A.D. Banker Comprehensive Exam
An evaluation of Simon's past earnings reveals his average earned monthly income to be about $4,000 monthly. The greatest amount of benefit that Simon will likely be able to purchase under a Disability Income Policy, in order to reduce malingering in the event of a claim, is:
$2,500 monthly
K has a $100,000 traditional whole life policy with $30,000 of cash values and a $10,000 loan outstanding. What is the maximum additional amount she could borrow from the policy at this time?
$20,000
If Alvin purchases a Variable Universal Life Policy with a face amount of $250,000, and chooses death benefit Option B, upon his death the amount of the benefit payable to the beneficiary would be _________ if the policy had $25,000 in cash values.
$275,000
Clarice pays a $99 monthly health insurance premium, due on the first day of each month. After paying her premium on April 1, how much of her premium has been earned by the insurance company on April 10.
$33
Nathan is insured under a group disability plan which requires that he pay 1/3 of the premium. Nathan is currently drawing a $6,000 monthly benefit from the plan. How much of the $6,000 is subject to income tax?
$4,000
If an insured is hospitalized and incurs a daily room charge of $492 and his Medical Expense Policy stipulated coverage for a hospital room up to $550 per day. How much will the insurer pay?
$492
Which of the following is not part of the Affordable Care Act?
$5,000,000 Lifetime and $1,000,000 annual benefit limits
All employer-paid premiums for amounts above $_________ of group life insurance are reported as taxable income to the employee.
$50,000
Employer-paid premiums for employee group term life do not constitute taxable income to the employee for coverage up to ___________.
$50,000
Ted owns a $50,000 Whole Life Policy. At age 47, he decides to stop paying premiums on his policy when it has $15,000 of cash value and exercise the Extended Term Option. Ted's term benefit will be:
$50,000
Paul is the insured and policyowner. Paul named Danny and Kayla as co-primary beneficiaries of Paul's $100,000 policy. What is the payout if Paul dies?
$50,000 to Danny and $50,000 to Kayla
C has a $250,000 30-year term life insurance policy with a waiver of premium rider at age 45. The base policy costs $500 and the rider $50. The rider expires at age 65. If C renews the policy beyond age 65, what is the total cost of the policy to C?
$500
E has a $10,000 traditional whole life policy with a $4,000 cash value. Premiums paid to date are $3,500. If the policy lapses with a $4,000 loan outstanding, what amount will be taxable as income to E?
$500
Jay receives an annual disability benefit of $10,000. His employer contributed 75% of the premium. How much of Jay's benefit is subject to income tax?
$7,500
C has a $100,000 traditional whole life insurance policy with a $30,000 cash surrender value. What is the insurer's net amount at risk?
$70,000
A $100,000 policy with a waiver of premium rider and $30,000 of cash value is in force. The base policy costs $750 and the rider is $50. What is the total premium annually the policyowner must pay to keep the policy in force if the policyowner decides to cancel the rider?
$750
A $100,000 policy with a waiver of premium rider and $30,000 of cash value is in force. The base policy costs $750 and the rider is $50. What is the total premium annually the policyowner must pay to keep the policy in force?
$800
Wayne has a health insurance policy with an 80/20 coinsurance, a $1,000 deductible. In January, Wayne goes into the hospital for an overnight stay and the bill totals $2,000. How much will the insurer pay?
$800
A small business owner used her life insurance policy as collateral for a bank loan. The face amount of the whole life policy was $100,000 and the original amount of the loan was $20,000. If the outstanding loan balance at the time the small business owner died was $10,000, how much will the policy's named beneficiary receive?
$90,000
Albert owned a $100,000 policy that had accumulated a cash value of $20,000, against which he had borrowed $10,000. If he dies with this loan outstanding, his beneficiary will receive which of the following amounts?
$90,000
If Jon dies with an outstanding policy loan of $10,000 on his $100,000 interest-sensitive whole life policy that has $15,000 of cash value, what will his beneficiary receive at the time of claim?
$90,000
Jeanne has a $100,000 whole life insurance policy that has $1,000 of dividend additions, a $6,000 outstanding loan that includes unpaid interest, and a monthly premium of $500. If she dies during the grace period, which of the following insurance settlements would be permitted?
$94,500
With regard to pre-existing conditions:
'Pre-existing condition' means a condition for which medical advice or treatment was recommended by, or received within 6 months preceding the effective date of coverage
The time frame for pursuit of legal action cannot exceed:
1 year
If funds are prematurely withdrawn from a Modified Endowment Contract (MEC) they are subject to a _____% penalty on any gains.
10
Which of the following traditional whole life policies has the highest first-year annual premium, all other factors being equal?
10-pay life
With a Noncontributory Group Life Plan, what percentage of the employer's employees must participate?
100%
XYZ Corporation has 59 employees. The company decides to purchase a group life policy and will pay the total premium. What percentage of employees must participate under this arrangement?
100%
An insured should receive necessary claim forms within _____ days after notice of claim.
15
The pregnancy discrimination act applies to groups with ______ or more employees.
15
An insurer must file a notice of appointment with the Commissioner within:
15 days after the date the agency contract is executed
Hicks Corp. wants to install a contributory group plan. It employs 200 people. How many employees must participate in order to install the plan?
150
The Social Security blackout period for surviving spouses begins when the youngest child reaches age ______, and ends when the surviving spouse reaches age ______.
16/60
Generally, children receive Social Security Survivor Benefits until age ________.
18
There are ______ methods available to determine the income objective after the death of the client for planning purposes.
2
An insurer is prohibited from contesting any claim on a life insurance policy after the policy has been in force for:
2 years
What is the typical time limit on life expectancy for a Viatical Settlement candidate?
2 years
A Group Health plan with ______ or more employees is primary to Medicare and pays first.
20
COBRA applies to employers with ______ or more employees.
20
If an employer has less than ______ employees, Medicare will be the primary payer for those eligible for Medicare.
20
Notice of claim is required within _____ days of loss.
20
Unless a direct rollover (transfer) occurs, a ______% withholding is required.
20
COBRA applies to employers with:
20 or more employees
COBRA is a federal law requiring employers with _____ or more employees to provide the option of continuing the employee's existing health coverage for dependents for up to _____ months following qualifying events.
20, 36
Which of the following Whole Life insurance policies has the highest annual premium payment per $1,000 of coverage for a 35-year-old, all other factors being equal?
20-Pay Ordinary Whole Life
How many credit hours of continuing education must a producer complete every renewal period?
24 (with at 3 hours in ethics)
As part of Social Security benefits, a one-time payment of $_______ may be made paid to a surviving spouse after a taxpayer's death.
255
If a plan offers coverage to dependents, eligible dependents include all children, natural and adopted, married and unmarried, up to age ______.
26
Every Long-Term Care policy must provide a ______-day free look period from the date the policy is delivered.
30
For an employee to be eligible to participate in an employer's group health insurance plan, he/she must be considered full-time and work a minimum of _____ hours as established by the Affordable Care Act.
30
A Medicare Supplement or LTC policy's free look period is:
30 days
How long is the free look period for a Medicare Supplement policy?
30 days
A producer must inform the Commissioner of a change of address within:
30 days of the change
Payment of the first premium and an application must be submitted to an insurer for individual coverage within how many days to convert group coverage to an individual policy not requiring proof of insurability?
31 days
The conversion notice period for a life insurance policy is:
31 days
To be considered fully insured under Social Security, a worker generally needs how many quarter credits?
40
Which of the following traditional whole life policies has the lowest first-year annual premium?
40-pay life
The XYZ Company, which employs 800 workers, provides group disability insurance for the 400 employees working 30 hours or more. How many workers must be covered if this group benefit is offered on a noncontributory basis?
400
When establishing a SIMPLE, what two different types of qualified plans must employers choose between?
401(k) or IRA
A Small Employer is defined as any person, firm, corporation, partnership, or association that is actively engaged in business and has ______ employees or less.
50
If a disabled worker is eligible for a Social Security disability benefits, his or her spouse and children may each also be eligible for a benefit in the amount of ____% of the disabled worker's benefit.
50
How many employees would an employer require in order to be considered a small employer:
50 or less
Failure to take a required minimum distribution (RMD) can lead to a ________ tax penalty.
50%
What happens if a traditional IRA account owner fails to start taking required minimum distributions on time or for the proper amount?
50% tax penalty on the excess accumulation
A non-school employer can set up a TSA plan for their employees under which of the following IRC section?
501(c)(3)
Nonprofit organizations as qualified by the internal revenue code _________ are also eligible to establish Tax Sheltered Annuities for their employees.
501(c)(3)
HIPAA defines a pre-existing condition as one for which the insured received medical advice, diagnosis, care, or treatment within the past _____ months.
6
In a Medicare Supplement replacement sale, if the original policy has been in force for less than ______ months, the replacing insurer shall waive any time periods applicable to preexisting conditions to the extent that they have already been satisfied under the original policy.
6
A carrier replacing employer group coverage is not required to cover all employees and dependents covered by, or eligible for, coverage under the previous policy if the replacement takes place more than _____ days after of the previous policy's termination.
60
The Legal Actions provision preserves the insured's right to bring suit against his/her own insurer, but the insured must wait at least _____ days after filing a proof of loss before pursuing this action.
60
The employee or the beneficiary must notify the employer within ______ days if they elect to continue coverage under COBRA.
60
Under the Legal Actions Mandatory Uniform Provision, an insured must wait at least _____ days after providing proof of loss before he or she can take legal action against the insurer.
60 days
The Bronze plan covers _______ of medical expenses.
60%
The lowest monthly Social Security retirement benefit would occur if started at age _______.
62
All of the following are true regarding IRA rollovers, except:
A 10% withholding is required if the distribution is paid directly to the account owner
Which of the following should be put in place by two business partners who want to be assured that the business will not be lost should either one of them become disabled?
A Buy-Sell Agreement
Which of the following statements is false regarding required provisions for Medicare supplement policies?
A Medicare supplement policy may not exclude pre-existing conditions for more than 12 months from the effective date of coverage
In order to purchase a Medicare Supplement, an eligible individual usually must have Medicare Parts __________.
A and B
With regard to termination and renewal of a license, which of the following is false?
A business entity producer's license expires April 30 of each even-numbered year
Which of the following disability policies would be considered a deductible business expense?
A business overhead expense policy
Which of the following describes Pure Risk?
A chance of loss or no loss, no chance of gain exists
With regard to privacy regulation, a customer relationship is established when:
A consumer becomes a licensee's policyholder or agrees to pay for financial advice about insurance
The entire contract typically consists of all of the following, except:
A copy of the cancelled check and receipt
Which of the following is NOT a disclosure requirement for accelerated benefits?
A description of the accelerated benefit's cash values
Which of the following statements is NOT correct with regard to advertising for health insurance?
A direct response insurer may advertise the low cost of a plan due to no agent being involved
With regard to genetic information:
A general authorization for the release of medical records or medical information is not considered an authorization to disclose genetic information
Until yesterday, J. J. worked for his father's company and was covered by the company's large group health plan. He stopped working to go to college. He is 26 years of age and wants to keep the same coverage until he earns his degree in approximately 24 months. Which of the following statements is true?
A good option for J.J. is to exercise the COBRA option under his father's group plan
With respect to dependent handicapped children, which of the following is incorrect?
A handicapped dependent child may be covered under a parent's policy up to age 30
All of the following are correct with regard to cancellation, except:
A health insurance policy is renewable pursuant to the insurer's option
Which of the following would not be a situation in which the annuity premium dollars would qualify for an income tax deduction for the premium payor?
A married couple purchasing a flexible premium non-qualified deferred annuity to supplement their future retirement income
All of the following are true regarding a nonresident license, except:
A nonresident licensee may be authorized for any line of insurance for which the licensee is not authorized in his/her home state
A partial withdrawal is considered ______________.
A partial surrender of the policy
Which of the following statements is false?
A policyholder may request premiums and benefits be suspended for up to 12 months if he/she will be entitled to Medicaid benefits
An initial privacy notice is NOT required to be provided to:
A prospective customer
Part B of Medicare excludes which of the following medical expenses?
A regular dental checkup
All of the following could be approved as Long-Term Care facilities, except:
A sanitarium for weight loss
Which of the following correctly defines a small employer?
A small employer is any person, business entity, or association actively engaged in business whose total employed work force consisted of, during the preceding year, at least 2 and no more than 50 eligible employees
Term Life insurance is designed to provide coverage for ___________.
A specified period of time
Which of the following statements best describes what we would define as being the co-pay provision in a health insurance policy?
A stated dollar amount applied per claim, in addition to any other cost-sharing
Which of the following statements is true with respect to supplemental illustrations?
A supplemental illustration must be accompanied by or preceded by a basic illustration
Which of the following is correct regarding a temporary license?
A temporary license may be issued to the surviving spouse of a disabled or deceased producer
How is a life settlement transaction similar to a viatical settlement transaction?
A third party buys a life insurance policy for less than its face amount
A voluntary surrender of a known right, claim, or privilege is known as:
A waiver
The period of time from the first deposit into an annuity to the selection of a settlement option is considered the ___________ period.
Accumulation
Q has an ordinary straight whole life insurance policy for $100,000. Due to a change in circumstances, Q finds that there is now a need for more coverage, but the budget is not sufficient for another similar policy. What can Q do to satisfy the need for additional coverage at a low price?
Add a term rider
Overseas foreign travel emergency coverage is a Medicare supplement:
Additional benefit
Which of the following statements is false with respect to required provisions for group life insurance?
Additional new insureds may not be added to a group life policy after it has been issued
Larry owns an insurance contract issued by the ABC company that contains words and phrases that are ambiguous to Larry. If ABC challenges a claim based on these phrases they will lose because an insurance contract is deemed to be a contract of:
Adhesion
Passive Unfair Claims Practices do not include failing to:
Affirm or deny coverage within a reasonable period without receipt of proof of loss
Alice is the insured, Bill is the primary beneficiary, and Claire is the contingent beneficiary. Bill dies, then Claire dies, then Alice dies, so who receives the policy proceeds?
Alice's estate
Which of the following is not true of Medicare Part B?
All retirees are automatically covered
All of the following are true about riders, except:
All riders are available free of charge and can be added at anytime without proof of insurability
All of the following are true in general about riders, except:
All riders are provided for as long as the policy is in effect
All states have adopted the Uniform Individual Accident and Sickness Policy Provision Law. If an insurer changes any of these provisions, it must make sure that the change does not:
Alter the minimum requirements of any provision
A producer who is acting as an agent is representing:
Always the insurer
A long-term care policy can exclude from coverage all of the following, except:
Alzheimer's disease
Which of the following is false concerning licensing for variable products?
An agent must be licensed as a life agent in order to sell a registered variable contract
Which of the following statements is true with respect to assumed names?
An agent who will be transacting business in Louisiana under an assumed name must notify the Commissioner prior to using the assumed name
G is concerned about the future and living a comfortable retirement. Which of the products listed below is ideally suited to help G prepare for his retirement goal?
An annuity
A Section 1035 Exchange is permitted in each of the following transactions, except:
An annuity is exchanged for a Whole Life Policy
The Attending Physician's Statement (APS) is completed by:
An applicant's physician to provide information about the applicant's medical history
Which of the following is used by an insurer to collect information from the applicaAfter a life insurance policy has been in force for 5 years the insured dies. During the claims process, the insurer discovers that the insured did not disclose material health information that had it known, would have caused the application to be rejected. What can the insurer do at this point in time?nt/insured for underwriting purposes?
An application
Which of the following statements is true concerning small employer insurance?
An eligible employee is any individual employed by an employer
A blanket health policy may NOT be issued to which of the following?
An employee
All of the following are transactions that qualify as a 1035 exchange, except:
An equity indexed annuity into a variable universal life insurance policy
A policy is issued with a rider. Years later the policyowner would like to drop the rider in order to save some money. Who has the authority to effect that policy change?
An executive officer of the insurer
Which of the following best describes the return of premium rider?
An increasing term benefit that matches the cumulative premiums paid
All of the following are true regarding life insurance advertising, except:
An insurer may use the name of its parent company in advertisements
Which of the following individuals is not eligible to establish a Health Savings Account?
Anne, who is covered through a traditional HMO
When must licensees provide privacy notices to individual customers?
Annually
Which product, offered by insurers is specifically designed to allow an individual's savings to be distributed to him/her periodically over his/her entire life, regardless of how long he/she lives?
Annuities
All of the following are true of a Universal Life policy, except:
Any borrowing or partial withdrawal from the cash value account terminates the policy
Which of the following statements is correct with respect to the Fraudulent Insurance Acts?
Any person who commits a fraudulent act is guilty of a felony and must be fined up to $5,000, imprisoned for up to 5 years, or both
Which of the following statements is correct?
Any sale of Medicare supplement coverage that will provide an individual more than one Medicare supplement policy or certificate is prohibited
The authority created when a producer/agent exceeds the authority stipulated in his/her contract, and when the insurer does nothing to counter the public impression that such authority exists (i.e., the producer/agent accepting premiums on lapsed policies) is known as ______ authority:
Apparent
A person making application, for themselves or another, to be insured under an insurance policy is called the:
Applicant
The person offering him/herself or another person to be insured by the contract best defines the:
Applicant
An insurable interest must exist between the _______ and the ________ at the time of application for life insurance to be valid.
Applicant/Insured
Concerning COBRA, which of the following is correct?
Applies to employers with 20 or more employees
To act as an agent for an insurer, the producer must be ________ by the insurer:
Appointed
J has an event that could be subject to a claim. This event occurs on April 1 of this year. How long does J have to bring legal action against the insurer?
April 1 of next year
When do individual producer licenses expire?
April 30 of each even-numbered year
Amounts paid out under the accelerated benefits rider:
Are deducted from the policy's death benefit
Which of the following is a true characteristic of a Variable Universal Life policy?
As long as there is sufficient cash value to cover policy expenses when due, the insured is not required to pay the planned premium
Which of the following allows reimbursement benefits to be paid directly to medical providers?
Assignment of benefits
If a father were to add a Child Rider to a policy to cover his children, when would coverage become effective for a newborn?
At 14 or 15 days of age
The Financial Privacy rule requires insurers to provide consumers with a privacy notice:
At the time the consumer relationship is established and annually thereafter
A client requests a Medical Expense Policy several months after you suggested the policy. The underwriter will most likely order which of the following?
Attending Physician's Statement
Which underwriting source is primarily used when an application reveals conditions for which more medical information is required?
Attending Physician's Statement
The ____________ provision prevents a Whole Life Policy from lapsing, as long as there is adequate cash value, if the insured/policyowner forgets to pay the premium by the end of the grace period.
Automatic Premium Loan
If an individual starts receiving Social Security retirement benefits at age 62, when are they eligible for Part A benefits?
Automatically at age 65
With Joint Life Insurance policies, the premium is based on the:
Average age of both insureds
With Long-Term Care Insurance coverage, the longer the _________is, the higher the premium is.
Benefit Period
Dental plans are normally written with a stated annual maximum on the number of:
Benefit dollars that will be paid
Which of the following is true of Medicare Part B?
Benefits are funded by a combination of taxes and premium dollars and coverage is elective
Which is not correct concerning a Blue Cross and Blue Shield Plan?
Benefits are paid directly to the insured individual
Alice is the insured, Bill is the primary beneficiary, and Claire is the contingent beneficiary. Alice dies, so who receives the policy proceeds?
Bill
Which of the following types of policies would a sports team purchase to obtain coverage for a season?
Blanket
Which of the following types of limited policies would a common carrier purchase to provide medical and surgical benefits in excess of any primary coverage?
Blanket Plan
Which is not a provider type?
Blue Cross/Blue Shield
Term insurance differs from permanent insurance in that term:
Builds no cash value, pays a death benefit only
The type of disability coverage purchased by a small business owner, to cover ongoing overhead in the event of the owner becoming disabled, would be called:
Business Overhead Expense
Under which of the following business-related plans are benefits taxable as income to the owner?
Business Overhead Expense
When disabled, which of the following would ensure payment for the wages of a business owner's employees?
Business overhead
Which of the following business disability plans can create a taxable event:
Business overhead expense
Which of the following will be covered under a business owner expense (business overhead) policy?
Business property rental
What is the fastest way to pay up a traditional whole life policy?
Buy a single premium policy
Which of the following is NOT correct concerning a producer's duties pursuant to replacement?
Buyer's Guide
A person who purchases a Medicare Supplement policy cannot enroll in Medicare Part _________.
C
Mona let her permanent policy lapse. She discovered there was $2,498 in cash value remaining in the policy and decided to pay off some of her credit card debt. She exercised which Nonforfeiture Option?
Cash Surrender
The nonforfeiture option that, if exercised, terminates all coverage is:
Cash Surrender
Which of the following personal uses of life insurance is specifically designed to provide benefits to the policyowner while the insured is still alive?
Cash accumulation
All of the following are exclusions under an LTC policy, except:
Chemical dependency on one's own prescription drugs
Which of the following is NOT correct with respect to marketing standards for Medicare supplement policies?
Cold lead advertising may be used if the producer informs the applicant at the time of application that the purpose of the advertising is solicitation of insurance
An insured goes to the bank for a business start-up loan. Asking for more security, the bank agrees to accept a(n) __________ on a permanent life insurance policy owned by the customer.
Collateral Assignment
The bank may require its borrowers to have a life insurance policy to secure a loan in the event of the borrower's death. Which provision gives the bank proportional protection but not control of the policy?
Collateral Assignment
Which of the following is TRUE concerning reinstatement of a life insurance policy?
Companies have the right to require medical examinations
In order to be valid, a contract must be between individuals considered legally able to enter into an agreement. This principle is known as:
Competent parties
_______________ Major Medical insurance coverage combines the features of the Basic Medical Expense policies and a Major Medical policy into a single policy and includes reimbursement for covered expenses on a 'usual, customary, and reasonable' basis.
Comprehensive
Jasper owns a policy that combines the best features of Basic Medical Expense Plans and Major Medical Insurance into a single policy to give him the most complete hospital coverage. Jasper owns a:
Comprehensive Major Medical Policy
Insurers include provisions in contracts to help reduce unnecessary claims and the overpayment of claims. Which of the following is not one of those provisions?
Consideration Clause
Each Health and Disability Income Policy must express the conditions and provisions for _________.
Continuation of the contract
All of the following are TRUE regarding non-qualified retirement plans, except:
Contributions are immediately tax deductible
Which statement would be considered inaccurate regarding the underwriting of a group plan?
Contributory plans require 100% employee participation
When a group member terminates employment, he or she has 31 days to purchase an individual policy without proof of insurability. This is referred to as the:
Conversion Privilege
When an individual is covered by more than one health plan and is injured, what provision determines which plan is that person's primary coverage?
Coordination of Benefits
Which of the following is not a Metal plan category?
Copper
The deductible that applies after the Basic Plan is exhausted and the Supplemental Major Medical Coverage begins is called:
Corridor Deductible
Generally, the ________ is the amount of premiums paid into the policy less any dividends or withdrawals previously taken.
Cost basis
Which of the following is true with regard to coverage for newborn and/or adopted children?
Coverage begins when the child is placed in the home even though the adoption process is not yet finalized
Upon receipt of an application, the insurer's underwriter may issue the contract with exclusions or limitations. This means that:
Coverage is issued, but there are limits on the insurer's obligation to pay
Which of the following statements is NOT correct with respect to New Cancer Therapy?
Coverage of an approved clinical trial is required regardless of whether the insured has a life-threatening disease or condition
If questions are incomplete on an application and the insurer issues the policy, a claim is:
Covered since the insurer issued the contract based on an incomplete application
If a consumer would like to make sure that survivors are left with a paid-off car, boat, and home, at an affordable price, what type of policy should he or she consider acquiring at the time each one of those items were purchased?
Credit life insurance
The Medical Information Bureau provides information to the insurer regarding the individual risk of an applicant and does not include:
Credit score
A(n)__________ plan is when business partners buy life insurance policies on one another.
Cross Purchase
The Social Security Survivor Benefit is based on the Primary Insurance Amount of the:
Deceased
The net amount at risk in an Ordinary Whole Life Insurance Policy _________ over the life of the policy.
Decreases
Which of the following is a type of life insurance that provides an amount of coverage that diminishes while the policy is in effect and is most often used to pay an outstanding loan or mortgage balance upon the death of the insured?
Decreasing Term
Mortgage or credit life refers to what type of life insurance coverage?
Decreasing term
Group Accidental Death and Dismemberment premiums are _______ by the company paying the premiums as a business expense.
Deductible
Which of the following limitations is not included in most dental expense insurance plans?
Deductibles for preventive care
What type of annuity is designed to start benefit payments many years from now and subjects the owner to investment risk?
Deferred variable
When an employee receives a fixed and known benefit at retirement, it comes from a(n) __________ plan.
Defined Benefit
In which of the following plans does the company assume all of the investment risk?
Defined benefit
Which of the following plans provides employees with a fixed and known benefit at retirement, the amount of which generally depends upon length of service and highest attained salary?
Defined benefit
All of the following are considered medical expense controls utilized by HMOs, except:
Defining out-of-network allowances
When a policy is mailed to an insured by an insurer, it is considered to be:
Delivered
The owner of an annuity may do all of the following, except:
Determine the contract's interest credit
All of the following describe the responsibilities of an agent or producer, except:
Determine the rate the insurer will charge the applicant/insured
Which of the following would be considered a pre-existing condition?
Diabetes
Double indemnity is a rider that provides two times the face amount if an insured:
Dies as a result of an accident within 90 days of the accident
An insured may find it more difficult to qualify for benefits, but will enjoy a lower premium, when a more restrictive definition of _________ is found in a Disability Income policy.
Disability
_______ income benefits received by an employee are subject to taxation in proportion to the amount of premium that the employer paid. That income attributable to the employee's premium is not taxable.
Disability
Which of the following products replaces lost income when one is unable to work due to a condition for which therapeutic and rehabilitative care services is often necessary?
Disability Insurance
PPO plans pay providers based on a:
Discounted fee for service negotiated in advance
Allen purchases an estate builder (jumping juvenile) policy for his 5-year old son, Donald. Suppose that when Donald reaches age 21 his father presents him with the policy as a gift. Which of the following statements is NOT correct?
Donald must change the beneficiaries immediately
Which of the following may be excluded under medical expense insurance?
Drugs provided in a research trial with no charge
Field underwriting is very important:
Due to the risk of a moral hazard
Mr. Zamboni is the owner and the annuitant of an annuity. Mrs. Zamboni, the designated beneficiary, will be able to assume all ownership rights and tax-deferral if Mr. Zamboni should die ___________.
During the Accumulation Period
Which of the following is consistent with group health underwriting?
Each member of the group is covered regardless of his or her health history
Insurance companies writing disability income generally have an occupational classification system based on considerations of all of the following, except:
Earning potential
One of the benefits of an annuity in regards to taxes is:
Earnings are tax deferred during the accumulation phase
A Disability Income Policy has a period of deductibility immediately following a disability during which time benefits are not payable. This period is called a(n):
Elimination Period
Beth has a contract stating she must be disabled for 3 months before benefits will begin to be paid. This 3-month period is known as the:
Elimination Period
Who among the following would not have an insurable interest in an insured under a life insurance policy?
Employee on the life of his/her employer
All of the following regarding employer group life insurance are true, except:
Employee-paid premiums are tax-deductible to the employee
All of the following are true regarding Tax-Sheltered Annuities (TSAs), except:
Employees can make direct contributions into their account
All of the following are characteristics of a 403(b) plan, except:
Employees can make direct payments into the retirement fund
All of the following statements about Group Life Insurance are true, except:
Employees receive a tax deduction for employer paid premiums
If a policyowner unintentionally pays premiums in excess of the MEC guidelines, the excess premium can be refunded by the insurer within 60 days after the ________.
End of the contract year
When the life insurance policy's cash value equals the face amount of the policy and the proceeds are paid to the policyowner, this is known as the policy's _________.
Endowment
Once issued, if the application is attached to the policy itself, it then becomes part of the ___________.
Entire contract
Which of the following is not used to reduce adverse selection?
Establishing a maximum number of participants that can be covered under the plan
Buying life insurance so that the death benefit will be available for paying estate taxes due upon the death of the insured is known as:
Estate conservation
The Minimum Benefit Standards under a qualified LTC policy include all of the following, except:
Every LTC policy must be issued as noncancellable
Home Health Care benefits under a LTC Policy may be limited or excluded by:
Excluding benefits for conditions caused by war or acts of war
Which individual policy standard provision stipulates the conditions under which the insurer will not pay a claim while the policy was in force at the time of death of the insured?
Exclusions
When an insurer relies on the prior claims history of the group to be insured in determining the rate to be charged, it is called:
Experience rating
The date on which insurance coverage is no longer in effect is referred to as the _________ date.
Expiration
An insured has a $175,000 permanent life insurance policy and is having difficulty keeping up with the premium payments. Which Nonforfeiture Option would allow him to forego the premiums and retain the same face amount until the cash surrender value is exhausted?
Extended Term
The ________ is the amount payable to the beneficiary upon death of the insured named in a life insurance policy.
Face amount
A producer gathers information about the applicant for the insurer in order to avoid adverse selection. This is considered to be:
Field underwriting
When withdrawing cash from When withdrawing cash from a cash value life insurance policy, the amount of the withdrawal up to the policy's cost basis is tax-free. This tax accounting rule is referred to as:a cash value life insurance policy, the amount of the withdrawal up to the policy's cost basis is tax-free. This tax accounting rule is referred to as:
First-In, First-Out (FIFO)
All of the following are situations in which a life insurance company can legally get out of paying a death claim after the insured has died, except:
Five years after the policy was issued, the insurer discovered that the insured was actually older than was stated on the application
If the beneficiary is concerned about a particular amount of cash flow each month, the _______ settlement option should be selected.
Fixed Amount
Which Settlement Option pays a specified dollar amount until benefits are exhausted?
Fixed Amount
If the policyowner specifies the time over which all settlement option installments are to be paid, he/she has chosen which Settlement Option?
Fixed Period
Which Settlement Option pays for a specified period, regardless of who may receive the payments?
Fixed Period
A long-term care policy typically provides daily benefits?
For 2 years, 5 years, to age 65 or lifetime
Which of the following is FALSE about the Automatic Premium Loan Provision (APL)?
For it to be included in the policy, there is an additional premium charge
Those insurers that are incorporated in another state, but doing business in this state, are considered:
Foreign
______ are primarily social organizations that engage in charitable and benevolent activities consisting of members of a given faith, lodge, or order, and are usually organized as non-profits.
Fraternal Benefit Societies
The intentional distortion of the truth in order to induce another to part with something of value or to surrender a legal right is:
Fraud
The term 'mode' refers to the:
Frequency of premium payments
Which action would not render a small employer's health benefit plan nonrenewable?
Frequent claims
What is the only way an annuity can pay out income tax free benefit payments?
Fund a Roth IRA and make a qualified distribution
Which of the following regarding Medicare Part B is true?
Generally pays 80% of covered physician, surgeon, and outpatient hospital expenses, with a monthly premium and annual deductible
Which of the following is false regarding the dependent child age limit?
Generally, a dependent child is covered up to age 24
Which of the following statements regarding life insurance policy exclusions is TRUE?
Generally, aviation is excluded, except for fare-paying passengers on a commercial flight
Which of the following best defines the 'Cost Recovery Rule'?
Generally, the difference between the amount of cash value received and the amount of premium paid in is subject to income tax upon surrender
If overdue premiums are paid during the __________ period, the policy will remain in effect.
Grace
If the insured dies while the _______ period is in effect, the death benefit paid is the face amount, minus the premiums due.
Grace
The _________ period keeps a policy in force for a short time after the premium due date, allowing policyowners a little extra time to pay an overdue premium without a lapse in coverage.
Grace
The _________ is the time period provided after the premium due date before a policy lapses.
Grace period
For those individuals who have health issues, which of the following would be an insurance plan to consider?
Group
All of the following are accurate statements, except:
Group insurance normally covers occupational injury or disease
When an underwriter evaluates the risks presented with a particular group life application, which of the following is considered the most important?
Group size, turnover, average age and purpose of the group
All of the following groups are eligible for group rates, except:
Groups formed to reduce premiums
As long as the premium is paid, a Medigap policy is __________ renewable.
Guaranteed
All of the following must be included in a whole life policy, except:
Guaranteed dividend table
Which of the following is not a standard or requirement for an illustration?
Guaranteed elements must be labeled as such, but non-guaranteed elements need not be labeled
The current rate of interest paid to the cash value account of a universal life policy consists of:
Guaranteed interest plus excess interest
The _________ gives the owner of a variable annuity the ability to withdraw a maximum percentage of the annuity value until the initial investment amount has been recouped.
Guaranteed minimum withdrawal benefit
Which of the following health plans will only cover losses by an approved provider:
HMO
Which statement is incorrect regarding HMOs?
HMOs must provide basic health care services including hospitalization, laboratory services, optical services, physical therapy, dental care, and preventive services
Ashley wanted to establish her company benefit plan so that it could cover her individual health insurance premiums and out-of-pocket expenses without group insurance or loss of unused benefits. After some research, she established a:
HRAs
What is the difference between a Health Reimbursement Account (HRAs) and a Health Savings Account (HSA)?
HRAs are owned by the employer, and are not portable when an employee leaves
When Harold became no longer eligible for coverage under his employer's group benefit program, which of the following statements accurately reflects the conversion privilege defined by his group contract?
Harold had 31 days to convert his policy to an individual plan
Which of the following is true of Medicare Part A, in terms of coverage?
Helps pay for hospital care and skilled nursing facility care as an inpatient plus home or hospice care
A small employer health benefit plan may be nonrenewed for all of the following reasons, except:
High number of claims
LTC coverage for such things as occasional visits and care by registered, practical or vocational nurses or a hospice organization in the home would be a feature of:
Home Health Care
Ultimately it is up to the _______ to determine if the proposed insured is an acceptable risk.
Home office underwriter
All of the following are considered specialty physicians, except:
Hospital administrator
Part A of Medicare pays for:
Hospital expenses
Which of the following types of care is excluded in a Long-Term Care policy?
Hospitalization in the Intensive Care Unit
The income-earning ability lost to dependents by the insured's premature death is a way to evaluate an individual's insurance needs. This method is known as the:
Human Life Value Approach
Which of the following statements about a Modified Endowment Contract (MEC) is FALSE?
If a contract is deemed a MEC, any funds distributed are subject to a first-in/first-out (FIFO) tax treatment
Under the Fair Credit Reporting Act, which of the following statements is correct?
If an individual is denied coverage, they can request a copy of the report
Which of the following statements is true regarding continuation of coverage under a group health insurance policy?
If an insured's coverage is terminated for any reason, the insured is eligible for continuation of coverage for 12 months if such insured has been covered under the group policy for at least 3 months
All of the following are characteristics of Ordinary Whole Life Insurance, except:
If insured lives to age 100, the total amount of premium paid over the lifetime of the insured is returned to the policyowner
Amy owns her own individual Medical Expense Policy. Which of the following is true about the taxation of her premiums and medical expenses?
If she itemizes deductions and her medical expenses, including premiums, exceed 10% of her adjusted gross income, the portion exceeding that amount may be deducted
Under what conditions would there be a limit as to how much premium can be deposited into an annuity?
If the annuity is funding a qualified retirement plan and the IRS imposes a limit on that type of plan
When would a life insurance policy loan be subject to income taxation?
If the policy lapses when there is a policy loan outstanding which is in excess of the policy's cost basis
A Tertiary Beneficiary is the person who receives a death benefit payment in which of the following scenarios?
If the primary and contingent beneficiary die prior to the insured
Failure to repay a loan or loan interest will void a life insurance policy:
If the total amount due equals or exceeds the policy's cash values
Attaching a(n) ___________ rider excludes coverage for a condition that would otherwise be covered.
Impairment
A producer's unwritten authority that is assumed by the public to exist is known as:
Implied
Which of the following is an example of what an advertisement cannot do?
Imply that an insurer is endorsed by a government entity
Which of the following statements is NOT correct?
In lieu of fines, the Commissioner may have a producer imprisoned for up to one year
All of the following are true of the Coordination of Benefits Provision under a group plan, except:
In the event children are covered under two group plans, the insurer for the parent who is the oldest is primary, and the other parent's plan is secondary
With respect to Exclusions, which of the following statements is NOT correct?
In the event of a death to which there is an exclusion or restriction, the insurer must pay the policy face amount
Which type of term protection has an increasing face value as the insured gets older?
Increasing Term
A commercial insurer who reimburses insureds for medical expenses they incur is known as what type of a provider?
Indemnity
Which of the following life insurance policies has a current and guaranteed maximum premium stated in the policy?
Indeterminate Premium Life
Which of the following Annuities can it be said that it has 'upside potential, but no downside risk' when it comes to the stock market overall?
Indexed
Which of the following policies is issued without medical exams required?
Industrial Life
Information about an applicant's work behavior or character gathered from neighbors or co-workers would be included on an?
Inspection Report
The ability of an individual to meet an insurance company's underwriting requirements is known as:
Insurability
What is required to add a nonfamily member to a life insurance policy under a term rider?
Insurable interest
Which of the following manufactures and sells insurance coverage in the form of insurance policies or contracts of insurance?
Insurance companies
Mandatory uniform provisions found in health insurance policies are designed to protect the:
Insured
Under an Entity Purchase Plan form of a Buy-Sell Agreement, the business is all of the following, except:
Insured
Optional uniform provisions found in health insurance policies are designed to protect the:
Insurer
The cost of any required medical exams in the underwriting process is paid by the:
Insurer
Optional Uniform Provisions are included in the contract at the _______ option.
Insurer's
The MIB obtains its information from which of the following?
Insurers
___________ manufacture and sell insurance coverage in the form of policies or contracts of insurance.
Insurers
Which of the following is true concerning the Federal Patient Protection and Affordable Care Act?
Insurers are prohibited from imposing lifetime dollar limits on essential benefits
What is an insurer permitted to do if and when it discovers during the underwriting process that a proposed insured has AIDS?
Insurers may refuse to issue a policy to individuals based on positive HIV test results
The ______________ clause is the insurance company's promise to pay the policy's death benefit to the named beneficiary, after receiving due proof of death of the insured, as long as the policy is in force.
Insuring
If an annuity lifetime benefit is selected in most cases, it is an _________ election.
Irrevocable
Which of the following beneficiary designations prevents a policyowner from assigning the policy, taking a policy loan, or surrendering the policy without the beneficiaries consent?
Irrevocable
An employer group health insurance sponsor does all of the following, except:
Issue the policy
The Commissioner may revoke, suspend, or refuse to renew a license for all the following, except:
Issued insufficient coverage to a customer through apparent authority
All of the following are true about a buy/sell agreement, except:
It can only be funded with term life insurance
An insured is covered for medical expense at work. A friend and the insured join the U.S. Army. How does this affect the insured's group medical insurance?
It ceases immediately when the insured is sworn in
Regarding COBRA, which of the following is not true?
It covers participants who have resigned for 36 months following the date of their resignation
What happens to the overall annual premium cost once a term rider expires?
It decreases
All of the following are true of insurance in general, except:
It eliminates risk
What is an impairment rider?
It excludes specific conditions that normally would cause the entire policy to be declined
A participating life insurance policy has a long-term care rider. The insured qualifies for the benefit. Where does the initial benefit money come from?
It is an advance of the face amount of the policy
No assignment of a policy will be binding on the insurer, unless:
It is in writing and received at the insurer's home office
Of the following listed choices, which is true as it pertains to Medicare Part A?
It is prepaid through FICA taxes and is automatic when that worker qualifies for Social Security retirement benefits ('fully insured')
If the insurer cancels an individual health plan, what happens to the unearned premium?
It is refunded on a pro rata basis
Which of the following statements is correct with respect to a Certificate of Authority?
It is unlawful for an insurer to transact any business in Louisiana without a Certificate of Authority
Which of the following is correct concerning an LTC policy?
It may define a preexisting condition as a condition for which advice or treatment was recommended or received within 6 months of the effective date of coverage
How does an Option A death benefit feature of a Universal Life policy work?
It pays out the policy's face amount
Which statement is incorrect concerning an Accidental Death and Dismemberment Policy?
It provides a specified payment for a specified injury
When vision care is added to a Medical Expense Policy as an optional benefit, which of the following would be true regarding that benefit?
It typically does not cover the cost to replace frames or lenses that are lost or broken
Which of the following best describes a Statement of Good Health?
It verifies that the insured has not suffered a serious illness or injury requiring surgery or hospitalization since the application date
In the event there is a policy issued and there are questions on the insurance application that went unanswered:
It will be assumed that the insurer waived their right to have answers to those questions
Which of the following is true concerning a Medical Expense Policy for a family?
It will continue to cover their unemployed 25-year-old child who is habitually unemployed
The optional guaranteed purchase option rider allows the insured to purchase additional coverage in all of the following situations, except:
Job change
The ___________ branch is responsible for interpreting and determining the constitutionality of the statutes.
Judicial
All of the following are life insurance disability riders, except:
Jumping Juvenile
An individual jumps off a roof and breaks his leg. Which of the following statements is correct?
Jumping off the roof was intentional and breaking his leg was an accident
K has a $10,000 traditional whole life policy with a loan outstanding of $1,000 and a 5% interest charge. At the end of the first year of the loan, K did not pay the loan interest. What is the result of K's inaction?
K's new loan balance is $1,050
Which of the following was the original plan for the unincorporated sole proprietor and their eligible employees?
KEOGH Plans or HR-10
Pete is a valuable veteran of 21 years at Joe's Garage working with 24 people and filling in for Joe when he is not in. Joe wants to insure Pete to offset any losses and the costs of trying to find, recruit and train a replacement, should Pete become disabled. What type of policy should Joe purchase?
Key Employee Insurance
What type of disability income insurance pays a benefit to a business to help in the search, cost, and hiring of a replacement when an employee becomes disabled and is unable to work for the company?
Key employee
Albert, as the owner of a life insurance policy insuring his son David, wants a Settlement Option that, if David were to die, would provide guaranteed payments to Albert and his wife Lois, until both of them die. Albert should choose:
Life Income Joint and Survivor
Mr. & Mrs. Smith received monthly benefits from their annuity, and upon Mr. Smith's death, Mrs. Smith receives a reduced amount. What annuity payment option did they choose?
Life Income Joint and Survivor
Ralph has selected an annuity benefit or payment option where, upon annuitization, the annuity will pay a benefit for as long as either Ralph or a co-annuitant are alive. Ralph has elected which of the following benefit or payment options?
Life Income Joint and Survivor
Fred owns a 40-Pay Life Policy. He designated his wife, Ethel, as primary beneficiary. Upon Fred's death, Ethel receives a set amount for life. Fred chose which Settlement Option?
Life Income Only
Which Payment Option pays an income for the life of the annuitant or for a specified period, whichever is longest?
Life Income with Period Certain
Which of the following products are offered by insurers to protect families from the financial setback of a family member's premature death?
Life Insurance
Quentin, age 65, has a life insurance policy he no longer needs and no longer can afford, but he does have a need for cash. XYZ Inc. purchased his policy for less than the face amount but more than the cash value and is now the policyowner and premium payor. This was which of the following transactions?
Life Settlement
Which of the following death benefits is paid out to the beneficiary income tax free?
Life insurance when the insured dies while the policy is in force
If money is paid to change the ownership on a policy covering an insured who is not terminally ill, this is referred to as a(n) __________.
Life settlement
Which contract would a bus line passenger purchase to cover injuries sustained while traveling across the United States?
Limited Travel Accident
Burt named Liz as his beneficiary; however, he did not choose a Settlement Option. At the time of his death, who determines the option to be used to receive the benefits?
Liz the beneficiary determines which option she would like to have
Any policy designed to provide coverage for not less than 12 consecutive months for diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital is the definition of:
Long-Term Care
Martha's Disability Income policy contains a definition of 'Presumptive Disability'. Each of the following situations would meet this definition, except:
Loss of a finger
A policy issued as a preferred risk will be issued with a:
Lower than standard rate
Instead of waiting to receive her payments over time Jeanne decides to obtain the greatest amount of money out of her annuity immediately. Which option did she choose?
Lump Sum
M purchased a traditional permanent life insurance plan many years ago. What happens when he attains age 100?
M gets a check for the face amount of the policy
All of the following types of coverage are exempt from the New Cancer Therapy regulation, except:
Major Medical
Joe purchased a policy that includes a Common Accident, Recurrent Hospitalization, Restoration of Benefits, and Accumulation Provision, as well as a Family Deductible. He purchased a _________ Policy.
Major Medical
Joan was told she could only expect about 70% of her weekly salary on a disability check if she was ever disabled. The reason for this is to reduce _________.
Malingering
Which of the following annuities will be directly impacted by rising and falling interest rates?
Market Value Adjustment
Howard talks to his agent Jane about buying a critical illness policy from the XYZ insurance company to cover his wife Deborah, and naming his daughter Mary as the beneficiary in case of death. Jane told him that she would need signatures from all of the following, except:
Mary
All of the following are 'statutory claims' for benefits under most states' Workers' Compensation laws, except:
Maternity
A basic medical plan provides a specified dollar limit per medical procedure as stated in the policy. This specified amount is the:
Maximum benefit the policy will pay for that procedure
Insurance coverages that cannot be obtained from any authorized insurers in a state:
May be purchased from an unauthorized insurer as surplus lines
Under ERISA qualified plans must meet all of the following requirements, except:
May discriminate in favor of highly compensated employees
A program designed to provide increased assistance to those who are unable to pay for their medical needs is known as:
Medicaid
In order for a claimant to be eligible for _______ benefits, they must qualify based upon need.
Medicaid
A policy that covers inpatient doctor visits and may be expanded to include payment for office visits, diagnostic x-rays, laboratory charges, ambulance and nurse's expenses when not hospitalized, and maternity benefits for an additional premium is considered which of the following?
Medical Expense Policy
Which type of Accident and Health policy would provide reimbursement for expenses involved with a broken hip?
Medical Expense Policy
The benefits received from which of the following personal policies are received tax-free?
Medical expense insurance, long-term care insurance, and disability income insurance
Which of the following requires an annual deductible and coinsurance?
Medicare Part B medical
The insured may select a managed care version of a traditional Medicare Supplement Policy at a lower premium by choosing a policy that limits care to a specific list of hospitals and physicians. This would be called a:
Medicare Select Policy
Which of the following statements is NOT correct concerning Medicare Select insurance?
Medicare select does not pay for covered services that are not available through network providers
Which of the following is a required benefit and not optional for the policyholder?
Mental disorders
Risk reduction is:
Minimizing the chance of loss
Mortality cost ______ interest (investment earnings) = equals the net premium.
Minus
Which of the following correctly describes the practice of Twisting?
Misleading and convincing an insured to surrender, lapse, or exchange an existing policy for a different one, to the insured's detriment
If an accelerated death benefit is in effect, how often must the insurer provide a report showing the amount paid and the amount of the remaining benefit?
Monthly
Which of the following is the most expensive premium mode overall?
Monthly
When employers who self-fund their employee benefits form a larger group in order to offer health insurance benefits to each employer's workers, it is called a (an):
Multiple Employer Welfare Association (MEWA)
With regard to examinations by the Commissioner, the Commissioner:
Must conduct a financial examination of an insurer at least once every 5 years
Members of the ___________ include state and territorial insurance commissioners or regulators.
National Association of Insurance Commissioners (NAIC)
Michelle's corporation chose a high-deductible health plan (HDHP) because it:
Needed an HDHP to coordinate with the HSA they intended to offer its 700 full time employees
An aunt and uncle purchase a life insurance policy on their niece, for whom they are the legal guardians. Both guardians perish in an accident some time later. Who receives the death benefit?
No claim is paid out
A Single Premium Immediate Annuity (SPIA) begins paying out its benefit:
No later than within 1 year
A producer is not considered to be holding a license for the purpose of controlled business as long as:
No more than 25% of the total volume of premiums per year is derived from controlled business
An annuitant owns an annuity that has been in force for 4 years. The policy has a 10-year surrender charge associated with it. If the annuitant suffered a long-term disability and used the funds from the annuity as a result, what surrender charges would be assessed?
No surrender charge would be applied
What taxes apply to the benefits under an individual Disability Income Policy on which the insured has paid the premiums?
No tax
A replacing insurer must assume liability for paying ongoing existing claims under which law?
No-Loss, No-Gain
Which of the following is a limited form of medical expense coverage added to a disability income policy?
Non-disabling injury rider
Raymond owns an Accidental Death and Dismemberment Policy with a principal sum of $50,000, and a capital sum of $25,000. After owning the policy for several months, Raymond dies as the result of coronary artery disease. Lynn, his beneficiary, can expect to receive what amount of benefit from the policy?
None
This rider will provide paid-up coverage if the insured cancels or lapses the policy due to nonpayment of premium.
Nonforfeiture
Most group Disability Income contracts are offered on a(n):
Nonoccupational basis
Most group Disability Income contracts are offered on a/an:
Nonoccupational basis
Accident and health insurance policy exclusions typically include all of the following, except:
Nonoccupational injuries
Group health plans usually cover:
Nonoccupational injury or disease
____________ do not meet requirements of federal law to be eligible for favorable tax treatment.
Nonqualified retirement plans
All of the following transactions qualify for IRC Section 1035 exchange tax treatment, except:
Nonqualified tax deferred annuities may be exchanged for life insurance policies
Which of the following term policies cost the least all other factors being the same?
Nonrenewable and non-convertible
If Mr. Stanley is injured while attempting to escape from the police after committing a bank robbery, his A & H coverage will probably pay:
Nothing
Under an annuity with a Joint Life Payment Option, what will the survivor receive upon the death of the first annuitant?
Nothing
What is the additional premium cost to have the automatic premium loan provision included in a permanent policy?
Nothing
Bill is a retired military officer suffering from complications caused by Agent Orange exposure during his military service. He is now hospitalized in the local Veterans Administration Hospital and has incurred $54,510 in medical expenses to date. The private health insurance he now owns will likely pay:
Nothing, as the loss would likely be excluded under his private health insurance
If it is known or should be known by the agent that an existing policy is going to be lapsed, forfeited, surrendered or terminated in favor of a new policy, the agent must submit a:
Notice Regarding Replacement
In Disability Income underwriting, the single most important rating factor from an underwriting standpoint is the applicant's:
Occupation
An insurer offering Medicare Supplements to senior clients must:
Offer Core Benefit Plan A if it sells any of the other plans
In respect to Accident and Sickness Insurance advertising, all of the following are true, except:
Only a comparison of benefits is required when insurers advertise by comparisons of like products
Angela's health policy was considered a limited insurance policy because it:
Only covered specific losses named in the policy for limited dollar amounts
Which of the following is NOT correct regarding the licensing of a business entity?
Only the designated producer may transact business on behalf of the business entity
A life insurance policy is a unilateral contract because:
Only the insurance company is bound to live up to its side of the agreement
HMOs are established as either ________, which means the doctor can work with anyone, including HMO members, or ________, which means the doctor can only work with HMO members.
Open panel, closed panel
Generally speaking, straight whole life is classified as which of the following?
Ordinary
Which of the following Whole Life insurance policies has the lowest annual premium payment per $1,000 of coverage for a 35-year-old, all other factors being equal?
Ordinary Straight Whole Life
Which of the following is not covered by Medicare Part A?
Outpatient hospital treatment
Coordination of Benefits is a provision designed to reduce ________ when an insured is covered under multiple health plans.
Overinsurance
A(n) ____________ is responsible for paying the policy's premium and has various rights as specified in the contract.
Owner
___________ in a policy allow the owner to name the beneficiary, choose a dividend option or settlement option, or borrow against the contract.
Ownership Provision
After the blackout period has ended, the widow or widower may receive a Social Security income benefit based on the ___________.
PIA of the deceased spouse
For what type of provider are services covered in or out of a network by a combination of a medical expense plan and/or an HMO?
POS
An insured with a participating life insurance policy receives annual dividends. She has opted for the insurer to use these funds to increase her overall amount of insurance. This would refer to which option:
Paid-Up Additions
In general, which of the following Medicare plans does not require additional premium?
Part A
Which statement is incorrect concerning Part B of Medicare?
Part B covers prescription drugs up to $1,500 annually
If an insured is not able to work full-time as a result of a current disability, and is receiving a disability income based upon this partial loss, it is considered a:
Partial Disability
All of the following are correct concerning partial disability, except:
Partial disability payments are usually 75% of the total disability benefit
Which of the following is not a way to access the money accumulated in a traditional ordinary permanent life insurance policy?
Partial surrender
Hank, an auto mechanic, had an accident in his garage. He was unconscious for several hours and he awoke in the hospital with a broken leg and missing an arm. His disability would be:
Partial, permanent
Which of the following types of policies is eligible for policy dividends?
Participating
Which of the following is not a major source of underwriting information?
Past life insurance owned
All of the following are coverages provided under a Basic Hospital Expense Policy, except:
Physician/Surgeon expenses
All of the following are the benefits of having an employer sponsored retirement plan be ERISA qualified, except:
Plan withdrawals are tax free
Which of the following Medicare Supplement policies have Core Benefits?
Plans A through N
All of the following are TRUE regarding qualified plans, except:
Plans can discriminate in favor of highly compensated employees
Which of the following covers the greatest percentage of the benefit cost of the plan under the Affordable Care Act?
Platinum
Which of the following would not provide dental services for an insured?
Podiatrist
All of the following are TRUE of Policy Loan Rate provisions, except:
Policies with fixed interest loan rates have a maximum interest rate of 10%
The __________ has the right to change the premium mode.
Policyowner
The __________ is the person applying for insurance coverage and is responsible for completing an application.
Policyowner
The ___________ decides which dividend option is in effect and can change their election at any time.
Policyowner
The individual who has the ownership rights of a policy is called the:
Policyowner
What factors are not used in underwriting an individual disability policy?
Political affiliation and religious preference
The prior medical conditions for which the applicant has received, or should have received, medical advice or treatment within a specified period before the effective date of a policy are called:
Pre-Existing Conditions
A medical condition that was treated prior to the effective date of a policy is a:
Pre-existing Condition
A type of coverage with a small face amount, typically purchased to pay the burial expenses of the insured, is called a(n) _________ plan:
Pre-need
To help protect against ___________, group plans have a probationary period set by the group sponsor.
Preexisting conditions and immediate claims
All of the following are correct regarding Key Employee Life Insurance, except:
Premiums are deducted from the employee's salary
Which of the following is correct pertaining to underwriting a group health policy?
Premiums are generally re-evaluated annually and may be based upon prior claims
Which of the following statements regarding the taxation of personally owned health insurance is false?
Premiums are never deductible if benefits are received tax-free
Which of the following is the best definition of a Limited Accident Policy?
Provides specific benefits for specific injuries from specific causes
The principal objectives of a HMO include all of the following, except:
Providing only inpatient medical care
Which statement is false regarding Social Security Disability benefits?
Qualification for benefits is contingent only upon the employee's having 45 work credits and being unable to perform his or her usual job
ERISA requires which of the following?
Qualified plans must meet certain minimum standards
The factors necessary for an insurer to calculate a Net Premium are:
Rate of interest assumed and mortality rate
Martin is age 30 when he applies for life insurance. The underwriter classifies him the same as a person age 40 and his policy is issued with a premium for a person age 40. What substandard rating has been applied to Martin's policy?
Rated-up Age
All of the following are true of re-entry Term, except:
Re-Entry is allowed without proof of insurability
The needs analysis approach in determining the amount of coverage someone needs takes into consideration all of the following, except:
Receiving raises and bonuses by the insured over the years
Lyle owns a $50,000 20-Pay Life Policy that he lets lapse at the end of the fourth year. The Nonforfeiture Option providing the longest period of coverage would be:
Reduced Paid-Up
The nonforfeiture option that provides protection to age 100 is:
Reduced Paid-Up
"Company expenses to issue and administer a policy include allof the following, except:"
Refund of unearned premium
Which of the following is NOT a purpose of the rule regarding replacement of life insurance?
Regulate the replacement of insurance by the consumer
What type of contract do commercial insurers traditionally market?
Reimbursement
The __________ provision specifies what an insured must do, if a policy has lapsed, in order to put it back in force?
Reinstatement
All of the following are ways in which an annuity can be classified based on its premium funding method, except:
Reinvestment
An individual owns a variable annuity. Upon annuitization, the number of Annuity Units on which the benefit amount is based will __________ from month to month.
Remain the same
To reduce its exposure to claims from a substandard disability risk, an insurer may take all of the following actions, except:
Remove all of the exclusion riders
The Guaranteed Renewable Provision states that the policy is:
Renewable with premiums that may be increased for entire classes of insureds
A new life policy is being purchased, and the agent knows that an existing contract through a different insurer will be lapsed. This is an example of (policy):
Replacement
Any transaction in which a new life policy or annuity is to be purchased, and the producer knows, or should know, that existing contract(s) will be: lapsed, forfeited, surrendered, terminated, reduced in value, amended with a reduction in benefit or term, have a reduced cash value, or is subjected to borrowing, is best known as a __________.
Replacement
Which of the following are true regarding the duties of insurers?
Replacement requirements do not apply to the existing insurer
All of the following are essential elements of a legal contract, except:
Representations
Statements made on the application are considered true to the best of the applicant's knowledge and belief are considered to be:
Representations
Which type of LTC coverage is designed to provide relief for the primary caregiver of a long-term care patient?
Respite Care
An insured dies within the time limit of an Increasing Term Rider and the beneficiary receives the face amount plus the value of all paid premiums. Which rider is attached to the policy?
Return of Premium
What should the producer do, if the insured is in the hospital with a heart condition pending surgery on the day the newly issued policy was to be delivered and initial premium collected?
Return the policy to the insurer with a letter of explanation
The life/health producer or agent is authorized to do all of the following, except:
Rewrite policy provisions
Dental expense insurance deductibles are normally waived for all of the following, except:
Routinely paying premiums on time and in full
What is the name of the plan that is very popular with self-employed individuals and uses employer funded IRA's for their employees?
SEP
A Medical Expense Policy's list of the amounts the insurer will pay for each medical service is known as a(n) __________.
Schedule of Benefits
If an individual is age 65 or over and continues to work, Medicare is usually the _________ insurer to any employer group health plan the individual participates in.
Secondary
A type of provider that consists of employers who pay claims out of their own funds instead of funding claims as an insurer is known as what type of provider?
Self-Insured
When, Peter, an independent contractor, purchased his own personal medical and dental insurance, he discovered that:
Self-employed persons may deduct up to 100% of the cost of health insurance for themselves and their dependents
________ is generally an option only for large corporations who may want to limit their risk up to a certain dollar amount, then buy insurance above and beyond that amount.
Self-insurance
The owner of a Variable Life Policy may allocate the premium into a sub-account which is owned by the insurer, this sub-account is a part of what is also known as the:
Separate Account
An organization that pays benefits to the providers of health care, rather than to the insured, is known as what type of provider?
Service
When a Medical Expense plan pays eligible expenses directly to the hospital, physician, or surgeon, it is paying on a:
Service basis
Electing a _____________ option for an annuity means that the annuitant will receive an income for life or for a temporary period of time.
Settlement
At the time of her retirement at age 62, Jolene chose a Life Income Payment Option to have her annuity distributed. Five years later, when her health declines, she needs the distribution to be increased. How is this accomplished?
She cannot change the distribution once commenced
Mary decides to convert her Term Policy to permanent protection. Which of the following statements is true regarding the conversion?
She may convert without evidence of insurability
Long-Term Care policies may not be written as which of the following?
Short-term policies
All of the following are eligible to participate in a HR-10 Keogh Plan, except:
Silent partner
Susan, age 65, inherits a substantial sum of money and wants to have the money distributed to her over the rest of her life starting next month. Which product offered by the life insurance industry will allow her to accomplish her objective?
Single Premium Immediate Annuity
All of the following are modes of premium payment for health insurance, except:
Single pay
Which of the following annuities does not have a traditional accumulation phase?
Single premium immediate
Medicare is available to individuals who have been receiving ______________ benefits for 24 months.
Social Security Disability
Which of the following is NOT true about social insurances?
Social insurance provides equal benefits to all citizens that contribute
Wagering on a horse race or at the casino tables is known as what type of risk?
Speculative
Medicaid is a federal program that is administered by the _______ government.
State
Under the Entire Contract provision, all of the following may be part of the agreement between the insured and the insurer, except:
Statements made to the applicant by the producer during the application process
An insurer considers all of the following when determining the fixed annuity payments, except:
Stock market value
Once the out-of-pocket limit has been reached, the _________ provision kicks in and the policy will cover 100% of covered losses for the balance of the year.
Stop-loss
__________ life insurance is when an insured is induced into purchasing life insurance with the sole intent of selling that policy once issued to third party investors for an amount less than the death benefit, but greater than its cash values.
Stranger originated
Which of the following insurance policies may be written in conjunction with a Basic Medical Expense Coverage and utilizes a Corridor Deductible after the basic plan benefits have been exhausted?
Supplementary Major Medical
Which policy utilizes a Corridor Deductible after Basic Medical Expense Coverage benefits have been exhausted and before Major Medical benefits begin?
Supplementary Major Medical
_____________ insurance allows for insurance coverage to be obtained when not available from admitted carriers.
Surplus lines
Lloyd's of London is not an insurance company, but consists of groups of underwriters called _________, each of which specializes in insuring a particular type of risk.
Syndicates
_____________ are allowed as a way to access annuity values without having to elect a settlement option or surrender the contract.
Systematic withdrawals
Which of the following programs provides health insurance that supplements Medicare for military retirees?
TRICARE for Life
Bert is the owner and insured of a permanent life insurance policy he purchased 20 years ago. He has never missed a premium payment. He would like to buy a new car but his bank account is running low. How can he obtain the necessary funds while still maintaining coverage?
Take a policy loan from the insurer
Which is true regarding the taxation of the cash value in a Universal Life Policy prior to withdrawal?
Tax deferred
Which of the following plans is designed for employees of non-profit organizations, which includes schools and other 501(c)(3) entities?
Tax-Sheltered Annuity (TSA)
Which of the following would have the lowest first-year annual premium for a 30-year-old, all other factors being equal?
Term to age 40
Which of the following is not a form of permanent life insurance coverage?
Term to age 70
Which of the following would have the highest first-year annual premium for a 30-year-old, all other factors being equal?
Term to age 70
Which is not a qualifying event for the continuation of dependent coverage under the Consolidated Omnibus Budget Reconciliation Act?
Termination of the employee for theft
The cost recovery rule states:
That the excess cash value over premiums paid is considered taxable income when withdrawn
An applicant's signature on an application indicates what?
That their statements are true
The Initial Enrollment Period for Medicare is 7 months in length. Which of the following are the start and stop dates for this period?
The 1st day of the 3rd month before the individual turns age 65 and the last day of the 3rd month after the month the individual turns age 65
Which provision requires the application, the contract itself and any riders to be attached to establish a complete contract?
The Entire Contract Provision
All of the following are characteristics of Home Service (Industrial) Insurance, except:
The Grace Period is 10 days
If the annuity policyowner and annuitant are the same person and the designated beneficiary is the annuitant's spouse, what happens if the annuitant dies during the accumulation phase?
The IRS code allows for the surviving spouse to become the new owner and tax deferral continues
Which of the following is incorrect with regard to outline of coverage requirements?
The Outline of Coverage may include advertisements
The provision which denies the beneficiary the right to commute, alienate, or assign his/her interest in the policy proceeds is:
The Spendthrift Clause
Which of the following statements is correct regarding health policy provisions?
The Time for Limit on Certain Defenses is 3 years after the policy has been in force
Who pays all future premiums after the Viatical Settlement?
The Viatical Company
How is a Variable Universal Life Insurance policy different from a Universal Life Insurance policy?
The ability to invest the cash values in various separate accounts
When calculating premium of life insurance policies, insurers assume all of the following, except:
The actual life expectancy of each group of insured's
When an applicant completes the insurance application in its entirety and provides the producer with a premium check, what in effect has taken place?
The applicant is making an offer to the insurer
In order for an insurance company to determine if it will issue a policy, what document must always be submitted for review?
The application
Which of the following two documents always constitutes part of the entire contract?
The application and policy
All of the following are parties to a life insurance contract, except:
The beneficiary
Which of the following parties does not sign an application for life insurance?
The beneficiary
Death benefits are paid to the estate of the policyowner/insured in which of the following situations?
The beneficiary is the estate
Which of the following is true in regard to an Entity Purchase Plan?
The business enters into an agreement to purchase the deceased's interest in the business
In order to convert a term policy to a permanent policy as of the original issue age, all of the following must occur, except:
The cash values will have to be paid out first before the conversion can be effected
John is the insured. His wife Mary is the primary beneficiary. Their three children are the contingent beneficiaries. John and Mary are killed in a common accident. The proceeds of John's policy would be paid to:
The children
Which of the following statements in NOT correct regarding variable contracts?
The contract must state that the benefits are on a guaranteed basis
All of the following regarding convertible term life insurance is true, except:
The conversion can take place at any time
All of the following are true of the group life insurance classification, except:
The coverage is usually written on a permanent basis providing a cash value as well as a death benefit
A universal life policy has a death benefit of $125,000 and a cash accumulation value of $15,000. Generally, what will happen to the policy if there is a $5,000 partial withdrawal?
The death benefit or cash accumulation will be reduced by the partial withdrawal
All of the following are characteristics of Credit Life Insurance, except:
The debtor generally is both policyowner and beneficiary
Which statement is incorrect regarding COBRA?
The employee or beneficiary must respond to the notification of his/her right to continue coverage within 90 days, if he/she wants to continue the coverage
How are employee FICA taxes collected?
The employer withholds the employee's tax and pays it along with the employer's portion
What portion of an employee's pension plan withdrawal is subject to tax?
The entire withdrawal
Randy has a preexisting condition for which coverage has been excluded since his Medicare Supplement Policy became effective 4 months ago. If Randy were to replace his Medicare Supplement Policy, what could be said about the preexisting condition under the new policy?
The exclusion will be waived to the extent it has already been satisfied under the original policy
With regard to examinations, which of the following statements is NOT correct?
The expense of examination of an insurer or of any person is paid by the Department
A is the insured under a $100,000 10 year term life insurance policy with her spouse named as her beneficiary. If she dies in year 9, what will her spouse receive?
The face amount of the policy
Which of the following provides the basis for the benefit amount paid to an insured under a disability income rider?
The face amount of the policy
Which of the following statements is correct concerning conversion provisions in group life insurance policies?
The group policy may limit the amount of an individual policy to the lesser of the insured's terminated group coverage (minus the amount of any group insurance he/she becomes eligible for within 31 days of the termination) or $2,000
Which of the following meets the criterion for being a natural group for group life insurance purposes?
The group was formed for a purpose other than for procuring or reducing the cost of insurance
Which of the following statements regarding health insurance advertising is not correct?
The history of very high or unique claim settlements if often used in agent advertising
For the most part, the highest authority for insurance regulation is:
The individual states
All of the following are risks to the life settlement purchaser, except:
The insured dies sooner than expected
Concerning PPOs, which is a true statement?
The insured has a financial incentive to use providers who have agreed to predetermined reimbursements for medical services rendered
Which of the following scenarios will cause the value of a life insurance policy death benefit to be included in the insured's estate?
The insured is also the policyowner
All of the following are TRUE regarding a Waiver of Premium Rider, except:
The insured must repay the unpaid premiums
All of the following can determine the death benefit settlement option, except:
The insurer
When it comes to underwriting a health insurance policy, and HIV or AIDS:
The insurer must approach the topic in a way that avoids unfair discrimination
Which of the following statements is false with regard to notification of termination of an appointment?
The insurer must mail a copy of the notification to the agent within 30 days after notifying the Commissioner
After a life insurance policy has been in force for 5 years the insured dies. During the claims process, the insurer discovers that the insured did not disclose material health information that had it known, would have caused the application to be rejected. What can the insurer do at this point in time?
The insurer must pay out the death benefit of the policy to the named beneficiary
An insured owns a $50,000 permanent life policy that she purchased 4 years ago that has a disability waiver of premium. The insured becomes disabled and pays premiums during the waiting period until the waiver begins. Once the waiver begins, what happens to the premiums she paid during the waiting period?
The insurer refunds it
If an application is submitted with a question left unanswered, which of the following should occur?
The insurer would require an answer before issuing a policy
Universal Life and Variable Universal Life share all of the following characteristics, except:
The investment risk
The relationship of a person who acts on behalf of a company whereby the person's actions can bind the company is known as:
The law of agency
Which of the following statements regarding an insurable risk is FALSE?
The loss must cause an economic hardship on the insurer
Which of the following statements is false regarding Relation of Earnings to Insurance?
The minimum monthly benefit cannot be more than $100
The process of calculating life insurance net premium requires consideration of all of the following, except:
The morbidity rates to be used
Which statement concerning individual A&H policy renewal provisions is most correct from the perspective of the insured?
The more favorable the renewal provision to the insured, the higher the cost
Which of the following is TRUE regarding payment of premium?
The more frequent the payment, the greater the overall cost
Joe suffers a broken leg while on vacation. With Joe's HMO, he may seek medical care at which of the following?
The nearest emergency room
All of the following are true regarding re-entry term, except:
The new policy's premium will be based on the insured's original age
All of the following are TRUE regarding a Variable Annuity, except:
The number of annuity units received upon annuitization, and the unit value, remain level
If an employee is age 65 and still working, which of the following statements is correct?
The older employee must be offered the same benefits as younger employees
If a life insurance policy lapses due to nonpayment of premium, then reinstatement requires:
The payment of back premiums, plus interest, and proof of insurability
Jerry has selected a Life Income 10 year Period Certain. What happens to the income payments if he dies in year 4 after starting to receive income benefit payments?
The payments continue for the balance of the Period Certain to a named beneficiary
All of the following provisions of an adjustable life policy may be changed to meet the policyholder's needs, except:
The person named as the insured on the policy
If a child is covered under more than one group health insurance plan how is it determined which carrier is primary?
The plan covering the parent whose birthday occurs first in the calendar year will be the children's primary coverage
Regarding group health insurance, which is true?
The plan sponsor is issued the Master Policy
All of the following are correct regarding regulatory jurisdiction over group insurance, except:
The policy only needs to provide benefits as required by the state in which the insurer is incorporated
Under the Uniform Individual Accident and Sickness Policy Provisions, what happens when a health policy contains provisions that have gone out of compliance because of changes in state law?
The policy will be construed as if it conformed to the law
If the cash value of a permanent life policy equals the face amount, what is that referred to?
The policy's endowment
An insured's spouse bought a whole life policy 15 years ago and it has accumulated a cash value of several hundred dollars. Who has the right to change beneficiaries and access the cash value?
The policyowner
Who receives the endowment value of a whole life policy?
The policyowner
All of the following are characteristics of Universal Life Insurance, except:
The policyowner can choose which investment(s) to place the cash values into from those available
Who are the parties in a third-party life insurance ownership situation?
The policyowner, the insured, and the insurer
Which of the following would be considered a speculative risk?
The possibility the painting you bought might be a long-lost masterpiece
If an insured's policy includes the waiver of premium rider, what happens when the age is reached where the rider no longer applies?
The premium for the policy is reduced
Which of the following statements is correct regarding a Waiver of Premium Rider on a participating whole life policy?
The premiums are waived until either the insured recovers from the disability, the policy achieves paid-up status, or the insured dies
All of the following are situations in which the insurer is obligated to pay out a death benefit after the insured has died, except:
The premiums have not been paid and have been overdue for 3 years
A mother with a teenage son purchases a life policy on his life. The policy includes an optional rider called the Payor Benefit. What will happen to the policy if the mother dies or is disabled before her son reaches age of majority?
The premiums on the son's policy would be waived until the son reaches a specified age
The life insurance policy cost basis consists of:
The premiums paid in
Which of the following are incorrect regarding suitability standards for long-term care insurance?
The producer must not focus on the consumer's ability to pay for long-term care insurance or the consumer's existing insurance, but rather focus on the consumer's goals and needs for long-term care
What information must appear on the policy summary provided to a life insurance client?
The producer's name and address
Which of the following is NOT covered by inflation protection?
The right to periodically decrease premiums
With a Business Overhead Expense Policy, all of the following are claims that are covered, except:
The salary or profit of the business owner
In which of the following circumstances was the small business owner able to deduct the premiums they paid for insurance?
The sole proprietor of a small firm buys an overhead expense policy
What happens to a spouse or child rider just prior to it expiring?
The spouse or child has a conversion option
Generally, regulatory jurisdiction over a group insurance plan belongs to the insurance commissioner of:
The state in which the group contract was delivered to the policyowner
The Social Security Death Benefit is payable to the ____________.
The surviving spouse
Which of the following is a likely outcome if a buy-sell agreement in a two person partnership is not in place when one of the partners dies?
The surviving spouse of the deceased becomes the other partner
If a policyowner of a convertible term life insurance policy exercises his/her right to convert, which of the following will happen?
The term policy will be replaced by a permanent life insurance policy
When a group is covered by a MET, who is issued the Master Policy?
The trust
Which of the following statements about policy dividends is TRUE?
There are several dividend options to choose from
What differences exist between the treatment of sole proprietors and partners when it comes to the taxation of medical expense insurance?
There is no difference
If a corporation owns an annuity, what is the tax ramifications?
There is no tax deferral benefit on any earnings
Which of the following pertaining to most LTC policies is true?Which type of insurance policy combines Basic Medical Expense Coverage with Major Medical Coverage?
They are issued guaranteed renewable
All of the following are true about indeterminate premium whole life policies, except:
They are like participating whole life
All of the following are true regarding changes or modifications to insurance policies, except:
They can be taken care of by the producer
All of the following are true regarding IRA transfers, except:
They can only take place once a year
Group health insurance plans apply which of the following restrictions to dependent coverage on children of the primary insured up to age 26?
They must be under age 26
If an employee does not enroll during open enrollment and they still want coverage, what happens?
They must provide proof of insurability
All of the following statements are true regarding Long-Term Care policies, except:
They must require prior confinement in a hospital as a condition for payment
All of the following are true of Blue Cross and Blue Shield Associations, except:
They specialize only in sponsoring group plans
Which of the following is true of traditional commercial insurers?
They traditionally market reimbursement-type contracts that pay directly to the insured
A grandparent purchases a life insurance policy on a granddaughter this is an example of _________.
Third-Party Ownership
What is one of the main reasons for a Universal Life policy to have a surrender charge?
This provides a means for the insurer to recapture their upfront expenses involved in issuing the policy
What is the main purpose that IRC section 1035 was enacted?
To allow for continued tax-deferral on any gains in an existing policy when a policyowner moves into a new one
The agent's primary underwriting role is:
To make sure the application provides the proper information
Why were industrial policies written?
To offset funeral expenses
What is the primary purpose of an annuity?
To protect against outliving one's income
All of the following are generally the main business uses of life insurance, except:
To provide funds for the deceased's heirs
To waive an insured's premium, most companies require an individual's disability to be:
Total and permanent
Residual Disability Income pays funds to the insured, to make up for what the insured would have earned after returning to work, and while recovering from ___________.
Total disability
Josh is a concert pianist and earns a very good living with his talent. He was in a car accident and broke his arm. His disability is considered:
Total, temporary
Which of the following is false with respect the health policy replacement?
Under group coverage, medical conditions that can be excluded are limited to those that were diagnosed or treated during the 12-month period prior to the day coverage begins under the policy
Which of the following policies allow for a partial withdrawal or partial surrender?
Universal Life
In order to achieve its goals, the Affordable Care Act instituted a variety of measures, including all of the following, except:
Universal use of Consumer Driven Health Plans (CDHPs)
If the premiums are not paid on a Traditional Whole Life policy that has been in force for decades with no loan outstanding, what happens?
Unless specified otherwise, the cash values buy extended term
Managed Health Care attempts to contain health care costs by controlling the behavior of participants through all of the following, except:
Unlimited access to providers
Illustrations must be retained as follows:
Until 3 years after the policy is no longer in force
All of the following are ways in which to avoid the early withdrawal additional tax, except:
Up to $100,000 for a first time homebuyer
An insured is hospitalized for at least 3 days. How long will Medicare pay for confinement in a skilled nursing facility?
Up to 100 days
All of the following are examples of an absolute assignment, except:
Using a Life Insurance policy as collateral for a loan
Many insurers pay benefits based on the average fee charged in a geographical area. This is referred to as which of the following?
Usual Customary and Reasonable
Many insurers pay benefits based on the average fee charged in a geographical area. This is referred to as:
Usual, Customary, and Reasonable
When payment under a Medical Expense policy is based on the average fee charged by all doctors in a given geographical area, and the balance of any overcharges or costs of any disallowed services are the insured's responsibility, the payment is known as:
Usual, customary, reasonable (UCR) payment
When will a primary care physician referral a HMO member to a specialist?
Usually after all other treatments have been exhausted
All of the following annuities can be sold without a securities registration/license, except:
Variable
During the accumulation phase of a(n) ____________ annuity, premium dollars buy more accumulation units.
Variable
Which annuity is the only one regulated by the SEC, FINRA, and State insurance departments?
Variable
Which of the following Annuities is generally not backed by the insurer's general account assets?
Variable
Which of the following is not a fixed type of an annuity?
Variable
Which of the following policies requires a producer to have both a life and securities license to sell?
Variable Universal
Which of the following policies must be sold by prospectus?
Variable Whole Life
The number of years excluded from the conversion privilege on a convertible term policy:
Varies among insurance companies
A viatical settlement is contract between a life insurance policyowner and a _______________.
Viatical settlement provider
All states have adopted the Uniform Individual Accident and Sickness Policy Provision Law. If an insurer changes any of these provisions, they must make sure it does not:
Violate legal precedent
Home health care provides benefits for all of the following, except:
Vocational or job rehabilitation
All of the following are life insurance policy prohibited provisions, except:
Voiding a policy for failing to repay any policy loan or loan interest when the total outstanding policy debt is greater than the policy's cash value
When an insurance company fails to enforce a provision in a contract and decides to pay a claim, they are giving up a legal right or advantage. This is known as which of the following?
Waiver
Which rider allows a disabled insured policyowner to forgo future premiums on his or her whole life insurance policy while continuing to enjoy full policy benefits?
Waiver of Premium
ACA Insurance plans must include coverage for preventive health services including all of the following, except:
Well-child care up to the age of 26
Which of the following is incorrect with regard to rules for coordination of benefits?
When a plan is primary, it must reduce its benefits so that the total benefits paid or provided by all plans are not more than 100% of total allowable expenses
Which is true regarding the advertising of Accident and Sickness Insurance?
When insurers advertise that a group endorses a certain health product, the public must be made aware of any control the insurer may have regarding the group
When is an entity buy-sell agreement plan used?
When the entity buys life insurance on each of the owners
An applicant completes the application and submits it to the insurer along with a premium check. When is the applicant's offer considered accepted?
When the insurer issues a policy
Frank purchased his life insurance policy 5 years ago and named his wife, Jean, as his beneficiary, but two years later Jean divorced Frank and married Pete. Can Jean collect from Frank's life policy since he had a fatal heart attack last week?
Yes, she is the beneficiary
Harry, the annuitant of a non-qualified tax deferred annuity with $40,000 cash value chooses the Life Income with Refund Payment Option when he annuitizes to policy. After receiving $1,000 each month for 80 months, Harry suddenly dies. How much will his beneficiary, his wife Lucille, receive?
Zero
Victor, age 59, calculated last year's gross income to be $100,000. When reviewing the cost of his various personal insurance policies, he found that his disability income policy annual premium was $3,500, his long-term care insurance annual premium was $4,000, and the total annual cost of his individual Medical insurance premiums and out-of-pocket medical expenses came to $5,500. Based on this information, he could deduct ______ from his taxable income for that year.
Zero
In a whole life insurance policy:
the cash value is greatest at the end of the policy period, and the insurance protection is greatest at the start of the policy
The waiting period from the start of a disability to be eligible to apply for Social Security disability is:
5 months
Which of the following life insurance policies does not develop a cash value?
5 year term
Which of the following is a typical benefit period for a group long-term disability benefit?
5 years
An individual is eligible for a Medicare Supplement as early as age:
65
Generally, an individual is eligible to enroll in Medicare at age:
65
If an individual is age ______ or over and continues to work, Medicare is usually the secondary insurer to any employer group health plan the individual participates in.
65
Originally, Medicare was for U.S. citizens age _______ and over.
65
The Age Discrimination in Employment Act (ADEA) affects both the short- and long-term group disability benefits for people employed after age _______.
65
Required Minimum Distributions must begin from Traditional IRAs by April 1st of the year following the year the account owner turns _____.
70 1/2
Paul is the insured and policyowner. Paul named Danny and Kayla as co-primary beneficiaries of Paul's $100,000 policy. Danny is to receive 70% and Kayla is to receive 30%, therefore Danny gets $________ and Kayla gets $______ when Paul dies.
70,000/30,000
Which of the following statements is false with respect to HIV testing?
A person may not opt out of HIV testing
Which of the following establishes a cost basis in an annuity?
After-tax contributions
Who among the following would be eligible for coverage under the Louisiana Health Insurance Association?
A person who is not covered under any other health plan
Which of the following disability income benefits would be received free of federal income tax?
A personal disability income insurance policy benefit
Experience rating utilizes _______ in determining the rate the insurer will charge for group coverage in each year of coverage.
Actual loss experience of the group
Every LTC Policy that provides benefits of homecare or community-based services shall provide all of the following, except:
Acute care
A and B are married. They have two minor age children. A and B feel that all family members should have coverage on their lives, not just A. What would be the least expensive way to accomplish this?
Add a term life insurance rider to this policy to provide additional coverage on the spouse and children
If the annuitant dies during the annuity or payout phase, the remaining value in the account will be:
Added to the deceased annuitant's estate for valuation
Other than the applicant, which signature is required on an application?
Agent
'Producer' includes all of the following, except:
Adjuster
Which of the following situations will require proof of insurability?
Adjusting the face amount up on a Universal Life insurance policy with Option A death benefit selected
Which reference to Medicaid is true?
Administered by the state using federal guidelines; funded federally and by states for poor persons of all ages; for poor persons 65+, disabled, or blind, may qualify for nursing home benefits
An insurer authorized to do business within this state is considered what type of insurer?
Admitted
Which of the following types of coverage provides custodial care outside the home for individuals not requiring confinement?
Adult Day Care
The underwriter's greatest concern when underwriting a group plan is ____________.
Adverse selection
Which of the following is incorrect regarding the group underwriting process?
Adverse selection is not a concern for group contracts
All of the following statements regarding advertising are correct, except:
Advertisements do not include radio scripts
Group long-term disability benefits are paid for:
As long as the policy specifies
All of the following qualifications are required for a producer license, except:
Be at least 21 years of age
A group of individuals comes together with the objective of obtaining a lower collective insurance premium. This would:
Be disallowed. Group formation must be for a reason other than reducing the cost of insurance.
Permanent insurance differs from term insurance with regard to:
Cash value accumulation
When both parties must perform certain duties and follow certain rules of conduct to make a contract enforceable refers to a(n) __________ contract.
Conditional
If a premium is collected at the time of the application, the producer will issue a:
Conditional receipt
The _________ clause states what each party exchanges in the contract.
Consideration
Dr. Doe is associated with an HMO. One of his main functions is to oversee referrals to other physicians and specialists. Dr. Doe is functioning in the capacity of a:
Gatekeeper
When an insured decides to change her mode of premium payment from annually to monthly, the total premium due would:
Increase
The Return of Premium Rider, the Return of Cash Value Rider, and the Cost of Living Rider all use which type of term insurance to accomplish their objective?
Increasing Term
Which principle states that an insured may be reimbursed up to the amount of the actual loss?
Indemnity
Which of the following statements is false with respect to continuing education requirements?
Credit hours awarded in a compliance period may not be carried over to another renewal period
If a policy was issued at a higher premium due to a higher risk exposure, all of the following can be used to reflect the higher risk, except:
Declined
As the cash value increases in a traditional whole life policy, the net amount at risk ____________, but the face amount of the policy would remain the same.
Decreases
Which of the following types of buy-sell agreements provides for a business to purchase a life insurance policy on each business partner?
Entity Plan
All of the following are Dividend Options, except:
Extended Term
Which of the following identifies the parties to the contract and the perils it covers and the circumstances under which the insurer will pay a life insurance policy claim?
Insuring Clause
All of the following are Payment Options available upon annuitization, except:
Interest Only
All of the following statements regarding an insurance application are correct, except:
It is not included as part of the contract
What health insurance product is designed to provide coverage for necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital?
Long-Term Care
The two categories of Group Disability Income policies are:
Long-Term and Short-Term
Which is not considered one of the basic benefits required of all HMOs?
Long-term care
Which of the following is a common exclusion in a medical expense plan:
Loss due to Workers' Compensation
Which statement is false?
Mandatory Second Surgical Opinion is when the physician submits claim information prior to treatment, to determine in advance if the procedure is covered
The results of the ________________ is the only document that might be copied and made part of the policy.
Medical Examination
Which of the following statements is correct?
No person may act as a producer in Louisiana unless licensed by the Department of Insurance
Albert owns a printing business in which he, at times, prints counterfeit money. One day while processing counterfeit bills, his arm is severely damaged. His insurance will:
Not cover the claim since he was involved in an illegal act at the time of injury
Buy-sell agreement life insurance premiums are:
Not deductible and proceeds are income tax free
Any employee-paid group life insurance premiums are __________.
Not tax-deductible
Contributions to a nonqualified plan are:
Not tax-deductible
F has a $100,000 face amount term life policy for which F paid $10,000 in premium to date. F dies and the benefit is paid out to G, the beneficiary. What amount of the death benefit received is taxable as income to G?
Nothing
Which of the following is true concerning the Benefit Period of a LTC Policy?
Once the elimination period has been satisfied, it is how long benefits will be payable
A misstatement of an insured's age was not discovered until after the insured died. The policy had been in effect for 3 years. What will the insurer do to address this situation?
Pay benefits based on what past premiums would have purchased at the correct age
If an insured dies during the policy's grace period, the insurer will:
Pay the death benefit, less the amount of premium due
All of the following are Anti-Money Laundering 'red flags', except:
Paying annual policy premiums
In the event a parent becomes disabled or dies while paying premiums on a life insurance policy for a minor child, which provision would allow the policy to continue in force until the child reaches a predetermined age?
Payor Benefit (Waiver of Payor Premium)
Beth owns a 20-Pay Life participating policy. She has decided that the dividends should be applied toward future premiums. Which Dividend Option did she choose?
Premium Reduction
Barry has just been hired by OPQ Corporation and finds that he cannot enroll for coverage under OPQ's group health insurance plan for 30 days. This 30-day period is known as a:
Probationary Period
Normally, when the insurer determines that the insured is an acceptable risk, the insurer will send the policy to the ____________.
Producer
The field underwriter is the _________ and is not a determiner of insurability.
Producer
Which of the following has primary responsibility for ensuring that the application is filled out completely?
Producer
Which of the following is required to sign the application for insurance?
Producer and the applicant
Penelope received benefits from her disability policy and went back to work. After 30 days she found she was not able to work and began to immediately receive her disability payments. Which of following provisions made this possible?
Recurrent Disability Provision
A mandatory participation rate for noncontributory group plans is designed to:
Reduce adverse selection
The main purpose of requiring a Gatekeeper is to:
Reduce costs within the plan
All of the following are Settlement Options, except:
Reduced Paid-Up
Beth exercised an owner's option on a life policy to stop paying premiums but continue to be covered until she was age 100. Which Nonforfeiture Option did she choose?
Reduced Paid-Up
The nonforfeiture option that provides the least amount of coverage is:
Reduced Paid-Up
Which of the following is NOT a Dividend Option?
Reduced Paid-Up
Which of the following might be done to protect against adverse selection when underwriting group medical insurance?
Require a minimum percentage of the group to enroll
A firm with 50 employees replaces its existing group health plan. With regard to ongoing existing claims, the replacing insurer will be:
Required to continue paying them under the No Loss-No Gain law
A limited pay life policy:
Requires premium payments for a specified number of years or until a specified age is reached
Which of the following is not a factor in premium determination?
Reserves
The ____________ market is a private source of coverage of last resort for individuals or businesses that have been rejected by voluntary market insurers.
Residual
Which provision provides a loss of earnings benefit to an employee who returns to work after sustaining a total disability, if the insured's earnings are less than they were before the disability.
Residual Disability
Examples of preventative care include all of the following, except:
Restricting travel to within 5 miles of home
All of the following causes of death are covered under an AD&D policy, except:
Stroke
If an annuitant withdraws funds from their annuity prior to age 59 1/2 what is the tax consequence?
Tax and 10% penalty tax on the withdrawal that represents earnings
The interest earned on dividends is:
Taxable
Which statement is true regarding taxation of health insurance?
The benefits received from a group Disability Income Policy paid entirely by the employer are fully taxable as income to the employee
If an annuity policyowner stops putting money into their periodic or flexible premium annuity what happens to the policy values?
They are protected by the nonforfeiture provision
Which is correct concerning Blue Cross and Blue Shield Plans?
They are service plans with benefits paid directly to the hospital or physician
A Medicare supplement policy cannot be denied, conditioned, or priced because of the health status, claims experience, receipt of health care, or medical condition of an applicant:
When the application is submitted prior to or during the 6-month period beginning with the first day of the first month in which an individual is both aged 65 or older and the applicant is enrolled for benefits under Medicare Part B
When demanded, Hearings are held:
Within 30 days after the date a hearing is demanded
Why should a producer collect a premium at the time the application is completed?
Without it, coverage cannot go into effect, as there would be a lack of consideration
Bess received information in regard to her individual Term Insurance explaining that she could convert the policy by doing which of the following?
Without providing proof of insurability, pay higher premiums based on her attained age
What is the purpose of nonforfeiture values?
Without them, any cash values would be retained by the insurer when the policy lapses due to non-payment of premium
Group Disability Income is usually offered only on a nonoccupational basis, which will not cover work-related disabilities, because:
Work related injuries are normally covered under Workers' Compensation
Under the Coordination of Benefits provision, if an insured is disabled due to a work-related loss, the primary payer is
Workers' Compensation
_______________ is insurance provided by an employer to cover injuries that occur on the job only.
Workers' Compensation
Accident and Health policies provide coverages for all, except:
Workers' Compensation claims
The duration of the grace period for individual life insurance policies is:
30 days
All of the following are true regarding ERISA qualified plans, except:
Employers must establish a pension plan
Which of these is a qualified plan designed specifically for unincorporated self-employed individuals?
Keogh Plan
All of the following are true of a substandard risk, except:
The premium would be discounted
Annually renewable term life insurance's premiums increase every:
1 Year
Core Benefits of Medicare Supplement policies cover ____ pints of blood.
3
Which of the following examples of elimination periods provides the lowest benefit:
6 months
Ordinarily, who would not be the owner of a juvenile policy from the outset?
A brother or sister
Which of the following best describes Third-Party Ownership?
A policy owned by one person insuring the life of another person
A producer must include their name and address on which of the following?
A policy summary
What are the two types of life insurance assignments?
Absolute and collateral
Which of the following are false regarding the Life and Health Insurance Guaranty Association?
An insurer has the option of becoming a member of the Association
Which of the following is correct regarding requirements for home health care benefits?
An insurer may not require the insured to have an acute condition before home health care services are covered
Which of the following is incorrect with regard to commissions and compensation?
An insurer may pay a commission to an unlicensed producer who is appointed by the insurer
Which type of insurance policy combines Basic Medical Expense Coverage with Major Medical Coverage?
Comprehensive Major Medical
Industrial Life Insurance is also referred to as a:
Debit Policy
All of the following are common exclusions, except:
Driving
A Certificate of Insurance is:
Evidence of insurance coverage
The Needs Analysis Approach always assumes the death of the insured to be:
Immediate
Which rider would eliminate coverage for a preexisting condition?
Impairment Rider
The only way a death benefit can be 100% income tax-free is to be paid out __________.
In a lump sum
The Medical Information Bureau (MIB) is formed by:
Insurance companies
All of the following are insurance or financial rating services, except:
Insurance rating bureau (IRB)
All of the following are Optional Uniform Provisions, except:
Legal Actions
Only the _________ can surrender an annuity.
Owner
All of the following are advantages of having a Buy-Sell Agreement in place, except:
Premiums are tax-deductible
When an insurance company sells part of their risk to another insurance company, this is called:
Reinsurance
Which of the following is NOT a common rating classification?
Subrated
The Mode of Premium provision addresses:
The frequency of premium payment
A Credit Life Policy will be cancelled if:
The loan is paid off or refinanced
Generally, life insurance death proceeds are income tax free to the policy beneficiary, except:
When a transfer of ownership has taken place
Premium is considered the policyowner's:
consideration
The _________ include bathing, continence, dressing, eating, toileting, and transferring.
Activities of Daily Living
Producers selling variable life insurance:
must have a valid life license and must be registered with FINRA
Which of the following is not a prohibited form of advertising?
A side-by-side comparison of two policies issued by different insurers
The premium charged for new policies obtained by exercising the Guaranteed Insurability Rider is based upon the:
Attained age of the insured
A false statement in the application that can render the contract void, if material to the acceptance of the risk, is known as a:
Misrepresentation
An applicant inaccurately representing information on the application is guilty of:
Misrepresentation
All of the following are producer responsibilities to the applicant, except:
Offering and selling only the lowest premium policy
All of the following are defined contribution plans, except:
Pension
With a life insurance policy, in the event of the premature death of the insured, who has first claim to the policy benefits?
Primary beneficiary
Which of the following is the proper sequence of beneficiaries?
Primary, contingent, tertiary
If an insured dies under the AD&D policy, which of the following will provide benefit payouts to the beneficiary:
Principal sum
HMOs may provide one or more of the following supplemental benefits, except:
Private hospital rooms
Which of the following is NOT an unfair claims practice?
Promptly acknowledging communications pertinent to a claim
If a policyowner wants to increase the death benefit of an Adjustable Life Insurance policy, what is required?
Prove insurability for the increase
The purpose of the Social Insurance Supplement rider is to:
Provide benefits in case an insured is declined Social Security disability benefits
All of the following regarding revocable beneficiaries is true, except:
They have rights in the policy just like any other party to the contract
How long, typically, is the reinstatement period from policy lapse?
3 years
The reinstatement period for a life insurance policy is:
3 years
All of the following will determine whether or not an IRA contribution is deductible, except:
Whether the IRA owner is over a specified age
Jill wants to know how much to put into her annuity in order to receive the greatest benefit payment amount. Which of the following will provide her with the largest monthly income regardless of the settlement option selected?
$1,000,000
W has a health insurance policy with an 80/20 coinsurance, a $1,000 deductible. If in January W goes into the hospital for an overnight stay, the bill coming to $2,000, what will W pay?
$1,200
After Robert signed up for Medicare, he withdrew $2,000 from his HSA. He used $600 for his Medicare Supplement premium, $200 for out-of-pocket medical expenses, and the remaining $1,200 on a trip to celebrate his retirement. Later on, when he paid his taxes for the year, he discovered that:
$1,200 was subject to income tax
Eileen's health insurance had a $500 deductible and 80% / 20% coinsurance. Her first claim of the policy year amounted to $1,000, of which she paid $600. How much was her coinsurance?
$100
Mateo applies for an insurance policy that will have an annual premium payment of $1,000 ($510 semi-annually, $260 quarterly, and $100 monthly) if issued. Which of the following premium checks would be adequate consideration if he chose to pay monthly?
$100
A $100,000 policy with a waiver of premium rider and $30,000 of cash value is in force when the insured dies at age 65. The beneficiary receives how much of the policy's values?
$100,000
A partnership involving four equal partners is valued at $1,800,000. Under a Cross Purchase Plan, the amount of the policy on the life of each partner would be:
$150,000
Which major medical plan deductible will result in the lowest premium?
$2,500
What is the maximum annual contribution to an FSA, which is allowed by law?
$2,550
If an insurer makes a payment for a claim but the insured is dissatisfied with it, he/she must wait _____ days after proof of loss before he/she might take any legal action.
60
When funds are transferred from one qualified plan to the trustee of an IRA or another plan, there is a _______ day requirement.
0
Gary participates in a group long-term care insurance program through his employer. The employer pays for a standard level of coverage for all employees, and Gary pays for an additional voluntary amount of coverage. In all, Gary's employer pays two thirds of the cost and Gary pays the remaining one third of the cost. If Gary makes a claim under this policy, what percentage of his benefits would be taxable based on the premium structure?
0%
A convertible term life insurance policy may be converted _____ time(s) for a permanent life policy based on the original or attained age.
1
Medical Expense Insurance is usually written with a policy period of __________.
1 year
An employee is considered full time and eligible for small employer medical expense insurance if he or she works a minimum of ________ hours per week.
30
If no money is involved when the ownership of a policy changes, this is referred to specifically as a(n) __________.
Absolute assignment
When a life insurance policy's ownership is changed from the original owner to a new owner without payment, this is known as a(n) ___________.
Absolute assignment
Which of the following statements is false regarding requirements for accelerated benefits?
Accelerated benefits effective for illness immediately upon the effective date
Which of the following statements is true regarding accelerated benefits?
Accelerated benefits must provide for a lump sum benefit option
All of the following are true regarding the accelerated death benefit rider, except:
Accelerated death benefits have to be repaid if the insured's health improves
Sylvia was the insured and owner of a policy that named her husband as the beneficiary. Upon her husband's death, she decided to change the beneficiary designation to her best friend since she has no close living relatives. The insurance company will:
Accept the beneficiary change
This is the only accident and health insurance policy that pays out a lump-sum benefit upon the death of the insured in certain situations.
Accidental death
The cash value of a permanent life insurance policy can be used for all of the following, except:
Accidental death benefits
Accident and Health Insurance provides coverage for two major categories of perils. They are:
Accidental injury and sickness
Which of the following is NOT an example of a prohibited practice?
Backdating
If overdue premiums are not paid by the end of the grace period, a traditional whole life policy will automatically:Be canceled with no value
Become extended term
K owns a variable annuity with an assumed interest rate of 4%. If the actual performance of the separate account(s) is 5%, the effect on this month's income benefit check will be such that it:
Becomes Higher
K owns a variable annuity with an assumed interest rate of 4%. If the actual performance of the separate account(s) is 3%, the effect on this month's income benefit check will be such that it:
Becomes lower
When must the Outline of Coverage and Guide be provided?
Both must be provided at the time of application
When an agent misleads the public in an advertisement, ___________are held accountable.
Both the insurer and agent
All of the following are prohibited provisions in a long-term care policy, except:
Cancelling a policy due to nonpayment of premium
Policy replacement is the process of:
Cancelling an existing policy and issuing a new policy
If an insured suffers a dismemberment under the AD&D policy, which of the following will provide benefit payouts to the beneficiary?
Capital sum
The rates charged by Independent Practice Association HMO physicians are prenegotiated on a ________ basis.
Capitation, or capitated
The ___________ provision deals with expenses that did not satisfy the previous year's deductible, were incurred in the last 3 months of that year, and are used towards satisfying the current year's deductible.
Carryover
All of the following are characteristics of Franchise Insurance, except
Certificates of Insurance are issued
When a policy lapses due to nonpayment of premium, which nonforfeiture option is the automatic option?
Extended term
In what interest rate environments is a bailout provision most likely to be exercised by the annuity owner?
Falling
If a policy requires the payment of an additional premium for the continuation of coverage for a newborn, the insurer must be notified within 31 days of the ______.
Date of birth
If an applicant for life insurance misstates his age on the application, what would be the consequence if/when it is discovered?
Death benefit will be what the premium paid would have purchased at issuance at the correct age
___________ are not taxable because they are considered a return of excess premium.
Dividends
Any extra premium charged for the waiver of premium rider:
Does not apply to the policy's cash value
_________ refers to the jurisdiction where an insurer was formed or incorporated.
Domicile
The Insurance Commissioner is:
Elected every 4 years
A client wants coverage for himself as well as coverage for his wife and children all under one policy at an affordable price. Which of the following would best meet the need?
Family Rider
Which of the following is included in Part II of a Life Insurance Application?
Family member's age and cause of death
Annuities may be funded with either a lump sum or a ______ premium basis.
Flexible
X is 57 years old, and planning for their retirement. They do not know what their cash flow will look like over the next 10 years, but wants to fund an annuity to provide retirement income. Which of the following premium funding methods would be best for X to consider?
Flexible
For which of the following may any funds remaining at year-end not be rolled over to the next year?
Flexible Spending Account
Sylvia is a participant in a Preferred Provider Organization and finds that if she opts to use a provider outside the network:
Her PPO will pay a reduced amount with Sylvia paying the balance
Under Small Employer Medical Expense Insurance, the insurer can nonrenew the health benefit plan for all of the following, except:
High claim frequency
If Alan owns a market value adjustment annuity (MVA) and interest rates have fallen since he has taken out the policy, what impact will this have on the policy values?
In effect, the policy values would have increased
Own occupation is the:
Inability to perform all duties of one's own occupation
What is the Health Insurance Marketplace?
It is a resource where consumers can learn about their health insurance coverage options and compare plans
John has had his individual Health and Disability Income policies for many years. While intoxicated, he was injured as the driver in a single car accident. Who covers the medical expenses for John?
John is liable for all expenses
All of the following policies end when an insured dies, except:
Joint Survivorship
A beneficiary wants a guarantee that benefits will be paid for a period of 10 years or life whichever time period is greater. Which of the following options should the beneficiary select?
Life with 10-year Period Certain
If X has a life insurance policy that is no longer wanted or needed and is considering selling their policy, how much might X receive if the premiums are $10,000 annually, the cash value is $200,000, and the face amount is $1,000,000?
More than $200,000 but less than $1,000,000
Under what conditions can a producer alter, change, modify or waive any policy provisions?
Never
Ole Olson owns a Business Overhead Expense Policy whereby if he should become disabled, the policy will continue to cover most business expenses in his absence. The policy would cover all of the following, except:
Ole's personal lost income
The insuring clause is found:
On the first page of the policy
When underwriting group life, the underwriter treats the group as if it were:
One individual
How long, typically, is the grace period on a $500,000 level term life insurance policy?
One month
Dominic is a physician associated with a closed panel HMO. This means that Dominic can work with:
Only that HMO's subscribers
Tom is the insured/owner of a $500,000 life insurance policy and dies leaving four surviving children, Mary, Carrie, Larry, and Barry, and each child receives $125,000 upon his death. This is an example of what type of distribution?
Per Capita
Whole Life is also known as ________ protection.
Permanent
An insured owning an Adjustable Life Policy enjoys a policy that has characteristics of both ______ and _______.
Permanent and Term
What should a producer do if the policy applied for is issued at a higher rate than was expected?
Personally deliver the policy, explain the rating, reinforce the value of the policy, and collect the additional premium
The three types of hazards are:
Physical, Moral, Morale
The purpose of the Louisiana Health Insurance Association is to:
Provide health insurance to residents who are otherwise unable to obtain coverage in the private market
Case managers do all of the following, except:
Providing the necessary care
Individuals covered under a Blue Cross/Blue Shield HMO plan are typically referred to as:
Subscribers
Accidental Injury is a:
Sudden, unexpected and unforeseen event
_____________ means ensuring that an annuity addresses a prospective owner's needs and financial objectives at the time of the sale.
Suitability
Which of the following types of coverage has a corridor deductible?
Supplemental major medical
Which of the following items does not become part of the insurance contract as defined in the entire contract clause?
The agent's report
All of the following are true regarding credit life, except:
The amount of coverage can exceed the debt
What is the primary source of underwriting information for an individual health insurance policy?
The application
If dividends are left on deposit with an insurer to earn interest:
The dividend is tax-free, but the interest is taxable
An insured has paid premiums annually on her life insurance policy. She would now like to change to a monthly premium payment. What must occur to effect this change?
The insured simply needs to contact the insurance company and request a change in premium mode
All of the following statements regarding the Living Needs Rider are true, except:
The insurer charges an annual premium for this rider which creates a pool of money from which to pay out the benefit
If an applicant is a minor, who signs the application?
Their guardian
With regard to delivery receipt requirements, which of the following is true?
Upon policy delivery, a producer must get the policyholder's signed receipt acknowledging delivery
F has an annuity with $50,000 of cash value. F needs life insurance but does not currently have it in his budget to pay for it. What is another option for F to consider to obtain the much needed life insurance F needs?
Use some of the annuity funds either through systematic withdrawal or a settlement option to pay the life insurance premiums
All of the following are considered specialized policies, except:
Whole Life
What do ADLs trigger?
long term care insurance
Loading includes all of the following, except:
mortality
