4

Tom's disability income policy has a 30-day elimination period and provides $2,500 per month for total disability. The policy also contains a partial disability rider. The insured is totally disabled for thirty days. Total disability benefits paid will be: $2,000 $1,250 $0 $2,500

$0

Bill has a $200,000 whole life policy with a $50,000 AD&D rider. Also attached is an accelerated benefits rider. A couple of years later Bill is terminally ill and receives $25,000 from the policy. Six months later he dies. What will the beneficiary receive? $150,000 $0 The principal sum $175,000

$175,000

Accident and Health policies include several uniform provisions, one of which is called the "claim form" provision. An insurer is required to send a proof of loss form to an insured within what period of time after notice of loss has been provided by the insured? 90 days 10 days 20 days 15 days

15 days

Insurance carriers that specialize in offering health care to small groups must make available at least how many health plans to the small employer? Five Two Ten Twenty

2

An employer is mandated to offer COBRA benefits as long as he or she employs: Two or more but not more than 50 employees 10 or more employees 30 or more employees 20 or more employees

20 or more employees

Health Maintenance Organizations (HMOs) are an alternative to health care provided by commercial insurers. Which of the following statements is true regarding HMOs? HMOs deliver medical care An HMO functions on a reimbursement basis HMOs differ from commercial insurers in that the latter deliver medical care Claim forms are submitted to each HMO facility

HMO's deliver medical care

A disability policy generally includes a "relation of earning to insurance" provision. Which of the following is TRUE regarding this provision? It is designed to prevent malingering It limits the amount of disability income protection an individual can purchase It allows the insured to increase policy benefits without insurability It only applies to medical expense insurance

It limits the amount of disability income protection an individual can purchase

Each of the following is a requirement that must be present in long-term care coverage in order for the plan to be qualified, EXCEPT: It must include a renewal provision of at least "guaranteed renewable" It cannot pay expenses that are reimbursable under Medicare It must include a cash surrender value in case benefits are never used It must only provide benefits for long-term care services

It must include a cash surrender value in case benefits are never used

An individual frantically searching for insurance protection the day after being diagnosed with a terminal illness best describes: Adverse selection Insurable interest Inadequate financial planning Confrontational selection

adverse selection

Rob owns a major medical expense policy with a $500 deductible. All of the following are covered claims under this policy, EXCEPT: An insured receives treatment for an injured ankle at a local emergency room An insured is injured at work and is treated at a nearby hospital An insured is charged fifty dollars for an office visit due to an illness An insured is injured in an auto accident and must undergo surgery

an insured is injured at work and is treated at a nearby hospital

AD&D coverage provides all of the following benefits, EXCEPT: Benefits for death as a result of an accident Capital sum benefits Benefits for loss of sight due to an illness Benefits for loss of use of limbs caused by an accident

benefits for loss of sight due to an illness

By legal definition, an agent represents his appointing company, whereas a broker represents: His client Himself Both his client and himself A professional insurance association

both his client and himself

Each of the following is excluded in a disability insurance policy, EXCEPT: Elective cosmetic surgery Bridgework as a result of an accident Injury to an individual in the military Intentionally self-inflicted injur

bridgework as a result of an accident

What is the most accurate way an agent can become aware of her express powers? By reading her agent contract By speaking with her branch manager By reviewing state statutes and insurance regulations By speaking with her regional sales manager

by reading her agent contract

Sara purchases a whole life policy with a death benefit of $450,000. What type of rider can Sara add to her policy to cover her spouse in case he dies in an accident? Payor rider Dependent rider Accidental death rider Dismemberment rider

dependent rider

A Modified Endowment Contract is a whole life policy that does not satisfy the seven-pay test. Which of the following statements is true concerning this classification of life insurance policy? Distributions prior to age 59 1/2 are subject to a penalty It is a policy whose cash value exceeds its death benefit following a limited period It combines temporary protection with equity invested in securities It is any type of permanent policy paid up at age 65

distributions prior to age 59 1/2 are subject to a penalty

All of the following are optional coverages offered by a Health Maintenance Organization (HMO), EXCEPT: Home health care Nursing home care Pharmacy services Emergency services

emergency services

A type of life insurance plan which provides permanent life insurance protection with decreasing term insurance best describes a: Family survivor policy Family maintenance policy Family policy Family income policy

family income policy

What type of disability income policy may have its premium increased for an entire class of policies? Conditionally renewable Non-cancelable Guaranteed renewable Guaranteed collateral

guaranteed renewable

Dan owns a life insurance policy that is classified as a modified endowment contract. He withdraws some of the cash value to pay for medical expenses. Which of the following statements is true? He will be subject to a penalty if the withdrawal is made prior to age 70 1/2 He is not permitted to withdraw cash prior to age 59 1/2 He will not be subject to a penalty no matter what his age He will be assessed a penalty if the withdrawal is prior to age 59 1/2

he will be assessed a penalty if the withdrawal is prior to age 59 1/2

A licensed producer who engages in material misrepresentations in such volume as to threaten the solvency of the insurer which sponsored him or her may be subject to which of the following? Decreased productivity The death penalty Lifetime renewals Imprisonment

imprisonment

Once a person becomes eligible for Social Security disability benefits, the initial benefit will be paid within what period of time? In the sixth month of disability In the third month of disability In the fifth month of disability In the ninth month of disability

in the 6th month of disability

Mutual insurers issue participating life insurance policies. One dividend option available to a whole life policyowner is called "paid-up additions." What does it provide to the policyowner if selected? Increased interest payments Increased cash values A taxable event Limited protection for one year

increased cash values

Which of the following BEST describes the concept of currently insured? Insured earned 40 quarters of coverage Insured earned six credits during the last 13 quarters Insured earned six or more credits during the 13-quarter period prior to the disability occurring Insured earned 40 quarters with 20 being consecutive leading up to the disability occurring

insured earned six or more credits during the 13-quarter period prior to the disability occuring

What does a captive producer represent in the sale of insurance? Insured Insurer Client Insurance department

insurer

What often occurs with the deductible for preventative dental care? It is waived by the dentist It is waived by the insurer It is a required payment Deductibles do not exist in dental care plans

it is waived by the insurer

An insurance company refuses to pay a legitimate claim that is covered by an insurance contract. This means that the insurer has violated which of the following? The contract of adhesion principal Its promise Good faith The legal purpose of the policy

its promise

Which of the following annuities promises to pay the annuitant monthly income for life with no minimum guaranteed amount of payments? Life annuity with a period certain Life annuity Limited life annuity Guaranteed period annuity

life annuity

Which of the following is provided to a sole beneficiary who desires a single life option in his or her annuity contract? Life income Income for a period certain Life income with rights of survivorship Tax-exempt income

life income

The cash value of a permanent insurance contract is designed to equal the face amount of the policy at age 100 assuming there are no policy loans outstanding. This is the point when the whole life insurance policy: Regenerates Matures Endows Matures or endows

matures or endows

A producer who guarantees the payment of dividends by a policy of insurance has engaged in: Twisting Misrepresentation Defamation Rebating

misrepresentation

An individual who is indifferent, careless or irresponsible is also known as a: Named peril Moral hazard Morale hazard Conditional recipient

morale hazard

Which of the following types of insurers issues participating life insurance policies? A fraternal mutual company Mutual insurer Surplus lines insurer Non-admitted insurer

mutual insurer

Health insurance policies all include a renewability provision. Premiums may not be increased on which type of health insurance policy? Guaranteed renewable Conditionally renewable Optionally renewable Non-cancelable

non-cancelable

What type of renewability provision is present in an accident and health policy which does not permit a premium increase as long as the insured makes timely payment of premiums? Non-cancelable Guaranteed renewable Cancelable Conditionally renewable

non-cancelable

Each is a general characteristic of group life insurance, EXCEPT: Group life insurance usually consists of annually renewable term insurance In most cases, group insurance enrollment requires no individual underwriting The owner of the group plan receives a master contract Only employees of the group and not their dependents can enroll in the group life plan

only employees of the group and not their dependents can enroll in the group life plan

Which of the following is best suited for providing retirement benefits for a firm with 600 employees? 403(b) plan Pension plan Traditional IRA 457 deferred compensation plan

pension plan

The amount of Social Security benefit payable each month would be based on which item below? The age of insured Primary Insurance Amount The gender of insured The marital status of the recipient

primary insurance amount

An accidental death and dismemberment rider (AD&D) may be added to a disability income policy or purchased as a separate contract. The death benefit paid by this rider is known as the: Principal sum Capital sum Lump sum Partial

principal sum

Mutual insurers issue participating policies which in turn may pay dividends. Which of the following is a dividend option provided to the policyowner of a "par" policy? Cash surrender Reduce the premium Reduced paid-up insurance Interest only

reduce the premium

Funds targeted for a variable annuity are invested in which of the following? General account Accumulation account Separate account Certificate of deposit

separate account

The initial open enrollment period for Part B of Medicare is: Three months Five months Six months Seven months

seven months

Whole life insurance provides death protection and a cash savings feature. Which of the following policies is potentially the least expensive over the life of the contract? Single premium whole life policy Whole life policy An endowment Limited payment policy

single premium whole life policy

Which of the following is NOT legally insurable? Pure risk Unilateral risk Bilateral risk Speculative risk

speculative risk

A life insurance policy is comprised of numerous provisions. Which of the following protects a beneficiary from creditors when proceeds at death are left with the insurer? Beneficiary provision Premium payment provision Spendthrift provision Settlement option provision

spendthrift provision

A Modified Endowment Contract provides what type of life insurance protection? Straight life A living benefit Life income Accelerated benefit

straight life

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 medical expense policy, EXCEPT: Surgical expenses Room and board expenses X-ray expenses Lab tests

surgical expenses

All of the following are tax-deferred, EXCEPT: A qualified annuity A nonqualified annuity Single premium annuity Tax-qualified annuitant

tax-qualified annuitant

Whether individual credit life or group credit life insurance, the death benefit is always payable to: The insured The bank or creditor The insurance company The insured's dependents

the bank or creditor

When purchasing LTC coverage an individual selects the level of benefit he or she desires. Most plans offer at least three daily benefits such as $100, $150 or $200. Most policies also provide the same level of benefits for institutional care but only a percentage of that benefit for home health care. Which of the following is true with regard to such benefits? The benefit for home health care will be greater than that for skilled nursing care The benefit for skilled nursing care is less than the benefit for custodial care The benefit for intermediate care is less than that provided for home health care The benefit for skilled nursing care is greater than that provided for home health care

the benefit for skilled nursing care is greater than that provided for home health care

Which of the following is true with regard to the taxation of a whole life insurance policy? The death benefit is tax-free and the cash value buildup is taxable in the year credited The death benefit is taxable to the recipient and the cash value is tax-deferred The death benefit is tax-free and the cash value buildup is tax-free The death benefit is tax-free and the cash value buildup is tax-deferred

the death benefit is tax-free and the cash value buildup is tax-deferred

Bob purchases an annuity. If he dies during the accumulation period, what will be paid to the beneficiary? The value of the contract The total amount paid into the contract The greater of the contract value or the total payments made The contract value less any earnings

the greater of the contract value or the total payments made

What would a 68-year-old individual be subject to pay under Medicare if he or she spent 55 days in a hospital for treatment of a covered illness? The coinsurance amount The hospital deductible 20% of the total charges The full amount of charges

the hospital deductible

All of the following statements regarding long-term disability policies are true, EXCEPT: Benefits are generally provided through an employer group plan Long term disability benefits will be offset by any benefits payable by social insurance plans Long-term disability benefits are paid in addition to any other disability benefit received from social insurance Long-term disability benefits may be paid out until the age of 65

Long-term disability benefits are paid in addition to any other disability benefit received from social insurance

Accident and health policies issued in most states must include twelve required uniform policy provisions. Which of the following is not one of the required uniform A&H policy provisions? Misstatement of age Time limit on certain defenses Reinstatement Payment of claim

MIsstatement of age

Most Commissioners of Insurance approve which of the following? Premium rates charged for insurance contracts Insurance regulations Commission schedules for producers Underwriting procedures utilized by carriers

Premium rates charged for insurance contracts

The purpose of a straight life annuity is to: Protect an individual against superannuation Protect an individual against premature death Protect an individual against investment risk Provide life income with the possibility of a refund

Protect an individual against superannuation

Mary owns a very expensive diamond pendant she wears on special occasions. When she is not wearing it, she keeps it in a safety deposit box at a local bank. Mary's action is an illustration of: Risk retention Risk reduction Risk sharing Risk transfer

Risk reduction

A medical expense policy provides medical care benefits up to a stated limit. Which of the following charges is covered by this type of plan? Room and board charges Surgical expenses Outpatient charges Physician charges

Room and board charges

The insured and primary beneficiary die in a common accident. The insured dies at the scene and the primary beneficiary dies thirty-six days later. To whom is the insured's $250,000 death benefit paid? The State Department of Revenue The contingent beneficiary The tertiary beneficiary The primary beneficiary's estate

the primary beneficiary's estate

All of the following are true regarding a consumer report, EXCEPT: The producer must inform that one may be requested, no later than sixty days after the request The applicant has the right to review the report with the insurance company. The applicant has the right to obtain the names of the institutions providing the report. The applicant has the right to request a hearing to review the report with the producer.

the producer must inform that one may be requested, no later than 60 days after the request

Which of the following statements is incorrect regarding limitations placed on dental benefits? Many benefits have a maximum calendar year benefit Many benefits have a maximum lifetime benefit Family deductibles are common in dental plans The purpose of benefit limitations is to diversify the risk among all group participants

the purpose of benefit limitations is to diversify the risk among all group participants

Most forms of major medical policies include a deductible of some sort. What is the primary purpose of a policy deductible? To eliminate smaller claims To increase the total premium To broaden policy benefits To reduce policy limitations

to eliminate smaller claims

Disability income policies generally include a waiting period which functions like a deductible. Which of the following is a primary purpose of a waiting or elimination period when it appears in a long-term disability policy? To weed out malingerers and other moral hazards It allows an insurer to increase the premium To guarantee that the insurer will provide benefits for everyone To permit an insurer to lower the cost of everyone's benefit

to permit an insurer to lower the cost of everyone's benefit

The main purpose of the underwriting department is: To support the field underwriting To compute the necessary profit To issue contracts To review applications

to review applications

When an individual purchases an automobile liability policy to cover both property and liability exposures connected with the ownership, maintenance or use of an auto, he or she is utilizing what insurance risk management technique? Avoidance Retention Transfer Reduction

transfer

Statements made by an applicant for insurance which are recorded on the application are: True to the best of his or her knowledge Warranties Guarantees Waivers

true to the best of his or her knowledge

An individual has applied for life insurance and given the producer the initial premium. The producer provides the applicant with a receipt which specifies that the individual is covered immediately for 60 days from the date of the application. Which type of receipt was issued? Unconditional Approval Tentative Insurability receipt

unconditional

A variable life policy is characterized by investing cash values in stocks, bonds, or mutual funds. Which of the following statements is not true concerning this form of life insurance protection? The amount of the variable life death benefit is dependent upon the performance of securities Variable life provides a guaranteed minimum death benefit Variable life cash values are deposited in a separate account Variable life includes a flexible premium

variable life includes a flexible premium

A person applying for insurance intentionally misrepresents material facts in order to obtain an insurance policy. The insurer discovers the deceit ten months later after the policy has been issued. What action will the insurer take? Reduce the benefit if a claim occurs within the first two years The insurer will take no action since the policy has been issued Adjust the policy benefit Void the contract

void the contract

Which of the following is not automatically included in a life insurance contract? Waiver of premium Entire contract provision Insuring clause Beneficiary provision

waiver of premium

Which of the following provisions guarantees payment of premiums in the event of the total disability of an insured? Disability income rider Entire contract provision Waiver of premium benefit Continuation of coverage provision

waiver of premium benefit

If a premium is not paid at the time an application for life insurance is completed, when will coverage go into effect? As of the date of the conditional premium receipt At the time of application When the application is approved and the policy is issued When the producer delivers the policy and collects the premium

when the producer delivers the policy and collects the premium

Each of the following are true regarding the misstatement of age provision, EXCEPT: This provision prohibits policy cancellation due to an error in age The policy may be void if the insurer discovers the misstatement during the first two years of the policy If the age is misstated, the amount payable under the policy will be adjusted to reflect the proper amount for the correct age If the sex of the insured is misstated, the benefit will be adjusted

the policy may be void if the insurer discovers the misstatement during the first two years of the policy

Jill is covered by a group disability policy. She pays 25% of the annual premium for this coverage. If she suffers a total disability and receives a monthly income benefit, what amount received will not be taxable as ordinary income? 10% 25% 50% 75%

25%

Bill purchases an annuity contract that guarantees a 4% return. The index to which the funds are tied only receives 3% this year. What return does Bill receive? 2% 3% 4% 0%

4%

An agent completes an application for Mr. Foster on March 22nd. The application and initial premium are sent to the underwriting department on March 23rd. They are received on March 25th. The application is approved on March 28th and the policy is issued. It is received by the agent from the home office on April 2nd and is delivered the next day. When does the ten-day free-look end? April 12th April 13th April 10th April 11th

April 13

A producer may have his or her insurance license suspended for engaging in an unfair sales practice or a failure to comply with other insurance regulations. Which of the following would cause a producer to suffer a license suspension. Low sales production Failing to provide a buyer's guide to a prospective client Failure to pay a child support obligation Low persistency

Failure to pay a child support obligation

Employers are mandated to carry Workers' Compensation insurance in order to provide workplace benefits to employees. An employer may comply with Workers' Compensation requirements by purchasing such insurance from which of the following? The State Insolvency Fund The State Fraud Insurance Fund A self-insurer A carrier in the involuntary market

a carrier in the involuntary market

Permanent or continuous premium whole life insurance includes a policy loan provision. All of the following statements are true regarding this policy provision, EXCEPT: A policyowner need not pay off policy loans during the life of a contract A maximum fixed interest rate or variable rate on cash value borrowed is generally available If an unpaid loan exists when the insured dies, it will be subtracted from the face amount with the balance paid to the beneficiary A delay clause of twelve months is included in a policy loan provision

a delay clause of twelve months is included in a policy loan provision

Special rules apply to life insurance under a qualified plan. If a qualified plan includes a life insurance death benefit, which of the following is true? A portion of the income under a qualified plan is taxable as a capital gain A portion of the life insurance premium under a qualified plan is taxable A portion of the interest under a qualified plan is tax-free A portion of the basis under a qualified plan is taxable

a portion of the life insurance premium under a qualified plan is taxable

An individual holding a producer's license may represent which of the following? An advisor A broker An appraiser A sponsoring insurer

a sponsoring insurer

A pension plan characterized by a fixed income amount in the future is known as: Defined contribution Defined benefit Qualified plan Nonqualified plan

defined benefit

Which of the following statements regarding the Fair Credit Reporting Act (FCRA) is correct? If an applicant for insurance is rejected based on a consumer report, the name of the reporting agency must be kept confidential Applicants must be notified within a short period of time that their credit report has been requested If requested to do so, the insurance company must provide the actual consumer report to the applicant Consumer reports are final in nature and cannot be disputed by an applicant

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

Those who make false statements regarding the solvency of a competing insurer have engaged in: Misrepresentation Fraud Defamation Coercion

defamation