Primerica HEALTH insurance (some General Life questions included)
The equity in an equity index annuity is linked to
An index like Standard & Poor's 500
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
for 20 years or until death, whichever occurs first
All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?
lower
Which of the following is another term for the accumulation period of an annuity?
pay-in period
Which of the following factors determines the amount of each installment paid in a Life Income Option arrangement?
recipient's life expectancy and amount of principal
All of the following are examples of third-party ownership of a life insurance policy EXCEPT
An insured borrows money from the bank and makes a collateral assignment of a part of the death benfit to secure the loan.
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?
Common Disaster
Life income joint and survivor settlement option guarantees
Income for 2 or more recipients until they die
What type of insurance would be used for a Return of Premium rider
Increasing term
Which of the following is true about the mandatory free look in a Life Insurance policy?
It commences when the policy is delivered
The paid-up addition option used the dividend
To purchase a smaller amount of the same type of insurance as the original policy
To sell variable life insurance policies, an agent must receive all of the following EXCEPT
a SEC registration
According to the Entire Contract provision, a policy must contain
a copy of the original application for insurance
What required provision protects against unintentional lapse of the policy?
grace period
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?
immediate annuity
What is a reasonable annual deductible for individual coverage under a medical savings account?
$2,000
Maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?
$2,500
*The Federal Fair Credit Reporting Act* A. Regulates consumer reports. B. Protects customer privacy. C. Regulates telemarketing. D. Prevents money laundering.
*A. Regulates consumer reports.* The Federal Fair Credit Reporting Act regulates consumer reports, also known as consumer investigative reports, or credit reports.
The 2010 patient Protection and Affordable Care Act (PPACA) in-acted health care reform that:
1) Extended dependent coverage for adult children up to age 26 2) Elimination of pre-existing condition exclusions for children ages 19 and under
Some cost of living (COLA) riders provide cost of living increases using
1. compound interest adjustments. 2. simple interest adjustments.
A policy owner cancels his life policy but instructs the insurance company to transfer the cash value of his policy to an annuity. This non taxable transaction is called
1035 exchange.
When a group insurance plan is terminated, there is normally a provision for an extension of benefits to any insured or dependent who is totally disabled for a period of ____________ or until the person is no longer totally or continually disabled.
12 months
How long must a producer keep records associated with an insurance policy?
3 years after the policy terminates
How long must an agent keep records associated with an insurance policy?
3 years after the policy terminates
How many policies are necessary to cover a cross purchase (buy/sell agreement) between 3 people?
6
The oldest type of insurance company structure is called:
A fraternal benefit society.
A straight life policy has what type of premium?
A level annual premium for the life of the insured
How is express authority conveyed onto an agent?
Agent's contract
All of the following statements concerning Waiver of Premium riders are correct EXCEPT
An insured who has recovered from a disabling injury will be required to repay the insurer for any premiums that were waived.
Which of the following statements is true, concerning the alteration of optional policy provisions?
An insurer may change the wording of optional provisions, as long as the change does not adversely affect the policyholder.
The classification Small Employer means any person actively engaged in a business that on at least 50% of its working days during the preceding year employed
At least 2 and not more than 50 persons.
When must an insurance company present an outline of coverage to a person?
At the time of application
Who is a third-party owner? A) An irrevocable beneficiary B) A policyowner who is not the insured C) An insurer who issues a policy for two people D) An employee in a group policy
B
What type of benefit plan is a managed plan that is developed in conjunction with the Small Employer Carrier Advisory Committee?
Basic Health Care Plan
Which of the following is not true of Disability Buy-Sell coverage?
Benefits are considered taxable income to the business.
Covers members of a particular group when they are participating in a particular activity
Blanket policy
What license or licenses are required to sell variable annuities?
Both a life insurance license and a securities license
. A policy that uses the accidental bodily injury definition will provide coverage that is _________ than a policy that uses the accidental means definition.
Broader
Kevin and Nancy are married; Kevin is the primary breadwinner and has a health insurance policy that covers both him and his wife. Nancy has an illness that requires significant medical attention. Kevin and Nancy decide to legally separate, which means that Nancy will no longer be eligible for health insurance coverage under Kevin. Which of the following options would be best for Nancy at this point?
COBRA
What is correct concerning the changing of an irrevocable beneficiary?
Can only be changed w/ written consent of beneficiary
Term policies do not develop what?
Cash Values
In any case where there is a controversy or dispute between the insurance company and the insured, the soliciting agent is the agent of the
Company
A health insurance plan that covers all accidents and sicknesses that are not specifically excluded from the policy is a ___ plan.
Comprehensive
Combination plans are comprised of both basic and ________ plan features.
Comprehensive
When an insurer offers services like preadmission testing, second opinions regarding surgery, and preventative care, which term would best apply?
Cost containment
A key person insurance policy can pay for which of the following?
Costs of training a replacement
Decreasing Term
Death Benefit decreases each year
Which component must increase in the increasing term insurance?
Death benefit
Which of the following is NOT typically excluded from life policies?
Death due to plane crash for a fare-paying passenger
When must an IRA be completely distributed when a beneficiary is not named?
December 31 of the year that contains the fifth anniversary of the owner's death.
An individual has just borrowed $10,000 from his bank on a 5 year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?
Decreasing term
Group disability income premiums are
Deductible to the employer as an ordinary business expense
Group disability income premiums are
Deductible to the employer as an ordinary business expense.
Which of the following is NOT considered to be a basic service, under a nonscheduled plan? 1) Fillings 2) Endodontics 3) Oral surgery 4) Dentures
Dentures
Fraudulent statements made by the insured that are found in a health insurance application give the insurance company the right to:
Deny all claims related to preexisting conditions for the first two years the policy is in force.
A man is enrolled in Part A of Medicare and not Part B. Three months into coverage, he applies for a Medicare supplement policy. What can insurer do?
Deny coverage
How often must a producer renew his or her insurance license?
Every 2 years
An agent selling variable annuities must be registered with
FINRA
If an employee enrolls in a health plan during open enrollment, the preexisting condition provision does not apply.
False
If the annuity owner or the annuitant dies before the distributions begin, the entire interest must be distributed in full on or before April 1 st. of the calendar year that contains the fifth anniversary of the owner's death, unless the owner is the designated beneficiary.
False
All of the following groups qualify for group health insurance, EXCEPT: 1) Employment related groups. 2) Fraternal benefit societies. 3) Sole proprietorships with at least one employee. 4) Multiple Employer Trusts
Fraternal benefit societies.
What phase begins after a new policy is delivered?
Free-Look Period
When does coverage begin for an adopted child?
From the moment the child is placed in the insured�s home.
Life insurance death proceeds are
Generally not taxed as income
How are HMO territories typically divided?
Geographic Areas
To qualify as a true group, an association must
Have at least 100 members.
Events or conditions that increase the chances of an insured loss occurring are referred to as
Hazards.
HSAs are designed to
Help individuals save for qualified health expenses.
Issue age policy premiums increase in response to which of the following factors?
Increased benefits
The type of dental plan which is incorporated into a major medical expense plan is a
Integrated dental plan.
What is NOT a benefit of a POS plan?
It allows guaranteed acceptance of all applicants.
If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy?
It is only taxable if the cash value exceeds the amount paid for premiums.
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?
It is reduced to the amount of what the cash value would buy as a single premium
Which of the following is true of a children's rider added to an insured's permanent life insurance policy?
It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.
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?
It is used to lower premiums
A Participating Life Insurance Policy may do which of the following?
It may pay dividends to the policyowner.
Which of the following statements concerning Medicare Part B is correct?
It pays for physician services, diagnostic tests, and physical therapy.
May be reinstated within 3 years by paying back premiums, with interest, and proving insurability.
Lapsed Policy
The _________ an insured group becomes, the more likely the reported losses will equal the statistical probability of loss for that particular class.
Larger
Variable Life insurance is based on what kind of premium?
Level fixed
If a settlement option is not chosen by the beneficiary or policy owner, which option will be used?
Lump sum
Every insurer transacting life and/or health insurance in the state as an admitted insurer must do what?
Maintain membership in the Guaranty Association
Which of the following best describes the concept of company solvency?
Maintaining capital or surplus in excess of the required amount
Producer A is prosecuted for a crime. He must notify the Director within what time frame after the initial pretrial hearing date?
No later than 30 days
A direct rollover or trustee-to-trustee transfer from one pension trustee to another pension trustee is
Not subject to the 20% withholding tax.
Neville is involved in a boating accident, which injures his legs severely enough to confine him to a wheelchair. He works as a booking agent for an airline, which means that in order for Neville to work, he must sit at a desk all day. What disability benefits would Neville receive?
Nothing
Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive
Nothing; the payments will cease.
Annually Renewable Term
One Year Term
Which of the following factors would be an underwriting consideration for a small employer carrier? 1) Percentage of participation by the employees 2) Claims experience 3) Health status 4) Medical history
Percentage of participation by the employees
Which of the following occupations would have the lowest disability insurance premiums?
Personal Trainer
Which of the following is not a characteristic of an HMO?
Physician provider discount contracts
10-day free looking period begins when?
Policy is delivered
Who can request changes in premium payments, face value, loans, and policy plans?
Policy owner
Which of the following is true about license reinstatement?
Reinstatement fees may be double the unpaid renewal fee
Which of the following is true about license reinstatement?
Reinstatement fees may be double the unpaid renewal fee.
Which of the following is not one of the three basic types of coverages that are available, based on how the face amount changes during the policy term? -Renewable -Decreasing -Level -Increasing
Renewable
What is the main responsibility of a company's underwriting unit?
Risk selection
Which of the following determines the length of time that benefits will be received under the Fixed Amount settlement option?
Size of each installment
The interest earned on policy dividends is....
Taxable
If an annuitant chooses a lump-sum settlement at annuitization, which of the following taxes would be imposed in all cases?
Taxes on interest earned during the accumulation period
Producers are required to post a Personal Information Privacy Practices notice that includes all of the following EXCEPT:
That personal information that is collected by the producer may never be disclosed without authorization
Under what conditions would a contract between an insurer and prospective insured be legal? 1) The applicant is a 12-year-old student. 2) The applicant is high on methamphetamines at the time of application. 3) The applicant is drunk at the time of application. 4) The applicant has been convicted of a felony.
The applicant has been convicted of a felony
In exiting a bus, Tom jumps down onto the street and breaks his ankle. Which of these is true?
The broken ankle was unintended and unforeseen.
All of the following would be true about an HMO, EXCEPT 1) HMOs do not work like health insurance. 2) HMOs transfer risk to health care providers. 3) HMOs focus on preventive care. 4) The federal government requires groups with 25 or more employees to offer an HMO as an alternative plan.
The federal government requires groups with 25 or more employees to offer an HMO as an alternative plan.
A 40-year old man buys a whole life policy and names his wife as his only beneficiary. His wife dies 10 years later. He never remarries and dies at age 61, leaving 2 grown up children. Assuming that he had never changed the beneficiary, the policy proceeds will go to
The insured's estate.
Who guarantees a conventional fully-insured group plan?
The insurer
all of the following are general requirements of a qualified plan EXCEPT
The plan must provide an offset for social security benefits
All of the following are general requirements of a qualified plan EXCEPT
The plan must provide an offset for social security benefits.
6. Which of the following statements regarding Key Person Disability Income policies is NOT true? 1) The policy benefits are paid to the insured. 2) The premiums are paid by the business. 3) The policy is owned by the business. 4) The business must have the consent of the insured to purchase the insurance.
The policy benefits are paid to the insured.
A policy with a 31-day grace period implies
The policy remains in force without penalty for 31 days even though the premium due has not been paid.
An insured buys a 5-year level premium term policy with a face amount of $100,000. The policy also contains renewability and convertibility options. When the insured renews the policy in five years
The premium will increase because the insured will be 5 years older than when the policy was originally purchased.
Which of the following is true about warranties?
They are guaranteed to be true.
Which of the following is a similarity between equity indexed annuities and fixed annuities?
They have a guaranteed minimum interest rate.
All of the following are uses for an annuity except:
To pay a business when a key employee retires.
9. Which of the following is NOT the purpose of HIPAA? 1) To prohibit discrimination against employees based on their health status 2) To limit exclusions for pre-existing conditions 3) To guarantee the right to buy individual policies to eligible individuals 4) To provide immediate coverage to new employees who had been previously covered for 18 months
To provide immediate coverage to new employees who had been previously covered for 18 months
Which of the following is NOT the purpose of HIPAA?
To provide immediate coverage to new employees who had been previously covered for 18 months
Which statement is NOT the purpose of HIPAA?
To provide specific benefits to self employed people, pregnant women and the mentally ill.
Income replacement contracts agree
To replace the insured's income up to a stated percentage if the insured suffers a loss due to a covered accident or sickness.
A peril is the immediate and specific event that causes a loss.
True
As a general rule life insurance benefits are not taxable
True
The purpose of the free look period is to give the insured time to review a policy and make sure it meets all of his or her needs and expectations once it has been delivered.
True
It is legal in Oregon to pay, or offer to pay, anything of value specified in the insurance contract as an inducement to purchase insurance.
True But, it is illegal in Oregon to pay or offer to pay any of the following as an inducement to purchase insurance: 1. Any special favor or advantage in dividends or benefits. 2. Any stocks, bonds, securities, or accrued dividends or profits. 3. Anything of value NOT specified in the insurance contract.
Dental plan benefits are usually divided into three categories:
True, They are diagnostic/preventive services, basic services, and major services
Insured who enters into a viatical settlement
Viator
When are workers compensation benefits payable?
When a worker is injured by a work-related injury, regardless of fault or negligence
In life and health insurance, an offer is usually made
When the application is submitted.
All of the following cases show when a Small Employer Medical plan cannot legally be renewed EXCEPT
When the employer chooses to renew the plan.
After a divorce, when can a surviving spouse of a certificate holder qualify for continuance of coverage under a group health policy that provides coverage for medical expenses?
When the spouse is 55 years of age or older.
Which of the following describes the taxation of an annuity when money is withdrawn during the accumulation phase?
Withdrawn amounts are taxed on a last-in-first-out basis.
An employee is injured in a construction accident, rendering him unable to work for a year. What plan would provide him with medical expense coverage and income assistance?
Workers compensation
An insurance agent is also called what?
a producer
What are the two types of policy assignment?
absolute and collateral assignment
who can make a fully deductible contribution to a traditional IRA
an individual not covered by an employer-sponsored plan who has earned income
oral surgery
an operation that might be required for extraction
Accidental bodily injury is typically defined as
an unforeseen and unintended injury
payout period
annuitization period
When the insured person or policy owner sells, renews or converts a term policy, the premium is figured at the insured person's age at the time. This is called the ___________age.
attained
receives payment
beneficiary
All of the following are personal uses of life insurance EXCEPT
buy-sell agreement
a life insurance policy used to fund an agreement that contractually establishes the intent of someone to purchase a business upon the insured business owner's death is a
buy-sell agreement
what does "liquidity" refer to in a life insurance policy?
cash values can be borrowed at any time
a tax-sheltered annuity is a special tax-favored retirement plan available to
certain groups of employees only
When producers write insurance on themselves, their family, or their coworkers, it is called what?
controlled business
A partnership buy-sell agreement in which each partner purchases insurance on the life of each of the other partners is called a
cross-purchase plan
The type of policy that provides the necessary funds for the business to purchase the interest of a disabled partner is called a ______________?
disability buy-sell policy
which of the following terms is used to name the nontaxed return of unused premiums?
dividend
all of the following are business uses of life insurance EXCEPT
funding against general company financial loss
The automatic premium loan provision is activated at the end of the
grace period
prothodontics
includes bridges and dentures
annuitant
insured
All of the following are Nonforfeiture options EXCEPT
interest only
when the policy endows or is surrendered, any cash value that exceeds the amount the policy owner contributed with premium payments (excess of basis), it _____ taxable as ordinary income in the year it is received by the
is
What is the purpose of a free-look period in insurance policies?
it allows the insured to reject the policy with a full refund
what is the main purpose of the seven-pay test?
it determines if the insurance policy is an MEC
Why is an equity indexed annuity considered to be a fixed annuity?
it has a guaranteed minimum interest rate
Which of the following is TRUE of a qualified plan?
it has a tax benefit for both employer and employee
What is the benefit of choosing extended term as a nonforfeiture option?
it has the highest amount of insurance protection
Which of the following is TRUE regarding the annuity period?
it may last for the lifetime of the annuitant
Which of the following is true regarding the annuity period? -during this period of time the annuity payments grow interest tax deferred. -it is also referred to as the accumulation period. -it is the period of time during which the annuitant makes premium payments into the annuity. -it may last for the lifetime of the annuitant.
it may last for the lifetime of the annuitant.
What Act changed the name of Part C from Medicare + Choice to Medicare Advantage?
medicare modernization act of 2003
What is the official name for the social security program?
old age survivors disability insurance
pure life
pays highest monthly benefit
owner
purchases policy
Restored to its original status
reinstatement provision
Disability insurance is specifically designed to do what?
replace the lost income in the event of disability
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy
required a premium increase each renewal.
What is the primary purpose of a 401k plan?
retirement
Equity index annuities -are more risky that variable annuities. -are security instruments. -invest conservatively. -seek higher returns.
seek higher returns.
an employee has group life insurance through her employer. after 5 years, she decides to leave the company and work independently. how can she obtain an individual policy?
she can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan.
which of the following would be considered a nonqualified retirement plan
split-dollar plan
periodontics
the care and treatment of the gums
which of the following is an example of liquidity in a life insurance contract?
the cash value available to the policy owner
which of the following is incorrect concerning a noncontributory group plan?
the employees receive individual policies
The right to examine provision is commonly referred to as what?
the free look period
A life insurance policy does not have a war clause. If the insured is killed during a time of war, what will the beneficiary receive from the policy?
the full death benefit
an employee is insured under her employer's group life plan. if she terminated her group coverage, which of the following statements is INCORRECT?
the insured may choose to covert to term or permanent individual coverage.
which of the following is true regarding health insurance underwriting for a person with HIV
the person may not be declined for medical coverage solely based on HIV status
which of the following is NOT true of life settlements?
the seller must be terminally ill
endodontics
the treatment of the pulp inside the tooth
under a SIMPLE plan, which of the following is TRUE regarding taxation on both contributions and earnings?
they are tax deferred until withdrawn
which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policy owner?
third-party ownership
which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage one the plan is terminated?
those who have been insured under the plan for at least 5 years
which of the following is the best reason to purchase life insurance rather than annuities?
to create an estate
When is it illegal to obtain sources of underwriting information?
w/o informing proposed insured
which of the following types of insurance policies would perform the function of cash accumulation?
whole life
which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE?
withdrawals are not taxable
which of the following is NOT an example of a business use of Life Insurance?
workers compensation
Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income?
Depreciation period
All of the following statements concerning dividends are true EXCEPTS
Dividend amounts are guaranteed in the policy
If a life insurance policy develops cash value faster than a seven-pay whole life contract, it is
a modified endowment contract
What is the maximum monetary fine for a nonwillful violation of insurance statutes regarding unfair trade practices?
$1,000
An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to rollover her plan to a Traditional IRA, how much will she receive, if not a direct rollover, from the plan administrator and how long does she have to complete the tax-free rollover?
$8,000, 60 days
*Something of value exchanged between the insurer and the insured is considered an* A. Legal capacity. B. Consideration. C. Offer. D. Acceptance.
*B. Consideration.* Consideration is something of value that each party to an insurance contract gives to the other.
*If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?* A. A legal (but unethical) contract B. Unilateral C. Adhesion D. Conditional
*B. Unilateral* In a unilateral contract, only one of the parties to the contract is legally bound to do anything.
*Which of the following entities can legally bind coverage?* A. Federal Insurance Board B. Agent C. Insurer D. The insured
*C. Insurer* Only insurers, not agents, can bind coverage.
What is the shortest possible elimination period for group short-term disability benefits provided by an employer?
0 days
The grace period for policy premium payments cannot be less than _______ days in Oregon,
10
Within what time period can a producer reinstate a lapsed license without having to pass a written examination?
12 months
The Consolicated Omnibus Budget Reconciliation Act (COBRA) stipulates that employers with 20 or more employees must offer a continuation of group health coverage for a specified period of time to qualified employees and their beneficiaries who would not otherwise be eligible for continued coverage because of a particular qualifying event involving the covered employee, including death, divorce, or termination of employment (for reasons other than misconduct). If someone is laid off from their job, that length of time would be
18 months
The Tax Reform Act of ________ eliminated many traditional tax shelters
1984
Every small employer carrier shall, as a condition of transacting business in this state with small employers, actively offer to small employers at least how many health benefit plans?
2
In Oregon, how long does a producer have to notify the Director of a change in location or name?
30 days
An immediate annuity purchased with the face amount at death or with the cash value at surrender can be referred to as one of the following? A) Settlement option B) Comprehensive Annuity C) Functional Annuity D) Roll-Over option
A
What is the official name for the Social Security Programs? A) Old Age Survivors Disability Insurance B) Social Insurance Program C) Defined Benefit Retirement Insurance D) Qualified Pension Plan
A
As of January 1, 2009 Oregon will now perform all of the following checks on applicants for insurance licenses, EXCEPT
A credit history check.
As of January 1, 2009 Oregon will now perform all of the following checks on applicants for insurance licenses, EXCEPT:
A credit history check.
The two types of assignments are
Absolute and collateral.
Period during which annuity payments earn interest, over which annuitant makes payments into an annuity & also called the pay-in period
Accumulation period of an annuity
Suzie 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?
Adjust the claim benefit to reflect Suzie's true age
What type of coverage does ERISA monitor?
All of the above
What is a characteristic of a 501(c)(9) trust?
All of the above are characteristics of a 501(c)(9) plan.
The equity in an equity index annuity is linked to
An index like Standard & Poors 500.
Who can make a fully deductible contribution to their IRA?
An individual covered by an employer-sponsored plan whose earned income is below a required limit
Deferred Compensation Funding refers to:
Any employer retirement or savings plan that is not a qualified plan.
Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium?
Automatic premium loan
An insured has a Modified Endowment Contract. He wants to withdraw some money in order to pay medical bills. Which of the following is true? A) He cannot withdraw money from his MEC before age 59 1/2 B) He will have to pay a penalty if he is younger than 59 1/2 C) He will have to pay a penalty regardless of his age D) He will not have to pay a penalty, regardless of his age
B
Which of the following types of LTC care is not provided in an institutional setting? A) Intermediate care B) Home health care C) Custodial care D) Skilled nursing care
B
Medicaid is sponsored by what kind of sources?
Both state and federal
The limits of a health reimbursement account are set by A) The insurer B) Federal regulation C) The employer D) State statutes
C
Term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.
Children's Rider
What process will the insurance company use to monitor the insured's hospital stay to make sure that everything is proceeding according to schedule?
Concurrent review
The gatekeeper of an HMO helps to
Control specialist costs
What happens when a policy is surrendered for its cash value?
Coverage ends and the policy cannot be reinstated
What about occupational vs nonoccupational coverage is true?
Disability Insurance can be written as either
What provision in a life or health insurance policy extends coverage beyond the premium due date?
Grace period
Concerning insurance, the definition of a fiduciary responsibility is
Handling insurer funds in a trust capacity.
What entities can legally bind coverage?
Insurer
Who pays for the cost of a medical examination required in the process of underwriting?
Insurer
Which of the following statements is TRUE concerning the Accidental Death Rider?
It will pay double or triple the face amount
Health insurance is based on
Mathematical principals & Scientific principals
A long-term care insurance shopper's guide must be provided in the format developed by the
NAIC
Who was the Oregon Medical Insurance Pool designed to protect?
People who have been denied medical coverage
An insurance agent's responsibilities include all of the following EXCEPT
Represent the client.
A replacing insurance company that uses a producer is required to do all of the following EXCEPT:
Require the producer to keep records at his or her place of business for 3 years and to make them available upon request.
Ed decided to purchase a $100,000 Annual Renewable Term Life Policy to provide additional protection until his children finished college. Ed discovered that his policy
Required a premium increase each renewal.
Which of the following is not covered under a dental insurance plan? 1) Endodontics 2) Respite Care 3) Orthodontics 4) Restoration Care
Respite Care
Which type of care re-establishes functional use to natural teeth?
Restorative
Because of financial obligations, John felt that he needed more insurance than the insurer was willing to issue. John's insurance producer told him that he could maximize the death benefit without increasing the face amount by the use of a(n)
Return of premium rider
Which type of Medicare policy requires insureds to use specific hospitals, except in emergency situations?
SELECT
Keogh plans are provided specifically for
Self-employed.
Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under an accident and health policy must contain
Statement sufficiently clear to identify insured & nature of claim
Which of the following is monitored by ERISA?
Stock profit-sharing plans
In the event of replacement, the current agent must do what?
Submit to the replacing insurance company, with the application, a copy of the replacement notice
Which of the following types of risk will result in the highest premium?
Substandard risk
A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as
Survivor Protection
The advantage of qualified plans to employers is
Tax deductible contributions.
Elise wants to know what are the tax implications of contributions to a Health Savings Account. You should advise her that the contributions are
Tax-free.
Special tax-favored retirement plan available to certain groups of employees only?
Tax-sheltered annuity
Who establishes the fees that must be paid in conjunction with an application for an insurance license?
The Director
Which of the following is NOT covered under a "core" policy, Plan A, in Medigap insurance? 1) The first three pints of blood each year. 2) Approved hospital costs for 365 additional days after Medicare benefits end. 3) The 20% Part B coinsurance amounts for Medicare approved services. 4) The Medicare Part A deductible
The Medicare Part A deductible.
Which of the following is NOT true about a group annuity?
The annuity must be purchased by a group, but could be owned by an individual.
Which of the following is NOT true about a group annuity? 1) The annuity could be obtained through a group of people identified by their relationship to a single entity buying a contract. 2) The annuity must be purchased by a group, but could be owned by an individual. 3) Group annuity could be considered qualified. 4) The employer may be the owner of the contract
The annuity must be purchased by a group, but could be owned by an individual.
If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back?
The balance of the loan will be taken out of the death benefit
All of these events might terminate coverage when there is a change in insurance companies or loss of coverage, EXCEPT
The beginning of the last period for which the employee has made the required premium payments.
If the annuitant dies during the accumulation period, who will receive the annuity benefits?
The beneficiary.
In a group life insurance policy, the employer may select all of the following EXCEPT 1) The amount of insurance. 2) The beneficiary. 3) The premium payor. 4) The type of insurance.
The beneficiary.
With regard to income taxation, how does a policy loan from a life insurance policy differ from a complete surrender?
The cash received in a complete surrender is income taxable to the extent the surrender exceeds the premiums paid.
All of the following statements are true about credit life insurance EXCEPT:
The creditor is the owner and the insured.
Bob owns an adjustable life policy. Sometime in the future he wants to increase the death benefit. Which of the following statements is correct regarding this change?
The death benefit can be increased by providing evidence of insurability.
Which of the following is not true about joint life insurance?
The death benefits can be written on a first to die or second to die basis, depending on the needs of the insureds.
The time immediately following the start of a disability when benefits are not payable
The elimination period
In Oregon, a small employer health benefit plan must be renewed at the option of the employer unless:
The employer elects not to renew all health benefit plans.
All of the following conditions must be met for an association group to buy group insurance for its members EXCEPT 1) The group is contributory. 2) The group has a constitution and by-laws. 3) The group holds semiannual meetings. 4) The group has at least 50 members.
The group has at least 50 members.
An insured purchased a 10-year level term life policy that is guaranteed renewable & convertible. What happens at the end of the 10-year term?
The insured may renew the policy for another 10 years, but at a higher premium rate.
Which of the following is NOT a characteristic of an insurable risk?
The loss must be catastrophic
Which of the following best describes what the "annuity period" is?
The period of time during which accumulated money is converted into income payments
All of the following are general requirements of a qualified plan EXCEPT 1) The plan must provide an offset for social security benefits. 2) The plan must be communicated to all employees. 3) The plan must be for the exclusive benefits of the employees and their beneficiaries. 4) The plan must be permanent, written and legally binding.
The plan must provide an offset for social security benefits.
Which of the following criteria is NOT correct regarding a qualified retirement plan? 1. The plan need not be permanent 2. The plan's benefit or contribution formula cannot discriminate in favor or the so called 'prohibited group', which consists of the company's officers, stockholders, and highly paid executives. 3. The plan must be for the exclusive benefit of the employees and their beneficiaries. 4. The plan must be approved by the IRS
The plan need not be permanent
If an insurer issued a policy based on the application that had unanswered questions, what would be TRUE?
The policy will be interpreted as if the insurer waived its right to have an answer on the application.
Nick purchases a Medicare supplement policy in March and decides to replace it with another in May. Nick's history of coronary artery disease is considered to be a pre-existing condition. Which of the following is true?
The preexisting condition waiting period that he served on the old policy will be transferred to the new policy, the new one picking up where the old one left off.
If a policy is rated-up, which of the following is true?
The premium increases
All of the following would be eligible to establish a Keogh retirement plan EXCEPT 1) A sole proprietor of film development store with no employees. 2) A hair dresser who operates her business in her home. 3) The president and employee of one's family's corporation. 4) A sole proprietor of a service station who employs four employees.
The president and employee of one's family's corporation
Which state has jurisdiction over a group policy that covers individuals that reside in more than one state?
The state in which the policy was delivered.
Which is generally true regarding insureds who have earned Preferred status?
Their premiums are lower.
How are fixed annuity premiums invested?
They are deposited into the insurance company's general account.
Which of the following is NOT true regarding Equity Indexed Annuities? 1) They earn lower interest rates than fixed annuities. 2) The insurance company keeps a percentage of the returns. 3) They have guaranteed minimum interest rates. 4) They are less risky than variable annuities.
They earn lower interest rates than fixed annuities.
In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?
They obtain customer information through interviews with associates, friends and neighbors.
All of the following are true regarding the guaranteed insurability rider EXCEPT
This rider is available to all insureds with no additional premium
Which provision states that the insurance company must pay Medical Expense claims immediately?
Time of Payment Claims
Under what circumstances may a life insurance agent deliver a policy that is dated up to six months before the application was taken?
To allow the insured to remain in a more favorable rate class.
What is the purpose of the buyer's guide?
To ensure that people who purchase variable life insurance and annuities understand certain basic features of these types of contracts.
Retention usually results from three basic goals of the insured. Which of the following is NOT one of these goals? 3. Retention usually results from three basic goals of the insured. Which of the following is NOT one of these goals? 1) To minimize the insured's level of liability in the event of loss 2) To fund for losses that cannot be insured 3) To reduce expenses and improve cash flow 4) To increase control of claim reserving and claims settlements
To minimize the insured's level of liability in the event of loss
What is the purpose of a fixed-period settlement option?
To provide a guaranteed income for a certain amount of time
What type of rider obligates the company to pay three times the face amount of the policy if the insured dies as a result of an accident
Triple indemnity accidental death rider
'Own occupation' is clearly the more liberal definition of disability and is more advantageous to the insured and has a higher premium.
True
A small employer is defined in Oregon as any employer that has employed an average of at least two but not more than 50 employees on business days during the preceding calendar year. The majority of the employees must be employed within Oregon and the employer must employ at least two eligible employees on the date on which the coverage becomes effective.
True
Anyone who is qualified for Medicare is also qualified to purchase a Medicare Supplement policy by paying the required premium for the level of benefits that most suits their needs. OBRA states that Medicare Supplement insurance cannot be denied on the basis of an applicant's health status, claims experience or medical condition during the first 6 months after a Medicare beneficiary turns 65 or during the first 6 months after the beneficiary enrolls in Part B.
True
Sometimes it is possible to get a lower premium rate by backdating the insurance application.
True
The National Association of Insurance Commissioners (NAIC) Uniform Individual Accident and Sickness Provision Law was developed in 1950.
True
The primary difference between a SEP and an IRA is the much larger amount that can be contributed each year to a SEP
True
The process of determining the suitability of certain types of policies for various situations will make it easier for you to distinguish the differences between the many types of policies.
True
he following are all characteristics of group life insurance, EXCEPT: 1) The group must be a natural group. 2) The group must be strong financially. 3) Underwriters prefer groups with low turnover. 4) The larger the group, the more accurately it can be underwritten.
Underwriters prefer groups with low turnover
Evaluating information that establishes adverse selection risk is the purpose of which stage of insurance?
Underwriting
When advertisements are used, all of the following are true EXCEPT
When covering benefits payable, it is acceptable for certain illustrations to be slightly misleading.
Which of the following is INCORRECT regarding the agent's duties and responsibilities at the time of the application? 1) The agent should check to make sure that there are no unanswered questions on the application. 2) The agent should change an incorrect statement on the application by personally initialing next to the corrected statement. 3) The agent should explain the nature and type of any receipt he/she is giving to the applicant. 4) The agent should probe beyond the stated questions if he/she feels the applicant is misrepresenting or concealing information.
Which of the following is INCORRECT regarding the agent's duties and responsibilities at the time of the application?
Tanya wants to buy a life insurance policy that has a cash value element. Which type should she buy?
Whole Life Insurance
Welfare benefits include all of the following EXCEPT
Workers compensation.
To be eligible for a Health Savings Account, an individual must be covered by
a High Deductible Health Plan.
Who is a third-party owner?
a policy owner who is not the insured
who is a third-party owner?
a policy owner who is not the insured
The term "fixed" in a fixed annuity refers to all of the following EXCEPT
death benefit
which of the following is true regarding taxation of dividends in participating policies?
dividends are not taxable
Which two terms are associated directly with the premium?
level or flexible
What has the State of Oregon set up to protect people who purchase insurance from harm?
licensing procedures
All of the following are true regarding a decreasing term policy except
the payable premium amount steadily declines throughout the duration of the contract.
all of the following are true of key person insurance EXCEPT
the plan is funded by permanent insurance only
what is the purpose of key person insurance?
to lessen the risk of financial loss because of the death of a key employee
In a legal health insurance contract, both parties to the contract are required to provide consideration. The applicant's consideration is the premium and the application. What is the insurance company's consideration?
to provide a promise to pay covered claims
Jack purchased a $100,000 Joint Life policy that covered his life and the life of his wife, Jill. Eight years later, Jack died in an automobile accident. How much will Jill receive from the policy?
$100,000
An insured's long-term care indemnity policy is scheduled to pay a fixed amount of coverage of $120 per day. The long-term care facility only charged a $100 per day. How much will the insurance company pay?
$120 a day
The contribution limit for a HR10 or Keogh plan is 100% of the total earned income up to $_____________ per year. The contribution is tax deductible and the funds accumulate interest on a tax deferred basis until they are withdrawn.
$45,000
*What is a material misrepresentation?* A. Concealment B. A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company C. Any misstatement made by an applicant for insurance D. Any misstatement by the producer
*B. A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company* A material misrepresentation is a statement that, if discovered, would alter the underwriting decision of the insurance company.
*The Medical Information Bureau (MIB) was 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 policyowners. 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 individuals.
*What is a definition of a unilateral contract?* A. If one party makes a condition, the other party can counteroffer. B. One-sided: only one party makes an enforceable promise C. Two or more parties go into a contract understanding there may be an unequal exchange of value D. One author: the company wrote the contract; the insured must accept it as written.
*B. One-sided: only one party makes an enforceable promise* An insurance contract is unilateral in that only one of the parties to the contract is legally bound to do anything.
*Under the Privacy Rule for HIPAA, protected information includes all individually identifiable health information* A. Held in a computer format. B. Held or transmitted in paper form. C. Held or transmitted in any form. D. Transmitted electronically only.
*C. Held or transmitted in any form.* Under the Privacy Rule for HIPAA, protected information includes all individually identifiable health information held or transmitted by a covered entity or its business associate in any form or media, whether electronic, paper or oral. This is called protected health information (PHI).
*Which of the following is true about the requirements regarding HIV exams?* A. Prior informed oral consent is required from the applicant. B. HIV exams may not be used as a basis for underwriting. C. The applicant must give prior informed written consent. D. Results may be disclosed to the agent and the underwriter.
*C. The applicant must give prior informed written consent.* A separate written consent form must be obtained prior to an HIV exam. HIV exam results may be disclosed to underwriters, but not agents.
*In insurance, an offer is usually made when* A. The agent hands the policy to the policyholder. B. An agent explains a policy to a potential applicant. C. The completed application is submitted. D. The insurer approves the application and receives the initial premium.
*C. The completed application is submitted.* In insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy.
*An agent is ready to deliver a policy to an applicant but has not yet received payment. Upon delivery, the agent collects the applicant's premium check, answers any questions the applicant may have, and then leaves. What did he forget to do?* A. Offer her a secondary policy B. Ask the applicant to sign a statement that acknowledges that the policy had been delivered C. Collect a late payment fee D. Ask her to sign a statement of good health
*D. Ask her to sign a statement of good health* If the premium is not collected until the policy is delivered, the agent must receive a statement of good health, which acknowledges that the insured's health status has not changed since the policy was approved.
*To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested?* A. When the applicant's credit is checked B. When the policy is delivered C. At the initial interview D. At the time of application
*D. At the time of application* A notice to the applicant must be issued to all applicants for health insurance coverage.
*In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?* A. They provide additional information from an outside source about a particular risk. B. They provide information about a customer's character and reputation. C. The customer has no knowledge of this action. D. The customer's associates, friends, and neighbors provide the report's data.
*D. The customer's associates, friends, and neighbors provide the report's data.* Both consumer reports and investigative consumer reports provide additional information from an outside source about a customer's character and reputation, and both types of reports are used under the Fair Credit Reporting Act. The main difference is that the information for investigative consumer reports is obtained through an investigation and interviews with associates, friends and neighbors of the consumer.
*An agent tries to sell insurance over the phone to an applicant who appears to be confused, but is eventually able to give enough information for the application to be completed. After the policy was issued, the agent talked to the insured's family, and they explained that the insured was recovering from a surgery and might have been under the influence of medication at the time of application. Which of the following is true?* A. The policy will remain in force as long as there are no material misrepresentations on the application. B. The policy is legal since the applicant was able to give all required information. C. The policy is not legal; agents cannot sell insurance over the phone. D. The policy may be voided if it can be proven that the applicant was not capable of making a buying decision at the time of application.
*D. The policy may be voided if it can be proven that the applicant was not capable of making a buying decision at the time of application.* When an insurer and insured enter into a contract, both parties must be of legal age and mentally competent. Because the applicant was confused, it is possible she was suffering from pain or could have been affected by medication, or was having other issues; therefore, if it can be proven that the applicant was incapable of making a buying decision during the application and acceptance process, the policy could be voided.
*In forming an insurance contract, when does acceptance usually occur?* A. When an insurer delivers the policy B. When an insurer receives an application C. When an insured submits an application D. When an insurer's underwriter approves coverage
*D. When an insurer's underwriter approves coverage* In insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy.
How much of the premium is paid by employees participating in a non-contributory plan?
0%
What percentage of individually-owned disability income is taxable?
0%
According to the rights of renewability rider for cancellable policies, what is true about the cancellation of an individual insurance policy?
1- Insurer must provide insured written notice of cancellation 2- Claims incurred before cancellation must be honored 3- Insurance company may cancel policy at any time
What is true regarding the accumulation at interest option?
1- Interest credited at rate specified by policy 2-Policyholder right to withdraw accumulations at any time 3-Annual dividend retained by company
What is true regarding a temporary license in this state?
1- doesn't require written examination 2- Each individual can hold one 3- Can be issued for up to 180 days to a spouse of the deceased agent
Name one of the three major categories of Health and Accident Insurance.
1. medical expense insurance 2. Accidential death and dismemberment insurance 3. Disability income insurance
General requirements of a qualified plan
1.) Must be communicated to all employees 2.) Plan must be for exclusive benefits of the employees & their beneficiaries 3.) Must be permanent, written, & legally binding
An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy?
10 days
Teresa pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy?
10 days
Non-qualified distributions from a health savings account have a __________ penalty tax.
10%
For how many days of skilled nursing facility care will Medicare pay benefits?
100
Single premium whole life endows for the face amount of the policy at what age?
100
For group medical and dental expense insurance, what percentage of premium paid by the employer is deductible as a business expense?
100%
In a noncontributory health insurance plan, what percentage of eligible employees must participate in the plan before the plan can become effective?
100%
Regarding Medicare Part D, beneficiaries must pay ____ of prescription drug costs when they are in the "doughnut hole," or once the initial benefit limit is reached.
100%
Sole proprietors and partners may deduct ____ of the cost of a medical expense plan provided to them and their families because they are considered self-employed individuals, not employees.
100%
what percentage of a company's employees must take part in a noncontributory group life plan?
100%
group life insurance is a single policy written to provide coverage to members of a group. which of the following statements concerning group life is correct?
100% participation of members is required in noncontributory plans
When someone is converting from a group plan to another group plan, he or she must have had at least how many months of creditable coverage under the old plan in order to carry over their coverage under HIPAA.
12 months of creditable coverage
When a hearing is scheduled, the Commissioner must give notice to all interested parties as to the time, place and purpose of a hearing within how many days of the hearing?
15 days
An insurance company forwards fixed annuity premiums to their general account, where the money is invested conservatively. The guaranteed minimum interest is set at 3%. During an economic downswing, the investments only drew 2.5%. How much will the insurer pay?
3%
What is the duration of the free-look period for Medicare supplement policies?
30 days
If a licensee has been convicted of certain crimes while licensed, he or she is required to submit a supplementary application to the Director. Within what time period must this be done?
30 days after the date of the final judgment
When a producer's residence or business address changes, the Insurance Division must be notified within
30 days.
what is the number of credits required for fully insured status for social security disability benefits?
40
What is the elimination period for Social Security disability benefits?
5 months
A replacing insurer must be able to produce copies of the Notification Regarding Replacement for at least how many years after a policy has been replaced?
5 years
The partial disability benefit is typically what percent of the regular benefit provided by the policy?
50%
A preexisting conditions provision in a small employer health benefit plan must apply only to a condition that a person sought medical advice, treatment, diagnosis, care or for which treatment was recommended during how many month period immediately preceding the enrollment date of the enrollee or late enrollee?
6 month
Benefits paid to disabled employees are exempt from the Social Security tax after what period of time?
6 months
In a small employer medical plan, a preexisting condition provision applies to conditions for which medical advice or treatment was received within what time frame before the effective date of coverage?
6 months
In order for a sickness to qualify as a pre-existing condition, how many months before the submission of an application must the condition have been treated or addressed by a medical professional?
6 months
What is the waiting period on a Waiver of Premium rider in life insurance policies?
6 months
A participant contributes more than the maximum amount to her Roth IRA. What kind of tax penalty will he or she have to pay?
6%
What is the penalty for excessive contributions to an IRA?
6%
Regarding the concept of creditable coverage, the number of days of coverage spent under the group plan will be used to reduce the 12-month waiting period for pre-existing conditions coverage if the employee does not have a break in coverage of __ days or more.
63
Notice of a hearing for a cease and desist order must be given at least how many days in advance?
7
Long-term care premium payments are deductible as a medical expense to the extent that when added to all other unreimbursed medical expenses, the total exceeds of the taxpayer's adjusted gross income if the taxpayer itemizes his/her deductions.
7.5%
There is an exemption from the 10% penalty on premature IRA withdrawals if they are used to pay medical expenses in excess of what percent of a person's adjusted gross income?
7.5%
An employer offers a short-term disability plan to its employees. How much of a given employee's income would be covered under the plan?
70%
The Cash Surrender rider in a policy creates a cash value of around what percent of the premiums that are paid into a disability income insurance policy in excess of claims paid out?
70%
How many eligible employees must be included in a contributory plan?
75%
The maximum amount than can be contributed to an MSA is ____ of the high-deductible plan for individuals.
75%
An HMO is required to provide the member with inpatient hospital care inside or outside of the service area for at least how many days per year for the treatment of each injury or sickness
90 days
In most cases, an insurer must give how many days notice before they are allowed to terminate a producer's appointment?
90 days
Medicare Part A helps a person pay for inpatient hospital care for up to how many days in a participating hospital in any benefit period.
90 days
A woman's health insurance policy dictates which doctors she is allowed to see. Her health providers share an assumed risk for their patients and encourage preventative care. What best describes the health system that the woman is using? A) Managed Care B) Comprehensive health C) Major medical D) Group health
A
Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insurance for full disability benefits. Which disability policy provision does this describe? A) Presumptive disability B) Dismemberment disability C) Partial disability D) Residual disability
A
Dave is injured in a construction accident, rendering him unable to work for a year. Which of the following plans would provide him with medical cost and income assistance? A) Workers Compensation B) Employee Disability C) Federal Workers Disability D) Worker's Injury Insurance
A
In which of the following cases is the doctor considered to be an employee of the PPO? A) Closed panel B) Both open and closed panel C) Neither open nor closed panel D) Open panel
A
In which of the following instances would the premium be tax deductible? A) Premiums paid by an employed on a $30,000 group term life insurance plan for employees B) Premiums paid by an individual on his/her own life insurance C) Premiums paid by a mother on her son's policy D) Premiums paid by an employed on the life of a key person
A
Of the following choices, which of the statements about occupational versus nonoccupational coverage is true? A) Disability insurance can be written as occupational and nonoccupational B) Group medical expense policies and individual medical expense policies always cover both occupational and nonoccupational injuries C) Individual disability policies never cover nonoccupational injuries D) Only group disability income policies can be written on an occupational basis
A
The purpose of managed care health insurance plans is to A) Control health insurance claims expenses B) Provide for the continuation of coverage when an employee leaves the plan C) Give the insured an unlimited choice of providers D) Coordinate benefits
A
Which of the following are the main factors taken into account when calculating residual disability benefits? A) Present earnings and earnings prior to disability B) Earnings prior to disability and the length of disability C) Employee's full-time state and length of disability D) Present earnings and standard cost of living
A
Which of the following statements regarding the Change of Beneficiaries Provision is false? A) The policyowner has the right to change beneficiaries in any case B) A policyown can change beneficiaries without the consent of the former revocable beneficiary C) The policyowner cannot change beneficiaries if he/she has chose to have an irrevocable beneficiary, unless the policyowner has the permission of the irrevocable beneficiary D) All policies that allow a death benefit must at least provide the option of a change of beneficiary provision.
A
Which of the following would NOT be considered a limited coverage policy? A) Major Medical Expense Insurance B) Accident insurance C) Cancer insurance D) Credit insurance
A
Which type of insurance provides funds for a business organization to purchase the business interest of a disabled partner? A) Disability Buy-Sell B) Disability Interest Buy-Out C) Corporate Transfer D) Corporate Disability
A
Who may contribute to an HR-10 plan? A) Self-employed plumber B) Manage of a store C) Corporate executive D) Partner with at least 5% owndership
A
When an insurance company plans to seek and use information obtained from investigators, they must first provide the applicant with:
A Disclosure Authorization Notice
If a life insurance policy develops cash value faster than a seven-pay whole life contract, it is
A Modified Endowment Contract.
Regarding the primary differences between a traditional IRA and a Roth IRA, which of the following statements is not accurate?
A Roth IRA grows tax deferred.
Underwriting for disability insurance is unique due to the type of risk involved. Which of the following situations illustrates this? 1) A stunt-person pays a lower premium than a data entry operator. 2) An attorney pays a higher premium and receives a poorer classification of disability. 3) A construction worker pays a low premium and receives a higher classification of disability. 4) A construction worker pays a higher premium and receives a poorer classification of disability.
A construction worker pays a higher premium and receives a poorer classification of disability.
Which of the following statements is INCORRECT? 1) A deferred compensation fund is usually a qualified plan. 2) Deferred compensation funds can be established by employers. 3) Deferred compensation funding can be made with cash deposits to an annuity. 4) Deferred compensation funds generally provide additional retirement benefits.
A deferred compensation fund is usually a qualified plan.
Lisa and Lena own a shop together. They are partners in their business of 2 years. Lisa is a designer; Lena is a seamstress. Lisa worries Lena will become disabled and be unable to sew, so she inquires about purchasing insurance to be able to buy out Lena's half of the business if she becomes disabled. What does an agent tell them about a disability buy-sell plan?
A disability buy-sell plan protects the insured in case of disability. It allows the policy-owner to buy out the partner's interest in the business, and the benefits are tax free.
Which statement best defines a Multiple Employer Welfare Arrangement (MEWA)? 1) A joining together by employers to provide health benefits for employee 2) A group health plan that covers medical expenses arising from work related injuries 3) A plan that provides hospice care for terminally ill employees 4) A government health plan that provides health care for the unemployed
A joining together by employers to provide health benefits for employee
Before insurers may transact business in a specific state, they must apply for....from the state department of insurance and meet any financial (capital and surplus) requirements set down by the state.
A license or Certificate of Authority
When Brad reads the first page of the cancer policy that was just delivered, what is one of the first things he should notice?
A limited policy notice
When Jeremiah applied for a life insurance policy, the agent informed him that a medical exam would be required. The exam may be completed by
A paramedic or examining physician at the insurer's expense.
Concerning insurance, the definition of a fiduciary is
A person who is responsible for handling insurance premiums for the insurer
The term "illustration" in a life insurance policy refers to
A presentation of non- guaranteed elements of a policy
Which of the following is an example of a producer's fiduciary responsibilities?
A producer promptly forwarding premiums to the insurance company
Concerning insurance, the definition of a fiduciary is
A producer who handles insurer funds in a trust capacity.
Insurance companies may be classified according to the legal form of their ownership. The type of company organization that offers their policy holders a risk sharing mechanism is called:
A reciprocal company.
All of the following are correct about the required provisions of a health insurance policy EXCEPT
A reinstated policy provides immediate coverage for an illness.
All of the following are correct about the required provisions of a health insurance policy EXCEPT 1) Proof-of-loss forms must be sent to the insured within 15 days of notice of claim. 2) A reinstated policy provides immediate coverage for an illness. 3) A grace period of 31 days is found in an annual pay policy. 4) The entire contract clause means the signed application, policy, endorsements, and attachments constitute the entire contract.
A reinstated policy provides immediate coverage for an illness.
Which of the following is true? 1. A scheduled plan is called a basic plan. 2. A basic plan is a comprehensive plan. 3. There are two varieties of dental indemnity plans. 4. None of the above
A scheduled plan is called a basic plan.
When an agent collects the premium, what else should be obtained?
A statement of good health
At age 30, Tom wants to start an insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. Which of the following policies would most likely fit Tom's needs?
Adjustable Life
The duty (or duties) of a producer where replacement is involved include 1) Leaving a copy or original of all solicitation material used for presentation to the applicant. 2) Submitting to the replacing insurer a copy of all soliciting material. 3) Submitting to the replacing insurer a statement signed by the applicant as to whether or not he has existing life insurance. 4) All of the above
All of the above
Which of the following are true? 1. The entire premium for a personally-owned medical plan is paid for by the insured. 2. Premium payments on personally-owned disability income insurance are not tax deductible by the individual. 3. The entire premium for a personally-owned long term care policy is paid for by the insured. 4. All of the above
All of the above
Which of the following provisions is mandated by HIPAA? 1) Dependent coverage up to age 19 regardless of student status. 2) All plans must cover preventive care. 3) All policies offered to small employers must be guaranteed issue. 4) All plans must offer high maximum limits.
All policies offered to small employers must be guaranteed issue
An agent is acting ethically in all of the following situations EXCEPT 1) Working within the conditions of his/her contract. 2) Representing the insurer, not the insured. 3) Always representing the insured. 4) Keeping customers' best interests in mind.
Always representing the insured.
Assuming that all of the following people are covered by a High Deductible Health Plan and are not claimed as dependents on anyone's tax returns, which would NOT be eligible for a Health Savings Account?
Amanda is 67 and is covered by a basic medical expense policy
What would be deducted from the death benefit paid to a beneficiary, if a partial accelerated death benefit had been paid while the insured was still alive?
Amount paid with accelerated benefit + earnings lost by insurance company in interest income from accelerated benefit
Which of the following would be deducted from the death benefit paid to a beneficiary, if a partial accelerated death benefit had been paid while the insured was still alive?
Amount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit
When Marsha purchased her Disability Income policy 6 years ago, she misstated her age to the agent. She told the agent that she was 30 years old, when in fact, she was 37. If the policy contains the optional provision
Amounts payable under the policy will reflect Marsha's correct age.
A 56-year-old annuitant decides to withdraw all the money from the annuity before he retires. Which of the following is correct?
An age-based penalty will be imposed for withdrawing the annuity
A 56-year-old annuitant decides to withdraw all the money from the annuity before he retires. Which of the following is correct?
An age-based penalty will be imposed for withdrawing the annuity.
Which of the following applicants could the insurer charge a higher rate and not be charged with unfair discrimination?
An applicant that is a female.
Under which condition would an employee's group medical benefits be exempt from income taxes?
An employee's group medical benefits are generally exempt from taxation as income.
Inspection reports may be obtained by an insurance company from
An independent investigating firm.
13. Under HIPAA, which of the following is INCORRECT regarding eligibility requirements for conversion to an individual policy? 1) An individual who doesn't qualify for Medicare may be eligible. 2) An individual who was previously covered by group health insurance for 6 months is eligible. 3) The gap of coverage for eligibility is a period of 63 or less days. 4) An individual who was previously covered by group health insurance is eligible.
An individual who was previously covered by group health insurance for 6 months is eligible.
Under which of the following circumstances would an insurer pay accelerated benefits?
An insured is diagnosed with cancer and needs help paying for her medical treatment
All of the following statements concerning Waiver of Premium riders are correct EXCEPT 1) Once activated, the Waiver of Premium will continue until the insured's recovery or the maturity of the policy, whichever occurs first. 2) Waiver of Premium riders require that disability needs to last for a certain period of time. 3) An insured who has recovered from a disabling injury will be required to repay the insurer for any premiums that were waived. 4) There is a maximum age limit for the Waiver of Premium rider to activate.
An insured who has recovered from a disabling injury will be required to repay the insurer for any premiums that were waived.
Which of the following is not applied toward the deductible under a nonscheduled plan? 1) Gingivitis treatment 2) Root canal 3) Wisdom tooth extraction 4) Annual dental exam
Annual dental exam
All other factors being equal, the least expensive first-year premium payment is found in
Annually renewable term
When an annuity is annuitized, whose life expectancy is taken into account?
Annuitant
Which of the following is NOT true about an insurance consultant in the State of Oregon? 1) Consultants offer advice for a fee 2)Individuals may act as consultants in both life, health, property and casualty insurance 3) A consultant must hold a valid license 4) Any attorney-at-law may be considered a consultant
Any attorney-at-law may be considered a consultant.
Mike purchased a policy to provide coverage on himself, his wife Linda, and their two children, Jon and Kris. All of them would need to prove insurability EXCEPT
Any children born to them after the inception of the contract.
Which of the following is NOT true about an insurance consultant in the State of Oregon?
Any insurance adjuster may be considered a consultant.
The Director regulates insurance rates through detailed rate reviews. The Director will prohibit insurance rates that are
Any of the above.
An insurer is attempting to determine the insurability of an applicant and decides to obtain medical information from several different sources. Which entity must be notified of the investigation?
Applicant
Which of the following individuals must have insurable interest in the insured?
Applicant
An insurer wants to begin underwriting procedures for an applicant. What source will it consult for the majority of its underwriting information?
Application
What is the consideration in a policy?
Application given to a prospective insured
Representations are written or oral statements made by the applicant which
Are considered true to the best of the applicant's knowledge.
Under a Key Person disability income policy, premium payments
Are made by the business and are not tax-deductible.
All of the following are true of the federal tax advantages of a qualified plan, EXCEPT
At distribution, all amounts received by the employee are free of taxes.
All individual and group health insurance policies that provide medical benefit expense insurance on any type of a cost incurred or service basis which provides coverage for the dependent family members of an insured participant are required to cover the newborn child of the insured starting when?
At moment of birth
When must the Medicare Supplement Buyer's Guide be presented?
At the time of application
Which document would give the underwriter a better understanding of how the insured was treated for various illnesses?
Attending Physicians Statement (APS)
If an insurer meets the State's financial requirements and is approved to transact business in the state,
Authorized.
The risk management technique that is used to prevent a specific loss by not exposing yourself to that activity is called
Avoidance.
A husband and wife are insured under group health insurance plans at their places of employment. Because their employers pay for their plans, each is covered as a dependent under their spouse's coverage. If the husband is hospitalized, how are the medical expenses likely to be paid? A) The husband will have to select a plan from which he wants to collect benefits B) The benefits will be coordinated C) Neither plan would pay D) The husband can collect from each plan
B
A life insurance policy used to fund an agreement that contractually established the intent of someone to purchase a business upon the insured business owners death is a A) Stock redemption plan B) Buy-sell agreement C) Key person policy D) Split-dollar plan
B
A provision found in insurance policies which prevents the insured from collecting twice for the same loss is called A) Appraisal B) Subrogation C) Consent to settle loss D) Right of salvage
B
All of the following are true of Key Person insurance EXCEPT A) The key employee is the insured B) The plan is funded by the permanent insurance only C) There is no limitation on the number of key employee plans in force at any one time D) The employer is the owner, payor and beneficiary of the policy
B
An insured purchased a disability income policy with a 10-year benefit period. The policy stated a 20-day probationary period for illness. If the insured is hospitalized with an illness two weeks after the policy was issued, how much will the policy pay? A) It will pay until the insured is released from the hospital B) Nothing, illness is not covered during the first 20-days of the contract C) The insured will receive a return of premium D) It will pay up to 10 years of benefits
B
Anna loses her left arm in an accident that is covered by her Accidental Death and Dismemberment policy. What kind of benefit will Anna most likely receive from this policy? A) The principal amount in monthly installments B) The capital amount in a lump sum C) The principal amount in a lump sum D) The capital amount in monthly installments
B
For an individual who is NOT covered by an employer-sponsored plan, IRA contributions A) Are partially tax deductible depending on the income level B) Will be tax deductible C) Will be deducted based on the income level D) Are never tax deductible
B
When a disabled dependent child reaches the age limit for coverage, how long does the policyowner have to provide proof of dependency in order for the dependent to remain covered under the policy? A) 15 days B) 31 days C) 60 days D) 10 days
B
Mr. Raines is the recipient of an Accidental Death and Dismemberment (AD&D) policy purchased by his employer. The policy pays triple indemnity in case of accidental death. If Mr. Raines died 2 months after an accident, as a result of an accident stipulated in the policy, how will the benefits paid be taxed?
Benefits received are considered income tax free.
John owns a medical expense policy he purchased for his family. John's employer purchased a group Disability Income policy for John and all eligible employees. John subsequently suffered an accident on the job that left him unable to work for four months. If John receives benefits from his disability income policy, which of the following would be true?
Benefits received by John that are attributable to employer contributions are fully taxable to the employee as income.
John owns a medical expense policy that he purchased for his family. John's employer purchased a Group Disability Income policy for John and all eligible employees. John subsequently suffered an accident on the job that left him unable to work for four months. If John receives benefits from his disability income policy, which of the following would be true?
Benefits received that are attributable to employer contributions are fully taxable to the employee as income.
The First Street Church plans to sponsor a summer camp for the youth of their congregation. They would like to purchase insurance that would pay benefits should one of the youth get injured while participating in the camp activities. The type of policy they would likely need is a/an
Blanket.
Which of the following group plans allow benefits to be collected income tax-free by the employee, without exception? 1) Accidental Death and Dismemberment 2) Employer Group Health 3) Long-Term Care 4) Both 1 and 2
Both 1 and 2
A policy that uses the accidental bodily injury definition will provide coverage that is __________ than a policy that uses the accidental means definition.
Broader
A business wants to make sure that if a key employee becomes disabled, the business will be protected from any resulting loss. Which kind of insurance will protect the business?
Business Disability
Brendon owns a small computer store. He is involved in a car accident that renders him totally disabled for half a year. Which type of insurance would help him pay for expenses of the company during the time of his disability?
Business Overhead Expense Policy
Which of the following options best depicts how the eligibility of members for group health insurance is determined? 1) By the physical conditions of the applicants at the time of employment 2) In such a manner as to establish individual selection as to the amounts of insurance 3) By conditions of employment 4) Eligibility is not determined, but simply accepted
By conditions of employment
A man works for Company A and his wife works for company B. The spouses are covered by health plans through their respective companies that also cover the other spouse. If the husband files a claim, A) The insurance plans will split the coverage evenly B) Both plans will pay the full amount of the claim C) The insurance through his company is primary D) The insurance through the wife's company is primary
C
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT A) The employed pays a bonus to a selected employee to fund the policy B) It is considered a nonqualified employee benefit C) The policy is owned by the company D) Any type of insurance policy may be used
C
If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy? A) It is taxable only if it exceeds the amounts paid for premiums by 50% B) It is automatically taxable C) It is only taxable if the cash value exceeds the amount paid for premiums D) It is not considered to be taxable
C
In long-term care insurance, what type of care is provided with intermediate care? A) Daily care, but not nursing care B) Intensive case C) Occasional nursing or rehabilitative care D) Nonmedical daily care
C
In terms of Social Security, what is the interval spanning between the day when the youngest child of a family turns 16 and before the surviving spouse turns age 60 called? A) Latent Interval B) Accumulation Period C) Blackout Period D) Nonpayment Interval
C
In which of the following locations would skilled care most likely be provided? A) In an outpatient setting B) At a physicians office C) In an institutional setting D) At a patients home
C
The period of time immediately following a disability during which benefits are not payable is A) The grace period B) The residual period C) The elimination period D) The probationary period
C
What is the goal of the HMO? A) Limiting the deductible and coinsurance to reduce costs B) Providing health services close to home C) Early detection through regular checkups D) Providing free health services
C
All of the following renewability and cancellation provisions are permitted in Oregon, EXCEPT: 1) Cancellable. 2) Guaranteed renewable. 3) Optionally renewable. 4) Conditionally renewable.
Cancellable.
Anna loses her left arm in an accident that is covered by her Accidental Death and Dismemberment policy. What kind of benefit will Anna most likely receive from this policy?
Capital amount in lump sum
Under which non-forfeiture option does the company pay the surrender value and have no further obligations to the policy-owner?
Cash surrender
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policy owner?
Cash surrender
Pete, the owner of a TV sales store, is the insured under a disability buy-sell policy. Were Pete to die or become disabled, the policy would provide
Cash to Pete's business partner to accomplish a buy-out.
What does "liquidity" refer to in a life insurance policy?
Cash values can be borrowed at any time
A tax sheltered annuity is a special tax-favored retirement plan available
Certain groups of employees only, like public educators.
In order for an insurer to legally transact insurance, it must obtain which of the following?
Certificate of Authority
Paul is injured while robbing a convenience store. How does his major medical policy handle the payment of his claim?
Claim is denied if Paul's policy contains the Illegal Occupation provision
Most scheduled plans provide first-dollar benefits without
Co-insurance and Deductibles.
The provision that provides for the sharing of expenses between the insured and the insurance company is
Coinsurance
A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?
Collateral Assignment
A producer is proposing that his client, Richard, purchase a new life insurance policy. Which of the following is the producer NOT required to do? 1) Keep a record of the application on file for three years 2) Collect a signed statement from Ken about his existing life insurance. 3) Collect Ken's fingerprints. 4) Place Ken's premium in a trust account.
Collect Richards's fingerprints
Clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident
Common Disaster Clause
Under which process does the insurance company monitor an insured's hospital stay to make sure that everything is proceeding according to schedule and that the insured will be released from the hospital as planned?
Concurrent review
Intended to provide coverage on a date earlier than the date of the issuance of the policy
Conditional Receipt
The contract provision which allows the insurer to not renew health coverage if certain events occur, like early retirement, is
Conditionally Renewable.
If a policy that is issued in Oregon covers a person who resides in another state and who has a claim outside the state of Oregon, the insurance company must:
Conform to the statutes of the state where the policyholder lives.
In reference to fixed annuities, what comprises most of a life insurance company's general account?
Conservative investments like bonds
Something of value that is transferred between the 2 parties to form a legal contract
Consideration
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as what?
Consideration
Which type of report includes information regarding a consumer's credit, character, reputation, and habits collected by a reporting agency from employment records, credit reports, and other public sources?
Consumer Report
Which of the following provisions must be included on the first page of a Medicare supplement policy and states the insurer's right to change premium amounts?
Continuation Provision
Which of the following situations will incur a 10% penalty for an early withdrawal from an IRA?
Contract holder is 55 1/2.
Contracts that are prepared by one party and submitted to the other party on a "take it or leave it" basis are classified as
Contracts of adhesion
Which of the following describes the tax advantage of a qualified retirement plan?
Contributions and earnings of the plan are exempt from the employee's taxable income
Which of the following describes the tax advantage of a qualified retirement plan?
Contributions and earnings of the plan are exempt from the employee�s taxable income.
Which of the following is true concerning profit sharing plans that do not provide a specific formula for calculating the profits to be shared?
Contributions must be substantial and regular
If an employee terminates her employment, which of the following provisions would allow her to continue health coverage under an individual policy, if requested within 31 days?
Conversion
Which of the following provisions give an employee's former spouse the right to exchange group insurance for an individual policy within 60 days of the separation or divorce?
Conversion provision
The type of policy that can be changed from one that does not accumulate cash value to one that does, is a:
Convertible Term Policy.
Has provision allowing policy owner to cover to permanent insurance
Convertible term policy
A specific dollar amount of the cost of care that must be paid by the member?
Copayment
Medicare Supplement Plan A provides what?
Core, or basic, benefits established by law
What are the conditions for the interest in a corporate-owned annuity to grow tax deferred?
Corporate-owned annuities need to be written with a measurable life as the annuitant.
Which of the following is not an exclusion in a dental expense benefit plan? 1.The replacement of lost appliances 2. Oral hygiene instruction 3. Treatment for preexisting conditions 4. Cosmetic services necessary as a result of an injury
Cosmetic services necessary as a result of an injury
All of the following are usually provided under an employer group dental insurance plan EXCEPT 1) Coverage for cosmetic treatment. 2) The dental plan places limits on such procedures as braces and appliances. 3) Preventive care for up to 2 visits per year. 4) The dental plan is typically written in conjunction with group health insurance.
Coverage for cosmetic treatment.
What characteristic makes whole life permanent protection?
Coverage until death or age 100.
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
An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his A) Experience Rating B) Group rate C) Insurer's scheduled rate D) Attained age
D
An insured is covered under 2 group health plans-under his own and his spouse's. He had suffered a lose of $2,000. After the insured paid the total of $500 in deductible and coinsurance, the primary insurer covered $1,500 of medical expenses. What amount, if any, would be paid by the secondary insurer? A) $1,500 B) $1,000 C) $2,000 D) $500
D
Andy has a health insurance policy with Sandy listed as a primary beneficiary. He would like to change his primary beneficiary to his sister Mandy. Which of the following is true? A) Andy can only change beneficiaries with Sandy's consent, unless she is designated as an irrevocable beneficiary B) Andy can only change beneficiaries if a court deems the change acceptable C) If Andy wants to change his beneficiary, he will have to cancel his policy and apply for a new one with Mandy name listed instead of Sandy's D) Unless the policy designated Sandy as an irrevocable beneficiary, Andy can make the change without Sandy's consent
D
Social Security is funded by payroll tax imposed on a percentage of employee's income. This percentage is called A) The income tax quotient B) The federal tax basis C) The earned income dividend D) The taxable wedge base
D
Under HIPAA, group health plans cannot impose more than a 12 month pre-existing conditions exclusion for a person who sought medical advice, treatment, or diagnosis within at the last A) 12 months B) 30 days C) 3 months D) 6 months
D
Under what condition are group disability income benefits received by an employee NOT taxable as income? A) When the employer makes all the premium payments B) When the employee is 59 1/2 C) When the amount of the benefit is equal or less than the amount of contributed by the employer D) When the benefits received are equal or less than the employee's percentage of the contribution
D
When an employee covered under a health reimbursement account changes employers, the HRA A) Follows the employee B) Returns to the insurer C) Is split between the employee and the employer D) Stays with the employer
D
Which of the following applicants would NOT qualify for a Keogh Plan? A) Some who has been employed for more than 12 months B) Someone who is over 25 years of age C) Someone who works for a self-employed individual D) Someone who works 400 hours per year
D
Which of the following is considered a qualifying even under COBRA? A) Marriage B) Relocation C) Promotion D) Divorce
D
Which type of a hospital policy pays a fixed amount each day that the insured is in the hospital? A) Surgical B) Blanket C) Medigap D) Indemnity
D
Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled?
Disability Buy-Sell
This arrangement specifies who will purchase a disabled partner's interest in the event he or she becomes disabled
Disability Buyout
Agreement that specifies who will purchase a disabled partner's interest and legally obligates that person or party to purchase such interest upon disability
Disability Buyout Agreement
Which of the following scenarios will incur a 10% tax penalty on distributions?
Distributions are made on a policy before age 59 1/2
Under the Fair Credit Reporting Act, a consumer may request the substance of the information contained in his/her report. If the consumer challenges the correctness of the information, the reporting agency must
Do nothing if the agency feels its report is accurate.
If an annuitant dies before annuitization occurs, what will the beneficiary receive?
Either the amount paid into the plan or the cash value of the plan, whichever is greater.
If an annuitant dies before annuitization occurs, what will the beneficiary receive?
Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount
Concerning group Medical and Dental insurance, which of the following statements is INCORRECT?
Employee benefits are tax deductible the year in which they were received.
Employers and insurance companies are given some latitude in setting minimum eligibility requirements for employee participants. These may include
Employees must be full time workers. & A probationary period.
The main purpose of ERISA is to ensure that
Employees receive the pension and other benefits promised by their employers.
Which type of dental care would cover repairing a root canal?
Endodontics
What is the general duty of the Commissioner?
Enforce insurance laws
The policy, in combination with the application, is joined together into one entity called the
Entire Contract
When a life insurance policy is cancelled and the insured has selected the extended term insurance option, the cash value will be used to purchase term insurance that has a face amount
Equal to the original policy for as long a period of time that the cash values will purchase.
Are not securities, but they invest on a relatively aggressive basis to aim for higher returns
Equity Indexed Annuities
An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard & Poor's 500 index. She would likely purchase an:
Equity Indexed Annuity.
14. Utilization Management consists of the evaluation and assistance with all of the following, EXCEPT: 1) The appropriateness of care. 2) The quality of care. 3) Prospective review. 4) Estimating the insured's out of pocket costs for care.
Estimating the insured's out of pocket costs for care.
What is the difference between the Medicare approved amount for a service or supply and the actual charge?
Excess charge
Which of the following is an example of a non- qualified retirement plan
Executive bonus plan
Who is the owner of the policy and who pays the premium in an Executive Bonus Plan?
Executive is the owner and the Executive pays the premium.
Only an....of the company, not an agent, has authority to make any changes to the policy.
Executive officer
The authority granted to an agent is defined in the agent's agreement setting forth the specific powers and functions of the agent, is referred to as
Express Authority.
Which policy component decreases in decreasing term insurance?
Face amount.
An applicant is denied insurance because of information found on a consumer report. What act requires that the insurance company supply the applicant with the name and address of the consumer reporting company?
Fair Credit Reporting Act
Protects consumers against the circulation of inaccurate or obsolete personal or financial information
Fair Credit Reporting Act
All individual and group health insurance policies that provide medical benefit expense insurance on any type of a cost incurred or service basis which provides coverage for the dependent family members of an insured participant are required to cover an adopted child of the insured after 31 days.
False
All necessary blood is covered under Medicare Part A.
False
An insurance company or producer may claim that its policies are guaranteed by the Life and Health Insurance Guaranty Association.
False
Benefits are taxable to the plan participant when they are received during the retirement and when the retired person may be in a much lower tax bracket. Distributions prior to age 70 � impose a 10% tax penalty.
False
Emergency care will not be provided for a member if they are outside the HMO service area.
False
If the insured person dies during the grace period, then the insurance company is not obligated to pay the death benefit
False
In Oregon, insurance companies that insure small employers are required to actively offer small employers at least three medical plans.
False
Risk Avoidance is a method of dealing with risk for a group or individual person, or a business with the same or similar exposure to loss.
False
Under certain conditions, Medicare Part A can help to pay for hospice care for people who are terminally ill if the care is provided by a Medicare- certified hospice. There are special benefits periods that apply to hospice care. Part A pays for two 60 day periods and one 30 day period.
False
HMOs allow participants to receive services from providers outside the plan but with higher cost sharing requirements.
False PPOs allow participants to receive services from providers outside the plan but with higher cost sharing requirements.
What is the advantage of having a qualified annuity?
Favorable tax treatment
J applied for a life insurance policy on January 10, it was issued on January 31. J did not receive the policy until February 18. J decides that he does not want the policy. When would J need to return the policy to the insurer in order to receive a full refund of premium paid?
Feb. 28th-- 10 days after policy is delivered
When an employee is still employed upon reaching age 65, is Medicare enrollment an option?
Federal laws require that people who participate under Medicare who are also covered by an employer sponsored medical plan are subject to federal guidelines regarding the relationship between Medicare and other plans.
The type of plan that will reimburse the insured (or the provider if the insured assigns the benefits) a payment for each different type of medical service that has been provided is called what?
Fee for Service
The requirement that producers must account for all insurance funds collected, and without the expressed consent of the insurance company(ies) are not permitted to co-mingle those funds with their own funds is known as
Fiduciary responsibility.
A producer is acting in what capacity when he or she is trying to obtain creditable information about an applicant for health insurance?
Field underwriter
When the policy owner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?
Fixed amount
If a beneficiary wanted a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what option would a beneficiary select?
Fixed period
The annuity purchased with multiple payments, whose benefit is paid more than one year after the purchase is known as which type of annuity?
Flexible Premium Deferred Annuity
Key person life insurance does NOT reimburse a company for which of the following?
For increased pension liability resulting from a key person's death.
What is the maximum period that an insurer would pay benefits in accordance with a Waiver of Premium rider?
For the duration of the disability or the contract, depending on which ends first
Alden is involved in a small plane accident that renders him permanently deaf, although he does not sustain any other major injuries. Alden is still able to perform his current job. To what extent will he receive Presumptive Disability benefits?
Full benefits
If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?
Full death benefit
Policies do not cover losses caused by war, military service, intentionally self-inflicted injuries, overseas residence, or injuries suffered while committing/attempting to commit a felony
General Disability policies
George wants to transfer his personal insurance policy to his friend. Under what conditions would this be possible?
George will need the written consent of his insurer.
What kind of policy issues certificates of insurance to insureds?
Group insurance
In life insurance policies, cash value increases
Grow tax deferred.
Ted and Fred are attorneys at law and operate their practice as a partnership. They want to start a program through their practice that will provide retirement benefits for themselves and three employees. They would likely choose
HR-10 (Keogh plan).
When the agent receives the application and issues a conditional receipt, the insurer....
Hasn't approved the application & issued the policy
A projection of insurance needs that is based upon the capitalization of an applicant's future earnings is
Human life value approach.
Which of the following is NOT correct concerning taxation of disability income benefits? 1) If the insured paid the premiums, any disability income benefits are tax-free. 2) If the benefits are for a permanent loss, they are not subject to income taxation no matter who paid the premium. 3) If the employer paid the premiums, income benefits are taxable to the insured as ordinary income. 4) If paid by the individual, the premiums are tax deductibl
If paid by the individual, the premiums are tax deductible.
Which of the following determines whether insurance benefits are taxed?
If the premiums were or were not taxed
An insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit?
If the primary beneficiary predeceases the insured
What type of annuity can be purchased with a single premium and provides benefit payments immediately?
Immediate
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?
Immediate annuity.
Medicaid provides all of the following benefits EXCEPT 1) Eyeglasses. 2) Family planning services. 3) Income assistance for work-related injury. 4) Home health care services.
Income assistance for work- related injury
Medicaid provides all of the following benefits EXCEPT
Income assistance for work- related injury.
The benefits received by the business in a Disability Buy-Sell policy are
Income tax free
Prevents an insurer from denying a claim due to statements in an application after the policy has been in force for 2 years, even on the basis of a material misstatement of facts or concealment of a material fact.
Incontestability Clause
An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium?
Increase because insured will be 5 years older than when policy was purchased
A Return of Premium term life policy is written as what type of term coverage?
Increasing
Hospital policy that pays a fixed amount each day that the insured is in a hospital?
Indemnity
Which type of hospital expense policy pays a fixed amount each day that the insured is in a hospital?
Indemnity
A morale hazard may exist due to
Indifference to loss.
All of the following are differences between individual and group health insurance EXCEPT 1) In individual policies, the individual selects coverage options, while in a group plan all employees are covered for the same coverage which is chosen by the employer. 2) Individual coverage can be written on an occupational or non- occupational basis, while group plans cover only non-occupational. 3) Individual insurance does not require medical examinations, while group insurance does require medical examinations. 4) Individual policies are renewable at the option of the insured, while group usually terminates when the individual leaves the group.
Individual insurance does not require medical examinations, while group insurance does require medical examinations.
Name one of the three classes of Health Insurance Policies.
Individual or Group policies Private or Government policies Limited or Comprehensive policies
When making a sales presentation for life insurance, you are required to do all of the following EXCEPT:
Inform the prospect of your role in advising and representing the client
Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be?
Installments for a fixed period
The Medical Information Bureau, which is supported by insurance companies, was designed to protect
Insurance companies from adverse selection by high risk persons.
What does the insuring clause specify?
Insurance company, name of insured & covered perils
The expense for an autopsy covered under the physical exam and autopsy provision is paid by
Insurer
When acting within the scope of their contract, the actions taken by an agent/producer will be assumed to be the acts of the
Insurer.
Credit Life insurance
Insures the life of a debtor
An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments & expense factors, the cash values could change from those shown in the policy at issue time. The policy is an:
Interest-sensitive whole life policy.
What statement best describes the Free Look provision?
It allows the insured to return the policy within 10 days and receive a full refund of premiums.
What is the main purpose of the Seven-pay Test?
It determines if the insurance policy is an MEC.
Why is an equity indexed annuity considered to be a fixed annuity?
It has a guaranteed minimum interest rate.
Which of the following is true of a qualified plan? 1) It has a tax benefit for both employer and employee. 2) It does not need to have a vesting schedule. 3) It may discriminate in favor of highly paid employees. 4) It may allow unlimited contributions.
It has a tax benefit for both employer and employee.
Which of the following best describes annually renewable term insurance?
It is a level term insurance.
What is the main purpose of the Seven-pay Test?
It is a test to determine a life insurance policy is funded properly and therefore qualifies for the favorable tax treatment that is provided to life insurance policies.
Which of the following is NOT true regarding a Certificate of Authority? 1) It may be necessary for transacting business in a specific state. 2) It is issued to group insurance participants. 3) It is an equivalent of insurance license. 4) It is issued by the state department of insurance.
It is issued to group insurance participants.
Which of the following would be a specific advantage life insurance has over other types of insurance?
It performs the function of cash accumulation.
Which of the following applies to the ten-day free look privilege?
It permits the policy owner to reject the policy with a full refund of premium.
Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option?
It provides a higher monthly benefit than a pure life annuity
If a retirement plan or annuity is "qualified", this means
It satisfies all requirements of the Internal Revenue Service for favorable tax treatment.
What is TRUE concerning the Accidental Death Rider?
It will pay double or triple the face amount
Which of the following is NOT true regarding the accumulation period of an annuity? 1) It is also known as the pay-in period. 2) It is the period over which the annuitant makes payments into an annuity. 3) It is the period during which the annuity payments earn interest. 4) It would not occur in a deferred annuity
It would not occur in a deferred annuity.
Which of the following is true of a PPO? 1) Its goal is to channel patients to providers that discount services. 2) No copayment fees are involved. 3) A most common type of PPO is the staff model. 4) Claim forms are completed by members on each claim
Its goal is to channel patients to providers that discount services.
Which statement is NOT true, regarding a Straight Life policy?
Its premium steadily decreases over time, in response to its growing cash value.
Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable & still provide a death benefit should one of them die?
Joint Life
Norm and Vera own a permanent policy which covers both of their lives and pays the face amount of the policy only upon the death of the first. Norm and Vera own a
Joint Life Policy.
A Straight Life policy has what type of premium?
Leven annual premium for the life of the insured
Which of the following is an example of a limited-pay life policy? -Level Term Life -Straight Life -Life Paid-Up at age 65 -Renewable Term to age 70
Life Paid-Up at age 65
Mortality tables are statistical tables used by life insurance companies to help predict
Life expectancy and the death rates for specific groups of individuals.
Which of the following statements would best describe the difference between life settlements and accelerated death benefits?
Life settlements are funded by a third party, and Accelerated Death benefits are provided by the insurer that issued the original policy.
Mary wants both protection and savings and is willing to pay premiums until retirement at age 65. The policy she will choose is
Limited pay whole life insurance.
Sally has a life insurance policy that requires that she only pay premiums for a specified number of years or until death (if death occurs before the end of the specified period). What kind of policy does she have?
Limited-pay Life Insurance Policy
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
Live at least to his life expectancy.
All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?
Lower
The larger the percentage that is paid by the insured, the....the required premium will be.
Lower
An applicant who receives a preferred risk classification qualifies for
Lower premiums than a person who receives a standard risk.
Anna has a policy with a $250 per year deductible that pays 80% of UCR up to $10,000 with a $1000 corridor deductible and then pays 100% of UCR. Which type of policy does she have?
Major Medical Insurance
Julie must have orthodontic work performed on her incisors. Which type of service would this be called, under a nonscheduled plan?
Major service
Which of the following statements is INCORRECT concerning an IRA? 1) Married individuals can contribute into two separate accounts, up to a specified amount for each person. 2) Anyone with earned income can have an IRA. 3) Married individuals must contribute into one account for both spouses, up to a specified amount for each person. 4) An individual can contribute 100% of earned income up to a specified limit.
Married individuals must contribute into one account for both spouses, up to a specified amount for each person.
Mary, 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 to be used?
Mary
In group insurance, what is the policy called?
Master policy
In group health insurance, all individuals are covered under what?
Master policy for the same coverages
An employer that fails to meet the continuation requirements for COBRA:
May not take a tax deduction for the premiums paid.
Which of the following programs expands individual public assistance programs for people with insufficient income and resources?
Medicaid
If a dental plan is integrated, it is combined with what type of plan?
Medical
Which of the following is not a government funded insurance program?
Medicare SELECT.
Which of the following best describes an unfair trade practice of in Oregon?
Misleading statements about policy terms that are only made orally and cannot be documented or proven.
A producer who omits a statement which may mislead or deceive the persons addressed has committed
Misrepresentation.
Which of the following best describes a misrepresentation?
Misrepresenting the true nature of a policy in order to induce the policyholder to replace it
Which of the following is NOT true regarding policy loans?
Money borrowed from the cash value is taxable.
Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to an insured is....
Monthly
Alex falls from his roof and damages his spinal column enough to render him disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive?
Monthly premium waiver and monthly income
In a long-term care policy, preexisting condition limitations
Must appear as a separate paragraph and be clearly labeled.
Medicare Part B, Supplemental Medical Insurance
Must be purchased & Is supplemented by the Federal Government out of general revenue
Insurers are classified according to the legal form of their ownership. The type of insurer organized to pay dividends to its policyholders is
Mutual Company.
Julie is 37 years old and owns a policy with a Future Increase Option Rider (FIO). Julie would like to increase the benefit amount offered by her policy. What documentation will be required?
No documentation is required.
. Your client uses $50,000 in inheritance money to purchase a single premium immediate annuity. How soon can he begin receiving income payments
No later than 1 year from the time of purchase
Your client uses $50,000 in inheritance money to purchase a single premium immediate annuity. How soon can he begin receiving income payments?
No later than 1 year from the time of purchase
Can a group that is formed for the sole purpose of obtaining group insurance qualify for group coverage?
No, the group must be formed for a purpose other than obtaining group insurance.
A policy that does not pay dividends to policy owners is a
Non-participating policy.
An insured does not have to pay co-insurance or deductibles on a full-series mouth x-ray, but does have to pay a deductible to get his cavities filled. Which dental plan does he have?
Non-scheduled
Cinderella divorces Prince Charming at age 35 and collects distributions on their retirement plan as a result. What penalties will she have to pay?
None
Medicare Part A will cover what services in a skilled nursing facility? 1. Part time skilled nursing care 2. Occupational therapy 3. Medical social services 4. None of the above
None of the above
While you are reviewing Patrick's employer's contributions to his Health Savings Account with him, he asks you how the contributions affect his taxes. You should advise him that HSA contributions are
Not included in the individual taxable income.
All individual and group health insurance policies providing medical, surgical, or hospital expense in Kansas, must provide reimbursement or indemnity for the treatment of alcoholism, drug abuse, or nervous or mental conditions. Such coverage may be limited to
Not less than 30 days per year when the person is confined in a properly licensed facility
Death benefits payable to a beneficiary under a life insurance policy are generally
Not subject to income taxation by the Federal Government
. A direct rollover or trustee-to-trustee transfer from one pension trustee to another pension trustee is
Not subject to the 20% withholding tax.
An insured purchased a disability income policy with a 10-year benefit period. The policy stated a 20-day probationary period for illness. If the insured is hospitalized with an illness two weeks after the policy was issued, how much will the policy pay?
Nothing, illness is not covered during the first 20-days of the contract
Rita is a resident producer in Washington and a non-resident producer in Oregon. She got married last week and moved into a new home. What must she now do in order to comply with the state rules of Oregon?
Notify the DOI within 30 days
All of the following are types of care that is provided under LTC's home health care EXCEPT 1) Occasional visits by licensed vocational nurses. 2) Occasional visits by registered nurses. 3) Occasional visits by pediatric nurses. 4) Occasional visits by licensed practical nurses.
Occasional visits by pediatric nurses
The dividend option in which the policy owner uses dividends to purchase a term policy for one year is referred to as the
One-year term option.
Limited health insurance policies
Only cover specific accidents or diseases.
Max needs to have his wisdom teeth removed. Which dental treatment would cover the costs of the extraction?
Oral surgery
Which type of dental care would cover operative treatment of the mouth?
Oral surgery
Cosmo has an individual life insurance policy with a face amount of $15,000. He pays a premium each month. What kind of policy did Cosmo purchase?
Ordinary Life
A child is being fitted for braces. Which type of dental care is this?
Orthodontics
Which document helps to insure full and fair disclosure to the recipient of a policy?
Outline of Coverage
Two equal partners in a business worth $150,000 are using a Cross Purchase plan to protect against each other's death. Which of the following statements would be correct?
Partner A buys a $75,000 policy on Partner B naming Partner A as beneficiary
An insured purchases a policy in 2008 and died in 2013. The insurance company discovers at that time that the insured concealed information during the application process. What can they do?
Pay the death benefit
What is another term for the accumulation period of an annuity?
Pay-In Period
"owner" of life settlement contracts
Policyowner of life insurance policy
1. According to Oregon law, all of the following must be included in the treatment of pre-existing conditions, EXCEPT: 1) Pre-existing condition limits may be applied to some adopted children. 2) Credit must be given to anyone who changes plans within 63 days. 3) Pregnancy may be treated as a pre-existing condition. 4) Genetic information does not ever constitute evidence of a pre- existing condition.
Pre-existing condition limits may be applied to some adopted children
Which clause allows both the insured and dentist to know in advance which benefits will be paid?
Precertification
Which of the following is consideration on the part of an insured?
Premium Payment and application
All of the following are examples of risk retention EXCEPT 1) Co-payments 2) Self-insurance 3) Deductibles 4) Premiums
Premiums
Most disability income policies will consider the insured to be totally disabled if he/she suffers the loss of two limbs, hearing, sight, or speech. This type of disability is known as
Presumptive disability.
A long-term care shopper's guide must be presented at what point?
Prior to the time of application
An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called?
Profit sharing plan
The purpose of insurance regulation is to
Promote the public welfare.
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?
Proof of insurability isn't required
Which type of dental treatment involves the replacement of natural teeth with artificial devices?
Prosthodontics
What is the purpose of a fixed-period settlement option?
Provide a guaranteed income for a certain amount of time
Another name for a substandard risk classification is
Rated.
Which nonforfeiture option provides coverage for the longest period of time?
Reduced paid-up
An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of unsurability is provided. Which policy provision allows this?
Reinstatement provision
Gary does not want to assume the risk that his wife may not have enough money if he dies. If he purchases insurance to help assume the risk what is he doing?
Risk Transfer
What two principles are the foundation on which insurance is based and allow insurance companies to be able to operate successfully?
Risk pooling and the law of large numbers
Which of the following statements concerning a Simplified Employee Pension plan (SEP) is INCORRECT? 1) SEPs allow the employer to make annual tax deductible contributions up to 25% of an employee's earned income, not to exceed $46,000. 2) SEPs limit participation to members of closely held corporations. 3) SEPs have a higher tax deductible contribution limit than an IRA. 4) SEPs offer ease of plan administration with minimal reporting requirements.
SEPs limit participation to members of closely held corporations.
Which type of Medicare policy requires insureds to use specific healthcare providers and hospitals, except in emergency situations?
Select
Which of the following best details the underwriting process for life insurance 1) Selection and issuance of policies 2) Selection, classification, and rating of risks 3) Selection, reporting, and rejection of risks 4) Evaluation and classification of risks
Selection, classification, and rating of risks
Type of life insurance policy that generates immediate cash value
Single Premium
Which type of life insurance policy generates immediate cash value?
Single Premium
An insurance policy that only requires a payment of premium at its inception and no further premiums contributions, and in addition to providing insurance protection for the life of the insured, endows at the insured's age 100, is called
Single premium whole life
An insurance policy that only requires a payment of premium at its conception, provides insurance protection for the life of the insured, & matures at the insured's age 100 is called:
Single premium whole life.
If a firm has between 2 and 50 employees that are actively engaged in business on at least 50% of its working days during the preceding calendar quarter, what is its classification?
Small Employer
To improve the availability and affordability of health benefit coverage for small employers, Oregon has established the
Small Employer Carrier Advisory Committee
Level Term
Specific period of years with level premium
Best way to change an application?
Start fresh
Workers Compensation benefits are regulated by which entity?
State government
Eddie submitted an application for life insurance without paying the premium. The application was approved, and now the agent is delivering the policy. What should the agent have Eddie sign?
Statement of Good Health
What characteristic must an annuity have if it is used to accumulate funds in an IRA?
Tax-qualified
When an employer or a group provides group life insurance where the benefit is greater than $25,000, the benefit is taxable to the employee.
The answer is false. When an employer or a group provides group life insurance where the benefit is greater than $50,000, the benefit is taxable to the employee.
Which of the following will NOT be covered under an individual health insurance policy?
The applicant�s grandchild
What happens if a non-member physician is utilized under the Point-Of-Service plan?
The attending physician will be paid a fee for service, but the member patient will have to pay a higher coinsurance amount or percentage for the privilege.
Major medical policy premiums vary according to all of the following factors, EXCEPT:
The availability of health care provider contracts in the service area.
The annuity owner dies while the annuity is still in the accumulation stage. What will happen?
The beneficiary will receive the greater of the money paid into the annuity or the cash value.
What are a life contract's liquid resources?
The cash values you can borrow from your whole life insurance policy
Which of the following characteristics does not need to be met in order for a long-term care policy to be considered tax qualified?
The contract is not guaranteed renewable.
Jim is covered by a high deductible health plan. He makes regular contributions to this HSA. How are those contributions treated in regards to taxation?
The contributions are tax- deductible
Sharon Mills employs 500 workers and contributes to their Health Savings Accounts. To reduce turnover, Sharon wants to tell employees that they will lose their Health Savings Accounts if they leave the company. How should you advise Sharon?
The employees own the accounts and may take them with them when they leave. Sharon will have to find another way to improve retention.
Which of the following statements concerning group health insurance is CORRECT?
The employer is the policyholder.
Randy transfers his life insurance policy to his son Andy two years before Randy's death. Which of the following is true?
The entire face value of the policy will be included in Randy's taxable estate.
What method is used to determine the taxable portion of each annuity payment?
The exclusion ratio
. If both the insured and the primary beneficiary died in the same car accident and it is impossible to determine who died first, which of the following will most likely receive the death benefit?
The insured's secondary beneficiary
Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to
The insured.
Physical Exam and Autopsy" provision, in the case of death of the insured, allows the insurer to conduct an autopsy. The expense for this procedure is paid by
The insurer.
Which of the following is NOT a characteristic of an insurance risk?
The loss must be catastrophic.
What will vary the length of the grace period in health insurance policies?
The mode of premium payment
Which of the following will vary the length of the grace period in health insurance policies?
The mode of the premium payment
All of the following are true of an annuity owner except? -The owner must be the party to receive benefits. -The owner pays the premiums on the annuity. -The owner has the right to name the beneficiary. -The owner is the party who may surrender the annuity.
The owner must be the party to receive benefits.
What determines the cash value of a variable life policy?
The performance of the policy portfolio.
All of the following are characteristics of a Universal Life policy EXCEPT 1) The insurance company reserves the right to adjust the mortality charges and/or interest rate. 2) The policy is a cash value account at a guaranteed interest rate and endowment insurance. 3) In effect, Universal Life is a combination of term insurance and a separate savings account joined in a single contract. 4) The planned premium pays for mortality charges and expenses and any excess is returned to the policy owner.
The planned premium pays for mortality charges and expenses and any excess is returned to the policy owner.
Which of the following regarding a long term care insurance policy is NOT true? 1. No long term care insurance policy that offers only nursing home benefits may be sold in Oregon. 2. All long term care insurance policies must pay benefits when the beneficiary is receiving covered services from a nursing home, assisted living facility, home care agency and an adult foster care center. 3. The policy may contain a provision establishing a new waiting period in the event that existing coverage is converted to or replaced by a new policy within the same company, unless the insured person or group policyholder voluntarily selects to increase benefits. 4. None of the above
The policy may contain a provision establishing a new waiting period in the event that existing coverage is converted to or replaced by a new policy within the same company, unless the insured person or group policyholder voluntarily selects to increase benefits.
An individual purchased a Whole Life Insurance policy and named his wife as the owner. After 20 years the policy has cash values of $12,000. Who has the right to the cash values?
The policy owner
A group of 15 skydivers meet at a seminar and begin talking about life insurance during a break. Because it is expensive to get individual life insurance, they decide to band together to form a small group so that they will be eligible. They apply for small group life insurance and are rejected. Why
The purpose of the group was to purchase life insurance.
A group of 15 skydivers meet at a seminar and begin talking about life insurance during a break. Because it is expensive to get individual life insurance, they decide to band together to form a small group so that they will be eligible. They apply for small group life insurance and are rejected. Why?
The purpose of the group was to purchase life insurance.
With personally owned long term care insurance, the benefits received are taxable and have to be reported as income on a tax return when they are disbursed.
The statement is false Personally owned long term care insurance policy benefits are received tax-free and do not have to be reported as income on a tax return when they are disbursed.
Hospice care is intended for
The terminally ill.
What are GMWBs and GMIBs?
The two most common types of living benefit riders for annuity contracts
In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT
The type of investment.
In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT 1) The length of coverage. 2) The premium payment period 3) The type of investment. 4) The amount of insurance.
The type of investment.
All of the following are characteristics of a group life insurance plan EXCEPT
There is a requirement to prove insurability on the part of the participants.
Which of the following statements regarding Disability Buy-Sell policies is NOT true?
They are contracts that specify how a business will pass between owners in the event one of the owners becomes disabled and can no longer work in the business.
Which of the following is NOT true regarding benefits paid to disabled employees? 1) The benefits are attributable to the employer's contribution. 2) They are exempt from the Social Security tax after 12 months. 3) They are subject to FICA withholding for Social Security. 4) Tax withholding is required for the first 6 months
They are exempt from the Social Security tax after 12 months.
Which of the following statements is most correct concerning irrevocable beneficiaries?
They can be changed only with the written consent of that beneficiary.
What is true regarding health insurance underwriting for a person with HIV?
They can't be declined for medical coverage based solely on HIV status
An insurance company may cancel a small employer plan only if:
They discontinue all small employer plans for 5 years.
What do long-term care policies offer to policyholders to account for inflation?
They offer the option of purchasing coverage that raises benefit levels accordingly.
Which of the following statements is true concerning employer group dental plans? 1) They always contain a conversion privilege. 2) They seldom contain a conversion privilege. 3) They are only marketed as stand-alone plans. 4) They are exempt from COBRA laws
They seldom contain a conversion privilege.
What employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated?
Those who have been insured under the plan for at least 5 years
Required health insurance policy provisions state that no statement or misstatement made in the application at the time it is issued will be used to deny a claim after the policy has been in force for two years.
True
Some HMOs charge the primary care physician the cost of the specialist's services when they refer one of their patients as a disincentive to provide referrals.
True
When someone becomes a member of an HMO they must choose a primary care physician.
True
How much controlled business in a calendar year is considered to be an unlawful rebate?
Twice the amount of the premiums for other health and/or life business.
Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
Twisting
The suitability rules are designed to protect consumers from:
Unfair trade practices and producer misconduct
Incontestability Provision
Unique to insurance contracts
An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdrawals a portion of the policy's cash value. There is a limit for a withdrawal & the insurer charges a fee. What type of policy does the insured most likely have?
Universal Life
What type of policy allows withdrawals or partial surrenders?
Universal Life
What kind of policy allows withdrawals or partial surrenders?
Universal life
All of the following are true regarding the convertibility option under a term life insurance policy EXCEPT 1) Upon conversion, the premium for the permanent policy will be based upon attained age. 2) Evidence of insurability is not required. 3) Most term policies contain a convertibility option. 4) Upon conversion the death benefit of the permanent policy will be reduced by 50%.
Upon conversion the death benefit of the permanent policy will be reduced by 50%.
Victor purchased a noncancelable health insurance policy 1 year ago. All of these are circumstances where the insurance company could cancel or void this policy EXCEPT 1) Within two years of the application, the insurer discovers a misrepresentation. 2) Victor does not pay the premium. 3) Victor reaches the maximum age limit specified in the policy. 4) Victor does not like his policy.
Victor does not like his policy.
If an annuitant dies during the ____________ period, either the cash value or the premiums that have been paid (whichever amount is greater) will be paid to a designated beneficiary. If the beneficiary is not named, the benefit will be paid to the annuitant's estate.
accumulation period
The entire face amount of a policy will be included in a persons taxable estate if The entire face amount of a policy will be included in a persons taxable estate if 1. the insured person is the owner of the policy at the time of death. 2. the insured person's estate is the designated beneficary at the time of the insured person's death. 3. the insured person is the policy owner and assigns or transfers ownership of the policy, or makes a policy a gift within three years prior to his or her death, 4. all of the above
all of the above
The precertification department might recommend alternatives to inpatient hospital care and other hospital services such as 1. home health care. 2. hospice care. 3. ambulatory care. 4. all of the above.
all of the above.
Which of the following premium payment modes will incur the lowest overall payment?
annual
All other factors being equal, the least expensive first-year premium payment is found in
annually renewable term
A Universal life Insurance policy is best described as a/an
annually renewable term policy with a cash value account
accumulation period
earn tax differed interest
when an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a/n
executive bonus
in the executive bonus plan, who is the owner of the policy, and who pays the premium?
executive is the owner, and the executive pays the premium
in a direct rollover, how is the money transferred from one plan to the new one?
from trustee to trustee
if an insured worker has earned 40 quarters of coverage, the worker's status under social security is
fully insured
which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors?
life expectancy
life with refund
life with minimum guaranteed
beneficiary
may elect lump sum or periodic payments
A person convicted of violating Oregon Statutes may be subject to a criminal penalty of
one year in jail
What is the name of a policy where the insurance company distributes its dividends to policy owners in the form of cash payments, reduced premiums, units of paid up insurance, a savings program or by purchasing term insurance.
participating or mutual policy
Whole life insurance is also referred to as what type of insurance?
permanent insurance
A service covered by Part B, Supplemental Medical Insurance is
physician services.
misstatement of age
policy adjustment allowed
in which of the following instances would the premium be tax deductible?
premiums paid by an employer on a $30,000 group life insurance plan for employees
What type of insurance company is a private organization that is publicly owned and incorporated under the laws of its state for the purpose of making a profit for its stockholders.?
stock insurance company
for an individual who is NOT covered by an employer sponsored plan, IRA contributions are
tax deductible
the premiums paid by the employer in a business life insurance policy are
tax deductible by the employer
a 60-year old participant in a 401k plan takes a distribution and rolls it over to an IRA within 60 days. which of the following is true?
the amount of the distribution is reduced by the amount of a 20% withholding tax
Regardless of the makeup of the specific policy and how it works, the only person who has ownership rights and the powers that go with them is who
the policy owner
which of the following best defines the owner as it pertains to life settlement contracts?
the policy owner of the life insurance policy
If an insured continually uses the automatic premium loan option to pay the policy premium loan option to pay the policy premium,
the policy will terminate when the cash value is reduced to nothing
The taxation of insurance benefits for personally- owned policies (policies owned by individuals for personal reasons) is usually determined according to how the premiums are paid.
true If someone pays the premium with money that has already been taxed, the benefits are usually dispersed tax free, meaning they do not have to be reported as personal income on a Federal tax return. If the premium is paid with pre-tax money (money that you have not already paid taxes on) as you might for a qualified plan, or is tax deductible, then the benefits are usually dispersed as taxable income and should be reported as such on a Federal tax return.
All of the following are true regarding the convertability option under a term life insurance policy except? -upon conversion, the premium for the permanent policy will be based upon attained age. -upon conversion, the death benefit of the permanent policy will be reduced by 50%. -Evidence of insurability is not required. -Most term policies contain a convertability option.
upon conversion, the death benefit of the permanent policy will be reduced by 50%.
orthodontics
using braces and appliances for repositioning
Which of the following products requires a securities license?
variable annuity
what is the name of the insured who enters into a viatical settlement?
viator
A 401 (k) qualified retirement plan allows employees to take a reduction in their current salaries by deferring amounts into the retirement plan.Does it also allow the company to match the employee's contribution?
yes
Which of the following best describes fixed-period settlement option?
Both the principal and interest will be liquidated over a selected period of time
At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called
Guaranteed insurability
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy?
Guaranteed insurability option
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?
Life income with period certain
Which of the following is TRUE about nonforfeiture values?
They are required by state law to be included in the policy
A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy be
the benefit is received tax free
Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insureds' death?
A minor son of the insured
Which of the following products will protect an individual from outliving his or her money?
annuity
An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase
Equity Indexed Annuity
Which of the following riders would NOT cause the Death Benefit to increase?
Payor Benefit Rider
An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a Traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer?
10,000 no tax consequence
A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250, 000 life insurance policy to secure the loan. Which provision makes this possible?
Collateral assignment
An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called?
Consideration
What is the benefit of choosing extended term as a nonforfeiture option?
It has the highest amount of insurance protection
Which of the following is correct concerning the taxation of premiums in a key person life insurance policy?
Premiums are not tax deductible as a business expense.
Nonforfeiture values guarantee which of the following for the policy owner?
That the cash value will not be lost
Which of the following information will be stated in the consideration clause of a life insurance policy?
The amount of premium payment
Who is the owner and who is the beneficiary on a Key Person Life Insurance policy?
The employer is the owner and beneficiary.
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?
The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.
Which of the following is NOT true regarding Equity Indexed Annuities?
They earn lower interest rates than fixed annuities
An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. The insured knows that his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilize?
Viatical settlement
The accelerated benefits provision will provide for an early payment of the death benefit when the insured
becomes terminally ill
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?
the annuitant must be a natural person
In a life settlement contract, whom does the life settlement broker represent?
the owner
All of the following are true of an annuity owner EXCEPT
the owner must be the party to receive benefits
The life insurance policy clasue that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the
Incontestability clause
The policy owner 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 the next premium. What option would allow her to do this?
Reduction of premium
An insured committed suicide one year after his life insurance policy was issued. The insurer will
refund the premiums paid
The interest earned on policy dividend is
taxable
Which of the following is TRUE regarding variable annuities?
The annuitant assumes the risks on investment
a producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. this is a personal use of life insurance known as
survivor protection
The interest earned on policy dividends is
taxable
All of the following entities regulate variable life policies EXCEPT
the Guaranty Association
An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term?
the insured may renew the policy for another 10 years, but at a higher premium rate
All of the following are true regarding insurance policy loans except
policy loans can be made on policies that do not accumulate cash value
