Greenlight Insurance Licensing Exam
Which of the following would NOT be considered an Activity of Daily Living (ADL) for insurance purposes? a.) Dressing b.) Driving c.) Bathing d.) Transferring
b.) Driving
Who has the authority to make changes to an insurance contract? a.) an agent b.) an executive officer of the company c.) the policyholder d.) an underwriter
b.) an executive officer of the company - Only an executive officer of the company has the authority to make changes to a policy. The policy holder must sign an amendment acknowledging the change.
A notice regarding replacement on Medicare supplement policies must inform the applicant about a free look period of how many days?
30 days
How long is the elimination period in in a long-term care policy?
30 days - most LTC policies contain an elimination period of at least 30 days
Which of the following is NOT an example of a business use of Life Insurance? a.) but-sell funding b.) executive bonuses c.) key person d.) workers compensation
d.) workers compensation - is a benefit payable when a worker is injured by a work related injury, regardless of fault or negligence. It is not considered a business use of insurance.
During which of the following annuity periods does an insured make monthly contributions to the annuity for retirement purposes a.) distribution period b.) pay out period c.) annuity period d.) accumulation period
d.) accumulation period
Which of the following practices would be allowed in regards to life settlements? a.) paying settlement proceeds in monthly installments b.) compensating an unlicensed person for referrals c.) acting as a life settlement broker for a policy in which the broker has personal interest d.) sharing commissions with more than one licensed life settlement brokers
d.) sharing commissions with more than one licensed life settlement brokers
The term "subscriber" is most commonly associated with which type of medical plan?
Managed Care - persons enrolled in managed care plans such as HMOs are typically referred to as subscribers, while participants in most major medical plans are called insureds.
All of the following characteristics are required in order to establish a group health plan for an association EXCEPT a.) the plan must be contributory b.) the group must have been active for at least 2 years c.) group members must hold annual meetings d.) the group must have at least 100 members
a.) the plan must be contributory
HMOs help reduce the cost of health care by providing
Preventive care - the main goal of HMO Act was to reduce the cost of health care by utilizing preventive care. In this way, the HMOs hope to catch disease in the earliest stages, when treatment has the greatest chance for success,
Health plans offered through health insurance exchanges are considered
Qualified - state insurance exchanges offer coverage through qualified health plans (QHPs)
To be eligible for coverage under the Health Insurance Marketplace, an applicant must meet all of the following qualifications EXCEPT a.) have been previously insured by a private insurer b.) live in the United States c.) be a U.S. citizen, national, or be otherwise lawfully present d.) not be currently incarcerated
a.) have been previously I surfed by a private insurer - to qualify for coverage under the Health Insurance Marketplace, the prospective insured must currently live in the United States, be a U.S. citizen, national, or be lawfully present, and cannot currently be incarcerated.
Which of the following is a characteristic of an equity indexed annuity? a.) interest rates are not guaranteed b.) annuitants cannot share in excess interest c.) interest rates are often associated with a stock index d.) it is a variable annuity
c.) interest rates are often associated with a stock index
All of the following characteristics of a group are considered in group underwriting EXCEPT a.) turnover rate b.) purpose of the group c.) medical conditions d.) financial strength
c.) medical conditions - in group insurance evidence of insurability (medical exams) is usually not required, so medical condition of group members would not be a factor
In an HMO policy, one of the main responsibilities of the primary care physician (PCP) as a gatekeeper is to do which of the following? a.) keep regular office hours b.) seek alternative treatments for patients c.) help run the HMO d.) help control costs
d.) help control costs - the PCP, also called the gatekeeper, may be inclined to try alternative treatments before referring patients to more expensive specialists in an effort to keep costs down. The PCPs are salaried employees of the HMO and as such, do not participate in running the business.
A rider attached to a life insurance policy that provide coverage on the insured's family members is called the
Other insured rider - the other insureds rider is useful in providing insurance for more than one family member. The type of insurance offered by this rider is usually term insurance, with the right to convert to permanent insurance.
A surgeon developed a disability and can no longer perform surgeries. However, he is able to teach medicine at the university. He is most likely to collect disability benefits if his disability policy uses which definition of disability?
Own occupation
When replacing a life insurance policy or annuity, a producer has all of the following duties EXCEPT a.) provide a signed Notice Regarding Replacement to the applicant b.) give the applicant copies of all replacement related communications c.) obtain a list of existing life insurance policies and annuities d.) send a written communication to existing insurers advising them of the proposed replacement
d.) send a written communication to existing insurers advising them of the proposed replacement
How long is a temporary license valid in New York?
90 days
In order to reduce the premium to the lowest monthly amount on his disability income policy, the insured could choose
A longer elimination period and a shorter benefit period - the elimination period is similar to the deductible found in many policies. The longer the elimination period (similar to choosing a higher deductible), the lower the premium. By choosing a shorter benefit period, the premium will further be reduced.
A fixed annuity has a guaranteed interest rate of 4%. This means that the annuitant will a.) always receive the current interest rate plus 4% b.) always receive the current interest rate adjusted for inflation c.) never receive more than 4% interest d.) never receive less than 4% interest
d.) never receive less than 4% interest - a fixed annuity sets a minimum interest amount paid into the account. However, it does not mean the annuity will not receive more than the minimum should the earned interests be higher, just that the annuity will never receive less than the stated minimum.
The benefit under a long term care (LTC) policy is usually expressed as a fixed dollar amount per
Day - typically the benefit amount that the insurer will pay is a fixed amount per day of confinement. If this amount is paid regardless of the actual amount that the facility charges, it is called an indemnity benefit.
All of the following statements regarding Medicare Supplement insurance are true EXCEPT a.) there is an open enrollment period of 6 months after the applicant signs up for Medicare Part B b.) Medicare Supplement policies A-N must offer the core benefits c.) Medicare Supplement policies require premiums for additional benefits d.) insurers use the traditional risk rating of preferred, standard, and substandard in underwriting
d.) insurers use the traditional risk rating of preferred, standard, and substandard in underwriting - insurers issuing Medicare Supplement policies may not discriminate on underwriting or pricing based on the applicant's health status, claims history, or medical condition.
Which of the following nonforfeiture options of a life insurance policy allows a policy owner to use the cash value to purchase additional insurance of the same type? a.) one-year term b.) extended term c.) reduced paid-up d.) cash surrender
c.) reduced paid-up : this option under nonforfeiture options allows the policy owner to use the cash value in the policy as a single premium to purchase the same type of insurance (completely paid-up)
Which of the following is true regarding a joint life policy? a.) it is a form of a group life insurance b.) premium is based on the average age of the insureds c.) it is used to offset the liability of the estate tax upon the insured's death d.) it pays a death benefit after the last insured's death
b.) premium is based on the average age of the insureds - Joint Life Policy is structured to insure two or more lives in a single policy. Commonly found as Joint Whole Life policy, it can also be formed using Term Insurance. A Joint Life policy pays a death benefit upon the first death only, and, the premium is based on a joint average age that is between the ages of the insureds.
Which of the following terms defines an illness that first appears while the policy is in force? a.) pre-existing condition b.) sickness c.) disability d.) accidental bodily injury
b.) sickness
Under what circumstances will the Superintendent issue a replacement life settlement broker's license? a.) the broker has less than 3 hours of continuing education to complete b.) the license is active, but has been lost or destroyed c.) the broker has moved since the original license was issued d.) the brokers license has been lapsed for 6 months or less
b.) the license is active, but has been lost or destroyed
In insurance policies, the entire contract is made up of which of the following? a.) the policy and the outline of coverage b.) the policy and a copy of the application, stapled together c.) the policy, and copies of the sales presentations d.) parts 1 and 2 of the application, and the agents report
b.) the policy and a copy of the application, stapled together - answers given in the application may be contested for a specified time period after issue of most policies, thus, the application becomes an important part of the entire contract along with the policy listing specific coverage
A life settlement transaction is an option for all of the following insureds EXCEPT a.) an insured who can no longer afford premiums b.) an insured who has a terminal disease c.) an insured who wants to assign the policy as collateral for a loan d.) an insured who needs money for living expenses
c.) an insured who wants to assign the policy as collateral for a loan
Which of the following standards is used to determine premium rates under the Affordable Care Act (ACA)? a.) alcohol use b.) family composition c.) medical history d.) employment
b.) family composition - health insurers set premium rates off of four permitted standards which include geographic rating area, family composition, age, and tobacco use.
Which of the following riders provides for a waiver of premium when the policy owner and the insured are NOT the same person? a.) waiver of premium b.) waiver of the cost of insurance c.) conditions for payment d.) payor benefit
d.) payor benefit - waives the premium of the owner when the owner becomes disabled and is a person other than the insured.
All of following are common exclusions in health insurance policies EXCEPT a.) Medicare eligible expenses b.) medically necessary cosmetic surgeries c.) injuries incurred at a workplace d.) active military duty
b.) medically necessary cosmetic surgery - elective cosmetic surgery is generally not a covered expense in health insurance. However, if treatment is required to correct a condition due to an accident or a birth defect, or is medically necessary then coverage may be available. All the other conditions listed above will generally be excluded.
Which of the following is NOT an IRS requirement for a qualified retirement plan? a.) the plan must satisfy vesting requirements b.) the plan must favor shareholders c.) the plan must be formally communicated to the employees d.) the plan must be permanent and approved by the IRS
b.) the plan must favor shareholders- in exchange for tax benefits, the IRS requires qualified plans to meet established guidelines. Qualified plans can not discriminate on coverage or benefits in favor of highly compensated employees, shareholders or company officers.
Regular premium payments made to purchase an individual non-qualified annuity are
Nondeductible- qualified plans require approval with applied situations. Non-qualified annuities are not subject to approval, and can be purchased or set up readily, but the premiums are not tax deductible.
An insured under a health insurance policy forgot to pay his premium on time. If he submits a claim during the grace period, what will the insurance company do?
Pay the claim but withhold the amount of the premium due - claims will be paid during the grace period, less the amount of the premium due.
What are the terms used to define the amount of benefit paid in a disability policy that contains an Accidental Death and Dismemberment (AD&D) rider?
Principal sum and capital sum - the principal sum is the greater amount and is normally the amount paid for accidental death. The capital sum is usually a percentage of the principal sum.
Which of the following disability policies will cover business' rent of employee salaries following the owner's disability? a.) short term disability policy b.) business overhead expense policy c.) key person disability policy d.) disability buy-sell policy
b.) business overhead expense policy - are available to small business owners to meet costs of doing business following a disability. These policies do not cover the owner's income lost due to a disability.
After a policy had been in effect for 18 months, a claim was submitted. The insurer determined that the insured had made a material misstatement on the application for coverage. The insurer would probably do which of the following? a.) cancel the policy b.) contest the claim c.) adjust any future premiums
b.) contest the claim
In whole life insurance, which of the following terms describes features such as cash values and loan provisions? a.) accelerated death benefits b.) living benefits c.) nonforfeiture options d.) dividend options
b.) living benefits
Which of the following losses would likely be covered under the Accidental Death rider? a.) heart attack b.) mountain climbing accident c.) death resulting from a long term disability d.) death cause by a head on collision
d.) death cause by a head on collision - accidental death rider pays some multiple of the face amount if death is the result of an accident as defined in the policy, it would not, however, include death that results from any health problem or disability, self-inflicted injuries, war, or dangerous hobbies or avocations.
Which of the following practices would be allowed in regards to life settlements? a.) paying settlement proceeds in monthly installments b.) compensating an unlicensed person for referrals c.) acting as a life settlement broker for a policy in which the broker has personal interest d.) sharing commissions with more than one licensed life settlement brokers
d.) sharing commissions with more than one licensed life settlement brokers - commission sharing is permissible as long as the producer is licensed and in good standing. All other activities listed above are prohibited.
The insurance component of a Universal Life policy is what type of insurance?
Annual Renewable Term - a Universal Life policy is constructed by combining an Annual Renewable Term (ART) policy with a cash value account. However, they are unbundled components.
An individual who decides that since he is going to die someday anyway, and since he will be covered by insurance until then, he might as well drink and smoke. From the underwriter's perspective, this is an example of
Morale hazard
An annuity pays a monthly amount for the remainder of the annuitants life. If death occurs before the principal is exhausted, the remaining amount will be paid to a designated beneficiary. Which payment option has the annuitant selected?
Refund life - a life only or straight life annuity will pay until the recipient dies, at which time payments cease. A fixed period annuity will pay for the time selected when the annuity is purchased. In these cases, if the recipient dies prematurely, the amount paid out may not equal the investment. A refund annuity (life with guaranteed minimum) guarantees the investment amount will be paid.
