practice test
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 provision
what would be an advantage to naming a contingent( or secondary) beneficiary in a life insurance policy
it determines who receives policy benefits if the primary beneficiary is deceased
which of the following applicants would not qualify for a Keogh plan
someone who works 400 hours per year. a person must have worked at least 1,000 hours per year to be eligible for a Keogh plan
which of the following product requires a securities license
variable annuity- is considered to be a security and is regulated by the securities exchange commission(SEC) in addition to state insurance regulations
to which of the following do replacement rules apply
whole life insurance
If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than
with the policy. if a life insurance policy contains a free look period of at least 10 days the buyer's guide can be delivered with the policy. if it doesn't the buyers guide must be delivered prior to accepting the initial premium
How soon following the occurrence of a covered loss must an insured submit written proof of such loss to the insurance company?
within the 90 days or as soon as reasonable possible but not to exceed 1 year ( proof of loss provision)
what is the maximum penalty for habitual willful noncompliance with the fair credit reporting act?
$2,500 an individual who willfully violates this act enough to constitute a general pattern or business practice will be subject to a penalty of up to $2,500.
what percentage of individual-owned disability income benefits is taxable
0% .... premiums are paid with tax dollars benefits are not income taxable
all life insurance policies, excluding replacement polices must have a free look period of at least
10 days- if it dont have A REPLACEMENT POLICY
how many days does a producer have to notify the deparment of insurance of a change of address
30 days
what is the maximum age for qualifying for a catastrophic plan
30 young adults under age 30 and individuals who cannot obtain affordable cover
what is the period of coverage for events such as death or divorce under COBRA
36 months max period of coverage under COBRA for death or divorce of an employee
the minimum number of credits required for partially insured status for social security disability benefits is
6 credits- to be considered partially insured an individual must have earned 6 credits during the last 13-quarter period
most policies will pay the accidental death benefits as long as the death is caused by the accident and occurs within
90 days most policies will pay the accidental death benefit as long as the death is caused by the accident and occurs with 90 days
a hospital indemnity policy will pay
A benefit for each day the insured is in the hospital Hospital confinement indemnity policies pay specific amounts that depend on the amount of time the insured is confined to the hospital
In insurance, an offer is usually made when
An applicant submits an application to the insurer
how is the director selected for the office
Appointed by the governor with advice and consent of the senate
childern's riders attached to whole life policies are usually issued as what type of insurance
children term riders provide term insurance with coverage expiring when the minor reaches a certain age
What phase begins after a new policy is delivered?
Free-look period The Free-Look Period occurs after a policy is delivered. This period allows the insured to review the policy and return it for a refund of the premium within a certain time interval.
forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as
coercion- for example is like the bank wont give you an auto loan unless you agree to buy auto insurance from them
what is true about a spouse term rider
The rider is usually level term insurance, spouse term rider allows a spouse to be added for coverage. it is available for limited amount of time, typically expiring at age 65. a spouse term rider( just like any other insured rider is usually level term insurance
When is the earliest a policy may go into effect?
When the application is signed and a check is given to the agent
which of the following documents delivered to the policy owner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years
a policy summary
The term "illustration" in a life insurance policy refers to
a presentation of nonguaranteed elements of a policy
all of the following statements concerning workers compensation are correct except
a worker receives benefits only if the work-related injury was his/her fault. workers compensation benefits are payable when a worker is injured by a work-related injury regardless of fault or negligence
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
adjusted to the insured's age at the time of renewal
all of the following would be considered rebating except
an agent misrepresents policy benefits to convince a policy owner to replace policies. rebating occurs when an insured is offered something of value in order to induce the sale of insurance products
under which of the following circumstances would an insurer pay accelerated benefits
an insured is diagnosed with cancer and needs help paying for her medical treatment. accelerated benefits are paid when insureds endure financial hardship due to serve illness usually up to 50%-100%
How long is an open enrollment period for Medicare supplement policies?
an open enrollment period is a 6 month period that guarantees the applicants the right to buy Medigap once they first sign up for Medicare part b
All of the following are TRUE of the federal tax advantages of a qualified plan except
at distribution, all amounts received by the employee are tax-free- funds in a qualified plan accumulate on a tax-deferred basis, however at distribution any amount received by the employee will be treated as ordinary income for tax purposes
when must an insurance company present an outline of coverage to an applicant for Medicare supplement policy
at the time of application
which of the following is not required to be stated in the outline of coverage provided with a long term care policy
basic information about supplementary policies-outline of coverage must follow the standard format included in the insurance regulation must provide policy number, important features of the policy, and explain the right to return the policy for refund, and information about the insurance company
the accelerated benefits provision will provide for an early payment of the death benefit when the insured
becomes terminally ill
which of the following must an insurer obtain in order to transact insurance within a given state
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
conditional- requires both the insurer and policy owner to meet certain conditions before the contract can be executed, unlike other types of polices which put the burden of condition on either the insurer or the policy owner
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 met the conditions specified
consideration clauses-payment of the premium is the consideration given by the applicant
which of the following provisions must be included on the first page of a Medicare supplement policy, which states the insurers right to change premium amounts
continuation provision or renewal provision. this provision explains the right of the insurer to alter premium amounts
if group insurance cease due to termination of employment the insured is entitled to obtain an individual life insurance policy without having to provide proof of insurability. which provision allows for this
conversion
which of the following is not an exclusion in medical expense insurance policies
coverage for dependents the exclusions are dental care, self-inflicted injuries or military duty
what is an important feature of a dental expense insurance plan that is not typically found in a medical expense insurance plan
diagnostic and preventive care
which of the following is considered a qualifying event under cobra
divorce, voluntary termination of employment, an employee change from full time to part time or death of employee
if a change needs to be made to the application for insurance, the agent may do all of the following except
erase the incorrect answer and record the correct answer
What type of premium do both Universal Life and Variable Universal Life policies have?
flexible variable and universal life has flexible premiums
if an insured worker has earned 40 quarters of coverage, the worker's status under social security disability is
fully insured
as it pertains to group health insurance, cobra stipulates that
group coverage must be extended for terminated employees up to a certain period of time at the former employee's expense- corba requires employers with 20 or more employees to continue group medical insurance for terminated workers and dependents for up to 18 months to 36 months. employee can be required to pay up to 102% of the coverage premium
which of the following types of LTC is not provided in an institutional setting
home health care, is given in the home but skilled nursing, intermediate, and custodial care may all be provided in an institutional setting
When the director finds that a license has been obtained by fraud or misrepresentation, he may suspend the license
immediately but not for more than 2 years
a typical accidental death and dismemberment policy covers all of the following losses except
income
Medicaid provides all of the following benefits except
income assistance for work- related injury - Medicaid covers a variety of medical cost from eyeglasses to hospitalization
annually renewable term polices provide a level death benefit for a premium that
increases annually
What type of insurance would be used for a Return of Premium rider?
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 premium previously paid are payable to the beneficiary premiums
Which type of a hospital policy pays a fixed amount each day that the insured is in a hospital?
indemnity
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 levels of benefits for their own coverage. in group health insurance all individuals are covered under the master policy for the same coverage
an insured purchases a life insurance policy. the agent told him that depending upon the company's investments and expense factor, the cash values could change from those shown in the policy at issue time . the policy is
interest-sensitive whole life. because the cash values are generated by investment, interest rate will affect the amount of cash value
a guaranteed renewable disability insurance policy
is renewable at the insured's option to a specific age, means that the insured has the right to keep the policy until a specific age, however while the insurer cannot increase the rates on an individual basis, the insurer can increase the rates for all insured by class
which of the following statements is not true concerning Medicaid
it consists of 3 parts: PART A: hospitalization, PART B: doctor's service, and PART C disability income..... Medicaid is a state program funded by state and federal taxes that provide medical care for the needy. part a-c are part of medicare
which of the following is not true regarding a flexible spending account
it does not have limits on contributions= flexible spending accounts (FSA) IS A FORM OF CAFETERIA PLAN BENEFIT FUNDED BY SALARY REDUCTION. THE EMPLOYEES ARE ALLOWED TO DEPOSIT A CERTAIN AMOUNT OF THEIR PAYCHECK INTO AN ACCOUNT BEFORE PAYING INCOME TAXES. FSA BENEFITS ARE SUBJECT TO ANNUAL MAXIMUM AND USE OR LOSE RULE
a married couple owns a permanent policy that covers both of their lives and pays the death benefit only upon the death of the first insured. which policy is that
joint life policy
a married couple owns a permanent policy which covers both of thier lives and pays the death benefit only upon the death of the first insured which policy is that
joint life policy
which of the following is an example of a limited pay life polciy
life paid up at age 65. limited pay whole life premiums are all paid by the time the insured reaches age 65. the policy endows when the insured turns 100. it is the premium period that is limited not the maturity
if a dental plan is integrated, it is combined with what type of plan
medical. integrated plans allow for dental plans to be included in a medical plan providing coverage for both under a single contract. sometimes the deductibles are merged, but this does not have to be the case
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
neither approved the application nor issued the policy
a rider attached to a life insurance policy that provides coverage on the insured's family members is called the
other-insured rider... is useful in providing insurance for more than one family member. offered by term insurance which can be covered to permanent insurance
which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest and the policy cash value to pay the policy up early
paid-up option. the insurer can accumulate dividends at interest and then use them in to pay the policy earlier than planned
all of the following reequipments for a nonresident license except
passing this state's licensing examination, licensing examination is not required for nonresident producers applying for the same line of authority as held in the home state
which of the following provision is manadatory for health insurance policies
physical examination and autopsy
a guaranteed renewable health insurance policy allows the
policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class- coverage is guaranteed, but rates can be adjusted for the entire class
What type of licensee represents the insurance company?
producer
an employer has sponsored a qualified retirement plan for its employee where the employer will contribute money whenever a profit is realized. what is this called?
profit sharing plan- is one where the employer will contribute monies into an employee retirement plan when the company shows a profit
the policyowner pays for her life insurance annually. until now she has collected a nontaxable dividend check each year. she has decided that she would rather use the dividends to help pay for her next premium. what option would allow her to do this
reduction of premium
a man deicded to purchase a 100,000 annually renewable term life policy to provide additional protection until his children finished college. he discovered that his policy
required a premium increase each renewal
when an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all the premiums paid. which rider is attached to the policy
return of premiums. death must occur prior to a certain age in order for the premium amount to be returned. funded by using increasing term insurance
which of the following best details the underwriting process for life insurance?
selection, classification, and rating of risks
It would be considered unfair discrimination to ask an insurance applicant about which of the following and then use that information as a rating factor to determine insurability?
sexual orientation, as well as using sexual orientation as a rating factor to determine insurability
an insurance policy that only requires a payment of premium at it inception provides insurance protection for the life of the insured and matures at the insured's age 100 is called
single premium whole life
which type of life insurance policy generates immediate cash value
single premium- is the fact that it generates immediate cash value, due to the lump-sum payment made to the insurer
which of the following special policies covers unusual risks that are not normally included under accidental death and dismemberment coverage
special risk policy will cover unusual types of risk that are not covered under AD&D policies. it covers only the specific hazard or risk identified in the policy such as a racecar driver
which of the following terms describes the specified dollar amount beyond which the insured no longer participates in the sharing of expenses
stop-loss limit - is a specified dollar amount beyond which the insured no longer participates in the sharing of expenses
a provision found in insurance policies which prevents the insured from collecting twice for the same loss is called
subrogation. when the insureds accept loss payment from the insurance company they must transfer their right to recovery to the insurer. this prevents the insured from collecting twice for the same loss and allows the insurer to indemnify the insurance company
a producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. this is a personal use of life insurance known as
survivor protection. life insurance can provide the funds necessary for the survivors of the insured to be able to maintain their lifestyle in the event of the insured's death this is known as survivor protection
the interest earned on policy dividends is
taxable. dividends are a return of unused premiums on which the insured has already paid taxes. any interest earned is taxable as ordinary income
whose responsibility is it to determine if all of the questions on an applications have been answered
the agent
An agent uses an insurer's illustration. He obtains proper approval and does not change the illustration in any way. The illustration involves projected amounts, and the agent stipulates that the amount would not be guaranteed. Which of the following is true?
the agent must stipulate that the illustration is not part of the contract
insurable interest can be best described by which of the following
the applicant must experience a financial loss due to an accident or sickness that befalls the insured
An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. If the applicant is killed in an automobile accident the next day,
the beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy - the conditional receipt provides that when the applicant pays the inital premium coverage is effective
if a business wants to buy a disability income policy on a key employee, which of the following is considered the beneficiary
the employer. in key person disability insurance purchased by a business, the business is the policyowner and the beneficiary and the key person is the insured
If an insurer becomes insolvent, which of the following would pay benefits to policyholders?
the guaranty association. is in existence to protect policymakers and beneficiaries losses caused by the insolvency of an insurance company
in which of the following situations would social security disability benefits not cease
the individual' son gets a part time job to help support the family
an insured purchased a noncancellable health insurance policy 1 year ago. which of the following circumstances would not be a reason for the insurance company to cancel the policy?
the insured is in an accident and incurs a large claim
which of the following is not a feature of a guaranteed renewable provision
the insurer can increase the policy on an individual basis... Guaranteed renewable provision has all the same features that noncancellable provision does, with the exception that the insurer can increase the policy premium on the policy anniversary date. however, the premiums can only be increased on a class basis, not on an individual policy
which of the following is not a feature of a noncancelable policy
the insurer may terminate the contract only at renewal for certain conditions- the insurance company cannot cancel a noncancelable policy nor can the premium be increased beyond what is stated in the policy. insured has a right to renew the policy for the life of the contract, however, the guarantee to renew coverage usually only applies until the insured reaches age 65
An agent is in the process of replacing the insured's current health insurance policy with a new one. Which of the following would be a proper action?
the old policy should stay in force until the new policy is issued - the agent must make sure that the current policy is not cancelled before the new policy is issued
all of the following are true regarding a decreasing term policy except
the payable premium amount steadily declines throughout the duration of the contract
which of the following best defines the owner as it pertains to life settlement cotracts
the policy owner of the life insurance policy
If an insured continually uses the automatic premium loan option to pay the policy premium,
the policy will terminate when the cash values is reduced to nothing
An insured is upset that her new health insurance policy was delivered to her by certified mail and not through her agent. Which of the following is true?
there is nothing wrong with this form of policy delivery
What do long-term care policies offer to policyholders to account for inflation?
they offer the option of purchasing coverage that raises benefit levels accordingly
what is the purpose of a fixed-period settlement option
to provide a guaranteed income for a certain amount of time
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?
under the fixed period installments option (also called period certain) a specified period of years is selected, and equal installments are paid to the recipient. the payment will continue for the specified period even if the recipient dies before the end of that period