Life and Health State Insurance Exam
An accident and health insurance applicant who fails to include material medical information on an application would be reason for the insurer to
Deny any future claims and to refund the premium
Which of the following statements does NOT accurately describe the tax treatment of premiums and benefits of Individual Accident and Health Insurance?
Disability income policy premiums are tax deductible
Which of the following does Social Security NOT provide benefits for?
Dismemberment
How are Roth IRA distributions normally taxed?
Distributions are received tax-free
Which of the following coverages does NOT need to be provided under the Affordable Care Act?
Elective cosmetic surgery
Which of these is NOT a characteristic of an Health Reimbursement Arrangement (HRA)
Employee funds the HRA entirely
A group life insurance policy can be converted to an individual whole life policy under which circumstance?
Employment termination
What provision in a life insurance policy states that the application is considered part of the contract?
Entire Contract provision
Which of these statements is INCORRECT regarding the federal income tax treatment of life insurance?
Entire cash surrender value is taxable
Which of the following is a role of the state corporation commission?
Establish rational insurance rules and regulations
D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to?
Ex-wife
T is an insurance agent running television ads stating he is licensed for a line of authority, when in fact, he is not. T is engaged in
False advertising
N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What type of annuity did N purchase?
Fixed Deferred
Which type of renewability best describes a Disability Income policy that covers an individual until the age of 65, but the insurer has the right to change the premium rate?
Guaranteed Renewable
Which of the following are prepaid group health plans where members pay in advance for the services of participating physicians and hospitals that have agreements?
HMO
Premiums collected by an insurance agent must be maintained in a fiduciary capacity. At what point must these premiums be remitted to the insurer?
In the ordinary course of business
A long term care rider in a life insurance policy pays a daily benefit in the event of which of the following?
Inability of the insured to perform more than 2 Activities of Daily Living (ADLs)
Which of these actions should a producer take when submitting an insurance application to an insurer?
Inform insurer of relevant information not included on the application
In a Key employee life insurance policy, the third party owner can be all of the following, EXCEPT:
Insured
A health insurer in Virginia may NOT discontinue coverage in which of the following situations?
Insured health's status has declined
Which type of coverage is best described as a short term medical policy?
Interim coverage
A policyowner would like to change the beneficiary on a Accidental Death and Dismemberment policy and make the change permanent. Which type of designation would fulfill this need?
Irrevocable
A policyowner's rights are limited under which beneficiary designation?
Irrevocable
Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements?
Legal Purpose (Insurable Interest)
Which of the following statements best describes how a policy that uses the "accidental bodily injury" definition of an accident differs from one that uses the "accidental means" definition?
Less restrictive
The Accelerated Death Benefit provision in a life insurance policy is also known as
Living Benefit
Which of the following types of health coverage frequently uses a deductible
Major Medical Policy
The health insurance program which is administered by each state and funded by both the federal and state government is called:
Medicaid
According to the Rules Governing Advertisement of Life Insurance and Annuities , an agent may NOT take which of the following actions during a sales presentation?
Mentioning guaranteed policy dividends
According to the Rules Governing Advertisement of Life Insurance and Annuities, an agent may NOT take which of the following actions during a sales presentation
Mentioning guaranteed policy dividends
J the agent makes false statements to a prospective client about the projected dividends for a policy. J may be found guilty of:
Misrepresentation
All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for
Modified Whole Life
Which of these statements concerning and Individual Disability Income policy is TRUE?
Normally includes and elimination period
During a sales transaction, which of the following forms must be completed by an agent if the customer has existing insurance coverage?
Notice Regarding Replacement of Life Insurance of Annuity
A young, married teacher has two children and owns a Whole Life policy. If the teacher wants an increasing Death Benefit to protect against inflation, the teacher should select which of the following Dividend Options?
Paid-Up Additional Insurance
What does Medicare Part A and B cover?
Part A covers hospitalization, Part B covers long term care
J is an insurance agent who maintains premiums in a fiduciary account. Which of the following expenses may NOT be paid using funds withdrawn from this account?
Personal medical expenses
Which of the following does the Commissioner of Insurance NOT have the authority to examine its business records?
Policyholders
A policyowner is able to choose the frequency of premium payments through what policy feature?
Premium Mode
Which of the following items are governed by the Rules Governing Advertisement of Life Insurance and Annuities?
Prepared sales presentations used by insurance agents —think advertising
All of these are considered sources of underwriting information about an applicant EXCEPT
Rating Services
When a person returns to work after a period of total disability but cannot earn as much as he or she did before the disability, this situation is called which of the following?
Residual disability
Which of these actions by a licensee would NOT likely result in license suspension or revocation?
Sharing commission with another similarly licensed agent
P is a new employee and will be obtaining non-contributory group Major Medical insurance from her employer. Which of the following actions must she take during the open enrollment period?
Sign an enrollment card
What is Old Age and Survivors Health Insurance (OASDHI) also known as?
Social Security
The investment gains from a Universal Life Policy usually go toward?
The cash value
Which statement is TRUE regarding a group accident and health policy issued to an employer?
The employer recieves the policy and each employee is issued a certificate
T files a claim on his Accident and Health policy after being treated for an illness. The insurance company believes that T misrepresented his actual health on the initial insurance application and is, therefore, disputing the claim's validity. The provision that limits the time period during which the company may dispute a claim's validity is called
Time Limit on Certain Defenses
An assignment of benefits of a Health Policy:
Transfers payments to someone other than the policyowner
An agent has made false comparisons of policies to induce the sale of an insurance policy. This illegal act is called:
Twisting
Which of these organizations approves continuation courses in VA?
VA Insurance Continuing Education Board
A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as
Variable Life
Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?
Variable Life
Which of the following policies is characterized by a flexible premium and death benefit and allows the policyowner control of the investment aspect of the plan?
Variable Universal Life
Which parts of a life insurance policy are guaranteed to be true?
Warranty
At what point does an informal contract become binding?
When one party makes an offer and the other party accepts that offer
Individual Accident and Health Insurance coverage must meet minimum standards in VA. These minimum standards:
apply to policy definitions as well as to benefits
All of the following are considered to be typical characteristics describing the nature of an insurance contract EXCEPT
bilateral
The incontestable clause allows an insurer to:
contest a claim during the contestable period
An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be
converted to an individual permanent policy at an individual rate
The reason for a business having a Business Overhead Expense Disability Plan is to cover:
fixed business expenses
If an administration fee is charged by an agent, the customers written signature is REQUIRED
in every occurrence
An insurance agent that solicits a Medicare Supplement policy must disclose to the applicant that the agent
is there to determine what is appropriate for the purchaser, while taking into consideration any existing coverage
M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the
policy proceeds
In VA which of the following insurance transactions do NOT require records to be maintained?
premium quotes not accepted by the client
Which of these options can an individual use their medical flexible spending account to pay for?
prescription drugs
In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and
the initial premium
A policy that becomes a Modified Endowmenr Contract (MEC)
will lose many of its tax advantages
Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?
"Decreasing Term". The Automatic Premium Loan provision can be incorporated into all of these policies EXCEPT decreasing term.
T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?
$0 because T is still alive and the sole primary beneficiary, while the mother is still the contingent beneficiary
What is the MINIMUM number of activities of daily living an insured must be unable to perform to qualify for Long Term Care benefits?
2
What is the qualification for being considered a small group in VA?
2 to 50 members
J is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value?
20 pay life
If an agent holds 2 license types, the continuing education requirement is ____ credits by Dec 31st
24
The Affordable Care Act provides health coverage dependents up to the age of
26
Insurance transactions must be maintained by an agent for how many calendar years?
3
If an insurance agency has moved it's office to a new location, the Bureau of Insurance must be notified within how many days of the move?
30
According to the Mandatory Uniform Policy Provisions, what is the maximum amount of time after the premium due date during which the policy remains in force even though the premium has not been paid?
31 Days
Individual life insurance policies can change no more than ____ interest per year on cash value loans?
8%
Which of these is an element of a Variable Life Policy?
A fixed, level premium
With whom may an agent share commissions with?
A licensed agent with the same license type
Which of the following does NOT qualify as creditable coverage under HIPAA
Accident plans
How long does the coverage normally remain on a limited-pay life policy?
Age 100
Which of these statements accurately reflects VA law regarding life insurance advertisements?
An insurance agency is responsibly for advertisements placed by its insurance agents
Before a life insurance policy is issued, which of these components of the contract is required?
Applicant's signature on application
Which of the following is most important when deciding how much Disability income coverage an applicant should purchase?
Applicants monthly income
Which of the following is the requirement for an individual to preform the duties of an insurance agent
Be duly licensed
All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT
Bilateral
Which of the following statements best describes what the legal actions provision of an accident and health policy requires? A) an insured must settle a claim within 60 days after Proof of Loss is submitted B) an insured must wait at least 30 days after proof of loss has been submitted before a lawsuit can be filed C) an insured must wait at least 60 days after proof of loss has been submitted before a lawsuit can be filed D) an insured must settle a claim within 30 days after proof of loss is submitted
C) An insured must wait at least 60 days after proof of loss has been submitted before a lawsuit can be filed
The situation in which a group of physicians are salaried employees and conduct business in an HMO facility is called
Closed panel
What would be a potential consequence for an agent who misappropriates insurance funds held in a fiduciary capacity?
Commission may suspend or revoke the agents license
Major Medical policies typically:
Contain a deductible and coinsurance
Which of the following does COBRA allow a terminated employee to receive?
Continued coverage in group health plan
Insurance policies are offered on a take it or leave it basis, which make them:
Contracts of Adhesion
what type of group insurance plan involves employees sharing cost?
Contributory plan
The Universal Life Policy is called an unbundled Life Policy because the policy holder can see the expense changes and interest earned, and the:
Cost of Insurance
If an agent has not completed the continuation education requirement by Nov 30 a final opportunity to complete this requirement is extended to when?
Dec 31 every even year
How are surrender charges deducted in a life policy with a rear-end loaded provision?
Deducted when the policy is discontinued