Final Exam - Oklahoma Life and Health

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 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

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

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%

A survivorship life insurance policy usually covers how many lives?

2

A life insurance policy becomes incontestable after it has been in force for

2 years

The licensing period for a producer's license is a

2-year period

An insured must notify an insurer of a medical claim within how many days after an accident?

20

When a life insurance or annuity replacement policy is sold, the policy owner has a right to return the policy for a full refund of premium within

20 days

Under an Unfair Claims Settlement Practices Act, an insurer CANNOT request a refund of an overpayment paid to a claimant after

24 months

How long must a life insurance policy be in effect before the policyowner may use the nonforfeiture provision?

3 years

Following military service, an insured must submit a request for reinstatement to a private health insurer no later than how many days following the deactivation?

30

Group and individual health insurance policies that provide coverage to women must cover annual mammography screenings for women aged:

40 and older

Social Security disability income requirements state that in order to become fully insured on a permanent basis, you must have worked in a covered occupation for

40 quarters

The Oklahoma Insurance Commissioner is REQUIRED to examine domestic insurers AT LEAST every

5 years

At what age do most people become eligible for Medicare?

65

Which of the following is NOT a qualification to be licensed as a producer or adjuster?

A high school diploma

Which of the following is NOT covered by a comprehensive long-term care policy?

Acute Care

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 HMOs?

An HMO combines medical care delivery and funding in one organization

Which type of policy can group term life insurance normally be converted to?

An individual permanent life insurance policy

Which of the following is considered to be a prosthodontic dental procedure?

Bridgework

A policyowner suffers a covered accident and health insurance loss on June 30 and submits the proof of loss to the insurer July 10. If the policyowner cancelled the coverage on July 2, how will the insurance company handle the claim?

Claim must be paid after proof of loss is received

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

Conditional Recepit

Each of the following is required of continuing education in the State of Oklahoma EXCEPT

Continuing education is NOT required for a producer's first renewal

Each of the following of required for continuing education in the State of Oklahoma EXCEPT

Continuing education is NOT required for a producer's first renewal

Which statement is true about a permanent disability under workers compensation coverage?

Coverage excludes nonoccupational injuries

An organization that requires healthcare services to be provided by a network of physicians and hospitals is known as a(n)

HMO

Which of the following health insurance provisions requires that the application becomes part of the policy?

Entire Contract clause

A Fraternal Benefit Society has each of the following characteristics EXCEPT

Exists For profit

All of the following are true regarding required immunization benefits for each child listed as a dependent on a health benefit plan EXCEPT:

Immunization benefits may not be subject to a schedule

Who is protected with the "other insurance with this insurer" provision?

Insurance company

James owns a business and purchased a policy that covers the business expense of finding a permanent or temporary employee to replace a disabled one. This type of disability coverage is called

Key employee coverage

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

Less than the policy's face amount

Which of these is NOT a common life insurance nonforfeiture option?

Life income annuity

Custodial care is normally covered under

Long-term care insurance

Each of the following will trigger a benefit under the presumptive disability provision, EXCEPT

Loss of any one limb

A producer may be disciplined by the Commissioner for which of the following actions?

Misappropriation of premium funds

Which of the following health insurance plans charges a premium that cannot be increased?

Noncancelable

A producer who is licensed in Oklahoma but resident in another state is called a

Nonresident producer

The responsibility for regulating the insurance continuing education requirements and approving insurance continuing education courses belongs to the

Oklahoma Insurance Department

How is the insured protected if a payor benefit rider is attached to the life insurance policy?

Premium payments are waived in the event the premium payor dies or becomes disabled

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

Premium remains the same no matter how many children

When must a producer provide disclosure about information practices to an applicant?

Prior to or at the time of signing the application

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

Insurance producer Karey offers insureds a $250 shopping card if they purchase an insurance product through her. What is this an example of?

Rebating, which is an unfair trade practice

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

Which of the following does a Medicare Advantage enrollee typically pay for?

Small co-pay per visit or per service

Which of the following would be the advantage of replacing an existing health insurance policy with a new one?

The existing policy no longer meets the needs of the insured

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

The insured must be disable for a period of time

Who may terminate coverage under a cancelable health insurance policy?

The insurer or the insured

Which statement concerning a deferred annuity contract is correct?

The owner can be the beneficiary, annuitant, or neither

Which of these statements regarding the extended term insurance nonforfeiture option is accurate?

The premium to purchase the coverage comes from the policy's cash value

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

Trust

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

When not prohibited by state law

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

Emergency health care coverage for Medicare enrollees traveling abroad is

a medicare supplemental additional benefit

Proceeds payable under a life insurance contract to a policyowner in anticipation of death or upon the occurrence of specified life-threatening conditions as defined by the policy are best described as:

accelerated benefits

Disability income insurance normally excludes coverage for disabilities that arise from

active military duty

Medicare Supplement coverage permits an open enrollment period on a guaranteed issue basis upon reaching

age 65

The highest mortality rate belongs to which group?

age 70 males

The absolute assignment of a life insurance policy results in

all incidents of ownership transferred to the assignee

According to Oklahoma law, which of the following must include coverage for equipment, supplies, and related services for the treatment of Type I and Type II diabetes when prescribed by a physician or other licensed health care provider?

all individual or group health contracts or agreements

An example of an alien insurer would be

an insurer formed according to the legal requirements of another country

In what situation could an insurance policy's coverage be modified?

applicant is a substandard risk

A producer may begin to solicit insurance ONLY when

appointed by an insurer

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

Insurers do business in Oklahoma only after a thorough financial review. MOST insurance policies written in Oklahoma are protected by the Guaranty Association established to protect policyowners in the event an admitted company

becomes financially insolvent

Who normally pays the premiums for group credit life insurance?

borrower

A preferred provider plan and an indemnity plan are similar in what way?

both pay on a fee-for-service basis

In a disability buy-sell agreement, the policies funding the agreement are owned by the

business entity

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 considered a limited accident and health plan?

cancer plan

A source of supplemental income for a life insurance policyowner can be derived from the

cash value

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

Which of the these is NOT a true statement of the war exclusion?

civil insurrections apply

Which of the following does NOT help determine group health insurance premiums?

claims experience of the group

An accident and health insurance policy's premium requirements are set forth in which of the following provisions?

consideration clause

Which report contains information regarding an individual's general reputation and credit standing?

consumer report

Interest is credited to a fixed annuity no lower than the

contract guaranteed rate

Any employee insured under a group life insurance plan is normally

covered with term life insurance

Insurance that is designed to pay the balance of a loan if the insured dies before the loan has been repaid in full is

credit life

The requirements for continuing education apply to all of the following EXCEPT

customer service representatives

Health providers are compensated by a preferred provider organization (PPO) for normal dental procedures by what means?

decreased fee schedules

Which of these life insurance policies does NOT contain a cash value provision?

decreasing term life

Making or publishing any oral or written statement that is FALSE or maliciously critical of the financial condition of an insurer, and is calculated to injure any person engaged in the business of insurance is known as

defamation

Which of the following statements BEST describes employer contributions for employer provided health insurance?

employer contributions are deductible

Scott has a life insurance policy in which the dividends are left with the insurance company. This particular policy may be paid up when the cash value plus accumulated dividends

equal the net single premium for the same face amount at the insured's attained age

Which tax cost is normally associated with death?

federal estate tax

Medicare Part A does NOT provide coverage for

first 3 pints of blood

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

A foreign insurance company is defined as one that is

formed under the laws of a state other than Oklahoma

A deliberate lie by an insured to the insurer to obtain a lower premium is an example of

fraud

An applicant for health insurance deliberately lies in order to obtain a lower premium rate. This is an example of

fraud

Insurable interest in one's own life is legally considered as

generally unlimited

An insurance producer would be found guilty of inducing a customer to purchase insurance in all of the following situations EXCEPT

giving the applicant merchandise worth $75 for the purchase of insurance

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

The Oklahoma Insurance Commissioner may place on probation, censure, suspend, revoke, or refuse to issue to an applicant for all of the following causes EXCEPT

having been convicted of a misdemeanor

Tonya has been diagnosed with kidney failure and is covered by group accident and health insurance through her large employer. Which of these accident and health plans will be primary during the months immediately following her diagnosis?

her employer's group accident and health plan

To legally receive a sales commission from an insurance company, an individual MUST

hold the appropriate license

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

All of these are considered features of whole life insurance EXCEPT

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

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

insuring

When compared to a fixed annuity, a variable annuity has what distinguishing feature?

investment risk is assumed by the purchaser

A policyowner has a life insurance policy where she had listed her age on the application as 5 years younger than her actual age. If she dies and the insurer discovers the misstatement of age, how much will the insurance company pay?

less than the face amount

Laura added a children's rider to her life insurance policy. What type of coverage was added?

level term

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

level term for a stated period of time

According to Oklahoma Statute, commissions may be paid to

licensed and duly appointed producers

Straight whole life insurance can be accurately described in all of these statements EXCEPT

policy protection normally expires at age 65

Inpatient psychiatric care is covered under Part A Medicare for 190 days per

lifetime

Employees generally receive workers compensation benefits for

lost wages and medical expenses due to occupational accidents

It is the responsibility of the producer to report all of the following information to the Insurance Commissioner EXCEPT changes of his or her

marital status

Field underwriting by a producer

may result in the disclosure of hazardous activities of the applicant

The Insurance Commissioner may revoke a producer's license for each of the following violations, EXCEPT

misdemeanor conviction

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

modified life

Periodic health claim payments must be made at least

monthly

Medicaid will pay for nursing home expenses under what condition?

must have financial need

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

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

A life insurance policy's contingent beneficiary is the

person who receives the death benefits if there is no named beneficiary

Which of these statements accurately portrays an adjustable life insurance policy?

policy can alternate between forms of term and whole life insurance

A signed good health statement may be requested by a life producer at the time of

policy delivery

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

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

A Guaranteed Renewable provision allows

premiums which can only be increased per rate class

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

producer

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

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

rate of earnings on investments increase

Jim is covered under a disability income policy. He is hurt while engaged in an occupation that is more hazardous than the occupation he specified in the policy. What action will the insurer likely take?

reduce the benefit level

When a lapsed policy's premium has been paid current, it has the potential of being

reinstated

Which of these is NOT considered the responsibility of a producer during the underwriting process?

selecting the final approval date

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

Jonas is covered with disability insurance through his employer. The employer pays 75% of the premium, while Jonas pays the other 25%. What is Jonas' tax liability for any benefits paid from the disability plan?

taxes must be paid on 75% of the benefits received

When a ten year renewable term life insurance policy issued at age 45 is renewed, the premium rate will be the current rate for

ten year term insurance for a person aged 55

A form of an accelerated death benefit is a

terminal illness settlement benefit

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

Which statement concerning adjustable life insurance is accurate?

the face amount and premiums can be changed simultaneously by the policy owner

The insured's consideration given for a health insurance policy is

the first premium payment and the application

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

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

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

the person insured

A life insurance illustration showing future premiums being paid out of nonguaranteed values must disclose that

the policy owner may need to resume premium payments depending on actual results

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

the seven pay test, adjusted for cash value, applies again

How does a continuous premium whole life policy differ from a limited payment whole life policy?

the time period in which premiums will be paid

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

The reason for backdating a policy is

to obtain a premium rate based on an earlier age

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

transfers specific ownership rights to a creditor

A false written or oral statement made by a producer for the purpose of replacing an existing policy to the detriment of the insured is

twisting

When does the producer give a premium receipt for a life insurance application?

when the initial premium has been paid with the application

A health insurer MUST provide a proof of loss form

within 15 days of receipt of the notice of loss