Final Exam

Medicare Part A does NOT provide coverage for

the first 3 pints of blood

Which statement regarding a fixed period settlement option is correct?

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

The Arizona Life and Disability Insurance Guaranty Fund protects an insured in the event of

the insurance insolvency

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

home health care

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 handicapped child is covered under an individual health policy. If continuation of coverage is needed beyond the policy's age limit, which of the following is required?

proof of incapacity and dependency upon reaching the age limit

The main role of accident and health and disability insurance is to

protect against medical care costs and the loss of earning power

The ACA (Affordable Care Act) must ensure a sufficient choice of ___ in the marketplace:

providers

Which of these occurrences could improve an insurer's ability to reduce premiums?

rate of earnings on investments increase

A nonparticipating whole life insurance policy was surrendered for its $20,000 cash value. The total premiums paid had 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 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

Larry has a Major Medical Expense policy for his family with a $1,000 per family/per year deductible and an 80/20 coinsurance provision. If Larry's family files four claims of $400, $800, $100, and $700 in one year, how much will the insurance company pay?

$800

What is the MAXIMUM number of employees an employer may have for qualified medical savings accounts?

50 employees

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

How many hours of initial long-term training must a producer complete before soliciting long-term care products?

8

Telemarketing calls may ONLY be received between the hours of

8-9

The Telemarketing Sales Rule states that ____ is the LATEST time of day that telemarketing calls may be received

9:00 PM

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

An employee quits her job and receives $50,000 from her qualified plan

A single-life annuity only has ONE

Annuitant

Who manages the premiums collected from a group's members for a reciprocal insurer?

Attorney in fact

A consumer who has been recently denied insruance, 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

What is an insurance contract that identifies individuals by relationship to a specific organization?

Group insurance

Which of the following is a syndicate established by a group of insurers to share underwriting duties?

Lloyd's organization

According to the Affordable Care Act (ACA), the proportion of premium revenues spent on clinical serviced and quality improvements is called the

Medical loss ratio

Insurance crimes which affect interstate commerce are prosecuted by the

US Attorney General

How do birthing centers reduce medical costs?

Using certified nurse midwives

Emergency health care coverage for Medicare enrollees traveling abroad is

a Medicare Supplement additional 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

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

In long-term care insurance, what is an "ADL"?

activities of daily living

An insured is covered under a group long-term disability policy. Under this type of policy, the definition of disability based on any occupation typically applies

after two years of disability

A(n) ____ insurer operates in the U.S. but is headquartered outside the U.S.

alien

What qualifies as acceptance of an insurance contract offer?

an issued policy

According to the Pregnancy Discrimination Act of 1978, employers must treat pregnancy in the same manner as

any other medical disability

According to HYPAA regulations, which of the following may reduce a medical plan's pre-existing conditions exclusion?

any period of prior coverage

The Affordable Care Act (ACA) established "exchanges" in order to

assist individuals and small businesses when making their health insurance purchases

Julie is in need of assistance with one or two activities of daily living. She may be eligible for a(n)

assisted living facility

A(n) ____ company is licensed by the Department of Insurance to conduct insurance business in Arizona

authorized

What are reasonable and customary charges for health insurance primarily based on?

average charges within a geographic region

A policyowner pays the first annual premium for a $50,000 life insurance policy and dies one month after the policy effective date. Which of these statements is normally true?

beneficiary receives $50,000 income tax-free

What is the federal income tax liability of a death benefit paid from a health insurance policy to a named beneficiary?

benefits are not taxable

What type of doctor-ordered care assists an individual with performing basic daily activities such as bathing, dressing, and eating?

custodial care

To protect information systems, producers, brokers, and insurance companies must implement and maintain a(n):

cybersecurity policy

What effect does interest income have upon insurance premiums?

decreases premium

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

If a life insurance applicant is shown future premiums are to be paid out of non-guaranteed values, the illustration used in the sale presentation MUST

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

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

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

An annuity contract may be returned for a full refund during the

free look period

What is considered a valid reason for small corporations to insure the lives of its major stockholders?

fund a buy-sell agreement

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

good health statement

A life annuity with period certain is characterized as

guaranteeing benefit payments for a stated minimum number of years

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

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

Enrollees in a staff model HMO normally have which of the following pharmacy options available?

in-house pharmacy

A 55 year old recently received a $30,000 distribution from a previous employer's 401k plan, minus $6,000 withholding. Which federal taxes apply if none of the funds were rolled over?

income taxes plus a 10% penalty tax on $30,000

Which health policy clause specifies the amount of benefits to be paid?

insuring

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

After an insurance application has been originated, the producer noramlly

is the major personal contact to the insured

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

it is available through application to Social Security

Which of these pays an income to two or more annuitants until the death of the last annuitant?

joint and survivor annuity

Which of the following is associated with an immediate annuity?

lack of an accumulation period

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

late enrollment penalty

All of these are duties that a producer may be required to perform when delivering an insurance policy EXCEPT

leave a conditional receipt with client

The death proceeds of a credit life insurance policy are typically paid to the

lender

During the early years of a whole life insurance policy, the cash value will normally be

less than the total premiums paid

After the extended term life nonforfeiture option is chosen, the available insurance will be

level term for a stated period of time

What is another term used for a "pure" life annuity?

life income

Time is confined to a nursing home but doesn't have a terminal illness. Which life insurance rider is designed to help pay for this type of expense?

long-term care benefit rider

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

loses the ability to speak

The owner of a single premium annuity is entitled to do all of these EXCEPT

make additional payments into the annuity

Which of these is a type of private insurance that covers the cost-sharing amounts under medicare?

medicare supplement

Medicare Part A coinsurance payments are covered by

medicare supplement plan A

which of the following may be considered an act of misrepresentation?

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

Which of these actions is considered to be an Unfair Claims Settlement Practice?

misrepresenting pertinent policy provisions relating to coverage after a loss

Which of these is NOT used as selection criteria in the underwriting process of a life insurance application?

national origin

The disability income policy most likely have been issued on a substandard basis is

non-cancelable with a health condition exclusive rider

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

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

notify the insurance company in writing

Which of these plans allow a participant to choose either a network or non-network provider at the time when medical care is needed?

point-of-service

These are all accurate statements regarding universal life insurance EXCEPT

policy loans are not permitted

The standard provisions of an accident and health insurance policy require that the

policy, endorsements, and attached papers constitute the "entire contract"

Which statement regarding the life insurance premium for a children's rider is true?

premium remains the same no matter how many children

Karen is a health maintenance organization (HMO) subscriber. Who provides all of her preventative and routine care?

primary care physician

An insurance producer must keep usual and customary records that pertain to transactions under the producer's license, at their ____

principal place of business

What is the accounting measurement of an 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

An example of endodontic treatment is

root canal

Assets that back the non-guaranteed values of variable life insurance products are held in which account?

separate account set up by the insurer

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

somewhat less

What type of risk involves the potential for loss AND the possibility for gain?

speculative

XYZ Corp gives money to an employee to purchase a life insurance policy and allows the employee to select the beneficiary. What kind of plan is this?

split-dollar

Which of the following entities does NOT establish regulations for variable insurance products?

state attorney general

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

summary of policy features and benefits

Which group is the Do Not Call Registry designed to protect against

telemarketers

Which of the following statements about the installments for a fixed period settlement option in life insurance policies is NOT true?

the periodic payment amount is determined by the beneficiary's age

Under an adjustable life insurance policy, which of the following may NOT be changed without further underwriting?

the person insured

Under which circumstance can an insurance company offer group Health insurance?

the sponsoring group provides an employer-employee relationship

How is an insured's accident and health claim handled by an insurer if it occurs during the policy's grace period?

the unpaid premium may be subtracted from the reimbursement

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

A business becoming incorporated is an example of risk ____.

transfer

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

under $50,000 but increases annually until fully insured

A policyowner with a terminal illness who sells his life insurance policy to a third party is called a

viator

Under what circumstance does an accident and health insurer have the right to request an autopsy?

when not prohibited by state law

Which event triggers a deferred annuity to start making benefit payments to the annuitant?

when the contract is annuitized

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

Pete is covered by a group health insurance plan which covers employees in multiple states. This plan is governed by the laws of which state?

where the master contract was issued

Which life insurance policy would be eligible to include an automatic premium loan provision?

whole life

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

How long is individual medical expense insurance normally written for?

1 year

Medicare will cover a maximum of how many days per benefit period in a skilled nursing facility?

100 days

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%

If an insured legally adopts a baby within ___ month (s) of birth, the maternity coverage for the child's birth is covered

12

Participants of a small group medical plan MUST be given advance notice of at least ___ days prior to the plan's discontinuation

180

The major medical deductible carryover period normally applies to expenses incurred during the last ___ months of the plan year

3

A licensee whose name or address changes must notify the Department of Insurance within ___ days

30

Which type of life insurance policy is best suited for paying off the outstanding balance of a 30-year mortgage in the event of the insured's death?

30-year decreasing term

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

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

The application is part of the annuity contract according to the

entire contract clause

Tina is insured under a business overhead expense insurance policy. Which of the following would be covered if she were to become disabled?

business property rental expense

The guarantee of insurability option provides a long-term care policyowner the ability to

buy additional coverage at a later date

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

The insurer's obligation to pay a claim depends on whether the insured or beneficiary has complied with all policy conditions. This makes the policy a(n)

conditional contract

What must be given to a life insurance applicant when the agent receives an application and the initial premium?

conditional receipt

If dividend option choices are offered on a whole life insurance policy, the policy MUST

contain a statement that dividends are NOT guaranteed

Which of the following is NOT guaranteed in a whole life policy?

dividend scale

An HMO prescription drug plan is generally characterized by

drugs dispensed through participating pharmacies

Disability income policies provide protection for which of the following?

economic death

An agreement is reached when an insurance contract is formed. Which of the following is NOT considered to be an element of an agreement?

equity

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

Employer-paid qualified long-term care insurance premiums are typically

excluded from the employee's gross income

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 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

A life policy that has premiums that are lower than normal during the early years is called

modified life

Insurable interest involves what assumption?

one person benefits from another person's continued life

Which statements is NOT true regarding health insurance policies that provide limited benefits?

only persons under the age of 65 are eligible

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

owner

The _____ is responsible for determining the appropriateness of a Medicare Supplement policy for an applicant.

producer

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

reduce the benefit level

ABC Company is attempting to minimize the severity of potential losses within its company. The company is engaged in risk

reduction

How do benefit payments fluctuate over time in a variable life annuity?

reflects changes in the market value of assets in a separate account

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

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

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, and obtained a good health statement from the insured

In order for a health plan to be an "accountable health plan", who has to approve it?

the director

An insured, age 67, is covered under a disability income policy. What will the insurer require in order for the insured to continue coverage?

the insured must be actively at work for a specified number of hours per week