Insurance Test
For group insurance policies, the covered individual receives proof of coverage in the form of
a certificate of insurance
A combination of basic medical expense coverage and major medical expense coverage is
a comprehensive medical expense policy
Under the financial privacy safeguards of the Gramm Leach Bliley Act, an individual about whom a financial institution collects information is
a consumer
Ashley has a policy that she must pay premiums on until she is 100 years old or until she dies. Ashley has
a continuous premium whole life policy
What is Endowment?
a contract designed to pay a lump sum after a specific term or on death
Curtis knows that when he retires, he will receive $100 a month for every year of service with his employer. This is an example of
a defined-benefit plan
An annuity that guarantees a minimum rate of return is
a fixed annuity
The ZYX Insurance Company is incorporated in Alabama. While doing business in Texas, it is
a foreign insurer
George's brother, Jerry, has a policy that will provide him an income if he is disabled from illness or injury, but only if he is confined to a hospital. George's brother probably has
a hospital income insurance policy
An insurable interest must exist when
a life insurance policy is issued
Liz purchases an immediate annuity. The annuity contract must be
a single premium annuity
Shane is a master carpenter in business for himself. His business is probably operated as
a sole proprietorship
The Albuquerque HMO's contracting physicians are paid employees working on the staff of the HMO, operating in a clinic setting at the HMO's physical facilities. The Albuquerque HMO operates at
a staff model HMO
Robin is a 25-year-old man who drinks occasionally, does not smoke, and has no known health problems. He probably would be classified by an insurer as
a standard risk
The type of policy that has a major medical portion that provides benefits once the basic policy limits are exhausted and a deductible has been paid is
a supplemental medical expense policy
The Gargantuan Garage company funds it sown claims but uses another company to make sure the plan is run correctly, acting as a liaison between the insurer and the employer. This arrangement is probably
a third-party administrator
The elimination period may be thought of as
a time deductible
A statement that ensures benefits provided under the old policy will continue under the new policy is
a transfer of benefits statement
When Tom dies, Rosemary receives the death benefit. If Rosemary had died before Tom, George would have received the benefit. Which of the following statements is TRUE?
Rosemary is the primary beneficiary, and George is the contingent beneficiary.
Which of the following types of retirement plans does NOT have a mechanism for making catch-up contributions past a certain age?
SEP
Which of the following must be the case once a year for a variable policy to meet the federal definition of life insurance?
The face amount must be higher than the cash value by a certain percentage.
An insured died during the Grace Period of her life insurance policy and had not paid the required annual premium. The insurance company is obligated to pay which of the following to the beneficiary?
The face amount of the policy less any earned premiums
Sally purchases $100,000 of participating whole life and $50,000 of term insurance. Over time, she intends to use the dividends from the whole life policy to purchase paid-up additions to replace the term insurance. Sally owns
an economic life insurance policy
A candlestick maker offers insurance to its employees. This type of group is called
an employee group
All of the following are considered to be unfair claims settlement practices EXCEPT
compelling a claimant to undergo medical examinations by an independent physician
The failure to disclose known facts is
concealment
Business written on the producer's own life or interests is known as
controlled business
When Betty purchased her insurance policy, her age was recorded as 32 when she was actually 34. Assuming her policy includes the misstatement of age provision and the insurance company discovers this 4 years later, Betty's policy
limits will be lowered
Nursing home care is generally covered by
long-term care policies
Among individual policies that include coverage for mental infirmities, the benefit will generally be
lower than the benefit for physical infirmities
The insurer looks at Carol's application and decides to offer Carol a modified policy, including an exclusion Carol did not request. The insurer has
made a counteroffer to Carol
Carol applies for a life insurance policy and pays the initial premium. Carol has
made an offer to the insurer
The nonfinancial regulatory activities of an insurance department fall under the broad heading of
market conduct
A revocable beneficiary
may be changed without the beneficiary's consent
Early long-term care policies were
more restrictive than current policies
All of the following are examples of managed care plans EXCEPT
indemnity arrangements
Vision care insurance is generally needed to cover all of the following EXCEPT
injury to the eye
A social device for spreading the chance of financial loss among a large number of people is the definition of
insurance
Insurance agents are appointed by
insurance companies
Group insurance generally does NOT require
stringent medical underwriting
Agent licenses can be issued for all of the following kinds of insurance EXCEPT
surplus lines through appropriate brokers
Mr. Jones makes application for an A & H policy and pays his agent the initial premium. The agent gives Mr. Jones a conditional receipt. His coverage will become effective when
the insurance company accepts the risk
An individual is NOT eligible for the conversion privilege if
the insured fails to make the conversion within 31 days
Health insurance coverage never applies until
the insured has paid for the policy
All insurance policies may be canceled at any time by
the insured only
Under the facility of payment provision
the insurer may select a beneficiary if the named beneficiaries cannot be found
Walter is the beneficiary of his mother's life insurance policy. He wants to make sure he proceeds will last not only as long as he lives but also as long as his wife is alive. Walter should select
the joint and survivorship life income option
Once a health insurance policy becomes effective, unless it is canceled, it will stay in force for
the length of the term
In order for an agent in Georgia to sell long-term care partnership policies, all of the following are true EXCEPT
they must have been licensed to sell accident and sickness insurance for at least two years
A prepaid dental plan that wants to restrict an enrollee's ability to receive services from a class of providers
must describe the limitation in the evidence of coverage and in all solicitation documents
As a general rule, for federal tax purposes
neither life insurance nor annuity premiums is tax deductible
A long-term care policy can be terminated because of the insured's
nonpayment of premium
Medicare Part B provides coverage for all of the following kinds of care EXCEPT
skilled nursing facility care not covered by Part A
A $10,000 life insurance policy with a Triple Indemnity clause has been in force for 3 years. The insured is injured in a train wreck and dies in a hospital 5 months later. The death proceeds payable under the policy would be
$10,000
Martha has a universal life policy she purchased several years earlier. At that time, the death benefit in the policy was $100,000. Her cash value is now $20,000, and she has selected death benefit option A. How much is her current death benefit?
$100,000
Garth has a$100,000 whole life insurance policy that has been in effect for 10 years. The policy includes a double indemnity rider. Garth jumps off a bridge and dies. How much will the policy pay?
$100,000 because the multiple indemnity rider excludes death resulting fro suicide, but the base policy's suicide exclusion has expired
All life insurance polices must be filed with the Commissioner at least how long before their intended use?
90 days
Which of the following is NOT likely to be considered non-routine dental care?
Annual checkups and cleaning of teeth, including x-rays to check the health of the teeth
Which of the following must be authorized to transact insurance in Georgia?
Insurers that only provide long-term care insurance
Sin Lan has a hospital income policy that will pay $1,500 per month for up to 12 months. There is no elimination period. If Sin Lan is hospitalized for 10 days, how much will the policy pay?
$500
Which of the following drugs may be excluded from a prescription drug policy?
- Ginseng - Fertility drugs - Rogaine
To protect the businessowner, the elimination period for disability buyout insurance normally is
1 to 2 years
Regarding life insurance, consumers have how long to review the policy and return it for a full refund of premium?
10 days
Premature distribution from a qualified plan or an IRA can result in the amount being taxed as income plus a penalty tax of
10%
Minimum deposit policies have become less popular as a result of tax regulations, but they still can be used as long as a certain number of the initial payment are made from sources other than cash value. How many payment must be made from other sources?
4 of 7
How many quarters of coverage does a person need to be fully insured?
40
The Age Discrimination in Employment Act applies to employees age
40 or older
Which clause contains the basic promise of the life insurance company to pay a specified sum of money to a beneficiary upon the death of the insured?
Insuring clause
Which of the following is NOT an advantage of whole life polices?
Low initial cost
What is credit life insurance?
Policies to cover payment of a debt if the debtor dies
Which of the following factors does NOT have an effect on insurance premium rates?
Producer certification
Which of the following can bind an insurance company by oral or written agreement?
Property and casualty producer
Which of the following organizations would be eligible to offer a 403(b) arrangement?
Public school system
If Lois cancels her health insurance policy, the insurer will issue
a short-rate refund of most of the unearned premium
At age 30, Jack Stevens wishes to purchase a Whole Life policy. His agent explains that he can pay for the policy in several ways. One method is called 20-Pay Life, and another, Straight Life. Jack wishes to know which plan will accumulate cash value at a faster rate in the early years of the policy. Which of the following would be the agent's most appropriate response?
"20-Pay Life will accumulate cash value faster."
All of the following could be considered dependents except the insured's
25-year-old child who became physically disabled at 24
An individual age 65 or older has what chance of being confined to a nursing home?
25%
How old must a minor be to buy a life insurance policy?
15 years
In most states, the policy becomes incontestable after
2 years
The incontestable clause in usually in effect after
2 years
Medicare will pay the entire cost for skilled nursing facility care for the first
20 days
In Georgia, a long-term care policy must offer benefits for at least
24 months
At what age can a surviving spouse who is disabled start receiving survivor benefits if the deceased was fully insured?
50
At what age can people begin making catch-up contributions to their retirement plans?
50
If Wanda paid 50% of premiums, what percentage of her benefits would be tax free?
50%
Disability benefits will generally be paid for the lifetime of the insured if total disability due to sickness begins at age
55 or earlier
At what age is an individual no longer subject to early withdrawal penalties under an IRA?
59.5
If an insured is disabled for at least 2 years, the insurer may require proof of continuance of disability every
6 months
How long do temporary agent licenses remain in effect?
6 months, renewable up to 15 months
A rollover from one IRA to another or from a qualified plan to an IRA must be accomplished within how many days if the owner is to avoid an income tax liability on the amount rolled over?
60
Which of the following organizations would be most likely to be eligible for business overhead expense insurance?
A doctor's office
Which of the following would be an example of replacement of a life insurance policy?
A new policy that causes an existing life insurance policy to be surrendered
Which of the following may NOT enter into a life insurance contract?
A person insuring the life of a neighbor who is not a relative
Mike allows his policy to lapse, then applies for reinstatement using the company's required application. The company does not inform Mike either that the policy has been accepted for that the policy is being rejected. At what point can Mike consider the policy reinstated?
After 45 days
Which of the following provisions is NOT a part of HIPAA?
Annual limits and lifetime spending limits may be applied to mental health coverage
Which of the following factors is NOT used to determine annuity premiums?
Annuitant's retirement date
Which type of policy is designed to protect against the risk of living too long?
Annuity
Who may contribute to an IRA?
Anybody with earned income
Which of the following must sign the Notice Regarding Replacement?
Applicant and agent
Which of the following is NOT generally an ownership right in an insurance policy?
Assigning the policy when an irrevocable beneficiary has been named
When does coverage begin for children under a family health insurance policy?
At birth
Alice decides to buy a policy. She pays the first premium; the producer issues a receipt and tells her that she is covered immediately, until she is notified that the policy is either issued or declined. What kind of receipt has Alice received?
Binding receipt
A plan under which the surviving partners of a partnership agree to buy the interest of a deceased partner is known as a
Buy and Sell Agreement
Which federal law requires employers with more than 20 employees to include in their group insurance plan a continuation of benefits provision for all eligible employees?
COBRA
Juanita is employed in California. She takes a business trip to Colorado to demonstrate some techniques to workers in another facility and is injured in the process. Her workers' compensation benefits will be paid according to the laws of
California
Carl purchased a life insurance policy when he was 44. The insurer accidentally recorded his age as 42. When the accident is discovered in a review of the files 5 years later
Carl will be charged the difference in premium between his actual age and his stated age, along with the interest on the back payments
If an insurer violates any section of the insurance code, what can the Commissioner issue to stop the insurer from committing the violation?
Cease and desist order
Which of the following is NOT a required provision under the Uniform Provisions Model Act?
Change of occupation
Which clause identifies the fact that the policyowner must pay something of value for the insurer's promise to pay benefits?
Consideration clause
Which of the following individual policy conversions is usually permitted without any evidence of insurability?
Conversion from a Term policy to a Whole Life policy
Christy has a term policy that will allow her to switch over to a whole life policy at any time during the first half of the term without providing evidence of insurability. What type of policy is this?
Convertible term insurance
Which type of insurance policy is most common today?
Credit life insurance
Which of the following is the type of care most people will require at some time during their later years?
Custodial or residential care
Which type of annuity is most likely to provide death benefits?
Deferred annuity
Which of the following is least likely to be covered by a major medical policy?
Dental care
Who performs the Commissioner's duties in the Commissioner's absence?
Deputy Commissioner of Insurance
Which of the following is NOT part of the qualification process for legal dependency?
Eligibility for insurance
Which is NOT part of a Medicare Supplement's Plan A Core Benefits?
Emergency care in a foreign country
Which type of policy is least likely to be sold today?
Endowment
Which type of policy would not provide a tax-free death benefit under current law?
Endowment policy
Which clause identifies the components of the contract?
Entire contract clause
Between George and his brother, Jerry, who has the more limited policy?
Jerry
Which of the following is considered an unfair claims practice?
Failing to affirm or deny coverage within a reasonable time after proof of loss
Life and health insurance producers have the authority to bind an insurance company to a contract agreement.
False
Life insurance proceeds are generally the only source of income for surviving dependents of a breadwinner.
False
A combination of Whole Life and Decreasing Term insurance
Family Income policy
A combination of Whole Life and Level Term insurance
Family Maintenance policy
Which type of policy combines whole life insurance with decreasing term coverage?
Family income policy
Which of the following statements regarding Social Security disability benefits is TRUE?
For benefits to be paid, the disability must prevent the individual from being able to perform any substantial gainful work existing in the national economy
Julia's variable policy deducts a certain percentage from the premiums as they are paid. What type of load does Julia's policy have?
Front-end load
Which of the following risks is most likely to be insurable?
George is concerned about the financial impact his premature death would have on his family
The main difference between traditional health insurance arrangements and HMOs is that
HMOs provide both the health care service and the health care financing, but traditional health care insurance companies provide only the financing
Ken has terminal cancer and wants to access the death benefit of his life insurance policy to pay medical expenses. How might he be able to do this?
He may access the funds either through a viatical settlement or by use of the accelerated benefits provision.
William is fired from his job for tardiness and as a result will be losing his group insurance coverage. He can request a conversion to an individual policy within how many days?
He will not be able to convert because he was terminated for cause.
Which of the following outpatient services is excluded from Part B coverage?
Hearing exams
Carlos Rivera is involved in a 2-car accident in which he is disabled and Mr. Rivera's passenger and the other driver are injured. Which of the following would most likely be covered by his Disability Income policy?
His lost income
Bill Wilson wants to obtain a life insurance policy on his employee, Kenneth Myers, and to name Kenneth's wife, Susan Myers, as the beneficiary. Signatures of which of the following would be legally required on the application? I. Bill Wilson II. Kenneth Myers III. Susan Myers
I and II only
Features that may be included in most Term policies include which of the following? I. Convertibility II. Renewability III. Waiver of Premium provision
I, II, and III
Which of the following statements about accidental death and dismemberment coverage is NOT true?
If the policy has a disability income feature, the disability income payments continue even after the dismemberment sum is paid.
The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the
Incontestability clause
When someone other than the insured is the owner of a life insurance policy, the owner may do all of the following without the insured's consent EXCEPT:
Increase the amount of insurance
CeeCee's policy is guaranteed renewable. Which of the following may the insurer NOT do?
Increase the premiums on CeeCee's policy only
Which of the following is NOT a common way dental insurance programs work to minimize adverse selection?
Increasing the maximum annual benefit to encourage the insured to maintain dental health for the long term
Ken is receiving interest-only payments on the settlement of his father's life insurance policy. If Ken dies before the lump sum is paid to him, what happens to the balance of the money?
It is paid to any contingent beneficiary named in the original policy, or if there is no contingent beneficiary, it is paid to Ken's estate
Which of the following statements about a Renewable Term policy is true?
It is renewable at the option of the insured
Which of the following statements about an automatic premium loan provision is TRUE?
It keeps the policy in force when it would otherwise lapse because of nonpayment of premiums
The annual general enrollment period for Medicare Part B begins on
January 1
Which of the following individuals would probably qualify for Social Security disability benefits?
John, who experiences serious early-onset Alzheimer's and is unable to remember how to get to work
Which of the following is NOT an example of insurable interest?
Juan wishes to take out a life insurance policy on his neighbor because his neighbor is a careless driver and Juan thinks his neighbor is likely to die in a car accident.
Social Security disability income and medical benefits are financed through
Mandatory payroll taxes
On May 8, a prospect filled out an application for a life insurance policy but paid no premium. The insurance company approved the application on May 14 and issued the policy on May 15. The agent delivered the policy on May 26 and collected the first premium. The coverage became effective on
May 26
This program was established to help states expand their public assistance programs for individuals whose income and resources are insufficient.
Medicaid
Which of the following A & H polices would provide reimbursement for expenses incurred as the result of a broken leg?
Medical Expense policy
Which of the following factors does NOT affect the payment of dividends?
Morbidity
Which of the following statements describes the best use of a producer's time when personally delivering the policy?
Mrs. Ritley delivers a policy and restates the advantages of the policy and how it can be amended to meet future insurance needs.
Which of the following is NOT an approved type of group in Georgia?
Neighbors who want to buy insurance
The premiums are deductible for which of the following?
Neither Disability policy to fund a buy-sell agreement & Key employee disability policy
Which of the following would be least likely to be a good candidate for an LTC policy?
Nina, a single mother whose financial struggles raising her children have left her with few assets and no independent retirement savings
The coverage provided by a Disability Income policy that does not pay benefits for losses occurring as the result of the insured's employment is called
Nonoccupational coverage
At what age is an individual eligible to receive full Social Security retirement benefits?
Normal retirement age
Which federal law extends the minimum continuation of coverage period from 18 to 29 months for qualified beneficiaries disabled at the time of termination or reduction in hours?
OBRA
Harry decides to borrow some money from a bank. What type of assignment will Harry probably use to secure the loan?
Partial assignment
Which of the following statements is true about Partial Disability benefits?
Payment may be based on loss of time, income, or function
Paul has a life insurance policy on his son for which he pays all the premiums. A rider to this policy states that if Paul becomes permanently and totally disabled, the premiums will be paid until his son reaches age 21, at which point his son will take over the premium payments. Which type of rider does he have?
Payor rider
Regarding long-term care insurance, the existence of symptoms that would cause an ordinarily prudent person to seek diagnosis or treatment, or a condition for which medical advice or treatment was recommended by or received from a provider of health care services within 6 months preceding the effective date of an insured's coverage, is known as what?
Preexisting condition
Under which of the following circumstances are qualified plan distributions likely to receive a tax penalty?
Premature distributions and Late distributions
Which of the following must adhere to advertising regulations?
Prepared presentations used by agents
Which of the following is a Non-forfeiture Option that provides continuing cash value buildup?
Reduced Paid-Up
Which of the following is NOT required to be able to sell variable policies?
Registration with the NAIC
An arrangement in which an insurer transfers part of the insurance risk to another insurance company is known as
Reinsurance
Which of the following statements is NOT true?
Replacement is illegal.
Which of the following is least likely to be covered by a major medical policy?
Replacement of an artificial limb
Al's Print Shop pays a provisional premium at the beginning of the year. At the end of the year, Al's insurer has the right to change that premium by charging more or issuing a refund. Al's policy is funded using which premium option?
Retrospective premium
A policyowner has which of the following rights under an A & H policy?
Selection of beneficiaries
Medicare Part A hospital insurance is primarily funded by
Social Security payroll taxes
Fully insured and disability insured are defined by
Social Security regulations
Which of the following is NOT financed using life insurance?
Split-dollar plan
Steve is the beneficiary on his wife's life insurance policy. When they divorce, his wife cannot remove him as beneficiary on the policy without his written permission because
Steve is an irrevocable beneficiary
Which of the following is NOT a common exclusion or limitation of dental policies?
Teeth that are knocked out in an accident will generally not be replaced under a dental policy.
Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources?
Term
Which of the following statements regarding settlement options is NOT true
The beneficiary invests the money at the suggestion of the insurer
Which of the following is NOT a factor in determining the amount the beneficiary will receive each time a payment is made under the fixed amount option?
The capital amount
Which of the following statements about Medicare supplement plans is NOT true?
The definition of accident may employ an accidental means test.
Which of the following is a purpose of the annuity?
The distribution of a lifetime income
Which of the following statements about paid up additions is TRUE?
The dividends are used to purchase additional insurance protection
Which of the following is considered a disqualifying event under COBRA?
The employer ceases to maintain any group health plan
Ann quits paying premiums on her whole life policy that has been in effect for 17 years. She does not select a nonforfeiture option. What happens to the cash value in her policy?
The insurer will issue a paid-up term insurance policy with the same face value as the policy with a term as long as the cash value will purchase
Which of the following statements about reduced paid-up insurance option is NOT true?
The new protection is for the same amount as the original policy
John leaves his $300,000 estate to his 3 children to split equally according to a per stirpes distribution. One of his children dies before John does. Upon John's death, which of the following is TRUE?
The proceeds are split 3 ways between the remaining children and the beneficiary of the deceased child's estate
Which of the following statements regarding the future increase option rider is NOT true?
The rider guarantees the ability to increase coverage to a predetermined limit regardless of change in the insured's income.
Preexisting Conditions are referred to in which of the following required A & H policy provisions?
Time Limit on Certain Defenses
Charles Adams advised his insurance company of a loss covered by his Major Medical policy. If the insurance company does not provide Mr. Adams with the proper claim forms within 15 days, he has which of the following rights?
To submit a description of the loss, in his own words, as proof of loss
Which of the following types of annuities are regulated as securities?
Variable annuities
Carol has a policy on her ex-husband that she wants to give to their daughter. Carol no longer wants any control over this policy. What type of assignment will Carol probably use to accomplish this?
Voluntary assignment
Which of the following is waiver of all future premiums in the event of total and permanent disability?
Waiver of premium
Alberta is concerned that if she became totally and permanently disabled, she would not be able to pay her life insurance premiums and the policy will lapse. Which type of rider should she consider to protect against this possibility.
Waiver of premium rider
Which of the following policies provides the greatest amount of protection for an insured's premium dollar as well as some cash accumulation?
Whole Life
Which of the following types of insurance requires a level premium and provides lifelong protection?
Whole life insurance
Which of the following is NOT considered an activity of daily living?
Working
Carla enrolls in group insurance when she is eligible under her employer's plan. Because of an administrative error, her enrollment form is never sent to the company. When she later has a claim, the insurer will
accept the enrollment form and all of the past due premium and pay the medical claim
Marcus purchased an annuity that offers a guaranteed minimum interest rate and a guarantee against loss of principal if the contract is held to term. However, if the Nasdaq moves upward, Marcus's annuity might end up accruing more than the guaranteed minimum interest rate. Marcus has purchased
an equity-indexed annuity
Annuities exist to
both accumulate a sum of money and distribute a lifetime income
Prepaid dental plans offer services based on
capitation
Dread disease policies
cover specific diseases as named in the policy, such a heart disease or cancer
Carl's insurance policy is designed to cover the mortgage on his house if he should die before paying it off. The policy is
decreasing term
Qualified group long-term care coverage is
deductible by the company but not the employee
The insuring clause does all of the following EXCEPT
describe the insured
Common exclusions under disability policies include all of the following EXCEPT
disability caused by flying as a passenger on a commercial aircraft
Kumar has a life insurance policy with a rider that will pay him $1,000 per month if he is totally and permanently disabled. Which type of rider does he have?
disability income rider
Michelle is 65 and starting to receive Social Security benefits. to receive Medicare Part A, she needs to
do nothing
Prescription drug policies generally exclude
experimental drugs
Ralph is a producer for Hoosier Insurance Company. His contract states that he is allowed to put the company's logo on his business cards and the door to his office. This is an example of
express authority
Occupational disability benefits are often reduced by benefits received
from either Social Security or workers' compensation
Intensive care benefits under hospital plans are
generally provided at some multiple of the room and board maximum
Medicare supplement polices must be
guaranteed renewable
The term used to describe the individual who is covered by the insurance is
insured
All of the following are considered to be unfair and deceptive trade practices EXCEPT
issuing checks in full settlement of a claim that contain language releasing the insurer from liability
To be compensable as interpreted in workers' compensation law, an injury must meet all of the following criteria EXCEPT
it must be unforseeable
An annuity might be called the flip side of
life insurance
Restrictions applying to the replacement of Medicare supplement policies are
often more restrictive than regulations applying to the replacement of other policies
A hospital room and board benefit may be paid
on either an indemnity basis or a reimbursement basis
Accident and sickness insurance policies issued in Georgia must provide coverage for pap smears
once each year
Cindy has a claim for $2,000 and a past due premium of $200. The insurer will
pay the claim minus the past due premium
The grace period varies according to
premium payment frequency
Pam owns a 1-year term policy. At the end of the year, she may purchase another identical policy without showing proof of insurability. Pam's policy is
renewable term
No loss/no gain laws require
replacing health insurance policies to cover any conditions for which there are ongoing claims under existing coverage
An applicant for an A & H insurance policy has a heart condition of which he is unaware and therefore he answers "no" to the question pertaining to heart problems. His answer is considered to be a
representation
Insurance laws generally are written by
the state legislature
Most often, LTD policies provide benefits
to age 65
For the waiver of premium to apply under a waiver of premium rider, the disability must be
total and permanent
Both parties to the contract have an affirmative duty to disclose all information relevant to the contract, whether or not it is requested. This is known as
utmost good faith
James Kahn, who has $2,000 of group life insurance, has just terminated his employment. Mr. Kahn has how many days in which to convert his group coverage to individual coverage?
31
Which of the following types of insurance policies combines several types of benefits and provides more coverage than any of the others?
Comprehensive Medical Expense
Which of the following statements about Accidental Death and Dismemberment coverage are true? I. Death benefits are paid only if death occurs within 24 hours of an accident. II. Dismemberment benefits are paid for certain disabilities that are presumed to be total and permanent. III. Accidental Death benefits are paid only if death results from an accidental bodily injury as defined in the policy.
II and III only
Which of the following statements are true about exercising a Guaranteed Insurability option? I. The new insurance is available at the original issue age rate. II. Evidence of insurability is not required. III. The insured can exercise the option at any time after the age of 21. IV. The maximum purchase is specified in the contract.
II and IV only
The policyowner has no guarantee of renewal and the insurance company may refuse to renew the policy at the next premium due date.
Optionally Renewable
A parent who wishes to have complete control of a son's life insurance policy until the son reaches age 25 can do so through the use of which of the following?
Ownership provision
If the insured is not entirely satisfied with the policy issued, she may return it to the insurance company for voiding and receive a refund of premium at which of the following times?
Within a specified period from the date the insured receives the contract
When completing an application for medical insurance, an agent should do which of the following?
Witness the applicant's signature.
The purpose of the Illegal Occupation provision is to
absolve an insurance company from liability for a loss incurred by an insured during his commission of a felony
The owner of a Medical Expense policy has all of the following rights EXCEPT to
add coverage for a spouse without providing proof of insurability
The Legal Actions provision of an A & H policy requires that
an insured wait at least 60 days after submission of Proof of Loss before initiating a law suit
Policy delivery refers to the delivery of the
completed insurance policy to the applicant
All of the following are a part of a life insurance policy EXCEPT the
conditional receipt
The time period covered by the Ten Day Free Look provision of a life insurance contract starts when the
insured receives the contract and makes the first premium payment, if needed
In the formation of a life insurance contract, the special significance of a conditional receipt is that it
is intended to provide coverage on a date earlier than the date of the issuance of the policy
The participants in a Blue Cross/Blue Shield plan are called
subscribers
Which of the following contracts requires that a series of benefit payments be made at specified intervals?
Annuity
In order to comply with the Fair Credit Reporting Act, at which of the following times must an agent notify an applicant that a credit report may be requested?
At the time of application
Which of the following policies is generally used to accumulate funds for education?
Endowment
Benefits cannot be reduced, premiums cannot be raised, and coverage cannot be cancelled.
Noncancellable
An applicant has been denied insurance coverage because of information contained in a consumer report. According to the Fair Credit Reporting Act, all of the following statements are true about this situation EXCEPT:
The applicant has the right to obtain a copy of the consumer report directly from an insurance company that used the report.
To be eligible for benefits under the Waiver of Premium provision, the insured must
be under a physician's care
James Kahn, who has $2,000 of group life insurance, has just terminated his employment. The maximum amount that Mr. Kahn will be able to convert is
$2,000
The owner of a business is insured under a $100,000 Key Employee Life policy that contains a Double Indemnity clause and a Suicide clause. The business has paid the annual premium of $2,000. Six months after the inception date of the policy, the insured commits suicide. The insurance company's liability for payment is
$2,000
An individual owns a Hospital Expense policy and a Surgical Expense policy. The Hospital policy pays $100 a day for hospital room and board and a maximum of $1,000 for miscellaneous hospital charges. The Surgical policy pays a maximum of $500 for any one operation. If the insured was hospitalized for 10 days and had charges of $200 a day for hospital room and board, $1,500 for miscellaneous expenses, and $2,000 for the surgical expense (a maximum procedure under the policy), what would the two policies pay?
$2,500
Jim O'Hara was hospitalized for 2 weeks and received a bill for $2,100. He has a Major Medical policy with a $100 deductible. His Coinsurance is 80/20, figured after reducing the bill by the deductible amount. Mr. O'Hara is expected to pay a total of
$500
Group A & H insurance normally specifies that what percentage of those eligible must be enrolled under a noncontributory plan?
100%
Michelle Richards, age 27, is advised by her agent to purchase life insurance to cover a 20-year, $50,000 amortized business-improvement loan. Which of the following plans would adequately protect Ms. Richards at the minimum premium outlay?
A $50,000 Decreasing Term policy for 20 years
An insurance company will grant an advance from the cash value of a life insurance policy when the policy owner requests which of the following?
A policy loan
The provision in a life insurance policy that provides protection against unintentional policy lapse is known as the
Automatic Premium Loan provision
This program was established originally to help hospitals collect bills and to protect their solvency.
Blue Cross
Under the Uniform Provisions Law, which of the following provisions is optional for an A & H policy?
Change of Occupation
A prospect's statements made in the application for insurance constitute a part of which of the following?
Consideration clause
An applicant for an individual health policy failed to complete the responses to the medical history questions because he had forgotten some important past treatment dates. He did, however, sign the application. Before being able to complete the responses and pay the initial premium, he was confined to a hospital for a condition that would ordinarily be covered by the policy. In this situation, he was not insured because he had not met the conditions specified in which of the following?
Consideration clause
The right of an employee to exchange his group insurance for an individual policy within 31 days from termination of employment is provided by the
Conversion provision
An insurance prospect wants to purchase a policy that will accumulate the largest amount of cash by the age of 65. Which of the following policies would be most likely to satisfy the prospect's needs?
Endowment at Age 65 policy
The policy provision that prevents an insurance company from altering its agreement with a policyowner by referring to documents or other items not contained in the policy is called the
Entire Contract provision
On the delivery of an insurance policy that contains an exclusion rider for a past health condition, an agent must do which of the following? I. Explain, to the best of her ability, the rider and the specific exclusions II. Obtain the insured's signature on the amendment form III. Change any statement on the application that she thinks may be incorrect
I and II only
In health insurance, the length of the Grace Period varies according to which of the following? I. The mode of premium payment II. The length of the benefit period III. The length of the Elimination (Waiting) Period
I only
Under a Major Medical policy, the cost of which of the following would usually be considered a covered medical expense? I. Heart surgery II. An emergency appendectomy III. Plastic surgery for burns received in an auto accident
I, II, and III
Which of the following statements about the Misstatement of Age provision in a life insurance policy is true?
If the insured's age has been understated, it provides that a Death benefit smaller than the face amount of the policy will be payable.
The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the
Insuring clause
Which of the following statements about a conditional receipt is true?
It is an interim Insuring Agreement
Which of the following statements about the Time Limit on Certain Defenses provision is true?
It may prohibit an insurance company from denying a claim on the basis of misstatements in an application.
Which of the following statements about the Reinstatement provision is true?
It requires the policyowner to pay, with interest, all premiums that are in arrears in order for the policy to be reinstated.
Which of the following statements is true about a policy assignment?
It transfers the owner's rights under the policy to the extent expressed in the assignment form
Which of the following is an example of a Limited-Pay Life policy?
Life Paid-Up at Age 65
An insured's individual health insurance policy was reinstated effective June 1. On June 8 the insured became ill, was hospitalized, and returned to work June 15. The insured's policy would provide which of the following?
No benefits
Mary Adams owned a Disability Income policy providing a 10-year accident and 10-year sickness insurance benefit period. The policy had a 7-day Elimination (Waiting) Period provision for sickness plus a 30-day Probationary (Waiting) Period provision. If Ms. Adams was hospitalized for an illness 9 days after the effective date of the policy, the maximum coverage immediately available would be which of the following, if any? 20 years of sickness benefits? 10 years? 21 days? None?
None
Which of the following benefits, if any, may be taxed like wages and salary by the Internal Revenue Service? Welfare benefits Social Security Disability benefits Workers Compensation benefits None of the above
None of the above
In a policy insuring the life of a child, which of the following allows the premiums to be waived in the event of the death or disability of the person responsible for premium payments?
Payor provision
When benefits are paid to a policyowner covered under a Hospital Expense policy, the policy is considered to be which of the following?
Reimbursement
Which of the following statements about a typical Suicide clause in a life insurance policy is true?
Suicide is excluded for a specific period of years and covered thereafter
All of the following statements about sources of underwriting information are true EXCEPT:
The contents of an inspection report cannot be disclosed to the applicant
All of the following statements about the Cancellation provision in an A & H policy are true EXCEPT that the insurance company
may cancel the policy when claims exceed a stated percentage
The Time of Payment of Claims provision requires that an insurance company pay Disability Income benefits no less frequently than
monthly
An agent has just been told by a policyowner that she is 10 years younger than was listed on the application. The agent should
notify the insurance company to adjust the existing policy to the correct age
Mr. Sim, whose wife is his business partner, buys a life insurance policy on his wife's life. Because of this third-party ownership, the beneficiary should be the
policyowner
The primary purpose of the Coordination of Benefits provision found in group Medical Expense coverage is to
prevent the claimant from profiting from an injury or sickness
An agent takes an application from a proposed insured without receiving payment of the first premium. The insurance company issues the policy and, when the agent visits the proposed insured to deliver it, she realizes that the health of the applicant has deteriorated significantly since the application was taken. The agent should
refuse to deliver the policy or to accept any premium offered
Statements made by an applicant for a life insurance policy which are supposed to be true are referred to as
representations
Betsy O'Connor wants to name her husband as the beneficiary of her life policy; however, she wishes to retain all of the rights of ownership. Mrs. O'Connor should have her husband named as
revocable beneficiary
Karen has a universal life policy she purchased several years earlier. At that time, the death benefit in the policy was $100,000. Her cash value is now $20,000, and she has selected death benefit option B. How much is her current death benefit?
$120,000
Tammy has a total of $10,000 loan and interest outstanding against her $100,000 policy. The policy has a double indemnity rider. Tammy is killed in an automobile accident. How much will the policy pay?
$190,000
Which of the following costs are associated with death?
- Doctor or hospital bills from a final illness or accident - Paying off debts such as a credit cards and other loans - Taxes
Premiums for individually owned health policies may be deductible if the taxpayer's medical expenses exceed
10% of their adjusted gross income during the taxable year
Richard Evans owns a 30-Pay Life policy that he purchased at the age of 30. The cash value will equal the face amount of the policy when he reaches the age of
100
A person who begins receiving retirement benefits at normal retirement age receives what percentage of PIA as a retirement benefit?
100%
If Wanda paid 100% of her premiums, what percentage of her benefits would be tax free?
100%
The maximum time during which suit ca be filed is how may years after written proof of loss is furnished?
3
How long is the typical grace period?
31 days
At what age can a surviving spouse who is not disabled start receiving survivor benefits if the deceased was fully insured?
60
For each benefit period, Medicare will pay the full cost of up to how many days of hospital care?
60
Because the insurer needs time to respond to a claim, the law provides the insurer with a window during which the insured cannot sue to recover under a claim. This window lasts for
60 days
Under workers' compensation, the permanent total disability benefit, while subject to minimum and maximum dollar amounts, is generally
66.66% of weekly wages
If a group insurance policy is contributory, what percentage of employees must participate?
75%
After the deductible is satisfied, Part B pays what percentage of all approved charges?
80%
A person licensed as an insurance producer in another state who moves this state has how many days after establishing legal residence to become a resident licensee without taking prelicensing education or an examination?
90
Normally, written proofs of loss must be furnished within how many days after the loss?
90
Self-insurance is an example of which method of handling risk?
Acceptance
Double payment may be made because of which occurrence?
Accidental death
Tracey is paying money into an annuity she hopes will support her in her retirement years. Her contract currently is in which of the following periods?
Accumulation period
Who investigates, settles, and provides reports involving claims arising under insurance contracts?
Adjuster
Kelsey's Printing funds all the claims in a year, regardless of the amount of the claim. Kelsey's insurer just manages the paperwork for the claims. Which of the following option's is Kelsey's Printing using?
Administrative services only
When must credit accident and health insurance polices define total disability as the inability to perform any occupation for which the debtor is reasonably fitted by education, training, or experience?
After the first 12 months of disability
Which of the following individuals would NOT be exempt from a producer licensing requirement?
Alicia works in an insurance office conferring directly with or offering advice to prospective purchasers about the benefits, terms, and conditions of insurance policies and urges a person to apply for policies Alicia thinks would be a good match.
Which type of insurer is incorporated or organized under the laws of a country other then the United States?
Alien
Wanda's company pays the entire premium for her group disability coverage. If Wanda became disabled, how much of her benefits from this coverage would be subject to tax?
All
Which insurers must be members of the Georgia Life and Health Insurance Guaranty Association?
All insurers transacting insurance business in Georgia
Ally pays for her health insurance monthly. Her identical twin, Georgia, has the same policy, but pays annually. Which of them probably pays more for her policy?
Ally probably pays more
How much coverage must a health insurance policy issued in Georgia provide for a 58-year-old woman's mammograms?
An annual mammogram
Which of the following statements is TRUE?
An exclusion is a provision that eliminates coverage for a specified condition; a reduction is a provision that decreases benefits as a result of a specified condition.
Which of the following is a risk?
An individual may need medical attention after slipping on the ice and falling
How often must the Commissioner examine domestic insurers?
At least once every 5 years
Which of the following types of health care insurers is an example of a producers' cooperative?
Blue Cross/Blue Sheild
Social Security taxes are often shared between the employer and employee. What do self-employed people pay?
Both the employer's portion and the employee's portion of the tax.
George has a noncancelable policy. Which of the following may the insurer do?
Cancel the policy if George fails to pay premiums
Which of the following is an optional provision under the Uniform Provisions Model Act?
Cancellation
Ana wishes to purchase enough insurance to support her husband for the rest of his life if she should die prematurely and then leave a sizeable inheritance for her children upon his death. Which method should be used to calculate the amount of insurance necessary?
Capital conservation
Which of the following people would NOT be eligible for benefits under Social Security?
Clarice, 60, whose fully insured son supported her
Who enforces all laws that relate to insurance in Georgia?
Commissioner of Insurance
What is the main difference between a prepaid dental plan and a comprehensive dental plan?
Comprehensive dental plans pay on the basis of reasonable and customary charges, whereas
Camille decides to buy a policy. She pays the first premium, and the producer issues a receipt and tells her that she is covered immediately, unless the company decides she would have been a substandard risk. What kind of receipt did Camille receive?
Conditional receipt
Which kind of receipt is most commonly used in life insurance?
Conditional receipt
The initial premium payment sent with an application constitutes which part of the insurance contract?
Consideration
Which federal law is intended to accomplish pension equity but also protects group insurance plan participants?
ERISA
Wilma's husband died 3 years ago, leaving her with 2 grade school-aged children. Which income period is Wilma in?
Family dependency period
Sarah has a policy that will pay her family a monthly income until 2020 if she passes away before that time. Which type of policy does Sarah have?
Family income policy
Which type of policy combines whole life insurance with level term coverage?
Family maintenance policy
A combination of Whole Life and Convertible Term insurance in which several insureds are named
Family policy
Tracy has a policy that provides permanent life insurance on him, along with term insurance on his wife and children. Which type of policy does Tracy have?
Family protection policy
Which type of policy combines whole life insurance on one family member with term coverage on other family members?
Family protection policy
Which of the following individuals is most likely to be rated a substandard risk under an LTC policy?
Garrison, who has been diagnosed with early-stage Alzheimer's disease
What nonprofit association in Georgia protects owners of policies issued by insurers that become insolvent?
Georgia Life and Health Insurance Guaranty Association
Which of the following would most likely be covered under a medical expense policy?
Gertrude steps on a rusty nail and requires a tetanus shot
Ginny is a revocable primary beneficiary on her mother's life insurance policy. Which of the following statements is TRUE?
Ginny will receive benefits before any other beneficiary upon her mother's death.
Which of the following individuals is NOT likely to be eligible for Medicaid?
Ginny, who is over 65 and working as a manager of a retail outlet
Which of the following statements about group insurance is true?
Group insurance is essentially reduced-cost mass protection
Which of the following is a guarantee that at specified ages, dates, or events, the insured may buy additional insurance without a medical exam?
Guaranteed insurability
Which of the following is NOT flexible in a universal life policy?
Guaranteed interest rate
George has several policyowners at the factory set up on a plan that deducts the premium automatically from their bank accounts every month. Which type of policy do these policyowners probably have?
Home service life insurance
Which of the following factors should NOT be taken into account when a producer makes recommendations as to the amount and type of insurance needed by an individual?
How much commission does the product offer?
An Annuity is designed to provide which of the following financial features? I. The Liquidation of principal and interest II. A favorable tax treatment for income received III. The creation of an estate
I and II only
Which of the following people represents several insurance companies but owns the policy expirations?
Independent agent
Laura collects insurance premiums every Friday at the home of several policyholders. Which type of policy do these policyholders probably have?
Industrial life insurance
Brenda decides that she wants to buy a policy. She fills out the application but does not pay the initial premium. What kind of receipt will Brenda receive?
Inspection receipt
Which of the following is an insurer?
Insurance company
Which of the following terms is used to denote insurance companies?
Insurer
Who does an insurance agent represent in an insurance transaction?
Insurer
Janice and Julie are identical twins who both work as teachers and live next door to each other. They each purchase a $75,000 whole life policy at the same time. Janice chooses continuous premium whole life, and Julie chooses a 20-pay whole life policy. Which sister is probably paying a higher premium?
Julie is probably paying more
Assume that Martha and Karen are identical twins. Martha selects death benefit option A, and Karen selects death benefit option B. Who is probably paying more for her universal life policy?
Karen
Which of the following individual sis least likely to be eligible for Medicare?
Karl, who has been diagnosed with end-stage liver disease
Some kind of supplement to Medicare is needed by almost everyone covered by Medicare. Which of the following individuals would NOT need Medicare supplement insurance?
Ken, whose income is low enough to qualify him for help from Medicaid
Which of the following individuals is least likely to be granted a temporary license?
Kim, who wants to try selling insurance on a temporary basis before investing the time and money into being licensed
A 40-year-old woman is insured under a $500 per month Disability Income policy that contains a Change of Occupation provision. After her policy was issued, she changed her occupation from insurance agent to farmer without notifying the insurance company and she was recently injured. She would most likely receive which of the following from the insurance company?
Less than $500 per month
Which of the following Settlement Options might provide payments that exceed the proceeds of the policy and the interest earned?
Life Annuity
Which of the following is an advantage of life insurance as property?
Life insurance requires no physical upkeep.
Which of the following generally is NOT considered to be a presumptive disability?
Loss of the dominant hand
This program is made up of two parts, and the insured helps to pay for one of these parts.
Medicare
The Original Medicare Plan consists of
Medicare Parts A and B
Which type of policy requires use of approved doctors and hospitals to receive benefits?
Medicare SELECT
Medicare supplement policies are also known as
Medigap polices
All of the following statements about Medigap insurance are correct EXCEPT
Medigap policies are available through Medicare
PDQ Printing pays for all routine claims. PDQ's insurer pays for excess or unexpected claims beyond a specified trigger point. PDQ's policy is funded using which premium option?
Minimum premium
Does Medicare pay all medical costs for its beneficiaries?
No
Carl has not selected a dividend option for his nonparticipating policy. What happens to his dividends?
No dividends are paid.
Which of the following group underwriting characteristics generally is required by law?
Nondiscriminatory classifications
Billy is receiving the proceeds of a life insurance policy as an income stream over a period of several years. What part of the money will be subject to tax?
Only the part that represents income earned on the original death benefit
Which definition of total disability is more favorable to the insured?
Own occupation
Which of the following Medicare supplement plans covers the Part A and Part B deductible?
Plan C
Which of the following Medicare supplement plans covers the Part B excess at 80%?
Plan G
Which of the following statements is true about the premium payment schedule for a Whole Life policy?
Premiums are payable throughout the insured's lifetime, and coverage continues until the insured's death.
Which of the following statements about conversion from group life insurance is TRUE?
Premiums for the new policy will be based on the insured's attained age
Which of the following riders is increasing term insurance that always equals the total premiums paid during the time the policy is in effect?
Return of premium
Which of the following people would be required in most states to obtain an insurance license?
Sarah, who sells insurance to businesses only
Which of the following statements about partial disability is NOT true?
Sickness disability is more likely to be partial than accident disability
Sin Lan has a hospital income policy that will pay $1,500 per month for up to 12 months. There is no elimination period. If Sin Lan is hospitalized, to whom will the insurer make payments?
Sin Lan
Which type of annuity is most likely to be used to distribute lottery winnings?
Single premium, temporary annuity with amount certain
Which of the following benefits are NOT required in any Medicare supplement policy?
Skilled nursing care benefit that covers the Part A co-payments for the 21st through the 100th day of skilled nursing facility care
Which of the following is a type of insurance company owned by its shareholders?
Stock
Tom started work the same day Gianna did, at the same company. Tom does not try to enroll in the company insurance plan until August 15. What will Tom probably need to do?
Submit to a medical exam and full individual underwriting
Which federal law is intended to prevent group term life plans from discriminating in favor of key employees?
TEFRA
Which of the following types of insurance is designed to provide life insurance protection for only a limited time?
Term life insurance
Adam purchases a universal life policy. In his second year, he decides to pay a $1,000 premium. What happens to the cash value of his policy at this point?
The front-end load is deducted from the premium, the premium is added to the cash value, the cost of insurance is deducted from the cash value, and the current interest rate is credited to the cash value
Which of the following is an advantage of term insurance?
The initial cost of the policy tends to be low.
If payment of a valid death claim is delayed, what is the usual reason?
The insurer has not received proper notification of the policy
Tina has a whole life insurance policy on her life that has been in effect for 15 years. Tina and her husband review their insurance coverage and decide that this policy, which was purchased before their marriage, is no longer necessary for their financial future. If Tina decides to stop paying the premiums, what will happen?
The policy will lapse, and Tina will be able to select a non forfeiture option to receive value for the cash value built up in the policy
Which of the following is NOT usually a condition of policy reinstatement?
The policyowner must pay all back dividends due plus interest on the amount.
Which of the following is allowed when policy proceeds are being paid through a spendthrift clause?
The proceeds are paid directly to the beneficiary in monthly installments
Alice and Ken are in a fatal car crash that kills them both. Alice is the primary beneficiary of a policy on Ken's life. What happens to the policy proceeds?
The proceeds are paid to any contingent beneficiaries or to Ken's estate
John leaves his $300,000 estate to his 3 children to split equally according to a per capita distribution. One of his children dies before John does. Upon John's death, which of the following statements is TRUE?
The proceeds are split 2 ways between the remaining children only
Dividend projections may be included in a proposal for life insurance when which of the following is true?
There is a clear statement that payment of future dividends is not guaranteed
Which of the following statements is usually true about the benefits of a group Short-term Disability Income policy?
They are not payable for accidents covered by Workers Compensation
Which of the following is NOT duty of the Commissioner of Insurance?
Writing Georgia insurance laws
Which element is NOT necessary for the formation of a valid contract?
Written document
Disability benefits under Social Security require at least
a 5-month waiting period
Delbert is self-employed and sets up a retirement plan for himself. Delbert most likely sets up
a Keogh plan
The baker's union and the butcher's union worked together to form a trust to provide insurance to their employees. This type of group is called
a Taft-Hartley trust
The type of policy covering doctor visits while the insured is in the hospital is
a basic medical expense policy
Bob's Balloons has a plan in which its employees can select benefits from a variety of coverage options based on individual and family needs. The plan is probably
a cafeteria plan
An insurer's license to do business in Georgia is called
a certificate of authority
A deductible that runs between the first dollar coverage of a basic policy and the comprehensive coverage of a supplemental policy is known as
a corridor deductible
Under the financial privacy safeguards of the Gramm Leach Bliley Act, an individual with whom a financial institution has an ongoing relationship is
a customer
Credit health insurance covers
a debtor
George has a policy that will provide him an income if he is disabled from illness or injury and recuperating at home. George probably has
a disability income policy
The Hoosier HMO contracts with an independent medical group that specializes in a variety of medical services in order to provide those services to HMO subscribers. The Hoosier HMO is structured as
a group model HMO
Dan and Dawn want to purchase a single policy that will provide a death benefit upon the death of either of them. The type of policy that might best fits this need is
a joint life policy
Devon wants to purchase a policy that will cover his nephew until the nephew turns 21 in order to help his nephew start out on the right foot in terms of insurance. The type of policy that best fits this need is
a juvenile policy
The United Auto Workers union provides insurance to its employees. This type of group is called
a labor group
The estimation of future losses is more accurate when information is from
a large group
A special type of policy tends to cover
a limited number of situations as described in the policy itself
Zelda agrees to pay premiums on her policy every year for 20 years. After that, she will no longer have to pay premiums, but her insurance protection will continue until she dies. Zelda has
a limited-pay policy
The type of health insurance providing high maximum coverage for medical care is
a major medical expense policy
Eric purchased an annuity with favorable rates. However, because of unforeseen circumstances, he needs to surrender the annuity. If the market has gone up, Eric will need to pay a higher surrender charge than if the market has gone down. Eric owns
a market value-adjusted annuity
Julia has a policy that will pay any expenses she incurs as the result of in-hospital medical treatment, as well as some of the expenses she incurs on an outpatient basis. Julia probably has
a medical expense insurance policy
Best Cleaners has a health plan that provides its employees with a high-deductible medical indemnity plan and an account funded by the business, which employees can use to pay for medical expenses throughout the year or withdraw at the end of the year as taxable income. The plan is probably
a medical savings account
Chianna becomes injured in a car accident caused when she took her eyes off the road to answer her cell phone. This is an example of
a morale hazard
Jimmy's Print Shop and Bryan's Boutique join together to form a trust to provide insurance to their employees. This type of group is called
a multiple employer trust
Tim has a life insurance policy that will pay $100,000 if he dies before age 65 and $50,000 if he dies after age 65. Time probably has
a multiple protection policy
Hoosier Insurance Company is owned by the policyholders. Hoosier Insurance is
a mutual insurer
Star HMO contracts with 14 medical groups to increase accessibility to providers as a convenience for subscribers. Each of the medical groups is paid on a capitation basis to provide services to Star's subscribers. The Star HMO operates as
a network model HMO
Kim is required to take a $2,000 minimum annual distribution from her IRA. She fails to comply and only takes a $1,000 distribution. Because of this failure, Kim will be subject to
a nondeductible excise tax of $500
For non-routine treatments, a comprehensive policy generally pays
a percentage of the reasonable and customary charges after a deductible
Under workers' compensation, individuals with partial disabilities who are able to perform some work are eligible to receive
a percentage of the wage loss, subject to minimum and maximum dollar amounts
Life insurance contracts contain all of the following EXCEPT
a policy folder
Carmen falls and breaks her leg, incurring $2,000 in medical expenses. Her policy pays the entire amount. Carmen has
a policy with first dollar coverage
Sara is hired to work at a restaurant. She is not eligible to join the group insurance plan for 30 days. This is an example of
a probationary period
Brandon injures his back working at a warehouse. Six months later, he is well enough to go back to work lifting boxes. Two weeks into working, however, he strains his back again and has to go back on bed rest. This is an example of
a recurrent disability
Thomas has chosen to receive the settlement from his wife's $100,000 life insurance policy according to the life income option. Under the option he chooses, he will receive an income fro his life and his daughter will receive payments if he dies before receiving $100,000 in income. Thomas has selected
a refund annuity option
Albert has purchased an annuity that will pay him a monthly income for the rest of his life. If Albert dies before the annuity has paid back as much as he put into it, the insurance company has agreed to pay the difference to Albert's daughter. Albert has purchased
a refund life annuity
Some policies have replaced the partial disability provision with
a residual disability provision
Devon purchases an annuity that will pay a monthly income for the remainder of his life and then stop making payments. Devon has purcased
a straight-life annuity
Gerald has a state insurance license but no other training or licenses. Gerald can sell any of the following EXCEPT
a variable universal life insurance policy
All of the following define a disability EXCEPT
accidental death and dismemberment
A reinstated policy will cover
accidents immediately and sickness after 10 years
Individual and group policies limit the age to which a dependent child may be covered. All of the following are reasons why the limit is not observed EXCEPT that the child is
adopted
Albert works as a window washer at the top of skyscrapers. Bernie works as a window washer on the ground floor. The fact that Albert is more likely to seek insurance coverage than Bernie is an example of
adverse selection
The ability of an individual to wait until covered by dental insurance before seeking treatment for dental issues is an example of
adverse selection
The tendency for poor risks to seek and be covered by insurance more often than average risks is
adverse selection
Social Security taxes are paid by employees with
after-tax dollars
When one party may receive much more from the contract than she gives in exchange, this is known as
aleatory
Ken has paid only 4 premiums on his health insurance policy when he is hit by a car. The insurance company pays out nearly half a million dollars to cover his treatment and a lengthy stay in intensive care. This is an example of
aleatory contract
A pro rata return is one in which the insurer returns
all of the unearned premium
A hospice works
alleviate pain and suffering for terminally ill patients until death, but does not attempt to cure
Carmen owns a business that provides a retirement plan to its employees whereby the business makes contribution of up to 25% of the total compensation paid to all participating employees to IRA plans owned by the individual employees. Carmen's plan is most likely
an SEP
Lee is helping a friend move his pool table when he strains his back, causing a disability. The insurer declines coverage, saying the injury was not accidental under the terms of Lee's policy. Lee's policy must include
an accidental means definition of accidental
LaKita buys a policy that allows her to adjust the face amount, premium, and length of protection without having to complete a new application or have a new policy issued. LaKita has
an adjustable life insurance policy
The ZYX Insurance Company is incorporated in Mexico. While doing business in Texas, it is
an alien insurer
Jerry has a policy that pays dividends, which are used to purchase additional paid-up insurance to increase the face value of the policy. Jerry has
an economatic policy
Hospital indemnity insurance pays
an income for each day the insured is confined to the hospital
Lauren's policy covers hospital expenses by paying a specified, predetermined amount per day, as shown in a schedule in the policy. Lauren's policy pays on
an indemnity basis
The Provider's Choice HMO was started by a group of individual physicians, and each physician operates out of his or her own office. The physicians are paid on a fee-for-service basis with the fees negotiated in advance. Provider's Choice HMO operates as
an individual practice association model HMO
Whole life insurance policies provide all of the following EXCEPT
an opportunity for significant investment gains
An individual who is considered chronically ill must be re-certified as such
annually
Tom has always made a practice of having his policyholders mail their premium checks directly to his home address and forwarding them on to the insurer so that he is aware of anyone missing a payment and can contact policyowners directly if that should happen. His contract does not allow this practice, but the insurer is aware of the actions and has not asked him to stop. This practice is an example of
apparent authority
All of the following constitute the transaction of insurance EXCEPT
applying for an agent's license
A policy may be issued in all of the following ways EXCEPT
as an exchange policy, covering someone other than the original applicant
Under the coordination of benefits rule, the primary company pays
as if there were no other coverage
Under OBRA, an employer may terminate COBRA coverage because of coverage under another health plan
as long as the other health plan does not limit benefits for the insured's preexisting conditions
Doctors and suppliers who agree to accept the amount Medicare will pay are said to have agreed to
assignment
A contributory life insurance plan must cover
at least 75% of the eligible employees
Roger refuses to travel by airplane. Roger is managing the risk of being in a plane crash by
avoidance
Social insurance supplements provide disability income
before and after workers' compensation and Social Security begin payments
John fills out an application for a life insurance policy to insure his own life, for which he plans to pay the premiums. John is playing all of the following roles EXCEPT
beneficiary
Virtually all of the current TLC policies are guaranteed renewable. This means the insurer cannot cancel the policy
but does reserve the right to increase policy premiums on specified classes of policies
Jennifer takes out an optionally renewable health policy with an annual premium due on June 14. The insurer decides it no longer wants to insure people with first names longer than five letters. The insurer may
cancel the policy, but only on June 14 of the next year
A method of payment in which a provider is paid a specific fee monthly for each subscriber is known as
capitation
If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to
charge an extra premium
Medicare Part A covers all of the following EXCEPT
charges for a private room
Gwyneth's HMO requires that she receive health care services from a specified, limited number of health care providers chosen by the HMO. Gwyneth's HMO is
closed panel
Kim is injured in a house fire. When the bills come, the insurance company pays 80% of the cost, and Kim pays the rest. This is an example of
coinsurance
Individuals who reside in and are licensed agents in another state must meet all of the following requirements to be issued nonresident licenses EXCEPT
complete the required prelicensing education in Georgia
Long-term care polices can limit or exclude coverage for all of the following EXCEPT
congenital heart disease
No loss/no gain legislation requires a replacing policy to
continue to pay claims ongoing under the policy it replaces
General Electricians offers insurance to its employees. About 80% of its eligible employees are currently covered under the plan. This plan is
contributory
Producers may act as
either agents representing the insurance company or brokers representing the individual seeking insurance.
The taxes to finance Social Security benefits are paid
equally by employees and employers
The application of the law of large numbers enables insurers to
estimate the future losses of a class or group of people
Albert's life insurance premium is due on the 10th of the month. Because he gets paid at the end of the month, he has always sent the premium in late. The insurer has been accepting his premium this way for 3 years when a new CEO comes in and decides to crack down on late premiums, canceling Albert's policy for nonpayment of premium. Albert contests this decision legally and gets the policy reinstated. The decision to reinstate the policy is an example of
estoppel
The creditor must notify the debtor that she may be covered by the group insurance plan
even if the creditor pays the full cost of the coverage
The head of the state Department of Insurance (usually called the Commissioner) is responsible for all of the following EXCEPT
examining individual insurance policies before issuance
The Commissioner may, without a hearing, immediately suspend the certificate of authority of an insurer for each of the following reasons EXCEPT
failing to pay claims when due
An insurer might require personal dilvery
for verification of the continued good health of the insured at the time of delivery
Julia worked as a race car driver until recently, when she took a job in the promotions office handling media inquiries. If she has the same health insurance, her premiums are likely to
go down
Associations organized to protect claimants, policyholders, annuitants, and creditors of financially impaired insurers are known as
guaranty associations
An applicant for an agent's license is required to take a written examination if he
has completed the prelicensing education requirements
The federal government
has the right to regulate the business of insurance to the extent that such business is not regulated by state law
To be eligible to purchase insurance, an association group must
have a constitution and bylaws
Carla is 67 and eligible for Social Security and Medicare. When she comes out of retirement to work at a large corporation that provides health benefits
her Medicare benefits become secondary to her private benefits
The Delectable Doughnut Company may deduct its premiums for business overhead expense insurance
if it is a corporation partnership, or sole proprietorship
Maternity benefits must be provided on the same basis as non-maternity benefits
if the policy covers an employee group of 15 or more people
Gina accepts the initial premium when she sells an insurance policy and sends it to the company with the application. Nothing in her contract mentions handling of initial premiums. This is an example of
implied authority
The least common of the following types of insurance is
increasing term
Benefits of travel accident insurance are limited to
losses caused by accidents while traveling, usually by common carriers such as airlines or bus lines
Scheduled benefits are generally
lower than reasonable and customary allowances
Nonfinancial regulatory activities of an insurance department fall under the broad heading of
market conduct
The penalties assessed against MECs primarily affect
money taken out of the policy
All of the following outpatient services are covered under Part B EXCEPT
most immunizations
Individual disability insurance premiums are
not deductible to the insured, but the benefits are received tax free
Pretext interviews are
not permitted unless some evidence of criminal activity exists
Carmen gets her health insurance policy on May 1, and on May 3 she decides she doesn't want it and returns it to the company. On May 6, she is hit by a car. The company will
only return any premium Carmen has paid and not any resulting claim
Carol is eligible for a retirement benefit based on her own earnings and also a benefit based on her late husband's earnings. Carol will receive
only the larger benefit
Annuities are a mechanism for transferring to an insurance company the risk of
outliving financial resources
The optional provisions that deal with multiple insurance polices of the same type on a single insured deal with the problem of
overinsurance
If a policyholder has two or more policies from different companies that cover the same expenses and the insurers were not notified that the other coverage existed, each insurer will
pay a proportionate share of any claim
Calvin is hit by a car while traveling out of state. When the bill for his emergency services arrives, Calvin's HMO will probably
pay for the services, even though they were incurred out of network, because emergency coverage is a basic health care service
Lee applies for a policy, pays the initial premium, and receives a conditional receipt on March 14. On March 15, he passes the medical exam with flying colors. On March 16, an undiagnosed brain aneurysm bursts, killing Lee instantly. On March 17, the insurer receives the results of the medical exam, which includes no information about the aneurysm. On March 19, the insurer receives the notice of claim. The insurer will
pay the claim
Rich applies for a policy, pays the initial premium, and receives a binding receipt on Friday, September 1. On Monday, September 4, the underwriting department decides not to issue the policy and places the file in a pile for notification letters to be sent out at the end of the week. On Wednesday, September 6, Rich is killed in an auto accident. On Thursday, September 7, the insurer receives the notice of claim. The insurer will
pay the claim because a binding receipt ensures coverage until the potential insured is notified of a rejection
Medicare Part A provides coverage for all of the following kinds of care EXCEPT
private-duty nursing
The Commissioner of Insurance has all of the following powers EXCEPT
promulgating insurance law
Purchasing basic benefits on an individual basis usually
provides less-complete coverage with more gaps than a major medical policy
The conversion privilege allows the insured to continue group coverage without
providing evidence of insurability
Term insurance provides
pure insurance protection
Knowingly offering to make any insurance agreement other than that expressed in the insurance contract is considered to be
rebating
Benefits paid by individually owned accident, health, disability, or long-term care policies generally are
received income-tax free by the taxpayer, provided benefits do not exceed actual expenses
When conducting examinations, the Commissioner of Insurance can do all of the following EXCEPT
require parties to appear in person
The Americans with Disabilities Act
requires that employees with disabilities be given equal access to whatever health insurance is provided to other employees
To be certain that insurers have the money available to pay claims as they arise, they are required to maintain
reserves
Typically, the expenses incurred in a hospice will be
room and board and medication for pain
Brit purchases a policy and tells the producer he wants immediate coverage, regardless of what the underwriting outcome is. To meet Brit's demand, the producer most likely will accept the premium and
set up a temporary insurance agreement
Life insurance that requires no medical exam and asks only basic medical questions is known as
simplified issue
The premiums paid by a company for group health for its employees are
tax deductible by the company and not considered taxable income to the employees
Medicare is administered by
the Centers for Medicare and Medicaid Services (CMS)
An organization that establishes model laws that are often adopted by states with only slight differences is
the National Association of Insurance Commissioners
The rider that provides more benefits during the first 6 months or year of a claim is known as
the additional monthly benefit rider
All of the following statements about profit-sharing plans are correct EXCEPT
the amount of annual contributions is set by law
The amount of money paid by an AD&D rider if the insured is disabled in an accident is referred to as
the capital sum
The sharing of expenses between the insured and the insurer is an example of
the coinsurance
The benefit that protects against the erosion of purchasing power for fixed disability benefits is known as
the cost-of-living benefit
The expense that must be incurred before major medical benefits begin to be paid is
the deductible
Gianna is eligible for coverage on July 1. She enrolls on July 15. She does not need to take a medical exam because she enrolled within
the eligibility period
Individuals who are eligible for Social Security benefits become eligible for Medicare Part A benefits as of
the first day of the month in which they turn 65
Carmen has selected to receive $10,000 per month until the principal and interest on her husband's life insurance policy have been paid out. Carmen has selected
the fixed-amount option
Emily has chosen to receive the payout from her husband's life insurance policy so that she will receive an income for the next 15 years. At the end of that time, the entire proceeds from the policy will have been paid out. Emily has selected
the fixed-period option
Doris dies 15 days after her group coverage is terminated and before she has the chance to convert her policy to permanent coverage. Doris's beneficiary will receive
the full benefit under the group policy
The option that allows an insured to purchase additional amounts of disability income protection is known as
the future increase option
Joe took out a disability policy while working as a very successful stockbroker. A few years later, he decides to take a less stressful job at a not-for-profit organization, writing about financial issues. He loves his new job and doesn't mind the fact that he makes a lot less money. When he becomes disabled 3 years later, his disability benefit is more than he has made in salary in 3 years. If the policy contains an average earnings clause, Joe's benefit will be
the greater of Joe's monthly earnings at the time the disability started, or the average monthly earnings for the period of 2 years immediately preceding his disability. In addition, the insurer will return some of the excess premiums that paid for the benefit Joe is not eligible to receive
The longer the benefit period
the higher the policy's premium
The benefit that pays the regular total disability benefit during the elimination period when the insured is hospitalized is known as
the hospital confinement rider
An insurance producer analyzed Bonita's life insurance needs, taking into account Bonita's net annual salary, her expenses, her current age, and depreciation of the dollar over time. This producer was using
the human life value approach to needs analysis
If there is no beneficiary listed on a policy, benefits will be paid to
the insured's estate
Jim has selected to receive only the interest from his mother's life insurance policy. When Jim dies, his children will receive the lump-sum benefit in addition to the benefit from his life insurance policy. Jim has selected
the interest-only option
Heath has chosen to receive the payout from his wife's life insurance policy in such a way that he will have an income for the remainder of his life, regardless of how long he lives. Heath has selected
the life-income option
An insurance producer analyzed Dwight's life insurance needs, taking into account the amount of money Dwight anticipated needing for his funeral and the amount of income that would be required to maintain his family's standard of living in the event of his death, including projected college costs and the costs of supporting his spouse. This producer was using
the needs approach to needs analysis
Applicants for insurance must be given advance notice including all of the following types of information EXCEPT
the persons who are collecting information
When both parents have employer-provided group coverage, the children are covered under
the plan of the parent whose birthday falls closest to the start of the calendar year
The sum of money the insured pays the insurer in exchange for the benefits provided in the policy is
the premium
According to the entire contract provision, the entire contract includes all of the following EXCEPT
the premium payment
When waiver of premium applies
the premium payment generally resumes when care ceases
Social Security benefits are expressed as a percentage of
the primary insurance amount
The amount of money paid by an accidental death benefit rider if the insured dies in an accident is referred to as
the principal sum
Gianna starts work at a new job on March 1. She is not eligible for insurance coverage until July 1. The period between start date and her eligibility date is
the probationary period
All of the following statements about accelerated living benefits are correct EXCEPT
the proceeds must be spent on the insured's medical expenses
If an applicant is rated or declined an insurance policy, the reasons for this decision will be explained to be applicant by
the producer
Insurers sometimes require personal delivery so that
the producer can verify the insured's good health at the time of delivery
If a policy includes the provision on conformity with state statues, and the state changes the law to be in conflict with another provision of the policy
the provision will automatically be amended to conform to the minimum requirement of the statutes
The benefit that enables a disabled insured to learn to work in another occupation is known as
the rehabilitation benefit
Medicare SELECT policies offer ________ coverage, compared with standard Medigap policies.
the same
The insurer may generally require an autopsy at its own expense unless
the state has an applicable law that forbids autopsy
Most insurance regulation takes place at
the state level
Consideration for a health policy includes
the statements made in the application and the premium
The insurance industry in the United States is primarily regulated by
the states
The dollar limit beyond which the insured no longer participates in payment of expenses is
the stop-loss limit
The out-of-pocket limit is also known as
the stop-loss limit
The amount of coverage available under a credit insurance policy is generally limited to
the total amount of indebtedness at any given point
The coordination of benefits provision provides that when a person is covered under more than one plan, the total benefits cannot exceed
the total medical expenses or loss of wages
When benefits are not listed by a specific dollar amount in a schedule, a policy will generally pay
the usual, customary, and reasonable charge for the procedure
Under Social Security benefits, disabled workers receive a benefit equal to
their primary insurance amount
Medicare supplement polices are regulated for all of the following reasons EXCEPT
to provide affordable supplemental coverage to all senior citizens in Georgia who want it
To receive benefits from a disability income policy for disability due to sickness, the insured must be
totally disabled
A flexible premium, adjustable benefit life insurance contract that accumulates cash values is called
universal life insurance
Securities-based whole life insurance is called
variable life insurance
The Commissioner of Insurance may suspend or revoke a certificate of authority for all of the following reasons EXCEPT that the company
was compelled by a court order to pay a final judgment rendered against it
Under the coordination of benefits rule, the secondary company pays
whatever the other coverage does not pay, up to the policy limit
Legally, the policy is considered delivered in all of the following situations EXCEPT
when the policy is approved by the company
Joel is hit by a car while crossing the street against the light. If Joel's policy contains the illegal occupation provision, the insurer
will pay the claim because crossing the street against the light is not a felony or a regular occupation
A customer is anyone
with whom a company has an ongoing relationship
Parties to a public hearing held by the Commissioner of Insurance have the right to do all of the following EXCEPT
withhold incriminating evidence
Comprehensive dental policies
work in much the same way as comprehensive
Under Medicare Part B, individuals pay a deductible each
year
