Exam part 1

Where will a life insurance policy's proceeds be directed to if all the beneficiaries die before the insured?

insured estate

in what ways are insurance policies said to be aleatory?

involves the potential for unequal exchange of value

When a policy loan is requested by a policyowner and it requires the consent of the beneficiary, what kind of beneficiary designation is this?

irrevocable beneficiary

which of the following statements regarding hospital pre admission authorization is not true?

it encourages weekend admission

which statement regarding the certificate of insurance is accurate

it indicates evidence of an employees insurance coverage

Ken is age 65 and has 2 years until he receives Social Security retirement income benefits. At his current age, which is true about Medicare Part A Hospital Insurance coverage?

it is available through application to social security

in regards to health insurance what is meant by the term privacy policy

it is the policy that will pay up to its limits before any other policy pays

the initial premium of life insurance policy is typically paid in what way

it is typically obtained by a producer and forward to the insurer

A retired couple would like to maximize the income derived from their life savings and have it payable until they both die. Which annuity would be their best choice?

joint and survivor annuity

a life insurance beneficiary died after receiving six months of payment under the policys life income settlement option. what happens with the remaining balance of the death proceeds?

kept by the insurance company

which of the folliwing is associated with an immediate annuity

lack of accumulation period

what will medicare charge if someone doesn't enroll in certain medicare programs or plans when they're first eligible ?

late enrollment penalty

How much is normally paid to a policyowner in a life (viatical) settlement?

less than the death benefit

what is the guaranteed cash value of a whole life insurance policy when the insured turns 65 years old?

less than the policys face amount

during the early years of a whole life insurance policy, the cash value will normallyy be sent to

less than the total premiums paid

all of these are common limiting factors with dental insurance except for

limited placed on number of teeth that may be treated annually

in a disability income contract an insured is considered to be totally disabled under the presumptive disability provision if he/she

loses the ability to speak

the annuitant is a single premium deferred annuity SPDA

makes only one premium payment

skilled nursing facility expenses are sometimes covered by (blank) but only if the insured was hospitalized prior to entering the facility

medicare

which of the following may be considered an act of misrepresentation

misleading or failing to adequately disclose the title and true nature of a policy offered to a client

which of these is considered to be an unfair claims settlement practice

misrepresenting pertinent policy provisions relating to coverage after a loss

which of the following is not a valid reason for an insurer to contest a life insurance policy during the policys first two years of existence

misstatement of age

which of the following is true about a qualified retirement plan that is top heavy?

more than 60% of plan assists are in key employee accounts

medicare supplement insurance requires an individual to be at least how old for open enrollment?

no minimum age

An insured is covered with a health insurance policy. If the insured would like to cancel the policy, he/she must

notify the insurance company in writing

which element of contract constitutes a definite and unqualified proposal by one party to another?

offer

If a producer surrenders their license, how long must they wait to re-apply for the same license?

one year

Autopsies may be requested by an accident and health insurer

only if not prohibited by state law

The authority to change the beneficiary in an individual annuity lies with the

owner

When a deferred annuity is surrendered, who must sign the authorization to do so?

owner

which of the following is not true of participants in multiple employer trusts

participants must purchases all coverages the trust offers

Employers often purchase life insurance on a key employee in order to

pay for finding and training a replacement if the employee dies prematurely

which of the following is not a function of accident and health insurance?

pays a death benefit as a result of natural causes

Mark is covered by a policy that uses the regular occupation (own-occ) definition of total disability. Using this definition, he will be considered disabled if unable to

perform the substantial and material duties of his regular occupation

which of the following can be defined as a cause of loss

peril

a life annuity feature which provides benefit payments for a minimum number of years no matter when The annuity dies is called

period certain

Kim is covered under two medical expense plans. Plan A pays up to $5,000. Plan B pays up to $4,000. If she incurs $7,000 in expenses, the coordination of benefits provision dictates that

plan A pays up to 5k and plan B pays up to 2k

which statement regarding an adjustable life insurance policy is not true?

policy loans are not permitted

which of the following guidelines does not apply under pregnancy provision of the civil rights act

post termination extensions of medical benefit must apply equally to pregnancy

a guaranteed renewable provision allows

premiums which can only be increased per rate class

After joining a health maintenance organization (HMO), a subscriber will typically select a

primary care physician

a pre existing condition exclusion in an accident and health insurance policy pertains to

prior health matters

what is the name of the period of time during which a new employee is ineligible for group health insurance coverage?

probationary period

A statement MUST be signed by the ________ for any illustrations used in the sale of a life insurance policy.

producer

When a producer submits an application that discloses personal information regarding the applicant, who supplies the privacy notice?

producer

Under federal law, which of the following actions is unlawful and subject to civil or criminal penalties?

producer embezzling funds from an insurer

the genetic information nondiscrimination act of 2008 bars all of the following except

prohibits the use of genetic information in health insurance unless the applicant signs a waiver

which of the following could be a future use of the cash value that builds in a recently purchased whole lifee insurance policy?

provide supplement income in 35 years

the ACA must ensure a sufficient choice of (blank) in the marketplace

providers

An insured is entitled to coverage under a policy that a prudent person would expect it to provide. This principle is called

reasonable expectations

which of the following disability income provisions allows two periods of disability to be counted as one?

recurrent disability

Omar is covered by a disability income policy. He is hurt while performing an occupation more hazardous than the occupation listed in his policy. The policy's change of occupation provision will have what effect?

reduce the benefit level

a long term care policy owner is replacing existing coverage with a new policy replacement regulations require a(n)

replacement notice

T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?

request of the change will be refused

What is the insurer responsible for when a producer is acting within the scope of authority granted in the agency contract?

responsible for acts by the producer that are authority only

Sylvia purchased an annuity for $100,000 from the proceeds of an inheritance. No further payments are permitted and the income stream begins in 15 years. This contract is a(n)

single premium deferred annuity

if an individual would like to enroll in medicare or seek public information of medicare which federal agency handles this?

social security administration

Christine is receiving benefits provided from her disability income insurance. As compared to her previous earnings, the disability benefits should be

somewhat less

which life insurance policy provision prohibits a beneficiary from commuting encumbering withdrawing or assigning any portion of proceeds prior to actual receipt from the company?

spendthrift clause

which of the following entities does not establish regulations for variable insurance products

state attorney general

An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately has the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee?

subject to federal income tax withholding

a group health certificate for coverage issued in Arizona must contain a(n)

summary of policys features and benefits

Under a deferred annuity, which contract feature initially charges a 5-10% fee that eventually reduces to $0 after a stated amount of time?

surrender charge

The interest paid during an annuity's payout period is considered

taxable as ordinary income

which of the following statements is true if the owner of an IRA names their spouse as beneficiary but then dies before any distributions are paid

the account can be rolled into the surviving supposes ira

which statement regarding the joint and survivor life insurance settlement option is not true?

the amount of each installment is larger than the single life income option

fee-for-service is a method of administering health insurance benefit payments in which

the cost of each service is scheduled

all of these statements concerning group life credit insurance are false except

the face amount is baed on the outstanding loan balance

what would be considered an advantage of purchasing term life insurance?

the initial premium is lower

which statement regarding a fixed period settlement option is correct

the installment payment amount is determined by the total number of installments

which of the following is not a valid reason for an insurer to refuse renewal of an individual accident and health insurance policy?

the insured is currently in poor health.

which of the following is true regarding a person receiving a waiver of premium benefit

the insured must be disabled for a period of time

When a producer acts within the scope of his/her contractual authority, which of the following is legally responsible for these actions?

the insurer

which of the following is a true statement regarding a medicare supplement policy purchased during the open enrollment period

the policy will be issued regardless of health

which of these must be disclosed in a universal life policy?

the policys surrender charges

A material change in a modified endowment contract (MEC) results in

the seven pay test adjusted for cash value applies again

how does a continuous premium whole life policy differ from a limited payment whole life policy

the time period in which premiums will be paid

When does the owner's contractual rights begin under an individual annuity contract?

time of purchase

What is the elimination period of an individual disability policy?

time period a disabled person must wait before benefits are paid

Why were Exchanges implemented by the Affordable Care Act (ACA)?

to create a one stop market for standardized health insurance plans

which of the following best describes the purpose of HIPPA

to reduce a pre existing condition waiting period when coverage is sought for a new medical plan

The owner's cost basis for a non-qualified deferred annuity is typically the same as the

total premiums paid

How is a collateral assignment used in a life insurance contract?

transfers specific ownership rights to a creditor

Typically, states will permit the grouping of two or more small employers in the same industry for obtaining group health insurance at a favorable rate. This grouping of employers is known as a multiple employer

trust

What is the face amount of a $50,000 graded death benefit life insurance policy when the policy is issued?

under 50k initially but increases overtime

which of the folliwng statements about universal life insurance is not true

universal life insurance normally has a minimum guaranteed cash value for duration of policy

In an individual retirement account (IRA), rollover contributions are

unlimited by dollar amount

what type of life insurance policy allows a policy owner the choice of investments along with flexible premium payments

variable universal life

If a producer replaces a client's existing life insurance policy with a new one, which of these actions is advisable?

wait until the new policy is issued and delivered before surrounding existing policy

an insurances company failure to to enforce a contracts provision is called

waiver

during the application process a statement made by an applicant that becomes part of the contract is considered to be a(n)

warranty

An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?

when the conditions of the receipt are met

when does the producer give a premium receipt for a life insurance application

when the initial premium has been paid with the application

a health insurer must provide a proof of loss form

within 15 days of receipt of the notice of loss

the following are all elements of a core contract except

written evidence

a policy owner pays the first annual premium for a 50k life insurance policy and dies one month after the policy effective date, which of these statements is normally true?

beneficiary receives 50k income tax free

what is the tax treatement of benefit payments for a non qualified annuity?

benefit payments are always taxable.

Pat is covered by a disability income insurance policy that covers disabilities arising from a work-related illness or injury. The amount of his disability income payments for an on-the-job injury may be reduced by

benefits paid under workers compensation

The refusal of doing business with an individual or business is called a(n)

boycott

a health reimbursement arrangement must be established

by the employer

a comprehensive group policy also covers expenses related to vision care which is typically not covered under a vision plan?

cataract surgery

which of these is not a true statement of war exclusion?

civil insurrections apply

which of the following statements is true regarding accident and health insurance claims that reimburse on an indemnity basis

claims can be sent directly to the insured

Chris has a single major medical contract which covers all medical expenses. His plan is considered to be

comprehensive

What does a Mandatory Second Surgical Opinion provision provide to an employer-paid health insurance plan?

containment of the employers premium payment cost

Jill has a group health plan with an employer that covers employees in more than one state. Which of the following aspects is NOT affected by the state regulatory jurisdiction established for this plan?

continuation of coverage under COBRA

an annuity accumulation period may

continue after the purchase payment stop

the policy provision that permits an employee to change from group life coverage to an individual life policy is called the

conversion provision

in what situation would disability income insurance premiums be a deductible expense

corporation paying for a group disability income coverage for its employees

Al surrenders his life insurance policy for its cash value. The total of the premiums paid into the policy minus total dividends received in cash or used to offset premiums is referred to as the

cost basis

which of the following disability buy sell agreements is best suited for businesses with a limited number of partners?

cross purchase agreement

Linda is covered with long-term care insurance and has early-stage Alzheimer's. She is still able to reside in her home while receiving primary care, as opposed to moving into a nursing home. All of the following long-term benefits encourage this EXCEPT for

custodial care

to protect information systems producers brokers and insurance companies must implement and maintain

cybersecurity policy

what effect does interest income have upon insurance premiums

decreases premium

In what way is a life insurance policy affected by an accelerated benefit payment?

decreases the death benefit

which of the following is generally a form of group credit life insurance?

decreasing term insurance

The amount of a covered loss to be paid by the insured before a major medical expense policy begins to pay is called the

deductible

if a life insurance applicant is shown future premiums are to be paid out of non guaranteed values the illustration used in the sales presentation must

disclose that premium payments may need to be resumed depending on actual results

a qualified profit sharing plan is designed to

distribute a portion of company earnings to its employees

disability income policies provide protection for which of the following

economic death

which of the following would permit an insurer to delay a covered disability policy claim?

elimination period

Christopher is issued an insurance policy that contains an attached agreement which alters the terms of the policy. This attached agreement is called a(n)

endorsement

The application is part of the annuity contract according to the

entire contract clause

which statement best defines what a policy title means on an insurance policy?

every policy must have a title on the face and on the back briefly describing the policy

Terry suffers an injury at his workplace which is covered by workers compensation. Terry also has a medical expense insurance policy. Under medical expense insurance policies, losses that are covered by workers compensation are typically

excluded from coverage

how are benefit payments from individually owned medical expense policies treated for tax purposes

exempt from income taxes

the powers directly given to a producer in an agency contract are called

express

An appointed producer's implied authority is derived from

express authority

which life insurance policy option allows the policy owner to have coverage equal to the net death benefit of the lapsed policy

extended term nonforfeiture option

which statement concerning a decreasing term life policy is accurate?

face amount decreases over the policy period

A consumer who has been recently denied insurance, credit, or employment based on an unfavorable consumer report MUST be advised as such. Which of the following does this statute originate from?

fair credit reporting act

Which benefit supplement added to a life insurance policy insures an entire family?

family term rider

When an annuity contract has been fully surrendered, how will the surrender charges affect the final contract settlement?

final contract settlement will be reduced

how long does one premium payment cover in a single premium whole life policy?

full life of the policy

John has a criminal record in which he was convicted of a felony that involved dishonesty. Under Federal law, how would John be able to engage in insurance transactions?

given written consent by the state insurance regulatory agency

The administrator for a corporate pension plan bought an accumulation annuity contract for its 2,000 employees. All 2,000 participating employees received certificates of participation. What kind of contract is this?

group deferred annuity

a large corporation pension plan purchased an accumulation annuity contract where all of the participating employees received certificates of participation what is this contract called?

group deferred annuity

what is the name of the rider that provides an additional purchase option in a life insurance policy?

guaranteed insurability rider

a life annuity with period certain is characterized as

guaranteeing benefits payments for a stated minimum number of years

a condition that increases the possibility of financial loss is called

hazard

Kyle is an insured who disregarded an accident and health insurance policy provision that requires him to seek a second surgical opinion. What will the end result be?

he may be reimbursed for the surgical procedure at a reduced benefit level

Terry receives long-term physical therapy at her residence. What type of insurance would cover this service?

home health care

which of the following is not true of a preferred plan provider?

hospitals can only initiate preferred provider plans

a single premium deferred annuity sometimes contains a bailout feature. which statement regarding this feature is correct?

if the interest rates falls below a specified level the Surender charge is waived

In a staff model HMO, enrollees normally have which of the following pharmacy options available to them?

in house pharmacy

all of these are considered features in whole life insurance except

initial premium is lower than for an equivalent amount of term insurance

Medicare Part A typically covers

inpatient drugs

Who must sign a rider attached to a health insurance policy in order for it to be valid?

insured and producer

what is another term used for pure life annuity

Life Income

which action will trigger a penalty tax on a premature distributions from a modified endowment contract MEC?

Policy loans

Steve has a group disability income policy where the premiums are paid by his employer. He elected to pay for additional residual disability coverage. Which of the following statements is true?

Steve will pay taxes on the disability benefits received from his employer

Who is the beneficiary in a life insurance policy?

The stated person or entity who is designated to receive the death proceeds

which of the following combinations best describes a universal life insurance policy

a flexible premium deposit fund and a monthly renewable term insurance policy

a health plan offered by private insurance companies is

a medicare supplement

which of the following describes coverage for the medicare part b coinsurance

a medicare supplement core benefit

which of the following would most likely purchase an immediate annuity?

a retiree having a lump sum to invest

disability income insurance normally excludes coverage for disabilities that arise from

active military duty

an (blank) insurer operates in the U.S but is headquartered outside the us

alien

which of the following distinguishes field underwriting from the home office underwriting

an agent has personal contact with applicant

which of these individuals may not obtain a temporary producer license?

an employee of a retired producer license

which of the following situations would allow funds to be deposited into a rollover IRA

an employee quits her job and receives 50k from her qualified plan

When a large sum of money is used to structure monthly payments, which product is typically used?

an immediate annuity

Rick is a disabled worker receiving Social Security benefits. What are his wife and dependent children eligible for?

an income benefit which is a percentage of his primary insurance amount

which is an accurate description of the premium in a graded premium life insurance policy

annual increases in premium for a stated number of years then remains level

The surrender charge on many deferred annuity contracts are waived when the

annuitant dies or becomes disabled

in what situation could an insurance policys coverage be modified

applicant is substandard risk

which of the following situations would a medical exam not be required for an individual health insurance applicant

applicants family members have a history of cancer

the affordable care act establishes exchanges in order to

assists individuals and small businesses when making their health insurance purchase

an insured has been court ordered to provide a Childs health insurance upon this order the insurer must allow the enrollment of this child

at any time

If a disability income policy contains a cost-of-living adjustment rider, benefits must typically be increased

at least one a year from when benefits began

Kate received a group accident and health termination notice. How many days does she have to apply for a converted policy?

31

Greg had recently been terminated from his job that covered him for group life insurance. How long does he have to convert his coverage to an individual policy?

31 days

Newborn children are automatically covered under an existing family medical plan at the moment of birth for a period of at least

31 days

Arizona allows a maximum of how many attempts in a 12-month period, before having to wait one year before attempting the exam again?

4 attempts

a policy owner decides to surrender the cash value of a whole life insurance policy the insurer has up to (blank) to delay this payment

6 months

how many hours of initial long term care training must a producer complete before soliciting long term care products

8

the telemarketing sales rule states that this time is the latest someone is to be called

8am-9pm

According to the telemarketing sales rules, what is the earliest time of day calls are permitted.

8am.

A single-life annuity only has ONE

Annuitant

Which tax cost is normally associated with death?

Federal estate tax

a family counseling benefit is typically offered under which of these coverages?

Hospice care

Premature IRA distributions are assessed a penalty tax of

10%

a premature distribution from a modified endowment contract MEC incurs a penalty tax of

10%

what is the maximum social security disability benefit amount an insured can receive?

100% of insurers primary insurance account PIA

Individuals seeking Social Security disability income benefits must have a disability that will eventually lead to death, or be expected to last at least

12 months

a nonparticipating whole life insurance policy was surrendered for its 20k cash value the total premiums paid had totaled 16k what are the federal income tax consequences to the policy owner on receipt of the cash value?

16k received tax free and 4k received as ordinary income

which of the following waiting periods would result in the lowest premiums for a disability income policy?

180 days

a survivorship life insurance policy usually covers how many lives?

2

non qualified medical expense distributions from a health savings account have a tax penalty of

20%

an insured has a 25,000 whole life insurance policy with 6k cash value available under the extended term of nonforfeiture option what is the amount of insurance to be insured?

25k

an insurer must keep advertising materials and records for at least how many years

3 years

how long must a producer maintain customer records for an insurance transaction

3 years