Policy riders
Before a policy will be issued, an insurable interest must exist between the owner (applicant) and the A Insured B Insurer C Producer D Beneficiary
A
K has a loan of $5,000 outstanding against her $25,000 traditional whole life policy. If K dies, how much will her beneficiaries receive? A $20,000 B $5,000 C $30,000 D $25,000
A
What taxes apply to the benefits under an individual Disability Income Policy on which the insured has paid the premiums? A Income tax B No tax C FICA tax D Capital gains tax
B
Which of the following are characteristics of universal life insurance policies? A Two death benefit options with premiums fixed for life B Fixed death benefit for life with premiums that may be increased or decreased C Two death benefit options, an adjustable death benefit and flexible premiums D Adjustable death benefit with premiums that are fixed for life
C
Which of the following is FALSE about the Automatic Premium Loan Provision (APL)? A It is only available on cash value policies B It is designed to prevent unintentional policy lapse C For it to be included in the policy, there is an additional premium charge D The APL is treated like any other policy loan
C
Which of the following is a Managed Care Provision used by insurers to monitor hospital stays? A Prospective Review B Utilization Review C Concurrent Review D Precertification
C
Which of the following is an example of a collateral assignment? A A wealthy person signing over a life insurance policy to their irrevocable trust for estate planning purposes B A parent turning over the juvenile policy to the now adult child C A business using a life insurance policy to secure a bank loan D A corporation signing over a policy on the life of an executive upon their retirement
C
Which of the following is an example of what an advertisement cannot do? A Use any statistics or facts B Describe policy benefits C Imply that an insurer is endorsed by a government entity D Disclose the insurer's name
C
Which of the following products requires a producer to obtain a securities registration in addition to an insurance license to solicit? A Indexed Life B Universal Life C Variable Universal D Current Assumption Whole Life
C
M purchased a traditional permanent life insurance plan many years ago. What happens when he attains age 100? A M gets a refund of all premiums paid B M gets a dividend check from the insurer C M receives nothing from the insurer because the traditional permanent insurance plan expires D M gets a check for the face amount of the policy
D
Which of the following health plans will only cover losses by an approved provider: A PPO B POS C Indemnity plan D HMO
D
A "level term" policy means that the _________ remains the same throughout the entire policy period. A Face amount B Beneficiary C Cash value D Loan value
A
A long-term care policy typically provides daily benefits? A For 2 years, 5 years, to age 65 or lifetime B For the life of the insured regardless of the stated benefit period C Up to age 65 D As long as the income lasts
A
All of the following are exclusions under an LTC policy, except: A Chemical dependency on one's own prescription drugs B Rest cures C Nervous or mental disorders that have no demonstrable organic cause D Injury arising due to committing a felony
A
All of the following are prohibited provisions in a long-term care policy, except: A Cancelling a policy due to nonpayment of premium B Cancels, nonrenews, or terminates the policy on the grounds of age or deterioration of the mental or physical health of the insured C Provides coverage for only skilled nursing care instead of lower levels of care D Limits or denies benefits to a policyholder who is diagnosed with any destructive brain tissue disease that will result in loss of brain function
A
All of the following are times in which life insurance policy cash values can become taxable, except: A When a policy loan is taken out B At policy surrender C When the policy is sold D If the policy fails to meet the IRS definition of life insurance
A
An application for insurance is completed and submitted to an insurance company. In order for coverage to be effective immediately, all of the following conditions must be met, except: A The policy is issued at a higher risk than the standard risk applied for B A medical exam is not required C The initial premium is submitted with the application D A conditional receipt is issued
A
An individual is covered under an individual disability income policy with a 90-day waiver of premium provision and a $100 monthly premium. If the insured becomes disabled due to a serious illness and is unable to work for 6 months, which of the following statements will apply? A The insured is responsible for paying the premiums for 3 months and will then receive a $300 refund and premiums are no longer payable for the remainder of the disability B The premiums must be paid by the insured for the entire 6 months and upon returning back to work the insurer will reimburse the insured for the premiums paid for the first 90 days C Premiums do not have to be paid during the entire 6 months D The insured does not qualify for the waiver of premium since the disability is due to sickness
A
An insured should receive necessary claim forms within _____ days after notice of claim. A 15 B 10 C 20 D 5
A
Based upon Optional Uniform Provisions, an insurer would have the right to deny claim payment in all of the following circumstances, except: A Misstatement of age on the application B A broken leg injury suffered as the result of ingesting an illegal drug C A claim involving an injury sustained in a bank robbery D A claim is covered by another insurer
A
Contributions to a nonqualified plan are: A Not tax-deductible B Partially tax-deductible C Tax-deductible up to $50,000 D Fully tax-deductible
A
Guaranteed Renewable means: A Renewable with adjustable premiums, by classification only B Renewable only at the option of the insurer C Renewable with adjustable premiums determined by frequency of claim D Renewable with guaranteed premium
A
Insurers include provisions in contracts to help reduce unnecessary claims and the overpayment of claims. Which of the following is not one of those provisions? A Consideration Clause B Emergency Services C Concurrent Review D Mandatory Second Surgical Option
A
Most group Disability Income contracts are offered on a(n): A Nonoccupational basis B Contributory basis C Occupational basis D Noncontributory basis
A
Notice of claim is required within _____ days of loss. A 20 B 90 C 15 D 10
A
The face amount of insurance is also referred to as the: A Policy proceeds B Surrender value C Loan value D Cash value
A
Which of the following causes of death is covered by the AD&D policy? A Commercial airline crash B Suicide C Heart attack D Cancer
A
Which of the following is a typical benefit period for a group long-term disability benefit? A 2 years B 52 weeks C 26 weeks D 13 weeks
A
Which of the following is not a valid nonforfeiture benefit option required when the nonforfeiture provision is included in a long-term care policy? A Contingent paid-up B Reduced paid-up C Shortened benefit period D Extended term
A
Which of the following is true concerning the Benefit Period of a LTC Policy? A Once the elimination period has been satisfied, it is how long benefits will be payable B It is the time between the beginning of a policyholder's disability and the beginning of the policy's benefits C It is always for the life of the insured D None of the answers listed
A
Which of the following plans could generate a taxable event to the recipient? A Business overhead expense B Disability buy-sell C Key person disability income D Medical expense policy owned by a sole proprietor
A
A _______________ policy has a death benefit that will increase or decrease over time based on the performance of the separate account, provides a guaranteed minimum death benefit, offers a choice of subaccounts in which cash value may be allocated, and a has fixed premium. A Indexed Life B Variable Life C Variable Universal Life D Universal Life
B
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 Cash Surrender B Premium Reduction C Cash D Paid up additions
B
A policy is issued based on an insured's age of 40. After a disability occurs, the insurer discovers that the age was understated and the insured was actually 45 years old at the time of application. The insurer will most likely: A Cancel the policy if the discovery is made within 2 years of policy issue B Reduce the benefit based on what the premiums paid would have purchased at the correct age C Pay the benefit as stated in the policy with no adjustment to the policy D Refund the excess premiums since the insured overpaid premiums
B
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
All of the following are characteristics of group disability income plans, except: A Coverage can be offered based on short-term or long-term disability benefits B Benefits are based on a percentage of the employee's income at the time the policy was issued C Issued as nonoccupational D Premiums are paid based on a contributory or noncontributory basis
B
An insured forgets to pay his insurance premium. Instead of the policy lapsing, the premium is paid by the company. This would suggest that a __________ policy was purchased. A Renewable term B Whole Life C Level term D Decreasing term
B
Index Life, Variable, and Variable Universal all have which of the following characteristics in common? A A securities license is required to sell each policy B The overall policy performance has something to do with the stock market in general C All have a guaranteed death benefit D The owner chooses the separate account(s) to invest the cash values in
B
The following are examples of boycott, coercion, or intimidation, except: A Coercing a debtor into getting requisite insurance through a particular agent B Offering a premium discount or credit that is not specified in the policy C Unreasonably disapproving a policy that provides requisite coverage D Requiring a mortgager to pay a handling charge on a policy required to secure a loan
B
What is the result of an insured not receiving a claim form within the time period allotted after submitting a notice of claim? A The insurer must add a 10% penalty to any amount eventually paid B The insured can submit written proof of the loss C The claim is automatically accepted D The claim is automatically denied
B
What prohibited trade practice does an agent commit when he lies about policy terms in order to convince a policyholder to cancel an existing policy in order to buy a new policy? A Defamation B Misrepresentation C Rebating D False advertising
B
When a disability buyout is funded by the partners, the premiums are: A Tax deductible and the value of the benefit is not taxable B Not deductible and the value of the benefit is not taxable as income C Tax deductible and the value of the benefit is taxable as income D Not tax deductible and the value of the benefit is taxable as income
B
Which of the following best describes the consideration on the part of an insurer? A The purpose of the contract must be legal B The promise to pay in the event of a covered claim C The offer of the contract D The acceptance of the contract
B
Which of the following is false regarding acts considered as insurance transactions? A Making a proposal to solicit an insurance policy B Addressing policyholder complaints C Receiving premiums for an insurance policy D Soliciting an insurance application
B
Which of the following is false regarding acts considered as insurance transactions? A Receiving premiums for an insurance policy B Addressing policyholder complaints C Soliciting an insurance application D Making a proposal to solicit an insurance policy
B
Which of the following is not a feature of term life insurance? A Lower initial cost B Cash value C Pure protection D Limited duration
B
Which of the following is not a valid nonforfeiture benefit option required when the nonforfeiture provision is included in a long-term care policy? A Extended term B Contingent paid-up C Reduced paid-up D Shortened benefit period
B
Which of the following is not an example of a cost containment measure specific to managed health care plans? A Utilization review B Replacement C Mandatory second opinion D Preventive care
B
Which of the following is not covered by a long-term care policy? A Respite care B Hospitalization C Adult day care D Custodial care
B
Which of the following policies would be deemed a MEC? A Variable Universal Life B Single Premium Whole Life C Universal Life D 10-pay Whole Life
B
Which of the following states the obligation of the insurer and the risk that is considered in a life insurance policy? A Entire Contract Clause B Insuring Clause C Exclusions Provision D Consideration Clause
B
Which of the following terms best describes the maximum length of time that disability income benefits will be paid to the disabled insured? A Disability period B Benefit period C Elimination period D Coverage period
B
Which type of insurance company is owned by its policyholders? A Non-admitted insurer B Mutual insurer C Admitted insurer D Stock insurer
B
Which underwriting source is primarily used when an application reveals conditions for which more medical information is required? A Agent's Report B Attending Physician's Statement C Medical Information Bureau Report D Inspection Report
B
___________ restrict the insurer's underwriting criteria for group policies. A Federal laws B State and federal laws C NAIC and Insurance Department rules and regulations D State laws
B
Lyle owns a $50,000 20-Pay Life Policy that he lets lapse at the end of the fourth year. The Nonforfeiture Option providing the longest period of coverage would be: A Extended Term B Reduced Paid-Up C Paid-Up Additions D Paid-Up Option
B (Extended is MOST coverage, not longest)
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 (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).
Abigail has a preexisting condition noted in her new A & H policy. If she submits a claim for this condition during the probationary period, what will the insurer do? A Pay benefits in full B Deny the claim C Pay benefits if the claim is nonoccupational D Pay half the usual benefit
B (during prob pd)
Anna is seeking a Medicare Supplement Policy. An agent has explained that all supplements must contain some of the same items. Which of the following is false? A A question about replacement must appear on the application B The insurer has the option to provide a Buyer's Guide and an Outline of Coverage C The policy must contain an Outline of Coverage D The policy must contain a 30-day free look provision on the first page
B (have to provide them)
Which of the following term life insurance policies would have the highest 1st-year annual premium, all other factors being equal? A 5-year B 15-year C 10-year D 1-year
B (over charged in first year then levels)
A contract that is drafted by an insurer and receives no input or alteration from the insured, is considered a(n): A Unilateral Contract B Conditional Contract C Contract of Adhesion D Aleatory Contract
C
A producer is explaining the concept of limited-pay life insurance to a 40-year-old client. When comparing a straight life policy with a 10-pay life policy, which of the following statements is correct? A A straight life policy has immediate cash value B A policy fully paid up in 10 years will endow at the client's age of 50 C The cash value in a straight life policy will accumulate at a slower rate than the cash value in a 10-pay life D A 10-pay life policy will have a lower annual premium than a straight life
C
All are considered medical expense controls utilized by HMOs, except: A Minimizing administrative costs B Controlling hospital stays and visits C Allowing out-of-network coverage D Encouraging preventive care through low-cost physical exams
C
All of the following are Optional Uniform Provisions, except: A Illegal Occupation B Misstatement of Age C Legal Actions D Change of Occupation
C
All of the following causes of death are covered under an AD&D policy, except: A Murder B Explosion C Stroke D Auto accident
C
An insurance company would most likely use an impairment rider in which of the following situations? A T, age 70, wants to buy a long-term care policy but is receiving skilled care in a nursing home B S is looking to buy a disability income policy, but is unemployed C G is looking to obtain a health insurance policy, but is concerned about a current heart condition D F has cancer and is looking to buy a cancer only policy to help with the cost of treatment
C
An ordinary straight whole life policy issued 30 years ago would endow at what age? A 95 B 121 C 100 D 65
C
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 Contingency Period B Grace Period C Elimination Period D Probationary Period
C
Dividends issued by Stock insurers are paid to: A Service providers B Agencies C Stockholders D Policyholders
C
False advertising, misrepresentation, and defamation are all examples of which of the following? A Unfair Claims Practices B Unfair Marketing Practices C Unfair Methods of Competition D Unfair Claims Methods
C
The Guaranteed Renewable Provision states that the policy is: A Renewable with adjustable premiums determined by frequency of claims B Renewable only at the option of the insurer C Renewable with premiums that may be increased for entire classes of insureds D Renewable with no increase in premium
C
The principal objectives of a HMO include all of the following, except: A Reducing unnecessary hospital admissions B Keeping patients well with preventative medicine C Providing only inpatient medical care D Reducing the average number of days per hospital visit
C
The provision that limits the amount of time an insurer has to challenge a claim and void the contract upon proof of a material misstatement is called the ____________ clause. A Insuring B Consideration C Incontestability D Entire Contract
C
What happens to the overall annual premium cost once a term rider expires? A It increases B It begins to vary C It decreases D It stays the same
C
Which of the following scenarios will trigger an income tax due? A Receiving a participating policy's cash dividend B Cancelling the policy during the free look period C Interest earned on dividends left on deposit with the insurer D Taking out a policy loan in an amount greater than the total premiums paid in
C
asmine has deposited $100,000 into a single premium immediate annuity. If Jasmine were to die before receiving $100,000 in payments, the balance of the $100,000 would be paid to her sister. Jasmine has selected the: A Life Income Joint and Survivor Option B Life Income Period Certain Option C Life Income with Refund Option D Joint Life Option
C
Which of the following is false regarding provisions for life policies? A The policy must have a legal action time limit of 2 years B The policy must be incontestable after 2 years from the effective date of coverage C The policy may not include a provision for reinstatement D The policy must have a grace period of at least 31 days
C (must have reinstatement within 3 years)
A Second to Die policy would be the most appropriate recommendation for which of the following? A A corporation concerned that its CEO might die before the end of his employment contract B Two business partners who are concerned about the future success of the business and want to provide funds to purchase the business from the decedent's family C A business owner who wants to make sure his wife has enough money to buy the business from his partner if he should die before his partner does D A husband and wife concerned about paying estate taxes after they have died
D
A long-term care rider: A Pays 25% of the death benefit as monthly income for an insured who cannot perform all of the six activities of daily living B 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 C 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 D 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
D
All of the following can determine the death benefit settlement option, except: A The policyowner prior to death B The beneficiary if the policyowner directs the insurer to permit him or her to choose C The beneficiary if no option was designated D The insurer
D
An applicant completes the application and submits it to the insurer along with a premium check. When is the applicant's offer considered accepted? A Only after the policyowner completes any required medical exams B Upon cashing the premium check C When the application and premium check arrive at the insurer's home office D When the insurer issues a policy
D
An insurance applicant must be notified prior to an insurer ordering an investigative or financial report as required by which law? A Health Insurance Portability and Accountability Act B USA PATRIOT Act C Freedom of Information Act D Fair Credit Reporting Act
D
If a premium is not paid at the time of application, the producer will obtain which of the following at the time of policy delivery? A Attending physician's statement B Conditional receipt C Notice of consent D Signed statement of good health
D
In a guaranteed renewable policy, the premiums may: A Only be increased according to the increased risk of an individual insured's health status B Be increased only in relation to the number of claims paid in the past year C Not be changed at all from the original premium at the time the policy was issued D Be increased for all similarly classified insureds based on age
D
In a long-term care policy transaction, when must the outline of coverage be provided to the applicant? A At the time of delivery B At the time of issuance C At the time of premium collection D At the time of initial solicitation and prior to the application
D
Mandatory uniform provisions found in health insurance policies are designed to protect the: A Producer B Insurer C Agency D Insured
D
Many insurers pay benefits based on the average fee charged in a geographical area. This is referred to as: A Cash B Scheduled C Reimbursement D Usual, Customary, and Reasonable
D
One of your clients just reinstated an Accident and Health policy. When is coverage effective for sickness and accident? A Immediately for both accident and sickness B In 30 days for sickness, immediate coverage for accidents C In 10 days for accident and in 48 hours for sickness D In 10 days for sickness and immediately for accidental injuries
D
The ABC corporation chose a high-deductible health plan (HDHP) for the purpose of: A Covering catastrophic losses but not the cost of preventative medical treatments B Providing a plan that offers First Dollar coverage to its employees C Meeting the requirements of establishing a Flexible Spending Account for its 1,000 employees D Coordinating with the HSA it intended to offer to its 700 full time employees
D
The elimination period in a disability income insurance policy: A Addresses where accidents and sicknesses must not occur in order for a claim to be payable B Describes how long the policy must be in force before claims can be considered C Defines what causes of loss are eliminated from potential claim payment D Serves as a time deductible before benefits are payable
D
The insurer's promise to pay benefits is expressly stated in the: A Legal actions provision B Entire contract clause C Consideration clause D Insuring clause
D
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 Waiver of premium C Guaranteed insurability (Future increase option) D Nonforfeiture
D
Which of the following is NOT a Dividend Option? A Paid in Cash B Paid-Up Additions C Accumulate at Interest D Reduced Paid-Up
D
Which of the following is responsible for paying the premiums due on a life insurance policy? A The insured B The producer C The beneficiary D The policyowner
D