insurance license course final exam
an employee is covered under a company group life plan with a $50,000 death benefit. What is the MAXIMUM amount a spuse may be insured for under tis program
$25,000
J's major medical policy has a $2,000 deductible and an 80/20 coinsurance clause. If J is hospitalized and receives a bill for $10,000 J would pay:
$3,600
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?
$50,000
which of the following is a requirement for obtaining a Texas insurance agents license?
- Be honest, trustworthy, and reliable
which of the following types of term life policies most likely contains a renewability feature?
10 year convertible term
a 15-year mortgage is best protected by what kind of life policy?
15-year decreasing term
An insured must notify an insurer of a medical claim within ___ days after an accident.
20
Every 12-months after the initial enrollment period, an HMO must hold an open enrollment period of
31 months
S is employed by a large corporation that provides group health coverage for its employees and their dependents. If s dies, the company must allow his surviving spouse and dependents to continue their group health coverage for a maximum of how many months under the COBRA regulations?
36
how long can a cash surrender value payment be deferred by the insurance company under the nonforfeiture law?
6 months
which of the following types of policies pays a benefit if the insured goes blind?
AD&D
All of the following are considered to be typical characteristics describing the nature of an insurance contract EXCEPT:
Bilateral
K has an accidental death and dismemberment (AD&D) insurance policy where her husband is beneficiary and her daughter is contingent beneficiary. Under the common disaster clause, if k and her. Husband re both killed in an automobile accident, where would the death proceeds be directed?
Daughter
when an individual is planning to protect his family with life insurance, one method of doing so is called needs analysis. What exactly does needs analysis involve?
Establishes the needs of the individual and his dependents
E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be directed to?
F
K's whole life insurance policy lapsed two months ago due to nonpayment. She would now like to reinstate the policy. All of these statements are correct about the policy's reinstatement EXCEPT
K will forfeit the right to use the automatic loan provision upon reinstatement
Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements ?
Legal purpose (insurable Interest)
On a life insurance policy, who is qualified to change the beneficiary designation?
Policyowner
which of the following are equity indexed annuities typically invested in?
S&P 500
life insurance companies are required to establish and maintain an anit-money laundering compliance program according to which federal regulation?
USA Patriot Act
P received disability income benefits for 3 months then returns to work. She is able to work one month before her condition returns, leaving her disabled once again. What would the insurance company most likely regard this second period of disability as?
a recurrent disability
if an insureds age was misstated on a life insurance contract, the misstatement of age provision requires that any death benefit payable would be
an amount that the premiums paid would have purchased at the current age
an insurer is NOT required to provide information on fraudulent claims if requested by
an insured
in Texas, which of these statements regarding the suicide clause is TRUE?
an insurer may not use suicide as defense against payment after the second year
what does the insuring agreement in a life insurance contract establish?
an insurers basic promise
with whom may agent legally share commissions?
another agent with the same line of insurance
when a policyowner cash surrenders a universal life insurance policy in its early years, this may be considered a red flag for a(n):
anti-money laundering violation
any changes made on an insurance application requires the initials of whom?
applicant
an incomplete life insurance application submitted to an insurer will result in which of these actions?
application will be returned to the writing agent
which of the following medical expenses does cancer insurance NOT cover?
arthritis
when does a probationary period provision become effective in a health insurance contract ?
at the policies inception
At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid?
at the time of the application
A certificate of _________ permits an insurance company to transact business in Texas.
authority
a life insurance application must be signed by all of these, EXCEPT:
beneficiary
B, an insurance agent, tells his clients that their rights may be impaired if they fail to complete a release form within a given period of time. B may be found guilty of
coercion
as a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of?
coercion
the phrase "transacting business" includes
collecting premiums
this type of deductible provision states that should more than one family member be involved in a common accident, or suffer the same illness, only one individual deductible amount shall be applied.
common accident deductible
which of the following is not included in a life insurance illustration?
companys mortality table
which of the following correctly explains an agent should take if a customer wants to apply for an insurance policy?
complete the application and review the information with the customer prior to obtaining the customers signature, then send the application off to the insurance company
an employee of 20 years recently retired at age 59 1/2 . this employees group life contract can be:
converted to an individual permanent policy at an individual rate
which of the following statements about health coverage for newborns is not true?
coverage is limited to only congenital defects
An agent takes an individual disability income application, collects the appropriate premium, and issues the prospective insured a conditional receipt. The next step the insurance company will take is to:
determine if the applicant is acceptable risk by completing standard underwriting procedures
which of the following statements BEST describes the intent of a Coinsurance clause in a major medical policy?
discourages over-utilization of the insurance coverage
the federal income tax treatment of employer-provided group medical expense insurance can be accurately described as:
employees premiums paid by the employer is a tax-deductible to the employer as a business expenditure
health insurance benefits NOT covered due to an act of war are:
excluded by the insurer in the contract provisions
when an insurer issues a policy that refuses to cover certain risks, this referred to as a(n):
exclusion
long term care policies will usually pay for eligible benefits using which of the following methods?
expense incurred
an insurance company organized under new York lays and licensed to do business in Texas is considered a(n)
foreign company
what is an organization that solicits insurance to its members?
fraternal benefit society
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
how would a contingent beneficiary receive the policy proceeds in an accidental death and dismemberment (AD&D) policy?
if the primary dies before the insured
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)
impairment rider
the first portion of a covered major medical insurance expense that the insured is required to pay is called the:
initial deductible
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 correct value has been paid. This is called a(n)
installment refund annuity
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
credit life insurance is
insurance issued on a debtor to cover outstanding loan balances
what is the initial requirement for an insured to become eligible for benefits under the Waiver of Premium provision?
insured must be under a physicians care
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?
insureds contingent beneficiary
an insurance company normally has 2 years to contest information provided on an accident and health application. This 2 year period begins on the date that the:
insurer dates the policy
the ____ clause identifies which losses resulting from an accident or sickness are insured by the policy.
insuring
all of these settlement options involve the systematic liquidation of the death proceeds in the event of the insureds death, EXCEPT:
interest only
. which of the following BEST describes how a policy that uses the "additional bodily injury" definition of an accident differs from one that uses the "accidental means" definition?
less restrictive
which of these are NOT an example of a nonforfeiture option?
life income
an employer that offers a qualified retirement plan to its employees is eligible to:
make tax-deductible contributions to the plan
which type of plan normally includes hospice benefits?
managed care plans
the entity whose sole purpose is sharing medical data among its member companies is called the
medical information bureau
which unfair trade practice involves an agent telling a prospective client that a policy dividends are guaranteed?
misrepresentation
according to the time payment claims provision, the insurer must pay disability income no less frequently than which of the following options?
monthly
which statement is true regarding a minor beneficiary?
normally, a guardian is required to be appointed in the beneficiary clause of the contract
an insurance agent has a fiduciary responsibility to all of the following EXCEPT
other agents
which of the following best describes a contingent beneficiary?
person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured
which of these statements is INCORRECT regarding a preferred provider organization (PPO)
ppos are NOT a type of managed care systems
which long term care insurance statement is true
pre-existing conditions must be covered
what is the purpose of the time of payment of claims provision?
prevents delayed claim payments made by insurer
The legal actions provision of an insurance contract is designed to do all of the following except:
protect the producer
A(n) _________ beneficiary may be changed by the policyowner without the consent of the beneficiary.
recoverable
K failed to pay a renewal premium within the time granted by the insurer. K then send in a payment which the insurer subsequently accepts. Which policy provision specifies that coverage may be restored in this situation?
reinstatement
J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions?
reinstatement provision
which of the following is not a required provision in group life policies
right to loan
P is a new employee and will be obtaining non-contributory group major medical insurance from her employer. Which of the following actions must she take during the open enrollment period?
sign an enrollment card
upon delivery of a rated life insurance policy, the producer must obtain each of the following, EXCEPT:
signed HIPPA disclosure
which mode of payments is NOT used by health insurance policies?
single premium
the insuring clause
states the scope and limits of the coverage
A(n) ____ rider may be used to include coverage for children under their parents' life insurance policy.
term
A contract owner terminates an annuity before the income payment period begins. The owner will then receive
the current contract surrender value
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
T was insured under an individual disability income policy and was severely burned in a life. As a result, t became totally disabled. The insurer began making monthly benefit payments, but later discovered that the fire was set by T in what was described as arson. What actions will the insurer take?
the insurer will rescind the policy, deny the claim, and recover all payments made
a Medicare supplement policy may be cancelled for which of the following reasons?
the premium has not been paid by the insured
the advantage of reinstating an original life policy is
the premiums are based on a younger age
The common Disaster clause provides that if both the insured and the sole named beneficiary were to die in a common accident, which of the following is true?
this clause provides the payment of proceeds to the insureds estate
an example of an unfair claims settlement practice is
turning down a claim without providing the basis of denial
in an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?
unilateral
how long does an insurance company appointment remain in force?
until terminated
when is the face amount paid under a joint life and survivor policy?
upon the death of the last insured
A life insurance policyowner would like to take out a loan against the cash value in his whole life policy. The interest rate applied to his loan may vary over time. This is referred to as a(n)
variable
if an individual is covered under an accidental death policy and dies, an autopsy can be performed in all of these situations, EXCEPT:
when the state prohibits this by law
a life insurance policy that provides a policyowner with cash value along with a level face amount is called:
whole life
Y purchased $100,000 worth of permanent protection on himself and $50,000 worth of 10-year term coverage of his wife on the same policy. Which of these policies did Y purchase?
whole life policy with an other insured rider
