Life, Accident and Health Final Exams - 3 Final set
Health insurance policies all include a renewability provision. Premiums may not be increased on which type of health insurance policy? Guaranteed renewable BConditionally renewable COptionally renewable Non-cancelable
non cancelable A non-cancelable policy cannot be cancelled as long as premiums are paid in a timely fashion. In addition, none of the benefits or conditions may be altered nor can the premium be increased. (1418)
An MIB may contain information about: AConsumer reports An applicant's previous health history CRisk classifications DAdverse selection
an applicant's previous health history
According to a permanent insurance policy's non-forfeiture options, a policy may not lapse when cash value is present. All of the following are types of these non-forfeiture options, EXCEPT: One-year term insurance BCash surrender CExtended level term insurance DReduced paid-up insurance
one year term insurance One year term insurance is a dividend option. Non-forfeiture options are available to a policyowner who wishes to surrender his or her whole life policy. Once surrendered, a policy cannot be reinstated. (1684)
Health insurance policies must include twelve required uniform policy provisions. Each of the following is a required provision, EXCEPT: Change of occupation BReinstatement provision CNotice of claim DChange of beneficiary
change of occupation The change of occupation is an optional accident and health insurance policy provision. It is commonly found in a disability income policy. (1396)
Group conversion to an individual plan must take place within what period of time following employment termination. 30 days B31 weeks 31 days D60 days
31 days Conversion from a group to an individual plan must take place within 31 days following employment termination. (1486)
The "inability to perform any gainful activity with an expectation that the disability will last at least 12 months or result in death" describes what policies' description of being disabled? ATotal permanent disability BTotal disability Social Security disability DPartial disability
Social Security disability The Social Security definition of being disabled is much more restrictive as compared to private insurer definitions. (1134)
During the underwriting process, who is the attending physician? AA disinterested physician BThe insurance company's physician The applicant's physician DThe holder's physician
the applicant's physician The attending physician is the applicant/insured's doctor who provides medical information about the insured to the insurer upon request. (1437)
When an insured suffers a covered illness, she must supply notice of loss to the insurer. Once this notice is received by the insurer, it must send a proof of loss form to the insured within: A10 days 15 days C20 days D90 days
15 days The "notice of loss" provision requires that an insured notify the insurer within twenty days of any accident or illness suffered. The insurer is then required to send claim forms to the insured within fifteen days. (4130)
According to the proof of loss form provision which appears in a health insurance policy, an insurer must send in a claim form to an injured insured within: A60 days of notification B20 days of notification 15 days of notification D90 days of notification
15 days of notification The claim form provision is also referred to as the "proof of loss form" provision. It states that once the insurer is notified that the insured has suffered an accident or illness, it must send out claim forms within 15 days or expose itself to an unfair claim practice. (1372)
According to the Patient Protection Affordable Care Act (PPACA), children of an insured may be covered by their parents medical plan up to age: A21 B22 24 26
26 The recent PPACA provides that parents may continue to cover children under their medical insurance plan, whether a group or individual plan, up until age 26. (2134)
If an insured wishes to take legal action against an Accident & Health insurer because of its failure to pay a claim fairly or adequately, such legal action must be taken within what period of time after written proof of loss has been provided to the insurer? A2 years 60 days C1 year 3 years
3 years An insured has three years in which to take legal action against an insurer with regard to a claim. (1386)
Insurers selling long-term care insurance are required to provide a new purchaser with a free-look of at least: 10 days B20 days 30 days D60 days
30 days LTC policies must allow covered persons to have a 30 day free-look at their policy (or certificate if a group plan). If the purchaser is not satisfied with the plan, he or she may terminate the plan as of the initial date of coverage. (1119)
A policyowner may have his policy reinstated after a lapse if a reinstatement application is completed and approved. Once this application is submitted, an insurer must notify the insured of its approval or declination within: 30 days B31 days 45 days D60 days
45 days Once a reinstatement application is submitted to the insurer, it must inform the applicant within forty five days if the application has been approved. If this does not occur, reinstatement is automatic. (4127)
Which of the following best describes adult day care ? Care for an elderly individual provided at a specific facility for folks who live at home but whose family members are not available during the day BCare provided for elderly individuals at a facility other than home twenty-four hours a day CServices provided by a care coordinator who works with an elderly person at home or at a designated care center DCare provided by an unskilled person to assist an elderly individual with basic daily activities
Care for an elderly individual provided at a specific facility for folks who live at home but whose family members are not available during the day Adult day care is designed for senior citizens who live at home but whose family members are not able to remain home during the day to provide needed care. The care provided at an adult day care center are similar to those provided by home health care. Adult day care centers sometimes provide transportation to and from the center as well. (1113)
Health Maintenance Organizations are an alternative to health care provided by commercial insurers. Which of the following statements is true regarding HMOs? HMOs deliver medical care. BAn HMO functions on a reimbursement basis. CHMOs differ from commercial insurers in that the latter delivers medical care. DClaim forms are submitted to each HMO facility.
HMOs deliver medical care HMOs are alternative providers of health care that do not function on a reimbursement basis like commercial insurance policies. HMOs deliver the health care whereas insurance policies (and their carriers) do not. (1284)
Arthur signed an application for a $200,000 life insurance policy on June 12th and took a required medical exam on June 14th. He gave the producer the initial premium and received a conditional receipt at the time of application. The home office approved the policy and sent it to the producer on June 29th and the producer delivered the policy to Arthur on July 2nd. Arthur's insurance protection actually began on: June 12th June 14th CJune 29th DJuly 2nd
June 14th Coverage is effective, in many cases, once the condition required is satisfied. In this case, application information, premium and a medical exam were required. Coverage is not effected until all requirements are provided. (1857)
Al purchases a disability income policy. The application is approved on March 4th. The contract is issued on March 10th. It is delivered by the producer on March 13th. When will the ten-day free-look period end? AMarch 13th March 23rd CMarch 22nd DMarch 24th
March 23rd The ten-day free-look period begins when the policy is delivered to the policyowner. During this period, if the policyowner returns the contract to the producer or insurer, he or she will receive a full premium refund. (1756)
Tom buys a deferred annuity. If he surrenders it prematurely he will receive a penalty of: AAn increasing percentage each year A decreasing percentage each year CA flat fee each year DA constant percentage each year
a decreasing percentage each year When an annuity owner surrenders the contract, he or she will be subject to a percentage penalty which decreases over time. (1629)
Once a specific amount of benefit is initially covered by Part D of Medicare, a gap exists before more costs are covered. This gap in coverage that exists under the prescription drug plan is known as: AThe donut maker BCatastrophic coverage A donut hole DWhole life coverag
a donut hole The donut hole is the out of pocket threshold that must be paid by the retiree. Once this out-of-pocket expense has been incurred catastrophic drug coverage begins. The insured then pays a copayment for each prescription through the end of the year. (4136)
Which of the following health insurance providers had as its original purpose the providing of preventive care? A Health Maintenance Organization BBlue Cross/Blue Shield CPreferred provider organization DLong-term care provider
a health maintenance organization HMOs are alternative health care providers characterized by prepaid financing. Unlike private insurance companies, they do not function on a reimbursement basis. (1268)
A producer that is found guilty of engaging in any unfair practice may be subject to a monetary penalty. In addition, he or she most probably will also receive which of the following? AA referral A license suspension CA deviated rating DA temporary license
a license suspension Whenever a producer engages in an unfair sales or trading practice, he or she will be subject to a license suspension or revocation. Generally, such action by the Commissioner or Superintendent of Insurance may not be effected until after a hearing is held so that the producer can defend himself or herself. (1011)
Which answer best describes the term risk exposure? A measure of how likely it is that some event will occur BThe chance of financial loss The predictability of a loss DThe acceptance of too many claims
a measure of how likely it is that some event will occur Exposure is the possibility that a loss or occurrence will take place. The greater the likelihood a loss will occur, the higher the premium that needs to be charged. (2050)
Replacement is a transaction in which a new life insurance policy is to be purchased and due to this purchase, an existing life insurance policy has or will be lapsed, forfeited, surrendered or terminated. Which of the following would not be considered a replacement? A policy continued as decreasing term insurance A policy pledged as collateral CA policy reissued with any reduction in cash value DA policy converted to extended term insurance
a policy continued as decreasing term insurance Replacement is a legal activity where a producer convinces a client to lapse an existing policy and purchase a new plan. (1942)
Most major medical insurance policies provide coverage for an insured's dependents. Coverage for dependent children is provided by such plans until: A specified age BThe dependent child graduates from high school The dependent child graduates from college DThe dependent child secures employment
a specified age Dependent coverage is provided by major medical expense plans. The ACA provides that dependent children may be covered by a parents plan up to age 26. For dependent children who are physically challenged or emotionally handicapped, coverage may be provided beyond age 26 under the parent's plan. (1217)
An insured who is covered by an HMO is known as which of the following? AA beneficiary BA policyholder A subscriber DA provider
a subscriber
If an applicant for life insurance is considered a substandard risk by an insurer but still insurable, the insurer will probably take which of the following actions? ADecline the application BIssue a standard policy Accept the risk and charge an extra premium DAccept the risk and increase the number of exclusions
accept the risk and charge an extra premium A substandard risk may be issued a policy or declined. If a policy is issued the premium will be "rated up". In other words, the policy will be issued with a higher the standard premium. (4025)
Which of the following is usually not excluded in a disability income policy? Aviation related injuries Accidental injuries that are self-inflicted CWar related injuries DRoutine dental care
accidental injuries that are self-inflicted Self-inflicted injuries are only excluded if they are intentional. (1248)
Theresa is age 38 and purchases a twenty-pay whole life insurance policy. The death benefit is $50,000. It is attractive to Theresa since she will no longer be required to make premium payments at the end of the twenty-year period. When will her policy mature? AAge 70 BAge 53 CAge 65 Age 100
age 100 Permanent insurance policies are designed to mature at age 100 no matter when premium payments cease. (1814)
Which of the following is considered to be underwriting criteria? AThe computer simulation of various risks implied by the insured BThe standards established by the Insurance commissioner for underwriters All information available for an underwriter to determine eligibility for coverage DThe mortality table applied by the underwriter
all information available for an underwriter to determine eligibility for coverage All of the sources of information available to an underwriter are: application, agent's report, medical exam, attending physician report, consumer reports, and medical information bureau reports. (1433)
Each of the following elements must be included in a contract in order for it to be legal, EXCEPT: AAgreement An exclusion section CConsideration DLegal capacity
an exclusion section A contract is legal if it includes a valid agreement, consideration, competent parties and is created for a legal purpose. (1900)
Which of the following entities is responsible for remitting a producer's appointment fee ? AAn insurance agency BThe Department of Insurance An insurance company DThe producer
an insurance company Generally, the insurer that sponsors a producer is responsible for sending to the Department of Insurance the payment of any appointment fee, whether or not they collect it from the appointed producer. (1069)
An insurer which does not hold a certificate of authority and is not permitted to conduct insurance business in this State, best describes: AAn authorized insurer An unauthorized insurer CAn admitted insurer DA revocable insurer
an unauthorized insurer A certificate of authority must be issued to an insurer in order for it to be able to engage in insurance transactions. The issuance of this certificate indicates that the insurer is authorized. (1975)
When a replacement of an insurance policy occurs, all States require that an insurer provide a "Notice Regarding Replacement" to a policyowner advising him or her of: Any reduction of benefits that may occur due to the replacement BThe compensation to be provided to the replaced producer CThe annual income of the replacing producer The time that must elapse before the replacement will occur
any reduction of benefits that may occur due to the relacement Whenever a life insurance or health insurance policy is replaced by another producer / insurer, the replacing producer must provide a Notice Regarding Replacement to the consumer to inform him or her of any accrued benefits that they may be relinquishing as a result of the replacement. The replacing insurer must also notify the insurance company whose policy is being replaced. Once a policy is replaced and a new one is delivered to the consumer, there is generally a twenty day free-look period which applies to the newly issued policy. When an insurer convinces a policyowner to exchange an older policy with a newer one, it is not considered to be a replacement. (2129)
Insurable interest in life insurance must exist: AAt the time of submission BAt the time of loss CAt the time of delivery At the time of application
at the time of application Insurable interest is also referred to as financial or economic interest. This is a requirement when one individual or entity wishes to purchase insurance on the life of another. The applicant must demonstrate to the producer that insurable interest in the life of another exists at the time of application. (1926)
All of the following are true regarding a guaranteed purchase option, EXCEPT: AProvides guaranteed issue amounts BCosts an additional premium Available if insured's income decreases Option dates are generally offered to age 50
available if insured's income decreases The guaranteed purchase option is also known as the guaranteed insurability option. It requires an additional premium and allows the policyowner / insured to buy additional amounts of coverage at option dates in the future without demonstrating insurability. These additional coverage amounts are guaranteed issue. The premium for these additional coverage amounts is based upon the attained age option dates. (4126)
In order to be eligible for benefits under a long-term care policy, an insured must: AHave insufficient income BBe totally disabled Be unable to engage in activities of daily living DBe eligible for Medicaid
be unable to engage in activities of daily living One trigger of coverage in a long-term care plan is the inability of the insured to engage in two or more activities of daily living. These activities include but are not limited to bathing, dressing, eating, taking medication, moving about, continence or toileting. (1097)
Which of the following receipts provides coverage for an insured immediately upon the payment of the premium? Binding receipt BApproval receipt Conditional receipt DInsurability receipt
binding receipt A binding receipt provided to an applicant / policyowner means that coverage goes into effect immediately upon the payment of the premium and the delivery of the receipt. A binding receipt is also referred to as an unconditional receipt. If the insured dies before the application is underwritten, the insurer must pay the claim. (4021)
An annuity is similar to a whole life policy in that both require prepaid financing in order for the contracts to function appropriately. Which of the following best describes another common trait between an annuity and a life insurance policy? ABoth provide a specified death benefit Both may include a designated beneficiary CBoth contracts will be executed once a physical exam is taken by the applicant DBoth require proof of insurability
both may include a designated beneficiary The beneficiary designated in a life insurance policy receives a predetermined death benefit upon the death of an insured. The beneficiary designated on an annuity contract will be paid the proceeds of the contract upon the death of the contract owner. The amount received is not a stipulated death benefit but the value of the contract. (1644)
Two partners enter into a buy-sell agreement. The business is worth $100,000. Both partners have an equal interest in the firm. Which of the following would be used to best support this agreement? ABuy $25,000 of life insurance on each partner Buy $50,000 of life insurance on each partner CBuy $100,000 of life insurance on one partner DBuy $50,000 of life insurance on one partner
buy $50,000 of life insurance on each partner Life insurance which funds the buy-sell agreement will help to maintain the value of the business. A buy-sell agreement used in a partnership binds the surviving partners to purchase the partnership interest of the first partner to die, at a prearranged price identified in the agreement. The agreement obligates the estate of the deceased partner to sell its interest to the surviving partner(s). In this example an equal share means $50,000 interest, thus the policies covering each with this amount of coverage. (4174)
Which of the following provisions is a required uniform health insurance provision? AChange of occupation Change of beneficiary CMisstatement of age Conformity with State statutes
change of beneficiary The change of beneficiary provision is one of the twelve required uniform policy provisions that must be included in all issued health insurance policies. The other choice listed involve "optional uniform" policy provisions. (2193)
All of the following are required uniform health insurance provisions, EXCEPT: ATime of payment of claims BNotice of claim Change of occupation DPhysical examination and autopsy
change of occupation The change of occupation provision is an optional provision and is not required to be included in all health insurance policies. An insurer may include it based on the type of health insurance being issued. (4182)
Which of the following provisions is an optional uniform health insurance provision? Change of occupation BChange of beneficiary CNotice of loss DGrace period
change of occupation The change of occupation provision is one of the eleven optional uniform policy provisions. The inclusion of any of these provisions generally depends upon the type of policy in question. For example, certain optional provisions are only applicable to disability income policies and not applicable to major medical plans. (2194)
An optional health insurance policy provision which allows the insurer to adjust benefit payments under certain situations or permits the insured to receive a reduced premium in other circumstances, best describes: APayment of claims Change of occupation Relation of earnings to insurance provision DTime limit on certain defenses
change of occupation The change or occupation provision is commonly found in a disability income policy. If the insured changes his or her occupation after a policy is purchased, the policy may be kept but something will be reduced. If the occupation change involves going to a more hazardous occupation, there will be a benefit reduction. If the occupation change involves going to a less hazardous occupation, there will be a premium reduction. (1399)
A type of assignment where some but not all rights are transferred to another party best describes: ADebt consolidation BLender assignment Collateral assignment DAbsolute assignment
collateral assignment If the owner assigns one or some of the rights to another, but not all, he or she has engaged in a collateral or conditional assignment. This is a partial and temporary transfer of policy rights to another. In a conditional assignment, the policy owner or assignor transfers a policy right to an assignee. Most conditional assignments involve the use by the assignor of a whole life policy's cash value as collateral in order to secure a loan from a financial institution. If the cash value or a portion of it is "assigned" to the bank or "assignee," this party actually becomes the primary beneficiary with regard to its interest. (4181)
Which of the following is not a penalty assessed a producer who engages in an unfair sales or marketing practice ? ALicense suspension or revocation BImprisonment Community service DMonetary fine
community service The common penalties assessed a producer when he or she engages in an unfair sales or marketing practices includes, license suspension or revocation, monetary penalties, imprisonment, or a combination of these penalties. (2128)
Each of the following is a required uniform policy provision, EXCEPT: AEntire contract BProof of loss Change of beneficiary Conformity with state statutes
conformity with state statutes The conformity with state statutes provision is an optional accident and health policy provision. (1389)
What provision found in a health insurance policy protects an insurer against an insured owning duplicate coverage or purchasing more insurance than needed? Insuring provisions BPre-existing conditions Coordination of benefits DExclusion provision
coordination of benefits This provision prevents an insured from profiting by owning more than one policy. (1411)
Alice applies for life insurance but pays no initial premium. The application is submitted to underwriting, is approved and a policy is issued. When the producer attempts to deliver the policy she learns that Alice is in the hospital. What should she do? ADeliver the policy to the beneficiary BDeliver the policy and collect the initial premium CCollect the premium and later mail the policy to the owner Do not delivery the policy nor collect the premium
do not delivery the policy nor collect the premium Since no premium was paid with the application, coverage is not yet bound. If the producer attempts to deliver the contract and collect the premium but finds that the proposed insured is hospitalized, he or she should not deliver the policy. The producer should find out why the proposed insured is ill or why they are in the hospital. (1955)
Which of the following insurers has its principal office in one particular State but is authorized to solicit or transact insurance products in this State? Foreign insurer BNon-admitted insurer CAlien insurer DFraternal insurer
foreign insurer A foreign insurer is authorized to conduct insurance business in a state or states other than the one in which it is domiciled. (1990)
Intentional deception can most closely be associated with which of the following terms? AConcealment Fraud CMisrepresentation Falsification
fraud Fraud always involves intentional deception. Concealment or misrepresentation may or may not involve intentional deception. Falsification is not a term used in the insurance business. (1918)
All are covered under an Errors and Omissions policy, EXCEPT: AAn incorrect review of insurance contract benefits BA review of group plan benefits CIncompetent or negligent opinion or advise Fraudulent misappropriation of collected premiums
fraudulent misappropriation of collected premiums E&O insurance is not designed to provide coverage arising from intentional or fraudulent acts. (1464)
John applied for life insurance in 2012 and the policy was issued. He suffered a heart attack in 2010 but failed to disclose this to the producer. If he died in 2013 and the company learns of the prior heart attack, what will it do? APay the claim less 25% BPay the claim If death occurs during the two-year contestable period, the company may deny coverage DPay the claim and return the premium
if death occurs during the two year contestable period the company may deny coverage Once a policy is insured, the insurer has two years to contest information about the insured's health history that was reported on the application. If it is determined that the applicant/proposed insured has engaged in any material misrepresentation, the insurer may deny coverage. (1864)
Which of the following statements is true with regard to the misstatement of age provision which appears in a life insurance policy? If the insured's age is overstated, the death benefit will be reduced BIf the insured's age is understated, the insurer will pay an additional death benefit upon death CIf the insured's age is misstated, the contract will be void If the insured's age is overstated, the insurer will pay an additional death benefit at death
if the insured's age is overstated, the insurer will pay an additional death benefit at death Whether an insured's age is understated or overstated on an application for life insurance, the insurer will adjust the death benefit. (1731)
Mike is a producer licensed in this State. To make sure that his largest commercial insurance account renews their policy, he makes a gift of a pair of diamond earrings to the owner's wife. Therefore, Mike has engaged in: ATwisting BMisrepresentation CDefamation Illegal inducement
illegal inducement An illegal inducement occurs when a producer offers something of value to a consumer in order to "induce" or persuade them to purchase an insurance policy. This is also known as rebating (1030)
Bill is 48 years of age and opens an Individual Retirement Account (IRA). At what point does Bill have ownership of the funds in the account? AAge 59 1/2 BAfter the account has been in force for five years Immediately DOnce taxes are paid on earnings or growth
immediately When an IRA is funded, proceeds can be used to purchase any of several investments from certificates of deposit to stocks and mutual funds. Once funds are contributed to the account they are owned by the individual immediately. However, they are also characterized by heavy withdrawal penalties in the early years after they are purchased, even if funds are withdrawn in order to be rolled over. (4166)
An individual has been licensed for two years. He then adds an additional line of authority to his license. When will he be permitted to begin soliciting the new line of insurance ? AAs soon as a passing grade is received on the State exam BAt the end of the current license period CUpon license renewal Immediately upon processing the appropriate paperwork
immediately upon processing the appropriate paperwork When an individual adds a new line of insurance to an existing license, he or she is generally allowed to commence selling the new line as soon as all appropriate paperwork is filed with the Department or Division of Insurance (1015)
The Producer's Report will include which of the following: Information not found elsewhere in the application BThe estimated premium CThe estimated mortality rate DContact information of the attending physician
information not found elsewhere in the application The Producer's Report is where the agent can record unusual information or observations about the applicant which are not asked about on the application itself. (1436)
An insurance adviser may also be referred to as an: AInsurance rating organization Insurance analyst Insurance loss specialist DInsurance risk manager
insurance analyst An insurance adviser is also referred to as an insurance consultant, insurance specialist, insurance analyst or insurance counselor. (1050)
Domestic insurance companies must be audited or examined by the Commissioner or Superintendent of Insurance on a regular basis in order to determine which of the following? Insurer solvency BInsurer production levels CInsurer capitalization DReserve allocations
insurer solvency The primary reason for a Commissioner or Superintendent to audit or examine an insurer is to make sure that an insurer is solvent and can meet all of its financial obligations. (1043)
A policyowner may leave dividends payable with an insurer to accumulate at interest. What are the tax ramifications of this dividend option? AInterest earned on dividends left with the insurer are not taxable as income BDividends received from a life insurance policy are taxable as ordinary income Interest earned on dividends left with the insurer are taxable as income DDividends paid on life insurance are the equivalent of stock dividends
interest earned on dividends left with the insurer are taxable as income The dividend paid on a life insurance policy is tax-exempt since it is considered to be a return of an overpayment of premium. If this dividend is left with the insurer to accumulate, any interest paid on the dividend is taxable as ordinary income. (1527)
Which of the following provides interest payments to the primary beneficiary following the death of the insured? ALife interest option BCash refund option CInstallment refund option Interest only option
interest only option Under this option, the proceeds of the policy remain with the insurer and only the interest is paid to the beneficiary. This option also provides the beneficiary with flexibility since the proceeds may be left with the insurer which frees him or her of any investment worry while guaranteeing both principal and a minimum rate of return (i.e., interest). The beneficiary always possesses the right to withdraw proceeds at any time in the future. Under any option selected where the policy proceeds are left "at interest" with the insurer, the beneficiary is protected against the claims of creditors. (4043)
Which of the following involves occasional nursing and rehabilitative care that must be based upon a doctor's orders and only performed by or under the supervision of skilled medical personnel ? ARespite care Intermediate care Skilled care DCustodial care
intermediate care Intermediate care, also called intermediate nursing care, is one of several levels of care that is commonly included in long-term care coverage whether the policy purchased is an individual or group plan. It commonly involves rehabilitative care and also includes occasional nursing care. Such care must be ordered by the attending physician and may only be performed by licensed or skilled medical personnel (1112)
Which of the following beneficiary designations states that the policyowner may not change the designation without the knowledge and consent of the beneficiary? APer stirpes beneficiary BRevocable beneficiary Irrevocable beneficiary DTertiary beneficiary
irrevocable beneficiary An irrevocable beneficiary may not be changed by the policyowner without the consent of the beneficiary. Any policy rights may not be exercised without the permission of the irrevocable beneficiary. This beneficiary may also request a copy of the policy to review the ownership rights. (1772)
The Fair Credit Reporting Act is a federal regulation enacted in 1971. Which of the following is its purpose? AIt prevents the use of information concerning an individual's character BIt provides guidelines on premium financing CIt is not applicable to the health insurance industry It establishes procedures for consumer reporting agencies
it establishes procedures for consumer reporting agencies The Fair Credit Reporting Act established rules for insurers who wish to conduct consumer reports on proposed insureds. It also established rights of consumers when their applications were declined due to information in a consumer report. (1079)
Which of the following statements is true with regard to a Universal Variable life insurance policy? AIt is a securities product BIt is an investment product CIt is a fixed premium policy It is a securities and investment product
it is a securities and investment product Universal variable life insurance is a type of permanent life insurance product since it has a cash savings value (i.e., cash value). The cash value is invested in the market, thus the reason it is also considered a securities product. Producers marketing this plan must secure a life insurance license and a securities license (i.e., FINRA). UVL is also called Variable Universal Life (VUL). (4046)
Traditional whole life policies include each of the following, EXCEPT: AStraight life Limited payment life CSingle premium life Joint life
joint life A joint life policy covers two or more individuals and pays and ends when the first covered insured dies. It is not considered to be a "traditional" form of life insurance. (4004)
Each of the following is a traditional whole life insurance plan, EXCEPT: AStraight life BSingle premium life Limited payment life Joint life
joint life A joint life policy is not generally associated with traditional forms of whole life insurance since it covers more than one person. Traditional forms of life insurance usually provide coverage for an individual. (4001
This type of insurance contract insures two or more persons under a single contract and pays a death benefit upon the death of any insured party. ASingle premium whole life BSurvivorship Life CCredit Life Joint Life
joint life Joint Life is commonly called First-To-Die and covers multiple persons under one contract. A death benefit is payable when any one of the insured parties under this contract die. In many cases, this type of contract is used by a husband and wife. Upon death, the death benefit is often payable to the surviving insured, although this is not required to occur. (1840)
Which of the following is the primary advantage of the automatic premium loan? AExtends the policy grace period BAutomatically transfers funds from the policyowner's bank to the insurer Keeps the policy in force when premiums are due and have not been paid Provides a low interest loan in the event of an emergency
keeps the policy in force when premiums are due and have not been paid This provision is not automatically included in a life insurance contract. It is only available to owners of whole life policies since it functions only if there is cash value present in the policy. If the applicant chooses to purchase a permanent form of insurance, the producing agent may explain how this provision operates and offer to include it in the contract. Generally, it must be selected by the applicant. Once included, in the future when cash value begins to accumulate, this provision will protect the policyowner in the event of an unintentional lapse where a premium payment is simply overlooked AND as long as there is sufficient cash value present to pay the premium. (4154)
An underwriter reviews applications and assesses risk. Each of the following may be a source of underwriting information, EXCEPT: AMedical Information Bureau report BAttending physician's statement Ledger statements DBlood test results
ledger statements Underwriters use several sources of information to assess risk including the application, medical reports, attending physician statements, MIB reports, consumer reports, lab tests and the producer report. (1855)
Which element of an insurance contract requires that the proposed insured be competent and possess the capacity to enter into a contract? ACompetent intent BConsideration Legal capacity DLegal purpose
legal capacity Parties entering into a contract must possess legal capacity. In other words, they must be legally competent to enter into a contract. Most individuals are legally competent except for minors, those under the influence, and those who are mentally incompetent or insane. (1901)
An insurance producer who does not comply with state Continuing Education requirements will be subject to which of the following? ALife imprisonment License suspension until compliant CA fine of not less than $5,000 DImprisonment for not more than sixty months
license suspension until compliant Whenever an individual does not satisfy Continuing Education requirements, his or her license will be suspended until compliance. Rarely are such individuals subject to a fine or imprisonment. (1001)
All are limited policies, EXCEPT: ACancer only insurance BPrescription drugs Vision Major medical
major medical Limited benefits only provide coverage for a limited benefit - cancer, drugs or vision. Major medical covers a wide variety of different and non-exclusive benefits. (1176)
Which of the following is not a minimum standard requirement for Medigap insurance? Medigap plans must be guaranteed renewable for life Medigap plans must have a 20-day free-look CMedigap plans must cover pre-existing conditions after six months DMedigap plans must have annual automatic adjustments to reflect changes in Medicare deductibles and copayments
medigap plans must have a 20 day free look Medicare Supplement or Medigap insurance must include at least a thirty-day free-look period. These policies must also include a "guaranteed renewable for life" provision. (1081)
An illegal comparison of insurance policies made by a producer which persuades an insured to lapse, surrender or cancel another policy currently in force is known as: AReplacement BSound business practice Misrepresentation DRebating
misrepresentation The unfair comparison of policies by a producer to induce a policy lapse is known as twisting. Twisting is a form of misrepresentation. (1054)
Which of the following types of insurance companies is incorporated without capital stock or shares? AStock insurer Mutual insurer CDomestic insurer DForeign insurer
mutual insurer A mutual company is one that is owned by its policyholders. It is incorporated without capital stock. In addition, surplus earned by a mutual insurer may be shared with policyholders in the form of a dividend. (1970)
Whole life policies include various options available to the owner. Which of the following policy options protects an insured against the lapse of a policy? ASettlement options Non-forfeiture options CDividend options DOptional policy provisions
non forfeiture options As long as cash value is present, a whole life policy cannot lapse even if the premium is not paid by the end of the grace period. (1685)
What type of renewability provision is present in an accident and health policy which does not permit a premium increase as long as the insured makes timely payment of premiums? Non-cancelable Guaranteed renewable CCancelable DConditionally renewable
non-cancelable A policy that is non-cancelable is one that may not be cancelled as long as the premium is paid on a timely basis. In addition, no policy language or benefits can be altered nor does the premium increase. (1428)
All health policies include a renewability provision. Which of the following provides an insured with the most advantageous provision? Noncancelable Guaranteed renewable CCancelable DConditionally renewable
noncancelable The most advantageous accident and health renewability provision is the noncancellable type. This provision states that the premium never changes, benefits never change and the policy is never cancelled as long as premiums are paid in a timely fashion (4180)`
Which of the following would be best served by a buy-sell agreement funded with life insurance? AA municipality BA retired employee seeking part-time work CA homogenous group One of three corporate owners who desires future control of the business
one of three corporate owners who desires future control of the business A buy-sell plan is an agreement between owners or partners of a business who promise to buy out the deceased partner's share of the business. Funds to do this are provided by life insurance covering the owners/partners. (1790)
Which of the following is a dividend option? ASurrender for cash BExtended term insurance One year term insurance DFixed amount
one year term insurance The one year term insurance option allows the policyowner to buy temporary life insurance protection for a year by funding coverage with the dividend payable. (1703)
Each of the following is necessary for an insurance license to be renewed, EXCEPT: APayment of license renewal fee BCompletion of continuing education credits Passing a State examination Completing a renewal application
passing a state examination Passing a State examination is a pre-licensing requirement for an individual who wishes to secure a insurance license. It is not a requirement in order to renew such a license. (1019)
A life insurance policy was issued to Bob four years ago. The insurer then learns of material misrepresentations when Bob dies. How will the insurer respond when the claim is filed by the beneficiary? ADeny the claim Pay the claim CDeny the claim and refund the premium DPay the claim less total premiums paid
pay the claim The incontestable clause states that the insurer may not void a contract, following the passage of a specified period, for any material misrepresentation on the part of the policyowner/insured as recorded in the application. The specified period referred to is generally two years. If the insurer is going to contest any representations made by the policyowner (i.e., applicant), it must do so within the first two years that the policy is in force. If the insurer finds, for example, that the applicant lied about his health, it can cancel the policy and return any premiums paid. Therefore, this provision allows an insurer to deny a claim or void a policy if the insured conceals material information or lies about health history on an application and the insurer discovers the material misrepresentation during the first two years. (4012)
An outline of coverage must be provided to an applicant no later than the time of: APolicy application BPolicy submission Policy delivery DThe conclusion of the 10 day free look
policy delivery The outline is generally provided at time of policy application, but is required to be provided to the applicant no later than the time the policy is delivered to the owner. (1454)
Why are pre-existing conditions so carefully scrutinized during a replacement sale? They are important in determining what type of policy to sell the client Pre-existing conditions could prevent the new replacement policy from being issued or approved by the insurer CInsurers only want to sell replacement policies to preferred risks DInsurers can only sell replacement policies to preferred risks
pre-existing conditions could prevent the new replacement policy from being issued or approved by the insurer If a client has pre-existing conditions, they may be prevented from purchasing a new contract because of these conditions. One should never cancel existing coverage until the replacement policy has been approved and issued by the insurer. The failure to follow these instructions may result in having no insurance coverage at all. (1471)
AD&D policies provide a benefit for the severance of a limb. In addition, such policies may also cover the loss of sight, speech and hearing. The loss of sight is an example of which of the following? Partial disability BResidual disability Presumptive disability DTotal disability
presumptive disability There are several types of presumptive disability benefits including loss of sight, speech and hearing. In addition, loss of use (i.e., paralysis) of limbs due to an accident is also included. (1311)
When an AD&D rider is added to a disability income policy, the policyowner must name a beneficiary. If a contingent beneficiary is listed, this individual: AReceives benefits contingent on surviving the insured BShares equally with the deceased primary beneficiary's estate Receives the proceeds if the primary beneficiary has predeceased the insured DIs the same as a primary beneficiary
receives the proceeds if the primary beneficiary has predeceased the insured The secondary beneficiary will receive a death benefit when the primary beneficiary predeceases the insured. The death proceeds are payable to the recipient income tax free. (1413)
John owns a whole life policy that pays a yearly dividend. If John decides to utilize the dividend to decrease his out-of-pocket funding, he has selected which of the following? Reduce the premium BReduced paid-up insurance CPaid-up additions DAccumulate at interest
reduce the premium A policyowner has five dividend options to choose from including using the dividend to reduce the annual premium. Other options include receiving the dividend in cash, leaving it with the insurer to accumulate, using it to purchase paid-up additional amounts of permanent insurance or utilizing it to buy one-year term insurance. (1704)
A life insurance dividend may be paid on a participating policy. Which of the following dividend options can be used when the policyowner is interested in minimizing his outlay of funds? AAccumulate at interest Reduce the premium CPaid-up additions DReduced paid-up insurance
reduce the premium Most whole life policies include five dividend options. If cash flow is the owner's main concern, the "reduce the premium" option is used since a lower amount out-of-pocket will be used to pay the annual premium. (1691)
Which of the following is not a dividend option? Accumulate at interest BReduce the premium Reduced paid-up insurance DCash
reduced paid up insurance The reduced paid-up insurance option is a insurance non-forfeiture option that is available when a policyowner voluntarily surrenders a cash value insurance policy. (1698)
A whole or straight life policy with a cash savings feature includes non-forfeiture options. Which of the following options will provide the policyowner with a smaller face amount of insurance for life? ALump sum Reduced paid-up insurance CPaid-up additions DExtended term insurance
reduced paid up insurance The reduced paid-up insurance option, if exercised, provides the insured with a reduced amount of life insurance compared to the whole life policy surrendered. (1681)
The reinstatement clause is a Required Uniform A&H provision. Each of the following is true regarding the reinstatement provision, EXCEPT: AIt must occur within three years of the due date of the defaulted premium Reinstatement does not require proof of insurability CAny unpaid premiums plus interest must be paid prior to reinstatement Statements on a reinstatement application are contestable for another two years
reinstatement does not require proof of insurability A primary condition for reinstatement is that the insured must demonstrate insurability. In addition, all owed premiums must be paid. Statements on the reinstatement provision are contestable for another two years. (1380)
An agent intentionally lists on the application that a sale is not intended to replace an existing contract. Later on, it is determined that the policy did in fact replace an existing contract. Which of the following best describes the action taken by the producer? Replacement BDefamation CLarceny DRebating
replacement It would be considered a replacement and the action of the agent would violate state insurance regulation. (1468)
Tristar Computers is a partnership comprised of John, Bob, and Tim. They hold an equal financial interest in the partnership. After deciding to enter into a buy-sell agreement, their agent suggests they utilize a cross-purchase plan and fund it with life insurance. If this plan is utilized, how many life insurance policies will be purchased? Three BFour Six DEight
six A cross-purchase plan specifies that the agreement will exist between the partners themselves and not between the partnership and the partners as in the entity plan. Therefore, a cross purchase plan is a type of buy sell agreement supported by life insurance purchased by each partner on the lives of each of the other partners. (4143)
Which of the following life insurance policies generally covers two lives only? AWhole life Survivorship life CVariable life Joint and survivor life
survivorship life A joint life policy and a survivorship life plan are designed to cover two lives. Joint life plans, however, may cover more than two lives, whereas, survivorship plans cover only two (generally spouses). (1831)
If an annuity contract owner dies during the pay-in phase and prior to the pay-out phase, the beneficiary will receive the greater of the accumulated value of the annuity or the amount of contributions. Any amount received in excess of premiums paid is: ANon-taxable BTaxable CTaxable in the year following receipt Taxable as ordinary income
taxable as ordinary income Any amount received in excess of the total premiums paid is considered to be "earnings" and is therefore taxable as ordinary income. (4134)
If a statement of continued good health must be submitted to an insurer, it must be completed by which of the following? AMIB The applicant CConsumer reporting agency DThe beneficiary
the applicant The applicant for insurance is also, generally, the proposed insured as well. If a statement of good health is required of the applicant/proposed insured, it is he or she that must complete it. (1952)
An applicant has been denied insurance coverage because of information contained in a consumer report. According to the Fair Credit Reporting Act (FCRA), all of the following statements are true with regard to this scenario, EXCEPT: AThe applicant has the right to obtain the substance of the information in the consumer report from the reporting agency BThe reporting agency may not disclose old negative information that predates the report by more than seven years CBankruptcies may be reported for up to a ten year period DThe applicant has the right to secure the information in the report directly from the insurance company
the applicant has the right to secure the information in the report directly from the insurance company An individual must be told if information in his file has been used against him. Anyone who uses a credit report or another type of consumer report to deny an application for credit, insurance or employment, or to take other adverse action, must inform the subject of the report. They must also provide one with the name, address and phone number of the credit agency that provided the information. The insurer does not provide the information in the report to the applicant. The credit reporting agency provides this information. (4042)
Three business partners decide to purchase a disability buyout policy. Each partner is married with dependent children. If one of them becomes disabled, benefits will be paid by the policy to which of the following? AThe partner's dependents The partner's spouse The business firm DCreditors of the business
the business firm Buy-sell or buy-out plans funded by insurance are designed to pay benefits to the firm. Since the business owns the policy, it may designate to whom benefits are payable. (1357)
Who will be paid death proceeds from a life insurance policy if the primary beneficiary predeceases the insured? The contingent beneficiary BThe primary beneficiary's estate CThe tertiary beneficiary DThe irrevocable beneficiary
the contingent beneficiary If the primary beneficiary designated in a life insurance policy predeceases the insured, the proceeds of the policy are paid to the contingent or secondary beneficiary. (1773)
Each of the following are important life or health insurance underwriting factors, EXCEPT: AConsumer report BMedical history CThe agent's report The initial premium
the initial premium The premium is not a factor in underwriting. It is a factor, however, with regard to coverage being effective. The payment of the premium is part of the policyowner's consideration. (1872)
Which of the following is not owed a fiduciary duty by an insurance producer? The Insurance Commissioner BAn insurance client CInsurance agency personnel DAn insurer
the insurance Commissioner A producer possesses a fiduciary responsibility to the insurer with which he or she places business, the staff with which he or she interacts and the clients that he or she represents. (1036)
Under a hospital expense or reimbursement plan, covered benefits are paid to which of the following? The insured BThe beneficiary The policyowner DThe medical examiner
the insured Hospital expense plans generally pay benefits to an insured. Such plans usually pay benefits in addition to other insurance owned by the insured. (1250)
In order for the waiver of premium benefit rider to be activated, which of the following must occur? AThe insured must be partially disabled The insured must be under the care of a doctor The insured must die prematurely DThe insured must file a claim form with the insurer
the insured must be under the care of a doctor In order to qualify for coverage under the rider the policyowner / insured must be "totally disabled and under the care of a physician." This means that the insurer will not activate the rider unless it receives proof from a doctor that the policyholder / insured is totally disabled. Therefore, if this rider is purchased and added to the life insurance policy, it will provide a benefit if the policyowner / insured suffers a total disability that lasts for six months or more. (4030)
The waiver of premium rider, when added to a life insurance policy, would provide coverage in which of the following circumstances? AThe insured breaks his leg which permits him to work part-time The insured suffers a total disability lasting eight months CThe insured is unemployed for six consecutive months DThe insured suffers a partial disability lasting twelve months
the insured suffers a total disability lasting eight months The waiver of premium rider provides a form of disability coverage. It states that if the insured is disabled for six straight months, the insurer will waive future premiums in subsequent months until the insured is able to work again. (1713)
Premiums for policies covering multiple insureds, such as a survivorship life plan, are based upon which of the following? AThe oldest insured BThe youngest insured The joint probabilities of both proposed insureds DThe bilateral enhancement of both proposed insureds
the joint probabilities of both proposed insureds Underwriting any policy covering more than one individual (i.e., multiple lives) will consider both proposed insureds when determining eligibility and the premium rates to be charged for coverage. (4036)
Joan is covered by a disability policy in her occupation as an inside salesperson. One of her hobbies is sky diving. She later leaves her job and becomes a paid instructor at a sky diving school. How will this affect her disability policy? AThe monthly benefit will be increased BIt will be cancelled CThe policy premium will be increased The monthly benefit will be reduced
the monthly benefit will be reduced When a person covered by an individual disability income policy changes his or her occupation to one that is more hazardous, the insurer, once notified, will reduce the policy's monthly benefit amount. The premium remains constant. (1408)
Illustrations may appear in an insurance policy which allow a policyowner to assume what they may imply. If the policy jacket or face page includes a picture of a male, female and three children, it is reasonable for the owner to assume which of the following? AThe policy covers both mother and father BThe policy covers the father only CThe policy covers the mother only The policy covers the entire family
the policy covers the entire family Illustrations may appear in advertisements for insurance products. They must conform to specific regulations and may not be misleading to the consumer at large. If advertisements are determined to be misleading, an insurer may be bound by what the average consumer believes the ads imply. (1939)
Each of the following are true regarding the misstatement of age provision, EXCEPT: AThis provision prohibits policy cancellation due to an error in age The policy may be void if the insurer discovers the misstatement during the first two years of the policy If the age is misstated, the amount payable under the policy will be adjusted to reflect the proper amount for the correct age DIf the sex of the insured is misstated, the benefit will be adjusted
the policy may be void it the insurer discovers the misstatement during the first two years of the policy The time limit on certain defenses provision states that the insurer may void the contract if it discovers that the policyowner/ insured has engaged any material misrepresentations. (1402)
Which of the following best describes the tax considerations of an individual whole life insurance policy? AThe premiums are not tax-deductible and the proceeds are taxable to the recipient BThe premiums are tax-deductible and the proceeds are income tax free The premiums are not tax-deductible and the proceeds are paid income tax free to the beneficiary DThe premiums are tax-deductible and the proceeds are taxable to the recipient
the premiums are not tax deductible and the proceeds are paid income tax free to the beneficiary Premiums paid for an individual life insurance policy are considered an individual expense and are not tax-deductible. The death benefit is paid to a designated beneficiary income tax free. (1540)
Which of the following is the person or entity primarily responsible for determining the suitability of a long-term care product for a prospective purchaser ? AThe prospective policyowner The insurer The producer or agent DThe Department of Aging
the producer or agent Since most buyer's of long-term care insurance are senior citizens, it is the responsibility of the person making the sale to determine whether the product is suitable for the purchaser. This is the responsibility of the insurance agent or producer. (1108)
Which of the following best describes how an insurance company receives an application for life insurance? The producer submits it directly to the insurer BThe applicant submits it directly to the insurer CThe beneficiary submits it directly to the insurer DThe proposed insured submits it directly to the insurer
the producer submits it directly to the insurer Producers possess express authority which means that they may complete insurance applications, collect premiums and submit these items to the underwriting department of the insurance company. (1946)
Which of the following is not eligible for a Keogh Plan? AA self-employed person with no employees BA barber operating his own shop CA sole proprietor with no employees The vice president of a corporation
the vice president of a corporation A Keogh Plan is a "non-corporate" retirement savings vehicle. It is designed for the self-employed person or sole proprietor, an individual who operates his or her business and is not incorporated. A Keogh Plan provides a combination of tax deferral and a tax deduction which reduces the participant's annual tax liability. (1520)
The legal action provision states that any suit brought against the insurer by the policy owner must occur within how many years from the date the proof of loss was furnished? AOne year Two years Three years DFive years
three years This provision stipulates two important legal limitations. One of these states that no legal action can be brought against an insurer (by the insured) until 60 days after written proof of loss has been furnished to the insurer. The second part of this provision states that any suit brought against the insurer by the policy owner must occur within 3 years from the date the proof of loss was furnished. (2192)
What policy provision found in an accident and health policy allows an insurer to void the contract during the initial two years if it finds that the insured engaged in material misrepresentation on the application? AReinstatement provision Time limit on certain defenses provision Misrepresentation provision DOwner's rights provision
time limit on certain defenses provision This provision is the equivalent of the life insurance contract's incontestable clause. It provides the insurer with two years to contest statements made by the applicant as recorded on the application. In other words, the insurer has two years, in the absence of fraud, to determine if the applicant made any material misrepresentation which could void the contract. (1393)
The Notice Regarding Replacement form must be provided to a client no later than: Time of application BTime of delivery CTime of underwriting DTime of renewal
time of application In addition, the agent must indicate on the new application that a policy is being replaced. (1467)
Most forms of major medical policies include a deductible of some sort. What is the primary purpose of a policy deductible? To eliminate smaller claims To increase the total premium CTo broaden policy benefits DTo reduce policy limitations
to eliminate smaller claims The amount of the policy deductible selected will influence the premium charged for coverage. The inclusion of a deductible in any policy helps to eliminate smaller claims. (1278)
Disability income policies may be referred to as contracts of indemnity. Insurers limit the monthly benefit amount one can purchase for which of the following reasons? To prevent malingering on the part of an insured BThe insurer cannot afford to reduce its reserves CDue to state regulations DSo that it may limit adverse reactions
to prevent malingering on the part of an insured If individuals were allowed to purchase a monthly benefit equal to or greater than their monthly income, there would be no incentive to return to work. This would increase malingering. (1303)
Which of the following is the reason why a Commissioner, Superintendent or Director of insurance approves policy forms ? ATo ensure that policies include applicable exclusions BTo enable insurers to comply with file and use requirements To protect the public from unfair provisions To regulate an insurer for solvency
to protect the public from unfair provisions The Commissioner or Superintendent of Insurance is responsible for approving policy forms that will be used by insurance companies as well as the premium rates they will charge. All State require that insurers approve all policy forms in order to protect the insurance buying public from possible unfair or inadequate provisions. (2132)
Which of the following is the reason why a Commissioner, Superintendent or Director of insurance approves policy forms ? ATo ensure that policies include applicable exclusions BTo enable insurers to comply with file and use requirements To protect the public from unfair provisions To regulate an insurer for solvency
to protect the public from unfair provisions The Commissioner or Superintendent of Insurance is responsible for approving policy forms that will be used by insurance companies as well as the premium rates they will charge. All State require that insurers approve all policy forms in order to protect the insurance buying public from possible unfair or inadequate provisions. (2142)
In most cases, medical plan premiums are not deductible to an employee, but employer paid premiums are deductible to the employer. True or False? True BFalse CNot enough information to answer question DNot enough information to answer question
true In most cases, premiums paid by an employee are not deductible, but premiums paid on behalf of an employee by the employer are deductible as a normal business expense to the employer. The exception would be if an employees out of pocket medical expenses and premiums exceed 10 % of their adjusted gross income, amounts in excess of the 10 % are deductible. (1236)
Which of the following unfair trade practices is a form of misrepresentation? ALarceny BRebating Twisting DEmbezzlement
twisting Twisting is a form of misrepresentation. Both are illegal insurance marketing practices which subject the offender to license suspension, monetary fine and possible imprisonment. (1044)
An individual has applied for health insurance and given the producer the initial premium. The producer provides the applicant with a receipt which specifies that the individual is covered for at least 60 days from the date of application. Which type of receipt was issued? AInsurability receipt BApproval receipt Tentative Unconditional
unconditional An unconditional receipt is also called a binding receipt. Coverage is effective as of the date on the receipt for a specified period of time (or until the insurer declines the application). (1431)
Nonforfeiture options provide a policyowner with each of the following choices, EXCEPT: Surrendering the policy for the cash value BUsing the cash value to purchase reduced paid-up insurance CUsing the cash value to buy extended term insurance Using the cash value to fund the automatic premium loan
using the cash value to fund the automatic premium loan Also known as non-forfeiture values or non-forfeiture benefits, these options are available to the whole life policyowner. These are the options available when the owner of the whole life insurance wishes to surrender the policy or return it to the insurer. The non-forfeiture provision is only found in cash value policies and provides the policyowner who chooses to terminate the contract the "option" of utilizing the surrender value in any of three ways. When a policy is surrendered voluntarily by the policyowner, the non-forfeiture "values" available prevent the loss of cash values in the life insurance policy. These options may go into effect automatically or may be selected by the policyowner. (4194)
Life insurance immediately creates an estate upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit? AUniversal life Variable life CFixed annuity DModified endowment contract
variable life The variable nature of a variable whole life insurance is its death benefit. However, if investment performance is poor, the death benefit will not go lower than the policy's guaranteed minimum. (1848)
Which of the following policies is characterized by a flexible premium and death benefit and allows the policyowner control of the investment aspect of the plan? AVariable life BUniversal life Variable universal life Adjustable life
variable universal life Any policy whose title includes the term "Universal" indicates that the policy has a flexible or adjustable premium. The variable nature of the product indicates that the cash savings value is invested in the stock market (e.g., mutual funds) which permits for a contract owner to decide where the equity (i.e., cash value) is to be invested. (4041)
Which of the following life insurance policies permits a policyholder to direct where the cash value will be invested? ATen-pay life Universal life Option B CModified life Variable universal life
variable universal life Any variable insurance product (e.g., variable life, variable universal life, variable annuity, etc.) allows a policyowner to decide in what area of the stock market they wish to invest the cash value. (4044)
Which benefit included in an accident and health insurance policy makes sure that a policy will not lapse if the insured is totally disabled? Waiver of premium BEntire contract CCost of living rider DDependent rider
waiver of premium The waiver of premium benefit is automatically included in a disability income policy. It provides for the insurer "waiving" premiums if the policyowner / insured becomes totally disabled. This means that the insurer will keep the coverage in place which prevents the contract from lapsing. (2176)
An individual with a history of illegal or dishonest behavior is seeking to secure an insurance license. This may be accomplished as long as he or she receives which of the following? Written permission from the Commissioner or Superintendent of Insurance BOral permission from the Commissioner or Superintendent of Insurance CPermission from the Department of Labor DReferences from at least three citizens in good standing
written permission from the Commissioner or Superintendent of Insurance Any individual that has a history of criminal activity may not secure an insurance license unless he or she receives written permission from an insurance regulatory official, such as the Commissioner or Superintendent of Insurance. (1010)
All of the following life insurance policies include a policy loan provision, EXCEPT: Yearly renewable term BWhole life Limited payment life DModified whole life
yearly renewable term A yearly or annual renewable term policy does not include a policy loan provision since there is no cash value in such a plan. (1797)
