Life and Health Insurance Test Questions

As part of the continuing education requirement, what is the minimum number of hours of continuing education specific to long-term care insurance to be completed prior to each license renewal?

8

In which of the following situations is it illegal for an insurer to disclose privileged information about an insured?

A researcher for marketing purposes

Occasional visits by which of the following medical professionals will NOT be covered under LTC's home health care?

Attending physician

The agent is known as the "Field Underwriter" because of the information he/she gathers for the insurer. This helps the insurer

Avoid adverse selection.

Who must sign the notice regarding replacement?

Both the applicant and agent

To legally transact insurance in this state, an insurer must obtain which of the following?

Certificate of Authority

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?

Consideration

All of the following statements concerning Accidental Death and Dismemberment coverage are correct EXCEPT

Death benefits are paid only if death occurs within 24 hours of an accident.

You did not enroll in Medicare Part B when you first became eligible. Which of the following would allow you another opportunity to enroll?

General enrollment period

An agent with an active license CANNOT act as a broker unless

He does not have an appointment with the company that he is brokering.

In which of the following locations would skilled care most likely be provided?

In an institutional setting

A contract which one party undertakes to indemnify another against loss is called

Insurance

Which of the following does NOT describe hospice care?

It provides care to people with life expectancies of 1 to 2 years.

Which of the following is true of a PPO?

Its goal is to channel patients to providers that discount services.

During the accumulation period in a nonqualified annuity, what are the tax consequences of a withdrawal?

Neither interest nor principal is taxed, but penalties may be imposed.

If one takes Social Security retirement benefits at age 62, what needs to be done at age 65 to qualify for Medicare?

Nothing

A Medicare SELECT policy does all of the following EXCEPT

Prohibit payment for regularly covered services if provided by the non-network providers

The risk of loss may be classified as

Pure risk and speculative risk.

Which of the below statements does NOT describe a Blue Cross and Blue Shield Plan?

Services are paid for at the time of use.

An employee becomes insured under a PPO plan provided by his employer. If the insured decides to go to a physician who is not a PPO provider, which of the following will happen?

The PPO will pay reduced benefits.

An insured who has an Accidental Death and Dismemberment policy loses her left arm in an accident. What type of benefit will she most likely receive from this policy?

The capital amount in lump sum

An employer employs 500 workers and contributes to their Health Savings Accounts (HSAs). To reduce turnover, the employer wants to tell employees that they will lose their HSAs if they leave the company. Which of the following is true?

The employees own the accounts and may take them with them when they leave. The employer will have to find another way to improve retention

The Waiver of Cost of Insurance rider is found in what type of insurance?

Universal Life

In a noncontributory health insurance plan, what percentage of eligible employees must participate in the plan before the plan can become effective?

100%

Which statement is NOT true regarding a Straight Life policy?

Its premium steadily decreases over time, in response to its growing cash value.

Which of the following is considered a presumptive disability under a disability income policy?

Loss of two limbs

The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?

ReductionofPremium

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT

Signed waiver of premium.

Most vision expense insurance plans restrict benefits to one exam and one pair of glasses in what time period?

12 months

When transacting business in this state an insurer formed under the laws of another country is known as a/an

Alien insurer.

The classification Small Employer means any person actively engaged in a business that on at least 50% of its working days during the preceding year employed

No more than 100 employees.

Death benefits payable to a beneficiary under a life insurance policy are generally

Not subject to income taxation by the Federal Government.

An insured has health insurance that covers them at work and at home. This policy was written on what basis?

Occupational

A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy

Required a premium increase each renewal.

If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than

With the policy.

An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receive as a settlement?

$200,000

Following an injury, a policyowner covered under Medicare Parts A & B was treated by her physician on an outpatient basis. How much of her doctor's bill will she be required to pay out-of-pocket?

20% of covered charges above the deductible

What is the maximum age for qualifying for a catastrophic plan?

30

What is the penalty for IRA distributions that are below the required minimum for the year?

50%

Benefit periods for individual short-term disability policies will usually continue from

6 months to 2 years.

Most policies will pay the accidental death benefits as long as the death is caused by the accident and occurs within

90 days.

A person caught violating provisions regarding misrepresentation could be subject to

A fine up to $25,000.

The protection of the insurer from adverse selection is provided in part by

A profitable distribution of exposures.

Which of the following is NOT covered under a long-term care policy?

Acute care in a hospital

A 63-year-old man is planning to be employed until age 68. When will he be eligible for Medicare?

Age 65, regardless of his employment status

An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe?

Aleatory

Assume that a policy allows the insurer to terminate coverage for a "class" of clients under stated circumstances. Which of the following classes would it be illegal for the insurer to terminate?

All insureds with a sexual preference which increases the risk of HIV infection

Harry has a disability that prevents him from doing certain kinds of work. Because of his qualifications, he responds to a recruitment ad and is hired for the position. What federal act allows him to apply for the job?

Americans with Disabilities Act

Bob was rendered totally disabled at the time his group health insurance plan was discontinued. Since benefits began to be paid while the policy was in force, which of the following would be required?

An Extension of Benefits.

What is a foreign insurer?

An insurer with a home office in another state

An agent solicited a policy for a client who originally qualified for standard premiums. During the underwriting process, the applicant was rated as a substandard risk and assigned a higher premium. Upon policy delivery, the agent failed to mention that the premiums would be higher, and the client filed a lawsuit against the insurer. This is an example of

An omission and will be covered by an Errors & Omissions policy.

The LEAST expensive first-year premium is found in which of the following policies?

Annually Renewable Term

Employer contributions made to a qualified plan

Are subject to vesting requirements

To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested?

At the time of application

Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as

Contracts of adhesion.

Which of the following types of insurance covers the whole family in a single contract?

Family Policy

If an insured is not required to pay a deductible, what kind of coverage does he/she have?

First Dollar

An insured has the right to return the new insurance policy for a full refund during the

Free-look period.

In life insurance policies, cash value increases

Grow tax deferred.

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a

Guaranteed insurability rider.

According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following?

Guaranteed surrender value

Which of the following is NOT a standard level of care?

Hospice care

All of the following would fall under the definition of Durable Medical Equipment EXCEPT

Hospital blankets.

Upon the submission of a death claim under a life insurance policy, when should the insurer pay the policy benefit?

Immediately after receiving written proof of loss

If a client has purchased a long term care policy that a HICAP counselor determines to be inadequate for the needs of the client, the counselor will

Inform the client of the inadequacies in the policy.

Which is true regarding HMO coverage?

It is divided into geographic territories.

Which of the following statements is NOT correct concerning the COBRA Act of 1985?

It requires all employers, regardless of the number or age of employees, to provide extended group health coverage.

Which of the following statements is TRUE about a policy assignment?

It transfers rights of ownership from the owner to another person.

The growing tendency of individuals to file lawsuits and to claim tremendous amounts for alleged damages is known as

Legal hazard.

A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?

Level term

An insurance company wants to obtain the insurance history of an applicant. Which source releases coded information to insurers regarding information included on previous insurance applications?

Medical Information Bureau

In a POS plan, benefits for covered services when self-referring (without having your primary care physician arrange for the service) are generally

More expensive.

What do living benefit riders do?

Pay part of the policy death benefit to insureds in order to help fund long-term care or nursing home care

Which of the following is another term for the accumulation period of an annuity?

Pay-in period

All of the following are covered by Part A of Medicare EXCEPT

Physician's and surgeon's services.

Which of the following is NOT allowed under the no-loss/no-gain provision?

Pre-existing Condition exclusion

An applicant for health insurance has not had a medical claim in 5 years. He exercises daily and does not smoke or drink. What classification do you assume the applicant would receive from his insurer?

Preferred

What is the term for the fee a policyowner must pay to the insurance company to maintain coverage?

Premium

In which of the following instances would the premium be tax deductible?

Premiums paid by an employer on a $30,000 group term life insurance plan for employees

An underwriter may reject an application for health insurance if the rejection is based upon which of the following?

Prescription usage

Profitable distribution of exposures serves the purpose of

Protecting the insurer against adverse selection.

Which of the following insurance options would be considered a risk-sharing arrangement?

Reciprocal

Adverse selection is a concept best described as

Risks with higher probability of loss seeking insurance more often than other risks.

Which of the following is NOT covered under Part B of a Medicare policy?

Routine dental care

A person steps off a street car and trips and breaks his ankle. This type of injury can be described as

Sudden and unforeseen.

Which of the following is NOT covered under Basic Hospital Expense Coverage?

Surgeons' fees

What is the name of a federal regulation designed to accomplish pension equality, and to protect group insurance plan participants?

The Employee Retirement and Income Security Act of 1974 (ERISA).

What is the "elimination period" under a long term care policy?

The amount of time during which no benefits will be paid.

The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?

The annuitant must be a natural person.

If a life insurance policy has an irrevocable beneficiary designation,

The beneficiary can only be changed with written permission of the beneficiary.

Who determines the eligibility and contribution limits in a HRA?

The employer determines both

Which of the following statements concerning group health insurance is CORRECT?

The employer is the policyholder.

Which of the following statements is NOT true about contributory group life insurance?

The employer will make a cash contribution to the estate of a deceased employee.

If a Medicare insured uses a health care provider who does not accept Medicare payments, which of the following will be true?

The insured might need to sign a private contract with the provider.

Which of the following are generally NOT considered when underwriting group insurance?

The insureds' medical history

Which of the following is NOT a feature of a noncancellable policy?

The insurer may terminate the contract only at renewal for certain conditions.

All of the following are true regarding copayments, EXCEPT

They are expressed as a percentage of the cost.

Which of the following is true regarding commissions for Medicare supplement policies?

They are permitted up to a certain amount for each policy.

Which of the following statements is TRUE concerning irrevocable beneficiaries?

They can be changed only with the written consent of that beneficiary.

What is the purpose of the buyer's guide?

To allow the consumer to compare the costs of different policies

HICAP counselors are primarily

Trained and registered volunteers.

Which characteristic does NOT describe managed care?

Unlimited access to providers

A medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographic area is known as

Usual, customary and reasonable.

Which of the following CANNOT be included along with illustrations used to sell life insurance?

Vanishing premium information

Which of the following describes the taxation of an annuity when money is withdrawn during the accumulation phase?

Withdrawn amounts are taxed on a last in, first out basis.

Because of the history of cancer in her family, Julie purchased a policy that specifically covers the expense of treating cancer. Her policy would be classified as what type of policy?

dread disease policy

Health Savings Accounts (HSAs) are designed to

help individuals save for qualified health expenses that they, their spouse, or their dependents incur.

Which renewability provision are you most likely to see on a travel accident policy?

periodoftime

Which of the following is an eligibility requirement for all Social Security Disability Income benefits?

Have attained fully insured status

An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?

$9,800

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT

The policy is owned by the company.

On a disability income policy that contains the "own occupation" definition of total disability, the insured will be entitled to benefits if they cannot perform

Their regular job.

The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive?

$100,000