Stimulation Test #10

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Representations in insurance contracts qualify as

implied warranties

Which Universal option has a gradually increasing cash value and a level death benefit?

option A

To be eligible under HIPAA regulations, for how long should an individual converting to an individual health plan have been covered under the previous group plan?

18 months

What is the penalty for excessive contributions to an IRA?

6%

Under the Affordable Care Act, a special enrollment period allows an individual to enroll in a qualified health plan within how many days of a qualifying event?

60 days

An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits?

A portion of the benefit up to a limit is tax free, the rest is taxable income

A guaranteed purchase or guaranteed increase rider could allow an insured to do all of the following EXCEPT

Add a new spouse or child to the policy, without proof of insurability

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 that describe?

Aleatory

Which of the following is NOT true of Section 1035 Policy Exchange?

Any exchange made under Section 1035 of the Internal Revenue Code must be completed within 30 days

The risk management technique that is used to prevent a specific loss by not exposing oneself to that activity is called

Avoidance

Which of the following statements concerning buy-sell agreements is true?

Buy-sell agreements are normally funded with a life insurance policy

Which of the following life insurance policies does NOT build cash value?

Guaranteed universal life

An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied?

Material misrepresentation

Which of the following information about the applicant is NOT included in the General Information section of the application for insurance?

Medical backgroud

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

All of the following are the responsibilities of every long term care insurer in California EXCEPT

Provide enough business to solicit long term care insurance

Another name for a substandard risk classification is

Rated

Which of the following entities may NOT be an insurer?

The Commissioner

All of the following entities regulate variable life policies EXCEPT

The Guaranty Association

An employee becomes insured under a PPO plan provided by his employer. If the insured decides to go to a physician who is not a PPO provider, which of the following will happen?

The PPO will pay reduced benefits

Your client has a Social Insurance Supplement (SIS) rider on his disability policy. After he becomes disabled, he receives payments from the company. Shortly thereafter, he also begins receiving Social Security benefit payments. Which of the following will happen?

The SIS payment will be reduced dollar for dollar by the Social Security benefit payment

What determines the penalty for surrendering a market value adjusted annuity prematurely?

The current interest rate at the time of surrender

Which of the following describes the tax advantage of a qualified retirement plan?

The earnings in the plan accumulate tax deferred

Who choses a primary care physician in a HMO?

The individual member

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

Their premiums are lower

Which of the following is true regarding commissions for Medicare supplement policies?

They are permitted up to a certain amount for each policy

When is the insurability conditional receipt given?

When the premium is paid at the time of application

What source pays for individual disability income premiums?

after tax dollars

First Dollar Coverage refers to a type of insurance which

has no deductible

Under a pure life annuity, an income is payable by the company

only for the life of the annuitant

All of the following statements about equity index annuities are correct EXCEPT

the annuitant receives a fixed amount of return

Which of the following is NOT a characteristic of a group long term disability plan?

the benefit can be up to 50% of ones yearly income

An employer offers group life insurance to its employees for the amount of $10,000. Which of the following is true?

the cost of coverage is a deductible expense by the employer

Which of the following is true regarding a market value adjusted annuity?

the owner is guaranteed a fixed interest rate for a specific period of time

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 statements are true regarding installments for a fixed amount EXCEPT

the payments will stop when the annuitant dies

What is the main difference between a life agent and a life analyst?

the way each is compensated

How can insurers obtain information on an applicant's avocations and the way they will affect a risk?

through the use of a questionnaire

All of the following are true regarding the Medical Information Bureau EXCEPT

MIB reports are bases upon information supplied by doctors and hospitals

Which of the following statements is NOT correct regarding Medicare?

Medicare Advantage must be provided through HMO's

Which type of Medicare policy requires insureds to use specific healthcare providers and hospital (network providers), EXCEPT in emergency situations?

Medicare SELECT

Which type of Medicare policy requires insureds to use specific healthcare providers and hospitals (network providers), EXCEPT in emergency situations?

Medicare SELECT

An insured had $500 left in his Health Reimbursement Account when he quit his job. What happens to that money?

The insured can have access to the $500 at his previous employer's discretion

What is the name of a clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military?

War or military service

An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it?

deferred

A new employee who meets HIPAA eligibility requirements must be issued health coverage on what basis?

guaranteed

Which of the following annuity riders ensures that the owner will receive from an annuity at least the amount paid for the annuity?

guaranteed lifetime withdrawal

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

increases annually

Which provision of a life insurance policy states the insurers duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?

insuring clause

All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT

it is a life contingency option

Which of the following statements about the reinstatement provision is true?

it requires the policy owner to pay all overdue premiums with interest before the policy is reinstated

If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age, what type of policy is this?

jumping juvenile policy

The premium of a survivorship life policy compared with that of a joint life policy would be

lower

Which operating division of an insurer is responsible for advertising, promoting, and distributing the insurer's products to the public

marketing and sales

In a POS plan, benefits for covered services when self-referring (without having your primary care physician arrange for the service) are generally

more expensive

Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive

nothing, the payment will cease

Which of the following can surrender a deferred annuity contract?

only the annuity owner

An insured purchases a life policy in 2010 and died in 2017. The insurance company discovers at that time that the insured had misstated information during the application process. What can they do?

pay the death benefit

An HMO is regarded as an organized system of health care that provides a comprehensive array of medical services on a

prepaid basis

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

Which type of beneficiary is changeable at any point?

revocable

A domestic insurer issuing variable contracts must establish one or more

separate accounts

Under Credit Disability Policy, until what point will payments to a Creditor be made for the Insured?

until the disability ends or the debt is satisfied, whichever is sooner

Which of the following statements is TRUE about a policy assignment?

It transfers rights of ownership from the owner to another person

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT

The policy is owned by the company

Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?

Twisting

Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insured's death?

a minor son of the insured

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

any occupation- more restrictive than other definitions

An individual wants to transact business as a life agent in this state. In addition to obtaining a life agent license, what else must the applicant have?

appointment

During a pre-selection interview, an agent is allowed to do all of the following EXCEPT

ask questions that are not on the application but that are important for underwriting

When must insurable interest exist in a life insurance policy?

at the time of application

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 health insurance policy that pays a lump sum if the insured suffers a heart attack or stroke is known as

critical illness

What required provision protects against unintentional policy lapse?

grace period

Which of the below statements does NOT describe a Blue Cross and Blue Shield Plan?

services are paid for at time of use

When an employee covered under a health reimbursement account changes employers, the HRA

stays with the employer

Which of the following is TRUE regarding variable annuities?

the annuitant assumes the risks on investment

What is the purpose of annuity riders?

to allow investors to obtain additional benefit

The purpose of having an elimination period in a policy is to accomplish which of the following?

to allow the client some flexibility in determining their own premium

When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees

to renew the policy until the insured has reached age 65

Under what circumstances would a life insurance contract qualify as a standard policy?

under no circumstances

The maximum penalty for failure to print an individual agent's license number on printed documents is

$1,000

At what age may an individual make withdrawals from an HSA for nonhealth purposes without being penalized?

65

If a person is disabled at age 27 and meets Social Security's definition of total disability, how many work credits must he/she have earned to receive benefits?

12 credits

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 tax free

An insured noticed that his policy stated that he "shall" keep all flammable liquids at least ten feet from an ignition source and "may" consider storing flammable liquids in another location. Based on the policy language, where must the insured keep liquids in relation to ignition sources?

At least 10 feet away


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