Final Exam
T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?
$0
K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?
$20,000 death benefit
B has a $100,000 Accidental Death and Dismemberment policy that pays triple indemnity for common carrier death. If B is killed from an accident on a commercial flight, what will the policy pay B's beneficiary?
$300,000
An agent who sells an individual life insurance policy in North Carolina MUST deliver to the policyowner
A Policy Summary and Buyer's Guide
North Carolina insurance law specifically allows the Commissioner to issue a temporary license to which of the following individuals?
A surviving spouse of a deceased agent
Which of the following is NOT included in an annuity contract?
AD&D rider
All of the following statements regarding group health insurance is true EXCEPT
An individual policy is given to each member
Before a Health Policy is issued or delivered, the form, classification or risks, and premium rates MUST be filed with the
Commissioner of Insurance
What is the purpose of a Policy Summary?
It highlights the critical parts of the policy issued
The rules and regulations of the Life and Health Insurance Guaranty Association in North Carolina apply to
Life and Health Policies issued by companies authorized in North Carolina
The health insurance program which is administered by each state and funded by both the federal and state governments is called
Medicaid
Continuation of coverage of a group Hospital, Surgical, and Major Medical Policy MUST include
hospital expenses
The funds used by the Life and Health Insurance Guaranty Association to carry out its purpose are obtained from the
member companies
What is the primary factor that determines the benefits paid under a disability income policy?
wages
The policyholder has how many days to return an Accident/Health Insurance Policy and receive a full refund on premiums?
10
All of the following statements about traditional individual retirement accounts are false EXCEPT
10% penalty is applied to withdrawals before age 59 1/2
Approved premium rates for group health insurance shall be guaranteed by the insurer for an initial period of not LESS than how many months?
12
An insurer must provide an insured with claim forms within __ days after receiving notice of a loss.
15
An insured must notify an insurer of a medical claim within how many days after an accident?
20
J is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value? Life Paid-up at Age 70 20-pay Life Increasing Term to age 65 Straight Life
20 pay life
Under a Group Health Insurance Policy, continuation shall be available only to an employee who has been insured immediately prior to the date of termination for a period of AT LEAST
3 months
According to the Information and Privacy Protection Act, when access to recorded personal information is requested following an adverse underwriting decision, the insurer must make the information available within how many business days?
30
If after satisfactory proof of loss, an insurer fails or refuses to pay death proceeds, the insurer must pay interest on the proceeds after how many days?
30
AT LEAST how many days before the effective date of a rate increase must an insurer provide written notice to individual accident and health policyowners?
30 days
An insured pays premiums on an annual basis for an individual health insurance policy. What is the MINIMUM number of days for the Grace Period provision?
31
V is insured under an individual Disability Income policy with a 30-day Elimination period. On July 1, he is involved in an accident and temporarily disabled. He returns to work on December 1. How many months of benefit are payable?
4 months
If a health insurance claim is not promptly paid, legal action may be taken against the insurer after
60 days from the date proof of loss is furnished
P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?
Accidental Death and Dismemberment clause
S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made?
Automatic Policy Loan
Defamation is BEST described as publishing or circulating which of the following types of information?
Brochures falsely criticizing the financial condition of an insurance company
G is an accountant who has ten employees and is concerned about how the business would survive financially if G became disabled. The type of policy which BEST addresses this concern is
Business Overhead Expense
Which statement about a whole life policy is correct?
Cash value may be borrowed against
If its employees share in the cost of insurance, what type of group life insurance plan would a corporation have?
Contributory
When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?
Conversion provision
Company Z has a Cross Purchase Buy-Sell Agreement in place among its three founding partners. If the agreement is funded with individual life insurance, what would it require?
Each partner must own a policy on the other partners
M becomes disabled and is unable to work for six months. M dies soon after from complications arising from this disability. M has a Disability Income policy that pays $2,000 a month. Which of the following statements BEST describes what is owed to her estate?
Earned, but unpaid benefits
The federal income tax treatment of employer-provided group Medical Expense insurance can be accurately described as
Employee's premiums paid by the employer is tax-deductible to the employer as a business expenditure
In a life insurance policy, which feature states that the policy will not cover certain risks?
Exclusion
What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years?
Family Maintenance Policy
With Accidental Death and Dismemberment policies, what is the purpose of the Grace Period?
Gives the policyowner additional time to pay overdue premiums
A vacancy that occurs during the North Carolina Commissioner of Insurance's term of office MUST be filled by the
Governor
Which of the following requires that an applicant for an individual Health Policy be notified of an investigation into his personal character, general reputation, and mode of living?
Insurance Information and Privacy Protection Act
What is being delivered during a policy delivery?
Insurance contract to the proposed insured
T was treated for an ailment 2 months prior to applying for a health insurance policy. This condition was noted on the application and the policy was issued shortly afterwards.How will the insurer likely consider this condition?
Insurer will likely treat as a pre-existing condition which may not be covered for one year
Variable annuities may invest premiums in each of the following EXCEPT
Insurer's corporate business account
Comprehensive Major Medical policies usually combine
Major Medical with Basic Hospital/Surgical coverage
When an existing life insurance policy is being reissued with a reduction in cash value, the agent must sign the
Notice Regarding Replacement of Life Insurance or Annuity
A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision?
Payor provision
Which is true concerning a Variable Universal Life policy?
Policyowner controls where the investment will go and selects the amount of the premium payment
A Medical Information Report (MIB) report may disclose which of the following
Prior use of marjuana
K is the insured and P is the sole beneficiary on a life insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true?
Proceeds will be payable to K's estate if P dies within a specified time
A Disability Income policyowner suffers a disability which was due to the same cause as a previous disability. Both disabilities occurred within a five-month period. The insurer may cover the second disability without a new elimination period under the
Recurrent Disability provision
D is an architect receiving Disability Income benefits who is not able to return to work full time, but can work on a part-time basis. Which of these features would allow D to continue receiving benefits?
Residual Benefit clause
Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take?
Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company
The insuring clause
States the scope and limits of the coverage
What does a Guaranteed Insurability rider provide a Disability Income policyowner?
The ability to periodically increase the amount of coverage without evidence of insurability
Which of the following statements regarding a Tax Sheltered Annuity (TSA) is INCORRECT?
The income from the TSA is received income tax-free
J, an Accidental Death and Dismemberment (AD&D) policy holder, dies after injuries sustained in an accident. J's age as stated on the application five years ago was found to be understated by ten years. Which of the following actions will the insurance company take?
The insurer will adjust the benefit to what the premiums paid would have purchased at the insured's actual age
Which of the following statements BEST defines usual, customary, and reasonable (UCR) charges?
The maximum amount considered eligible for reimbursement by an insurance company under a health plan
W gave W's age as 50 when W purchased a Life policy. At the time of W's death seven years later, the company discovered W's true age at issue had been 59. What would the normal procedure be under the misstatement of age provision in regard to the payment of the death claim?
The proceeds would be reduced based on whatever the premium would have been if purchased at age 59
Which of the following statements is true about most Blue Cross/Blue Shield organizations?
They are nonprofit organizations
Which of the following BEST describes how pre-admission certifications are used?
Used to prevent nonessential medical costs
A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as
Variable Life
A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?
Waiver of Premium
All students attending a large university could be covered by
a blanket policy
According to the Affordable Care Act (ACA), a dependent child's eligibility status is determined by
age
One of the stated purposes of the Life and Health Insurance Guaranty Association is to
assist in the prevention of insurer insolvencies
Variable Whole Life Insurance can be described as
both an insurance and securities product
The following acts are examples of unfair methods of competition and deceptive practices in the business of insurance EXCEPT the use of
comparisons showing that a policy has higher benefits
Circulation of any oral or written statement or any pamphlet, circular, article, or literature that is false or maliciously critical of or derogatory to the financial condition of an insurer is known as
defamation
Medicare Part A and Part B do NOT pay for
dental
Insurers organized under the laws of North Carolina are called
domestic companies
Non-occupational disability coverage is designed for
employees who suffer non-work related disabilities, since work-related disabilities are covered by Workers' Compensation
The purpose of the Insurance Guaranty Fund is to
ensure that claims filed against insolvent insurance companies will be paid
Which of the following policy provisions prohibits an insurance company from incorporating external documents into an insurance policy?
entire contract
When L applies for a Health Insurance Policy, L unintentionally fails to list a previous visit to a cardiologist. If the insurance company contests the policy, it MUST do so within 2 years
from the date of issue
An insurance company MUST clearly specify questions designed to obtain information solely for marketing research
in any insurance transaction
The Commissioner does NOT have the power to
incarcerate an agent
When determining the monthly benefit amount for a Disability Income policy, the factor that limits the amount a prospective insured may purchase is
income
Information obtained from a phone conversation to the proposed insured can be found in which of these reports?
inspection report
When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have
insurable interest in the proposed insured
The Insurance Information and Privacy Protection Act is designed to limit or direct the information collection activities of all of the following EXCEPT
insurance regulators
An insurance company normally has 2 years to contest information provided on an accident and health application. This 2 year period begins on the date that the
insurer dates the policy
Which of these types of coverage is best described as a short term medical policy?
interim coverage
The phrase "This policy will only pay for a semi-private room" is an example of a(n)
internal limit
What type of life policy covers 2 lives and pays the face amount after the first one dies?
joint life
Which of these is an element of a Single Premium annuity?
lump sum payment
Every Group Health Policy providing benefits for chemical dependency treatments must include, for the life of the contract, a
minimum benefit of $16,000
The Notice of Claims provision requires a policyowner to
notify an insurer of a claim within a specified time
Deductibles are used in health policies to lower
overuse of medical services
Whole Life insurance policies are contractually guaranteed to provide each of the following EXCEPT
partial withdrawal features beyond a surrender charge period
If, at the time of an insured's death, the insurance company discovers that the insured's age was misstated on the application for life insurance, the company will most likely
pay the policy proceeds in the amount the premiums would have purchased at the insured's actual age
How does group insurance differ from individual insurance?
premiums are lower
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?
refused
Which of the following terms is defined as any transaction in which new life insurance or a new annuity is to be purchased and existing life insurance or annuity is to be terminated or discontinued?
replacement
All of the following actions are considered rebating EXCEPT
sharing commissions with other licensed and appointed agents
The premiums paid by an employer for his employee's group life insurance are usually considered to be
tax-deductible to the employer
What kind of life insurance product covers children under their parent's policy?
term rider
Which of the following statements is correct regarding an employer/employee group health plan?
the employer receives a master policy and the employees receive certificates
The Consideration clause of an insurance contract includes
the schedule and amount of premium payments