Life & Health: Practice Exam Questions
What is the maximum monetary fine for a nonwillful violation of insurance statutes regarding unfair trade practices?
$1,000
Maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?
$2,500
Before insurers may transact business in a specific state, they must apply for....from the state department of insurance and meet any financial (capital and surplus) requirements set down by the state.
A license or Certificate of Authority
All other factors being equal, the least expensive first-year premium payment is found in
Annually renewable term
An insurer is attempting to determine the insurability of an applicant and decides to obtain medical information from several different sources. Which entity must be notified of the investigation?
Applicant
The gatekeeper of an HMO helps to
Control specialist costs
If an employee terminates her employment, which of the following provisions would allow her to continue health coverage under an individual policy, if requested within 31 days?
Conversion
Has provision allowing policy owner to cover to permanent insurance
Convertible term policy
A specific dollar amount of the cost of care that must be paid by the member?
Copayment
Medicare Supplement Plan A provides what?
Core, or basic, benefits established by law
A man is enrolled in Part A of Medicare and not Part B. Three months into coverage, he applies for a Medicare supplement policy. What can insurer do?
Deny coverage
This arrangement specifies who will purchase a disabled partner's interest in the event he or she becomes disabled
Disability Buyout
Agreement that specifies who will purchase a disabled partner's interest and legally obligates that person or party to purchase such interest upon disability
Disability Buyout Agreement
What about occupational vs nonoccupational coverage is true?
Disability Insurance can be written as either
What is the general duty of the Commissioner?
Enforce insurance laws
Are not securities, but they invest on a relatively aggressive basis to aim for higher returns
Equity Indexed Annuities
Only an....of the company, not an agent, has authority to make any changes to the policy.
Executive officer
Protects consumers against the circulation of inaccurate or obsolete personal or financial information
Fair Credit Reporting Act
J applied for a life insurance policy on January 10, it was issued on January 31. J did not receive the policy until February 18. J decides that he does not want the policy. When would J need to return the policy to the insurer in order to receive a full refund of premium paid?
Feb. 28th-- 10 days after policy is delivered
If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?
Full death benefit
Hospital policy that pays a fixed amount each day that the insured is in a hospital?
Indemnity
All individual and group health insurance policies providing medical, surgical, or hospital expense in Kansas, must provide reimbursement or indemnity for the treatment of alcoholism, drug abuse, or nervous or mental conditions. Such coverage may be limited to
Not less than 30 days per year when the person is confined in a properly licensed facility
What kind of policy allows withdrawals or partial surrenders?
Universal life
When is it illegal to obtain sources of underwriting information?
w/o informing proposed insured
According to the rights of renewability rider for cancellable policies, what is true about the cancellation of an individual insurance policy?
1- Insurer must provide insured written notice of cancellation 2- Claims incurred before cancellation must be honored 3- Insurance company may cancel policy at any time
What is true regarding the accumulation at interest option?
1- Interest credited at rate specified by policy 2-Policyholder right to withdraw accumulations at any time 3-Annual dividend retained by company
What is true regarding a temporary license in this state?
1- doesn't require written examination 2- Each individual can hold one 3- Can be issued for up to 180 days to a spouse of the deceased agent
General requirements of a qualified plan
1.) Must be communicated to all employees 2.) Plan must be for exclusive benefits of the employees & their beneficiaries 3.) Must be permanent, written, & legally binding
An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy?
10 days
For how many days of skilled nursing facility care will Medicare pay benefits?
100
When a hearing is scheduled, the Commissioner must give notice to all interested parties as to the time, place and purpose of a hearing within how many days of the hearing?
15 days
Period during which annuity payments earn interest, over which annuitant makes payments into an annuity & also called the pay-in period
Accumulation period of an annuity
What 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 accelerated benefit + earnings lost by insurance company in interest income from accelerated benefit
What is the consideration in a policy?
Application given to a prospective insured
Which document would give the underwriter a better understanding of how the insured was treated for various illnesses?
Attending Physicians Statement (APS)
Covers members of a particular group when they are participating in a particular activity
Blanket policy
What is correct concerning the changing of an irrevocable beneficiary?
Can only be changed w/ written consent of beneficiary
Anna loses her left arm in an accident that is covered by her Accidental Death and Dismemberment policy. What kind of benefit will Anna most likely receive from this policy?
Capital amount in lump sum
Term policies do not develop what?
Cash Values
Term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.
Children's Rider
The provision that provides for the sharing of expenses between the insured and the insurance company is
Coinsurance
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
Clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident
Common Disaster Clause
Intended to provide coverage on a date earlier than the date of the issuance of the policy
Conditional Receipt
Something of value that is transferred between the 2 parties to form a legal contract
Consideration
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as what?
Consideration
Policies do not cover losses caused by war, military service, intentionally self-inflicted injuries, overseas residence, or injuries suffered while committing/attempting to commit a felony
General Disability policies
How are HMO territories typically divided?
Geographic Areas
When the agent receives the application and issues a conditional receipt, the insurer....
Hasn't approved the application & issued the policy
Prevents an insurer from denying a claim due to statements in an application after the policy has been in force for 2 years, even on the basis of a material misstatement of facts or concealment of a material fact.
Incontestability Clause
An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium?
Increase because insured will be 5 years older than when policy was purchased
What does the insuring clause specify?
Insurance company, name of insured & covered perils
The expense for an autopsy covered under the physical exam and autopsy provision is paid by
Insurer
What entities can legally bind coverage?
Insurer
Who pays for the cost of a medical examination required in the process of underwriting?
Insurer
What is TRUE concerning the Accidental Death Rider?
It will pay double or triple the face amount
May be reinstated within 3 years by paying back premiums, with interest, and proving insurability.
Lapsed Policy
A Straight Life policy has what type of premium?
Leven annual premium for the life of the insured
All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?
Lower
The larger the percentage that is paid by the insured, the....the required premium will be.
Lower
Every insurer transacting life and/or health insurance in the state as an admitted insurer must do what?
Maintain membership in the Guaranty Association
In group health insurance, all individuals are covered under what?
Master policy for the same coverages
Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to an insured is....
Monthly
An insured purchased a disability income policy with a 10-year benefit period. The policy stated a 20-day probationary period for illness. If the insured is hospitalized with an illness two weeks after the policy was issued, how much will the policy pay?
Nothing, illness is not covered during the first 20-days of the contract
An insured purchases a policy in 2008 and died in 2013. The insurance company discovers at that time that the insured concealed information during the application process. What can they do?
Pay the death benefit
10-day free looking period begins when?
Policy is delivered
"owner" of life settlement contracts
Policyowner of life insurance policy
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?
Proof of insurability isn't required
What is the purpose of a fixed-period settlement option?
Provide a guaranteed income for a certain amount of time
Because of financial obligations, John felt that he needed more insurance than the insurer was willing to issue. John's insurance producer told him that he could maximize the death benefit without increasing the face amount by the use of a(n)
Return of premium rider
Type of life insurance policy that generates immediate cash value
Single Premium
Best way to change an application?
Start fresh
Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under an accident and health policy must contain
Statement sufficiently clear to identify insured & nature of claim
In the event of replacement, the current agent must do what?
Submit to the replacing insurance company, with the application, a copy of the replacement notice
A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as
Survivor Protection
Special tax-favored retirement plan available to certain groups of employees only?
Tax-sheltered annuity
The interest earned on policy dividends is....
Taxable
If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back?
The balance of the loan will be taken out of the death benefit
The time immediately following the start of a disability when benefits are not payable
The elimination period
What will vary the length of the grace period in health insurance policies?
The mode of premium payment
If an insurer issued a policy based on the application that had unanswered questions, what would be TRUE?
The policy will be interpreted as if the insurer waived its right to have an answer on the application.
What is true regarding health insurance underwriting for a person with HIV?
They can't be declined for medical coverage based solely on HIV status
What employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated?
Those who have been insured under the plan for at least 5 years
What type of rider obligates the company to pay three times the face amount of the policy if the insured dies as a result of an accident
Triple indemnity accidental death rider
Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
Twisting
Insured who enters into a viatical settlement
Viator
When are workers compensation benefits payable?
When a worker is injured by a work-related injury, regardless of fault or negligence
An employee is injured in a construction accident, rendering him unable to work for a year. What plan would provide him with medical expense coverage and income assistance?
Workers compensation