SIMULATE YOUR EXAM

When does the initial enrollment period for Medicare Part B begin?

3 months before the insured's 65th birthday

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?

31 days

What is the period of coverage for events such as death or divorce under COBRA?

36 months

In the event a policy lapses due to nonpayment of premium, within how many days would the policy be automatically reinstated once the outstanding premium is paid?

45 days

Ray has an individual major medical policy that requires a coinsurance payment. Ray very rarely visits his physician and would prefer to pay the lowest premium possible. Which coinsurance arrangement would be best for Ray?

50/50

Unreimbursed medical expenses paid for the insured may be claimed as deductions if the expenses exceed what percentage of the adjusted gross income?

7.5%

According to the Entire Contract provision, a policy must contain

A copy of the original application for insurance.

The free-look provision allows for which of the following?

A right to return the policy for a full premium refund

A deductible is

A specified dollar amount that the insured must pay first before the insurance company will pay the policy benefits.

Which of the following long-term care benefits would provide coverage for care for functionally impaired adults on a less than 24-hour basis?

Adult day care

Group health insurance is characterized by all of the following EXCPET?

Adverse selection

In insurance, an offer is usually made when

An applicant submits an application to the insurer

While a claim is pending, an insurance company may require

An independent examination as often as reasonably required.

Disability income coverage specifies that the policy covers the insured if he is unable to preform any job for which he is qualified. In this case, total disability is defined as

Any occupation- more restrictive than other definitions.

What is the term used for an applicant's written request to an insurer for the company to issue a contract, based on the information provided?

Application

What is the maximum period of time during which an insurer may contest fraudulent misstatements made in a health insurance application?

As long as the policy in force

To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested?

At the time of application

Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process ?

Buyer's Guide

Which of the following is a genetic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process?

Buyer's Guide

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?

Consideration

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.

Which of the following is NOT a term for the period of time during which the annuitant of the beneficiary receives income?

Depreciation period

A waiver of premium provision may be included with which kind of health insurance policy?

Disability income

A producer agent must do all of the following when delivering a new policy to the insured EXCEPT

Disclose commissions earned from the sale of the policy.

All of the following statements concerning dividends are true EXCEPT

Dividend amounts are guaranteed in the policy.

The provision that states that both the printed contract and a copy of the application form the contract between the policyowner and the insurer is called the

Entire contract.

Items stipulated in the contract that the insurer will not provide coverage for are found in the

Exclusions.

What does "level" refer to in level term insurance?

Face amount

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.

Which provision allows the policyholder a period of time, while coverage is in force, to examine a health insurance policy and determine whether or not to keep it?

Free Look Period

The automatic premium loan provision is activated at the end of the

Grace period.

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.

What are the 2 types of Flexible Spending Accounts?

Health Care Accounts and Dependent Care Accounts

Which of the following types of LTC is NOT provided in an institutional setting?

Home health care

What are the three basic coverages for medical expense insurance?

Hospital, Surgical, Medical

Which of the following riders would NOT increase the premium for a policyowner?

Impairment rider

Annually renewable term policies provide a level death benefit for a premium that

Increases annually

Underwriting a group health insurance plan that is paid for by the employer requires all of the following EXCEPT

Individual members of the group may select the level of benefits for their own coverage.

Who makes up the Medical Information Bureau?

Insurers

What statement best describes the free look provisions ?

It allows the insured to return the policy within 10 days for a full refund

What is the benefit of choosing extended term as a nonforfeiture option?

It has the highest amount of insurance protection.

Which of the following best describes annually renewable insurance?

It is a level term insurance

If a retirement plan or annuity is "qualified," this means

It is approved by the IRS

Which of the following is NOT true of a major- medical health insurance policy?

It is designed to pay on a first dollar of expenses basis

Which two terms are associated directly with the premium?

Level or flexible

Medicare Advantage is also known as

Medicare Part C.

An applicant for a health insurance policy returns a completed application to her agent, along with a check for the first premium. She receives a conditional receipt two weeks later. Which of the following has the insurer done by this point?

Neither approved the application nor issued the policy

The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the

One-year term option.

Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy?

Owner's Rights

An insured pays her Major Medical Insurance premium annually on March 1. Last March she forgot to mail her premium to the company.On March 19, she had an accidental and broke her leg. The insurance company would

Pay the claim

All of the following are true regarding insurance policy loans EXCEPT

Policy loans can be made on policies that do not accumulate cash value.

A guaranteed renewable health insurance policy allows the

Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class.

Which of the following will be included in a policy summary?

Premium amounts and surrender values

Underwriting is a major consideration when an insured wishes to replace her current policy for all of the following reasons EXCEPT

Premiums always stay the same.

Which of the following is correct concerning the taxation of premium in a key-person life insurance policy?

Premiums are not tax deductible as a business expenses.

Under the Accidental Death and Dismemberment (AD&D) coverage, what type of benefit will be paid to the beneficiary in the event of the insured's accidental death?

Principal Sum

When an insurer combines two periods of disability into one, the insured must have suffered a

Recurrent disability.

When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy, as well as a refund of all of the premiums paid. Which rider is attached to the policy?

Return of premium

Which is the appropriate action by the insurer if a prospective insured submitted an incomplete application?

Return the application to the applicant for completion

What is the best way to change an application?

Start over with a fresh application

Which of the following would an accident-only policy NOT cover?

Surgery to repair a wrist damaged by tendonitis

Which of the following would be a qualifying event as it relates to COBRA?

Termination of employment due to downsizing

Which of the following is NOT true regarding the annuitant?

The annuitant cannot be the same person as the annuity owner.

Which is true regarding obtaining underwriting sources?

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

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?

The date of medical exam

The policyowner of an adjustable life policy 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 best describes the "first-dollar coverage" principle in basic medical insurance?

The insured is not required to pay a deductible.

Which of the following statements is true regarding coinsurance?

The larger the percentage that is paid by the insured, the lower the required premium will be.

Which of the following definitions would make it easier to qualify for total disability benefits?

The more liberal "own occupation"

Which of the following determines the cash value of a variable life policy?

The performance of the policy portfolio

A policy with a 31-day grace period implies

The policy will not lapse for 31 days if the premium is not paid when due.

Which of the following best describes the "owners" as it pertains to life settlement contracts?

The policyowner of the life insurance policy

Which is true about a spouse term rider?

The rider is usually level term insurance.

On a health insurance application, a signature is required from all of the following individuals EXCEPT

The spouse of the policyowner.

Which is generally true regarding insurers who have been classified as preferred risks?

Their premiums are lower

Which of the following is TRUE about nonforfeiture values?

They are required by state law to be included in the policy.

Which of the following 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

An insured notifies the insurance company that he has become disabled. What provision states that claims must be paid immediately upon written proof of loss?

Time of Payment of Claims

What is the purpose of a fixed-period settlement option?

To provide a guaranteed income for a certain amount of time

The paid-up addition options uses the dividend.

To purchase a smaller amount of the same type of insurance as the original policy

An absolute assignment is a

Transfer of all ownership rights in a policy.

In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?

Unilateral

In a survivor life policy, when does the insurer pay the death benefit?

Upon the last death

A medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographic area is known as

Usual, customary and reasonable.

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called

Waiver of premium.

In forming an insurance contract, when does acceptance usually occur?

When an insurer's underwriter approves coverage

The main difference between immediate and deferred annuities is?

When the income payments begins

Who is a third-party owner?

a policy owner who is not the insured

What type of insurance would be used for a Return of Premium rider?

increasing Term

The policy owner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policy owner choose?

interest only option

Which of the following statements is correct about standard risk classification in the same age group with similar lifestyles?

standard risk representative of majority of people

All of the following are correct about the required provision of a health insurance policy EXCEPT?

A reinstated policy provides immediate coverage for all illness.

Which of the following is true regarding taxation of dividends in participating policies?

Dividends are not taxable.

A guaranteed renewable disability insurance policy

Is renewable at the insured's option to a specified age.

Which of the following is INCORRECT concerning Medicaid?

It is solely a federally administered program.

Which of the statements is NOT true regarding a Straight Life Policy?

It's premium steadily decreases over time, in response to its growing cash value.

What type of health insurance policy provides an employer with funds to train a replacement if a valued employee becomes disabled?

Key Person Disability

Which of the following premium modes would result in the highest annual cost for an insurance policy?

Monthly

All of the following are true of annuity owner EXEPT?

The owner must be the party to receive benefits.

Which of the following is the best reason to purchase life insurance rather than annuities?

to create an estate