Review questions
An individual obtained a life insurance policy in March , but 3 months later was deemed clinically insane by the state of Missouri . Five months later the insured takes his own life . What type of death benefits will the policy beneficiaries receive ? A No death benefits are ever received for deaths that are ruled as suicides . B No benefits will be received because the policy was not in effect for at least one year ; however , all premium payments will be returned
B No benefits will be received because the policy was not in effect for at least one year ; however , all premium payments will be returned .
An Insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy What is this an example of ? A Twisting B Defamation C False advertising D Unfair claims
C False advertising False advertising is the illegal practice of advertising or circulating materials that are untrue , deceptive or misleading
eswa.examfx.com/ExamFX/sye/Missed All of the following long - term care coverages would allow an insured to receive care at home EXCEPT a ) Respite care . b ) Home health care . c ) Skilled care d ) Custodial care in insured's house .
C) skilled care Custodial care , respite care , home health care , and adult day care are all coverages used to reduce the necessity of admission into a care facility . Skilled care is almost always provided in an institutional setting .
How many hours of continuing education must be completed in ethics and Missouri law each licensing period ?
a ) 3 b ) 5 c ) 16 d ) 1 Three of the credit hours must be completed in courses related to ethics . state law and producer duties .
An insured pays a $ 100 premium every month for his insurance coverage , yet the insurer promises to pay $ 10,000 for a covered loss . What characteristic of an insurance contract does this describe ? a ) Aleatory b ) Good health c ) Adhesion d ) Conditional
a ) Aleatory In an aleatory contract , unequal amounts are exchanged between payments and benefits . In this instance , the insured receives a large benefit for a small price .
The classification " small employer " means any person actively engaged in a business during the preceding calendar year employed a ) At least 2 and not more than 50 persons b ) At least 5 and not more than 75 persons . c ) At least 10 and not more than 100 persons . d ) At least 3 and not more than 25 persons .
a ) At least 2 and not more than 50 persons Small employer means any person , firm , corporation , partnership or association that is actively engaged in business that during the preceding calendar year employed at least 2 , but no more than 50 eligible employees
The classification " small employer " means any person actively engaged in a business during the preceding calendar year employed a ) At least 2 and not more than 50 persons b ) At least 5 and not more than 75 persons . c ) At least 10 and not more than 100 persons . d ) At least 3 and not more than 25 persons . firm , corporation
a ) At least 2 and not more than 50 persons b Small employer means any person , firm , corporation , partnership or association that is actively engaged in business that during the preceding calendar year employed at least 2 , but no more than 50 eligible employees .
All of the following statements concerning dividends are true EXCEPT a ) Dividend amounts are guaranteed in the policy . b ) Lower insurance company costs generate higher dividends . c ) They stem from favorable underwriting experience . d ) Favorable investment results generate higher dividends
a ) Dividend amounts are guaranteed in the policy . Dividends cannot be guaranteed .
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 ani a ) Equity Indexed Annuity b ) Variable Annuity c ) Flexible Annuity . d ) Immediate Annuity .
a ) Equity Indexed Annuity The interest rates of Equity Indexed Annuities are tied to the Standard and Poor's Index
Which types of insurance companies marketing long - term care insurance coverage must establish procedures to assure that any comparison of policies by its agents will be fair and accurate ? a ) Every company is required to establish marketing procedures b ) Any company that uses any form of media to market policies that yield no less than 20 % of its business . c ) Mutual and stock.companies . d ) No companies are required to establish marketing procedures
a ) Every company is required to establish marketing procedures Every insurer marketing long - term care coverage must establish marketing procedures to assure that any comparison of its policies by its agents is accurate and fair . Companies must also have marketing guidelines to ensure that excessive insurance is not sold or issued to clients .
Which nonforfeiture option has the highest amount of insurance protection ? a ) Extended Term b ) Conversion ( c ) Decreasing Term d ) Reduced Paid - up
a ) Extended Term The Extended Term nonforfeiture option has the same face amount as the original policy , but for a shorter period of time .
The automatic premium loan provision is activated at the end of the a ) Grace period b ) Free - look period c ) Elimination period . d ) Policy period .
a ) Grace period Provided there is sufficient cash value in the policy , this provision triggers a loan at the end of the grace period to keep a policy in force .
An insured has a continuous premium whole life policy . She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise . What dividend option could she use ? a ) Paid - up option b ) One - year term c ) Reduction of premium d ) Accumulation at interest
a ) Paid - up option With the paid - up option , the insurer can accumulate dividends at interest and then use them , in addition to interest and the policy's cash value , to pay the policy earlier than planned . This is different from paid - up additions , in which the dividends are used to buy additional policies that increase the face amount of the original policy .
The sole beneficiary of a life insurance policy dies before the insured . If the policyowner fails to change the beneficiary before the insured's death , the proceeds of the policy will go to a ) The insured's estate b ) Probate c The state d . The beneficiary's estate .
a ) The insured's estate In the absence of a viable beneficiary , proceeds will be paid to the estate of the insured .
All of the following are true of key person insurance EXCEPT a ) The plan is funded by permanent insurance only . b ) There is no limitation on the number of key employee plans in force at any one time . c ) The employer is the owner , payor and beneficiary of the policy . d ) The key employee is the insured
a ) The plan is funded by permanent insurance only . Key Person coverage may be funded by any type of life insurance .
What is the purpose of the insurability provision in group life policies issued in this state ? a ) To allow the insurer to require proof of insurability from individual insured b ) To automatically renew coverag for a new policy term c ) To require the insurer to provide certificates of insurance to individual insured d ) To guarantee insurability for all eligible applicants
a ) To allow the insurer to require proof of insurability from individual insured Under the insurability provision in group life policies , the insurer has the right to require an individual applicant to provide evidence of insurability as a condition for coverage of the graded death section section
How many hours of continuing education must be completed in ethics and Missouri law each licensing period ? a ) 3 b ) 5 c )16 d ) 1
a) 3 Three of the credit hours must be completed in courses related to ethics , state law and producer duties
A client has a new individual disability income policy with a 20 - day probationary period and a 30 - day elimination period . Ten days later , the client breaks their leg and is off work for 45 days . How many days of disability benefits will the policy pay ? a ) 10 days b ) 15 days c ) 25 days d ) 45 days )
b ) 15 days A probationary period refers to the amount of time that coverage is not available for illness - related disabilities , so it would not apply to a broken leg . The elimination period , however , is the time that must elapse between the onset of the disability and when benefits will start being paid . In this case , the individual is considered disabled for 45 days , and the benefits will start to be paid after 30 days . So , the client will receive benefits for 15 days .
Which of the following is NOT required on an application for a variable life insurance policy ? a ) Questions designed to assist the insurer in determining suitability of the insurance b ) A statement explaining the use of separate accounts in variable insurance c ) A statement that the death benefit may be variable or fixed d ) A statement that cash values may increase or decrease based on the separate account
b ) A statement explaining the use of separate accounts in variable insurance There is no requirement that applications for variable life insurance policies contain a statement explaining separate accounts to the applicant .
How long must an insurer maintain advertisements used in the sale of life insurance ? a ) 2 years . b ) 3 years c ) 5 years d ) 6 years Insurers must All health insurance policies issued in this state must provide coverage for maternity services . How many hours of inpatient care must be provided to a mother after a delivery by caesarian section ? a ) At least 48 b ) At least 96 c ) At least 24 d ) At least 36
b ) At least 96 Health insurance plans must provide coverage for maternity services , including inpatient care for childbirth at least 48 hours following a vaginal delivery , and at least 96 hours following caesarean section
What type of policy allows the insurance company to cancel a policy at any time ? a ) Noncancellable : b ) Cancellable c ) Renewable d ) Guaranteed renewable
b ) Cancellable A cancellable policy may be canceled at any time with proper written notice from the insurer and a refund of any unearned premium . ( The insurer must continue to honor a any claims submitted before the cancellation date )
What does " level " refer to in level term insurance ? a ) Interest rate b ) Face amount c ) Premium . di Cash value
b ) Face amount Level term policies maintain level death benefit ( or face amount ) throughout the term of the policy . In level term insurance , the premium also remains consistent over the years , unlike the premiums of many policies , which increase as the policyholder ages
insured is involved in a car accident . In addition to general , less serious injuries , he permanently loses the use of his leg and is rendered completely blind . The blindness improves a month later . To what extent will he receive Presumptive Disability benefits ? a ) Full benefits until the blindness lifts b ) No benefits c ) Full benefits d ) Partial benefits
b ) No benefits Presumptive Disability plans offer full benefits for specified conditions . These policies typically require the loss of use of at least two limbs , total and permanent blindness , or loss of speech or hearing . Benefits are paid , even if the insured is able to work . Because the insured's blindness was only temporary and the loss of use in only 1 leg , he does not qualify for presumptive disability benefits .
Which of the following is NOT provided by an HMO ? a ) Patient care b ) Reimbursement c) Services d ) Financing
b ) Reimbursement Traditionally the insurance companies have provided the financing while the doctors and hospitals have provided the care . The HMO concept is unique in that the HMO provides both the financing and the patient care for its members . The HMO provides benefits in the form of services rather than in the form of reimbursement for the services of the physician or hospital
The type of policy that can be changed from one that does not accumulate cash value to the one that does is a a ) Whole Life Policy . bi Convertible Term Policy ) Renewable Term Policy d ) Decreasing Term Policy .
b) Convertible Term Policy A convertible term policy has a provision that allows the policyowner to convert to permanent insurance .
How long must an insurer maintain advertisements used in the sale of life insurance ? a ) 2 years . b ) 3 years c ) 5 years d ) 6 years
c ) 5 years Insurers must maintain a record of all advertisements , testimonials , appraisals , and policy analyses for at least 5 years , or upon examination by the Director
Within what time frame after the effective date of coverage of an individual long - term care policy may an insurer exclude coverage of a loss related to a pre - existing condition ? a ) 3 months b ) Once the policy takes effect , all losses will be covered c ) 6 months d) 12 months
c ) 6 months No long - term care insurance policy , excepting group policies , may exclude coverage for a loss related to a pre - existing condition unless the loss begins within 6 months of the effective date of coverage .
small business owner is the insured under a disability policy that funds a buy - sell agreement . If the owner dies or becomes disabled , the policy would provide which of the following ? a ) The business manager's salary b ) Disability insurance for the owner c ) Cash to the owner's business partner to accomplish a buyout d ) The rent money for the building
c ) Cash to the owner's business partner to accomplish a buyout If an owner dies or becomes disabled , the disability policy under the buy - sell agreement would provide enough cash to accomplish a buyout of the company .
Under which of the following employer - provided plans are the benefits taxable to an employee in proportion to the amount of premium paid by the employer ? al Dental Expense b ) Basic Medical Expense c ) Disability Income dy Major Medical
c ) Disability Income The part of the benefit that is provided by the employer's contribution is income taxable to the employee
In a disability policy , the probationary period refers to the time a ) Between the 10th day of an illness - related disability and the first payment . b ) Between the first day of disability and the actual receipt of payment for the disability incurred . c ) During which illness - related disabilities are excluded from coverage . d) Between the first day of disability and the day the disability must continue before the insured receives any benefits .
c ) During which illness - related disabilities are excluded from coverage . disability and the disability continue The probationary period limits coverage on new policies for certain illness - related conditions
The Director , or his designated examiner , may examine the conduct of any insurance company operating in Missouri The Director must conduct a financial examination : of every insurer licensed in Missouri at least a) Every other year . b ) Every three years . c ) Every five years d) Every year .
c ) Every five years . SS374.205 states the Director must exame the finances of every insurer every five years , as part of the examination of the insurer's conduct Next
Fixed annuities provide all of the following EXCEPT a ) Minimum guaranteed rate of interest . b ) Future income payments . c ) Hedge against inflation d ) Equal monthly payments for life .
c ) Hedge against inflation Fixed annuities invest premium payments into a general account - a safe and conservative investment portfolio . They also provide a specified dollar amount for each annuity payment regardless of the purchasing power of the money . Variable annuities premiums are invested in securities , hopefully maintaining a constant purchasing power , and therefore providing protection against inflation
A 65 year old enrolls for benefits under Medicare Part B and submits an application for a Medicare supplement policy two months later . For which of the following reason may the insurer deny the application ? a ) Claims experience b ) Medical condition c ) Material misrepresentation d ) Health status
c ) Material misrepresentation Under the Omnibus Reconciliation Act ( OBRA ) , Medicare supplement insurance may not be denied due to an applicant's health status , claims experience , or medical condition during the first 6 months that the applicant is both 65 or older and enrolled in Medicare Part B. This six months is referred to as the open enrollment period .
Which of the following would be considered a nonqualified retirement plan ? a ) Keogh plan b ) Roth IRA c ) Split - dollar plan d ) 401 ( k )
c ) Split - dollar plan Examples of nonqualified plans are individual annuities and deferred compensation plans for highly paid executives , split - dollar insurance arrangements , and Section 162 executive bonus plans .
Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information ? a ) The Guaranty Association b ) Consumer Privacy Act c ) The Fair Credit Reporting Act d ) Unfair Trade Practices Law
c ) The Fair Credit Reporting Act ) The purpose of the Fair Credit Reporting Act is to protect consumers against the circulation of inaccurate or obsolete information and to ensure that consumer . reporting agencies are fair and equitable in their treatment of consumers .
Which of the following does NOT have to be disclosed in a long - term care ( LTC ) policy ? a ) Any limitations or conditions of eligibility for LTC benefits b ) Any riders or endorsements c ) The aggregate amount of premiums due d ) The meaning of the terms " reasonable " and " customary "
c ) The aggregate amount of premiums due All LTC policies must disclose and explain the renewability provisions . With regard to life insurance policies that provide an accelerated benefit for long - term care , the policy must include a statement to the effect that receipt of the accelerated benefits may be taxable , and that the insured should seek assistance from a personal tax advisat
What must contain a notice of the graded death benefit in a life insurance policy with graded death benefits ? a ) The policy's provisions section b ) The policy's exclusions section c ) The policy application d ) The policy underwriting explanation
c ) The policy application The policy application must contain a notice of the graded death benefit .
When can a Long - Term Care policy deny a claim for losses incurred because of a pre - existing condition ? a ) At any time b ) At no time c ) Within 6 months of the effective date of coverage d ) Within 12 months of the effective date of coverage
c ) Within 6 months of the effective date of coverage A long - term care policy cannot deny a claim for losses incurred more than 6 months from the effective date of coverage because of a pre - existing condition
On its advertisement , a company claims that it has funds in its possession that are , in fact , not available for the payment of losses or claims . The company is guilty of a ) Unfair claim practice b ) Rebating . c) Misrepresentation di Concealment .
c) Misrepresentation Issuing or circulating any sales material that is false or misleading would be considered misrepresentation and is illegal
Ifa policyholder declines the nonforfeiture benefit , what must the insurer provide to the client upon the lapse of the policy ? a ) An aleatory benefit b ) A full refund of premiums c ) Pro Rata premiums d ) A contingent benefit
d ) A contingent benefit Insurers shall provide to the client a contingent benefit that will be available for a specified period of time following a substantial increase in premiums .
The president of a manufacturing company has offered one of the company's officers a special individual annuity plan that is unavailable to lower - echelon employees . This plan would be funded with before - tax corporate dollars , and it does not meet government approval standards . This annuity plan is a ) An executive annuity plan . b ) Subject to government standards . c ) Illegal . d ) Anonqualified annuity plan
d ) A nonqualified annuity plan Nonqualified plans are a perfectly legal way for selected employees to receive certain types of benefits . Before - tax corporate dollars can be used for these plans , and they are not subject to government standards . Because of this , however , nonqualified plans contributions are not tax - deductible , unlike with qualified plans .
The type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called a ) Credit health . b ) Decreasing whole life . c ) Multiple Protection insurance . d ) Credit life
d ) Credit life Credit life is most often sold by lenders and is term insurance written with a face amount and term that is matched to the amount and length of the loan period . Credit insurance is a special type of coverage written to insure the life of the debtor and pay off the balance of a loan in the event of the death of the debtor
During replacement of life insurance , a replacing insurer must do which of the following ? a ) Designate a new producer for a replaced policy b ) Send a copy of the Notice Regarding Replacement to the Department of Insurance c ) Obtain a list of all life insurance policies that will be replaced d ) Guarantee a replacement for each existing policy
d ) Guarantee a replacement for each existing policy The replacing insurance company must require from the producer a list of the applicant's life insurance policies to be replaced and a copy of the replacement notice provided to the applicant , and send each existing insurance company a written communication advising of the proposed replacement .
The benefits received by the business in a Disability Buy - Sell policy are a ) Tax deductible . b ) Partially taxable . c ) Fully taxable . d ) Income tax free
d ) Income tax free In disability buy - sell policies , whether cross purchase or entity , the benefits are received income tax free by the business , but the premiums are not deductible to the business .
A producer has submitted a new application to his insurer ; however , 30 days later there was still no coverage available for the applicant . What must the producer do ? a ) Nothing producer has no further obligations once the application is submitted to the insurer . b ) Submit a complaint to the Department of Insurance c ) Submit a request for coverage to the insurer d ) Inform the applicant in writing
d ) Inform the applicant in writing Producers must ensure that each applicant for new policy receives coverage as soon as reasonably possible . If the insurer does not provide coverage within 30 days of the application , the producer must inform the prospective insured of this fact in writing
Which of the following is TRUE regarding the accumulation period of an annuity ? a ) It is also referred to as the annuity period . b ) It is a period of time during which the beneficiary receives income c ) It is limited to 10 years . d ) It is a period during which the payments into the annuity grow tax deferred
d ) It is a period during which the payments into the annuity grow tax deferred The accumulation period " is the period of time over which the annuitant makes payments ( premiums ) into an annuity . This is the period of time during which the payments earn interest and grow tax deferred .
Which of the following is NOT a type of whole life insurance ? a ) Single premium b ) Straight life c ) Limited payment d ) Level term
d ) Level term There are several types of whole life policies . The first three , Straight Life , Limited Payment , and Single Premium , are the basic forms of whole life . Level term is a type of term insurance
amount due . Which of the following best describes the unfair trade practice of defamation ? al Assuming the name and identity of another person b ) Issuing false advertising material ( c ) Refusing to deal with other insurers d ) Making derogatory oral statements about another insurer's financial condition
d ) Making derogatory oral statements about another insurer's financial condition
What must a health carrier do within 72 hours of receiving a request for an expedited review ? al Provide written confirmation of the carrier's decision b ) Acknowledge receipt of the request c ) Notify the requesting enrollee of the carrier's established written procedures for an expedited review d ) Notify the requesting enrolice of the carrier's determination
d ) Notify the requesting enrollee of the carrier's determination Within 72 hours of receiving a request for an expedited review , the carrier must notify the requesting enrollee of the carrier's decision .
A corporation is the owner and beneficiary of the key person life policy . If the corporation collects the policy benefit , then a ) The benefit is subject to the exclusionary rule . b ) IRS has no jurisdiction . c ) The benefit is received as taxable income . d ) The benefit is received tax free
d ) The benefit is received tax free Should a key person die , the benefit is treated as a reimbursement to the business for loss of services from that key person
Which of the following is TRUE regarding the insurance amount in a credit life policy ? a ) The creditor may insure the debtor for an unlimited amount of coverage . b ) Allowable amount of coverage is determined by the State Insurance Commissioner . c ) The amount of coverage can be greater than the amount owed . d ) The creditor can only insure the debtor for the amount owed
d ) The creditor can only insure the debtor for the amount owed Credit life insurance cannot pay out more than the balance of the debt , so that there is no financial incentive for the death of the insured .
The minimum interest rate on an equity indexed annuity is often based on a ) An index ke Standard & Poor's 500 . b ) The returns from the insurance company's separate account . c) The annuitant's individual stock portfolio d ) The insurance company's general account investments .
d ) The insurance company's general account investments . Equity indexed annuities are not securities , but they invest on a relatively aggressive basis to aim for higher returns . Like a fixed annuity , the equity indexed annuity has a guaranteed minimum interest rate . Interest rates on equity indexed annuities are often tied to a familiar index , such as the Standard and Poor's 500
All individual health policies , issued in the state of Missouri which provide coverage for hospital treatment must also provide coverage for treatment of alcoholism , which may be limited to how many days ? a) 60 b ) 180 c ) There is no limit for the treatment of chemical dependency d) 30
d) 30 Chemical dependency is the psychological or physiological dependency upon and abuse of drugs , including alcohol . Ab individual health policies must cover alcoholismi on the same basis as any other iness , though this coverage may be listed to 30 days
What is the primary purpose of a 401 ( k ) plan ? a ) Education funds b ) To receive dividends over a certain period c ) Life insurance distribution di Retirement
di Retirement allows employees to take a reduction in their current salaries by deferring amounts into retirement plan . The company can also somehow match the employee's Profit - sharing plans are qualified plans where a portion of the company's profit is contributed to the plan and shared with employees . A 401k ) qualified retirement plan contribution , whether it is dollar for dollar or on a percentage basis