Practice Exam

Pataasin ang iyong marka sa homework at exams ngayon gamit ang Quizwiz!

An insured files for an accident and health insurance policy claim eight days after the premium due date. The benefit payable is $500 and the overdue premium is $200. Assuming that the policy pays on a first-dollar basis and contains the unpaid premium provision, how much will the insurer pay?

$300

Premature IRA distributions are subject to a penalty tax of

10%

Which of these do NOT indicate the presence of insurable interest in a life insurance contract?

Lifelong friendship

Group dental insurers can discourage adverse selection by

Limiting the duration of coverage

Which of the following health insurance provisions requires that the application becomes part of the policy?

Entire Contract clause

XYZ Insurance Company gives direct authority to its agents to sell insurance through an agency contract, but nothing is stated regarding the collection of premiums. Which authority grants the agent the right to collect premiums?

Express authority

When an accident and health insurance policy provision is in conflict with the statutes of Ohio, it is

Amended to conform to the minimum statutory requirements

Rick is a disabled worker receiving Social Security benefits. What are his wife and dependent children eligible for?

An income benefit which is a percentage of his primary insurance amount

Traditional individual retirement annuity (IRA) distributions must start by

April 1st of the year following the year the participant attains age 70 1/2

Long-term care insurance policies may exclude coverage for all of the following EXCEPT

Senile dementia

An Ohio agent's license to sell insurance may be revoked for all of the following reasons EXCEPT

Sharing commissions with licensed agents

Which statement is true regarding hospital preadmission certification for emergency situations?

Notification is required to be given after insured is admitted to the hospital

Which of the following would NOT have a restricted ability to enter into a contract?

Small employer

Taxable income may be the result from all of these modified endowment contract (MEC) transactions EXCEPT for

The policy is surrendered for less than what was paid into it

Which of the following statements is INCORRECT about why the government provides insurance?

Reduce fraudulent claims

Which of the following statements BEST describes the HIPAA portability rules for an individual who changes from one group medical plan to another?

Reduces or eliminates any pre-existing conditions excluded under the new plan

Where does the primary funding for Medicare Part A come from?

Federal payroll and self-employment taxes

Which of these is NOT an allowable deduction made from premium payments of the cash value of a variable life insurance policy?

Federal premium taxes

Major Medical policies are typically characterized by which of the following?

Flat deductible

How can an insurance company minimize exposure to loss?

Reinsuring risks

What is the name of the rider that provides an additional purchase option in a life insurance policy?

Guaranteed insurability rider

Which of the following can be defined as "the potential for loss"?

Risk

Kate received a group accident and health termination notice. How many days does she have to apply for a converted policy?

31

When does the agent give a premium receipt for a life insurance application?

When the initial premium has been collected with the application

A policyowner is permitted to take out a policy loan on a whole life policy at what point?

When the policy has a cash value

After an applicant reads and signs an insurance application, he/she should be conscious of the fact that

a false statement could lead to loss of coverage

The coinsurance for skilled nursing facility services covered by Medicare after the 100% Medicare coverage ends is

a flat dollar amount per day

An insured is covered under a group long-term disability policy. Under this type of policy, the definition of disability based on any occupation typically applies

after two years of disability

When there is a named beneficiary on a life insurance policy, the death benefits

are paid directly to the beneficiary without interference from the insured's creditors

A source of additional income for a life insurance policyowner can be derived from the

cash value

An employee welfare plan exempt from ERISA regulations would be

church plans

The payment of the first premium, the promise to pay a covered loss, and the agreement to abide by policy conditions are all examples of

consideration

When a sum of money undergoes capital liquidation, that sum will

decrease in size

The amount of a covered loss to be paid by the insured before a major medical expense policy begins to pay is called the

deductible amount

Employer group dental plans may attempt to minimize adverse selection by utilizing all of the following EXCEPT

encouragement of reduction in employee participation

A prepaid dental plan has an agreement in place with a network of dentists which

establishes amounts that are considered full payment for services rendered

The difference between a doctor's actual charges and the amount approved by Medicare is called a(n)

excess charge

Mark has a policy that uses the regular occupation (own-occ) definition of total disability. Using this definition, he will be considered disabled if unable to

execute the substantial and material duties of his regular occupation

Death benefits from a life insurance policy are normally considered to be

exempt from federal income tax

In Ohio, when an individual is covered under a small employer's accident and health plan, the pre-existing conditions exlcusion period may be partially or wholly satisfied by

having creditable coverage with a previous employer

With life insurance, the needs approach is used primarily in determining

how much life insurance a client should apply for

The insurance coverage in a variable life insurance policy may vary based on the value of

its underlying investments

A policyowner has a life insurance policy where she had listed her age on the application as 5 years younger than her actual age. If she dies and the insurer discovers the misstatement of age, how much will the insurance company pay?

less than

An insured is considered to be totally disabled under the presumptive disability provision if he/she

loses the ability to speak

An insurable risk requires

that the chance of loss be calculable

The absolute assignment of a life insurance policy results in

the assignee receives all incidents of ownership

Attainment of the limiting age for dependent children will not terminate the coverage of a dependent child if

the child is incapable of self-sustaining employment by reason of physical or mental disability

The insured's consideration given for a health insurance policy is

the first premium payment and the application

An arrangement where an individual is authorized to act on behalf of another person or company is established through

the law of agency

The reason for backdating a policy is

to obtain a premium rate based on an earlier age

The grouping of two or more small employers in order to obtain group health insurance at a favorable rate is called a multiple employer

trust

In an individual retirement account (IRA), rollover contributions are

unlimited by dollar amount

An insurance company's failure to enforce a contract's provision is called a(n)

waiver

An insurance company can be liable for an agent's unauthorized acts

when the agency contract is unclear concerning the authority given

Pat has a disability income insurance policy that covers disabilities arising from a work-related illness or injury. The amount of his disability income payments for an on-the-job injury may be reduced by

workers compensation benefits already paid

An accident and health insurance policy defines an injury as "bodily injury by accidental means". For an injury to be covered on this policy, what is required?

Both the cause and resultant injury must be accidental

What is a prosthodontics dental procedure?

Bridgework

Which of these is NOT considered to be a cost connected with an individual's death?

Business expenses

The power to change the beneficiary in an individual annuity lies with the

owner

A contingent beneficiary is described as the

person who receives the death benefits if the primary beneficiary dies before the insured

Under a key person disability income policy, benefits will be received as

tax-free income to the business

Prepaid dental plans differ from most other types of dental plans in what way?

Closed panel of dentists can only be used

What is considered a valid reason for small businesses to insure the lives of its major shareholders?

Fund a buy-sell agreement

Life insurance premiums are based on what three factors?

Mortality, interest, expenses

All of these statements correctly describe an aleatory contract EXCEPT

Only one party makes any kind of legally enforceable offer

In Ohio, continuation of medical plan coverage for a handicapped child beyond the age limit stated in the policy may require proof of the child's

Incapacity and dependency upon reaching the age limit

When must insurable interest exist for a life insurance contract to be valid?

Inception of the contract

Which life insurance clause prohibits an insurance company from questioning the validity of the contract after a stated period of time has passed?

Incontestable clause

Which of these factors does NOT influence an applicant's need for life insurance?

Self-maintenance expenses

Which statement regarding whole life insurance is accurate?

Insurance coverage can continue for life

Which type of deductible must be satisfied again for each illness or accident in a major medical plan?

Per-cause

What is the maximum number of employees (earning at least $5,000) that an employer can have in order to start a SIMPLE retirement plan?

100

Health providers are compensated by a preferred provider organization (PPO) for normal dental procedures by what means?

Decreased fee schedules

All of these are used to prevent adverse selection in a group dental plan EXCEPT

Decreased participation

Which of these pays an income to two or more annuitants until the death of the last annuitant?

Joint and survivor annuity

Straight whole life insurance can be accurately described in all of these statements EXCEPT

Policy protection normally expires at age 65

Which of the following describes a participating life insurance policy?

Policyowners are entitled to receive dividends

What must the claimant do if the proper forms are not provided by the insurer?

Proceed by providing written verification of the loss

A life insurance illustration showing future premiums being paid out of nonguaranteed values must disclose that

The policyowner may need to resume premium payments depending on actual results

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

Universal life insurance normally has a minimum guaranteed cash value for duration of the policy

Which of the following combinations best describe a universal life insurance policy?

A flexible premium deposit fund and a monthly renewable term insurance policy

Which of these would NOT be a valid reason to add the waiver of premium rider to a life insurance policy?

Allows a policyowner to take out a policy loan to cover premium payments in the event of total disability

What type of policy can group term life insurance normally be converted to?

An individual permanent life insurance policy

Who normally pays the premiums for group credit life insurance?

Borrower

What could be the potential result of taking out a cash value loan on a life insurance policy?

Cash surrender value will be reduced if policy is forfeited

A policyowner suffers a covered accident and health insurance loss on June 30 and submits the proof of loss to the insurer July 10. If the policyowner cancelled the coverage on July 2, how will the insurance company handle the claim?

Claim must be paid after proof of loss is received

Which of these is NOT considered a Federal punishment for unfair and deceptive insurance practices?

Community service

Which report contains information regarding an individual's general reputation and credit standing?

Consumer report

In regards to the Affordable Care Act (ACA), which of these is NOT a role of a health insurance exchange?

Contact the employer if an employee stops coverage under a plan offered in the exchange

What does a Mandatory Second Surgical Opinion provision provide to an employer-paid health insurance plan?

Containment of the employer's premium cost

Which of the following is a key characteristic of an HIC compared to other health and accident plans?

HIC combines health care delivery and financing

Which of the following is NOT true of a preferred provider plan?

Hospitals can only initiate preferred provider plans

A 55 year old recently received a $30,000 distribution from a previous employer's 401k plan, minus $6,000 for income tax withholding. Which federal taxes apply if none of the funds were rolled over?

Income taxes plus a 10% penalty tax on $30,000

According to HIC laws, confidentiality of health information applies to

Information supplied by both the covered individual and the providers

What is the guaranteed cash value of a whole life insurance policy when the insured turns 65 years old?

Less than the policy's face amount

Skilled nursing facility expenses are sometimes covered by _____, but ONLY if the insured was hospitalized prior to entering the facility.

Medicare

Which of these is a type of private insurance that covers the cost-sharing amounts under Medicare?

Medicare Supplement

Medicare Part B excess charges are covered by

Medicare Supplemental insurance

Who does TRI-CARE provide accident and health coverage to?

Military families

Medicare Supplement insurance requires an individual to be at least how old for open enrollment?

No minimum age

All of these are normally covered under most dental plans EXCEPT for

Oral cancer

When a deferred annuity is surrendered, who must sign the authorization to do so?

Owner

Which of the following is NOT a function of accident and health insurance?

Pays a death benefit as a result of natural causes

With whom may the subscriber of an HIC file an appeal regarding the resolution of a complaint concerning services provided?

Peer Review Committee

Which of these plans allow a participant to choose either a network or non-network provider at the time when medical care is needed?

Point-of-service

Which of these statements accurately portrays an adjustable life insurance policy?

Policy can alternate between forms of term and whole life insurance

Which of the following statements accurately describes the financial impact of total disability?

The financial impact may be worse than that of death

Which statement concerning a deferred annuity is correct?

The owner can be the beneficiary, annuitant, or neither

Which statement about group life insurance is INCORRECT?

Each participant requires evidence of insurability

An employer has a group life insurance plan in place for his employees. How would an employee in poor health be treated in this situation?

Eligible for the same type of coverage as the other employees

Which parties are directly involved in a group accident and health insurance contract?

Employer and insurer

Which of the following contracts offer deferred taxation, flexible payments, a guaranteed interest rate, and death benefits equal to the cash value?

Flexible premium fixed annuity

Which life insurance policy provision allows a policyowner to cancel the policy within a limited time period and be given a full refund?

Free-look period

A business may purchase an annuity for all of the following reasons EXCEPT

Funding a non-qualified deferred compensation plan

Which of these statements is NOT true regarding a cash value loan against a life insurance policy?

Interest payments made by policyowner are deductible

Medicare will cover a maximum of how many days per benefit period in a skilled nursing facility?

100 days

Mary is the sole proprietor of her business and has a family health plan. She would like to deduct the premiums from her taxes. What percentage of her premiums are tax deductible?

100%

Which of the following best describes the tax treatment of medical expense policies for the self-employed?

100% of medical expense plan premiums are tax deductible

An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction?

20% is withheld for income taxes

What is the MAXIMUM number of employees an employer may have for qualified medical savings accounts?

50 employees

Which of the following is NOT a reason for a business to buy key person life insurance?

An increased pension liability if the key employee dies

What qualifies as acceptance of an insurance contract offer?

An issued policy

Which of the following statements is true regarding accident and health insurance claims that reimburse on an indemnity basis?

Claims can be sent directly to the insured

What does the rehabilitation benefit cover in a disability income policy?

Covers the approved cost of the rehabilitation necessary to help a disabled insured return to work

Which of the following is NOT an intended use of an annuity?

Create new funds upon the death of a wage-earner

ABC Partnership is a business with a limited number of partners. Which disability buy-sell agreement is best suited for this business?

Cross purchase agreement

What happens to the purchasing power of benefit payments from a fixed life annuity when the cost of living goes up?

Decreases

Individuals covered with employer-paid group health plans will normally receive tax-free benefits under all of these plans EXCEPT

Disability income

An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately had the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee?

Distribution is subject to federal income tax withholding

What is considered a valid reason for an insurer's refusal to pay policy proceeds directly to a minor?

Minors are normally not capable of handling money in a reasonable manner

An insured covered under a Disability Income policy is disabled and collecting benefits for a period of two months. He returns to work and is again disabled from the same cause, whereupon benefits continue to be paid. This is an example of which of the following?

Recurrent disability

When an annuity contract has been surrendered, how will the surrender charges affect the final contract settlement?

Settlement will be reduced

All of the following are causes for termination of an employee's group insurance coverage EXCEPT

The plan's coinsurance limit is reached

In dental insurance coverage, which of the following typically is EXCLUDED?

Treatment started prior to the eligibility date

Under which circumstance is the interest rate guaranteed within a market value adjusted annuity?

When the contract has been held for a stated time period

In a qualified retirement plan, the yearly contributions to an employee's account

are restricted to maximum limits set by the IRS

A signed good health statement may be collected by a life agent at the time of

policy delivery

Which action will trigger a penalty tax on premature distributions from a modified endowment contract (MEC)?

policy loans

Where is the difference between a standard risk and a substandard risk reflected?

premium charges

An owner's cost basis for a non-qualified deferred annuity is typically the same as the

premiums paid into the annuity

A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a

profit-sharing plan

A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a(n)

risk retention group

When a health insurance policy includes a Mandatory Second Surgical Opinion provision, the insured must

seek a second opinion for specified elective surgeries

When issuing disability income coverage on a substandard risk, an insurance company may

shorten the benefit period

The premiums paid by an employer for his employee's group life insurance are usually considered to be

tax-deductible to the employer

Long-term care policies normally cover expenses associated with

Nursing homes

Which benefit can be found in an equity indexed annuity, but not in a fixed annuity?

Protection against long-term inflation

Which of the following would NOT be a reason for purchasing life insurance on a child's life?

Provide benefits for the child if the parents die

A characteristic of a Preferred Provider Organizations (PPO) is

If service is obtained outside the PPO, benefits are reduced and costs increase

A single premium deferred annuity sometimes contains a bailout feature. Which statement regarding this feature is correct?

If the interest rate falls below a specified level, the surrender charge is waived

All of these are considered features of whole life insurance EXCEPT

Initial premium is lower than for an equivalent amount of term insurance

In what way are insurance policies said to be aleatory?

Involves the potential for the unequal exchange of value

Which term describes the elimination of a hazard?

Risk avoidance

XYZ Corp gives money to an employee to purchase a life insurance policy and allows the employee to select the beneficiary. What kind of plan is this?

Split-dollar

Darrell has a group long-term disability income policy paid by his employer. Which of these statements is true?

The specified benefit amount is a percentage of his wages

Which of these is NOT a reason to buy a term life policy?

To accumulate savings

What is the effect of the market value adjustment in a market value adjustment annuity?

Transfers some of the investment risk to the policyowner

The contractual rights that allow the owner of a deferred annuity to surrender the cash value several years before the annuity date are called

nonforfeiture options

Ron recently purchased an immediate, straight life fixed annuity. His benefit payments will

remain a constant dollar amount for the duration of the annuity period

Which of the following can be defined as "the potential for loss"?

risk


Kaugnay na mga set ng pag-aaral