Final Exam - Tennessee Life and Health

T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay? a. The total premiums paid minus any policy loans Nothing $50,000 $100,000

$50,000

A 15-year mortgage is best protected by what kind of life policy? a. Modified whole life 15-year level term 15-year decreasing term Adjustable life

15-year decreasing term

M's insurance company denied a reinstatement application for her lapsed health insurance policy. The company did not notify M of this denial. How many days from the reinstatement application date does the insurance company have to notify M of the denial before the policy will be automatically placed back in force? a. 10 days 30 days 45 days 60 days

45 days

What action can a policyowner take if an application for a bank loan requires collateral? a. Utilize accelerated benefits provision Borrow against policy cash value and use as a down payment Assign policy ownership to the bank Name bank as beneficiary

Assign policy ownership to the bank

M is insured under a basic Hospital/Surgical Expense policy. A physician performs surgery on M. What determines the claim M is eligible for? a. Claim payment is equal to physician's actual charges Claim payment is negotiated between physician and patient Determined by the schedule of benefits from the hospital Determined by the terms of the policy

Determined by the terms of the policy

Two partners own equal shares in a business worth a total of $1,000,000. If they both commit to the purchase of a life insurance policy that will fund a Buy-Sell Agreement, which of the following is TRUE? a. Each partner owns a $1,000,000 policy on their own life Each partner owns a $1,000,000 policy on their partner's life Each partner owns a $500,000 policy on their own life Each partner owns a $500,000 policy on their partner's life

Each partner owns a $500,000 policy on their partner's life

What type of renewability guarantees premium rates and renewability? a. Optionally renewable Conditonally renewable Noncancellable Guaranteed renewable

Noncancellable

Which of the following BEST describes a short-term medical expense policy? a. Conditionally renewable Noncancellable Guaranteed renewable Nonrenewable

Nonrenewable

Which of these statements concerning an individual Disability Income policy is TRUE? a. Premiums are normally tax-deductible Age of the insured determines the amount of the benefits Normally includes an Elimination period Benefits are normally taxable

Normally includes an Elimination period

Which of these characteristics is consistent with a Straight Life policy? a. Owner can adjust both premium and death benefit Premiums are lower for the first five years, increase the sixth year, then levels off for the remaining length of the contract Owner has the option of converting to term insurance Premiums are payable for as long as there is insurance coverage in force

Premiums are payable for as long as there is insurance coverage in force

Which of these life insurance riders allows the applicant to have excess coverage? a. Automatic Premium Loan rider Waiver of Premium rider Guarantee Insurability rider Term rider

Term rider

Which statement regarding the Change of Beneficiary provision is true? a. The beneficiary can only be changed with the consent of the insurer The policyowner can change the beneficiary The insured can change the beneficiary A beneficiary change is subject to underwriting procedures

The policyowner can change the beneficiary

What is the elimination period of an individual disability policy? Time period an insured must wait before coverage begins Time period a disabled person must wait before benefits are paid Time period after the policy issue date in which the provisions are still contestable The point in time when benefits are no longer payable

Time period a disabled person must wait before benefits are paid

Which of the following BEST describes how pre-admission certifications are used? a. Used to assist in underwriting Used to prevent nonessential medical costs Used to minimize hospital lawsuits Used to help process claims

Used to prevent nonessential medical costs

What type of rider would be added to an Accident and Health policy if the policyowner wants to ensure the policy will continue if he/she ever becomes totally disabled? Accidental Death and Dismemberment rider Disability Income rider Guaranteed Insurability rider Waiver of Premium rider

Waiver of Premium rider

A Return of Premium life insurance policy is a. a Nonforfeiture option Whole life and Increasing term interest-sensitive Variable life

Whole life and Increasing term

A statement made by an insured in an insurance application that must be true to the best of one's knowledge and which becomes a part of the contract is known as a. an insuring agreement a mutual assent a warranty a representation

a representation

Which of the following characteristics is CORRECT about Interest Sensitive Whole Life? a. There is a flexible premium payment b. There are no guaranteed minimum interest rates c. Mortality charges do not impact the investment amount d. Interest rates determine cash values

a. There is a flexible premium payment

To be eligible for Social Security disability benefits, an employee must be unable to perform a. any occupation b. his/her current occupation c. any occupation that reflects the employee's education level d. any occupation that the employee is qualified and willing to do

a. any occupation

The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n) a. Term rider b. Accidental Death and Dismemberment rider (AD&D) c. Family rider d. Annuity

b. Accidental Death and Dismemberment rider (AD&D)

The sections of an insurance contract which limit coverage are called a. waivers b. riders c. exclusions d. limitations

c. exclusions

Major Medical policies typically a. pay 100% of covered expenses contain a deductible and coinsurance require use of in-network facilities only do not contain a deductible and coinsurance

contain a deductible and coinsurance

Insurance policies are offered on a "take it or leave it" basis, which make them a. Conditional Contracts b. Aleatory Contracts c. Unilateral Contracts d. Contracts of Adhesion

d. Contracts of Adhesion

Which of these are NOT an example of a Nonforfeiture option? a. Extended Term b. Reduced Paid-up c. Cash Surrender d. Life Income

d. Life Income

K has a health policy that must be renewed by the insurer and the premiums can only be increased if applied to the entire class of insureds. This type of policy is considered a. optionally renewable conditionally renewable guaranteed renewable noncancellable

guaranteed renewable

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 a. medical examination is given producer completes the application insurer dates the policy the first premium is paid

insurer dates the policy

Whole Life insurance policies are contractually guaranteed to provide each of the following EXCEPT a. cash value that will ultimately replace the death benefit nonforfeiture benefit options premiums that remain fixed for the life of the policy partial withdrawal features beyond a surrender charge period

partial withdrawal features beyond a surrender charge period

The benefits under a Disability Buy-Out policy are a. normally paid in installments taxable to the beneficiary payable to the company or another shareholder normally paid after a short elimination period

payable to the company or another shareholder

Qualified Long-Term Care policies may take into consideration an applicant's pre-existing conditions for a maximum of not more than __ month(s) prior to the effective date of coverage. 1 6 12 24

6

In health insurance policies, a waiver of premium provision keeps the coverage in force without premium payments a. Whenever an insured is unable to work During the time an insured is confined in a hospital Following an accidental injury, but not during sickness After an insured has become totally disabled as defined in the policy

After an insured has become totally disabled as defined in the policy

A student pilot can pay regular premium costs for her life insurance policy with the addition of which of the following? a. Guaranteed Insurability rider Aviation exclusion Impairment rider Accidental Death Benefit rider

Aviation exclusion

Which type of policy would pay an employee's salary if the employer was injured in a bicycle accident and out of work for six weeks? a. Key Employer Disability Disability Income Business Overhead Expense Worker's Compensation

Business Overhead Expense

N purchases an annuity by making payments in an amount no less than $100 quarterly. This describes which of the following annuities? a. Installment Immediate Fixed Installment Deferred Flexible Installment Deferred Flexible Premium Immediate

Flexible Installment Deferred

T owns an Accident & Health policy and notifies her insurance company that she has chosen a less hazardous occupation. Under the Change of Occupation provision, which of the following actions may her insurance company take? a. Allow her to take a tax deduction on unearned premiums Increase her policy's coverage amount Decrease her policy's coverage amount Nothing

Increase her policy's coverage amount

Which of these actions should a producer take when submitting an insurance application to an insurer? a. Issue a binding receipt to applicant if no initial premium is submitted Disclose to the applicant the amount of commissions to be earned on this transaction Inform insurer of relevant information not included on the application Arrange for a copy of the Attending Physician Statement (APS) to be sent to the producer

Inform insurer of relevant information not included on the application

In a Key Employee life insurance policy, the third-party owner can be all of the following EXCEPT a. Applicant Owner Payor Insured

Insured

The clause identifying which losses resulting from an accident or sickness are insured by the policy is called the Entire Contract provision Consideration clause Benefit clause Insuring clause

Insuring clause

Which of these statements accurately describes the Waiver of Premium provision in an Accident and Health policy? a. Past due premiums on a lapsed policy are waived and coverage is restored The insured is paid a monthly benefit to keep insurance premiums current in the event of total disability Premiums are waived after the insured has been unemployed for a specified time period Premiums are waived after the insured has been totally disabled for a specified time period

Premiums are waived after the insured has been totally disabled for a specified time period

All of these are considered sources of underwriting information about an applicant EXCEPT a. Inspection Report Credit Report Rating Services Medical Information Bureau

Rating Services

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 a. Residual Disability provision Presumptive Disability provision Recurrent Disability provision Partial Disability provision

Recurrent Disability provision

Equity indexed annuities are invested in which of the following a. Insurer's general account Savings bonds Insured's general account S&P 500

S&P 500

An annuity promises that, if the annuitant dies before receiving payments equal to the correct value, the payments will be continued to a beneficiary until an amount equal to the contract value has been paid. This type of annuity is called a. An installment Refund annuity A Straight Life annuity A Cash Refund annuity A Joint Life annuity

a. An installment Refund annuity

An incomplete life insurance application submitted to an insurer will result in which of these actions? a. Application will be returned to the writing agent Application will be approved with restrictions Application will be pending until a MIB report is sent to the insurer Application will be automatically declined

a. Application will be returned to the writing agent

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? a. Automatic Policy Loan Assignment Grace Period Waiver of Premium

a. Automatic Policy Loan

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? a. Guaranteed insurability rider b. Additional coverage rider c. Paid-up option rider d. Extended insurability rider

a. Guaranteed insurability rider

For which of the following expenses does a Basic Hospital policy pay? Prescription medication Surgical fees Physician's fees

a. Hospital room and board

A young, married teacher has two children and owns a Whole Life policy. If the teacher wants an increasing Death Benefit to protect against inflation, the teacher should select which of the following Dividend Options? a. Paid-Up Additional Insurance Accumulate at Interest Reduced Premiums Cash

a. Paid-Up Additional Insurance

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? a. Residual Benefit clause Waiver Benefit clause Concurrent Benefit clause Guaranteed Benefit clause

a. Residual Benefit clause

The percentage of an individual's Primary Insurance Amount (PIA) determines the benefits paid in which of the following programs? a. Social Security Disability Income Medicare Supplements Medicaid COBRA

a. Social Security Disability Income

An insurer receives proof of loss for an acceptable medical expense claim under an Individual Health Insurance Policy. Under the Time of Payment of Claims provision, the insurer MUST pay the benefits a. immediately within a maximum of three months within a reasonable amount of time at least monthly

a. immediately

Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy? a. increase face amount b. decrease face amount c. increase premium-paying period d. decrease premium payment

a. increase face amount

Pre-hospitalization authorization is considered an example of a. managed care PPO care Medicaid Major Medical insurance

a. managed care

Which of the following is an important underwriting principle of group life insurance? a. Physical examinations are required b. Everyone must be covered in the group c. Employer must pay for the entire premium d. The group must be formed for the purpose of getting affordable insurance

b. Everyone must be covered in the group

Which of the following types of organizations are prepaid group health plans, where members pay in advance for the services of participating physicians and hospitals that have agreements? a. PPO b. HMO c. MEWA d. POS

b. HMO

Comprehensive Major Medical policies usually combine a. Major Medical with Disability Income coverage b. Major Medical with Basic Hospital/Surgical coverage c. Basic Hospital/Surgical with Accidental coverage d. Basic/Hospital/Surgical with Disability Income coverage

b. Major Medical with Basic Hospital/Surgical coverage

K failed to pay a renewal premium within the time granted by the insurer. K then sends in a payment which the insurer subsequently accepts. Which policy provision specifies that coverage may be restored in this situation? a. Free-look b. Reinstatement c. Grace Period d. Consideration

b. Reinstatement

order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and a. a Medical Information Report b. the initial premium c. forward it immediately to the insurer d. Attending Physician Statement

b. the initial premium

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? a. Return of premiums paid b. Cash value plus interest c. $20,000 death benefit d. Face amount plus interest

c. $20,000 death benefit

An insurer must provide an insured with claim forms within __ days after receiving notice of a loss. a. 5 b. 10 c. 15 d. 20

c. 15

Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself? a. Policy Exclusion b. Incontestable c. Entire Contract Provision d. Assignment

c. Entire Contract Provision

P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability? a. P cannot borrow against the policy's cash value while disabled b. P will have to pay income taxes on the amount of premiums waived c. P will still receive declared dividends d. P cannot assign ownership of the policy while premiums are being waived

c. P will still receive declared dividends

All of these statements about Equity Indexed Life Insurance are correct EXCEPT a. Cash value has a minimum rate of accumulation b. If the gain on the index goes beyond the policy's minimum rate of return, the cash value will mirror that of the index c. The premiums can be lowered or raised, based on investment performance d. Tied to an equity index such as the S&P 500

c. The premiums can be lowered or raised, based on investment performance

Which of the following policies requires a producer to leave a buyers guide with the applicant? a. Annuity b. Credit Life c. Universal Life d. Group Life

c. Universal Life

A 66 year-old is covered under a group health plan while employed with a business that has 40 employees. If she injures herself while walking in the park, what coverage would be considered primary? a. Medicaid b. Long-term care c. Medicare d. Her group health plan

d. Her group health plan

What is the initial requirement for an insured to become eligible for benefits under the Waiver of Premium provision? a. Insured must be unemployed b. Insured must be hospitalized c. Insured must demonstrate financial need d. Insured must be under a physician's care

d. Insured must be under a physician's care

Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine a. driving history probability of making timely premium payments if applicant is a tobacco user overall health of the applicant

probability of making timely premium payments

A major medical policy typically provides benefits for surgical expenses only, subject to policy limits contains more limitations than a Basic Hospital, Medical, or Surgical policy contains a 60-day Elimination period for losses due to accident provides benefits for reasonable and necessary medical expenses, subject to policy limits

provides benefits for reasonable and necessary medical expenses, subject to policy limits

A level premium indicates a. the premium is fixed for a period stated in the contract, then becomes variable the premium can only be changed with the consent of the insurer the premium stays level until the policy's renewal date the premium is fixed for the entire duration of the contract

the premium is fixed for the entire duration of the contract