NWM Frequently Missed Questions
An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an a) Credit Life. b) Annual Renewable Term. c) Adjustable Life. d) Interest-sensitive Whole Life.
D) Interest-sensitive Whole Life.
All of the following benefits are available under Social Security EXCEPT a) Welfare benefits. b) Old-age and retirement benefits. c) Disability benefits. d) Death benefits.
a) Welfare benefits.
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.
A health insurance policy that pays a lump sum if the insured suffers a heart attack or stroke is known as a) Critical illness. b) Major medical. c) AD&D. d) Medical expense.
a) Critical illness.
Which of the following would be considered a nonmedical insurance application? a) An application on which the medical information is completed by the applicant and the agent only b) An application that does not ask any questions about the applicant's medical history c) An application submitted with the Agent's Report d) Any application for life insurance An application on which all of the questions, including medical history questions, do not need to be completed by medical professionals, and may be completed by the applicant and the agent.
a) An application on which the medical information is completed by the applicant and the agent only
When an annuity is written, whose life expectancy is taken into account? a) Annuitant b) Beneficiary c) Life expectancy is not a factor when writing an annuity. d) Owner
a) Annuitant
If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant's a) Prior insurance. b) Ancestry. c) Credit history. d) Habits.
b) Ancestry.
According to the provisions of the Patient Protection and Affordable Care Act, all of the following are required preventive care services EXCEPT a) Screenings for autism and behavioral disorders in children. b) Cervical cancer exams for all women starting at age 40. c) Diet counseling for adults. d) Well-woman visits and counseling.
b) Cervical cancer exams for all women starting at age 40.
The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose? a) Fixed amount option b) Interest only option c) Life income with period certain d) Joint and survivor
b) Interest only option
The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the a) Paid-up additions. b) One-year term option. c) Paid-up option. d) Accelerated endowment.
b) One-year term option.
Which of the following statements concerning a Simplified Employee Pension plan (SEP) is INCORRECT? a) Employer contributions are not included in the employee's gross income. b) SEPs are suitable for large companies. c) SEPs allow the employer to make annual tax deductible contributions up to 25% of an employee's earned income. d) SEPs have a higher tax deductible contribution limit than an IRA.
b) SEPs are suitable for large companies.
Which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting? a) Fraternal b) Stock c) Mutual d) Reciprocal
b) Stock
A brain surgeon has an accident and develops tremors in her right arm. Which disability income policy definition of total disability will cover her for all losses? a) "Any occupation" - less restrictive than other definitions b) "Any occupation" - more restrictive than other definitions c) "Own occupation" - less restrictive than other definitions d) "Own occupation" - more restrictive than other definitions
c) "Own occupation" - less restrictive than other definitions
If an HMO policy is cancelled for nonpayment of the amounts due under the contract, how long of a notice must the insurer give the insured? a) 10 days b) 15 days c) 30 days d) 45 days
c) 30 days
Insurance companies may be classified according to the legal form of their ownership. The type of company organized to return any surplus money to their policyholders is a) A fraternal insurer. b) A stock company. c) A mutual insurer. d) A reciprocal company.
c) A mutual insurer.
How can a new physician be added to the PPO's approved list? a) Pay an annual fee for being on the PPO list. b) New physicians are only added once a year, and are selected by the PPO's Board of Directors. c) Agree to follow the PPO standards and charge the appropriate fees. d) Fill out the appropriate paperwork and wait the 12 month pre-certification period.
c) Agree to follow the PPO standards and charge the appropriate fees.
The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective? a) As of the first of the month after the policy issue b) As of the policy issue date c) As of the application date d) As of the policy delivery date
c) As of the application date
Which of the following provisions states the insurer's right to change premium amounts? a) Insurer's Rights b) Coverage Limitations c) Continuation Provision d) Premium Provision
c) Continuation Provision
All of the following are true about group disability Income insurance EXCEPT a) The waiting period starts at the onset of the injury or sickness. b) The longer the waiting period, the lower the premium. c) Coverage applies both on and off the job. d) Benefits are usually short term.
c) Coverage applies both on and off the job.
Which of the following best describes annually renewable term insurance? a) Neither the premium nor the death benefit is affected by the insured's age. b) It provides an annually increasing death benefit. c) It is level term insurance. d) It requires proof of insurability at each renewal.
c) It is level term insurance.
What is the other term for the cash payment settlement option? a) Face amount b) Proceeds c) Lump sum d) Principal amount
c) Lump sum
Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean? a) The beneficiary will receive the lump sum, plus interest. b) The primary beneficiary will receive the death benefit and the secondary beneficiaries will share the interest payments. c) The beneficiary will only receive payments of the interest earned on the death benefit. d) The beneficiary must pay interest to the insurer.
c) The beneficiary will only receive payments of the interest earned on the death benefit.
Upon the submission of a death claim under a life insurance policy, when should the insurer pay the policy benefit? a) Immediately after receiving written proof of loss b) Within 30 days c) Within 2 months d) On the next anniversary of the policy
c) Within 2 months
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a) 7 days b) 10 days c) 3 days d) 5 days
d) 5 days
Which of the following persons is required to hold a producer license? a) A person who takes messages related to claims b) A person who creates insurance advertisements c) A person who administers employee benefits d) A person who negotiates insurance contracts
d) A person who negotiates insurance contracts
Issue age policy premiums increase in response to which of the following factors? a) Increased deductible b) Inflation c) Age d) Increased benefits
d) Increased benefits
Which of the following applies to partial disability benefits? a) An insured is entitled to a principal sum benefit for the partial loss of a limb. b) Payment is based on termination of employment. c) Benefits are reduced once an insured is no longer under a doctor's care. d) Payment is limited to a certain period of time.
d) Payment is limited to a certain period of time.
An employee becomes insured under a PPO plan provided by his employer. If the insured decides to go to a physician who is not a PPO provider, which of the following will happen? a) The PPO will not pay any benefits at all. b) The insured will be required to pay a higher deductible. c) The PPO will pay the same benefits as if the insured had seen a PPO physician. d) The PPO will pay reduced benefits.
d) The PPO will pay reduced benefits.
Which of the below statements is FALSE concerning a Modified Endowment Contract (MEC)? a) Distributions before age 59 1/2 have a penalty tax of 10% on the gain in the policy. b) Policy loans are taxable distributions. c) MECs lose some of the favorable tax treatment of distributions. d) The policyholder can receive distributions at any time without being penalized.
d) The policyholder can receive distributions at any time without being penalized.
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 lump sum up front, and the remaining 1/3 will be paid over time. b) The beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies. c) One of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies. d) The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.
d) The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.
