Life and Health

Nathan is insured under a group disability plan which requires that he pay 1/3 of the premium. Nathan is currently drawing a $6,000 monthly benefit from the plan. How much of the $6,000 is subject to income tax? A $4,000 B $2,000 C $6,000 D Zero

A $4,000 Since the employer pays 2/3 of the monthly premium, then 2/3 of the monthly benefit ($4,000) would be taxable as income to Nathan.

C has a $100,000 traditional whole life insurance policy with a $30,000 cash surrender value. What is the insurer's net amount at risk? A $70,000 B $130,000 C $100,000 D $30,000

A $70,000 The insurer's net amount at risk is the difference between the face amount and the cash surrender values. Here, it is $70,000 ($100,000 - $30,000).

One of your clients just reinstated his health insurance plan. When is coverage effective for sickness and accident? A 10 days for sickness, and immediately for accidental injuries B Immediately for both accident and sickness C 30 days for sickness, immediate coverage for accidents D 10 days for accident and 48 hours for sickness

A 10 days for sickness, and immediately for accidental injuries Upon reinstatement, accidents are covered immediately and sickness after 10 days.

The Time Limit on Certain Defenses (Incontestable) period is _____ years under individual health and disability contracts. A 2 B 7 C 5 D 3

A 2 The Time Limit on Certain Defenses (Incontestable) period is 2 years.

How many credit hours of continuing education must a producer complete every renewal period? A 24 B 12 C 20 D 18

A 24 A producer must complete 24 credit hours of continuing education every renewal period.

Typically, how many days can elapse before an overdue premium will cause a policy to lapse? A 30 B 7 C 10 D 28

A 30 There is a grace period for late premiums. Typically it is 30 days (or one month) during which coverage will remain in effect.

The XYZ Company, which employs 800 workers, provides group disability insurance for the 400 employees who work 30 hours or more. If this group disability coverage is offered on a noncontributory basis, how many employees are participating? A 400 B 800 C 600 D 300

A 400 Noncontributory plans requires 100% participation by eligible employees. In this example, only 400 employees qualify as eligible.

Under the Legal Actions Mandatory Uniform Provision, an insured must wait at least _____ days after providing proof of loss before he or she can take legal action against the insurer. A 60 days B 45 days C 90 days D 180 days

A 60 days An insured must allow a reasonable passage of time for an insurer to live up to its contractual obligations. In this case, reasonable is 60 days.

What percentage of employee participation is required for a contributory employer group plan? A 75% B 50% C 25% D 100%

A 75% Contributory plans require 75% participation.

Gary participates in a group long-term care insurance program through his employer. The employer pays for a standard level of coverage for all employees, and Gary pays for an additional voluntary amount of coverage. In all, Gary's employer pays two thirds of the cost and Gary pays the remaining one third of the cost. If Gary makes a claim under this policy, what percentage of his benefits would be taxable based on the premium structure? A 100% B 0% C 67% D 33%

B 0% This is a long-term care insurance plan, not disability insurance. The tax-status of benefits does not depend on who pays the premium.

COBRA is a federal law requiring employers with _____ or more employees to provide the option of continuing the employee's existing health coverage for dependents for up to _____ months following certain qualifying events such as death of the employee. A 25, 45 B 20, 36 C 20, 18 D 15, 36

B 20, 36 The question specifies coverage for dependents (36 months), not the employee (18 months).

In Indiana, a group health insurance policy must provide for a grace period of ___ days A 7 B 31 C 10 D 60

B 31 The policyholder is entitled to a 31-day grace period for the payment of any due, during which the policy will continue in force.

To be considered fully insured under Social Security, a worker generally needs how many quarter credits? A 80 B 40 C 20 D 10

B 40 To be considered fully insured, a worker generally needs 40 quarter credits (10 years of work).

The Commissioner is required to examine every domestic insurer licensed in Indiana at least once every ___ years. A 2 B 5 C 3 D 4

B 5 The Commissioner is required to examine every insurer licensed in Indiana at least once every 5 years. However, the Commissioner or any appointed examiner may conduct an examination of any insurer at any time and as often as the Commissioner deems appropriate.

Generally, an individual is eligible to enroll in Medicare at age: A 67 B 65 C 59 1/2 D 62

B 65 Medicare is available to individuals at age 65 as a general rule.

An annuity that is purchased with contributions made as often and in whatever amounts the owner wishes, subject only to the insurer's minimums and maximums, is called: A A periodic premium annuity B A flexible premium annuity C A single premium annuity D A fixed premium annuity

B A flexible premium annuity This defines a flexible premium annuity.

Which of the following best describes an Annual Renewable Term Policy? A A policy with a level death benefit, but with increased premium at each renewal B A policy with decreasing premium at each renewal C A policy with increasing cash value at each renewal D A policy with an increased face value at each renewal

A A policy with a level death benefit, but with increased premium at each renewal Whether the policy period is 1 year, 5 years, 10 years, etc., the premium will increase at each renewal to sustain the same specified death benefit that was purchased when the policy was written. At renewal the premium is based upon attained age.

Which of the following statements is false? A A producer license expires every 12 months B A producer license remains in effect for 2 years C The renewal fee for an expired license is 3 times the unpaid renewal fee D A lapsed producer's license may be reinstated within 12 months after the renewal date without having to take a new examination

A A producer license expires every 12 months A producer license remains in effect for 2 years.

Which of the following are part of the legal responsibility of maintaining an insurance license? A A producer must inform the Commissioner of any change in address within 30 days B A producer must inform the Commissioner of any change in address within 60 days C A producer must inform the Commissioner of any change in address within 90 days D A producer must inform the Commissioner of any change in address within 10 days

A A producer must inform the Commissioner of any change in address within 30 days A producer is required notify the Commissioner within 30 days of a change in address.

Which of the following might be done to protect against adverse selection when underwriting group medical insurance? A Allow coverage to begin immediately B Enroll the business owner first C Include all dependents to make the group larger D Require a minimum percentage of the group to enroll

A Allow coverage to begin immediately By requiring a minimum percentage of the group to enroll, the risk is spread by possibly getting those of better health to participate along with those of poorer health.

Which of the following are false regarding the Life and Health Insurance Guaranty Association? A An insurer has the option of becoming a member of the Association B It prevents financial loss to policyholders when an insurer becomes insolvent C The Association is not liable for more than $300,000 in benefits for any one life D Other member insurers are assessed to provide money for the claims of an insolvent insurer

A An insurer has the option of becoming a member of the Association Insurers transacting insurance in Indiana are required to be members of the Association.

With regard to the Buyer's Guide and Policy Summary, the failure of an insurer to provide or deliver a buyer's guide or policy summary constitutes: A An omission B Fraud C A misdemeanor D A felony

A An omission The failure of an insurer to provide or deliver a buyer's guide or a policy summary constitutes an omission which misrepresents the benefits, advantages, conditions, or terms of an insurance policy.

A person making application, for themselves or another, to be insured under an insurance policy is called the: A Applicant B Fiduciary C Beneficiary D Sponsor

A Applicant One applying for coverage is always the applicant. Typically, the applicant is also both the insured and the owner, but not always, as in a third-party policy.

The following qualifications are required for a producer license, except: A Be at least 21 years of age B Have not committed any act, which is ground for denial, suspension or revocation of license C Pay the license fee D Pass a licensing examination

A Be at least 21 years of age An individual must be at least 18 years of age.

An insured owns a whole life policy that ends at age 100 and lives to be 100 years of age. Why does the insurer pay the face value to the insured? A Because the policy endows B Because the cash values exceed the death benefit C Because risk exceeds reward to the insurer D Because the mortality costs exceed the premium

A Because the policy endows Older Whole Life policies are structured to endow (i.e. mature) at age 100. At endowment, the cash value equals the death benefit. Policies written under the 2001 CSO Mortality tables endow at age 121.

Under which business-related use of Disability Income Insurance would the premiums be tax-deductible? A Business Overhead Expense Coverage B Disability coverage purchased to fund a cross purchase plan C Disability coverage purchased to fund an entity purchase plan D Key Person Disability Income

A Business Overhead Expense Coverage Business Overhead Expense Coverage is deductible as an ordinary business expense. Any benefits received would be taxable.

Which of the following is NOT correct concerning a producer's duties pursuant to replacement? A Buyer's Guide B Listing of all policies proposed to be replaced C Copy of each sales proposal D Signed replacement notice

A Buyer's Guide The agent is required to provide an applicant pursuant to a replacement with a Policy Summary, but not a copy of a Buyer's Guide.

Policy replacement is the process of: A Cancelling an existing policy and issuing a new policy B Changing riders and exclusions C Lowering a policy premium D Adding additional coverage

A Cancelling an existing policy and issuing a new policy Replacement means cancelling an old policy and replacing it with new a new policy.

When the owner of the policy and insurer must meet certain conditions in order for the health insurance policy to be enforceable, it is referred to as a(n): A Conditional contract B Contract of adhesion C Unilateral contract D Aleatory contract

A Conditional contract A Conditional Contract is one in which both parties to a contract must perform certain duties to make the contract enforceable.

If the premium is paid at the time of application, the agent will provide the applicant with a: A Conditional receipt B Free look notice C Statement of good health D Claim form

A Conditional receipt The agent will provide a conditional receipt if the premium is paid by the applicant at the time of application.

If a home office underwriter obtains MIB codes inconsistent with information provided on the application, what is the underwriter required to do? A Conduct further investigation to obtain more information prior to making a decision B Refer the case to the state Insurance Department for possible insurance fraud C Issue the policy at a higher premium due to the undisclosed higher risk D Automatically reject the application and order any premium paid refunded

A Conduct further investigation to obtain more information prior to making a decision When the home office underwriter receives MIB codes that are inconsistent with information provided on the application, the underwriter is required to conduct a further investigation to obtain more information prior to making an underwriting decision. Underwriting decisions cannot be based solely on MIB codes since there could be a reasonable explanation for the discrepancy.

The deductible that applies after the Basic Plan is exhausted and before the Supplemental Major Medical Coverage begins is called: A Corridor Deductible B Stop Loss C Payment Structure D Coinsurance

A Corridor Deductible A Corridor Deductible is used between the Basic Plan and before the start of coverage under the Supplemental Major Medical policy.

Which of the following does an agent not have to do to be eligible to assist individuals with enrollment through healthcare.gov: A Create a healthcare.gov account through the IHCP website B Complete a searchable profile on the Marketplace Learning Management System (MLMS) and sign the Privacy and Security Agreement C Create a healthcare.gov account through the SHOP website D Register for access to the CMS enterprise portal by creating a User ID and password

A Create a healthcare.gov account through the IHCP website To be eligible to assist individuals and small businesses with enrollment through healthcare.gov, an agent or broker must create a healthcare.gov account through the SHOP website, register for access to the CMS enterprise portal by creating a User ID and password, and complete a searchable profile on the Marketplace Learning Management System (MLMS) and sign the Privacy and Security Agreement.

Group Accidental Death and Dismemberment premiums are _______ by the company paying the premiums as a business expense. A Deductible B Tax-Deferred C Tax-Free D Taxable

A Deductible Group Accidental Death and Dismemberment premiums are tax deductible by the business owner. Benefits are paid income tax-free because they are not considered income.

_______ income benefits received by an employee are subject to taxation in proportion to the amount of premium that the employer paid. That income attributable to the employee's premium is not taxable. A Disability B Medical C Dental D Long-Term Care

A Disability Disability income premiums paid by the employer are deductible to the employer and are not considered part of the employee's income. Because of this, benefits received are treated as income to the employee to the extent that the employer paid the premiums.

PPO plans pay providers based on a: A Discounted fee for service negotiated in advance B Reimbursement basis C Prepaid basis determined by a primary care physician D Flat benefit determined by geographical region

A Discounted fee for service negotiated in advance The organizers and the providers agree upon medical service charges that are generally less than the providers would charge patients not associated with the PPO. Unlike most HMO arrangements the providers are paid on a fee-for-service basis rather than receiving a flat monthly amount.

_________ refers to the jurisdiction where an insurer was formed or incorporated. A Domicile B Approved C Authorized D Admitted

A Domicile Domicile refers to the jurisdiction either state or country where an insurer was formed or incorporated.

Which of the following is consistent with group health underwriting? A Each member of the group is covered regardless of his or her health history B Participants must submit to individual physical exams C Smokers pay a higher rate D Individual health histories are required

A Each member of the group is covered regardless of his or her health history Group health insurance does not usually require individual underwriting, and the group is either accepted or rejected as a whole. If accepted, all of the group members are covered, regardless of their health history.

Beth has a contract stating she must be disabled for 3 months before benefits will begin to be paid. This 3-month period is known as the: A Grace Period B Contingency Period C Elimination Period D Probationary Period

A Grace Period The Elimination Period is a period of time that must elapse after onset of a disability before benefits begin to be paid.

All of the following groups are eligible for group rates, except: A Groups formed to reduce premiums B Employers C Labor unions D Associations

A Groups formed to reduce premiums A group cannot be formed for the express purpose of obtaining insurance. Employers, labor unions, and associations are eligible plan sponsors.

When Harold became no longer eligible for coverage under his employer's group benefit program, which of the following statements accurately reflects the conversion privilege defined by his group contract? A Harold had 31 days to convert his policy to an individual plan B Harold was covered for an additional 30 days under the conversion provision C Harold had 31 days in order to request COBRA coverage D Harold was covered by his group plan until he found individual coverage

A Harold had 31 days to convert his policy to an individual plan Group plans offer a 31-day conversion privilege. During that time, an employee can choose from among the available individual plants. COBRA refers to an extension of group benefits, not individual benefits. It is available under certain conditions, and is mandated by law, not the insurance contract.

Z chooses a life income with 10 year period certain settlement option for the annuity Z owns. Z dies after 15 years of receiving income benefit payments. What does Z's beneficiary receive? A Nothing B Lifetime income C 5 years' worth of payments D 10 years' worth of payments

A Nothing Since Z outlived the period certain, the beneficiary designated receives nothing.

Under the Fair Credit Reporting Act, which of the following statements is correct? A If an individual is denied coverage, they can request a copy of the report B The reporting company can provide confidential information to anyone requesting it C The Act is designed to protect reporting agencies from the public D The reporting agency has no responsibility to investigate inaccurate information

A If an individual is denied coverage, they can request a copy of the report The FCRA is designed to protect the public and requires the reporting agency to investigate disputed information. The applicant has the right to request a copy of the report from the reporting agency. This act protects confidential information.

Which type of term protection has an increasing face value as the insured gets older? A Increasing Term B Renewable Term C Level Term D Convertible Term

A Increasing Term Increasing Term, as its name implies, increases the death benefit on an annual basis. Used primarily as a rider attached to a permanent policy, the annual premium typically stays level.

Which of the following does Medicare Part A help pay for? A Inpatient hospitalization B Routine physical exams C The first 3 pints of blood D Outpatient services

A Inpatient hospitalization Medicare Part A provides coverage for up to 90 days of inpatient hospitalization per benefit period.

Mandatory uniform provisions found in health insurance policies are designed to protect the: A Insured B Producer C Agency D Insurer

A Insured The mandatory uniform provisions are designed to protect the insured's interests.

If a copy of the application, which led to a life insurance policy being issued, is attached to the policy: A It is considered part of the entire contract B It can be used by the insurance company later on if the insured wants to increase their coverage instead of using a new one C It is a way for the insurer and policyowner to evidence who the producer was at the time of application D It is provided merely as a convenience to the policyowner so that they will have a record of the transaction

A It is considered part of the entire contract If a copy of the application is attached to the policy it becomes part of the entire contract and information contained within or left out can be the basis upon which the insurance company can challenge a claim during the contestable period.

The ___________ branch is responsible for interpreting and determining the constitutionality of the statutes. A Judicial B Electoral C Executive D Legislative

A Judicial The judicial branch is responsible for interpreting and determining the constitutionality of the statutes.

All of the following are Optional Uniform Provisions, except: A Legal Actions B Misstatement of Age C Change of Occupation D Illegal Occupation

A Legal Actions Legal Actions is a Mandatory Uniform Provision. All other responses are Optional Uniform Provisions.

A married couple is interested in an annuity settlement option that will guarantee them both an income for as long as they live, an amount which reduces to 2/3 of that initial amount after one of them dies. What should they select? A Life Income Joint and Survivor B Life Income Period Certain C Joint Life Income D Dual Life Income

A Life Income Joint and Survivor The Life Income Joint and Survivor Settlement Option pays a periodic benefit until the last surviving recipient dies. However, depending upon which survivor option is chosen (e.g. joint-and-full, joint-and-2/3, joint-and-1/2), the benefit paid following the first death could be different.

Z is the beneficiary of a life insurance policy. Rather than take a lump sum, Z wanted a lifetime payout. However, Z would feel bad if after he died, residual values were retained by the insurer rather than being paid out. Z should consider which of the following settlement options? A Life Refund B Life Only C Life with Period Certain D Joint Life

A Life Refund With Life Refund, payments are made for the lifetime of the recipient. Upon death, if a recipient has not received an amount equal to the total death benefit, the balance is refunded to the beneficiary, either in a lump sum (cash refund), or in installments (installment refund).

This type of policy covers various expenses that an insured may incur due to a routine accident or sickness. A Medical expense B Disability income C Dental expense D Long-term care

A Medical expense A Medical Expense contract covers the various expenses which an insured may incur due to an accident or sickness.

Part 1 of the application consists of all of the following information, except: A Medical status of immediate family members, their ages and causes of death B Occupation C Place of residence D Gender

A Medical status of immediate family members, their ages and causes of death Part 1 of the application consists of general questions about the applicant, such as gender, marital status, residence, date of birth, occupation, and past and present life insurance.

With _______, the patient must pay 20% of covered charges plus the deductible. A Medicare Part B B A Medicare Supplement C None of the answers listed D Medicaid

A Medicare Part B Medicare Part B pays 80% of allowable charges after the annual deductible is met.

Bill is a retired military officer suffering from complications caused by Agent Orange exposure during his military service. He incurs $54, 510 in medical expenses during hospitalization at the local Veterans Administration Hospital. The private health insurance he now owns will likely pay: A Nothing B $13,627.50 C $54,510 D $27,255

A Nothing Private insurance does not cover treatment received in a governmental facility. This is a standard exclusion. Retired military personnel are covered under TRICARE.

Which of the following Whole Life insurance policies has the lowest annual premium payment per $1,000 of coverage for a 35-year-old, all other factors being equal? A Ordinary Straight Whole Life B Limited Pay Ordinary Whole to age 85 C 30-Pay Ordinary Whole Life D 20-Pay Ordinary Whole Life

A Ordinary Straight Whole Life The longer the premium-paying period, the lower the annual premium. A $100,000 Ordinary Straight Whole Life Policy spreads the payments out over a longer period of time than a limited premium payment policy.

The person who generally has the rights in the insurance policy is known as the ____________. A Policyowner B Insurer C Insured D Beneficiary

A Policyowner The individual who has ownership rights in a policy. The policyowner and insured are usually the same, but not necessarily. Any changes made to a policy must be approved by the policyowner in writing with his/her signature.

Mutual insurance companies are owned by: A Policyowners B Beneficiaries C Stockholders D Directors

A Policyowners The ownership of mutual insurance companies rests with the policy owners

Barry has just been hired by OPQ Corporation and finds that he cannot enroll for coverage under OPQ's group health insurance plan for 30 days. This 30-day period is known as a: A Probationary Period B Elimination Period C Deductible D Policy Period

A Probationary Period The specified period of time set by the employer before an employee is eligible to enroll for group benefits is known as a Probationary Period. It usually is 30 days in length but could be up to 90 days.

A specified period that must elapse before new coverage goes into effect for a given condition is known as which of the following? A Probationary period B Exclusion C Benefit period D Waiting period

A Probationary period A probationary period is a specified period of time after the effective date of a policy before new coverage goes into effect for specified conditions, such as losses due to a sickness or preexisting conditions.

Case managers do all of the following, except: A Providing the necessary care B Requiring a referral or second opinion prior to approving a procedure C Managing the utilization review of a hospital stay D Determining the appropriate course of action for the insured

A Providing the necessary care A case manager may be assigned to a case to determine the appropriate course of action for an insured. The case manager may require a referral or a second opinion before approving a procedure. The case manager will also manage the utilization review of a subscriber's stay in the hospital.

Eliza has a policy that allows her to deduct the premiums she pays that exceed 10% of her adjusted gross income. Once she turns 65, she can deduct the premiums that exceed 7.5% of her adjusted gross income. Which type of policy does Eliza have? A Qualified Long-Term Care B Either a long-term care policy or a group health plan C Workers' Compensation D Dental

A Qualified Long-Term Care The premiums paid for individual qualified LTC policies that exceed 10% of the individual's adjusted gross income may be tax deductible. For individuals age 65 or older, the premiums paid for individual LTC policies that exceed 7.5% of adjusted gross income may be tax deductible

An insured, whose policy is in force, intentionally kills herself 7 months after purchasing the policy. How much will the insurer pay? A Refund of premiums paid only B Nothing C Refund of premiums paid less the costs of policy issuance D The face amount of the policy

A Refund of premiums paid only Suicide within 2 years of policy issue is a common exclusion in life insurance (the time can vary by state). Only premiums paid are refunded.

The Guaranteed Renewable Provision states that the policy is: A Renewable with premiums that may be increased for entire classes of insureds B Renewable with adjustable premiums determined by frequency of claims C Renewable with no increase in premium D Renewable only at the option of the insurer

A Renewable with premiums that may be increased for entire classes of insureds The Guaranteed Renewable Provision allows the insurer to adjust premiums upon renewal, but by classification only, not for particular individuals.

Any transaction in which a new life policy or annuity is to be purchased, and the producer knows, or should know, that existing contract(s) will be: lapsed, forfeited, surrendered, terminated, reduced in value, amended with a reduction in benefit or term, have a reduced cash value, or is subjected to borrowing, is best known as a __________. A Replacement B Re-entry C Reissuance D Conversion

A Replacement This is the definition of a replacement.

Which of the following is true regarding the duties of insurers? A Replacement requirements do not apply to the existing insurer B The existing insurer must notify the replacing insurer of a policy being replaced within 3 working days C The replacing insurer and existing insurer must retain records relating to replacements for 5 years D The replacing insurer and existing insurer must retain records relating to replacements for 3 years

A Replacement requirements do not apply to the existing insurer Replacement records must be maintained for 3 years by the replacing, not the existing insurer; The replacing insurer would be required to notify the existing insurer of a policy being replaced, not the other way around.

A court reporter develops arthritis making it impossible to continue this employment. The reporter now has other employment at a reduced salary and receives a monthly benefit from an insurance contract due to which of the following policy provisions? A Residual Disability B Total Disability C Recurrent Disability D Partial Disability

A Residual Disability Residual Disability recognizes one's ability to continue to work, but at a reduction of earnings.

A lump sum of money is placed into an account from which the annuitant will draw periodic benefits beginning more than a year from the date of purchase. This describes a: A Single Premium Deferred Annuity B Flexible Premium Immediate Annuity C Single Premium Immediate Annuity D Flexible Premium Deferred Annuity

A Single Premium Deferred Annuity Regardless of how it is funded, by definition a deferred annuity does not begin its income stream for at least 13 months. Typically, the deferral period is many years, not just one.

Which of the following is NOT a common rating classification? A Subrated B Substandard C Standard D Preferred

A Subrated The three classifications for risks are standard, preferred and substandard.

Which of the following statements is NOT correct? A The Commissioner may impose imprisonment for up to 6 months B The Commissioner may suspend or revoke a certificate of authority or license C The Commissioner may order a licensee to make restitution if the licensee has committed a violation D The Commissioner may impose a fine of up to $25,000 per violation or up to $50,000 if the person knew or should have known that he/she was in violation

A The Commissioner may impose imprisonment for up to 6 months The Commissioner does not have the authority to have a person imprisoned.

The 31 days in which the employee may change his/her group policy to an individual policy upon termination and without evidence of insurability, is known as: A The Conversion Period B Change of Policy Provision C The Contestable Period D Ownership Rights Provision

A The Conversion Period As the name implies, the Conversion Period is the period in which an employee may convert the group term death benefit to an individual permanent policy upon termination and without evidence of insurability.

In order for an insurance company to determine if it will issue a policy, what document must always be submitted for review? A The application B A conditional coverage receipt C A premium check D A copy of the applicant's driver's license

A The application The application is what the insurer's home office underwriters use to start their determination of the applicant's insurability in regard to the coverage applied for.

Tom submits an application and a premium check. Six days later, the insurer issues the policy as applied for and mails it overnight to Tom's producer. Tom picks up the policy at his producer's office the next day. When did Tom's coverage begin? A The day Tom submitted his application B The day Tom picked up his policy at his producer's office C The day the insurer mailed the policy D The day the insurer issued the policy

A The day Tom submitted his application Since the policy was issued as applied for, the effective date of coverage is the date of application.

Which statement is inaccurate regarding the Change of Occupation Provision? A The insured must notify the insurer of a change of occupation, or the policy will be cancelled B If the insured changes to a less hazardous occupation, he/she may apply for a rate reduction C If the insured works at two occupations, rates for the most hazardous occupation will be charged D If the insured changes to a more hazardous occupation, benefits will be reduced to the amount which the premiums paid would purchase at the more hazardous occupation

A The insured must notify the insurer of a change of occupation, or the policy will be cancelled Failure to notify the insurer of a change of occupation will not result in cancellation of the policy.

If a child is covered under more than one group health insurance plan how is it determined which carrier is primary? A The plan covering the parent whose birthday occurs first in the calendar year will be the children's primary coverage B The younger parent's plan will become primary C The parent whose date of birth is closest to the end of the year determines which is primary D The date of birth of the child that is closest to either parent becomes primary

A The plan covering the parent whose birthday occurs first in the calendar year will be the children's primary coverage In the event children are covered by more than one group plan, the 'birthday rule' which says the plan covering the parent whose birthday occurs first in the calendar year will be the children's primary coverage.

Each of the following choices are true of whole life, except: A The policy can be converted into a term life insurance plan at anytime B Endowment occurs at age 100 C The death benefit and cash values are guaranteed D As an insured ages, the premiums remain the same

A The policy can be converted into a term life insurance plan at anytime Term can be converted into a permanent plan of life insurance, if convertible, but a whole life plan cannot be converted into a term plan.

The Social Security Death Benefit is payable to the ____________. A The surviving spouse B The estate of the insured C The next of kin D The named beneficiary

A The surviving spouse The Social Security Death Benefit is payable to the surviving spouse or minor children if they meet certain requirements.

How is the funding for Social Security provided? A Through FICA taxes that are paid by both employers and employees B Through the PIA C Through FICA taxes that are paid by employers D Through FICA taxes that are paid by employees

A Through FICA taxes that are paid by both employers and employees Both the employer and employee fund Social Security through paying FICA taxes. Self-employed persons pay the entire amount.

One characteristic of life insurance is that the insurer is obligated to pay a claim in the event of the death of the insured, however, the insured is not contractually obligated to do anything other than keep the policy in force. This is a: A Unilateral Contract B Contract of Adhesion C Aleatory Contract D Conditional Contract

A Unilateral Contract In a Unilateral Contract, only one party is legally bound to contractual obligations after the premium is paid.

Which of the following best describes Third-Party Ownership? A A policy owned by the insured B A policy owned by one person insuring the life of another person C A key employee buying a life insurance policy on him/herself D A business partner buying a life insurance policy on him/herself

B A policy owned by one person insuring the life of another person When a policy is owned by someone other than the insured, it is a third-party ownership situation.

Q has an ordinary straight whole life insurance policy for $100,000. Due to a change in circumstances, Q finds that there is now a need for more coverage, but the budget is not sufficient for another similar policy. What can Q do to satisfy the need for additional coverage at a low price? A Add an accidental death rider B Add a term rider C Ask for an increase in the existing policy's face amount D Use the cash values of the policy to cover the difference

B Add a term rider Adding a term life insurance rider will allow for the additional coverage to be put into place at an affordable price, without having to acquire another policy. Ordinary straight whole life does not allow for an increase in face amount, as it is a fixed benefit policy.

With a Life Income Payment Option, what happens at the annuitant's death? A Payments continue until the principal is paid out B All payments cease C The beneficiary starts receiving benefits D The estate is paid the total remaining balance

B All payments cease Because all payments cease upon the annuitant's death, the amounts of the monthly income payments under this option are larger than under any other option.

The Commissioner of Insurance is the executive officer of the Department of Insurance and is __________. A Elected by citizens B Appointed by the governor C Appointed by the president D Chosen by legislators

B Appointed by the governor The Commissioner of Insurance is the executive officer of the Department of Insurance and is appointed by and serves at the pleasure of the Governor (without term limits).

With a Contributory Group Life Plan, what percentage of the employees must participate? A At least 50% B At least 75% C A full 100% D At least 60%

B At least 75% A Contributory Plan is one in which the participants pay all or a portion of the premiums. The high enrollment percentage, 75%, helps to minimize the risk of adverse selection.

A premium is paid at the time of application and a conditional receipt is issued. If the policy is issued as applied for, and assuming a medical exam has already been completed, coverage becomes effective: A At the time the policy is issued B At the date of application C Upon policy delivery D After the free look expires

B At the date of application The conditional receipt is issued upon the premium being paid at the time of application. If the policy is issued as applied for, coverage is effective as of either the date of application, or the date of completion of any required medical exam, whichever is later. Since the question asks you to assume the medical exam is already complete, the date of application would be the later date.

An application for health insurance includes all of the following information, except: A Medical status of immediate family members B Attending physician's statement C Past and present health conditions D The applicant's age, gender, date of birth, and occupation

B Attending physician's statement The application includes general questions relating to the applicant (date of birth, gender, residence, marital status, and occupation) and medical questions (past and present health conditions, recent medical visits, procedures, hospitalizations or surgeries, and medical status of immediate family members). The attending physician's statement is separate from the application and is requested by the underwriter if the applicant has a preexisting condition that needs further explanation.

Some traditional whole life policies offer a(n) __________ feature to keep the policy in force if there are sufficient cash values to do so. A Collateral B Automatic premium loan C Bank loan D Cash surrender

B Automatic premium loan Some policies offer an automatic premium loan feature to keep the policy in force if there are sufficient cash values to do so.

All of the following are exclusions under an LTC policy, except: A Rest cures B Chemical dependency on one's own prescription drugs C Nervous or mental disorders that have no demonstrable organic cause D Injury arising due to committing a felony

B Chemical dependency on one's own prescription drugs Chemical dependency would not be excluded if it results from the administration of drugs under a physician's prescription and direction.

A producer who wants to sell LTCP qualified policies must: A Complete 7 hours continuing education on LTC and complete a one-time 8-hour training requirement on the Indiana LTC Program B Complete 8 hours continuing education on LTC and complete a one-time 7-hour training requirement on the Indiana LTC Program C Complete 4 hours continuing education on LTC D Obtain an LTC license

B Complete 8 hours continuing education on LTC and complete a one-time 7-hour training requirement on the Indiana LTC Program A producer who wants to sell LTCP qualified policies must complete 8 hours continuing education on LTC and complete a one-time 7-hour training requirement on the Indiana LTC Program.

If a policy requires the payment of an additional premium for the continuation of coverage for a newborn, the insurer must be notified within 31 days of the ______. A First day of the month of birth B Date of birth C Hospitalization date D Policy date

B Date of birth Although coverage begins immediately, notification of birth or adoption and payment of any required premium must occur within 31 days after the date of birth or adoption in order to continue coverage beyond 31 days.

Which of the following is a characteristic of a contributory plan? A Dependents of eligible employees must pay 75% of the premium B Eligible employees pay a portion of the premium C Employers must enroll 100% of eligible employees D Part-time employees must be eligible to participate

B Eligible employees pay a portion of the premium In a contributory group insurance plan, eligible employees pay a portion of the premium. Part-time employees are usually not eligible. Dependents of an eligible employee do pay a required percentage of premium, the amount varies as determined by the employer. A contributory plan requires at least 75% participation of eligible employees. Noncontributory group plans require 100% participation.

______________ is the process of selection, classification and rating, and determining if someone is insurable. A Completing the application B Home office underwriting C Field underwriting D The agent's report

B Home office underwriting Home office underwriting is the process of selection, classification and rating, and determining if someone is insurable.

Which principle states that an insured may be reimbursed up to the amount of the actual loss? A Adhesion B Indemnity C Insurable Risk D Fair Claims Settlement

B Indemnity The Principle of Indemnity states that the insured should not profit from an insurance transaction, but should be restored in whole or in part to their prior condition.

A STOLI/IOLI transaction is best defined as which of the following? A Beneficiaries selling the annuitized benefit they are receiving for immediate cash B Inducing insureds who do not need and cannot afford life insurance to buy a policy and sell it for cash C Beneficiaries choosing one of the settlement options the policy provides D Electing a settlement option for the beneficiaries at time of application

B Inducing insureds who do not need and cannot afford life insurance to buy a policy and sell it for cash. Investors, producers, or brokers with absolutely no personal or business connection with a person, who induce a purchase of a life insurance policy with the sole intent of selling that policy to institutional investors for an amount less than the death benefit, but greater than the policy's cash value is a STOLI/IOLI transaction.

When a policy is mailed to an agent by an insurer after being accepted as applied for and the initial premium paid, it is considered to be: A Legally Delivered B Issued C Purchased D Rated

B Issued A policy may be delivered by registered or certified mail with a signed receipt of delivery. 'Constructive delivery' occurs when the insurer places the policy with the delivery service and no longer has physical custody of the policy.

What portion of an employee's pension plan withdrawal is subject to tax? A The employee's contribution B The entire withdrawal C The employer's contribution D The earnings on the contributions

B The entire withdrawal Since the contributions were pre-tax and all earnings were tax deferred, then the entire withdrawal would be subject to taxation unless one of the exceptions apply.

Which of the following is correct concerning an LTC policy? A It may provide coverage for only skilled nursing care and not any lower levels of care B It may define a preexisting condition as a condition for which advice or treatment was recommended or received within 6 months of the effective date of coverage C A policy may be canceled or nonrenewed on the basis of age D A new waiting period may be established when existing coverage is converted or replaced by another policy

B It may define a preexisting condition as a condition for which advice or treatment was recommended or received within 6 months of the effective date of coverage LTC policies may define a preexisting condition as a condition for which advice or treatment was recommended or received within 6 months of the effective date of coverage. All other choices describe provisions that are prohibited.

How does an Option A death benefit feature of a Universal Life policy work? A It pays out the policy's cash values B It pays out the policy's face amount C It pays out the face amount less the cash values D It pays out the policy's face amount plus the cash values

B It pays out the policy's face amount Option A in a Universal Life Insurance policy pays out a level death benefit, while Option B pays out an increasing death benefit, the face amount plus the cash values.

Medical exams are requested in all of the following situations, except: A High amounts of coverage B Low amount of premium C Past health history D Insured's advanced age

B Low amount of premium Medical examinations are usually requested by the insurer after determining if the amount of coverage, age of applicant, or his/her health history warrants the examination. Premium has nothing to do with it.

With regard to examinations by the Commissioner, the Commissioner: A May, but is not required to examine insurance companies B Must conduct a financial examination of an insurer at least once every 5 years C Must conduct a financial examination of an insurer at least once every 3 years D Must conduct a financial examination of an insurer at least once every 10 years

B Must conduct a financial examination of an insurer at least once every 5 years The Commissioner must conduct an examination of an insurer at least once every 5 years.

This rider will provide paid-up coverage if the insured cancels or lapses the policy due to nonpayment of premium. A Return of premium B Nonforfeiture C Waiver of premium D Guaranteed insurability (Future increase option)

B Nonforfeiture The nonforfeiture rider will provide paid-up coverage if the insured cancels or lapses the policy due to nonpayment of premium.

A Short-Term Disability Policy generally is for a disability lasting for: A 2-3 years B Not more than 2 years C 2 weeks D 3-5 years

B Not more than 2 years A Short-Term Disability is always defined as less than 2 years' duration.

An insurer offering Medicare Supplements to senior clients must: A Offer at least one of the other standardized plans in addition to Core Benefit Plan A B Offer Core Benefit Plan A if it sells any of the other plans C Offer all of the standardized plans D Select three standardized plans that it will offer

B Offer Core Benefit Plan A if it sells any of the other plans An insurer selling Medicare Supplement insurance must also make Plan A available if it offers any of the other plans.

Which of the following is not covered by Medicare Part A? A Hospitalization B Outpatient hospital treatment C Hospice care D Post hospital skilled nursing facility care

B Outpatient hospital treatment Part A is Hospital Insurance mainly providing coverage for inpatient services. Outpatient services are covered under Part B.

In general, which of the following Medicare plans does not require additional premium? A Part D B Part A C Part B D Part C

B Part A Parts B, C, and D are optional and require an additional premium.

All of the following are coverages provided under a Basic Hospital Expense Policy, except: A Board B Physician/Surgeon expenses C Semi-private room D Miscellaneous hospital expenses

B Physician/Surgeon expenses A Basic Hospital Expense Policy does not pay for the expenses of a physician or surgeon.

All of the following are TRUE regarding qualified plans, except: A Distributions taken prior to age 59 1/2 are subject to tax and a tax penalty B Plans can discriminate in favor of highly compensated employees C Employer contributions are not taxable to the employee until withdrawn D Employer contributions are immediately tax-deductible

B Plans can discriminate in favor of highly compensated employees In an ERISA-qualified plan, there can be no discrimination in favor of highly compensated employees.

A viatical settlement is an agreement between a third party and a(n) ___________. A Lender who owns the mortgage on a terminally ill insured's home or business property B Policyowner insuring the life of a terminally ill insured with 2 years or less life expectancy C Insurance agent representing the family of the terminally ill insured D Terminally ill insured's spouse and children who don't want to wait until the insured dies to collect the death benefit

B Policyowner insuring the life of a terminally ill insured with 2 years or less life expectancy A viatical settlement is an agreement between a third party and a life insurance policyowner insuring the life of an individual with a life-threatening or terminal illness, normally with a life expectancy of 2 years or less.

A life Insurance policyowner receives an annual dividend. One option for this dividend is to use it to offset the annual obligation to the insurer. What is this option called? A Paid up additions B Premium Reduction C Cash D Cash Surrender

B Premium Reduction The obligation the policyowner has to the insurer is the premium. Under the Premium Reduction Dividend Option, the dividend payable is used to reduce the current year's premium. Any excess could be used according to the other dividend options.

Which of the following is required to sign the application for insurance? A Producer only B Producer and the applicant C Producer and the insurer D Insurer only

B Producer and the applicant The producer and the applicant must sign the application. If the applicant and insured are different, then both must sign as well as the producer.

An advantage of key person life insurance is to: A Provide life insurance benefits to all eligible employees and their dependents B Provide the owner of the policy with funds to recruit and train a replacement employee upon the death of an employee who contributes substantially to the success of a company C Protect a partnership against the death of a partner by providing benefits to buyout a deceased partner's share of the business D Provide the family of the deceased employee with up to ten years of the employee's lost future income

B Provide the owner of the policy with funds to recruit and train a replacement employee upon the death of an employee who contributes substantially to the success of a company The death of a key person can negatively impact business operations. The owner of a key person policy is the company and it may use the death benefit proceeds to cover the expense of recruiting, hiring, and training a replacement, which may take months to accomplish.

A long-term care rider: A Establishes a trust fund for the insured's family so that nursing home care can be paid for with insurance premiums instead of paying premiums directly to the life insurance company B Provides up to 100% of the policy benefits if the insured qualifies for benefits as specified in the rider but will reduce the amount of death benefit protection based on the amount paid under the rider C Pays 25% of the death benefit as monthly income for an insured who cannot perform all of the six activities of daily living D Provides an amount equal to the death benefit plus any cash value to a terminally ill insured expected to die in the next 6 months

B Provides up to 100% of the policy benefits if the insured qualifies for benefits as specified in the rider but will reduce the amount of death benefit protection based on the amount paid under the rider A long-term care rider provides up to 100% of the policy benefits if the insured qualifies for long-term care benefits as defined in the rider, such as the inability to perform 2 out of 6 activities of daily living. Any payout is an acceleration of the life insurance death benefit, meaning it will reduce the ultimate death benefit payable to the beneficiary.

A married couple wants to make sure that if either of them dies, the survivor has enough funds to maintain their standard of living but want to accomplish this in the most economical way. Which of the following recommendations is best suited to accomplish their goal? A Buy two separate Whole Life policies B Purchase a Joint life policy C Buy a Joint and Survivorship Life Policy D Buy two separate Limited payment life policies

B Purchase a Joint life policy Joint Life pays on the death of the first insured. It is less expensive than buying two separate policies.

The nonforfeiture option that provides protection to age 100 is: A Paid-up Additions B Reduced Paid-Up C Cash Surrender D Extended Term

B Reduced Paid-Up With Reduced Paid-Up, the Present cash value is used to buy a single premium, permanent paid-up policy of a reduced face amount. Coverage will continue to age 100.

An individual owns a variable annuity. Upon annuitization, the number of Annuity Units on which the benefit amount is based will __________ from month to month. A Vary B Remain the same C Increase D Decrease

B Remain the same It is important that the individual understand that upon annuitization, the number of units used to calculate the benefit amount will always be the same. It will be the unit value that fluctuates according to the performance of the separate account(s).

A new life policy is being purchased, and the agent knows that an existing contract through a different insurer will be lapsed. This is an example of (policy): A Surrender B Replacement C Termination D Exchange

B Replacement The existing policy is not being surrendered because it will lapse. The existing policy will not terminate until the time that it lapses. The existing policy is not being exchanged with a different insurer. Purchasing a new policy while allowing an existing policy to lapse is policy replacement.

Upon annuitizing an annuity, all of the following factors help in determining the amount of the income benefit payment, except: A Gender B State of residence C Settlement option D Age

B State of residence Upon a lifetime annuitization, payments will be made to the annuitant based upon the annuitant's age, gender, settlement option selected, and dollar amount used to fund the income benefit payments.

Under COBRA, coverage for dependents of an employee may continue up to 36 months for any of the following events, except: A The employee's eligibility for Medicare benefits B Termination of the employee C Death of the employee D Divorce or legal separation between employee and spouse

B Termination of the employee If the qualifying event under COBRA is termination of employment, the coverage may be continued only for 18 months.

Which of the following statements is true with respect to a Certificate of Authority? A A Certificate of Authority does not specify the kind of insurance that the insurer may transact B The Commissioner grants an insurer the authority to engage in the insurance business in Indiana by issuing a Certificate of Authority C Insurers are not required to report the election or appointment of a new principal officer or director D Certificate of Authority may be denied without notice

B The Commissioner grants an insurer the authority to engage in the insurance business in Indiana by issuing a Certificate of Authority An insurer may not transact any kind of insurance that is not specified in the Certificate of Authority; A Certificate of Authority may not be denied until proper notice; An insurer must notify the Commissioner within 30 days of the election or appointment of every new principal officer or director.

Which of the following is the least important when it comes to determining the cost of the group life insurance plan? A Size of the group B The health of each member of the group C The group' claims D The nature of the work involved

B The health of each member of the group Since evidence of insurability is not usually required, the health of each member of the group is not used when determining premiums of the group.

For the most part, the highest authority for insurance regulation is:. A The National Association of Insurance Commissioners (NAIC) B The individual states C The Interstate Commerce Commission (ICC) D The Federal Trade Commission (FTC)

B The individual states States have the authority to regulate insurance without interference from federal regulation, unless federal law specifically provides otherwise.

An applicant for accident and health insurance works two jobs. Which of the applicant's jobs will be used to underwrite the policy? A The job in which the applicant has the most experience B The most hazardous of the two C The least hazardous of the two D The one with the most hours per week

B The most hazardous of the two When one has two occupations, the most hazardous is used for rating, regardless of hours worked or experience in each.

If the parents decide to continue a newborn child's coverage and notify the insurance company within 31 days after birth, which of the following is true? A The newborn will be covered, as long as there are no congenital defects B The newborn cannot be denied coverage at that time C The parents must also provide the insurance company with proof of insurability D Coverage will be denied if the insurance company isn't notified within 15 days

B The newborn cannot be denied coverage at that time Notification of birth or adoption and payment of the required premium must be within 31 days after the date of birth or adoption, in order to continue coverage. The newborn cannot be denied coverage at that time.

All of the following are correct regarding Key Person Insurance, except: A The policy is source of funds to replace any lost revenue due to the death of the employee B The policy primarily insures the employee's retirement plan C The policy is owned by the employer D The policy can be term or permanent

B The policy primarily insures the employee's retirement plan A Key Person Plan is intended to help a company recover from the loss of a key employee until a replacement is found.

All of the following are true of a substandard risk, except: A The insured may be rated as older than their actual age B The premium would be discounted C The insured may have a flat additional premium added to their base premium D The coverage could be reduced for a period of time

B The premium would be discounted Individuals whose risk factors do not measure up to underwriting standards are usually issued rated policies.

Which of the following are characteristics of universal life insurance policies? A Two death benefit options with premiums fixed for life B Two death benefit options, an adjustable death benefit and flexible premiums C Fixed death benefit for life with premiums that may be increased or decreased D Adjustable death benefit with premiums that are fixed for life

B Two death benefit options, an adjustable death benefit and flexible premiums Two death benefits options are a key characteristic of all forms of universal life insurance. All UL policies permit the policyowner to make changes in both the amount and timing of premium payments, including making no payments at all providing flexible premiums, and the death benefit may be increased or decreased in accordance with the terms and provisions of the policy.

Permitting individuals of the same class and equal life expectancy to be charged different rates for life insurance or annuities is an example of what type of unfair trade practice? A Boycott B Unfair Discrimination C Unfair claim practice D Prohibited underwriting

B Unfair Discrimination Permitting individuals of the same class and equal life expectancy to be charged different rates for life insurance or annuities does not constitute prohibited underwriting; Boycott constitutes unreasonable restraint of, or monopoly in, the insurance business.

A life insurance premium is paid each month. The insurer then subtracts a mortality and expense charge from the policy's cash value. This best describes which of the following life insurance policies? A Whole Life B Universal Life C Adjustable Whole Life D Variable Whole Life

B Universal Life All premiums paid to a Universal Life Policy are placed in the policy's cash value account. The mortality charge (cost of protection) and expenses are then deducted from the cash value account.

How would a term policy normally be used to pay off a mortgage upon death? A By using the policy as collateral for a policy loan B Using the death proceeds after the insured has died C By using the policy's cash values D Through a viatical or life settlement

B Using the death proceeds after the insured has died Term can be used as mortgage insurance which typically provides a decreasing term benefit.

All of the following annuities can be sold without a securities registration/license, except: A Indexed B Variable C Fixed D Guaranteed

B Variable Only a life insurance license is required in order to sell fixed annuities in most states.

When demanded, Hearings are held: A Within 60 days after the date a hearing is demanded B Within 30 days after the date a hearing is demanded C Within 5 days after the date a hearing is demanded D Within 10 days after the date a hearing is demanded

B Within 30 days after the date a hearing is demanded Hearings are held within 30 days after the date a hearing is demanded.

D has an accidental death and dismemberment policy with a $200,000 principal sum and a $100,000 capital sum. While mowing the lawn, D cut off a finger. How much will the policy pay? A $50,000 B $100,000 C $0 D $200,000

C $0 An accidental death and dismemberment policy will not pay for fingers or toes since they are not considered to be limbs.

An insured purchases a 20-Pay Life Policy with a face amount of $25,000 and an annual premium of $1,000. The insured dies 15 years later when the cash value is $5,000. What amount will the beneficiary receive? A $15,000 B $30,000 C $25,000 D $20,000

C $25,000 If death occurs at any point prior to age 100, the beneficiary receives the death benefit of $25,000.

A married couple purchases a $250,000 Joint Life Policy. When the older of the two dies, what is the amount payable to the survivor? A Zero B $125,000 C $250,000 D $500,000

C $250,000 A Joint Life Policy insures two lives. It is the order of death that is significant in a Joint Life Policy. The entire death benefit is paid at the death of the first insured, regardless of age.

Ted owns a $50,000 Whole Life Policy. At age 47, he decides to stop paying premiums on his policy when it has $15,000 of cash value and exercise the Extended Term Option. Ted's term benefit will be: A $35,000 B $65,000 C $50,000 D $15,000

C $50,000 The Extended Term Option uses the present cash value of the policy, upon its lapse, to automatically buy a single premium term policy of the same face amount for a specified number of years and days as listed in the policy's nonforfeiture table.

A Medicare Supplement Policy must include, as a core benefit, Medicare Part B coinsurance in the amount of _______. A 15% B 10% C 20% D 25%

C 20% All Medicare Supplement Policies must cover as a core benefit the 20% Medicare Part B coinsurance for medical insurance.

Which of the following Whole Life insurance policies has the highest annual premium payment per $1,000 of coverage for a 35-year-old, all other factors being equal? A Limited Pay Ordinary Whole Life to age 85 B 30-Pay Ordinary Whole Life C 20-Pay Ordinary Whole Life D Ordinary Straight Whole Life

C 20-Pay Ordinary Whole Life The shorter the premium-paying period, the higher the annual premium.

Payment of the first premium and an application must be submitted to an insurer for individual coverage within how many days to convert group coverage to an individual policy not requiring proof of insurability? A 7 days B 45 days C 31 days D 10 days

C 31 days State insurance laws require a 30- or 31-day Conversion Period in group insurance policies.

Proof of loss is required within _____ days of loss. A 180 B 45 C 90 D 60

C 90 The Proof of Loss Provision (a Mandatory Uniform Provision) stipulates that the insured must generally provide proof of the loss within 90 days of the loss, or within the shortest time possible, but not exceeding 1 year unless the insured suffers legal incapacity.

Which of the following could initiate the Accelerated Benefits Provision or Rider of a life policy? A A total disability not reducing life expectancy B A presumptive disability C A condition that is terminal D Inability to perform some activities of daily living

C A condition that is terminal The qualifying event in the Living Needs rider is the terminal status of the insured (i.e. projected to die within 1 or 2 years).

If, as the result of an injury or illness, the insured is deemed to be terminal (i.e., expected to die within 1 or 2 years), what rider added to a life insurance policy would advance a portion of the face value? A Viatical Rider B Disability Rider C Accelerated Benefit (Living Need) D Return of Cash Value Rider

C Accelerated Benefit (Living Need) The Accelerated Benefit or Living Need Rider advances a portion of the death benefit to the owner if the insured is diagnosed with a terminal condition (i.e., death expected within 2 years).

Accident and Health Insurance provides coverage for two major categories of perils. They are:. A Automobile and home health care B Driving under the influence and driving while intoxicated C Accidental injury and sickness D On the job and off the job

C Accidental injury and sickness Accidental injury and sickness are the general perils insured. Intentional losses are excluded.

Other than the applicant, which signature is required on an application? A Insurance commissioner B Executive officer of the insurer C Agent D Beneficiary

C Agent The applicant and the agent are required to sign and application for insurance. If the insured is not the applicant and is not a minor, a signature is also required.

A Child Rider that is added to an insured's permanent policy includes which of the following features? A The covered child becomes the premium payor B If the child rider death benefit is paid, it reduces the face amount of coverage C All children (beyond 14 or 15 days of age) are covered, and the rider may be converted to permanent coverage at a specified age without evidence of insurability D Coverage is for the same amount as the primary insured

C All children (beyond 14 or 15 days of age) are covered, and the rider may be converted to permanent coverage at a specified age without evidence of insurability The benefit of a Child Rider is twofold. It provides basic coverage, and is convertible to a permanent policy without proof of insurability, when the child reaches the maximum age.

All of the following are true regarding life insurance solicitation and advertising except: A An agent must inform the prospective purchaser, prior to a life insurance sales presentation, that he/ she is acting as a life insurance agent B An agent must inform the prospective purchaser that dividends are not guaranteed C An agent is not required to inform the prospective purchaser that the sole purpose of the transaction is to sell insurance D The name of the insurer must be disclosed

C An agent is not required to inform the prospective purchaser that the sole purpose of the transaction is to sell insurance An agent must inform the prospective purchaser that the sole purpose of the transaction is to sell insurance

Which of the following statements is correct regarding time periods in conjunction with producer appointments? A An insurer who terminates an appointment, employment or other relationship of a producer must notify the Commissioner within 10 days after the effective date of the termination B An insurer must file a notice of appointment within 30 days after the contract is executed or the first application for insurance is submitted C An insurer must file a notice of appointment within 15 days after the contract is executed or the first application for insurance is submitted D An insurer must mail a copy of the notification of termination to the producer within 30 days after notifying the Commissioner

C An insurer must file a notice of appointment within 15 days after the contract is executed or the first application for insurance is submitted An insurer who terminates an appointment, employment or other relationship of a producer must notify the Commissioner within 15 days after the effective date of the termination.

The __________ is the person on whose life the annuity contract's income benefit is based. A Insured B Owner C Annuitant D Beneficiary

C Annuitant Just like a life insurance policy is based on the life of the insured, an annuity is based on the life of the annuitant.

Concerning COBRA, which of the following is correct? A Provides employees and dependents 36 months of continuation of coverage after termination of employment B Provides 36 months of continuation of coverage for disabled participants C Applies to employers with 20 or more employees D Provides 18 months of continuation of coverage for dependents of Medicare-eligible employees

C Applies to employers with 20 or more employees Federal law mandates that employers with 20 or more employees provide a COBRA option. Termination of employment provides only 18 months of continuation. Qualifying events for dependents only (not employees) permit continuation up to 36 months.

A Buy-Sell Agreement: A Provides a business with funds in the event of the death of a key person who is not an owner B Specifies the conditions and requirements that are necessary to sell the business to a third party if a business owner dies unexpectedly C Assures the continuation of the business by providing benefits to the surviving business partners to buyout a business partner's interest in the event one of them dies unexpectedly D Describes which relatives of a business owner have the right to purchase that person's interest in the business upon death

C Assures the continuation of the business by providing benefits to the surviving business partners to buyout a business partner's interest in the event one of them dies unexpectedly A Buy-Sell agreement is funded with life insurance and is designed to protect the business and assure continuation by providing benefits to the surviving business partners to buy out the deceased partner share of the business.

With Joint Life Insurance policies, the premium is based on the: A Age of the oldest insured B Age of the youngest insured C Average age of both insureds D Age in a specialized table used for this type of policy

C Average age of both insureds The premium on a Joint Life Policy is calculated on the average age of both insureds.

With Long-Term Care Insurance coverage, the longer the _________is, the higher the premium is. A Elimination Period B Waiting Period C Benefit Period D Preexisting Period

C Benefit Period A long benefit period is more costly to the insurer. Therefore, the premium is higher.

Alice is the insured, Bill is the primary beneficiary, and Claire is the contingent beneficiary. Alice dies, so who receives the policy proceeds? A Claire B The treasury of the state where Alice lives C Bill D Alice's estate

C Bill Bill is the primary beneficiary and is first in line to receive the policy proceeds if Alice should die first.

A generic brochure developed by the NAIC to provide consumers with descriptions of basic types of life insurance as well as the comparative costs of each is called the _______. A Consumer Information Kit B Sales Illustration C Buyer's Guide D Policy Summary

C Buyer's Guide It is required that prospective life insurance buyers receive the NAIC Buyer's Guide to assist them in their life insurance purchase decision.

The HMO provider is paid a set fee per enrollee, known as a: A Service fee B Enrollee fee C Capitation fee D Provider fee

C Capitation fee Typically, the HMO provider is paid a set fee, known as a capitation fee, per enrollee.

All of the following are typically what key employee life insurance proceeds are used for, except to: A Train a replacement B Recruit a replacement C Close down the business D Hire a replacement

C Close down the business A key person life insurance policy provides the necessary funds to recruit, hire, and train a replacement employee, restore lost profits, and reassure customers that business operations will continue.

When an insured decides to change her mode of premium payment from monthly to annually, the total premium due would: A Fluctuate B Increase C Decrease D Remain the same

C Decrease Additional charges are included in modes other than annual to offset the lost interest earnings and increased administration costs. For this reason, the annual mode is the least amount of total premium outlay.

______________ are conditions stipulated in the contract for which the insurer will not provide coverage. A Exceptions B Hazards C Exclusions D Eliminations

C Exclusions Exclusions are conditions stipulated in the contract for which the insurer will not provide coverage.

Insurers that are incorporated in another state, but doing business in this state, are considered: A Alien B Domestic C Foreign D Stock

C Foreign An insurer operating in this state but incorporated in another state is referred to as foreign.

Under Social Security, a worker needs 10 years of work to be considered ________ insured. A Currently B Partially C Fully D Over

C Fully To be considered fully insured, a worker generally needs 10 years of work (40 credits).

If overdue premiums are paid during the __________ period, the policy will remain in effect. A Nonforfeiture B Loan C Grace D Extended premium paying

C Grace There is a grace period for late premiums. Typically it is 30 days (or one month) during which coverage will remain in effect.

Which of the following statements about a Modified Endowment Contract (MEC) is FALSE? A The 7-Pay Test compares the premiums paid for the policy during its first 7 years with the annual net level premiums of a 7-Pay Policy B Funds distributed before age 59 1/2 are subject to a 10% penalty on any gains C If a contract is deemed a MEC, any funds distributed are subject to a first-in/first-out (FIFO) tax treatment D Taxable distributions include cash value surrenders and policy loans

C If a contract is deemed a MEC, any funds distributed are subject to a first-in/first-out (FIFO) tax treatment Any funds distributed are subject to a last-in, first-out (LIFO) tax treatment, meaning gains will be taxed before principal.

All of the following are true regarding Current Assumption Whole Life, except: A Interest rate changes affect policy premiums B The insurer may have to add a corridor of insurance protection to keep the policy from endowing C If current rates decrease, the policyowner pays reduced premiums, or the cash values will grow faster D The policy has a guaranteed minimum death benefit

C If current rates decrease, the policyowner pays reduced premiums, or the cash values will grow faster If current rates increase (not decrease), either the policyowner pays a reduced premium, or the cash value will increase at a faster rate.

Which of the following is true regarding the Buyer's Guide and Policy Summary requirements? A A Buyer's Guide and a Policy Summary must be provided to all prospective purchasers only upon request B A Buyer's Guide and a Policy Summary must always be provided to all prospective purchasers at the time of policy delivery C If the policy contains at least a 10-day Free-Look or Right to Examine, then the Buyer's Guide and Policy Summary may be delivered with the policy D A Buyer's Guide and a Policy Summary must be provided to all prospective purchasers at the time of policy renewal

C If the policy contains at least a 10-day Free-Look or Right to Examine, then the Buyer's Guide and Policy Summary may be delivered with the policy A Buyer's Guide and a Policy Summary must be provided to all prospective purchasers prior to accepting the applicant's initial premium, unless the policy includes a 10-day free look provision.

Death benefits paid from an employee group life insurance plan to an employee's named beneficiary are received __________. A Income tax-deferred B Income tax penalty-free C Income tax-free D Income tax-deductible

C Income tax-free Death benefits paid in a lump sum to a named beneficiary are income tax-free.

Which of the following is NOT one of the essential elements of any legal contract? A Competent Parties B Legal Purpose C Indemnity D Offer and Acceptance

C Indemnity The essential elements of a contract are offer and acceptance, consideration, competent parties, and legal purpose.

All are types of service plans, except: A PPOs B HMOs C Indemnity Plans D POSs

C Indemnity Plans HMOs, PPOs, and POSs are all types of service plans (i.e., those in which the insurer contracts with service providers in advance to control costs). An indemnity plan not a service plan.

The cash value in an Indexed Life insurance policy: A Is based on the performance of Separate Accounts B Is declared by the insurer, based on the performance of the insurer's general account C Is based on the performance of a designated quity index over a specified period of time D Is directly invested in an equity index

C Is based on the performance of a designated quity index over a specified period of time Unlike variable product owners, individuals who own indexed life do not put their capital at risk in the stock market. The insurer guarantees a minimum return, but does declare returns based on its performance. The yield is tied to the performance of an equity index between two designated dates.

W and Z are annuitants of an annuity. W dies and Z receives 1/2 of the amount coming into their household when both were alive. They must have elected which of the following settlement options? A Life with Installment Refund B Life with Period Certain C Joint and 1/2 Survivor D Joint Life

C Joint and 1/2 Survivor In a Joint and Survivor annuity, benefits are payable to 2 annuitants while both are living. Upon the death of the first annuitant, survivor benefits continue, either paying the full amount or reduced to 2/3 or 1/2 for the survivor's income until the survivor dies.

In those instances in which the death of a valued employee could cause financial hardship for a company, the company might acquire additional funds through which type of coverage? A Business Reimbursement B Preferred Insured C Key Person D Employer-Employee Cross Purchase

C Key Person The business would likely purchase a Key Person (Key Employee) Policy on the life of the valued employee to offset the expenses and financial losses due to the death of that employee.

The annuity benefit or payment option requiring the greatest amount of capital per $1,000 of benefit is: A Life Income Joint and Survivor 50% B Life Income Joint and Survivor 75% C Life Income Joint and Survivor 100% D Life Income Joint and Survivor 66 2/3%

C Life Income Joint and Survivor 100% The income benefit requiring the greatest amount of capital per $1,000 of benefit is Life Income Joint and Survivor 100%. The higher the percentage of payment for the survivor (1/2, 2/3), the greater amount of capital that is needed.

The annuity settlement option that pays out the highest monthly income for as long as the annuitant lives, and leaves no residual value upon the annuitant's death, is the: A Life Income Joint and Survivor Option B Life Income with Refund Option C Life Income Option D Joint Life Option

C Life Income Option The annuity Life Income Option (like the Life Income Settlement Option in life insurance) pays a benefit for as long as the annuitant lives, and upon death, all payments cease. It also provides the highest monthly income, all other factors being equal.

Tom is the beneficiary and is concerned about both running out of money during his lifetime and at the same time leaving funds behind to the insurer. Looking for some time period guarantee, Tom should consider the _________ settlement option. A Life with Refund B Life Only C Life with Period Certain D Joint and Survivor Life

C Life with Period Certain With Life Income Period Certain, payments are guaranteed for the lifetime of the recipient or a specified period of time, whichever is longer. If the recipient dies prior to the end of the period certain, the payments continue to another person until the end of the period certain.

After K completed an application for health insurance, a paramedical scheduled an appointment to check height, weight, blood pressure, and collect blood and urine samples. This is an example of which source of underwriting? A Completing the application B Attending Physician's Statement C Medical exam D Medical Information Bureau

C Medical exam This scenario is an example of using a medical or physical exam to assist in underwriting. An Attending Physician's Statement is a form completed by a physician regarding a current medical condition, and the MIB is a third party that reports information about past insurance the applicant has applied for or owned.

ERISA sets ________ standards for pension plans in private industry. A Voluntary B Flexible C Minimum D Maximum

C Minimum ERISA sets minimum standards.

Most group Disability Income contracts are offered on a(n): A Noncontributory basis B Occupational basis C Nonoccupational basis D Contributory basis

C Nonoccupational basis Workers' Compensation is designed to cover occupational or job-related accidents and disease, so the group plan would be designed to cover nonoccupational disabilities.

An insured with a participating life insurance policy receives annual dividends. She has opted for the insurer to use these funds to increase her overall amount of insurance. This would refer to which option: A Premium Reduction B Reduced Paid-Up C Paid-Up Additions D One-Year Term

C Paid-Up Additions Paid-Up Additions is a Dividend Option that buys small amounts of life insurance with a single premium and increases both the death benefit and cash value of the policy. Each addition's cash value is separate from the cash value of the base policy. Reduced Paid-Up is a Nonforfeiture Option.

HIPAA ensures which of the following? A Answers on the application are guaranteed to be true B Notice of information practices when received by a third party C Privacy of health information D The insurer must provide a copy of a third-party report to the applicant

C Privacy of health information HIPAA ensures the privacy of an applicant's health information. The FCRA requires notice of information practices when received by a third party.

Which of the following is NOT a purpose of the rule regarding replacement of life insurance? A Regulate the activities of insurers and agents B Protect the interests of life insurance and annuity purchasers C Regulate the replacement of insurance by the consumer D Reduce the opportunity for misrepresentation

C Regulate the replacement of insurance by the consumer The rule regarding replacement of life insurance does not regulate the replacement of insurance by the consumer.

The owner's rights include all of the following, except: A Select dividend paying options on a participating policy B Name and change beneficiaries C Selection of mortality table to use D Borrowing the cash values

C Selection of mortality table to use The policyowner has the right to name or change revocable beneficiaries, the right to borrow against the cash values or access living values, the right to receive dividends and to select among the dividend options made available, and the right to assign the policy on a collateral basis or an absolute basis, to name a few.

Under the Entire Contract provision, all of the following may be part of the agreement between the insured and the insurer, except: A A copy of the application B Any riders or endorsements C Statements made to the applicant by the producer during the application process D The policy

C Statements made to the applicant by the producer during the application process The Entire Contract Provision (a Mandatory Uniform Provision) stipulates that the policy, a copy of the application, and any riders or endorsements constitute the entire contract between the insurer and insured.

Which of the following insurance policies may be written in conjunction with a Basic Medical Expense Coverage and utilizes a Corridor Deductible after the basic plan benefits have been exhausted?. A Hospital Expense B Surgical Expense C Supplementary Major Medical D Comprehensive Major Medical

C Supplementary Major Medical . The question is describing the characteristics and mechanics of a Supplementary (or, Supplemental) Major Medical Policy.

Which of the following best describes producer field underwriting? A Interviewing the applicant's neighbors about the applicant's morals and character B Obtaining the applicant's medical records, conducting a credit history check, and logging in to the MIB C Taking the time to probe beyond the stated questions on the application based upon the applicant's responses D Conducting blood pressure readings, taking the applicant's pulse, and drawing blood

C Taking the time to probe beyond the stated questions on the application based upon the applicant's responses Probing beyond the stated questions in the application based upon the applicant's responses is field underwriting. The producer does not engage in any of the other listed activities.

Generally, the payment of an accelerated death benefit is _______ to a recipient if the benefit payment is qualified. A Taxable to the extent it exceeds 7.5% of AGI B Tax free up to $50,000 C Tax free D Taxable

C Tax free Generally, the payment of an accelerated death benefit is tax free to a recipient if the benefit payment is qualified.

An applicant's signature on an application indicates what? A That the producer had coached them through the process B That it is up to the insurer to discover the truth C That their statements are true D That the statements made are guaranteed to be true in all respects

C That their statements are true The applicant is representing that statements on the application are true to the best of their knowledge and belief.

A producer is not considered to be holding a license for the purpose of controlled business as long as: A Not more than 25% of the total volume of premiums per year is derived from controlled business B The aggregate commissions earned from the controlled business exceeded the aggregate commissions earned on all other business written by the during any 12-month period licensee C The aggregate commissions earned from the controlled business do not exceeded 25% of the aggregate commissions earned on all other business written by the during any 12-month period licensee D Not more than 50% of the total volume of premiums during any 12-month period is derived from controlled business

C The aggregate commissions earned from the controlled business do not exceeded 25% of the aggregate commissions earned on all other business written by the during any 12-month period licensee A producer is not considered to be holding a license for the purpose of controlled business as long as the aggregate commissions earned from the controlled business do not exceeded 25% of the aggregate commissions earned on all other business written by producer the during any 12-month period.

Which statement is incorrect regarding COBRA? A The employer may require the former employee or beneficiary to pay an amount equal to 102% of the premium B Evidence of insurability is not required to continue coverage under COBRA C The employee or beneficiary must respond to the notification of his/her right to continue coverage within 90 days, if he/she wants to continue the coverage D Coverage continues for 29 months for individuals receiving Social Security disability

C The employee or beneficiary must respond to the notification of his/her right to continue coverage within 90 days, if he/she wants to continue the coverage The employee or beneficiary must notify the employer within 60 days if he/she wants to continue the coverage.

When will a primary care physician refer a HMO member to a specialist? A When the patient is facing a terminal illness B If the primary care physician is overbooked with appointments C Usually after all other treatments have been exhausted D If the primary care physician is retiring

C Usually after all other treatments have been exhausted A Specialist or Referral Physician will treat a HMO member if the Primary Care Physician has made a referral, usually after all other treatments have been exhausted.

Which of the following products requires a producer to obtain a securities registration in addition to an insurance license to solicit? A Current Assumption Whole Life B Indexed Life C Variable Universal D Universal Life

C Variable Universal All variable products are subject to SEC regulation and can only be sold by individuals with a life insurance license and a FINRA (securities) registration.

Which rider waives the cost of insurance and expenses if an insured becomes disabled? A Payor Benefit B Return of Premium C Waiver of Monthly Deduction D Accelerated Death Benefit

C Waiver of Monthly Deduction The Waiver of Monthly Deduction will waive the cost of insurance and expenses if the insured becomes disabled. The payor benefit rider will waive premiums if the owner of a policy (not the insured) becomes disabled; a return of premium rider will pay a refund of premiums if the insured is still living when the policy expires; and the accelerated death benefit rider will provide benefits if the insured is terminally ill.

Does the insured have the right to change the beneficiary designation of a health insurance policy? A No, only the insurer has that right in health policies B Yes, the beneficiary designation is always revocable in health policies C Yes, unless the beneficiary is designated as irrevocable D No, the beneficiary designation in health policies is always irrevocable

C Yes, unless the beneficiary is designated as irrevocable The Change of Beneficiary Provision (a Mandatory Uniform Provision) establishes the insured's right to change the beneficiary, unless it is designated as irrevocable.

Part B of Medicare excludes which of the following medical expenses? A Clinical laboratory services B Home health care C Outpatient hospital treatment D A regular dental checkup

D A regular dental checkup Part B does not cover routine dental services.

Which of the following elimination periods found in a disability income policy will result in the highest premium? A 60 days B 1 year C 90 days D 1 month

D 1 month The elimination period on a disability income policy can be thought of as a "time deductible." The shorter the elimination period, the higher the premium.

With a Noncontributory Group Life Plan, what percentage of the employer's employees must participate? A 50% B 75% C 90% D 100%

D 100% A Noncontributory Group Life Plan is one in which the participant does not pay premiums. State law requires that 100% of eligible employees are covered. The insurer can be certain that all employees will enroll and it will not be subject to adverse selection.

A viatical settlement contract must provide the viator with an unconditional right to rescind the contract for at least: A 10 days after the receipt of the viatical settlement proceeds or 30 days after the contract is executed B 30 days after the receipt of the viatical settlement proceeds or 15 days after the contract is executed C 5 days after the receipt of the viatical settlement proceeds or execution of the contract D 15 days after the receipt of the viatical settlement proceeds or 30 days after the contract is executed

D 15 days after the receipt of the viatical settlement proceeds or 30 days after the contract is executed A viatical settlement contract must provide the viator with an unconditional right to rescind the contract for at least 15 days after the receipt of the viatical settlement proceeds or 30 days after the contract is executed.

Hicks Corp. wants to install a contributory group plan. It employs 200 people. How many employees must participate in order to install the plan? A 200 B 50 C 100 D 150

D 150 Contributory plans require a participation percentage of 75%.

An insurer is prohibited from contesting any claim on a life insurance policy after the annual premiums have been paid for: A 5 years B 3 years C 1 year D 2 years

D 2 years An insurer is prohibited from contesting any claim on the policy after the annual premiums have been paid for 2 years.

If a plan offers coverage to dependents, eligible dependents includes all children, natural and adopted, married and unmarried, up to age ______. A 21 B 19 C 18 D 26

D 26 If a plan offers coverage to dependents, eligible dependents includes all children, natural and adopted, married and unmarried, up to age 26.

For an employee to be eligible to participate in an employer's group health insurance plan, he/she must be considered full-time and work a minimum of _____ hours as established by the Affordable Care Act. A 35 B 40 C 50 D 30

D 30 To be eligible, an employee must be considered full-time and work a minimum of 30 hours as established by the Affordable Care Act.

Based upon Optional Uniform Provisions, in which of the following circumstances would an insurer have the right to deny disability income benefits entirely and disregard a claim as void? A Misstatement of age (by 2 years) on the application B At the time of disability, the insured's earnings are less than the policy benefits C A claim incurred while working in a more hazardous occupation than listed on the application D A broken leg sustained while committing a robbery

D A broken leg sustained while committing a robbery The Change of Occupation, Misstatement of Age, and Relation of Earnings to Insurance are all optional provisions that could allow an insurer to reduce benefits. The Illegal Occupations and Actions provision could allow an insurer to deny benefits entirely.

All of the following become part of the entire contract, except: A A copy of the application B The policy itself C Any riders D A copy of the check

D A copy of the check A copy of the application, if attached to the policy, becomes part of the entire contract along with any amendments, riders, or endorsements.

All of the following are examples of third-party ownership, except: A A cross purchase plan B A key employee plan C A grandparent buys life insurance on a granddaughter D A mother buys a policy for herself and names her son as beneficiary

D A mother buys a policy for herself and names her son as beneficiary A key employee plan and a cross purchase plan have an owner other than the insured, as does the policy bought by the grandmother on the life of her grandchild.

A Consumer Investigative Report is not completed by ___________. A A company that regularly conducts inspection reports B The insurer C A third party provider D A producer

D A producer A Consumer Investigative Report. This can be completed by the insurer or a third-party provider.

All of the following could be approved as Long-Term Care facilities, except: A An intermediate care facility B A skilled nursing facility C A custodial care facility D A sanitarium for weight loss

D A sanitarium for weight loss LTC approved facilities include Skilled, Intermediate and Custodial facilities. A weight loss sanitarium is not an approved LTC facility.

What is the name of the rider (benefit) that, in the event of a claim, the policy normally pays double or triple the face amount if death was a result of an accident. A Additional Indemnity B Auto Insurance C Occupational D Accidental Death

D Accidental Death Accidental Death Benefit (Double or Triple Indemnity) is a benefit that is payable only if death occurs before a specific age and within 90 days of the accident. It does not add any additional values to the base policy.

Experience rating utilizes _______ in determining the rate the insurer will charge for group coverage in each year of coverage. A Actual loss experience of everyone in that zip code B Credit rating of all participants C The plan sponsor's credit rating D Actual loss experience of the group

D Actual loss experience of the group Experience looks at claims experience. Creditworthiness of a business or its employees is not a factor in underwriting group insurance.

Which of the following is incorrect with regard to commissions and compensation? A An insurer or producer may pay commissions to a duly licensed producer for negotiating, soliciting, or effecting insurance contracts B Renewal commissions may be paid to a person for selling or negotiating insurance in this state if the person was required to be licensed at the time of the sale, or negotiation and was licensed at that time C An insurer or producer may not pay a commission to a person for selling, soliciting, or negotiating insurance in this state if that person is required to be licensed and is not licensed D An insurer may not pay a commission to anyone other than a currently licensed and appointed producer, but may pay a commission to an agency that is not licensed

D An insurer may not pay a commission to anyone other than a currently licensed and appointed producer, but may pay a commission to an agency that is not licensed An agency must be licensed before an insurer may pay commissions to an agency

When are LTC premiums deductible for an employer: A When the plan is a tax qualified plan B When the policy is offered as a group plan C When the premiums are paid by the employee D Any time premiums for employee policies are paid by the employer

D Any time premiums for employee policies are paid by the employer Whenever an employer pays for an employee's LTC, the premium is deductible, regardless of whether it is a group or individual policy. The LTC policy's status as qualified or non-qualified may impact the taxability of the benefits, but not the deductibility of the premiums.

In life insurance, the Buyer's Guide is not required to be provided earlier than at the time of policy ___________. A Delivery B Issuance C Renewal D Application

D Application In life insurance, the Buyer's Guide is not required to be provided earlier than at the time of application.

Primarily, the _________ is the person who will receive any residual contract benefits after the annuitant has died. A Spouse B Owner C Insurer D Beneficiary

D Beneficiary The beneficiary of an annuity receives any residual contract benefits upon the death of the annuitant.

What type of disability income insurance pays a lump sum enabling certain businesses to cover the cost of purchasing a disabled business owner's interest in the business? A Business overhead expense B Reducing term C Key employee D Business disability buyout

D Business disability buyout Business Disability Buyout insurance pays a lump sum benefit that enables the insured's business partners to buy out his or her interest in the business.

If an insured suffers a dismemberment under the AD&D policy, which of the following will provide benefit payouts to the beneficiary? A Principal sum B Principal investments C Capital funds D Capital sum

D Capital sum. Dismemberment benefits payable under an AD&D policy are referred to as the capital sum.

A contract that is drafted by an insurer and receives no input or alteration from the insured, is considered a(n): A Conditional Contract B Aleatory Contract C Unilateral Contract D Contract of Adhesion

D Contract of Adhesion A Contract of Adhesion is submitted on a take it or leave it basis.

Life insurance policy premiums establish a _________ in the policy for tax purposes. A Dividend B Cash value C Loan D Cost basis

D Cost basis Cost basis is primarily established by accounting for the premiums paid into the policy.

Which of the following statements is false with respect to continuing education requirements? A Generally, limited lines producers (other than resident credit insurance producers) must complete 5 hours of continuing education credit once every 2-year renewal period B If a resident producer sells traditional LTC insurance, 5 hours of the 20-hour requirement must be specifically in LTC C Licensees who only maintain a license in order to collect renewal commissions, may apply to be excepted from the continuing education requirements D Credit hours awarded in a compliance period may be carried over to another compliance period

D Credit hours awarded in a compliance period may be carried over to another compliance period Credit hours awarded in a compliance period may not be carried over or applied to any other compliance period.

______________ is a form of whole life in which the insurance company can change the premiums or interest rate being credited to the account based on current money market rates. A Traditional Whole Life B Adjustable Life C Universal Life D Current Assumption Whole Life

D Current Assumption Whole Life Current Assumption or Interest-Sensitive Whole Life is a form of whole life in which the insurance company can change the premiums or interest rate being credited to the account based on current money market rates.

If an applicant for life insurance misstates his age on the application, what would be the consequence if/when it is discovered? A Premiums refunded with interest, no death benefit paid B Real age divided by actual age, multiplied by death benefit C The policy will be voided D Death benefit will be what the premium paid would have purchased at issuance at the correct age

D Death benefit will be what the premium paid would have purchased at issuance at the correct age The Misstatement of Age or Sex Provision prevents the policy from automatically being voided, but protects the insurer's right to protect its interests by adjusting the death benefit based on what the actual premiums paid would have purchased had the correct age been known.

All of the following are true regarding ERISA qualified plans, except: A The plan must be IRS approved B The plan must benefit employees and beneficiaries C A vesting schedule must be established D Employers must establish a pension plan

D Employers must establish a pension plan Establishing a corporate pension plan is optional; however, if one is established it must meet the ERISA requirements in order to qualify for favorable tax treatment.

If a policyowner unintentionally pays premiums in excess of the MEC guidelines, the excess premium can be refunded by the insurer within 60 days after the ________. A Latest premium payment was received B End of the calendar year C End of the tax year D End of the contract year

D End of the contract year If a policyowner unintentionally pays premiums in excess of the MEC guidelines, the excess premium can be refunded by the insurer within 60 days after the end of the contract year.

The difference between Estate Creation and Estate Conservation is that A Estate creation and estate conservation are two names for what is essentially the same goal B Estate creation is one of the uses for life insurance and estate conservation is not C Estate creation results from the accumulation of cash value, and estate conservation use the face amount D Estate creation occurs when policy proceeds are paid to survivors. Estate conservation occurs when those proceeds are used to pay estate taxes

D Estate creation occurs when policy proceeds are paid to survivors. Estate conservation occurs when those proceeds are used to pay estate taxes An estate is created every time a policy is bought, because the purchase creates a pool of money that will be paid out at death as long as the policy is in force. At that point the promise becomes a reality. Estate conservation assumes wealth has already been created during one's life and needs to be protected from taxes and loans due at the death of the insured.

Concerning the Paid-Up Additions Dividend Option, all of the following are true, except: A These single premium additions do not change the face value of the original policy B Paid-up additions increase the amount of future dividends credited C Paid-up additions have their own increasing cash values D Eventually, no more premiums will be due on the policy

D Eventually, no more premiums will be due on the policy The Paid-Up Additions purchased under this Option have their own values and do not change the face amount of the original policy. Each additional segment of insurance contains both a death benefit and increasing cash surrender value, and by purchasing paid-up additions, larger dividends may be paid in the future. Paid up additions do not eliminate need to pay premiums on the original policy.

When withdrawing cash from a cash value life insurance policy, the amount of the withdrawal up to the policy's cost basis is tax-free. This tax accounting rule is referred to as: A Last-In, First-Out (LIFO) B Dollar Cost Averaging C First-In, Still There (FIST) D First-In, First-Out (FIFO)

D First-In, First-Out (FIFO) FIFO accounting is first-in, first-out, which is why the recovery of amounts up to the cost basis are income tax-free.

LTC coverage for such things as occasional visits and care by registered, practical or vocational nurses or a hospice organization in the home would be a feature of: A Intermediate Care B Adult Day Care C Custodial Care D Home Health Care

D Home Health Care Usually, a private nurse or a state-licensed home health care agency provides Home Health Care in the home of the patient.

Which rider would eliminate coverage for a preexisting condition? A Return of Premium Rider B Lifetime Benefit Rider C Guaranteed Purchase Option D Impairment Rider

D Impairment Rider The Impairment Rider eliminates coverage for pre-existing conditions, but at the same time may make insurance available for an otherwise uninsurable person.

Cash values within an ordinary straight whole life insurance policy _______ over time. A Remain constant B Vary C Decrease D Increase

D Increase Cash values increase over time as premium is paid in and interest is reflected in the cash values shown in the policy's nonforfeiture table.

The cost of any required medical exams in the underwriting process is paid by the: A Producer B Applicant C Insured D Insurer

D Insurer Medical exams are done at the insurer's expense.

___________ manufacture and sell insurance coverage in the form of policies or contracts of insurance. A Insureds B Agencies C Producers D Insurers

D Insurers Insurers manufacture and sell insurance policies through agencies and producers to applicant/insureds.

Regarding COBRA, which of the following is not true? A It provides continuation of coverage for 29 months for workers on Social Security Disability B It provides continuation of coverage for 36 months for a surviving spouse C It provides continuation of coverage for 36 months for an individual losing dependent status D It covers participants who have resigned for 36 months following the date of their resignation

D It covers participants who have resigned for 36 months following the date of their resignation Termination of employment other than for gross misconduct allows former employees and their dependents a maximum of 18 months of continuation.

For an individually purchased life insurance policy, the premiums are considered a __________. A Deductible business expense B Deductible personal expense C Nondeductible business expense D Nondeductible personal expense

D Nondeductible personal expense The premiums paid for an individual life insurance policy are a personal expense and are not deductible.

Social Security monthly retirement benefits are determined using a formula that calculates which of the following? A FICA B FRA C COLA D PIA

D PIA To be eligible for SS all benefits and be considered fully insured, a worker must have earned 40 credits.

Which statement is incorrect concerning Part B of Medicare? A All Part B recipients pay a monthly premium B Part B has an annual deductible and requires a copayment C Part B will cover vaccines and preventive screenings D Part B covers prescription drugs up to $1,500 annually

D Part B covers prescription drugs up to $1,500 annually Medicare Part B does not cover prescription drugs at all. Part A would cover them but only while hospitalized. All other possible answers are correct concerning Medicare Part B.

Which of the following is not an underwriting factor for health insurance? A Tobacco use B Occupation and hobbies C Physical condition D Place of birth

D Place of birth The underwriters do not take into consideration where the applicant was born.

The cost basis of a life insurance policy is __________. A Cash values in excess of premiums paid B Dividends left on deposit at interest plus the policy's cash values C Cash values plus any outstanding policy loans D Premiums paid less dividends or withdrawals

D Premiums paid less dividends or withdrawals The basis is premiums paid less dividends or withdrawals.

Penelope received benefits from her disability policy and went back to work. After 30 days she found she was not able to work and began to immediately receive her disability payments. Which of following provisions made this possible? A Second Injury Provision B Residual Disability Provision C Presumptive Disability Provision D Recurrent Disability Provision

D Recurrent Disability Provision The question defines the Recurrent Disability Provision.

A mandatory participation rate for noncontributory group plans is designed to: A Maximize the premium an insurer collects B Achieve economies of scale C Allow the employer to obtain the greatest premium discount D Reduce adverse selection

D Reduce adverse selection Requiring 100% of eligible employees to participate in a noncontributory employer group life insurance plan reduces the risk of adverse selection.

Statements made on the application by the applicant that are believed to be true to the best of his/her knowledge are: A Warranties B Conditions C Waivers D Representations

D Representations Statements made on the application by the applicant that are believed to be true to the best of his/her knowledge, but are not guaranteed to be true, are known as representations.

Which is not a qualifying event for the continuation of dependent coverage under the Consolidated Omnibus Budget Reconciliation Act? A Death of the employee B Divorce or legal separation C The employee's eligibility for Medicare benefits D Termination of the employee for theft

D Termination of the employee for theft This would be termination for gross misconduct and neither the employee nor his/her dependents would be eligible for continuation under COBRA.

Money accumulated in a permanent policy that the policyowner may borrow via a policy loan or receive if the policy is surrendered, refers to: A Savings Account B Deferred Savings Account C Accumulated at Interest Account D The Cash Value

D The Cash Value Premiums in excess of what is necessary to cover the cost of pure insurance (i.e. term) create cash value as an internal savings component in all permanent policies.

Which of the following items does not become part of the insurance contract as defined in the entire contract clause? A Information regarding hobbies B The medical examination report C The application D The agent's report

D The agent's report The agent's report is neither part of the application, nor part of the insurance contract. The agent's report is a confidential communication between the agent and the insurer.

When an applicant completes the insurance application in its entirety and provides the producer with a premium check, what in effect has taken place? A The applicant has given the producer the authority to negotiate the terms of the contract with the insurer B The producer is making an offer of insurance to the applicant C The applicant is accepting the producer's offer of coverage D The applicant is making an offer to the insurer

D The applicant is making an offer to the insurer When an application accompanies the initial premium, the applicant is making an offer to the insurer. Before acceptance can take place, an offer must first be made. The insurer accepts the offer when the policy is issued.

With regard to eligibility for coverage under the Indiana Children's Health Insurance Program, which of the following is false? A The child must be a resident of Indiana B The child's family must have an annual income of more than 150%, not to exceed 200%, of the federal income poverty level C The child's family must agree to pay any required cost sharing amounts D The child must be less than 26 years of age

D The child must be less than 26 years of age To be eligible for coverage under the Indiana Children's Health Insurance Program, a child must be less than 19 years of age.

Events that will cause termination of continuing health coverage under COBRA include all of the following, except: A The employer ceases to maintain any group health insurance plan B Timely premium payments are not made C The employee becomes eligible for Medicare benefits D The employee fails to convert to an individual health insurance plan on the day it is offered

D The employee fails to convert to an individual health insurance plan on the day it is offered Events that will cause termination of continuing health coverage by COBRA include failure to pay premiums on time, cessation of group health coverage by the employer, and employee eligibility for Medicare benefits. Conversion is a separate benefit.

Which of the following are included in Part I of a Health Insurance Application? A Family health history B Present health C Medical background D The gender of the applicant

D The gender of the applicant Part I of the application contains general questions about the applicant, such as gender, marital status, residence, date of birth, occupation, and past and present life insurance.

Concerning PPOs, which is a true statement? A The insured may only utilize providers contracted with the insurer B PPOs provide all services at one location C PPOs are typically not for profit D The insured has a financial incentive to use providers who have agreed to predetermined reimbursements for medical services rendered

D The insured has a financial incentive to use providers who have agreed to predetermined reimbursements for medical services rendered PPOs cover out-of-network providers, but the financial incentive of lower out-of-pocket cost is intended to encourage the use of in-network providers, who have agreed to accept the PPO's reimbursements as payment in full.

Regarding group health insurance, which is true? A Individual underwriting is utilized B Each plan participant receives a policy C The premium payment is the responsibility of each individual D The plan sponsor is issued the Master Policy

D The plan sponsor is issued the Master Policy In group health insurance, only the plan sponsor receives a copy of the Master Policy. Covered individuals receive a Certificate of Insurance. The plan sponsor is responsible for paying the premiums.

Which statement is true for BOTH Universal Life and Whole Life? A The death benefit is adjustable B Policy loans and partial withdrawals are allowed C A guaranteed minimum interest rate is determined at policy issuance D The policy is supported by the insurer's general account

D The policy is supported by the insurer's general account Both are supported by the insurer's general account--in other words, neither uses a separate account. The other answer options are only true for Universal Life, not Whole Life.

Which of the following statements about Annual Renewable Term premiums is TRUE? A Premiums are variable B Premiums are level over time C Premiums initially start out higher than comparable permanent coverage and decrease as the insured's age increases D The premium increases over time as the insured's age increases

D The premium increases over time as the insured's age increases. Term premiums increase as the insured's age increases.

High Deductible Health Plans (HDHPs) are characterized by which of the following? A To qualify as a HDHP, the plan must have an HSA associated with it B Medical expenses are available as first dollar coverage C Once the deductible is paid, the plan pays at 100% D The premiums are significantly lower than other plans

D The premiums are significantly lower than other plans The premiums payable for a HDHP are significantly lower than other plans, but the insured is responsible for paying more out-of- pocket.

What information must appear on the policy summary provided to a life insurance client? A A copy of the producer's license B The producer's agency's name and address C The producer's name and home address D The producer's name and address

D The producer's name and address The producer's name and address along with the address of the insurance company must appear on the policy summary.

With a Business Overhead Expense Policy, all of the following are claims that are covered, except: A Utilities B Employee labor C Office rent D The salary or profit of the business owner

D The salary or profit of the business owner A Business Overhead Policy does not pay the owner's salary or profit. Virtually all other financial aspects of running a business are covered.

If an applicant is a minor, who signs the application? A A probate court judge B The producer C Any adult D Their guardian

D Their guardian. If the applicant is a minor, a guardian must sign the application.

Which of the following is not a fixed type of an annuity? A Fixed B Guaranteed C Indexed D Variable

D Variable A variable annuity is not a fixed type of annuity since it is supported by the separate account and not the general account. Relevant Content: Annuities

When does the annuitization period begin? A When the annuitant reaches age 59 1/2 B When the annuitant reaches age 70 1/2 C At the specified age stated in the policy, usually age 100 D When the policyowner elects to convert the annuity into an income benefit payment

D When the policyowner elects to convert the annuity into an income benefit payment The annuitization period begins once the policyowner elects to convert the deferred annuity into an income benefit payment.

Harry was hospitalized and in a coma for 6 months. When does proof of loss for this claim have to be submitted? A Anytime, since he was in a coma and obviously could not submit a claim B An executor would be appointed by the courts to handle the necessary paperwork C Within 2 years, covered under the contestable period D Within 1 year, unless he suffers legal incapacity

D Within 1 year, unless he suffers legal incapacity The Proof of Loss Provision (a Mandatory Uniform Provision) stipulates that the insured must provide proof of the loss within 90 days of the loss, or within in the shortest time possible, but not to exceed 1 year unless the insured suffers legal incapacity. Since Harry was in a coma for 6 months, it would not have been possible for him to file a claim within the 90-day time period.

Harry, the annuitant of a non-qualified tax deferred annuity with $40,000 cash value chooses the Life Income with Refund Payment Option when he annuitizes the policy. After receiving $1,000 each month for 80 months, Harry suddenly dies. How much will his beneficiary, his wife Lucille, receive? A Payments over the rest of her life B $40,000 C $80,000 D Zero

D Zero A Refund Option returns the remaining unpaid principal, since Harry lived well beyond the refund (principal amount) there would be no residual values remaining on the payment option selected.

An insurer that is authorized to do business in this state MUST be _____. A domestic insurer B foreign insurer C alien insurer D admitted insurer

D admitted insurer "Admitted" only means the insurer is authorized to do business in this state. Admittance is not the same as domicile. Admitted insurers might have domestic, foreign, or alien domicile.