NC Certification Exam - Life and Health - Missed questions
Z suffers a total and permanent disability. The policy he has requires a premium payment of $100 per month. He is on claim for 100 months. Initially, how much did Z have to pay before the waiver of premium benefit on his policy started? A $600 B $1,200 C $10,000 D $1,800
A $600
Gary participates in a group long-term care insurance program through his employer. The employer pays for a standard level of coverage for all employees, and Gary pays for an additional voluntary amount of coverage. In all, Gary's employer pays two thirds of the cost and Gary pays the remaining one third of the cost. If Gary makes a claim under this policy, what percentage of his benefits would be taxable based on the premium structure? A 0% B 67% C 100% D 33%
A 0%
A person must be at least ______ years of age to enter into an insurance contract or an annuity. A 15 B 17 C 16 D 18
A 15
A health policy must contain a time limit on certain defenses of _____ years from the date of issue. A 2 B 4 C 5 D 3
A 2
HIPAA defines a pre-existing condition as one for which the insured received medical advice, diagnosis, care, or treatment within the past _____ months. A 6 B 12 C 18 D 3
A 6
A carrier replacing employer group coverage is not required to cover all employees and dependents covered by, or eligible for, coverage under the previous policy if the replacement takes place more than _____ days after of the previous policy's termination. A 60 B 10 C 90 D 30
A 60
To act as an agent in North Carolina, a person must obtain a license for the kinds of insurance for which the person intends to act as an agent and, if acting for an insurer, __________ from the insurer. A An appointment B An approval C An authorization D A license
A An appointment
A policy is issued with a rider. Years later the policyowner would like to drop the rider in order to save some money. Who has the authority to effect that policy change? A An executive officer of the insurer B The beneficiary C The insured D The producer
A An executive officer of the insurer
If overdue premiums are not paid by the end of the grace period, a traditional Whole Life policy will automatically: A Become extended term B Be canceled with no value C Be cash surrendered D Be reduced in face amount by the amount of the overdue premium
A Become extended term
Which of the following is NOT prohibited from disclosing personal information about a client under the Insurance Information and Privacy Protection Act? A Client B Agency support personnel C Insurer D Agent
A Client
Insurance companies writing disability income generally have an occupational classification system based on considerations of all of the following, except: A Earning potential B Claims history of the occupation C Job duties D Stability of the industry
A Earning potential
Choose the passive unfair claims settlement practice. A Failing to promptly explain, based on applicable provisions or laws, a claim's denial B Telling an insured the policy of appealing arbitration awards C Refusing to pay claims without conducting an investigation D Misrepresenting pertinent facts or insurance policy provisions relating to the coverage
A Failing to promptly explain, based on applicable provisions or laws, a claim's denial
X is 57 years old, and planning for their retirement. They do not know what their cash flow will look like over the next 10 years, but wants to fund an annuity to provide retirement income. Which of the following premium funding methods would be best for X to consider? A Flexible B Single C Periodic D Variable
A Flexible
Which of the following disclosures is prohibited under the Insurance Information and Privacy Protection Act? A Information about an individual in connection with an insurance transaction B Information given to a medical provider in order to provide care C Information provided to a group policyholder for reporting claims experience D Information disclosed in an audit of the insurer
A Information about an individual in connection with an insurance transaction
Which one of the following regarding the Life and Health Insurance Guaranty Association of North Carolina is false? A It is funded by the State through the collection of insurance premium taxes B It consists of all authorized insurers writing Life and Health policies in North Carolina C It assists in detecting and preventing insurer impairment or insolvency D It protects residents, who have rights under a contract providing benefits of life or health or both, against financial loss due to insurer impairment or insolvency
A It is funded by the State through the collection of insurance premium taxes
An adjuster is a person who investigates all of the following types of insurance claims, except: A Life B Casualty C Property D Health
A Life
Which one of the following types of policies are exempt from standard policy replacement rules? A Non-convertible, non-renewable term policies with less than 5 years of coverage remaining B Traditional whole life insurance policies C Universal life insurance policies D 30-year renewable term life insurance policies
A Non-convertible, non-renewable term policies with less than 5 years of coverage remaining
A (an)_________ is used when the insured's age, medical history, or amount of coverage does not require a medical exam for underwriting purposes. A Nonmedical application B Agent's report C Short form D Inspection report
A Nonmedical application
Bill is a retired military officer suffering from complications caused by Agent Orange exposure during his military service. He incurs $54, 510 in medical expenses during hospitalization at the local Veterans Administration Hospital. The private health insurance he now owns will likely pay: A Nothing B $27,255 C $13,627.50 D $54,510
A Nothing
A procedure used by dental insurance carriers to determine the benefit to be paid is known as: A Precertification B Preliminary Evaluation C Least Coverage Provision D Pretreatment Examination
A Precertification
A viatical settlement broker is required to inform the viator of all of the following, except: A Proceeds are exempt from creditor claims B Proceeds may jeopardized eligibility for Medicaid C Proceeds could be subject to tax liability D Accelerated death benefits or policy loans are possible alternatives to a viatical settlement
A Proceeds are exempt from creditor claims
Which of the following is true of traditional commercial insurers? A They traditionally market reimbursement-type contracts that pay directly to the insured B They offer only group plans of insurance C They offer only individual plans of insurance D They traditionally market service-type contracts that pay directly to the provider of the service
A They traditionally market reimbursement-type contracts that pay directly to the insured
Flexible premium adjustable life is another name for: A Universal Life B Variable Life C Adjustable Life D Interest-Sensitive Whole Life
A Universal Life
The mortality rate is based on mortality tables which show life expectancy and the death rate per _______ people living in the U.S. A 100,000 B 1,000 C 10,000 D 100
B 1,000
A typical life insurance application contains how many parts? A 4 B 2 C 1 D 3
B 2
To obtain an insurance license, a person must complete at least _____ hours of prelicensing education for each license sought. A 30 B 20 C 24 D 40
B 20
How long, typically, is the reinstatement period from policy lapse? A 2 years B 3 years C 1 year D Indefinitely
B 3 years
How long must an insurer keep a Policy Summary? A 5 years after first use B 3 years after last use C 3 years after issuance D Until the Commissioner issues the final report of the next examination after issuance
B 3 years after last use
When a person obtains a replacement life insurance policy the free look period is _____ days from the date the policy is delivered. A 20 B 30 C 10 D 15
B 30
To be issued in North Carolina, an individual life policy must have a grace period of ______ days. A 10 B 31 C 20 D 30
B 31
Sherman is the custodian at an elementary school and participates in its qualified retirement plan. This describes a: A SIMPLE IRA B 403(b) Tax-Sheltered Annuity C Simplified Employee Pension D HR-10 Keogh Plan
B 403(b) Tax-Sheltered Annuity
The cost-sharing provisions of TRICARE Standard include: A An $11 co-pay for office visits and $12 daily co-pay for hospital stays B A $12 co-pay for office visits and 25% co-pay for procedures C An $11 daily co-pay for hospital stays and 25% co-pay for procedures D A $12 co-pay for office visits and $11 daily co-pay for hospital stays
B A $12 co-pay for office visits and 25% co-pay for procedures
J and his insurance company disagree over some ambiguous language in J's life insurance policy. If the parties end up in court, which principle would direct the court to rule in favor of J? A Indemnity B Adhesion C Reasonable expectation D Good faith
B Adhesion
Mona let her permanent policy lapse. She discovered there was $2,498 in cash value remaining in the policy and decided to pay off some of her credit card debt. She exercised which Nonforfeiture Option? A Fixed Amount B Cash Surrender C Reduced Paid-Up D Extended Term
B Cash Surrender
Which of the following is a Managed Care Provision used by insurers to monitor hospital stays? A Prospective Review B Concurrent Review C Retrospective Review D Precertification
B Concurrent Review
Universal Life provides for an increasing death benefit only if the applicant chooses: A To include an inflation rider at the time of application B Death Benefit Option B C To add an increasing term rider to the policy D A return of premium rider to the plan
B Death Benefit Option B
All of the following are characteristics of Ordinary Whole Life Insurance, except: A The policy pays the face value if the insured dies before age 100 B If insured lives to age 100, the total amount of premium paid over the lifetime of the insured is returned to the policyowner C Premiums remain uniform D Premiums are designed to be paid throughout the life of the insured
B If insured lives to age 100, the total amount of premium paid over the lifetime of the insured is returned to the policyowner
Which of the following disclosures is prohibited under the Insurance Information and Privacy Protection Act? A Information given to a medical provider in order to provide care B Information about an individual in connection with an insurance transaction C Information disclosed in an audit of the insurer D Information provided to a group policyholder for reporting claims experience
B Information about an individual in connection with an insurance transaction
A(n) ________ report is a general report of the applicant's finances, character, morals, work, hobbies, and other habits. A Motor vehicle B Inspection C Agent's D Attending physician's
B Inspection
What type of disability income insurance pays a benefit to a business to help in the search, cost, and hiring of a replacement when an employee becomes disabled and is unable to work for the company? A Buy-sell B Key employee C Reducing term D Business overhead expense
B Key employee
Which of these is a Mandatory Uniform Provision? A Illegal Occupation B Legal Actions C Conformity with State Statutes D Misstatement of Age
B Legal Actions
The results of the ________________ is the only document that might be copied and made part of the policy. A Consumer Investigative Report B Medical Examination C Attending Physicians Statement D Agent's Report
B Medical Examination
An insurer NOT authorized to do business within this state is considered what type of insurer? A Domestic B Non-Admitted C Alien D Foreign
B Non-Admitted
All of the following are unfair claims settlement practices, except: A Compelling insureds to sue to recover amounts due by offering substantially less than the amounts typically recovered in actions brought by legal process B Promptly explaining, based on applicable provisions or laws, a claim's denial C Making known to insureds or claimants a policy of appealing arbitration awards D Not attempting in good faith to promptly, fairly, and equitably settle a claim in which liability has become reasonably clear
B Promptly explaining, based on applicable provisions or laws, a claim's denial
An existing term life insurance policy may be exchanged for a new term life insurance policy on the ______ date. A Expiration B Re-Entry C Conversion D Renewal
B Re-Entry
Sam is totally disabled and receiving benefits while attending an insurer-approved vocational training program. What provision guarantees the continuation of benefits while Sam participates in the training program and remains totally disabled? A Impairment Disability B Rehabilitation C Presumptive Disability D Temporary Disability
B Rehabilitation
To reduce the risk of insuring a substandard disability applicant, an insurer may take all of the following actions, except: A Increase the elimination period B Remove all of the exclusion riders C Charge additional premium D Reduce the amount of benefit
B Remove all of the exclusion riders
When a Medical Expense plan pays eligible expenses directly to the hospital, physician, or surgeon, it is paying on a: A Scheduled basis B Service basis C Reimbursement basis D Cash basis
B Service basis
Maria's policy was issued with an incorrect age. She was actually older than what was listed in the policy. Which of the following will the insurer most likely do if she had died 5 years after policy issue, but prior to this discovery? A The insurer would have to pay out the full face amount since the policy is now beyond the contestable period B The insurer would pay out a reduced benefit in proportion to the underpayment of premium C The insurer would bill the beneficiary for the underpayment in premiums D The insurer would simply reduce the death benefit by the amount of the premium underpayment
B The insurer would pay out a reduced benefit in proportion to the underpayment of premium
Which of the following is the reason why premiums paid on personal life insurance are not deductible? A They rarely exceed 10% of a taxpayer's AGI B They are considered a personal expense C They are considered to produce a guaranteed source of income D It makes the deductibility of employer-paid premiums more attractive
B They are considered a personal expense
A Variable Universal Life (VUL) is a combination of: A Term and Whole Life B Universal and Variable Life C Term and Universal Life D Whole Life and Variable Life
B Universal and Variable Life
Victor, age 59, calculated last year's gross income to be $100,000. When reviewing the cost of his various personal insurance policies, he found that his disability income policy annual premium was $3,500, his long-term care insurance annual premium was $4,000, and the total annual cost of his individual Medical insurance premiums and out-of-pocket medical expenses came to $5,500. Based on this information, he could deduct ______ from his taxable income for that year. A $9,500 B Zero C $3,000 D $5,500
B Zero While the total amount calculated is over 10%, part of that total refers to disability insurance premiums, which are not deductible. Without that amount, the other expenses add up to $9,500, which is below the threshold for deductibility.
Z elects the life refund settlement option for a $250,000 death benefit. Z lives long enough to recover $150,000 of the $250,000 death benefit. How much does his beneficiary receive? A $50,000 B 250,000 C $100,000 D $150,000
C $100,000
A health policy must contain a _____-day free look period with a full premium refund if the policy is returned. A 30 B 20 C 10 D 15
C 10
The viator may rescind the viatical settlement contract within _____ business days after receiving the viatical settlement proceeds. A 30 B 15 C 10 D 20
C 10
To be issued in North Carolina, an individual life policy must be incontestable after being in force for _____ years from the issue date. A 3 B 4 C 2 D 5
C 2
No privacy information notice needs to be provided to the insured if one was provided within the previous ______ months. A 36 B 12 C 24 D 6
C 24
How long, typically, is the reinstatement period from policy lapse? A 2 years B 1 year C 3 years D Indefinitely
C 3 years
To be issued in North Carolina, an individual life policy must have a grace period of ______ days. A 20 B 10 C 31 D 30
C 31
To be issued in North Carolina, an individual life policy must have a grace period of ______ days. A 30 B 10 C 31 D 20
C 31
When establishing a SIMPLE, what two different types of qualified plans must employers choose between? A Defined benefit or defined contribution B SEP or TSA C 401(k) or IRA D Keogh or corporate
C 401(k) or IRA
_____________ is/are not considered material to the policy issuance. A 12 driving under the influence tickets within 6 months prior to application B Recent major inpatient hospital surgeries C Age and/or gender D Hazardous occupations and/or hobbies
C Age and/or gender
J has an event that could be subject to a claim. This event occurs on April 1 of this year. How long does J have to bring legal action against the insurer? A October 1 of this year B June 1 of this year C April 1 of next year D July 1 of this year
C April 1 of next year
All of the following are nonforfeiture values, except: A Reduced paid-up B Extended term C Automatic premium loan D Cash surrender
C Automatic premium loan
Insurers include provisions in contracts to help reduce unnecessary claims and the overpayment of claims. Which of the following is not one of those provisions? A Mandatory Second Surgical Option B Concurrent Review C Consideration Clause D Ambulatory Services
C Consideration Clause
When a policy lapses due to nonpayment of premium, which nonforfeiture option is the automatic option? A Reduced paid-up B Cash surrender value C Extended term D Automatic premium loan
C Extended term
If a beneficiary has the choice and is interested in capital conservation, then which of the following settlement options should be chosen? A Life Only B Period Certain C Interest Only D Fixed Amount
C Interest Only
Which one of the following regarding the Life and Health Insurance Guaranty Association of North Carolina is false? A It assists in detecting and preventing insurer impairment or insolvency B It protects residents, who have rights under a contract providing benefits of life or health or both, against financial loss due to insurer impairment or insolvency C It is funded by the State through the collection of insurance premium taxes D It consists of all authorized insurers writing Life and Health policies in North Carolina
C It is funded by the State through the collection of insurance premium taxes
Buy-Sell agreements are used for all of the following entities, except: A Closely held businesses B Partnerships C Large Public Corporations D Sole Proprietorships
C Large Public Corporations
Group health plans usually cover: A Both occupational and nonoccupational injury or disease B Neither occupational nor nonoccupational injury disease C Nonoccupational injury or disease D Occupational injury or disease
C Nonoccupational injury or disease
Bill is a retired military officer suffering from complications caused by Agent Orange exposure during his military service. He incurs $54, 510 in medical expenses during hospitalization at the local Veterans Administration Hospital. The private health insurance he now owns will likely pay: A $54,510 B $13,627.50 C Nothing D $27,255
C Nothing
All of the following are duties of the producer when involved in a replacement transaction, except: A Obtain a notice regarding replacement signed by the applicant B Leave a copy of all sales material with the applicant C Notify each existing insurer within 5 business days and, upon request, furnish a copy of any proposals and comparison statements D Submit a signed statement about whether the applicant has existing policies
C Notify each existing insurer within 5 business days and, upon request, furnish a copy of any proposals and comparison statements
Angela bought a policy from her friend, an insurance producer. After looking it over thoroughly, Angela only has one question. Will she receive dividends? She will if the policy is which of the following? A Cash Value Policy B Nonparticipating C Participating D Accumulating
C Participating
The Guaranteed Renewable Provision states that the policy is: A Renewable only at the option of the insurer B Renewable with adjustable premiums determined by frequency of claims C Renewable with premiums that may be increased for entire classes of insureds D Renewable with no increase in premium
C Renewable with premiums that may be increased for entire classes of insureds
Which provision provides a loss of earnings benefit to an employee who returns to work after sustaining a total disability, if the insured's earnings are less than they were before the disability. A Recurrent Disability B Restorative Disability C Residual Disability D Presumptive Disability
C Residual Disability
A completed application and a check were submitted by a producer to an insurer on behalf of the applicant. A conditional receipt was given. The insured died prior to the insurer issuing the policy however the check was no good. What is the result? A The amount of the premium will be deducted from the claim payment B The insurer will pay the claim once they receive a new check C Since the check did not clear the bank there is no coverage D The claim will be paid only if it can be shown that the funds were in the account at the time the check was written and given to the producer
C Since the check did not clear the bank there is no coverage
All of the following are benefits an annuity can provide that other investment or savings products cannot, except: A Guaranteed minimum withdrawal benefit B Guaranteed minimum death benefit C Tax-free distributions D Income benefit payments that cannot be outlived
C Tax-free distributions
If an insured has a Life Paid-Up at 75 Policy (a limited-pay life paid-up at age 75), what would the beneficiary receive if the insured died at age 68? A The face amount plus the cash value B The face amount minus the cash value C The face amount D The cash value
C The face amount
In all cases upon the insured's death, the beneficiary receives which of the following? A A refund of premiums B The policy's cash values C The face amount of the policy D The policy's rider values
C The face amount of the policy
If an insurer accepts an overdue premium payment and continues the policy uninterrupted, this is an example of: A Coercion B Estoppel C Waiver D Consideration
C Waiver
An insured has a $25,000 annual renewable term life policy, originally purchased on her birthday, April 1st of last year. She forgot to pay the $250 renewal premium, and dies in an accident on April 15. The beneficiary will receive: A $25,250 B Nothing C $24,750 D $25,000 less the earned premium due
D $25,000 less the earned premium due
The viator may rescind the viatical settlement contract within _____ business days after receiving the viatical settlement proceeds. A 30 B 15 C 20 D 10
D 10
The Social Security blackout period for surviving spouses begins when the youngest child reaches age ______, and ends when the surviving spouse reaches age ______. A 16/62 B 18/65 C 18/60 D 16/60
D 16/60
No privacy information notice needs to be provided to the insured if one was provided within the previous ______ months. A 36 B 6 C 12 D 24
D 24
Which of the following is NOT an acceptable grace period for late premium payments? A 7 days for weekly premiums B 31 days for quarterly premiums C 10 days for monthly premiums D 61 days for annual premiums
D 61 days for annual premiums
P is 75 years old and his required minimum distribution for the year is $10,000. However, P only withdraws $2,000. What is the amount of the resulting tax penalty? A A $5,000 tax penalty B A $1,000 tax penalty C An $8,000 tax penalty D A $4,000 tax penalty
D A $4,000 tax penalty Failure to take all of an RMD results in a 50% penalty tax on the amount not distributed. The undistributed amount is $8,000 (10,000 - 2000 = 8000). 50% of $8,000 is $4,000.
Which of the following is TRUE concerning reinstatement of a life insurance policy? A Proof of insurability is not required B Reinstatement may be completed at any time after the policy has lapsed C Back premiums need not be paid prior to granting reinstatement D Companies have the right to require medical examinations
D Companies have the right to require medical examinations
When a policy lapses due to nonpayment of premium, which nonforfeiture option is the automatic option? A Reduced paid-up B Automatic premium loan C Cash surrender value D Extended term
D Extended term
All of the following must be included in a whole life policy, except: A Surrender value B Cash value accumulation C Extended term provision D Guaranteed dividend table
D Guaranteed dividend table
Which of the following properly states a requirement of a group health policy? A An employer group may cover executives only B An association group must have 100 members and be in existence for at least 5 years C A credit policy may require evidence of individual insurability if less than 75% of new debtors become insured D If a group policy is replaced within 15 days of being terminated, the replacing insurer must cover everyone covered under the policy being replaced
D If a group policy is replaced within 15 days of being terminated, the replacing insurer must cover everyone covered under the policy being replaced
When group health insurance is being replaced, ongoing claims under the former policy must continue under the new policy, overriding any preexisting condition exclusion. This is a requirement under which of the following? A Replacement Regulations for Group Policies B The Level of Benefits Provision C The Preexisting Conditions Provision D No Loss - No Gain Statutes
D No Loss - No Gain Statutes
Which of the following is not a true characteristic of permanent protection Whole Life? A Premiums are payable to age 100 in older policies, and to age 121 in newer policies B The insurer bears all risk C Death benefit typically remains level D Premiums are flexible
D Premiums are flexible
A viatical settlement broker is required to inform the viator of all of the following, except: A Proceeds may jeopardized eligibility for Medicaid B Accelerated death benefits or policy loans are possible alternatives to a viatical settlement C Proceeds could be subject to tax liability D Proceeds are exempt from creditor claims
D Proceeds are exempt from creditor claims
All of the following are traditional whole life policy nonforfeiture values, except: A Reduced paid-up insurance B Cash surrender values C Extended term insurance D Renewable and convertible features
D Renewable and convertible features
A completed application and a check were submitted by a producer to an insurer on behalf of the applicant. A conditional receipt was given. The insured died prior to the insurer issuing the policy however the check was no good. What is the result? A The amount of the premium will be deducted from the claim payment B The insurer will pay the claim once they receive a new check C The claim will be paid only if it can be shown that the funds were in the account at the time the check was written and given to the producer D Since the check did not clear the bank there is no coverage
D Since the check did not clear the bank there is no coverage
When calculating premium of life insurance policies, insurers assume all of the following, except: A Premiums will be invested and earn interest B Claims are paid at year end C Premiums are paid in advance D The actual life expectancy of each group of insured's
D The actual life expectancy of each group of insured's