insurance quiz over chapters

The convertibility provision of a term life policy lets the owner convert the term coverage into what type of policy? a convertible term policy a permanent life insurance policy a paid-up whole life insurance policy a renewable term policy

A permanent life insurance policy

In a fixed deferred annuity that has a current declared interest rate, a change in the current rate results in a new: guaranteed rate renewal rate general account rate initial interest rate

renewal rate

For which of the following purposes are annuities most often used? income protection in the event of death short-term savings estate planning retirement planning

retirement planning

Which of the following types of qualified retirement plan can include life insurance in the plan funding? SEP plan. 401(k) plan 412(i) plan. 403(b) plan

412(i) plan.

Producers and insurers must maintain records of their insurance transactions for at least how long? three years five years two years one year

5

For purposes of group health insurance, a small employer is defined in Nebraska as any person or entity that employs no more than how many employees? 20 50 2 100

50

Which statement is true about the "any occupation" and "own occupation" definitions of total disability? Disability policies sold to those in blue-collar occupations typically use the own occupation definition. The any occupation definition is normally available only in policies sold to professional or white-collar employees. Insureds prefer the any occupation definition. Policies with an own occupation definition are more expensive.

Policies with an own occupation definition are more expensive.

Which statement is correct about a community-rated plan issued to a group sponsor? The underwriter will consider the sponsor's unique group characteristics. The plan and premium rate will be the same as those that the insurer offers to similar groups in the area. The group members must undergo a medical exam or provide evidence of insurability. The sponsor can structure the plan's coverage and benefits according to its needs.

The plan and premium rate will be the same as those that the insurer offers to similar groups in the area.

Which provision of a health insurance policy requires the insurer to give the insured the forms necessary to file a claim? change of beneficiary reinstatement notice of claim claim forms

claim forms

Long-term care insurance policies commonly define benefits as: total annual payments lump-sum payments flat monthly amounts flat daily amounts

flat daily amounts

Dental plans commonly group covered treatment and benefits into how many classes? two one three four

three

With a survivorship life insurance policy, the insurer pays the death benefit: when the surviving spouse dies only when the younger of the two insureds dies when either of the insureds dies first only when the older of the two insureds dies

when the surviving spouse dies

Jackie Jones is the CFO of Delta Industries and has been instrumental in the company's growth and success over the years. Because of the significant financial loss that it would suffer if she died, Delta purchased a key person insurance policy covering Jackie. All the following statements regarding this scenario are correct EXCEPT: If Jackie dies, the death benefits can be used to pay Delta's outstanding loans. If Jackie ends her employment, she can demand that Delta surrender the policy and give her the cash value. If Jackie ends her employment, Delta can keep the policy and collect the death benefit when she dies. If Jackie dies, the insurer will pay the death benefit to Delta.

If Jackie ends her employment, she can demand that Delta surrender the policy and give her the cash value.

Justine leaves her position with her employer on March 1. She wants to convert her employer's group life insurance coverage to an individual policy. In order to convert her group coverage, she must apply for an individual policy no later than what date? March 31 March 10 April 30 March 7

March 31

A Section 125 cafeteria plan may cover which of these expenses? child day care health insurance premiums cosmetic treatment medical monitoring devices-tax health insurance benefits and unreimbursed health insurance premiums

health insurance premiums

The federal government has helped control the cost of health care by passing laws that allow the use of: preferred provider organizations (PPOs) comprehensive major medical plans Medicare supplement policies health savings accounts (HSAs)

health savings accounts (HSAs)

An insurer would use which of the following to limit or exclude coverage for an applicant's health condition? guaranteed insurability rider nonrenewable term policy multiple indemnity rider impairment rider

impairment rider

Policyholders who buy a health insurance policy issued in Nebraska are entitled to review the policy without obligation for at least how many days after it is delivered? 7 10 31 21

10

A recurrent disability arises while the disability income policy is in effect and within how many months of an earlier, related disability? 6 months 12 months 9 months 3 months

6 months

All the following statements regarding an employer's group life insurance plan are correct EXCEPT: The employees are the insured individuals. Employee contributions are not permitted. The amount of insurance coverage provided for each employee is typically some percentage of his or her salary. The employer owns the master policy.

Employee contributions are not permitted.

From an insurance risk perspective, an applicant engaging in adverse selection is demonstrating which type of hazard? -legal hazards -morale hazard -moral hazard -physical hazard

Moral hazard

Which organization recommends that health insurance policies follow certain standard provisions to protect consumers? National Association of Insurance and Financial Advisors (NAIFA) American Council of Life Insurance (ACLI) U.S. Department of Commerce National Association of Insurance Commissioners (NAIC)

National Association of Insurance Commissioners (NAIC)

Which organization offers health insurance to Nebraska residents who are denied health insurance and unable to obtain coverage from private companies due to pre-existing medical conditions? Nebraska Comprehensive Medical Association Nebraska Uninsured Risk Providers Nebraska Comprehensive Health Insurance Pool Nebraska Life and Health Insurance Guaranty Association

Nebraska Comprehensive Health Insurance Pool

Darlene failed to pay the premium on her individual health insurance policy, which was due on October 1. She can avoid lapsing the policy if she pays the premium before what date? December 1 November 30 October 31 November 11

October 31

Which of the following will happen if a traditional IRA owner dies before all of the funds in his or her account have been paid out? The balance will be paid to the beneficiary and taxed as ordinary income The balance will be paid to the deceased owner's estate, which then is responsible for paying estate taxes on it. The balance is forfeited to the financial institution providing the IRA. The balance will be paid to the beneficiary tax free but taxed to the owner's estate.

The balance will be paid to the beneficiary and taxed as ordinary income

Who normally owns life insurance that is used to meet business insurance needs? the business the employees the insured the business jointly with the insured

The business

What happens if a person submits an insurance application without the first premium? The applicant has made a counteroffer. The insurer must make an offer to the applicant. The insurer must make a counteroffer. The applicant made an offer to the insurer.

The insurer must make an offer to the applicant.

Which statement is NOT correct about utilization reviews? They determine whether a managed care provider will cover services or treatment. The review can only take place after a medical service is provided. They determine whether treatment is appropriate. They only determine coverage for medical issues arising in the future.

The review can only take place after a medical service is provided.

Which statement about deferred compensation plans is correct? Although life insurance is not allowed to fund deferred compensation plans, annuities and mutual funds are allowed. All employees over the age of 21 with at least one year of service must be eligible to participate in the plan. They allow executives to delay receiving current compensation until a future time. They are considered qualified plans.

They allow executives to delay receiving current compensation until a future time.

When can the owner of a deferred annuity select a settlement option? only when the contract is annuitized any time before or after annuitization The choice of settlement option is built into the contract; the owner chooses a contract with the preferred settlement option. any time prior to annuitization

any time prior to annuitization

Brady purchased an individual life insurance policy on February 1. He typically will not be able to enter into a viatical settlement contract within how many years after purchasing the policy? one five three two

five

The amount of coverage provided by a children's term life rider is usually: any amount the policyowner wishes limited to a modest flat dollar amount or a small percentage of the base policy's face amount limited to the base policy's face amount equal to the base policy's cash value

limited to a modest flat dollar amount or a small percentage of the base policy's face amount

What is the main appeal of joint life insurance? underwriting is performed only on the older of the two applicants higher death benefit lower cost than two separate policies ability to cover an entire family

lower cost than two separate policies

Maya was laid off from her job on October 1. Which action must Maya take to continue her group health insurance coverage? apply for an individual policy within 31 days provide evidence of insurability pay the first premium and submit evidence of insurability within 30 days pay the premium within 10 days after receiving notice of the right to continue the policy

pay the premium within 10 days after receiving notice of the right to continue the policy

Billy, age 10, is insured under a juvenile life insurance policy purchased by his father, who pays the premiums. Which of the following would ensure that the insurance stays in force if the father dies or becomes disabled? waiver of monthly deductions rider disability income benefit rider waiver of premium rider payor benefit rider

payor benefit rider

Long-term care insurance is designed to provide coverage for diagnostic, preventive, rehabilitative, and personal care services for at least how many months? 24 months 12 months 18 months 6 months

12 months

How many days does the insurer have to provide claim forms to the insured after receiving a notice of claim? 15 10 30 60

15

Under the standard bring-back rule, assets transferred out of a decedent's estate will be valued in the estate if the transfer occurred within how many years before death? 7 years 3 years 4 years 5 years

3 years

The Commissioner of Insurance must conduct a fiscal examination of an insurer at least once every how often? five years two years one year three years

5 years

Juanita is insured under a pool policy and has satisfied her plan's deductible for the year. The policy will pay 100 percent of her covered expenses once she incurs what amount of out-of-pocket expenses? $1,500 $2,000 $2,500 $1,000

$1,500

Paul dies with a $50,000 unpaid loan (including interest) against his $150,000 life insurance policy. What death benefit will the insurance company pay his beneficiary? $50,000 $100,000 $250,000 $25,000

$100,000

Ralph's AGI is $100,000. His unreimbursed medical expenses are $10,000. He also paid $10,000 for health insurance premiums. How much is Ralph's medical expense deduction? $7,500 $10,000 $20,000 $12,500

$12,500

Which of the following would be most appropriate for Haley, 55, if her primary objective is to ensure having an income she cannot outlive? life insurance mutual funds an annuity CDs

an annuity

Which of the following distribute a sum of money regularly, starting very shortly after they are bought? life insurance immediate annuities retirement annuities deferred annuities

immediate annuities

After a viatical settlement agreement is signed, which party owns the life insurance policy? the viatical settlement provider the insured the viator the viatical settlement broker

the viatical settlement provider

Bob bought a universal life insurance policy with a $100,000 stipulated amount and chose an Option 2 (increasing) death benefit. At his death ten years later, the policy's cash value had increased to $50,000. What will his beneficiary receive? $200,000 $100,000 $50,000 $150,000

$150,000

In life insurance, for how long must insurable interest exist? It must continue for the life of the policy. It must exist when a claim is submitted. Insurable interest must exist only at the time the applicant enters into a life insurance contract. If no insurable interest exists when a policyowner buys a life insurance policy, the contract may still be enforced.

Insurable interest must exist only at the time the applicant enters into a life insurance contract. With life insurance, insurable interest need exist only at the time the applicant enters into the life insurance contract.

Which of the following best describes an agent's responsibilities? -An agent only has to act in the best interests of the insurer he or she represents -An agent has no fiduciary duty toward insurers, applicants, or insureds. -an agent only has to act in the best interests of the insured or applicant, but not the insurer -An agent has to act in the best interests of insureds, applicants, and insurers

-An agent has to act in the best interests of insureds, applicants, and insurers

All the following statements about life insurance settlement options are correct EXCEPT: Available settlement options are listed in the insurance policy. All settlement options include a life contingency. A life insurance policy's death benefit can be paid out or settled in many different ways at the death of the insured. The policyowner or beneficiary can determine these options.

All settlement options include a life contingency.

What happens to a signed application after the applied-for policy is issued? It is sent to the MIB for permanent storage. It becomes part of the contract between the insurer and the policyowner. It is destroyed. It becomes property of the state.

It becomes part of the contract between the insurer and the policyowner.

Sandra names her father and mother joint beneficiaries of her life insurance without specifying what percentage each should receive. How will the insurance company pay the benefits if Sandra dies before her parents? It will hold up payment until the father and mother instruct it on how to split up the payment. It will pay the father the entire amount. It will pay each parent 50 percent of the benefit. It will pay the death benefit to the estate and let the executor decide how to split it up.

It will pay each parent 50 percent of the benefit.

Which of the following statements regarding the way whole life insurance differs from term life insurance is most correct? Only whole life insurance can be renewed. Only whole life insurance offers level premium payments. Only whole life insurance offers protection until age 80. Only whole life insurance builds a cash value.

Only whole life insurance builds a cash value.

In a collateral assignment, policyowners may do all the following, EXCEPT: pay the premiums borrow additional money against the cash value as long as enough remains to cover the collateral assignment change beneficiaries surrender the policy

Surrender the policy

All the following statements about the interest-only life insurance settlement option are correct EXCEPT: When a policyowner selects the interest only option, the insurer holds the policy proceeds until a future date and pays out the interest that those proceeds earn. The policy specifies a minimum interest rate. The interest rate used with this option is the lower of a current rate or the guaranteed rate specified in the policy. Interest is most commonly distributed monthly or annually.

The interest rate used with this option is the lower of a current rate or the guaranteed rate specified in the policy.

All the following statements about the accumulate at interest dividend option are correct EXCEPT: The dividends are retained in the insurer's general account. The insurer credits a rate of interest to the dividends as they remain on deposit with the insurer. Participating policy dividends are not generally taxable. The policyowner can only withdraw the accumulated dividends and interest on the policy's anniversary date.

The policyowner can only withdraw the accumulated dividends and interest on the policy's anniversary date.

By submitting an application for life insurance without the first premium, Larry is doing which of the following? suggesting that the insurer should not issue the policy for some reason negotiating for lower premiums inviting the insurer to make an offer making the policy's effective date earlier than it would be if the initial premium was paid with the application.

inviting the insurer to make an offer

All of the following are elements of an insurable risk EXCEPT: -losses resulting from the insured peril must be potentially catastrophic -the insured peril must be outside of the insured's control -any losses resulting from the insured peril must be definable as to time, cause, and location -the loss must be measurable

losses resulting from the insured peril must be potentially catastrophic to be insurable a loss must be definable, measurable, uncertain, and not catastrophic

Who completes an attending physician's statement (APS)? a doctor assigned by the insurer in the state where the insurance is being written a local doctor, other than applicant's, who is familiar with how the medical condition is being treated the proposed insured's doctor, who is familiar with how the medical condition is being treated a member of the MIB

the proposed insured's doctor, who is familiar with how the medical condition is being treated

What is the purpose of a life insurance policy's ownership provision? to establish the conditions under which the policyowner can exercise certain rights of ownership to establish the beneficiary's right to determine how the policy death benefit is paid out to stipulate that the owner must be a natural person to establish the terms under which the insurance company can take ownership of the policy

to establish the conditions under which the policyowner can exercise certain rights of ownership

Ben, a single working father, dies at age 50. How much will his only dependent child, Tom (age 15), receive from Social Security in a lump-sum death benefit? an amount equal to one month's worth of the deceased worker's primary insurance amount $255 $0 $750

$255

An insured has a comprehensive major medical insurance policy with a $1,000 deductible and 80/20 coinsurance. She incurs a bill of $11,000. What will she pay in total? $3,000 $9,000 $2,000 $8,000

$3,000

Which of the following is an insurable risk? -The possibility of losing money in stock investments - The possibility of one's home value decreasing due to a drop in market prices -The possibility of becoming disabled and unable to earn an income -the possibility of losing money gambling in Las Vegas

-The possibility of becoming disabled and unable to earn an income only pure risks (representing the chance of loss but not gain) are insurable. Speculative risks, which involve the chance of gain as well as loss, are not insurable.

ABC Life Insurance Co. sells term and whole life insurance policies through producers. If it sells a policy, it must give the customer the right to examine the policy for at least how long? 10 days 31 days 30 days 20 days

10 days

How long is the standard free-look period? 15 days 1 day 5 days 10 days

10 days

When Gary bought an indexed annuity with a $10,000 premium deposit, the S&P 500 Index was at 1000. At the end of the contract's first term one year later, this index was at 1100. Based only on this information, what is the basis for the amount of interest credited to Gary's contract? 20 percent 5 percent 10 percent 15 percent

10 percent

If Harry, age 58, withdraws funds from his annuity, the taxable portion of the withdrawal may also be assessed which of the following? 50 percent penalty nothing 10 percent penalty 15 percent surcharge

10 percent penalty

All the following statements about life insurance living benefits riders or provisions are correct EXCEPT: They provide access to the policy's death benefit while the insured is alive. There are two basic types. Accelerated benefits are payable to insureds who require hospitalization for any reason. If they are used, the net death benefit paid to beneficiaries is reduced in most cases.

Accelerated benefits are payable to insureds who require hospitalization for any reason.

The tendency of a person diagnosed with a serious illness to try to buy life or health insurance is known as: -adverse selection -exposure reduction -risk avoidance -concealment

Adverse selection The tendency of people to buy and keep insurance if they perceive themselves to be at a greater risk of loss is a moral hazard called adverse selection

Which of the following statements about health insurance advertisements is NOT correct? Advertisements must include prepared sales talks and materials used by producers when soliciting insurance. Advertisements must be truthful and not misleading. Advertisements must disclose that policyholders are protected by the Nebraska Life and Health Insurance Guaranty Association. Advertisements must disclose the extent to which losses are not covered due to pre-existing conditions.

Advertisements must disclose that policyholders are protected by the Nebraska Life and Health Insurance Guaranty Association.

All of the following statements about life insurance policy long-term care riders are correct, EXCEPT: An insured must first be hospitalized before qualifying for LTC benefit payments. An insured who bought a long-term care rider becomes eligible for its benefit when he or she is diagnosed as chronically ill. If the insured's diagnosis is due to a medical reason, the insured must be certified as unable to perform at least two activities of daily living (ADLs) for at least 90 days. There may be an elimination or waiting period of 10 to 100 days before benefits are payable.

An insured who bought a long-term care rider becomes eligible for its benefit when he or she is diagnosed as chronically ill.

John owns a whole life insurance policy with a $250,000 death benefit. Over the years, the policy's cash value has grown to $25,000. All the following statements regarding this are correct EXCEPT: John can withdraw funds from the policy's cash value to pay for his son's college education. At John's death, the beneficiary receives the policy's full face amount even if there is an outstanding policy loan. If John surrenders the policy, he will receive the policy's cash value. John can take a loan from the policy's cash value if he needs funds in an emergency.

At John's death, the beneficiary receives the policy's full face amount even if there is an outstanding policy loan.

Which statement about workers' compensation disability benefits is correct? Employers must contribute to the state's workers' compensation program. Both occupational and nonoccupational disabilities may qualify for benefits. Disabled workers must sue their employer for benefits. Benefits may include rehabilitation services and replacement income.

Benefits may include rehabilitation services and replacement income.

Eli, age 80, lives at home and can no longer dress, bathe, or eat by himself. What will happen if he submits a claim for benefits under his individual long-term care policy? Benefits will be payable because he suffers from cognitive impairment. Benefits will be payable because he cannot perform three activities of daily living. Benefits will not be payable because he lives at home. Benefits will not be payable because he must be unable to perform at least four activities of daily living.

Benefits will be payable because he cannot perform three activities of daily living.

Bill recently purchased an indeterminate premium whole life insurance policy. Which one of the following statements about his policy is correct? Bill's policy was issued with a low introductory premium that may periodically increase over time, but which will never be higher than a guaranteed maximum rate. Bill's policy was issued with a premium that will be level for most of the policy period but may be reduced under certain conditions. Bill will pay a low initial fixed premium for several years, at which point there will be a one-time increase in the premium that is guaranteed to remain level thereafter. Bill's policy was issued with a high introductory premium that will be reduced as the insurer's actual experience is known.

Bill's policy was issued with a low introductory premium that may periodically increase over time, but which will never be higher than a guaranteed maximum rate.

Dave receives Social Security retirement benefits. His wife Cathy is still working. Which statement about Cathy's Social Security spousal benefit is CORRECT? Cathy must be at least age 65 to receive the benefit. Cathy can choose either the spousal benefit or the worker's benefit. Cathy's benefit is 100 percent of Dave's paid-in allowance (PIA). Cathy can claim the benefit because she is still working.

Cathy can choose either the spousal benefit or the worker's benefit.

Which statement about Roth IRAs is correct? Earnings on contributions are taxed at capital gains tax rates when withdrawn. Contributions, but not earnings, are received tax free when withdrawn. Contributions to a Roth IRA cannot be deducted. Contributions to a Roth IRA are deductible if the IRA owner meets the adjusted gross income limits.

Contributions to a Roth IRA cannot be deducted.

Which one of the following statements most correctly describes how interest-sensitive whole life and current assumption whole life insurance differ? Neither current assumption whole life nor interest-sensitive whole life permit changes to the policy's death benefit. Only current assumption policies include an interest crediting feature. Current assumption whole life's premium can change over time, while the premium for interest-sensitive whole life does not change. Current assumption policies guarantee minimum cash values while interest-sensitive policies do not guarantee a minimum cash value.

Current assumption policies guarantee minimum cash values while interest-sensitive policies do not guarantee a minimum cash value.

Which of the following statements regarding the life insurance needs analysis is correct? Most people do not need an insurance needs analysis because Social Security benefit payments will generally provide most of the ongoing income that surviving dependents might need. Determining the ongoing income needs of surviving dependents is a critical part of the needs approach to life insurance needs analysis. The human life value approach is best suited for calculating how much ongoing income a surviving family needs. Because it includes an estimate of a person's net future earnings, the human life value approach is best suited for determining surviving dependents' ongoing income needs.

Determining the ongoing income needs of surviving dependents is a critical part of the needs approach to life insurance needs analysis.

All the following statements regarding life insurance policy dividends are correct EXCEPT: Dividends are guaranteed. Interest earned on dividends left with the insurer is taxable. Participating life insurance policies include provisions that enable the policyowner to choose how he or she wants to apply any declared policy dividends. Dividends are generally received income tax free.

Dividends are guaranteed.

Which federal law regulates group health plans and protects their enrollees? ADEA ERISA FMLA COBRA

ERISA

Which statement is correct about the MIB (Medical Information Bureau)? It collects medical information about insurance applicants. It reports applicants' claim histories. It makes its consumer information available to physicians. It compiles information about applicants' credit histories, lifestyles, and financial conditions.

It collects medical information about insurance applicants.

The following statements about flexible spending accounts (FSAs) are correct, EXCEPT: Employees can use FSA funds to pay costs that their employer's health plan covers. Employees can use FSA funds to pay for partially covered costs. An FSA is a group benefit that an employer can offer to its employees. An FSA allows employee contributions on a pre-tax basis.

Employees can use FSA funds to pay costs that their employer's health plan covers.

Which statement regarding an insurer's general account is correct? Insurers invest a large percentage of their general account funds in risky investments that offer the potential of higher returns. General account funds are invested only in safe, secure long-term assets such as U.S. government securities, blue-chip dividend-producing stocks, and investment-grade bonds. Insurers try to achieve a balance in their general account investments, allocating half to risky investments and half to extremely conservative interest-bearing accounts. General account funds are invested only in the most conservative assets available, such as bank savings accounts and CDs.

General account funds are invested only in safe, secure long-term assets such as U.S. government securities, blue-chip dividend-producing stocks, and investment-grade bonds.

How does health insurance differ from life insurance? Only one type of health insurance is available. Health insurance protects against financial loss. Health insurance protects against the unexpected. Health insurance protects against risks that may arise more than once in a lifetime.

Health insurance protects against risks that may arise more than once in a lifetime.

Why does an individual health insurance policy have a probationary period? It gives the insurer time to decide whether to accept the risk. It lets the insurer assess the level of risk. It helps the insurer determine the insured's financial condition. It helps the insurer avoid adverse selection.

It helps the insurer avoid adverse selection.

Zelda, a producer selling health insurance, assures a prospective applicant that the insurance company she represents is backed by the protections of the Nebraska Life and Health Insurance Guaranty Association. Which of the following statements is true about this kind of assurance? It is highly regulated by the Insurance Department. It is required when selling to Medicare-eligible individuals. It is recommended when selling health insurance. It is prohibited at all times.

It is prohibited at all times.

To be eligible to set up a SIMPLE plan, a business has to meet which one of the following basic requirements? It must employ no more than 100 people. It must already have a qualified plan in place that it will be replacing with the SIMPLE plan. It must have reported a profit on its tax returns the previous two years. It must be organized as an S corporation.

It must employ no more than 100 people.

Which of the following statements correctly describes the accidental death benefit (ADB) rider on a life insurance policy? It pays benefits if the insured dies unexpectedly as result of an accident or a sudden illness. It pays benefits if the insured dies as result of an accident or a self-inflicted injury. It pays benefits only in the event of accidental death. It pays benefits if the insured suffers a disabling injury, permanent dismemberment, or death resulting from an accident.

It pays benefits only in the event of accidental death.

Jim, age 45, is single and earned $50,000 this year. He owns both a Roth IRA and a traditional IRA. Which statement is correct? Jim can contribute only to his traditional IRA this year. Jim cannot contribute to either his traditional IRA or his Roth IRA this year. Jim can contribute only to his Roth IRA this year. Jim can contribute to both his traditional IRA and Roth IRA, provided the total amount contributed does not exceed the overall contribution limit.

Jim can contribute to both his traditional IRA and Roth IRA, provided the total amount contributed does not exceed the overall contribution limit.

Joe is employed by Delta Motors, Inc. He participates in Delta's group health insurance plan for employees. What should this plan be considered? Joe's primary plan Joe's basic provider Joe's secondary plan Joe's principal provider

Joe's primary plan

What happens to a group health insurance plan when members leave the group? The group's premiums will immediately decrease. Nothing will happen. A new group plan must be issued. The group's premiums will immediately increase.

Nothing will happen.

Which Medicare supplement plan covers the copayment for the 61st through 90th day of hospitalization? Plans A, B, and C only Plan C only Plans A and B only Plans A through N

Plans A through N

Which of the following statements about the renewability of small group plans is NOT true? Plans can be canceled only after the insurer provides 180 days' prior notice. Plans can be canceled due to fraud by the policyholder. Plans can be canceled due to noncompliance with the insurer's minimum participation requirements. Plans can be canceled for nonpayment of premiums.

Plans can be canceled only after the insurer provides 180 days' prior notice.

Which statement is NOT correct about the tax treatment of business overhead expense (BOE) insurance? The premiums are an ordinary and necessary business expense. Premiums cannot be deducted. The business expenses that the insurance covers are ordinary and necessary. Benefits are taxable income.

Premiums cannot be deducted.

All the following statements regarding Section 529 prepaid tuition plans are correct EXCEPT: Prepaid tuition plans typically limit a child's choice of colleges to in-state schools. Prepaid tuition plans cover tuition and mandatory fees only (not room and board or books). Prepaid tuition plans can be used to cover elementary and secondary school tuitions as well as college tuitions. Prepaid tuition plans let parents "prepay" a child's tuition at participating in-state public colleges and universities.

Prepaid tuition plans can be used to cover elementary and secondary school tuitions as well as college tuitions.

Which of the following best typifies the use of a structured settlement annuity? Carl wants to save money in a financial product that will grow on a tax-deferred basis and, at retirement, provide him with income that he cannot outlive. Dick recently retired and wants to take his vested retirement plan money and divide it between a lump-sum payment and payments made over his lifetime. Shirley was paralyzed in a car accident, and a jury awarded her $2 million, which must be paid to her over a 20-year period. Rachel wants to use a portion of her monthly annuity payment to fund a life insurance policy in which her husband is the beneficiary.

Shirley was paralyzed in a car accident, and a jury awarded her $2 million, which must be paid to her over a 20-year period.

All the following statements about family term riders with life insurance are correct EXCEPT: The policyowner can add or drop family members on a family term rider but must prove insurability if adding insureds other than newborn children. Children covered by this rider can convert their coverage to permanent coverage at age 21 without proof of insurability. A family term rider essentially combines the coverages of another insured rider and a children's term rider into a single rider. Spouses are provided more coverage than children under a family term rider.

Spouses are provided more coverage than children under a family term rider.

What is the only restriction on naming an annuitant? The annuitant must be a natural person. The annuitant can be a natural or non-natural person. The annuitant must not be related to the owner. The annuitant must be related to the owner.

The annuitant must be a natural person.

Which of the following is NOT a condition for extending health coverage of a child beyond the limiting age? The child is married. The child is mentally retarded. The child remains dependent on the insured. The child is physically handicapped.

The child is married.

To be eligible to participate in an employer's Simplified Employee Pension (SEP) plan, an employee must meet all the following requirements EXCEPT: The employee may not be a key employee or executive. The employee must have worked for the employer during at least three of the previous five years. The employee must have received a minimum specified amount in annual compensation. The employee must be 21 or older.

The employee may not be a key employee or executive.

How do employees contribute to an employer's Section 125 cafeteria plan? They pay into a common fund. The employer reduces their salary after taxes. They pay an annual premium with after-tax dollars. The employer withholds part of their pre-tax salary.

The employer withholds part of their pre-tax salary.

he exclusion ratio applies until all principal in the annuity contract has been paid out. After that, what happens? The annuity will be paid up, and no further taxes will apply. The full amount of future annuity payments is income tax free. The full amount of future annuity payments is treated as taxable income. The annuity contract is canceled.

The full amount of future annuity payments is treated as taxable income.

When might an insurer remove an impairment rider from a health insurance policy? The insurer's financial condition improves. The insured's health improves. The insured pays an additional premium to cover the impairment. The insured buys a specified amount of life insurance from the insurer.

The insured's health improves.

What does the unpaid premium provision let the insurer do about overdue premiums when paying a claim? The insurer can deduct the premium amount from the benefit payment. The insurer can take legal action to collect the unpaid premium. The insurer will can add an additional fee to the amount of the unpaid premium. The insurer can attach a notice of past-due premium to the claim payment.

The insurer can deduct the premium amount from the benefit payment.

Which statement is CORRECT about a guaranteed renewable disability income policy? The insurer can increase the premium if it increases the premium for all policies in the same class. The insurer can never reduce the benefits. The insurer can never increase the premium. The insurer can increase the premium only if the insured makes a claim.

The insurer can increase the premium if it increases the premium for all policies in the same class.

Debbie owns a noncancelable individual disability income policy. She receives benefits for one year and then returns to work. Which statement is correct about the policy's renewal? The insurer can reduce the benefits. The insurer can increase the premium. The insurer can cancel the policy. The insurer must renew the policy if Debbie pays the premium.

The insurer must renew the policy if Debbie pays the premium.

Which of the following will happen if the outstanding balance of a whole life insurance policy loan, including accrued interest, ever exceeds the policy's cash value? The policy will automatically go on the extended term option. The policy will be surrendered for cash. The policy will remain in effect. The insurer will cancel the policy.

The insurer will cancel the policy.

All of the following statements about annuities are correct, EXCEPT: The primary purpose of an annuity is to guarantee the accumulation of money over time. Annuities are not life insurance. An annuity converts a sum of money into a series of income payments. Annuities are sold by life insurance agents and are issued by life insurance companies.

The primary purpose of an annuity is to guarantee the accumulation of money over time.

Four shareholders of ABC Corporation, who each own a $1,000,000 interest in the company, enter into a stock redemption agreement funded with life insurance. If one shareholder dies six months later, all the following statements are correct EXCEPT: This is a form of entity-purchase buy-sell plan. The insurer will pay the $1,000,000 death benefit from the deceased owner's policy to ABC Corporation. Each of the surviving shareholders will then own a one-third share of ABC Corporation. The three remaining shareholders will buy the deceased owner's interest from his estate

The three remaining shareholders will buy the deceased owner's interest from his estate

Which of the following most accurately describes the standard life insurance policy war clause? The war exclusion excludes paying the death benefit if the insured dies while in the military, but only if there is a declared war in effect. The war exclusion excludes paying the death benefit if the insured dies when there is a declared war in effect. The war exclusion excludes paying the death benefit only if the death is the direct result of war action. The war exclusion excludes paying the death benefit if the insured dies while in the military, whether or not there is a declared war in effect.

The war exclusion excludes paying the death benefit only if the death is the direct result of war action.

Why do most insurers require a waiting period of four to six months before the disability income benefit rider begins payments? They want to control claims by eliminating claims for short-term disabilities. They must meet federal disability waiting period requirements. They want to eliminate disability income rider claims by letting disabled insureds die before qualifying for benefit payments. They want to get at least six months of insurance premiums before they pay for the disability.

They want to control claims by eliminating claims for short-term disabilities.

Sally owns a $750,000 life insurance policy that names her son as beneficiary. Which statement correctly describes how the policy death benefit will be treated in Sally's estate when she dies? They will be included in Sally's estate but not subject to taxation because life insurance death benefits are tax free. They will not be included in Sally's estate and therefore not subject to estate taxation. They will be included in Sally's estate and subject to estate taxation regardless of the value of her estate. They will be included in Sally's estate but whether or not they are subject to estate taxation depends on the value of her estate.

They will be included in Sally's estate but whether or not they are subject to estate taxation depends on the value of her estate.

Jones is the policyowner and insured of a life insurance policy that contains a standard suicide provision. He commits suicide 18 months after the policy was issued, Jones's beneficiary will get which of the following from the insurer? nothing a return of the premiums paid only the full death benefit a return of premiums paid, plus interest

a return of premiums paid, plus interest

Alicia is covered by a Nebraska Health Insurance Pool policy and incurs expenses for the following listed items. Which type of care or services will not be covered by her policy? physical therapy a routine physical exam prescription medications X-rays

a routine physical exam

Lottery winners who want to receive their winnings in installment payments over a 20-year period will most likely be set up with: a structured settlement, using an immediate fixed annuity, that guarantees the distribution of payments over the specified period a stream of income paid by the lottery commission from a fund consisting of the announced lottery prize a deferred annuity from an insurance company that will annuitize in 20 years an immediate variable annuity that offers the potential for the lottery winner to receive even more than the announced prize winnings

a structured settlement, using an immediate fixed annuity, that guarantees the distribution of payments over the specified period

The terms "double indemnity rider" and "triple indemnity rider" are common names for which type of life insurance policy rider? accidental death benefit rider return of premium rider cost-of-living rider guaranteed insurability rider

accidental death benefit rider

Premiums that are paid into a variable annuity acquire: sub-account units annuity units cash value units accumulation units

accumulation units

When completing an application for life insurance, Andrew states that he is 39 years old, though he is actually 45. When the insurer discovers this, what will it probably do? adjust the benefits notify the Director increase the premium cancel the policy

adjust the benefits

U.S. tax law requires IRA owners and other qualified plan participants to start taking required minimum distributions from their plans by April 1 of the year following the year the individual turns: age 70½ age 66 age 59½ age 62

age 70½

What must Medicare supplement policies do whenever Medicare adjusts its deductibles and copayment requirements? reduce benefits to avoid duplicating Medicare's adjustments align benefits to match the adjustments increase benefits to exceed Medicare's deductibles and copayment requirements maintain benefits

align benefits to match the adjustments

Which of the following correctly describes a life insurance policy dividend? an insurer's revenues in excess of costs an amount returned to a policyowner out of an insurance company's surplus funds, effectively representing unused premiums an amount paid to insurance company stockholders annually if profit margins are met a distribution of insurer profit to those holding stock in the company

an amount returned to a policyowner out of an insurance company's surplus funds, effectively representing unused premiums

Which rider adds a death benefit to a disability income policy? waiver of premium rider cost-of-living adjustment rider future increase option rider annually renewable term rider

annually renewable term rider

A fixed deferred annuity that has a guaranteed interest rate of 3 percent and a current declared rate of 5 percent can adjust the current declared rate: never any time after the initial rate period only if the current rate drops to the guaranteed rate of 3 percent only every two years

any time after the initial rate period

Which form of health insurance bases benefits on the indemnification of the insured? managed care plans Medicare supplement policies HMOs and PPOs basic medical expense insurance

basic medical expense insurance

Which of the following play a role in the regulation of variable insurance product sales? both FINRA and state insurance departments Financial Industry Regulatory Authority (FINRA) only state insurance departments only the Securities Exchange Commission (SEC) only

both FINRA and state insurance departments

Workers' compensation plans offer all of the following benefits to covered workers EXCEPT: medical treatment wage replacement benefits for disability vocational rehabilitation business overhead expense coverage

business overhead expense coverage

Dave has a small business. What kind of insurance will cover the monthly costs of operating the business if he is disabled? long-term care insurance disability buy-out insurance business overhead expense insurance key person disability insurance

business overhead expense insurance

Which of the following is the actuary's first step in determining the premium charged for a policy? calculate the expected profit calculate the annual policy dividend calculate the net premium calculate the gross premium

calculate the net premium

Hannah participates in her company's retirement plan, which provides for 100 percent vesting after five years with no vesting prior to that. What is this type of vesting schedule called? accelerated vesting graduated vesting cliff vesting qualified vesting

cliff vesting

Jim plans to withdraw $3,000 from his Section 529 education savings plan this year to pay for some of his college expenses. He can withdraw the money tax free to pay for all of the following, EXCEPT: room and board clothes books tuition

clothes

Which type of group health insurance plan bases premiums and benefits on the claims experience of similar groups in the region? experience-rated plan group-rated plan regional-rated plan community-rated plan

community-rated plan

Brenda files a claim with her health insurer. Her premium was due last week. What will the insurer do when processing her claim? reject the claim deduct the premium pay the claim in full cancel coverage

deduct the premium

The activities a producer performs to support the insurance company in learning all it can about the applicant when seeking applications for insurance are generally called: fiduciary process due diligence field underwriting agency development

field underwriting

A totally disabled person must pass a waiting period of how long before Social Security disability benefits are paid? five months four months two months three months

five months

Which of the following requires monthly fixed premium payments of a specified amount, produces a predetermined amount of income upon annuitization, and has traditionally been used to supplement retirement income? immediate annuity single-premium deferred annuity fixed premium deferred annuity flexible premium deferred annuity

fixed premium deferred annuity

Under which settlement option is an income paid until the second of two annuitants dies, at which point no further payments are made to anyone? joint and survivor with period certain option joint life option joint and survivor option life income with period certain option

joint and survivor option

What kind of insurance policy pays benefits to the business owner if an essential manager were to become disabled? business overhead expense insurance disability buy-out insurance disability reducing term insurance key person disability income insurance

key person disability income insurance

A group short-term disability income plan (STD) typically has a maximum benefit period of: 4 years 1 year 6 months less than 2 years

less than 2 years

Which rider is NOT commonly found in a disability income policy? return of premium rider guaranteed insurability rider long-term care rider social insurance supplement rider

long-term care rider

The purpose of the social insurance supplement (SIS) rider on a disability income (DI) policy is to: duplicate Social Security disability benefits pay additional benefits if the insured cannot qualify for Social Security disability benefits pay additional monthly benefits until Social Security disability benefits begin help the insured qualify for Social Security disability benefits

pay additional monthly benefits until Social Security disability benefits begin

Which provision gives the insurer the right to cancel coverage? renewability provision probationary period consideration clause elimination period

renewability provision

A group disability income plan with a maximum benefit period of less than two years is what type of plan? short-term disability plan occupational plan nonoccupational plan long-term disability plan

short-term disability plan

To be considered currently insured, a worker must have earned how many quarters of coverage in the 13-quarter period before he or she dies? 13 40 six one for each year since turning age 21

six

A life insurance policy cannot be backdated more how long before the original application was made? nine months one year three months six months

six months

Which level of long-term care provides continuous, 24-hour care delivered by licensed medical professionals who are under a doctor's supervision? intermediate care custodial care remedial care skilled nursing care

skilled nursing care

A currently insured worker is eligible for which of the following Social Security benefits? survivor death benefits, disability benefits, and retirement benefits survivor death benefits and disability benefits survivor death benefits only retirement benefits only

survivor death benefits only

In which one of the following ways are Section 529 prepaid tuition plans and education savings plans similar? types of education-related expenses covered types of educational institutions where the plan's funds can be used account funding requirements tax treatment of distributions

tax treatment of distributions

A business overhead expense policy does NOT provide: monthly benefit payments a brief elimination period tax-free benefits a tax deduction for premium payments

tax-free benefits

Sue, an annuity owner, names her 15-year-old son and 10-year-old daughter as joint annuitants of her contract. Upon whose life (or lives) are income payments determined? Sue's son's life Sue's daughter's life Sue's life the joint life expectancy of Sue's son and daughter

the joint life expectancy of Sue's son and daughter

George purchased an annuity in which his wife will receive income for as long as she lives. In this scenario, what is George most correctly called? the beneficiary the agent the owner the annuitant

the owner

Besides select policy anniversary dates, a life insurance guaranteed insurability rider usually permits special alternative option dates that typically include all the following, EXCEPT: the policyowner's marriage the policyowner's adoption of a child the birth of the policyowner's child the policyowner's loss of a job

the policyowner's loss of a job

An application for health insurance requires the signature of: only the underwriter. the proposed insured and the producer only the proposed insured only the producer

the proposed insured and the producer

What would NOT be a reason for a business owner to buy business disability insurance? to buy out a disabled owner's share of the business to get a tax deduction for the business to continue business operations if the owner is disabled to protect the business from financial loss if the owner or a key person is disabled

to get a tax deduction for the business

What is the principal purpose of Medicaid? to establish a state-run health care agency to provide a low-cost alternative to private health insurance companies to provide health care and health-related services to uninsurable people to provide health care and health-related services to people with low incomes

to provide health care and health-related services to people with low incomes

All the following reasons that a business might buy life insurance represent a valid insurable interest, EXCEPT: to insure partners' lives to provide funds to buy out a deceased partner's interest to provide insurance coverage for large-volume customers to insure the lives of key employees or owners to insure liquidity in case one of the owners or key employees dies

to provide insurance coverage for large-volume customers

An insurer may issue a group accident and health insurance policy to an employer if at least how many employees are insured? five two ten one

two

The insurance company function responsible for evaluating the insurable risks and assigning appropriate premium rates is the: actuarial division underwriting division sales claims

underwriting

All of the following statements regarding reinsurance are correct except: -Claims are paid to the policyowner separately by each insurer participating in the reinsurance agreement -The insurer seeking to transfer some of its risk to another insurer is known as the ceding company -resinsurance is a risk-sharing process used by insurance companies -the insurer accepting some of the risk being transferred from another insurer is known as the reinsuring company

-Claims are paid to the policyowner separately by each insurer participating in the reinsurance agreement

Agent Thompson received a letter from the Director of Insurance stating that his license would not be renewed. Within how many days must the Director hold a hearing on the matter if requested by Agent Thompson? 30 20 45 10

30 The Director must give written notice to an applicant or licensee if he or she decides to not renew or deny an application for a license. The applicant or licensee may request a hearing to determine the reasonableness of the Director's action, which must be held within 30 days.

All the following are standard life insurance policy exclusions EXCEPT: suicide provision hazardous hobby exclusion war clause 6-month legal action limit provision

6-month legal action limit provision

Ralph, Jerry, and Paula are primary and equal beneficiaries of the $600,000 insurance policy on the life of their mother, Judy. Ralph dies before his mother. He leaves two children, Tim and Hal. Judy's life insurance policy designates the death benefit per capita. How will the insurer distribute the policy benefits? Ralph's $200,000 share will pass equally to his two children when Judy dies. Jerry, Paula, Tim, and Hal will divide the benefits equally among them. Tim and Hal will divide the death benefit between them. Jerry and Paula will each receive $300,000

Jerry and Paula will each receive $300,000

Which of the following statements correctly describes the relationship, if any, between the application and the insurance contract? The application is not part of the contract, but statements made on it can be used to void the contract if they are found to be misrepresentations. The application is part of the entire contract. The application is the entire contract. The application is not a part of the contract, and once the policy is issued, nothing on it can be used to void the contract.

The application is part of the entire contract.

The facility of payment clause of a life insurance policy, allowing an insurance company to determine who should receive a death benefit payment if a valid beneficiary is not available, could be applied in all the following situations EXCEPT: The sole beneficiary dies before the policyowner and the policyowner did not name a contingent beneficiary. The insurer learns, when paying the claim, that the sole designated beneficiary had no insurable interest in the insured at the time of death. The sole beneficiary is a charitable organization that no longer exists at the time of the insured's death. The sole beneficiary is a minor at the time of the insured's death.

The insurer learns, when paying the claim, that the sole designated beneficiary had no insurable interest in the insured at the time of death.

Jerry names a trust as the beneficiary of his life insurance. When Jerry dies, how will this trust work? The trustee invests the insurance benefit in securities. A trust cannot be a beneficiary; Jerry must name an individual or business. The insurer pays the death benefit to the trustee who manages the assets for the trust's beneficiaries, named by Jerry when the trust was formed. The trust passes the insurance benefit to Jerry's next of kin.

The insurer pays the death benefit to the trustee who manages the assets for the trust's beneficiaries, named by Jerry when the trust was formed.

If an applicant for life insurance unintentionally misstates her age on her life insurance application, what will the insurer do if this is discovered after the end of the contestability period? The insurer will re-calculate the death benefit. Nothing, because the contestability period has ended. The insurer will adjust the issue date to compensate for the loss of interest and expenses. The insurer will void the policy.

The insurer will re-calculate the death benefit.

All of the following can sponsor group life insurance plans EXCEPT: municipalities individual employers neighborhoods labor unions

neighborhoods

A policyowner who lapses his whole life policy and applies its cash value to buy paid-up whole life coverage has chosen which of the following? cash surrender option cash surrender and withdrawal provision extended term option reduced paid-up option

reduced paid-up option

How does a family income policy differ from a family maintenance policy? A family income policy combines whole life insurance with decreasing term insurance, while a family maintenance policy combines whole life and level term insurance. A family income policy combines whole life insurance with level term insurance, while a family maintenance policy combines whole life and decreasing term. A family income policy combines whole life insurance with increasing term insurance, while a family maintenance policy combines whole life and level term insurance. A family income policy combines whole life insurance with increasing term insurance, while a family maintenance policy combines whole life and decreasing term.

A family income policy combines whole life insurance with decreasing term insurance, while a family maintenance policy combines whole life and level term insurance.

Under which of the following settlement options are the insurer's responsibilities under the contract fulfilled upon the death of the insured? fixed amount fixed period lump-sum cash payment interest only

lump-sum cash payment

All of the following statements regarding the career agency distribution system are correct EXCEPT: -It uses agents who primarily if not exclusively represent one insurer -There are two types, the general agency system and the managerial system -The managerial form of career agency system uses company employees as the agency managers -Personal producing general agents are commonly hired to manage career agencies.

-Personal producing general agents are commonly hired to manage career agencies.

All of the following statements regarding apparent authority are correct except: -The insurer is not liable for an agent's acts when he or she is acting under apparent authority -the insurer does not intend it -The agent's contract does not create it -A third party reasonably believes that the producer has it based on the reasonable statements and actions by the insurer and agent

-The insurer is not liable for an agent's acts when he or she is acting under apparent authority

The purpose for the Policy Summary, which must be given to every insurance applicant before an application is signed, is to: -disclose all the hidden costs associated with the policy being applied for -explain the general features, benefits, and conditions of the type of insurance being considered -explain the step-by-step process involved in purchasing the recommended product -provide buyers with details of the specific insurance contract they are considering for purchase

-provide buyers with details of the specific insurance contract they are considering for purchase

Which one of the following statements best describes if and when a traditional whole life insurance premium may change under the level premium concept? Premiums are either fixed or flexible at the option of the insurer. Premiums may vary each time they are due based on the insured's current insurability. Premiums may change if the risk to the insurer increases over time. Premiums are set and remain fixed over the full term of the premium-paying period.

Premiums are set and remain fixed over the full term of the premium-paying period.

Sasha, Kendall, Adam, and Julio are licensed producers in Nebraska. The Director would NOT be able to suspend or revoke which producer's license for engaging in the following acts? Julio, who violated an order issued by the Texas Commissioner of Insurance Sasha, who sold insurance policies to family members and friends this year Adam, who intentionally accepted insurance business from a friend who was not licensed Kendall, who failed to pay state income taxes this year

Sasha, who sold insurance policies to family members and friends this year The Director can revoke or suspend the licenses of producers who engage in all of the other listed acts but cannot suspend or revoke a license because a producer sells insurance to family and friends.

Under a joint life insurance policy, when does the insurer pay the death benefit? when the older insured dies upon the death of the insured who dies first upon the death of the insured who dies second when the younger insured dies

upon the death of the insured who dies first Under a joint life insurance policy, the insurer pays the death benefit upon the death of either insured, whoever dies first. The surviving insured has a conversion right, which allows him or her to buy an individual policy with the same or lesser face amount.

The requirement that an insurable interest must exist when life insurance is purchased is intended to prevent people from doing which of the following? designating an ineligible person as the policy beneficiary using life insurance as a speculative investment on another person's life overusing life insurance using life insurance to fund future cash needs

using life insurance as a speculative investment on another person's life

Most states require that a group have at least how many members to qualify for standard group health insurance? 12 10 100 50

10

When can a waiver of premium rider be added to a life insurance policy? any time after the policy is issued, subject to a maximum age stipulated in the policy only when the policy is issued up to one year after the policy is issued, regardless of age up to six months after the policy has been issued, regardless of age

any time after the policy is issued, subject to a maximum age stipulated in the policy

Which of the following is NOT a duty of the Director? licensing producers soliciting insurance contracts regulating insurers enforcing the insurance laws

soliciting insurance contracts

What is a terminally or chronically ill person who sells his or her life insurance policy through a viatical settlement known as? the viator the viatical broker the viatical settlement provider the viatical settlement purchaser

the viator

How long must insurers keep copies of illustrations used in selling life insurance policies? two years after the policy expires five years after the policy expires one year after the policy expires three years after the policy expires

three years after the policy expires

What is the purpose of the fiduciary in a group health insurance plan? to advise the enrollees to administer the plan in a financially responsible manner to process appeals to process claims

to administer the plan in a financially responsible manner

What is the main purpose of key person insurance? to add to an employee's salary at retirement to compensate the business for the loss of its key employee to compensate the key employee's family when he or she dies to provide retirement benefits to key employees

to compensate the business for the loss of its key employee

Which of the following is an example of an unauthorized insurance company in illinois? -company D, a canadian company that holds a certificate of authority in illinois -company b, an iowa based company that does not hold a certificate of authority in illinois and sells products that are not approved by the illinois insurance department -company A, an illinois-based company that holds a certificate of authority in illinois and 32 other states -company C, a florida based company that does not hold a certificate of authority illinois but whose products are approved by the illinois insurance department

-company b, an iowa based company that does not hold a certificate of authority in illinois and sells products that are not approved by the illinois insurance department

Failure to begin taking required minimum distributions (RMDs) from a qualified retirement plan when required can result is a penalty tax equal to: 10 percent of the difference between the amount that was taken and the RMD amount that should have been taken 50 percent of the difference between the amount that was taken and the RMD amount that should have been taken 50 percent of the RMD amount 10 percent of the RMD amount

50 percent of the difference between the amount that was taken and the RMD amount that should have been taken

What is the maximum length of time that a Medicare supplement policy can exclude individuals from coverage based on pre-existing medical conditions? 12 months 6 months 3 months 24 months

6 months

Which statement is correct about state administration of Medicaid? All states base Medicaid eligibility on financial need. Every state must have the same requirements for Medicaid eligibility. Every state provides the same Medicaid benefits. States cannot provide Medicaid assistance to anyone under age 65.

All states base Medicaid eligibility on financial need.

An endowment policy matures (endows) when its cash value equals its face amount, which may be: no earlier than the insured's age 120 only between ages 95 and 120 no earlier than the insured's age 95 at almost any age

At any age Endowment contracts are a special form of life insurance in which cash values grow rapidly, maturing at a date selected by the applicant that was typically age 21 (for college savings) or age 65 (for retirement savings).

Brian contributes 10 percent of his salary to his company's 401(k) plan. His employer contributes a matching contribution of 4 percent of his salary. All the following statements regarding this arrangement are correct, EXCEPT: Brian's contributions to his 401(k) plan account are made with pre-tax dollars. Brian will not be taxed this year on the amount that his employer contributed to his account. Brian's taxable income is reduced by the amount he contributed to his 401(k) plan account. Brian must be 100 percent vested in both his and his employer's contributions at all times.

Brian must be 100 percent vested in both his and his employer's contributions at all times.

Which statements is correct about underwriting group health insurance? Insurers consider the risk characteristics of each group member. Insurers examine group members to identify those engaging in adverse selection. Insurers consider the risk characteristics of the group as a whole. Insurers can exclude group members whose health is poor.

Insurers consider the risk characteristics of the group as a whole.

Which statement about the taxation of accidental death and dismemberment policy benefits is correct? Benefits paid in a lump sum are taxed. The death benefit is not taxed, but the dismemberment benefit is taxed. Interest earnings on benefits held by the insurer are taxed. The beneficiary pays income tax on the death benefit.

Interest earnings on benefits held by the insurer are taxed.

Holly just turned 65 and purchased a Medicare Select policy. Which statement correctly describes the features of her policy? It allows insureds to receive care from both network and nonnetwork providers on the same basis. It contains restricted network provisions. It provides limited preventive and emergency care. It operates on a pre-paid and fee-for-service basis.

It contains restricted network provisions.

What typically happens to the face amount of an indexed whole life insurance policy over time? It increases annually based on a fixed rate specified in the policy. It increases every year at the same rate as the national inflation rate. It increases annually to reflect increases in the consumer price index. It increases annually as long as the insured continues to prove insurability.

It increases annually to reflect increases in the consumer price index.

Which statement is correct about the Fair Credit Reporting Act? It prevents disclosure of the identity of those contacted during preparation of a consumer report. It prohibits the sharing of consumer credit information among insurers. It requires insurers to notify applicants when a consumer report has been requested. It prohibits applicants from disputing consumer credit reports.

It requires insurers to notify applicants when a consumer report has been requested.

Which type of health insurance plan is particularly suitable for the senior insurance market? long-term care term insurance Medicare plans managed care

Medicare plans

Agent Johns started offering potential clients courtside tickets to a professional basketball game in exchange for purchasing a life insurance policy. Which ethical sales practice has Agent Johns violated? replacement churning controlled business rebating

Rebating Offering anything of value that is not specified in the contract as an inducement to purchase insurance is considered rebating and is illegal.

Grace owns a fixed annuity and wants to exchange it for a variable annuity. What must she use to be sure no taxes are imposed? an annuity exchange a qualified conversion a free exchange Section 1035 exchange

Section 1035 exchange

The tax-free exchange of a life insurance policy for an annuity is sometimes called a: Section 1035 exchange Section 401(k) exchange Section 79 exchange Section 403(b) exchange

Section 1035 exchange

All of the following statements about the funding of Social Security benefits are correct, EXCEPT: The FICA tax is allocated between OASDI and Medicare. Social Security benefits are funded through payroll taxes. The FICA tax is split between a worker and his or her employer. Self-employed workers pay a lower FICA tax than employees.

Self-employed workers pay a lower FICA tax than employees.

Life insurance has been purchased by ABC Company on the lives of two partners, Hugh and Danny, and three key employees Eileen, Vern, and June. Which of the following would apply if Hugh and June were to leave the business? The company can only retain its coverage on June because she is not a principal of the company. The company could keep the life insurance it has on Hugh, since he is a principal of the company, but would have to drop June's coverage, because she is not. The company would have to drop its coverage for both Hugh and June within 30 days of their departures. The company could keep the life insurance it has on both Hugh and June, even though both are no longer employed there.

The company could keep the life insurance it has on both Hugh and June, even though both are no longer employed there.

What will cause a health insurance policy to lapse? The premium is not paid by the end of the grace period. The policyholder becomes uninsurable. The carrier decides to no longer insure the policyholder. The policyowner files for bankruptcy.

The premium is not paid by the end of the grace period.

All the following statements regarding the automatic premium loan (APL) are correct, EXCEPT: Some policies prohibit automatic premium loans from paying any more than a total of 12 monthly premiums. The policy's cash value must be at least equal to the unpaid premium for the automatic premium loan to be made. Some policies prohibit automatic premium loans from paying consecutive premiums. Under the APL, a policy loan is created to pay a premium on its due date.

Under the APL, a policy loan is created to pay a premium on its due date.

Alex sold an insurance policy before his license lapsed and earned a commission on the sale. Is he entitled to a commission if the policy is renewed? Yes, because his license was not revoked or suspended. No, because only one commission can be paid on a policy sale. No, because he is no longer licensed. Yes, because he was licensed when the policy was sold.

Yes, because he was licensed when the policy was sold.

In accordance with Section 1035 of the Tax Code, which of the following exchanges is permitted on a tax-free basis? a variable annuity for a variable life insurance policy a deferred market-value adjusted annuity for an immediate variable annuity a market-value adjusted annuity for a whole life insurance policy an equity-indexed annuity for an equity-indexed life insurance policy

a deferred market-value adjusted annuity for an immediate variable annuity

Who would NOT be eligible for Medicare enrollment? a person who has amyotrophic lateral sclerosis a person who is 65 years old a person with end-stage renal disease a person under age 65 who has received Social Security disability benefits for six months

a person under age 65 who has received Social Security disability benefits for six months

After Todd was injured in a car crash, he received occupational therapy to help him return to work. His disability income policy paid for this therapy because it had: an exclusion provision a rehabilitation provision a relation-to-earnings provision an elimination period

a rehabilitation provision

A health insurer, at its expense, may conduct a physical examination of the insured how often? at any time only during the underwriting period as often as reasonably necessary to investigate a claim only within the contestability period

as often as reasonably necessary to investigate a claim

You answered 25% of the questions correctly Question 1 How frequently must an insurer that issues variable annuities value the assets of the separate account used to pay benefits? at least annually at least semi-annually at least quarterly at least monthly

at least monthly

Which is the amount that is paid for dismemberment under an accidental death and dismemberment (AD&D) insurance policy? principal sum indemnity amount primary amount capital sum

capital sum

The evidence of coverage that an employee receives under an employer-sponsored group disability income (DI) plan is the: certificate of creditable coverage certificate of insurance proof of claim master policy

certificate of insurance

To receive tax-free benefits under a qualified LTC insurance policy, the insured must be: under treatment for a recurring medical condition chronically ill under a physician's care terminally ill

chronically ill

When selling a life insurance policy that replaces an existing policy, the producer must leave all of the following items with the applicant EXCEPT: originals or copies of marketing communications used in the sale confirmation that any existing insurers have been notified of the replacement Notice Regarding Replacement signed by the producer and applicant a printed copy of any electronically presented sales material

confirmation that any existing insurers have been notified of the replacement

A function of the other insurance with this insurer provision and the other insurance with other insurer(s) provision is to: coordinate benefits relate insurance to the insured's earnings allow for a change in the insured's occupation accommodate a misstatement of age or sex in the application

coordinate benefits

Like all health insurance plans, dental insurance plans exclude coverage for: diagnostic and preventive care, such as routine exams and cleanings cosmetic treatment, such as tooth alignment and whitening basic procedures such as fillings, extractions, and periodontal treatment oral surgery, such as root canals

cosmetic treatment, such as tooth alignment and whitening

Which of the following is NOT characteristic of a major medical plan? broad coverage of medical care and treatment coverage of cosmetic surgery no stated benefit limits maximum lifetime benefits that can exceed $1 million

coverage of cosmetic surgery

Which of the following can be funded with a single premium payment, a series of fixed premium payments, or flexible premium payments? retirement annuities single-premium immediate annuities immediate annuities deferred annuities

deferred annuities

The purpose of the insuring clause is to: list the exclusions from coverage describe the type and scope of coverage state the premium for the covered risks state the parties' consideration

describe the type and scope of coverage

With respect to annuities, the basic purpose for the exclusion ratio is to: determine if annuity payments are taxable determine the non-taxable portion of each annuity payment determine the taxable portion of each annuity payment determine the tax rate to be used in calculating the annuitant's tax liability of each annuity payment

determine the non-taxable portion of each annuity payment

Which type of group health insurance plan bases premium s and benefits on the group's claims experience? claims-rated plan. community-rated plan group-rated plan experience-rated plan

experience-rated plan

An insured's medical expense plan requires the insured to pay the medical care provider for each service rendered. The insurer then reimburses the insured. On what basis are benefits paid? fee-for-service specified comprehensive pre-paid

fee-for-service

Using the "needs approach" to determining lump-sum cash needs at death, a producer should consider all the following expenses EXCEPT: future food, clothing, and housing expenses final medical and funeral expenses estate taxes and estate settlement costs the insured's debt

future food, clothing, and housing expenses

All the following are types of riders that are available with most types of life insurance policies EXCEPT: guaranteed dividend rider cost-of-living rider accidental death benefit rider guaranteed insurability rider

guaranteed dividend rider

Which occupation would qualify for a disability income policy that pays benefits on the basis of the "own occupation" definition of disability? factory worker construction worker lawyer manual laborer

lawyer

A tax-qualified long-term care insurance policy lets policyowners deduct premiums as a medical expense while also receiving: unlimited tax-free benefits a premium credit upon policy renewal a partial premium refund if no claims are filed limited tax-free benefits

limited tax-free benefits

Which statement best describes the purpose for a business owning a key person disability income policy? reduce a key employee's need to buy personal disability income coverage provide key employees with a fringe benefit not available to rank-and-file employees provide the business with funds to use for any purpose upon a key employee's disability provide a key employee with the funds needed to buy the business from a disabled owner

provide the business with funds to use for any purpose upon a key employee's disability

An income replacement disability insurance policy pays a monthly benefit that equals: a flat monthly amount limited to half of monthly earnings before the disability the actual amount of income lost the principal sum stated in the policy a percentage of the insured's income before the disability

the actual amount of income lost

Before selling an annuity, a producer must make reasonable efforts to obtain information about all of the following EXCEPT: the prospect's financial status the prospect's investment objectives the prospect's tax status the prospect's marital status

the prospect's marital status

Unfair discrimination in health insurance transactions can occur when an insurer differentiates charges or benefits among persons of which group? the same age and sex the same occupation the same class and risk the same geographical location

the same class and risk

The Director of Insurance can examine the business transactions, accounts, and records of insurers as often as necessary, but must do so at least once in how many years? one ten five four

five

Acme Insurance and Apogee Insurance agree to offer different premium rates for persons of equal risk within a particular class. They also agree to limit benefits paid to insureds within this class if the insureds live in certain counties of Nebraska. What type of activity are Acme and Apogee engaging in? false advertising unfair and prohibited business practices acceptable marketing and underwriting practices insurance fraud

unfair and prohibited business practices Acme and Apogee are agreeing to an unreasonable restraint of trade in the insurance business of Nebraska. Furthermore, they are engaging in unfair discrimination by charging persons of the same class and substantially equal risk different premium rates and by paying different benefits to persons in this class.

In accordance with Section 1035 of the Tax Code, all the following exchanges are permitted on a tax-free basis EXCEPT: A variable life insurance policy exchanged for a deferred fixed annuity. A deferred variable annuity exchanged for an immediate fixed annuity. A universal life insurance policy exchanged for a whole life insurance policy. A deferred annuity exchanged for a whole life insurance policy.

A deferred annuity exchanged for a whole life insurance policy.

Which statement is correct about the tax treatment of group disability income benefits? An employee pays income tax on the percentage of benefits equal to the percentage of premium the employer paid. An employee pays income tax on all benefits. An employee does not pay income tax on the benefits while disabled. An employee pays income tax on the percentage of benefits equal to the percentage of premium the employee paid.

An employee pays income tax on the percentage of benefits equal to the percentage of premium the employer paid.

Which of the following statements correctly describes the tax treatment of withdrawals from a modified endowment contract (MEC)? Withdrawals from an MEC are treated on a LIFO (last-in/first-out) basis; in addition to income tax, MEC withdrawals taken before the owner's age 62 are subject to a 20 percent penalty. Withdrawals from an MEC are considered to be withdrawals of premiums first, which are taxable; only after all premiums have been distributed (and taxed) are withdrawn amounts deemed a non-taxable return of earned interest. Full withdrawals and policy loans from a MEC are treated on a LIFO (last-in/first-out) basis; in addition to income tax, MEC withdrawals taken before the owner's age 59½ are subject to a 10 percent penalty. The 20 percent tax penalty is waived if the policyowner is disabled. It is also waived if the withdrawal is taken in a lump sum.

Full withdrawals and policy loans from a MEC are treated on a LIFO (last-in/first-out) basis; in addition to income tax, MEC withdrawals taken before the owner's age 59½ are subject to a 10 percent penalty.

All of the following statements about credit life insurance are correct EXCEPT: It is usually sold in the form of decreasing term insurance. It is only offered on a group basis. As the borrower's loan balance decreases, the amount of coverage also decreases. The creditor is the policyowner and the borrower is the insured.

It is ONLY offered on a group basis is NOT correct

Julia signed a viatical settlement agreement on May 1. Two weeks later, she decides that she no longer wishes to sell her policy. What are her options? Julia may cancel the contract only if the viatical settlement provider consents. Julia cannot cancel the contract because the cancelation period has expired. Julia may cancel the contract and can keep any settlement proceeds received. Julia may cancel the contract because the cancelation period has not expired.

Julia may cancel the contract because the cancelation period has not expired.

Mattie received proceeds from her viatical settlement agreement on May 1. Three weeks later, she decides that she no longer wishes to sell her policy. What are her options? Mattie may cancel the contract and can keep any settlement proceeds received. Mattie may cancel the contract only if the viatical settlement provider consents. Mattie cannot cancel the contract because the cancelation period has expired. Mattie may cancel the contract because the cancelation period has not expired.

Mattie may cancel the contract because the cancelation period has not expired.

Which statement does NOT describe Medicare supplement policies? Insurers selling Medicare supplement policies must sell Plan A. Medicare adjusts its deductibles and copayments to match insurers' benefits. Plan A provides the core benefits of Medicare supplement insurance. Medicare supplement policies are guaranteed renewable.

Medicare adjusts its deductibles and copayments to match insurers' benefits.

Which health insurance policy supports and improves Medicare coverage? disability income policy accidental death and dismemberment (AD&D) policy medical expense policy Medicare supplement policy

Medicare supplement policy

Which statement regarding defined contribution qualified plans is correct? Participants are always fully vested in their contributions, but employer contributions may not fully vest for several years. The retirement benefit is tax free if distributed at the participant's full retirement age. Participants may choose to keep account values undistributed, to be passed on tax free to heirs. They are required to distribute benefits in the form of lifetime annuitized payments.

Participants are always fully vested in their contributions, but employer contributions may not fully vest for several years.

When looking at how much income his family would need if he were to die prematurely, Tom discovered that the Social Security survivors' benefit would not give them enough ongoing income. If securing his family's financial future is his top priority, which of the following statements describes Tom's best response? Tom should try to lower his monthly expenses and increase the amount of Social Security withheld from his paychecks to ensure his family will have enough income if he dies. Tom should apply to the Social Security Administration now to ensure that his family will receive higher benefits if he dies. Tom can buy additional life insurance to cover the amount needed to provide an adequate stream of income upon his death. Tom can arrange to have his 401(k) account distribute its account value to his surviving dependents in monthly payments.

Tom can buy additional life insurance to cover the amount needed to provide an adequate stream of income upon his death.

Which statement about variable annuities (VAs) is correct? Variable annuities can only be purchased as deferred contracts. With a variable annuity, annuity income payments may increase or decrease based on the investment performance of the sub-accounts supporting them. Variable annuities offer fewer income settlement options than fixed annuities. While VAs may yield higher returns than a fixed annuity, both types guarantee the annuity's principal.

With a variable annuity, annuity income payments may increase or decrease based on the investment performance of the sub-accounts supporting them.

All the following statements regarding deferred annuity beneficiaries are correct EXCEPT: With owner-driven contracts, the owner's death before annuitization triggers payment of the death benefit to the beneficiary, even if the designated annuitant is still alive. With an annuitant-driven contract, the beneficiary must annuitize the contract immediately if the annuitant dies before annuitization. With annuitant-driven contracts, the annuitant's death before annuitization triggers payment of the contract value to the beneficiary even if the owner is still alive. The distinction between annuitant-driven and owner-driven deferred annuities disappears if the owner and annuitant are the same person.

With an annuitant-driven contract, the beneficiary must annuitize the contract immediately if the annuitant dies before annuitization.

Which of the following is guaranteed under most variable annuity contracts? level monthly income payments each sub-account's net asset value a death benefit, if the owner or annuitant dies before the contract is annuitized a minimum interest rate

a death benefit, if the owner or annuitant dies before the contract is annuitized

How is increasing term life insurance normally sold? as a rider attached to a permanent life insurance policy as an endorsement as a stand-alone term life insurance policy as a permanent insurance policy

as a rider attached to a permanent life insurance policy

To be eligible for payments under a life insurance policy's long-term care rider, the insured must be certified as unable to perform which of the following? at least five activities of daily living for at least 30 days at least two activities of daily living for at least 30 days at least five activities of daily living for at least 90 days at least two activities of daily living for at least 90 days

at least two activities of daily living for at least 90 days

When acting in the best interests of applicants and insureds, producers must: help applicants get rebates for buying policies explain the features and benefits of other insurers' policies give all important information about a proposed policy avoid replacing any insurance policies

give all important information about a proposed policy

The Acme Company sets up a plan that provides annuities to its employees when they retire. The individuals those annuities cover hold "certificates of participation." Which type of plan is that? fixed annuity multiple-lives annuity group annuity 403(b) plan

group annuity

Three times a week, Ernest pays for a licensed nurse to come to his house and help with his diabetes management. The nurse also helps with everyday tasks such as bathing and eating. Which type of care is Ernest receiving? intermediate care home health care respite care skilled care

home health care

When determining eligibility for Medicaid, states do NOT consider: income limitations household size disability or age asset limitations

household size

Which level of long-term care provides ongoing but not continuous care to address a person's condition and is delivered by registered nurses, licensed practical nurses, and nurses' aides under a doctor's supervision? intermediate care custodial care remedial care skilled nursing care

intermediate care

Annuity income payments are most commonly paid on what schedule? quarterly in a lump sum monthly annually

monthly

The premiums that a company pays for corporate-owned life insurance (COLI) on the lives of its employees are generally: not tax deductible tax deductible up to an IRS limit per employee that is changed annually taxable to the corporation tax deductible up to a corporate limit set by the IRS annually

not tax deductible

When Terry applied for his life insurance policy four years ago, he omitted any information in the application related to treatment he had received several years earlier for a serious chronic illness. Which of the following actions can the insurance company take when it learns of the omission? nothing cancel the policy reduce the benefits impose additional exclusions

nothing

Amanda applied for a long-term care policy on August 1, at which time she received a document disclosing the policy's benefits, exclusions, renewal provisions, and continuation provisions. Which document did Amanda receive? Notice Regarding Replacement Buyer's Guide shopper's guide outline of coverage

outline of coverage

A major medical expense policy requires the insured to pay separate deductibles for each illness or each accident. What type of deductible does it have? separate risk deductible per cause deductible per diem deductible separate ailment deductible

per cause deductible

Which method of determining disability benefits is most common in group policies? occupational amount totality of income approach percent-of-earnings flat amount

percent-of-earnings

Which of the following settlement options does NOT include a life contingency? life income with period certain option straight life income option life income with guaranteed refund option period certain-only option

period certain-only option

Which kinds of health care providers contract with a PPO? surgeons and end-stage care specialists physicians, hospitals, and clinics private clinics and institutional care providers medical schools and internship hospitals

physicians, hospitals, and clinics

Which of the following would typically be eligible for family coverage under an individual or group medical expense plan? primary insured, spouse, their child, and the insured's nephew primary insured, spouse, and their adopted child primary insured and a former spouse primary insured and a sister

primary insured, spouse, and their adopted child

Which is the amount that is paid for death under an accidental death and dismemberment (AD&D) insurance policy? principal sum indemnity amount primary amount capital sum

principal sum

James and Edwina have a 26-year-old daughter who is mentally handicapped and incapable of self-sustaining employment. To continue their daughter's health insurance coverage after she reaches the limiting age stated in their group policy, what must James and Edwina do? provide evidence that their daughter's incapacity is considered a pre-existing condition submit an affidavit attesting to her mental incapacity provide proof of their daughter's incapacity to the insurer within 31 days after she reaches the limiting age submit proof of their daughter's incapacity to the insurer every six months

provide proof of their daughter's incapacity to the insurer within 31 days after she reaches the limiting age

Most disability income benefit riders also include which of the following? provision for a waiver of premium provision for an increased death benefit payee benefit rider payor benefit rider

provision for a waiver of premium

What part of employer-funded group life insurance coverage-if any-is tax exempt for employees? the full amount of coverage the value of the first $50,000 of coverage the value of the first $25,000 of coverage $0

the value of the first $50,000 of coverage

This year, Agent Todd earned 20 percent of his total commissions from life and health insurance written for his relatives and friends. Which statement is correct? Agent Todd must report the transactions to the Director. Agent Todd has engaged in lawful insurance practices. Agent Todd has engaged in controlled business. Agent Todd has violated his fiduciary duties.

Agents whose total commissions on business written on the property, lives, health, or liability of themselves, their relatives, and their employers and employees exceed 10 percent of the total amount of commissions received during one year are presumed to have obtained a license for the purpose of writing controlled business.

Melissa asks to continue her lapsed universal life insurance policy under the extended term option. How will the insurance company respond? It will tell Melissa that she cannot elect the extended term option but may elect either the reduced paid-up or cash value payment options. It will tell Melissa that lapsed universal life policies automatically go on the extended term option. It will tell Melissa that her policy does not have the extended term option and she may only take any remaining cash value in cash or let the policy continue without premiums until the cash value can no longer cover monthly deductions. It will ask Melissa to complete the nonforfeiture option selection form.

It will tell Melissa that her policy does not have the extended term option and she may only take any remaining cash value in cash or let the policy continue without premiums until the cash value can no longer cover monthly deductions.

A policyowner owns a variable universal life insurance policy that offers a wide array of variable subaccounts. With respect to this policy, all of the following statements are correct EXCEPT: Subaccount funds are not guaranteed by the insurer. Cash value funds can be transferred from one subaccount to another without income tax consequences. The insurance company bears the investment risk for funds allocated to variable subaccounts. The variable subaccounts allow policyowners to participate in the investment performance of the assets underlying their contracts.

The insurance company bears the investment risk for funds allocated to variable subaccounts.

All of the following statements about indexed life insurance are correct EXCEPT: There is both a whole life and a universal life version of indexed life insurance. Interest credited to an indexed UL policy's cash value is tied to changes in an equity index like the S&P 500. Indexed universal life insurance offers potentially higher rates of return than those offered by traditional life insurance policies. The insured bears all of the investment risk with an indexed life insurance policy.

The insured bears all of the investment risk with an indexed life insurance policy.

Which of the following is NOT an unfair claims settlement practice if committed by an insurance company in Nebraska? failing to promptly acknowledge communications about claims raising policy defenses to reduce a claim offering to settle claims for less than due to encourage litigation failing to promptly settle a claim for which liability is uncertain

failing to promptly settle a claim for which liability is uncertain

In a front-end loaded universal life contract, when does the insurer deduct a charge to cover the costs of administering the policy? from the premium payment before it is credited to the policy's cash value once, when the first premium is paid at the start of each policy year from the cash value after the premium has been deposited to it

from the premium payment before it is credited to the policy's cash value

Permanent life insurance can also provide funds, through its cash value, that may be used during the insured's lifetime. What is that feature called? the money feature permanent values capital accumulation living benefits

living benefits Permanent life insurance can provide funds out of its cash value accumulations for use during the insured's lifetime. Thus, this feature is called living benefits.

Which of the following most correctly describes the option(s) available with a universal life insurance policy the owner no longer wishes to maintain? surrender the policy for its cash value or convert it to paid-up whole life insurance surrender the policy for its cash value or let the policy continue without premiums until the cash value can no longer cover monthly deductions surrender the policy for its cash value or convert it to extended term insurance surrender the policy for its cash value, convert it to extended term insurance, or convert it to paid-up whole life insurance

surrender the policy for its cash value or let the policy continue without premiums until the cash value can no longer cover monthly deductions

A life insurance application's main purpose is to provide underwriters with information regarding: the reason for the requested coverage the applicant's personal risk data and health the type of policy being applied for the applicant's wealth

the applicant's personal risk data and health An accurate and complete application provides critical information about personal data about the applicant and the insured, the requested insurance coverage, and the applicant's health.

In a participating life insurance policy, the insurance company pays the policyowner a dividend out of which of the following? the insurer's divisible surplus the policyowner's life insurance policy cash value the company's cash reserves set amounts prescribed in the policy

the insurer's divisible surplus

Sylvia's insurer guarantees a fixed death benefit for the policy she owns. Based on this, which one of the following benefits is also most likely guaranteed with this policy? the policy's cash value policy dividends her ability to borrow an interest-free loan from the cash value payment of premiums on Sylvia's behalf in the event of emergencies

the policy's cash value

When comparing her insurance company's policies to those of Zenith Insurance, Melanie makes a misleading statement to convince an insurance prospect to terminate a policy with Zenith and buy one from Melanie's company. What has Melanie engaged in? defamation unfair discrimination rebating twisting

twisting

Endowment contracts are NOT considered life insurance (for tax purposes) because: They never mature. They do not build cash values. They do not pay a death benefit if the insured dies before the contract matures. They endow before age 120.

They endow before age 120.

All the following statements about universal life insurance partial surrenders are correct EXCEPT: Insurers do not require policyowners to repay partial surrenders. They incur interest charges. Policyowners can withdraw funds as long as the policy has a cash surrender value. Partial surrenders reduce the death benefit dollar-for-dollar.

They incur interest charges.

All of the following statements regarding the extended term nonforfeiture option are correct EXCEPT: Coverage under the extended term insurance option continues for the insured's entire life. If the extended term option is elected, the face amount of the term policy is the same as the face amount of the lapsed policy. The extended term option is not available if the original policy was issued on a substandard (rated) basis. An extended term option allows the policyowner to have insurance coverage for some period with no further premium payments required.

Coverage under the extended term insurance option continues for the insured's entire life.

Which statement about the conversion provision in group life insurance policies is correct? It allows terminating plan participants to convert their coverage to an individual policy of the same face amount if they furnish evidence of insurability. It allows terminating plan participants to convert their coverage to an individual policy of the same face amount without the need to provide evidence of insurability. It allows terminating plan participants to convert their coverage to an individual policy of the same face amount if they furnish evidence of insurability or to a policy with a lesser face amount without having to prove insurability. It allows terminating plan participants to convert their coverage to another group policy at the same benefit level without the need to provide evidence of insurability.

It allows terminating plan participants to convert their coverage to an individual policy of the same face amount without the need to provide evidence of insurability.

Which of the following best describes the premium tax insurance companies must pay when they receive premiums? It is a state tax imposed by all states. It is a federal tax that is collected at the state level by all states. It is federal tax paid to the U.S. Treasury. It is a state tax imposed by relatively few states.

It is a state tax imposed by relatively few states. It is a state tax, imposed by relatively few states, that most companies pass on to their policyowners in some way.

With respect to third-party ownership of life insurance in the personal insurance market, all the following statements are true EXCEPT: Third-party ownership is the basis of stranger-oriented life insurance (STOLI). The insured has the right to name the beneficiary. Third-party ownership is common in estate planning. Policy ownership can be transferred to anyone without there having to be an insurable interest between that person and the insured.

The insured has the right to name the beneficiary.

All the following statements regarding stranger-owned life insurance (STOLI) are correct EXCEPT: STOLI and investor-owned life insurance (IOLI) are the same thing. STOLI is an arrangement in which investors convince an individual to purchase a life insurance policy on himself which is transferred to the investor in exchange for a sum of money. STOLI is financed through premium loans during the first several years, until it is transferred from the insured to the investors. The insured retains the right to designate the policy's beneficiary.

The insured retains the right to designate the policy's beneficiary.

Which of the following is NOT a requirement to obtain a resident producer's license? appointment by at least two insurers submission of an application successful completion of the licensing examination completion of a prelicensing course of study

appointment by at least two insurers To receive a resident producer's license, a person must be at least 18 years old, submit an application, pay the required fees, complete a prelicensing program, and pass the licensing exam. A person is not required to be appointed by at least two insurers.

Question 1 Which of the following types of life insurance is the least expensive way to provide mortgage loan protection? permanent life insurance decreasing term insurance increasing term insurance level term insurance

decreasing term insurance

Many payees worry about choosing the straight life income option because they know that if they die after receiving only a single income payment, the insurer makes no further payment. To address this concern, the insurance industry created which of the following? life income settlement options guaranteeing that a certain minimum number of payments will be made or a specified minimum amount will be paid settlement options guaranteeing that the amount of each payment is calculated so that the principal plus the interest earned reaches zero at the end of the selected period policy riders for disability contingent beneficiary designations

life income settlement options guaranteeing that a certain minimum number of payments will be made or a specified minimum amount will be paid

Carl is a policyowner who prefers to pay premiums monthly rather than annually. How will Carl's insurance company adjust his premium to accommodate this request? The insurer divides the annual premium by 12 and then adds a modest charge in the first policy year after which premiums equal the annual premium divided by 12. The insurer divides the annual premium by 12 and then adds a modest charge. The insurer simply divides the annual premium by 12. The insurer divides the annual premium by 12 and then reduces the premium amount to reflect the fact that premiums will be paid throughout the year.

The insurer divides the annual premium by 12 and then adds a modest charge.

A producer's commission for the sale of a Medicare supplement policy in the first year following its effective date cannot exceed what percentage of the commission paid for servicing the policy in the second year? 25 200 100 150

200

Kim lives in an urban area with a high cost of living. Grace lives in a rural area with a lower cost of living. They have identical medical expense plans from the same insurer which pays claims on a usual, customary, and reasonable (UCR) basis. Why will the insurer pay each a different benefit for the same medical treatment? They bought their policies at different times. Patients have different symptoms. Costs for medical treatment in large urban areas are typically lower than costs for the same treatment in rural areas. Costs for medical treatment in large urban areas are typically higher than costs for the same treatment in rural areas.

Costs for medical treatment in large urban areas are typically higher than costs for the same treatment in rural areas.

For any given amount of coverage, how does the cost of group life insurance generally compare to the cost of individual life insurance? Group life is more expensive for smaller companies only. Group life is about the same cost. Group life is less expensive. Group life is more expensive.

Group life is less expensive.

Which of the following must HMO members use to receive covered care? HMO's network of providers and caregivers the nearest provider or caregiver any licensed health care practitioner or caregiver providers and caregivers selected by the state HMO association

HMO's network of providers and caregivers

The intoxicants and narcotics provision lets an insurer deny a claim if: a loss results from negligence or indifference a third party claims the insured was intoxicated or under the influence of non-prescribed narcotics the insured is arrested while driving under the influence of alcohol a loss results from intoxication or use of non-prescribed narcotics

a loss results from intoxication or use of non-prescribed narcotics

The death of a fully insured worker may result in all the following Social Security benefits being payable EXCEPT: a monthly income benefit to the deceased worker's brothers or sisters, if any a monthly benefit to surviving parents, if any a lump-sum death benefit if there is at least one surviving spouse or dependent child a monthly benefit to the surviving spouse, if any

a monthly income benefit to the deceased worker's brothers or sisters, if any

Term life insurance is well suited for all the following needs EXCEPT: protection while the family children are living at home or attending college inexpensive protection until the policyowner can afford permanent life insurance mortgage protection a source of emergency cash for any financial need

a source of emergency cash for any financial need

Which group would be considered a natural group for purposes of obtaining group health insurance? members of a large family friends in need of insurance coverage alumni of a college passengers on an airliner

alumni of a college

Which are NOT qualified, unreimbursed medical expenses for purposes of the medical expense deduction? contributions to premiums for group health insurance contributions to premiums for group medical expense insurance contributions to premiums for group LTC insurance contributions to premiums for group AD&D insurance

contributions to premiums for group AD&D insurance

A long-term care rider on a life insurance policy will pay benefits if the insured is diagnosed as chronically ill due to which of the following? a catastrophic accident only either a medical or cognitive (mental health) reason any medical problem requiring hospitalization terminal cancer only

either a medical or cognitive (mental health) reason

What period follows the onset of disability, during which no benefits are payable? benefit period provision exclusion provision probationary period elimination period

elimination period

How long must insurers keep files of advertisements used to sell accident and health insurance policies? five years seven years three years four years

four years

Newborn children are automatically covered under an insured's individual health insurance policy for how long? from birth to the first birthday from birth to 31 days from birth to the end of the first calendar year from birth to the policy renewal date

from birth to 31 days

A worker with Social Security coverage for disability benefits has a work status of: completely insured currently insured fully insured partially insured

fully insured

Under standard exclusions, most insurers would deny coverage of which of the following? someone flying as a passenger in a private airplane someone flying as a passenger in a commercial airplane someone serving as an aircraft crew member someone killed as a bystander during a bank robbery

someone serving as an aircraft crew member

The amount of money a person might typically receive from a viatical settlement is: 85 to 100 percent of the death benefit 15 to 25 percent of the policy death benefit. 30 to 45 percent of the policy death benefit. 50 to 80 percent of the death benefit.

50 to 80 percent of the death benefit.

After the deductible is paid, the insured can expect Medicare Part A to cover all eligible hospital expenses without a copayment for up to: 60 days 30 days 45 days 10 days

60 days

A producer owes a fiduciary duty to: Neither the insurer nor the customer the insurer only both the insurer and the customer the customer only

Both the insurer and the customer

Which of the following statements best describes how employer-paid premiums for a nondiscriminatory group life insurance plan are treated for tax purposes? Group life insurance premiums are not tax deductible to the employer. Employers can deduct premiums paid on a group life insurance plan. Employers may only deduct premiums paid for rank-and-file participants in a group life insurance plan. Employers may only deduct premiums paid for key employees and officers in a group life insurance plan.

Employers can deduct premiums paid on a group life insurance plan.

All of the following statements regarding a variable annuity's assumed interest rate (AIR) are correct, EXCEPT: The value of each annuity payment is directly affected by changes in the AIR. If the actual return is greater than the AIR, payments will decrease. Annuitized payments under a variable annuity are based on the AIR and the value of the contract's annuity units. If the value of the annuity units grows at the same rate as the AIR, payments to the annuitant will stay the same.

If the actual return is greater than the AIR, payments will decrease.

The charge-free withdrawals provision of a deferred annuity contract does which of the following? It exempts deferred annuity withdrawals from surrender charges and penalty taxes as long as the withdrawal does not exceed a specified percentage of the accumulated value. It exempts deferred annuity withdrawals from surrender charges and all taxes as long as the withdrawal does not exceed a specified percentage of the accumulated value. It permits annuity contract owners to withdraw a specified percentage of the accumulated value on a one-time basis without imposing a surrender charge. It permits annuity contract owners to withdraw a specified percentage of the accumulated value annually without imposing a surrender charge.

It permits annuity contract owners to withdraw a specified percentage of the accumulated value annually without imposing a surrender charge.

Medicare supplement insurance policies supplement coverage of which Medicare Part? Medicare Parts A and B only Medicare Part C (Medicare Advantage) Medicare Part A only Medicare Parts A, B, and C

Medicare Parts A and B only

Adam is a Medicare beneficiary and enrolled in his state's Medicaid program. When he submits a claim for covered services to both, how will Medicare and Medicaid pay the claim? Medicare will be the primary insurer, and Medicaid will be the secondary insurer. Medicaid will pay the entire claim. Medicare will pay the entire claim. Medicaid will be the primary insurer, and Medicare will be the secondary insurer.

Medicare will be the primary insurer, and Medicaid will be the secondary insurer.

Why is it relatively easy for employers to change group health care plans or insurers? Employees and labor unions often demand changes in group coverage. State laws prohibit the renewal of group health plans to encourage competition among insurers. Most group health plans are written to provide benefits for only one year. Insurance companies encourage employers to shop for benefits.

Most group health plans are written to provide benefits for only one year.

All the following statements about "other insured" term riders on a life insurance policy are correct EXCEPT: Applicants often purchase this rider to cover their spouse or partner. Coverage ends when the policyowner reaches a specified age such as 65 or 70. The term life coverage provided by the rider is temporary. Only spouses or partners can be covered under this rider.

Only spouses or partners can be covered under this rider.

What process will an insured follow when using funds from a flexible spending account (FSA) to pay for a medical expense? Submit a claim form to the FSA administrator for reimbursement. Submit a claim to the employer's group health insurance administrator with proof of payment for reimbursement. Submit a claim to the insurance company with proof of payment for reimbursement. Submit a claim and proof of payment to the FSA administrator for reimbursement.

Submit a claim and proof of payment to the FSA administrator for reimbursement.

All the following statements regarding children's term riders in life insurance are correct EXCEPT: Depending on the insurer, the age limit for coverage under a children's term rider may be 18, 21, or 25. Children who have not yet reached the limiting age remain covered under the rider while it ends for their older siblings who reach the maximum coverage age. The insurer must write separate riders for each child in a family. The coverage for any covered child normally ends when he or she reaches a certain age.

The coverage for any covered child normally ends when he or she reaches a certain age.

Which of the following statements regarding the taxation of death benefits paid from a group life insurance plan is correct? The death benefit is income tax free, but interest earned on funds left with the insurer under a settlement option is taxable in the year earned. Both the death benefit and interest earned on funds left with the insurer under a settlement option are income tax free. Both the death benefit and interest earned on funds left with the insurer under a settlement option are taxable as ordinary income. The death benefit is taxable in the year distributed, but interest earned on funds left with the insurer under a settlement option is tax free.

The death benefit is income tax free, but interest earned on funds left with the insurer under a settlement option is taxable in the year earned.

What happens if the provisions of an insurer's health insurance policies contradict state law? The provisions stay in effect until a claim if made. The provisions are removed from the policy. The provisions become subject to federal law alone. The provisions are changed automatically to comply with the law.

The provisions are changed automatically to comply with the law.

Which statement about disability reducing term insurance policies is correct? The policy pays the loan balance if the business owner becomes disabled before the policy term. The benefit payment increases over the policy's term. Policies are available only to large businesses. The purpose of the policy is to cover the term of a loan.

The purpose of the policy is to cover the term of a loan.

Fred is terminally ill. He sells his $100,000 life insurance policy to a viatical settlement provider for $60,000. Six months later, Fred dies. Which of the following statements is correct? The death benefit will be split equally between the viatical settlement provider and Fred's estate. The viatical settlement provider will receive the entire $100,000. Fred's estate will receive $60,000 as a death benefit under the policy, and the viatical settlement provider will receive $40,000. Fred's estate will receive $100,000 as a death benefit.

The viatical settlement provider will receive the entire $100,000.

How does the Pregnancy Discrimination Act prevent discrimination against pregnant employees? Non-pregnant employees who do not participate in the employer's health plan can be prevented from joining it. They must be treated the same under the plan as non-pregnant employees. Non-pregnant employees who participate in the employer's group health plan can be charged a higher premium. They must receive more benefits than are provided to non-pregnant employees.

They must be treated the same under the plan as non-pregnant employees.

Guaranteed insurability riders are typically found in: group plans medical expense policies long-term care policies disability income policies

disability income policies

Which of the following is a type of Section 529 plan that builds a tax-free pool of money the account owner can use to pay for qualifying education expenses including tuition, fees, room and board, and books? college spending plan prepaid tuition plan education savings plan deferred annuity plan

education savings plan

The needs approach to determining life insurance needs quantifies two basic categories of life insurance needs, which are: immediate lump-sum cash needs and funds to pay estate taxes and settlement costs immediate lump-sum cash needs and ongoing income needs immediate lump-sum cash needs and funds to pay final expenses ongoing income needs of survivors and funds to pay monthly expenses

immediate lump-sum cash needs and ongoing income needs

What kind of information is NOT commonly requested on a health insurance application? medical history frequency of premium payment names and sex of the persons to be insured likelihood of disability or illness

likelihood of disability or illness

Medicare Part A coverage for home health care does NOT include: intermittent skilled care long-term nursing care home health aide services part-time skilled care

long-term nursing care

Which disability would most likely qualify for a full benefit under the presumption of disability provision? brain concussion heart surgery back surgery loss of eyesight

loss of eyesight

A subscriber's health insurance policy names the caregiver who will provide medical services, which is characteristic of a: limited benefits policy managed care plan disability income policy long-term care policy

managed care plan

In which health care delivery plan does the insured share the cost of services and treatment with the insurer? medical expense plan traditional insurance policy managed care plan indemnity plan

managed care plan

Social Security does NOT provide benefits for medical care death retirement disability

medical care

Which account is no longer available to small employers and self-employed individuals as a means of paying for medical expenses? flexible spending account health reimbursement account health savings accounts medical savings accounts

medical savings accounts

What are policies that do NOT meet the IRS's definition of life insurance generally called? FIFO policies nonqualified life insurance policies LIFO policies modified endowment contracts (MECs)

modified endowment contracts (MECs)

An insurable interest will typically be presumed in all of the following types of relationships EXCEPT: child and parent neighbor and friend business and key employee creditor and debtor

neighbor and friend

What must an annuity owner do to withdraw funds from his or her annuity contract? notify the insurer of the request to withdraw funds pledge a certain amount of collateral, and agree to a repayment schedule The funds must remain in the contract until annuitization. provide proof of the owner's need for those funds

notify the insurer of the request to withdraw funds

Jason is applying for a health insurance policy with ABC Insurers. What must ABC Insurers do before it can ask Jason to take an HIV test? have Jason designate a physician or other third party to receive test results notify Jason that all test results will be reported to the Medical Information Bureau obtain a waiver from Jason in which he relinquishes any right to sue ABC Insurers obtain Jason's written consent to the test

obtain Jason's written consent to the test

The FICA tax is split between an employee and employer, with the employee paying how much? three-quarters (75 percent) of the total tax one-half (50 percent) of the total tax one-third (33 percent) of the total tax one-quarter (25 percent) of the total tax

one-half (50 percent) of the total tax

Regarding policy dividend options, the so-called "fifth dividend option" involves the purchase of: one-year term life insurance equal to the base policy's cash value or the amount that the dividend can purchase permanent life insurance in $1,000 increments term life insurance in $1,000 increments additional insurance (determined by the dividend amount) of the same type as the base policy

one-year term life insurance equal to the base policy's cash value or the amount that the dividend can purchase

After a disability income policy has been issued, what period of time must pass before the insured may file a claim for benefits? benefit period exclusionary period probationary period elimination period

probationary period

Any sale of a Medicare supplement policy that results in the insured having more than one such policy is permitted if the insured intends to eventually replace one of them. allowed if the producer provides the appropriate disclosures. prohibited in all cases. recommended for the best insurance protection.

prohibited in all cases.

Which type of utilization review is conducted before a person is admitted to a hospital or before treatment begins to determine the appropriateness and necessity of the care to be provided? immediate review concurrent review intermediate review prospective review

prospective review

The purpose of health insurance is to: get health care and medical treatment keep the insured healthy prevent medical risks protect against the financial cost of accidental injury and illness

protect against the financial cost of accidental injury and illness

Genevieve wants to renew her Nebraska insurance producer's license. Which of the following is not a condition for renewal? submission of a renewal form report of insurance sales made in the last two years payment of the renewal fee fulfillment of continuing education

report of insurance sales made in the last two years To continue a license, the producer must submit a renewal form, satisfy the continuing education requirements, and pay the required fee.

Which does NOT restrict the health care coverage that an HMO provides? limitations on when, where, and how members receive treatment prior approval of hospital stays and surgeries In an emergency, it may be impossible for a member to get prior approval for treatment. requirement to contact the HMO within one hour of treatment outside the HMO's service area

requirement to contact the HMO within one hour of treatment outside the HMO's service area

Which of the following is NOT considered an unfair claims settlement practice? settling claims based on an application that the agent altered without informing the insured requiring the insured to submit a formal proof of loss form making claims settlements without stating the coverage under which payments are made failing to acknowledge a request for claims forms

requiring the insured to submit a formal proof of loss form

In-person delivery of a whole life insurance policy gives the producer the opportunity to do all of the following, EXCEPT: review coverage to determine if the policyowner wants to increase the policy's face amount explain that the free-look period begins at that moment, giving the policyowner ten days (in most states) to return the policy for a full premium refund get any required delivery forms, discuss any exclusions, and explain any substandard ratings explain policy benefits, terms, and riders

review coverage to determine if the policyowner wants to increase the policy's face amount

The Fair Credit Reporting Act (FCRA) of 1971 does which of the following? sets procedures credit reporting agencies must follow to ensure confidentiality, accurate reporting, and proper use of the information sets protocols agents must follow when requesting confidential financial information from applicants monitors the code the MIB uses to send confidential information to insurers sets procedures insurers must follow to make sure they use information effectively

sets procedures credit reporting agencies must follow to ensure confidentiality, accurate reporting, and proper use of the information

Annuities offer all the following benefits EXCEPT tax-free distributions upon the annuity owner's death or retirement a death benefit retirement income the annuitant cannot outlive tax-deferred growth during a deferred annuity's accumulation period

tax-free distributions upon the annuity owner's death or retirement

the Health Insurance Portability and Accountability Act of 1996 (HIPAA) created which two categories of long-term care policies? individual and group LTC policies tax-qualified and non-tax-qualified LTC policies long-term care and short-term care policies simple inflation protection and compound inflation protection LTC policies

tax-qualified and non-tax-qualified LTC policies

A business offers a group disability income plan and pays the premiums. If an employee suffers a disabling injury, the benefits paid to the employee will be: taxable income to the employee a deductible business expense for the business taxable income to the business deductible income to the employee

taxable income to the employee

The IRS encourages the use of annuities for long-term retirement savings, which is why it imposes a penalty tax on deferred annuity withdrawals that occur before: the contract owner reaches age 62 the contract owner begins collecting Social Security retirement benefits the contract owner reaches age 59½ the annuitant reaches his or her Social Security full retirement age

the contract owner reaches age 59½

Sandy and Cindy are healthy, are both 45 years old, and have similar life expectancies. Though they are insured by the same company, Sandy's life insurance premiums are considerably lower than Cindy's. What may this indicate a case of? unfair discrimination false advertising misrepresentation twisting

unfair discrimination

When underwriting individual disability income insurance, the most important factor in determining the maximum monthly benefit is the insured's: health wages and earnings occupational class age and sex

wages and earnings