Alabama Life and Health Exam

What is the amount a physician or supplier bills for a particular service or supply? a) Actual charge b) Assignment c) Coinsurance d) Approved amount

A

What type of annuity guarantees to pay an income to the annuitant each year as long as he lives, and upon death, the annuity will refund the remaining payments to a beneficiary? a) Installment refund annuity b) Joint and survivor annuity c) Cash refund annuity d) Temporary annuity

A

Which of the following is NOT an allowable 1035 exchange? a) A whole life insurance policy is exchanged for a term insurance policy. b) A whole life insurance policy is exchanged for a Universal life insurance policy. c) An annuity is exchanged for another annuity. d) A life insurance policy is exchanged for an annuity.

A

Which of the following is NOT true regarding the accumulation period of an annuity? a) It would not occur in a deferred annuity. b) It is the period during which the annuity payments earn interest. c) It is the period over which the annuitant makes payments into an annuity. d) It is also known as the pay-in period.

A

Which of the following options best depicts how the eligibility of members for group health insurance is determined? a) By conditions of employment b) Eligibility is not determined, but simply accepted c) By the physical conditions of the applicants at the time of employment d) In such a manner as to establish individual selection as to the amounts of insurance

A

How long is an open enrollment period for Medicare supplement policies? a) 6 months b) 1 year c) 30 days d) 90 days

A

In a noncontributory health insurance plan, what percentage of eligible employees must participate in the plan before the plan can become effective? a) 100% b) 75% c) 50% d) 25%

A

The insured's health policy only pays for medical costs related to accidents. Which of the following types of policies does the insured have? a) Accident-only b) Restrictive c) Accidental Death d) Comprehensive

A

To be eligible under HIPAA regulations, for how long should an individual converting to an individual health plan have been covered under the previous group plan? a) 18 months b) 5 years c) 12 months d) 63 days

A

Because of the history of cancer in her family, Julie purchased a policy that specifically covers the expense of treating cancer. Her policy would be classified as what type of policy? a) Dread Disease Policy b) Family History Cancer Policy c) Specified Health Policy d) Term Health Policy

A

All of the following are true of key person insurance EXCEPT a) The plan is funded by permanent insurance only. b) There is no limitation on the number of key employee plans in force at any one time. c) The employer is the owner, payor and beneficiary of the policy. d) The key employee is the insured.

A

An individual is insured under his employer's group Disability Income policy. The insured suffered an accident while on vacation that left him unable to work for 4 months. If the disability income policy pays the benefit, which of the following would be true? a) Benefits that are attributable to employer contributions are fully taxable to the employee as income. b) The insured has to wait 2 more months to start receiving the benefits. c) For the business, payments are not considered tax deductible as an ordinary business expense. d) The insured can deduct his medical expense benefits from his income tax.

A

An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called a) Paid-up additions. b) One-year term purchase. c) Accumulation at interest. d) Reduction of premiums.

A

At what point must an Outline of Coverage be delivered? a) At the time of application or upon delivery of the policy b) At any point up to 30 days after policy delivery c) At the time of application only d) Upon delivery of the policy only

A

All other factors being equal, the least expensive first-year premium payment is found in a) Level Term. b) Annually Renewable Term. c) Increasing Term. d) Decreasing Term.

B

All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy? a) Half the amount b) Lower c) Higher d) As high

B

An applicant has a history of heart disease in his family, so he would like to buy a health insurance policy that strictly covers heart disease. What type of policy is this? a) Scheduled benefit coverage b) Dread disease coverage c) Single indemnity protection d) Term health coverage

B

Attempting to determine how much insurance an individual would require based upon their financial objectives is known as a) Viatical Approach. b) Needs Approach. c) Human Life Value Approach. d) Estate Planning.

B

Concerning group Medical and Dental insurance, which of the following statements is INCORRECT? a) Employee paid premiums may be deducted if certain conditions are met. b) Employee benefits are tax deductible the year in which they were received. c) Benefits received by the employee are free from federal income tax. d) Premiums paid by the employer are deductible as a business expense.

B

Employer contributions made to a qualified plan a) Are taxed annually as salary. b) Are subject to vesting requirements. c) May discriminate in favor of highly paid employees. d) Are after-tax contributions.

B

How long will a life annuity with an installment refund pay? a) Until the balance of the initial premium is paid out in a lump sum to the beneficiary after the annuitant dies. b) Until the balance of the initial premium is paid out in continued payments to the beneficiary after the annuitant dies. c) For guaranteed 20 years. d) Only until the annuitant dies.

B

In which type of HMO model are physicians actually paid employees of the HMO, practicing in the HMO's own facility? a) Network b) Staff c) Group d) Contained

B

Most health insurance policies exclude all of the following EXCEPT a) Injury due to war. b) Accidental injury. c) Occupational injury. d) Intentional injury.

B

Officers who manage stock insurance companies are a) Appointed by the Department of Insurance. b) Elected by the stockholders. c) Hired through an application process. d) Appointed by other company officials.

B

The insurer may suspect that a moral hazard exists if the policyholder a) Always drives over the speed limit. b) Is not honest about his health on an application for insurance. c) Is prone to depression. d) Is indifferent to activities that may be dangerous.

B

Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to an insured is a) Biweekly. b) Monthly. c) Within 45 days. d) Weekly.

B

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act? a) Revocation of license b) $2,500 c) $1,000 d) $100 per violation

B

When a homeowner purchases insurance on his home, what risk management technique is he practicing? a) Retention b) Transfer c) Avoidance d) Sharing

B

When may an insured deduct unreimbursed medical expenses paid under a long-term care policy? a) Only if the insured does not itemize the expenses b) When the expenses exceed a certain percentage of the insured's adjusted gross income c) Only if the insured is age 65 or older d) All LTC expenses are tax deductible.

B

Which describes the features of a comprehensive major medical policy? a) There is no coinsurance. b) Basic medical expense benefits are provided in a single package. c) The deductible is always expressed as deferred amount. d) It is the same as major medical insurance.

B

Which of the following will vary the length of the grace period in health insurance policies? a) The term of the policy b) The mode of the premium payment c) The length of any elimination period d) The length of time the insured has been insured

B

Your client's employer does not offer a company-wide annuity contract. What type of annuity contract could your client obtain? a) Nonqualified b) Individual c) Independent Group Contract d) Single

B

Which of the following authorities is authorized to issue a temporary insurance producer's license? a) Federal Insurance Licensing Association b) State Insurance Board c) Commissioner d) NAIC

C

A 35-year-old spouse of the insured collects early distributions from her husband's retirement plan as a result of a divorce settlement. What penalties, if any, will she have to pay? a) 15% penalty tax b) Age-based penalty stipulated in the contract c) No penalties d) 10% penalty tax

C

A policy with a 31-day grace period implies a) The policy is incontestable after 31 days of delivery. b) The policy benefits must be paid within 31 days after a claim is submitted. c) The policy will not lapse for 31 days if the premium is not paid when due. d) The policyholder may return the policy for a full refund within 31 days.

C

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as a) Survivorship insurance b) Juvenile protection provision c) Survivor protection d) Life planning

C

All of the following may be excluded from coverage in a Major Medical Expense policy, EXCEPT a) Cosmetic surgery. b) Coverage provided under workers compensation. c) Emergency surgery. d) Custodial care.

C

All of the following qualify for Medicare Part A EXCEPT a) Anyone who is at the end stage of renal disease. b) Anyone who is over 65, not covered by Social Security, and is willing to pay premium. c) Anyone who is willing to pay a premium. d) Anyone that qualifies through Social Security.

C

An agent accepts the premium payment 35 days after it is due, telling the insured that there will not be a problem keeping the policy in force. This is an example of what type of agent authority? a) Implied b) Assumed c) Apparent d) Express

C

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy? a) $20,000 b) $25,000 c) $50,000 d) The face amount will be determined by the insurer.

C

During the accumulation period in a nonqualified annuity, what are the tax consequences of a withdrawal? a) Both interest and principal are taxed; no other penalties are imposed. b) Neither interest nor principal is taxed, but penalties may be imposed. c) Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 ½. d) Nontaxable principal may be withdrawn first, but the 10% penalty will be imposed if under age 59 ½.

C

In disability income insurance, the own occupation definition of disability applies a) During the elimination period. b) As long as an individual is unable to work. c) For the first 2 years of a disability. d) During the waiting period.

C

In reference to the standard Medicare Supplement benefits plans, what does the term standard mean? a) All plans must include basic benefits A-N. b) Coverage options and conditions are developed for average individuals. c) All providers will have the same coverage options and conditions for each plan. d) Coverage options and conditions comply with the law, but will vary from provider to provider.

C

Most insurers issue health insurance policies for delivery in many states. Because each state regulates and mandates the requirement for policies delivered to their residents, instead of having a policy form for each state, the insurer attaches a) A waiver of other state requirements. b) Nothing. An insurer's policy only needs to conform to the regulations of the state where the insurer is domiciled. c) Conformity with State Statutes provision. d) Miscellaneous optional provision.

C

Most policies will pay the accident death benefits as long as the death is caused by the accident and occurs within a) 30 days. b) 60 days. c) 90 days. d) 120 days.

C

Should an insurer accept business from a producer who is not appointed as that insurer's agent, what penalty may be exacted? a) The insurer is fined the amount of the commission paid to the unappointed producer b) Both the insurer and producer is fined $500 each c) The insurer is fined 3 times the amount of the premium received on that business d) The producer is fined the amount of commission paid on the business

C

The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the a) Consideration clause. b) Probationary period. c) Insuring clause. d) Incontestability clause.

C

What does "level" refer to in level term insurance? a) Cash value b) Interest rate c) Face amount d) Premium

C

What is the difference between a single premium and a flexible premium payment options in a deferred annuity? a) The amount of benefit b) The purpose of the annuity c) The number of payments that purchase the annuity d) The time of income payouts

C

What is the duration of the free-look period for Medicare supplement policies? a) 10 days b) 15 days c) 30 days d) 60 days

C

What is the maximum period that an insurer would pay benefits in accordance with an Additional Monthly Benefit rider? a) For the duration of the disability or the contract, depending on which ends first b) 1 month c) 1 year d) 2 years

C

Which of the following applies to partial disability benefits? a) Payment is based on termination of employment. b) Benefits are reduced once an insured is no longer under a doctor's care. c) Payment is limited to a certain period of time. d) An insured is entitled to a principal sum benefit for the partial loss of a limb.

C

Which of the following is NOT true regarding the annuitant? a) The annuitant receives the annuity benefits. b) The annuitant must be a natural person. c) The annuitant cannot be the same person as the annuity owner. d) The annuitant's life expectancy is taken into consideration for the annuity.

C

Which of the following is an example of a peril covered in an accident and health insurance policy? a) Smoking b) Death c) Sickness d) Alcoholism

C

Which statement accurately describes group disability income insurance? a) There are no participation requirements for employees. b) Short-term plans provide benefits for up to 1 year. c) The extent of benefits is determined by the insured's income. d) In long-term plans, monthly benefits are limited to 75% of the insured's income.

C

According to the Law of Agency, a principal is represented by a/an a) Insurer. b) Broker. c) Insured. d) Agent.

D

All of the following are considered to be basic benefits of an HMO plan EXCEPT a) Preventive services. b) Out-of-area coverage. c) Diagnostic laboratory services. d) Prescription drugs.

D

All of the following statements describe a MEWA EXCEPT a) MEWAs can be sponsored by insurance companies. b) MEWA employers retain full responsibility for any unpaid claims. c) MEWAs can be self-insured. d) MEWAs are groups of at least 3 employers.

D

An applicant buys a nonqualified annuity, but dies before the starting date. For which of the following beneficiaries would the contract's interest NOT be taxable? a) Charitable Organization b) Dependents c) Annuitant d) Spouse

D

An applicant is discussing his options for Medicare supplement coverage with his agent. The applicant is 65 years old and has just enrolled in Medicare Part A and Part B. What is the insurance company obligated to do? a) Exclude pre-existing conditions from coverage under the supplement policies b) Look at the applicant's medical history to decide what premium to charge c) Send the applicant to a doctor for a physical. Nothing can happen until they get the results. d) Offer the supplement policy on a guaranteed issue basis

D

B just bought a new car, which he anticipates will be paid for 4 years from now. He also wants to buy a life insurance policy, but is financially limited until the car is paid off. Which of the following types of policies would be best for B? a) Limited Term b) Limited Pay c) Interest-sensitive Whole Life d) Modified Life

D

In Modified Life policies, what happens to the premium? a) It always remains level. b) It is higher during the first policy years. c) It varies at the beginning, but levels out by the end of the third year. d) It is level at the beginning and increases after the first few years.

D

Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement? a) Term insurance only b) Permanent insurance only c) Universal life insurance only d) Any form of life insurance

D

The gatekeeper of an HMO helps a) Determine who will be allowed to enroll in an HMO program. b) Prevent double coverage. c) Determine which doctors can participate in an HMO plan. d) Control specialist costs.

D

Two attorneys at law and operate their practice as a partnership. They want to start a program through their practice that will provide retirement benefits for themselves and three employees. They would likely choose a) Section 457 Deferred Compensation Plan. b) 403(b) plan. c) 401(k) plan. d) HR-10 (Keogh Plan).

D

Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to a) Creditors. b) Beneficiary of the death benefit. c) The spouse of the insured. d) The insured.

D

Under a nonscheduled plan, what portion of the balance could an insured expect to pay for basic services? a) 50% b) 80% c) 100% d) 20%

D

Variable Life insurance is based on what kind of premium? a) Increasing b) Decreasing c) Graded d) Level fixed

D

When the insured purchased his health policy he was a window washer. He has since changed occupations and now manages a library. If the insurer is notified of the insured's change of occupation, the insurer should a) Increase the benefit. b) Return any unearned premium. c) Consider decreasing the premium. d) Adjust the benefit in accordance with the decreased risk.

D

Which concept is associated with "exclusion ratio"? a) Dividend distribution b) How exclusion riders affect an insurance premium c) Policy provisions d) Annuities payments

D

Which of the following individuals must have insurable interest in the insured? a) Beneficiary b) Actuary c) Producer d) Policyowner

D

Which of the following is NOT true regarding Equity Indexed Annuities? a) The insurance company keeps a percentage of the returns. b) They have guaranteed minimum interest rates. c) They are less risky than variable annuities. d) They earn lower interest rates than fixed annuities.

D

Which of the following is TRUE about a class designation? a) Beneficiaries must be part of the insured's immediate family. b) It is not allowed. c) It determines the succession of beneficiaries. d) Beneficiaries are not identified by name.

D

Which of the following is a characteristic of a Reciprocal Insurance Exchange? a) Normally write all lines of insurance b) Stock holders share in any profits of the Reciprocal Insurance Exchange c) Issues nonassessable policies d) The chief administrator of the insurer is called an "attorney-in-fact".

D

Which of the following is true regarding a single life settlement option? a) Payments continue until the entire principal is exhausted. b) Proceeds are paid out in a lump sum. c) It provides income for a specified period of time. d) It provides income the beneficiary cannot outlive.

D

Which of the following policies would be classified as a traditional level premium contract? a) Adjustable Life b) Universal Life c) Variable Universal Life d) Straight Life

D

Which of the following statements concerning buy-sell agreements is true? a) Premiums paid are deductible as a business expense. b) Benefits received are considered income taxable. c) Buy-sell agreements pay in the event of a medical emergency. d) Buy-sell agreements are normally funded with a life insurance policy.

D

Which statement regarding insurable risks is NOT correct? a) Insurance cannot be mandatory. b) The insurable risk needs to be statistically predictable. c) An insurable risk must involve a loss that is definite as to cause, time, place and amount. d) Insureds cannot be randomly selected.

D