South Carolina Insurance Exam Questions
The purpose of the Coordination of Benefits provision in group accident and health plans is to
avoid overpayment of claims
An insured has a health plan that pays established amounts in accordance with a list of injuries, surgical procedures, or other losses. This list is called a
benefit schedule
Under a group life policy, the insurer will issue an individual _____ to the policyowner for delivery to each person insured.
certificate
Ownership of a life insurance policy may be temporarily transferred with a(n)
collateral assignment
Which of the following is NOT a circumstance to which a temporary producer license can be issued?
prospective producer who is waiting to take the state licensing examination
Decreasing term life insurance is often used to
provide coverage for a home mortgage
Which of these is NOT considered to be a purpose of an annuity?
Annuities are intended to create an estate
Which of approach predicts a persons earning potential and determines how much of that amount would be devoted to dependents?
Human life value approach
According to the Affordable Care Act, what metal tier is required to have an actuarial value of 70% with covered individuals paying 30% through deductibles, co-pays, and other cost sharing features?
Silver Plan
Which of these will have the highest monthly payout upon annuitization
Straight life
Premiums paid that exceed 7 1/2% of an insured's Adjusted Gross Income (AGI) are tax-deductible when paid for which of the following plans?
Qualified Long-Term Care plan
Which of the following actions is REQUIRED by a producer who is replacing an existing life insurance policy?
Submit to the replacing insurer a list of the policies to be replaced
The entire contract includes the actual policy and the
application
An indemnity plan
provides the insured a specific dollar amount for services
Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called
representations
An endorsement found in an insurance plan which modifies the provisions of the policy is called a(n)
rider
A whole life insurance policy accumulates cash value that becomes
the policy loan value which the insured may borrow against
If an annuitant dies before the annuity start date
the premiums paid plus interest will be given to the beneficiary
The typical long-term care insurance policy is designed to provide a minimum of___year(s) of coverage
1
Within___days after policy delivery, an individual life insurance policy can be returned for a 100% premium refund
10
Sole proprietors are permitted tax deduction for health cost paid from their earnings in the amount of
100% of cost
Lorenzo is self employed with an S corporation. He is unmarried and had a net profit for the tax year. What are the tax ramifications of his health insurance premiums paid for the year?
100% of his health insurance costs can be deducted from his gross income
Frank is shopping for a disability income policy. Which of the following would have the HIGHEST premium?
14 day period / 10 year benefit period
A producers license MUST be renewed every____year(s)
2
Tim's individual life insurance policy has just recently lapsed. His policy may be reinstated at any time within ____year(s)
3
How many days must a Traditional IRA be rolled over to another IRA in order to avoid tax consequences?
60
Proof of loss on a health insurance claim must be submitted to an insurer within___days after the insured's date of loss
90
How soon can the benefit payments begin with a deferred annuity?
A minimum of 12 months after date of purchase
Of the following dividend options, which of these is taxable?
Accumulation of interest
The waiver of premium does NOT include which provision?
All future premiums are waived if the insured recovers from the disability
With a scheduled dental policy, how are covered expenses paid?
Benefits are limited to a specific maximum dollar amount per procedure
Donald is the primary insured of a life insurance policy and adds a children's term rider. What is the advantage of adding this rider?
Can be converted to permanent coverage without evidence of insurability
What happens to the coverage under a children's term rider when that child reached a certain specified age?
Coverage is eliminated
Which of these is NOT subject to income taxation under a Modified Endowment Contract (MEC)?
Death benefit
All of these are typically sources of underwriting for life or health insurance EXCEPT
Disclosure authorization response
Which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive?
Endowment policy
All of the following are qualifications for establishing a health savings account (HSA) EXCEPT
Enrolled in a health plan with a prescription drug benefit
The taxable portion of each annuity payment is calculated using which method?
Exclusion Ratio
XYZ Company has applied for a group health insurance for its employees. What information would the insurers underwriters likely use to determine the appropriate coverage and final premium rate given to the group?
Experience rating
Which of these riders will pay a death benefit if the insured's spouse dies?
Family term insurance rider
A health care provider claim may be settled using which of the following payment methods?
Fee-for-service
Which of these annuities require premium payments that vary from year to year?
Flexible premium deferred annuity
When a qualified plan starts making payments to its recipient, which portion of the distributions is taxable?
Gains
Which of the following is NOT taken into consideration when determining eligibility for Medicare benefits?
Income
An insurer is REQUIRED to offer which of the following to each long-term care applicant at the time of purchase?
Inflation protection
Health Insurance will typically cover which of the following perils?
Injury due to accident
In regards to a life insurance contract, which of the following statements is NOT true regarding the concept of insurable interest?
Insurable interest can be established sufficiently by sentimental attachment alone
Which of these is NOT considered to be a nonforfeiture option in a whole life insurance policy?
Interest only
What happens to interest earned if the annuitant dies before the payout start date?
It is taxable
Which contract element is insurable interest a component of?
Legal purpose
Tyler purchased a disability policy with a waiver of premium rider on April 1. He is disabled on May 1. On June 1, he receives proof of permanent and total disability, and submits a claim. He begins receiving benefits on June 15. When are his premiums waived?
May 1
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?
May 30
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?
Medicare supplement Plan F
How does one become eligible for Part D: Prescription Drug coverage?
Must have Medicare coverage
Disability income plans which require that the insurer can NEVER change or alter premium rates are usually considered
Nonconcellable
What is the required action to be taken by a South Carolina licensee before operating under an assumed business name?
Notify the Director
An interest-sensitive life insurance policyowner may be able to withdraw the policy's cash value interest free. The provision that allows this is called
Partial Surrender
Which type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies?
Payor benefit
What is an insurance policy's grace period?
Period of time after the premium is due but the policy remains in force
Under a Modified Endowment Contract, what are the likely tax consequences?
Pre-death distributions will become taxable
What is the primary reason for buying an annuity?
Provide future economic security
Which of the following is NOT an Unfair Claim Settlement Practice?
Providing claim payments to insureds according to the policy's coverage guidelines
The factor used most often when underwriting a disability income policy is
annual earnings
Kristi purchases an annuity that will pay her husband an income for 15 years. If he dies, this income will become payable to their children for the remainder of the period. Kristi has what kind of annuity?
Temporary annuity certain
Which of the following policies does NOT build cash value?
Term
Which of the following decisions would a Health Savings Account (HSA) owner NOT be able to make?
The amount contributed by the employer
Which of these is NOT a characteristic of the Accelerate Death Benefit option
The benefit can be offered as a rider at a specific exit cost or may be at no cost
Krissa purchases a 10-year level term life insurance policy that has a death benefit of $200,000. Which of these statements is true?
The face amount and premium will remain constant over the 10-year period
What is the corridor in relation to a Universal Life insurance policy?
The gap between total death benefit and the policy's cash value
If the annuitant dies before the annuity start date?
The premiums paid plus interest earned will be given to the beneficiary
What is the elimination period of an individual disability policy?
Time period a disabled person must wait before benefits are paid
A producer has committed an insurance crime that violates US Code 1033 (interstate commerce). Who would be responsible for the persecution of this crime?
US attorney general
Reggie purchased a life insurance policy with a face amount of $500,000. After 15 years, the cash value has accumulated to $100,000 and the policy's face amount has become $600,000. Which type of life insurance policy is this?
Universal life
David submits a $500 claim for medical expenses. There is a past-due amount owed for insurance premiums of $200. As a result, the insurer only pays $300 for the claim. This deduction came as a result of which provision?
Unpaid provision
Which type of life insurance offers flexible premiums, a flexible death benefit, and the choice of how the cash value will be invested?
Variable universal policy
What guarantees that statements supplied by an insurance applicant are true?
Warranty
When are group disability benefits considered to be tax-free to the insured?
When the recipient pays the premiums
Under which circumstance may a commission be shared between two producers?
When they are both licensed in the same line of business
What type of injury would NOT be covered under a health insurance policy?
Work related
A medical provider that accepts Medicare Assignment must
accept payment based upon a defined Medicare schedule as payment in full
Under a disability income policy, which provision would be payable if the cause of an injury is unexpected and accidental?
accidental bodily injury provision
All of these are common exclusions to a life insurance policy EXCEPT
accidental health
A health insurance policy where the insurer has the right to terminate the policy for reason other than the insured's health is called
conditionally renewable
Where would policy proceeds be paid if both the insured and primary beneficiary were killed in the same accident?
contingent beneficiary
Medicare Part B covers
doctor's charges
All of these are characteristics of a major medical expense policy EXCEPT
elimination periods
Key person Disability Insurance pays benefits to the
employer
A life insurance policy normally contains a provision that restricts coverage in the event of death under all of the following situations EXCEPT
fare-paying passenger
Upon policy delivery, which of the following must a producer have an applicant sign if no initial premium was collected with the life insurance application?
good health statement
A life insurance rider that allows an individual to purchase insurance as they grow older, regardless of insurability, is called a(n)
guaranteed insurability rider
Mike has inherited his father's traditional IRA. As beneficiary, he will pay ____ taxes on any money withdrawn.
income
Medicare Part A (aka Hospital Insurance or HI) covers
inpatient hospital stay
A life insurance policy that has premiums fully paid up within a stated time period is called
limited payment insurance
All _____ policies must be guaranteed renewable.
long-term care
The suicide clause of a life insurance policy states that if an insured commits suicide within a stated period from the policy's inception, the insurer will only be liable for a return of premiums paid
minus indebtedness and without interest
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)
modified application with a new signature
A type of insurer that is owned by its policy owners is called
mutual
How are premiums paid by the insured for personally owned disability income insurance treated for tax purposes?
not tax deductible
What kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus?
participating life insurance policy
In what form do disability income policies typically pay benefits?
periodic income
Which of the following does Medicare Part D cover?
prescription drugs
Distributions from a Health Savings Account (HSA) for qualified medical expenses are
tax-free
Justin is receiving disability income benefits from a group policy paid for by his employer. How are these benefits treated for tax purposes?
taxable income
What types of life insurance are normally used for key employee indemnification?
term, whole, and universal life insurance
Pre-death distributions from a modified endowment contract (MEC) receive different tax treatment than other life insurance policies because
the MEC tends to be an investment vehicle
A life insurance policy that contains a guaranteed interest rate with the chance to earn a rate that is higher than the guaranteed rate is called?
universal life
A renewable Term Life insurance policy allows the policyowner the right to renew the policy
without producing proof of insurability
Loans obtained by a policyowner against the cash value of a life insurance policy
would not be treated as taxable income