Final exam-Virginia life and Health
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 The extended term option uses the policy's cash value to purchase a level term insurance policy in an amount equal to the original policy's face value, for as long a period as the cash value will purchase.
An agent who willfully violates the insurance code may, after a hearing, pay UP TO _________ per violation as a penalty
$5,000
Is an individual violates a cease and desist order issued by the state corporation commission, the individual will be subject to a fine of
$5,000
If an individual violates a cease and desist order issued by the state corporation commission, the individual will be subject to a fine of
$5,000 If an individual violates a cases and desist order issued by the SCC, the individual will be subject to a find of $5,000
An independent agent may
-represent several insurers
Medicare will cover a maximum of how many days per benefit period in a skilled nursing facility?
100 days
_____________ is the attempt made by an agent to intimidate or use force
coercion
Periodic health claim payments MUST be made at least
monthly
A life insurance policy loan in Virginia cannot exceed an interest rate of
8%
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? 0% 25% 50% 100%
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? 0% 50% 75% 100%
100%
The health insurance premiums paid for by each partner in a partnership is considered to be
100% tax deductible In a business partnership, each individual's health insurance premiums are 100% tax deductible.
COBRA extends coverage for a surviving spouse but at a rate not more than _____ of the group premium.
102%
A license who must complete continuing education as a requirement for license renewal must do so every ______ year(s).
2 years
In Virginia, once a life insurance policy has been in force for ______ year(s), it becomes incontestable.
2 years
Virginia requires that an agent must complete___ hours of continuing education on the subject of ethics every reporting.
3 hours
An insurance company or agent must respond within_____ days to an insured's request to access personal information collected on him/her by the insurer.
30 days
In Virginia, an insurer must file a written notice of appointment with the state corporation commission within
30 days of the first insurance application submitted by the licensee
An agent has received the first commission paid on a Medicare supplement policy. Renewal commissions must then be provided for at least ______ years after the first year.
5
An agent has received the first year commission paid on a Medicare supplement policy Renewal commissions must then be provided for at least _____ years after the first year.
5 years
What is the MAXIMUM number of employees an employer may have for qualified Medical savings account?
50 full-time employees
In a long-term care policy issued in Virginia, any provision limiting preexisting conditions may not exceed
6 months
An insured is must furnish written proof of loss to the health insurer within______ days of the occurrence of the loss.
90days
Which of the following would NOT be appropriate for an immediate annuity?
A parent saving for a child's college
A group health certificate for coverage issued in Virginia MUST contain a(n)
A summary of policy features and benefits
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
disability income insurance normally excludes coverage for disabilities that arise from
Active duty military
Which of the following statements accurately describe the "time limit on certain defense"?
After a stated period of time, claims cannot be denied due to material misrepresentation on the application
Which of these is NOT considered advertising?
An AM Best company rating
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 levels off for the remainder of the contract
An applicant submits a life insurance application where an investigative consumer report is used in the underwriting process. Which of these statements is true?
Applicant has a right to receive a copy of the report
An applicant submits an accident and health insurance application where an investigative consumer report is used in the underwriting process. Which of these statements is true?
Applicant has a right to receive a copy of the report
When does a family accident and health policy's coverage for a newborn child begin?
At the moment of birth
Which statement regarding the cash value of a whole life insurance policy correct?
Available to the policyowner when policy has been surrounded
A domestic insurance company in Virginia MUST
Be formed under Virginia insurance laws
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? Premium will be refunded with interest and no death benefit paid Premium received by insurer is considered to be unearned Proceeds are prorated to 1/12th of the full amount Beneficiary receives $50,000 income tax-free
Beneficiary receives $50,000 income tax-free
Which of these statements regarding major expense insurance is NOT true?
Benefits are paid on a capitation basis Benefits are NOT provided on a capitation basis with a major medical expense policy.
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 may apply?
Benefits can be increased in the event of a covered claim
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
In a disability buy-sell argument, the policies funding the agreement are owned by the
Business entity
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
Which of the following provisions allows an insured or the insurer to terminate the policy
Cancelable provision
Which statement regarding the waiver of premium rider is accurate?
Cash payment is not directly provided to the policyowner
Which of the following statements is true regarding accident and health insurance claims that reimburse on an indemnity basis?
Claims can be sent directly to the insured
All of these are considered to be a violation of the federal fraud and false statements act EXCEPT
Claims reimbursement
The principal source of information concerning an applicant's identity, age, and marital status is found in the
Completed application
An accident and health insurance policy's premium requirements are set forth in which of the following provisions?
Consideration clause The Consideration clause sets forth an accident and health insurance policy's premium requirements.
AI 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
Viatical Settlement proceeds may be subject to the claims of
Creditors
In what way is a life insurance policy affected by an accelerated benefits payment?
Decreased the death benefits
What effect does interest income have upon insurance premium?
Decreases premium
Which of these is typically regarding as a major treatment in an indemnity dental plan?
Dentures
Which of these is NOT an unfair claims settlement practice?
Denying unsubstantiated claims on a timely basis
Which of these is NOT an underwriting responsibility of a life insurance agent
Determining the final rate classification
Which type of group plan is excluded from HIPAA rules?
Disability Income
A qualified profit-sharing plan is designed to
Distribute a portion of company earnings to its employees
For purposes of disability income insurance, earned income would include all of the following EXCEPT
Dividends (Salary, commissions, bonus)
disability income policies provide protection for which of the following?
Economic death
Under which circumstance may an insurer discontinue a small employer group medical plan?
Employer fails to pay the premium for it to the end of the grease period
Christopher is issued an insurance policy that contains an attached agreement which alters the terms of the policy. This attached agreement is called a(n)
Endorsement- An endorsement is a written form attached to an insurance policy that alters the policy's coverage, terms, or conditions. Sometimes called a rider.
Which of these is NOT considered a type of limited payment whole life insurance?
Endowment at age 70
Which of the following health provisions requires that the application becomes part of the policy?
Entire contract clause
When an applicant applies for a large amount of life insurance coverage, which of the following would likely NOT be an underwriting requirement? Consumer report Eye examination Urine sample Blood sample
Eye examination
Where dose the primary funding for medical part A come from?
Federal payroll and self employment taxes
Major Medical policies are typically characterized by which of the following?
Flat deductible
What are premium 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
A(n)________ insurance company conducts business in a state outside the one in which it is domiciled.
Foreign
Which life insurance policy provision allows a policyowner to cancel the policy and receive a full refund within a limited time period after policy delivery?
Free-look period
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
Insurable inter in one's own life is legally considered as
Generally unlimited
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
According the the affordable care act (ACA), insurers can no longer deny health coverage due to pre-existing conditions unless that plan is a(n)
Grandfathered plan
A long-term care policy in Virginia must be issued on which of the following basis?
Guaranteed renewable
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 life insurance clause prohibits an insurance company from questioning the validity of the contract after a stated period of time has passed?
Incontestable clause
Who is protected with the "other insurance with this insurance" provision?
Insurance company
Who must sign a rider attached to a health insurance policy in order for it to be valid?
Insured and producer To be valid, a rider attached to a health insurance policy must be signed by the insured and the producer.
Which health policy clause specifies the amount of benefits to be paid?
Insuring- In an Accident & Health policy, the insuring clause states the amount of benefits to be paid.
Which of these statements is NOT true regarding a cash value loan against a life insurance policy?
Interest payments made by policyowner are deductible
In regards to health insurance, what is meant by the term "primary policy"?
It is the policy that will pay up to its limit before any other policy pays
In regards to health insurance, what is meant by the term "primary policy"?
It is the policy that will pay up to its limit before any other policy pays.
How much is normally paid to a policyowner in a life (viatical) settlement?
Less than the death benefit
Which of these is NOT relevant when determining the amount of personal life insurance needed?
Local unemployment rate
Each of the following will trigger a benefit under the presumptive disability provisions, EXCEPT
Loss of any one limb
Employees generally receive Worker's Compensation benefits for
Lost wages and medical expenses due to a occupational accident
Defamation can be best defined as
Making a statement that is false or maliciously critical of the financial condition of an insurer
What would be a valid reason for naming a trust as the beneficiary of a life insurance policy as opposed to naming an individual?
Management of proceeds would be provided
An insurable interest in each other's lives may exist in absence of an economic interest when the individual are
Marriage partners
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 The pre-existing conditions exclusion may reduce the insured's benefits because the new policy may not cover the same health conditions.
Which of the following does TRI-CARE provide accident and health coverage to?
Military families
Medical supplement policies in Virginia may contain
Neither waiting periods nor preexisting conditions exclusions
Which of the following is covered by a basic dental indemnity plan?
Non-surgical periodontal treatment
Which of the following health insurance plans charges a premium that cannot be increased?
Noncancelable
Which of these would likely be considered an unfair claims settlement practice?
Offering settlements that are less than the fair value to offset insurer expenses
Which of these is NOT an unfair claims settlement practice?
Offering to settle a claim by arbitration
Which statement best describes a single premium whole whole life policy?
Paid-up policy that offers lifetime protection
When an insurer discovers (during the claim process) that the insured's age was accidentally misstated on the life insurance application, the insurer will likely
Pay an amount preemies we have purchased at the insurance actual age
When an insurer discovers (during the claim process) that the insured's age was accidentally misstated on the life insurance application, the insurer will likely
Pay an amount the premiums would have purchased at the insured's actual age
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
These are all accurate statements regarding universal life insurance EXCEPT
Policy loans are not permitted
What happens to a life insurance policy when the policy loan balance exceeds the cash value?
Policy will no longer be in force
The standard provisions of an accident and health insurance policy require that the
Policy, endorsement, and attached papers constitute the "entire contract"
Under which circumstances would inflation protection NOT be included in a long-term policy?
Policyowner declines the coverage in writing
Which typically changes at the re-entry option date found in some term life policies?
Premium
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
A life insurance agent is required to give a disclosure notice about information practices to an applicant or proposed insured
Prior to or at the time of signing the application
Under federal law, which of the following actions may result in a producer becoming imprisoned?
Producer embezzling funds from an insurer
A cease and desist order issued against an agent Suspends the agent's certificate or broker's license Prevents the agent from receiving commissions Prohibits a specific practice listed in the order Terminates the agent's appointment with the insurer
Prohibits a specific practice listed in the order
Group accident and health insurance may be offered by an insurer when the sponsoring group
Provides an employer-employee relationship Insurance companies can offer group accident and health insurance when the sponsoring group provides a relationship such as employer-employee.
An insured is entitled to coverage under a policy that a prudent person would expect it to provide. This principle is called
Reasonable Expectations- Reasonable expectations is a concept that states that the insured is entitled to coverage under a policy that a sensible and prudent person would expect it to provide
Which of the following actions may result in an agent's license being suspended?
Rebating a portion of the commission to the insured
Which of the following is NOT a divided opinion for a life insurance policy?
Receiving the entire policy cash value
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 these is NOT an unfair claims settlement practice?
Refusing to pay persons bringing false or Fraudulet claims
Which of following would prevent a prevent a person from obtaining a Virginia resident agent license?
Residing in a state outside of Virginia
Which of the following would provider a reimbursement of some premiums when a long-term care policy is cancelled?
Return of premium rider
Which is a role of the replacing insurer during a life insurance replacement transaction?
Send notice of the proposed replacement transaction to the existing insurer
Long-term care policies sold in Virginia may NOT exclude coverage for
Senile dementia
Sylvia purchased an annuity for $100,000 from the proceeds of an inheritance. No further payments are permitted and the income stream begins in 15 years. This contract is a(n)
Single Premium Deferred Annuity
License agents in Virginia are authorized to
Solicit, receive, and forward applications to the insurer
Which of the following entities does NOT establish regulations for variable insurance products?
State Attorney General
Which of the following approves continuing education courses for credit in Virginia?
State Continuing Education Board
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
Individual who participate in an HMO plan are called
Subscribers
What determines the full amount of social Security retirement benefits a qualified individual is entitled to receive?
The Primary Insurance Amount (PIA) determines the full amount of retirement benefits for an eligible person.
What would be considered an advantage of pushing term life insurance?
The initial premium is lower compared to an equivalent amount of whole life coverage
Where will a life insurance policy's proceeds be directed to if all the beneficiaries die before the insured?
The insured's estate
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 the Law of Agency, the principal is considered to be
The insurer-According to the Law of Agency, the insurer is considered to be the principal.
What determines how much an annuitant is paid for a variable annuity?
The market value variations of the securities backing it
Taxable income may be the result from all of these modified endowment contract (MEC) transactions EXCEPT For
The policy is surrendered for less than what was paid into it
What happens when a policyowner borrows against the cash value of his life insurance policy?
The policy proceeds would be reduced by the outstanding loan balance
Which of these statements regarding the extended term insurance nonforfeiture Option in a life policy is accurate?
The premium to purchase the coverage comes from the policy's cash value
An insurer MUST charge the same individual life insurance premium for two individuals who share
The same risk class and have equal life expectancy
How does a continuous premium whole life policy differ from a limited payment while 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
When an insured contests the amount of a claim payment by the insurer, he or she has what period of time to bring legal action if necessary?
Three years
What is the primary reason for the state corporation commission's examination of an agent's insurance records?
To determine compliance with state insurance laws and regulations
Why does Virginia law require an insurance agent to examine the existing Medicare supplement policies of a prospective insured?
To determine the suitability of potential changes
Every_____ year(s), an agent's license in Virginia must be renewed
Two
Mentally or physically handicapped dependent children MUST be covered under an individual health insurance policy
Until they become self-supportive
Under what circumstances does an accident and health insurer have the right to request an autopsy?
When not prohibited by state law
When does the producer give a premium receipt for a life insurance application?
When the initial premium has been paid with the application
The conversation option for group term insurance may be be exercised by an employee
With in 31 days of terminated employment
Which of the following is included in the entire contract according to the entire contract provision?
application
When there is a named beneficiary on a life insurance policy, the death benefits
are paid directly to the beneficiary without interference from the insured's creditors
The guarantee of insurability option provides a long-term care policyowner the ability to
buy additional coverage at a later date
What is payable to the policyowner if a whole life policy is surrendered prior to its maturity date?
cash value
An agent who attempts to intimidate is engaging in
coercion
Which of the following reduces the opportunity for over insurance
coordination of benefits provision
According to the needs approach, an emergency reserve fund's primary purpose is to
cover the cost of unexpected expenses
How often must the commission examine each domestic insurance company?
every 5 years
Death proceeds from a life insurance policy are typically included in a deceased insured's gross estate
for federal income tax reasons
The Medical information Bureau consists of members from which group?
insurance companies
The Optionally Renewable provision allows what party to cancel the contract?
insurer
After an insurance application has been originated, the producer normally
is the major personal contact to the insured
When an agent is determining the suitability of an annuity for a client, which of these is NOT usually taken into consideration?
level of education
What type of premiums are associated with individual mortgage protection life insurance policies? Level premiums Flexible premiums Modified premiums Decreasing premiums
level premiums
A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid
mandatory income tax withholding on the transfer amount There is no federal tax withholding involved in a transfer of funds from one qualified plan into another. Rollovers, however, involve a 20% withholding. Once the rollover takes place to the new custodian, the remainder of the distribution is made.
An insurance contract may be voided if a misrepresentation found on the application is determined to be
material". An insurer can void an insurance policy if a misrepresentation on the application is found to be material.
Which of these is NOT used as selection criteria in the underwriting process of a life insurance application?
national origin
Under a long-term care inflation rider, the benefit levels
periodically increase without proof of insurability
Tim is in need of surgery. Before being hospitalized, he is referred to an outpatient clinic for diagnostic tests. What is this an example of?
pre-admission testing
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
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 f an individual health contract is issued on a conditionally renewable basis, the insurer has a right to refuse renewal for specific reasons stated in the contract only.
An insurer will typically assess a back-end load on a deferred annuity that is cancelled during the early contract years. What is this back-end load referred to as?
surrender charge
Misrepresenting pertinent policy provisions relating to coverage after a loss is a(n) A concealment in insurance application An unfair claims settlement practice An unfair discrimination between individuals A violation of the principle of adhesion
unfair claims settlement practice
A health insurer MUST provide a proof of loss form
within 15 days of receipt of the notice of loss
