Practice Exam #1
Pierre is covered by his employer's group major medical plan. His employer pays for 75% of the premium and he pays for 25%. How much would a $10,000 benefit be taxable as income under this plan? $10,000 $7,500 $2,500 $0
$0
How much does Medicare Part B pay for physician fees? 40% 60% 80% 100%
80%
Of the following dividend options, which of these is taxable? Reduction of premium One year term Paid-up additions Accumulation at interest
Accumulation at interest
A guaranteed issue insurance policy has no initial premium requirement incontestable period waiting period medical underwriting
medical underwriting
An appointing insurer has how many days to file a notice of appointment with the Commissioner? 10 15 30 45
15
How soon after the beginning of a loss must written notice of claim be presented under individual health insurance? 10 days 15 days 20 days 30 days
20 days
A licensed producer who changes a residential or business address must notify the Commissioner within how many days? -10 days -15 days -20 days -30 days
30 days
The Commissioner must examine the financial affairs of each admitted insurer operating in Louisiana at least once every how many years? -1 -3 -5 -7
5
The legal action provision in a health contract is limited to no more than ___ years. 2 3 4 5
5
As of January 1, 2014, an employer with up to 25 full time equivalent (FTE's) with average annual wages of less than $50,000 may be eligible for a tax credit of ___ of the premiums paid by the employer. 30% 40% 50% 60%
50%
In an employer-sponsored contributory group Disability Income plan, the employer pays 60% of the premium and each employee pays 40% of the premium. Any income benefits paid are taxed to the employee at Employee has no tax liability 40% of the benefit 60% of the benefit 100% of benefit
60%
Which of the following BEST describes a conditional insurance contract? A contract that requires certain conditions or acts by the insured individual A contract that has the potential for the unequal exchange of consideration for both parties A contract where one party "adheres" to the terms of the contract A contract where only one party makes any kind of enforceable contract
A contract that requires certain conditions or acts by the insured individual
Which is true about the licensing of business entities in Louisiana? -A separate license is issued for each line of insurance -A licensed producer must be designated as responsible for compliance with state insurance laws and regulations -Business entities handling only commercial lines need NOT be licensed -No licensing is necessary as long as all producers active within the business entity are properly licensed
A licensed producer must be designated as responsible for compliance with state insurance laws and regulations
Fran is currently uninsured. Which of the following would allow Fran to qualify for a special enrollment in his small employer's health benefit plan? Adoption of a child An injury on the job Birth of a grandchild A new cancer diagnosis
Adoption of a child
When does an immediate annuity begin making payments? After multiple premiums have been paid After the first premium has been paid After policy has been active for one year After the incontestable period
After the first premium has been paid
Any individual may satisfy part of the eligibility requirements for the Louisiana Health Plan by providing evidence of -Lack of access to an employer's health plan due to unemployment -An insurer's refusal to provide comparable insurance for health reasons -Financial need -Good health during the previous six months
An insurer's refusal to provide comparable insurance for health reasons
Fixed period settlement options are considered to be a form of a(n) cash value loan variable life policy annuity endowment
Annuity
Why are dividends from a mutual insurer not subject to taxation? Because insurance premiums are tax-deductible Because dividends are already subject to capital gains Because dividends are payable directly to the policyholder Because dividends are considered to be a return of premium
Because dividends are considered to be a return of premium
All of the following are elements of an insurance policy EXCEPT definitions other insurance claim forms conditions
Claim Forms
Which of the following would be considered an underwriting duty of an agent? -Requesting medical information from the Medical Information Bureau (MIB) -Completing all applications and collecting initial premiums -Accepting or declining an application -Assigning a risk classification
Completing all applications and collecting initial premiums
All of the following are qualifications for establishing a health savings account (HSA) EXCEPT Enrolled in a high deductible health plan Be under the age of 65 (not enrolled in Medicare) Enrolled in a health plan with a prescription drug benefit Enrolled in a health plan that limits out of pocket expenses
Enrolled in a health plan with a prescription drug benefit
XYZ Company has applied for group health insurance for its employees. What information would the insurer's underwriters likely use to determine the appropriate coverage and final premium rate given to the group? -Experience rating -Credit reports -Arrest reports -AM Best rating
Experience Rating
When the principal gives the agent authority in writing, it's referred to as -Express authority -Implied authority -Apparent authority -Imposed authority
Express authority
All of these are settlement options for life insurance policies EXCEPT Life income Lump sum Extended term Fixed period
Extended Term
A group Disability Income plan that pays tax-free benefits to covered employees is considered non-contributory partially contributory group contributory fully contributory
Fully contributory
How is Medicare Part B funded? Employer taxes Payroll taxes User premiums General tax revenue and user premiums
General tax revenue and user premiums
An insurer will accept a premium from the insured and continue the coverage in full force as though it was NOT late during which time period? Incontestable period Probation period Reinstatement period Grace period
Grace Period
A health insurance policy that allows an insurer to change the policyowner's premiums, but NOT cancel the policy is called a(n) guaranteed renewable policy conditionally renewable policy optionally renewable policy noncancelable policy
Guaranteed Renewable Policy
A group life policy terminates a class of participants. To qualify for an individual policy, an employee must do which of the following? -Prove that he is insurable -Have been insured at least 5 years -Apply for the new policy within 30 days -Pay at least two premiums in advance
Have been insured at least 5 years"
Which license is REQUIRED in order to solicit Long Term Care insurance in the State of Louisiana? -Life Insurance Producer License -Long Term Care Insurance Producer License -Casualty Insurance Producer License -Health Insurance Producer License
Health Insurance Producer License
Simon has purchased a fixed immediate annuity. His payment amount will be dependent upon principal, interest, and the contract's surrender charge death benefit cash refund income period
Income period
Which of the following protects a policyowner from a misrepresentation caused by an innocent mistake? Reinstatement clause Entire Contract clause Incontestable clause Nonforfeiture clause
Incontestable clause
Which of the following actions may an insurance company NOT do in a health policy that contains a guaranteed renewable premium benefit? Stop renewing policy when the insured reaches a specified age Cancel policy if premiums are not paid Increase the premiums on an individual basis Increase the premiums on the basis of an entire classification
Increase the premiums on an individual basis
The Louisiana Life and Health Insurance Guaranty Association was established to protect consumers in the event of an insurer's Insolvency Demutualization Merger with another company Sale of part of the company
Insolvency
Which of these is NOT considered to be a nonforfeiture option in a whole life insurance policy? Interest only Reduced paid-up insurance Extended term insurance Cash surrender
Interest Only
A common exclusion with Vision plans is eyeglass frames the examination contact lenses lasik surgery
Lasik Surgery
When a decreasing term policy is purchased, it contains a decreasing death benefit and increasing premiums level premiums decreasing premiums variable premiums
Level Premiums
Which of the following are considered viatical settlement providers in Louisiana? -Banks taking collateral assignment of life insurance policies -Issuers of life insurance policies providing accelerated benefits -Corporations purchasing life insurance contracts on employees -Licensed entities entering multiple agreements with terminally ill patients
Licensed entities entering multiple agreements with terminally ill patients
A life insurance policy that has premiums fully paid up within a stated time period is called stated payment insurance limited universal insurance stated modified insurance limited payment insurance
Limited payment insurance
Sonya applied for a health insurance policy on April 1. Her agent submitted the information to the insurance company on April 6. She paid the premium on May 15 with the policy indicating the effective date being May 30. On which date would Sonya have coverage? -April 1 -April 6 -May 15 -May 30
May 30
Which of these is likely to occur when life or health insurance is being applied for? The Medical Information Bureau (MIB) will determine the risk classification The agent is required to report all medical information to the Medical Information Bureau (MIB) Physical examinations are required Medical history from the insured may be reviewed and reported
Medical history from the insured may be reviewed and reported
Shirley has a Medigap policy, which is designed to pay costs associated with -Medicare Parts A and B -Medicare Advantage -Medicare Part C -Medicare Part D
Medicare Parts A and B
The purpose of Medicare Supplement Insurance is to address gaps in Medicare coverage, which can include Medicare in-hospital deductible replacing HMO coverage covering chiropractic treatment treatment provided in a government hospital
Medicare in-hospital deductible
Which type of plan would be most appropriate for an individual on Medicare and is concerned that Medicare will NOT pay for charges exceeding the approved amount? Medicaid Long-term care Medicare supplement Plan F Comprehensive major medical
Medicare supplement Plan F
Where on the policy form should individual long-term care insurance policies contain an appropriate captioned renewability provision? On the application On the second page On the schedule page On the first page
On the first page
In a health insurance contract, changes may be made: Only when approved in writing by an officer of the insuring company Only when approved by the producer Only if the insured does so within five years from the date of issue Only if the insured provides evidence of insurability
Only when approved in writing by an officer of the insuring company
In a health insurance contract, changes may be made: Only when approved in writing by an officer of the insuring company Only when approved by the producer Only if the insured does so within five years from the date of issue Only if the insured provides evidence of insurability
Only when approved in writing by an officer of the insuring company
Joe is a Medicare participant who receives his benefits through a Managed Health Care Plan. Which Medicare plan does he have? Part A Part B Part C Part D
Part C
What is an insurer required to do when faced with an error made under the Misstatement of Age provision? Cancel the policy Pay age-corrected benefits Pay full benefits as stated in the policy Bill the policyowner for back premiums
Pay age-corrected benefits
Which type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies? Waiver of premium Juvenile waiver Guaranteed insurability Payor benefit
Payor Benefit
The cause of a loss is referred to as a(n) -Hazard -Adversity -Peril -Risk
Peril
Which annuity payout option allows the policyowner to choose a pre-determined number of benefit payments? Period certain Straight life Installment refund Amount certain
Period Certain
Which type of disability would be less than total impairment and equal to permanent impairment? -Partial total disability -Permanent partial disability -Residual partial disability -Temporary partial disability
Permanent partial disability
During the accumulation period, who can surrender an annuity? Payor Annuitant Beneficiary Policyowner
Policy Owner
Which of these is considered to be a document that describes the critical segments of a life insurance policy? Buyer's guide Policy summary Consumer report Buyer's summary
Policy Summary
A cease and desist order issued against a producer Suspends the producer's certificate or broker's license Prevents the producer from receiving commissions Prohibits a specific practice listed in the order Terminates the producer's appointment with the insurer
Prohibits a specific practice listed in the order
When must a claim on a life insurance policy be paid after proof of loss has been received by the insurer? Promptly Within 10 days Within 20 days Within 30 days
Promptly
In general practice, which statement is true of the powers of the Commissioner of Insurance with respect to access to a producer's business records? Records can only be accessed by an order of a state court Authorization must come from the National Association of Insurance Commissioners (NAIC) Records must be produced upon the request of the Commissioner to the producer The Commissioner has no right to access a producer's business records because of privacy considerations
Records must be produced upon the request of the Commissioner to the producer
In general practice, which statement is true of the powers of the Commissioner of Insurance with respect to access to a producer's business records? -Records can only be accessed by an order of a state court -Authorization must come from the National Association of Insurance Commissioners (NAIC) -Records must be produced upon the request of the Commissioner to the producer -The Commissioner has no right to access a producer's business records because of privacy considerations
Records must be produced upon the request of the Commissioner to the producer
What is the primary feature of a viatical settlement? No interest on policy loans Reduced death benefit prepayment Longer contestable period Lower premiums
Reduced death benefit prepayment
A transaction in which a new life insurance policy is purchased and an existing life insurance policy is surrendered is called Nonforfeiture Replacement Reinvestment Rollover
Replacement
Kurt is an active duty serviceman who was recently killed in an accident while home on leave. Which military service exclusion clause would pay upon his death? Active Status Results Leave
Results
An annuity is primarily used to provide retirement income disability income long-term care benefits death benefits
Retirement Income
Which of the following is considered to be controlled business? Selling only term life insurance policies Selling most of the insurance policies to family members Choosing not to market to people under age 30 Selling only one company's insurance policies
Selling most of the insurance policies to family members
Which of the following are the premium payments for a Universal life policy NOT used for? -Death benefits -Cash value -Loading costs -Separate account investments
Separate account investments
Which of the following is NOT a type of Medicare Advantage Plan? Health Maintenance Organization (HMO) Preferred Provider Organization (PPO) Private Fee-For-Services (PFFS) Social Security Disability Income (SSDI)
Social Security Disability Income (SSDI)
In Louisiana, regulation for variable insurance contracts are set by all of the following EXCEPT: Securities and Exchange Commission Department of Insurance State securities authorities State attorney general's office
State attorney general's office
In a Long-Term Care policy, activities of daily living (ADL's) can be each of the following EXCEPT -Talking -Dressing -Transferring -Feeding oneself
Talking
A Medicare supplement policy must disclose all of the following EXCEPT -The right to return the policy for a full refund -Any limitations on pre-existing conditions -The right of the insurer to increase premiums -The approval of the policy by Medicare
The approval of the policy by Medicare
If an insured dies during the grace period with no premiums paid -The policy would be payable, minus the premium amount -The policy would be payable only after the beneficiary makes past due premium payment -All past premiums will be refunded with interest -The claim would be denied
The policy would be payable, minus the premium amount
A life insurance illustration showing future premiums being paid out of nonguaranteed values must disclose that -These policy premiums will vanish -The policy guarantees payment of these premiums -The policyowner forfeits the option of paying these premiums from other sources -The policyowner may need to resume premium payments depending on actual results
The policyowner may need to resume premium payments depending on actual results
A producer's license in Louisiana must be renewed every One Year Two years Three years Four years
Two Years
Which of the following pertains to the analysis of an applicant's personal information and determining whether insurance should be issued or declined? Adverse calculation Underwriting Risk classification Actuarial determination
Underwriting
A partial surrender is allowed in which of the following life policies? Adjustable whole life Universal life Decreasing term life Limited whole life
Universal life
What is the primary factor that determines the benefits paid under a disability income policy? Education level Wages Type of occupation Age
Wages
All of the following riders can increase the death benefit amount EXCEPT Cost of Living Waiver of Premium Accidental Death Rider Guaranteed Insurability
Waiver of Premium
All of the following services typically are considered maternity care in a health maintenance organization (HMO) EXCEPT: Prenatal care Well-baby care Postnatal care Hospital charges for the mother
Well-baby care
All of these statements concerning whole life insurance are false EXCEPT Policyowner can take out a policy loan up to the face amount When a whole life policy is surrendered, income taxes may be owed Coverage is normally temporary The death benefit is not affected by outstanding loans
When a whole life policy is surrendered, income taxes may be owed
What type of injury would NOT be covered under a health insurance policy? -Accidental -Work-related -Sports-related -Recreational
Work related
A fee for service health insurance plan will normally cover vitamins and natural remedies cosmetic procedures gym membership a disease
a disease
An insurer operating in the U.S. but headquartered outside the U.S. is a foreign insurer an alien insurer unauthorized authorized
an alien insurer
A disability income policy can prevent an insured from earning a higher income than if he/she were working by utilizing elimination periods probationary periods benefit limits deductibles
benefit limits
All of the following are included as part of a contract in the entire contract provision EXCEPT the riders application changes made by the producer policy
changes made by the producer
Field underwriting performed by the producer involves -assigning a risk classification to the insured -providing commission information to the applicant -approving or declining an applicant -completing the application and collecting initial premium
completing the application and collecting initial premium
Where would policy proceeds be paid if both the insured and primary beneficiary were killed in the same accident? primary beneficiary's estate contingent beneficiary insured's estate children of the insured
contingent beneficiary
All of these are standard exclusions found in a life insurance policy EXCEPT hazardous occupations aviation disability war
disability
In small group accident and health plans, a late enrollee is an individual who -is covered under another group plan -applies for coverage during an open enrollment period -is permitted to enroll after an administrative review -elects coverage after the initial eligibility period
elects coverage after the initial eligibility period
Under the Health Insurance Portability and Accountability Act (HIPAA), the employee's new Group Health Plan will verify Creditable Coverage so that the -employee's benefits still owed can be claimed -employee cannot be excluded from the new employer's health plan -employee's waiting period for coverage of a preexisting condition can be reduced under the new employer's health plan -new health insurance carrier will have a clear record of any chronic conditions that exist
employee's waiting period for coverage of a preexisting condition can be reduced under the new employer's health plan
The "Notice to buyer" on the first page of each long term care policy delivered in Louisiana explains that some long term care costs may not be covered provides the addresses of approved long term care facilities states the possible disadvantages of replacement states the cost of the coverage
explains that some long term care costs may not be covered
A tax-free Section 1035 Exchange of a life insurance policy to a different policy is permitted if it occurs -in the same state as the original transaction -within a 12 month period -from insurer to insurer and no cash is received by the policyowner -from agent to agent as long as the agents are licensed in the same line
from insurer to insurer and no cash is received by the policyowner
A permanent life insurance policy where the policyowner pays premiums for a specified number of years is called a(n) -Adjustable policy -Limited pay policy -Level term policy -Variable universal policy
limited pay policy
In contrast to a guaranteed renewable policy, a noncancellable policy may cancel the policy only at renewal may raise premiums at policy renewal may raise premiums at anytime may never raise premiums
may never raise premiums
Tara the producer is delivering a specified disease insurance policy to a new policyowner. Upon delivery, she may be expected to collect all of the following EXCEPT a(n) -initial premium -signed impairment rider acknowledgement -modified application with a new signature -good health statement
modified application with a new signature
How are premiums paid by the insured for personally owned disability income insurance treated for tax purposes? -partially tax deductible -not tax deductible -fully tax deductible -tax deferred
not tax deductible
When a producer is replacing an existing ordinary life insurance policy, the producer must take all of the following actions EXCEPT give the applicant a Notice Regarding Replacement of Life Insurance give the applicant the original or a copy of the proposals used in the sales presentation obtain the beneficiary's signature on a summary of all policies to be replaced submit to the producer's insurance company a copy of the Notice Regarding Replacement of Life Insurance signed by the applicant
obtain the beneficiary's signature on a summary of all policies to be replaced
The gatekeeper's role when used by an HMO is establishing out-of-network providers obtaining referrals to specialists from primary care physicians taking applications for enrollment into an HMO processing the subscriber's payments
obtaining referrals to specialists from primary care physicians
A clause that allows an insurer the right to terminate coverage at any anniversary date is called a(n) -conditionally renewability clause -optional renewability clause -selective renewability clause -cancelable clause
optional renewability clause
Richard owns an insurance policy that is renewable only at the option of the insurance company. His policy is considered to be -cancelable -guaranteed renewable -conditionally renewable -optionally renewable
optionally renewable
A health insurance policy will typically cover injuries obtained from war elective cosmetic surgery preventative health services work related injuries
preventative health services
The elimination period under a hospital indemnity plan is -the period in which pre-existing conditions are not taken into consideration -the period in which all deductibles are eliminated -the specified number of days after an insurance policy's issue date during which coverage is not afforded for sickness -the specified number of days an insured must wait before becoming eligible to receive benefits for each hospitalization
the specified number of days an insured must wait before becoming eligible to receive benefits for each hospitalization
