EXAM QUESTIONS
Which of the following describes the tax advantage of a qualified retirement plan?
the earnings in the plan accumulate tax deferred
which of the following best describes a misrepresentation?
issuing sales material with exaggerate statements about policy benefits
Which of the following is TRUE regarding the annuity period?
it may last for the lifetime of the annuitant
which of the following statements is true about a policy assignment?
it transfers rights of ownership from the owner to another person
A policy will pay the death benefit if the insured dies during the 20 year premium paying period, and nothing if death occurs after the 20 year period. What type of policy is this?
level term
Which of the following terms describes the specific dollar amount beyond which the insured no longer participates in the sharing of expenses?
stop-loss limit
life income joint and survivor settlement option guarantees what?
income for 2 or more recipients until they die
what is the maximum health benefit that the Kansas Life and Health Insurance Guarantee Association will pay for health insurance benefits for any one individual?
$100,000
Which of the following statements is NOT correct regarding the COBRA act of 1985? a. it requires all employers, regardless of the number or age of employees, to provide extended group health coverage b. it covers terminated employees and/or their dependents for up to 36 months after a qualifying event. c. It applies only to employers with 20 or more employees that maintain group health insurance plans for employees d. COBRA stands for Consolidated Omnibus Budget Reconciliation Act
A COBRA act applies only to employers of 20 or more employees
Which of the following statements regarding the taxation of MECs is false? a. policy loans are taxable distributions b. accumulations are tax deferred c. withdrawals are not taxable d. distributions before age 59 and 1/2 incur 10% penalty on policy gains
A any distributions from MECs are taxable
The term "fixed" in a fixed annuities refers to all of the following except: a. equal annuity payments b. amount and length of payments c. death benefit d. guaranteed rate of interest
C
Which statement for the qualifications for Social Security disability benefits is NOT true? a. the individual must meet the definition of a disability b. the individual must have proper insured status c. the individual must be at least 65 years old d. the individual must satisfy the waiting period
C
which of the following is NOT an exclusion in medical expense insurance policies: a. self inflicted injuries b. routine dental care c. coverage for dependents d. military duty
C
Which of of the following is an eligibility requirement for Social Security disability income benefits? a. experiencing at least one year of disability b. being at least 50 years of age c. currently employed status d. fully insured status
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 riders would NOT increase the premium for a policyowner? a. payor benefit rider b. waiver of premium rider c. multiple indemnity rider d. impairment rider
D
An individual had just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?
Decreasing term
what does pro rata mean?
In the insurance industry, "pro rata" means that claims are only paid out in proportion to the insurance interest in the asset;
which universal life option has a gradually increasing cash value and level death benefit?
Option A
which health insurance provision describes the insured's right to cancel coverage?
Renewal provision
what is unearned premium?
That portion of the policy premium that has not yet been "earned" by the company because the policy still has some time to run before expiration.
Which of the following would be an example of a limited accident and health insurance policy?
a dread disease policy
a straight life policy has what type of premium?
a level annual premium for the life of the insured
According to the replacement rule, replacement of life insurance is defined as a process in which...
a new policy is bought, and an old policy is converted to a reduced paid up policy
An individual is diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding the taxation of accelerated benefits?
a portion of the benefit up to a limit is tax free; the rest is taxable income
Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under and accident or health policy must contain...
a statement that is sufficiently clear to identify the insured and the nature of the claim
which of the following is the closest term to an authorized insurer?
admitted
when an insured purchased her disability income policy, she misstated her age to the agent. She told the agent she was 30 years old when in fact she was 37. If the policy contains the optional misstatement of age provision......
amount payable under the policy will reflect the insured's correct age
the death protection component of universal life insurance is always...
annually renewable term
Which of the following woudl be allowed in a Life insurance contract in Kansas?
backdating a policies issue date 6 months from the application date
In Kansas, which of the following provisions is legal?
cancellation of a policy if amount of loan is more than loan value -- if the amount of loan is less than loan value it is illegal to cancel a policy
Which of the following is true regarding in-patient hospital care for HMO members?
care can be provided outside of the service area
If an employee terminates her employment, which of the following provisions would allow her to continue health coverage under an individual policy, if request within 31 days?
conversion
An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of?
false advertising
the regulation of the insurance industry primarily rests with...
the state
Which of the following is NOT covered under part A in Medigap Insurance a. the Medicare Part A deductible b. approved hospital costs for 365 additional days after the medicare benefits end c. The 20% Part B coinsurance amounts for Medicare approved services d. the first three pints of blood each year
A
the isnuring clause of a disability policy states all of the following except: a. the method of premium payment b. the identities of the insurance company and the insured c. that insurance against loss is provided d. the types of losses covered
A
The patient protection and affordable care act contains all of the following provisions except: a. individual tax deduction for premiums paid b. right to appeal c. no lifetime dollar limits d. coverage for preventative benefits
A it offers tax credit, but no tax deductions
According to the rights of renewability rider for cancellable policies, all of the following are correct about the cancellation of an individual insurance policy except: a. unearned premiums are retained by the insurance company b. the insurer must provide the insured with a written notice of cancellation c. claims incurred before cancellation must be honored d. an insurance company may cancel the policy at any time.
A unearned premium is returned to the policyholder
A Universal Life policy is best described as an
Annually renewable term policy with a cash value
All of the following are true of the Key Person disability income policy except: a. the income may be used to find a replacement for the key employee b. benefits are considered taxable income to the business c. premiums are not deductible to the business d. it is typically written to cover key employees in the event they become disabled or unable to work
B
Which of the following is NOT true regarding the accumulation period of an annuity? a. it is also known as the pay in period b. it would not occur in a deferred annuity c. it is the period during which the annuity payments earn interest d. it is the period over which the annuitant makes payments over an annuity
B
if an applicant makes a false statement on his or her application, what are they guilty of?
perjury
What provides specific information about the products that are being considered and must be left with a prospective insured at the time of application?
policy summary
the interest earned on policy dividends is...
taxable
What is the purpose of settlement options?
they determine how death proceeds will be paid
Which provision states that an insurance company must pay medical expense claims immediately?
time of payment of claims
what is the purpose of establishing the target premium for a universal policy?
to keep the policy in force
What is the purpose of COBRA?
to provide continuation of coverage for terminated employees
what type of annuity provides a hedge against inflation?
variable annuity
when is the earliest a policy may go into effect?
when the application is signed and a check is given to the agent
When would a 20-pay whole life policy endow?
when the insured reaches age 100
in forming an insurance contract, when does acceptance usually occur?
when the insurer's underwriter approves coverage
What is the time frame for filing suspicious activity reports?
within 30 days of initial discovery
An employee becomes insured under a PPO plan provided by his employer. If the insured decides to go to a physician who is not a PPO provider, which of the following will happen?
the PPO will pay reduced beenfits
An employee becomes insured under a PPO plan provided by his employer. If the insured decides to go to a physician who is not a PPO provider, what will happen?
the PPO will pay reduced benefits
An insurance agent is subject to an administrative hearing by the commissioner. The costs associated with the hearing included witness fees a fees for reproduction of documents for the record. Which of the following will be help responsible for covering the costs?
the agent
What happens if a non-member physician is utilized under the point of service plan?
the attending physician will be paid a fee for service, but the member patient will have to pay a higher coinsurance amount
The primary beneficiary of her husband's life policy found that no settlement option was stated in the policy on the date of her husband's death. Who will select the settlement option in this case?
the beneficiary
the annuity owner dies while the annuity is still in the accumulation stage. What happens?
the beneficiary will receive the greater of the money paid into the annuity or the cash value
Under a health insurance policy, benefits, other than the death benefits, that have not otherwise been assigned will be paid to who?
the insured
under an extended term nonforfeiture option, the policy cash value is converted to...
the same face amount as in the whole life policy
What type of insurance would be used for a Return of Premium rider?
increasing term
on it's advertisement, a company claims that it has funds in their possession that are, in fact, not available for payment of losses or claims. this company is guilty of what?
misrepresentation
If the insurer cancels the policy, any unearned premium will be paid out how?
on a pro rata basis
All of the following statements regarding the use of life insurance as an executive bonus are correct except: a. any type of insurance policy may be used b. the employer pays a bonus to a selected employee to fund the policy c. it is considered a nonqualified employee benefit d. the policy is owned by the company.
D the policy is owned by the employee
If a life policy allows a policyowner to make periodic additions to the face amount at standard rates, without proving insurability the policy includes a...
guaranteed insurability rider
An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on what?
his attained age
Which of the following would not be included in the policy summary? a. policy exclusions b. cash value c. policy loan interest rates d. general advantages and drawbacks of this type of policy
D
medical part A services do NOT include which of the following: a. post hospital skilled nursing care b. hospitalization c. hospice care d. outpatient hospital treatment
D
If a beneficiary wants to guarantee that benefits paid from principal and interest would be paid for a period of ten years before being exhausted what settlement option should the beneficiary select?
fixed period
if a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?
fixed period
under a 20-pay whole life policy, in order for the policy to pay the death benefit to the beneficiary, the premiums must be paid....
for 20 years or until death, which ever occurs first
As it pertains to group health insurance, COBRA stipulates that..
group coverage must be extended for terminated employees up to a certain period of time at the former employee's expense
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?
the annuitant must be a natural person
Which of the following definitions would make it easier to qualify for total disability benefits?
the more liberal "own occupation"
An HSA holder who is 65 years old decides to use the money in the account for a nonhealth expense. Which of the following is true?
there will be a tax, but not a 20% penalty
when a beneficiary receives payments of both principal and interest portions, which parts are taxable as income?
interest only
All of the following could be considered rebates if offered to the insured in the sale of insurance except: a. an offer of employment b. stocks, securities, or bonds c. an offer to share in commissions generated by the sale d. dividends from a mutual insurer
D the policy specifies that these might be paid
giving a client an inducement to a sale not stated in the policy is an unlawful practice known as what?
rebating
Paul is an agent in Missouri and wants to become an agent in Kansas. The department will waive certain examination requirements, provided that Missouri would waive these same requirements if a Kansas agent sought licensure in Missouri. What term is used to describe this?
reciprocity
If an employer decides to change its life insurance policy to a similar one with a different insurer, which of the following describes the extent that replacement regulations will be exercised?
replacement regulations will not apply to this situation
if an immediate annuity is purchased with the face amount at death, or with the cash value at surrender, this would be considered a...
settlement option
An insured has endured multiple injuries and hospitalizations for an illness during the summer months. Her insurer no longer bill her for medical expenses. What terms best describes the conditions she has met?
stop-loss limit
the longer the elimination period,
the lower the cost of coverage
Which of the following is not a requirement for obtaining a nonresident license in this state? a. submitting the NAIC uniform application b. providing a certification letter from the home state c. paying $30 application fee d. being at least 18 years old
B
the duties of an agent where replacement is involved include:
1. leaving a copy or original of all solicitation material used for presentation to the applicant 2. submitting to the replacement insurer a copy of all soliciting material 3. submitting to the replacing insurer a statement signed by the applicant as to whether or not he has existing life insurance
if an employee has been continuously insured under a group health policy for at least 3 months prior to termination, the employee will be entitled to how many months of continued coverage (maximum)?
18 months
An insurance agent was born in 1978, and became licensed in 2013. What is the closet year by which the agent must complete his continuing education requirements?
2016
a Medicare supplement policy must have a free look policy of at least...
30 days
How long is an open enrollment period for Medicare supplement policies?
6 months
An insured purchased a noncancellable health insurance policy 1 year ago. Which of the following circumstances would NOT be a reason for an insurance company to cancel coverage? a. the insured is in an accident and incurs a large claim b. the insured does not pay the premium c. the insured reaches the maximum age limit specified in the policy d. within 2 years of the application the insurer discovers a misrepresentation
A
Fixed annuities provide all of the following except: a. hedge against inflation b. equal monthly payments for life c. minimum guaranteed rate of interest d. future income payments
A
Which of the following is NOT a characteristic or service of an HMO plan? a. contracting with insurance companies b. providing free annual checkups c. encouraging early treatment d. providing care on an outpatient basis
A
all of the following entities regulate variable life policies except: a. the guarantee association b. federal government c. the SEC d. the insurance department
A
The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is called the
insuring clause
Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured and to whom the benefits will be paid?
insuring clause
premium payments for personally owned disability income policies are...
not tax deductible