INSURANCE EXAM (1-5)

When does a credit disability insurance expire?

15 days after the loan is satisfied

When does credit disability insurance expire?

15 days after the loan is satisfied

37. In relationship to COBRA, how many employees must an employer have for a terminated employee to be eligible for benefits

20

COBRA covers death and divorce for what time?

36 months

A policy that would cover heart disease is often called?

A critical illness policy

In relationship to advertising, which of the following is not part of it?

A rating from a rating service company like A.M. Best

What is mandatory about a contract between an insurer and an insured?

A written contract signed by both parties

Which of the following terms means that an insurance contract is dependent on unequal values being exchanged?

Aleatory

The medical information bureau does not relate to which of the following statements?

An applicant must give written permission to the MIB to give information to other companies

When individuals are qualified to enter into a contract, they make up which part of a contract?

Competent parties of the contract

T/F: it is the agent's responsibility to put more emphasis on the insurer's more profitable policies?

FALSE

What protects consumers from receiving outdated material?

Fair credit reporting act

46. When an agent handles the funds of an insured, the agent is acting in an ___ capacity?

Fiduciary

Large numbers of similar risks, describes which of the following terms?

Homogeneous

What group is funded by its members, and it provides payments for claims for insolvent insurers?

Life and health insurance guaranty association

If an insurance company issues a policy and fails to perform their contractual obligation because it becomes impaired, what organization protects its policyholders?

Life and health insurance guaranty corporation

What association is composed of all the us commissioners

NAIC

If an insurer cancels a policy, how are prepaid premiums to be returned to an insured?

On a pro rata basis, which means all unearned premiums will be returned to an insured

Which of the following best describes unilateral?

Only one person makes a promise

Why is an insurance policy a unilateral contract?

Only the insurance company is bound to live up to its side of the agreement

What is the primary difference between Mutual and Stock companies?

Ownership

Which of the following is a requirement of an agent that solicits insurance?

Provide the applicant with the name of the insurer and their license status

Which of the following best describes the underwriting process?

Selection, classification and rating of risks

T/F: when an agent attempts to replace an individual A&H policy, care should be given to compare benefit levels, limits of coverage and exclusions:

TRUE

to what extent may an insured be reimbursed for their loss?

The amount must be the maximum stated in the policy

Agent Jackson made a mistake in an advertisement. Who is responsible for the content in the advertisement?

The insurance company that agent Jackson represents

Which of the following is factor of the Fair Credit Reporting Act?

To give the consumer the right to protect their own credit information

When is dental treatment covered under a hospital or medical expense policy?

To repair an injury

What leads to class action lawsuits against insurance companies

Unfair and misleading marketing practices

Joan applied for a preferred rate on a health insurance policy? Her insurer responded with a standard risk after evaluating her past medical history. Her insurer's response would be considered which of the following?

a counteroffer

If an accident and health policy covers only a specified illness, what must its advertisement prominently display?

a statement that the policy is limited

Who must sign an application, in addition to an applicant?

agent

10. In an insurance contract, what refers to a contract in which one party may get more benefits than the other party?

aleatory

When an insured pays a small premium for a large amount of coverage, this describes which term?

aleatory

Which of the following relates to the fact that both parties of a contract may not receive the same value?

aleatory

How many eligible members must be covered under a group policy?

all of them

Who represents an insurance company?

an agent

What is not allowed to be gained in an inspection report?

ancestry of an applicant

In a replacement situation, all of the following must be considered except?

assets

John has more than one occupation. His insurance company uses his occupations as a means to classify his risk. How will his insurer classify him?

by using his most hazardous occupation

A major medical insurance policy would cover expenses for all of the following except:

charges covered under workers compensation insurance

In a group prescription drug plan, the insured typically pays what amount?

co payment

What must an agent always follow?

code of ethics

What type of health policy covers all conditions not excluded in a policy?

comprehensive

What element of an insurance contract shows that each party is giving something of value?

consideration

A policy that would cover cancer is called?

critical illness

When an applicant displays a risk that may not be insurable, which of the following describes their classification

declined

What kind of policy covers medical costs related to a specific condition?

dread disease

An agreement that an insurer grants to a producer, is what type of authority?

express

What will a vision care policy cover?

eye examinations and eyeglasses

When reinsurance is purchased on a certain specific policy, what type of insurance does this describe?

facultative

Every insurance applicant must be told if any investigation regarding their character and reputation in relationship to which of the following?

fair credit reporting act

Which act was designed to improve the accuracy of credit reports

fair credit reporting act

What is the statement that refers to agents being accountable for all of the insurance funds they collect?

fiduciary responsibility

ABC Insurance Company conducts business outside of Puerto Rico. What type of insurer is ABC?

foreign

All of the following are health insurance underwriting factors except:

geographic location

What increases the likelihood of a loss occurring?

hazards

Mr. Rodgers had an accidental death and dismemberment policy, and last week he died. An autopsy can be performed under all circumstances except;

his state prohibits the autopsy

A typical accidental death and dismemberment policy would cover all of the following except:

income

Which of the following applies to a change in an insurance application?

it must be initated by the applicant

Who funds the Insurance Guaranty Association

its members

In regard to an insurance company , what is the prime risk associated with a disability?

loss of income

Tri care was designed for all of the following except:

medocaid of the military

George, the owner of an art shop, is very concerned that his employees may help themselves to his art supplies from his inventory without paying for them. What hazard does this represent?

moral

an applicant lying about his/ her age represents what type of hazard?

moral

All of the following may not be underwriting factors, except:

moral hazards

Four years ago Ted purchased a policy. Last year he received a dividend check, but this year he didn't receive one. What does this describe?

mutual

Policyholders receive policy dividends when there is a profit with which type of insurance company?

mutual

When may an applicant be denied coverage, due to information found in their MIB report

never

If an employee is terminated due to selling company production secrets, how long will the employees dependents be covered by COBRA?

no coverage

In franchise groups, how many master policies will be issued?

none

Which of the following is the term applied for a drug used for a purpose not specifically on the label or approved by the food and drug administration for that use?

off the label

A dread disease policy covers

only the diseases specified on the policy, usually that occur relatively infrequently

What document helps to ensure full and fair disclosure to the recipient of their policy?

outline of coverage

____ ___ is the condition for which an applicant should have received or did receive medical treatment within a specified period of time, prior to the effective date of the policy.

pre exisiting condition

Accidental death and dismemberment benefits cover ___ and ___ amounts:

principle and capital

What term best describes an insurer's consideration in an insurance policy?

promise

In regard to the disclosure of an insured's personal medical information, when is it not permitted?

public interest

Which of the following is the most common way to transfer risk

purchase insurance

32. The risk of loss may be classified as

pure & speculative risk

Joe was very active in his job, but after a job change he sits at a desk for work. When Joe gets home he walks 2 miles and he has stopped eating sweets. How is Joe handling his situation with his desk job?

reduction

ABC insurer cedes part of an insured's coverage to another insurance company, but assumes part of the risk. What does this describe?

reinsurance

What is used as protection against catastrophic loss?

reinsurance

Which of the following refers to the situation in which an insurance company transfers part or all of their risk to another insurer?

reinsurance

What are 3 factors that may not be used as underwriting factors?

religion, race & nationality

Henry's is an insurance applicant. His statements regarding his job, hobbies and history background is best related to which of the following?

representation

Self insurance is an example of what kind of risk management?

retention

the chance that a loss may occur, relates to which of the following terms?

risk

What is another name for disease or an illness?

sickness

Which of the following is a rated risk?

substandard

Which risk classification is often considered to be special?

substandard

Which of the following most likely not be covered under vision coverage?

sunglasses

Who is responsible for any marketing materials written by an insurance company?

the insurer

What happens when an individual changes their group health policy to an individual health policy ?

their new individual plan will have a higher premium

Which of the following is the purpose of a long term care policy?

to provide nursing home coverage

The principal of insurance is an example of what kind of risk management?

transfer

The principle of insurance is an example of what kind of risk management?

transfer

All of the following are exclusions from individual health coverage except:

travel

In regard to the only party in an insurance contract that makes a legal enforceable promise, makes the contract _______.

unilateral

when the actions of one party may purposefully give up a known right, it is referred to as a(n):

waiver