insurance exam #2

All of the following are unfair claim settlement practices EXCEPT

requiring written documentation of claim details

The investment gains from a Universal Life Policy usually go toward

the cash value

When is the face amount paid under a Joint Life and Survivor policy?

upon death of the last insured

To receive a percentage of the policy face value, an owner of a life policy may sell the policy to a(n)

viatical settlement provider

The part of a life insurance policy guaranteed to be true is called a(n)

warranty

Florida insurance law requires that if a Medicare Supplement policy is sold, the agent must deliver an Outline of Coverage to the applicant no later than

when the application is taken

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

K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the producer stating that coverage begins immediately if the application is approved. What kind of receipt was used?

Conditional

When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?

Conversion provision

Variable annuities are regulated by both the

Department of Financial Services and the Securities Exchange Commission

M is insured under a basic Hospital/Surgical Expense policy. A physician performs surgery on M. What determines the claim M is eligible for?

Determined by the terms of the policy

A CEO's personal assistant suffered injuries at home and as a result, was unable to work for four months. Which type of policy will pay a monthly benefit to the personal assistant?

Disability Income

A characteristic of Preferred Provider Organizations (PPOs) would be:

Discounted fees for the patient

Which of the following statements BEST describes the intent of a Coinsurance clause in a Major Medical policy?

Discourages overutilization of the insurance coverage

Under a trustee group life policy, who would be eligible for a certificate of coverage?

Employee

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

Which of these statements is INCORRECT regarding the federal income tax treatment of life insurance?

Entire cash surrender value is taxable

What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years?

Family Maintenance Policy

A 66 year-old is covered under a group health plan while employed with a business that has 40 employees. If she injures herself while walking in the park, what coverage would be considered primary?

Her group health plan

Which of these actions should a producer take when submitting an insurance application to an insurer?

Inform insurer of relevant information not included on the application

What is being delivered during a policy delivery?

Insurance contract to the proposed insured

In Florida, Group Life policies must contain a conversion privilege that

allows for conversion to an individual policy for a specified period of time

Group life insurance policies are generally written as

annually renewable term

To be eligible for Social Security disability benefits, an employee must be unable to perform

any occupation

When does a Guaranteed Insurability Rider allow the insured to buy additional coverage?

at future dates specified in the contract with no evidence of insurability required

HMO contracts/certificates or member handbooks must contain all of the following provisions EXCEPT

five-day grace period

The reason for a business having a Business Overhead Expense Disability Plan is to cover

fixed business expenses

What kind of special need would a policyowner require with an Adjustable Life insurance policy?

flexible premiums

Florida's insurance law that governs group life insurance conversion privileges provides that the

individual policies do not require evidence of insurability

When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have

insurable interest in the proposed insured

The agent's primary responsibility in the application process is to the

insurer

Which of these types of coverage is best described as a short term medical policy?

interim coverage

In Florida, a foreign insurance company is a company that

is formed under the laws of a state other than Florida

Basic Hospital and Surgical policy benefits are

lower than the actual expenses incurred

Under Florida insurance law, the minimum number of insureds required for a Group Life insurance policy is

no minimum

The Notice of Claims provision requires a policyowner to

notify an insurer of a claim within a specified time

A mutual insurance company is owned by its

policyholders

Who elects the governing body of a mutual insurance company?

policyholders

An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a

$25,000 individual whole life policy

Which of the following statements BEST describes what the Legal Actions provision of an Accident and Health policy requires?

An insured must settle a claim within 60 days after Proof of Loss is submitted

An incomplete life insurance application submitted to an insurer will result in which of these actions?

Application will be returned to the writing agent

According to Florida law, how often must a variable annuity policyholder be informed of the accumulated value of the contract during the premium payment period?

At least once each year

P died five years after purchasing a life policy. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will the insurer take?

Beneficiary will be paid the Death Benefit

T applies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or medical examination, whichever is later, provided that T is an acceptable risk. What item is given to T?

Conditional receipt

Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?

Conversion

Which type of provider is known for stressing preventative medical care?

Health Maintenance Organizations (HMO's)

In a Life insurance contract, an insurance company's promise to pay stated benefits is called the

Insuring clause

The clause in an Accident and Health policy which defines the benefit amounts the insurer will pay is called the

Insuring clause

What kind of life insurance beneficiary requires his/her consent when a change of beneficiary is made?

Irrevocable beneficiary

Which statement regarding third-party ownership of a life insurance policy is true?

It is used extensively in estate-planning as well as business circumstances

Which of the following statements 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 of the following situations does a Critical Illness plan cover?

Leukemia

Life insurance that covers an insured's whole life with level premiums paid over a limited time is called

Limited-Pay Life

An insurance company would MOST likely pay benefits under an Accidental Death and Dismemberment policy for which of the following losses?

Loss of eyesight due to an accidental injury

Which of these life products is NOT considered interest-sensitive?

Modified Whole Life

Which of these is NOT considered to be a right given to a policyowner?

Modify a provision in the insurance contract

Under Florida law, adjustable rates for life insurance policy loans are based on

Moody's corporate bond index

Which of the following statements is CORRECT about accelerated death benefits?

Must have a terminal illness to qualify

All of these statements concerning Settlement Options are true EXCEPT

Only the beneficiary may select

Which statement is TRUE in regards to a policy loan?

Past-due interest on a policy loan is added to the total debt

The provision that defines to whom the insurer will pay benefits to is called

Payment of Claims

Which of these statements concerning an Individual Straight Life annuity is accurate?

Payments are made to an annuitant for life

Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled?

Payor clause

A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the

Policy Loan provision

Which of these do NOT constitute policy delivery?

Policy issued with a rating

Which statement is true concerning a Variable Universal Life policy?

Policyowner controls where the investment will go and selects the amount of the premium payment

Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life plan to all its eligible employees?

Portion of the premiums paid for by the employer may be a tax deduction

How does group insurance differ from individual insurance?

Premiums are lower

Which of these characteristics is consistent with a Straight Life policy?

Premiums are payable for as long as there is insurance coverage in force

Which statement is correct regarding the premium payment schedule for whole life policies?

Premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured

What benefit does the Payor clause on a Juvenile Life policy provide?

Premiums are waived if payor becomes disabled

What is the purpose of the Time of Payment of Claims provision?

Prevents delayed claim payments made by the insurer

The individual who provides general medical care for a patient as well as the referral for specialized care is known as a

Primary Care Physician

A policyowner would like to change the beneficiary on a Life insurance policy and make the change permanent. Which type of designation would fulfill this need?

Revocable

Which of these terms accurately defines an underwriter's assessment of information on a life insurance application?

Risk classification

Which of the following statements BEST describes dental care indemnity coverage?

Services are reimbursed after insurer receives the invoice

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

Which of the following statements BEST defines usual, customary, and reasonable (UCR) charges?

The maximum amount considered eligible for reimbursement by an insurance company under a health plan

The policy provision that entitles the insurer to establish conditions the insured must meet while a claim is pending is

Time Limit on Certain Defenses

Dread Disease policies cover

a single disease or illness only

How long does the coverage normally remain on a limited-pay life policy?

age 100

S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT

beneficiary's age

An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be

converted to an individual permanent policy at an individual rate

All of the following are possible consequences for placing with an unauthorized insurer EXCEPT

conviction of a first degree misdemeanor

A Business Overhead Expense policy

covers business expenses such as rent and utilities

Health insurance benefits NOT covered due to an act of war are

excluded by the insurer in the contract provisions

Association Plans established to provide health benefits to members are subject to state regulation because they

must be fully insured by an authorized insurer

The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is

the cost

Which of the following statements is correct regarding an employer/employee group health plan?

the employer receives a master policy and the employees receive certificates

In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and

the initial premium

The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and

the initial premium

The amount of coverage on a group credit life policy is limited to

the insured's total loan value

A level premium indicates

the premium is fixed for the entire duration of the contract

An individual who purchases a Life annuity is given protection against

the risk of living longer than expected

The Consideration clause of an insurance contract includes

the schedule and amount of premium payments

Q is hospitalized for 3 days and receives a bill for $10,100. Q has a Major Medical policy with a $100 deductible and 80/20 coinsurance. How much will Q be responsible for paying on this claim?

"$2,100". In this situation, $10,000 x 20% coinsurance + $100 deductible = $2,100.

A 15-year mortgage is best protected by what kind of life policy?

15-year decreasing term

A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?

20-Pay Life accumulates cash value faster than Straight Life

A newly licensed agent MUST satisfy a continuing education requirement of how many hours every two years?

24

All licensees are required to notify the Department of Financial Services of a change in address within how many days?

30

Issued Medicare Supplement policies may be returned for a premium refund within a MAXIMUM of how many days after delivery?

30

Florida Insurance Law requires the minimum grace period on a health insurance policy paid on a quarterly basis is

31 days

According to the insurance code, an agent's controlled business may NOT exceed a maximum of

50%

S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary?

50,000

An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age?

59 1/2

The individual most likely to buy a Medicare Supplement policy would be a(n)

68-year old male covered by Medicare

According to Florida statutes, all of the following provisions must be contained in a Medicare Supplement policy EXCEPT

A 12-month limitation on pre-existing conditions

Which of these is an element of a Variable Life policy?

A fixed, level premium

Which of the following is NOT an eligibility requirement for an association group?

A minimum of 25 participants is required for a contributory plan

P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?

Accidental Death and Dismemberment provision

Which action would NOT result in suspension of an agent's license?

Acting as a fiduciary

Which of the following options is NOT a Nonforfeiture Option?

Automatic premium loan

Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?

Annuity

Which of the following is the MOST important factor when deciding how much Disability Income coverage an applicant should purchase?

Applicant's monthly income

When does a Probationary Period provision become effective in a health insurance contract?

At the policy's inception

Comprehensive Major Medical policies usually combine

Major Medical with Basic Hospital/Surgical coverage

Which of these acts is considered to be an unfair trade practice?

Making a material misrepresentation to an insured

Which of the following BEST describes a short-term medical expense policy?

Nonrenewable

Which statement is true regarding a minor beneficiary

Normally, a guardian is required to be appointed in the Beneficiary clause of the contract

What must the policyowner provide to the insurer for validation that a loss has occurred?

Proof of Loss

Which of the following actions is an example of unfair discrimination?

Providing different terms of coverage for different policyowners in the same risk classification

A Disability Income policyowner suffers a disability which was due to the same cause as a previous disability. Both disabilities occurred within a five-month period. The insurer may cover the second disability without a new elimination period under the

Recurrent Disability provision

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?

Reinstatement

The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called

Reinstatement

Which of these provisions require proof of insurability after a policy has lapsed?

Reinstatement

When a person returns to work after a period of total disability but cannot earn as much as he or she did before the disability, this situation is called which of the following?

Residual disability

S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation?

Single Premium

Which of the following statements describes the purpose of the Insuring clause in Health and Accident policies?

States the scope and limits of the coverage

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

What kind of life insurance product covers children under their parent's policy?

Term rider

Which statement regarding a Key Employee Life policy is NOT true?

The beneficiary is named by the key employee

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

Which Accident and Health policy provision addresses preexisting conditions?

Time Limit on Certain Defenses

Which of the following statements about unfair trade practices is true?

Twisting is a misrepresentation made by an agent in order to induce a policyholder to lapse a policy and switch insurance companies

What type of life insurance incorporates flexible premiums and an adjustable death benefit?

Universal Life

Which of the following phrases refers to the fees charged by a healthcare professional?

Usual, customary, and reasonable expenses

A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as

Variable Life

Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?

Variable Life

A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?

Waiver of Premium

The provision in a health insurance policy that interrupts premiums being paid to the insurer while the insured is disabled is called the

Waiver of Premium

Disability policies do NOT normally pay for disabilities arising from which of the following?

War

Which parts of a life insurance policy are guaranteed to be true?

Warranty

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

Florida's rules on disclosure require an insurance company to provide a purchaser of life insurance with

a Buyer's Guide and a Policy Summary

All students attending a large university could be covered by

a blanket policy

An insurance company licensed in Florida and domiciled in Pennsylvania is known as

a foreign company

The situation in which a group of physicians are salaried employees and conduct business in an HMO facility is called a(n)

closed panel

A producer who tells claimants that their rights may be impaired if they fail to complete a release form within a given period of time could be guilty of

coercion

The incontestable clause allows an insurer to

contest a claim during the contestable period

When an employee covered on a Group Life policy leaves the group, the conversion privilege gives the employee the right to

convert to an individual policy upon termination of employment