Final Exam 1
What is the actuarial value of a bronze level health plan?
60
The conversion option for a group term insurance may be exercised by an employee
within 31 days of terminated employment
The following are all elements of a valid contract EXCEPT
written evidence
A licensee or applicant who is ordered into active military service may request that the license or application be placed on inactive status by sending the department a:
written statement
An individual is seeking coverage for nursing home (custodial) care that does NOT require any previous period of hospitalization. Which program offers these specification?
AHCCCS
Which of the following actions would be considered a felony in the State of Arizona?
Attempting to defraud an insurer
Who is protected with the "other insurance with this insurer" provision?
Insurance company
Who must sign a rider attached to a health insurance policy in order for it to be valid?
Insured and producer
Which health policy clause specifies the amount of benefits to be paid?
Insuring
Which of these statements is NOT true regarding a cash value loan against a life insurance policy?
Interest payments made by policyowner are deductible
Andy is in need of health care performed by skilled medical practitioners, but only on an intermittent basis. What level of care will his doctor likely prescribe?
Intermediate care
When compared to a fixed annuity, a variable annuity has what distinguishing feature?
Investment risk is assumed by the purchaser
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
The initial premium for a life insurance policy is typically paid in what way?
It is typically obtained by the producer and forwarded to the insurer
After the initial enrollment period for Medicare Part B has expired, when may an individual purchase again?
January through march of each year
Which life insurance settlement option pays lifetime benefits to two or more people?
Joint and survivor
Which of these is a type of private insurance that covers the cost-sharing amounts under Medicare?
Medicare supplement
Why do insurers require a minimum number of employees participate in a group insurance plan?
Minimize adverse selection
The insured's consideration given for a health insurance policy is
The first premium payment and the application
The interest paid during an annuity's payout period is considered
taxable as ordinary income
An insurable risk requires
that the chance of loss be calculable
In order to contribute to a Health Savings Account (HSA),
the applicant must be enrolled in a High Deductible Health Plan (HDHP)
An individual is insured under a major medical plan with a $1,000,000 lifetime benefit. The plan has a $500 deductible and an 80% coinsurance. If the insured suffers a $50,500 medical expense during the calendar year, what is the remaining lifetime benefit.
$1,000,000
Beth is a surgeon who has an own-occupation disability income policy. She was injured months ago and has been unable to return to her practice. Her monthly benefit from the policy is $15,000. During this time, Beth has been working part-time at a local boutique and receives $2,000 monthly. What is her ongoing monthly benefit while she is unable to perform her surgical duties?
$15,000
Participants of a small group medical plan MUST be given advance notice of at least ____ days prior to the plan's discontinuation.
180
A nonparticipating whole life insurance policy was surrndered for its $20,000 cash value. The total premiums paid has totaled $16,000. What were the federal income tax consequences to the policyowner on receipt of the cash value?
$16,000 was received tax-free and $4,000 as ordinary income
An insured has a $25,000 whole life insurance policy with $6,000 cash value available. Under the extended term nonforfeiture option, what is the amount of insurance available to the insured?
$25,000
An insured files for an accident and health insurance policy claim eight days after the premium due date. The benefit payable is $500 and the overdue premium is $200. Assuming that the policy pays on a first-dollar basis and contains the unpaid premium provision, how much will the insurer pay?
$300
An individual is insured under a major medical plan with a $1,000,000 lifetime benefit. The plan has a $500 deductible and an 80% coinsurance. If the insured suffers a $50,500 medical expense during the calendar year, what is the remaining lifetime benefit?
$960,000
How long is individual medical expense insurance normally written for?
1 year
A "premature" distribution from a modified endowment contract (MEC) incurs a penalty tax of
10%
Starting in 2016, businesses with up to ____ employees will be defined by the ACA as a "small business".
100
John received a one-time distribution of $50,000 from his modified endowment contract (MEC). Prior to that, the contract's cash value was $150,000, the contract investment amount was $100,000, and the death benefit was $500,000. What percentage of the $50,000 distribution was taxable as ordinary income?
100%
What minimum percentage of all eligible employees must participate in a group life insurance plan if the premiums are completely paid for by the employer?
100%
The health insurance premiums paid for by each partner in a partnership is considered to be
100% tax deductible
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 health insurance claim may be contested due to statements made on the applicants for up to ____ year(s) after issuance of the policy.
2
A health insurance claim may be contested due to statements made on the applications for up to ____ year(s) after issuance of the policy.
2
After an annuity has been in force for ____ year(s), it becomes incontestable
2
After an annuity has been in force for ____ year(s), it becomes incontestable.
2
How many employees must an employer have for the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to apply?
20 or more
Mary has a Health Saving Account (HSA). Distributions that she has made for anything other than qualifies medical expenses are considered taxable and subject to a penalty of
20%
Mary has a Health Savings Account (HSA). Distributions that have been made for anything other than qualified medical expenses are considered taxable and subject to a penalty of
20%
What year was the Mental Health Parity and Addiction Equity Act established?
2008
An insurer must keep advertising materials and records for at least how many years?
3 years
A licensee whose name or address changes must notify the Department of Insurance within ____ days.
30
How many days notice does the Affordable Care Act require insurers to give before rescinding coverage?
30
Every producer licensed in Arizona must notify the Director within how many days of any change of residential, business or e-mail address?
30 days
Kate received a group accident and health termination notice. How many days does she have to apply for a converted policy?
31
Newborn children are automatically covered under an existing family medical plan at the moment of birth for a period of at least ____ days.
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
A policyowner decides to surrender the cash value of a whole life insurance policy. The insurer has up to ____ month(s) to delay this payment.
6
An insured MUST wait ____ days to bring legal action against an insurer after written proof of loss has been received by the insurer.
60
The time limit an individual has to "rollover" funds from an IRA or qualifies plan is
60 days
How many hours of initial long-term care training must a producer complete before soliciting long-term care products?
8
Telemarketing calls may only be received between the hours of
8:00 AM and 9:00 PM
Which of the following describes coverage for Medicare Part B coinsurance?
A Medicare Supplement core benefit
Which of the following describes coverage for the Medicare Part B coinsurance?
A Medicare Supplement core benefit
Which of these is NOT an advantage of term life insurance?
A cash benefit will be provided if the insured is alive at the end of the policy period
Which report contains information regarding an individual's general reputation and credit standing?
A consumer report
Which of the following combinations best describe a universal life insurance policy?
A flexible premium deposit fund and a monthly renewable term insurance policy
What is a juvenile life insurance policy?
A life policy that covers the life of a minor
Mike recently lost sight in both eyes. He has a policy that pays a lump sum benefit for this injury. What type of insurance does Mike have?
Accidental death and dismemberment
Mike recently lost sight in both eyes. He has a policy that pays a lump sum benefit for this injury. What type of insurance foes mike have?
Accidental death and dismemberment
In long-term care insurance, what is an "ADL"?
Activities of daily living
Which statement regarding a single premium life insurance policy is NOT correct?
Additional premiums may be required under certain conditions
Which of the following statements accurately describes the "time limit on certain defenses"?
After a stated period of time, claims cannot be denied due to material misrepresentation on the application
What is a major difference between private commercial insurers and HMO's
An HMO combines medical care delivery and funding in one organization
Which of the following is NOT a valid contract exchange?
An annuity exchanged for a life insurance policy
Which of these individuals may NOT obtain a temporary producer license?
An employee of a retired licensed producer
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
During the liquidation phase of an annuity contract, to whom are the income benefits normally payable to?
Annuitant
According to HIPAA regulations, which of the following may reduce a medical plan's pre-existing conditions exclusion?
Any period of prior coverage
In what situation could an insurable policy's coverage be modified?
Applicant is a substandard risk
Which of the following situations would a medical exam NOT be required for an individual health insurance applicant?
Applicant's family members have a history of cancer
Accident and health insurance claim handling is made more convenient to the insured by utilizing
Assignment of benefits
When does a family accident and health policy's coverage for a newborn child begin?
At the moment of birth
In long term care insurance, what is the length of time for which claims will be paid?
Benefit period
In long-term care insurance, what is the length of time for which claims will be paid?
Benefit period
What is the federal income tax liability of a death benefit paid from a health insurance policy to a named beneficiary?
Benefits are non taxable
The Change of Occupation provision in a Disability Income policy states that, in the event the insured changes to a less hazardous occupation, which of the following apply?
Benefits can be increased in the event of a covered claim
Tim had an on-the-job accident and collects benefits from his individual disability income policy. Which factor could possibly reduce these benefits?
Benefits he receives from workers compensation
A preferred provider plan and an indemnity plan are similar in what way?
Both pay on a fee-for-service basis
Which of the following statement is true regarding accident and health insurance claims that reimburse on an indemnity basis?
Claims can be sent directly to the insured
Which of these is NOT considered a Federal punishment for unfair and deceptive insurance practices?
Community service
Chris has a single major medical contract which covers all medical expenses. His plan is considered to be
Comprehensive
What must be given to a life insurance applicant when the agent receives an application and the initial premium?
Conditional receipt
An accident and health insurance policy's premium requirements are set forth in which of the following provisions?
Consideration clause
An insurance application requires an applicant to make a full, accurate disclosure of the risk factor involved. Using this criteria, an insurance policy is considered what type of contract?
Contract of utmost good faith
In what situation would disability income insurance premiums be a deductible expense?
Corporation paying for group disability income coverage for its employees
Which statement is true about a permanent disability under workers compensation coverage?
Coverage excludes nonoccupational injuries
Which of the following is NOT an intended use of an annuity
Create new funds upon the death of a wage-earner
Which of the following disability buy-sell agreements is best suited for businesses with a limited number of partners?
Cross-purchase agreement
Major medical plans typically exclude coverage for which of the following benefits?
Custodial care
What type of doctor-ordered care assists an individual with performing basic daily activities such as bathing, dressing, and eating?
Custodial care
Mike applied for life insurance and was issued a conditional receipt. He is later found to be insurable and is issued a policy. When does his coverage become effective?
Date of issuance of the conditional receipt
What happens to the purchasing power of benefit payments from a fixed life annuity when the cost of living goes up?
Decreases
In what way is a life insurance policy affected by an accelerated benefit payment?
Decreases the death benefit
What kind of life policy typically offers mortgage protection
Decreasing term
Which of these life insurance policies does NOT contain a cash value provision?
Decreasing term life
Which of these is NOT an underwriting responsibility of a life insurance agent?
Determining the final rate classification
An insurer markets its products by soliciting customers by mass media advertising and mail WITHOUT using the services of a producer. Which of these marketing systems does the insurer utilize?
Direct response
An insurer markets its products by soliciting customers by mass media and mail WITHOUT using the services of a producer. Which of these marketing systems does the insurer utilize?
Direct response
Which of these noncontributory group plans would a claim likely result in the payment of federal income taxes?
Disability income
For purposes of disability income insurance, earned income would include all of the following EXCEPT
Dividends
Which life insurance policy option allows the policyowner to have coverage equal to the net benefit of the lapsed policy?
Extended term nonforfeiture option
When an applicant applies for a large amount of life insurance coverage, which of the following would likely NOT be an underwriting requirement?
Eye examination
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
How long does one premium payment cover in a single premium whole life policy?
Full life of the policy
What is considered a valid reason for small corporations to insure the lives of its major stockholders?
Fund a buy-sell agreement
A major medical expense plan typically includes coverage for hospital room and board. Which of the following is normally covered under the category "room and board"?
General nursing care
When the disclosure of an insured's nonpublic information is involved, what is the insurer obligated to do?
Give notice, explain, and allow opting out
An insured may be required to sign which document at policy delivery to ensure there has not been any adverse medical conditions since the time of the application?
God health statement
According to the Affordable Care Act (ACA), insures can no longer dent health coverage due to pre-existing conditions unless that plan is a(n)
Grandfathered plan
What is the name of the rider that provides an additional purchase option in a life insurance policy?
Guaranteed insurability rider
Terry receives long-term physical therapy at her residence. What type of insurance would cover this service?
Home health care
A family counseling benefit is typically offered under which of these coverages?
Hospice care
Which of the following is NOT subject to the promise to pay in an insuring clause?
How the premium is calculated
A characteristic of preferred provider organizations (PPO) is
If service is obtained outside the PPO, benefits are reduced and costs increase
When is it acceptable to charge or receive a fee or service charge in addition to the premium in connection with the transaction of insurance?
If the amount of the fee or service charge is reasonably related to the cost of service
A single premium deferred annuity sometimes contains a bailout feature. Which statement regarding this feature is correct?
If the interest rate falls below a specified level, the surrender charge is waived
XYZ Insurance Company gives direct authority to its producers to sell insurance through an agency contract, but nothing is stated regarding the collection of premiums. Which authority grants the producer the right to collect premiums?
Implied authority
Which of the following financial products creates an instant estate, no matter when the date of death?
Life insurance
What action can an insurer take to discourage malingering and false disability claims?
Limit the amount of benefits an insured can receive from two disability policies with the same insurer
Which of these is NOT relevant when determining the amount of personal life insurance needed?
Local unemployment rates
Respite Care coverage is typically found in a(n)
Long Term Care policy
Custodial care is normally covered under
Long-term car insurance
Each of the following will trigger a benefit under the presumptive disability provision, EXCEPT
Loss of any one limb
Medicare Part A coinsurance payments are covered by
Medicare Supplement Plan A
All of the following are covered under most dental plans EXCEPT for
Mouth cancer
What is the eligibility requirement for Medicare Part B?
Must be eligible for Medicare Part A
Which of the following does NOT meet the requirements of "skilled nursing care"?
Must be provided exclusively in a hospital
Which of these is NOT used as selection criteria in the underwriting process of a life insurance application
National origin
Wyatt is shopping for life insurance and is mainly concerned with the policy's death benefit. Which index should he be looking at when making comparisons?
Net payment cost index
Medicare Supplement insurance requires an individual to be at least how old for open enrollment?
No minimum age
Tim is covered by an accident and health insurance policy that may not be changed in any way by the insurer up to a stated age, as long as the premiums are paid. What type of policy is this?
Noncancelable
All of these statements correctly describe an aleatory contract EXCEPT
Only one party makes any kind of legally enforceable offer
Which statement is NOT true regarding health insurance policies that provide limited benefits?
Only persons under the age of 65 are eligible
Julie is an employee with a group health plan that contains the Mandatory Second Surgical Opinion provision. What is to be expected with this provision in place?
Out-of-pocket expenses are lower when a second surgical opinion is obtained as opposed to having only one
When a deferred annuity is surrendered, who must sign the authorization to do so?
Owner
Straight whole life insurance can be accurately described in all of these statements EXCEPT
Policy protection normally expires at age 65
Straight whole life insurance can be accurately describes in all of these statements EXCEPT
Policy protection normally expires at age 65
What happens to a life insurance policy when the policy loan balance exceeds the cash value?
Policy will not longer be in force
If an insured dies during the grace period without having paid the premium, how will the insurer pay?
Policy's face amount minus any premiums due
The beneficiary of a life insurance policy is normally selected by whom?
Policyowner
Which of the following accurately describes a participating insurance policy?
Policyowner may be entitled to receive dividends
Which of the following outlines the authority given to the producer on behalf of the insurer?
Producer contract
Under Federal Law, which of the following actions may result in a producer becoming imprisoned?
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
A life insurance policy's waiver of premium rider has the ability to
Relieve the insured of premium payments following an initial waiting period after the insured becomes totally disabled
Ron recently purchased an immediate, straight life fixed annuity. His benefit payments will
Remain a constant dollar amount for the duration of the annuity period
According to the IRS, a company may NOT do which of the following in regards to funds in a qualified retirement plan?
Repossess the funds for business purposes
What is the accounting measurement of a insurance company's future obligations to its policyowners?
Reserves
Which of the following would most likely purchase an immediate annuity?
Retiree having a lump sum to invest
What kind of arrangement gives the policyowner the right to change the beneficiary?
Revocable designation
Which term describes the elimination of a hazard?
Risk avoidance
What does a fixed life annuity offer protection against?
Savings depletion due to longevity
If an individual would like to enroll in Medicare or seek public information about Medicare, which federal agency handles this?
Social Security Administration
What type of risk involves the potential for loss AND the possibility for gain?
Speculative
Which one of these is NOT considered to be an element of an insurable risk?
Speculative risk
Which of the following entitles does NOT establish regulations for variable insurance products?
State attorney general
Who regulates an insurer's claim settlement practices?
State insurance departments
In regards to technology and the ACA, which of the following statements is correct?
States which operate with an Exchange must offer an internet-based portal
Which of the following incidents would NOT be covered by an Accidental Death and Dismemberment policy?
Suicide
Which of these annuity contract features is meant to discourage withdrawals and exchanges?
Surrender charges
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
Which factor determines the maximum disability income benefit that can be purchased by an applicant?
The applicant's income
Why might it be beneficial for an employee to purchase private disability income insurance for workplace injuries when he/she is already covered by worker's compensation?
The benefits arising from a worker's compensation claim could be inadequate to replace the los of income
What is payable to the policyowner if a whole life policy is surrendered prior to its maturity date?
The cash value
K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective?
The date the agent delivered the policy, collected the initial premium, an obtained a good health statement from the insured
What would be considered an advantage of purchasing term life insurance?
The initial premium is lower compared to an equivalent amount of whole life coverage
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 these is typical result of a concurrent review?
The length of time spent in the hospital is monitored
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 policy's surrender charges
Darrell has a group long-term disability income policy paid by his employer. Which of these statements is true?
The specified benefit amount is a percentage of his wages
Who is the beneficiary in a life insurance policy?
The stated person or entity who is designated to receive the death proceeds
How long must a producer maintain customer records for an insurance transaction?
Three years
How is a collateral assignment used in a life insurance contract?
Transfers specific ownership rights to a creditor
All of the following are typically covered under dental insurance EXCEPT
Treatment which began before the eligibility date
Which of the following BEST describes a "partial disability"?
Unable to perform one or more job duties
How long does a protection normally extend to under a limited pay whole life policy?
Until age 100
When does interest income for a flexible premium deferred annuity get reported for federal income taxes
Upon receiving distributions from the contract
How do birthing centers reduce medical costs?
Using certified nurse midwives
If a producer replaced 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 surrendering existing policy
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 surrendering existing policy
Which of the following best describes the presumptive disability provision?
Waives the typical total disability requirements
Under what circumstance does an accident and health insurer have the right to request an autopsy
When not prohibited by state law
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
Under which circumstance is the interest rate guaranteed within a market value adjusted annuity?
When the contract has been held for the period specified in the policy
When would evidence of insurability be required for a person already covered with a variable life policy?
When the death benefit is increased
When would evidence of insurability be required for a person already covered with a variable universal life policy?
When the death benefit is increased
When does the producer give a premium receipt for a life insurance application?
When the initial premium has been paid with the application
A policyowner is permitted to take out a policy loan on a whole life policy at what point?
When the policy has a cash value
Emergency health care coverage for Medicare enrollees traveling abroad is
a Medicare Supplement additional benefit
After an applicant reads and signs an insurance application, he/she should be conscious of the fact that
a false statement could lead to loss of coverage
Medicare can be described as
a federal health insurance program for individuals over the age of 65 or permanently disabled
Disability income insurance normally excludes coverage for disabilities that arise from
active military duty
An agent's authority to bind an insurer to an insurance contract may be granted in the
agent's contract and the insurance company's appointment
A(n) ____ insurer operates in the U.S. but is headquartered outside the U.S.
alien
The absolute assignment of a life insurance policy results in
all incidents of ownership transferred to the assignee
An individual who purchases a modified life insurance policy expects
an improvement in future income
A single-life annuity only has ONE
annuitant
A television advertisement features a health insurance product that is endorsed by a specific group. In this advertisement,
any control by the insurer over this group must be disclosed
A client applies for an individual accident and health policy in Arizona. If the insurer collects personal information from any source other than public records or the applicant, a notice of application practices MUST be given to the application no later than the
application date
A trade association group is seeking coverage for group medical benefits. The members of this association
are probably in the same industry
In a qualified retirement plan, the yearly contributions to an employee's account
are restricted to maximum limits set by the IRS
Julie is in need of assistance with one or two activities of daily living. She may be eligible for a(n)
assisted living facility
An insured has been court-ordered to provided a child's health insurance. Upon this order, the insurer must allow the enrollment of this child
at any time
Notice of information practices must be given to a policyholder
at least once a year
If a disability income policy contains a cost-of-living adjustment rider, benefits must typically be increased
at least once per year when benefits begin
A(n) ____ company is licensed by the Department of Insurance to conduct insurance business in Arizona.
authorized
The purpose of the 'No-loss No-gain' provision is to avoid duplication of ____ and ____ when an individual is covered under multiple group health insurance plans:
benefit payments and overinsurance
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
An accident and health insurer has just received written proof of loss from one of its insureds. The insured must now wait 60 days before
bringing legal action against the insurer
The guarantee of insurability option provides a long-term care policyowner the ability to
buy additional coverage at a later date
A Health Reimbursement Arrangement MUST be established
by the employer
A(n) ____ insurer restricts the exposures it writes to those of its owners.
captive
The payment of the first premium, the promise to pay a covered loss, and the agreement to abide by policy condition are all examples of
consideration
The payment of the premium, the promise to pay a covered loss, and the agreement to abide by policy conditions are all examples of
consideration
If dividend option choices are offered on a whole life insurance policy, the policy MUST
contain a statement that dividends are NOT guaranteed
An annuity's accumulation period ma
continue after the purchase payments stop
The policy provision the permits an employee to change from group life coverage to an individual life policy is called the
conversion provision
Al surrenders his life insurance policy for its cash value. The total of premiums paid into the policy minus total dividends received in cash or used to offset premiums is referred to as the
cost basis
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
According to the needs approach, an emergency reserve fund's primary purpose is to
cover the cost of unexpected expenses
Any employee insured under a group life insurance plan is normally
covered with term life insurance
The main purpose of an annuity is to
create a stream of income
To protect information systems, producers, brokers, and insurance companies must implement and maintain a(n):
cybersecurity policy
When a sum of money undergoes capital liquidation, that sum will
decrease in size
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 amount
An employer pays the accident and health insurance premiums for its employees. The premiums paid by the employer are
deductible to the business
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 the premium payments may need to be resumed depending on actual results
Employer-paid qualified long-term care insurance premiums are typically
excluded from the employee's gross income
Death benefits from a life insurance policy are normally considered to be
exempt from federal income tax
A comprehensive major medical health insurance policy contains an Eligible Expenses provision which identifies the types of health care services that are covered. All of the following health care services are typically covered EXCEPT for
experimental and investigative services
Death proceeds from a life insurance policy are typically included in a deceased insured's gross estate
for federal income tax reasons
An annuity contract may be returned for a full refund during the
free look period
Emily is disabled. In order to become eligible for Social Security disability income benefits, she must be
fully insured, according to Social Security
Insurable interest in one's own life is legally considered as
generally unlimited
A life annuity with period certain is characterized as
guaranteeing benefit payments for a stated minimum number of years
A medical fee schedule shows the amount an insurer will pay for a given procedure. This amount is considered to be the
highest amount payable
An annuity which starts paying monthly benefits within a month after issuance is called a(n)
immediate annuity
When group benefits under COBRA have expired, a fully insured group policy can be converted to a(n)
individual health policy
A business may purchase an annuity for all of the following reasons EXCEPT
informally funding a non-qualified deferred compensation plan
When premiums are determined, one factor would be the expenses of the
insurer
Which statement is INCORRECT about the interest-only settlement option in a life insurance policy?
interest on proceeds must be paid by the beneficiary
After an insurance application has been originated, the producer normally
is the major personal contract to the insured
The insurance coverage in a variable life insurance policy may vary based on the value of
its underlying investments
What will Medicare charge if someone doesn't enroll in certain Medicare programs or plans when they're first eligible
late enrollment penalty
What will Medicare charge if someone doesn't enroll in certain Medicare programs or plans when they're first eligible?
late enrollment penalty
During the early years of a whole life insurance policy, the cash value will normally be
less than the total premiums paid
Group life insurance is typically issues as
level term insurance
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
A life policy's spendthrift clause would have not effect if the beneficially is paid the proceeds as a
lump-sum payment
The owner of a single premium deferred annuity is entitled to do all of these EXCEPT
make additional payments into the annuity
The annuitant in a single premium deferred annuity (SPDA)
makes only one premium payment
Greg applies for insurance and makes a false statement on the application that will influence whether or not the insurer will accept the risk. Greg's false statement is called a(n)
material misrepresentation
A producer is proposing that a policyowner replace an existing individual health insurance policy with a new one. Under the new contract, a pre-existing conditions exclusion
may reduce the insured's benefits
Field underwriting by a producer
may result in the disclosure of hazardous activities of the applicant
Periodic health claim payments MUST be made at least
monthly
In Arizona, the Human Immunodeficiency Virus (HIV) consent form
must disclose who will be receiving a copy of the test results
The contractual rights which allow the owner of a deferred annuity to surrender the cash value several years before the annuity date are called
nonforfeiture options
An agent whose actions exceed the authority granted by contract is
not backed by the insurer
Sarah, age 88, is a life annuitant who has lived beyond her life expectancy. The funds for additional benefit payments will be derived primarily from funds that were
not distributed to life annuitants who died before life expectancy
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
Typically, working individuals age 65 or over must be
offered the same Health benefits as the younger employees
Autopsies may be requested by an accident and health insurer
only if not prohibited by state law
A major medical expense policy typically does NOT
pay surgeon fees on a first-dollar benefits
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
Under a long-term care inflation rider, the benefit levels
periodically increase without proof on insurability
A life insurance policy's contingent beneficiary is the
person who receives the death benefits if the primary beneficiary dies before the insured
Which action will trigger a penalty tax on premature distributions from a modified endowment contract (MEC)?
policy loans
The standard provisions of an accident and health insurance policy require that the
policy, endorsements, and attached papers constitute the "entire contract"
Patrick purchased a long-term care policy. He has a health condition for which medical treatment was recommended by a physician within 6 months prior to the policy's effective date. This condition is called a(n)
pre-existing condition
What typically changes at the re-entry option date found in some term life policies?
premium
A Guaranteed Renewable Provision allows
premiums which can only be increased per rate class
In most dental plans, a deductible typically is NOT applied to
preventative and diagnostic services
An insurance producer must keep usual and customary records that pertain to transactions under the producer's license, at their ____ .
principal place of business
A statement MUST be signed by the ____ for any illustrations used in the sale of a life insurance policy.
producer
The ____ is responsible for determining the appropriateness of a Medicare Supplement policy for an applicant.
producer
A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a
profit-sharing plan
A group Medicare Supplement policy was terminated and not replaced by the insurer. In this situation, the insurer MUST
provide an offer of conversion to individual coverage
The ACA (Affordable Care Act) must ensure a sufficient choice of ____ in the marketplace:
providers
Group accident and health insurance may be offered by an insurer when the sponsoring group
provides an employer-employee relationship
The automatic premium loan provision can be accurately described as a
provision that provides a policy loan to pay any premiums by the end of the grace period
During an annuity's liquidation phase, the annuitant normally
receives benefit payments at regular intervals
When a lapsed policy's premium has been paid current, it has the potential of being
reinstated
A long-term care policyowner is replacing existing coverage with a new policy. Replacement regulating require a(n) ____ notice be signed by the application and retained by the replacing insurer.
replacement
A long-term care policyowner is replacing existing coverage with a new policy. Replacement regulations require a(n) ____ notice be signed by the applicant and retained by the replacing insurer.
replacement
Third-party administration has become fairly common in accident and health insurance due to the growth of
self-funding of benefits
A stock insurance company is owned by its
shareholders
Dividends from a stock insurance company are normally sent to
shareholders
Kelly purchases a health insurance policy issued on a conditionally renewable basis. The insurance company has a right to refuse renewal of the policy for
specific reasons stated in the contract
Rick provides a notice of claim to his health insurer. If he does not receive a claim form within 15 days, he may comply with the proof of loss provision by
submitting written proof of loss
A group health certificate for coverage issued in Arizona MUST contain a(n)
summary of policy features and benefits
The premiums paid by an employer for his employee's group life insurance are usually considered to be
tax-deductible to the employer
Qualified long-term care premiums are treated for tax purposes as
tax-deductible to the extent they exceed 7 1/2% AGI
In order for a health plan to be an "accountable health plan", who has to approve it?
the director
Medicare Part A does NOT provide coverage for
the first 3 pints of blood
Under the Law of agency, the principal is considered to be
the insurer
James is covered with health insurance by two different insurers. The "insurance with other insurers" provision in an individual health insurance policy allows an insurer to pay benefits to the insured on a pro-rata basis when
the insurer was not notified prior to the claim that the insured has other health coverage
The Arizona Life and Disability Insurance Guaranty Fund protects an insured in the event of
the insurer's insolvency
Rick recently dies and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The transfer of Rick's IRA account balance to his surviving spouse qualifies for
the marital deduction
Under HIPAA requirements, eligibility for the pre-existing conditions exclusion waiver under new coverage is lost if
there is a break in coverage of more than 33 days
Purchasing insurance is an example of risk
transference
A life insurance policy can usually be contested by the insurer only during the first ____ years of the contract.
two
Mentally or physically handicapped dependent children MUST be covered under an individual health insurance policy
until they become self-supportive
An insurance policy that can also be classified as a securities product is called
variable life
A terminally ill policyowner decides to sell his life insurance policy at a discount to help support his family. This sale is called a(n)
viatical settlement
Medicare supplement insurance that provides a preventative medical care benefit will often cover
yearly physical examinations
Which of the following associated with an immediate annuity?
Lack of an accumulation period
Under HIPAA, medical plan late enrollees may be excluded for pre-existing conditions for a maximum of
18 months
Nonqualified medical expense distributions from a Health Savings Account (HSA) have a tax penalty of
20%
Which situation would not require the insured's consent when a life insurance policy is issued?
A policy is purchased by a parent for a minor child
Which of the following actions is considered to be an unfair trade practice?
A producer who sells insurance to an individual by means of threat
Which benefit is normally payable to a life insurance policyowner when the insured's life expectancy has been severely limited?
Accelerated (living) benefit
Which of the following is NOT an allowable exclusion for long-term care insurance policies?
Care for incurable conditions
Which statement regarding the waiver of premium rider is accurate?
Cash payment is not directly provided to the policyowner
Which of the following is NOT a condition that must be met for an accidental death benefit to be paid?
Cause of death must be from a job-related injury
When does the insured stop making payments under a thirty-payment whole life policy?
At the time of death or 30 years after the policy's inception, whichever comes first
Which of the following actions would be considered a felony in the State of Arizona
Attempting to defraud an insurer
An accident and health insurance policy defines an injury as "bodily injury by accidental means". For an injury to be covered on this policy, what is required?
Both the cause and resultant injury must be accidental
A disabled business owner who has payroll and business expenses paid for has what kind of insurance policy
Business overhead expense
For employees covered in multiple states under a group health plan, jurisdiction rules cannot alter
COBRA laws
Which of the following is considered a Limited accident and health plan?
Cancer plan
For purposes of disability income insurance, earned income would include all of the following except
Dividends
When dealing with long-term care coverage, which of the following are classifies as ADLs?
Eating, bathing, dressing, and mobility
Disability income policies provide protection for which of the following?
Economic death
Who may terminate coverage under a cancelable health insurance policy?
Either the insured or the insurer
An employer has a group life coverage for his employees. How would an employee in poor health be treated in this situation?
Eligible for the same type of coverage as the other employees
When using the needs approach for life insurance planning, a lump sum may be created to provide for all of the following EXCEPT
Employee benefits
Which parties are directly involved in a group accident and health insurance contract?
Employer and insurer
Which of the following statements BEST describes employer contributions for employer provided health insurance?
Employer contributions are deductible
Which of these is NOT considered a type of limited payment whole life insurance?
Endowment at age 70
The application is part of the annuity contract according to the
Entire Contract clause
Which of the following health insurance provisions requires that the application becomes part of the policy?
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 of the policy, briefly describing the policy
The power directly given to a producer in an agency contract are called
Express
Which tax cost is normally associated with death?
Federal estate tax
Which tax is normally associated with an individual's death?
Federal estate tax
Where does the primary funding for Medicare Part A come from?
Federal payroll and self-employment taxes
Which of these may NOT be deducted from premium payments or the cash value of a variable life insurance policy?
Federal premium taxes
Which of these is NOT considered a preventative service in a dental plan?
Fillings
When an annuity contract has been fully surrendered, how will the surrender charges affect the final contract settlement?
Final contract settlement will be reduced
Which life insurance settlement option pays a stated monthly benefit until both principal and interest are exhausted?
Fixed amount installment option
Which settlement option makes minimum guaranteed dollar payments over a stated number of years?
Fixed-Period
Major Medical policies are typically characterized by which of the following
Flat deductible
What are premiums for group credit life insurance based on?
Flat rate unrelated to the borrower's age
The "Use it or Lose it" rule applies to
Flexible Savings Accounts
Rick owns a variable universal life policy and chooses a variable death benefit option. What will typically happen to the death benefit as a result of this selection?
Fluctuate with changes in the cash account
Which of these is NOT a factor during the health insurance underwriting process?
Former residence
Which of the following statements is NOT true concerning the relationship between group health insurance plans and Medicare? (assuming the business has more than 20 employees)
Group health insurance is NOT available for workers over the age of 65
Bryce purchased a disability income policy with a rider that guarantees him the option of purchasing additional amounts of coverage at predetermined times without requiring to provide evidence of insurability. What kind of rider is this?
Guaranteed insurability rider
An organization that requires healthcare services to be provided by a network of physicians and hospitals is known was a(n)
HMO
A condition that increases the possibility of financial loss is called a(n)
Hazard
Dan owns a disability income insurance policy which provides ONLY nonoccupational coverage. Which of the following circumstances would likely NOT be covered under his plan?
He falls and breaks his hip at work
In a staff model HMO, enrollees normally have which of the following pharmacy options available to them?
In-house pharmacy
Which of the following does NOT help determine group health insurance premiums?
Income level of group members
Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?
Income tax and penalty tax
Which life insurance clause prohibits an insurance company from questioning the validity of the contract after a stated period of time has passed?
Incontestable clause
The Medical Information Bureau consists of members from which group?
Insurance companies
A retired couple would like to maximize the income derived from their combined life savings and have it payable until they both die. Which annuity would be their best choice?
Joint and survivor annuity
Which of these pays an income to two or more annuitants until the death of the last annuitant?
Joint and survivor annuity
What type of life insurance policy covers two or more persons and pays the face amount upon the death of the first insured?
Joint life
Which of the following situations would an insurance agent need to guard against liability for professional errors and omissions?
Making a recommendation to a potential insured to replace existing coverage
John bought a deferred annuity on Mary. John amends the contract years later to name Tom as the recipient of the proceeds if Mary dies. Who is the annuitant for this contract?
Mary
Which of the following statements accurately describes the financial impact of total disability?
May be worse than the financial impact of death
Karen is considering replacing her individual accident and health insurance policy with another individual policy. She has had issues in the past with her gall bladder that would be considered a pre-existing condition. How will a pre-existing conditions exclusion affect Karen's new insurance contract?
May reduce her benefits
What is considered a valid reason for an insurer's refusal to pay policy proceeds directly to a minor?
Minors are normally not capable of handling money in a reasonable manner
Which of the following actions may result in a producer's license being suspended?
Misappropriation of premiums
Which of the following may be considered an act of misrepresentation?
Misleading of failing to adequately disclose the title and true nature of a policy offered to a client
Which of these actions 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 policy's first two years of existence?
Misstatement of age
Which of the following health insurance plans charges a premium that cannot be increased?
Noncancelable
Jerome is covered by a disability income policy that does NOT provide benefits for losses occurring as the result of his employment. What kind of coverage is this?
Nonoccupational coverage
If a Medicare Supplement policy is cancelled by the insurer, which of these circumstances does NOT require prior approval by the Arizona Department of Insurance?
Nonpayment of premium
Which of the following is NOT an example of risk retention?
Not doing a business deal after deciding it would be too risky
How are the premiums for an individually-owned disability income policy treated for tax purposes?
Not tax-deductible at all
Which of these is NOT an Unfair Claims Settlement Practice?
Offering to settle a claim by arbitration
If a producer surrenders their license, how long must they wait to re-apply for the same license?
One year
Which type of deductible must be satisfied again for each illness or accident in a major medical plan?
Per-cause
Which of the following can be defined as a cause of a loss?
Peril
Which of the following can be defines as a cause of a loss?
Peril
A health insurance applicant is notifies that a physical examination is required. Which of the following statements is correct?
Physical examinations are performed at the expense of the insurer
Which of these statements accurately portrays an adjustable life insurance policy?
Policy can alternate between forms of term and whole life insurance
These are all accurate statements regarding universal life insurance EXCEPT
Policy loans are not permitted
Which statement regarding an adjustable life insurance policy is NOT true?
Policy loans are not permitted
Which of the following statements BEST describes disability buy-sell insurance policies?
Policy proceeds are typically received income tax-free
A disability income insurance policy was recently issued with a rating. What does this mean?
Policyowner will be charged an additional premium
A disability income insurance policy was recently issues with a rating. What does this mean?
Policyowner will be charged an additional premium
Which of the following guidelines does NOT apply under the pregnancy provision of the Civil Rights Act?
Post-termination extensions of medical benefits must apply equally to pregnancy
Where is the difference between a standard risk and a substandard risk reflected?
Premium charges
Which statement regarding the life insurance premium for a children's rider is true?
Premium remains the same no matter how many children
How are level term policies able to provide level premiums?
Premiums are averaged over the term of the policy
When must a producer provide disclosure about information practices to an applicant?
Prior to or at the time of signing the application
When a producer submits an application that discloses personal information regarding the applicant, who supplies the privacy notice?
Producer
A Medicare Supplement policy is required to do which of the following?
Provide a 20 day free-look period
Which of the following would NOT be a reason for purchasing life insurance on a child's life?
Provide benefits for the child if the parents die
Which of the following could be a future use of the cash value that builds in a recently-purchased whole life insurance policy?
Provide supplemental income in 35 years
Which of the following could be a future use of the value that builds in a recently-purchased while life insurance policy?
Provide supplemental income in 35 years
Which of these statements is NOT a characteristic of the law of large numbers?
Rates can be calculated to compensate for losses
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 is NOT a dividend option for a life insurance policy?
Receiving the entire policy cash value
An insured covered under a Disability Income policy is disabled and collecting benefits for a period of two months. He returns to work and is again disabled from the same cause, whereupon benefits continue to be paid. This is an example of which of the following?
Recurrent disability
Which of the following is NOT a reason the government provides insurance?
Reduce fraudulent claims
What happens to the death benefit of a life insurance policy if the insured elects a partial payment from the accelerated (living) benefit provision?
Reduced
What could be the potential result of taking out a cash value loan under a life insurance policy?
Reduces the amount receivable upon surrender of the contract
Which of the following is NOT included as a hospice benefit under a major medical plan?
Rehabilitation
How can an insurance company minimize exposure to loss?
Reinsuring risks
The inability to perform SOME of the duties of one's own occupation is known as a
Residual disability
What is the insurer responsible for when a producer is acting within the scope authority granted in the agency contract?
Responsible for acts by the producer that are authority only
Switching Life insurance policies without tax consequence is permitted under
Section 1035 rules
Security laws passed by Congress are enforced by which Federal agency?
Security and Exchange Commission
Which of these is NOT considered the responsibility of a producer during the underwriting process?
Selecting the final approval date
Which of these factors does NOT influence an individual's need for life insurance?
Self-maintenance expenses
Which of the following does a Medicare Advantage enrollee typically pay for?
Small co-pay per visit or per service
How does the cost for a survivorship life policy compare to the cost of combining two separate individual life insurance policies?
Survivorship life policy is lower
How are monthly life annuity benefit payments treated under a tax sheltered annuity (TSA)?
Taxed as ordinary income in the year received
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 made?
The account can be rolled into the surviving spouse's IRA
Which statement concerning the Entire Contract provision in an individual accident and health insurance policy is TRUE?
The agent doesn't have the authority to change the policy or waive its provisions
All of these statement concerning group credit life insurance are false EXCEPT
The face amount is based on the outstanding loan balance
All of these statements concerning group credit life insurance are false EXCEPT
The face amount is based on the outstanding loan balance
What is the elimination period of an individual disability policy?
Time period a disabled person must wait before benefits are paid
Which of these is NOT a reason to buy a term life policy?
To accumulate savings
Why were Exchanges implemented by the Affordable Care Act (ACA)?
To create a one-stop market for standardized health insurance plans
Short-term group disability income benefits are
a percentage of weekly earnings up to to a stated maximum
A loss of minimum essential coverage usually counts as a qualifying event that triggers what?
a special enrollment period
A life insurance policy provision that has the ability to reduce the death benefit is called the
accelerated (living) benefit
In regards to health insurance, employees age 65 or older are typically required to
be offered the same group health benefits offered to the younger employees