practice exam 2 - 130 questions

A reinstatement provision is generally included in all life insurance policies issued for delivery. If a policy owner applies for reinstatement after a policy lapse, the insurer will require the completion of a reinstatement application. Statements made on this application are contestable for what period of time?

2 years

A waiver of premium benefit is included in a disability income policy. It states that future premiums will be waived if the insured becomes totally disabled for how many consecutive months?

3 months

The Sloppy Slangar Corporation is comprised of five partners. If it wishes to enter into an entity type of buy-sell agreement funded potentially by life insurance, how many policies need to be produced?

5

Written proof of loss must be supplied to an insurer within what period of time?

90 days from the date of the loss

Which of the following licensed individuals may provide insurance advice to a customer for a stipulated fee?

A consultant or adviser

Four business partners individually agree to acquire the interest of a deceased partner and own life insurance on each of the other partners in the amount of his or her share of the business's buy-out value. This is a description of which of the following?

A cross-purchase buy-sell plan

Which of the following best describes a return of unused premium?

A dividend

Which of the following is not considered a rebate?

A favorable payment plan provided to a policyholder

Which of the following individuals possesses the legal capacity to enter into an insurance contract?

A minor contracting for food and clothing

Twisting is a form is misrepresentation. Which of the following is considered a form of twisting?

A producer makes an illegal inducement to influence the surrender of a policy

All of the following statements are true regrading a representation, EXCEPT:

A representation of a fact is the same as an expression of opinion or attitude

Insurance transfers risk from an individual to an insurer. Each of the following statements is true concerning the concept of insurance, EXCEPT:

Insurance is the exclusive method used to manage risk

Which of the following is income taxable as ordinary income?

Interest paid on life insurance proceeds

Which of the following is true with regard to a group medical plan that excludes coverage for abortion procedures ?

It must cover medical expenses that are incurred as a result of complications resulting from an abortion

A whole life insurance policyholder possesses several dividend options as the owner of the contract. Which of the following is true regarding the one-year term dividend option?

It provides a level amount of protection for a temporary period

Settlement options available to a beneficiary allow for the disposition of proceeds from a life insurance contract. Which of the following options available to a beneficiary possesses the greatest degree of risk?

Life income option

Accident & Health policies are characterized by twelve required uniform policy provisions. Which of the following is NOT a required uniform policy provision?

Misstatement of age

All of the following requirements must be satisfied before a person may be issued a resident insurance license, EXCEPT:

Must possess a college degree

Permanent insurance plans include various options available to the policyowner. What whole life insurance policy options protect a policyowner against an unintentional coverage lapse?

Non-forfeiture option

Where does the health history of a proposed insured appear in a life insurance application?

Part II of the application

Which of the following provisions allows the insurer, at its own expense, the right to require a review by a physician or coroner prior to the issuance of coverage or the payment of benefits?

Physical examination and autopsy

All of the following are required at contract delivery, EXCEPT:

Producer must collect the Statement of Good Health

Which statement is not correct when describing the Medical Information Bureau?

Provides the malpractice history of the attending physician

All of the following are types of dividend options, EXCEPT:

Reduced paid-up insurance

When an insured dies, his or her beneficiary may select any of several settlement options in which to receive the policy proceeds. Each of the following is an available life insurance settlement option, EXCEPT:

Reduced paid-up insurance

The change of occupation provision states that If the insured changes from a more hazardous to a less risky occupation, the benefit provided will:

Remain constant and the premium will be reduced

Which of the following annuities pays a monthly income thirty days after it is purchased and is funded with one premium payment?

Single premium immediate annuity

Life insurers also offer variable products. Which of the following statements is true regarding Variable Life insurance?

The cash value in the policy is not guaranteed

The entire contract provision is a required uniform policy provision. Which of the following statements is true regarding this provision?

The entire contract consists of the health insurance policy and a copy of the original application

A policy is issued to S. It is not delivered for two months. Which of the following would apply?

The free-look period does not begin until the owner receives the policy

Insurers utilize several sources of information in order to make underwriting decisions. Each of the following are important underwriting factors, EXCEPT:

The initial premium paid

Claims must be submitted to an insurer in a timely fashion. Which of the following is correct regarding the claim process?

The insured has 20 days to notify the insurer of a claim and the insurer has 15 days to provide claim forms

According to the Uniform Simultaneous Death Act, when an insured and the primary beneficiary are killed in a common disaster and it is not known who died first, what does the policy presume?

The insured survives the beneficiary

Which health insurance policy provision states that in consideration of the payment of a premium, the insurer agrees to pay policy benefits to an insured upon receipt of a written proof of loss?

The insuring clause

The assignment or transfer of one's interest in a policy to another is allowed. Which of the following best describes the concept of assignment?

The legal transfer of the policyowner's rights and interest under a policy

What provision in a health insurance policy allows the insurer to void coverage if the insured has engaged in material misrepresentation and such false statements are discovered during the first two years after the policy is issued?

Time limit on certain defenses provision

Which of the following is a power or duty of the Superintendent or Commissioner of Insurance?

To compute the reserves of life insurance companies

John applies for life insurance and pays an initial premium. He is provided with an insurability type of conditional receipt. The next day John dies in an auto accident. The insurer is notified by John's wife the following day. What action will the insurer take?

Underwrite the policy and if John is found insurable, the insurer will pay the claim

Which benefit included in an accident and health insurance policy makes sure that a policy will not lapse if the insured is totally disabled?

Waiver of premium

Which of the following riders prevents a policy from lapsing if the insured becomes disabled?

Waiver of premium

Premiums paid are tax-deductible to the business since they are a legitimate business expense

Which of the following is true with regard to employer-paid disability insurance?

A public adjuster represents:

a policyowner

A hospital expense plan provides coverage for an insured who suffers an illness or is injured accidentally. Each of the following is covered by a hospital expense plan, EXCEPT

surgical expenses

What increases each year in an increasing term insurance rider?

the amount øf coverage

The binding force in an insurance contract is:

the consideration

If an insured purchases a decreasing term life insurance policy, what portion of the contract decreases?

the death benefit

There are two parties involved in an insurance contract. Which of the following has the right to determine the language or wording to be included in the contract?

the insurer

An insurer conducts home office underwriting activities to determine whether or not a proposed insured is insurable. However, field underwriting is performed by which of the following?

the producer

To avoid any penalties or adverse tax consequences, rollovers of qualified plans must be effected within how many months of withdrawal?

two months

Which of the following types of life insurance is characterized by a corridor?

universal life

Which of the following does not require an additional premium in order to be included in a disability income policy?

waiver of premium

A disability income policy provides Toby with a total disability benefit of $3,000 per month. The plan includes a 30-day elimination period. Toby is disabled for eight months. What portion of his income benefits are going to be taxable?

$0

Cathy owns a whole life policy with a $200,000 face amount. It includes an accelerated benefits rider with a 25% clause. Years later Cathy borrows $20,000 from the policy's equity and dies three months later. What benefit will be paid by the policy?

$180,000

To be eligible for Social Security disability benefits the individual must be disabled for at least:

12 months

All are true statements regarding the underwriting process, EXCEPT:

AIDS and HIV virus exams can be conducted in a discriminatory fashion

If an applicant for life insurance is considered a substandard risk by an insurer but still insurable, the insurer will probably take which of the following actions:

Accept the risk and rate-up the premium

A rider added to a disability income contract that limits coverage is known as an exclusion rider. This rider may also be referred to as:

An impairment rider

Which of the following best describes the doctrine of reasonable expectations?

An insured is entitled to the coverage that he or she may expect

Producers may generally share commissions with which of the following?

Another producer licensed in the same line of insurance

Which of the following statements regarding the Fair Credit Reporting Act (FCRA) is correct?

Applicants must be notified within a short period of time that their credit report has been requested

When will a producer request that a proposed insured sign a statement of continued good health?

At the time of policy delivery

In order for an insurance contract to be legal and enforceable it must include four basic elements. All of the following are elements of a legal contract, EXCEPT:

Beneficiary designation

An insurer's underwriting department reviews applications for life insurance to assess the risk. However, insurers may refer to additional information before providing coverage. Each of the following is a source of underwriting information used by underwriters, EXCEPT:

Blood type of the proposed insured

If an insurer terminates a producer who has acted on its behalf in the sale of insurance products, the insurer will:

Cancel the producer's appointment

A major medical policy provides coverage for basic medical expenses after an initial deductible. Once this deductible is satisfied the insurer will pay up to its:

Coinsurance amount

If no premium is paid with an application for life insurance, what responsibilities does a producer possess when the policy is delivered?

Collect the premium and a statement of continued good health and issue a premium receipt

Who receives the principal sum of an accidental death benefit if the primary beneficiary predeceases the insured?

Contingent beneficiary

Which of the following policies would pay benefits to an insured for illness due to cancer only?

Critical illness or dread disease

Group life insurance is characterized by term life protection. When an employee is terminated, he or she may convert group life coverage to an individual whole life plan without:

Demonstrating insurability

The Commissioner of Insurance may place on probation, suspend, revoke or refuse to renew a producer license after a hearing if the producer has engaged in which of the following:

Engaged in coercive practices

Expenses connected with abortion procedures are covered under most medical plans and group health insurance policies. Which of the following is true regarding this type of covered medical expense ?

Expenses relating to abortion are covered just like any other covered medical expense

Federal and State law specifies that a producer may be sent to prison for each of the following, EXCEPT:

Failure to produce

A benefit rider may be added to a life insurance policy for an additional premium. What benefit rider may be attached to a policy which protects an insured's future insurability?

Guaranteed insurability rider

An individual frantically searching for insurance protection the day after being diagnosed with a terminal illness best describes:

adverse selection

aAn insurer chartered in another country but authorized to conduct business in this State is known as:

an alien insurer

The individual accepting a rebate in an insurance transaction is known as:

an offeree

Health insurance policies include an exclusion provision. All of the following would be excluded under an accident and health policy, EXCEPT:

self inflicted injury

What type of health insurance policy can be used to cover students, passengers on a common carrier or a high school sports team?

blanket health insurance

A long-term care policy provides coverage for an insured who is confined to a nursing home. Each of the following is a covered activity of daily living (ADL), EXCEPT:

breathing

What mandatory provision allows the insured to send in proof of loss in any reasonable form?

claim form provision

Jack borrowed money from a local bank. He also transferred to the bank the right to a portion of the death benefit from his life insurance policy if he dies before paying off the loan. This transfer is also known as:

collateral assignment

An agent or producer who engages in an unfair sales or marketing practice may be subject to all of the following actions, EXCEPT:

community service

Most long-term care policies exclude each of the following, EXCEPT:

senile dementia

Group health insurance policies are also comprised of several provisions or clauses. A group insurance provision which limits the insured's liability for covered claims is the:

stop loss provision

A Modified Endowment Contract is a permanent insurance policy whose premiums paid for it are not in proportion to its death benefit. Each of the following distributions will be subject to taxation in a Modified Endowment Contract, EXCEPT:

death benefit

An underwriter may accept all risks, EXCEPT:

declined risks

When an insurance producer sells insurance over the phone or through the mail, he or she is engaging in which of the following?

direct response marketing

Life insurers issuing participating policies may pay dividends to policyowners from surplus. All of the following are dividend options available to policyholders of such life insurance policies, EXCEPT:

extended term insurance

Part B of Medicare is an optional coverage. Which of the following would not be covered by this portion of Medicare?

eye examination

A producer must act in which of the following capacities?

fiduciary

The Commissioner or Superintendent of Insurance approves premium rates on policies to be issued in this State to make sure that they are not unfairly discriminatory. This means that an insurer may submit rates to the Insurance Department on which of the following bases?

file and use

All of the following are considered to be insurance transactions, EXCEPT:

filing of a claim

All of the following are known as required uniform policy provisions, EXCEPT:

illegal occupation

All of the following are qualified plans, EXCEPT:

income replacement plan

Some life insurance policies may cover more than one individual. A life insurance contract which insures two or more individuals with the proceeds paid upon the death of the first to die is known as a:

joint life policy

A producer who uses health insurance premiums collected for his own personal use has engaged in:

larceny

Which of the following provisions is a required uniform health insurance provision?

legal action

Which provision states that no lawsuit can be brought against an insurer by the insured until 60 days after written proof of loss has been furnished to the insurer?

legal action

Which of the following summarizes the benefits and features of a long-term care policy ?

outline of coverage

In order for a contract to be legal, there must be present a valid offer and acceptance. Which of the following illustrates an acceptance of an offer to contract for insurance?

policy delivery