LAH Practice Exam

An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a Traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer?

$10000, no tax consequence During an IRA direct transfer (or direct rollover), the full amount gets reinvested from one plan to the other.

In all health care plans under the Affordable Care Act (ACA), how many essential benefit categories are there?

10

The time limit of certain defenses provision prohibits insurers from denying a 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/her average income over the last?

24 months. The relation of earnings to insurance provision allows the insurance company to limit the insured's benefits to his/her average income over the last 24 months.

In this state, long-term care benefits may be triggered by inability to perform how many activities of daily living?

3

What is the maximum age for qualifying for a catastrophic plan?

30 Young adults under age 30 and individuals who cannot obtain affordable coverage (have a hardship exemption) may be able to purchase individual catastrophic plans that cover essential benefits.

In the event a policy lapses due to nonpayment of premium, within how many days would the policy be automatically reinstated once the outstanding premium is paid?

45 days

In the state of Florida, it is illegal for a licensee's commissions from controlled business to exceed what percentage of the total in a given year?

50%

Benefit periods for individual short-term disability policies will usually continue from

6 months to 2 years

Which of the following is a feature of a disability buyout plan?

A lump-sum benefit payment option

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 of the application date. If the full premium was submitted with the application and the policy was issued as requested, the policy coverage effective date would generally coincide with the date of application

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 (If the premium is not collected until the policy is delivered, the agent must receive a statement of good health, which acknowledges that the insured's health status has not changed since the policy was approved.)

When must the Medicare Supplement Buyer's Guide be presented?

At the time of application

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 Consideration is something of value that each party gives to the other. The consideration on the part of the insured is the payment of premium and the representations made in the application.

An applicant for an individual health policy failed to complete the application properly. Before being able to complete the application and pay the initial premium, she is confined to a hospital. This will not be covered by insurance because she has not met the conditions specified in the

Consideration clause

Which of the following authorities grants and revokes licenses?

Department of Financial Services. The Department is responsible for issuing, reissuing, and terminating licenses.

What is an important feature of a dental expense insurance plan that is NOT typically found in a medical expense insurance plan?

Diagnostic and preventative care

When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?

Equal to the original policy for as long as the cash value will purchase

Which policy component decreases in decreasing term insurance?

Face Amount decreasing term policies feature a level premium and a death benefit that decreases each year over the duration of the policy term.

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

Guaranteed insurability rider. The Guaranteed Insurability rider allows the policyowner to purchase specific amounts of additional insurance at specific dates or events, without proving continued insurability. Rates for the additions are based upon attained age.

Which of the following types of LTC is NOT provided in an institutional setting?

Home health care Home health care is given in the home, but skilled nursing, intermediate, and custodial care may all be provided in an institutional setting.

Under what conditions will proof of insurability NOT be required of an employee wanting to enroll in a group insurance plan?

If the employee enrolls within a certain time period

All of the following are differences between individual and group health insurance EXCEPT

Individual insurance does not require medical examinations, while group insurance does require medical examinations.

What is the benefit of choosing extended term as a nonforfeiture option?

It has the highest amount of insurance protection Under this option the insurer uses the policy cash value to convert to term insuirance for the same face value amount as the former permanent plsn

Which of the following best describes annually renewable term insurance?

It is level term insurance. Annually renewable term is a form of level term insurance that offers the most insurance at the lowest cost.

Which statement is NOT true regarding Straight Life policy?

Its premium steadily decreases over time, in response to its growing cash value.

Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die?

Joint Life A Joint Life policy covering two lives would be the least expensive because the premiums are based on an average age, and it would pay a death benefit only at the first death.

When replacing life insurance, the duties of the replacing insurance company include all of the following EXCEPT

Maintaining a copy of the Notice Regarding Replacement and all sales proposals used for at least 5 years.

An applicant for a health insurance policy returns a completed application to her agent, along with a check for the first premium. She receives a conditional receipt two weeks later. Which of the following has the insurer done by this point?

Neither approved of the application nor issued the policy *When the agent receives the application and issues a conditional receipt, the insurer has not yet approved the application and issued the policy.

In long-term care insurance, what type of care is provided with intermediate care?

Occasional nursing or rehabilitative care Intermediate care is nursing and rehabilitative care provided by medical personnel for stable conditions that require assistance on a less frequent basis than skilled care.

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will

Pay the policy proceeds only if it would have issued the policy

Which of the following will be included in a policy summary?

Premium amounts and surrender values

Which of the following is NOT among the goals of a Medicare supplement application?

Presuming the applicant is eligible for Medicaid, based on the nature of the policy

In the case of producer solicitation, at what point must a long-term care Shopper's Guide must be presented to the applicant?

Prior to the time of application

When an insurer terminates an agent's appointment, the insurer must do all of the following EXCEPT

Provide a 30-day advance notice to the Commissioner

All of the following are true regarding rebates EXCEPT

Rebates are allowed if it is in the best interest of the client

A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the

Revocable beneficiary: policy owner may change designation at any time without beneficiary consent.

An insured has endured multiple surgeries and hospitalizations for an illness during the last few months. Her insurer no longer bills her for medical expenses. Which of the following allows for that?

Stop-loss limit A "stop-loss limit" is a specified dollar amount beyond which the insured no longer participates in the sharing of expenses.

Which of the following would help prevent a universal life policy from lapsing?

Target premium

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

Which of the following is INCORRECT concerning a noncontributory group plan?

The employees receive individual policies. The employer receives a master policy, and employees receive a certificate of insurance.

All of the following statements concerning an employer sponsored nonqualified retirement plan are true EXCEPT

The employer can eceive a current tax deduction for any contributions made to the plan

Who is the owner and who is the beneficiary on a Key Person Life Insurance policy?

The employer is the owner and beneficiary. With the key-person coverage, the business (the employer) is the applicant, owner, premium payer, and beneficiary.

Which statement regarding qualifications for Social Security disability benefits is NOT true?

The individual must be at least 65 years old.

Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to

The insured Payments for loss of life benefits are to be made to the designated beneficiary. If no beneficiary has been named, payment proceeds are to be paid to the deceased insured's estate. Claims other than death benefits are to be paid to the insured or the insured's estate, unless otherwise assigned by the insured.

When an applicant applies for Medicare supplement insurance, whose responsibility is it to confirm whether the applicant has an accident or sickness insurance policy in force?

The insurer's

In accordance with the Code of Ethics, agents must provide a completed application to

The prospective insured and the insurer

Which provision states that the insurance company must pay Medical Expense claims immediately?

Time of Payment of Claims The Time Payment of Claims provision requires that claims will be paid immediately upon receipt of proofs of loss except for periodic payments, which are to be paid as specified in the policy.

Which of the following is the best reason to purchase life insurance rather than annuities?

To create and estate

The paid-up addition option uses the dividend

To purchase a smaller amount of the same type of insurance as the original policy.

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?

Universal life The policyowner has the flexibility to increase the amount of premium going into the policy and to later decrease it again. In fact, the policyowner may even skip paying a premium and the policy will not lapse as long as there is sufficient cash value at the time to compensate for the nonpayment of premium.

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

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

How often must domestic insurance companies be examined by the Chief Financial Officer in Florida?

at least every 5 years

An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called

consideration

An insurance producer just sold an insurance policy to his sister. What kind of business is this?

controlled

Fixed annuities provide all of the following EXCEPT

hedge against inflation

Premium payments for personally-owned disability income policies are

not tax deductible

During replacement of life insurance, a replacing insurer must do which of the following?

obtain a list of all insurance policies that will be replaced

The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the

one year term option the dividend is utilized to purchase one year term insurance.

Which of the following is NOT a feature of a guaranteed renewable provision?

the insurer can increase the policy premium on a individual basis

All agents licensed in this state must complete how many hours of continuing education specific to law and ethics?

4 As part of their CE hours, all agents must complete a 4-hour Law and Ethics updates course every 2 years.