Final Exam - Tennessee Life and Health
T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?
$50k as the suicide clause period is 1-2 years. Face amount will be paid
Whole Life insurance policies are contractually guaranteed to provide each of the following EXCEPT: A) cash value that will ultimately replace the death benefit B) nonforfeiture benefit options C) premiums that remain fixed for the life of the policy D) partial withdrawal features beyond a surrender charge period
D) partial withdrawal features beyond surrender charge period
The Combination of Whole Life and _____ Term insurance is referred to as a Family Income Policy
Decreasing
Credit life insurance is typically issued with which of the following types of coverage?
Decreasing Term
How often must the Commissioner examine each domestic company?
Every 5 years
With Accidental Death and Dismemberment policies, what is the purpose of the Grace Period?
Gives the policyowner additional time to pay overdue premiums
The purpose of the ________ Period clause is to avoid an unintentional lapse of a life insurance policy.
Grace
Which type of renewability best describes a Disability Income policy that covers an individual until the age of 65, but the insurer has the right to change the premium rate for the overall risk class?
Guaranteed Renewable
Bryce purchased a disability income policy with a rider that guarantees him the option of purchasing additional amounts of coverage at predetermined times without requiring to provide evidence of insurability. What kind of rider is this?
Guaranteed insurability rider
A Long-Term Care policy sold in Tennessee MUST be
Guaranteed renewable
K has a health policy that must be renewed by the insurer and the premiums can only be increased if applied to the entire class of insureds. This type of policy is considered
Guaranteed renewable
Which type of provider is known for stressing preventative medical care?
HMO
What authority does the Commissioner have over Tennessee producers?
He may establish guidelines for continuing education as a part of the producer license renewal procedure
A medical care provider which typically delivers health services at its own local medical facility is known as a
Health Maintenance Organization (HMO)
For which of the following expenses does a Basic Hospital policy pay?
Hospital room and board
The clause in an Accident and Health policy which defines the benefit amounts the insurer will pay is called the
Insuring Clause
A policyowner's rights are limited under which beneficiary designation?
Irrevocable
On January 8, an applicant filled out an application for a life insurance policy but did not include the initial premium. The insurance company approve the application on Jan 14 and issued the policy Jan 15. The producer delivered the policy on Jan 26 and collected the first premium. When did the coverage become effective?
January 26
T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this?
Life Annuity with Period Certain
The individual Health Insurance policy that offers the broadest protection is a(n) __________ policy.
Major Medical
Z owns a Disability Income policy with a 30-day Elimination period. Z contracts pneumonia that leaves him unable to work from January 1 until January 15. Z then becomes disabled from an accident on February 1 and the disability lasts until July 1 the same year. Z will become eligible to receive benefits starting on
March 1st
The Tennessee Guaranty Association is subject to review and regulation by the Commissioner. A financial statement must be submitted no later than ______ of each year.
March 30th
Which of these is NOT an element of Life insurance premiums?
Morbidity Rate
Which statement is true regarding a minor beneficiary?
Normally, a guardian is required to be appointed in the Beneficiary clause of the contract
S filed a written Proof of Loss for a Disability Income claim on September 1. The insurance company did not respond to the claim. S can take legal action against the insurer beginning
November 1st - 60 days
Under what system do a group of doctors and hospitals in a designated area contract with an insurer to provide services at a prearranged cost to the insured?
PPO
The provision that defines to whom the insurer will pay benefits to is called
Payment of Claims
Which of these is considered a mandatory provision?
Payment of Claims
An individual health insurance policy is REQUIRED to contain a(n)
Payment of Claims Provision
Which of these do NOT constitute policy delivery? A) policy mailed to applicant B) policy maile to agent C) policy delivered to the applicant by agent D) policy issued with rating
Policy issued with a rating
A policyowner is able to choose the frequency of premium payments through what policy feature?
Premium mode
What is considered to be a characteristic of a Conditionally Renewable Health Insurance policy?
Premiums may increase at time of the renewal
How long is a temporary license valid?
180 days
An insured must notify an insurer of a medical claim within _____ days after an accident.
20
The USA Patriot Act was enacted in:
2001
A producer needs to complete _____ of continuing education every _____ years.
24;2
The commissioner notifies the association of an insolvent insurer no later than ______ after receiving notice of the insurer's insolvency
3 days
According to the Mandatory Uniform Policy Provisions, what is the maximum amount of time after the premium due date during which the policy remains in force even though the premium has not been paid?
31 days
If an insurance producer applicant is required to pass a written examination, what is also required?
A fingerprint-based criminal background check
Which of the following types of care is typically not covered in a Long-Term Care policy? A) Acupuncture B) Skilled Care C) Home Health Care D) Custodial Care
A) Acupuncture
K is an annuitant currently receiving payments. If she were to die before receiving payments equal to the correct value, a beneficiary will continue receiving payments until an amount equal to the contract value has been paid. This is called a(n): A) installment refund annuity B) joint refund annuity C) straight refund annuity D) equal value annuity
A) installment refund annuity
All are true statements regarding the underwriting process, EXCEPT:
AIDS and HIV virus exams can be conducted in a discriminatory fashion
The amount of monthly disability benefits payable under Social Security is affected by which of the following factors?
Amount of benefits available from other sources
Any changes made on an insurance application requires the initials of whom?
Applicant
A(n) _____________ of benefits of a Health Policy transfers payments to someone other than the policy owner.
Assignment
Which of the following statements BEST describes dental care indemnity coverage? A) Services will be reimbursed before receiving invoice B) Services are reimbursed after insurer receives the invoice C) In-network dentists must always be used D) Very limited list of providers
B - Services will be reimbursed after insurer receives the invoice
When a Medicare Supplement policy is delivered to a policyholder, which of the following MUST accompany the policy? A) producer's address B) outline of coverage C) insurer's AM Best rating D) outline of policy-loss ratios
B) Outline of Coverage
K failed to pay a renewal premium within the time granted by the insurer. K then sends in a payment which the insurer subsequently accepts. Which policy provision specifies that coverage may be restored in this situation? A) Free-Look B) Reinstatement C) Grace Period D) Consideration
B) Reinstatement
A Key Employee policy is taken out by Company X on its vice president. Ten years later, this employee leaves Company X and begins working for Company Y. If this individual were to die and the policy is still in force and unchanged, where would the death proceeds be directed?
Company X
When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?
Conversion Provision
What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?
Convertible Term
What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability? A) Entire Contract B) Owner's Rights C) Nonforfeiture Options D) Conversion
D - Conversion
Which of the following is NOT included in the policy face? A) Free Look Provision B) Name of the insured C) Name of the insurer D) Exclusions
D - Exclusions
Which of the following would best describe the actions of an insurer who promises the cheapest premium rates in the United States? A) rebating B) defamation C) Sliding D) Flase Advertising
D - False Advertising
A life insurance arrangement which circumvents insurable interest statutes is called: A) contract of adhesion B) an indemnity contract C) key person insurance D) investor-originated Life Insurance
D) Investor-Originated Life Insurance
A producer may apply for one or more of the following licenses: A) Life Insurance B) Personal lines property C) Accident and health or sickness insurance D) All of the above
D) all of the above
All of these are considered a producer's breach of fiduciary duty EXCEPT: A) Misappropriation of premiums B) Conversion of premiums C) Improper withholding of premiums D) Allowing premiums to be submitted electronically
D) allowing premiums to be submitted electronically
What is the consideration given by an insurer in the Consideration clause of a life policy?
Promise to pay a death benefit to a named beneficiary
What must the policyowner provide to the insurer for validation that a loss has occurred?
Proof of Loss
The Tennessee Insurance Guaranty Association
Protects Tennessee insurance policy owners in the event an insurance company becomes insolvent
Which of these is NOT a fair marketing practice when an existing insurance policy is being replaced?
Reduce the cost by lowering the commission
What type of life insurance are credit policies issued as?
Term
A provision that the policy, application, and all attachments shall constitute the ______ between the parties.
entire contract
Which health policy clause stipulates that an insurance company must attach a copy of the application to the policy to ensure that it is part of the contract?
entire contract
In Tennessee, a(n) ________ insurance company is one formed under the laws of a state outside of Tennessee.
foreign
J, an Accidental Death and Dismemberment (AD&D) policy holder, dies after injuries sustained in an accident. J's age as stated on the application five years ago was found to be understated by ten years. Which of the following actions will the insurance company take?
The insurer will adjust the benefit to what the premiums paid would have purchased at the insured's actual age
In Tennessee, and insurer that is incorporated in New Jersey and conducts business in Tennessee is called a(n)
foreign insurer
The Insurance Commissioner is REQUIRED to do which of the following before holding a hearing that could lead to the suspension of a producer's license.
give written notice to the producer
If a producer commits an act of coercion or intimidation, how would the producer's insurance company be held responsible for this act?
if the insurer approves of the act
All of these are powers of the Commissioner EXCEPT:
incarcerate a producer
A licensed producer can be BEST described as a(n)
individual who places insurance on behalf of anyone seeking insurance
In Tennessee, the definition of "individual" may include who?
individual's legal representative
A policy of adhesion can only be modified by whom?
insurance company
If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act?
insured's contingent beneficiary
Dividends paid from a life insurance policy are
issued by the insurer
Which of the following BEST describes how a policy that uses the "Accidental bodily injury" definition of an accident differs from one that uses the "accidental means" definition:
less restrictive
Which Accident and Health policy provision addresses preexisting conditions?
Time Limit of Certain Defenses
A producer MUST leave a buyer's guide with an applicant for which type of policy?
Universal Life Insurance
A(n) ________ annuity pays benefits based on units rather than stated dollar amounts.
Variable
What is the primary factor that determines the benefits paid under a disability income policy?
Wages
The provision in a health insurance policy that suspends premiums being paid to the insurer while the insured is disabled is called the:
Waiver of Premium
What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?
Whole Life
All students attending a large university could be covered by
a blanket policy
Which of the following is TRUE if the owner of an IRA names their spouse as beneficiary, but then dies before any distributions are made?
account can be rolled into the surviving spouse's IRA
An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the:
applicant's physician
What is the initial source of underwriting for an insurance policy?
application containing statements from insured
Under a Graded Premium policy, the premiums are lower or high during the early years?
are lower during the policy's early years
A business entity can be defined as a(n)
association or a limited liability company
Medicare Part C is:
available to those who are enrolled in Medicare Part A and Part B
The Automatic Premium Loan provision is designed to:
avoid a policy lapse
Insurance contracts may be sold, solicited or negotiated by an insurance producer ONLY ipom
becoming an appointed producer of an insurer
All individuals covered under a group contract will receive a(n)
certificate
For a change to a health policy to be valid, what is required?
changes in the policy must be approved by an executive officer of the insurer
Unfair discrimination is BEST described as
charging a different rate for someone in the same actuarial class
Whose life is covered on a life insurance policy that contains a payor benefit clause?
child
Which rider provides coverage for a child under a parent's life insurance policy?
child term rider
What is an example of defamation?
circulating brochures that falsely denounce the financial condition of an insurer
Which of the following is NOT a requirement to sell, solicit, or negotiate Long-Term Care insurance?
complete a one-time 4hr course on estate planning
The incontestable clause allows an insurer to:
contest a claim during the contestable period
Which type of plan normally
managed care plans
When does the Free-Look provision for health insurance begin?
date the policy is delivered to the insured
Periodic health claim payments MUST be made at least
monthly
All of these insurance subjects qualify for continuing education credits in Tennessee EXCEPT:
motivating producers
The commissioner would like to hold a hearing against a producer. Before the hearing is held, a notice
must be sent by registered or certified mail to the producer's address on file
How does a typical Variable Life Policy investment account grow?
mutual funds, stocks, and bonds
A Disability Income policy that only the policyowner can terminate and which the rates will never go up is considered to be:
noncancellable
The Notice of Claims provision requires a policyowner to:
notify the insurer of a claim within a specified time
Two partners own equal shares in a business worth a total of $1,000,000. If they both commit to the purchase of a life insurance policy that will fund a Buy-Sell Agreement, which of the following is TRUE?
partners own a $500,000 policy on the other partners life
Additional coverage can be added to a Whole Life policy by adding a(n):
decreasing term rider
What is the purpose of the USA Patriot Act?
detect and deter terrorism
Whole Life insurance is sometimes referred to as "Straight Life". What does the word "Straight" indicate when using the phrase?
duration of premium payments
What is the underlying concept regarding level premiums?
early years are charged more than what is needed
B recently died and was insured with a life insurance policy for over five years. During the claims process, the insurer discovered that B had understated his age by 5 years at the time of application. In this situation, the insurer will
pay the amount that the premium would have purchased at the correct age
XYZ Corp was issued a group Accident and Health policy for its employees. Under this plan the
policy must be issued to XYZ Corp, and certificate issued to each employee
K is the insured and P is the sole beneficiary on a life insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true?
proceeds paid to P's estate
Which of these is NOT a legitimate insurance marketing practice for obtaining business from a competitor?
reducing commissions to make better sale
T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?
request will be refused
In a qualified retirement plan, the yearly contributions to an employee's account:
restricted to maximum levels set by the IRS
The individual most likely to buy a Medicare Supplement policy would be a(n)
someone already covered by Medicare
An individual Disability Income insurance applicant may be required to submit all of the following information, EXCEPT:
spouses occupation
What should an insured do if the insurer does not send claims forms within the time period set forth in a health policy's Claims Forms provision?
submit the claim in any form
Who would qualify for a temporary license in Tennessee?
surviving spouse of a deceased producer
Which of these life insurance riders allows the applicant to have excess coverage?
term rider
B is an insurance producer who occasionally engages in financial planning. If B sells an insurance policy during the course of a financial planning seminar, B must disclose to the client
that a commission will be earned in addition to any fee charged for financial planning
Upon policy delivery, a signed good health statement is requested from the applicant. Why would this be necessary?
the initial premium was NOT submitted with the application
G is involved in an automobile accident as a result of driving while intoxicated and suffers numerous injuries. According to the Intoxicants and Narcotics exclusion in G's policy, who is responsible for paying the medical bills?
the insured
What does the insuring agreement in a Life insurance contract establish?
the insurer's basic promise
When a life insurance application is completed, a Policy Summary must be given to the applicant. The Policy Summary MUST include:
the premium cost for basic coverage applied for
The advantage of reinstating an original life policy is:
the premium is based on original age
P's individual health policy is now in the Grace Period. P's coverage will remain in force if:
the premium is paid
Who would be liable for an insurance claim on a policy sold by a Tennessee producer and issued by an insurance company NOT authorized to conduct business in Tennessee?
the producer
When is the face amount of a Whole Life policy paid?
when the insured dies or at the policys maturity date, whichever happens first
P is self-employed and owns an Individual Disability Income policy. He becomes totally disabled on June 1 and receives $2,000 a month for the next 10 months. How much of this income is subject to federal income tax?
$0
What is the maximum fine that can be imposed by the Commissioner to a producer who violates an insurance law?
$1k
An insured covered by a group Major Medical plan is hospitalized after sustaining injuries that resulted from an automobile accident. Assuming the plan had a $1,000 deductible and an 80/20 Coinsurance clause, how much will the INSURED be responsible to pay with $11,000 in covered medical expenses?
$3k
An insurance producer could be found guilty of rebating by: A) Offering a better insurance coverage to an existing policyholder B) sharing commissions with a client who has purchased insurance C) recommending a policyholder convert existing term life coverage to an individual whole life policy D) offering a discount for a client being a non smoker
B) Sharing commissions with a client who purchased insurance
Which of the following does Social Security NOT provide benefits for? A) Survivorship B) Dismemberment C) Disability D) retirement
B) dismemberment
T applied for a Disability Income policy and has a history of back injuries. The insurer issued the policy with a statement that excludes coverage for back injuries. This statement is called a(n): A) back exclusion B) impairment rider C) rating D) encumbrance
B) impairment rider
B receives yearly dividends and interest from a participating life insurance policy. Which of these should B include as gross income for federal tax purposes? A) Interest and dividends B) interest only C) dividends only D) neither interest nor dividends are taxable
B) interest only
G is an accountant who has ten employees and is concerned about how the business would survive financially if G became disabled. The type of policy which BEST addresses this concern is
Business Overhead Expense
Many small business owners worry how their business would survive financially if the owner becomes disabled. The policy which BEST addresses this concern is:
Business Overhead Expense
Which of these circumstances is a Business Disability Buy-Sell policy designed to help in the sale of a business?
Business owner becoming disabled
A long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following? A) Critical Illness B) Terminal Illness C) Inability of the insured to perform more than 2 ADLs D) inability of the insured to maintain insurance premiums due to unemployment
C
Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy? A) Have the customer sign a blank application, then take the application back to his office to complete prior to sending it off to the insurance company B) Complete the application over the phone with the customer, sign the application for the customer, then send the application off to insurance company C) Complete the application and review information with customer prior to obtaining the customer signature, then send application to insurance company D) Have the customer fill out the application and send it to his office for him to sign then send it off to insurance company
C
Which of these is NOT a type of agent authority? A) Express B) Implied C) Principal D) Apparent
C - Principal
A 45 year-old woman won $100,000 in a scratch-off lottery ticket. She purchased an annuity that will pay her $1500 per month beginning at age 60. Which of these annuities did this woman purchase? A) Immediate Variable annuity B) Immediate annuity C) Deferred Fixed annuity D) Variable annuity
C) Deferred Fixed Annuity
In order to establish a Health Reimbursement Arrangement (HRA), it MUST: A) Be offered in conjunction with other employer provided health benefits B) Limit the benefits to prescription drugs only C) be established by the employer D) limit the amount of money the employee can contribute toward the account
C) be established by the employer
A life insurance application may be rejected on the basis of all these factors EXCEPT: A) medical history B) hobbies C) gender D) weight
C) gender
