Life & Health: Practice Exam Questions

What is the maximum monetary fine for a nonwillful violation of insurance statutes regarding unfair trade practices?

$1,000

Maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?

$2,500

Before insurers may transact business in a specific state, they must apply for....from the state department of insurance and meet any financial (capital and surplus) requirements set down by the state.

A license or Certificate of Authority

All other factors being equal, the least expensive first-year premium payment is found in

Annually renewable term

An insurer is attempting to determine the insurability of an applicant and decides to obtain medical information from several different sources. Which entity must be notified of the investigation?

Applicant

The gatekeeper of an HMO helps to

Control specialist costs

If an employee terminates her employment, which of the following provisions would allow her to continue health coverage under an individual policy, if requested within 31 days?

Conversion

Has provision allowing policy owner to cover to permanent insurance

Convertible term policy

A specific dollar amount of the cost of care that must be paid by the member?

Copayment

Medicare Supplement Plan A provides what?

Core, or basic, benefits established by law

A man is enrolled in Part A of Medicare and not Part B. Three months into coverage, he applies for a Medicare supplement policy. What can insurer do?

Deny coverage

This arrangement specifies who will purchase a disabled partner's interest in the event he or she becomes disabled

Disability Buyout

Agreement that specifies who will purchase a disabled partner's interest and legally obligates that person or party to purchase such interest upon disability

Disability Buyout Agreement

What about occupational vs nonoccupational coverage is true?

Disability Insurance can be written as either

What is the general duty of the Commissioner?

Enforce insurance laws

Are not securities, but they invest on a relatively aggressive basis to aim for higher returns

Equity Indexed Annuities

Only an....of the company, not an agent, has authority to make any changes to the policy.

Executive officer

Protects consumers against the circulation of inaccurate or obsolete personal or financial information

Fair Credit Reporting Act

J applied for a life insurance policy on January 10, it was issued on January 31. J did not receive the policy until February 18. J decides that he does not want the policy. When would J need to return the policy to the insurer in order to receive a full refund of premium paid?

Feb. 28th-- 10 days after policy is delivered

If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?

Full death benefit

Hospital policy that pays a fixed amount each day that the insured is in a hospital?

Indemnity

All individual and group health insurance policies providing medical, surgical, or hospital expense in Kansas, must provide reimbursement or indemnity for the treatment of alcoholism, drug abuse, or nervous or mental conditions. Such coverage may be limited to

Not less than 30 days per year when the person is confined in a properly licensed facility

What kind of policy allows withdrawals or partial surrenders?

Universal life

When is it illegal to obtain sources of underwriting information?

w/o informing proposed insured

According to the rights of renewability rider for cancellable policies, what is true about the cancellation of an individual insurance policy?

1- Insurer must provide insured written notice of cancellation 2- Claims incurred before cancellation must be honored 3- Insurance company may cancel policy at any time

What is true regarding the accumulation at interest option?

1- Interest credited at rate specified by policy 2-Policyholder right to withdraw accumulations at any time 3-Annual dividend retained by company

What is true regarding a temporary license in this state?

1- doesn't require written examination 2- Each individual can hold one 3- Can be issued for up to 180 days to a spouse of the deceased agent

General requirements of a qualified plan

1.) Must be communicated to all employees 2.) Plan must be for exclusive benefits of the employees & their beneficiaries 3.) Must be permanent, written, & legally binding

An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy?

10 days

For how many days of skilled nursing facility care will Medicare pay benefits?

100

When a hearing is scheduled, the Commissioner must give notice to all interested parties as to the time, place and purpose of a hearing within how many days of the hearing?

15 days

Period during which annuity payments earn interest, over which annuitant makes payments into an annuity & also called the pay-in period

Accumulation period of an annuity

What would be deducted from the death benefit paid to a beneficiary, if a partial accelerated death benefit had been paid while the insured was still alive?

Amount paid with accelerated benefit + earnings lost by insurance company in interest income from accelerated benefit

What is the consideration in a policy?

Application given to a prospective insured

Which document would give the underwriter a better understanding of how the insured was treated for various illnesses?

Attending Physicians Statement (APS)

Covers members of a particular group when they are participating in a particular activity

Blanket policy

What is correct concerning the changing of an irrevocable beneficiary?

Can only be changed w/ written consent of beneficiary

Anna loses her left arm in an accident that is covered by her Accidental Death and Dismemberment policy. What kind of benefit will Anna most likely receive from this policy?

Capital amount in lump sum

Term policies do not develop what?

Cash Values

Term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.

Children's Rider

The provision that provides for the sharing of expenses between the insured and the insurance company is

Coinsurance

A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?

Collateral Assignment

Clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident

Common Disaster Clause

Intended to provide coverage on a date earlier than the date of the issuance of the policy

Conditional Receipt

Something of value that is transferred between the 2 parties to form a legal contract

Consideration

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as what?

Consideration

Policies do not cover losses caused by war, military service, intentionally self-inflicted injuries, overseas residence, or injuries suffered while committing/attempting to commit a felony

General Disability policies

How are HMO territories typically divided?

Geographic Areas

When the agent receives the application and issues a conditional receipt, the insurer....

Hasn't approved the application & issued the policy

Prevents an insurer from denying a claim due to statements in an application after the policy has been in force for 2 years, even on the basis of a material misstatement of facts or concealment of a material fact.

Incontestability Clause

An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium?

Increase because insured will be 5 years older than when policy was purchased

What does the insuring clause specify?

Insurance company, name of insured & covered perils

The expense for an autopsy covered under the physical exam and autopsy provision is paid by

Insurer

What entities can legally bind coverage?

Insurer

Who pays for the cost of a medical examination required in the process of underwriting?

Insurer

What is TRUE concerning the Accidental Death Rider?

It will pay double or triple the face amount

May be reinstated within 3 years by paying back premiums, with interest, and proving insurability.

Lapsed Policy

A Straight Life policy has what type of premium?

Leven annual premium for the life of the insured

All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?

Lower

The larger the percentage that is paid by the insured, the....the required premium will be.

Lower

Every insurer transacting life and/or health insurance in the state as an admitted insurer must do what?

Maintain membership in the Guaranty Association

In group health insurance, all individuals are covered under what?

Master policy for the same coverages

Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to an insured is....

Monthly

An insured purchased a disability income policy with a 10-year benefit period. The policy stated a 20-day probationary period for illness. If the insured is hospitalized with an illness two weeks after the policy was issued, how much will the policy pay?

Nothing, illness is not covered during the first 20-days of the contract

An insured purchases a policy in 2008 and died in 2013. The insurance company discovers at that time that the insured concealed information during the application process. What can they do?

Pay the death benefit

10-day free looking period begins when?

Policy is delivered

"owner" of life settlement contracts

Policyowner of life insurance policy

A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?

Proof of insurability isn't required

What is the purpose of a fixed-period settlement option?

Provide a guaranteed income for a certain amount of time

Because of financial obligations, John felt that he needed more insurance than the insurer was willing to issue. John's insurance producer told him that he could maximize the death benefit without increasing the face amount by the use of a(n)

Return of premium rider

Type of life insurance policy that generates immediate cash value

Single Premium

Best way to change an application?

Start fresh

Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under an accident and health policy must contain

Statement sufficiently clear to identify insured & nature of claim

In the event of replacement, the current agent must do what?

Submit to the replacing insurance company, with the application, a copy of the replacement notice

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as

Survivor Protection

Special tax-favored retirement plan available to certain groups of employees only?

Tax-sheltered annuity

The interest earned on policy dividends is....

Taxable

If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back?

The balance of the loan will be taken out of the death benefit

The time immediately following the start of a disability when benefits are not payable

The elimination period

What will vary the length of the grace period in health insurance policies?

The mode of premium payment

If an insurer issued a policy based on the application that had unanswered questions, what would be TRUE?

The policy will be interpreted as if the insurer waived its right to have an answer on the application.

What is true regarding health insurance underwriting for a person with HIV?

They can't be declined for medical coverage based solely on HIV status

What employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated?

Those who have been insured under the plan for at least 5 years

What type of rider obligates the company to pay three times the face amount of the policy if the insured dies as a result of an accident

Triple indemnity accidental death rider

Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?

Twisting

Insured who enters into a viatical settlement

Viator

When are workers compensation benefits payable?

When a worker is injured by a work-related injury, regardless of fault or negligence

An employee is injured in a construction accident, rendering him unable to work for a year. What plan would provide him with medical expense coverage and income assistance?

Workers compensation