Exam 1

In this state, what is the maximum fine for transacting insurance without a license?

$1000

An employee insured under a group health plan has been paying $25 monthly premium for his group health coverage. The employer has been contributing $75, for the total monthly cost of $100. If the employee leaves the company, what would be his maximum monthly premium for COBRA coverage?

$102

An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. How much will the beneficiary receive from the policy?

$200,000

An insured owns a general disability policy and is injured during a war, rendering him disabled. What will be the extent of benefits that he will receive?

0%

Existing insurers must provide policyowners with a policy summary for the existing life insurance within how many days of receiving the written communication and replacement?

10

What is the maximum first-year commission that a producer may receive for the sale of a Medicare supplement policy in the state of Georgia?

200% of the commission paid for the servicing of the policy in the second year

An insured recently discovered that the interest rate on his policy loan once again increased. Which of the following is the shortest amount of time that could have passed since the last change in the insured's interest rate?

3 months

In the event a policy lapses due to nonpayment of premium, within how many days would the policy be automatically reinstated once the outstanding premium is paid?

45 days

Ray has an individual major medical policy that requires a coinsurance payment. Ray very rarely visits his physician and would prefer to pay the lowest premium possible. Which coinsurance arrangement would be best for Ray?

50/50

How long is an open enrollment period for Medicare supplement policies?

6 months

What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 months

In order to maintain coverage under COBRA, how soon from termination of employment must an employee exercise extension of benefits?

60 days

Insurers or agents soliciting partnership policies must provide each prospective applicant with all of the following EXCEPT

A statement that the insured does not automatically qualify for Medicare Part A

All of the following are examples of third-party ownership of a life insurance policy EXCEPT

An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan

Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium?

Automatic premium loan

Which of the following is TRUE about a class designation?

Beneficiaries are not identified by name

A producer who fails to separate premium monies from his own personal funds is guilty of

Commingling

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is

Conditional

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?

Consideration

An applicant for an individual health policy failed to complete the application properly. Before being able to complete the application and pay the initial premium, she is confined to a hospital. This will not be covered by insurance because she has not met the conditions specified in the

Consideration clause

Which of the following is true regarding the taxation of dividends in participating policies?

Dividends are not taxable

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT

Dividends from a mutual insurer

How often must the Commissioner of Insurance examine health maintenance organizations (HMOs) authorized to do business in this state?

Every 3 years

What does "level" refer to in level term insurance?

Face amount

Which policy component decreases in decreasing term insurance?

Face amount

In a direct transfer, how is money transferred from one retirement plan to a traditional IRA?

From trustee to trustee

A Medicare supplement plan must have at least which of the following renewal provisions?

Guaranteed renewable

A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium?

If the father is disabled for more than 6 months

Medicaid provides all of the following benefits EXCEPT

Income assistance for a work-related injury

In long-term care (LTC) policies, as the benefit period lengthens, the premium

Increases

What type of insurance would be used for a Return of Premium rider?

Increasing term

Underwriting a group health insurance plan that is paid for by the employer requires all of the following EXCEPT

Individual members of the group may select the level benefits for their own coverage

The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the

Insuring clause

An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an

Interest-sensitive Whole Life

Which of the following is TRUE of a qualified plan?

It has a tax benefit for both employer and employee

Concerning Medicare Part B, which statement is INCORRECT?

It is fully funded by Social Security taxes (FICA)

Which of the following statements is TRUE concerning the Accidental Death Rider?

It will pay double or triple the face amount

Which of the following is NOT a type of whole life insurance?

Level term

Which provision concerns the insured's duty to provide the insurer with reasonable notice in the event of a loss?

Notice of claim

The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the

One-year term option

Which universal life option has a gradually increasing cash value and a level death benefit

Option A

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

Option B

Traditional IRA contributions are tax deductible based on which of the following?

Owner's income

A participating insurance policy may do which of the following

Pay dividends to the policyowner

Which of the following are the main factors taken into account when calculating residual disability benefits?

Present earnings and earnings prior to disability

What is the initial period of time specified in a disability income policy that must pass, after the policy is in force, before a loss can be covered?

Probationary period

Who elects the Commissioner of Insurance to office?

Registered voters

Todd has been informed that he has a hernia which requires repair. When Todd researches the cost, he learns that his insurance plan will cover 200 points worth of surgical expenses. Each point represents $10, which means that $2000 of his surgery will be covered by his insurance plan. What system is Todd's insurance company using?

Relative value

When a policy is being replaced, the replacing company notifies the

Replacement company

Which of the following statements is INCORRECT?

Replacing insurance policies for the purpose of making commissions is legal

To sell variable life insurance policies, an agent must receive all of the following EXCEPT

SEC Registration

Regarding long-term care policies, which of the following would NOT be included in activities of daily living?

Sleeping

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

Survivor protection

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?

The date of medical exam

In a disability policy, the elimination (or waiting) period refers to the period between

The first day of disability and the day the insured starts receiving benefits

All of the following are TRUE statements regarding the accumulation at interest option EXCEPT

The interest is not taxable since it remains inside the insurance policy

Which of the following statements is true regarding coinsurance?

The larger the percentage paid by the insurer, the lower the required premium will be

Which of the following determines the cash value of a variable life policy?

The performance of the policy portfolio

If an insurance premium is paid by the policyowner to the agent, and the agent fails to remit that premium to the insurer, which of the following statements is true?

The policy will not lapse since payment to the agent is the same as a payment to the insurer

Which is true about a spouse term rider?

The rider is usually level-term insurance

Which of the following is true regarding Medicare Supplement policies?

These policies may not contain limitations of coverage except for those permitted by the pre-existing condition clause

Which of the following is TRUE about nonforfeiture values?

They are required by state law to be included in the policy

Premiums paid by self-employed sole proprietors or partners for medical expense insurance are

Totally tax deductible

Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of

Twisting

Under an individual disability policy, the minimum schedule of time in which claim payments must be made to an insured is

monthly