Insurance XCEL Exam
Qualified long-term care policies may take into consideration applicants pre-existing conditions for a maximum of not more than how many months prior to the effective date of coverage?
6 months
A long-term care rider in a life insurance policy pays a daily benefit in the event of...
Inability of the insured to perform more than two activities of daily living (ADL's)
At the age of 45, an individual withdraws $50,000 from his Qualified Profit-Sharing Plan and then deposits this amount into a personal savings account. This action would result in
Income tax and a 10% penalty assessed upon funds withdrawn from the Qualified Plan
T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide?
Income that cannot be outlived by the owner
How does an indexed annuity differ from a fixed annuity?
Indexed annuity owners receive credited interest tied to the fluctuations of the linked index
When an existing life insurance policy is terminated so that a new life insurance policy can be purchased, this transaction is referred to as...
Replacement
According to Indiana law, group life insurance conversion privileges must not
Require evidence of insurability
The first portion of a covered Major Medical insurance expense that the insured is required to pay is called the...
initial deductible
A policy owner would like to change the beneficiary on a life insurance policy and make the change permanent. Which type of designation would fulfill this need?
irrevocable
A whole life insurance policy owner does not wish to continue making premium payments. Which of the following enables the policy owner to sell the policy for more than it's cash value?
life settlement contract
Defamation occurs when an agent makes a false statement intended to
malign another insurer
What type of reinsurance contract involves two companies automatically sharing their risk exposure?
treaty
When is the face amount paid under a Joint Life and Survivor policy?
upon death of the last insured
ABC Insurance Company has accepted a life insurance application which contains unanswered questions. The company then makes the application part of the life contract. In this situation, the insurer has
waived one of its legal rights
T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?
$0
An example of false advertising would be *Paid testimonials from celebrity endorsements *An insurer exaggerating its dividends in a magazine advertisement *An agent spending more than $25 on marketing gifts for a client *An insurer advertising in an insurance trade journal
*An insurer exaggerating its dividends in a magazine advertisement (An insurance company may be judged guilty of false advertising if it exaggerates its dividends in a magazine advertisement.)
What is the maximum number of employees (earning at least $5000) that an employer can have in order to start a SIMPLE retirement plan?
100
Indiana's long-term care partnership program requires a producer to have
15 hours of additional education after they receive their license
How many days is a temporary producers license valid?
180 Days
Insurers may request a hearing within how many days if their policy is rejected?
20 Days
A potential client, age 40, would like to purchase a whole life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?
20-Pay Life accumulates cash value faster than Straight Life
Producers must complete how many hours of continuing education every two years to keep their license active?
24
In Indiana, what is the maximum percentage of controlled business a producer may produce over a 12 month period?
25%
In Indiana, what is the maximum percentage of controlled business a producer may write in a 12 month period
25%
All long-term care policies purchased in Indiana must contain a free look period of:
30 days
P receive disability income benefits for three months than returns to work. She is able to work one month before her condition returns, leaving her disabled once again. What would the insurance company most likely regard the second period of disability as?
A recurrent disability
What is Indiana's definition of life insurance replacement?
A transaction in which a new policy is bought and an old policy is terminated
Which of the following dividend options results and taxable income to the policy owner?
Accumulation at interest
At what point may a producer sell insurance for an insurer?
After being properly appointed by the insurer
Under a long-term care policy, which benefit would typically be excluded or limited?
Alcohol Rehabilitation
What is correct regarding the tax dreaming of a lump sum payment paid to a life insurance policies primary beneficiary?
All proceeds are income tax free in the year they are received
When an insurance application is taken by a producer, which of these statements is true?
Any changes made on the application require the applicant's initials
Before a life insurance policy is issued, which of these components of the contract is required?
Applicant's signature on application
A student pilot can pay regular premium costs for her life insurance policy with the addition of which of the following?
Aviation exclusion
Which of these circumstances is a Business Disability Buy-Sell policy designed to help in the sale of a business?
Business owner becoming disabled
The guarantee of insurability option provides a long-term care policy owner the ability to
Buy additional coverage at a later date
Which rider provides coverage for each child under a parents life insurance policy?
Child Term Rider
N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take?
Claim will be denied
What actions should an agent take if a customer wants to apply for an insurance policy?
Complete the application and review the information with the customer prior to obtaining the customer signature, then send the application off to the insurance company
Insurance contracts are known as _______ because certain future conditions or acts must occur before any claims are paid
Conditional
What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?
Convertible Term
what is not a situation that involves life insurance policy replacement?
Converting a term policy to a permanent policy with the same insurer
A family income policy is a combination of whole life and
Decreasing term insurance
M is insured under a basic Hospital/Surgical Expense policy. A physician performs surgery on M. What determines the claim M is eligible for?
Determined by the terms of the policy
Which of the following statements does not accurately describe the tax treatment of premiums an benefits of individual accident and health insurance? Disability income policy premiums are not tax deductible Disability income policy premiums are tax deductible Major medical policy benefits are normally not taxed Disability income policy benefits are normally not taxed
Disability income policy premiums are tax deductible
Consumers who purchase health insurance through the marketplace/exchange
Do not have their health history taken into account
How often must the commissioner examine each domestic insurance company
Every 5 years
What is the name of the law that requires insurers to disclose information gathering practices and where the information was obtained?
Fair Credit Reporting Act
After an insured gives notice of loss, what must he/she do if the insurer does not furnish forms?
File written proof of loss
What provision specifies how long a policy owners health coverage will remain in effect if the policy owner does not pay the premium when it is due?
Grace Period
What are valid reasons for the insurance commissioner to suspend or revoke a producers license?
If a producer returns part of a commission to a client in exchange for a sale, engages in false advertising, or commingles premiums collected with a personal account
In major medical expense policies, what is the intent of a stop loss provision?
Limits and insured's out-of-pocket medical expenses
Which unfair competition practice involves A producer suggesting that an insurance policy is like a share of stock?
Misrepresentation
What describes how a preferred provider organization(PPO) is less restrictive than a health maintenance organization(HMO)
More physicians to choose from
The notice of claims provision requires a policy owner to...
Notifying insurer of a claim within a specified time
An individual who in any manners cells, solicits, or negotiate insurance on behalf of insurance companies or compensation is an insurance
Producer
What is an example of rebating?
Offering a client something of value not stated in the contract in exchange for their business
P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to
P only
P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability?
P will still receive declared dividends
What is considered a mandatory provision?
Payment of claims
Which of the following characteristics is correct about interest sensitive whole life?
Premium payments can vary
What determines the full amount of Social Security retirement benefits a qualified individuals entitled to receive?
Primary Insurance Amount (PIA)
Which of these is not a type of agent authority?
Principal Agent authority is what an agent is authorized to do on behalf of his company. The three types of agent authority include express, implied, and apparent authority.
D is an architect receiving disability income benefits who is not able to return to work to full-time but can work on a part-time basis. What would allow D to continue receiving benefits?
Residual Benefit Clause
An example of rebating would be
Returning a portion of a premium as inducement to purchase insurance
What is considered rebating?
Returning a premium to a client as an inducement for purchasing a policy, giving something of value to an insured in exchange for their business, offering special dividends
J would like to maintain the right to change beneficiaries. Which beneficiary designation should be used?
Revocable
What types of care are typically covered under a long-term care policy?
Skilled Care, Home Health Care, Custodial Care
A ______ license may be issued in cases where a producer has become disabled or dies, requiring a replacement to service the producers business
Temporary
What can affect the amount of monthly disability benefits payable under Social Security?
The amount of benefits available from other sources
P is a Major medical policy owner who is hospitalized as a result of injuries sustained from participating in a carjacking. How will the insurer most likely handle this claim?
The claim will be denied
K as an agent who takes an application for individual life insurance and excepts a check from the client. He submits the application and the check to the insurance company, however the check was never signed by the applicant. If the application is approved when will coverage be effective?
The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured
G is involved in an automobile accident as a result of driving while intoxicated and suffers numerous injuries. According to the intoxicants and narcotics exclusion in G's policy, who is responsible for paying the medical bills?
The insured
Define usual, customary, and reasonable (UCR) charges
The maximum amount considered eligible for reimbursement by an insurance company under a health plan
What are the elements of an insurance contract?
The offer, consideration, acceptance
What qualifies a child to be able to be covered under the Indiana children's health insurance program?
They must be a resident of Indiana, be under the age of 19 years and the families income level must be greater than 150% of the federal poverty level but less than 200%
The insurance commissioner is authorized:
To enforce state laws relating to insurance
A producer inducing an insured to lapse, forfeit, or surrender insurance through misrepresentation is committing the illegal act of
Twisting
J is a producer who has induced an insured through misrepresentation to surrender an existing insurance policy. What is J guilty of?
Twisting
Which of the following is considered an element of a variable life policy?
Underlying equity investment
Insureds in the same risk classification or being charge different premiums by an insurance company. This insurer is committing the illegal act of
Unfair Discrimination
In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?
Unilateral
K purchased a life insurance policy in 1986 which paid 10% interest in the early years of the policy. 20 years after the purchase she received a notice from the insurer stating that the policy will soon terminate unless a much higher premium is paid because of falling interest rates. This type of policy is known as a ________ life policy
Universal
At what point must a life insurance applicant be informed of their rights that fall under the fair credit reporting act?
Upon completion of the application
Life insurance immediately creates an estate upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit?
Variable Life
A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?
Waiver of Premium
What type of rider would be added to an Accident and Health policy if the policyowner wants to ensure the policy will continue if he/she ever becomes totally disabled?
Waiver of premium rider
At what point does an informal contract become binding?
When one party makes an offer and the other party accepts the offer
What type of group insurance plan involves employees sharing the cost?
contributory plan
Medicaid was designed to assist individuals who are
below a specific income limit
The situation in which a group of physicians are salaried employees and conduct business in an HMO facility is called:
closed panel
K has an Accidental Death and Dismemberment (AD&D) insurance policy where her husband is beneficiary and her daughter is contingent beneficiary. Under the Common Disaster clause, if K and her husband are both killed in an automobile accident, where would the death proceeds be directed?
daughter
In a life insurance policy, which feature states that the policy will not cover certain risks?
exclusion
A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of its members is known as:
fraternal benefit society
J is a subscriber to a plan which contracts with doctors and hospitals to provide medical benefits at a predetermined price. What type of plan does J belong to?
health maintenance organization
An insurer receives proof of loss for an acceptable medical expense claim under an Individual Health Insurance Policy. Under the Time of Payment of Claims provision, the insurer MUST pay the benefits
immediately
An example of unfair discrimination would be
offering different terms of coverage for different policyowners having the same risk classification
Deductibles are used in health policies to lower
overuse of medical services
Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called
representations
