PRACTICE EXAM 1

The probationary period is A. A specified period of time that a person joining a group has to wait before becoming eligible for coverage B> The number of days the insured has to determine fi he/she will accept the policy as received C> The stated amount of time when benefits may be reduced under certain conditions D> The period of days that must expire after the onset of an illness before benefits will be earned

A. A specified period of time that a person joining a group has to wait before becoming eligible for coverage A probationary period is a waiting period that new employee would normally have to satisfy before becoming eligible for benefits

If a life insurance company uses HIV testing as a part of its underwriting, when must an applicant be notified of the procedure? A. Prior to solicitation of the policy B. Prior notice is not required C. Prior to performance of the test D. Prior to ordering a physical examination

C. Prior to performance of the test Prior to testing, the insurer must disclose in writing its intent to test the applicant for the Human Immunodeficieny Virus infeciton or for a specific health condition derived from HIV. The insurer must obtain the applicant's written consent to administer the test

In group insurance, the primary purpose of the Coordination of Benefits provisions is to A. Prevent overinsurance B. Prevent lawsuits between insurance companies involved in the claim C> Ensure the payment of claims by all polciies that are in effect at the time of the claim D. Encourage hospitals to keep their charges reasonable

A. Prevent overinsurance Coordination of Benefits provision is used to prevent or minimize over-insurance. Usually, under Coordination of Benefits provisions, one insurance policy is primary and the other is secondary. The primary policy pays first. Expenses not covered by the primary, but covered under the secondary may be collected, but only after the primary has paid its limit.

To obtain a Texas PRoducer license, an applicant must do all of the following EXCEPT A. Submit fingerprints B. Complete prelicensing training C. Pass an exam D. Be 18 years of age

B. Complete prelicensing training Texas does not requires prelicensing training, but applicants for a producer license must be at least 18 years old, pass a written exam, and submit fingerprints

How many hours of continuing education can be carried over from one licensing period to the next? A. 5 B. Any excess hours C> 0 D. 2

C. 0 All CE hours must be completed during the reporting period; licenses are not allowed to carry over excess hours to the next reporting period

All of the following information must be included in the evidence of coverage for an HMO plan EXCEPT A> Examples of information to appear in the blanks B. HMO's toll-free telepone number C> The insurance agent's name and license number D. A chedule of benefits

C. The insurance agent's name and license number are not required, all the other information must be provided The insurance agent's name and license number are not reuqired, all the other information must be provided

On an Accidental Death and Dismemberment (AD&D) policy, the death benefit payable is known as the A> Face amount B. Capital sum C. policy limit D. Principal sum

D. Principal sum In Accidental Death and Dismemberment coverage, the principal sum is paid for accident death

In replacement of life insurance policies, who must sign the Notice Regarding Replacement? A. Only the applicant B. Both the applicant and the producer C. The replacing producer and the original producer D. Only the replacing producer

B. Both the applicant and the producer Notice Regarding Replacement is a document signed by the applicant and producer prior to completing a new applicaiton that provides information regarding the replacement transaction

All of the following must sign an applicaiton for health insurance EXCEPT the A. Insurer B. The proposed insured C. Applicant D. Producer

A. Insurer Health insurance application require the signatures of the proposed insured, the policyowner (if different than the insured), and the agent or producer

All of the following statements apply to temporary licenses EXCEPT A. They are valid up to 90 days B. They may be renewed C. They required 40 hours of license training D> They may be issued without a written examination

B> They may be renewed Temporary licenses may be granted up to 90 days without examination to applicant who complete a 40 hour training course before apply for the license or within 14 days after applying for the license. A temporary license cannot be renewed

What is the purpose of the impairment rider in a health insurance policy? A. To provide disability coverage B. To identify pre-existing conditions C. To exclude coverage for a specific impairment D. To cover impairments that otherwise could not be covered

C. To exclude coverage for a specific impairment The impairment rider may be attached to a contract for the purpose of eliminating coverage for a specifically defined condition

In a disability policy, the elimination (or waiting) refers to the period between A. The effective date of the polciy and the date the first premium is due. B> Coverage under a disabiltiy polciy and coverage under Social Security C> During which any specific illness or accident is excluded form coverage D. The first day of disability and the day the insured starts receiving benefits

D. The first day of disability and the day the insured starts receiving benefits The eliminaiton, or waiting, period starts at the onset of a disability claim and is the period of time the insured must wait before benefits start

What type of health insurance plan provides broad medical expense coverage without requiring an insured to meet a deductible? A. Comprehensive B.Indemnity C. Major medical D> Blanket

B> Indemnity Indemnity health insurance plans, otherwise known as first-dollar insurance, do not require insureds to satisfy a deductible before providing benefits

Which is true regarding obtaining underwriting sources? A> The insurer only needs to inform the applicant of how the information is being gathered, it is not necssary to disclose the sources B> It is illegal to obtain information from outside sources in order to determine an applicant's insurability C. The applicant must be informed of the sources contracted and how the information is being gathered D. The insurer does not need to inform the applciant of how the infomration is gathered, informing only of the source is sufficient

C. THe applicant must be informed of the sources contacted and how the information is being gathered

Each HMO enrollee must be provided A> Buyer's guide B> Nondisclosure agreement C> Certificate of authority D> Evidence of coverage

D. Evidence of coverage Texas HMOs must provide each enrollee evidence of coverage that includes information about the HMO, plan benefits and cancellation provisions

The primary beneficiary of her husband's life policy found that no settlement option was stated in the policy on the date of her husband's death. Who will select the settlement option in this case? A. The beneficiary B. The benefit must be paid in a lump sum C. The insurance company D> The court

A. The beneficiary If a settlement option is not selected by the policyowner before the insured dies, then the beneficiary can choose the option

Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid A> Until the policyowner's age 100, when the policy matures B. For 20 years or until death, whichever occurs first c> Until the polciyowner reaches age 65 D. For at least 20 years

B. For 20 years or until death, whichever occurs first Under a 20 pay life policy, all of the premiums necessary to cause the polciy to endow at the insured's age 100 are paid during the first 20 years, however if the insured dies before all of the planned premiums are paid, the beneficiary will receive the face amount as a death benefit

All of the following are excluded from coverage in an individual health insruance policy EXCEPT A. Treatment received in a government hospital B. Mental illness C. Experimental procedures D. Purely cosmetic surgery

B. Mental Illness Mental illness is covered, with some limitations

An underwirter is reviewing an applicant with an extensive medical history. Which of the following would give the underwriter a better understanding of how the applicant has been treated for various illnesses? A. policy applicaiton B. Medical exam C. Attending Physician's Statement D. MIB report

C. Attending PHysician's Statement An Attending PHysician's Statement (APS) is the best way for an underwriter to evaluate an insured's medical history. The report incldues past diagnoses, treatments, length of recovery time, and prognoses

A married couple wants to include the entire family in their whole life polciy under one rider. Which of the following riders will help them achieve that goal? A. Family term B. Other-insured term C. Inclusive term D. Children's term

A. Family term A Family Term policy is created when a Children's Term Rider and Spouse Term Rider are combined into a single rider which is attached to a whole life policy. Under the Family Term Rider, the entire family is covered under the same policy

Which of the following is NOT true regarding a deferred annuity? A. Income payments begin within 1 year from the date of purchase B. It is used to accumulate funds for retirement C. It can be purchased with a single lump sum D. The annuity grows tax deferred

A. Income payments begin within 1 year from the date of purchase Deferred annuity benefit payments begin sometime after one year after the contract was purchased. The rest of the statements are true regarding deferred annuities

An annuitant pays the annuity premium on the 14th of each month. Which of the following best describes this arrangement? A. Level B. Flexible C> Lump sum D> Single

A. Level The main ways to pay an annuities premium are: single premium, which is a single ump-sum payment, and periodic premium, in which the premium is paid in multiple installments. Periodic premiums can be paid either level. The amount is the same for each payment, or flexible - the amount varies from one payment to the next

An annuity would normally be purchased by an individual who wants A. Provide income for retirement B. Provide a death benefit to the surviving family C. Earn a higher rate of interest D. Create an estate

A. Provide income for retirement The main purpose of an annuity is to liquidate an estate and provide income for retirement. Life insurance creates an estate and provides a death benefit to the beneficiaries

When may HIV-related test results be provided to the MIB? A. Only when the test results are negative B> Only if the individual is not identified C. Under all circumstances D> When given authorization by the patient

B. Only if the individual is not identified Insurance companies must maintain strict confidentiality regarding HIV-related test results or diagnoses. Test results may not be provided to the MIB if the individual is identified

All of teh following are true of annually renewable term insurance EXCEPT A. The policy renews regardless of the insured's health B. Proof of insurability must be provided at each renewal C. The premium increases each year D. The death benefit remains level

B. Proof of insurability must be provided at each renewal ART is a form of level term insurance, in which the death benefit remains level and the polciy may be guaranteed to be renewable each year without proof of insurability, but the premium increases annually according to the insured's attained age

Disability income policies can provide coverage for a loss of income when returning to work only part-time after recovering from total disabiltiy. What is the benefit that is based on the insured's loss of earnings after recovery from a disability? A. Income replacement B> residual disability C. Recurrent disability D. Partial disability

B. Residual disability A residual disability will pay an amount ot make up the difference between what the insured would have earned before the loss

Death benefits payable to a beneficiary under a life insurance policy are generally A. Exempt from income taxation if under $10,000 B. Exempt from income taxation if over $10,000 C. Not subject to income taxation by the Federal Government D. Subject to Income taxation by the Federal Government

C. Not Subject to income taxation by the Federal Government When premiums are paid with after tax dollars, the death benefit is generally not subject to federal income taxation

The recipient of a Cease and Desist Order wants to contest the Commissioner's charges in court. Within what span of time must the request be made? A. 45 days B. 60 days C. 15 days D. 30 days

D. 30 days IF the recipient of a Cease and Desist Order wants to contest or review the charges in court, the request must be made within 30 days of the order

If an agent suspects that a fraudulent insurance act has been committed in this state, whom should the agent notify first and foremost? A. The Insurance Fraud Unit of the Texas Department of Insurance B. The defrauded insureds C. The state police department D> The agent's insurer

A. The Insurance Fraud Unit of the Texas Department of Insurance IF a person suspects that a fraudulent insurance act has been or is about to be committed in this state, the person must report the information in writing to the Insurnace Unit of the Department within 30 days

All insurers that provide life or accident and health insurance coverage in Texas must be members of what association? A. NAIC B. The Life and Health Insurance Guaranty Association C> Texas Insurers Guild D. Federal Association of Insurers

B. The Life and Health Insurance Guaranty Association The Life and Health Insurance Guaranty Association was created to protect polciyholders againt an insurance company's failture to perform its contractual obligaitons due to impairment or insolvency. All inssurers that provide life, accident and health insurance, annuities or hospital services coverage in Texas msut be members of the association

What is the differnece between a straight life policy and a 20 pay whole life policy? A. The benefit settlement option B. The face amount and cash value C> Policy maturity date D. Premium payment period

D. Premium payment period A limited-pay whole life policy, just like straight lfie, endows for the face amount if the insured lives to age 100. The premium is, however, completely paid off in 20 years

Which health insurance provision describes the insured's right to cancel coverage? A. Policy duration provision B. Insuring clause C. Cancellation provision D. Renewal provision

D. Renewal provisions Renewability provisions are included to each health insurance contract and outlines both the insurer's and insured's right to cancel or renew coverage. This is considered to be a very important provision required by HIPAA, the

Upon the submission of a death claim under a life insurance policy, when must the insurer pay the polciy benefit? A. Immediately after receiving written proof of loss B. On the next anniversary of the policy C. Within 30 days D> Within 2 months

D. Within 2 months Upon receipt of a written proof of death and the rights of the claimant to the proceeds, the insurer must pay death claims within 2 months

When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option? A. Extended term B. Paid up additions C. Cash surrender value D. Reduced paid up

A. Extended term The automatic nonforfeiture option is extended term

When a life insurance polciy was issued, the polciyowner designated a primary and a contingent beneficiary. several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. Which of the following would receive the death benefit? A. The insured's estate B. The primary beneficiary's estate C. The insured's contingent beneficiary D. The insurance company

C. The insured's contingent beneficiary Under the Uniform Simultaneous Death law, the law will assume that the beneficiary dies first in a common disaster. This provides that the proceeds will be paid to the contingent beneficairy or to the insured's estate if none is designated

What is the purpose of a benefit schedule? A. To provide the dates for the payment of benefits B. To list the insured's copayments and deductibles C. To state what and how much is covered in the plan D. To include the average charges for procedures

C. To state what and how much is covered in the plan Some medical expense insurance plans contain a benefit schedule, which very specifically states exactly what is covered in the plan and for how much

Which of the following applies to partial disability benefits? A. An insured is entitled to a principal sum benefit for the partial loss of a limb B. Payment is based on termination of employment C. Benefits are reduced once an insured is no longer under a docter's care D> Payment is limited to a certain period of time.

D. Payment is limited to a certain period of time The partial disability benefit is typically 50% of the total disability benefit, and is limited to a certain period of time.

Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive A. Nothing, the payments will cease B> Guaranteed minimum benefit C. The amount paid into the annutiy D> The remainder of the principal

A. Nothing, the payments will cease Straight or pure life annuity will pay a specific amount of income for the remainder of the annuitant's life. This payment will cease at death, regardless of the amount of principal that hasn't been paid out. There is no refund or payments to survivors

An employee quits his job on May 15 and doesn't covert his group Lfie polciy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen? A> The insurer will pay the death benefit minus one month's premium B. The insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one C> The insurer will pay the full death benefit from the group policy to the beneficiary D. The insurer will pay a reduced death benefit to the beneficiary

C. The Insurer will pay the full death benefit from the group polciy to the beneficiary The employee usually has a period of 31 days after terminating form the group in order to exercise the conversion option. During this time, the employee is stilled covered under the original group policy

Which of the following statements regarding HIV testing is NOT TRUE? A. Test results must be sent to the Department of Insurance B. Testing may be waived at the discretion of the insurer C. The insurer is responsbile for the cost of HIV testing D. Written consent form the applicant is required prior to the examination

A. Test results must be sent to the Department of Insurance The Department does not require HIV test results. Hwoever, the insurer is requried to provide applicants with written polciies and procedure concerning the internal dissemination of test results among producers and employees of the insurance company

Disability Income coverage specifies that the policy covers the insured if he is unable to perform any job for which he is qualified. In this case, total disability is defined as A. Own occupation - more restrictive than other definitions B. Own occupation - less restrictive than other definitions C. Any occupation - more restrictive than other definitions D. Any occupation - less restrictive than other defintiions

C. Any occupation - more restrictive than other definitions If total disability is defined as any occupation, it means the coverage will apply only if the insured cannot find any means of income whatsoever. This is more strict than own occupation, where a person merely has to prove that they cannot perform the job for which they were previously trained?

What is the purpose of the gatekeeper in a HMO? A. Establishing strong preventive care B> Making usre that services are properly prepaid C. Controlling costs D. Making sure that patients do not go to physicians outside of the HMO's region

C. Controlling costs Initially the member chooses a primary care physicians, or gatekeeper. If the member needs the attention of a specialist, the primary care physician must refer the member. This helps keep the member away from the higher priced specialists unless it is truly necessary

Which of the following determines the legnth of time that benefits will be received under the Fixed-Amount settlement option? A. Length of income period B. Amount of interest C. Size of each installment D. Predetermined length of time stated in the contract

C. Size of each installment The size of each installment determines the length of time that benefits are received under the Fixed Amount settlement option. It logically follows that larger installments translate into shorter benefit periods

How does a member of an HMO see a specialist? A. HMOs do not cover specialist B. The member is allowed to choose his or her own specialist C. The primary care physician refers the member D. The insurer chooses the specialist

C. The primary care physician refers the members In order for the member to get to see a specialist, the primary care physician must refer the member. If the member feels that the specialist should be treating him or her but is unable to get the referral from the primary care physician, the member might consider changing primary care physicians. In some HMOs there is a financial cost to the primary care physician for referring a patient to a more expensive specialist

Which of the following does NOT have to be included on the first page of a Medicare supplement policy? A. Continuation Provision B. The company's rights to change premiums C> Premium rates D. renewal Provision

C> Premiums rate Medicare supplement policies must include a renewal or continuation provision that is appropriately captioned and on the first page of the policy. It must include any reservation by the insurance company of the right to change premiums and any automatic renewal premium increases based on the policyholder's age (attained age policies)

According to the state nonforfeiture law for life insurance policies, insurers must offer at least one of the following nonforfeiture options EXCEPT A> Extended term B> Shortended benefit period C. Reduction of premium D. Reduced paid up

C> Reduciton of premium Reduction of premium is not a nonforfeiture option (it's a dividend option). The other answer choices are the required nonforfeiture options in life insurance policies issued in this state

What does the application of contract of adhesion mean? A. The holder of the contract has the ultimate power of promise B. The insurer may go to another for repsentation C. It makes sure that the insured does not get more than the value of the loss D. Since the insured does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured

D. Since the insrued does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured The insurer prepares the policy and submits it to the insrued on a take-it-or-leave-it-basis. Because the insured does not have input in drafting the policy but simply adheres to the terms of the policy, the policy is classified as a contract of adhesion. Any uncertain terms in the policy will be interpreted in favor the insured.

Life insurance can provide which of the following A. Protection against outliving one's assets B> Creation of a future liability C> Liquidation of one's estate D> Survivor proteciton

D. Survivor protection Life insurance provides the dollars to protect the dependents (survivors) of a deceased insured

When enrolling an applicant for HMO coverage, all of the following evidence of coverage must be provided to the applcaint EXCEPT A. Cancellation provisions B. The HMO's address C. A schedule of benefits D. The applicant's health status

D. The applicant's health status HMOs are required to provide enrollees with evidence of coverage, which includes the HMO's contact information, schedule of benefits, copayments, deductibles, cancellation, and nonrenewal provisions

In whole life insurance, when is the policy cash value scheduled to equal the face amount? A. At the insured's age 100 B. By the policy's 10th year C. When the insured paid up all policy loans D. It depends on the type of whole life purchased

A. At the insured's age 100 The cash value, created by the accumulation of premium, is scheduled to equal the face amount of the policy when the insured reaches age 1000 and is paid out to the polciyowner

A Medicare supplement policy must have a free look period of at least A. 10 days B. 15 days C. 30 days D> 45 days

C. 30 days The free look period for Medicare supplement policies must be at least 30 days

The guaranteed Insurability Rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT A. Marriage B. Purchase of a new home C. Approximately every 3 years between the age of 25 and 40 D. Birth of a child

B. Purchase of a new home The Guaranteed Insurability Rider allows the owner to purchase additional amounts of insurance without proof of insurability at marriage, birth of a child, and/or every years or so between the ages of 25 and 40

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report A. Must be informed of the source of the report B> Are entitled to obtain a copy of the report from the party who ordered it. C> Must be advised that a copy of the report is available to anyone who requests it D> MAy sue the reporting agency in order to get inaccurate data corrected

A. Must be informed of the source of the report Under the Fair Credit Reporting Act, if an insurance polciy is declined or modified because of information contained in a consumer report, the consumer must be advised and provided with the name and address of the reporting agency

An insured has had a life insurance polciy 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 applicaiton. What will the company do? A. Pay a reduced death benefit B. Pay the full death benefit C. Pay nothing, there was a misrepresentation on the applicaiton D> PAy the full death benefit and refund excess premium

A. Pay a reduced death benefit The incontestabiltiy clause prevents an insured from deny a claim due to statements in an application after the polciy has been in force for 2 years. However, it does not apply to statements relating to age, sex, and identity

What is the initial period of time specified in a disability income policy that must pass, after the polciy is in force, before a loss can be covered? A. Grace period B. Probationary period C> Contestable period D. Elimination period

B. Probationary period Probationary period is the period of time after a policy is in effect before claims arising out of an illness are covered. This is to prevent adverse selection, persons waiting until they have been exposed to a cause of loss before purchasing coverage.

An insured purchased a life insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a a/an A> Interest-sensitive Whole Life B. Credit life C. Annual Renewable Term D. Adjustable Life

A. Interest-sensitive Whole Life Because the cash values are generated by investments, interest rates will affect the amount of the cash value

An insured, who is 44 years old, falls while mountain climbing on vacation. He is left paralyzed. After a year, doctors feel he will never recover from his injuries. From which of the following programs will he be able to collect disability income? A. Social Security B> Medicare C> Medical D. Worker's compensation

A. Social Security Social Security has, as one of its 4 main components, a disability income section for long-term disability

All of the following are considered unfair trade practices in the business of insurance EXCEPT A. Defamation B> Sharing commisions C> boycott D. rebating

B. sharing commissions Sharing commissions is allowed as long as both producers are properly licensed. All other choices are unfair trade practices

Which of the following is a correct statement about annuities? A. Variable annuities place the funds into the company's general account B> Fixed annuities have the annuitant assume the risks of investment C. Fixed annuities do not provide proteciton against inflation D. Variable annuities provide minimum guaranteed rate of interest

C. fixed annuities do not provide proteciton against inflation Fixed products provide protection against the risks associated with investing, since the insurance company bears the investments risks. They, however, do not provide proteciton against inflation, since the income (annuity) payments do not vary from one payment to the next.

In an individual life insurance policy, when must the nonforfeiture benefits begin? A. At the end of the second policy years B. At the request of the insured C. After the first policy year D. After 3 policy years

D. After 3 policy years A policy's nonforfeiture benefits must begin no later than the end of the third year following the policy issue date.

A retail shop owner is insured under a business overhead expense policy that pays a maximum monthly benefit of $2,500. His actual monthly expenses are $3,000. If the owner becomes disabled, the monthly benefit payable under his policy will be A. $2,5000 B. $3,000 C. $2,000 D. $2,100

A. $2,5000 Business overhead expense insurance reimburses the insured for the covered expenses incurred or the maximum stated in the policy, whichever is less.

Which of the following statements regarding Business Overhead Expense policies is NOT true? A> Benefits are usually limited to six months B. Premiums paid for BOE are tax-deductible C> Any benefits received are taxable to the business D> Leased equipment expenses are covered by the plan

A. Benefits are usually limited to six months Business Overhead Expense (BOE) insurance is sold to small business owners for the purpose of reimbursing the polciyholder for business overhead expenses during a period of total disabiltiy. Premiums are tax-deductible for a business, but any benefits recived are taxable as income. Overhead expenses, including equipment and employee salaries, are covered by the plan. Salaries and profits of the employer are not protected

Workers Compensation benefits are regulated by which entity? a> employer B. Insurer C. Federal government D. State government

D. State government The state government offers and regulates Workers Compensation benefits, which vary slightly from state to state

The annual contribution limit of a Dependent Care Flexible Spending Account is set by A> The employer B. The insurer C. The insured D. The IRS

D. The IRS The IRS sets limits for the annual contribution for Dependent Care ACcounts

Regarding the consideration clause, which of teh following is NOT correct? A. The insured's consideration consists of providing information on the application, as well as agreeing to pay the premium B> Consideration of the insurer and insured must be equal C. Consideration is defined as the exchaneg of values D. The insurer's consideration consist of providing coverage

B. Consideration of the insurer and insured must be equal Consideration is a prerequsite to a valid contract, but does not necessarily have to be equal

Which of the following is the distinguishing characteristics of the interest-adjusted net cost method? A. Buying equity indexed life insurance B. Keeping yearly premiums and dividends level C. Considering the time value of money in comparing life insurance costs D. Comparing interest rate at a designated point in time

C. Considering the time value of money in comparing life insurance costs Interest-adjusted net cost method considers the time value of money in comparing life insurance costs by applying an interest adjustment to yearly premiums and dividends. This means that each year premiums and dividends are figured, Interest is taken into consideration

Medicare Part B covers all of the following eXCEPT A. home health visits B. Outpatient hospital services C> Long-term care services D> Doctor's services

C. Long-term care services Medicare does not cover long-term care services

A fraternal benefit society A. Is open to anyone B. Sell insurance, but its representatives don't have to be licensed C. Is operated for the benefit of its members D. Is open only to men

C> IS operated for the benefit of its members Fraternal insurers operate on the basis of a lodge or charitable organization, but they may also sell formal insurance plans for the benefit of their members. Reciprocal insurers are also associations that provide insurance for their members, but they are formed only for the purpose of providing insurance

Which statement accurately describe group disability income insurance? A. In long-term plans, monthly benefit are limited to 75% of the insured' income B. There are no participation requirements for employees C. Short-term plans provide benefits for up to 1 years D. The extend of benefits is determined by the insrued's income

D. The extent of benefits is determined by the insrued's income Group plans usually specify the benefits based on a percentage of the worker's income. Group long-term plans provide monthly benefits usually limited to 60% of the individual's income

Which of the following is a key distinction between variable whole life and variable universal life products? A. Variable universal life is regulated solely through FINRA. B. Variable whole life allows policy loans from the cash value C. Variable universal life has a fixed premium D> Variable whole life has a guaranteed death benefit

D. variable whole life has a guaranteed death benefit Variable universal life insurance may or may not have a minimum death benefit, unlike variable whole life insurance which guarantees a minimum death benefit

Which of the following would provide an underwriter with information concerning an applicant's health history? A. The Medical Information Bureau B. A medical examination C. The agent's report D. The inspection report

A. The Medical Information Bureau An agent's report and inspection reprot provide personal information. Medical exams provide information on current health. Only the MIB will provide information about an applicant's medical history

To obtain a Texas producer license, an applicant must do all of the following EXCEPT A. Submit fingerprints B. Complete prelicensing training C. Pass an exam D. Be 18 years of age

B. Complete prelicensing training Texas does not require prelicensing training, but applicants for a producer license must be at least 18 years old, pass a written exam, and submit fingerprints

All of the following are change to health insurance plans introducted by the PPACA EXCEPT A. Requirements for preventive care without deductibles or copays B. Full-cost coverage for all medical expenses C> Limiting age for dependent children D> Coverage for pre-existing conditions

B. Full-cost coverage for all medical expenses Under PPACA, health insurance plans will receive a metal level classification according to the percentage of costs covered. The insured will still be required to pay a portion of the costs. All the other are the required changes

Which of the following is true regarding coverage for chemical dependency treatment in group health insurance policies issued in this state? A. Coverage cannot be less than for any other physical illness B> Coverage is optional and may be offered at the discretion of the insurer C> Coverage is not available D> Benefits provided must be the same as for any other physical illness

D. Benefits provided must be the same as for any other physical illness All group health insurance benefit plans in Texas must provide coverage for chemical dependency treatment on the same basis as the benefits provided for physical illness. Coverage amounts may be less, but must be sufficient to treat the chemical dependency

An applicant gives her agent a completed and the intiial premium. What can the agent issue her that acknowledges the intial premium payment? A. Provisional Receipt B. Advanced Premium Receipt C> Premium Receipt D> Conditional Receipt

D. Conditional Receipt When an applicant pays teh initial premium before the application is approved and the policy is issued, a conditional receipt can be issued in order to acknowledge the payment, Coverage will not begin, however, until the policy has been issued

Life insurance death proceeds are A. Taxed as ordinary income B> Generally not taxed as income C. Taxable to the extent that they exceed 7.5% of the beneficiary's adjusted gross income D> Taxed as a capital gain

B. Generally not taxed as income Life insurance death benefits are generally not taxed as income

An underwriter may obtain information on an applicant's hobbies, financial status, and habits by order a(n) A. Attending Physician Statement B. Inspection report C. Medical Information Bureau report D. Medical examination

B. Inspection report An inspection report may be ordered about an applicant from an independent investigating firm or credit agency. IT is a general report of the applicant's finances, character, work, hobbies, and habits

The Medical Information Bureau (MIB) waas created to protect A. Medical examiners that perform insurance physical examinations B> Insurance companies from adverse selection by high risk persons C. Insurance departments from lawsuits by polciyowners D. Insureds from unreasonable underwriting requirements by the insurance companies

B. Insurance companies from adverse selection by high risk persons The MIB makes information available to underwriters to assist them in the underwriting process. It is a nonprofit trade organization which receives adverse medical information from insurance companies and maintains confidential medical impairment information on indivudals.

What is NOT a benefit of a POS plan? A. With the Point-Of-Serviecs plan the employees do not have to make a decision between the HMO or PPO plans that lock them in B> It allows guaranteed acceptance of all applicants C. It allows the employee to use an HMO provided doctor D. It allows the employee to use a doctor not covered under the HMO

B. It allows guaranteed acceptance of all applicants A difference choice can be made every time a need arises for medical services

Insureds have the right to do which of the following if they have NOT received the proper claim forms within 15 days of their notice to the insurer of a covered loss under a major medical policy? A. Speak with a claims adjuster or another representative from the insurance company B. Submit the descirption in theor own words on a plain sheet of paper C. Be reimbursed any copayment or deductible on the claim D. Demand full payment immediately for the claim

B. Submit the description in their own words on a plain sheet of paper Insured have the right to submit the descirption in their own words on a plain sheet of paper if a proper form is not supplied. This is a mandatory provision in individual health insurance policies.

Which of NOT true about beneficiary designations? A. Trusts can be valid beneficiaries B. The beneficiary must have insurable interest in the insured C> The beneficiary may be a natural person D. The polciy does not have to have a beneficiary named in order to be valid

B. The beneficiary must have insurable interested in the insured A beneficiary is the person or interest to whom the policy proceeds will be paid upon the death of the insured. Beneficairies do not have to have an insurable interest to the polciyholder.

If a credit life polciy is terminated upon the payment of the death benefit, what happens to the premium paid into the policy? A. Any unearned premium will be refunded to the beneficiary B> The premium is considered earned, so no refund is required C. Credit life policies do not require any payment of premium D. The premium will be refunded to the insured's estate on a pro rata basis.

B> The premium is considered earned, so no refund is required If a polciy is terminated due to the payout of the death benefit, the premiums paid to the insurer are deemed earned and no refund is required

If an agent suspects that insurance fraud is being committed, within how many days must the agent notify the Insurance Fraud Unit of the Depart of Insurance? A. 10 days B. 15 days C. 30 days D> 90 days

C. 30 days IF a person suspects that a fraudulent insurance act has been or is about to be committed in this state, the person must report the information in writing to the insurance Fraud Unit of the Department within 30 days

In this state, in order for a n employer to obtain group health coverage for small employers, what percentage of employees are required to be covered by the plan? A. 25% B. 50% C. 75% D. 100%

C. 75% Coverage under a small employer group plan is available if 75% of the eligible employees elect to be covered

An insured and his spouse recently had a child. Which of the following riders would allow the couple to insure the cihld for a limited period of time at a specified amount? A> Guaranteed insurabiity rider B. Spouse term rider C> Children's term rider D. Payor rider

C. Children's term rider The children's term rider allows children to be added to coverage for a limited period of time for a specified amount

Regarding health insurance, all of the following are tax-deductible EXCEPT A. Employer paid group Long-Term Care B. Employer paid group Accident Death and Dismemberment C. Employee paid group disability income D. Employer paid group health insurance

C> Employee paid group disability income When the emplyoer pays for group premiums, they are tax-deductible to the employer. When the employee pays for a portion of the group disability premiums, they are not tax-deductible to the employees

Which of the following statements is INCORRECT concerning Medicare Part B coverage? A. Participants under Part B are responsible for an annual deductible B. Part B will pay 80% of covered expenses, subject to Medicare's standards for reasonable charges. C> It is a voluntary program designed to provide supplementary medical insurance to cover physician services, medical services and supplies not covered under Part A D. Part B coverage is provided free of charge when an individual turns age 65

D. Part B coverage is provided free of charge when an individual turns age 65 Those who desire Part B coverage must enroll and pay a monthly premium

Who determines the eligibility and contribution limits in a HRA? A. The employer determines eligbility and the insurer determines contributions limits B. The insurer determines eligiblity and the employer determines contribution limits C> The insurer determines both D. The employer determines both

D. The employer determines both The employer determines eligibility and contribution limits in a HRA

The "stop-loss" feature on a major medical polciy is intended to A. Establish the number of claims that may be filed on a policy in a calendar year B. Establish a maximum amount of out-of-pocket expense that an insured will have to pay for medeical expense in a calendar year C. Establish a maximum amount of out-of-pocket expense that an insured will have to pay for medical expense for the life of the policy D> Discourage insured from making unnecessary appointments at the doctor's office

B. Establish a maximum amount of out-of-pocket expense that an insured will have to pay for medical expense in a calendar year A stop-loss feature is a provision that gives the insured financial security by limiting the maximum amount that would have to be paid in deductibles and co-payments during a calendar year

Which of the following is the distinguishing characteristic of the interest-adjusted net cost method? A. Buying equity indexed life insurance B. Keeping yearly premiums and dividends level C. Considering the time value of money in comparing life insurance costs D> Comparing interest rates at a designated point in time

C. Considering the time value of money in comparing life insurance costs Interest-adjusted net cost method considers the time value of money in comparing life insurance costs by applying an interest adjustment to yearly premiums and dividends. This means that each year premiums and dividends are figured, interest is taken into consideration