Life and Health Insurance Review

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#92. What is the shortest possible elimination period for group short-term disability benefits provided by an employer? a) 0 days b) 30 days c) 60 days d) 90 days

(a) 0 Days

#42. A Return of Premium term life policy is written as what type of term coverage? a) Increasing b) Decreasing c) Renewable d) Level

(a) Increasing

#83. All of the following are examples of risk retention EXCEPT a) Premiums. b) Deductibles. c) Copayments. d) Self-insurance.

(a) Premiums

#8. How long does a temporary producer's license last for the surviving spouse of a deceased producer? a) 150 days b) 180 days c) 1 year d) 90 days

(b) 180 days

#33. An insured has a $1,000 HRA account through his employer. He incurred $750 in medical expenses the first year of the plan. How much, if anything, will the insured be able to roll over toward the next year's expenses? a) $0 b) $250 c) $750 d) $1,000

(b) 250

#16. If an insurer terminates a producer's appointment, the Commissioner must be notified within how many days? a) 10 b) 30 c) 60 d) 90

(b) 30

#47. What is the civil penalty for the first violation of the Pennsylvania Insurance Fraud Prevention Act? a) $1,000 b) $5,000 c) $10,000 d) $15,000

(b) 5,000

#114. Which document is used to assess risk associated with an applicant's lifestyle and character? a) Applicant Lifestyle Assessment b) Investigative Consumer Report c) Character Assessment d) Non-medical Risk Assessment

(b) Investigative consumer report

All of the following are true of the survivorship life policy EXCEPT a) It can insure more than 2 lives b) The premium is based on the age of each insured c) The death benefit is not paid until the last death d) The premium would be lower than in a joint life policy

(b) The premium is based on the age of each insured

#125. Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? a) Representation b) Warranty c) Concealment d) Indemnity

(b) Warranty

#90. In forming an insurance contract, when does acceptance usually occur? a) When an insured submits an application b) When an insurer's underwriter approves coverage c) When an insurer delivers the policy d) When an insurer receives an application

(b) When an insurer's underwriter approves coverage

All of the following are changes to health insurance plans introduced by the PPACA EXCEPT a) coverage for pre-existing conditions b) Requirement for preventive care without deductibles or copays c) Full-cost coverage for all medical expenses d) Limiting age for dependent children

#82. Shortly after a replacement transaction on a Medicare supplement policy, the insured decided to cancel the policy, but is unsure whether the free-look provision applies. The insured could find that information in the a) Buyer's Guide. b) Certificate of Coverage. c) Notice Regarding Replacement. d) Policy application.

#78. Which of the following must be present in all Medicare supplement plans? a) Outpatient drugs b) Plan C coinsurance c) Plan A d) Foreign travel provisions

#15. In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT a) The premium. b) The amount of insurance. c) The type of investment. d) The length of coverage.

#13. Which provision states that the insurance company must pay Medical Expense claims immediately? a) Legal Actions b) Relation of Earnings to Insurance c) Time of Payment of Claims d) Payment of Claims

#37. Which of the following is NOT a cost-saving service in a medical plan? a) Second surgical opinions b) Risk sharing c) Denial of coverage d) Preventive care

#128. In order to collect Social Security disability benefits, the claimant must be able to demonstrate that the disability will last at least a) 24 months. b) Until age 65. c) For life. d) 12 months.

(d) 12 months

#34. How long must insurers maintain the evidence from the agent that a disclosure statement about a life insurance policy was delivered to the applicant? a) 3 months b) 6 months c) 1 year d) 3 years

(d) 3 Years

#23. Within how many days must a producer respond to an inquiry from the Commissioner? a) 3 days b) 10 days c) 15 days d) 30 days

(d) 30 days

In health insurance, what is coinsurance? a) A portion of the deductible the insured must pay for treatment b) The amount an insured pays for treatment c) The amount the insurance company pays for the insured's treatment d) A percentage of the cost of service that the insured and insurer share

(d) A percentage of the cost of service that the insured and insurer share

#100. In a group health policy, a probationary period is intended for people who a) Have a pre-existing condition at the time they join the group. b) Have additional coverage through a spouse. c) Want lower premiums. d) Join the group after the effective date.

(d) Join the group after the effective date

Cash value guarantees in a whole life policy are called a) Living benefits b) cash loans c) Dividends d) Non forfeiture values

(d) Non forfeiture values

The frequency and the amount of the premium payment are known as what? a) Plan mode b) Premium mode c) net premium d) Level premium

(b) Premium mode

Which of the following must be listed by producers during replacement? a) Policies sold during the past 5 years b) Policies still in force and policies sold during the past 5 years c) Policies that cannot be replaced d) Policies still in force

Policies still in force and policies sold during the past 5 years

Under the mandatory uniform provision Proof of Loss, the claimant must submit proof of loss within what time period after the loss? a) 90 days b) two years c) 30 days d) 60 days

(a) 90 days

#57. The death protection component of Universal Life Insurance is always a) Whole Life b) Adjustable Life c) Increasing Term d) Annually Renewable Term

(d) Annually renewable term

Which of the following are members of and financially support the medical information bureau? a) Guaranty Associations b) Insurance companies c) National Association of Insurance commissioners d) Licensed Insurance Agents

c) National Association of Insurance Commissioners (NAIC)

#9. During replacement, producers must provide a list of insurance policies still in force. In addition, they must list policies sold during the past a) 6 months. b) 1 year. c) 5 years. d) 10 years.

#7. Under the 401(k) bonus or thrift plan, the employer will contribute a) All of the money to the plan. b) 30% of what the employee contributes. c) 75% of what the employee contributes. d) An undetermined percentage for each dollar contributed by the employee.

(d) An undetermined percentage for each dollar contributed by the employee

#106. All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT a) Any type of insurance policy may be used. b) The employer pays a bonus to a selected employee to fund the policy. c) It is considered a nonqualified employee benefit. d) The policy is owned by the company.

(d) The policy is owned by the company

#35. How often must the Commissioner examine rating organizations? a) Annually b) Every 2 years c) Every 3 years d) Every 5 years

(d) Every 5 years

#72. An insured who has an Accidental Death and Dismemberment policy loses her left arm in an accident. What type of benefit will she most likely receive from this policy? a) The principal amount in a lump sum b) The capital amount in monthly installments c) The principal amount in monthly installments d) The capital amount in a lump sum

(d) The capital amount in a lump sum

#130. How are employer contributions to Health Reimbursement Accounts treated in regards to taxation? a) They are taxed as a regular business expense. b) They are treated as income tax for the employer. c) They are excluded from all taxation. d) They are tax deductible.

(d) They are tax deductible

#18. Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount? a) Flexible life b) Variable life c) Adjustable life d) Universal life

(d) Universal Life

#68. To avoid violations of unfair claims settlement regulations, insurers are required to acknowledge the receipt of a claim within how many days? a) 10 days b) 15 days c) 30 days d) 45 days

(a) 10 days

#74. How long is the right to examine period for new individual annuities issued in this state? a) 10 days b) 20 days c) 45 days d) 90 days

(a) 10 days

#103. If an annuitant selects the straight life annuity settlement option, in order to receive all of the money out of the contract, it would be necessary to a) Name another annuitant. b) Live at least to his life expectancy. c) Die before his life expectancy. d) Name a beneficiary.

(b) Live at least to his life expectancy

Treatment of gum disease is known as a) Prosthodontics b) Periodontics c) Endodontics d) Orthodontics

(b) Periodontics

Who determines if a particular group of employees can be excluded from group health coverage? a) The insurer b) The employer c) The employee union d) The department of insurance

(b) the employer

#39. An individual is insured under his employer's group Disability Income policy. The insured suffered an accident while on vacation that left him unable to work for 4 months. If the disability income policy pays the benefit, which of the following would be true? a) The insured has to wait 2 more months to start receiving the benefits. b) For the business, payments are not considered tax deductible as an ordinary business expense. c) The insured can deduct his medical expense benefits from his income tax. d) Benefits that are attributable to employer contributions are fully taxable to the employee as income.

(d) Benefits that are attributable to employer contributions are fully taxable to the employee as income

#132. How are the variable annuities regulated? a) By the National Association of Securities Dealers b) By the Commissioner of Insurance c) By the Department of Insurance d) By state and federal agencies

(d) By state and federal agencies

An employee dies having 6 quarters of coverage during the previous 13-quarter period. What status of coverage does the employee have under social security? a) fully insured b) uninsured c) conditionally insured d) currently insured

(d) Currently insured

#147. An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it? a) Fixed b) Flexible premium c) Immediate d) Deferred

(d) Deferred

If an agent follows the rules and terms of his agent contract, he is exercising his a) Apparent authority b) Contractual authority c) Implied authority d) Express authority

(d) Express authority

When a whole life policy is surrendered for its notforfeiture value, what is the automatic option? a) Paid up additions b) Cash surrender value c) Reduced paid up d) Extended term

(d) Extended Term

An applicant may challenge information discovered as a result of an investigative consumer report under which of the following acts? a) Privacy protection act b) Consumer Credit Protection Act c) HIPAA d) Fair Credit Reporting Act

(d) Fair Credit Reporting Act

#96. What are the 2 types of Flexible Spending Accounts? a) Health Care Accounts and Health Reimbursement Accounts b) Medical Savings Accounts and Dependent Care Accounts c) Medical Savings Accounts and Health Reimbursement Accounts d) Health Care Accounts and Dependent Care Accounts

(d) Health Care Accounts and Dependent Care Accounts

An agent received some inaccurate information, and, as a result, he publicly misstated the financial condition of another entity 12 times over a period of 3 months. If this fact is revealed, the agent may face a fine up to a) 10,000 b) 12,000 c) 1,000 d) the agent will not be fined due to the unintentional violation

(a) 10,000

#91. An insured was involved in an accident and could not perform her current job for 3 years. If the insured could reasonably perform another job utilizing similar skills after 1 month, for how long would she be receiving benefits under an "own occupation" disability plan? a) 2 years b) 1 month c) She would not receive any benefits. d) 3 years

(a) 2 years

#73. Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained? a) 3 days b) 5 days c) 10 days d) 14 days

(a) 3 Days

An insurer must notify the consumer in writing that an investigative consumer report has been requested, within how many days of the initial request? a) 3 days b) 5 days c) 10 days d) 30 days

(a) 3 days

#118. All of the following statements describe a MEWA EXCEPT a) MEWAs can be self-insured. b) MEWAs are groups of at least 3 employers. c) MEWAs can be sponsored by insurance companies. d) MEWA employers retain full responsibility for any unpaid claims.

(b) MEWAs are groups of at least 3 employers

A self-employed mechanic operates his own shop. He is considering purchasing health insurance that would protect him financially in the event of a serious sickness or accident. He feels that he can handle any small health care expenses. What type of policy would likely meet this person's needs? a) Dread Disease b) Major medical c) Comprehensive major medical d) Basic hospital

(b) Major medical

An insured wants to cancel her health insurance policy. Which portion of the contract would explain cancellation rights? a) Renewability provision b) Exclusions c) Insuring clause d) Consideration clause

(a) Renewability provision

#97. Insurance producers that do not have company appointments are considered a/an a) Representative of the consumer. b) Managing General Agent. c) Agent. d) Producer.

(a) Representative of the consumer

All of the following are true of group life insurance EXCEPT a) The insureds each own their own contract b) Evidence of insurability is usually not required c) Premium rates are based upon average age, gender and purpose of the group d) When the insured terminates membership in the group the coverage can be converted to whole life

(a) The insureds each own their own contract

Which of the following statements is incorrect? a) The insurer does not have the right to conduct an autopsy b) The physical exam and autopsy provision gives the insurer the right to examine the insured, at its own expense c) The physical exam and autopsy provision gives the insurer the right to examine the insured as often as may be reasonably necessary while a claim is pending d) The insurer also has the right to conduct an autopsy, if not forbidden by state law

(a) The insurer does not have the right to conduct an autopsy

An individual acted as an exclusive general agent- even though she was not licensed to do so. Since this offense occurred over a period of 60 days, what is the maximum penalty she faces a) 60,000 and a second degree misdemeanor b) 600,000 and a third degree misdemeanor c) 600,000 and a second degree misdemeanor d) 60,000 and a third degree misdemeanor

60,000 and a third degree misdemeanor

#95. A producer sold an insurance policy. Subsequently, his license was suspended. In this case, how much of the commission will the producer receive? a) All b) 1/2 c) 1/4 d) None

(a) All

#134. In which Medicare supplemental policies are the core benefits found? a) All plans b) Plans A and B only c) Plan A only d) Plans A-D only

(a) All plans

#44. What document describes an insured's medical history, including diagnoses and treatments? a) Attending Physician's Statement b) Physician's Review c) Individual Medical Summary d) Comprehensive Medical History

(a) Attending Physician's statement

#93. Ray has an individual major medical policy that requires a coinsurance payment. Ray very rarely visits his physician and would prefer to pay the lowest premium possible. Which coinsurance arrangement would be best for Ray? a) 50/50 b) 75/25 c) 80/20 d) 90/10

(a) 50/50

#105. In underwriting a substandard risk, which of the following is INCORRECT? a) A discounted premium would be charged. b) The policy could be modified in the coverage or amount of coverage requested. c) The applicant could be rejected for coverage. d) Additional exclusions could be included to modify the underlying policy coverage.

(a) A discounted premium would be charged

#3. An insured misstated her age on an application for an individual health insurance policy. The insurance company found the mistake after the contestable period had expired. The insurance company will take which of the following actions regarding any claim that has been issued? a) Adjust the claim benefit to reflect the insured's true age b) Deny any claims and cancel the policy c) Deny paying a claim based on misrepresentation d) Pay the full amount of a claim because the contestable period has ended

(a) Adjust the claim benefit to reflect the insured's true age

#67. An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision? a) Common Disaster b) Accidental Death c) Survivor Life d) Second-to-Die

(a) Common Disaster

A new homebuyer wants to purchase a life insurance policy that would protect his family against losing the home, should he die before the mortgage was paid. The most inexpensive type of policy that would accomplish this need would be a) decreasing term b) Increasing term c) Flexible term d) level term

(a) Decreasing term

#85. If an insurer appoints a producer, which authority must be notified? a) Department of Insurance b) Federal Directory of Insurers c) State Insurance Regulation Board d) Commissioner

(a) Department of insurance

#94. Which of the following authorities monitors the financial strength of insurers? a) Department of Insurance b) National Association of Insurance Commissioners c) Financial Industry Regulatory Authority d) Insurance companies

(a) Department of insurance

#128. An insured has Medicare Part D coverage. He has reached his initial benefit limit and must now pay 50% of his prescription drug costs. What is the term for this gap in coverage? a) Donut hole b) Bridge c) Blackout period d) Latency period

(a) Donut hole

#72. A policy which covers medical costs related to a specific condition is called a a) Dread Disease Policy. b) Condition-Specific Policy. c) Specific Condition Policy. d) Limited Coverage Policy.

(a) Dread Disease Policy

All of the following health insurance disability benefits are income tax free EXCEPT a) Employer-paid group disability b) Employee-paid group disability c) Key-person disability benefits d) Personally-owned individual disability insurance

(a) Employer-paid group disability

#50. All of the following violations may result in an agent's imprisonment EXCEPT a) Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction. b) Embezzling funds from the insurer. c) Knowingly obtaining information about a consumer under false pretenses. d) Engaging in the business of insurance after being convicted of breach of trust.

(a) Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction

#4. Which of the following is INCORRECT concerning Medicaid? a) It is solely a federally administered program. b) It provides medical assistance to low-income people who cannot otherwise provide for themselves. c) It pays for hospital care, outpatient care, and laboratory and X-ray services. d) The federal government provides about 56 cents for every Medicaid dollar spent.

(a) It is solely a federally administered program

#120. Which of the following statements best describes the effect the Accelerated Benefit provision would have on the benefits paid to the beneficiary? a) It will decrease the benefits paid to the beneficiary. b) It will not affect the benefits paid to the beneficiary. c) It will reduce the benefits by 70%. d) It will increase the benefits paid to the beneficiary.

(a) It will decrease the benefits paid to the beneficiary

Your client wants to provide a retirement income for his elderly parents in case something happens to him. he wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this policy owner select? a) Joint and survivor b) fixed-amount installments c) Fixed-period installments d) life income

(a) Joint and survivor

#116. Which of the following best describes the difference between Pure Life and Life with Guaranteed Minimum settlement options? a) Life with Guaranteed Minimum will pay the remaining principal to the beneficiary. b) In Life with Guaranteed Minimum, payments can be made in installments. c) Pure Life guarantees to pay out all the proceeds. d) Pure Life is not a life contingency option.

(a) Life with Guaranteed Minimum will pay the remaining principle to the beneficiary

#118. When an applicant purchased a life insurance policy, the agent dated the application 4 months prior. When asked by the applicant, the agent said he was allowed to backdate policies up to 6 months if it would a) Lower the insured's premium. b) Shorten the contestability period. c) Eliminate pre-existing conditions. d) Help him meet a sales quota for that period.

(a) Lower the insured's premium

#65. Which of the following statements pertaining to Medicare Part A is correct? a) Medicare Part A is automatically provided when an individual qualifies for Social Security benefits at age 65. b) For the first 90 days of hospitalization, Medicare Part A pays 100% of all covered services, except for the initial deductible. c) Individuals with ESRD do not qualify for Part A. d) Each individual covered by Medicare Part A is allowed one 90-day benefit period per year.

(a) Medicare part A is automatically provided when an individual qualifies for Social Security benefits at age 65

#114. Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to an insured is a) Monthly. b) Within 45 days. c) Weekly. d) Biweekly.

(a) Monthly

#12. In a long-term care policy, pre-existing condition limitations a) Must appear as a separate paragraph and be clearly labeled. b) Apply to 12 months from the effective date of coverage. c) Never have specific exclusions. d) Are not permitted.

(a) Must appear as a separate paragraph and be clearly labeled

If an insured is injured while committing an illegal act and his health policy contains the illegal occupation provivision, what percentage of the claim will be paid? a) Nothing b) 50% c) 75% d) 100%

(a) Nothing

Which of the following is NOT a component of an insurance policy premium a) number of beneficiaries b) mortality cost c) Insurer expenses d) Investment Return

(a) Number of beneficiaries

Which dividend option will increase the death benefit? (a Paid-up additions (b accumulation (c extended term (d reduced paid up

(a) Paid-up additions

#109. Prior to purchasing a Medigap policy, a person must be enrolled in which of the following? a) Parts A and B of Medicare b) All four parts of Medicare c) Any private insurance policy d) Only Part A of Medicare

(a) Parts A and B of medicare

#137. When Linda suffered a broken hip, she notified her agent, in writing, within 12 days of the loss. However, her agent did not notify the insurance company until 60 days after the loss. Which of the following statements correctly explains how this claim would be handled? a) The insurer is considered to be notified since the notification to agent equals notification to the insurer. b) The insurer may delay the payment of this claim for up to 6 months. c) The insurer may settle this claim for less than it otherwise would have had the notification been provided in a timely manner. d) The insurer may deny the claim since it was not notified within the required 20-day time frame.

(a) The insurer is considered to be notified since the notification to agent equals notification to the insurer

#89. An applicant is considered to be high-risk, but not so much that the insurer wants to deny coverage. Which of the following is NOT true? a) The insurer will issue a conditional coverage. b) The insurer can increase the premium. c) The insurer can add exclusions to the policy. d) The insurer can rate-up the policy.

(a) The insurer will issue a conditional coverage

#142. The termination of marital property rights may be reversed for all of the following reasons EXCEPT a) The spouse named as beneficiary has obtained or consented to a final decree or judgment of an annulment, divorce or separation. b) The beneficiary can prove the couple were living together as husband and wife or planning to remarry. c) The spouse was named as beneficiary by class. d) The divorce or annulment decree or judgment is not recognized as valid.

(a) The spouse named as beneficiary has obtained or consented to a final decree or judgement of an annulment, divorce or separation

#6. What is the purpose of the rehabilitation benefit in disability insurance? a) To cover the expenses of retraining the insured to return to work b) To compensate the insured for the lost income c) To refund the insured's premium paid during the disability d) To help the insured recover from a disability

(a) To cover the expenses of retraining the insured to return to work

#120. All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT a) Upon conversion, the death benefit of the permanent policy will be reduced by 50%. b) Evidence of insurability is not required. c) Most term policies contain a convertibility option. d) Upon conversion, the premium for the permanent policy will be based upon attained age.

(a) Upon conversion, the death benefit of the permanent policy will be reduced by 50%

#79. Which of the following groups seeking group health insurance would represent a bad risk for underwriters? a) A group that changes insurance annually b) A group that pays a low premium c) A group that has a noncontributory plan d) A group that has a large number of members

(a) a group that changes insurance annually

#21. All of the following are advantages of an HMO or PPO for a Medicare recipient EXCEPT a) Elective cosmetic procedures are covered. b) Prescriptions might be covered, unlike Medicare. c) Health care costs can be budgeted. d) There are no claims forms required.

(a) elective cosmetic procedures are covered

#32. When is the insurability conditional receipt given? a) When the premium is paid at the time of application b) After the application has been approved and the premium has been paid c) When an insured individual needs to obtain an insurability receipt for tax purposes. d) If the application is approved before the premium is paid

(a) when the premium is paid at the time of the application

If an individual willfully violates provisions of the Fair Credit Reporting Act, what is the maximum civil penalty? a) 1,000 b) 2,500 c) 5,000 d) 10,000

(b) 2,500

#4. Once a viatical settlement contract has been completed, how long does the viatical settlement provider have to notify the insurance company that the life policy has been viaticated? a) 15 b) 20 c) 30 d) 10

(b) 20

#34. Under the Insurance Fraud Protection Act, when can a person who has been convicted of a crime involving dishonesty or a breach of trust engage in the business of insurance? a) No sooner than 7 years after the conviction b) After obtaining the consent of the Department of Insurance c) Never; a person cannot be involved in the business of insurance after a conviction d) After paying fines or serving a prison sentence

(b) After obtaining the consent of the Department of Insurance

Which of the following riders pays a beneficiary a death benefit that is double or trip the face amount if the insured's death was caused by an accident as defined in the policy? a) A covered peril rider b) An accidental death rider c) A double indemnity rider d) A guaranteed insurability rider

(b) An accidental death rider

#136. What characteristic makes whole life permanent protection? a) Living benefits b) Coverage until death or age 100 c) Guaranteed death benefit d) Guaranteed level premium

(b) Coverage until death or age 100

An adjustable life policy can assume the form of a) Only permanent insurance b) Either term insurance or permanent insurance c) neither term insurance nor permanent insurance d) Only term insurance

(b) Either term insurance or permanent insurance

A jumping juvenile policy is unique in that the death benefit automatically a) Pays out to the insured b) Increases at a predetermined age c) Decreases at a predetermined age d) Doubles a predetermined age

(b) Increases at a predetermined age

#96. Which type of a hospital policy pays a fixed amount each day that the insured is in a hospital? a) Medigap b) Indemnity c) Surgical d) Blanket

(b) Indemnity

#19. What is the purpose of a conditional receipt? a) It is given by the agent only to applicants who fully prepay all scheduled premiums in advance of policy issue. b) It is intended to provide coverage on a date earlier than the date of the issuance of the policy. c) It guarantees the applicant that a policy will be issued in the amount applied for in the application. d) It serves as proof that the agent has determined the applicant to be fully insurable for coverage by the insurance company.

(b) It is intended to provide coverage on a date earlier than the date of the issuance of the policy

Which of the following time periods is he general enrollment period of Medicare part B a) March 1 through March 31 each year b) January 1 through march 31 each year c) March 1 through may 31 each year d) January 1 through January 31 each year

(b) January 1 through March 31 each year

#145. An insurance company wants to obtain the insurance history of an applicant. Which source releases coded information to insurers regarding information included on previous insurance applications? a) Federal Bureau of Investigation b) Medical Information Bureau c) Insurer's Protection Guild d) Integrated Insurer's Support

(b) Medical information Bureau

#101. Which of the following is NOT true regarding the needs approach method of determining the value of an individual's life? a) It must be assumed that the death of the insured will occur immediately. b) Need is predicted using the number of years until the insured's retirement. c) Coverage is based on the predicted needs of that family. d) The death of an insured must be premature.

(b) Need is predicted using the number of years until the insured's retirement

#8. Which of the following is the most common time for errors and omissions to occur on the part of an insurer? a) Application process b) Policy delivery c) Policy renewal d) Underwriting

(b) Policy Delivery

Ed is covered under a health plan provided by his employer. he was told that his insurance would pay the majority of the covered expenses if he would choose to see a provider in his plan's list. If ed chose to be treated by a provider who was not on the list, his portion of the bill would be greater. Ed is covered under a a) Limited health plan b) Preferred provider plan c) Coordinated plan d) HMO group plan

(b) Preferred provider plan

#40. Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy? a) Premiums are taxable to the employee. b) Premiums are not tax deductible as a business expense. c) Premiums are tax deductible by the key employee. d) Premiums are tax deductible as a business expense.

(b) Premiums are not tax deductible as a business expense

Which of the following will be eligible for a tax-sheltered annuity? a) Dependents under the age of 21 b) Public school teachers c) Military personnel d) The elderly

(b) Public school teachers

#111. All of the following are penalties a producer may face for violating the insurance laws of this state EXCEPT a) License revocation. b) Re-examination. c) A monetary fine. d) Imprisonment.

(b) Re-examination

#126. Which nonforfeiture option provides coverage for the longest period of time? a) Accumulated at interest b) Reduced paid-up c) Extended term d) Paid-up option

(b) Reduced paid-up

#5. The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this? a) Cash option b) Reduction of premium c) Paid-up addition d) Accumulation at interest

(b) Reduction of premium

#51. Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must a) Send an actual certified copy of the entire report to the consumer. b) Respond to the consumer's complaint. c) Defend the report if the agency feels it is accurate. d) Change the report.

(b) Respond to the consumer's complaint

#76. Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles? a) Standard risk is also known as high exposure risk. b) Standard risk is representative of the majority of people. c) Standard risk pays a higher premium than a substandard risk. d) Standard risk requires extra rating.

(b) Standard risk is representative of the majority of people

#52. Which of the following groups would most likely be covered under a blanket accident policy? a) Independent contractors who work for a general contractor b) Students at a public school c) Office workers for a retail business d) Factory workers at the automobile assembly plant

(b) Students at a public school

#123. All of the following statements about equity index annuities are correct EXCEPT a) They invest on a more aggressive basis aiming for higher returns. b) The annuitant receives a fixed amount of return. c) They have a guaranteed minimum interest rate. d) The interest rate is tied to an index such as the Standard & Poor's 500.

(b) The annuitant receives a fixed amount of return

What is the cost of coverage based on for group life insurance? a) The insured's individual ages b) The average age and ratio of men to women c) The average age d) The ratio of men to women

(b) The average age and the ratio of men to women

In a group policy, all of the following can be the policy EXCEPT a) an association b) The insurance company c) A union d) The employer

(b) The insurance company

If an annuity has a guaranteed minimum interest rate, this means a) There is not interest rate b) The interest rate will never drop below the guaranteed minimum c) The interest rate will never rise above the guaranteed minimum d) The interest rate will not fluctuate

(b) The interest rate will never drop below the guaranteed minimum

#25. Which of the following is true regarding health insurance underwriting for a person with HIV? a) The person may only be declined if he/she has symptoms. b) The person may not be declined for medical coverage solely based on HIV status. c) A person may be declined for HIV but not AIDS. d) The person may be declined.

(b) The person may not be declined for medical coverage solely based on HIV status

#19. If an insured continually uses the automatic premium loan option to pay the policy premium, a) The insurer will increase the premium amount. b) The policy will terminate when the cash value is reduced to nothing. c) The face amount of the policy will be reduced by the automatic premium loan amount. d) The cash value will continue to increase.

(b) The policy will terminate when the cash value is reduced to nothing

An insured's hospital policy states that it will pay him a flat fee of 75$ per day for each day he is hospitalized. The policy pays benefits on what basis? a) Expense b) Service c) Indemnity d) reimbursement

#11. Who must pay for the cost of a medical examination required in the process of underwriting? a) Underwriters b) Department of Insurance c) Insurer d) Applicant

#41. A deferred annuity is surrendered prior to annuitization. Which of the following best describes the nonforfeiture value of the annuity? a) The surrender value will not be more than 80% of the cash value in the annuity at the time of surrender. b) The surrender value should be equal to 100% of the premium paid, minus any prior withdrawals and surrender charges. c) A deferred annuity cannot be surrendered prior to annuitization. The owner must wait until the annuitization period begins to receive any payments. d) The surrender value will be based on current interest rates.

(b) The surrender value should be equal to 100% of the premium paid, minus any prior withdrawals and surrender charges.

#113. What is a major problem with naming a trust as the beneficiary of a life insurance policy? a) The insured must have the Superintendent's permission to name a trust as the beneficiary. b) They are expensive to administer. c) The insurance company will not pay the proceeds to a nonliving beneficiary. d) It is illegal to name a trust as the beneficiary.

(b) They are expensive to administer

An agent who knowingly misrepresents material information for the purpose of inducing an insured to lapse, forfeit, change or surrender a life insurance policy or annuity has committed and illegal practice known as a) Misrepresentation b) Twisting c) Fraud d) Concealment

(b) Twisting

#112. How long will the beneficiary receive payments under the single life settlement option? a) Until the insured's age 100 b) Until the beneficiary's death c) Until the insured's death d) For a specified period of time

(b) Until the beneficiary's death

The party that sells a life insurance policy in order to effectuate a viatical settlement contract is called the a) broker b) viator c) ceding party d) seller

(b) Viator

#109. Any licensed person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to a) 3 years. b) 5 years. c) 10 years. d) 12 years.

An insured recently underwent surgery related to a specified disease. How much can her specified (dread) disease policy pay for this expense? a) 1000 b) 0 c) 3,500 d) 5000

#62. In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years? a) 1 b) 3 c) 5 d) 10

#73. If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a) 10 days b) 3 days c) 5 days d) 7 days

#141. Under the Affordable Care Act, a special enrollment period allows an individual to enroll in a qualified health plan within how many days of a qualifying event? a) 10 days b) 30 days c) 60 days d) 90 days

#138. Your client plans to retire at age 50. He would like to purchase an annuity that would provide income from the time he retires to the age when social security and other pension funds become available. What settlement option should he consider? a) Refund Life b) Variable annuity c) Annuity certain d) Fixed annuity

#49. For how long must a company maintain a complete file of all advertisements used? a) 30 days after the advertisement expires b) No more than 3 years c) At least 4 years d) 90 days after the advertisement is first used

#140. Which of the following is INCORRECT regarding a $100,000 20-year level term policy? a) If the insured dies before the policy expired, the beneficiary will receive $100,000. b) The policy will expire at the end of the 20-year period. c) At the end of 20 years, the policy's cash value will equal $100,000. d) The policy premiums will remain level for 20 years.

#74. An individual is insured under his employer's group Disability Income policy. The insured suffered an accident while on vacation that left him unable to work for 4 months. If the disability income policy pays the benefit, which of the following would be true? a) For the business, payments are not considered tax deductible as an ordinary business expense. b) The insured can deduct his medical expense benefits from his income tax. c) Benefits that are attributable to employer contributions are fully taxable to the employee as income. d) The insured has to wait 2 more months to start receiving the benefits.

#60. An insured is receiving hospice care. His insurer will pay for painkillers but not for an operation to reduce the size of a tumor. What term best fits this arrangement? a) Limited Coverage b) Claims Saving c) Cost-containment d) Selective Coverage

Regarding health insurance, all of the following are tax-deductible EXCEPT a) employer paid group long-term care b) Employer paid group accidental death and dismemberment c) employee paid group disability income d) Employer paid group health insurance

#113. If an insured worker has earned 40 quarters of coverage, the worker's status under Social Security disability is a) Correctly insured. b) Permanently insured. c) Fully insured. d) Partially insured.

An insured bought an insurance policy that requires him to pay 150$ in premiums on the 15th of each month. He then takes an extended vacation and forgets to pay the premium. Ten days later his policy is still in effect and has not lapsed. Which policy provision allowed for this? a) Automatic premium loan b) Incontestability c) Grace Period d) Waiver of premium

An insured has an individual disability income policy with a 30-day elimination period. He becomes disabled on June 1st for 15 days. When will he collect on his disability income payments? a) he will begin collect on the 15th day b) He will begin collecting on june 1st c) He won't collect anything d) He will collect 15 days of payment after 30 days

#98. Annually renewable term policies provide a level death benefit for a premium that a) Remains level. b) Fluctuates. c) Increases annually. d) Decreases annually.

#141. An insurer invests the money it receives from premiums paid by its insureds. Which of the following is TRUE regarding the interest earned on these investments? a) It is used to fund executive bonuses b) It is used to increase the death benefit. c) It is used to lower premiums. d) It is paid out as dividends.

Which of the following is true regarding pure life annuity settlement option? a) The beneficiary will receive a refund of the principle b) It guarantees income for a specified period of time c) It provides the highest monthly benefit d) it guarantees that all the proceeds will be paid out

Which of the following best describes pure life annuity? a) It is also known as refund life annuity b) It guarantees to pay out all the proceeds c) It provides the highest monthly benefits d) It continues payments to the beneficiary when the annuitant dies

What does an annuity protect the contract owner against? a) estate taxes b) The financial impact caused by premature death c) Living longer then expected d) Leaving beneficiaries without income

#64. An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do? a) Pay nothing; there was a misrepresentation on the application b) Pay the full death benefit and refund excess premium c) Pay a reduced death benefit d) Pay the full death benefit

#87. Which of the following methods to designate a beneficiary literally means "by the head?" a) Tertiary b) Contingent c) Per capita d) Per stirpes

#126. When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to a) Pay back all premiums owed plus interest. b) Receive payments for a fixed amount. c) Purchase a single premium policy for a reduced face amount. d) Purchase a term rider to attach to the policy.

#9. Insurers may change which of the following on a guaranteed renewable health insurance policy? a) Individual rates b) No changes are permitted. c) Rates by class d) Coverage

#123. When benefits are paid directly to the insured under a health insurance policy, the policy provides benefits on what type of basis? a) Limited b) Scheduled c) Reimbursement d) Service

The family term rider incorporates a) Key person whole life and dependents term b) Cost of living rider and family protection rider c) Spouse term and children's term d) Whole life and other-insured term

#36. According to the privacy of consumer financial information regulation, if a consumer decides to opt out, this means a) The consumer has chosen not to participate in insurance contracts with the insurer. b) The consumer has declined the nonforfeiture options available in the policy. c) The consumer directs the licensee not to disclose the consumer's nonpublic personal financial information to a third party. d) The consumer gives the licensee an unconditional right to share the consumer's nonpublic financial information with a third party.

(c) The consumer directs the licensee not to disclose the consumer's nonpublic personal financial information to a third party

#104. Which of the following statements about group life is correct? a) The group sponsor receives a Certificate of Insurance. b) The policy can be converted to an individual term insurance policy. c) The cost of coverage is based on the ratio of men and women in the group. d) The premiums are higher than in an individual policy because there is no medical exam.

#29. Which statement accurately describes group disability income insurance? a) There are no participation requirements for employees. b) Short-term plans provide benefits for up to 1 year. c) The extent of benefits is determined by the insured's income. d) In long-term plans, monthly benefits are limited to 75% of the insured's income.

#122. Which of the following statements is true regarding coinsurance? a) The smaller the percentage that is paid by the insured, the lower the required premium will be. b) The smaller the percentage that is paid by the insured, the more consistent the required premium will be. c) The larger the percentage that is paid by the insured, the lower the required premium will be. d) The larger the percentage that is paid by the insured, the higher the required premium will be.

#17. A licensee serving in the military is unable to fulfill her continuing education requirement. What would the licensee have to do to renew the license? a) Nothing; licenses of active duty military service personnel are automatically reinstated for a full licensing term. b) The licensee must complete the continuing education requirements and pay the lapse renewal fees. Requirements cannot be waived. c) The licensee may submit a request to the department to have requirements and fees waived. The department will then determine if the request is permissible. d) Nothing; the license is automatically reinstated for an additional 6 months following return from military service.

(c) The licensee may submit a request to the department to have requirements and fees waived. The department will then determine if the request is permissible

Which of the following is a requirement for a replacement of health policies a) replacements in health insurance are not allowed b) The old policy must be cancelled before the new policy can be issued c) The old policy must stay in force until the new policy is issued d) Policies must overlap to cover pre-existing conditions

All of the following are characteristics of group health insurance plans EXCEPT a) Employers may require the employees to contribute to the premium payments b) The benefits under a group plan are more extensive than those under individual plans c)the parties that hold a group health insurance contract are the employees and the employer d) The cost of insuring an individual is less than what would be charged for comparable benefits under an individual plan

#117. An insured stops making payments on a loan taken from his cash value policy. What will most likely happen? a) The insurer will not permit the policyowner to take out any more loans. b) The policy will be reduced to an extended term option. c) The policy will terminate when the loan amount with interest equals or exceeds the cash value. d) The insurer will increase the interest rate on the loan and charge a penalty.

#14. Which of the following would be considered an unfair claims settlement practice? a) Requesting the insured swear under oath concerning the facts of the claim b) Delaying the settlement of a claim for 30 days in order for the insured to conduct an investigation c) Advising the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered d) Requesting the insured to submit a signed proof of loss statement, after the insured has already verbally advised the insurer of the claim

(c) advising the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered

Refusing to pay claims without conducting a reasonable investigation based upon all available information is an example of a) a typical insurance practice b) a required practice c) an unfair claims practice d) a fair trade practice

#148. A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits? a) Flexible payment annuity b) Deferred interest annuity c) Immediate annuity d) Variable annuity

#53. How soon after the due date should the insurer pay the agent appointment fees? a) Immediately b) Within 10 days c) Within 30 days d) Within 60 days

Under a long-term care policy, the commission or other compensation provided for a minimum of 5 subsequent years CANNOT exceed what percentage of the renewal premium? a) 15% b) 5% c) 20% d) 10%

(d) 10%

The contingent benefit on lapse will be triggered when an insurer increases an insured's premium rates to a certain level, and the policy subsequently lapses within a) 30 days b) 31 days c) 1 year d) 120 days

(d) 120 days

#20. Under a nonscheduled plan, what portion of the balance could an insured expect to pay for basic services? a) 50% b) 80% c) 100% d) 20%

(d) 20%

A person receives his Medicare supplement policy and is not satisfied with the provisions. He can return the policy for a full premium refund if he does so withing how many days? a) 10 b) 15 c) 20 d) 30

(d) 30

#54. A long-term care policy may NOT lapse because of unpaid premiums, unless the insurer gives at least a) 60 days' notice. b) 31 days' notice. c) 10 days' notice. d) 30 days' notice.

(d) 30 days' notice

In the event of lapse, long term care insurance policies should include a provision that provides for reinstatement of coverage. this option is available within a) 6 months of termination b) 1 year of termination c) 31 days of termination d) 5 months of termination

(d) 5 months of termination

#10. Once it has been reasonably proven that a person has knowingly violated the Insurance Code regarding unfair methods of competition, the Department may impose a civil penalty of a) $1,000 for each violation. b) $2,000 for each violation. c) $3,000 for each violation. d) $5,000 for each violation.

(d) 5,000 for each violation

#52. Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under an accident and health policy must contain a) A statement from the insured's employer showing that the insured was unable to work. b) An estimate of the total amount of medical and hospital expense for the loss. c) A complete physician's statement. d) A statement that is sufficiently clear to identify the insured and the nature of the claim.

(d) A statement that is sufficiently clear to identify the insured and the nature of the claim

#18. The Omnibus Budget Reconciliation Act of 1990 requires that large group health plans must provide primary coverage for disabled individuals under a) Age 59½ who are not retired. b) Age 65 who are retired. c) Age 59½ who are retired. d) Age 65 who are not retired.

(d) Age 65 who are not retired

#111. An insurer wants to begin underwriting procedures for an applicant. What source will it consult for the majority of its underwriting information? a) Interviews b) State records c) Medical records d) Application

(d) Application

#15. Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? a) Extended term b) Reinstatement c) Reduced paid-up option d) Automatic premium loan

(d) Automatic premium loan

#105. Which of the following provisions in annuity contracts allow the owner to surrender the annuity if interest rates drop to a specified level? a) Surrender b) Nonforfeiture c) Annuitization d) Bail-out

(d) Bail-out

#87. Which of the following is TRUE about a class designation? a) Beneficiaries must be part of the insured's immediate family. b) It is not allowed. c) It determines the succession of beneficiaries. d) Beneficiaries are not identified by name.

(d) Beneficiaries are not identified by name

If a person qualifies for social security disability benefits after the 5 month elimination period, when will benefits begin? a) Benefits begin at the beginning of the 6th month and are retroactive to the beginning of the disability b) Benefits will begin after the 6th month and are retroactive to the beginning of the disability c) A lump-sum of benefits will be paid at the beginning of the 6th month which are retroactive to the beginning of the disability d) Benefits begin at the beginning of the 6th month and are not retroactive to the beginning of the disability

(d) Benefits begin at the beginning of the 6th month and are not retroactive to the beginning of the disability

#134. Circulating deceptive sales material to the public is what type of Unfair Trade Practice? a) Defamation b) Coercion c) Misrepresentation d) False advertising

(d) False Advertising

#139. When would a misrepresentation on the insurance application be considered fraud? a) Never: statements by the applicant are only representations. b) When the application is incomplete c) Any misrepresentation is considered fraud. d) If it is intentional and material

(d) If it is intentional and material

What happens to the copy of the application for health insurance once the policy is issued ? a) It is filed with the Department of Insurance b) It is discarded c) It is returned to the insured d) it becomes part of the entire contract

(d) It becomes part of the entire contract

Which of the following best describes life annuity with period certain option? a) It provides the highest monthly benefit for an individual annuitant b) The maximum guarantee period is 10 years c) The benefit payments cease with the death of the annuitant d) It guarantees benefit payments for life of the annuitant and for a specified period for the beneficiary

(d) It guarantees benefit payments for life of the annuitant and for a specified period for the beneficiary

#86. Which of the following statements is NOT correct concerning the COBRA Act of 1985? a) It covers terminated employees and/or their dependents for up to 36 months after a qualifying event. b) It applies only to employers with 20 or more employees that maintain group health insurance plans for employees. c) COBRA stands for Consolidated Omnibus Budget Reconciliation Act. d) It requires all employers, regardless of the number or age of employees, to provide extended group health coverage.

(d) It requires all employers, regardless of the number or age of employees, to provide extended group health coverage

When the owner of a participating whole life policy uses the dividend to provide more life insurance coverage, which of the following dividen options is being used? a) Reduce the premium b) Fixed amount c) Reduced paid up d) Paid-up additions

(d) Paid-up additions

#140. Underwriting is a major consideration when an insured wishes to replace her current policy for all of the following reasons EXCEPT a) Due to age or health, the policy may change dramatically. b) Pre-existing conditions that were previously covered may not be covered under the replacing policy. c) Benefits may change. d) Premiums always stay the same.

(d) Premiums always stay the same

#100. Who is responsible for paying producer appointment fees? a) The Commissioner's office b) The Department of Insurance c) The producer d) The appointing insurer

(d) The appointing insurer

#116. What happens if a non-member physician is utilized under the Point-Of-Service plan? a) The non-member physician will be paid a fee for service. b) The non-member physician will be paid a fee for service, but the member patient will be penalized per visit on his/her monthly premium. c) The member patient will have to pay all costs out-of-pocket. d) The attending physician will be paid a fee for service, but the member patient will have to pay a higher coinsurance amount.

(d) The attending physician will be paid a fee for service, but the member patient will have to pay a higher coinsurance amount

#117. An employee insured under a group health policy is injured in a car wreck while performing her duties for her employer. This results in a long hospitalization period. Which of the following is true? a) The group plan will pay. b) The group plan will pay a portion of the employee's expenses. c) The group plan will pay depending on the employee's recovery. d) The group plan will not pay because the employee was injured at work.

(d) The group plan will not pay because the employee was injured at work

#119. A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums? a) The premiums will become tax deductible until the insured's 18th birthday. b) Since it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected. c) The insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums. d) The insured's premiums will be waived until she is 21.

(d) The insured's premiums will be waived until she is 21

When an insured terminates membership in the insured group, the insured can convert to a) Whole life with proof of insurability b) Term without proof of insurability c) Term with proof of insurability d) Whole life without proof of insurability

(d) Whole life without proof of insurability

#150. When a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount a) In lesser amounts for the remaining policy term of age 100. b) Equal to the cash value surrendered from the policy. c) The same as the original policy minus the cash value. d) Equal to the original policy for as long a period of time that the cash values will purchase.

(d) equal to the original policy for as long a period of time that the cash values will purchase

#43. What do long-term care policies offer to policyholders to account for inflation? a) They do not account for inflation. b) They automatically increase premiums to account for inflation. c) They pay a dividend that increases every 7 years. d) They offer the option of purchasing coverage that raises benefit levels accordingly.

(d) they offer the option of purchasing coverage that raises benefit levels accordingly

Life and Health Insurance Review

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