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Under most dental plans, what limitations are posed for denture replacement? No limitations Only the initial dentures are covered. Once every 5 years Once every 10 years

b Most dental plans limit coverage for repeated procedures. Dentures can only be replaced once every five years.

HIPAA applies to groups of More than 2, fewer than 50. 2 or more. At least 10. At least 100.

a HIPAA applies to groups of two or more.

Which of the following best describes what the annuity period is?a)The period of time from the effective date of the contract to the date of its terminationb)The period of time during which accumulated money is converted into income paymentsc)The period of time from the accumulation period to the annuitization periodd)The period of time during which money is accumulated in an annuity

b The annuity period is the time during which accumulated money is converted into an income stream.

Which of the following is excluded in a dental insurance plan?a)Replacement of a stolen prosthetic deviceb)Lost denturesc)Treatment for the surrounding and supporting tissue of the teeth such as for gum diseased)Cosmetic treatment due to an accident

b Lost dentures are specifically excluded from coverage in a dental plan.

The policyowner 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 policyowner choose?a)Fixed amount optionb)Interest only optionc)Life income with period certaind)Joint and survivor

b With the interest-only option, the insurance company retains the policy proceeds and pays interest on the proceeds to the recipient (beneficiary) at regular intervals.

An applicant wants to buy a policy that has a cash value element. Which type should she buy?a)Termb)Permanentc)Stockd)Investment

b Unlike term insurance, permanent insurance provides lifetime death protection and a savings or cash value option.

Which of the following is NOT covered under Plan A in Medigap insurance?a)The 20% Part B coinsurance amounts for Medicare approved servicesb)The first three pints of blood each yearc)The Medicare Part A deductibled)Approved hospital costs for 365 additional days after Medicare benefits end

c Medicare Supplement Plan A provides the core, or basic, benefits established by law. All of the above are part of the basic benefits, except for the Medicare Part A deductible, which is a benefit offered through nine other plans.

Installing deadbolt locks on the doors of a home is an example of which method of handling risk?a)Transferb)Self-insurancec)Reductiond)Avoidance

c Steps taken to prevent losses from occurring are called risk reduction.

A husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouse's coverage. If one of them incurs hospital expenses, how will those expenses likely be paid? Neither plan would pay. Each plan will pay in equal shares. The insured will have to select a plan from which to collect benefits. The benefits will be coordinated.

c Benefits will be coordinated when individuals are covered under two or more health plans.

A man bought an individual health insurance policy for himself. Which of the following roles does he now legally have?a)Brokerb)Subscriber onlyc)Insured onlyd)Both subscriber and insured

d Insureds are persons covered by health insurance and who receive benefits. Subscribers are people in whose name the contract is issued.

the commissioner has to determined that a producer is ineligible for appointment by an insurer. the commissioner must notify the insurer within

10 days

An insured is admitted to the hospital for surgery on a herniated disk. The insurance company monitors the treatment and progress in order to make sure that everything proceeds according to the insurer's schedule. This is called Comprehensive review. Schedule of benefits. Concurrent review. Prospective review.

a Under the concurrent review process, the insurance company will monitor the 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.

Why is an equity indexed annuity considered to be a fixed annuity? It is not tied to an index like the S&P 500. It has a guaranteed minimum interest rate. It has modest investment potential. It has a fixed rate of return.

a While equity indexed annuities earn higher interest rates than fixed annuities, both types of annuities guarantee a specific minimum interest rate.

Which of the following statements regarding conditional receipts is true? They guarantee the insurer will approve the application. They purchase temporary insurance, up to 6 months. They become part of the policy. They are temporary insuring agreements.

a With a conditional receipt, insurance coverage is effective as of the date of the receipt, so long as the application is approved.

The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as thea)Paid-up additions.b)One-year term option.c)Paid-up option.d)Accelerated endowment.

b The dividend is utilized to purchase one-year term insurance.

Which of the following statements concerning group health insurance is CORRECT? The employer is the policyholder. Only the employer receives a certificate of insurance. Each employee receives a policy. Under group insurance, the insurer may reject certain individuals from coverage.

b The employer receives the master policy; each employee receives a certificate of insurance. All employees have the same coverage under the master contract.

If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered aa)Rollover.b)Settlement option.c)Nontaxable exchange.d)Nonforfeiture option.

b A settlement option is exercised when an immediate annuity is purchased with the face amount at death or with the cash value at surrender.

Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to Beneficiary of the death benefit. The spouse of the insured. The insured. Creditors.

b Payments for loss of life benefits are to be made to the designated beneficiary. If no beneficiary has been named, payment proceeds are to be paid to the deceased insured's estate. Claims other than death benefits are to be paid to the insured or the insured's estate, unless otherwise assigned by the insured.

Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value? Predicted needs of the family after the insured's death. Insured's current and future income. Insured's annual expenses. Effect of inflation on income over time.

b The Human Life Value Approach to determining the value of an individual's life requires the calculation of probable future earnings of the insured, which involves wages, expenses, inflation, amount of time until retirement, and the time value of money. Predicted needs of the family after the insured's death are used in the needs approach.

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. Paid-up option. Accelerated endowment. Paid-up additions.

b The dividend is utilized to purchase one-year term insurance.

Which of the following statements concerning group health insurance is CORRECT?a)Under group insurance, the insurer may reject certain individuals from coverage.b)The employer is the policyholder.c)Only the employer receives a certificate of insurance.d)Each employee receives a policy.

b The employer receives the master policy; each employee receives a certificate of insurance. All employees have the same coverage under the master contract.

In disability income insurance, the own occupation definition of disability appliesa)As long as an individual is unable to work.b)For the first 2 years of a disability.c)During the waiting period.d)During the elimination period.

b The own occupation definition of disability usually applies to the first 24 months after a loss.

Which of the following is true regarding benefits paid to disabled employees? Disability benefits are not taxed. They may be subject to taxation if the premium was paid by the employer. They are exempt from taxation if any portion of the premium was paid by the employee. Tax withholding is required if the employee paid the premium.

c Any portion of the benefit paid for and deducted by the employer will be considered taxable income to the employee.

If a new individual long-term care policyholder is not satisfied with a new policy, within how many days can the insured return the policy for a full premium refund? 30 7 10 90

c Individual long-term care insurance policyholders and group certificate holders who contribute to the cost of their long-term care coverage have the right to return the policy within 30 days of its delivery and have the premium refunded if, after examining the policy or certificate, they are not satisfied for any reason.

OBRA requires which disease to be covered by an employer for 30 months before Medicare becomes the primary mode of coverage?a)Leukemiab)End-stage heart failurec)End-stage renal failured)Black lung

c OBRA requires end-stage kidney (renal) failure to be covered by an employer for 30 months before Medicare becomes the primary mode of coverage.

Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under an accident and health policy must contain A statement from the insured's employer showing that the insured was unable to work. An estimate of the total amount of medical and hospital expense for the loss. A complete physician's statement. A statement that is sufficiently clear to identify the insured and the nature of the claim.

c The Insurance Code requires that each policy must include, "Written notice of claim must be given to the insurer within 20 days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible".

What happens if a non-member physician is utilized under the Point-Of-Service plan? The non-member physician will be paid a fee for service, but the member patient will be penalized per visit on his/her monthly premium. The member patient will have to pay all costs out-of-pocket. The attending physician will be paid a fee for service, but the member patient will have to pay a higher coinsurance amount. The non-member physician will be paid a fee for service.

d If a non-member physician is utilized under the Point-Of-Service plan, then the attending physician will be paid fee for service, but the member patient will have to pay a higher coinsurance amount or percentage for the privilege.

Which of the following is TRUE regarding the annuity period?a)During this period of time the annuity payments grow interest tax deferred.b)It is also referred to as the accumulation period.c)It is the period of time during which the annuitant makes premium payments into the annuity.d)It may last for the lifetime of the annuitant.

d The "annuity period" is the time during which accumulated money is converted into an income stream. It may last for the lifetime of the annuitant or for a shorter specified period of time depending on the benefit payment option selected.

All of the following are true regarding the Medical Information Bureau (MIB) EXCEPTa)MIB information is reported to underwriters in coded form.b)MIB reports contain previous insurance information.c)Insurers may not refuse to accept an application solely due to information in an MIB report.d)MIB reports are based upon information supplied by doctors and hospitals.

d The information contained in MIB reports comes from the underwriting disclosures made by applicants to MIB member insurers on prior insurance applications.

In what way can an agent demonstrate a high standard of ethics? Recommending qualified retirement plans to each client Putting the client's best interests before their own Making enough commissions to cover personal expenses Setting and meeting monthly production goals

d The needs of the client(s) are the priority to a highly ethical agent.

Traditional IRA contributions are tax deductible based on which of the following? IRA limit Owner's income How long the plan has been in force Owner's age

d Traditional IRA contributions are tax deductible, but may be limited if the owner's income exceeds a certain level.

Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled?a)Absolute assignmentb)Transfer of Ownershipc)Disability Buy-Selld)Proprietary Transfer

c The Disability Buy-Sell agreement specifies how a business will pass between business owners if one of the owners dies or becomes disabled.

An insured has Medicare Part D coverage. Upon reaching the initial benefit limit, what percentage of the prescription drug cost is the insured responsible for paying? a)15% b)16% c)23% d)25%

d Once the initial benefit limit is reached, an insured is only responsible for 25% of the prescription drug cost. This percentage applies to generic and brand name drugs.

What is the penalty for IRA distributions that are below the required minimum for the year?a)10%b)25%c)50%d)60%

c If there are no distributions at the required age, or if the distributions are not large enough, the penalty is 50% of the shortfall from the required annual amount.

Maximum benefits for a major medical plan are usually lifetimea)Closed panel.b)Minimums.c)Maximums.d)Open panel.

c Major medical plans have high maximum benefits such as $1,000,000 or $2,000,000. Maximum benefits are usually lifetime maximums.

Once the initial benefit limit is reached, an insured is only responsible for 25% of the prescription drug cost. This percentage applies to generic and brand name drugs.

b Consideration is something of value that is transferred between the two parties to form a legal contract.

The primary eligibility requirement for Medicaid benefits is based upona)Number of dependents.b)Need.c)Whether the claimant is insurable on the private market.d)Age.

b Medicaid is a program operated by the state, with some federal funding, to provide medical care for those in need.

Under most dental plans, what limitations are posed for denture replacement?a)Once every 10 yearsb)No limitationsc)Only the initial dentures are covered.d)Once every 5 years

d Most dental plans limit coverage for repeated procedures. Dentures can only be replaced once every five years.

While a claim is pending, an insurance company may require an independent exam as often as reasonably required.

d Once the initial benefit limit is reached, an insured is only responsible for 25% of the prescription drug cost. This percentage applies to generic and brand name drugs.

Which nonforfeiture option has the highest amount of insurance protection?a)Conversionb)Decreasing Termc)Reduced Paid-upd)Extended Term

d The Extended Term nonforfeiture option has the same face amount as the original policy, but for a shorter period of time.

If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy?a)It is not considered to be taxable.b)It is taxable only if it exceeds the amounts paid for premiums by 50%.c)It is automatically taxable.d)It is only taxable if the cash value exceeds the amount paid for premiums.

d The cash value of a surrendered policy is only considered to be taxable as income if the cash value exceeds the amount of premiums paid for the policy.

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?a)Dividend optionsb)Guaranteed renewable optionc)Nonforfeiture optionsd)Guaranteed insurability option

d The guaranteed insurability option allows the insured to purchase specific amounts of additional insurance at specific times without proving insurability.

While a claim is pending, an insurance company may requirea)An independent examination only once every 45 days.b)An independent examination as often as reasonably required.c)The insured to be examined only within the first 30 days.d)The insured to be examined only once annually.

b While a claim is pending, an insurance company may require an independent exam as often as reasonably required.

Which of the following entities protects policyowners, insureds, and beneficiaries under insurance contracts when insurers fail to perform contractual obligations due to financial impairment?a)Insurance Solvency Associationb)Consumer Protection Agencyc)Life and Health Guaranty Associationd)Insurance Consumer Protectorate

c Guaranty Associations are created to protect policyowners, insureds, and beneficiaries under life insurance policies, health insurance policies, annuity contracts, and supplemental contracts when insurers fail to perform contractual obligations due to financial impairment

Which of the following best describes fixed-period settlement option?a)The death benefit must be paid out in a lump sum within a certain time period.b)Income is guaranteed for the life of the beneficiary.c)Both the principal and interest will be liquidated over a selected period of time.d)Only the principal amount will be paid out within a specified period of time.

c Under the fixed-period option (also called period certain), a specified period of years is selected, and equal installments are paid to the recipient. Both the principal and interest are liquidated together over the selected period of time.

Person A has an insurable interest in Person B and wants to insure B's life. A will be the policy beneficiary. Which of the following is true? Person A must be an irrevocable beneficiary. Person B must consent to be insured in writing. Person B must have an insurable interest in Person A. Person A must be related to the insured by blood.

a If an individual has an insurable interest in the life of another person and wishes to insure the life of that person, that other person must consent in writing or sign the application.

In reference to the standard Medicare Supplement benefits plans, what does the term standard mean? All plans must include basic benefits A-N. Coverage options and conditions are developed for average individuals. All providers will have the same coverage options and conditions for each plan. Coverage options and conditions comply with the law, but will vary from provider to provider.

a In reference to the standard Medicare Supplement benefits plans, the term "standard" implies that all providers will have the same coverage options and conditions for each plan.

Which of the following best describes what the annuity period is? The period of time from the accumulation period to the annuitization period The period of time during which money is accumulated in an annuity The period of time from the effective date of the contract to the date of its termination The period of time during which accumulated money is converted into income payments

a The annuity period is the time during which accumulated money is converted into an income stream.

A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of Defamation. Twisting. Coercion. Loading.

a This is an example of the illegal practice of coercion.

Why is an equity indexed annuity considered to be a fixed annuity?a)It has modest investment potential.b)It has a fixed rate of return.c)It is not tied to an index like the S&P 500.d)It has a guaranteed minimum interest rate.

d While equity indexed annuities earn higher interest rates than fixed annuities, both types of annuities guarantee a specific minimum interest rate.

Bethany studies in England for a semester. While she is there, she is involved in a train accident that leaves her disabled. If Bethany owns a general disability policy, what will be the extent of benefits that she receives?a)Fullb)50%c)25%d)None

d General disability policies do not cover losses caused by war, military service, intentionally self-inflicted injuries, overseas residence, or injuries suffered while committing or attempting to commit a felony.

After three years of making payments into a flexible premium deferred annuity, the owner decides to surrender the annuity. The insurer returns all the premium payments to the owner, except for a predetermined percentage. What is this percentage called?a)Inflation adjustmentb)Surrender chargec)Termination penaltyd)Bail-out charge

b If a deferred annuity is surrendered prematurely, a surrender charge is imposed. The charge is generally a percentage that reduces over time until it ends.

Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified asa)Binding contracts.b)Contracts of adhesion.c)Unilateral contracts.d)Aleatory contracts.

b Insurance policies are written by the insurer and submitted to the insured on a take- it-or-leave-it basis. The insured does not have any input into the contract, but simply adheres to the contract.

Which of the following describes taxation of individual disability income insurance premiums and benefits?a)Premiums are not tax deductible, but benefits are taxable.b)Premiums are tax deductible, but benefits are not taxable.c)Premiums are tax deductible, and benefits are taxable.d)Premiums are not tax deductible, and benefits are not taxable.

b The APS is used to obtain medical DETAILS about a specific condition which has shown up in the application; the insurance company orders the information directly from the physician, using a signed authorization which was part of the application.

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?a)Accidental deathb)Return of premiumc)Cost of livingd)Decreasing term

b The Return of Premium Rider pays the beneficiary not only the face amount of the policy but also the amount that had been paid in premiums. The rider stipulates that death must occur prior to a certain age in order for the premium amount to be returned. The Return of Premium Rider is funded by using increasing term insurance.

Why do group health providers usually require a certain amount of participation in the plan by eligible employees?a)To ensure the employer is being fair to employeesb)To guard against adverse selection and reduce costc)To promote preventive cared)To ensure a higher profit for the insurer

b The reason for the minimum participation requirement is to guard against adverse selection and to reduce administrative costs for the insurer.

Which of the following components of dental insurance does NOT require the payment of a deductible?a)Orthodontic careb)Cosmetic dentistryc)Routine and preventive maintenanced)Routine and major restorative care

c Routine and preventive maintenance does not require the payment of an annual premium or coinsurance, unlike the other two types, which both require deductible payment. Insurers typically do not charge an annual premium or coinsurance in order to provide an incentive for preventive care.

When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty ofa)Misrepresentation.b)Discrimination.c)Nothing, unless the remarks were in writingd)Defamation.

d A producer or broker who makes oral or written statements intended to injure another producer or insurer is guilty of the unfair trade practice of defamation.

Which of the following applies to partial disability benefits?a)Benefits are reduced once an insured is no longer under a doctor's care.b)Payment is limited to a certain period of time.c)An insured is entitled to a principal sum benefit for the partial loss of a limb.d)Payment is based on termination of employment.

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

Which of the following best describes a misrepresentation? a)Making a deceptive or untrue statement about a person engaged in the insurance business b)Making a maliciously critical statement that is intended to injure another person c)Discriminating among individuals of the same insuring class d)Issuing sales material with exaggerated statements about policy benefits

d Misrepresentation is issuing, publishing or circulating any illustration or sales material that is false, misleading or deceptive as to policy benefits or terms, the payment of dividends, etc. This includes oral statements.

All of the following would be considered rebating EXCEPTa)An agent offers tickets to a baseball game as an inducement to buy insurance.b)An agent misrepresents policy benefits to convince a policyowner to replace policies.c)An agent offers the use of his lake house to a client as an inducement to buy an insurance policy from him.d)An agent offers to share his commission with a policyholder.

b Rebating occurs when an insured is offered something of value in order to induce the sale of an insurance product. Both the offer and acceptance of a rebate are illegal.

In a disability policy, the elimination (or waiting) period refers to the period betweena)During which any specific illness or accident is excluded from coverage.b)The first day of disability and the day the insured starts receiving benefits.c)The effective date of the policy and the date the first premium is due.d)Coverage under a disability policy and coverage under Social Security.

b The elimination, or waiting, period starts at the onset of a disability claim and is the period of time the insured must wait before benefits start.

An insured misstates her age at the time the life insurance application is taken. This misstatement may result ina)Recession of the policy.b)Adjustment in the amount of death benefit.c)No change whatsoever.d)Automatic lapse.

b If the applicant has misstated his or her age or gender on the application, the insurer, in the event of a claim, is allowed under this provision to adjust the benefits to an amount that the premium at the correct age or gender would have otherwise purchased.

A flexible premium universal life insurance policy must provide a grace period ofa)10 days.b)30 days.c)60 days.d)90 days.

b Michigan regulations require universal life insurance policies to provide for a grace period of 30 days

After the elimination period, a totally disabled insured qualified and started receiving benefits from his disability income policy that has a waiver of premium rider. What will most likely happen to the premiums paid into the policy during the elimination period?a)Premiums will be waived.b)Premiums will be refunded.c)Premiums will be retained by the company, but no further premium will be required for the duration of the disability.d)Premiums will be prorated.

b Premiums that were paid by the insured during the elimination period are usually refunded once the insured qualifies to begin receiving benefits.

All of the following are considered unfair trade practices in the business of insurance EXCEPTa)Defamation.b)Sharing commissions.c)Boycott.d)Rebating.

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

What phase begins after a new policy is delivered?a)Grace periodb)Free-look periodc)Insurability periodd)Elimination period

b The Free-Look Period occurs after a policy is delivered. This period allows the insured to review the policy and return it for a refund of the premium within a certain time interval.

Which of the following is another name for a primary care physician in an HMO?a)Specialistb)Gatekeeperc)Subscriberd)Referring physician

b The HMO subscriber must choose a primary care physician (PCP) who acts as a gatekeeper. If the member needs the attention of a specialist, the PCP must make a referral. This helps the member avoid higher priced specialists unless it is truly necessary.

Upon policy delivery, the producer may be required to obtain any of the following EXCEPTa)Delivery receipt.b)Signed waiver of premium.c)Statement of good health.d)Payment of premium.

b The policy does not go into effect until the premium has been collected. If the premium was not collected at the time of the application, the producer may also be required to get a Statement of Good Health from the applicant at the time of policy delivery. Waiver of premium is a rider that can be added to a life insurance policy, and not something to be obtained from the applicant.

Which of the following disability income policies would have the highest premium?a)15-day waiting period / 5-year benefit periodb)15-day waiting period / 10-year benefit periodc)30-day waiting period / 10-year benefit periodd)30-day waiting period / 5-year benefit period

b The waiting, or elimination, period is the time from the onset of disability the insured must wait before becoming eligible for benefits. The shorter the waiting period, the higher the premium. After the insured satisfies the waiting period, they will receive benefits from the insurer for a limited benefit period. The longer the benefit period, the higher the premium. A disability income policy that includes the shortest waiting period and the longest benefit period would be most expensive.

In what way can an agent demonstrate a high standard of ethics?a)Setting and meeting monthly production goalsb)Recommending qualified retirement plans to each clientc)Putting the client's best interests before their ownd)Making enough commissions to cover personal expenses

c The needs of the client(s) are the priority to a highly ethical agent.

An insured is covered by a disability income policy that contains an accidental means clause. The insured exits a bus by jumping down the steps and breaks an ankle. What coverage will apply?a)No coverage will apply, since disability income policies cover sickness only.b)Coverage will apply since the break was accidental.c)Coverage will apply, but will be reduced by 50%.d)No coverage will apply, since the injury could have been foreseen.

d An accidental means clause states that if the insured meant to do whatever caused their injury, no coverage applies since the resulting injury should have been foreseen.

How long is the required grace period in life insurance policies in this state?a)3 monthsb)10 daysc)15 daysd)1 month

d In Michigan, each life insurance policy must provide a grace period of 1 month for the payment of every premium after the first year.

All of the following are true of key person insurance EXCEPTa)There is no limitation on the number of key employee plans in force at any one time.b)The employer is the owner, payor and beneficiary of the policy.c)The key employee is the insured.d)The plan is funded by permanent insurance only.

d Key Person coverage may be funded by any type of life insurance.

Medicare Advantage is also known asa)Medicare Part D.b)Medicare Part A.c)Medicare Part B.d)Medicare Part C.

d Medicare consists of Hospital Insurance protection (Part A), Medical Insurance protection (Part B), and Medicare Advantage (Part C) (formerly known as Medicare+Choice). Medicare Part D is a "stand alone" drug insurance policy for persons who need the coverage and are eligible for Medicare Part A and/or Part B.

Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under an accident and health policy must containa)A statement from the insured's employer showing that the insured was unable to work.b)An estimate of the total amount of medical and hospital expense for the loss.c)A complete physician's statement.d)A statement that is sufficiently clear to identify the insured and the nature of the claim.

d The Insurance Code requires that each policy must include, "Written notice of claim must be given to the insurer within 20 days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible".

Which of the following actions does NOT constitute false advertising? a-misrepresenting the dividends of a policy b-misrepresenting the terms of a policy c-using names that disguise the true nature of a policy d-requiring applications more quickly than what's reasonable e-state that dividends are not guaranteed f-representing an insurance policy as a share of stock

d & e

Which of the following best describes annually renewable term insurance?a)It requires proof of insurability at each renewal.b)Neither the premium nor the death benefit is affected by the insured's age.c)It provides an annually increasing death benefit.d)It is level term insurance.

d Annually renewable term is a form of level term insurance that offers the most insurance at the lowest cost.

Which of the following is an example of a producer being involved in an unfair trade practice of rebating?a)Making deceptive statements about a competitorb)Telling a client that his first premium will be waived if he purchases the insurance policy todayc)Inducing the insured to drop a policy in favor of another one when it is not in the insured's best interestd)Charging a client a higher premium for the same policy as another client in the same insuring class

b Rebating is defined as offering any inducement in the sale of insurance products that is not specified in the policy, including money, reductions in commissions, promises, and personal services. Both the offer and acceptance of a rebate are illegal.

All of the following can qualify as a trust EXCEPTa)A group formed by two or more employers in the same field.b)A group that has the Commissioner's permission to issue a group health insurance policy.c)An employer insuring at least 5 employees for the benefit of that employer.d)A labor union that insures at least 25 members.

c A group health insurance policy issued to a trust cannot benefit the employer.

In which of the following cases would an "any occupation" disability income policy pay the benefits? a)The insured is unable to perform the duties of his or her specific occupation. b)The insured changes jobs and is injured as a result of a more hazardous occupation. c)The insured's family has unexpected expenses due to the insured's disability. d)The insured is unable to perform any jobs in the field related to the insured's education and experience.

c A policy that has an "any occupation" provision will only provide benefits when the insured is unable to perform any of the duties of the occupation for which they are suited by reason of education, training, or experience.

If a change needs to be made to the application for insurance, the agent may do all of the following EXCEPTa)Note on the application the reason for the change.b)Destroy the application and complete a new one.c)Erase the incorrect answer and record the correct answer.d)Draw a line through the first answer, record the correct answer, and have the applicant initial the change.

c An agent should not use white-out, erase or obliterate any answers given to a question on an application. It could prevent an insurer from contesting the application, should it be necessary.

What process will the insurance company use to monitor the insured's hospital stay to make sure that everything is proceeding according to schedule?a)Corridor deductibleb)Preventive reviewc)Concurrent reviewd)Prospective review

c Under the concurrent review process, the insurance company will monitor the 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.

A participating insurance policy may do which of the following?a)Provide group coverageb)Pay dividends to the stockholderc)Require 80% participationd)Pay dividends to the policyowner

d A participating insurance policy will pay dividends to the owner based upon actual mortality cost, interest earned and costs.

When is the insurability conditional receipt given?a)After the application has been approved and the premium has been paidb)When an insured individual needs to obtain an insurability receipt for tax purposes.c)If the application is approved before the premium is paidd)When the premium is paid at the time of application

d Under the terms of the insurability conditional receipt, the insurance coverage becomes effective as of the date of the receipt, provided the application is approved. This receipt is generally provided to the applicant when the initial premium is paid at the time of application.

A group blanket health policy is best suited for which of the following?a)A large familyb)A summer campc)A small employerd)A manufacturer

b Group blanket health insurance policies are meant to cover members of a group or association without evidence of insurability. Coverage is usually limited to loss from specific causes.

When a policyowner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called a)Irrevocable designation. b)Stirpes designation. c)Class designation. d)Revocable designation.

c A designation such as the child of the insured, or all children of the insured, or all current members of a group, is called a "class designation." The individuals need not be specifically named, since each who meet the qualifications of being included in the class will share in the benefit.

Under what condition are group disability income benefits received by an employee NOT taxable as income? a)When the employee is 59 ½. b)When the amount of the benefit is equal or less than the amount of contributed by the employer. c)When the benefits received are equal or less than the employee's percentage of the contribution. d)When the employer makes all the premium payments.

c Benefits received by the employee that are attributable to his or her portion of the contribution are not taxable as income.

When must an IRA be completely distributed when a beneficiary is not named? a)December 31 of the year following the year of the owner's death. b)Due date of the deceased owner's final tax return including extensions. c)December 31 of the year that contains the fifth anniversary of the owner's death. d)Due date of beneficiary's tax return including extensions.

c If the owner dies before distributions have begun, the entire interest must be distributed in full on or before December 31 of the calendar year that contains the fifth anniversary of the owner's death, unless the owner named a beneficiary.

When must an IRA be completely distributed when a beneficiary is not named?a)December 31 of the year following the year of the owner's death.b)Due date of the deceased owner's final tax return including extensions.c)December 31 of the year that contains the fifth anniversary of the owner's death.d)Due date of beneficiary's tax return including extensions.

c If the owner dies before distributions have begun, the entire interest must be distributed in full on or before December 31 of the calendar year that contains the fifth anniversary of the owner's death, unless the owner named a beneficiary.

What is the penalty for IRA distributions that are below the required minimum for the year? a)10% b)25% c)50% d)60%

c If there are no distributions at the required age, or if the distributions are not large enough, the penalty is 50% of the shortfall from the required annual amount.

On a major medical insurance policy, the amount that an insured must pay on a claim before the insurer will pay is known asa)Inside limit.b)Coinsurance.c)Deductible.d)Copayment.

c On a major medical claim, dollar deductibles are paid up front, and the coinsurance, or sharing of the cost, is paid after the deductible is met and the claim is submitted.

Which renewability provision allows an insurer to terminate a policy for any reason, and to increase the premiums for any class of insureds?a)Cancellableb)Guaranteed renewablec)Optionally renewabled)Conditionally renewable

c The renewability provision in an optionally renewable policy gives the insurer the option to terminate the policy for any reason on the date specified in the contract (usually a renewal date). Furthermore, this provision allows the insurer to increase the premium for any class of optionally renewable insureds.

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

c 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.

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have? a)Term life b)Limited pay c)Universal life d)Adjustable life

c Universal Life policies allow for policyholders to withdraw a limited portion of the policy's cash value. Each withdrawal, however, is usually charged, and the amount and frequency of withdrawals are usually limited.

Which of the following is the term for the specific dollar amount that must be paid by an HMO member for a service?a)Premiumb)Cost sharec)Copaymentd)Deductible

c A copayment is a specific dollar amount of the cost of care that must be paid by the member. For example, the member may be required to pay $5 or $10 for each office visit.

Who might receive dividends from a mutual insurer?a)Stockholdersb)Agentsc)Policyholdersd)Subscribers

c A mutual insurer has no stock, and is owned by the policyholders. Since they may receive a dividend (not guaranteed), such policies are known as participating policies. Dividends received by policyholders of a mutual insurer are not taxable.

What describes the specific information about a policy?a)Buyer's guideb)Producer's reportc)Policy summaryd)Illustrations

c A policy summary describes the features and elements of the specific policy for which a person is applying.

Which concept is associated with "exclusion ratio"?a)How exclusion riders affect an insurance premiumb)Policy provisionsc)Annuity paymentsd)Dividend distribution

c A portion of an annuity payment is taxable, while another portion is not. The return of the principal paid in is nontaxable. The portion that is taxable is the actual amount of payment, less the expected return of the principal paid in. This relationship is called the "exclusion ratio."

Disability income policies can provide coverage for a loss of income when returning to work only part-time after recovering from total disability. What is the benefit that is based on the insured's loss of earnings after recovery from a disability?a)Partial disabilityb)Income replacementc)Residual disabilityd)Recurrent disability

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

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?a)Indemnityb)Representationc)Warrantyd)Concealment

c A warranty in insurance is a statement guaranteed to be true. When an applicant is applying for an insurance contract, the statements he or she makes are generally not warranties but representations. Representations are statements that are true to the best of the applicant's knowledge.

Which of the following is true of a children's rider added to an insured's permanent life insurance policy?a)The policy covers only the natural children of the insured.b)Each child covered must show evidence of insurability.c)It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.d)It is permanent insurance.

c Children's rider is term insurance covering all of the children in the family, including newly born children, and is convertible to permanent insurance upon a child reaching the maximum age without evidence of insurability.

An insured does not have to pay coinsurance 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?a)Procedure-basedb)Scheduledc)Nonscheduledd)Limited

c Diagnostic and preventative services are generally not subject to coinsurance or deductibles in nonscheduled plans, but basic and major services are.

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?a)$8,000, tax on growth onlyb)$10,000, tax on growth onlyc)$10,000, no tax consequenced)$8,000, no tax consequence

c During an IRA direct transfer (or direct rollover), the full amount gets reinvested from one plan to the other.

A portion of an annuity payment is taxable, while another portion is not. The return of the principal paid in is nontaxable. The portion that is taxable is the actual amount of payment, less the expected return of the principal paid in. This relationship is called the "exclusion ratio."

c Equity Indexed Annuities invest on an aggressive basis in order to yield higher returns. Like a fixed annuity, Equity Indexed Annuities have guaranteed minimum interest rates. The insurance company often keeps a predetermined percentage of the return and pays the rest to the annuity owner. Equity Indexed Annuities are less risky than variable annuities and earn higher interest rates than fixed annuities.

Which of the following is NOT typically excluded from life policies?a)Death that occurs while a person is committing a felonyb)Death due to war or military servicec)Death due to plane crash for a fare-paying passengerd)Self-inflicted death

c Generally, policies do not exclude conditions in which an insured is a fare-paying passenger on a commercial airline.

An insured owes his insurer a premium payment. Since then, he incurs medical expenses. The insurer deducts the unpaid premium amount from the claim amount and pays the insured the difference. What provision allows for this?a)Proof of lossb)Payment of claimsc)Unpaid premiumd)Legal action

c If a premium is past due and the insurer owes claim payment, the amount of the premium will be deducted from the amount of the claim. For example, if a claim is worth $500 and the premium costs $200, the insured would receive the net total of $300 from his insurer.

Person A has an insurable interest in Person B and wants to insure B's life. A will be the policy beneficiary. Which of the following is true?a)Person A must be related to the insured by blood.b)Person A must be an irrevocable beneficiary.c)Person B must consent to be insured in writing.d)Person B must have an insurable interest in Person A.

c If an individual has an insurable interest in the life of another person and wishes to insure the life of that person, that other person must consent in writing or sign the application.

The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE?a)The insurance company will retain the cash value and pay back the premiums to the owner's estate.b)The money will continue to grow tax-deferred until the liquidation period, and then will be paid to the beneficiary.c)The beneficiary will receive the greater of the money paid into the annuity or the cash value.d)The owner's estate will receive the money paid into the annuity.

c If the annuitant dies during the accumulation period, the beneficiary receives benefits from the annuity: either the amount paid into the plan or the cash value, whichever is greater.

If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer maya)Prolong the open enrollment period.b)Increase medical requirements on existing members.c)Require evidence of insurability.d)Require a higher premium.

c In group underwriting the evidence of insurability is usually not required of each participant unless he or she is enrolling for coverage outside of the normal enrollment period.

When the policy premium wasn't submitted with the application, what should the agent obtain from the insured upon policy delivery?a)A conditional contractb)A unilateral contractc)A statement of good healthd)A medical report

c In many cases, the initial premium is not paid until the policy is delivered. Most insurance companies require that when the agent collects the premium, he or she must also obtain a statement signed by the insured testifying to the continued good health.

The gatekeeper of an HMO helpsa)Prevent double coverage.b)Determine which doctors can participate in an HMO plan.c)Control specialist costs.d)Determine who will be allowed to enroll in an HMO program.

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

Which of the following policies is characterized by a provision where the premiums are lower in the early years of the policy and increase over time to a point where they become level for the remainder of the policy?a)Enhanced whole lifeb)Minimum deposit whole lifec)Graded premium whole lifed)Indeterminate premium whole life

c Premiums charged for a graded premium whole life policy are lower during the preliminary period and then increase each year until leveling off after the preliminary period. The premium rates are actually equivalent to a standard whole life policy.

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?a)$20,000b)$25,000c)$50,000d)The face amount will be determined by the insurer.

c The face of the term policy would be the same as the face amount provided under the whole life policy.

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 asa)Benefit schedule.b)Gatekeepers.c)Usual, customary and reasonable.d)Relative-value schedule.

c The usual, customary and reasonable approach for determining insurance benefits is based upon the fees normally charged for specific procedures in the geographic location where the services are provided.

What would a physician utilize if he/she wanted to know if a treatment is covered under an insured's plan and at what rate it will be paid?a)Comprehensive reviewb)Supplementary chartc)Prospective reviewd)Concurrent review

c Under the prospective review or precertification provision, the physician can submit claim information prior to providing treatment to know in advance if the procedure is covered under the insured's plan and at what rate it will be paid.

All of the following are penalties for submitting fraudulent claims to the insurer EXCEPTa)Imprisonmentb)Payment of restitutionc)Community serviced)Fine

c Upon conviction, a person who has submitted a false or fraudulent claim or report to the insurer may be fined, imprisoned, or both, and required to pay restitution. An agent's license may also be suspended or revoked.

All of the following statements concerning Medicaid are correct EXCEPTa)Individual states design and administer the Medicaid program under broad guidelines established by the federal government.b)Individuals claiming benefits must prove they do not have the ability or means to pay for their own medical care.c)Persons, at least 65 years of age, who are blind or disabled and financially unable to pay, may qualify for Medicaid Nursing Home Benefits.d)Medicaid is a state funded program that provides health care to persons over age 65, only.

d Medicaid is a government funded (both state and federal) program designed to provide health care to poor people of all ages.

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?a)Waiverb)Utmost Good Faithc)Estoppeld)Material misrepresentation

d A material misrepresentation will affect whether or not a policy is issued. If the insured had been truthful, it is very likely that the policy would not be issued.

In this state, what type of violation is rebating?a)Criminal offenseb)Class C violationc)Felonyd)Misdemeanor

d An insurer, agent, solicitor, or other person that violates the Insurance Code section on rebating is guilty of a misdemeanor.

What is an important feature of a dental expense insurance plan that is NOT typically found in a medical expense insurance plan?a)A broad coverage areab)A low monthly premiumc)Low cost deductiblesd)Diagnostic and preventive care

d Dental expense insurance is a form of medical expense health insurance that covers the treatment, care and prevention of dental disease and injury to the insured's teeth. An important feature of a dental insurance plan which is typically not found in a medical expense insurance plan is the inclusion of diagnostic and preventive care (teeth cleaning, fluoride treatment, etc.).