Life & Health Exam Question Bank

Charla wants to serve as a producer for Commissions Galore Insurance Company. In addition to obtaining her producer's license, what else must happen before she can officially transact insurance for CGIC?

Must be appointed specifically by CGIC

Mortality-Interest+Expense=

Gross premium

As it pertains to group health insurance, COBRA stipulates that

Group coverage must be extended for terminated employees up to a certain period of time at the former employee's expense

An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additonal coverage will be available in the future. Which of the following options should be included in the policy?

Guaranteed Insurability Option

Events or conditions that increase the chances of an insured loss occurring are referred to as

Hazards

To be eligible for a Health Savings Account, an individual must be covered by a

High-deductible health plan

Which of the following riders would not increase the premium for a policy owner

Impairment rider

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?

Implied

Premium payments for personally-owned disability income policies are

Not tax deductible

Insurance company wants to obtain the insurance history of an applicant. Which source releases coded information to insurers regarding information included on previous insurance applications?

Medical Information Bureau

Which is not covered under Plan A in medigap insurance

Medicare Part A deductible

Which of the following is NOT correct

Medicare advantage must be provided through HMO s

During a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant. This describes

Misrepresentation

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

If one takes Social Security retirement benefits at age 62, what needs to be done at age 65 to qualify for Medicare?

Nothing

Which of the following statements is most correct concerning the changing of an irrevocable beneficiary?

They can be changed only with the written consent of that beneficiary

When employees are actively at work on the date coverage can be transferred to another insurance carrier, what happens to coinsurance and deductibles?

They carry over from the old plan to the new plan

Which of the following is true for both equity indexed annuities and fixed annuities?

They have a guaranteed minimum interest rate

Best reason to purchase life insurance rather than annuities

To create an estate

Why do group health providers usually require a certain amount of participation in the plan by eligible employees?

To guard against adverse selection and reduce cost

A health insurance policy may cover all of the following risks except

War related injuries

While repairing the roof of his house an insured accidentally falls off and breaks his arm and sustains a head injury that results in total blindness of both eyes. His policy contains an Accidental Death and Dismemberment Rider. What is the extent of benefits that he will receive?

Principal sum

Which of the following are the main factors taken into account when calculating residual disability benefits?

Present earnings and earnings prior to disability

Pertaining to insurance, what is the definition of a fiduciary responsibility?

Promptly forwarding premiums to the insurance company

Insurers may change which of the following on a guaranteed renewable health insurance policy?

Rate by class

Which of the following would be a typical maximum benefit offered by major medical plans?

$1 milliion

Producer intentionally violates the insurance code to increase his commissions. How much would he be penalized?

$25,000

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 on February 28. How much would the beneficiary receive from the policy?

$9800

For how many days of skilled nursing facility care will Medicare pay benefits?

100

The widower of an agent was issued a temporary license 30 days ago. How much longer can he legally serve under this license?

150 days (180 days total)

What is a penalty tax for non-qualified distributions from a health savings account?

20%

What is the duration of the free-look period for Medicare supplement policies

30 days

What is the elimination period for Social Security disability benefits?

5 months

In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?

5 years

To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters?

6 credits

What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 months

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

6 months to 2 years

If an employer provides long-term group disability insurance for its employees, what percentage of monthly wages are lower paid employees eligible to collect?

66 and 2/3%

Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within

90 days of a loss

Jason is insured under his employer's group health insurance. He splits the cost of the premiums with his employer. This is an example of

A contributory plan

All of the following could own group life policies except

A group needing low-cost life insurance

Which of the following named beneficiaries would not be able to receive the death benefit directly from the insurer in the event of the insured's death?

A minor son of the insured

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

Mike Armstrong is a producer and wants to operate under the name The Insurance Palace. What kind of license would this require?

Agency

When transacting business in this state an insurer formed under the laws of another country is known as a/an

Alien insurer

Which of the following individuals is eligible for a health savings account?

Allison is insured by a High Deductible Health Plan (HDHP)

Long term care insurance policies must cover which of the following?

Alzheimer's disease

Under HIPAA, which of the following is INCORRECT regarding eligibility requirements for conversion to an individual policy?

An individual who was previously covered by group health insurance for 6 months is eligible

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 the application

An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his

Attained age

What document describes an insured's medical history, including diagnosis and treatments?

Attending Physician's Statement (APS)

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is

Conditional

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT

Conditions

An applicant wants to buy a life insurance policy in which he can count on receiving the same benefits as stated in the contract. Which type should he buy?

Fixed

Regarding long-term care coverage, as the elimination period gets shorter, the premium

Gets higher

Which type of a hospital policy pays a fixed amount each day that the insured is in a hospital?

Indemnity

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

The Patient Protection and Affordable Care Act includes all of the following provisions except

Individual tax deduction for premiums paid

Which of the following refers to "Own Occupation" disability?

Insured is unable to perform duties of the occupation for which he/she was educated/trained

Credit life insurance

Insures the life of the debtor

All are nonforfeiture options except

Interest only

The policy owner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policy owner choose?

Interest only option

In a group health policy, a probationary period is for people who

Join the group after the effective date

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

All of the following statements describe a MEWA except

MEWAs are groups of at least 3 employers

In group insurance, what is the policy called?

Master policy

A long-term care insurance shopper's guide must be provided in the format developed by which of the following

NAIC

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

Insured didn't pay premium. Policy lapsed, filled a reinstatement app and another premium- reinstated shortly thereafter. 5 days after the reinstatement, he had a consultation with a general physician. Which part of the consultation costs will be covered?

None

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 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 options

The part of Medicare that helps pay for inpatient hospital care, inpatient care in a skilled nursing facility, home health care and hospice care, is known as

Part A

An insured has a level term life insurance policy that is guaranteed renewable and also includes a re-entry provision. The re-entry provision would allow the insured to renew the policy and

Pay a lower renewal premium by proving insurability

Insured purchased a life policy in 2010 and died in 2017. The insurance company discovers at that time that the insured had concealed information during the application process. What can they do now?

Pay the death benefit

Which of the following methods to designate a beneficiary literally means "by the head"?

Per capita; each person named as beneficiaries would receive equal portions

If the policy owner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?

Policy owner

Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value?

Predicted needs of the family after the insured's death; Human Life Value Approach to determing the value of an individual's life requires the calculation of probable future earnings of the insured, which involves wages, expenses, inflation, amount of time until retirement, and the time value of money. Predicted needs of the family after the insured's death are used in the needs approach.

An underwriter may reject an application for health insurance if the rejection is based upon which of the following?

Prescription Usage

What would a physician utilize if he/she wanted to know if a treatment is covered under an insured's plan and at what rate it would be paid?

Prospective review

Giving a client an inducement to a sale not stated in the policy is an unlawful practice known as

Rebating

Rod wants to pay his initial life insurance premium in advance. Which of the following best describes his situation?

Rod can pay his premium as early as he wants, even with his application

Which settlement option provides a single beneficiary with income for the rest of his/her life?

Single life

All of the following long-term care coverages would allow an insured to receive care at home except

Skilled Care

All of the following are beneficiary designations except

Specified

Stipulates that the beneficiary will receive payments in specified installments or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the planned installments

Spendthrift provision

When the policy premium wasn't submitted with the application, what should the agent obtain from the insured upon policy delivery?

Statement of Good Health

Traditional IRA contributions are

Tax deductible

All of the following would be different between qualified and non qualified retirement plans except

Taxation on accumulation

The National Do Not Call Registry was created to regulate

Telemarketers

Individual wants to purchase a life policy. His agent asks if the transaction will involve replacing any existing life policies. if he replies yes, which of the following best describes the agent's next step?

The agent must provide a replacement notice to the applicant

Which of the following is not a characteristic of a group long-term care disability plan?

The benefit can be up to 50% of one's yearly income

A husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouse's coverage. If one of them incurs hospital expenses, how will those expenses likely be paid?

The benefits will be coordinated

What is the advantage of reinstating a policy instead of applying for a new one?

The original age is used for premium determination

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 are true about variable products except

The premiums are invested in the insurer's general account

Which of the following is not a goal of risk retention?

To minimize the insured's level of liability in the event of loss

Which of the following is not the purpose of HIPAA

To provide immediate coverage to new employees who had been previously covered for 18 months

When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees

To renew the policy until the insured has reached age 65.

Who has the legal title of the property in a trust

Trustee

Evaluating information that establishes adverse selection risk is the purpose of which stage of insurance?

Underwriting

The Waiver of Cost of Insurance rider is found in what type of insurance?

Universal Life

Which of the following life insurance policies would be considered interest sensitive?

Universal Life

A temporary license in this state is valid for

180 days

An insured misstated her age on an application for an individual health insurance policy. The insurance company found the mistake after the contestable period had expired. The insurance company will take which of the following actions regarding any claim that has been issued?

Adjust the claim benefit to reflect the insured's true age

With a Single Premium Deferred Annuity (SPDA), when are the benefits paid?

After more than 1 year

The First Street Church plans to sponsor a summer camp for the youth of their congregation. They would like to purchase insurance that would pay benefits should one of the youth get injured while participating in the camp activities. The type of policy they would likely need is a/an

Blanket

Which of the following is a true comparison between annuities and life insurance?

Both annuities and life insurance use mortality tables

Which of the following options best depicts how the eligibility of members for group health insurance is determined?

By conditions of employment

Which is true about the cash surrender nonforfeiture option?

Funds exceeding the premium paid are taxable as ordinary income

What type of policy allows the insurance company to cancel a policy at any time?

Cancellable

What type of annuity promises to pay a beneficiary, in a lump sum, the difference between the amount paid into the contract and the benefits received prior to the annuitant's death?

Cash refund annuity

Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as

Coercion

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; The binding force in any contract is consideration. Consideration on the part of the insured is the payment of premiums and the health representations made in the application. Consideration on the part of the insurer is the promise to pay in the event of loss

Which of the following provisions must be included on the first page of Medicare supplement policies. This provision explains the right to change premium amounts

Continuation provision

If an employee terminates her employment, which of the following provisions would allow her to continue health coverage under individual policy, if requested within 31 days?

Conversion

A 7% inflation because economic hardship. Policy owner notices that the face of her life insurance policy has been raised 7% as a result. What policy rider?

Cost of living rider

Which of the following would be the beneficiary in credit life insurance

Creditor

Which of the following expenses is not covered by a health insurance policy?

Funeral

Which component increases in the increasing term insurance?

Death benefit

On a major medical insurance policy, the amount that an insured must pay on a claim before the insurer will pay is known as

Deductible

What would be an advantage to naming a contingent (secondary) beneficiary in a life insurance policy?

Determines who receives policy benefits if the primary beneficiary is deceased

All of the following are features and requirements of the Living Needs Rider except

Diagnosis must indicate that death is expected within 3 years

Which will not be considered unfair discrimination by insurer

Discriminating in benefits and coverages based on the insured's habits and lifestyle

The period of time immediately following a disability during which benefits are not payable is

Elimination Period; The elimination period is a waiting period, expressed in days, not dollars imposed on the insured from the onset of disability until benefit payments commence.

The insurance policy, together with the policy application and any added riders form what is known as

Entire contract

The provision that states that both the printed contract and a copy of the application form the contract between the policy-owner and the insurer is called the

Entire contract

Which of the following are the authorities that an agent can hold?

Express and implied

Which nonforfeiture option has the highest amount of insurance protection?

Extended term

An agent selling variable annuities must be registered with

FINRA

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.

Health coverage becomes effective when the

First premium has been paid and the application has been approved.

Annually renewable term policies provide a level death benefit for a premium that

Increases annually

What type of insurance would be used for a Return of Premium Rider?

Increasing Term; Return of premium rider is achieved by using increasing term insurance. When added to a whole life policy it provides that at death prior to a given age, not only is the original face amount payable, but also all premiums previously paid are payable to the beneficiary.

An applicant is discussing his options for Medicare supplement coverage with his agent. The applicant is 65 years old and has just enrolled in Medicare Part A and Part B. What is the insurance company obligated to do?

Offer the supplement policy on a guaranteed issue basis

Which Universal Life option has a gradually increasing cash value and a level death benefit?

Option A

When an employee is still employed upon reaching age 65 and eligible for medicare, which of the following is the employee's option?

Remain on the group health insurance plan and defer eligibility for medicare until retirement

Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must

Respond to the consumer's complaint

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 entities regulate variable life policies except

The guaranty association

In a group policy, who is issued a certificate of insurance?

The individual insured

In which of the following cases would any occupation disability income policy pay the benefits

The insured is unable to perform any jobs in the field related to the insured's education and experience

The expense for an autopsy covered under the physical exam and autopsy provision is paid by

The insurer

All of the following are true statements regarding the accumulation at interest option except

The interest is not taxable since it remains inside the policy

Which of the following statements regarding the taxation of modified endowment contracts is false

Withdrawals are not taxable

Credit Life Insurance

insures the life of a debtor

Which of the following is not provided by an HMO?

reimbursement

Your client uses $50,000 in inheritance money to purchase a single premium immediate annuity. How soon can he begin receiving income payments?

No later than 1 year from the time of purchase

Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a

Premium Receipt

All of the following are true regarding key person disability income insurance except

Premiums are tax deductible as a business expense

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?

$10,000, no tax consequence

Which of the following is an example of a limited-pay life policy?

Life paid-up at age 65

Most policies will pay the accident death benefits as long as the death is caused by the accident and occurs within

90 days

Which of the following would be deducted from the death benefit paid to a beneficiary, if a partial accelerated death benefit had been paid while the insured was still alive

Amount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit.

Which of the following individuals must be licensed as an insurance agent?

An employee of an insurer who receives commissions only on a few policies a year

While a claim is pending, an insurance company may require

An independent examination as often as reasonably required

Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?

Apparent

in which of the following cases would a credit disability policy be issued?

If an individual is in debt to a specific creditor, payments will be made for him/her until the return to work

A couple near retirement is planning for their golden years. They want to make sure that their retirement annuity provides monthly benefits for the rest of their lives. Should one of them die, the other would still like to continue receiving benefits. Which settlement option should they choose?

Joint and Survivor

If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age, what type of policy is this?

Jumping Juvenile Policy

Concerning Juvenile Life insurance, which of the following statements is INCORRECT?

Juvenile life is classified as any life insurance purchased by a minor

An insured owns a term life policy with a guaranteed renewable options. When the end of the policy draws near, the insured answers medical questions in order to prove insurability and qualifies for a discounted premium rate. Which option best describes the scenario?

Re-entry; Some policies contain a re-entry option where the insured, upon the end of a term policy with guaranteed renewable option, may answer medical questions to prove insurability and qualify for a discounted premium rate.

Which of the following factors determines the amount of each installment paid in a life income option arrangement?

Recipient's life expectancy and amount of principal

Which of the following insurance options would be considered a risk-sharing arrangement?

Reciprocal; When insurance is obtained through a reciprocal insurer, the insureds are sharing the risk of loss with other subscribers of that reciprocal

Which nonforfeiture option provides coverage for the longest period of time?

Reduced paid-up

An insured who has an accidental death and dismemberment policy loses her left arm in an accident. What type of benefit will she most likely receive from this policy?

The capital amount in a lump sum

Under an extended term nonforfeiture option, the policy cash value is converted to

The same face amount as in the whole life policy; under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former policy

In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT

The type of investment

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

Universal Life