Indiana Insurance exam practice
An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined and the cash value fell to $10,000. If the insured dies, how much will be paid out?
$50,000
An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died February 28. How much would the beneficiary receive from the policy?
$9,800
L has a major medical policy with a $500 deductible and 80/20 coinsurance. L is hospitalized and sustains a $2,500 loss. What is the maximum amount that L will have to pay?
$900 (deductible + 20% of the bill after the deductible [20% of $2,000])
Which of the following disability income policies would have the highest premium
15-day waiting period / 10-year benefit period
Time Limit on Certain Defenses provision prohibits insurers from denying claim due to misrepresentation, as long as the policy has been in force for at least
2 years
The relation of earnings to insurance provision allows the insurance company to limit the insureds benefits to his/he average income over the last
24 months/2 years
What is the period of coverage for events such as death or divorce under COBRA
36 months
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 for Ray?
50/50 - After the deductible has been paid, the insurance company will pay a specified amount for a physician's visit, while the insured pays the remaining percentage. This is called "coinsurance". Plans will often be listed in a fraction format, with the first number representing the amount that will be paid by the insurer. The less the insurer must pay with coinsurance payments, the lower the premiums will be. Therefore, Ray should choose the 50/50 plan.
How long is an open enrollment period for Medicare supplement policies?
6 months
What is the waiting period on a Waiver of Premium rider in life insurance policies?
6 months
Which of the following would best describe total disability?
A person's ability to work is significantly reduced or eliminated for the rest of his/her life.
Who is a third-party owner?
A policyowner who is not the insured
If a company has a Simplified Employee Pension Plan, what type of plan is it?
A qualified plan for a small business
In reference to the standard Medicare Supplement benefits plans, what does the term standard mean?
All providers will have the same coverage options and conditions for each plan
Long-term care insurance policies must cover which of the following?
Alzheimer's disease
Disability income coverage specified that the policy covers the insured if he is unable to perform any job for which he is qualified. In this case, total disability is defined as
Any occupation- more restrictive than others
What is the maximum period of time during which an insurer may contest fraudulent misstatements made in a health insurance application?
As long as the policy is in force
An agent is ready to deliver a policy to an applicant but has not yet received payment. Upon delivery, the agent collects the applicant's premium check, answers any questions the applicant may have, and then leaves. What did he forget to do?
Ask her to sign a statement of good health
To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested?
At the time of application
What document describes an insured's medical history, including diagnosis and treatment?
Attending Physicians Statement
Which of the following is a feature of a variable annuity?
Benefit payment amounts are not guaranteed
Which of the following statements regarding Business Overhead Expense Policies is NOT true
Benefits are usually limited to six months.
Which of the following is true regarding inpatient hospital care for HMO members
Care can be provided outside of the service area
Alexander has a policy with his ex-wife as its beneficiary. What provision allows his to change the beneficiary to his new wife?
Change of Beneficiary
A man is injured while robbing a convenience store. How does his major medical policy handle the payment of his claim?
Claim is denied if his policy contains the Illegal Occupation provision
An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision?
Common Disaster
An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?
Conditional
In a disability policy, the probationary period refers to the time
During which illness-related disabilities are excluded from coverage.
The insurance policy, together with the policy application and any added riders form what is known as
Entire Contract
What does "level" refer to in a level term insurance?
Face amount
What are the two components of a universal policy?
Insurance and cash account
Concerning Medicare Part B, which statement is INCORRECT?
It is fully funded by Social Security taxes (FICA)
Which of the following statements about the reinstatement provision is true?
It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated.
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?
Life income with period certain
Which of the following information about the application is NOT included in the General Information section of the application for insurance
Medical background
An insured is involved in a car accident. In addition to general, less serious injuries, he permanently loses the use of his leg and is rendered completely blind. The blindness improves a month later. To what extent will he receive Presumptive Disability benefits?
No benefits
Prior to purchasing a Medigap policy, a person must be enrolled in which of the following?
Parts A and B of Medicare
Which of the following must be presented in all Medicare supplement plans?
Plan A
Who can request changes in premium payments, face value, loans, and policy plans
Policyowner
Regarding the taxation of Business Overhead policies,
Premiums are deductible, benefits are taxed.
The Federal Fair Credit Reporting Act
Regulates consumer reports
Disability income policies can provide coverage for a loss of income when returning to work only part time after recovering from total disability. What is the benefit that is based on the insureds loss of earnings after recovery from a disability?
Residual disability
To sell variable life insurance policies, an agent must receive all of the following EXCEPT
SEC registration
Which of the following would be a qualifying event as it relates to COBRA
Termination of employment due to downsizing
Which of the following is NOT the consideration in a policy
The application given to a prospective insured
Which is NOT true about beneficiary designations?
The beneficiary must have insurable interest in the insured.
In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?
The customer's associates, friends, and neighbors provide the report's data.
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. 5 days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?
The date of medical exam
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?
The death benefit will be smaller
Who chooses a primary care physician in an HMO plan?
The individual member
An insured purchased a noncancellable health insurance policy 1 year ago. Which of the following circumstances would NOT be a reason for the insurance company to cancel the policy?
The insured is in an accident and incurs a large claim
What is necessary in order to be eligible to receive benefits from a long-term care policy?
The insured must be unable to perform some activities of daily living
Which of the following is true regarding elimination period and the cost of coverage?
The longer the elimination period, the lower the costs of coverage
Which of the following will vary the length of the grace period in health insurance policies?
The mode of the premium payment
Which of the following definitions would make it easier to quality for total disability benefits?
The more liberal "own occupation"
Which of the following is TRUE about nonforfeiture values?
They are required by state law to be included in the policy.
Which of the following is NOT true regarding Equity Indexed Annuities
They earn lower interest rates than fixed annuities.
An insured notified the insurance company that he has become disabled. What provision states that claims just be paid immediately upon written proof of loss?
Time of payment of claims
In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?
Unilateral In a unilateral contract, the insured is not legally bound to do anything. The insurer, however, must pay losses covered by the policy.
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit
Universal Life - Option A
Which of the following types of policies allows flexible premium and a variable investment component
Variable Universal Life Policy
In forming an insurance contract, when does acceptance usually occur?
When an insurer's underwriter approves coverage
SSI or SSRI would provide for the payment of income benefits in each of the situations except
When the amount payable under SS is more than the amount payable to riders
Which of the following products will protect an individual from outliving their money?
annuity
What is the term used for an applicants written request to an insurer for the company to issue a contract, based on the information provided?
application
A life insurance policy used to fund an agreement that contractually establishes the intent of someone to purchase a business upon the insured business owners death is a
buy-sell agreement
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?
consideration
Which of the following is NOT an essential element of an insurance contract?
counteroffer
All of the following statements are true regarding tax-qualified annuities EXCEPT
employer contributions are not tax deductible
The automatic premium loan provision is activated at the end of the
grace period
Which of the following types of LTC is NOT provided in an institutional setting
home health care
Regarding long-term care coverage, as the elimination period gets shorter, the premium
increases
A return of a premium term life policy is written as what type of term coverage
increasing
In health insurance, if a doctor charges $50 more than what the insurance company considers usual, customary and reasonable, the extra cost
is not covered
The provision which prevents the insured from bringing any legal action against the company for at least 60 days after proof of loss is known as
legal actions
The premium of a survivorship life policy compared with that of a joint policy would be
lower
Which of the following premium modes would result in the highest annual cost for an insurance policy?
monthly
An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use?
paid up option
An employe is insured under her employer's group life plan. If she terminates her group coverage, which if the following statements is incorrect?
the premium for individual coverage will be based upon the insured's attained age
If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?
unilateral
All of the following benefits are available under Social Security EXCEPT
welfare benefits
All of the following are unfair claims settlement practices EXCEPT
Suggesting negotiations in settling the claim
Who has the authority to issue a cease and desist order?
The Insurance Commissioner
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?
The annuitant must be a natural person.
An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the acceleration benefits rider. Which if the following is true regarding taxation if the accelerated benefits?
A portion of the benefit up to a limit is tax free; the rest is taxable income
All of the following are correct about the required provisions of a health insurance policy EXCEPT
A reinstated policy provides immediate coverage for an illness.
Which of the following would be considered a violation of Rule 13: Life Insurance Advertising
Calling an insurance policy an investment plan
A new insurance company wants to begin conducting insurance in Indiana. What will it need to receive before it can legally open for business?
Certificate Authority
According to the provisions of the Patient Protection and Affordable Care Act, all of the following are required preventive care services EXCEPT
Cervical cancer exams for all women starting at age 40
Another name for a substandard risk classification is
rated
Which of the following limited lines producers licensed would require a life producers license?
Funeral Director Insurance
What is the purpose of coinsurance provisions?
To help the insurance company to prevent overutilization of the policy
What is the purpose of a fixed-period settlement option
To provide a guaranteed income for a certain amount of time
The primary purpose of disability income insurance is to
To replace income lost due to a disability
In a direct transfer, how is money transferred from one retirement plan to another traditional IRA?
Trustee to Trustee
What kind of policy allows withdrawals or partial surrenders?
Universal Life
Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles?
Standard risk is representative of the majority of people.
What is the best way to change an application
Start over with a fresh application
An insured has been diagnosed with a life threatening disease and is given 6 months to live. The insured is in a hard financial situation which will worsen with the upcoming medical expenses. Which of the following options could the insured utilize right away?
Viatical Settlement
An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?
$50,000
The insured is also the policy owner of a whole life policy. What age must the insured attain in order to receive the policies face amount?
100
How much time does the insurer have to pay the death benefit to the beneficiary of a life insurance policy after the receipt of proof of death?
2 months
How long can a person hold a consultants license before it expires?
2 years
How long is the free-look period for replacement policies
20 day
In health insurance policies issued in this state, what is the maximum age for coverage of dependent children?
26 years old
A person buys an individual long-term care policy and is not satisfied with the provisions. Within how many days will the insured be able to return the policy for a full premium refund?
30 days
Every company possessing a certificate of authority must notify the Commissioner of the election or appointment of every new director or principal officer within
30 days
The Commissioner must be notified in all of the following circumstances EXCEPT
A change of the producer's business phone number
Which of the following would be considered an unfair claims settlement practice?
Advising the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered
A business entity may be licensed as an insurance producer if
An employee who holds a producer's license is designated as a compliance officer.
In Indiana, all of the following may act as insurance consultants EXCEPT
An individual who holds both the producer's and consultant's license.
If a company transacts any business of insurance without a certificate of authority, what is the maximum penalty that can be charged to the director of that company?
Civil penalty of $25,000
Who is the chief executive and administrator officer of the insurance department
Commissioner
Which of the following would be considered an illegal inducement to purchase insurance
Confirming future dividends in a life insurance proposal
What is the main difference between coinsurance and copayments
Copayment is a set dollar amount.
The provision in a health insurance policy that ensures that the insurer cannot refer to any document that is not contained in the contract is the
Entire contract clause
When an employee terminates coverage under a group insurance policy, coverage continues in force
For 31 days.
For how long is an insurance producers license valid?
For as long as the fees are paid and the education requirements are met by the due date
Which of the following statement pertaining to Medicare Part A is correct?
For the first 90 days of hospitalization, Medicare part A pays 100% of all covered services, except for the initial deductible
Before an agent delivers a policy, the insurer makes a last-minute change to the policy. The agent informs the insured of this change, and he accepts it. In response, the agent must
Have the insured sign a statement acknowledging that he is aware of the change.
Employers can reduce health plan costs by coupling a HRA with
High Deductible Health Plan
The annual contribution limit of a Dependent Care Flexible Spending Account is set by
IRS
Insured A recently purchased an individual health policy. Insured B purchased the same policy, but did so as the result of a direct response solicitation. Which of these two insureds has a longer free look period?
Insured B
Which if the following statements is TRUE concerning the Accidental Death Rider?
It will double or triple the face amount
All of the following could be reasons for issuing a temporary producers license EXCEPT
Licensing of new insurance producers after the business has been transferred.
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. What is the company guilty of?
Misrepresentation
Which renewal provision(s) must be included in a long-term care policy issued to an individual?
Noncancellable and guaranteed renewable
Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option?
Size of each installment
According to the Life Insurance Advertising Rule 13, all the following statements are correct EXCEPT
Only written presentations by the producers are considered advertising
Which Universal Life option has a gradually increasing cash value and a level death benefit?
Option A
Which of the following conditions is NOT necessary for becoming a nonresident producer in Indiana
Passing the proper examination
An insured purchased a life policy in 2010 and died in 2020. The insurance company discovers at that time that the insured had misstated information about her medical history on the application. What will the insurer do?
Pay a decreased death benefit
Which of the following provisions would prevent an insurance company from paying a reimbursement claim to someone other than the policy owner
Payment of Claims
An insurer may disclose an applicant's AID/HIV test result to all of the following EXCEPT
Previous insurer
A producer licensed in another state wants to become a nonresident producer in Indiana. The other state gives the same privileges as Indiana producers as it does to its own producers. Indiana, therefore extends the licensing privileges to the prospective producer of the other state. What is this called?
Reciprocity
You know that your client is currently insured under a life policy, but you are making a sale presentation to that client for a new life policy. You must provide your client with the Important Notice Regarding the Replacement of Life Insurance and a copy of the sale proposal under all of the following situations EXCEPT
The client is converting from an existing teeny policy to a whole life
How do employer contributions to a Health Savings Account affect the insured's taxes?
The employer contributions are not included in the individual insured's taxable income
If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?
The full death benefit
Who must be licensed to sell, solicit and negotiate insurance contracts in the state of Indiana?
The producer
On a health insurance application, signature is required from all of the following EXCEPT
The spouse of the policy owner
How long does the commissioner serve in office?
There is no specific length of term
What do long-term care policies offer to policyholders to account for inflation?
They offer the option of purchasing coverage that raises benefit levels accordingly.
When can a Long-Term Care policy deny a claim for losses incurred because of a pre-existing condition?
Within 6 months of the effective date of coverage
When transacting business in this state an insurer formed under the laws of another country is known as a/an
alien insurer
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as
coercion
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?
consideration
Life insurance replacement rule 16.1 is considered which of the following
disclosure rule
Circulating deceptive sales material to the public is what type of Unfair Trade Practice?
false advertising