LAH Final Exam 2
The change of occupation provision states that If the insured changes from a more hazardous to a less risky occupation, the benefit provided will:
Remain constant and the premium will be reduced
Why would an applicant for health insurance be classified as a declined risk?
Since his or her risk factors and characteristics result in a declined application
Which of the following annuities pays a monthly income thirty days after it is purchased and is funded with one premium payment?
Single premium immediate annuity
Group health insurance policies are also comprised of several provisions or clauses. A group insurance provision which limits the insured's liability for covered claims is the:
Stop loss provision
Which of the following summarizes the benefits and features of a long-term care policy ?
Outline of coverage
Which statement is not correct when describing the Medical Information Bureau?
Provides the malpractice history of the attending physician
In order for an insurance contract to be legal and enforceable it must include four basic elements. All of the following are elements of a legal contract:
Legal purpose; Consideration; Agreement
Life insurers also offer variable products. Which of the following statements is true regarding Variable Life insurance?
The cash value in the policy is not guaranteed
All of the following are qualified plans
403(b) plan, Simplified Employee Pension, 401(k) plan
All the following are considered rebates:
A personal service offered as an inducement to contract insurance, not specified in the policy; Stocks and bonds given as an inducement to contract; Any valuable consideration used as an inducement to contract insurance, not specified in the policy
Twisting is a form is misrepresentation. Which of the following is considered a form of twisting?
A producer makes an illegal inducement to influence the surrender of a policy
If an applicant for life insurance is considered a substandard risk by an insurer but still insurable, the insurer will probably take which of the following actions:
Accept the risk and rate-up the premium
An insurer chartered in another country but authorized to conduct business in this State is known as:
An alien insurer
A rider added to a disability income contract that limits coverage is known as an exclusion rider. This rider may also be referred to as:
An impairment rider
An insurer must provide to each insured a confidentiality statement with regard to privacy issues within which of the following time frames?
Annually
Producers may generally share commissions with which of the following?
Another producer licensed in the same line of insurance
When will a producer request that a proposed insured sign a statement of continued good health?
At the time of policy delivery
What type of health insurance policy can be used to cover students, passengers on a common carrier or a high school sports team?
Blanket health insurance
An insurer's underwriting department reviews applications for life insurance to assess the risk. However, insurers may refer to additional information before providing coverage. Each of the following is a source of underwriting information used by underwriters, EXCEPT:
Blood type of the proposed insured
A major medical policy provides coverage for basic medical expenses after an initial deductible. Once this deductible is satisfied the insurer will pay up to its:
Coinsurance amount
Jack borrowed money from a local bank. He also transferred to the bank the right to a portion of the death benefit from his life insurance policy if he dies before paying off the loan. This transfer is also known as:
Collateral assignment
If no premium is paid with an application for life insurance, what responsibilities does a producer possess when the policy is delivered?
Collect the premium and a statement of continued good health and issue a premium receipt
A Modified Endowment Contract is a permanent insurance policy whose premiums paid for it are not in proportion to its death benefit. Each of the following distributions will be subject to taxation in a Modified Endowment Contract, EXCEPT:
Death benefit
Group life insurance is characterized by term life protection. When an employee is terminated, he or she may convert group life coverage to an individual whole life plan without:
Demonstrating insurability
When an insurance producer sells insurance over the phone or through the mail, he or she is engaging in which of the following?
Direct response marketing
A producer must act in which of the following capacities?
Fiduciary
All of the following are considered to be insurance transactions, EXCEPT:
Filing of a claim
An insurance organization which offers insurance benefits to its members best describes which of the following?
Fraternal
A benefit rider may be added to a life insurance policy for an additional premium. What benefit rider may be attached to a policy which protects an insured's future insurability?
Guaranteed insurability rider
Health insurance policies include an exclusion provision. All of the following would be excluded under an accident and health policy
Hearing examination; Loss due to war; Elective cosmetic medical expenses
All of the following are qualified plans, EXCEPT
Income replacement plan
Insurance transfers risk from an individual to an insurer. Each of the following statements is true concerning the concept of insurance, EXCEPT:
Insurance is the exclusive method used to manage risk
Which of the following is income taxable as ordinary income?
Interest paid on life insurance proceeds
Which of the following is true with regard to a group medical plan that excludes coverage for abortion procedures ?
It must cover medical expenses that are incurred as a result of complications resulting from an abortion
A whole life insurance policyholder possesses several dividend options as the owner of the contract. Which of the following is true regarding the one-year term dividend option?
It provides a level amount of protection for a temporary period
Some life insurance policies may cover more than one individual. A life insurance contract which insures two or more individuals with the proceeds paid upon the death of the first to die is known as a:
Joint life policy
Settlement options available to a beneficiary allow for the disposition of proceeds from a life insurance contract. Which of the following options available to a beneficiary possesses the greatest degree of risk?
Life income option
When an insured dies, his or her beneficiary may select any of several settlement options in which to receive the policy proceeds. Each of the following is an available life insurance settlement option
Life income; Interest only; Fixed amount
An insurer's underwriting department reviews applications for life insurance to assess the risk. However, insurers may refer to additional information before providing coverage. Each of the following is a source of underwriting information used by underwriters:
Medical exam results; Consumer report information; Agent's report
Accident & Health policies are characterized by twelve required uniform policy provisions. Which of the following is NOT a required uniform policy provision?
Misstatement of age
Which of the following policies possesses the lowest initial annual premium?
Modified life
All of the following requirements must be satisfied before a person may be issued a resident insurance license:
Must pass a State examination; Must be a State resident; Must be competent and trustworthy
All of the following requirements must be satisfied before a person may be issued a resident insurance license, EXCEPT:
Must possess a college degree
Which of the following would be best served by a buy-sell agreement funded with life insurance?
One of four corporate owners who desires future control of the business
All of the following are types of dividend options:
One-year term insurance, Paid-up additions, Accumulate at interest
Questions posed on a health insurance application regarding other health insurance owned by the applicant are designed to prevent which of the following?
Over insurance
Life insurers issuing participating policies may pay dividends to policyowners from surplus. All of the following are dividend options available to policyholders of such life insurance policies
Paid-up additions; Accumulate at interest; Reduced premium payments
Where does the health history of a proposed insured appear in a life insurance application?
Part II of the application
Which of the following provisions allows the insurer, at its own expense, the right to require a review by a physician or coroner prior to the issuance of coverage or the payment of benefits?
Physical examination and autopsy
What form provides an overview of a recently purchased insurance policy and must be provided no later than time of the policy delivery?
Policy Summary
In order for a contract to be legal, there must be present a valid offer and acceptance. Which of the following illustrates an acceptance of an offer to contract for insurance?
Policy delivery
All of the following are types of dividend options, EXCEPT:
Reduced paid-up insurance
When an insured dies, his or her beneficiary may select any of several settlement options in which to receive the policy proceeds. Each of the following is an available life insurance settlement option, EXCEPT:
Reduced paid-up insurance
An underwriter may accept all risks
Standard risks; Preferred risks; Substandard risks
A hospital expense plan provides coverage for an insured who suffers an illness or is injured accidentally. Each of the following is covered by a hospital expense plan, EXCEPT:
Surgical expenses
A variable life policy is characterized by investing cash values in stocks, bonds, or mutual funds. All of the following statements is are true concerning this form of life insurance protection:
The amount of the variable life death benefit is dependent upon the performance of securities; Variable life provides a guaranteed minimum death benefit; Variable life cash values are deposited in a separate account
Insurers utilize several sources of information in order to make underwriting decisions. Each of the following are important underwriting factors
The application information; The agent's statement or report; Health history of the proposed insured
All are true statements regarding the underwriting process
The cost of any examination is paid for by the insurer; The original application is the primary source of information used in the underwriting process; Signed consent from the applicant must be provided in order to test for AIDS and HIV virus
If an insured purchases a decreasing term life insurance policy, what portion of the contract decreases?
The death benefit
The entire contract provision is a required uniform policy provision. Which of the following statements is true regarding this provision?
The entire contract consists of the health insurance policy and a copy of the original application
Claims must be submitted to an insurer in a timely fashion. Which of the following is correct regarding the claim process?
The insured has 20 days to notify the insurer of a claim and the insurer has 15 days to provide claim forms
According to the Uniform Simultaneous Death Act, when an insured and the primary beneficiary are killed in a common disaster and it is not known who died first, what does the policy presume?
The insured survives the beneficiary
There are two parties involved in an insurance contract. Which of the following has the right to determine the language or wording to be included in the contract?
The insurer
Which health insurance policy provision states that in consideration of the payment of a premium, the insurer agrees to pay policy benefits to an insured upon receipt of a written proof of loss?
The insuring clause
The assignment or transfer of one's interest in a policy to another is allowed. Which of the following best describes the concept of assignment?
The legal transfer of the policyowner's rights and interest under a policy
An insurer conducts home office underwriting activities to determine whether or not a proposed insured is insurable. However, field underwriting is performed by which of the following?
The producer
What provision in a health insurance policy allows the insurer to void coverage if the insured has engaged in material misrepresentation and such false statements are discovered during the first two years after the policy is issued?
Time limit on certain defenses provision
Which of the following is a power or duty of the Superintendent or Commissioner of Insurance?
To compute the reserves of life insurance companies
To be eligible for Social Security disability benefits the individual must be disabled for at least:
Twelve months
John applies for life insurance and pays an initial premium. He is provided with an insurability type of conditional receipt. The next day John dies in an auto accident. The insurer is notified by John's wife the following day. What action will the insurer take?
Underwrite the policy and if John is found insurable, the insurer will pay the claim
Which of the following types of life insurance is characterized by a corridor?
Universal life
A hospital expense plan provides coverage for an insured who suffers an illness or is injured accidentally. Each of the following is covered by a hospital expense plan,
X-ray expenses, Lab tests, Room and board expenses
Cathy owns a whole life policy with a $200,000 face amount. It includes an accelerated benefits rider with a 25% clause. Years later Cathy borrows $20,000 from the policy's equity and dies three months later. What benefit will be paid by the policy?
$180,000
If an employee covered by a group medical expense plan dies, his family may continue coverage under the group plan for
36 months
The Sloppy Slangar Corporation is comprised of five partners. If it wishes to enter into an entity type of buy-sell agreement funded potentially by life insurance, how many policies need to be produced?
5
Once a claim form is submitted to an insurer, a policyowner must wait what period of time before taking any legal action against the insurer?
60 days
When an insured files a claim with an insurer, he or she cannot take any legal action against the insurance company until what period of time passes?
60 days
All of the following are required at contract delivery:
A copy of the entire contract; A producer review of the entire contract; Producer must review riders or other additions to the contract following application submission
Four business partners individually agree to acquire the interest of a deceased partner and own life insurance on each of the other partners in the amount of his or her share of the business's buy-out value. This is a description of which of the following?
A cross-purchase buy-sell plan
Which of the following best describes a return of unused premium?
A dividend
Which of the following best describes a return of unused premiums to a policyowner from a whole life insurance contract?
A dividend
Which of the following is not considered a rebate?
A favorable payment plan provided to a policyholder
Which of the following individuals possesses the legal capacity to enter into an insurance contract?
A minor contracting for food and clothing
All of the following statements are true regarding a representation:
A policy is usually voidable if a material fact is misrepresented; Representations appear on an insurance application; Representations may be written or oral
In order for an insurance contract to be legal and enforceable it must include four basic elements. All of the following are elements of a legal contract, EXCEPT:
Beneficiary designation
By legal definition, an agent represents their appointing company, whereas a broker represents:
Both their client and themselves
A long-term care policy provides coverage for an insured who is confined to a nursing home. Each of the following is a covered activity of daily living (ADL), EXCEPT:
Breathing
An underwriter may accept all risks, EXCEPT:
Declined risks
All of the following are considered to be activities of daily living, EXCEPT:
Driving
Which of the following is true with regard to insurable interest and life insurance?
Every individual possesses an unrestricted insurable interest in himself
Insurance producers must account for all funds collected from policyowners. This means that the producer must act in which of the following capacities?
Fiduciary
The Commissioner or Superintendent of Insurance approves premium rates on policies to be issued in this State to make sure that they are not unfairly discriminatory. This means that an insurer may submit rates to the Insurance Department on which of the following bases?
File and use
All of the following are known as required uniform policy provisions, EXCEPT:
Illegal occupation
An agent or producer who engages in an unfair sales or marketing practice may be subject to all of the following actions:
Imprisonment; License suspension or revocation; Monetary penalty
Once a person becomes eligible for Social Security disability benefits, the initial benefit will be paid within what period of time?
In the sixth month of disability
Insurance transfers risk from an individual to an insurer. Each of the following statements is true concerning the concept of insurance
Insurance is a risk management method that finances an insured's loss exposures; Insurance involves the pooling of premiums in order to pay claims; Insurance transfers risk from one to many
A life insurer's promise to pay the death benefit is found in which of the following provisions?
Insuring provision
The insured's consideration in a life insurance contract is the:
Premiums paid and statements made
Which of the following is true with regard to employer-paid disability insurance?
Premiums paid are tax-deductible to the business since they are a legitimate business expense
All of the following are required at contract delivery, EXCEPT:
Producer must collect the Statement of Good Health
Dependents who are not self reliant may be covered by their parents group medical plan as long as:
Proof of dependency is provided at renewal
Most long-term care policies exclude each of the following, EXCEPT:
Senile dementia
The waiting period that must be satisfied before premiums will be waived under an accident and health contract is:
Three months
To avoid any penalties or adverse tax consequences, rollovers of qualified plans must be effected within how many months of withdrawal?
Two months
A reinstatement provision is generally included in all life insurance policies issued for delivery. If a policy owner applies for reinstatement after a policy lapse, the insurer will require the completion of a reinstatement application. Statements made on this application are contestable for what period of time?
Two years
A variable life policy is characterized by investing cash values in stocks, bonds, or mutual funds. Which of the following statements is not true concerning this form of life insurance protection?
Variable life includes a flexible premium
Federal and State law specifies that a producer may be sent to prison for each of the following, EXCEPT:
Failure to produce
A public adjuster represents:
A policyowner
An alien insurance company is a type of organization whose principal office is located in:
Canada
Which of the following limits the rights of a life insurance policyowner?
Irrevocable beneficiary designation
A policy is issued to S. It is not delivered for two months. Which of the following would apply?
The free-look period does not begin until the owner receives the policy
Insurers utilize several sources of information in order to make underwriting decisions. Each of the following are important underwriting factors, EXCEPT:
The initial premium paid
Which of the following does not require an additional premium in order to be included in a disability income policy?
Waiver of premium
Which provision states that no lawsuit can be brought against an insurer by the insured until 60 days after written proof of loss has been furnished to the insurer?
Legal action
All of the following statements are true regarding a representation, EXCEPT:
A representation of a fact is the same as an expression of opinion or attitude
Which of the following best describes the doctrine of reasonable expectations?
An insured is entitled to the coverage that he or she may expect
The individual accepting a rebate in an insurance transaction is known as:
An offeree
Which of the following statements regarding the Fair Credit Reporting Act (FCRA) is correct?
Applicants must be notified within a short period of time that their credit report has been requested
Which benefit included in an accident and health insurance policy makes sure that a policy will not lapse if the insured is totally disabled?
Waiver of premium
Which of the following riders prevents a policy from lapsing if the insured becomes disabled?
Waiver of premium
With regard to an Accidental Death policy or rider, when may an insurer be prevented from having an autopsy done?
When State law prevents such action
An agent or producer who engages in an unfair sales or marketing practice may be subject to all of the following actions, EXCEPT:
Community service
All of the following are considered to be activities of daily living
Continence, Bathing, Dressing
Who receives the principal sum of an accidental death benefit if the primary beneficiary predeceases the insured?
Contingent beneficiary
All of the following are considered to be insurance transactions:
Contract issuance; Collection of premiums; Delivery of an insurance policy
Which of the following policies would pay benefits to an insured for illness due to cancer only?
Critical illness or dread disease
A disability income policy provides Toby with a total disability benefit of $3,000 per month. The plan includes a 30-day elimination period. Toby is disabled for eight months. What portion of his income benefits are going to be taxable?
0$
Written proof of loss must be supplied to an insurer within what period of time?
180 days from the date of the loss
Insurance regulation requires that all persons licensed in a particular state who change a residence address must notify the Commissioner or Bureau of Insurance within how many days of the change?
30 days
Which of the following licensed individuals may provide insurance advice to a customer for a stipulated fee?
A consultant or adviser
Each of the following are included in an insured's estate for Federal Estate tax purposes, EXCEPT:
A motor vehicle
All are true statements regarding the underwriting process, EXCEPT:
AIDS and HIV virus exams can be conducted in a discriminatory fashion
An individual frantically searching for insurance protection the day after being diagnosed with a terminal illness best describes:
Adverse selection
If an insurer terminates a producer who has acted on its behalf in the sale of insurance products, the insurer will:
Cancel the producer's appointment
A Modified Endowment Contract is a permanent insurance policy whose premiums paid for it are not in proportion to its death benefit. Each of the following distributions will be subject to taxation in a Modified Endowment Contract
Cash distributions from the policy, The policy's cash surrender value, A loan against the policy's cash value
What mandatory provision allows the insured to send in proof of loss in any reasonable form?
Claim form provision
Medical treatment provided for an individual who is injured as a result of attempted suicide is generally:
Excluded
Health insurance policies include an exclusion provision. All of the following would be excluded under an accident and health policy, EXCEPT:
Self-inflicted injury
The binding force in an insurance contract is:
The consideration
Each of the following are included in an insured's estate for Federal Estate tax purposes
The insured's residence; A life insurance policy; An annuity
A waiver of premium benefit is included in a disability income policy. It states that future premiums will be waived if the insured becomes totally disabled for how many consecutive months?
3 months
What type of policy would you suggest your client purchase if she desires death protection and a cash value buildup but is of limited means presently?
Modified life insurance
When discussing policy benefits, a producer:
Must not give answers they are unsure of;Must not use verbiage that is confusing to the applicant; Must be accurate
Permanent insurance plans include various options available to the policyowner. What whole life insurance policy options protect a policyowner against an unintentional coverage lapse?
Non-forfeiture option
The Commissioner of Insurance may place on probation, suspend, revoke or refuse to renew a producer license after a hearing if the producer has engaged in which of the following:
Engaged in coercive practices
Expenses connected with abortion procedures are covered under most medical plans and group health insurance policies. Which of the following is true regarding this type of covered medical expense ?
Expenses relating to abortion are covered just like any other covered medical expense
Life insurers issuing participating policies may pay dividends to policyowners from surplus. All of the following are dividend options available to policyholders of such life insurance policies, EXCEPT:
Extended term insurance
Part B of Medicare is an optional coverage. Which of the following would not be covered by this portion of Medicare?
Eye Examination
A producer may have his or her license suspended for engaging in an unfair sales practice or a failure to comply with other insurance regulations. Which of the following would cause a producer to suffer a license suspension?
Failure to pay a child support obligation
All of the following are known as required uniform policy provisions:
Grace period; Time limit on certain defenses; Change of beneficiary
Federal and State law specifies that a producer may be sent to prison for each of the following:
Impersonation; Misappropriation of premiums; Material misrepresentation
A producer who uses health insurance premiums collected for his own personal use has engaged in:
Larceny
Which of the following provisions is a required uniform health insurance provision?
Legal action
All of the following statements are correct when describing the Medical Information Bureau?
The MIB helps to detect any adverse health conditions of the applicant; May be used to compare information collected from the Attending Physician Statement; Compares health data from previous applications against current application information
What increases each year in an increasing term insurance rider?
The amount of coverage
