practice test 2

An applicant applies for a nonmedical (No Part 2 of app) insurance and pays the premium 4 days later; before underwriting is complete, the insured dies of an illness. How will the insurer respond?

pay the claim

A student pilot would likely have which exclusion applied to their policy?

aviation

Joint life is also known as which?

first to die

An insured has a $100,000 Accidental Death & Dismemberment policy and is mowing the lawn. They cut off their toes, what is the maximum amount they will receive in benefits?

$0

Under a group life conversion, the death benefit may be reduced to a minimum of what amount?

$10,000

Long Term Care will pay for skilled care for a minimum of how long?

1 years.

All of the following may be used for medical underwriting purposes EXCEPT:

marital status

A company sets aside extra revenue (profit) that they plan to distribute to the employees. Which type of plan is this?

Profit Sharing Plan

Which of the following best describes a variable whole life policy?

guaranteed minimum death benefit

A person has a 25,000 claim and is covered by two health insurance plans. Their primary insurer pays 13,500 of the claim. How much will their secondary insurer pay of this claim

11,500

What is the minimum benefit period for Long Term Care?

12 months

A probationary period may be all of the following lengths of time, EXCEPT

120 days

Under HIPAA, what is the lowest amount of members for any group health plan?

2 members

In this state, how many hours of ethics training is required in continuing education?

3

How many days does a general lines producer have to notify the insurance commissioner upon change of address?

30 days

If the employer offers a nonmedical group health insurance plan where the employees pay a portion of premiums, the plan must have what minimum percentage of participation

75%

Which of the following options will reduce the death benefit?

Accelerated payment

The type of policy where the insured would most likely name a beneficiary is known as:

Accidental Death and Dismemberment

The dividend option if used will create a taxable event is known as:

Accumulation of Interest

Which of the following is NOT a duty of the commissioner of insurance?

Activate claims reserves

A Limited Pay policy will provide coverage until when?

Age 100

Which of the following COULD cause an agent to lose their license due to controlled business?

An agent obtaining a license only to insure their employers business.

When does coverage on a newborn begin

At the date of birth

Medicare can be BEST described as

Basic Hospital and Medical Coverage.

Which rider will allow a child temporarily covered on their parent's policy to continue coverage on their own after age 18?

Child's Term Rider

HMOs file their annual financial report on March 1st to whom?

Commissioner

When an insurer pulls credit on an insured this can be found in:

Consumer Report

J is insured through his plan and added as a dependent on his wifes plan. Which of the following provisions allows J to file claims under his plan?

Coordination of Benefits

A person has a deferred annuity which pays $450 per month until funds are exhausted. Which type of annuity does the insured have?

Level Fixed Amount

Which of the following cannot be a renewable policy

Decreasing Term

A policy that matures upon attaining a certain age or pays out in the event of death is known as:

Endowment contract

At age 100 what does an original whole life policy pay to the insured?

Face Amount

The type of renewability option that provides for coverage until 65 without premiums increasing would be best described as

Guaranteed - Noncancelable

Which policy has the most limited choice of providers?

HMO

Which type of insurer most likely has local clinics that provide care for the insured?

Health Maintenance Organizations

Which of the following is typically used in conjunction with Renewable Term?

Level Term

An applicant has finished their application and written a check to the insurer but accidentally made the check out in the producer's name. Upon discovery, what MUST the agent do in this scenario?

Immediately return to the applicant to have a new check issued

Which of the following life insurance policies would be best suited for an insured seeking safe growth that will never lose value, as well as hopefully maintaining protection against inflation?

Indexed Universal Life

Which of the following BEST describes a morale hazard?

Indifference to loss

Justin the insured has an insurance contract, within the exclusions portion of the policy the contract contradicts itself. If Justin the insured has a claim and it is denied due to the contradiction, whom would the court rule in favor of?

Insured

If a person takes a loan against a Variable Universal Life insurance policy, what will most likely happen next year

Interest will accrue on the loan

If the insured gives an insurers health agent notification of a claim, which of the following is true?

It is considered notification.

K has a life insurance policy with H and L named as beneficiaries. L dies young at age 18 and H died in a car accident. 2 months later when K dies, under the common disaster clause, who will receive the benefits?

Ks estate

Which of the following would be considered consideration on the insurer's behalf?

Paying out the benefits of the policy

What would be the consideration of an insured in an insurance contract?

Paying the first months premium

Which of the following will NOT receive a copy of the Medical Information Bureau report?

Policyowner who is not the insured

If a policy lapses, what may an insured do to start the policy back up?

Reinstate

Which type of life insurance policy has an increasing premium?

Renewable Term

Which of the following would a Basic Hospital/Surgical plan most likely cover?

Room and board

Accidental Death and Dismemberment will pay no benefits in which scenario?

Self-Inflicted Injuries

P owns a small corporation of 25 employees; P's staff is comprised of high income earners who would like to save for retirement by contributing more than $30,000 per year to their retirement account. Which retirement account is best suited for P's company?

Simplified Employee Pension Plan (SEP)

Which of the following would generate cash value the slowest?

Straight life

Who must sign a Medicare Supplement policy replacement?

The agent and the insured.

COBRA benefits would be terminated in which of these scenarios?

The employer has canceled the health plan

Which provision states that the application is part of the contract?

The entire contract

Which of the following is true regarding conversion from a group life insurance plan?

The insured may convert any time after participating in the plan for 5 years.

Which of the following best fits representation?

The insured stating their age on an application

T and L are married; L is named as the primary beneficiary on T's policy and T's sister K is named as contingent beneficiary. If T and L are involved in an accident where T dies immediately and L died 15 days later due to the same cause of loss; who will receive the death benefit?

The insured's contingent beneficiary (k)

Which clause specifically applies to Pre-Existing Conditions?

Time Limit on Certain Defenses

L, 61, is a retired U.S. Naval officer. Which of the following would L most likely use for health insurance?

Tricare

Which of the following investment products have producers who are regulated by the National Association of Securities Dealers (NASD):

Variable Life

Which of the following annuities is most likely used for 401k retirement plans

Variable annuity

Insured's in a viatical settlement are known as

Viators

When a whole life policy is overfunded per IRS guidelines, this best describes

a Modified Endowment Contract (MEC)

Which of the following best describes credit insurance?

a creditor requiring a debtor to purchase to cover a loan

Which of the following is NOT used during underwriting

actuarial justification

Which of the following best describes a contract written on a "take it or leave it" basis?

adhesion

Which of the following is not an interest sensitive policy?

adjustable life

Part C of Medicare covers what?

advantage (coinsurance)

Which of the following is true if the employer pays all of the premiums?

all eligible employees must be covered

Which of the following is true about the taxation of a participating insurer?

any amount earned in excess of the dividend is taxable each year

The Accelerated Benefit rider is used when an insured is diagnosed with a terminal illness. How would this likely be paid out?

benefits would be deducted from the death benefit

Which of the following statements would be true about the guaranteed insurability rider?

coverage can be increased at certain ages

Which of the following is a characteristic of term?

ceases at end of time period

Telling an insured that if they do not sign a disclosure agreement they may be unable to obtain the rates at a future date is considered:

coercion

Which of the following best describes the maximum out of pocket cost under the Affordable Care Act?

coinsurance deductibles and copay

The insured paid for the premium upfront, but the underwriter rated up the policy. When the agent delivers the policy, what must the agent do?

collect more premium and an amended application

Agent Y completes an application on January 8th, while collecting premium at the same time. The insured V has stated they would like to be covered at the time of application regardless of health status, but Agent Y has repeatedly told V the policy will go into effect at the time of medical exam. Which type of receipt will Agent Y give to V on January 8th?

conditional receipt

A Certificate of Coverage is required to have which of the following

effective dates

Costs paid for by a medical policy are referred to:

eligible expenses

A copy of the application and the policy together comprise of which document?

entire contract

A comprehensive PPO would not cover which of the following?

experimental and investigative services

An insured has a disability policy with a 15 day sickness elimination period. The insured was diagnosed with pneumonia and upon walking out of the doctors' offices trips over a log, hits their head on the sidewalk and incurs a serious injury of the spine. When would the insured be eligible for benefits?

immediately

The entire contract clause states that only which party may make changes to the contract?

insurer

Which of the following would likely be found on a Medical Information Bureau Report?

life insurance policies applied for in the past

Hospice is considered which aspect of health insurance?

managed care

Which of the following best describes an insurers consideration?

paying a death benefit of a life insurance policy

Which of the following highlights the benefits and exclusions in a life insurance contract?

policy summary

The following are true regarding the grace period, EXCEPT

premiums are waived

A policy summary would likely not have which of the following

prescriptions covered

A newly hired employee is beginning a job and has tried to utilize the group health plan but is not eligible for coverage yet. Which provision most likely applies?

probationary period

The insuring clause pertains to all of the following parties except

producer

Which of the following MUST be completed in order for the insurer to fulfill their promise under the contract?

proof of loss submitted

The Medical Information Bureau is best described as:

sharing medical information between it's member organizations

The incontestability clause cannot void a contract within the first two years due to which scenario?

statements made that are true to the best of the applicant's knowledge

Which of the following is a correct assertion about the waiver of premium ride

the insurance company will pay premiums after a short probationary period

A producers license would likely not be granted in which scenario?

they plan to only sell to their friends and family

What is the purpose of the time payment of claims clause?

to prevent unnecessary delaying of claims

A major difference between universal life and an annuity in regards to cash value would be?

universal life will be more expensive than an annuity

A new employee would most likely fall in which of the following categories before coverage begins?

waiting period