Health and life Insurance practice exam

which of the following will NOT be an appropriate use of a deferred annuity? a) accumulating retirement funds b) accumulating funds in an IRA c) Funding a child's college education d) creating an estate

D

Which rider, when attached to a permanent life insurance policy, provides the amount of insurance on every family member? a) Children's rider b) Additional insured rider c) Family term rider d) Spouse rider

C

Hospital indemnity/hospital confinement indemnity policy will provide payments based on a) premiums paid into policy b) medical expense incurred c) number of days confined in a hospital d) types of illness

C

Reduction of premium

allows the policyholder to apply policy dividends towards next year's premium

"preferred" status

insured is in excellent physical condition and employs healthy lifestyles and habits - qualify for lower premiums

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained? a) 3 days b) 5 days c) 10 days d) 14 days

A) investigative consumer reports can't be made unless consumer is advised in writing about the report within 3 days of the date the report was requested

The National Do Not Call Registry was created to regulate a) Insurance solicitors b) telemarketers c) field underwriters d) insurers

B

Traditional IRA contributions are a) Never tax deductible b) partially tax deductible depending on the income level c) tax deductible d) deducted based on the income level

C

Which of the following is NOT covered by Health Maintenance Organizations (HMOs)? a) routine physicals b) well-baby care c) elective services d) Immunizations

C) HMOs emphasize preventive health care as a method of reducing medical expenses by early detection of health problems before they may require more costly treatment

What is the purpose of a fixed-period settlement option? a) settle the insurance company's liability b) provide a guaranteed income for life c) provide a guaranteed amount of money each month d) provide a guaranteed income for a certain amount of time

D) insurer agrees to pay the proceeds in equal installments over a specified period of time

Which of the following is NOT true regarding the Life with Guaranteed minimum annuity a) does not guarantee entire principal amount will be paid up b) life contingency option c) beneficiary receives remainder of principal amount upon annuitant's death d) payments can be made in installments and as a single cash refund

A)

Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid a) for 20 years or until death, whichever occurs first b) until Policyowner reaches age 65 c) for 20 years d) until the Policyowner's age 100, when policy matures

A) if insured dies before all premiums are paid, beneficiary will receive the face amount as a death benefit

In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to a) Policyowner b) insurance company c) contingent beneficiary d) insured's spouse

C

In a group policy, who is issued a certificate of insurance? a) insurance company b) employer c) individual insured d) health care provider

C

Individual has flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase? a) paymentss for life b) nothing c) payments for 15 years d) payments for 20 years

C

Lump Sum

Cash payment settlement option

How long does a temporary producer's license last for the surviving spouse of a deceased producer? a) 1 year b) 90 days c) 150 days d) 180 days

D

A group policy used to provide accident and health coverage on a group of persons being transported by a common carrier, without naming the insured persons individually is called a) blanket policy b) universal policy c) comprehensive policy d) limited benefit policy

A

All of the following are licensing requirements for a business entity, EXCEPT a) having all employees complete continuing education courses once every 2 years b) demonstrating general fitness, competence, and reliability c) maintaining on staff at least 1 person in good standing d) applying for a license in the same lines of authority as held by licensed designees

A

Who makes up the Medical Information Bureau? a) insurers b) hospitals c) former insured d) physicians and paramedics

a) made up of insurers so the companies can compare info they have collected on a potential insured with info other insurers may have discovered

Morale Hazard

applicant that is dishonest in completing an application for insurance or submitting fraudulent claims would be deemed

When group coverage is converted to an individual policy,

insurer will determine the type of coverage, usually permanent insurance Insurer decides, not insured

Joint Life policy covering two lives

least expensive because the premiums are based on average age, and it would pay death benefit only at the first death

Which type of life insurance policy allows Policyowner to pay more or less than the planned premium? a) universal life b) variable life c) decreasing term d) straight whole life

A) Policyowner has flexibility to increase amount of premium going into the policy and to later decrease it again universal = CASH VALUE

An insured misstated her age on an application for an individual health insurance policy. The insurance company found the mistake after the contestable period has expired. The insurance company will take which of the following actions regarding any claim that has been issued? a) adjust the claim benefit to reflect the insured's true age b) deny any claims and cancel the policy c) deny paying a claim based on misrepresentation d) pay full amount of claim becuase the contestable period has ended

A

In a replacement situation, all of the following must be considered EXCEPT a) assets b) benefits c) limitations d) exclusions

A

A rider attached to a life insurance policy that provides coverage on the insured's family members is called a) other-insured rider b) change of insured rider c) juvenile rider d) payor rider

A)

Which of the following factors about the insured determines the amount of disability benefit that the insured will receive? a) income b) gender c) marital status d) age

A)

Which document describes the insured's medical history, including diagnoses and treatments? a) attending physicians statement b) physician's review c) individual medical summary d) comprehensive medical history

A) (APA) best way for underwriter to evaluate an insured medical history

If a business wants to buy a disability income policy on a key employee, which of the following is considered the beneficiary? a) employer b) insurer c) employee d) producer

A) business is the Policyowner and the beneficiary - key person is the insured

All of following are beneficiary designations EXCEPT a) specified b) tertiary c) contingent d) primary

A) contingent includes secondary and tertiary

under a pure life annuity, an income is payable by the company a) only for the life of the annuitant b) until principal and interest are exhausted c) for guaranteed period of time, whether or not annuitant survives to end of that period d) for as long as either annuitant or named beneficiary is alive

A) income payments cease at the annuitants death and there is no refund or payments to survivors also referred to as Life only or Straight life

When benefits are paid directly to insured under health insurance policy, the policy provides benefits on what type of basis? a) reimbursement b) service c) limited d) scheduled

A) insured is responsible to pay provider, policy reimburses the insured for covered expenses

which is true about a spouse term rider? a) rider is usually level term insurance b) coverage is allowed for an unlimited time c) rider is decreasing term insurance d) coverage is allowed up to age 75

A) just like any other insured rider, is usually level term insurance

All of following could own group life insurance EXCEPT a) group needing low-cost life insurance b) group sponsored by employer c) alumni group d) debtor group

A) must be formed for a reason other than purchasing insurance

when insured under life insurance policy died, designated beneficiary received the face amount of policy as well as a refund of all the premiums paid. Which rider is attached? a) return of premium b) cost of living c) decreasing term d) premature death

A) pays beneficiary not only face amount but also the amount that had been paid in premiums

Which of the following is NOT covered under Plan A in Medigap insurance ? a) The Medicare Part A deductible b) Approved hospital costs for 365 additional days after medicare benefits end c) 20% Part B coinsurance amounts for medicare approved services d) first three pints of blood each year

A) provides the core, or basic, benefits established by law (Medicare Supplement Plan A)

If a licensee wants to transact insurance under a different name than that listed on his/her producer's license, which of the following must occur? a) change must be reported to Commissioner b) Change must be reported to the Federal Producer's Directory c) licensee must obtain a new license d) illegal to transact insurance under any name other than the one listed on the license

A) required to notify commissioner in writing prior to use of fictitious name

Under HIPAA, which of the following is INCORRECT regarding eligibility requirements for conversion to an individual policy? a) individual who was previously covered by group health insurance for 6 months is eligible b) individual who has used up COBRA continuation coverage is eligible c) individual who doesn't qualify for medicare may be eligible d) gap of coverage for eligibility is a period of 63 or less days

A) requires at least 18 months

A health insurance policy may cover all of the following risks EXCEPT a) Medical expenses b) war-related injuries c) dental expenses d) loss of income due to disability

B

Advantage of qualified plans to employers is a) taxable contributions b) tax deductible contributions c) tax free earnings d) no lump sum payments

B

The paid-up addition option uses the dividend a) to accumulated additional savings for retirement b) to purchase smaller amount of the same types of insurance as the original policy c) to purchase a one-year term insurance in the amount of the cash value d) to reduce the next year's premium

B

Which of the following best describes a bail-out provision? a) decreases annuity surrender value b) allows owner to surrender annuity without charge c) waives the surrender charge for the annuitants confined to a LTC facility d) allows owner to receive higher interest rate at certain timeframe

B

An applicant wants to buy life insurance policy in which he can count on receiving the same benefits as stated in the contract. Which type should he buy? a) any type of annuity b) Fixed c) Permanent d) Variable

B) Fixed life insurance policies offer a minimum guaranteed or fixed benefits stated in the contract - variable life or annuities are contracts in which the cash values accumulate based upon specific portfolio of stocks without guarantees of performance

If a policy is rated-up, which of the following is true? a) number of benefits increases b) premium increases c) premium decreases d) number of exclusions decreases

B) If applicant is considered to be too much a risk, application can be denied. - if applicant risks are not high enough to decline, two measures can be taken to protect insurer : 1) policy can be rated up : premiums will increase 2) Exclusions added; insurer will not have to cover conditions that make applicant a high risk to insure

Which of following is NOT true regarding the needs approach method of determining the value of an individuals life? a) must be assumed that death of insured will occur immediately b) neet is predicted using number of years until insured's retirement c) coverage is based on the predicted needs of that family d) death of an insured must be premature

B) Needs approach: need is determined by the predicted needs of the family after the premature death of the insured, which must be assumed will happen immediately - allows for benefits to be collected upon insured's death

Another name for a substandard risk classification is a) elevated b) rated c) controlled d) Declined

B) Substandard risk (aka rated) - since policies could be issued with the premium rated-up - resulting in higher premium substandard = higher risk = rated-up = higher premium = "rated"

what license or licenses are required to sell variable annuities? a) no license b) both life insurance license and a securities license c) only a life insurance license d) only a securities license

B) agents are required to have both life insurance license and a securities license to sell variable annuities

if insurer becomes insolvent, which of following would pay benefits to policyholders? a) federal reserve fund b) The Guaranty Association c) the NAIC fund d) The state

B) all admitted insurers must be a member of the insurance guaranty association - in existence to protect policy owners and beneficiaries against losses caused by insolvency of insurance company

If a life policy allows the Policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a a) nonforfeiture option b) guaranteed insurability rider c) Paid-up additions options d) Cost of Living provision

B) allows Policyowner to purchase specific amounts of additional insurance at specific dates or events, without proving continues insurability - rates based upon attained age

Insured has a life insurance policy from a participation company and receives quarterly dividends. He has instructed company to apply the policy dividends to increase the death benefit. The dividend option insured has chosen is calld a) reduction of premiums b) paid-up additions c) one year term purchase d0 accumulation of interest

B) annual dividend acts as a single premium each year to buy additional amounts of insurance, based on the insureds currently attained age

A Universal Life Insurance policy is best describes as a/an a) Flexible Premium Variable Life policy b) Annually Renewable Term policy with a cash value account c) Variable life with a cash value account d) Whole life policy with two premiums : target and minimum

B) has two components: - insurance component and a cash account - insurance component (death protection) of universal life policy is always annual renewable term insurance

Employer contributions made to a qualified plan a) are taxed annually as salary b) are subject to vesting requirements c) may discriminate in favor of highly paid employees d) are after-tax contributions

B) qualified plans MUST have a vesting requirement

The Policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but the principal will be paid to their children when they reach a certain age. Which settlement option should the Policyowner choose? a) Fixed amount option b) Interest only option c) life income with period certain d) Joint and survivor

B)with Interest-only option, insurance company retains the policy proceeds and pays interest on the proceeds to the recipient (beneficiary) at regular intervals

All of the following are true of the Key Person disability income policy EXEPT a) typically written to protect company in event of a key employee becomes disabled and is unable to work b) income may be used to find a replacement for the key employee c) benefits are considered taxable income to the business d) premiums are not deductible to the business

C

Variable whole life insurance is based on what type of premium? a) flexible b) graded c) level fixed d) increasing

C

What is the civil penalty for violating a cease and desist order of the Commissioner? a) $1000 b) $5000 c) $10000 d) $50000

C

When must IRA be completely distributed when beneficiary is not named? a) December 31 of year following owners death b) due date of deceased owners final tax return including extensions c) December 31 of year that contains the 5th anniversary of owners death d) due date of beneficiary tax return including extensions

C

Which is NOT true regarding a Certificate of Authority? a) equivalent to an insurance license b) issues by the state department of insurance c) issued to group insurance participants d) may be necessary for transacting business in a specific state

C

Which of the following entities must approve all continuing education courses in this state? a) the appointing insurer b) State Board of Education c) The Commissioner d) The NAIC

C

Which of the following is an example of a producer's fiduciary duty? a) duty based on all transactions upon the principle of Utmost Good Faith b) Obligation to tell the truth to the best of one's knowledge c) trust that a client places in the producer in regard to handling premiums d) obligation to state every known fact about the policy the producer is selling

C

Which of the following would be the best option that would help the surviving spouse of the insured to put her child through daycare after the insured's death? a) Viatical settlement b) Estate conservation c) Life insurance proceeds d) State education waiver

C

According to the 2001 CSO Table, at what age will the terminal reserved be reached? a) 99 b) 101 c) 120 d) 100

C) 2001 CSO Mortality Table extends to age 120

a 403(b) plan, commonly referred to as TSA, is available to be used by a) postal employees b) self-employed persons c) teachers and not-for-profit organizations d) government workers

C) 403(b) = teachers and non profit Grandpa and his 403(b) issues -- remember

Which of the following is true regarding taxation of dividends in participating policies? a) Dividends are taxable in some life insurance policies and nontaxable in others b) dividends are considered income for tax purposes c) dividends are not taxable d) dividends are taxable only after a certain amount is accumulated annually

C) Dividends = return of unused premium - interest earned on dividends is subject to taxation as ordinary income

which is NOT a goal of risk retention? a) increase control of claim reserving and claim settlements b) fund losses that can't be insured c) minimize insured's level of liability in event of loss d)reduce expenses and improve cash flow

C) Retention usually results from 3 basic desires of the insured : - to reduce expenses and improve cash flow - to increase control of claim reserving and claims settlements - fund losses that can't be insured

Age 30, applicant wants to start insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. Which of the following policies will most likely fit his needs? a) interest-sensitive Whole Life b) decreasing term c) adjustable life d) single premium whole life

C) allow for increases or decreases in face amount or premium, so long as premium is sufficient to pay for the mortality - any increase in face amount requires proof of insurability adjustable = can be modified as changes occur

Client planning to retire. Has accumulation $100000 in retirement annuity, and now wants to select benefit option that will pay the largest monthly amount for as long as she lives. You should recommend a) installment refund b) Joint and survivor c) straight life d) life income with period certain

C) annuity payments cease at death

Which of following determines the interest rates paid to the owner of a fixed annuity? a) investment performance of insured b) statewide predetermined annual interest rate c) insurer's guaranteed minimum rate of interest d) investment performance of the company

C) company is required to pay at least a guaranteed minimum rate of interest to owners in Fixed annuities fixed= guaranteed minimum

which of the following riders would NOT cause the Death Benefit to increase? a) cost of living rider b) accidental death rider c) payor benefit rider d) guaranteed insurability rider

C) does not increase death benefit, it only pays the premium if the payor is disabled or dies

Which of the following best describes an insurance company that has been formed under the laws of this state? a) alien b) foreign c) domestic d) sovereign

C) doing business within the state in which it is incorporated

Why is an equity indexed annuity considered to be a fixed annuity? a) has a fixed rate of return b) not tied to an index like th S&P 500 c) has a guaranteed minimum interest rate d) has modest investment potential

C) fixed annuity = guaranteed minimum interest rate

Which of the following reports will provide the underwriter with info about an insurance applicant's credit? a) inspection report b) agent's report c) any federal report d) consumer report

D

when is the insurability conditional receipt given? a) when insured individual needs to obtain an insurability receipt for tax puposes b) if application is approved before premium is paid c) when premium is paid at time of application d) after application has been approved and premium has been paid

C) insurance coverage becomes effective as of the date of the receipt, provided the application is approved

An employee quits his job and converts his group policy to an individual policy ; the premium for the individual policy will be based on his a) experience rating b) group rating c) insurer's scheduled rate d) attained age

D

If a licensed person is moving to PA, they may become licensed as a resident if they submit a completed application within how many days of establishing residence in PA with proof of licensing from their prior home state? a) 180 b) 30 c) 60 d) 90

D

If taken as a lump sum, life insurance proceeds to beneficiaries are passed a) tax-deductible b) part tax free part taxable c) without interest d) free of federal income taxation

D

In a group prescription drug plan, the insured typically pays what amount of the drug cost? a) none b) full until deductible is met, then nothing for rest of year c) full until deductible is met, then small copay d) copayment

D

The authority granted to an agent through the agent's contract is referred to as a) apparent authority b) implied authority c) absolute authority d) express authority

D

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act? a) $1000 b) $100 per violation c) revocation of licensee D) $2500

D

Who can make a fully deductible contribution to a traditional IRA? a) Anyone: all IRA contributions are fully deductible regardless of income level b) someone making contributions to an educational IRA c) person whose contributions are funded by a return on investment d) individual not covered by an employer-sponserd plan who has earned income

D

in insurance, an offer is usually made when a) insurer approves application and received initial premium b) agent hands policy to the policyholder c) agent explains a policy to potential applicant d) Applicant submits an application to insurer

D

If insurance company makes statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considerd a) misrepresentation b) required disclosure c) legal representation of the Association d) an unfair trade practice

D)

When agent collects the initial premium from the applicant, the agent should issue the applicant a a) statement of good health b) backdated receipt c) warranty d) premium receipt

D) Premium receipt = receipt for paid premium

If a vatical settlement provider transfers ownership of an insurance policy, how Long does the insurer have to inform the insured of the change? a) 30 days b) 60 days c) 90 days d) 20 days

D) 20 days, shortest - inform of different provider ASAP = SHORTEST - less than one month

Which type of hospital policy pays a fixed amount each day that the insured is in the hospital ? a) surgical b) blanket c) medigap d) indemnity

D) Hospital Indemnity policy pays a fixed amount each day insured is hospitalized, unrelated to medical expenses

What types of insurance would be used for a Return of Premium rider? a) level term b) decreasing term c) annually renewable term d) increasing term

D) achieved by using increasing term insurance - when added to whole life policy, provides that at death prior to given age, not only is original face amount payable but also all premiums previously paid are payable to benefit icy

Attending Physician Statement (APS)

used to obtain medical DETAILS about a specific condition which has shown up in the application - insurance company orders info directly from physician, using a signed authorization which was part of the application

Insurability conditional receipt

when the premium is paid at the time of application

Which of the following is correct about Medicare? a) program is divided into 4 parts (A-D) b) part B is available to the insured at no cost c) it is a federal program for welfare recipients d) the program provides complete medical care at no cost

A) Medicare has four parts -Part A covers hospital expenses -Part B covers doctors expenses -Part C allows people to receive all of their health care services through available provider organizations -Part D for prescription drug coverage

If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance info practices has been provided, the report may contain all of the following info EXCEPT the applicants a) Ancestry b) credit history c) habits d) prior insurance

A) The Fair Credit Reporting Act regulates what info may be collected and how it may be used. Consumer reports include written/oral info regarding consumer's credit, character, reputation, and habits collected by a reporting agency from employment records, credit reports, and other public sources

For what reason may a life insurance producer backdate a life insurance policy? a) to avoid an increase in premium rate for the insured b) to meet sales quotas established by the insurer c) to make a policy effective during a period when the agent's appointment was in force d) to shorten the period of contest ability

A) agents may backdate policies up to 6 months in order to obtain a better premium rate for the insured

If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy? a) death benefit will be smaller b) death benefit will be forfeited c) death benefit will be the same as the original face amount d) death benefit will be larger

A) if insured withdraws a portion of the death benefit by the use of this rider, benefit payable at death is reduced by that amount, plus the amount of earnings lost by the insurancee company in interest income

An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy? a) 7 days b) 10 days c) 31 days d) 60 days

B) grace period is 7 days if premium is paid weekly, 10 days if premium is paid monthly, and 31 days for all other modes

Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled? A) Absolute Assignment B) Transfer of Ownership C)Disability Buy-Sell D) Proprietary Transfer

C

Which of the following would qualify as a competent party in an insurance contract? a) applicant is a 12 year old student b) applicant is under the influence of a mind-impairing medication at time of application c) applicant has a prior felony conviction d) applicant is intoxicated at the time of application

C

Which of the following statements regarding Business Overhead Expense policies is NOT true? a) any benefits received are taxable to the business b) leased equipment expenses are covered by the plan c) benefits are usually limited to six months d) premiums paid for BOE are tax-deductible

C) BOE is sold to small business owners for the purpose of reimbursing the policyholder for business overhead expenses during a period of total disability -premiums tax-deductible -benefits received are taxable as income -overhead expenses are covered -salaries and profits of the employer are not protected

When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy? a) it decreases over the term of the policy b) remains the same as the original policy, regardless of any differences in value c) reduced to the amount of what the cash value would buy as a single premium D) is increased when extra premiums are paid

C) In a reduced paid-up policy, original policy's cash value is used as a single premium to pay for a permanent policy with a reduced face amount from the original , hence the name. new policy accumulates in cash value until its maturity or the insured's death

All of the following are features and requirement of the Living Needs Rider EXCEPT a) remainder of the policy proceeds is payable to the beneficiary at the insured's death b) provides funds for medical and nursing home expenses to a terminally ill insured c) diagnosis must indicate that death is expected within 3 years d) usually available at no additional charge

C) The Living Needs Rider provides for the payment of part of the policy death benefit if the insured is diagnosed with a terminal illness that will result in death within 2 years

which of the following ultimately determines the interest rates paid to the owner of a fixed annuity? a) investment performance of the insured b) Statewide predetermined annual interest rate c) Insurer's guaranteed minimum rate of interest d) investment performance of the company

C) With fixed annuities, company is required to pay at least a guaranteed minimum rate of interest to the owners

Which of the following is an example of a producer's fiduciary duty? a) duty to base all transactions upon the principle of Utmost Good Faith b) obligation to tell the truth to the best of one's knowledge c) trust that a client places in the producer in regard to handling premiums d) obligation to state every known fact about the policy the producer is selling

C) agent acts in a fiduciary capacity, based upon trust and confidence, when handling the financial affairs of their customers, including the handling of premiums -Fiduciary = TRUST

If an insurer appoints a producer, which authority must be notified? a) Federal Directory of Insurers b) State Insurance Regulation Board c) Commissioner d) Department of Insurance

D) Every insurer authorized to transact business in PA must notify the Insurance Department of all appointments and terminations of appointments of producers in the format and within the time frame required by the Commissioner - termination of appointment shall be provided to the department in writing on an approved form or through an approved electronic process within 30 days following the effective date of the termination

An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied? a) Waiver b) Utmost Good Faith c) Estoppel d) Material misrepresentation

D) will affect whether or not a policy is issued - if insured has been truthful, very likely policy would be issued

In an annuity, the accumulated money is converted into a stream of income during which time period? a) Payment period B) amortization period C) Conversion Period D) Annuitization Period

D. "annuitization period" (annuity period) = time during which accumulated money is converted into an income stream

What term best describes the act of withholding material info that would be crucial to an underwriting decision? A) Concealment B) Withholding C) Leading D) Breach of warranty

a) Concealment occurs when a person withholds a material fact that is crucial to making a decision

What was created to keep telemarketers from calling consumers who do not wish contacted? a) Call Control Registry b) National Do Not Call Registry c) Confidential No Call Act d) Freedom of Information Act

B) National Do Not Call registry was created to allow consumers the choice to not be contacted by telemarketers

A licensee serving in the military is unable to fulfill her continuing education requirement. What would the licensee have to do to renew the license? a) may submit a request to the department to have requirement and fees waived. Department will then determine if request is permissible b) Nothing; license is automatically reinstated for an additional 6 months following return from military services c) Nothing; Licenses of active duty military service personnel are automatically reinstated for a full licensing term d) licensee must complete the continuing education requirement and pay the lapse renewal fees. Requirements can't be waived

A

Which of the following best describes gross annual premium? a) Expense Premium b) Net premium plus expenses c) annual loading d) basic insurance rate plus commissions

B) Gross annual premium is net premium plus expenses (loading)

If an insured changes his payment plan from monthly to annually, what happens to the total premium? a) doubles b) increases c) decreases d)stays the same

C) Because the insurer would have the entire premium to invest for a full year, they would reduce the premium amount

An insured's disability income policy includes an additional monthly benefit rider. For how many years can the insured expect to receive payment from the insurer before Social Security benefits begin? a) 5 b) 3 C) 2 d) 1

D

Long-term care insurance policies must cover which of the following? a) All mental disorders b) treatment of alcoholism c) injuries caused by an act of war d) Alzheimer's disease

D

An insured receives an annual life insurance dividend check. What term best describes this arrangement? a) Reduction of premium b) Annual Dividend Provision c) Accumulation at Interest d) Cash option

D) cash option allows an insurer to send the policyholder an annual, nontaxable dividend check

Which of the following authorities is authorized to issue a temporary insurance producer's license? a) Federal Insurance Licensing Association b) State Insurance Board c) Commissioner d) Naic

C) Commissioner has power to issue and revoke all types of licenses , including temporary

What are the licensing requirements for someone who sells variable universal life insurance? a) Securities b) Universal life and variable products c) Life insurance and securities d) Life insurance

C) Individual must be licensed for both securities and life insurance in order to sell variable universal life

In a survivorship life policy, when does the insurer pay the death benefit? a) Half at the first death, and half at the second death b) if the insured survives to age 100 c) upon the last death d) upon the first death

C) Survivorship life pays on the last death rather than upon the first

Which of the following will NOT be appropriate use of a deferred annuity? a) accumulating funds in an IRA b) Funding a child's education c) creating an estate d) accumulating retirement funds

C) deferred annuities grow tax deferred, and are best suitable for accumulating retirement income or funds for children's college education. -unline life insurance, annuities do not create an estate, but liquidate it

The provision in a health insurance policy that ensures that the insurer can't refer to any document that is not contained in the contract is the a) time limit on certain defenses clause b) incontestability clause c) legal action against us clause d) Entire contract clause

D) Entire Contract is a mandatory provision that is required by law

A married couple's retirement annuity pays them $250 per month. Husband dies and his wife continues to receive $125.50 per month for as long as she lives. When the wife dies, payments stop. What settlement option did they select? A) Joint Annuity B) Cash refund Annuity C) Straight life D) Joint and survivor

d

All of the following are true of the Key Person Disability income policy EXCEPT a) Benefits are considered taxable income to the business B) premiums are not deductible to the business C) Typically written to protect company in event a key employee becomes disabled and is unable to work D) income may be used to find replacement for key employee

A) key person disability benefits are not considered taxable income to the business

If an insurer terminates a producer's appointment, the Commissioner must be notified within how many days? a) 10 b) 30 c) 60 D) 90

B

Which of the following statements pertaining to Medicare Part A is correct? a) Each individual covered by Medicare Part A is allowed one 90-day benefit period per year b) Medicare Part A is automatically provided when an individual qualifies for Social Security benefits at age 65 c) For the first 90 days of hospitalization, Medicare Part A pays 100% of all covered services, except for the initial deductible d) Individuals with ESRD do not qualify for part A

B) Workers who have paid FICA taxes automatically qualify at age 65

Which of the following is an example of a producer's fiduciary responsibilities? a) producer offering additional coverage to his clients b) producer promptly forwarding premiums to the insurance company c) producer helping clients to file claims d) producer reviewing clients coverage

B) when producers handle the premiums that belong to the insurer, they are acting in a position of TRUST - must safely care for money and not commingle it with any other personal funds

Long-Term Care policies MUST cover a) a pre-existing condition b) Alzheimer's disease c) treatment payable by Medicare d) alcoholism

B) while normally mental and nervous disorders/disease are excluded in LTC, Alzheimer's is not

In a group health policy, a probationary period is intended for people who.. a) want lower premium b) join the group after the effective date c) Have a pre-exising condition at time they join the group D) Have additional coverage through a spouse

B.

Paul is a producer in Ohio and wants to become a producer in PA. The Commissioner will waive certain examination requirements, provided that Ohio would waive these same requirements if a PA producer sought licensure to Ohio. what term is used to describe this phenomenon? a) Fair Exchange b) Equanimity b) Reciprocity d) Equality

C) "reciprocity" occurs when the state in which the person resides accords the same privilege to residents of PA

An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy? a) will still be covered under the group plan, but will have to pay an individual policy premium b) can only convert her coverage without proof of insurability if she has the master policy c) must apply for a new policy, which requires her to provide proof of insurability d) can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan

D)

How many pints of blood will be paid for by Medicare Supplement core benefits? a) none; Medicare pays for it all b) everything after the first 3 c) 1 pint d) first 3

D) Medicare supplemental policies cover costs of deductibles and coinsurance for Parts A and B - Since medicare will not pay for the first 3 pints, Medicare Supplement plan will cover that

What characteristic makes whole life permanent protection? a) coverage until death or age 100 b) guaranteed death benefit c) guaranteed level premium d) living benefits

A

Insurance is the transfer of a) peril b)risk c) loss D) Hazard

B

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? a) Representation b) Warranty c) Concealment d) Indemnity

B) Warranty in insurance is a statement guaranteed to be true -representations are statements that are true to the best of the applicant's knowledge and are normally the statements made when applying for an insurance contract

Individual won state lottery, so state will be sending him a check each month for next 25 years. What type of annuity products are they likely to use to provide these benefits? a) deferred interest annuity b) immediate annuity c) variable annuity d) flexible payment annuity

B) annuity purchased with a single lump-sum payment, with a 25 year fixed period distribution will be must suitable for Immediate annuity

In underwriting a substandard risk, which of the following is INCORRECT? a) policy could be modified in the coverage or amount of coverage requested b) applicant could be rejected for coverage c) additional exclusions could be included to modify the underlying policy coverage d) a discounted premium would be charged

D) some substandard risks are rejected outright, while others will be accepted for coverage at a higher premium

An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied? a) material misrepresentation b) waiver c) utmost good faith d) estoppel

A

All other factors being equal, the least expensive first year premium payment is found in a) annually renewable term b) increasing term c) decreasing term d) level term

A) purest form of life insurance - death benefit remains level but premium increases each year with attained age

All of the following are licensing requirements for a business entity, EXEPT a) applying for a license in the same lines of authority as held by licensed designees b) having all employees complete continuing education courses once every 2 years c) demonstrating general fitness, competence, and reliability d) maintaining on staff at least 1 licensed person in good standing

B

Which of the following provisions that any policy language that is in conflict with the state statutes of the state in which the insured resides is automatically amended to conform with those of the state residence? a) Legal actions b) conformity with state statutes c) incontestability d) insurance with other insurers

B

Which of the following would be required to be licensed as an insurance producer? a) insurance company director who performs executive administrative and managerial duties b) salaried employee who advertises and solicits insurance c) person whose activities are limited to producing insurance advertisements d) salaried full-time employee who furnishes information for group insurance

B

The most the Insurance Guaranty Association will pay for net cash surrender values is a) $1000000 b) $100000 c) $250000 d) $500000

B)

What process will the insurance company use to monitor the insured's hospital stay to make sure that everything is proceeding according to schedule? a) Preventive review b) concurrent review c) prospective review d) corridor deductible

B)

Which of the following statements is true concerning the creditors of the deceased insured? a) creditors of deceased have no rights to the proceeds of life insurance under any circumstances b) creditors have rights to proceeds if they can show evidence of a valid assignment c) anyone may put a lien against the proceeds of a life insurance policy d) none of the above is true

B) proceeds of life insurance are exempt from claims of creditors except in certain situations - show evidence of valid assignment - premiums were used to defraud creditors - insured had filed bankruptcy in last two years

Which types of insurance companies marketing long-term care insurance coverage must establish procedures to assure that any comparison of policies by its agents will be fair and accurate? a) mutual stock companies b) no companies are required to establish marketing procedures c) every company is required to establish marketing procedures d) any company that uses any form of media to market policies that yield no less than 20% of its business

C

what is the purpose of key person insurance? a) insure retirement benefits are available to all key employees b) maintain an account that insures the owner of a company remains solvent c) lessen the risk of financial loss because of death of key employee d) provide health insurance to the families of key employees

C

Employer health plans must provide primary coverage for individuals with end-stage renal disease before Medicare becomes primary for how many months? a) 12 b) 24 c) 30 d) 36

C)

what does "liquidity" refer to in a life insurance policy? a) death benefit replaces the assists that would have accumulated if insured had not died b) Policyowner receives dividend checks each year c) insured receives payments each month in retirement d) cash values can be borrowed at any time

D) Liquidity in life insurance = ash to insured through cash values

Which of the following is an example of liquidity in a life insurance contract? a) death benefit paid to beneficiary b) flexible premium c) money in savings account d) cash value available to Policyowner

D) Liquidity in life insurance refers to availability of cash to the insured

Are insurance company underwriter allowed to discriminate? a) no, higher risks pay higher premiums b) no, discrimination is an unfair practice c) yes, but only for gender d) yes, but not unfairly

D) company will discriminate in favor of good risks and not of poor risks - can't discriminate unfairly by using factors such as race or national origin in their underwriting

Who might receive dividends from a mutual insurer? a) subscribers b) stockholders c) agents d) policyholders

D) mutual insurer has no stock, and is owned by policyholders

Underlying assets for variable annuity contracts must be maintained in what type of account? a) general acocunt b) fiduciary accound c) Securities account D) separate account

D) separate accounts are not part of the insurer's own portfolio and can hold investments that stand to earn a higher return

An insured covered by by a dread disease policy is confined in hospital for 2 years as result of a covered loss. In this situation, what is the minimum amount that they policy must pay? a) $73000 b) $1000 c) $250 d) $50000

D) specified (dread) disease policies must pay for hospital confinement in amounts of at least $100 per day, for at least 500 days hence $50000

Which of the following does the Insuring Clause NOT specify? a) List of available doctors b) covered perils c) The insurance company d) the name of the insured

A) The insuring Clause lists the insured, the insurance company, what kind of losses are covered, and for how much the losses would be compensated

which Universal Life option has a gradually increasing cash value and a level death benefit? a) Option A b) Juvenile life c) Term Insurance d) Option B

A) Under option A, death benefit remains level while the cash value gradually increases - death benefit will increase at a later date in order to maintain a gap between the cash value and the death benefit before the policy matures

An agent is in the process of replacing the insured's current health insurance policy with a new one. which of the following would be a proper action? a) old policy should stay in force until new policy is issued b) should be at least a 10-day gap between policies c) policies must overlap to cover pre-existing conditions d) old policy must be cancelled before new one can be issued

A) agent must make sure the current policy is not cancelled before the new one is issued

In a replacement situation, all of the following must be considered EXCEPT a) assets b) benefits c) limitations d) exclusions

A) the agent must be careful to compare the benefits, limitations, and exclusions found in the current and the proposed replacement policy

Which of the following entities has the authority to make changes to an insurance policy? a) Producer b) Insurer's executive officer c) Department of Insurance d) Broker

B) Only an executive officer of the company, not an agent, has authority to make any changes to the policy - isurer must have the insured's written agreement to the change

Which statement best defines a Multiple Employer Welfare Arrangement (MEWA)? a) group health plan that covers medial expenses arising from work related injuries b) joining together by employers to provide health benefits for employee c) plan that provides hospice care for terminally ill employees d) gov health plan that provides health care for the unemployed

B) a MEWA provides benefits for a number of member groups

The Commissioner of Insurance is placed in office by which means? a) Through a bid process b) By NAIC nomination c) an appointment by the Governor d) election at the same time that other state officials are selected

C

All of the following statements are true regarding installments for a fixed amount EXCEPT a) this option pays a specific amount until the funds are exhausted b) the annuitant may select how big payments will be c) the payments will stop when the annuitant dies d) value of the account and future earnings will determine the time period for the benefits

C) Installments for a fixed amount option has no life contingencies - specific amount of benefits will be paid until funds are exhausted whether or not the annuitant is living

What is the maximum period that an insurer would pay benefits in accordance with an Additional Monthly Benefit rider? a) for the duration of the disability or the contract, depending on which ends first b) 1 month c) 1 year d) 2 years

C) The Additional Monthly Benefit rider stipulates that the insurer will pay benefits comparable to what Social Security would pay - after a year's time, insurer ends the benefit and assumes that Social Security would begin benefit payment

An insured owns a life insurance policy. To be able to pay some of her med bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have? a) Term Life B) Limited pay C) Universal Life D) Adjustable Life

C) Universal life policies allow for policyholders to withdraw a limited portion of the policy's cash value

Any licensed person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to a) 3 years b) 5 years c) 10 years d) 12 years

C) anyone engaged in the business of insurance whose activities affect the interstate commerce, and who knowingly makes false material statements may be fined, imprisoned for up to 10 years, or both. - if activity jeopardized the security of the accompanied insurer, the punishment can be up to 15 years

The paid-up addition option uses the dividend a) to reduce the next year's premium b) to accumulate additional savings for retirement c) to purchase a smaller amount of the same type of insurance as the original policy d) to purchase a one-year term insurance in the amount of the cash value

C) dividends are used to purchase a single premium policy in addition to the face amount of the permanent policy

Under the Physical Exam and Autopsy provision, how many times can an insurer have the insured examined, at its own expense, while a claim is pending? a) none at all b) 1 exam per week of the claim processing period c) 2 exams per week of the claim processing period d) unlimited

D) allows the insurer to examine the insured as much as reasonably necessary while the claim is being processed, provided the insurer pays the expenses

What happens when a policy is surrendered for its cash value? a) coverage ends but the policy can be reinstated at any time b) policy can be reinstated by paying back all policy loans and premiums c) policy can be converted to term coverage d) coverage ends and the policy cannot be reinstated

D) once the cash surrender value option is selected, coverage is terminated and can't be reinstated

An insured owns a $50000 whole life policy. At age 47, insured decides to cancel his policy and exercise the extened term option for the policy's cash value, which is currently $20000. What would be the face amount of the new term policy? a) $20000 b) $25000 c) $50000 d) Face amount will be determined by the insurer

d) The face of the term policy would be the same as the face amount provided under the whole life policy

Licensees must make a report of any action taken against them in another jurisdiction or by another governmental agency in PA within how many days of the final disposition of the matter? a) 10 b) 30 c) 60 d) 90

B

which of the following reports will provide the underwriter with the info about an insurance applicant's credit? a) Any federal Report B) Consumer report C) Inspection report D) Agent's report

B

When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer? a) Nonadmitted b) Foreign c) Domestic D) Alien

B) Foreign insurer is one that is formed under laws of another state - non admitted or unauthorized insurer is an insurance company that has not applied for, or has applied and been denied a Certificate of Authority and may not transact insurance

In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. which of the following is true concerning the policy premium? a) applicants habits and health do not affect the premiums b) will likely be lower because the applicant is a preferred risk c) likely be higher because applicant is a substandard risk d) will likely be average premium issued to standard risks

C) applicants are considered substandard risks because of physical condition, personal or family history of disease, occupation, or dangerous habits -usually issued a higher premium than standard risk

which of the following produces requires a securities license? a) Equity Indexed annuity b) deferred annuity c) Variable annuity d) Fixed annuity

C) considered to be a security and is regulated by the Securities Exchange Commission (SEC) in addition to state insurance regulations

The authority granted to an agent through the agnet's contract is referred to as a) Express authority b) Apparent authority c) Implied authority d) Absolute authority

A) Express powers are written into the contract between the insurer and the agent

Under HIPAA, which of the following is Incorrect regarding eligibility requirements for conversion to an individual party? A) individual who was previously covered by group health insurance for 6 months is eligible B) an individual who has used up COBRA continuation coverage is eligible C) individual who doesn't qualify for Medicare may be eligible D) gap of coverage for eligibility is a period of 63 days or less

A) HIPAA requires that the individual have a previous continuous creditable health coverage for at least 18 months

Which of the following is usually true of a participating life insurance policy? a) Pays dividends to policy owners b) may be converted to a term life policy c) pays dividends to stockholders d) assesses premiums against stockholders

A) Participating is a term used to refer to any insurance policy that distributes its dividends by cash payments, reduced premium, units of paid-up life insurance, a savings program, or by the purchase of term insurance

Which of the following does a producer NOT have the authority to do? a) Issue policies b) Deliver policies c) Solicit insurance contracts d) Negotiate contracts of insurance

A) an insurance producer sells, solicits, or negotiates contracts of insurance

A producer has become disabled. In order to keep his business going, what may his designee do? a) hire a temporary producer to run the business during producer's absence b) obtain a temporary license c) suspend operations d) file for federal aid designated for this situation

B) Temporary license can be issued to the designee of a licensed producer if the producer becomes disabled

Concerning Juvenile Life Insurance, which of the following statements is INCORRECT? a) can be a limited premium payment policy b) classified as any life insurance written on the life of a minor c) classified as any life insurance purchased by a minor d) usually a parent or guardian is the applicant for insurance on the life of a minor

C) insures life of a minor; does not need to be purchased by minor

Ray has an individual major medical policy that requires a coinsurance payment. Ray very rarely visits his physician and would prefer to pay the lowest premium possible. Which coinsurance arrangement would be best? a) 75/25 b)80/20 C)90/10 D) 50/50

D

Under a typical health insurance policy, claims that result form injuries while the insured was intoxicated or under the influence of drugs are generally a) covered b) covered, but an extra premium is charged when a claim is filed c) covered with a 90 days waiting period d) excluded

D

Which of the following is true regarding health insurance underwriting for a person with HIV? a) person may be declined for HIV but not AIDS b) person may be declined c) person may only be declined if he/she has symptoms d) person may not be declined for medical coverage solely based on HIV status

D

To be eligible under HIPAA regulations, for how long should an individual converting to an individual health plan have been covered under the previous group plan? a) 5 years b) 12 months c) 63 days d) 18 months

D)

An insured receives an annual life insurance dividend check. What term best describes this arrangement? a) reduction of premium b) annual dividend provision c) accumulation at interest d) cash option

D) cash option allows insurer to send policyholder an annual, nontaxable dividend check

Which of the following info regarding an insured is NOT included in an Investigative Consumer Report, which is requested by an underwriter? a) Medical History b) Applicant's Character c) Personal Habits d) General reputation

A) assess non-medical risk factors related to moral standing and avocations - friends and colleagues are interviewed in order to evaluate applicant's character, reputation, and habits -applicant must be informed in writing if insurer decides to conduct

All of the following are personal uses of life insurances EXEPT a) Buy-sell agreement b) survivor protection c) estate creation d) cash accumulation

A) personal uses of life insurance include survivor protection, estate creation, and conservation, cash accumulation, and liquids - Buy-sell agreement is for BUSINESS uses of life insurance

An insured buys a 5-year level premium term policy with a face amount of $10000. Policy also contains renewability and convertibility options. When insured renews the policy in 5 years, what will happen to the premium? a) will decrease for new 5 year term since insured is now a lesser risk to company b) will increase each year during next 5 years since face amount increases each year c) will increase because insured will be 5 years older then when policy was originally purchased d) will remain same for new term

C) premium based on insureds attained age at renewal

An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it? a) Variable Life b) Adjustable LIfe c) Graded Premium Life d) Limited-pay life

D) in limited pay policies ; premiums for coverage will be completely paid-up well before age 100, usually after a specified number of years

In case of loss, the indemnity provision in insurance policies a) allows insured to collect 20% more than actual loss b) pays insured a percentage of the loss above and beyond the loss C) pays insured as much as 95% of the loss d) restores insured person to the same financial state as before the loss

D) indemnity (aka reimbursement) = provision in insurance policy that states that in the event of loss, the insured or a beneficiary is permitted to collect only to the extent of the financial loss - not allowed to gain financially

In a group policy, who is issued a certificate of insurance? a) health care provider b) insurance company c) employer d) individual insured

D) individuals covered under a group insurance contract are issued certificates of insurance - tells what is covered, how to file a claim, how long coverage will last, and how to convert to individual policy

If a licensee wants to transact insurance under a different name than that listed on his/her producer's license, which of the following must occur? a) change must be reported to the Commissioner b) change must be reported to the Federal Producer's Directory c) Licensee must obtain a new license d) it is illegal to transact insurance under any name other than the one listed on the license

A

In underwriting a substandard risk, which of the following is INCORRECT? a) a discounted premium would be charged b) policy could be modified in the coverage or amount of coverage requested c) applicant could be rejected for coverage d) additional exclusions could be included to modify the underlying policy coverage

A

Individual has been making periodic premium payments on an annuity. annuity income payments are sceduled to begin after 1 year since the annuity was purchased. What type of annuity? a) deferred b) fixed c) flexible premium d) immediate

A

When beneficiary contains payments of both principal and interest portions, which parts are taxable as income? a) interest b) both c) neither d) principal

A

Which of following is rue regarding taxation of accelerated benefits under a life insurance policy? a) are tax free to terminally ill insured b) are always taxable to chronically ill insured c) are always taxed d) 10% penalty for early distribution of the death benefit

A

If $100000 of life insurance proceeds were used in a settlement option, which paid $13000 per year for ten years, which of the following would be taxed annually? a) $3000 b) 13000 c) 10000 d) 7000

A) 10000 per year would be income tax free (as principal) and 3000 per year would be income taxable (as interest)

Following an injury, a Policyowner covered under Medicare Parts A and B was treated by her physician on an outpatient basis. How much of her doctor's bill will she be required to pay out-of-pocket? a) 20% of covered charges above the deductible b) 80% of covered charges above the deductible c) all reasonable charges above the deductible according to Medicare Standards d) A per office visit deductible

A) After the deductible, Part B will pay 80% of covered expenses, subject to Medicare's standards for reasonable charges

If a consumer requests additional info concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a) 5 days b) 7 days c) 10 days d) 3 days

A) Consumers must be advised that they have a right to request additional info concerning neg consumer reports, and the insurer/reporting agency has 5 days to provide them

If one takes Social Security retirement benefits at age 62, what needs to be done at age 65 to qualify for Medicare? a) nothing b) apply for coverage through the state c) appear for a physical at the Social Security office d) apply at a local Social Security office

A) Medicare Part A and B will automatically be effective the month you turn 65

Insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than last. What type of policy does insured have? a) Variable b) Term c) securities d) stock

A) vary in value, as the name suggests, because the value is based on the stocks that support the policy - if policyholder wants more stable, reliable value, he/she should invest in a fixed policy variable = varies ( can be lower or higher)

Annuities can be used to fund which of the following? a) estate creation b) retirement plans c) variable life insurance d) group life insurance

B

The Commissioner of Insurance is placed in office by which means? a) By NAIC nomination b) an appointment by the Governor c) election at the same time that other state officials are selected d) Through a bid process

B

Which of the following best describes gross annual premium? a) expense premium b) net premium plus expenses c) annual loading d) basic insurance rate plus commissions

B

When must an insurance company present an outline of coverage to an applicant for a Medicare supplement policy? a) only upon the applications request b) at time of application c) when policy is delivered d) within 30 days of policy delivery

B)

Who is involved in completing the agent's report? a) attending physician and agent b) only agent c) agent and applicant d) only the underwriter, if no agent

B)

Traditional IRA contributions are a) partially tax deductible depending on the income level b) tax deductible c) deducted based on the income level d) never tax deductible

B) Taxation rules for traditional IRA plans : -tax-deductible contributions for the year of the contribution (based on persons income) - contributions must be made in "cash" in order to be tax deductible - excess contributions are taxed a 6% per year as long as the excess amounts remain in the IRA - tax-deferred earnings are not taxed until withdrawn

Which of the following is NOT true regarding a Variable Universal Life policy? a) cash values are not guaranteed b) death benefit is fixed c) Policyowner can participate in some of the investment decisions d) minimum death benefit is guaranteed

B) death benefit is adjustable, and the cash values are not guaranteed - death benefit may decrease or increase but can't go below a guaranteed minimum face amount

If applicant for life insurance policy and person to be insured by policy are two different people, underwriter would be concerned about? a) which individual will pay premium b) whether an insurable interest exists between the two c) gender of applicant d) type of policy requested

B) insurable interest must exist at time policy is issued - some relationships automatically presumed qualify as insurable interest ex) spouses, parents, children, and certain business relationships

Attempting to determine how much insurance an individual would require based upon their financial objectives is known as a) vatical approach b) needs approach c) human life value approach d) estate planning

B) needs method determines how much benefit would be necessary to replace the loss of income and increased expenses should the insured die prematurely

An insured is covered under 2 group health plans - under his own and his spouse's. He had suffered a loss of $2000. After the insured paid the total of $500 in dudctibles and coinsurance, the primary insurer covered $1500 of medical expenses. What amount, if any, would be paid by the secondary insurer? a) $0 b) $500 c) $1000 D) $2000

B) once primary insurer has paid full benefit, secondary insurer will cover what first company will not pay, such as deductibles and coinsurance - insured will then be reimbursed for out-of-pocket costs

Which of the following is TRUE regarding variable annuities a) person selling variable annuities is required to have only a life agents license b) annuitant assumes the risks on investments c) funds are invested in the company's general account d) company guarantees a minimum interest rate

B) payments that the annuitant invests into variable annuity are invested the insurers separate account - separate account under many annuities provides annuitant with a dozen or more investment option

employer has sponsored a qualified retirement plan where employer will contribute money whenever a profit is realized. what is this called? a) HR 10 plan b) Profit sharing plan c) 401(k) plan d) tax-sheltered account plan

B) profit realized = profit sharing plan

All of following are examples of risk retention EXCEPT a) self-insurance b) premiums c) deductibles d) copayments

B) retention is a planned assumption of risk, or acceptance of responsibility for the loss by an insured through the use of deductibles, copayments, or self-insurance

The premium of a survivorship life policy compared with that of a joint life policy would be a) half the amount b) lower c) higher d) as high

B) since death benefit is not paid until last death, joint life expectancy in a sense is extending, resulting in lower premium than what is typically charged

Which type of dental care would cover operative treatment of the mouth? a) Orthodontics b) Oral surgery c) Restorative d) Endodontics

B) such as wisdom teeth

What must happen when an individual policy or annuity has been personally delivered to the Policyowner? a) producer must go over policy with policy owner b) notary public must witness exchange c) Policyowner must sign a delivery receipt d) Policyowner must pay annual premium in full

C

Which of the following will vary the length of the grace period in health insurance policies? a) length of time the insured has been insured b) term of the policy c) mode of the premium payment d) length of any elimination period

C

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of a) Unfair claim practice b) rebasing C) misrepresentation d) Concealment

C) issuing or circulating any sales material that is false or misleading

Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insured's death? a) wife of deceased b) former wife of deceased c) minor son of insured d) business partner of insured

C) minor doesn't have the legal capacity to release the insurer from further obligation, benefits normally have to be passed through a guardian or trustee

Under most dental plans, what limitations are posed for denture replacement? a) no limitations b) only the initial dentures are covered c) once every 5 years d) once every 10 years

C) most dental plans limit coverage for repeated procedures

A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium? a) if daughter is disabled for more than 3 months b) if daughter is disabled for any length of Tim e c) if father is disabled for more than 6 months d) if father is disabled for at least a year

C) only pays the owner, the father in this example, is disabled for at least 6 months

In an optionally renewable policy, the insurer has which of the following options? a) alter the due date so the policy can be cancelled sooner b) shorten the notice that the insured receives c) increase premiums d) increase grace period

C) optionally renewable policies allow insurer to cancel policy for any reason - can only be cancelled by class on the policy anniversary or premium due date (renewal)

all of the following are true regarding insurance policy loans EXCEPT a) policy will terminate if loan plus interest equals or exceeds cash value of policy B) policy owners can borrow up to the full amount of their whole life policy's cash value c) policy loans can be made on policies that do not accumulate cash value d) amount of the outstanding loan and interest will be deducted from the policy proceeds when insured died

C) policy loan option is only found in policies that contain cash value

which of the following are the authorities that an agent can hold? a) Authorized and admitted b) primary and secondary c) express and implied d) apparent and allowed

C) powers and authorities that an agent holds are express and implied - apparent authority is the appearance of, or assumption of, authority based on the action, words, or deeds of the principle or because of circumstances the principal created

Individual who has Accidental Death and Dismemberment policy loses her left arm in an accident. What type of benefit will she most likely receive? a) capital amount in monthly installments b) principal amount in monthly installments c) capital amount in a lump sum d) principal amount in a lump sum

C) principal amount is paid for death and 2 limbs as a lump sum paid as lump sum capital : loss of eyesight, one limb

which of following would help prevent a universal life policy from lapsing? a) adjustable premium b) corridor of insurance c) target premium d) face amount

C) recommended amount that should be paid on a policy in order to cover cost of insurance protection and to keep policy in force throughout its lifetime

which nonforfeiture option has the highest amount of insurance protection? a) decreasing term b) reduced Paid-up c) extended term d) conversion

C) same face amount as the original policy, but for a shorter period of time highest amount - EXTENDED

What happens if a deferred annuity is surrendered before the annuitization period? a) insurer can only apply the surrender value toward another annuity b) deferred annuities can't be surrendered prior to annuitization period c) owner will receive the surrender value of the annuity d) owner will only receive a refund of premium

C) surrender value of annuity is guaranteed according to the nonforfeiture provision

Life insurance policy has a legal purpose if both of which of the following exist? a) offer and counteroffer b) policy owners and named beneficiaries c) insurable interest and consent d) underwriting and reciprocity

C) to ensure legal purpose of a life insurance policy, it must have both insurable interest and consent

Death benefits payable to beneficiary under a life insurance policy are generally a) exempt from income taxation if under &10000 b) exempt from income taxation if over $10000 c) not subject to income taxation by the Federal government d) subject to income taxation ''''

C) when premiums paid with after tax dollars, death benefit is generally not subject to federal income taxation

A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after period. What type of policy is this? a) ordinary life policy b) limited pay whole life c) level term d) term to specified age

C) written to provide a LEVEL death benefit for 20 years

When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a) key person policy b) fraternal association c) aleatory contract d) executive bonus

D)

Which of the following programs expands individual public assistant programs for people with insufficient income and resources? a) Medicare b) Social Security c) Unemployment compensation d) Medicaid

D) Medicaid is a "needs" tested program administered by the states to provide assistance to persons who are not able to provide for themselves

What is the term for the entity that an agent represents regarding contractual agreements with third parties? a) client B) designee c) insured d) principle

D) agent represents the principle, acting on the entity's behalf in contractual agreements with third parties

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for withdrawal and the insurer charges a fee. What type of policy does the insured most likely have? a) adjustable life b) term life C) limited pay d) universal life

D) allow for policyholders to withdraw a limited portion of the policy's cash value - each withdrawal usually charged, and amount and frequency of withdrawals are usually limited

A health insurance policy that pays a lump sum if the insured suffers a heart attack or stroke is known as a) Major Medical b) AD&D c) Medical Expense d) Critical illness

D) covers multiple illnesses, such as heart attack, stroke, renal failure, and pays a lump-sum benefit to insured upon diagnosis and survival of any of the illnesses covered

All of following are TRUE regarding the accumulation of interest option EXCEPT a) annual dividend is retained by the company b) interest is credited at a rate specified to the policy c) policyholder has right to withdraw the accumulations are any time d) interest is not taxable since it remains inside the insurance policy

D) is TAXABLE whether or not the Policyowner receives it

Which is considered a Morale hazard? a) smoking b) working as a firefighter c) engaging in illegal activities d) Driving recklessly

D) morale hazards arise from a state of mind that causes indiferrence to loss, such as carelessness

all of following are true regarding installments for a fixed amount EXCEPT a) value of the account and future earning will determine the time period for the benefits b) option pays a specific amount until funds are exhausted c) annuitant may select how big payments will be d) payments will stop when annuitant dies

D) no life contingencies - specific amount of benefits will be paid until funds are exhausted whether or not annuitant is living

All of following are general requirements of a qualified plan EXCEPT a) plan must be communicated to all employees b) plan must be for the exclusive benefits of the employees and their beneficiaries c) plan must be permanent, written, and legally binding d) plan must provide an offset for social security benefits

D) plans must meet the general requirements established by IRS

In which of following will insured be able to receive full amount from a whole life policy? a) soon as the cash value exceeds the face amount b) if there are no named beneficiaries when policy is paid up c) at age 65 d) if insured lives to age 100

D) provides protection for entire lifetime of insured - if insured lives to 100, company pays face amount of policy to Policyowner (usually insured)