Insurance Test 9/12
Which of the following would be considered an unfair claims settlement practice?
A claims adjuster advises the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered
Fixed annuities provide all of the following EXCEPT
Hedge against inflation.
Which nonforfeiture option provides coverage for the longest period of time?
Reduced paid-up
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?
The death benefit can be increased by providing evidence of insurability.
The insuring clause of a disability policy usually states all of the following EXCEPT
The method of premium payment.
How are contributions to a tax-sheltered annuity treated with regards to taxation?
They are not included as income for the employee, but are taxable upon distribution.
under a group health insurance plan benefits may be extended to all of the following dependents except
a 27 year old married daughter who is attending college and lives with us
the probationary period is
a specified period of time that a person joining a group has to wait before becoming eligible for coverage
disability income benefits must be payable if the loss occurs within how many days of the accident
30
an elimination or waiting period may NOT have to be satisfies for a disability in which of the following
an insured suffers a relapse of a prior disability within 6 months of the initial covered disability
If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered
An unfair trade practice.
a major medical expense policy would exclude coverage for all of the follow treatments EXCEPT
Drug addiction
A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will
continue to increase
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
all of the following are true of the survivorship life policy except:
the premium is based on the age of each insured
Social Security Supplement (SIS) or Social Security Riders would provide for the payment of income benefits in each of the situations below EXCEPT
When the amount payable under Social Security is more than the amount payable under the rider.
According to the life insurance replacement regulations, which of the following would be an example of policy replacement?
A policy is reissued with a reduction in cash value.
a viatical settlement is a transaction outside the life insurance company where the owner sells the life insurance policy for which of the following
a percentage of the face amount of the policy
the provision that sets forth the basic agreement between the insurer and the insured and states the insurers promise to pay the death benefit upon the insureds death is called the
insuring clause
Producers who broker insurance must file a bond along with the application for license. The bond must be issued in favor of the people of Illinois, and must be on a continuous form and for an amount equal to 5% of the premium brokered the previous year, NOT to exceed
$50,000
how much is the fee for a nonresidential producer to obtain and maintain his or her insurance license
250
the policy loans provision state that the insurer must advance to the policy owner a sum up to the policy's cash value after the full amount of premiums have been paid for how long
3 years
Paula applied for a Medicare Supplement policy one month before her 65th birthday. The policy was issued on her birthday, Jan. 31. Her producer mailed the policy by certified mail, and she received the policy on Feb. 5. How long does Paula have to examine the policy and decide whether to keep it?
30 days from the date it was received
All other factors being equal, the least expensive first-year premium payment is found in
Annually Renewable Term.
Disability income coverage specifies 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 other definitions.
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 NOT true regarding complaints procedures for limited health service organizations?
Complaints must be submitted directly to the Department of Insurance.
Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as
Contracts of adhesion.
what is the purpose of the gatekeeper at an HMO
Controlling costs
What are the two components of a universal policy?
Insurance and cash account
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
Misrepresentation.
Long-term care partnership policies concern which of the following issues?
Nursing home expense payment
An equity Indexed Annuity will grow based upon
Performance of a recognized index
In respect to the consideration clause, which of the following is consideration on the part of the insurer?
Promising to pay in accordance with the contract terms
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a
Settlement option.
The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE?
The beneficiary will receive the greater of the money paid into the annuity or the cash value.
what is the term used for a life insurance provision or rider that allows for the early payment of the some portions of the policys face amount should the insured suffer from a terminal illness or injury
accelerated benefits
Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be
adjusted to the insureds age at the time of renewal
which of the following statements is NOT true regarding health insurance policy provisions
all additional provisions written by insurer care cataloged by their respective states
which of the following is NOT an indicator of a competent party
business profession
conrad received 50 k from a 1000k accidental death and dismemberment policy as a result of the loss of his left arm in an accident. conrad has received the
capital amount
if an insurance producer knowingly and consistently converts fiduciary monies for personal use, the producer will be charged with a
class 4 felony
a business owner was trying to obtain a bank loan to fund the purchase of a new business facility but the bank required proof of additional assets to secure the loan. the business owner then decided to use her $250,000 life insurance policy to secure the loan. which provision makes this possible?
collateral assignment
In a basic expense policy, after the limits of the basic policy are exhausted, the insured must pay what kind of deductible?
corridor
Which of the following is NOT an exclusion in medical expense insurance policies?
coverage for dependents
how often must the preparation and posting of records of insurance transactions occur
every 30 days
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?
extended term
J is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did J choose?
fixed amount
which of the following is a correct statement about annuities
fixed annuities do not provide protection against inflation
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?
fixed period
in order for an alumni association to be eligible to purchase group health insurance for its members, all of these statements must be true except when the association was over
has been active for five years min.
An agent delivers a policy he explains a policy change was made, makes him sign s statement acknowleging the changes were made, the agent says the premium has not been paid and must be paid before the policy goes into effect. He collects a statement of good health, relinquishes the policy and leaves what did he do wrong
he left the policy with the insured without collecting the premium
which of the following is NOT true regarding a noncancellable policy
insurer can increase the premium above what is stated in the policy if claims experience is greater than expected
a producer explains a couple of life insurance policies to a prospective insured but does not help to evaluate the costs of similar plans. which rule is being violated
life solicitation rule
what does an annuity protect the annuitant against
living longer than expected
Agents may be found guilty of defamation if they make a false statement that is intended to? A) malign another insurance company. B) mislead a prospect about a policy's term of coverage. C) misrepresent the benefits payable under a policy. D) defraud an insured or a claimant.
maliciously criticize another insurance company
Which of the following programs expands individual public assistance programs for people with insufficient income and resources?
medicaid
all of the following are excluded from coverage in an individual health insurance policy except
mental illness
an insurance agent visits a potential client and explains various types of policies. the customer displays a lack of interest so the agent guarantees higher dividends than he knows would be possible which term describes what the agent has done
misrepresentation
what is the limit to the number of the 90 day temporary licenses that a person may hold
no more than 1 per life time
a trust officer of a bank wants to counsel people on their life insurance policies, for a small fee. what licensure must the officer receive in order to do this legally
none
which of the following best describes a presumptive disability
one that is severe enough that the insured automatically qualifies for full disability benefits
with respect to the entire contract clause in health policies who has the authority to make changes to an existing policy?
only an executive officer of the company
key person insurance can provide protection for all of the following economic losses to a business except
pay the death benefit to the estate of the insured
a married couple purchase a life insurance policy on their newborn baby, they are concerned about what would happen to the policy if either of them were unable to continue making the premium payments due to death or disability. which policy rider should their agent recommend
payor benefit
Insurers may change which of the following on a guaranteed renewable health insurance policy?
rates by class
if a group health insurance plan discontinues it policy and a certificate holder is currently on total disability what if anything must the insurer cover
reasonable extension of benefits
insureds have the right to do which of the following if they have NOT received proper claim forms within the 15 days of their notice to the insurer of a covered loss under a major medical policy?
submit the description in their own words on a plain sheet of paper
all of the following are prohibited reasons for an insurer to deny coverage to a dependent except
the additional premium owed to the childs coverage was not paid
an insured need ongoing treatment for a diabetic condition. under ppaca which of the following is correct
the condition must be covered under the insureds plan
an insured decides to surrender his whole life insurance policy. the cash value at surrender is higher than the premiums paid into the policy due to interest. What part of the surrender value would be income taxable?
the difference between the premiums paid and the cash value
all of the following statements concerning the use of life insurance as an executive bonus are correct except
the policy is owned by the company
all of the following would be violations of the advertising and sales regulations products except
using testimonials
what is the maximum penalty for habitual willful noncompliance with the fair credit reporting act
$2500
an applicant for life insurance must receive a buyers guide and policy summary prior to the initial premium payment unless the policy offers an unconditional refund offer lasting a minimum of
10 days
if a producers license is violated for criminal activity what is the maximum amount that can be charged for each offense
10,000
what is the max civil penalty that a producer can be charged if found guilty of violations in a court of law
100,000
all of the following statements about indexed whole life insurance are correct except
the death benefit is not guaranteed
For what time period after the effective date of the policy can coverage be excluded on permissible pre-existing conditions applicable to a Medicare supplement insurance policy?
6 months
Under the mandatory uniform provision proof of loss, the claimant must submit proof of loss within what time period after the loss
90 days
which of the following is incorrect regarding $100,000 20 year level term policy
at the end of the 20 years the policys cash value will equal 100,000
within how many days must a producer report his or her felony conviction to the director
30
All of the following are prohibited practices EXCEPT
Denial of a claim after an investigation.
Which of the following is considered a qualifying event under COBRA?
Divorce
An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?
Fair Credit Reporting Act
If an insurer terminates coverage on an insured, what will happen to the spouse's coverage?
It will remain unchanged.
The premiums paid by the employer in a business life insurance policy are
Tax deductible by the employer.
The Director must find all of the following to be true of a viatical supplement provider applicant before a license will be issued EXCEPT
The applicant posts a bond with the Department of Insurance
All of the following are true regarding the guaranteed insurability rider EXCEPT
This rider is available to all insureds with no additional premium.
a company refused to issue an insurance policy to an individual based on his status as a member of the us army. this would be considered
an unfair discrimination
which statement below is incorrect regarding the type of term insurance that fits best with the applicants need
applicants who may require a larger death benefit in the future should buy convertible term insurance
which of the following is correct concerning the taxation of premiums in a key person life insurance policy
premiums are not tax deductible as a business expense
the benefits in medical expense insurance are
received income tax free by the individual
which of the following is a provision found in life insurance policies
reinstatement
which of the following determines the cash value of a variable life policy?
the performance of the policy portfolio
On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are
Not taxable since the IRS treats them as a return of a portion of the premium paid.
dividends received on participating life insurance policies are
not taxable because they are a return of unused premiums
All of the following are dividend options EXCEPT
Fixed-period installments.
What is the purpose of a conditional receipt?
It is intended to provide coverage on a date prior to the policy issue.
irene is covered under her husbands policy. what will happen to her coverage if he dies before her
her coverage will be continued
An insured under a long-term care policy and has just been diagnosed with Multiple Sclerosis (MS). What alteration will most likely be made to the policy?
No changes will be made to the insured's coverage.
The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive?
$100,000
In all health care plans under the Affordable Care Act (ACA), how many essential benefit categories are there?
10
in order for a business partner to be eligible for a keogh plan he or she must work full-time and own at least how much of the business
10%
A producer receives notice that his license has been terminated. If the producer wants to have the charges reviewed in court, within what time period must the request be made?
30 days
what is the waiting period on a waiver of premium rider in life insurance policies
6 months
All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT
At distribution, all amounts received by the employee are tax free.
which of the following would not trigger the payment of ACB
Being permanently disabled
The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?
as the application date
if an insurance policy is cancelled within 90 days following the inception date in what matter will the fee be refunded
on a prorated basis
An annuity would normally be purchased by an individual who wants to
provide income for retirement
the guaranteed insurability rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following except:
purchase of a new home
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?
the death benefit can be increased by providing evidence of insurability
all of the following are true about the bond requirements in the state of illinois except
the insurance producers with insurance companies that take responsibility for their actions are still required to post a bond
Which of the following statements is incorrect?
the insurer does not have the right to conduct an autopsy
an insurance producer fails to meet the directors contributing education requirement. which of the following will most likely occur
the producers license will be terminated
All of the following are Nonforfeiture options EXCEPT
Interest only
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?
50k
If coverage is offered as a dividend, what also must be offered as an alternative option?
Cash equivalent
A child is covered under an HMO plan through her non-custodial parent. Which of the following is NOT true?
Claims cannot be submitted by the custodial parent without the non-custodial parent's permission.
according to the common disaster clause if the insured and primary beneficiary are killed in the same accident and it cannot be determined who died first which of the following will be assumed?
the primary beneficiary died before the insured
A deductible is
A specified dollar amount that the insured must pay first before the insurance company will pay the policy benefits.
All of the following statements concerning workers compensation are correct EXCEPT
A worker receives benefits only if the work related injury was not his/her fault.
the interest earned on policy dividends is
taxable
core benefits are included in alll medicare supplemental policies. What percent of part B coinsurance is required
20%
Which of the following is NOT true regarding a flexible spending account?
It does not have limits on contributions.
Which of the following is an example of a producer being involved in an unfair trade practice of rebating?
Telling a client that his first premium will be waived if he purchased the insurance policy today
the benefits from a business overhead expenses insurance policy
are limited to covered expenses and are taxable to the business
in addition to participation requirements how does an insurer guard against adverse selection when underwriting group health
by requiring that the insurance be incidental to the group
An employee dies having 6 quarters of coverage during the previous 13-quarter period. What status of coverage does the employee have under Social Security?
currently insured
all insurance companies are forbidden to do any of the following except
require proof of insurability
What is the typical deductible for basic surgical expense insurance?
0
if an insurer violates state regulations in marketing a long term care policy it can be fined up to
10k
A client has a new individual disability income policy with a 20-day probationary period and a 30-day elimination period. Ten days later, the client breaks their leg and is off work for 45 days. How many days of disability benefits will the policy pay?
15 days
within what time period from the receipt must the insurer refund any premiums due to the insured
15 days
How soon must the insurer pay a death benefit claim after receiving the proof of death?
2 months
if a medicare supplement policyholder becomes eligible for medicaid, what is the maximum time period for which the medicare supplement policy premiums could be suspended
24 months
which of the following is not a medicaid qualifier
insurability
According to the PPACA metal levels classification, if a health plan is expected to cover 90% of the cost for an average population, and the participants would cover the remaining 10%, what type of plan is that?
platinum
what is the purpose of the impairment rider in a health insurance policy
to exclude coverage for a specific impairment
which of the following losses would likely be covered under the accidental death rider
death caused by a head-on collision
the reduction of premium option uses the dividend to reduce
next years premium
What is a penalty tax for nonqualified distributions from a health savings account?
20%
Which of the following best describes the "first-dollar coverage" principle in basic medical insurance?
The insured is not required to pay a deductible.
A life insurance policy does not have a war clause. If the insured is killed during a time of war, what will the beneficiary receive from the policy?
The full death benefit
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 of the following type of discrimination by the company underwriters would be considered legal?
In policy benefits on the basis of life expectancies
