Insurance Missed Questions
What is a penalty tax for nonqualified distributions from a health savings account?
20%
Annually renewable term policies provide a level death benefit for a premium that
Increases annually
When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income?
Interest only
What document describes an insured's medical history, including diagnoses and treatments
Attending Physician's Statement
What percentage of individually owned disability income benefits is taxable?
0%
How many pints of blood will be paid for by Medicare Supplement core benefits?
First 3
Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?
Fixed amount
Which Rider would NOT cause the Death Benefit to increase?
Payor benefit rider
Which of the following does the Insuring Clause not specify
A list of available doctors
If a dental plan is integrated, it is combined with what type of plan?
Medical
An applicant wants to buy a policy that has a cash value element. Which type should she buy?
Permanent
Which nonforfeiture option provides coverage for the longest period of time?
Reduced paid-up
Installing deadbolt locks on the doors of a home is an example of which method of handling risk?
Reduction
The insured had his wife named as the beneficiary. To ensure she had income for life after his death, he chose the life income settlement option. What won't be taken into account to determine the amount of payment?
The insured's age at death
Which life insurance policy would be considered interest sensitive?
Universal life
An insured committed suicide one year after his life insurance policy was issued. The insurer will
refund the premiums paid
Medicare Part B is not
A compulsory program
Anyone who willfully violates a cease and desist order can be fined up to
$100 per day
A licensed producer may be fined for nonwiilful and for willful violations of insurance laws with the following respective fine
$2,500/$5,000
Which of the following types of insurance policies is most commonly used in credit life insurance?
Decreasing term
Which of the following statements concerning buy-sell agreements is true?
Buy-sell agreements are normally funded with a life insurance policy
A health insurance plan that covers all accidents and sicknesses that are not specifically excluded from the policy is referred to as a
Comprehensive plan
Which of the following is true regarding the insurance amount in a credit life policy?
Creditor can only insure the debtor for the amount owed
Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled?
Disability buy-sell
Which of the following terms is used to name the nontaxed return of unused premiums
Dividend
An insured purchased a life insurance policy on his life and named his wife as primary beneficiary and his daughter as contingent. When would the daughter collect the death benefit?
If the primary beneficiary predeceases the insured
Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?
Implied
Which is not true regarding an insured who is considered to be a standard risk?
The insured may have to pay slightly higher premiums
In an adjustible life policy all of the following can be changed by the policy owner except
The type of investment
According to the entire contract provision, what document must be made part of the insurance policy?
Copy of the original application
Which is not fundable by annuities?
Death benefits
Which of the following is true regarding the spendthrift clause in life insurance policies?
It can protect the policy proceeds from creditors of the beneficiary
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?
It is reduced to the amount of what the cash value would buy as a single premium
An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy?
10 days
Every small employer carrier must actively offer to small employers at least how many health benefit plans?
2 plans
In a group policy, who is issued a certificate of insurance?
The individual insured
Which nonforfeiture option has the highest amount of insurance protection?
Extended Term
What is term for how frequently a policyowner is required to pay the policy premium?
Mode
Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insured for full disability benefits. What disability policy provision does this describe?
Presumptive disability
Annuities can be used to fund which of the following?
Retirement plans
Which is true about HRAs
The account allows roll-over of unused balances at the end of the year at the employer's discretion
Which of the following is not a feature of a guaranteed renewable provision?
The insurer can increase the policy premium on an individual basis
Within how many days of requesting an investigative consumer report must an insurer notify the consumer writing that the report will be obtained?
3 days
A hospital indemnity policy will pay
A benefit for each day the insured is in a hospital.
What is the goal of the HMO
Early detection through regular checkups
Which is usually true of a participating life insurance policy?
It may pay dividends to policyowners
What is necessary in order to be eligible to receive benefits from a long-term care policy?
The insured must be unable to perform some activities of daily living
Individuals who itemize deductions can claim deductions for medical expenses not covered by health insurance that exceed what percent of their adjusted gross income?
10%
A policyowner cancels his life policy but instructs the insurance company to transfer the cash value of his policy to an annuity. This nontaxable transaction is called
1035 exchange
Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under an accident and health policy must contain
A statement that is sufficiently clear to identify the insured and the nature of the claim
If the insured under a disability income insurance policy changes to a more hazardous occupation after the policy has been issued, and a claim is filed, the insurance company should do which of the following?
Adjust the benefit in accordance with the increased risk
An insured misstated her age on an application for an individual health insurance policy. The insurance company found the mistake after the contestable period had expired. The insurance company will take which of the following actions regarding any claim that has been issued?
Adjust the claim benefit to reflect the insured's true age
An insured misstates her age at the time the life insurance application is taken. This misstatement may result in
Adjustment in the amount of death benefit
Which of the following individuals is eligible for a Health Savings Account
Allison is insured by a High Deductible Health Plan (HDHP)
If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered
An unfair trade practice
Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?
Apparent
What limits the amount that a policyowner may borrow from a whole life insurance policy?
Cash value
All of the following would be considered rebates if offered to an insured in the sale of insurance EXCEPT
Dividends from a mutual insurer
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?
Fixed period
Which of the following situations is legal to limit coverage based on a marital status?
It is never legal to limit coverage based on marital status
Which statement is not true regarding a straight life policy?
Its premium steadily decreases over time, in response to its growing cash value
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?
Limited pay whole life
All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?
Lower
Which of the following programs expands individual public assistance programs for people with insufficient income and resources?
Medicaid
Which type of benefit helps to pay for accidental injuries that are not severe enough to qualify as disabilities?
Medical Reimbursement Benefit
Attempting to determine how much insurance an individual would require based upon their financial objectives is known as
Needs approach
The Director has just finished examining a domestic insurer. When is the Director next required to examine the same insurer?
No later than 5 years from now
Which of the following individuals must have insurable interest in the insured?
Policyowner
If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may
Require evidence of insurability
An insured wants to name her husband as the beneficiary of her health policy. She also wishes to retain all of the rights of ownership. The insured should have her husband named as what type of beneficiary?
Revocable
The legal process that gives the insurer, after payment of a loss, the right to seek recovery from a third party that was responsible for the loss is known as
Subrogation
Regarding health insurance premiums, what isn't true
Substandard risks are not insurable and are always rejected
A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as
Survivor protection
During the accumulation period in a non-qualified annuity, what are the tax consequences of a withdrawal?
Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 and a half
In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?
The customer's associates, friends, and neighbors provide the report's data
An agent wants to include an illustration written by his insurance company. Which of the following best describes the conditions under which she may use the illustration?
The illustration must stay exactly as it is
What is not the purpose of HIPAA
To provide immediate coverage to new employees who had been previously covered for 18 months
When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees
To renew the policy until the insured has reached age 65
Income replacement contracts agree
To replace the insured's income up to a stated percentage if the insured suffers a loss due to a covered accident or sickness.
An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?
Universal life
The Medical Information Bureau does not
have reports that are based upon information supplied by doctors and hospitals
A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will
pay the policy proceeds only if it would have issued the policy
Which of the following is not the consideration in a policy
The application given to a prospective insured
In forming an insurance contract, when does acceptance usually occur?
When an insurer's underwriter approves coverage
Which type of care is not covered by Medicare?
long term care
Which of the following statements regarding conditional receipts is true?
They are temporary insuring agreements
What is the benefit of experience rating?
It allows employers with low claims experience to get lower premiums.
What is the period of coverage for events such as death or divorce under COBRA?
36 months
Employers can reduce health plan costs by coupling a HRS with
A high deductible health plan
Who is an insurance producer?
Any person licensed to sell, solicit, or negotiate insurance
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT
It is a life contingency option
Premium payments for personally-owned disability income policies are
Not tax deductible
If $100,000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually?
$3,000
Which concept is associated with "exclusion ratio"?
Annuities payments
When a policyowner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called
Class designation
An applicant buys a nonqualified annuity, but dies before the starting date. For which of the following beneficiaries would the contract's interest NOT be taxable?
Spouse
When an employee covered under a health reimbursement account changes employers, the HRA
Stays with the employer
Which of the following best describes what the annuity period is?
The period of time during which accumulated money is converted into income payments
An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?
$9,800
Fines levied by the director in lieu of license revocation or suspension must be paid within
30 days
According to the Future Increase Option Ride (FIO), which of the following is NOT a qualifying event to increase an insured's benefit level?
Death of a spouse
Which term makes false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance
Defamation
Prior to purchasing a Medigap policy, a person must be enrolled in which of the following?
Parts A and B of Medicare
In a noncontributory health insurance plan, what percentage of eligible employees must participate?
100%
Under the Affordable Care Act, what percentage of preventive care must be covered without cost sharing?
100%
The death protection component of Universal Life Insurance is always
Annually renewable term
What happens when a policy is surrendered for its cash value?
Coverage ends and the policy cannot be reinstated
Risk retention doesn't involve
Premiums
Equity indexed annuities
Seek higher returns
Who determines the eligibility and contribution limits in a HRA
The employer determines both
When an annuity is written, whose life expectancy is taken into account?
Annuitant
An individual purchased a Medicare supplement policy in March and decided to replace it 2 months later. His history of coronary artery disease is considered a pre-existing condition. Which of the following is true?
The pre-existing condition waiting period fulfilled in the old policy will be transferred to the new policy. the new one picking up where the old one left off
Which is not an enrollment period for Medicare Part A applicants?
Automatic enrollment
Which of the following provisions in annuity contracts allow the owner to surrender the annuity if interest rates drop to a specified level?
Bail-out
Which is not required to be stated in the outline of coverage provided with a long-term care policy?
Basic information about supplementary policies
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash option
Most scheduled plans provide first-dollar benefits without
Coinsurance and deductibles
As deductible amounts increase, premium amounts change in what way?
Decrease
In disability income insurance, the own occupation definition of disability applies
For the first 2 years of disability
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a
Guaranteed insurability rider
Which of the following entities must approve all Medicare supplement advertisements?
Insurance Commissioner or Director
The policyowner wants to make sure that upon his death. the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?
Interest only option
Which of the following is true regarding a term health policy?
It is nonrenewable
During replacement of life insurance, a replacing insurer must do which of the following?
Obtain a list of all life insurance policies that will be replaced
In order to transact insurance business in this state, an agency must meet all requirements but not
Obtain an insurance agency license
Decreasing term policy and premiums
Remain level
Workers Compensation benefits are regulated by which entity?
State government
Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce
Without receiving written consent from an insurance regulatory authority
The two types of assignments are
absolute and collateral
In a replacement situation, all must be considered except
assets
Rebates are not allowed
if it's in the best interest of the client
An insured has a $1,000 HRA account through his employer. He incurred $750 in medical expenses the first year of the plan. How much, if anything, will the insured be able to roll over toward the next year's expenses?
$250
What is the elimination period for Social Security disability benefits?
5 months
South Carolina statutes require that an employee who loses group coverage for any reason other than nonpayment of premium may continue coverage under the group policy for
6 months
The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?
As of the application date
Which of the following is the most common time for errors and omissions to occur on the part of an insurer?
Policy delivery
What describes the specific information about a policy
Policy summary
Your client wants to know what the tax implications are for contributions to a health savings account. You should advice her that the contributions are
Tax deductible
The annuity owner dies during the accumulation period without naming a beneficiary. Annuity's cash value exceeds premiums paid. Which is true?
The cash value will be paid to the annuitant's estate
What is not a requirement of eligibility for Social Security disability
Being 65
What license or licenses are required to sell variable annuities?
Both life and securities
A producer is acting in what capacity when he or she is trying to obtain creditable information about an applicant for health insurance?
Field underwriter
Which of the following statements is true about a policy assignment?
It transfers rights of ownership from the owner to the next person
An insured purchased a life policy in 2010 and died in 2017. The insurance company discovers at that time that the insured had concealed information during the application process. What can they do?
Pay the death benefit
If an insured withdraws a portion of the face amount in the form of accelerated benefits for a terminal illness, how will that affect the payable death benefit?
The death benefit will be smaller
The paid-up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy
The sole proprietor of a business makes $50,000 a year. His medical expenses reached $75,000.. What amount may he deduct?
$50,000
In order to collect Social Security disability benefits, the claimant must be able to demonstrate that the disability will last at least
12 months
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
5 days
In which Medicare supplemental policies are the core benefits found?
All plans
All other factors being equal, the least expensive first-year premium payment is found in
Annually renewable term
Which of the following is the term for the specific dollar amount that must be paid by an HMO member for a service
Copayment
When the director finds that a license has been obtained by fraud or misrepresentation, he may suspend the license
Immediately, but not for more than 2 years
All of the following statements are true of a combination dental plan EXCEPT
It is also known as a Superimposed Plan
If one takes Social Security retirement benefits at age 62, what needs to be done at age 65 to qualify for Medicare?
Nothing
In order to become licensed as a nonresident producer in this state, a person must do which of the following
Show proof of a valid license for the same line of authority in the home state
Which of the following is an example of a peril covered in an accident and health insurance policy?
Sickness
Which of the following is the best reason to purchase life insurance rather than annuitites?
To create an estate
An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?
When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health
To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters?
6 credits
An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe?
Aleatory
In reference to the standard Medicare Supplement benefit plans, what does the term standard mean?
All providers will have the same coverage options and conditions for each plan
Who can make changes to policy once it is in effect?
An executive officer of the insurer
Who can make a fully deductible contribution to a traditional IRA?
An individual not covered by an employer-sponsored plan who has earned income
Which of the following is a short-term annuity that limits the amounts paid to a certain fixed period or until a certain fixed amount is liquidated?
Annuity certain
In disability income insurance., if an insured is considered disabled if they cannot perform any job they are suited for by prior education, training or experience, they fall under which definition of total disability?
Any occupation
Which is not an advantage of an HRA for an employer
HRAs are defined benefit programs
Which of the following types of LTC is not provided in an institutional setting?
Home health care
Medicare Advantage is also known as
Medicare Part C
Which renewal provision(s) must be included in a long-term care policy issued to an individual?
Noncancellable and guaranteed renewable
Which of the following are the main factors taken into account when calculating residual disability benefits?
Present earnings and earnings prior to disability
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a
Settlement option
Who is the beneficiary in a credit health policy?
The lending institution
Susan owns an individual long-term care insurance plan and is able to deduct the premiums from her taxes. What income taxation will be imposed on the benefits she receives?
None
Which of the following is not an allowable 1035 exchange?
A whole life insurance policy is exchanged for a term insurance policy
When benefits are paid directly to the insured under a health insurance policy, the policy provides benefits on what type of basis?
Reimbursement
Events in which a person has both the chance of winning or losing are classified as
Speculative risk
Which of the following insurers are owned by stockholder who have the usual rights of ownership, including the right of voting?
Stock
Under an extended term nonforfeiture option, the policy cash value is converted to
The same face amount as in the whole life policy
An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. The insured knows that his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilize?
Viatical settlement
Following hospitalization because of an accident, Bill was confined in a skilled nursing facility. Medicare will pay full benefits in this facility for how many days?
20
Concerning group Medical and Dental insurance, which of the following statements is INCORRECT?
Employee benefits are tax deductible the year in which they were received
Which of the following would be the beneficiary in credit life insurance?
Creditor
Which of the following is not allowed in credit life insurance?
Creditor requiring that a debtor buys insurance from a certain company
Which of the following is true regarding taxation of dividends in participating policies?
Dividends are not taxable
An insured is involved in an accident that renders him permanently deaf, although he does not sustain any other major injuries. The insured is still able to perform his current job. To what extent will he receive Presumptive Disability benefits?
Full benefits
Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement?
Any form of life insurance
Issue age policy premiums increase in response to which of the following factors?
Increased benefits
Which is NOT true regarding the needs approach method of determining the value of an individual's life?
Need is predicted using the number of years until the insured's retirement
Shortly after a replacement transaction on a Medicare supplement policy. the insured decided to cancel the policy but is unsure whether the free-look provision applies. The insured could find that information in the
Notice Regarding Replacement
Which of the following is correct regarding the taxation of group medical expense premiums and benefits?
Premiums are tax deductible and benefits are not taxed
After the elimination period, a totally disabled insured qualified for benefits from a disability income policy that has a waiver of premium rider. What will happen to the premium that was paid into the policy during the elimination period?
Premiums will be refunded
Which is not a characteristic of a group long-term disability plan?
The benefit can be up to 50% of one's yearly income
An HSA holder who is 65 years old decides to use the money in the account for non-health expense. WHich of the following is true?
There will be a tax
What kind of policy allows withdrawals or partial surrenders?
Universal life