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Final Exam Review

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In order to qualify for Social Security disability, one must: Be confined to the house or other facility Have a disability that is expected to last longer than 12 months Wait 3 months to become eligible Have not received disability benefits previously

To qualify as an association group benefit program, an organization must: Be formed for the purpose of setting up an insurance plan Have no common business affinity Exist for at least two years Have at least 1,000 members

36 months after a policy was issued, the policy insured committed suicide. What is the insurance company's liability in this situation? The face amount Back premiums are refunded 1/2 of the face amount Nothing at all

A Health Maintenance Organization (HMO) is known for stressing which type of medical care? Preventative and wellness care to keep its members well Diagnostic medicine after a member develops health conditions Limiting the number of visits a patient may use on a calendar - year basis Providing surgical options after internal medicine has run its course

A disability policy can be provided on a noncancellable and guaranteed renewable basis because: The benefits are fixed and will not increase at a later date. There is a specific stop loss in the contract. A longer waiting period applies. There is a decreasing maximum annual benefit.

A disability policy can be written as noncancellable, which means that premiums and benefits are guaranteed for the life of the contract because: The benefits are not affected by inflation. The benefits will vary by change in occupation. The company is at risk for an unknown fixed dollar amount. Only doctors can purchase non-cancellable policies.

A family maintenance policy uses a _________ rider, rather than a ____________ rider, which is used in a family income policy. level term, decreasing term C.A.R.T term, level term decreasing term, level term level term, A.R.T.

A health insurance policy will generally exclude all of the following losses EXCEPT: Injuries sustained while falling off a ladder Losses sustained as a result of drug abuse Hurting oneself intentionally Injuries incurred while robbing a bank

A health policy has an outline of coverage. All of the following would be included in the outline of coverage EXCEPT: Contractual provisions Renewal and cancellation provisions Benefits and coverage Exclusions and limitations

A large group of 2,000 employees has renewed for another year. The premiums have increased by 12% over the previous year. The new rates were most likely a result of: Higher than expected claims for that particular group of people Higher than expected claims for the insurance company's block of group insurance business Higher than expected claims for the entire group of insureds in that geographic area Higher fixed costs to administer the program

A policy lapses when: Premiums have not been paid and the grace period expires A bank draft is returned for NSF The insured pays with a money order The insured does not contact his agent for payment instructions

A qualified retirement plan differs from a non-qualified retirement plan in all of the following ways EXCEPT: Contributions to a non-qualified plan are deductible on a current basis. Qualified plans have specific rules on participation and non-qualified plans do not. Highly compensated employees may be limited by qualified plans and non- qualified plans do not have the same limits. Qualified plans are subject to annual discrimination tests and non-qualified plans are not.

A universal life plan differs from a whole life plan in all of the following ways EXCEPT: A whole life plan displays a detailed list of all mortality, expense and interest payments in the premium calculation. A universal life plan may have features that are not guaranteed. The cost of life insurance may vary from year to year on a universal life contract. The administrative expenses are a listed charge in universal life.

A war clause exclusion can be enforced at which of the following times? During wartime At the insurer's discretion Always Never

Agent John notices that he has made an error in completing an application for Sally Smith. John should do which of the following? For a minor change, he should correct the error and have Sally initial the changes in his presence He should shred the incorrect application and complete a new form by telephone Ignore the error and submit the application Make the changes and initial it himself without contacting Sally

Ajax Manufacturing has a self-funded group health plan and believes it can lower administrative costs from those charged by an insurance company for processing claims. Which type of organization should Ajax use to process claims? Third Party Administrator (TPA) Health Maintenance Organization (HMO) Preferred Provider Organization (PPO) Administrative Services Only (ASO)

All of the following are correct concerning Blue Cross Blue Shield plans EXCEPT: Blue Cross Blue Shield plans are exempt from state insurance regulations Blue Cross plans typically cover hospital benefits Blue Shield plans typically cover doctors' services Blue Cross and Blue Shield plans were organized as nonprofits

All of the following are true about elements of insurable risk EXCEPT: The loss must be catastrophic. The loss must be predictable. The loss must occur to chance. The loss must be chosen randomly.

All of the following are true concerning workers' compensation laws EXCEPT: All states require employers to have workers' compensation Insurance. Workers compensation provides benefits for employees who have been injured, become ill or died as a result of workplace issues. Many states have pools from which employers can purchase coverage. Premiums for workers' compensation vary by industry classification and actual employer experience.

All of the following are ways in which dividends may be used by the policyowner EXCEPT: As stock in the company Left to accumulate with interest Used to buy additional paid-up insurance Applied to reduce the premium

All of the following provisions are mandatory in health policies EXCEPT: Coinsurance provision Grace period Payment of claims provision Reinstatement provision

All the following are considered basic health care services offered by HMO's EXCEPT: Rehabilitative and home health services Emergency care Inpatient hospital care X-ray services

All the following statements about PPO arrangements are correct EXCEPT: No difference in deductible is permitted between care received by preferred and non-preferred providers. Services rendered by non-preferred providers must be covered at a rate of at least 80% of coverage for preferred providers. All subscribers must receive a complete list of preferred providers, listed by specialty and geographic area. The plan must specify procedures by which subscribers may lodge and resolve complaints about the plan.

An _______ is program where employees deduct pre-tax dollars from their income earnings and deposit them in an employer-sponsored account and submit receipts for reimbursement for medical expenses. FSA HSA HRA CDP

An accidental death and dismemberment policy will cover all of the following EXCEPT: Hospital expense Severance of a hand Loss of an eye Death

An applicant's addiction to drugs is considered which of the following? A moral hazard A morale hazard A physical hazard A material hazard

An association is required to do all of the following to qualify for an association group plan EXCEPT: The employer must pay all premiums in full for his employees. The association must have been in existence for at least two years. The association must be a natural group, not formed specifically to provide benefits. There must be at least 100 members.

An association seeking group insurance must meet all of the following requirements EXCEPT: Must be formed for the purpose of buying insurance Meet minimum number of participants Must be made up of employees and employers Must meet criteria of "natural group"

An employee changes employers and has diabetes. He has worked for his previous employer for 4 years and is covered by a HIPAA eligible group. When will he have full coverage under the new employer? At the end of any eligibility period under the new employer plans After 12 months for diabetes and immediate for all other conditions He will be declined for coverage, since diabetes is a knock out disease. He may be issued a plan with restrictive riders.

An employer-sponsored wellness plan that fosters healthier lifestyles for employees is a(n): Worksite plan. Franchise plan. Health Savings Account. MEWA

An individual may deduct an IRA contribution from his taxable income in the following situation: You or your spouse are not covered by a company sponsored qualified plan Your adjusted gross income does not exceed IRS limits You have income from investments only Your grandparents make the contribution

An insured has 20 days to notify the insurance company of a loss. This is called: Notice of claim provision Documentation of claim Claim form requirement Affirmative action provision

An underwriter considers physical conditions in addition to other factors in judging a risk. All of the following are physical conditions EXCEPT: Credit score Height and weight History of heart trouble Hypertension

Anderson Carpet Company has purchased business overhead expense insurance. All of the following are covered under this policy EXCEPT: The employer's salary Leased equipment The employee's salaries Mortgages

Another common life insurance provision is the __________________. If there is insufficient proof to show order of death when the insured and beneficiary die in the same accident, it is presumed that the insured died last, and the proceeds are payable to the named contingent beneficiary. uniform simultaneous death act per capita and per stirpes facility of payment spendthrift clause

Are there limitations that when placed on universal life, result in favorable tax treatment? Yes, a certain percentage of all premiums must purchase death benefits No, insurance policies never receive favorable tax treatment Yes, the IRS will check each policy to be sure it is not a MEC No, there will be no need to maintain a corridor due to the tax deferral of the cash values

Arthur has been issued a health policy with a probationary period. He should understand which of the following? The waiting period for accidents may be different than for sickness. The probationary period is one of the 12 mandatory rules. A sickness before the probationary period has been served will void the policy. Accidents must involve dismemberment to be covered.

As Samantha considers her options to purchase life insurance, she looks at the advantages of a graded premium life policy. Which of the following is not an advantage of such a policy? In the beginning a greater amount of the premium is applied to the death benefit - less to the cash value. The policy has a level death benefit as long as it remains in force. Once the premiums level off, they remain level for the remaining term of the policy. The initial premium is much lower than whole life insurance.

Austin is covered by his employer under a key employee insurance policy. Who is usually the beneficiary on this type of policy? The business The insured's family The board of directors The insured's employees

Before an HMO may offer coverage and benefits to the public, the HMO must do which of the following? Obtain a certificate of authority from the state's Department of Insurance Receive permission from its home state to do business outside of state lines Join the local Chamber of Commerce Have at least 500 individuals ready to enroll

Betty has enrolled in an HMO through her employer. The booklet she receives indicates that she may choose any doctor or specialist without a referral, but approved HMO doctors will provide service at lower or no out-of-pocket cost. Betty is enrolled in: Open panel HMO Independent practice HMO Staff model HMO Closed panel HMO

Blue Sky HMO has an open panel plan. The plan is: A group of physicians who contract with the HMO for services, but maintain a private practice A group of physicians who are full time salaried employees of the HMO A group of physicians that can only work with HMO's that are government affiliates A group of physicians that negotiate pricing services provided through an established network

Certain riders allow the insured to add people to the policy as additional insureds. Which of the following is a type of additional insured rider? Family term rider Payor rider Substitute insured rider Disability rider

Charlie is changing his lifestyle to minimize a known risk. This is an example of which of the following? Risk reduction Risk retention Risk transference Risk avoidance

Clark has a universal life policy. What are the reserves usually invested in with this type of policy? Long-term securities Medium- term and short- term government securities Both long- term and short- term The reserves are invested in areas directed by the insured.

Co-insurance may do any of the following EXCEPT: Provide insurance for multiple individuals Provide a cost sharing between the individual and the insurance company Mitigate risk Define which party will pay what portion of a medical bill

For those considering an immediate annuity, which of the following is not an advantage of this type of investment? Loan privileges Tax treatment Sheltering assets Creditor protection

For what period of time does a joint and survivor income option on an annuity pay? It ceases when the second annuitant dies. It ceases when the first annuitant dies. It ceases when the payment period expires. Payments don't stop until the annuity is exhausted.

George has enrolled in his company's group insurance plan. As proof of his participation, George will receive which of the following? A certificate of coverage A copy of the master contract outlining benefits An individual insurance contract that he can keep if he leaves the group Claim forms

Gilda is at home and she discovers that her child is running an extremely high fever. Gilda places a call to her primary care physician advising her that she is going to go to the emergency room. Which of the following is true? As long as Gilda takes her child to an HMO approved hospital, she will have benefits. Gilda may take her child to any emergency room under the circumstances. Gilda's child may only be treated at the outpatient clinic during regular hours. Gilda must wait until her primary care physician is available.

HIPAA rules on renewability apply to: Individual policies Group policies Both group and individual policies Companies can cancel at any renewal anniversary with notice.

HMO's (Health Maintenance Organizations) typically: Provide annual physicals and preventative services Require a deductible before services are paid for Provide the same level of care regardless of where care is rendered Allow members to use any provider they choose without penalty

Hal has a disability income contract with Gigantic Mutual. If he qualifies for benefits, he should expect to receive: A monthly income for a specified period of time Reimbursement for medical expenses related to the disability Reimbursement only if he suffers an accident Lifetime income regardless of the cause of disability

Happy Hills, a day camp, wants to offer a health insurance policy to its campers. The type of policy they will offer is: A blanket policy A franchise policy An ASO plan Partially self-insured plan

Harriet owns a 30-pay life policy that she purchased at the age of 30. When will the cash value equal the face amount of the policy? When Harriet turns 100 When Harriet turns 65 When Harriet turns 60 When Harriet turns 50

Harry has been disabled for 2.5 years. He has been on his employer group plan through COBRA most of that time, but his coverage expired due to time limits. He is not eligible for Medicare Part A and Part B. What is the status of his employer plan? His employer plan has expired and it is not an issue in this case. His employer is required to continue his coverage for at least 5 years. Medicare will become primary to his employer's plan. Harry will automatically qualify for Medicaid due to the length of his disability.

Health insurance will provide benefits for all the following EXCEPT: Living too long Surgery Illness Heart attack

Helen and Mark have purchased a policy to cover both of their lives. They know that there are benefits and also disadvantages of such a policy. Which of the following is not something that would be regarded as a benefit of a joint policy? Premiums and face value cannot be changed. Premiums usually are lower than for two separate policies. The policy can be written as whole life or term life. The premiums are usually lower.

If Heather misstates her age at the time of policy issue, what action will the insurer take in response to such a misstatement when a claim is filed? The amount payable to beneficiaries is equal to the amount that the premium would have purchased if her correct age had been known. The insurer will refund the premiums. The beneficiaries will be given the full death benefit because she died after the incontestable period. The insurer will do nothing because she lied on the application.

In a variable annuity, who is responsible for regulating the separate account? SEC NASD State insurance commissioner It is self-regulating.

In addition to the basic health services, an HMO may also offer which of the following services? Health education programs (quit smoking, prepare for childbirth, etc.) Spiritual counseling Naturopathic medicine Dental care

In order to be considered an association, a group must: Have been in existence for 2 years or more and be a natural group Have been in existence for 2 years or more and be a large group Have been in existence for 1 year or more and be a natural group Have been in existence for 1 year or more and be a large group

In order to take out a life insurance policy on another person, you must demonstrate that you have an insurable interest. Which of the following could have an insurable interest in another person? Spouse and Employer Neighbor Only spouse Friend

Insurance companies are required by the ___________ to notify an applicant, in writing, that an investigative consumer report may be made on him. Fair Credit Reporting Act McCarran-Ferguson Act Freedom of Information Act Medical Information Bureau Disclosure Act

It is possible for one person to have insurance on another person. The first person is said to have an insurable interest. Which of the following statements about insurable interest is FALSE? An insurable interest must exist between the policy owner and the insured at the time of the claim Sisters and brothers can have an insurable interest in each other A person can have an insurable interest in themselves A creditor can have an insurable interest in a debtor, but the interest is limited to the amount of the indebtedness

Jack has an accidental death and dismemberment policy. He can expect benefits for all of the following EXCEPT: An emergency appendectomy Losing his arm in a hunting accident Losing his eye as a result of a nail thrown from his lawnmower Dying in a car crash on a business trip

Jasmine has a Roth IRA. At what point in her life must she take distribution? She is not required to take distribution. April 1st following the year she becomes 70 1/2 April 1st following the year she becomes 65 At age 59 1/2

Joseph's company offers a group Medicare Supplement policy and a group Accidental Death and Dismemberment policy. All of the following are tax implications of these policies EXCEPT: Premiums for group Medicare Supplement insurance policies and accidental death and dismemberment policies - paid by the employer are not tax-deductible as a business expense. Premiums paid by Joseph for group Medicare supplement policies are tax-deductible only if Joseph's unreimbursed medical expenses exceed 10% of his adjusted gross income. Deductions must be itemized on Joseph's tax return. Benefits are tax-free as long as they do not exceed the actual cost of medical expenses.

Judy is injured while she is on her job. Her company covers Judy with short-term disability, long-term disability and Workers' Compensation. What plan will pay benefits to Judy in the event she is unable to work as a result of the on-the-job injury? Workers' Compensation will pay up to specified limits with the employer's long-term disability plan making up any short fall of total income benefits after an elimination period. Workers' Compensation will pay and the other plans will not provide benefits. Short-term disability will pay first, and then Workers' Compensation and long - term will not be involved. Long-term disability will be the primary benefit with Workers' Compensation and short - term disability being secondary.

Julie's father has an accidental death and double indemnity provision in his life policy. Under what circumstances will his policy pay an amount greater than the face value of the policy? Accident Cancer Stroke All of the above

Karl has an individual health insurance policy with Wildlife Mutual. Wildlife also sells group contracts and his employer decides to purchase group coverage for his employees through that company. Karl enrolls in the group, but he also continues to pay premiums on his individual plan. When Karl has a claim, what can he expect? Karl will receive full benefits from both contracts, since there is no coordination of benefits on individual plans. Karl's group plan will be primary and the individual plan will be secondary. Karl's individual policy will be primary and the group plan will be secondary. Wildlife Mutual will be able to cancel Karl's individual policy under these circumstances.

Karl's grandmother has been diagnosed as being in end-stage renal failure. The ______________ provision of her life policy will giver her access to funds for rent, food and necessary medical services. accelerated benefits disability income cost of living waiver of premium

Kimberly works for a nonprofit, charitable organization. What distinct class of retirement plans is available to Kimberly and other employees of certain nonprofit charitable organizations? A tax-sheltered annuity A qualified annuity A Keogh plan A qualified corporate retirement plan

Like medical expense insurance, long-term care insurance has tax implications. These include all of the following EXCEPT: Premiums paid are never tax-deductible. Deductions must be itemized on the individual's tax return. Deductions are limited to a specified dollar amount per year based on the Consumer Price Index and the recipient's age. Benefits are received tax-free.

Maggie's life policy has lapsed. There are several ways she can recover some of the value of her policy. Which of the following is NOT a non-forfeiture option? One-year term Reduced paid-up Extended term Cash surrender

Mark bought a family health insurance policy on his state's health insurance exchange. How are the premiums for this coverage handled as far as taxes are concerned? He can take a full deduction as medical expense He cannot take a deduction unless he purchases directly from an insurance company He can deduct 50% of the premium if it is a single policy He can deduct 75% of the premium if it is a family policy

Martha decides she does not want the new policy she purchased. She is within her free look period, so she returns the policy. She should receive which of the following? Full refund of all premiums paid Full refund less an administrative charge for the paperwork Full refund less the basic cost of insurance for the period Martha held the policy Full refund less a pro-rata charge for the agent commission

Max is enrolled through his employer's group plan. While he has a generous reimbursement schedule for benefits, all of his medical care must be focused through a designated physician whom he may choose. The designated physician must make all referrals, but there is no restriction on the network. Max most likely has: A POS plan A closed panel HMO A PPO plan An open panel HMO

Medicare Part A provides which of the following benefits: Hospice care Doctor visits Physical exam Dental check ups

Medicare Part B includes benefits for: Doctor's services Inpatient prescription drugs Hospice Care Outpatient prescription drugs

Melanie tells her agent that she gave him the wrong date of birth on her application. The agent should: Notify the insurer to have the premium corrected to reflect the correct date of birth Complete a new application to request a new policy be issued Re-check her health status to be sure there is no gap in coverage Notify the company, so they can cancel the policy for incorrect information

Michelle has reviewed her health policy after her agent delivered it to her. She noticed that the birth date recorded is not correct and she requested that her date of birth be changed to reflect her correct age. Michelle can expect all of the following EXCEPT: The company will rescind her policy due to incorrect information. She may have a premium change to reflect the correct age. If she has a claim before the age change is noted, the benefit may be more or less due to age adjustment. The policy will continue at the new age once corrected.

Mr. Jones wants a health policy that can never be cancelled by the insurance company. He also wants one that will guarantee the premiums for the life of the policy (no premium increases). He should look for a policy that is: Noncancellable Guaranteed renewable Renewable for life Provisionally renewable

Mrs. Selleck runs a Christmas store and needs $200,000 of permanent life insurance in June. Because her business is cyclical, she is "cash poor" until October. How can Mrs. Selleck obtain the insurance she needs? Preliminary term for interim coverage Limited pay policy to keep the cost down Temporary insurance agreement Monthly renewable term

Nathan incurs a $5,500 hospital bill. His major medical plan has a $500 deductible. Expenses beyond the deductible are payable at 80%, not to exceed $2,000 out-of-pocket expense. Nathan had $400 of charges that he paid before entering the hospital. How much will his insurance company pay towards his hospital bill? $4,320 $3,600 $4,400 $4,000

Nick is reading his policy to determine any exclusions that he should know about. If he suffers a loss as a result of using intoxicants or narcotics, he should expect which of the following from most policies? Losses from the use of intoxicants or narcotics will only be covered if prescribed by a licensed physician. Losses from the use of intoxicants or narcotics will be covered under any policy without restriction. Losses from the use of intoxicants or narcotics may be considered fraud and result in a policy cancellation. The insurance company may file criminal charges.

Of the following statements about HMO's, which is CORRECT? They place special emphasis on preventive health care. Subscribers pay a one-time, fixed fee in advance for health care services. HMO's generally are owned by insurance companies. They mainly provide emergency medical care for subscribers.

Once the insurer has looked at the facts pertaining to a life insurance applicant, the insurer will categorize the risk and calculate premiums based on which of the following? The risk classification and mortality, interest earnings and expenses The ownership of the policy and the risk classification The beneficiary of the policy and whether or not it is a third party ownership The risk classification and morbidity, interest earnings and expenses.

Premiums for life insurance are not tax-deductible and death benefits, received in a lump sum, are not taxable. Which of the following is taxable? Interest on life proceeds paid in installments Dividends Accelerated benefits Policy loans

Qualified retirement plans need to be approved by the IRS. When an employee withdraws from a qualified plan, which of the following is true? Withdrawals are taxable income. Withdrawals made prior to age 65 are not taxed. Withdrawals must be accomplished by age 75. All of the above

Reginald is trying to find a disability policy that will fit into his budget. In order to lower his premium, he should look at which of the following? Consider a longer elimination period Consider a longer benefit period Consider an increased benefit level Consider the most liberal definition of disability for the policyholder

Rick is considering surrendering his life insurance policy for its cash value. Which of the following is a major consideration that could affect his decision to do this surrender? The cash received in excess of the premiums paid is taxable. He might not be able to purchase additional insurance at a reduced rate. Both of the above None of the above

Sally and Gail are partners in The Bakery. They have purchased medical expense coverage and long-term care coverage for the partnership. The premiums - Are tax-deductible as a business expense, not to exceed income earned that year. Can be deducted if the individual is eligible for coverage under his or his spouse's employer-subsidized health plan. Both of the above Neither of the above

Sandy's company has a corporate retirement plan. Which of the following plans could she have? 401(k) CIRA 403b DTDA

Self-insurance is a form of which of the following? Risk retention Risk limitation Risk transfer Risk avoidance

Seth has notified his insurance company that he has a claim. The insurance company must furnish a claim form within how many days to comply with the governing provisions? 15 days 21 days 10 days 30 days

Sometimes an insurer will cancel a life policy. What happens to all unearned premiums? They will be returned. The insurer gets to keep them. The insurer returns half of the premiums. The insurer applies the premiums to a new policy.

State University will offer what kind of plan to enrolled students? Blanket health plan Association health plan Student group plan Franchise health plan

Statistics indicate that women under age 55: Have a greater frequency of disability than men Have a shorter length of disability than men Rehabilitate faster than men Usually go back to work more quickly than men

Tax sheltered annuity plans are available to employees of the following type of organizations: Public school systems and other "not- for- profit" groups Professional sports association Professional corporations Small business enterprises

The Savvy Soup Company purchased a disability insurance policy to provide disability income benefits to the business in the event of disability of a key person. With this type of policy - Premiums are not tax-deductible as a business expense The disability income benefits are taxable Premiums are tax-deductible The key person has tax liability for benefits

The definition of accident is determined by which of the following theories? Accidental means and accidental bodily injury Accidental means only Accidental bodily injury only None of the above

The incontestable clause will provide what protection? After two years, the claim may not be contested by the insurance company, except for fraud. The insured may not contest the premiums after two years. The policy may not be altered for any reason after two years. Premiums may not be waived until the end of two years.

The legal action provision states that a policyholder must wait for how long after presenting proof of loss before bringing legal action against the insurer? 60 days 120 days 30 days 45 days

The nonforfeiture option is designed to protect the policyholder from losing his/her entire investment if a policy is cancelled or surrendered. Which of the following is not a nonforfeiture option? Non-participating Cash surrender value Reduced paid up insurance Extended term insurance

The owner of CEO, Inc. is concerned about his key employees becoming disabled. He should consider a(n): Key person disability plan Business overhead expense policy Individual medical plan for the key employees Entity buy out plan

The owner of an annuity can stop making premium payments during the accumulation period without losing the value that has accumulated in the annuity. The right to the cash value that has accumulated in the annuity is called the - Nonforfeiture option Flexible option Withdrawal option Fixed payout option

The part of the application that provides information about an applicant, such as financial condition, character, purpose of sale, and how long the agent has known the applicant, is- The agent's report A special questionnaire The inspection report Part II of application

The payor rider is sometimes added to a life insurance contract on a juvenile. The purpose of the rider is to make sure that the coverage on the juvenile does not lapse if the adult (the person responsible for paying premiums) becomes disabled or dies. Which of the following is not true about the payor rider? There is no added premium for this rider. The premiums can be waived until the juvenile reaches a specified age. The premiums can be waived until the maturity date of the contract. The insurance remains in force even if the premiums are not paid.

The reinstatement provision in a life policy _____________. requires the policyowner to pay, with interest, all premiums that are in arrears in order for the policy to be reinstated guarantees the reinstatement of a policy that has been surrendered for cash permits reinstatement within 10 years after a policy has lapsed provides for reinstatement of a policy regardless of the insured's health

The theory of providing preventative care under an HMO is: Diagnosing and treating a problem at the earliest possible date will reduce health care cost in the long run. Free physicals will encourage people to use the plan. Doctors can get to know patients better. The patient will be better educated about health issues.

Timothy has a plan that provides coverage for life, but the premiums are not due beyond age 65. It has guaranteed premium, accumulates cash value and the coverage will never decrease. Timothy has purchased: A limited-pay life plan An endowment at age 65 plan A term to age 65 plan A variable life plan

To have an approved presentation of a variable annuity the prospect must receive which of the following documents? A prospectus and an approved illustration A sample policy and an approved illustration An outline of all expenses and charges separate from the sample policy A financial report from the insurance company and a sample policy

To protect a policyholder from an inadvertent lapsing of a contract, the automatic premium loan (APL) provision may be added to a cash value life policy. Which of the following statements is not true about this provision? It can be applied for at any time. The policy will lapse if there is not enough cash value to cover the premium payment. Reinstatement is not available if the policy lapses for lack of payment. Outstanding loan amounts are deducted from the death benefit.

Under a variable annuity policy, when will a paid-up deferred variable annuity be issued? When premium payments are discontinued When the annuitant dies in the first year of payout period When the loan provision is exercised When the value of the variable annuity fund decreases 10%

Underwriting is the name of the process used by insurers to rate risk. Once the risk has been rated, it is classified. Which of the following is the classification for an individual that would pose the least amount of risk to the insurer? Preferred Premium Standard Substandard

Universal life policies are similar to whole life in that they ___________________. both provide death protection and cash value both provide flexibility both treat cash withdrawals as a partial surrender both provide fixed and guaranteed benefits.

Valerie is looking at types of insurance to enhance her retirement. Which of the following should she NOT consider in planning her retirement? Term insurance Endowment Whole life Limited pay life

Walter is reading his disability policy and notices that there is a clause concerning "rehabilitation". He is trying to understand the difference between the rehabilitation benefit as opposed to partial disability. The rehabilitation benefit differs from partial disability in the following way: Rehabilitation requires a period of total disability and usually provides a benefit for a specified time to transition back to work. Partial disability will provide a graded benefit based on a time factor. Rehabilitation will be available for an unlimited time up to the policy maximum. All disability policies have a rehabilitation provision.

What happens if an estate is named as a beneficiary on a life policy? Proceeds are included in the gross estate. Proceeds are divided equally to relatives. Proceeds are tax-free. All of the above

What is the time limit for an insured to notify the insurance company of a loss? 20 days 15 days 30 days 90 days

What provision of a health policy may cover preexisting conditions? Time limit for certain defenses Entire contract Insuring clause Exclusions

When a minor child is the insured, which of the following is true about the payor rider? If the premium payor dies, premiums are waived until the insured child is 25. Premiums are waived if the minor child dies. Premiums are doubled if the minor child becomes disabled. None of the above

When constructing an adjustable life policy, which of the following is used as the base policy? Whole life Variable life Increasing term Decreasing term

When group insurance is compared to individual insurance, all of the following are true EXCEPT: More people are covered by individual plans than by group plans. It is usually easier to qualify for a group plan than an individual plan. The unit cost for group insurance is generally less than for a comparable individual plan. Premiums may increase for both group plans and individual plans.

Which of the following are common approaches used in determining the amount of insurance that is needed by a family? Human Life Value Approach and Needs Approach Dollar Amount Approach and Needs Approach Human Life Value Approach and Dollar Amount Approach. Human Life Value Approach only.

Which of the following are required in order for a risk to be insurable? A reasonably predictable and definite loss A certain and catastrophic loss A reasonably predictable and catastrophic loss A definite and catastrophic loss

Which of the following benefits are provided by a health service provider? Both hospitals and physician services paid directly to the provider Loss of income benefits paid directly to the policyholder Hospitals only Doctors only

Which of the following best describes a TPA? An organization that processes claims for a self-funded group plan An insurer that only provides small businesses group coverage A state agency that reviews group policies An insurance company that processes claims for a self-funded group plan

Which of the following cannot be used to determine group benefits? Age Earnings Flat benefit Employment position

Which of the following categories of authority allows an agent to use materials provided by his/her company? Apparent Permanent Implied Actual

Which of the following employ capitation as a plan for paying health care providers? HMO PPO POS Commercial insurance companies

Which of the following is NOT a purpose of the entire contract provision? The provision makes it clear that the contract is a three party agreement among the insured, the insurance company and the agent. The provision describes that the contract cannot be changed after it has been issued. The provision prohibits the insurance agent from altering any of the terms or conditions of the contract. The provision protects the insured from any attempts by the insurer to alter the agreement by referencing other documents.

Which of the following is NOT a requirement of a qualified corporate retirement program? Employee contributions must be vested after 2 years. The program must be for the exclusive benefit of employees. The program cannot discriminate by sex. The life insurance benefits must be incidental to retirement benefits.

Which of the following is NOT a type of insurance company that may be approved to operate in nearly all states? Lloyd's of London Mutual insurance companies Fraternal insurance companies Stock insurance companies

Which of the following is NOT often included in variable annuity options? A lump sum payout An income for life. A list of beneficiaries A specified period of time

Which of the following is a business plan where each of the partners agree to buy the interest of a deceased partner? Cross purchase plan Stock purchase plan Corporate insurance plan Entity plan

Which of the following is entitled to a paid-up deferred variable annuity? Annuitants who discontinue premium payments Annuitants who want to start receiving an income A paid-up deferred variable annuity is never offered for sale Annuitants who do not have sufficient cash amounts in their accounts

Which of the following is part of the termination clause in a group life plan? An employee is guaranteed at least 31 days of protection. The insurer will pay 1/2 of the face amount if death occurs within 31 days. An employee can convert if they convert to a lesser face amount. If death occurs, there is no liability immediately after termination.

Which of the following is responsible for the regulation of retirement plans? ERISA State Commission of Insurance SEC Department of Insurance

Which of the following is the annuity option which will not cover life's contingencies? Period certain Cash refund 10-year life certain Straight life

Which of the following life insurance approaches states that the value is determined by discounting estimated future income? Human Life Value Approach Needs Approach Life Needs Value Approach Human Needs Approach

Which of the following retirement plans does NOT automatically qualify for a federal income tax deduction? Single premium deferred annuity SEP 403b Corporate pension plan

Which of the following statements is NOT true about the Fair Credit Reporting Act? It is a state law. It promotes accuracy, fairness and privacy in credit reporting. You must be told if information in your file is used against you. You have the right to know what is in your file.

Which of the following statements is an example of the insuring clause? "Subject to the provisions on the following pages of this contract, the insurance company will pay the death benefit to the named beneficiary. The death benefit will be paid on receipt of due proof of death of the insured and surrender of this policy." "This contract, together with any attached riders, endorsements, or amendments, as well as the attached policy application, comprises the entire contract between all parties. No changes can be made to the policy once it is in effect unless all parties to the contract agree." "The policyowner has 10 days from the date the policy was issued to examine the policy and may, within those 10 days, return the policy for a full refund of any premiums paid." "The policyowner must pay a premium in exchange for the insurer's promise to pay benefits."

Which of the following statements is true about a life income annuity? If the annuitant is older, the payment is larger. If the annuitant is older, the payment period is longer. If the annuitant is younger, the shorter the payment period. If the annuitant is older, the monthly payment is smaller.

Which of the following statements reflects how limited pay life policies differ from straight whole life policies? With a limited pay life policy, the premium-paying period is shorter With a limited pay life policy, you do not give insurance protection to age 100 Limited pay life policies endow before age 100 With a limited pay life policy, you have protection for a limited time, typically to age 65

Which of the following would have the greatest impact on the underwriting process for risk on an individual? He/she is grossly overweight. He/she likes to bungee jump. He/she owns a snowmobile. He/she takes trips overseas.

While the definition of a pre-existing condition may vary to some degree, a pre-existing condition is one that: The employee received treatment for or was diagnosed with prior to joining the group 12 months before employment Commenced at birth Manifested itself prior to the open enrollment Existed, but the insured did not know about it

Who completes a medical report when required by the insurance underwriters? A physician or paramedic Medical officer of the insurer A nurse An insurance underwriter

William has submitted an application for health insurance to All Good Insurance Company through his agent, Tom Smith. Under which of the following sets of circumstances will William's insurance coverage become effective? The applicant has met all underwriting requirements, the insurance company approves the policy, the initial premium has been paid and the policy is issued The policy has been mailed to the agent with all amendments All the paperwork has been signed by the agent and applicant, and has been countersigned by the insurance company Not until the free look period has expired

William is in the hospital recovering from surgery. He has some complications and his course of treatment has varied for the original plan. A representative from his insurance provider has visited the hospital to check on his progress and prognosis. Part of the visit involves creating a discharge plan. This process is known as: Concurrent review Postoperative review Prospective review Utilization review

Winston applied for a health insurance policy stating that he had never had heart trouble, even though he had suffered a heart attack one year prior to making the application. Winston has a heart attack 2 months after the policy is issued. The insurance company cancelled the policy and refunded his premiums. Under what clause does the insurance have the right to take this action? Pre-existing condition exclusion Anti-money laundering Fraud Entire contract provision

Your disability policy states that to be considered disabled you must not be able to work as a result of an accident or sickness. That definition is known as: Any occupation definition Partial disability definition Residual disability definition Rehabilitative disability

Your disability policy states that you will qualify for benefits as a result of your inability to perform the duties of any job that you are qualified by prior training, education, or experience. It further states that you must lose income as a result of this circumstance. You most likely have: An income replacement policy An indemnity policy A specified risk policy A qualified health plan

A "matching element" is part of which of the following? 403.b 401(k) IRA Keogh

A Health Maintenance Organization (HMO) uses a method called capitation. Which of the following describes capitation? Sets a limit on the number of doctors that can be employed by the HMO Pays a fixed monthly fee to the health provider for each member regardless of the services they may use Sets a limit on the number of visits a member may make to the doctor each month Sets a limit on the out-of-pocket expense that a member may incur

A business overhead expense policy will cover all of the following expenses EXCEPT: Copy machine lease 50% of the owner's salary Bookkeeping expense Building rent

A change of occupation provision will allow the insurance company to do any of the following at the time of claim EXCEPT: Pay the benefits stated in the policy Increase the premiums for that individual Pay a reduced benefit for a higher risk occupation Require a doctor's statement confirming disability

A company may use a rider or an endorsement to do any of the following EXCEPT: Add benefits Change the insuring clause Increase premiums Restrict benefits

A disability plan states that there is a 14-day elimination period to qualify, but this may be waived. The waiver will generally apply to what event? Pre-existing conditions Accidental injury Specified events, such as home fires Elimination periods are usually never waived for any reason.

A disability plan that pays a benefit based on loss of earnings is considered which of the following? A non-cancellable plan A residual disability plan A rehabilitative plan A partial disability plan

A disability policy has lapsed due to non-payment of premium. The insured contacts his/her agent to pay back premium and reinstate the policy. What is the waiting period before coverage resumes? 90 days for accidents and sickness 10 days for sickness and immediate for accidents 60 days for sickness and 30 days for accidents 30 days for both sickness and accidents

A fixed annuity may offer any of the following income options EXCEPT: A life income without refund at death A joint income for three individuals A 10 year certain An installment refund annuity

A fully insured individual qualifies for Medicare: At age 62, if a widow At any age with end stage renal failure At age 59 As soon as he satisfies his waiting period

A group plan will generally accept all employees without underwriting questions. What are the circumstances where the insurance company can accept or reject a member under a group plan? The group has had excessive claims An employee has declined coverage when eligible and later elects to join the group If an employee has exceeded his stop loss too many times This is never allowed under any circumstances.

A guaranteed renewable policy will have all of the following features EXCEPT which of the following? The company will renew the policy, but may increase rates for the entire class of business. The company will renew the policy to a certain age and never increase premiums. The company may stop renewing the policy based on a specified age in the policy. The insured may cancel the policy at any time by stopping premium payments

A hospital indemnity plan provides coverage for some hospital stay costs - in excess of what may be covered under your health plan. Kathy's mom was in the hospital for 10 days and just received a check for $1,500. Is this taxable? Yes No Partially Depends on her income level.

A participating life policy refunds a portion of the premiums paid to the insured. These refunds are in the form of an annual dividend. Dividends are determined by the difference between the gross premiums paid, and the loss experience of the insurer. It is the ____________________ that allows the policyholder to leave the dividends with the insurer to accumulate interest. cash dividend option accumulation at interest option paid-up additions option paid-up option

A participating policy usually pays dividends. Most health insurance policies: Pay dividends until claims are paid Do not pay any dividends Refund all premiums if no claims are paid Allow dividends to be paid after a specified number of years

A policyholder is injured while robbing a home. He has to be hospitalized as a result of his injury. When the insurance company discovers that a felony is involved with the claim, the insurance company may do which of the following? Cancel the policy for fraud Deny the claim based on no liability Reduce the claim payment by 50% Increase the premium immediately

A portion of a fixed dollar life annuity payable to a retired worker is not taxable. How is the nontaxable amount determined? No portion of the annuity is nontaxable. An amount determined by the exclusion ratio An amount determined by the taxable ratio An amount determined by the tax-free ratio

A short-term disability policy will provide short benefit periods of less than two years. In most cases, the benefit period is shorter. One common exclusion for short-term disability policies is: Only accidents qualify for benefits On the job injuries are not covered Benefits are generally paid weekly Pre-existing exclusions are not allowed

A variable annuity company's separate account is regulated by which of the following? ERISA The SEC The variable annuity company The state insurance commission

A variable life insurance policy has which of the following characteristics? A guaranteed minimum cash value A guaranteed minimum death benefit Benefits vary and are linked to the Dow-Jones stock averages Premiums and benefits are both variable

Acme Plumbing is purchasing a group life plan for its employees. What type of plan is most common for this type of purchase? Level term Annual renewable term Whole life Universal life

All of the following are considerations on whether to include life insurance proceeds in determination of federal estate taxes EXCEPT: The estate is the named beneficiary of the proceeds of the policy. The deceased was not the policyowner. The policy was transferred to another person within three years of death. None of the above

All of the following are true about a conditional receipt EXCEPT: It will provide coverage from the policy date if all underwriting requirements have been met and the policy is issued as applied for. It will guarantee coverage is in effect at the time of the payment. It will list requirements for coverage to be effective under the receipt. It will explain the limits of the agent's authority.

All of the following government benefit programs will provide for medical benefits EXCEPT: OASDI Social Security disability Medicare Medicaid

All of the following government benefit programs will provide medical benefits EXCEPT: OASDI Social Security Disability Medicare Medicaid

All of the following government benefit programs will provide medical benefits EXCEPT: OASDI Social Security disability Medicare Medicaid

All of the following may be exclusions from coverage in a health policy EXCEPT: Injury while committing a felony Sickness while traveling abroad Treatment for drug and alcohol abuse Self-inflicted injury

All of the policies listed below will pay a death benefit EXCEPT: Ordinary life policy Disability income Term life policy Accidental death and dismemberment

Amanda has an accident policy. She reads the phrase "accidental bodily injury". She asked her agent to explain this to her. His correct response would be: You will receive varying benefits depending on the type of accident. You will have less restrictions on your claims than if the policy read accidental means. You will have more restrictions on your claims than if your policy read accidental means. Only certain types of accidents will be covered.

An HMO (Health Maintenance Organization) is considered to be what type of organization? Regular licensed insurance company A pre-paid service organization Medical reimbursement organization Federal health care system

An HMO allows it members to choose approved physicians who are in private practice. This is called: Staff model HMO Open panel HMO Fixed panel HMO PPO/HMO

An HMO is an IPA model HMO. The HMO members can expect any of the following EXCEPT: Annual physicals and other wellness benefits Choice of any surgeon Co-payments instead of deductibles Choice of any doctor in the panel

An agent wants to qualify to sell variable life plans. He must: Seek an exemption from the state to endorse his license Secure a license from FINRA, as well as the state Secure a license from FINRA, which supersedes the state Test for a special state variable product license

An annual maximum benefit will provide: A lifetime benefit of $1,000,000 No specified life time amount but, a limited benefit for each year A limited benefit per month No lifetime maximum at all

An applicant completed an application for health insurance, but he omitted answers to several questions. The application was signed, but he did not submit a premium with the application. Before the policy was issued, he was admitted to the hospital for a condition that was covered under the policy. His claim would most likely be denied because: Exclusion clause would be effective No consideration Insuring clause not applicable Condition was pre-existing

An elimination period for a disability policy can be considered which of the following? A method of increasing the insurance company's liability A method for the insured to accept a short-term risk to lower the premium cost An allowance of the insured to request a refund of premium in the event he is dissatisfied An elimination of specific losses under the policy

An equity-indexed annuity will provide which of the following benefits? A minimum guaranteed interest credit A guarantee that the account balance will not decline below the initial deposit A guarantee of the long-term performance of the underlying index A guarantee of better income that a fixed annuity

An individual health policy will normally exclude which of the following losses suffered? A broken leg sustained by falling off a ladder Injuries suffered on the job A concussion from an auto accident Being an inpatient in a hospital

An item that insurers look at that would constitute additional risk for the insurer is the moral hazard. Which of the following would contribute to the moral hazard consideration? The health of the potential insured The lifestyle of the potential insured The occupation of the potential insured The physical condition of the potential insured

An underwriter has reviewed an application and determines that the risk does not meet the criteria for standard issue. The company may choose to take any of the following actions EXCEPT: Decline to accept the risk Issue a probationary policy that can be cancelled by the insurer after a specified time Issue the policy with an exclusion rider Issue the policy with a higher than standard premium

Angie cashes in her life policy. She had paid $10,000 in premiums and received $15,200 in cash surrender. How much of this is taxable? $0 $5,200 $10,000 $15,200

Anita's sister funded her annuity with a single lump-sum premium. Anita ,however, is looking at funding her annuity over time. Which of the following is not a true statement about annuities funded with periodic payments? The premiums may be level premiums There is no option for flexible premiums Premiums can be paid monthly, quarterly, semi annually or annually With a level premium, a fixed amount is paid - in installments - until the annuity income starts.

Annuities offer various premium payment options. Which of the following is not an annuity premium payment option? Flexible premium Indexed premium Level premium Single premium

Arnold has purchased an Adjustable Life plan. His agent has told him that he may do all of the following EXCEPT: Pay varying premiums each year Quit paying premiums after 7 years when they vanish. Pay a minimum amount as long as he funds the mortality cost Pay a higher premium if he wants to build cash faster

As a new agent, you are completing an application for health insurance. You should take care of all of the following EXCEPT: Ask and complete all questions on the application Witness all signatures whether present or not Complete the agent's report Submit all paperwork and money on a timely basis to the underwriting company

At what point does an insurance policy become incontestable, even if fraud is evident? 1 year 2 years 5 years Never, if fraud is involved

Averaging out the cost of units during pay-in period is referred to as which of the following? Dollar averaging Dollar cost averaging Cost averaging Dollar cost principle

Bill has a policy that will always be the same premium. He has which of the following? A guaranteed renewable policy A noncancellable policy An unconditionally renewable policy A cancellable policy

Both HMO and PPO plans may allow out- of-network access. If a member elects to use out- of - network providers, he/she may expect any of the following results EXCEPT: Lower benefits reimbursement Lower quality of care More out-of-pocket expense More individual paperwork

Bruce has a non-cancellable health policy. The company may do any of the following EXCEPT: Pay the benefits when they are due Cancel the policy or raise premiums Offer different premium modes Pay the listed beneficiary any death benefit due

COBRA is intended to accomplish which of the following in regard to a group health policy? Terminate coverage at the time of resignation or other separation from employment Protect employees and their dependents from immediately losing health insurance under the group plan in the event of a separation by a listed number of events Totally eliminate the need for a conversion plan Allow the employer to select exactly who may be covered under the company's group plan

Carl is considering the HMO option on his employer's plan. Which of the following benefits may not be provided by the HMO? Hospital care Prescription drugs Annual physicals Physician's services

Carl is unable to work due to a medical condition. He has been confined to his home for four months and wants to begin the process for filing a disability claim with Social Security. All of the following are true EXCEPT: He should wait until he has completed 5 months of waiting. He should be eligible for Medicare before he applies. His disability should prevent him from working at all. He should expect to be disabled for 12 months or more.

Charles and Rick have started an electronics business. Their business is young and their cash flow is tight. What is the primary advantage of them purchasing a modified premium whole life policy? It is guaranteed renewable. They are able to purchase a larger policy than traditional whole life. They are able to add term riders. It has a level premium.

Charles has a major medical policy that has a $1,000 deductible and a maximum out of pocket of $2,000. He has 80/20 coinsurance. He incurs a medical bill of $7,000. What will he have to pay? $4,800 $2,200 $3,200 $5,000

Charles has been out on disability for a heart condition. He later has another episode of the same heart condition. Under a disability policy, this is referred to as which of the following? A new spell of illness A recurrent disability A residual disability A pre-existing condition

Claire has a policy with a payor provision and a 9 year old child. What happens if the child becomes disabled? The premiums stop. Nothing happens. The premiums are waived until the child is 21. The face amount becomes payable.

Clancy has bought a single premium immediate annuity. He must start taking payments _____. immediately within 12 months within 2 years within 5 years

Combinations plans are intended to be representative of the needs of the insured. One such plan is called the ___________________________. It combines ordinary life and level term insurance. It provides monthly income for a stated period of 10, 15, or 20 years, or to an age - as selected by the insured. Family income policy Family maintenance policy Family protection policy Endowment policy

Consumer-driven healthcare plans combine the use of HSAs and HRAs to pay for routine medical expenses and high-deductible coverage. Which of the following is not true about tax liability for this type of plan? Eligible HSA withdrawals and HRA reimbursements are non-taxable. Additional out-of-pocket deductibles paid by the insured are tax-deductible as applied to the federal medical expense deduction for medical expenses exceeding 7.5 % of the individual's adjusted gross income. Benefits are received tax-free. None of the above.

Daniel accumulated $80,000 in his annuity. He is receiving $800/month and each unit is worth $2.00. How many units does he receive each month? 40 400 4,000 16,000

Dennis has provided a disability plan for his top employees in the event they become sick or injured. What is this called? Decreasing term disability Key person disability Business overhead Buy out funding

Edward has been treated for kidney stones in the past. He is applying for disability benefits. His agent should explain to him that he might have which of the following added to his policy: A longer elimination period for benefits A waiting or probationary period before disabilities related to his pre-existing condition are covered No recurrent disability benefit None of the above

Eudy suffered an injury in an automobile accident. His policy covers disabilities as a result of an accident. In this case, he did not qualify for benefits. His injury most likely: Was an outpatient procedure that did not require hospitalization Did not meet the threshold to qualify for disability payments Was treated in the emergency room, which is not covered Did not meet his deductible

For a life insurance policy, when can a statement of good health be required? When the application is made and the initial premium is paid When the application is made and no initial premium is paid A statement of good health is always required. A statement of good health is never required.

For a single premium deferred annuity, the ___________________ is the time between the purchase date and the date when benefits begin. annuity phase accumulation phase premium determination benefit phase

Frank has set up a monthly payment from his fixed annuity. He knows that he will receive $2,000 per month until his death. Frank's family has a history of living well into their 90s. What is Frank's biggest risk if he lives that long? Running out of money Inflation Insurance company insolvency Choosing another option

Gail has been in the hospital and has a total bill of $9,000. Her insurance policy contains a $200 deductible and a $5,000 maximum out-of-pocket provision. Benefits are paid at 80%/20%. How much will Gail have to pay on this bill? $2,000 $1,960 $1,800 $0

Gary became disabled 10 months before he turned 65. His disability lasted 36 months. How long will the company waive his premiums under the waiver of premium clause? 36 months 30 months 10 months Permanently

George has a disability policy that states he must be disabled for 180 days before he can collect benefits. This feature is known as which of the following? The deductible period The elimination period The corridor period The co-pay period

George has a hospital indemnity plan that pays $100 per day while he is an inpatient. He was admitted to the hospital for five days. What benefit should he expect? Nothing if he did not have surgery $500 Reimbursement for miscellaneous hospital services up to $500 The difference between semi-private and private room

George is a participant in his employer's medical plan. The plan requires that he select a primary care physician(PCP) for all medical treatment. George suffers from severe allergies. He wants to see a specialist about his problem. George should: Tell his primary care physician that he is going to see a specialist for allergies Request that his primary care physician refer him to an allergist Make an appointment with any allergist listed in the insurance plan's directory Seek an over- the- counter solution to his problem

George is blinded in an accident. His disability policy begins benefits as soon as his disability is confirmed. This type of disability it known as: Immediate Presumptive Total and permanent Residual

Group insurance regulations require that in order to be considered an eligible group, certain criteria must be met. In order for a professional association to be considered an eligible group, they must meet all of the following EXCEPT: Been an active association for at least two years Have at least 20 members Hold regular meetings Have a constitution and bylaws

Group life and individual life have similarities. What is a major difference between group and life policies regarding taxation? Premiums paid by employees are tax deductible Premiums paid by employers are tax deductible Proceeds received as a lump sum are not taxable. Interest on installment proceeds is taxed.

Group life and individual life have similarities. What is a major difference between group and life policies regarding taxation? Premiums paid by employees are tax deductible. Premiums paid by employers are tax deductible. Proceeds received as a lump sum are not taxable. Interest on installment proceeds is taxed.

Group life insurance has similar characteristics and also characteristics that are different from individual life policies. Which of the following is not a similarity that the two types of policies share? Proceeds are not taxable when received as a lump sum payment Both can deduct premium payments Premiums paid by a company are not considered income to an employee All of the above

HIPAA requirements deal with, on a federal level, groups of what size? 100 or more 50 or more 500 or more 1,000 or more

Harold has been issued a disability policy. In reading the policy, he finds that he must be insured for at least 15 days before he will be able to claim benefits for a disability due to a sickness. This time period is called the: Elimination period Probationary period Interim insurance period Conditional insurance period

Harold is enrolled in an HMO program through his employer. He notes in his benefit booklet that he must select a primary care physician for his medical treatment and consultation. There are specialists listed in the panel of doctors, but none are listed as primary care physicians. How will Harold be able to access these specialists? He can choose to make an appointment with any physician on the list. He must consult his primary care physician and receive a referral to a specialist based on his primary doctor's evaluation. He may only see a specialist with permission from the plan sponsor. Harold may only see a specialist in the event of an emergency.

Health polices can be all of the following, EXCEPT: An indemnity contract A valued contract A reimbursement contract A service basis contract

Hector has a disability policy that will pay partial disability benefits. This means that Hector's benefit will be: Payable when he has had the policy for less than one year Payable when he is not totally disabled Payable for accidents, but not sickness Continued indefinitely when he returns to work

How is an immediate annuity purchased? With payment over the years before payout With a lump sum payment To begin after the first year To begin the first month

How is the cost basis determined for accumulated cash values in a policyowner's life insurance policy? The total premiums paid - less dividends received The total premiums paid - less loans received, dividends and premiums paid for supplementary benefits The total premiums paid - less any cash received The total premiums paid

How long do COBRA benefits remain from the date employment is terminated? 12 months 18 months 6 months 24 months

If Louise wants to provide her beneficiary with equal payments for a specific period of time using the proceeds of her life insurance, she would select which of the following options? Installment plan Fixed period Fixed amount Life with period certain

If Mr. Baker requests price quotes for identical amounts of insurance for four different types of policies, which of the following policies would have the higher initial premium? A one- year renewable and convertible policy A participating whole life policy A nonparticipating whole life policy A ten-year term policy

If an annuity owner receives $2000.00 a month, and the value of each annuity unit is $2, how many units does he receive monthly? 500 1000 2000 4000

If an insured becomes permanently and totally disabled, a waiver of premium rider on his/her life insurance contract would allow coverage to remain in force, without payment of premiums, during the period of the disability. Which of the following is not true about a waiver of premium rider? The premium charged for the waiver does not increase cash value of the policy. The disability must always occur prior to age 75. The premiums are waived retroactively after the insured has completed the required waiting period. All of the above

If an insured commits suicide __________, the insurer will return the premiums to the beneficiary. after the initial 2 years within 2 years after 3 years within 5 years

In a basic hospital expense policy, the ancillary hospital charges are usually paid as follows: Whatever is considered reasonable and customary A multiple of the daily room and board rate An amount equal to the room and board rate The scheduled daily charge

In order for a retirement plan to be qualified, it must allow enrollment of all employees who have: Worked 400 hours throughout the year and reached the age of 21 Completed 1 year of service and reached age 21 Completed 2 years of service and reached age 21 Worked 200 hours throughout the year

Jacob wants to receive income for the rest of his life. He wants his daughter to continue to receive the income for her life - after he dies. Which of the following should Jacob choose? Period certain Joint and survivor Joint life Amount certain

James wants to have his annuity pay him until he dies, with no payments to anyone after his death. Which of the following annuities will best serve his wishes? An interest only option A straight life annuity A refund option annuity A period certain annuity

Jason is comparing plans for medical insurance. His employer offers two plans. One has an 80/20 coinsurance provision and the alternate plan has a 75/25 coinsurance provision. Jason should expect which of the following? To pay less out of pocket for the 75/25 plan To have a lower premium for the 75/25 plan To have a better stop loss with the 80/20 plan There will be no difference between the plans.

Jeff received benefits from his individually owned health policy. How are these benefits treated for tax purposes? Jeff must pay taxes when he receives the benefits. The benefits are tax-free as long as they do not exceed his actual expenses. The benefits are partially taxed - based on expenses. None of the above

Jeff's employer is domiciled (has its home office) in another state. When the company is authorized to do business in this state, it is called a(n) ________ company. multi-state foreign domestic alien

Jerry Wilson is an agent for Wonderful Mutual Insurance Company. He has just completed an application for insurance on Allen Jones and collected the first premium. He has issued Allen a conditional receipt for the insurance. He should also tell Allen all of the following EXCEPT: An insurance policy will not be issued until he completes the physical exam. He will receive a report from an agency called MIB concerning any health information that is on record about him. His insurance will not be in full force until any additional requirements are completed. The policy has a free look period once he has received it.

Jim, an agent, notices when he returns to his office that he failed to obtain answers to a few questions on an application for John and Mary Smith. Before submitting the application, he should: Call the Smiths and ask the questions by phone Return in person to the Smiths to ask them the questions in person and have them initial the missed questions Ask the manager to sign off on the change Pick the answers he thinks fit in best, based on his interview

Joan asked her agent when will she have benefits if she reinstates a lapsed health policy. Her agent would be correct if he told her: 10 days for accidents and 30 days for sickness Immediately for accidents and 10 days for sickness 30 days for either sickness or accident, but there would be a new pre-existing condition period 30 days for accidents and 60 days for sickness

Joe is qualified for disability benefits as a result of an off the job accident. He returns to work after 9 months. Unfortunately, Joe has a heart attack and must go out on disability again. Which of the following is true? Joe will continue benefits without a new waiting period. Joe will have to satisfy a new elimination period since the new disability is not related to the first. Since the disabilities are not related, there is a mandatory 6-month wait for new benefits. Premiums will be waived regardless of the waiting period.

John has been in the hospital for five days. How long does he have to file a claim form and show proof of loss with his insurance company? 45 days 90 days 20 days 60 days

John is over 65 and has been enrolled in Medicare Part A. He remains enrolled on his employer's group plan. If he has a claim, how is payment determined? Medicare will be primary and his employer's plan will function as a supplement. The employer plan will be primary and Medicare will be secondary as long as he is actively at work. His employer plan will automatically terminate at age 65. John can choose which plan he wishes to make primary.

Jose purchased an annuity for $20,000 and the expected return is $40,000. If the annuity pays $600 per month, what portion of the $600 is taxable? $600 (all of it) $300 (half of it) $150 (one-fourth of it) Zero

Joy's employer pays the entire premium on the company group policy. This type of plan is called which of the following? Non-qualified Non-contributory Qualified Contributory

Julia purchases a disability policy that will provide $500 per month if she becomes disabled. The policy requires her to notify the insurance company if she changes occupations. When the policy was issued, Julia was a bank employee. At the time of disability, she had changed occupations to become a welder. What kind of benefit should she expect? A refund of premium since she had not notified the company of the change A lower benefit since she had changed to a more hazardous occupation $500 per month since that is what she paid for More than $500 per month since she had paid premiums for a long time

Kevin's employer pays his premiums for the group life insurance policy. The premiums are: Considered taxable income for Kevin Tax deductible under certain conditions Not tax deductible Partially tax deductible

Lazarus has been disabled for 6 months. What other requirements must he meet to qualify for waiver of premium? All premiums must be current. He must be under a physician's care. He must be confined to a wheelchair. He has to have a physical exam by the insurance company's doctor.

Leon has decided to self-insure his medical plan through an insurance company. This will pay his claims and administer the other features of the plan for a set fee plus claims paid. This arrangement is known as which of the following? Third Party Administration (TPA) Administrative Services Only (ASO) Health Maintenance Organization (HMO) Preferred Provider Organization (PPO)

Long - term care benefits may be available through all of the following, EXCEPT: Individual policy Medicare Part B Group policy Policy rider attached to a life policy

Major medical may have any of the following deductibles, EXCEPT: Flat Stacked Corridor Integrated

Margaret began receiving monthly benefits from her annuity in November of 2011. In May of 2012 her aunt passed away and she received an inheritance. She would like to provide a guaranteed income stream for twenty years. What are her options? She can add to her current annuity. She can purchase a life annuity certain. She can purchase a refund life annuity. She can purchase a life annuity - no refund.

Marjorie has notified the insurance company of a claim. How long does the insurance company have to furnish a claim form? 10 days 15 days 30 days 45 days

Martin surrendered his whole life policy. The policy had a cash value of $50,000. Over the duration of the policy, Martin has paid total premiums of $42,000. What amount is subject to be taxed as ordinary income? None $8,000 $42,000 $50,000

Mary has been admitted to the hospital for testing. How long does she have to give notice of claim to the insurance company? 15 days 20 days 30 days 45 days

Maternity coverage covers the expenses for child delivery. Which of the following statements is correct regarding maternity coverage? Individual policies may not offer this benefit or have limitations. Group policies treat maternity like any other sickness or accident. The employer may make maternity coverage optional. The employees can pay an extra premium for this benefit.

Matilda is starting a new job on Monday. She has been covered under her prior employer's group plan for 6 months, but she has been treated for a stomach disorder just prior to joining her new employer. When will she have full coverage under the new plan if they do not offer guaranteed issue? Immediately, since the new company may not look back on pre-existing conditions After six months, since Matilda has 12 months of credible coverage She may be declined at the company's option She will be issued a plan with exclusions for stomach disorders

Matthew has recently purchased a variable life insurance policy. In reading his prospectus, he sees that the various accounts have the same managers as some of the mutual funds he owns. Matthew should understand which of the following: The money manager co-mingles the funds from his and other variable life plans with their various mutual funds. The insurance company maintains separate accounts for each investment and they are not co-mingled with other assets. Matthew does not need to be concerned about the performance, as it will mirror the performance of the mutual fund of the same name. Matthew can withdraw his money at any time penalty free.

Max has a policy that pays part of his medical bill without any deductible. He most likely has a(n): Disability income Basic medical expense plan Individual medical plan Group medical plan

Max is leaving his current employer for a new position. He has accumulated a tidy sum in his 401 (k) plan. What is his best option to maintain control over his account? Max can withdraw the money with no tax consequences if he re-deposits the funds within 60 days. Max should have his funds transferred directly to a new trustee without taking possession of the funds. Max should make a maximum loan on his 401(k) and reinvest it through another source. Max should leave his account with his former company as long as he is allowed to do so.

Medicare Part A will provide services for all of the following EXCEPT: Home health care Surgery In-patient hospital services Hospice benefits

Medicare Part B provides benefits for all of the following EXCEPT: Durable medical equipment at home Outpatient prescription drugs Surgery Doctor's office visits

Medicare is primarily funded through: General fund of the federal government FICA payroll taxes Social Security State taxes

Medicare supplement plans must contain a provision that allows a free look period. What is the minimum time for a free look? 10 days 30 days 60 days 90 days

Medicare was instituted for the primary reason of: Providing medical services for the indigent Providing medical services for individuals who are 65 or older Supplementing Social Security Providing a government controlled medical plan

Michael purchased an individual disability policy when he was an executive at BXT, Inc. Due to downsizing at BXT, Inc., Michael was laid off and so he accepted a new position at a new employer with a substantial reduction in pay. Due to an accident, Michael was disabled according to the terms of his contract. The benefit to be paid is more than Michael's current salary. What is the company that issued the policy obligated to do under a relation of earnings to insurance optional provisions? Pay the benefits that Michael bought at the time the policy was issued Pay a reduced benefit based on Michael's current earnings Cancel the policy due to the change in occupation Suspend benefits pending further investigation

Most life policies have exclusions. The most common exclusion in a life policy is __________. flight on a commercial airline suicide flight on a private jet illegal acts

Nancy works for Classy Car Wash. Classy provides disability income insurance that is paid for by both the company and the employee. The following premium payment and benefit treatment tax obligations are correctly stated EXCEPT: Classy's part of the premium payment is deductible as a business expense. Nancy's premium payments are deductible Nancy's benefits are taxable income only up to an amount based on the portion of premiums paid by Classy. Nancy's premium payments are not deductible.

Nick has paid a large lump sum of cash to the insurance company for an immediate fixed annuity. That money will be invested by the insurance company in what fund? A separate account for annuitants The company's general fund A private retirement account A real estate trust for retirees

Normally, proof of loss for a medical claim must be submitted to the insurance company for consideration within 90 days UNLESS: The provider fails to submit the claim. The insured is not of legal capacity. Hospital claims take longer. The insured is out of town.

Part III of the application contains which of the following? Background information on the applicant The agent's report Medical information on the applicant All of the above

Randall sees reference to an organization called the NAIC. What does NAIC stand for? National Association for Insurance Counselors National Association for Insurance Commissioners National Association for Insurance Companies National Association for Indigent Children

Rich wants to have income for life and he also wants his wife Pam to continue to receive income for the rest of her life upon his death. Which of the following should Rich choose? Life with period certain annuity A joint and survivor annuity An installment refund annuity A straight life annuity

Risk involves the chance of loss. Only _________ is insurable. calculated risk pure risk speculative risk investment risk

Sally and James are married and they work for the same employer. Both have family coverage under the employer group plan, since the employer pays the full premium for all employees. What will the reimbursement be in the event that Sally or James has a claim? Both Sally and James will receive full reimbursement from the plan, even if that results in a higher payment than the claim. The spouse who has the sickness or accident will receive reimbursement up to the benefit maximum under the contract, and coverage for the well spouse will make up the difference up to 100% of the bill, but there will be no excess payment. The spouse who has the sickness or accident will be reimbursed according to the contract and the secondary plan will pay nothing. The claim will be paid based on the whether the birth date falls on an even or an odd month.

Sally sees her policy has no maximum benefit for life, but she will not receive more that $100,000 in benefits in any one calendar year. This is known as: Lifetime maximum Annual maximum Limited benefit policy Major medical maximum

Sam is involved in a serious accident. He will not be able to return to his job as an instructor for an undetermined amount of time. He also has training as a welder. His disability policy states that Sam will be considered disabled in the event he is not able to perform the duties of any occupation for which he has been trained, has education or prior experience. Sam is also not able to perform the duties of a welder. Sam should expect the following: Full benefits until his health allows him to return to work Full benefits until he can return to work or work in another suitable occupation Full benefits regardless of his ability to perform other occupations Full benefits for two years and then a reduced amount based on a formula

Samantha has a basic plan with a supplemental major medical through her employer. The deductible that will be applied when she is eligible for major medical benefits is called which of the following? An integrated deductible A corridor deductible A flat deductible A residual deductible

Samantha has not paid her premium on her health insurance policy. It has not lapsed, but the premium is due. On her pending claim, Samantha can expect which of the following? The claim will not be paid until premium is current. The insurance company will pay the claim minus the premium due. The insurance company will wait until the policy lapses and cancel the policy. The insurance company will use the time limit for certain defenses clause

Samantha has suffered a heart attack and she expects to be unable to work for the foreseeable future due to unexpected complications. She is covered by a group disability policy, and she has qualified for benefits under that plan. Samantha has also qualified for Social Security disability benefits after the prescribed waiting period. Samantha's disability benefit is 60% of her salary at the time of disability. How will Social Security disability affect her benefits? Samantha will receive 60% of her salary plus the benefits provided by Social Security. Samantha will receive 100% of the Social Security benefits; however, her employer's benefits will be reduced so that her total benefits will not exceed 60% of her salary at the time of disability, including what Social Security pays. Samantha will receive 100% of her benefits from the employer plan with a small supplement from Social Security based on the cost of living index. Samantha will stop receiving benefits from her employer's plan as soon as her Social Security benefits commence.

Samantha wants to purchase life insurance, but her funds are limited at this time. Her agent has recommended a whole life policy that starts out with a premium that is lower than usual. The premium increases every year for a specified number of years. This type of policy is called a - Modified life policy Graded premium life policy Universal life policy Variable whole life policy

Shondra wants to begin to receive payments from her traditional IRA without incurring negative tax consequences. At what age can she begin to receive the payments and not have the consequences? 50 1/2 years 59 1/2 years 62 years 65 years

Sigmund's disability policy has a "recurrent disability provision". This means: The plan will only pay for a disability once. The insured will not have to serve a new elimination period if he goes out for the same disability within a set period of time. The plan sets a limit on how many times any one disability can be claimed. None of the above

Term life insurance policies are used to provide temporary insurance protection - usually for a specific amount of time. If an insured provides evidence of insurability at the end of a term and qualifies for reduced premiums rates, the insured has a(n) - Convertible term policy Reentry term policy Renewable term policy Interim term policy

The "time limit on certain defenses" provision allows the insurance company to defend against which of the following? The time limit for the company to cancel the policy for misstatement of age or sex The time limit for which the insurance company may cancel the policy and refund premiums for material misrepresentation in the application The time an insurance company must wait to take legal action against a fraudulent claim The time limit the insured must wait to file legal action for non-payment of claim

The Acme Plumbing Company has just made arrangements for group term life insurance. Which employees would most likely be excluded from this insurance? Full time employees Part time employees Retired employees None of the above

The Health Insurance Coverage Continuation Act regulates which of the following? Large companies with exclusions in their policy Establishing requirements for insurers who market to small employers with 20 employees or less The transition of individual employees from regular group benefits to Medicare Members switching from an HMO plan to a regular group medical plan

The M.I.B. (Medical Information Bureau) is a valuable tool in the insurance industry. Which of the following is a true statement pertaining to the M.I.B.? The American Medical Association operates the M.I.B. The medical information contained in the M.I.B. is received from insurance applications. An applicant can request a report directly from the M.I.B. The agent has the duty of making sure the applicant receives an M.I.B. report.

The Mayflower Insurance Company is a stock insurance company. What is its operating objective? To have the lowest net premium To make a profit for stockholders To make a profit for policyholders To have the lowest gross premium

The NAIC proposes laws for states to consider. They have proposed a law that requires mandatory standard provisions for health insurance contracts. How many mandatory standard provisions does the current law include? 11 12 10 13

The Oglobo Company is starting a marketing campaign to provide prospective applicants with the information needed to make a decision on whether or not to purchase an annuity. They must determine their target audiences. Which of the following would be most likely to purchase an immediate annuity? Newly married couple Man who received a settlement for injuries occurring from an automobile accident Couple about to adopt a baby All of the above

The Savvy Soup Company offers its employees the opportunity to have a Health Savings Account (HSA). All of the following are benefits of this type of account EXCEPT: Contributing to an HSA reduces the employee's adjustable gross income Contributions are made on a post-tax basis. Interest is tax-deferred Tax-free withdrawals can be made for doctor's expenses, prescription drugs, and other qualifying expenses.

The Smithermans are covered by Medicare Parts A & B. They are concerned that these will not cover their entire medical bill in the event there is a sickness or an accident. The Smithermans should consider: Determining if they are eligible for Medicaid Purchasing a Medicare supplement plan that will cover some of the cost not paid by Medicare Buying a hospital indemnity plan that will pay the full balance of any outstanding charges Spending down their assets to avoid having to pay for a nursing home

The ___________ is intended to protect the policyholder against unintentional lapses in coverage. waiting period grace period Cooling-off period Conversion principle

The cash values of a whole life policy are affected by the interest rates. Which of the following determines these interest rates? The insurance commissioner A formula set by the insurer Moody's corporate bond index Current market interest rate(s)

The contract that an agent has with his/her agency grants the agent all of the following types of authority EXCEPT: Express authority Formal authority to change the policy if it benefits the insured Apparent authority Implied authority

The death benefit for an accidental death and dismemberment policy is referred to as which of the following? Maximum benefit Principal sum Capital sum Residual sum

The front page of all insurance policies must contain which of the following? A list of riders Insuring clause Incontestable clause Consideration clause

The grace period for a health insurance policy may vary according to which of the following? Annual benefit period Frequency of premium payment Amount of the deductible Length of the elimination period

The insurance companies look at actuarial tables and thereby know what reserves need to be on their balance sheet to cover which of the following? Current liabilities Future liabilities Assets All of the above

The longest pre-existing period for conditions that occurred prior to employment under HIPAA is: 6 months 12 months 18 months 24 months

The payout option for an annuity is selected by the owner of the annuity. Which of the following is true? The accumulation period may also be described as a benefit period. Once the payout option is selected, it cannot be changed after payments begin. The settlement option can be changed within 5 years of annuitizing. None of the above

The provision in a life insurance contract which states that the entire agreement between the insurer and the insured is contained in the contract, including the application if attached, insuring agreements, exclusions, conditions, declarations and endorsements is called the - Insuring clause Entire contract clause Consideration clause All of the above

There are two parties mentioned in the insuring clause. Who are they? The insurance company and the state regulatory agency The insurance company and the insured The agent and the insured The insured and the agency that sold the policy

Tim is in good health. If he takes receipt of his traditional IRA funds before _________, a tax penalty would be imposed. 50 years of age 59 1/2 years of age 65 years of age 70 1/2 years of age

To protect against a disabled person receiving more income by being disabled than they can earn by working, most group disability plans will offset policy benefits with any of the following benefits, EXCEPT: Wage continuation plans Medicaid Social Security Workers' compensation

Under HMO guidelines, rules are very specific about when a member should receive certificates and handbooks outlining their coverage. When must an HMO deliver this material to an enrolling member? 7 days 10 days 30 days 45 days

Under the Fair Credit Reporting Act, when an applicant has been denied insurance coverage because of information contained in a consumer report, the applicant is entitled to which of the following? The right to obtain a copy of the consumer report directly from the insurer The right to obtain disclosure of the source of the information in the consumer report Delivery of the report to him personally by the agent None of the above

Universal life policies are different from other whole life insurance policies because of which of the following? Free look period Premium schedules Beneficiary provision Settlement option

Using the facility of payment clause in a policy, the insurance company may pay an amount up to the maximum limit to which of the following? The people who appear to be entitled to it The insured's estate Directly to a medical provider without proper assignment None of the above

Variable annuities were created in order to do which of the following? To generate more income for the insurance company To protect against inflation To have more products to offer All of the above

Variable annuity withdrawals are taxed on what basis? FIFO LIFO Exclusion ratio Capital gains

What constitutes the "entire contract" for a health policy? The form the insurance company has on file with the insurance commissioner The policy, all riders and amendments, the application and all other papers that are required All papers the agent has on file applicable to the policy The photocopy on file with the insurance commissioner

What is considered constructive delivery to the policyholder? The company sends the policy with amendments to be signed The company sends the policy to the agent or other representative of the policyholder and all premiums due are paid The agent gives the policy to the insured, but premiums have not been paid The company mails the policy to the insured with a bill for the first premium

What is the benefit-paying period of an annuity called? Circumvention period Annuity period Accumulation period Retroactive period

What is the major difference between career general agents and PPGA's? There is no difference. They both recruit and train. Career general agents primarily recruit and train, while PPGA's primarily sell. They both primarily sell. Career general agents primarily sell and PPGA's train

What is the maximum amount of insurance available for dependents under an employee's group coverage? 10% of the employee's coverage 50% of the employee's coverage 75% of the employee's coverage 100% of the employee's coverage

What type of policy has premiums paid to age 100, and upon age 100 pays the face amount as an endowment? Universal life Straight whole life Limited pay whole life Refund annuity

When Joshua took out a life policy, he overstated his age. What will the insurer's course of action be if it discovers the misstatement after the insured dies? Refund all past premiums paid with any accumulated interest Pay an amount equivalent to that which the premium would have purchased at the correct age Deny payment of claim Pay the face amount of the policy minus a deduction in the amount of the underpaid premiums Correct

When a company opts to self-insure, this is an example of risk ___________. avoidance retention transference reduction

When a policy is issued and forwarded to the agent, what constitutes personal delivery of the policy? All underwriting requirements have been completed and the company issues the policy The final complete insurance policy is placed in the hands of the insured and any premium due is paid The company calls the insured to announce he/she has been approved and the policy will be in the mail The insured makes a payment and receives a receipt from the local agency

When an employee has enrolled in a group health plan, he/she will receive what document? An abridged copy of the master contract A certificate of coverage Notice of coverage from the insurance company A letter from the employer acknowledging enrollment

When does the fixed income, paid to two or more annuitants at the same time, under a joint and survivor annuity, stop? The date the actuarial table predicts the death of either annuitant At the death of the last annuitant At the end of the period certain At the death of the first annuitant

Which of the following answer choices correctly lists the requirements for a defined benefit pension plan? Commencement upon attaining age 65; Definite determinable benefits; Primarily retirement benefits Definite determinable benefits; Systematic payment of benefits; Primarily retirement benefits Commencement upon attaining age 65; Definite determinable benefits; Systematic payment of benefits Commencement upon attaining age 65; Primarily retirement benefits; Systematic payment of benefits

Which of the following are deemed qualified retirement plans? Defined premium plan and defined contribution plan Defined benefit plan and defined contribution plan Defined payment plan and defined benefit plan Defined premium plan and Defined payment plan

Which of the following gives a subscriber the broadest choice in health care providers without paying a penalty? Closed panel PPO Open panel PPO In-network POS HMO

Which of the following is NOT a factor used in determining both life and health premiums? Age Morbidity Expense factor Interest factor

Which of the following is NOT an element that contributes to the gross premium for a life insurance policy? Mortality costs Morbidity costs Interest Expenses

Which of the following is NOT part of the insurance underwriting process? The selection of risks The notifying of risks The rating of risks The classifying of risks

Which of the following is a benefit provided by an annuity contract that makes it different from other investments? An annuity contract allows you to create an estate. An annuity contract provides income for life. An annuity contract offers a guaranteed death benefit. An annuity contract provides guaranteed health benefits.

Which of the following is a plan that meets requirements for the federal government in order to receive favorable tax treatment? Section 192 Qualified Income valuation Non-qualified

Which of the following is a true statement regarding a 30 year limited pay life policy? It is not a wise buy because of its limitations. It requires payment for 30 years and endows at age 100. It is impossible because insurers do not sell 30-year pay policies. It requires payment for 30 years and then it endows.

Which of the following is a type of permanent plan that has a "corridor"? Variable life Universal life option 1 Term life Whole life

Which of the following is an example of a non-tax advantage of retirement plans for employees that is not an advantage for the employer? Good business reputation Forced savings Increased productivity Attracting key employees

Which of the following is not a limited risk policy? Travel accident Medicare supplement Aviation policy Automobile policy

Which of the following is not a true statement about tax liability for these coverages? Business Overhead Expense (BOE) premiums are tax-deductible as a business expense. Business Overhead Expense (BOE) benefits are not taxable. Disability Reducing Term Insurance premiums are not tax-deductible for a business. Disability Reducing Term Insurance benefits are not taxable.

Which of the following is not covered under a basic medical insurance plan? Private nursing Income replacement Daily hospital charges for room Physician's visits

Which of the following is not included in the insuring clause? The face amount of the policy The contingent beneficiary The name of the insurer The name of the insured

Which of the following is one of the ownership rights of an insurance contract? Pay a claim Change a beneficiary Consideration provision Insuring provision

Which of the following is true about a modified whole life policy? It starts without any riders and the eligibility for options begins in 3 years It starts with a lower premium that increases over the life of the policy It starts as term and automatically converts to permanent It starts with a lower face amount that increases throughout the policy period

Which of the following is true about the rejected business rule? The insurer that the agent is not licensed with refuses to write the policy. It is a circumstance where the agent's company refuses to write the policy. The business practice is not allowed by state law. The business practice is not allowed by federal law.

Which of the following is true regarding life insurance and health insurance? Health insurance is considered a valued contract; life is a reimbursement contract. Life insurance is considered a valued contract; health a reimbursement contract. Both are valued and reimbursement Neither is valued nor reimbursement

Which of the following limits coverage under an insurance policy? Waivers Exclusions Conditions Declarations

Which of the following may be an optional provision under the Uniform Provisions Law? Physical exam Change in occupation Entire contract Time limit to file claims

Which of the following statements about the automatic premium loan provision of a whole life policy is NOT true? Using the provision prevents the risk of inadvertent lapse Its use causes dividends to be withheld If premiums are missed, the automatic premium loan provision uses cash values Using the provision preserves insurability

Which of the following statements is NOT true about taxation of life insurance? There is no current taxation as cash value builds each year The difference between premiums paid and death benefit are taxed to the spouse under a lump sum settlement Premiums paid by an employer can be deducted by the business Policy proceeds owned by decedent are included for estate taxes

Which of the following will you find in the consideration clause of a heath insurance contract? Rules on filing claims Frequency of premium payments Entire contract Conversion options

Who is responsible for regulation of variable annuities? SEC and NASD SEC and state insurance department SEC and commissioner of insurance NASD and state office of insurance regulation

Who is responsible for the regulation of variable life insurance? ERISA SEC and state insurance department SEC only State insurance department only

Why do group policies include coordination of benefit (COB) provisions? To allow the insured to collect double when they have two insurance plans To limit payment to 100% of the loss and no more To designate which company must pay the claim To allow the insured to pick the policy with the best benefits

Xavier has a noncancellable disability policy. He has an accidental injury, but he is not disabled. He does receive a one-time payment for his accident. He is most likely receiving a benefit from which of the following? A partial disability benefit A nondisabling injury benefit Loss of income benefit Residual disability benefit

You belong to a system that provides both health care services and health care insurance. You belong to: PPO HMO TPA Traditional health insurance plan

Your disability policy defines your eligibility for disability benefits as your inability, due to sickness or accident, to perform the essential duties of your occupation. That definition is known as: Any occupation for disability Own occupation for disability Both own occupation and any occupation Residual Disability

A Long - term care policy has which of the following renewability options: Non-cancellable Guaranteed renewable All of the above None of the above

A PPO network may have a contract that involves any of the following EXCEPT: The contracting network Physicians, hospitals and other providers The participating employee Insurance companies

A PPO plan will usually have all the following features EXCEPT: Higher reimbursement for in - network providers Office visit co-pays Mandatory referrals to specialists Deductibles and co-insurance for non-network providers

A Roth IRA differs in all of the following ways from a traditional IRA EXCEPT: Money accumulates tax deferred in the account Money must be withdrawn under specific guidelines to avoid penalties. A Roth contribution is deductible under specific circumstances. Properly withdrawn, Roth withdrawals are not taxable.

A claim has been filed on a timely basis. The insurer has requested further proof of loss. How long does the insured have to furnish the proof? 60 days, up to one year 60 days, up to 5 years 90 days, up to 1 year 90 days, up to 5 years

A fraternal benefit program should have all of the following components to qualify EXCEPT: Have charitable and benevolent functions Have regularly scheduled meetings Be incorporated under state law Have an organized lodge system

A grace period allows a certain number of days by contract for the insured to submit a premium. Except for weekly and monthly premium contracts, what is the usual grace period? 7 days 15 days 31 days 60 days

A grace period is a component of every life insurance contract. The grace period is the amount of time, following the date that the premium is due, that the policy will remain in force. If the insured dies during the grace period, how will it affect the proceeds of the policy? No effect at all The policy is voided. The benefits are paid to the beneficiary, minus the outstanding premium. The insurer will wait until the premium is paid before distributing benefits.

A group health insurance plan may include all of the following benefits EXCEPT: Medical expense Disability income Retirement pension Accidental death and dismemberment

A group long-term disability plan provides benefits under an employer-sponsored plan. A group plan may contain all of the following features EXCEPT: Benefits will be coordinated with Social Security disability benefits. Benefits will not be paid for on-the-job losses. The benefit is not usually stated as a percent of income. The benefits will coordinate with Workers' Compensation benefits.

A health insurance underwriter is considering an application for John Smith. Which of the following is not a factor the underwriter may consider? Medical history Moral hazards Race Occupation

A health savings account where the employer, not the employee, makes tax-deductible contributions is known as an __________. FSA HSA HRA CDP

A husband wants to name his wife as a beneficiary of his life policy, but wants to retain all of the rights of ownership. Which of the following beneficiary designations would be most appropriate? Tertiary beneficiary Irrevocable beneficiary Revocable beneficiary Secondary beneficiary

A long - term care policy has an elimination period before benefits are payable. How long is the usual elimination period? 365 days 90 days only 30 days or longer 0 days only

A major medical expense plan: Is provided only through a group plan Supplements Medicare Has large lifetime benefit maximums Never has a deductible

A moral hazard can be any of the following EXCEPT: Poor credit history Drug or alcohol abuse Riding motorcycles Criminal history

A nonforfeiture option that provides continuing cash value buildup is called which of the following? A fixed term option An extended period option A reduced paid-up option A cash surrender option

A person that is disabled under Social Security is eligible for Medicare benefits after how long? 5 months (150 days) 24 months (720 days) 29 months (870 days) Varies, determined by a Medicare formula

A point-of-service (POS) plan is MOST like a Health Maintenance Organization (HMO) in which of the following ways? Both are generally nonprofit organizations. Both allow subscribers to use outside providers. Both use a primary care physician. Both use providers who are employees of the plan itself.

A policy that is paid up early and endows at the age of 100 is called which of the following? Universal life Whole life 20-pay life Modified life

A pre-existing condition clause protects the insurance company against: Fraud Misrepresentation Adverse selection Over insurance

A variable annuity has each of the following features EXCEPT: Accumulation units in the accumulation phase Annuity units in the income phase A minimum guaranteed income benefit Varying sub-accounts or investment

A variable life plan must be a type of universal life because - The mortality tables are different than those used for whole life. The face amounts are always higher than those for whole life. The accumulation accounts must be separated from general company assets. The internal accumulation on a variable product is taxable.

Accumulation units must be converted into ________ before variable annuity benefits can be paid out. Dollars Value units Annuity units Credit units

Agents have a variety of duties and responsibilities. The agent can be fined for all of the following actions EXCEPT: Converting premiums for personal use Defamation Acting as a fiduciary Twisting

All life insurance policies have which of the following standard provisions? Waiver of premium Legal action Grace period Guaranteed renewability

All life policies require some sort of beneficiary be named. Usually it is a person, but it can also be an estate, trust, charity, church, or a company. A beneficiary that can be changed at any time is a revocable beneficiary. An irrevocable beneficiary, however, cannot be changed so easily. All of the following statements are true about irrevocable beneficiaries EXCEPT: The beneficiary cannot be changed without written consent. The policyowner makes premium payments. The policyowner retains the right to borrow against the policy. All of the above

All of the factors below are factors in underwriting a group health insurance plan EXCEPT: Stability of the group Type of industry Individuals with certain health conditions Community or experience rating

All of the follow are true about Medicare Part A EXCEPT: There is a deductible to enter the hospital. There is a coinsurance beyond 60 days of confinement. Outpatient prescription drugs are subject to the doughnut hole. Hospice benefits are provided to eligible individuals.

All of the following are considered health policies EXCEPT: Medical expense Major medical Accidental death Hospital indemnity

All of the following are medical cost management techniques designed to minimize overall health costs EXCEPT: Preventative care Requiring a second opinion for surgery Differing the payment amounts for specified illnesses Negotiating doctor and hospital fees in advance

All of the following are purposes of an annuity EXCEPT: To provide an income stream To provide against the risk of living too long To completely replace income after retirement To reduce depletion of the retirement fund

All of the following are true about approval conditional receipts EXCEPT: It establishes when coverage under the policy begins It is part of the consideration It is temporary insurance until the policy is issued It may also be used in the case of reinstatement

All of the following are true concerning Interest Sensitive Whole Life (ISWL) EXCEPT: The death benefit is guaranteed as long as premiums are paid. Policy loans are available. The policyholder will always know the amount of cash value available. The cash account accumulates tax free inside the policy.

Amanda noticed that the wrong date of birth was recorded on her application for insurance. Health policies have a provision that addresses this issue. If Amanda has a claim, she can expect which of the following? The policy will be cancelled for fraud. Claims will be denied until her age is corrected. The amount of the claim will be adjusted to reflect the correct premium and benefit. The insurance company will ignore this and pay as requested.

An HMO hospital benefit will usually provide all of the following services EXCEPT: Specified mental health conditions Hospital room and board Eyeglasses and hearing aids X-rays and laboratory testing

An accidental death and dismemberment policy will usually pay benefits for which of the following? Elliott loses three fingers working on his lawnmower Manford loses the use of his left hand in an auto accident Suzanne loses her eye as a result of a flying puck from a hockey game Bill loses a thumb in a chainsaw accident

An agent is aware that a prospective insured omitted information about an illness that the proposed insured had prior to the application. The agent should do which of the following? The agent has no responsibility to report the omission. Nothing, because the insurer will discover the illness in the Medical Inspection Bureau (MIB) reports Inform the proposed insured that he may have a claim rejected later on with possible other repercussions Hope the insured makes no claims related to the illness until the policy becomes incontestable after two years

An annuitant bought an immediate annuity at the age of 60. When she turned 65, she decided that she wanted to stop the annuity, get a refund of the remaining amount, and move to Brazil. What does the annuity company do? Notify the IRS that she is leaving the country Send her a check for the balance Continue sending the monthly checks Suggest she contact her agent for a referral in Brazil

An annuity is used to protect the annuitant against which of the following risks? The risk of being terminated when they reach 65 The risk of becoming disabled The risk of outliving one's income The risk of premature death

An employee's eligibility for group enrollment may be determined by all of the following EXCEPT: Number of hours worked weekly or monthly Job classification Gender Time in service with the employer

An individual disability will be characterized in all of the following ways EXCEPT: The benefit is a stated dollar amount based on a percentage of income per month. The premium is established by the insured's occupation and health status. The benefit may be paid annually. The company may be able to increase premiums.

An insurance company may not modify the policy agreement (contract) without the insured's written permission. The part of the policy that addresses this is called which of the following? Uncontested legal action provision Incontestable provision Entire contract provision Modifying benefits provision

An insured has reported the wrong age and the wrong occupation on his application. What is the insurance company allowed to do when the error is discovered? Cancel the policy and start over Cancel the agent's appointment for a grievous error Pay a benefit that the premium paid would have purchased at the correct age or occupation Bill the insured for unpaid premiums based on the insured's actual age

An ordinary deferred annuity with a decreasing term life insurance rider is called a - Two-tiered annuity Tax-sheltered annuity Retirement income annuity Market value-adjusted annuity

An outline of coverage will include all of the following EXCEPT: Exclusions and limitations Renewal and cancellation provisions Calculation of premiums Benefits and coverages

Angelina purchased a policy with a face value of $100,000. She died 10 years later and the policy paid a death benefit of $50,000. Why? Her policy was a level term. Her policy was not renewed. Her policy was a decreasing term. Her policy was an increasing term.

Annuities have a variety of payout options. These options provide the annuitant with choices on how the annuity settlement will occur. All of the following are annuity payout options EXCEPT: Cash (lump sum) Annuity certain Flexible payment Refund life annuity

As Howard was filling out his life insurance application, he questioned whom he should name as his primary and contingent (or secondary) beneficiaries. He decided to name his wife Helena as the primary beneficiary, and his son Collin as the contingent beneficiary. What is the most likely circumstance for Collin to receive the benefits of Howard's policy? Howard dies before Helena Collin receives the benefits from Howard's estate When Howard dies, Helena has already passed away When Howard dies, Helena has received benefits from another policy

Barney has a surgical expense policy listed as a "$1,000 Basic Surgical Expense Policy". This means which of the following? Any surgery will pay $1,000. The plan will pay $1,000, only if the surgeon is board certified. Only the most complex surgery will be reimbursed at $1,000 and other procedures by the dollar value of procedure. Only specific surgeries listed in the policy will be covered.

Before variable annuity benefits can be paid out, accumulation units must be converted to: Dollars Credit units Annuity units Mutual fund shares

Ben has a COLA (cost of living adjustment) rider on his disability policy. Any adjustment to his benefit will be tied to: Dow Jones Average Gross National Product (GNP) Consumer Price Index (CPI) S & P 500

Bernie is disabled and wants to apply for disability under Social Security. In order to qualify, he must meet all of the following requirements, EXCEPT: Total and permanent disability and he must not be able to work He must have earned the necessary number of quarters of coverage. There is a 6 month waiting period. The disability is expected to last 12 months or more, or result in death.

Bill is a small business owner. He is considering the purchase of a Business Overhead Expense (BOE) plan. He can expect the policy to pay which of the following in the event he is disabled? His salary up to the policy maximum His home mortgage Rent or mortgage on his business property Personal expenses for his family

Both spouses are covered by their employer group plans for full family coverage. Based on usual guidelines, how is the order of coverage determined? The father's coverage is always primary. The first qualification is which parent has been covered longest. Primary coverage is usually determined by which parent's birthday comes earliest in the year. The couple may choose the plan with the higher benefit schedule.

Brad purchased a fixed annuity for $40,000 that has a guaranteed benefit of $50,000. What will be the exclusion ratio? 20% 50% 80% 100%

Carl has been in the hospital. When he is discharged, the accounting department agrees to file his claims as long as he executes an assignment. This means that Carl: Has directed the provider to bill the insurance company and the company will pay him directly Has paid his bill in full and will be reimbursed by the insurance company later Has authorized the provider to bill the insurance company on his behalf and the insurance company will pay the provider directly Has paid his portion of the bill and the insurance company will send him a check for the balance owed

Carl has enrolled in an HMO plan through his employer. The price is very low and attractive. Carl reads that he must use the doctor listed in his directory or lose benefits. This type of HMO is known as a (an): Open panel HMO Staff model HMO Closed panel HMO Modified HMO

Carly's grandfather wants to stop paying premiums on his life policy. If he wants coverage for the remainder of his life, which of the following policies would provide this coverage? Term Extended term Reduced paid-up Endowment

Caroline recently was admitted to the hospital. During this visit, she incurred a $7,000 charge. Her major medical plan has a $500 deductible and pays 80% after the deductible is satisfied. Her plan has a maximum out-of-pocket of $2,500. How much did Caroline owe for her part of the bill? $2,500 $2,200 $1,800 $1,600

Cheryl has filed a claim for a hospital stay with her insurance company. She has complied with all time lines, but the insurance company has been unresponsive to date. Her health care providers are calling her for payment and threatening to turn her account over to a collection agency. How long does Cheryl have to wait until she can take legal action against the insurance company? 20 days 30 days 60 days 90 days

Clarice is the owner of the life insurance policy on her husband Herb. Which of the following can she NOT do without Herb's consent? Change the designated revocable beneficiary Make a policy loan Increase the amount of the insurance Surrender the policy for its cash value

Credit life insurance is a type of decreasing term insurance. It was designed to protect creditors in the event that the debtor dies. All of the following are true statements about credit life EXCEPT: It can be written on both a group and an individual basis. The insurance premiums are often financed in conjunction with the item purchased. The number of insureds on the policy can range from 1-50. The policy does not have a conversion option.

David applies for a health insurance policy. He is not aware that he has a heart condition at the time, and he answers NO to the question concerning heart issues. His answer is considered: Fraud and the insurance company may cancel his policy Concealment, since he had the condition but did not know about it A representation, since he was telling the truth to the best of his knowledge A warranty, since he is swearing that all on the application is true without reservation

Derrick has a plan with his employer that provides co-pays and a higher payment from the insurance company if he uses designated providers. He, may, however, use other providers if he chooses, but the reimbursement will be lower. Derrick's employer most likely has what kind of plan? IPA HMO PPO Basic medical

Dominic has decided to cash in his life policy. How soon must the cash surrender values become available to him? 1 month 60 days 6 months 1 year

Dr. Haley, an ophthalmologist, is severely injured in a skiing accident. He has a business overhead expense (BOE) policy and he qualifies for benefits on that policy. All of the following are true EXCEPT: He will be reimbursed for rent on his office. He will be reimbursed for leased equipment. He will be reimbursed for his home utilities. He will be reimbursed for his receptionist's salary.

Eddie has an accidental death and dismemberment policy for $100,000 principal amount. He is involved in a logging accident and his hand is severed. What benefit should he expect? $100,000 since this a complete loss of the hand Nothing, since logging is an excluded industry $50,000 since this is the benefit for losing a hand $200,000 since this is an industrial accident

For a benefit plan to be considered non-contributory: The employee must pay part of the cost. The government subsidizes the premiums. The employer pays 100% of the cost. The employee pays 100% of the cost.

Frank has been out on disability and receives benefits under his current policy. His health has improved, but not enough for him to return to full time employment. He can work part time. He can continue to receive benefits at a reduced basis if his policy has which of the following provisions? Rehabilitative employment benefit Recurrent disability benefit Residual disability benefit Contingent disability benefit

Fred has purchased a cancellable policy. He should understand that: He can keep the policy as long as he makes required premiums. The policy may be cancelled by the insured only on the anniversary date. The insurance company may cancel the policy at any time with proper notice and refund of all unearned premium. The insured can cancel for any reason.

Fred has purchased a health policy with a waiver of premium rider. When can Fred expect to receive benefits from this rider? This is a promotion and the insurance company will waive the first three month's premiums as an inducement to buy now. If Fred does not file claims within the first five years of the policy, he will not have to pay premiums for six months. If Fred becomes totally and permanently disabled, the insurance will waive all premiums during the period of disability. At age 65, Fred will receive a check if premiums paid exceed the claims paid over the same period of time.

Gail surrendered her life insurance policy for its cash value. Why was some of the cash value she received taxable? It was a lot of money. She failed to report it. The cash received exceeded the premiums paid. All of the above

George has a fixed annuity. How does the change in interest rates during the annuity period caused by increased interest rates affect his payout? The monthly amount increases. The new interest rate is used to determine the payout. The payout remains the same for life. It is paid out longer.

Group insurance plans have certain characteristics and provisions. Which of the following is a standard group insurance provision? A grace period of 30 days for nonpayment of premium A copy of the application must be provided to each insured. A certificate of insurance must be provided to each insured. All of the above

Group insurance plans typically have a provision called coordination of benefits. This occurs when an insured is covered by more than one group plan. Why is this provision in the contract? It provides the contract with a formal method to deny claims. It allows the insured to choose which contract will pay the claim. It prevents over insurance It prevents payment for excluded conditions for both programs equally.

Group policies must include an option to convert from the group policy to an individual policy if- The individual loses coverage due to loss of employment The individual loses coverage because the master policy was cancelled Both of the above None of the above

Group policies typically contain a coordination of benefits (COB) provision. This provision is in the contract to: Prevent underpayment of claims Eliminate arbitration on disputed claims Prevent overpayment of a claim when more than one insurance policy is involved Provide extra income for the participant

Hal is covered by a short-term disability through his employer. These plans may be designed with any of the following features EXCEPT: Benefits may be paid as a percent of income. Benefits may be paid as a flat indemnity amount. Benefits will coordinate with Workers' Compensation. Both accidents and sicknesses will be covered.

Harold has a policy that provides $5,000 basic hospital expense with a supplemental major medical that has a $500 deductible and 80/20 thereafter. He receives a surgeon's bill for $3,000. How much will Howard pay out-of-pocket? $0 $500 $1,000 $2,500

Harry has a major medical plan that has a new deductible for each illness or accident he incurs. What is the name for this type of deductible? Annual deductible Carryover deductible Per cause deductible Aggregate deductible

Hiram is looking at various disability contracts. He is concerned about the definition of disability as it varies on different contracts. The best definition from his standpoint is: Total and permanent and not being able to work at all Inability to perform any occupation Inability to perform the duties of his own occupation The disability must last at least 12 months.

How is a life insurance agent similar to a field underwriter? He/she gathers information from the M.I.B. He/she fills out the medical section of the application. He/she actually sees the applicant. He/she obtains the credit report.

How is the benefit amount that an annuitant receives from a variable annuity determined? Number and value of accumulation units Number of annuity units and value of accumulation units Number and value of annuity units Number of accumulation units and value of annuity units

How long is the "free look" period for a health insurance policy? 30 days for high deductible plans 7, 10 or 31 days depending on the premium mode 10 days for all health policies 60 days for hospital indemnity plans

How many mandatory provisions for health insurance contracts are there? 10 11 12 13

If Karl's grandmother decides to exercise the accelerated benefit option of her life policy, which of the following is a responsibility of the insurer? Provide the policyholder with an illustration showing the effects on the death benefit Notify policyholder that the recipient's eligibility for Medicaid could be affected Both of the above None of the above

If ___ did not have an insurable interest, insurance would be unenforceable and considered a wager. The beneficiary The insured The owner The agent

If a policy becomes a modified endowment contract (MEC), the tax consequences are significant. Which of the following is not true about MECs? Money distributed from a MEC is considered to come first from earnings. Money distributed from a MEC is taxed as ordinary income. If the policyowner is younger than 59-1/2, there is always a 10% penalty tax. MECs provide a death benefit.

If a policy has been ___________, it will not be reinstated. continued under the reduced paid up option continued under the extended term provision surrendered for its cash value continued under the default nonforfeiture option

If the ___ did not have an insurable interest, insurance would be unenforceable and considered a wager. beneficiary insured owner agent

If the value of each annuity is $6, and the annuitant (Andrew) receives $1,800 per month, how many annuity units does Andrew receive? 2400 2000 300 24

In an HMO a member may be required to have a primary physician to be the focal point for all treatment and service. All of the following are true about the primary care physician relationship EXCEPT: The primary care physician will have records from all physicians and other providers in the HMO to coordinate the patient's treatment. The primary care physician will provide referrals to specialists and other providers when required. The primary care physician can decide what is covered and what is not for the member. The primary care physician is usually an internal medicine or general Practice doctor.

Insurance companies investigate potential insureds before issuing a policy. In which of the following reports would the insurer have information about a prospective insured's lifestyle? Medical report M.I.B. report Inspection report Application

Is an insurance company required to return unearned premiums on a policy cancellation? Only if the insurance company initiates cancellation Only if the policy has a provision allowing this action In all cases where the insured has paid for coverage beyond the cancellation date Never

Izzy has funded a fixed annuity over time and has a substantial account value. He wants to remodel his home before retirement. He would like to make a policy loan to pay for the home upgrade. What is the main consideration when he decides how to structure the loan? He will have to pay an early withdrawal penalty if he is under 59 He can only make a loan to buy a new home. Annuity plans do not have loan provisions. He can use his 10% withdrawal feature at any time with no penalty.

Jacob is an agent who writes controlled business. How much of his business must he write to the public? More Less Half None

Jaime's company offers medical and dental insurance as one of their benefits. Which of the following is not true about these types of policies? Premiums for medical or dental insurance policies paid by the employer are tax-deductible as a business expense. Premiums paid by the employee are tax-deductible only if the employee's unreimbursed medical expenses exceed 10% of his adjusted gross income. Deductions need not be itemized on the employee's tax return. Benefits are tax-free as long as they do not exceed the actual cost of medical expenses.

James has been out on disability for three years. He has recovered from his condition to the point where he can return to work on a part time basis, but he may never be able to return full time. In order for James to receive benefits on this basis, his disability plan should have which provision? Rehabilitative employment Residual disability Partial disability Income protection

James is an annuitant receiving monthly payments from a variable annuity under a joint and 2/3 to the survivor option. What will the surviving annuitant receive when the primary annuitant dies? Two thirds of the primary annuitant's last monthly payment A cash distribution of two thirds of the primary annuitant's reserve Monthly payments for life of a dollar value of two thirds of the annuity units that were previously being distributed Two thirds of the annuity units accumulated by the annuitant

James is in an auto accident and breaks his arm and has blurred vision for a short period of time. He has a $100,000 accidental death and dismemberment policy. What benefit can he expect from this accident? $50,000 for a broken arm $25,000 for temporary loss of vision $0 since he did not die or lose a limb, and his vision loss was temporary $100,000 since he had multiple problems

Jennifer has a $200,000 life policy. Her husband is a 50% beneficiary. Her son and daughter are beneficiaries with 25% each. Before she dies, she takes out a $100,000 loan, which is not repaid. What does her daughter get upon her death? $125,000 $50,000 $25,000 $10,000

Jim applies for reinstatement after his health policy lapses. He submits all requirements, including the premiums. He hears nothing further from the company. This policy is in effect: When 30 days have passed without notification When his agent binds the contract Automatically in 45 days if the company takes no action Only when the company notifies him he has coverage

Joan was robbing a bank when she was severely injured in a car accident as she tried to make her escape. Joan can expect her health insurance policy to: Pay normal benefits Pay 50% of normal benefits due to her occupation Pay nothing since Joan was engaged in an illegal occupation Report this to local law enforcement for prosecution

John has opted to purchase a participating life insurance policy. Which of the following will be higher than if John had chosen a comparable nonparticipating life policy? Interest rate on a policy loan Surrender value Premium Lump sum settlement

Jonathan's employer pays part of his health insurance premium. Which of the following is true about Jonathan's tax options in this situation? He can take a deduction for his employer's contribution to health insurance premiums He can take a deduction for his contribution to health insurance premiums He cannot take a deduction for expenses he did not incur He can take only a partial deduction for his expense.

Justin works for the Baker Box Company. As part of his employment package, the company provides a disability income insurance policy, paid for by the company. Which of the following is not correct about the tax implications of this scenario? Baker Box Company can take a tax deduction of the premiums as a business expense. The premium payments are not taxed as income to Justin. Disability income benefits that Justin receives are not taxable. Disability income benefits that Justin receives are taxable.

Kathy has a cancellable health policy. Her insurance company may do any of the following EXCEPT: Raise premiums for her class of insureds Cancel the policy with notice Change the state required provisions of the policy Give a 30-day notice of cancellation

Kathy's husband has an individual Accidental Death and Dismemberment plan. The premiums for this plan are - Tax deductible Treated as a tax credit Not tax deductible Depends on his income level

Kenneth is injured on the job. He is disabled to the point that he is unable to resume the duties of his job prior to his injury, but he is capable of performing the duties of another occupation. His disability will be classified as: Total lifetime disability Total disability for two years and then partial disability Partial disability Temporary disability.

Kenny wants to start collecting from his traditional IRA, but he doesn't want to incur any penalties. At what age should he start collecting from his traditional IRA to avoid penalties? Any age 55 59 1/2 65

Life insurance and annuity premiums, paid by an individual, are generally not tax deductible. There are exceptions ,however, to this rule. Which of the following premiums could be tax deductible under certain conditions? Variable life Variable universal life Retirement accounts Term

Long-term disability has a benefit that will provide income payments for longer time periods. The maximum duration of a long-term disability payment is usually: 10 years only To age 65 in all cases Age 65 or a specified period of time if the insured is over a specified age when disabled Coinciding with Social Security

Marcus is an applicant for a standard risk policy. When is he considered to be covered? When the manager of the agency deposits the initial premium in the bank When the applicant signs the completed application When the insurer mails the policy for delivery (which had the initial one month premium submitted with the application) When the applicant completes the application and has a physical exam with the intent to pay the premium if he is approved

Margaret may be late paying the premium on her life policy. What is the typical grace period on a life policy? 30-90 days 30-45 days 30-31 days 10 days

Maria's grandmother is applying for living benefits paid by her life insurance policy because she is terminally ill. All of the following are true statements about these benefits EXCEPT: In order to received the benefits tax free, they must be qualified. Qualified means that her condition has been certified to reasonably expect death within 24 months. When she dies, the full death benefit will be paid and be taxable. When she dies, the amount paid under living benefits will be deducted from the death benefit.

Matt is a little short on cash and wants to access some of the cash in his life policy. A partial cash value distribution can be made. If he has the intention to repay the cash he takes out from his policy, it is considered a - Withdrawal Partial surrender Policy loan None of the above

Medical expense plans are what type of contracts? Point value Substandard risk Reimbursement Current value

Medicare Part A pays for hospital expenses. What is the maximum out-of-pocket for the patient in this plan? The per admission deductible The difference between a private and semi-private room charge There is no limit on out-of-pocket. $10,000

Medicare Part A will pay for the first 60 days of hospitalization in full after the required deductible. How long must a member be out of the hospital before a new benefit period begins? 30 days 90 days 60 days 180 days

Medicare was enacted in 1965 and took effect in 1966. Medicare is part of what larger system? OASDI Railroad Retirement Social Security Medicaid

Most disability policies will not cover more that 60-70% of pre-disability compensation. Why is this true? Disability income is a volatile product and the insurance company is hedging. To go any higher would require the insurance company to increase reserves beyond legal limits. To provide a higher level of income might create over insurance. The insurance company does not want to take a higher risk.

Mr. Jones was laid off from the Acme Company on August 3rd. He died on August 30th. Under The Acme Company group policy, what would the insurer pay? 1/4 of the face amount of the policy 1/2 of the face amount of the policy The full face amount of the policy Nothing

Mrs. Brown owns a boutique. She has 20 employees that are covered by a group life policy from Sunflower Insurance. Which of the following is true if Mrs. Brown decides not to renew her policy and ceases paying the premiums? Mrs. Brown must purchase a policy from a different company to insure the group. Sunflower Insurance must notify all employees that the policy has been cancelled. Sunflower Insurance will notify Mrs. Brown, who will then notify her employees of the cancellation. Neither Mrs. Brown nor Sunflower must do anything.

Mrs. Kupchock, who is 78 years old, has received the benefits of her husband's life insurance policy. Although she is quite frail, her agent has recommended that she invest the proceeds in an immediate annuity. Her grandson does not think it is her best option. Why? An immediate annuity is a suitable option for a healthy individual who probably will live longer than most people in his/her age group. Because her life expectancy is not very good, she will probably lose most of her investment. Both of the above None of the above

Mrs. Olsen worries that her health may deteriorate in the future. She wants to provide adequate coverage for herself and her family. Which rider should she consider for her life policy? Payor rider Disability income rider Guaranteed insurability rider Waiver of premium rider

Ms. Swanson has a $75,000 mortgage and assigns a $150,000 policy. The assignee and the mortgagee received a check payable to them jointly. What is this agreement called? Partial assignment Absolute assignment Collateral assignment Divisible assignment

Naomi is the tertiary beneficiary on her uncle's life insurance policy. Under what circumstances would she collect the benefits of the plan? When the primary beneficiary dies When the secondary beneficiary dies When both the primary and secondary pre-decease the tertiary beneficiary None of the above

Nathan has advised his insurance company of a loss covered by his major medical policy. Nathan has not received a claim form. After 15 days, Nathan may: File a complaint with the insurance department Hire a lawyer to settle the claim in court Submit a description with supporting documents in any form he chooses Have his claim paid automatically since the company has not followed the rules

Nathaniel completes an application for health insurance, but he does not pay the first premium. What is the earliest date that coverage will begin? When the application is mailed to the company When the insurance company issues the policy When the policy is delivered and the proper premium is paid When the policy is mailed to the agent

Neighborhood Plumbing Company has decided to let their group insurance coverage that they have with Global Insurance Company terminate. Which of the following correctly states the obligations of the parties involved? Neither party is obligated to do anything. Global must notify all the individual insureds. Neighborhood Plumbing Company must notify their employees. Employees are guaranteed permanent coverage.

Old Reliable issues a policy that may not be cancelled by the insurance company, except for non-payment of premium. The company does have the right to adjust premiums for an entire class of business. This type of policy is called which of the following? Guaranteed level premium Non-cancellable and renewable Guaranteed renewable Variable rate policy

PPO networks contract with individual physicians and also with physician groups. What is the disadvantage of contracting with physician groups? Contracting with physician groups provides higher discounts to services. Contracting with groups allows the network and the physicians to have one individual act on their behalf. Physicians may leave the group from time to time to begin an individual practice and not be part of the network at the time of service. Doctors tend to practice in groups and the network can contract with more doctors in a shorter period of time.

Ralph has qualified for benefits under his disability plan. The company is required to pay him at what minimum frequency? Weekly Bi-weekly Monthly Quarterly

Randall purchased a 20-year family maintenance policy when he was 30 years old. He died at age 40. How many years will benefits be paid to his beneficiaries? None, because he died before the policy matured 10 years 20 years 25 years

Randy has just purchased a Medicare Supplement policy. His knows that his premiums are only tax-deductible if his unreimbursed medical expenses exceed 10% of his gross income. Which of the following is also true about this coverage? If he takes deductions, they must be itemized on his tax return. Any benefits he may receive are tax-free. Both of the above Neither of the above

Retirement plans are important to employers because: Retirement plans force employees to save money. Retirement plans save employers money. Retirement plans attract good employees and help employees in retirement. Retirement plans attract good employees and save employers money.

Roland has been on a trip and has failed to pay the premium due on his health insurance policy. His agent explains to him that he still has coverage because his policy has which of the following? Waiver of premium benefit Consideration clause Grace period Annual review period

Ron and Jack are partners. The business assignment of their life insurance policies was made to protect which of the following? The beneficiary from the claims of creditors The insurance company from fraudulent claims The financial interest that the lender has in the insured The ability of the insureds to maintain their insurability

Roth IRAs are different from traditional IRAs. Which of the following is not true about Roth IRAs? There is no tax on withdrawals. Interest on contributions is not taxable. Qualified distributions must occur after 2 years in the event of the death or disability of the individual with the account. High-income individuals may not have a Roth IRA.

Rupert has filed a claim to be reimbursed for a recent hospital stay. He feels the company is either ignoring his claim or is attempting to deny coverage. How long must he wait to initiate legal action? He must use an arbitrator first. He must contact the insurance department first. He must wait 60 days. The company has 45 days to respond.

Sarah wants to have her face lifted to look better. There is no medical necessity for this procedure. The insurance company will: Pay the benefit if Sarah has been covered for two years Pay a reduced benefit, since it is not medically necessary Exclude the benefit entirely Pay a specified benefit with a maximum allowance

Sasha purchased an immediate annuity. How soon can the payment begin? Anytime specified by the insurer before she turns 68 At age 65 or thereafter Within 1 year or less from the time it is purchased After 5 years

Simon has a special risk policy. The policy will only pay a benefit if Simon suffers: A dread disease An industrial accident while working a hazardous occupation An unusual hazard not covered on other policies A loss incurred while traveling on the local freeway

Smaller employer group rates are usually determined by a preset table that deals with the demographic make up of that group of individuals. This process is known as: Industry rating Group rating Community rating Combined rating

Some retirement plans are deemed nonqualified and do not have the tax benefits of qualified plans. A nonqualified plan: Needs IRS approval Cannot be established to compensate key employees Can be a deferred compensation plan Cannot be an executive bonus plan

Statistics have proven that our greatest need for income is which of the following? When we send our children to college When an insured dies When children are growing up During the blackout period to support a spouse

Steve is considering the HMO option offered by his employer. Which of the following can Steve expect if chooses this option? Choice of any doctor he wishes to use Treatment for diagnosed illness only Annual physical and preventative care Use any hospital he chooses

Susan has paid the maximum out-of-pocket required on her major medical plan for the year. Any additional claims will be reimbursed at what level? 80% 90% 100% 75%

Term riders are available to help the insured to customize their life insurance contract to fit their individual needs. All of the following are common term riders EXCEPT: Waiver of premium Accelerated death benefit Variable life Return of premium

The 10-day free look period gives the insured the opportunity to look over a policy to decide if he/she is satisfied that it meets their requirements. When does the free look period begin? When the policy is issued When the application is made When the policy is physically delivered When the first claim is filed

The Globo Insurance Company is based in Utah and has an office in Ohio. In Ohio, Globo is referred to as which of the following? Domestic Alien Foreign None of the above

The agent's report, in which an agent can comment on the client, the situation and/or circumstances, or any other thing that the agent thinks is noteworthy, is located in which part of the application? Part I Part II Part III Part IV

The application and the premium are which part of the contract? Right of ownership Underwriting clause Consideration Entire contract

The benefit amount that an annuitant receives from a variable annuity is determined by which of the following? The number of annuity units The value of annuity units The number and value of annuity units Neither the number nor the value of annuity units

The cash value in a whole life policy is held in the insurance company's: Cash value account Separate account invested in government bonds General account Separate account for that class of policies

The conversion period for an employee to convert his/her group policy to an individual policy is: 7 days 15 days 31 days 45 days

The fact that women live longer than men means that women's premiums should be which of the following? No different Higher Lower Double

The factor most often used in the calculation of health rates is: Mortality Gender distribution Morbidity Community experience

The factor that affects rates and benefits for a disability policy primarily is: Occupational class Interest on reserves Morbidity tables Gender of the insured

The free look for Medicare supplement plans and long - term care policies is: 10 days for Medicare supplement, 45 days for long - term care 30 days for Medicare supplement, 60 days for long - term care 30 days for both Medicare supplement and long - term care 60 days for both plans

The free look period for an insurance policy begins: When the company issues the policy When the underwriting company approves the risk When the agent delivers the policy to the insured When the first premium is paid

The grace period on a health policy is based on: The amount of the benefit maximum The amount of the deductible The mode of premiums The exclusion rider attached

The individual on whose life the annuity has been issued is the annuitant. Which of the following is a right and/or responsibility of the annuitant? The annuitant pays the premiums. The annuitant chooses the beneficiary. Both of the above None of the above

The normal conversion benefit available to terminated employees under a group life insurance policy is: The employees may convert to an individual term policy within 31 days without submitting evidence of insurability. The employees may convert to an individual whole life policy within 31 days by submitting evidence of insurability. The employees may convert to an individual whole life policy within 31 days without having to submit evidence of insurability. The employees may convert to an individual term policy within 31 days by submitting evidence of insurability.

The principal difference between a preferred provider organization (PPO) and a point-of-service plan (POS) is that a: PPO allows the individual to use any service provider, whereas a POS requires the individual to use only pre-selected providers. POS allows the individual to use any service provider, whereas a PPO requires the individual to use only pre-selected providers POS uses a gatekeeper, while a PPO does not. PPO uses a gatekeeper, while a POS does not.

The producer is responsible for field underwriting. Field underwriting is done when the producer is in front of the applicant. Which of the following is not expected from a producer as part of the field underwriting? The producer should make sure the application is filled out completely. The producer should note the applicant's physical appearance (weight, build, etc.:) The producer should note how many children the applicant has in the house. The producer should note the habits and lifestyle of the applicant.

There are many types of retirement plans. Which of the following is not a qualified plan? Defined contribution (401(k)) Defined benefit (Pension Plan) Executive bonus SEP IRA

There are several types of whole life policies. Which of the following types of whole life policy offers flexible premium payments tied to interest rate fluctuations? Continuous premium whole life Limited payment whole life Current assumption whole life Economatic whole life

There are two basic types of annuities - immediate and deferred. Which of the following is not a true statement about deferred annuities? A deferred annuity has annuity periods that begin sometime in the future. A deferred annuity can have a one-time premium payment. A deferred annuity payout period must begin within 12 months of purchase. A deferred annuity can have multiple premium payments.

To be considered an out- of- network a provider must: Provide service at multiple locations Be in a non-recognized specialty Not have a contract with the network Not accept new patients

Tom is an accountant and as such, likes to plan his income and expenses on a relatively finite basis. What is his best option for life insurance premiums? Flexible premium Variable premium Level premium Automatic premium loan

Traditional IRAs are a way for individuals, especially those without employer funded retirement plans, to save for retirement. All of the following are true about traditional IRAs EXCEPT: Based on their adjusted gross income, some people can deduct IRA contributions. Withdrawals can be made prior to age 59 First time homebuyers can withdraw $10,000 with no tax liability. Based on their situation, some can deduct all of their contributions to their IRA.

Under HIPAA an insurance company may look back how far on pre-existing conditions for a late enrollee? 6 months 12 months 18 months 24 months

Valerie has a health insurance policy that states that the insurance company may not cancel the policy, but they may increase the rates on a specified class of insureds. Valerie has a: Non-cancellable policy Optionally renewable policy Guaranteed renewable policy Conditionally renewable policy

Variable annuities have all of the following features EXCEPT: Account values accumulate tax deferred. There are usually a variety of investment choices. Money can be withdrawn at any time without penalty. Optional riders are available for an extra charge.

What happens if there is an outstanding policy loan upon the insured's death? The loan, plus any interest due, is paid by the insured's estate. The loan does not have to be repaid. The loan, plus any interest due, is deducted from the death benefit. The beneficiary takes over the loan, plus any interest due.

What is the maximum amount that an employee can contribute to a SEP? 100% of his/her compensation up to a maximum of $5,000, whichever is less. 100% of his/her compensation up to a maximum of $49,000, whichever is less. 25% of his/her compensation up to a maximum of $49,000, whichever is less. 25% of his/her compensation up to a maximum of $5,000, whichever is less

What is the maximum benefit period of preliminary term for interim coverage? 30 days 60 days 11 months 12 months

What is the maximum length that COBRA benefits may be extended: 12 months 18 months 36 months 24 months

What is the period called from when the annuity contract is issued to when the payments start? The pay-in period The annuity period The accumulation period The payout period

What is the primary function of an annuity? Fixed benefits Death protection Income for life All of the above

What is the tax liability on divisible surplus received by a recipient? Tax-deferred Taxable Tax-free None of the above

What kind of annuity promises two annuitants full income for both their lifetimes? A joint life annuity A joint and 2/3 life annuity A joint and survivor life annuity A double life annuity

What kind of group would be covered by a franchise life insurance plan? Any group Fraternal groups Groups smaller than the minimum number required by state law to cover a group of people that do not qualify for true group insurance Very large groups

What kind of safeties or guarantees are provided by the Fair Credit Reporting Act? It provides protection to debtors against harassment by lending institutions. It provides rules for the regulation of credit life insurance. It requires that the applicant for insurance be informed that a consumer report may be requested. It provides the funding for life insurance company underwriting operations.

What type of policy does Shelly have if the cash value in Shelly's policy increased to a point where the corridor was applied? Variable life Universal life option 2 Universal life option 1 Whole life

When does a deferred annuity begin to pay benefits? Exactly one year after purchase When the annuitant reaches age 65 At a specified number of years after purchase, but no sooner than at least one year after purchase Within one year of purchasing the annuity

When setting up a policy, the policyholder chooses how he/she wants the benefits to be paid when the policy matures. Which of the following is not a settlement option available to most policyholders? Fixed amount option Fixed period option Accelerated endowment option Life income option

Which of the following is NOT a characteristic of a "joint and survivor" annuity? A variable monthly lifetime income for two people based upon the performance of the annuities mutual funds The payout may be reduced to the survivor to allow more income while both are alive. The company cannot use the sex of the individuals as a payout factor. A predictable monthly income for life for two people based upon an interest rate in effect at the time it is annuitized

Which of the following is a false statement regarding group credit life policies? The premiums are paid by the debtor. There is a limit on the amount of insurance per debtor. The debtor is the beneficiary. None of the above

Which of the following is a preexisting condition? A condition the insured contracted before the policy was in effect for 90 days A condition the insured contracted while the policy was in underwriting, even though premiums have been paid A condition the insured contracted prior to the application A condition in the insured's family medical history

Which of the following is true about VGLI (Veterans Group Life Insurance)? It is convertible term insurance. It is 5-year renewable insurance. Both of the above None of the above

Which of the following policies will not reimburse for specified medical expenses? Major medical policies Daily hospital indemnity Disability income HMO plans

Which of the following situations does NOT allow the policy owner complete control of the policy? If the policy was purchased to cover an employee If the policy owner has no insurable interest in the insured If an irrevocable beneficiary has been named on the policy If the spouse of the insured is the beneficiary for the policy

Which of the following statements is true about a waiver of premium rider? A waiver of premium rider can only be added to a regular life policy. A waiver of premium rider cannot be added to a term policy. A waiver of premium rider can be added to a term policy. A waiver of premium rider cannot be added to a life policy once the policy is approved.

Which of the following statements is true about how annuity payments are taxed? The investment made by the purchaser is returned in equal tax-free payments. The part of the annuity payment that qualifies as earnings is reported as income during the year that the payment(s) are received and is taxable. Both of the above None of the above

Who pays tax on personal life insurance given as a gift? The insurer. The state. The gift-giver. The gift recipient.

Why do most insurance plans pay for benefits in an outpatient service facility? It is more convenient for the patient. Outpatient services do not require as much time. The cost is usually much less for the same service as an inpatient admission. Outpatient services have a better outcome.

Your disability policy states that you will qualify for benefits in the event you are not able to perform the essential duties of your occupation as a result of a sickness or an accident for 5 years and any occupation for which you have had prior experience, education or training thereafter. You are a surgeon who has a neurological problem in your arm. You are not able to perform surgery, but you can practice internal medicine. What benefits might your expect when your disability is approved? Full benefits until you recover or reach a specified age Full benefits reduced by the income you earn as an internal medicine doctor. Full benefits for five years and no benefits thereafter Partial benefits for five years and no benefits thereafter

Zack and his friends were celebrating his promotion to manager at a local pub after work. Zack was "over served" at the party and on the way home, Zack was involved in a serious accident that required him to be hospitalized. His blood alcohol level was well above the allowable limit. Zack's insurance policy will most likely pay his benefit at what level? Standard benefits as for any other claim A limit of $5,000 total, regardless of claim size Nothing, as alcohol related accidents are usually policy exclusion. His deductible will be twice the policy schedule.

___________ are retirement plans which are similar to Keoghs. Simple plans IRAs Corporate plans SEPs

___________ determine(s) the value of a separate account in an annuity during payout. The entire stock market Credit units Annuity units Value units

___________ occurs when an agent converts the premium he collects for his personal use. Misrepresentation Fraud Embezzlement Defamation

A 1035 exchange is allowed on any of the following transactions EXCEPT: A whole life policy to a universal life policy A universal life policy to a whole life policy A life insurance policy to an annuity An annuity to a life insurance policy

A _____________ life insurance policy is issued in a small amount and has frequent premium payments. Temporary Permanent Ordinary Industrial

A clause that protects a beneficiary from creditors coming after the proceeds of a policy is called which of the following? Beneficiary protection clause Insuring clause Incontestable clause Spendthrift clause

A complete and accurate application for insurance is important because: The application is used to fully identify the applicant. The information provided becomes the basis on which the company makes a decision to issue a policy. The application becomes a part of the policy issued. All of the above

A conditional receipt issued by the agent at the time of application provides which of the following? A guarantee to issue the policy as applied for A promise to refund all premiums if the insured changes his/her mind before one year has transpired A warrant that all statements on the application are true and complete An indication that coverage will begin as of the application date if the policy is issued without modification

A disability income plan is designed to pay benefits for which of the following? Unemployment benefits On the job injuries Medical expense Weekly or monthly income as a result of sickness or accident

A health insurance company may refuse coverage or charge a higher premium for which of the following? Previous medical problems Ethnic background Marital status Poor moral history

A hospital income plan pays benefits based on which of the following? Aggregate stop loss Reimbursement schedule Co-insurance Flat payment per day in the hospital

A long-term care rider is a provision that can be added to a cash value life insurance policy. If the insured becomes confined to a nursing home, this rider would reimburse health care expenses. Certain optional benefits may also be provided such as - Hospice care Adult day care Cost of living expenses All of the above

A market value adjusted annuity differs from other fixed annuities in which of the following ways? A fixed annuity guarantees a minimum rate of interest. A market value annuity transfers the interest rate risk to the owner. Principal is not at risk in a fixed annuity. A market rate annuity will usually credit a higher interest rate than a fixed annuity.

A modified endowment contract (MEC) is an over funded life policy and as such, is subject to taxation. Which of the following pertains to MECs? Once an MEC, always an MEC Funds withdrawn are subject to LIFO (last in, first out) tax treatment. Any policy exchanged for an MEC is automatically classified as an MEC. All of the above

A number of personal and family needs can be fulfilled by life insurance. Which of the following would be a common use of the proceeds from a life insurance policy? Creation of an estate when the insured dies Funds for funeral expenses Income for survivors of the insured All of the above

A provider under an HMO arrangement could be: A physician A hospital A diagnostic laboratory All of the above

A representation is- A guarantee that all statements are 100% factual The company's guarantee that benefits will be paid promptly A guarantee that the insured can get a refund if he is dissatisfied with the service A statement that all information is true to the best of the applicant's knowledge

A technique used to evaluate the clinical necessity, appropriateness, and/or efficiency of health care services, procedures, or settings is known as: Adverse selection Retrospective review External review Utilization review

A variable annuity separate account will be invested in which of the following types of investments? Short-term government securities Bonds The legal reserve for liquidity Equity investments

Additional tax qualified retirement plans may include any of the following EXCEPT: Traditional IRA plan Keogh plan 403 (b) plan 501 (c) (3) plan

All of the following are commonly used when investigating the insurability of an applicant EXCEPT: An attending physician's statement A credit report Contacting the Medical Information Bureau (M.I.B.) Talking to the neighborhood watch

All of the following are examples of limited policies EXCEPT: Travel accident Vision care Hospital indemnity Long-Term Care

All of the following are federal income tax free transactions for a life insurance policy EXCEPT: Death proceeds Premiums paid that build cash value Dividend payments Gain on policy surrender value

All of the following are required provisions in a health policy EXCEPT: Grace period Notice of claim Entire contract Change of occupation

All of the following are true about group insurance EXCEPT: There are usually no health questions for group insurance. The rates for larger groups can be based on that group's claims experience. The rates may change on the anniversary of the contract. Every employee can tailor make his/her own plan within the group.

All of the following are true about health insurance deductibles EXCEPT: Higher deductibles limit smaller claims Higher deductibles tend to lower premiums Deductibles continue to increase as the cost of healthcare services increase Deductibles vary on an employer group plan depending on the risk of the individual employee

All of the following statements are true regarding the waiver of premium rider for a life insurance policy EXCEPT: Premium payments are waived when the policyowner is disabled. The policy is kept in force while premium payments are waived. The rider is void after the policyowner reaches a certain age, such as 65. All waived premiums must be repaid if the policyowner recovers from the disability.

All of the following statements regarding Medicare Part A are true, EXCEPT: Covers hospitalization Coverage is mandatory Covers hospice care Covers outpatient prescription drugs

All periodic premium annuities are _______________. level premium flexible premium fixed deferred

An HMO found guilty of unfair trade practices can be subject to: Imprisonment Fines not exceeding $25,000 Fines up to $50,000 Both imprisonment and fines up to $50,000

An HMO has a limited number of health care providers that are owned or employed by the HMO. This type of HMO is: Gatekeeper system Open panel Capitation system Closed panel

An HMO member can usually qualify for benefits when there is an emergency in all of the following EXCEPT: While on vacation out of the HMO area While on business out of the HMO area Using an urgent care facility when the situation is critical Using a non - HMO emergency room when you are in the HMO area

An HMO plan is characterized by all of the following EXCEPT: Community rating Periodic wellness testing Annual open enrollments Free choices of any provider

An HMO will generally cover all of the following services from a hospital EXCEPT: Inpatient care, including ancillary services Outpatient surgery X-ray and laboratory Outpatient prescription drugs

An HMO will offer basic services to all members. All of the following services are offered as a basic service EXCEPT: Doctor services Preventive and routine care, like annual physical and immunizations Rehabilitation therapy Durable equipment

An agent takes an application. What information is in Part III? Medical History Credit Reporting General Information Agent's Report

An application for insurance will contain all of the following EXCEPT: A written request for insurance by the applicant Information about the applicant's background Information about the applicant's health history An oral request by the agent to the company to issue the requested coverage

An application for reinstatement of a health insurance policy was submitted with all the proper requirements. The company makes no response. Will the policy automatically reinstate without further company action? No, the company has refused reinstatement. Yes, coverage is in effect after 90 days. No, the company must take affirmative action. Yes, the coverage will be effective in 45 days.

An attitude or state of mind that causes indifference to a hazard resulting in a loss is called which of the following? Moral Physical Material Morale

An equity-indexed annuity will have all of the following features EXCEPT: A choice of multiple stock indices on which to base a return A crediting method for gains A cap rate to limit returns Dividends from the index chosen, if any are paid

An example of presumptive disability might be any of the following EXCEPT: Total blindness Complete loss of hearing Amputation of a leg at the hip Severance of a hand

An insurance company can accommodate substandard life insurance risks with a provision that is made for the expected higher death rate. What does this provision entail? The establishment of special risk groups Reduction in the agent's commission Reduction of the death benefit Charging a higher premium

An insurance company must pay a disability benefit no less frequently than: Weekly Bi-weekly Quarterly Monthly

Anthony is continuing to buy when the stock market levels are fluctuating. This activity, which tends to average out the cost of units during the pay-in period, is called - An illegal stock purchase Buying on sale Annuity averaging Dollar cost averaging

Any of the following will have an insurable interest in the insured EXCEPT: An employer who wishes to protect himself against the loss of a key employee A wife who wants to be sure her children are secure in the event her husband dies An individual who wants to leave a charitable bequest Two friends who want to help the other person out in the event one dies.

April completed her insurance application on the 9th of August. She paid her initial premium on the 10th of August. The insurance company issued the policy on the 16th of August. Her agent delivered the policy on the 17th of August. The insurer has a 15-day free look provision. When does she need to return the policy if she decides she does not want to purchase it, and wants her premium refunded? September 15th. September 10th. September 2nd. September 1st.

As with all investments, there are risks and rewards, advantages and disadvantages. All of the following are disadvantages of immediate annuities EXCEPT: Once the annuity is purchased - there is no turning back - the annuitant loses access to the principal. The guaranteed income may be less than could be earned in another investment. If the annuitant does not outlive the actuarial predictions, substantial monies could be lost. In the event of a downturn in the market, the benefit payments remain level.

At what point are an employee's contributions into a qualified retirement vested? 10 years 5 years 1 year Immediately

Besides a limited period of time after the discontinuance of premium payments, what else may be required in order to reinstate a lapsed policy? Payment of any outstanding loans, as well as payment of any back premiums Proof that he/she is still insurable Payment of interest on any past-due premium All of the above

Bill has several employees that he would like to retain for the long term good of his company. He has paid in the maximum allowed on his qualified retirement plan. What is a possible choice that would provide both Bill and his key employees an additional benefit? Key man life insurance Split dollar life insurance Cross testing on the 401(k) plan Deferred compensation plan

Bill receives a check directly from the insurance company for his recent hospital stay. He has a Hospital Expense Policy. This type of policy is referred to as which of the following? An indemnity contract A special payment contract A fee for service contract A reimbursement contract

Blanket health insurance covers which of the following? Large fixed groups of employers Each person named in the policy A limited number of insureds An ever-changing group of people, like students

COBRA eligibility may be triggered as a result of any of the following events EXCEPT: An employee loses eligibility for group coverage as a result of reduction in hours Termination of employment An employee dies An employee is promoted

COBRA is a provision that allows a terminating employee to continue health insurance under his employer's plan for a specified period of time. If an employer fails to allow this benefit, his consequences may include which of the following? Private lawsuits under ERISA IRS excise taxes Liability for past and future medical expenses during the qualified beneficiary's continuation period All of the above

Cafeteria plans may offer which of the following? Flexible spending accounts Tax shelter for premiums paid on chosen coverage Options to choose coverage that meets the individual's needs All of the above

Can Vicki, who has a valid life insurance license in the state, also sell variable annuities? Yes, she is qualified No, she is not qualified Yes, if her company has a broker's license Yes, if she has a Series 6 or Series 7 license

Carla has invested in an annuity to have money at retirement. What factors will determine the amount that Carla will receive at retirement? The interest rate The total capital The payout option selected All of the above

Carol wants to start saving in a traditional IRA. What is the latest that she can start saving in a traditional IRA? Age 59 1/2 The first of April following the year she turns 65 The first of April following the year of age 70 1/2 Age 70 1/2

Clyde has purchased disability income insurance. Which of the following statements is not true about tax liabilities for disability income insurance? Premiums paid for individually owned disability income policies are not tax-deductible Disability income benefits are tax-free when paid with after-tax dollars. Both of the above Neither of the above

Co-insurance is designed to control which of the following situations? Make deductibles higher Allow the insurance company to charge higher premiums Raise premiums more frequently Make the insured responsible for some of the charges to hold down claims payments

Continuous premium, limited premium and single premium are types of whole life policies. Which of the following is indicative of a continuous premium method? It has immediate cash value. It is also called 20-pay life. It has the lowest cost over the life of the insured. It has the lowest annual premium.

Credit scores are used by insurers when determining insurability of a client. Which of the following regarding the Fair Credit Reporting Act (FCRA) is FALSE? The FCRA is a federal law. The FCRA was enacted in 1970. The FCRA requires insurers to identify the source of the information provided to them in a credit report. The FCRA requires insurers to explain the reason(s) behind any issued denials of coverage.

Daniel has a disability income rider on his life policy. With a disability income rider - The insurer pays Daniel a specified amount each month. The income continues for the duration of the disability. There is a waiting period before benefits are paid. All of the above

Disability insurance can be used in a business for which of the following needs? Funding a buy-sell agreement Business overhead expense protection Key person insurance protection All of the above

Dividends are not taxable as income due to which of the following reasons? They are considered a prepaid portion of the proceeds. The government will collect taxes after the policy matures. The taxes were paid before the premium was paid. They are a return of part of the premium paid.

Earl has deposited a large lump sum with an insurance company and he will begin receiving monthly payments next month. Earl has purchased: A flexible premium deferred annuity A single premium flexible annuity A single premium deferred annuity A single premium immediate annuity

Employees may NOT be classified for group life insurance by which of the following? Job responsibilities Union or nonunion status Department Sex or age

Final Rest Mutual is an insurance company that processes and pays claims for ABC Company's self-funded health plan. This arrangement is known as: Third Party Administration (TPA) Cost plus benefits (CPB) Exclusive Provider Organization (EPO) Administrative Services Only (ASO)

Gregory is trying to examine the different tax issues to determine how he wants to set up his life insurance policy. Which of the following statements is not true about tax liability for life insurance proceeds? Lump sum payments are taxable as income. Installment payments are not taxable as income. Both principal and interest are always taxed. All of the above

Guaranteed issue is a process by which eligible employees may enroll in the company's group plan without restriction. Guaranteed issue is usually available on what basis? At any time the employee wishes to enroll At the employer's discretion At the insurance company's discretion At the time of hire or other annual open enrollments

HIPAA recognizes time served under group plans to determine pre-existing condition restrictions. If a person is not covered, what is the maximum period they are allowed to go without coverage before the HIPAA requirements become void? 6 months 5 months 90 days 63 days

Harland is confined to the hospital for 10 days for surgery. He has a hospital expense policy that provides $100 per day for a room, plus $1,000 for miscellaneous hospital charges and $500 for surgery. The hospital charges $200 per day for room, $1,500 for miscellaneous services and the doctor charges $1,500 for his fee. How much will Harland's policy pay? $5,000 $1,500 $2,200 $2,500

Health insurance may be sold on a participating or a non-participating basis. Which of the following is true about participating policies? Dividend amounts are guaranteed Dividends will always be the same as the projected schedule The insured has a choice of whether his policy will be participating or not Dividends are paid year to year and the amount of the payment is not guaranteed

Henry works for GHI Corp and they have announced an annual re-enrollment for the HMO plan. Under most HMO's, Henry has how long to make his decision to join the HMO? 60 days 10 days 45 days 30 days

Horace owns a health insurance policy that will not pay benefits unless he is confined to the hospital. This type of contract is known as a: Non-cancellable contract Unilateral contract Contract of adhesion Conditional contract

How does the pre-existing condition vary from individual to group policies? There is no difference. Individual pre-existing conditions are less restrictive. Group plans never have pre-existing conditions. Individual plans are usually more restrictive than group plans.

How long can an insurance company delay payment of a cash surrender? The insurer must pay immediately. 30 days 60 days 6 months

If Sally belongs to an HMO, she can expect which of the following included in her benefits? Annual physical Immunization shots as required Age related preventative treatment All of the above

If an individual covered under Medicare Part A is in the hospital beyond 90 days, benefits may be subject to: Deductibles Co-insurance Out-of-pocket maximum Lifetime reserve equal to a maximum of 60 days of hospitalization

In a non-contributory plan: The employer may choose who they want to cover The employer may exclude hazardous occupations The employee must pay part of the cost 100% of the employees must be covered

In calculating premiums for health insurance, actuaries use which of the following information? Interest Mortality Expenses Morbidity

In order to qualify for SSDI, an individual must have worked in jobs covered by Social Security and have medical conditions that result in total disability. The individual must be unable to perform the same work that he/she did prior to the disability. The individual is unable to perform other jobs because of a medical condition The disability must have lasted, or is expected to last for at least one year or result in death. All of the above

In order to sell variable annuities, the sales person must be qualified. What is required to qualify to sell variable annuities? A specialty license from the state A "Blue Sky" license from the state An annuity license from the state Registration with FINRA and an insurance license from the state

In some cases a credit-reporting agency is used in the underwriting process. According to the Fair Credit Reporting Act, when is the applicant to be notified that a report may be ordered? Prior to the initial interview by letter If a report is actually ordered As part of the policy delivery At the time of an application

Insurance companies do not have to pay claims or benefits immediately. How long can an insurance company delay payment of cash surrender values? 10 days 30 days 2 months 6 months

Insurance companies use 5 major factors to determine annuity premiums. All of the following are common factors used to determine premiums for annuities EXCEPT: The age of the annuitant The sex of the annuitant The payment guarantee to the annuitant The marital status of the annuitant

Jennifer's employer offers her the opportunity to choose from a variety of group benefits. She can choose the plans that best meet her needs while declining to participate in components of the plan. The type of plan she is being offered is called which of the following? HMO PPO Free lunch program Cafeteria plan

Jerome has a policy with a waiver of premium provision. How long must Jerome be disabled before his premiums will be waived due to a qualifying disability? 20 days for accidents 4 weeks for accidents or sickness 90 days for accidents, 6 months for sickness 3 or 6 months for any disability

Joe Jones has completed an application for accident and health insurance at an applicant's home. He collects the premium and returns to the office. Before sending the application to the home office, Joe should do which of the following? Correct any mistakes on the application and initial for the insured Deposit the premium in his/her personal account and buy a money order to send in with the application Order an MIB report Complete an agent's report

Joe has named his wife, Sarah, primary beneficiary to his accidental death and dismemberment Policy. Joe is not able to change the beneficiary without Sarah's consent. This type of arrangement is called which of the following? Contingent Irreconcilable Primary Irrevocable

Julia has a basic medical expense plan through her employer. This can also be referred to as: Dread Disease Policy Excess medical coverage Contingent major medial insurance First dollar coverage

Ken has a medical plan through his employer that provides a schedule of benefits and payment allowances for those benefits in his employee group certificate booklet. Ken most likely is enrolled in a: PPO plan HMO plan Point- of- Service plan Basic Surgical Expense plan

Larry is in an accident and he loses one hand and one eye. He has an Accidental Death and Dismemberment policy for $200,000 principal sum. What should he expect for his benefit? $50,000 for each loss $100,000 total $400,000 since this is a double dismemberment $200,000 since this is the principal sum

Larry, Moe and Curly are equal partners in a business that has been valued at $500,000 by their accountant. None of the three want to be in business with their partners' families in the event one is disabled. The business entity should purchase which of the following? Three disability buy-sell policies for $100,000 each Six disability buy-sell policies for $100,000 each Life insurance will cover this need Three disability buy-sell policies of $167,000 each

Life insurance policies are considered to be _________ contracts because the insurance contract pays a stated amount. compensation indemnity unilateral valued

Maggie was taking a class at the community center on health insurance, policies, benefits, and taxation. Which of the following was most likely included in the class? Every policy has tax consequences (direct or indirect) If premiums are tax deductible, benefits are taxed as income. If premiums are not tax-deductible, benefits are usually tax-free. All of the above

Major medical plans usually allow benefits for all of the following EXCEPT: Non-occupational accidents Diagnostic testing Surgical procedures Experimental drugs and treatment

Marilyn has a major medical policy that has a $500 deductible and pays 80% of the benefit after the deductible. Marilyn has a hospital stay that results in a $21,000 bill. How much will Marilyn owe for her part of the bill? $2,100 $4,100 $500 $4,600

Marjorie has notified her insurance company that she has been in the hospital. The insurance company has furnished the form to file a claim. How long does Marjorie have to file proof of her loss? 10 days 30 days 60 days 90 days

Mark and Sarah have recently been blessed with a new son, James. James will be covered under Mark's health policy: Immediately for group policies and after 3 months for individual policies After 24 hours on individual policies After 72 hours on group policies At birth for both individual and group policies

Mark is soon to reach age 65. At age 65 he will become eligible for which of the following: Medicare Part A Medicare Part B Medicare Part D All of the above

Market value adjusted (MVA) annuities are fixed annuities. When does the market value come in to play? When the market goes up When the market goes down When the annuitant dies When the annuity is surrendered early.

Martin has gall bladder surgery that requires a 4 day hospital stay. His policy has a $500 deductible and pays 80% with a maximum out-of-pocket of $5,000. The hospital bill is $8,500. What is Martin's part of the bill? $6,400 $6,800 $1,700 $2,100

Mary has reached age 65 and she wants to begin a monthly income on her fixed annuity. She has funded her plan with after- tax contributions, and she wants to know what her tax liability will be going forward. Her agent explains that her tax will be calculated using: Income averaging Morbidity tables Tax rates based on her age The exclusion ratio

Mary-Margaret has applied for a new health insurance policy. When must Mary-Margaret be given an outline of coverage? At the time of the first claim At the time of the application At the time of the first premium At the time the policy is delivered to the applicant

Matilda goes motocross racing over the Memorial Day weekend and suffers a broken leg. She contacts her agent to purchase a major medical policy and files a claim when the policy is issued. The company declines the claim. The grounds for declination is which of the following? Insuring clause does not cover this event The premium was not paid until the policy was issued The transaction did not meet the consideration requirement The broken leg was a preexisting condition

Medicaid is a program that: Is co-funded by the states and the federal government Provides benefits for eligible low income individuals Is administered by individual states All of the above

Medicare will require the individual participant to pay a premium for which of the following parts? Part A only Part B only Part D only Part B and Part D

Mia moved to a new city to take a new job. When she finally got around to transferring the funds from her old IRA to a new IRA, she was surprised to see that she was assessed a tax of 20%. Why was this tax assessed? The new plan is a Roth IRA. The new plan is not qualified. She took more than 30 days to complete the transfer. She took more than 60 days to complete the transfer.

Michelle received a lump sum payment from her uncle's policy (as the named beneficiary). Are the proceeds subject to taxes if the policy was purchased with after tax dollars? Federal income taxes - always State income taxes - always Federal income taxes - sometimes State income taxes - sometimes

Mike Donaldson is involved in a serious auto accident. As a result of the accident, Mike is disabled and his passenger is also seriously injured. Mike has a disability income plan. Which of the following losses will the disability plan reimburse? Medical expenses for his passenger The other driver's loss of income Mike's out-of-pocket medical expense Mike's loss of income

Mollie is purchasing a new life insurance policy. Under which of the following circumstances would this new policy be considered a replacement? When existing life insurance is reduced in face amount When existing life insurance is surrendered When existing life insurance is continued as an extended term All of the above

Most life insurance policies have common exclusions. That means there are circumstances, conditions, etc. in which they are not obligated to pay benefits of a policy in force. Which of the following is not such an exclusion? Suicide Dangerous activity Aviation Sexual orientation

Mr. Brown knows that his social security benefits are determined using a formula based on his earnings. Which of the following is a traditional benefit of the social security program? Monthly disability benefits for disabled workers and their dependents Monthly benefits for spouses of retired workers Lump sum death benefit All of the above

Mr. Watson wants to purchase a policy that will provide the greatest amount of death protection and some cash accumulation at the best value for his periodic premium dollar. Which of the following policies should he choose? Annuity Limited pay life Term life Straight whole life

Mrs. Jurandi owns a small bakery. What is her social security tax rate? 5% 6.2% 10% 12.4%

One of the most common types of life insurance is the whole life insurance policy. Which of the following is a typical characteristic of a whole life policy? The premiums remain level for the entire period that the policy is in force. Whole life policies have a guaranteed cash value. The face amount of the policy does not change while the policy is in force. All of the above

Premium payments for life insurance are made in advance. Typically they are paid to the insurer's home office or to the agent. The premium payment mode defines the timing of the payments. Usually the payment mode with the best economy is - Monthly Quarterly Bi-annually Annually

Premiums paid by Felicia for her employer group long-term care policy are tax-deductible only if Felicia's unreimbursed medical expenses exceed 10% of her adjusted gross income. Which of the following is also true about this coverage? Deductions must be itemized on the employee's tax return. Deductions are limited to a specified dollar amount per year based on the Consumer Price Index. Benefits are received tax-free as long as they do not exceed the actual cost of medical expenses and up to a specified amount per day. All of the above

Randall's company has taken out a life insurance policy on a key employee - John. John is the insured, but the company is the owner of the policy. What rights does John have as the insured? Choice of premium mode Beneficiary designation Take out a policy loan None of the above

Rebecca is disabled and not able to work. When can she file a claim with the Social Security Administration for disability benefits? After one year As soon as she is diagnosed as totally and permanently disabled After 3 months (90 days) After 5 months (150 days)

Regarding a graded premium whole life policy, which of the following statements is correct? Premiums are payable to age 60. Premiums are reduced each year during the early policy years and then remain level. Premiums start high, are reduced for the first 5 years, and then remain level. Premiums start low, increasing each year during the early years of the contract and then remain constant for life.

Regina is insured under a guaranteed renewable health contract. The insurance company may increase rates: When it has approval from the insurance commissioner When specific individuals have excessive claims On any anniversary date for any reason Only when an entire class of insureds has a premium increase

Richard purchases a disability policy while he is a bookkeeper in a family business. He leaves the family business to work on an offshore oil platform and he becomes disabled. His policy states that he has a $1,000 monthly benefit for a qualifying disability, but he receives $750.00 per month. His policy most likely has a: Residual disability clause Presumptive disability clause Own occupation definition Change of occupation clause

Robert has been notified that he does not qualify for full disability benefits, but his policy does contain a provision for partial disability that he does qualify for. His current policy pays $1,000 per month in the event of a full disability. What benefit should he expect for a partial disability? $750 $600 $300 $500

Sally is reading her HMO contract. She sees the term "capitation" listed in the wording. The HMO uses capitation to describe: The maximum number of doctors who may be listed in the panel The per member fee paid to the state for licensing The number of times a patient may have service each month The flat fee the HMO pays the doctor per subscriber each month regardless of services rendered

Sam Johnson is looking at possible methods to classify his employees under his group insurance program. He may choose all of the following except: Method of compensation Job classification Length of service Age bands

Samantha has qualified for a disability benefit under her current plan. Samantha can expect to begin receiving benefits at the end of: The disability period The probationary period The benefit period The elimination period elected under the policy

Samuel is explaining the exclusions in a life insurance policy to his new client. Which of the following is an exclusion that would be found in a life policy? Hazardous occupation War Suicide All of the above

Seth must work for 90 days before his insurance is effective. These 90 days are called the: Elimination period Deductible period Contestable period Probationary period

Several factors impact annuity benefits. Which of the following is NOT an annuity benefit factor? Interest rate Amount of proceeds Age of annuitant Age of beneficiary

Several small businesses join together to form a large group for the purpose of buying group health insurance. This type of arrangement is called which of the following? Health Maintenance Organization (HMO) Franchise Association Multiple Employer Trust (MET)

Social Security Disability Insurance (SSDI) is a federal insurance program that provides disability benefits to eligible disabled persons. SSDI is a social program funded by payroll taxes withheld from every individual's paycheck. Which of the following is not true about this program? The current Social Security payroll tax is 6.2% in 2014, which is deducted from employees' paychecks. Employers pay a matching 6.2% Social Security tax. Self-employed individuals pay the entire 12.4% Social Security tax. Employers can take a deduction for Social Security tax contributions.

Sometimes small businesses are grouped together in order to obtain insurance as one large group. This practice is a characteristic of which of the following? A Blue Cross/Blue Shield plan A franchise Plan Health Maintenance Organization (HMO) A multiple employer trust or M.E.T.

Sophie has a variable annuity. She wants to know when she reaches retirement, what percent of the total value of all accumulation units credited to her account will be converted to annuity units? 15% 25% 50% 100%

Term coverage has many applications, such as mortgage protection. It gives the insured the best 'bang for their buck'. It is not without its disadvantages however. Which of the following is not a disadvantage of term insurance? It is pure death protection. It is generally not renewable after age 65 or 70. It becomes more expensive over time. None of the above

The Acme Baking Company just purchased group life insurance plans for its employees. What will the employees receive as proof/evidence of their insurance? A copy of their individual policy A copy of the master policy A master policy with a copy of the certificate of authority A certificate of insurance

The Clark family's insurance policy lapsed when Mr. Clark was out of work. The policy was not surrendered for its cash value. Under what conditions can the policy be reinstated? Proof of insurability may be required All back premiums need to be paid It has not been more than three years since the policy lapsed All of the above

The SGLI (Servicemember's Group Life Insurance) provides coverage for personnel enlisted in the service. What type of basic coverage is issued to an eligible member under the SGLI program? Endowment insurance Whole life insurance Split dollar Term life insurance

The Savvy Soup Company also purchased a Buy-Sell policy. All of the following are true about this type of policy EXCEPT: A Buy-Sell is a disability insurance policy. A Buy-Sell policy provides a benefit to allow the partners or owners or officers of closely held businesses to purchase the ownership interest of a disabled partner or owner. Premiums for these policies are not tax-deductible as a business expense. The Buy-Sell benefits are taxable.

The Swanson Company has 5 partners. How many policies will they need if they buy a partnership cross-purchase plan? 1 12 16 20

The ____________ is used to calculate the tax-free portion of an annuity payment. variable factor interest factor taxation ratio exclusion ratio

The agent issues a conditional receipt at the time of the application. Which of the following statements is true? The coverage is effective immediately, until he hears otherwise from the insurance company. The agent should issue a receipt whether or not a payment has been collected. The company will look on his application more favorably, even if he has some health problems. If the insurer accepts the policy as applied for, the coverage will take effect from the date of the application or medical exam, whichever is later.

The corridor test relates to the amount of pure insurance in a contract. If a policy fails to meet the cash value test, the tax implications are significant. All of the following statements are true EXCEPT: The corridor test deals with the relationship between the cash value and death benefit at a point in time. If an insured is 35 years old, the total death benefit cannot be less than 250% of the cash value. If the cash value of a 40-year-old insured's policy is $100,000, the death benefit must be at least $250,000. After age 60 the cash value ratio begins to scale down.

The entire contract provision in a health policy prevents the insurance company from: Cancelling the policy without written notice Increasing premiums for all in this policy type Eliminating the need for consideration Changing the terms of the contract by referring to documents not included in the policy

The insurance company that Jonathan works for has classified Jonathan as totally disabled. Under the waiver of premium, how long is the waiting period? 30 days 60 days 1-3 months 3-6 months

The insured and the insurance company are each responsible for a percentage of a medical claim. This feature is called a: Deductible Stop loss Copayment Coinsurance

The outline of coverage in a policy contains all of the following EXCEPT: Policy benefits Limitations and exclusions Conditions of renewability Future value of the policy

The owner of an insurance policy and the insured are usually the same person. However, sometimes the policy owner is a different person. This is known as - Tax-sheltered Two-tiered Survivorship Third party

The policy clause that states, "benefits are subject to all the provisions, conditions, and exclusions of the policy" is: Time limit on certain defenses clause Entire contract clause Consideration clause Insuring clause

The process by which an employee may enroll in an employer group insurance plan without regard or restriction for any pre-existing condition is referred to as: Automatic enrollment Conditional enrollment Prospective enrollment Guaranteed Issue

The regulation of insurance at the state level was the result of which of the following? U.S. v. Southeastern Underwriters Association SEC intervention Paul v. Virginia McCarran-Ferguson Act

The term used for incontestable period for a health insurance contract is which of the following? Grace Period Time limit on filing claims Consideration clause Time limit on certain defenses

Tim has added an accidental death rider to his life insurance contract. He knows that he will be charged an additional premium for this coverage, but because he lives in a dangerous neighborhood, he thinks the coverage is a good idea. For which of the following will the insurer exclude the payment of benefits? Conducting an illegal activity Acts of war Flying an experimental aircraft All of the above

To be eligible to participate in a group medical plan, an employee: Must be full time Must have served any required probationary period Should enroll during period of eligibility All of the above

Underwriting considerations for group plans employ which of the following considerations? Groups are rated based on the oldest insured in the group. Groups are rated without consideration of the number of men vs. women. Groups that are large pay higher premiums. Groups usually do not have a requirement for medical exams.

Variable annuities guarantee ___________. with life insurance a recovery of the initial investment against a downturn in the market against outliving your income

Walter has a major medical policy with a $500 deductible, 80/20 coinsurance and a $1,500 maximum out-of-pocket. His hospital bill is $6,500. How much will the insurance company pay? $5,200 $1,500 $1,800 $4,800

Warren has followed the procedure to initiate a claim for a hospital stay. His insurance company has requested information from him that documents his loss. How long does Warren have to produce this proof of loss? 20 days 30 days 60 days 90 days

What are participants called in a Blue Cross Blue Shield plan? Insureds Enrollee Policyholder Subscriber

What conversion rights does a surviving spouse have under a group plan? The spouse is required to purchase a new policy. The spouse can stay in the group for 1 year. The spouse has no conversion rights. The spouse has the same rights that the employee had.

What is the elimination period for filing Social Security disability benefits? 360 days 180 days 90 days 150 days

What is the main difference between traditional life insurance and variable? Tax advantages Flexibility Method of premium payment Cash values

What is the main purpose of the M.I.B.? Help doctors and other medical professionals Prevent over-insurance Provide detailed medical information Prevent fraud and misrepresentation

What is the major difference between a participating policy and a comparable nonparticipating policy? Participating policies do not have cash value Participating policies build faster cash value Participating policies have lower premiums Participating policies have higher premiums

What is the tax rate for dividends received on accumulation units? Capital gains rate Ordinary income rate Dividend rate None of above

What maximum number of days in a skilled nursing facility is covered under Medicare Part A? 20 days 60 days 80 days 100 days

What must happen before the payout phase begins on an annuity? Accumulation units must be converted to stock units Accumulation units must be converted to credit units Accumulation units must be converted to value units Accumulation units must be converted to annuity units

What will Perry, an annuitant, receive if he selects a life with period certain as his annuity option? He will receive a payout for life. He will receive a payout for life or a fixed number of years - whichever is first. He will receive a payout for a fixed number of years. He will receive a payout for life or a fixed number of years - whichever is last.

When comparing individual disability income policies with group disability income policies, group policies are generally: More costly and more restrictive More restrictive in terms of what constitutes a disability Made to have longer elimination periods Less costly and have more liberal benefits

When conducing business, a life insurance agent can use which of the following titles? Investment advisor Financial planner Financial consultant None of the above

When considering a variable annuity, the prospect should review all of the following EXCEPT: The mortality charge The expense charge The investment fee for each separate account The expected return for each separate account

When the Acme Corporation purchased life insurance on its partners, what was this called? A stock redemption A partnership A cross purchase An entity type plan

When the policyholder sells, gives or pledges a policy as collateral, it is called - Incontestability Consideration Settlement Assignment

Which contract is considered a reimbursement contract? Accidental death and dismemberment Term life Monthly disability income Medical expense

Which of the following are considered in the needs approach? Monthly income Disability income Final expense fund All of the above

Which of the following are uses of life insurance? Investment management and estate creation Survivor protection Charitable contributions All of the above

Which of the following can be risk factors in judging a risk for insurance? Family medical history Gender and age Smoking All of the above

Which of the following factors is NOT important when selling insurance following the needs approach? Disability income Monies for an education fund A final expense fund Future income

Which of the following information is not required on the first page of an application for insurance? Agent's name Name of the insurance company Agent's license number Health information about the applicant

Which of the following is NOT a defined contribution plan? Employee stock ownership plan(ESOP) Profit sharing plan Money purchase plan Salary sharing plan

Which of the following is a conversion permitted in an industrial life insurance policy? Only after purchasing a whole life product To annual renewable term Before age 31 Of two or more policies into a single ordinary policy

Which of the following is provided in a money purchase plan? Fixed contributions/fixed benefits Undefined contributions/undefined benefits Undefined contributions/fixed benefits Fixed contributions/undefined benefits

Which of the following is required to qualify for association group life? The group members must be part of at least 3 associations. The group is organized for the sole purpose of purchasing insurance. The group has at least 2 members. The group has been in existence for 2 years.

Which of the following policies has premiums payable for 60 years, insurance protection for 60 years and endows at age 100? A 20-pay endowment at age 60 contract issued at age 40. Straight whole life policy issued at age 30. A 20-pay life policy issued at age 30. Straight whole life policy issued at age 40.

Which of the following policies is sold in proportioned units to cover an insured, as well as the insured's spouse and children? Family united insurance policy Family maintenance policy Family income policy Family plan

Which of the following statements correctly depicts tax liability for medical expense insurance issues? Premiums paid are tax-deductible only if an individual's unreimbursed medical expenses exceed 10% of his adjusted gross income. Deductions must be itemized on the individual's tax return. Benefits are received tax-free. All of the above

Which of the following statements is true about level term? Level term remains at a level face amount. The premiums increase at renewal. There is no requirement to prove insurability at renewal. All of the above

Which of the following types of policies might have a guaranteed insurability clause attached? Major medical PPO HMO Disability income

Which of the following would not qualify for a group life policy? Multiple employer trusts Employer-employee groups Trade unions Family groups

Which type of policy generally requires an elimination period to qualify for benefits? A dread disease policy A major medical plan A dental plan A disability plan

Who is responsible for regulating the separate account of a variable annuity? SEC and NASD NASD State insurance department SEC

Who of the following are regulated by NASD when selling variable annuities? Insurance agents Insurance dealers Brokers Brokers and dealers

Wildlife Manufacturing Company has a non-contributory health plan. How many employees must participate to meet enrollment requirements? 75% 90% 50% 100%

William is seeking the best way to minimize his total premium for the year. His best choice is: Monthly Quarterly Semi-Annual Annual

With a universal life policy, which of the following is NOT a true statement? The death benefit can be modified. Cash values can be allotted toward premium payments. Premiums can be increased or decreased. With changes, a new policy needs to be issued immediately.

With regard to life insurance settlement options, which of the following statements is true? If the owner specified life income with no right to commute, the only option available to the beneficiary is a lump sum. Options must be pre-selected by the owner for the beneficiary to take advantage of them. If not pre-selected by the owner, the only option available to the beneficiary is life income. If the owner did not specify a settlement option, the beneficiary may select any option.

Zebadiah is injured and unable to go to work due to his injury. His definition of disability reads: "Disability means the insured's inability to perform the duties of any occupation for which he is reasonably qualified by education, training or experience." This definition is: Known as the "own occupation" definition and he can work at other jobs and still be considered disabled Known as a limited occupation and he must be hospital confined to receive benefits Known as rehabilitative disability and he must try to return to work as soon as possible to begin rehabilitative employment Known as the "any occupation" definition, which is more restrictive than the own occupation definition for disability

__________ is a life insurance policy that offers the same guarantees as traditional whole life insurance with a lower initial premium that remains level for the first five years of the policy. Ordinary life Adjustable life Equity-indexed life Modified life

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