Practice test #4
Which of the following best describes the aleatory nature of an insurance contract?
Exchange of unequal values
Which nonforfeiture option has the highest amount of insurance protection?
Extended term
Every two years, producers are required to fulfill continuing education requirements. How many of these credit hours must be dedicated to ethics?
1
Which of the following disability income policies would have the highest premium?
15-day waiting period / 10-year benefit period
How long must a life insurance policy be in force before the owner can enter into a viatical settlement contract?
2 years
An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits?
A portion of the benefit up to a limit is tax free; the rest is taxable income.
What amount of care is provided in LTC's intermediate care?
Daily care by medical personnel
A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits?
Immediate annuity
In which of the following locations would skilled care most likely be provided?
In an institutional setting
What is the main purpose of the Seven-pay Test?
It determines if the insurance policy is an MEC.
Variable Whole Life insurance is based on what type of premium?
Level fixed
Which of the following settlement options in life insurance is known as straight life?
Life income
which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices?
Making comparisons between different policies
Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?
Premiums are not tax deductible as a business expense.
An insurance agent is subject of an administrative hearing by the Commissioner. The costs associated with the hearing included witness fees and fees for reproduction of documents for the record. Which of the following will be responsible for covering the costs?
The agent
Under an extended term nonforfeiture option, the policy cash value is converted to
The same face amount as in the whole life policy
An insured makes regular contributions to his Health Savings Account. How are those contributions treated in regards to taxation?
They are tax deductible
Which of the following is true regarding taxation of accelerated benefits under a life insurance policy?
They are tax free to terminally ill insured
Which provision states that the insurance company must pay Medical Expense claims immediately?
Time of Payment of Claims
What is the purpose of a fixed-period settlement option?
To provide a guaranteed income for a certain amount of time
Which characteristic does NOT describe managed care?
Unlimited access to providers
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
ancestry
What type of policy allows the insurance company to cancel a policy at any time?
cancellable
Who is a person, other than a viator, that enters into a viatical settlement contract?
provider
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?
warranty
In order to maintain coverage under COBRA, how soon from termination of employment must an employee exercise extension of benefits?
60 days
An insurance producer licensed in life and/or health must complete 12 hours of continuing education courses every
Every 2 years
All of the following are true regarding rebates EXCEPT
Rebates are allowed if it's in the best interest of the client.
Which of the following entities ultimately decides if an advertisement is complete and truthful?
The commissioner
If the Commissioner does not receive certification of successful course completion by the deadline, the producer's license will be suspended until he or she completes the education requirement or for
90 days
To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested?
At the time of application
The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called
Joint and survivor
With regard to group health conversion, written application and payment of the first premium must be made to the insurer within how many days after the date of termination of insurance?
31
If a person is disabled at age 27 and meets Social Security's definition of total disability, how many work credits must he/she have earned to receive benefits?
12 credits
When a hearing is scheduled, the Commissioner must give notice to all interested parties as to the time, place and purpose of a hearing within how many days of the hearing?
15 days
The relation of earnings to insurance provision allows the insurance company to limit the insured's benefits to his/her average income over the last
24 months
What is the period of coverage for events such as death or divorce under COBRA?
36 months
In the event a policy lapses due to nonpayment of premium, within how many days would the policy be automatically reinstated once the outstanding premium is paid?
45 days
Once the person meets the stringent requirements for disability benefits under Social Security, how long is the waiting period before any benefits will be paid?
5 months
In life insurance contracts in this state, dividend payments may be deferred for up to how many years?
5 years
In Kansas, which of the following provisions is legal?
Cancellation of a policy if amount of loan is more than loan value
If more than one family member covered under the same major medical policy is injured in the same accident, the family only has to pay one deductible. This is due to the
Common accident provisoon
What characteristic makes whole life permanent protection?
Coverage until death or age 100
What is another name for interest-sensitive whole life insurance?
Current assumption life
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT
Dividends from a mutual insurer.
Underwriting a group health insurance plan that is paid for by the employer requires all of the following EXCEPT
Individual members of the group may select the level of benefits for their own coverage.
An investor buys a life policy on an elderly person in order to sell it for a life settlement. This is an example of
A Stoli policy (Stranger originated life insurance policies are usually purchased by people who have no relationship with the insured with the intention of selling them for life settlements.
In which of the following situations is it legal to limit coverage based on marital status?
It is never legal to limit coverage based on marital status
All of the following are mandatory life insurance policy provisions EXCEPT
Policy backdating
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?
Time of Payment of Claims
Which of the following determines whether disability insurance benefits are taxed?
Whether the premiums were tax deductible
Which of the following statements is TRUE concerning the Accidental Death Rider?
It will pay double or triple the face amount
