Insurance

K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?

$20,000 death benefit

J has an Accidental Death and Dismemberment policy with a principal sum of $50,000. While trimming the hedges, J cuts off one of his fingers. What is the MAXIMUM J will receive from his policy?

$25,000.

XYZ Company pays the entire premium for its group health plan. The MINIMUM percentage of eligible employees that must be covered is

100%

A long-term care policy must have a minimum benefit period of:

12 months

N is a 40 year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purhcase?

30 pay life; limited pay whole life policies have level premiums that are limited to a certain period.

Every 12 months after the initial enrollment period, an HMO must hold an open enrollment period of

31 days

M's insurance company denied a reinstatement application for her lapsed health insurance policy. The company did not notify M of this denial. How many days from the reinstatement application date does the insurance company have to notify M of the denial before the policy will be automatically placed back in force?

45 days

T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?

50, 000 (The suicide occurred after the Suicide Provision which is typically 1-2 years)

A loss-purchase buy and sell agreement among 3 partners, funded with individual life insurance would require how many policies?

6 since each partner owns and is the beneficiary of and pays the premium for life insurance on the other partners equal to his or her share of the purchase price.

How long does an individual have to rollover funds from an IRA or qualified plan?

60 days

C is a key employee at ABC Incorporated. If a Key Employee life policy is purchased on her life, which of these statements would be true?

ABC is the policy owner, C is the insured, and ABC is the beneficiary

In annuity contract, there is not:

AD&D coverage

Under long term care policy this benefit is excluded

Alcohol rehabiliation

Which of the following statements is correct regarding the tax treatment of a lump-sum payment paid to a life insurance policy's primary beneficiary?

All proceeds are income tax free in the year they are received.

In a qualified retirement plan, the yearly contributions to an employee's account

Are restricted to maximum levels set by the irs

Which of the following is a requirement for obtaining a Texas insurance agent license?

Be honest, trustworthy, and reliable

Which of the following policy features allow an insured to defer current health charges to the following year's deductible instead of the current year's deductible?

Carryover provision

A Disability Income policyowner recently submitted a claim for a chronic neck problem that has now resulted in total disability. The original neck injury occurred before the application was taken 5 years prior. The neck injury was never disclosed to the insurer at the time of application. How will the insurer handle this claim?

Claim will be paid and coverage will remain in force. Because After a policy has been in force for 2 (sometimes 3) years, it enters the incontestable period, in which the insurer may not deny a claim based on information not disclosed at the time of application.

T applies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or medical examination, whichever is later, provided that T is an acceptable risk. What item is given to T?

Conditional receipt binds the insurer to coverage as of the date of the application or medical exam, provided the proposed insured is determined to be an acceptable risk.

Common exclusions to continuation of group coverage include:

Dental care and other prescription drugs

Which of these provisions is not required in life insurance policies?

Extended term

N purchases an annuity by making payments in an amount no less than $100 quarterly. This describes which of the following annuities?

Flexible installment deferred

What is considered a valid reason for small businesses to insure the lives of its shareholders?

Fund a buy-sell agreement

A physician opens up a new practice and qualifies for a $7,000/month disability income policy. What rider would the physician add if he wants the ability to increase his policy benefit as his practice and income grow?

Guaranteed insurability option rider

Which of the following statement about health reimbursement arrangements is correct?

If the employee paid for qualified medical expenses, the reimbursements may be tax-free

In texas how long must a policy be in force before an insurance company must pay death benefits for suicide?

In force for a minimum of two years.

How does an indexed annuity differ from a fixed annuity?

Indexed annuity owners receive credited interest tired to the fluctuations of the linked index; an indexed annuity differs from a fixed annuity in that indexed annuity owners receive credited interest tied to the fluctuations of the linked index.

If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act?

Insured's contingent beneficiary; policy proceeds will be paid as if the insured died last.

T was treated for an ailment 2 months prior to applying for a health insurance policy. This condition was noted on the application and the policy was issued shortly afterwards.How will the insurer likely consider this condition?

Insurer will likely treat as a pre-existing condition which may NOT BE covered for one year.

A life insurance arrangement which circumvents insurable interest statutes is called:

Investor-originated life insurance.

Which of the following statements BEST describes how a policy that uses the "accidental bodily injury" definition of an accident differs from one that uses the "accidental means" definition?

Less restrictive

T has a disability income policy that pays a monthly benefit of 5000. IF T becomes disabled what can he likely expect?

Less than $5,000 per month benefit regardless of the cause

A whole life insurance policy owner does not wish to continue making premium payments. Which of the following enables the policy owner to sell the policy for more than its cash value?

Life settlements contract which allows a policyowner to sell the insurance policy for more than its cash value.

Nursing home benefits must be provided for at least 12 consecutive months in which of the following types of policies?

Long-term care

Which of these factors do not play a role in the underwriting of a life insurance policy?

Marital status

What type of renewability guarantees premium rates and renewability?

Noncancellable

P is the insured on a participating life policy. Which statement if true if P's premiums are waived due to disability?

P (insured) will continue to receive dividends as if the insured were still making the payments themselves.

Which of these statements is incorrect regarding a preferred provider organization (PPO)?

PPO's are a managed health care system.

Under what system do a group of doctors and hospitals in a designated area contract with an insurer to provide services at a prearranged cost to the insured?

PPO, a group of doctors and hospitals in a designated area that contract with an insurer ro provide services at a prearranged cost to the insured.

What statement is true in regards to a policy loan?

Past-due interest on a policy loan is added to the total debt

M had an annual life insurance premium payment due January 1. She died January 10 w/o making the premium payment. What action will the insurer take?

Pay face amount minus the past due premium.

What long term care insurance statement is true?

Pre-existing conditions must be covered after the coverage has been in force for six months.

What is the consideration given by an insurer in the Consideration clause of a life policy?

Promise to pay a death benefit-Consideration is given by the insurer by promising to pay a death benefit to a named beneficiary.

When an insured has the same disability within a specified time period and the insurance company provides the same benefits without a new waiting period, the second disability is covered under which of the following benefits?

Recurrent disability

To terminate an agents appointment, an insurance company must

Send notice of the termination to the Texas Department of Insurance

P is a producer who notices 5 questions on a life application were not answered. What actions should P take?

Set up a meeting with teh applicant to answer the remaining questions

Which type of plan allows an employer to give money to an employee for buying a life insurance policy and also permits the employee to select the beneficiary?

Split-dollar plan

T would like to be assured that $10,000 is available in 10 years to replace a roof. What kind of $10,000 policy should T purchase?

Ten-year endowment

Before a life policy is issued which of these components of the contract is required?

The applicant's signature on the application.

Which of the following statements is correct regarding an employer/employee group health plan?

The employer receives a master policy and the employee receives certificates.

What is the elimination period of an individual disability policy?

Time period a disabled person must wait before benefits are paid

How long does an insurance company appointment remain in force?

Until terminated

What type of annuity has a cash value that is based upon the performance of its underlying investment funds?

Variable annuity; depends on the results of its investment funds

Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?

Variable life because of the transfer of investment risk from the insurer to the policyowner, varibale insurance products are consdiered securities contracts as well as insurance contracts.

Which type of policy contains a monthly mortality charge as well as self investment choices?

Variable universal life

The provision in a Group Health policy that allows the insurer to postpone coverage for a covered illness 30 days after the policy's effective date is referred to as the

Waiting period which gives the insurance company the rights to delay coverage for a covered sickness for a specified # of days after the effective date of the policy.

When is the face amount of a Whole Life policy paid?

When the insured dies or at the policy's maturity date, whichever happens first.

What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?

Whole life insurance

Which life insurance rider typically appears on a Juvenile life insurance policy?

a payor benefit rider which provides a waiver of premium if the adult-payor of the policy dies or becomes totally disabled.

What provision is not required in a group policy?

accidental (AD&D)

a qualified profit-sharing plan is designed to:

allow employees to participate in the profits of the company

The Consideration clause in a life insurance contract contains what pertinent information?

amount of premium payments and when they are due.

all of the following statements regarding group health insurance is true except:

an individual policy is given to each member; in group policies each member receives a certificate of insurance not an individual policy

Which type of contract liquidates an estate through recurrent payments?

annuity; a contract that provides for the liquidation of all or part of an estate through periodic payments

Group/voluntary long-term care policy premiums are typically deducted from income and

are LESS costly as compared to individ. long term care

Insurance contracts are known as CONDITIONAL because

certain future conditions or acts must occur before any claims can be paid

The situation in which a group of physicians are salaried employees and conduct business in an HMO facility is called a(n)

closed panel; when an HMO is represented by a group of physicians who are salaried employees and work out of the HMO's facility.

Which of the following reimburses its insureds for covered medical expenses?

commercial insurers

The universal life policy is called an unbundled life policy because the policyholder can see the expense charges , the interest earned and the

cost of insurance

Which of the following best describes a hospital indemnity policy?

coverage that pays a stated amount per day of covered hospitalization

Which of these types of policies may not have the automatic premium loan provision attached to it?

decreasing term; the automatic premium loan provision can be incorporated into all of the policies except decreasing term

M is insured under a basic Hospital/Surgical Expense policy. A physician performs surgery on M. What determines the claim M is eligible for?

determined by the terms of the policy.

Which contract permits the remaining partners to buy-out the interest of a disabled business partner?

disability buy-sell

M becomes disabled and is unable to work for six months. M dies soon after from complications arising from this disability. M has a Disability Income policy that pays $2,000 a month. Which of the following statements BEST describes what is owed to her estate?

earned, but unpaid benefits

In a disability income policy, which of these clauses acts as a deductible?

elimination period serves as the deductible in a disability income policy.

Which of the following health policy provisions states that the producer does not have the authority to change the policy or waive any of its provisions?

entire contract

What is being delivered during a policy delivery?

insurance contract to the proposed insured.

The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death is called a(n)

insuring agreement

the phrase this policy will only pay for a semi-private room is an example of a

internal limit; limits placed on the dollar amount of a service

The variable nature of the product indicates that the cash savings value is:

invested in the stock market (mutual funds) which permits for a contract owner to decide where the equity is to be invested

Credit life insurance is

issued in an amount not to exceed the amount of the loan.

Which of the following may not charge fees for insurance advice?

legal reserve agents

Which of these are not an example of a nonforfeiture option?

life income

Limited pay life is:

life insurance that covers an insured's whole life with level premiums paid over a limited time

Rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The widow qualifies for the

marital deduction; the transfer of a decedent's IRA account balance to a surviving spouse qualifies for the unlimited marital deduction

In an individual retirement account (IRA), rollover contributions are

not limited by dollar amount

A retirement plan that sets aside part of the companys net income for distibutions to the qualified employees is called a:

profit-sharing plan

A major medical policy typically:

provides benefits for reasonable and necessary medical expenses, subject to policy limits

Which of these Nonforfeiture Options continue a build-up of cash value?

reduced paid-up

J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions?

reinstatement provision

Which factors are taken into consideration when an insurance company determines the premium rate for a whole life policy on an applicant?

risk classification

What type of life insurance gives the greatest amount of coverage for a limited period of time?

term life

A level premium indicates:

the premium is fixed for the entire duration of the contract

Under a renewable term policy,

the renewal premium is calculated on the basis of the insured's attained age

Blanket health insurance is issued:

to cover a group who may be exposed to the same risks

The reason for backdating a policy is

to obtain a premium rate based on earlier age

According to the Time Limit of Certain Defenses provision in an Individual Health Insurance Policy, nonfraudulent misstatements first become incontestable

two years from the date of the policy was issued

All of these are considered to be a benefit under social security except

unemployment

ABC insurance company is actively engaging in boycott coercion and intimidation that results in the unreasonable restraint of trade. ABC is committing a prohibited act under Texas insurance laws covering

unfair methods of competition

A family income policy is a combination of:

whole life and decreasing term insurance.