Missed Questions 2

When does the beneficiary have the right to change the settlement option on a life insurance policy? a) With the insurance company's permission b) At the time of the insured's death if there is no contingent beneficiary c) At the time of the insured's death if no settlement options are selected d) With the insured's permission

c) At the time of the insured's death if no settlement options are selected If the policyowner does not select a settlement option, the beneficiary will be allowed to choose one at the time of the insured's death

In which Medicare supplemental policies are the core benefits found? a) All plans b) Plans A and B only c) Plan A only d) Plans A-D only

a) All plans The benefits in Plan A are considered to be core benefits and must be included in the other types. Therefore, all types contain the core benefits offered by Plan A.

Which renewal option does NOT guarantee renewal and allows the insurance company to refuse renewal of a policy at any premium due date? a) Optionally renewable b) Conditionally renewable c) Guaranteed renewable d) Noncancellable

a) Optionally renewable In an optionally renewable policy, it is the insurer's option as to whether to renew or not.

Which type of life insurance policy generates immediate cash value? a) Single Premium b) Level Term c) Decreasing Term d) Continuous premium

a) Single Premium Like other types of whole life policies, Single Premium Whole Life (SPWL) endows for the face amount of the policy if the insured lives until the age of 100. The distinguishing feature of a SPWL is the fact that it generates immediate cash value, due to the lump-sum payment made to the insurer.

Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another? a) Rebating b) Twisting c) Switching d) False advertising

b) Twisting "Twisting" is a misrepresentation that persuades an insured/owner, to his or her detriment, to cancel, lapse, or switch policies from one to another.

In order to sell long-term care partnership policies, how much ongoing training are agents required to undergo? a) 4 hours every 12 months b) 8 hours every 24 months c) 4 hours every 24 months d) 8 hours every 12 months

c) 4 hours every 24 months After the initial 8-hour training, agents are required to complete 4 hours of additional training every 24 months.

The two types of assignments are a) Complete and partial. b) Complete and proportionate. c) Absolute and collateral. d) Absolute and partial.

c) Absolute and collateral. Absolute assigns the entire policy. Collateral assigns a part or all of the benefits.

Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insured for full disability benefits. Which disability policy provision does this describe? a) Dismemberment disability b) Partial disability c) Residual disability d) Presumptive disability

d) Presumptive disability Presumptive disability is a provision that is found in most disability income policies which specifies the conditions that will automatically qualify the insured for full disability benefits.

An association may be the policyholder of a group policy that covers its members, providing that it has a minimum of how many members? a) 50 b) 100 c) 10 d) 15

b) 100 An association may be the policyholder of a group policy that covers its members, providing that it has a minimum of 100 members, has been organized and maintained in good faith for purposes other than obtaining insurance, and has been in active existence for at least 5 years.

Which of the following policy components contains the company's promise to pay? a) Entire contract provision b) Insuring clause c) Premium mode d) Consideration clause

b) Insuring clause

A long-term care insurance shopper's guide must be provided in the format developed by the a) Director b) State Insurance Board c) NAIC d) CPA

c) NAIC A long-term care insurance shopper's guide must be provided in the format developed by the National Association of Insurance Commissioners (NAIC). The shopper's guide must be presented to the applicant prior to completing the application.

Once the agent's appointment with the insurer has been terminated, how soon must the insurer mail a notice of termination to the agent? a) 15 calendar days b) 30 days c) 5 business days d) 10 days

a) 15 calendar days Within 15 calendar days after notifying the Commission of an agent's appointment termination, the insurer must mail a copy of the notification to the agent at his last known address.

What is a primary difference between an IRA and an SEP? a) Only $40,000 maximum per year can be contributed to an IRA. b) Much more money can be contributed to an IRA. c) Much more money can be contributed to a SEP. d) Only $3,000 maximum per year can be contributed to a SEP.

c) Much more money can be contributed to a SEP. The primary difference between a SEP and an IRA is the much larger amount that can be contributed each year to a SEP ($51,000 in 2013 or 25% of the employee's compensation, whichever is less).

Every insurer or entity providing long-term care benefits in this state must provide a copy of any advertisement to which entity for review? a) Federal Regulation of Insurance Advertising b) Consumer Protection Agency c) Guaranty Association d) Commission

d) Commission Every insurer or entity providing LTC supplement benefits in the state must provide a copy of any advertisement intended for use in Virginia, whether written or through radio or television, to the Commission for review. All advertisements must be retained by the insurer for at least 3 years from the date the advertisement was first used.

When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a) Key Person. b) A Fraternal Association. c) Aleatory Contract. d) Executive Bonus.

d) Executive Bonus.

What type of insurance would be used for a Return of Premium rider? a) Annually Renewable Term b) Increasing Term c) Level Term d) Decreasing Term

b) Increasing Term The 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.

The term "illustration" in a life insurance policy refers to a) Pictures accompanying a policy. b) Charts and graphs. c) A presentation of nonguaranteed elements of a policy. d) A depiction of policy benefits and guarantees.

c) A presentation of nonguaranteed elements of a policy. The term "illustration" means a presentation or depiction that includes nonguaranteed elements of a policy of individual or group life insurance over a period of years.

Variable Life insurance is based on what kind of premium? a) Increasing b) Decreasing c) Graded d) Level fixed

d) Level fixed Variable Life insurance is a level fixed premium investment based product

When a policy is surrendered for its cash value a) It can only be reinstated as a term policy b) Coverage ends and the policy cannot be reinstated. c) Coverage ends but the policy can be reinstated at anytime d) It can be reinstated by paying back all policy loans and premiums

b) Coverage ends and the policy cannot be reinstated. Once the cash surrender value option is selected, the coverage is terminated and the policy cannot be reinstated.

Which is true about a spouse term rider? a) The rider is decreasing term insurance. b) Coverage is allowed up to age 75. c) The rider is level term insurance. d) Coverage is allowed for an unlimited tim

c) The rider is level term insurance. The spouse term rider allows a spouse to be added for coverage. It is available for a limited amount of time, typically expiring at age 65. A spouse term rider (just like any other insured rider) is usually level term insurance.

All of the following are correct about the required provisions of a health insurance policy EXCEPT a) A reinstated policy provides immediate coverage for an illness. b) Proof-of-loss forms must be sent to the insured within 15 days of notice of claim. c) A grace period of 31 days is found in an annual pay policy. d) The entire contract clause means the signed application, policy, endorsements, and attachments constitute the entire contract.

a) A reinstated policy provides immediate coverage for an illness. Accidental injury is covered immediately, but to protect the insurer against adverse selection, losses resulting from sickness are covered only if the sickness occurs at least 10 days after the reinstatement date.

A husband and wife both incur expenses that are attributed to a single major medical insurance deductible. Which type of policy do they have? a) Family b) Combined c) Joint d) Mutual

a) Family In a family deductible, expenses for two or more family members can satisfy a common deductible in a given year, regardless of the amount of expenses incurred by other family members.

In Virginia, after 3 years of ownership, policyholders of whole life insurance policies are able to borrow cash values in excess of the mandated reserves at an interest rate that is a) Fixed or Variable. b) Prime plus 3%. c) Fixed. d) Variable.

a) Fixed or Variable. Insurers will provide in life policies, except extended term policies, a provision that after 3 policy years allows policyholders to borrow any cash values in excess of the mandated reserves at a specified interest rate which is either fixed or variable.

Marsha pays her Major Medical Insurance annually on March 1, each year. Last March she forgot to mail her premium to the company. On March 19, Marsha had an accident and broke her leg. Her insurance company would a) Pay the claim. b) Hold the claim as pending until the end of the grace period. c) Deny the claim. d) Pay half of her claim because she had an outstanding premium.

a) Pay the claim. Because the accident occurred during the grace period, the insurance company will pay the claim.

A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums? a) The insured's premiums will be waived until she is 21. b) The premiums will become tax deductible until the insured's 18th birthday. c) Since it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected. d) The insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums.

a) The insured's premiums will be waived until she is 21. Under the Payor Benefit, if the guardian of a child dies or becomes disabled, the child will be exempt from premium payment until a certain age, usually 21.

A life insurance policyowner has the flexibility to increase the amount of premium and then decrease it at a later date. The person is also allowed to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount. What type of policy is this? a) Universal life b) Flexible life c) Variable life d) Adjustable life

a) 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.

Tom purchased a 10 Year Level Term Insurance policy that is guaranteed renewable and convertible. Which of the following statements about Tom's policy is correct? a) At the end of the 10 year term, Tom can choose to renew the policy for another 10 year period at the same premium rate. b) At the end of the 10 year term, Tom can choose to renew the policy for another 10 year period, but at a higher premium rate. c) Tom must state at the time the policy is issued, whether he intends to renew or convert the policy. d) At the end of the 10 year term, Tom can only convert the policy to another term policy.

b) At the end of the 10 year term, Tom can choose to renew the policy for another 10 year period, but at a higher premium rate. Policies that are guaranteed renewable and convertible may be renewed, without evidence of insurability, for another like term, or may be converted to permanent insurance, without evidence of insurability.

An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act? a) Legal, provided that the other insurers are paid royalties for the usage of their names b) Illegal under any circumstances c) Legal, provided that the information can be verified d) Illegal until endorsed by the Guaranty Association

b) Illegal under any circumstances When a company criticizes the financial situation of another company, with the intention of injuring that company, it has committed an illegal trade practice called "defamation."

Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary? a) Fixed-amount b) Life income with period certain c) Joint and survivor d) Single life

b) Life income with period certain The life income with period certain option guarantees payments for the life of the recipient and also specifies a guaranteed period of continued payments. If the recipient should die during this period, the payments would continue to a designated beneficiary for the remainder of the period.

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the a) Payor rider. b) Other-insured rider. c) Change of insured rider. d) Juvenile rider.

b) Other-insured rider. The other-insureds rider is useful in providing insurance for more than one family member. The type of insurance offered by this rider is usually term insurance, with the right to convert to permanent insurance.

Which of the following riders would NOT cause the Death Benefit to increase? a) Accidental Death Rider b) Payor Benefit Rider c) Guaranteed Insurability Rider d) Cost of Living Rider

b) Payor Benefit Rider Payor Benefit Rider does not increase the Death Benefit; it only pays the premium if the payor is disabled or dies. With Guaranteed Insurability Rider, the policyowner can increase DB at specified ages or events, i.e. marriage or birth of a child; Cost of Living Rider increases DB to keep pace with inflation; in Accidental Death Rider, if the insured dies from an accident, DB is a multiple of the Face Amount.

Upon policy delivery, the agent may be required to obtain any of the following EXCEPT a) Corrected and resigned application. b) Signed waiver of premium. c) Statement of good health. d) Payment of premium.

b) Signed waiver of premium. The policy does not go into effect until the premium has been collected. If the premium was not collected at the time of the application, the agent may also be required to get a Statement of Good Health from the applicant at the time of policy delivery. Waiver of premium is a rider that can be added to a life insurance policy, and not something to be obtained from the applicant.

The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true? a) The contract can be issued without an annuitant. b) The annuitant must be a natural person. c) A corporation can be an annuitant as long as it is also the owner. d) A corporation can be an annuitant as long as the beneficiary is a natural person.

b) The annuitant must be a natural person. Owners of annuities can be individuals or entities like corporations and trusts, but the annuitant must be a natural person, whose life expectancy is taken into consideration for the annuity.

An insured submitted a notice of claim to the insurer, but never received claims forms. He later submits proof of loss, and explains the nature and extent of loss in a hand-written letter to the insurer. Which of the following would be true? a) The insured must submit proof of loss to the Department of Insurance. b) The insured was in compliance with the policy requirements regarding claims. c) The claim most likely will not be paid since the official claims form was not submitted. d) The insurer will be fined for not providing the claims forms.

b) The insured was in compliance with the policy requirements regarding claims. If claims forms are not furnished to the insured, the claimant is deemed to have complied with the requirements of the policy if he or she submits written proof of the occurrence, nature of the loss, and extent of loss to the insurer

An employee insured under a group health plan has been paying $25 monthly premium for his group health coverage. The employer has been contributing $75, for the total monthly cost of $100. If the employee leaves the company, what would be his maximum monthly premium for COBRA coverage? a) $25.50 b) $100 c) $102 d) $25

c) $102 The employer is permitted to collect a premium from the terminated employee at a rate of no more than 102% of the individual's group premium rate (in this scenario, 102% of $100 total premium is $102). The 2% charge is to cover the employer's administrative costs.

When an insurance producer is to charge an administrative fee to an insured, all of the following must be done EXCEPT a) The insured must provide a signature on any fee disclosure. b) A schedule of fees must be posted in the office. c) A copy of any fee disclosure must be provided to the insured. d) The agent must disclose the fees in writing.

c) A copy of any fee disclosure must be provided to the insured. All fees and charges for insurance must be stated in the premium. Agents are permitted to charge certain administrative fees provided the agent posts a schedule of the fees in the office, discloses the fees to the client in writing and the client signs the disclosure.

After a person's employment is terminated, it is possible to obtain individual health insurance after losing the group health coverage provided by the employer. Which of the following is NOT true? a) The employee can convert from group to individual insurance within 31 days of termination. b) The premium of the individual health insurance policy can be higher than the original policy. c) By law, the new, individual policy must provide the same benefits as the group insurance policy. d) Continuation of group coverage need not include dental, vision, or prescription drug benefits.

c) By law, the new, individual policy must provide the same benefits as the group insurance policy. Terminated employees have 31 days to convert to an individual health insurance policy, without having to provide proof of insurability. The insurer can adjust the new, individual health policy's premium as it sees fit, as long as coverage is provided. The new policy could offer lesser benefits than the original group health policy.

Fixed annuities provide all of the following EXCEPT a) Minimum guaranteed rate of interest. b) Future income payments. c) Hedge against inflation. d) Equal monthly payments for life.

c) Hedge against inflation. Fixed annuities invest premium payments into a general account - a safe and conservative investment portfolio. They also provide a specified dollar amount for each annuity payment regardless of the purchasing power of the money. Variable annuities premiums are invested in securities, hopefully maintaining a constant purchasing power, and therefore providing protection against inflation.

An agent has moved from Virginia to another state. When will his license authority be terminated? a) 30 days after the change of residence b) Within 10 business days c) Immediately d) 30 days after the Commission receives the notification of the move

c) Immediately If an agent has moved the place of residence from this Commonwealth, the license authority terminates immediately, whether or not the Commission has been notified.

Shelia has an embolism in her brain. After a week-long hospitalization and subsequent bed rest, she is allowed to work again. Three months later, she develops a second brain embolism. Which provision would determine whether a new set of benefits would cover the second embolism? a) Relapse Clause b) Corridor Clause c) Recurrent Disability Provision d) Elimination Period Provision

c) Recurrent Disability Provision The Recurrent Disability Provision specifies the amount of time that must lapse between two like illnesses in order for the second illness to be covered under a new set of benefits. It is to the insured's advantage for the second illness to be considered a relapse, because this would allow the insured to avoid paying a second deductible and waiting through a second elimination period.

Unlike the dividend itself, the interest earned on dividends is a) Tax deductible. b) 40% taxable, similar to a capital gain. c) Taxable. d) Nontaxable.

c) Taxable. Dividends are a return of unused premiums on which the insured has already paid taxes. Any interest earned is taxable as ordinary income.

During replacement of an individual health insurance policy, who must sign a replacement form? a) The agent and the existing insurer b) The replacing insurer c) The insured and the agent d) The insurer

c) The insured and the agent The replacement form must be signed by both the client and the agent, with a copy staying with the client and the other filed with the insurer.

The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as a) The policyowner cannot skip premiums without the policy lapsing. b) The next month's premium is sufficient to cover both the current premium amount and the skipped amount. c) The policy contains sufficient cash value to cover the cost of insurance. d) The previous premium payments were high enough to create an excess of premium.

c) The policy contains sufficient cash value to cover the cost of insurance. In Universal Life Insurance, the policyowner may skip a premium payment without lapsing the policy as long as the policy contains sufficient cash value at the time to cover the cost of insurance for that premium period.

An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries? a) The beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies. b) One of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies. c) The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive. d) The beneficiary will receive 2/3 of the lump sum up front, and the remaining 1/3 will be paid over time.

c) The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive. When the reduced option is written as "joint and 2/3 survivor," the surviving beneficiary receives 2/3 of what was received when both beneficiaries were alive.

According to the rights of renewability rider for cancellable policies, all of the following are correct about the cancellation of an individual insurance policy EXCEPT a) Claims incurred before cancellation must be honored. b) An insurance company may cancel the policy at any time. c) Unearned premiums are retained by the insurance company. d) The insurer must provide the insured a written notice of the cancellation.

c) Unearned premiums are retained by the insurance company. This rider allows the insurer to cancel the policy at any time, or at the end of the policy period. Any unearned premium must be returned to the policyholder. If the insurer cancels, the unearned premium will be returned on a pro rata basis.

Which of the following is NOT a duty of the Commission of Insurance? a) Appointing the Commissioner of Insurance b) Enforcing the Insurance Code c) Suspending or revoking licenses of Insurance Code violators d) Examining each domestic insurer at least once a year

d) Examining each domestic insurer at least once a year The Commission is required to examine every insurer licensed in Virginia at least once in every 5 years.

Cameron is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he feels he can afford at this time, he wants to be sure that additional coverage will be available in the future. He should include in this policy a a) Conversion option. b) Guaranteed renewable option. c) Nonforfeiture option. d) Guaranteed insurability option.

d) Guaranteed insurability option. The guaranteed insurability option allows the insured to purchase specific amounts of additional insurance at specific times without proving insurability.

An adverse underwriting decision may be based on which of the following: a) Personal information received from an insurance-support organization whose primary source of information is insurance institutions. b) That an individual previously obtained insurance coverage from a particular insurance institution or agent. c) That an individual previously obtained insurance coverage through a residual market mechanism. d) Information obtained from an insurance institution or agent responsible for a previous adverse underwriting decision

d) Information obtained from an insurance institution or agent responsible for a previous adverse underwriting decision An agent may receive information from an insurance institution responsible for a previous adverse underwriting decision that enhances his or her decision to make an adverse underwriting decision. If the decision is make an adverse underwriting decision, he or she must give the Commission notice.

What is the name of a clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military? a) Limited b) Aviation c) Hazardous occupation d) Military service or war

d) Military service or war There are two different types of exclusions that may be used by life insurers that limit the death benefit if the insured dies as a result of war or while serving in the military. The status clause excludes all causes of death while the insured is on active duty in the military. The results clause only excludes the death benefit if the insured is killed as a result of an act of war.

Bethany studies in England for a semester. While she is there, she is involved in a train accident that leaves her disabled. If Bethany owns a general disability policy, what will be the extent of benefits that she receives? a) Full b) 50% c) 25% d) None

d) None General disability policies do not cover losses caused by war, military service, intentionally self-inflicted injuries, overseas residence, or injuries suffered while committing or attempting to commit a felony.

Jonny has decided to leave her current employer and to become self-employed in her career field. What are Jonny's right regarding the former employer's health insurance plan under HIPAA? a) The insurer can limit Jonny to an equivalent plan that the employer offered as long as Jonny meets the minimum standards of insurability. b) Jonny may select from any plan the insurer is currently marketing, nut may be required to provide proof of insurability and await coverage based on pre-existing conditions. c) The insurer must offer Jonny the right to continue paying the premiums herself. d) Since Jonny was an eligible employee, the insurer must offer Jonny any plan being marketed by the insurer.

d) Since Jonny was an eligible employee, the insurer must offer Jonny any plan being marketed by the insurer. Eligible employees must be offered all types of plans that the insurer offers and be issued any plan for which they apply. No type of exclusions for pre-existing conditions or waiting periods for coverage may be included in such plans.