Life Insurance

Which of the following types of insurance policies is most commonly used in credit life insurance? a)Equity indexed life b)Decreasing term c)Increasing term d)Whole life

b)Decreasing term

Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid a)Until the policyowner's age 100, when the policy matures. b)For 20 years or until death, whichever occurs first. c)Until the policyowner reaches age 65. d)For at least 20 years.

For 20 years or until death, whichever occurs first.

A Straight Life policy has what type of premium? a)A variable annual premium for the life of the insured b)A level annual premium for the life of the insured c)An increasing annual premium for the life of the insured d)A decreasing annual premium for the life of the insured

b)A level annual premium for the life of the insured

Who is a third-party owner? a)An irrevocable beneficiary b)A policyowner who is not the insured c)An insurer who issues a policy for two people d)An employee in a group policy

b)A policyowner who is not the insured

Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe? a)Personal b)Adhesion c)Unilateral d)Conditional

b)Adhesion

Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be a)Discounted. b)Adjusted to the insured's age at the time of renewal. c)Determined by the health of the insured. d)Based on the issue age of the insured.

b)Adjusted to the insured's age at the time of renewal.

While a claim is pending, an insurance company may require a)An independent examination only once every 45 days. b)An independent examination as often as reasonably required. c)The insured to be examined only within the first 30 days. d)The insured to be examined only once annually.

b)An independent examination as often as reasonably required.

What does "liquidity" refer to in a life insurance policy a)The insured receives payments each month in retirement. b)Cash values can be borrowed at any time. c)The death benefit replaces the assets that would have accumulated if the insured had not died. d)The policyowner receives dividend checks each year.

b)Cash values can be borrowed at any time.

A policyowner would like to replace an existing policy with a new one. After having compared the two policies, the insurer has advised the policyowner not to continue the replacement process. What is the insurer's action called? a)Intervening cause b)Conservation c)Coercion d)Retaining

b)Conservation

Which provision allows the policyholder a period of time, while coverage is in force, to examine a health insurance policy and determine whether or not to keep it? a)Probationary Period b)Free Look Period c)Grace Period d)Elimination Period

b)Free Look Period

How are HMO territories typically divided? a)By where the HMO can find the least expensive physicians b)Geographic areas c)Type of physician services available d)Community rating system

b)Geographic areas

Who must pay for the cost of a medical examination required in the process of underwriting? a)Department of Insurance b)Insurer c)Applicant d)Underwriters

b)Insurer

Which of the following is true about the premium on the children's rider in a life insurance policy? a)It decreases when an adopted child is added to the policy. b)It remains the same no matter how many children are added to the policy. c)It decreases when the oldest child reaches the age of 21. d)It increases when a newborn baby is added to the policy.

b)It remains the same no matter how many children are added to the policy.

L has a major medical policy with a $500 deductible and 80/20 coinsurance. L is hospitalized and sustains a $2,500 loss. What is the maximum amount that L will have to pay? a)$1,000 (deductible + 20% of the entire bill) b)$2,500 (the entire bill) c)$900 (deductible + 20% of the bill after the deductible [20% of $2,000]) d)$500 (amount of deductible)

c)$900 (deductible + 20% of the bill after the deductible [20% of $2,000])

What is the maximum percent of customary charges for immunizations that a health care provider may charge? a)25% b)50% c)100% d)150%

c)100%

How long must an insurer retain an advertisement for its long-term care policies? a)1 year b)2 years c)3 years d)5 years

c)3 years

The Director may waive the continuing education reporting requirements for any of the following, EXCEPT a)A licensee who resides outside the United States. b)A licensee on active duty in the U.S. Armed forces. c)A licensee age 65 or older. d)A licensee with serious physical injury or illness.

c)A licensee age 65 or older.

Which of the following does the Insuring Clause NOT specify? a)The insurance company b)The name of the insured c)A list of available doctors d)Covered perils

c)A list of available doctors

A deductible is a)An insurer's obligation to the service provider. b)A nominal fee for the use of an insurer's services. c)A specified dollar amount that the insured must pay first before the insurance company will pay the policy benefits. d)A percentage of the medical bill the insured must pay before services will be rendered.

c)A specified dollar amount that the insured must pay first before the insurance company will pay the policy benefits.

What document describes an insured's medical history, including diagnoses and treatments? a)Individual Medical Summary b)Comprehensive Medical History c)Attending Physician's Statement d)Physician's Review

c)Attending Physician's Statement

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be a)Qualified. b)Approved. c)Authorized. d)Certified.

c)Authorized.

G is a commercial airline pilot who also flies his own twin piper aircraft for recreational purposes. What type of provision in a life insurance policy prevents his life from being covered under the policy should he die in a recreational plane crash? a)Aviation Disaster Clause b)Recreational Disaster Clause c)Aviation Exclusion Cause d)Recreational Exclusion Clause

c)Aviation Exclusion Cause

What describes the specific information about a policy? a)Buyer's guide b)Producer's report c)Policy summary d)Illustrations

c)Policy summary

What is the maximum first-year commission that a producer may receive for the sale of a Medicare supplement policy? a)50% of the aggregate commissions for the year b)100% of the aggregate commissions for the year c)100% of the commission paid for the servicing of the policy in the second year d)200% of the commission paid for the servicing of the policy in the second year

d)200% of the commission paid for the servicing of the policy in the second year

What is the waiting period on a Waiver of Premium rider in life insurance policies? a)30 days b)3 months c)5 months d)6 months

d)6 months

A child with phenylketonuria (PKU) will have its physician-recommended foods covered by a health insurance policy, provided the child is under what maximum age? a)1 months old b)3 months old c)3 years old d)6 years old

d)6 years old

All individual and group health insurance policies issued in this state that cover dependents of the insured must provide coverage for newborn children of the insured starting a)31 days after birth. b)90 days after birth. c)At the moment the insured pays the first premium for the child. d)At the moment of birth.

d)At the moment of birth.

When must insurable interest exist in a life insurance policy? a)At the time of policy delivery b)When there is a change of the beneficiary c)At the time of loss d)At the time of application

d)At the time of application

Ray has an individual major medical policy that requires a coinsurance payment. Ray very rarely visits his physician and would prefer to pay the lowest premium possible. Which coinsurance arrangement would be best for Ray? a)50/50 b)75/25 c)80/20 d)90/10

a)50/50

Which of the following is the required number of participants in a contributory group plan? a)75% b)100% c)25% d)50%

a)75%

The insured's health policy only pays for medical costs related to accidents. Which of the following types of policies does the insured have? a)Accident-only b)Restrictive c)Accidental Death d)Comprehensive

a)Accident-only

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? a)Adjust the claim benefit to reflect the insured's true age b)Deny any claims and cancel the policy c)Deny paying a claim based on misrepresentation d)Pay the full amount of a claim because the contestable period has ended

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

All of the following statements are correct regarding credit life insurance EXCEPT a)Benefits are paid to the borrower's beneficiary. b)The amount of insurance permissible is limited per borrower. c)Premiums are usually paid by the borrower. d)Benefits are paid to the creditor.

a)Benefits are paid to the borrower's beneficiary.

A small hardware store owner is involved in a car accident that renders him totally disabled for half a year. Which type of insurance would help him pay for expenses of the company during the time of his disability? a)Business overhead expense policy b)Key person insurance c)Disability buy-sell agreement d)Business disability policy

a)Business overhead expense policy

An insurer cannot transact business until it obtains a/an a)Certificate of Authority. b)State Insurer's Certificate. c)Director's Statement of Approval. d)Insurer's License.

a)Certificate of Authority.

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 a)Consideration Clause. b)Insuring Clause. c)Pre-existing Conditions Clause. d)Eligibility Clause.

a)Consideration Clause.

An insured is hospitalized with a back injury. Upon checking his disability income policy, he learns that he will not be eligible for benefits for at least 30 days. This indicates that his policy is written with a 30-day a)Elimination period. b)Blackout period. c)Probationary period. d)Waiver of benefits period.

a)Elimination period.

The provision that states that both the printed contract and a copy of the application form the contract between the policyowner and the insurer is called the a)Entire contract. b)Certificate of insurance. c)Aleatory contract. d)Master policy.

a)Entire contract.

All of the following are dividend options EXCEPT a)Fixed-period installments. b)Accumulated at interest c)Reduction of premium. d)Paid-up additions.

a)Fixed-period installments.

What phase begins after a new policy is delivered? a)Free-look period b)Insurability period c)Elimination period d)Grace period

a)Free-look period

Under the Privacy Rule for HIPAA, protected information includes all individually identifiable health information a)Held or transmitted in any form. b)Transmitted electronically only. c)Held in a computer format. d)Held or transmitted in paper form.

a)Held or transmitted in any form.

All of the following are differences between individual and group health insurance EXCEPT a)Individual insurance does not require medical examinations, while group insurance does require medical examinations. b)In individual policies, the individual selects coverage options, while in a group plan all employees are covered for the same coverage which is chosen by the employer. c)Individual coverage can be written on an occupational or nonoccupational basis; group plans cover only nonoccupational. d)Individual policies are renewable at the option of the insured, while group usually terminates when the individual leaves the group.

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

Which of the following entities can legally bind coverage? a)Insurer b)The insured c)Federal Insurance Board d)Agent

a)Insurer

Who makes up the Medical Information Bureau? a)Insurers b)Hospitals c)Former insured d)Physicians and paramedics

a)Insurers

In health insurance, if a doctor charges $50 more than what the insurance company considers usual, customary and reasonable, the extra cost a)Is not covered. b)Must be covered by the insurer. c)Counts toward deductible. d)Counts toward coinsurance.

a)Is not covered.

Insurance that would pay for hiring a replacement for an important employee who becomes disabled is called a)Key employee disability insurance. b)Blanket disability insurance. c)Long-term disability. d)Business overhead expense disability insurance.

a)Key employee disability insurance.

Which of the following statements is NOT correct regarding Medicare? a)Medicare Advantage must be provided through HMOs. b)Medicare Advantage may include prescription drug coverage at no cost c)Medicare Part A provides hospital care. d)Medicare Part B provides physician services.

a)Medicare Advantage must be provided through HMOs.

All of the following are the most common variations in a Long-Term Care policy EXCEPT a)Number of family dependents. b)The amount paid for nursing home care. c)Number of days of confinement covered. d)Number of home health visits covered.

a)Number of family dependents.

If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a a)Settlement option. b)Nontaxable exchange. c)Nonforfeiture option. d)Rollover.

a)Settlement option.

Who bears all of the investment risk in a fixed annuity? a)The insurance company b)The owner c)The beneficiary d)The annuitant

a)The insurance company

When would a 20-pay whole life policy endow? a)When the insured reaches age 100 b)At the insured's age 65 c)After 20 payments d)In 20 years

a)When the insured reaches age 100

What would be an advantage to naming a contingent (or secondary) beneficiary in a life insurance policy? a)It requires that someone who is not the primary beneficiary handles the estate. b)It determines who receives policy benefits if the primary beneficiary is deceased. c)It allows creditors to receive payment out of the proceeds. d)It ensures the policy proceeds will be split between the primary and contingent beneficiaries.

b)It determines who receives policy benefits if the primary beneficiary is deceased.

An insured is covered by a disability income policy that contains an accidental means clause. The insured exits a bus by jumping down the steps and breaks an ankle. What coverage will apply? a)Coverage will apply, but will be reduced by 50%. b)No coverage will apply, since the injury could have been foreseen. c)No coverage will apply, since disability income policies cover sickness only. d)Coverage will apply since the break was accidental.

b)No coverage will apply, since the injury could have been foreseen.

Which of the following must be present in all Medicare supplement plans? a)Plan C coinsurance b)Plan A c)Foreign travel provisions d)Outpatient drugs

b)Plan A

Which of the following are the main factors taken into account when calculating residual disability benefits? a)Present earnings and standard cost of living b)Present earnings and earnings prior to disability c)Earnings prior to disability and the length of disability d)Employee's full-time status and length of disability

b)Present earnings and earnings prior to disability

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT a)Delivery receipt. b)Signed waiver of premium. c)Statement of good health. d)Payment of premium.

b)Signed waiver of premium.

Group life insurance policies delivered in this state must contain all of the following provisions EXCEPT a)A copy of the application is considered part of the policy. b)Statements of the applicant are considered warranties. c)A grace period of 31 days. d)Incontestability period of 2 years.

b)Statements of the applicant are considered warranties.

Which of the following describes the tax advantage of a qualified retirement plan? a)Employer contributions are not taxed when paid out to the employee. b)The earnings in the plan accumulate tax deferred. c)Distributions prior to age 59½ are tax deductible. d)Employer contributions are deductible as a business expense when the employee receives benefits.

b)The earnings in the plan accumulate tax deferred.

Which provision states that the insurance company must pay Medical Expense claims immediately? a)Relation of Earnings to Insurance b)Time of Payment of Claims c)Payment of Claims d)Legal Actions

b)Time of Payment of Claims

When is the earliest a policy may go into effect? a)After the underwriter reviews the policy b)When the application is signed and a check is given to the agent c)When the first premium is paid and the policy has been delivered d)When the insurer approves the application

b)When the application is signed and a check is given to the agent

Which of the following best describes fixed-period settlement option? a)The death benefit must be paid out in a lump sum within a certain time period. b)Income is guaranteed for the life of the beneficiary. c)Both the principal and interest will be liquidated over a selected period of time. d)Only the principal amount will be paid out within a specified period of time.

c)Both the principal and interest will be liquidated over a selected period of time.

Which of the following components must a life insurance policy have to allow policy loans? a)Flexible premiums b)Face amount c)Cash value d)Dividends

c)Cash value

To legally transact insurance in this state, an insurer must obtain which of the following? a)Business entity license b)Certificate of Insurance c)Certificate of Authority d)Power of Attorney

c)Certificate of Authority

An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe? a)Aleatory b)Unilateral c)Conditional d)Contingent

c)Conditional

What is another name for interest-sensitive whole life insurance? a)Term life b)Adjustable life c)Current assumption life d)Variable life

c)Current assumption life

An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation? a)Universal life b)Whole life c)Decreasing term d)Variable life

c)Decreasing term

A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this? a)Ordinary life policy b)Limited pay whole life c)Level term d)Term to specified age

c)Level term

A 65 year old enrolls for benefits under Medicare Part B and submits an application for a Medicare supplement policy two months later. For which of the following reason may the insurer deny the application? a)Claims experience b)Medical condition c)Material misrepresentation d)Health status

c)Material misrepresentation

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? a)Approved the application b)Issued the policy c)Neither approved the application nor issued the policy d)Both approved the application and issued the policy

c)Neither approved the application nor issued the policy

Which of the following applies to partial disability benefits? a)Payment is based on termination of employment. b)Benefits are reduced once an insured is no longer under a doctor's care. c)Payment is limited to a certain period of time. d)An insured is entitled to a principal sum benefit for the partial loss of a limb.

c)Payment is limited to a certain period of time.

Methods used to pay the death benefits to a beneficiary upon the insured's death are called a)Beneficiary provisions. b)Death benefit options. c)Settlement options. d)Designation options.

c)Settlement options.

Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members? a)Guaranteed insurability rider b)Change of insured rider c)Term rider d)Accidental death and dismemberment rider

c)Term rider

Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to a)Beneficiary of the death benefit. b)The spouse of the insured. c)The insured. d)Creditors.

c)The insured.

Which of the following is NOT a feature of a noncancellable policy? a)The guarantee to renew coverage usually applies until the insured reaches certain age. b)The insured has the right to renew the policy for the life of the contract. c)The insurer may terminate the contract only at renewal for certain conditions. d)The premiums cannot be increased beyond the amount stated in the policy.

c)The insurer may terminate the contract only at renewal for certain conditions.

Which of the following provisions is NOT mandatory for health insurance policies in this state? a)Reinstatement b)Legal actions c)Unpaid premiums d)Claim forms

c)Unpaid premiums

When can a Long-Term Care policy deny a claim for losses incurred because of a pre-existing condition? a)At any time b)At no time c)Within 6 months of the effective date of coverage d)Within 12 months of the effective date of coverage

c)Within 6 months of the effective date of coverage

Before the Director will issue a license, a person must meet all of the following qualifications EXCEPT a)Be at least 18 years of age. b)File an application with the Director. c)Pass an examination for each line for which a license is sought. d)Be appointed to represent at least one authorized insurance company.

d)Be appointed to represent at least one authorized insurance company.

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 a)Conditions. b)Utmost good faith. c)Acceptance. d)Consideration.

d)Consideration.

Which of the following is true regarding coverage for diabetes in group health insurance policies in Missouri? a)Coverage is optional with a higher co-payment. b)Coverage is available in limited benefit health plans. c)Coverage must be provided without deductibles. d)Coverage is required for type I and II diabetes.

d)Coverage is required for type I and II diabetes.

What provision in an insurance policy extends coverage beyond the premium due date? a)Free look b)Automatic premium loan c)Waiver of premium d)Grace period

d)Grace period

Which of the following provisions in universal life policies stipulates that a written notice of the termination of coverage must be sent to the policyowner? a)Policy guarantees b)Illustrations c)Periodic disclosure d)Grace period and lapse

d)Grace period and lapse

Which of the following best describes a misrepresentation? a)Making a deceptive or untrue statement about a person engaged in the insurance business b)Making a maliciously critical statement that is intended to injure another person c)Discriminating among individuals of the same insuring class d)Issuing sales material with exaggerated statements about policy benefits

d)Issuing sales material with exaggerated statements about policy benefits

In a group health policy, a probationary period is intended for people who a)Have a pre-existing condition at the time they join the group. b)Have additional coverage through a spouse. c)Want lower premiums. d)Join the group after the effective date.

d)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? a)Time limit on certain defenses. b)Payment of claims. c)Proof of loss. d)Legal actions.

d)Legal actions.

The corridor deductible derives its name from the fact that it is applied between the basic coverage and the a)Comprehensive expense coverage. b)Interval expense coverage. c)Limited coverage. d)Major medical coverage.

d)Major medical coverage.

Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices? a)Stating that the insurance policy is a share of stock b)Exaggerating the benefits provided in the policy c)Stating that the competitors will arbitrarily increase their premiums each year d)Making comparisons between different policies

d)Making comparisons between different policies

Children's riders attached to whole life policies are usually issued as what type of insurance? a)Variable life b)Adjustable life c)Whole life d)Term

d)Term

Who is the owner and who is the beneficiary on a Key Person Life Insurance policy? a)The employer is the owner and the key employee is the beneficiary. b)The key employee is the owner and beneficiary. c)The key employee is the owner and the employer is the beneficiary. d)The employer is the owner and beneficiary.

d)The employer is the owner and beneficiary.

An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT? a)The insured would not need to prove insurability for a conversion policy. b)The insured may convert coverage to an individual policy within 31 days. c)The premium for individual coverage will be based upon the insured's attained age. d)The insured may choose to convert to term or permanent individual coverage.

d)The insured may choose to convert to term or permanent individual coverage.

Which of the following determines the cash value of a variable life policy? a)The company's general account b)The policy's guarantees. c)The premium mode d)The performance of the policy portfolio

d)The performance of the policy portfolio

Which of the following is true regarding taxation of accelerated benefits under a life insurance policy? a)They are always taxable to chronically ill insured. b)They are always taxed. c)There is a 10% penalty for early distribution of the death benefit. d)They are tax free to terminally ill insured.

d)They are tax free to terminally ill insured.

An insured notifies the insurance company that he has become disabled. What provision states that claims must be paid immediately upon written proof of loss? a)Incontestability b)Physical Exam and Autopsy c)Legal Actions d)Time of Payment of Claims

d)Time of Payment of Claims