Practice questions - general

Brad has a monthly benefit of $2,500 for total disability under a residual disability policy. Brad suffered a 40% loss. How much will be his benefit? $2,500 $0 $1,250 $1,000

$1,000 The residual benefit would be 40% of $2,500. (40% x $2,500 = $1,000)

Key Person Life Insurance does NOT reimburse a company for which of the following? A. For a loss of leadership skills resulting from a key person's death B. For a reduction of profits resulting from a key person's death C. For increased future pension liability resulting from a key person's death D. For a loss of previous business results from a key person's death

. For increased future pension liability resulting from a key person's death

3. Short term policies have a benefit period of how long? A. 13 weeks to 104 weeks B. 24 weeks to 120 weeks C. 12 weeks to 52 weeks D. 15 weeks to 130 weeks

13 weeks to 104 weeks

A replacing Life insurer must maintain a register for a replaced policy for how many years? A. 2 years B. 4 years C. 5 years D. 3 years

5 years

Bill was 76 years old when he decided to collect his IRA benefits paid with his immediate annuity. What kind of penalty is Bill expected to pay? 10% tax penalty 15% tax penalty 7% tax penalty 50% tax penalty on the amount not distributed by age 70 ½.

50% tax penalty on the amount not distributed by age 70 ½.

When do individuals under a Blanket policy receive their Certificate of Insurance? A. After their policy is delivered B. Within the first two weeks of its delivery C. At the time of their application D. A Certificate of Insurance is not issued to an individual under a Blanket policy.

A Certificate of Insurance is not issued to an individual under a Blanket policy.

Due to Karen's family history of heart disease, she purchased a policy that specifically covers the expense of treating heart disease. What kind of policy did Karen purchase? A. Limited Care Policy B. Critical Family Heart Disease Policy C. Dread Disease Policy D. Term Disease Policy

A Dread Disease policy covers specific limited conditions

How is the per capita administrative cost of group insurance compared to individual insurance? A. Group is higher B. Group is lower C. Group and Individual are equal D. Group and Individual are comparable

B. Group is lower Group insurance is provided at a lower cost than individual coverage.

Which of the following is not considered in recommending a suitable annuity? A. Income B. Taxes C. Financial interest D. Beneficiary's age

Beneficiary's age

Which of the following is incorrect about Term insurance? It is protection for a certain period of time It provides temporary protection Level, Increasing and Decreasing are types of Term policies It builds cash value

It builds cash value

Which of the following would not be considered a qualifier for disability income? Proof of a disability Being confined to one's house Be under the care of a doctor A certain income status before a disability

A certain income status before a disability

Regarding the PPACA, what is the mandate on pre-existing conditions? A. All Health plans must cover an insured regardless of their pre-existing condition B. Pre-existing conditions must be covered after 30 days C. Pre-existing conditions are covered to a certain degree set by each insurer D. All Health plans must limit coverage to two pre-existing conditions

All Health plans must cover an insured regardless of their pre-existing condition

Which of the following characteristics is not associated with a Non-Cancellable policy? A. An insurer cannot cancel the policy B. An insurer cannot increase the premium C. An insurer may terminate the contract for certain conditions D. An insurer has the right to make contract changes

An insurer may terminate the contract for certain conditions

Which of the following would be considered the purest form of Term insurance? A. Annually Renewable Term B. Increasing Term C. Decreasing Term D. Level Term

Annually Renewable Term

Policy benefits that are not assigned will be paid to which of the following? A. Beneficiary B. Spouse C. Dependents D. Insured

Insured An insured will be paid benefits from their policy, unless they were assigned to another party.

Who pays the larger share of a coinsurance amount? A. Insurer B. Insured C. It is shared equally D. It depends on the maximum benefits

Insurer

Which of the following is false about the Living Needs Rider? A. It provides funds for Nursing Home expenses B. It helps pay for Medical costs C. An insured with this rider is expected to die within 3 years D. An insured will be terminally ill

C. An insured with this rider is expected to die within 3 years A Living Needs Rider helps to pay expenses for an insured that is expected to die within 2 years.

Life insurance premiums are determined by several factors pertaining to an insured, including age, occupation and: A. Location of residence B. Number of children C. Avocation D. Marital status

C. Avocation

What clause permits an insured to pay benefits to a person not named in a policy as its beneficiary? A. Common Disaster B. Spendthrift C. Facility of Payment D. Paid Up Option

C. Facility of Payment The Facility of Payment Clause allows an insurer to select a person that has possession of a policy to obtain a portion of its proceeds

A group of more than 20 employees would have _____ available in any state. A. ERISA B. NAIC C. COBRA D. NAIS

COBRA COBRA states that an employer with 20 or more employees must provide notification statements to eligible terminated individuals to extend their group coverage after a qualifying event.

Which of the following is an example of replacement? Cancel a Whole Life policy to purchase a Term Policy Cancel a Major Medical Policy to purchase a Disability Policy Cancel a Return Policy to purchase a LTC Policy Cancel a Term Policy to purchase a Disability Policy

Cancel a Whole Life policy to purchase a Term Policy Replacement is when a new policy is bought to take the place of one currently in force, not to buy additional coverage.

Wayne has a disease. His employer has kept him on their Health plan for 30 before Medicare becomes his primary coverage. What is Wayne's disease? Heart Disease End Stage Renal Kidney disease Cancer Leukemia

Cancer

All of the following are exclusions from Major Medical policies, except: A. Custodial Care B. Self inflicted injuries C. Catastrophic loss D. Injuries from an act of war

Catastrophic loss

HRAs are considered to be what type of programs? A. Contribution B. Benefit C. Retirement D. Business

Contribution

Leo is receiving Hospice Care. His insurer will pay for painkillers, but not for an operation to reduce the size of his tumor. What term best fits this arrangement ? A. Limited Coverage B. Cost-Containment C. Claims Saving D. Selective Coverage

Cost-Containment

Jason was involved in an accident. He lost the use of his right leg and lost the hearing in his left hear. A month later his hearing improved. To what extent would Jason receive Presumptive Disability benefits due to his injury and loss of hearing? A. Full benefits B. Partial benefits C. Half benefits D. No benefits

D. No benefits Loss of temporary hearing and loss of the use of one leg are not qualifiers for Presumptive Disability benefits.

What Medicare program will cover off the label drugs? A. Part A B. Part B C. Part C D. Part D

D. Part D

What kind of policy may include a Waiver of Premium Provision? Dread Disease Accidental Death Loss of Income Disability Income

Disability Income

What are Major Medical Insurance Plans that cover expenses in and out of Medical facilities called? A. Eligible Plans B. Deductible Plans C. Comprehensive Plans D. Indemnity Plans

Eligible Plans Major Medical Insurance plans that cover Medical expenses in and out of Medical facilities and contain high maximum benefits are called eligible plans.

That NAIC activities include drafting model legislation and: Educating State Legislators Exchanging information and developing uniformity in regulatory practices Helping legislators make decisions Informing the Governor about insurance

Exchanging information and developing uniformity in regulatory practices

From the following which options has the highest amount of protection? A. Extended Term B. Reduced Paid Up C. Increasing Term D. Cash Paid Up

Extended Term Extended Term has the same face amount as its original policy, but for a shorter time.

Social Security should be considered one's primary source of disability income coverage. True False

False

Which of the following is not a dividend option? Paid Up One Year Term Cash Payment Fixed Period

Fixed Period

43. A third party ownership would be which of the following? MEC Collateral Assignment Group insurance Nonqualified Exchange

Group insurance In group insurance, the company, insured and owner make up a third party ownership.

All of the following are features of an association except: A. Conduct and hold annual meetings B. Have a constitution C. Have bi-laws D. Have 25 members

Have 25 members

Jerry committed suicide one year after his policy was issued. What will his insurer do in this situation? His insurer will keep the paid premiums His insurer will not pay anything to his beneficiary His insurer will refund his paid premiums His insurer will pay the full death benefit to their beneficiary

His insurer will refund his paid premiums

After Barbara died, and it was discovered that she was younger than her policy stated. What did her insurer do in this situation? A. Nothing B. Cancel her proceeds due to a misrepresentation C. Reduce her benefits to reflect her correct age D. Increase her proceeds to an amount the premium would have bought at the correct age

Increase her proceeds to an amount the premium would have bought at the correct age

Which of the following best describes premium payments for a personally owned Disability Income policy? A. The premiums are tax deductible if their amount exceeds 7.5% of an individual's total gross income B. The premiums for personally owned disability income are not tax deductible C. The premiums are eligible for credits within one year D. The premiums are only deductible if they exceed the benefits by 7.5%

Individual Disability Income premiums are not tax deductible.

Jack and John started a partnership business and decided to purchase Life Insurance on the life of each other because of their business interest. Both of them later retired and then dissolved the partnership. John died shortly thereafter and both of them were still married. To whom would the policy proceeds go? A. John B. John & Jack C. Jack D. No one

Jack

What provision stipulates that an insured can't bring legal action against their insurer for at least 60 days? Incontestability Legal Actions Proof of Loss Time Limit on Certain Defenses

Legal Actions

Which of the following types of insurance policies would perform the function of cash accumulation? A. Property B. Life C. Stock D. Health

Life The Facility of Payment Clause allows an insurer to select a person that has possession of a policy to obtain a portion of its proceeds

A Health Insurance plan involves financing, managing, and delivery of Health Care services. This describes what type of plan ? A. Self-Insurer plan B. Preferred Care plan C. Limited Care plan D. Managed Care plan

Managed Care plan

Mr. Jones is terminally ill. What kind of Part A care does he most likely receive? Medicare Hospice Care Respite Care Physical Care Outpatient Medical Care

Medicare Hospice Care

All of the following are differences between Fixed and Variable annuities except: License Interest rates Mortality Investment

Mortality

Which of the following is true in regard to an association? A. Requires a constitution B. Must have 100 members C. Must have bi-laws D. Must be active for at least 2 years

Must have 100 members

In Franchise groups, how many Master Policies will be issued? A. One B. Two C. Three D. None

None

What must contain the 30 day Free Look provision? A. Outline of Coverage B. Buyer's Guide C. Notice Regarding Replacement D. Renewal Provision

Notice Regarding Replacement

What is the basis for the premium amount of a Children's Rider? Newborns Number of children Adopted Children Stepchildren

Number of children

What law authorized the NAIC to develop a model for Medicare Supplement policies? A. OBRA B. MEDI C. MIB D. APPAC

OBRA The OBRA, Omnibus Budget Reconciliation Act, authorized the NAIC to develop a model for Medicare Supplement policies.

If an individual pays only part of their IRA premiums before their death, which of the following will occur? Only the premiums paid will be included in their estate The unpaid premiums will be deducted from their estate Only the premiums paid over $10,000 will be taxed None of the premiums will be included in their estate

Only the premiums paid will be included in their estate

An employee receives a Certificate of Insurance. What information is not included in their certificate? Benefits Coverage length Premium amount Claims process

Premium amount

What disability policy covers total hearing loss? Presumptive Rehabilitation Medical Reimbursement Accidental

Presumptive

Insurance companies base their insurance on: A. Commissions B. Speculative Risks C. Retention D. Hazards

Retention

53. Paul wants to put his wife as a beneficiary on his policy, but he also wants to retain the rights of ownership. Paul should designate his wife as what type of beneficiary? Revocable Assigned Irrevocable Collateral

Revocable

The basic feature of a managed care indemnity plan is that the participants A. Select a provider and submit claims to the insurance company(Missed) B. Select a provider at work and claims processor C. Pre-select a physician and third-party claims administrator D. Pre-select a clinic and submit claims to the insurance company

Select a provider and submit claims to the insurance company

What determines how long benefits will be received under a Fixed Amount Settlement Option? A. Interest amount B. Income period C. Size of installment D. Length of contract

Size of installment

Tim just purchased a Health policy. How will he receive his benefits? A. Tax Free B. Subject to Federal Tax C. Subject to State Tax D. Subject to State and Federal Tax

Tax Free Individual Health premiums are taxed, and the benefits are received tax free.

Two years before Paul's death, he transferred his Life policy to his daughter Samantha. Which of the following will apply to this situation? The entire amount will not be in Paul's estate The entire amount will be tax free The entire amount will be included in Paul's taxable estate The entire amount will be deductible from Samantha's income tax

The entire amount will be included in Paul's taxable estate The entire amount will be included in the taxable estate because it was within 3 years prior to the insured's death.

When are lenders allowed to suggest a source for Credit Insurance? During an individual's loan procedure After an individual's loan has been approved If an individual is approved for a loan over $100,000 The lenders are never allowed to suggest a source for Credit Insurance.

The lenders are never allowed to suggest a source for Credit Insurance.

Which of the following is true regarding underwriting for a person with HIV? A. The person may be declined B. A person may be declined for HIV but not AIDS C. The person may only be declined if he/she has symptoms. D. The person may not be declined

The person may be declined

Kyle and Ken are the owners of a car repair shop. They have a Disability Buy Sell policy. If Ken became disabled, which of the following would most likely occur? A. The policy would provide funds among the partners to accomplish a buy-out B. The funds would pay for the lease of the business C. The policy would pay for Ken's salary D. The policy would pay for Ken's disability

The policy would provide funds among the partners to accomplish a buy-out

Why does the corridor of a Universal Life policy raise the death benefit? To avoid the lapse of the policy To provide a tax exchange To provide a beneficiary change To avoid losing tax advantages

To avoid losing tax advantages The corridor or gap must be maintained between the Graded Premium Whole Life policies cash value and its death benefit.

Mary is a single mother with an 8 year old daughter named Amanda. Mary wants her and her daughter to be financially protected if she became disabled. What plan is best suited for Mary's needs? A. Total Disability Plan B. Income Benefit Family Plan C. Residual Family Benefit Plan D. Coordination of Benefits Family Plan

Total Disability Plan A basic total disability plan protects a family unit against the economic loss as a result of the total disability of their wage earner.

Which of the following isn't considered to be a Long Term Care exclusion? A. Treatment for a mental disorder B. Treatment for an illness caused by war C. Treatment for drug dependency D. Treatment for Alzheimer's disease

Treatment for Alzheimer's disease The treatment of Alzheimer's disease, Dementia and Parkinson's disease are covered treatments under a LTC policy.

What Universal Life policy would have the IRS require a corridor between the cash value and the death benefit? A. Universal Life Option A B. Universal Life Option B C. Universal Life Option II D. Universal Life Option III

Universal Life Option A

Which of the following is a correct statement regarding Group Life? A. The sponsor of the group receives a Certificate of Insurance B. The employee receives a Master copy of the policy C. The cost of group insurance is based on the ratio of men to women D. The premium for group insurance is based on occupation and geographic area

he cost of group insurance is based on the ratio of men to women