D) attending physician's statement

A) Investigation report

All of the following are ways in which insurers issue health insurance policies when an impairment is indicated. Which is the most common approach used with disability income policies? A) Issuing the policy with a reduced-benefit amount B) Issuing the policy with a reduced-benefit period C) Issuing the policy with a longer elimination period D) Issuing the policy with an exclusion rider

A) Issuing the policy with a reduced-benefit amount

Which of the following is correct about Blue Cross/Blue Shield? A) It pays directly to the doctor or hospital. B) It is a commercial insurer. C) It is uniform throughout the 50 states. D) It is a reimbursement plan.

A) It pays directly to the doctor or hospital.

The Medicare Advantage program offers all of the following to Medicare beneficiaries EXCEPT A) Medicaid B) private fee-for-service plans C) HMOs D) PPOs

A) Medicaid

An insurance industry source of information about a proposed insured's medical information for underwriting is called the A) Medical Information Bureau B) doctor's records C) Social Security Administration D) Medical Depository Bureau

A) Medical Information Bureau

Which definition of total disability is most favorable to the insured? A) Own occupation B) Any occupation C) Presumptive disability D) Social Security

A) Own occupation

Which of the following statements is TRUE regarding replacement of health insurance policies? A) Patterns of improper replacement may subject an insurer to disciplinary action. B) Replacement is an unfair trade practice. C) Replacement is almost always in the best interest of the insured. D) Replacement transactions are extremely rare.

A) Patterns of improper replacement may subject an insurer to disciplinary action.

Self-insurance is an example of what type of risk management? A) Retention B) Sharing C) Transfer D) Avoidance

A) Retention

Which of the following is the settlement option of a life policy that provides periodic payments of a specified amount as long as the proceeds plus interest last? A) Interest B) Fixed amount C) Life income D) Fixed period

B) Fixed amount

Which of the following types of health insurance policies would require the most comprehensive underwriting? A) Basic medical expense B) Guaranteed renewable disability income insurance C) Limited accident insurance D) Industrial health insurance

B) Guaranteed renewable disability income insurance

Which of the following policies pays a fixed hospital benefit directly to the insured, regardless of the actual hospital expenses incurred? A) Supplementary major medical B) Hospital indemnity C) Basic hospital D) Industrial health

B) Hospital indemnity

Which of the following types of health insurance is always available under a group health contract? A) Accidental death and dismemberment B) Maternity care C) Disability income D) Medical expense

B) Maternity care

Which of the following statements is TRUE regarding life policy dividends? A) Stock insurers commonly pay dividends from company profits. B) Mutual insurance companies issue participating policies that may pay an annual dividend. C) Policy dividends are paid from the insurer's separate account. D) Dividends are virtually guaranteed and based on past performance.

B) Mutual insurance companies issue participating policies that may pay an annual dividend.

Which standard nonforfeiture option would use a whole life policy's surrender value to purchase a paid-up policy with a smaller face amount of insurance than the original policy? A) Extended term insurance B) Reduced paid-up insurance C) Extended paid-up insurance D) Reduced term insurance

B) Reduced paid-up insurance

If an employee is eligible for group insurance, which of the following is TRUE? A) The employee will need to show evidence of insurability. B) The employee will need to fill out an enrollment form. C) The employee will pay a premium. D) The employee will receive a master policy.

B) The employee will need to fill out an enrollment form.

Who is responsible for controlling the content, form, and distribution of insurance policy advertisements? A) The NAIC B) The insurer C) The attorney general D) The producer

B) The insurer

Which of the following requires a minimum required distribution at age 70½? A) Retirement annuities B) Traditional IRAs C) Fixed annuities D) Roth IRAs

B) Traditional IRAs

The time during which funds are being paid into an annuity is called the A) annuity period B) accumulation period C) savings period D) endowment period

B) accumulation period

For an additional premium, a rider can be added to a life insurance policy that makes some of the cash value available to pay for long-term care expenses. This is known as A) an institutionalization rider B) an accelerated benefits rider C) an additional coverage rider D) a health care rider

B) an accelerated benefits rider

An insurer incorporated in Canada but doing business in California would be A) a foreign insurer B) an alien insurer C) a domestic insurer D) a nonadmitted insurer

B) an alien insurer

A policy may be issued in all of the following ways EXCEPT A) modified or amended B) as an exchange policy, covering someone other than the original applicant C) as applied for D) with a waiver excluding death from a certain cause

B) as an exchange policy, covering someone other than the original applicant

Circulation of a maliciously critical statement about an insurer's financial condition to damage the insurer's reputation or business is an unfair practice known as A) unfair competition B) defamation C) conservation D) coercion

B) defamation

Premiums paid on an individual disability income insurance policy are A) deductible if they exceed 7.5% of the insured's adjusted gross income B) generally not tax deductible C) generally tax deductible D) deductible if paid for by the insured's employer

B) generally not tax deductible

Dental and vision coverages are most commonly included A) in individual health policies B) in group health policies C) in franchise health policies D) in blanket health policies

B) in group health policies

The Gramm-Leach-Bliley Act requires A) insurance companies to adopt anti-money laundering practices B) insurance companies to disclose their privacy policy and how a customer's information may be shared with affiliates and third parties C) health insurers to maintain control over disclosure of their customers' protected health information D) employers with 20 or more employees to allow former employees to continue benefits under the employer's group health insurance plan

B) insurance companies to disclose their privacy policy and how a customer's information may be shared with affiliates and third parties

Jill is interested in buying an annuity but is not sure how she wants to fund it or when she wants to start receiving annuity payments. Which of the following is NOT available under any circumstances? A) A periodic premium deferred annuity B) A single premium deferred annuity C) A single premium immediate annuity D) A periodic premium immediate annuity

D) A periodic premium immediate annuity

What is the maximum number of days of skilled nursing facility care for which Medicare will pay? A) 60 B) 25 C) 75 D) 100

D) 100

If Wanda paid 100% of disability income premiums for her group disability policy, what percentage of her benefits would be tax free? A) 75% B) 50% C) 0% D) 100%

D) 100%

Which of the following allows employees to elect to reduce their current salaries by deferring amounts into a retirement plan? A) IRA B) Defined contribution C) Keogh D) 401(k)

D) 401(k)

When must the Buyer's Guide to Life Insurance be provided to an applicant? A) At the time of the first appointment B) Within 10 days of policy delivery C) Only when requested by the applicant D) At the time the policy is delivered

D) At the time the policy is delivered

To prevent the lapse of a whole life insurance policy at the end of the grace period, cash value will be used by the insurer to pay the premium. This is called A) extended term insurance B) cash surrender within 30 days of the lapse C) reduced paid-up insurance D) automatic premium loan

D) automatic premium loan

With disability income insurance, an elimination (waiting) period may NOT be imposed when the insured is disabled A) while traveling B) by sickness C) while at work D) by accidental injury

D) by accidental injury

For the insurance company to pay the accidental death benefit, most companies require that the insured A) have the policy in force at least 2 years prior to the accident B) die within 10 days of the accident C) die instantly in the accident D) die within 90 days of the accident

D) die within 90 days of the accident

Each of the following is a personal use of life insurance proceeds EXCEPT A) providing funds to pay for final expenses such as medical bills or a funeral B) creating an immediate estate C) establishing an emergency fund D) funding a buy-sell agreement

D) funding a buy-sell agreement

Skilled nursing care means A) nursing and rehabilitative care that is required daily and can be performed only by skilled medical practitioners on a doctor's orders B) help in performing activities of daily living C) nursing and rehabilitative care that is required occasionally and can be performed only by skilled medical practitioners D) rehabilitative care provided in a nursing home

A) nursing and rehabilitative care that is required daily and can be performed only by skilled medical practitioners on a doctor's orders

An agent who takes into account the applicant's financial goals and needs, ability to pay for the proposed coverage, and the applicant's existing coverage prior to making a purchase recommendation is complying with the industry's A) suitability standards B) unfair trade practices requirements C) policy replacement laws D) duty of good faith and fair dealing laws

A) suitability standards

All of the following are required to sign an application for life insurance EXCEPT A) the beneficiary B) the applicant C) the agent D) the insured

A) the beneficiary

The Time Limit on Certain Defenses (Incontestability period) is usually how long in most states? A) two years B) one year C) four years D) 90 days

A) two years

Which of the following statements about qualified retirement plans is NOT correct? A) Contributions to qualified retirement plans by the employer are deductible as a business expense. B) A plan that guarantees a benefit of 2% of salary for each year an employee participates in the plan would be a defined benefit plan. This is the correct answer because this meets the definition of a profit sharing plan (15.5) which is a defined contribution plan. C) A defined contribution plan does not have to provide a definite, determinable future benefit to maintain qualified status. D) The 2 types of qualified retirement plans are defined benefit and defined contribution.

B) A plan that guarantees a benefit of 2% of salary for each year an employee participates in the plan would be a defined benefit plan. This is the correct answer because this meets the definition of a profit sharing plan (15.5) which is a defined contribution plan.

The Fair Credit Reporting Act A) establishes a clearinghouse from which member companies can draw information about an individual's credit history B) obligates insurers that use a third-party source to acquire credit information to inform applicants who have been denied coverage of the identity of that source C) requires insurers to openly advertise their premium rates and underwriting guidelines D) requires insurance applicants to make known to the insurer their credit history, including bankruptcy

B) obligates insurers that use a third-party source to acquire credit information to inform applicants who have been denied coverage of the identity of that source

Suitability is A) delivering the Buyers Guide and Policy Summary to the applicant B) obtaining information from the applicant to determine whether an insurance or annuity product is appropriate C) properly applying the insurer's underwriting guidelines to an applicant D) converting a term policy to a whole life policy

B) obtaining information from the applicant to determine whether an insurance or annuity product is appropriate

All the following are optional health insurance policy provisions EXCEPT A) misstatement of age B) proof of loss C) illegal occupation D) earnings to insurance

B) proof of loss

Liz purchases an immediate annuity. The annuity contract must be a A) deferred annuity B) single premium annuity C) variable annuity D) fixed annuity

B) single premium annuity

All of the following statements regarding annuities are true EXCEPT A) an annuity is classified as immediate or deferred, depending on when benefit payments begin B) the annuitant is always the same person as the owner of the annuity C) straight life annuities provide income as long as the annuitant lives D) the surrender charge serves as a back-end load when the annuity is canceled in its early years

B) the annuitant is always the same person as the owner of the annuity

In a group life insurance plan, a Certificate of Insurance is provided to A) the Insurance Commissioner for approval as to form and content B) the employees, in lieu of the master contract C) the insurer, as evidence that the policy was delivered by the agent D) the employer, in lieu of the master contract

B) the employees, in lieu of the master contract

If Sue's daily benefit under her long-term care policy is $150 per day and her nursing home charges are $100 per day A) the insurance company will only pay the $100 cost of her nursing home care B) the insurance company will pay the full daily benefit of $150 C) the insurance company will pay $100 per day to the nursing home and apply the extra $50 to future premiums D) the insurance company will adjust the policy premium to match the new daily benefit

B) the insurance company will pay the full daily benefit of $150

Insured losses are covered immediately after a policy is reinstated when A) claim forms are submitted with proof of loss B) the losses result from accidental injuries C) hospitalization is required D) the losses result from sickness

B) the losses result from accidental injuries

In a noncontributory plan, when the premium is paid by the sponsor (employer), what percentage of eligible employees must participate in the plan? A) 50% B) 75% C) 100% D) 25%

C) 100%

All of the following types of plans are reserved for smaller employers EXCEPT A) SIMPLE IRAs B) SEPs C) 401(k)s D) SIMPLE Plans

C) 401(k)s

In a contributory plan, when the premium is paid by both the sponsor and the insured, what percentage of eligible employees must participate in the plan? A) 100% B) 25% C) 75% D) 50%

C) 75%

Transferring total ownership of a life insurance policy may be accomplished in which of the following ways? A) Collateral assignment B) Total surrender C) Absolute assignment D) Partial surrender

C) Absolute assignment

Which of the following situations describes an instance of unfair discrimination? A) An insurer declines to issue a policy to an applicant that does not meet the insurer's underwriting standards. B) An insurer quotes a higher premium to an applicant who has a poor driving record. C) An insurer refuses to issue a policy to a male applicant who works in the theater industry because he is assumed to be at higher risk for HIV. D) An insurer assigns a premium rating to an applicant because he participates in a high-risk hobby (skydiving).

C) An insurer refuses to issue a policy to a male applicant who works in the theater industry because he is assumed to be at higher risk for HIV.

Carol wants her annuity settlement to guarantee that the entire annuity principal amount will be paid out. What should she choose? A) Joint and full survivor annuity B) Period certain annuity C) Cash refund annuity D) Installment refund annuity

C) Cash refund annuity

Long Life Insurance Company insures substandard risks. Which of the following will it employ to compensate for the higher death rates it expects? A) Issue only binding receipts B) Require attending physician's statements (APS) with all applications C) Charge increased premiums for substandard risks D) Use the Medical Information Bureau (MIB) for underwriting

C) Charge increased premiums for substandard risks

An individual who wants to insure a home mortgage with life insurance in the most economical means possible would be best served with which of the following types of life insurance? A) Universal life B) Level term C) Decreasing term D) Whole life

C) Decreasing term

What type of annuity offers a guaranteed interest rate during accumulation and guaranteed payments after annuitization? A) Guaranteed payout annuity B) Flexible premium annuity C) Fixed annuity D) Variable annuity

C) Fixed annuity

A long-term care insurance policy must contain which of the following provisions? A) Probationary period of no longer than 180 days B) Coverage for drug and alcohol dependency C) Guaranteed renewability D) Coverage for conditions that result from war

C) Guaranteed renewability

problem with calcium deposits on the knee. The insurance company will most likely do which of the following? A) Issue the policy as preferred. B) Deny coverage. C) Issue the policy with an impairment rider. D) Refuse the application.

C) Issue the policy with an impairment rider.

Which of these statements regarding Medicare is CORRECT? A) Under Medicare Part B, payments for physicians' services are unlimited. B) Medicare recipients are billed for their Medicare Part A premiums semiannually. C) Medicare Part B is voluntary. D) Medicare Part A Hospital Insurance carries no deductible.

C) Medicare Part B is voluntary.

How are the premiums and benefits of individual life insurance taxed? A) Deductibility of premiums, non-taxable death benefits B) Deductibility of premiums, taxable death benefits C) Non-deductibility of premiums, non-taxable death benefits D) Non-deductibility of premiums, taxable death benefits

C) Non-deductibility of premiums, non-taxable death benefits

When would a misstatement on a health application void the contract? A) Only when the misstatement is immaterial B) Never C) Only if it involves applicant fraud D) Always

C) Only if it involves applicant fraud

Which of the following individuals does NOT have to sign an application for a life insurance policy? A) The applicant, if different than the proposed insured B) The producer making the sale C) The beneficiary D) The proposed insured

C) The beneficiary

Which of the following types of life insurance policy was designed to combine the protection features of traditional life insurance with the cash value growth potential of securities? A) Term life B) Universal life C) Variable life D) Whole life

C) Variable life

A voluntary relinquishment of a known right is called A) an estoppel B) a warranty C) a waiver D) a concealment

C) a waiver

All of the following statements are true regarding modified endowment contracts (MECs) EXCEPT A) a life policy that passes the 7-pay test is not an MEC B) funds withdrawn from an MEC are subject to last in, first out (LIFO) tax treatment C) an MEC may be exchanged for another policy that is not an MEC D) an MEC is subject to less favorable tax treatment than other life policies

C) an MEC may be exchanged for another policy that is not an MEC

All of the following statements are true regarding policy dividends EXCEPT A) dividends are not taxable as income B) interest earned on dividends and paid to the policyowner is taxable C) dividends paid to policyowners are excluded from the insurer's annual statement D) dividends are a return of excess premium paid

C) dividends paid to policyowners are excluded from the insurer's annual statement

COBRA (the Consolidated Omnibus Budget Reconciliation Act) requires A) insurance companies to adopt anti-money laundering practices B) health insurers to maintain control over disclosure of their customers' protected health information C) employers with 20 or more employees to allow former employees to continue benefits under the employer's group health insurance plan D) insurance companies to disclose their privacy policy and how a customer's information may be shared with affiliates and third parties

C) employers with 20 or more employees to allow former employees to continue benefits under the employer's group health insurance plan

A life insurance contract's insuring clause A) includes policy conditions and exclusions B) describes the financial strength rating of the insurer's ability to pay claims C) expresses the insurer's intent to pay for covered losses in exchange for payment of premium and compliance with policy terms D) expresses the status of a pending claim

C) expresses the insurer's intent to pay for covered losses in exchange for payment of premium and compliance with policy terms

The core policy (Plan A) developed by the NAIC as a standard Medicare supplement policy includes all of the following EXCEPT A) coverage for Part A copayment amounts B) the first 3 pints of blood each year C) foreign travel emergency care D) the 20% Part B coinsurance amounts for Medicare-approved services

C) foreign travel emergency care

HIPAA (the Health Insurance Portability and Accountability Act) requires A) insurance companies to disclose their privacy policy and how customer's information may be shared with affiliates and third parties B) insurance companies to adopt anti-money laundering practices C) health insurers to maintain control over disclosure of their customers' protected health information D) employers with 20 or more employees to allow former employees to continue benefits under the employer's group health insurance plan

C) health insurers to maintain control over disclosure of their customers' protected health information

Controlled business refers to A) policies that are controlled by the insurer B) policies that are vested with the writing agent or broker C) insurance business written by an agent on himself or on a family member D) insurance business that generates both commissions and renewals

C) insurance business written by an agent on himself or on a family member

If a producer offers to refund part of a prospect's premium in exchange for the purchase of a life insurance policy, the producer is committing the unfair practice known as A) twisting B) conservation C) rebating D) defamation

C) rebating

Misstatement of age in an insurance contract A) voids the contract if the correct information is discovered by the insurer at any time in the first 2 years B) subjects the person who misstated the information to prosecution for fraud and/or perjury C) results in the policy benefit being adjusted according to the correct age of the insured; it does not void the contract D) voids the contract if discovered by the insurer at any time before or after the insured's death

C) results in the policy benefit being adjusted according to the correct age of the insured; it does not void the contract

Consumer rights under the Fair Credit Reporting Act include all of the following EXCEPT A) the applicant has the right to request a copy of the credit agency's report B) the applicant will need to hire legal representation in order to challenge erroneous information in the report C) the applicant may request to be interviewed D) the applicant may make a written statement regarding negative information in the credit report, which must be included in the report

C) the applicant may request to be interviewed

A group life insurance plan is considered noncontributory when A) the employee pays part or all of the premium for the plan B) the service organization pays part of the premium C) the employer pays all of the premium for the plan D) the third-party administrator pays the premium for the plan

C) the employer pays all of the premium for the plan

The longer the benefit period of a disability income policy A) the lower the policy's premium B) the lower the policy's benefits C) the higher the policy's premium D) the higher the policy's benefits

C) the higher the policy's premium

Information about an applicant's character, general reputation, personal habits, and lifestyle would be included in A) the attending physician's statement B) the insurance application C) the investigative consumer report D) the MIB report

C) the investigative consumer report

Question ID: 515271 A significant feature of adjustable life insurance is that A) the policyowner may make retroactive adjustments in the policy's provisions B) the policyowner need not pay premiums after the policy has been in force for a certain number of years C) the premiums may be increased or decreased from time to time by the policyowner D) the cash value is 3 times greater than in traditional whole life insurance

C) the premiums may be increased or decreased from time to time by the policyowner

With a conditional life insurance receipt, coverage may become effective as early as the date A) the receipt is given to the applicant, regardless of the applicant's insurability B) the policy is delivered to the owner C) the receipt is given to the applicant, if the applicant is approved as a standard risk D) the application is received by the insurer

C) the receipt is given to the applicant, if the applicant is approved as a standard risk

All of the following statements regarding Roth IRAs are true EXCEPT A) they provide for tax-free accumulation of funds B) they are not available to individuals in the upper income brackets C) they mandate distributions no later than age 70½ D) they limit contributions each year

C) they mandate distributions no later than age 70½

Which of the following statements about contributions to a qualified plan is CORRECT? A) Employer contributions are 100% vested when made. B) Employees have nonforfeitable rights in both employee and employer contributions when made. C) Employers have the option of creating vesting schedules for benefits. D) Employees have 100% vested interest in benefits made from their own contributions.

D) Employees have 100% vested interest in benefits made from their own contributions.

Which of the following characteristics is NOT considered by underwriters when underwriting group insurance? A) Size of the group B) Financial stability of the group C) Year of formation of the group D) Individual medical histories

D) Individual medical histories

Which of the following riders uses death benefit proceeds prior to the death of an insured to pay for non-hospital confinement following a major stroke? A) Disability income B) Waiver of premium C) Automatic premium loan D) Long-term care

D) Long-term care

Which of the following private insurance carriers has a contractual relationship with doctors and hospitals? A) Employer-administered plans B) Blue Cross/Blue Shield C) Medicaid D) Medicare

D) Medicare

Which of the following statements is TRUE regarding life policy replacement? A) Replacement is almost always in the best interest of the insured. B) Replacement is an unfair trade practice. C) Replacement transactions are extremely rare. D) Patterns of improper replacement may subject an insurer to disciplinary action.

D) Patterns of improper replacement may subject an insurer to disciplinary action.

Larry is age 50, has been paying premiums on his whole life policy for more than 15 years, and now has a need to use about ⅓ of his available cash value for a short period of time. He does not want to give up his insurance and can afford to continue paying premiums. What advice would you give to Larry? A) The only way to access the cash value is through a surrender. He can have up to 90% of the cash value to purchase other insurance. B) Look for other available funds. Policy cash value is unavailable for loans before age 59½ due to tax penalties. C) Tell Larry he should have purchased term insurance. Whole life has no cash value. D) Tell Larry to take the policy loan, continue paying premiums to prevent a lapse, and also recommend that he repay the principal and interest on the loan.

D) Tell Larry to take the policy loan, continue paying premiums to prevent a lapse, and also recommend that he repay the principal and interest on the loan.

Six days after purchasing an individual health policy, Andrew gets a new job with generous employee benefits and decides to return the individual policy. He overnights the policy back to the insurer. What will the insurer do? A) Nothing. There is no free-look period for individual health insurance. B) The premium will be refunded only if Andrew does not meet the policy's underwriting standards. C) The insurer will refund 100% of the premium minus underwriting expenses. D) The insurer will refund 100% of the amount paid.

D) The insurer will refund 100% of the amount paid.

Three days after purchasing a term life policy, Jean gets a new job with generous employee benefits and decides she does not need the new policy after all. She overnights the policy back to the insurer. What will the insurer do? A) The insurer will refund 100% of the premium minus underwriting expenses. B) Nothing. There is no free-look period for term insurance. C) Nothing. The insurer will allow the contract to expire at the end of the term. D) The insurer will refund 100% of the amount paid.

D) The insurer will refund 100% of the amount paid.

COBRA provides which of the following benefits to those who are insured under a group health insurance contract? A) The right to convert group health coverage to an individual policy without evidence of insurability B) The option to receive benefits under both the insured's coverage and a spouse's coverage C) The right to simultaneously collect disability benefits under both a group policy and Social Security D) The option to continue the coverage for a specified period of time after terminating employment with the group sponsor

D) The option to continue the coverage for a specified period of time after terminating employment with the group sponsor

Which of the following most accurately describes the probationary period in a health insurance policy? A) The period of time of conditional coverage after an application for coverage is submitted, and before the company accepts the risk and issues the policy B) The period of time during which a policy's coinsurance provision applies C) The period of time an insured is required to be sick or disabled before the policy pays benefits D) The period of time that must elapse after a policy is issued before any benefits for illnesses are payable

D) The period of time that must elapse after a policy is issued before any benefits for illnesses are payable

An insured has a disability income policy with a change of occupation provision. The insured changes occupations to a less hazardous occupation without informing the insurance company. How will the insurance company handle a claim? A) They will deny the claim. B) They will base the claim on what the premium paid would have purchased at the more hazardous rate. C) They will pay the original claim. D) They will prorate the benefit and refund the premium.

D) They will prorate the benefit and refund the premium.

Paul owns an adjustable life policy. Which of the following statements regarding his policy is TRUE? A) Any adjustments made to the policy will retroactively affect the policy provisions. B) Decreasing the premium shortens the premium-payment period C) The insurance company has the right to change the premium on the basis of its investment earnings. D) Upon showing evidence of insurability, Paul can increase the face amount of his policy.

D) Upon showing evidence of insurability, Paul can increase the face amount of his policy.

Which of the following riders requires the insured to be totally disabled before it becomes effective? A) Payor rider B) Exchange privilege rider C) Guaranteed insurability rider D) Waiver of premium rider

D) Waiver of premium rider

Which of the following affects the deductibility of contributions made to a traditional IRA? A) The type of investments the IRA purchases with the contributions B) The IRA owner's age C) The IRA owner's marital status D) Whether or not the IRA owner participates in a qualified employer plan

D) Whether or not the IRA owner participates in a qualified employer plan

An annuity that guarantees a minimum rate of return is A) a deferred annuity B) a single premium annuity C) a variable annuity D) a fixed annuity

D) a fixed annuity

A cease and desist order A) is issued by an insurance company when a policyowner defaults on premium B) is issued by the Insurance Commissioner when it appears an unfair trade practice has occurred C) is issued by a public adjuster when a claim is denied D) is issued by an insurance company when a claimant is suspected of fraud

D) is issued by an insurance company when a claimant is suspected of fraud

All of the following are considered unfair trade practices EXCEPT A) rebating B) coercion C) misrepresentation D) replacement

D) replacement

Funds set aside by an insurer to pay future claims are called A) dividends B) general accounts C) premiums D) reserves

D) reserves

Elimination (waiting) periods in disability income policies are designed to A) help keep premium rates at a profitable level B) last generally for 1 year C) eliminate claims for long-term disabilities D) specify a limited period of time at the start of disability when benefits are not payable

D) specify a limited period of time at the start of disability when benefits are not payable

Group health insurance premiums paid by the employer are A) sometimes tax deductible B) partially tax deductible C) not tax deductible D) tax deductible as a business expense

D) tax deductible as a business expense

With an optionally renewable policy, the company reserves the right to A) cancel the policy at any time B) modify the coverage at any time if claims filed by the insured are excessive C) increase the premium on a policy at any time if benefits paid to an insured exceed a stated amount D) terminate coverage at any policy anniversary date

D) terminate coverage at any policy anniversary date