insurance exam

What are the two major approaches to defining "totally disabled" for Disability Income insurance?

"Your" occupation of "Any" occupation

A man with an Accidental Death & Dismemberment (AD&D) policy having a Principal Sum of $100,000 and a Capital Sum of $50,000 loses a leg due to a blood clot which was not due to an accident. The policy will pay

$0

The Alabama Life and Disability Insurance Guaranty Association covers the contractual obligations of an insolvent life and disability insurer, but its aggregate liability for CASH VALUES shall not exceed

$100,000

Darlene dies without having paid the $500 premium on her $50,000 policy that was due a week before her death. With no outstanding policy loans, Darlene's beneficiary can expect to receive

$49,500, which is the face amount less the premium owed

in noncontributory group insurance plans what percentage of eligible employees must be covered by the plan

100%

An individual insurance producer who allows his or her license to lapse may, within a period of __ months from the due date of the renewal fee, reinstate the same license without having to complete the prelicensing course of pass a written exam.

12

Alabama law regulates Life insurance benefits with respect to minors. Which statement is FALSE?

18-year olds may receive a limit of $3,000 in life benefits in any one year

You must notify the Company of a health insurance claim within how many days (or as soon thereafter as reasonable possible)?

20 days

An immediate annuity with quarterly payments will begin making payments

3 months after the annuity is purchased

According to Required Health Policy Provisions, the insured is prevented from filing suit against the insurer for at least

60 days and not longer than three years from the date of proof of loss

For weekly premium disability policies in Alabama, there must be a grace period of

7 days

A straight life annuity provides which of the following?

A periodic income to the annuitant for life

The Accidental Death Rider pays double the face amount (or another multiple of the face) if death is caused by what?

Accidental cause and within 90 days of the accident

Under the waiver of premium provision of a life insurance policy, if a disability proves total and permanent, what happens to any premium paid by the policy owner during the waiting period?

All premiums paid by the policyholder during the waiting period are typically refunded

Which of the following accurately describe the "free look" provision?

Allows the insured to look over the issued policy for a specific number of days and return it for a premium refund if desired.

A contract requires an Offer and Acceptance. What constitutes a valid offer?

An application and premium payment submitted to the company or one of its agents.

The Entire Contract Provision stipulates each of the following EXCEPT:

Any verbal changes made by the agent are permissible if in writing

COBRA and HIPAA both address portability. What is the difference between them?

COBRA provides a coverage bridge, HIPAA addresses coverage under plans for new entrants

the suicide clause has what effect?

It excludes suicide during the first two years

Which part of Medicare requires premium payment by most eligible participants?

Part B, supplementary medical insurance

Which of the following is INCORRECT concerning premiums collected by an insurance producer in Alabama?

Premium payments become the property of the producer

If you have not met the Continuing Education requirement when it is time to renew your license, you may?

Request an extension and continue to do business until your request is accepted or denied.

If William has a major medical plan on himself, his wife Harriet, and their son Bill, what happens when daughter Bess is born?

She is covered from the moment of birth even if the policy does not provide maternity benefits

When Jonas died, it was discovered that he was actually six years older than he had claimed when applying for an insurance policy. Upon his death what will the insurance company pay?

The company will pay only the amount of insurance that Jonas' premiums would have purchased at his correct age

Oliver has a life insurance policy with a $50,000 death benefit. At his death, there is a $5000 policy loan outstanding. which of the following statements is correct?

The insurer will subtract the amount of the loan and pay $45,000 to the beneficiary

The "entire contract" law in Alabama says

The policy and the application (or a summary of the application) constitute the entire contract

If you misstate your age when applying for Disability Income insurance, you may suffer what consequence at claim time?

Your benefits will be reduced if your age if higher than stated

The type of health insurance policy most likely used to cover all students attending a large university is

a blanket policy

when the owner of a life insurance policy transfers ownership to a third party in return for payment of a large percentage of the death benefit this is known as

a viatical settlement agreement

Annuities have two basic stages. They are called what?

accumulation period and income period

which if the following is correct regarding alabama's annuity suitability regulation?

all are correct -the producer must make every effort to obtain information to clarify the prospective purchaser's financial status, tax status and investment objectives -the producer must have reasonable grounds to believe the recommended annuity purchase is suitable based on the facts disclosed -the producer must maintain records of information obtained for at least three years after the transaction

Which of the following characteristics apply to Medicare Supplements Policies (MSPs)?

all of the above -first time applicants (over age 65) for MSPs cannot be turned down -the definitions used in MSPs must be the same definitions used in medicare -MSPs may not duplicate coverage provided by medicare

To sell a variable life insurance policy, an insurance producer must

all of the above -have a valid life insurance license -have a variable life and variable annuity products license -be registered with FINRA (the Financial Regulatory Authority)

if you qualify for COBRA coverage under the group health plan

all of the above -may be extended for up to 18 months for you and your dependents -may be extended for a total of 29 months if on the date coverage is terminated your or any of your dependents meet the qualifications for social security disability -may be extended for your dependents for 36 months when they marry or reach the limiting age

which of the following are true regarding medicare prescription drug coverage (part d)?

all of the above -there is a monthly premium -there is an annual deductible -there are copay requirements

a life insurance company may pay a death claim for less than the face amount of a policy under which of the following conditions

all of the above -when there is an outstanding policy loan -when the policy is in the grace period because of an unpaid premium -when the age of the insured was understated on the application

when a policyowner permanently turns over all rights in a policy to an assignee it is called

an absolute assignment

All of the following are examples of insurable interest EXCEPT:

an airline insuring the lives of its passengers

the grace period has what effect

an extension of time to pay a late premium

when a policy claim contains a deductible and a coinsurance provision the policy holder's portion of the claim is calculated by

applying the deductible first

To receive some Social Security benefits and be considered "currently insured", an individual must have

at least 6 quarters of coverage

which of the following riders could decrease the amount of the policy death benefit if utilized?

automatic premium loan rider

joe, whose life insurance policy has a waiver of premium rider, becomes disabled for two years during which time the company pays over $1,500 in premiums. Joe recovers and now must

begin paying the premiums again as they become due

the income period when a surviving spouse does not qualify for social security survivor or retirement benefits is called the

blackout period

legally, who does an insurance agent (producer) represent

both the client and the company

in general advertising would include each of the following except

communication of administrative matters

how can interest rates or investments affect premiums

companies pass the cost of borrowing money along to customers

withholding of facts that should be included in an application for insurance is called

concealment

when a dependent child covered under the parents major medical policy reaches the limiting age what is the provision that allows the child to purchase his or her own policy without establishing insurability

conversion privilege

An insured can increase the monthly benefits paid under a disability income policy by a specified percentage or in relation to an economic index with which of the following riders?

cost of living adjustment

interest sensitive whole life is also called

current assumption whole life

when does the 10-day free look begin

date of policy delivery

The State's Nonforfeiture Law is supported by?

dividend option

if louise allows her whole life policy to lapse which nonforfeiture option should she elect to obtain the most life insurance protection?

extended term option

A company domiciled in another state that has received permission from the insurance commissioner to do business this state is called

foreign admitted company

the application has two parts. part 1 is?

general information about the applicant

Laws have been enacted to prohibit cancellation of a Medicare supplement policy on the sole basis of age or deterioration of health. This requirement is called

guaranteed renewability

The life and health insurance marketing system utilizing producers that represent multiple insurance companies at the same time, are compensated on a commission basis, and own their own " book of business" is the

independent agency system

the convertibility option offers what major advantage to the insured?

insurability is not a factor

all health insurers must pay claims as prescribed by alabama law. which of these statements is false?

insurers may decide which claim forms they will accept

the settlement option under which the principal never decreases unless the beneficiary makes withdrawals is the

interest only option

which of the following statements describes the aviation exclusion?

it limits or excludes coverage when the insured is participating in only certain kinds of air travel

Mr. and Mrs. Carter receive annuity payments. Mr. Carter dies, but Mrs. Carter continues to receive payments for the rest of her life. The Carters have a

joint and survivor life annuity

a disability income policy typically covers

just the wage earners

The factors that determine the amount of each payment to a beneficiary under the fixed period (fixed time) option are the

length of the fixed period and the death benefit of the policy, and interest

Billy is the owner of a life insurance policy and has chosen a policy settlement option under which the company will pay the beneficiary (his widow) an income each month for as long as she lives. Payment stops at her death. Which settlement option has billy selected?

life income option

Which of the following most specifically describes a type of policy intended to cover extended residence in a nursing home?

long term care policies

A form of welfare that provides assistance to the needy is:

medicaid

medical expense policies generally provide

medical service or expense reimbursement benefits

which life policy starts as term insurance but after a certain period of time automatically converts to whole life?

modified life

which of the following premium payment modes will result in the highest total premium?

monthly

When may agents change a policy or waive its provisions according to Required Provision 1 of a standard health policy?

never

which of the following is correct concerning the payment of commissions for insurance in alabama

no insurer may pay a commission to relatives of a deceased insurance producer

Insurance policies issued by companies which are owned by stockholders and do not pay policy dividends are known as

non-participating policies

Benefits paid under an employer-paid Group Health Insurance policy are?

non-taxable to the employee

an attending physician's statement is used to do what?

obtain detailed information regarding a specific medical condition

Why are insurance contracts said to be contracts of adhesion?

one party writes the contract and the other party must accept or reject the contract as written

a life insurance policy is a unilateral contract because

only the insurance company is bound to live up to the terms of the agreement

in health maintenance organizations (HMOs) the use of a primary care physician or PCP is common as part of

out of network provider

which of the following statements is true

policy dividends cannot be guaranteed

The primary components in premium calculations include each of the following EXCEPT:

profit margins

many major medical policies include a provision whereby when expenses reach a certain dollar amount the insured no longer shares in the cost of expenses the insurer pays 100% of the remaining covered charges this is referred to as the

stop loss limit

the kind of life insurance that acquires no cash value is

term life

under a credit disability policy, what is the maximum amount payable?

the amount of the original indebtedness

which of the following statements about key employee life insurance is true?

the business is always the owner and beneficiary of key employee insurance

Each of the following statements is true about disclosures except

the company must keep a copy of the buyers guide and policy summary for at least 5 years

Under the typical Coordination of Benefits Clause in Group Health Insurance, how is primary coverage determined?

the employees plan is primary and the other may be excess

in the life insurance agency relationship what party is the principal

the insurance company

renewable term guarantees

the insureds insurability

the optional provisions of a standard health policy address the issue of claims arising from "illegal occupations, "commission of felonies," and "use of narcotics." according to these provisions

the insurer is not liable for claims arising under the conditions described in these provisions

a level term policy is one where

the premium and the protection remain constant for the term of the policy

contracts must have consideration. insurance contracts are considered to be aleatory contracts. this means what?

the promise to pay claims will most likely not be equal to all premium payments

"Community Rating" generally means the insurer charges

the same rate for everyone in a geographic area

the "elimination period" refers to

the time period after a disability starts and before the insured may begin receiving disability income benefits

How can "Key Employee" disability income insurance purchased by a business be used by the business?

to temporarily replace the key employee

What is the definition of Risk?

uncertainty or chance of loss

According to the Alabama regulations concerning Long-Term Care (LTC) insurance, which of the following practices is allowed?

use of large amounts of direct mail to market a specific LTC policy

dividend options are defined as ways in which the policy owner can:

use or collect policy dividends

A man applied for a Long Term Care (LTC) policy. Three months earlier he was diagnosed with diabetes. Can the LTC policy exclude future health problems linked with diabetes?

yes for 6 months

If you suffer a loss linked directly to your use of intoxicants or non-prescribed narcotics, what is the effect?

your claim may be denied by the carrier