05/03/22 Set One GUARANTEED EXAM Life + Health Exam
#139.How many hours of Continuing Education are required to maintain a Counselor's license?
None Continuing Education requirements do not apply to those with a Counselor's license.
5. Who can request changes in premium payments, face value, loans, and policy plans?
Producer
#39. Which of the following is true regarding a joint life annuity?
The payments stop at the first death Joint Life is a settlement option where two or more annuitants receive payments until the first death among the annuitants, then the payments stop.
#60.Which of the following Medicare parts provides prescription drugs benefit?
Part D Medicare Part D is for prescription drug coverage.
#11 All of the following are ways to handle risk EXCEPT
Elimination Risk cannot be eliminated
#74.When agents, brokers, or solicitors handle premiums for an insurer, they are acting in which capacity?
As a fiduciary A fiduciary is a person acting in a position of trust. For example, the agents may have been trusted with the funds or property of another person (handling premiums for the insurance company)
#140.Which of the following is NOT true of the agent's implied authority?
It is specifically stated in the contract Implied authority is authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal. Implied authority is incidental to express authority since not every single detail of an agent's authority can be spelled out in the written contract
#50.Partial disability usually pays what percent of the total disability benefit?
50%
#10.The Omnibus Budget Reconciliation Act of 1990(OBRA)requires that large group health plans with 100 employees or more must provide primary coverage for nonretired, disabled individuals under what maximum age?
65 OBRA requires that large group health plans with 100 employees or more must provide primary coverage for disabled individuals under age 65 who are not retired.
#15.Which of the following defines "own occupation disability" with respect to disability income insurance?
A disability that results in the insured being unable to work at their regular job even though they may be able to perform the duties of another occupation The definition of "own" occupation means the insured is unable to perform their regular job, but could work or be retrained to perform other jobs
#110.Which of the following is NOT a standard exclusion in life insurance policies?
Disability Exclusions are policy provisions, which exclude certain types of risks. Aviation, hazardous occupation, and war and military services are most common exclusions. Disability is not a common exclusion.
#70.Benefits for a Disability Income policy are based on which of the following?
Earnings of the insured Disability income benefits are limited to a percentage of earned income. The insurer wants a claimant to have a financial incentive to return to work.
#29.Which act was introduced to reduce the cost of health care by utilizing preventive care?
HMO Act of 1973 The main goal of the HMO Act of 1973 was to reduce the cost of health care by utilizing preventive care
#37.Under what circumstances will the contingent beneficiary receive the death benefit?
If the primary beneficiary dies before the insured The only way the contingent beneficiary will receive the death benefit is if the primary beneficiary dies before the insured.
#42 Which of the following is the primary source of information that an insurer uses to evaluate an insured's risk for life insurance?
Insurance application Insurance application is the data-gathering tool utilized in evaluating an individual risk.
#31 Which of the following is consideration on the part of an insurer?
Paying a claim The binding force in any contract is consideration. Consideration on the part of the insured is the payment of premiums and the health representations made in the application Consideration on the part of the insurer is the promise to pay in the event of loss.
#48.An individual is applying for health insurance. His health history is nearly perfect; he has a healthy weight, and doesn't smoke. What risk classification would this applicant most likely receive?
Preferred The preferred" status indicates that an insured is in excellent physical condition and employs healthy lifestyles and habits. These individuals qualify for lower premiums than those who are in the lower categories.
#100.What does the application of contract of adhesion mean?
Since the insured does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured The insurer prepares the policy and submits it to the insured on a take-it-or-leave-it basis. Because the insured does not have input in drafting the policy but simply adheres to the terms of the policy, the policy is classified as a contract of adhesion. Any uncertain terms in the policy will be interpreted in favor of the insured.
#81 A whole life policy that will generate immediate cash value is a
Single premium policy A whole life policy that will generate immediate cash value is a single premium policy
#73.Insureds have the right to do which of the following if they have NOT received the proper claim forms within 15 days of their notice to the insurer of a covered loss under a major medical policy?
Submit the description in their own words on a plain sheet of paper Insureds have the right to submit the description in their own words on a plain sheet of paper if a proper form is not supplied. This is a mandatory provision in all individual health insurance policies.
#65. In life insurance, which of the following is NOT required to have an insurable interest in the insured?
The beneficiary The beneficiary does not have an insurable interest in the life of the insured.
#109.An insured needs ongoing treatment for a diabetic condition Under PPACA, which of the following is correct?
The condition must be covered under the insured's plan Under PPACA, chronic conditions, like diabetes, must be covered as an essential service under the plan. Lifetime or annual treatment dollar limits are not allowed.
#90.With Adjustable Life, the owner can change all of the following EXCEPT
The insured The mortality charge is determined by the actuary in the home office. The owner of the policy has no control over this mortality cost.
#105. The elimination period in a disability income policy is better known as
The period of time an insured must wait after the onset of an illness or injury before benefits begin An elimination period is a deductible of time before benefits are payable after a disability occurred.
#129.Under a group medical policy, prescription drug plans are
optional benefits Prescription drug plans are considered to be optional benefits under a group medical policy. The insured typically pays a copay, and the insurer pays the balance. There is generally a limit to the quantity of drugs that can be purchased at one time
#8.If an insured purchases an insurance policy with a large deductible, what risk management technique is the insured exercising?
retention When an insured purchased a policy with a large deductible, he or she received a lower premium rate In return for the lower premium rate, the insured was required to retain a larger amount of a loss, should it occur.
#52 The Human Life Value approach to determining Life Insurance needs is based upon which of the following ideas?
Loss of the breadwinner's income The Human life value approach is based upon loss of income
#125. Once a temporary producer's license has expired its initial period, the person granted the temporary license must
Obtain a permanent license Temporary licenses are issued for 180 days, but if a license is needed beyond that time frame, the person will need to obtain a permanent license.
#62 What is the cost of coverage based on for group life insurance?
The average age and the ratio of men to women One of the aspects of group underwriting that differs from individual insurance is that the cost of the coverage is based on the average age of the group and ratio of men to women
#43.A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will
Continue to increase The new policy continues to build its own cash value and will remain in force until the insured's death or maturity.
#106. Al of the following are characteristics of group health insurance plans EXCEPT
The parties that hold a group health insurance contract are the employees and the employer The contract for coverage is between the employer and the insurance company. Only one policy is issued (master policy) to the employer, covered employees receive a certificate of insurance.
#57.Which of the following is NOT correct concerning taxation of disability income benefits?
If paid by the individual, the premiums are tax deductible Premium payments on personally owned disability income policies are non-deductible by the individual However, disability income benefits are received income tax free by the individual.
#107.Upon the surrender of a life insurance policy, any cash value accumulated in excess of the premium payments is
Taxed as ordinary income Upon surrender or endowment, any cash value in excess of cost basis (premium payments) is taxable as ordinary income
#120. An individual is approaching retirement age and is concerned about having proper coverage should he have to be placed in a Long-Term Care(LTC) facility His agent told him that LTC policies would provide necessary coverage at all of the following levels EXCEPT
Acute Acute care is provided by Medical insurance
#117.An insured and his spouse recently had a child Which of the following riders would allow the couple to insure the child for a limited period of time at a specified amount?
Children's term rider The children's term rider allows children to be added to coverage for a limited period of time for a specified amount
#25.How long is a newborn covered without notification to the insurer?
From the moment of birth, and the insurer must be notified within 31 days From the time labor has begun, and the insurer must be notified within 31 days.
#127.A college student will graduate next year. His studies have limited his ability to work, so he has borrowed funds to pay for his education. He would like to start a permanent life insurance program that would cover his debt and still be affordable during the period he is establishing his earning potential An appropriate policy would be
Modified Whole Life Modified life requires low premiums at the beginning of the policy. The premiums are increased at a later date, usually three to five years after the issue
#14 A stock insurer is defined as an insurer
Owned by it stockholders A stock insurance company is owned by its stockholders who contribute the capital. Any profits of the company are paid to the stockholders as dividends on their stock. If the company loses money, the stockholders suffer the financial losses by a reduction of the value of the stock and the absence of dividends paid
#13.Wagering on a sporting event is an example of what type of risk?
Speculative With speculative risk a chance to win or a chance to lose exists. Speculative risks are not insurable.
#146.Which of the following is required in order for a plan to be qualified?
The plan must be formally written and communicated to the employees The plan must be for the exclusive benefit of the employees and their beneficiaries, formally written and communicated to the employees, and the plan's benefit or contribution formula cannot discriminate in favor of the prohibited group. Participation in a plan may not be geared exclusively to the prohibited group. The plan must be permanent
#150.What is the purpose of a benefit schedule?
To state what and how much is covered in the plan Some medical expense insurance plans contain a benefit schedule, which very specifically states exactly what is covered in the plan and for how much.
#45.Whose responsibility is it to ensure that the application for health insurance is complete and accurate?
agents As a field underwriter, the agent must ensure that the applications are complete and accurate
#98.HMOs are known as what type of plans?
Service The HMO provides benefits in the form of services rather than in the form of reimbursement for the services of the physician or hospital
#46.All of the following could qualify as a group for the purpose of purchasing group health insurance EXCEPT
An association of 35 people Group insurance may be issued to employer, employee, or other groups that are together for a purpose other than purchasing insurance.
#77. Medicare is a health insurance program for all the following individuals EXCEPT
Those with low income and low assets Medicare is a federal program for those over 65,those that have been on Social Security for 2 years, and those with permanent kidney failure. Assets and income have nothing to do with Medicare eligibility.
#101 An annuity has accumulated the cash value of $70,000, of which $30,000 is from premium payments. The annuitant dies during the accumulation phase. The beneficiary will receive
70,000 If the annuitant's death occurs during the accumulation period, the beneficiary will receive the amount of premiums paid into the plan or the cash value, whichever is greater. In this case, the beneficiary will receive $70,000.
#92 Which of the following elements of an insurance contract requires payment of premium?
consideration The binding force in any contract is consideration. Consideration on the part of the insured is the payment of premiums and representations made in the application. Consideration on the part of the insurer is the promise to pay in the event of loss.
#47.If an annuity has a guaranteed minimum interest rate ,this means
The interest rate will never drop below the guaranteed minimum With a guaranteed minimum interest rate, the insurer will not let the annuity's interest rate drop below the guaranteed minimum(usually 3%).If company has higher interest rates, the annuity will utilize the higher rates.
#128 Medicare Part B covers all of the following EXCEPT
Long-term care services Medicare does not cover long-term care services.
#24.Which of the following riders pays a beneficiary a death benefit that is double or triple the face amount if the insureds death was caused by an accident as defined in the policy?
An Accidental Death Rider The Accidental Death Rider pays some multiple of the face amount if death is the result of an accident as defined in the policy
#138 When an agent delivered an insurance policy to the insured, he collected the initial premium, as well as a document verifying that the insured had not had any injuries or illness since the application date What is this document called?
Statement of Good Health If the premium was not collected at the time of the application, the agent may also be required to get a statement from the applicant at the time of policy delivery that verifies that the insured has not suffered injury or illness since the application date (known as the Statement of Good Health).
#61 What is the main difference between blanket insurance and group health insurance?
The insured members are not named The main difference between blanket insurance and group health insurance is that the insured members are not named in blanket insurance.
#132 Which of the following best depicts the law of large numbers?
The larger the pool of risks under study, the more accurate the predictions will be Actuaries utilize the law of numbers to set premium rates. It is more likely for similar results to occur if a larger group is studied.
#55. In order for an alumni association to be eligible to purchase group health insurance for its members, all of these statements must be true EXCEPT when the association
Has been active for five years minimum To be eligible to purchase group health insurance, an association must be organized for reasons other than buying insurance, must have at least 100 members, have a constitution, by-laws, and must hold at least annual meeting. As association group must have been active for at least years.
#58.Which of the following best describes life annuity with period certain option?
It guarantees benefit payments for life of the annuitant and for a specified period for the beneficiary Life with Period Certain annuity benefit option guarantees the payments for the life of the annuitant. There is also a specified period that is guaranteed. The guaranteed period could be 10 or 20 years, or to age 65 -whatever time period meets the needs of the annuitant
#38. Which term describes an individual who is domiciled and licensed as a resident producer in a state other than Michigan?
Nonresident producer A nonresident producer is an individual who is domiciled and licensed as a resident producer in a state other than Michigan.
#33.All of the following are true of annually renewable term insurance EXCEPT
Proof of insurability must be provided at each renewal ART is a form of level term insurance, in which the death benefit remains level and the policy may be guaranteed to be renewable each year without proof of insurability but the premium increases annually according to the insured's attained age.
#28 Which of the following is TRUE regarding premium in a 10-year level premium policy?
The premium will remain level for 10 years Level premium 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
#97.All of the following health insurance disability benefits are income tax free EXCEPT
Employer-paid group disability Employer-paid group disability benefits are income taxable.
#133.Which health insurance provision ensures that multiple policies that provide the same benefits on an expense-incurred basis pay a proportionate share of a claim?
Insurance with Other Insurers If an insured has multiple insurance policies that cover the same expenses, the Insurance with Other Insurers provision allows each insurer to pay a proportionate share of a claim.
#91 Al of the following statements are true regarding an Ordinary(Straight) Life policy EXCEPT
It does not have a guaranteed death benefit Straight Life (also called Ordinary Life or Continuous Premium Whole Life)charges a level annual premium for the lifetime of the insured and provides a level, guaranteed death benefit. If the insured lives to age 100,the policy endows(matures)and the face amount is paid to the insured at that time During the insured's lifetime the straight life policy builds cash value. The insurer guarantees the cash value and death benefit under a straight life policy.
#136.The benefits in Medical Expense Insurance are
Received income tax free by the individual The benefits in Medical Expense Insurance are received income tax free by the individual
#137.Which of the following is required to provide a notice of information practices to applicants and policyholders?
The producer Insurers and producers must provide a notice of information practices to applicants and policyholders in connection with insurance transactions
4. The omnibus budget reconciliation act of 1990 (OBRA) requires
Large group health plans must provide primary coverage for disabled individuals under age 65 for not retired OBRA requires large group health plans covering 100 or more employees to provide primary coverage for disabled individuals under age 65 who are not retired
#41 The reduction of premium option uses the dividend to reduce
Next year's premium With the reduction of premium option, the insurer uses the dividend to reduce the next year's premium.
#113.Which type of insurance policies provides pure life insurance protection without a savings element?
Term Life insurance policies that provide pure life insurance protection are called term insurance, those that include a savings or investment element (or cash value) and lifetime protection against premature death, called permanent insurance
#51 What is the purpose of a disability buy-sell agreement?
To allow the business buyout in case of the owner's disability The buy-sell agreement specifies how the business will pass between owners when one of the owners dies or becomes disabled
#89.The presumptive disability provision assumes that the insured is totally disabled upon loss of all of the following EXCEPT
Feeling Should an insured suffer the loss of any of the above, the insurer will assume that no improvements exist and the insured may not have to submit to periodic exams to prove continued disability.
#7.In health insurance, the length of the grace period varies according to the
Mode of premium payment
#82 Which of the following statements describes one of the reasons individuals purchase life insurance?
It creates an immediate estate Life insurance death proceeds can create an estate when the insured dies.
#44.When may HIV-related test results be provided to the MIB?
only if the individual is not identified insurance companies must maintain strict confidentiality regarding HIV-related test results or diagnoses. Test results may not be provided to the MIB if the individual is identified
#53.An important fact about the financial status of an insurer was deliberately withheld. Which of the following terms best describes this action?
False financial statement Statements of this kind - when used to put the company into a favorable light - are often called false financial statements
#83. Credit disability insurance will pay
Monthly payments until the insured recovers or the loan is paid off If an insured with a credit disability policy becomes disabled, the benefits are paid to the creditor in the form of monthly payments until the insured recovers or the loan is paid off
#40.J's retirement plan meets all federal requirements and entitles him to certain tax benefits as the owner of the plan. What term best describes J's retirement plan?
Qualified A qualified retirement plan entitles the owner to tax benefits. In order for a retirement plan to be qualified, certain federal requirements must be met.
#80. What is the tax penalty for withdrawing money from an annuity prior to age 59 1/2?
10% In the event an annuitant decides to withdrawal funds from an annuity, prior to reaching age 59 1/2, the annuitant must pay a 10% tax penalty to the IRS.
#121 If an insured decides to reduce the coinsurance amount on her major medical insurance, what can the insured expect?
A higher monthly premium The greater portion that the insurer pays, the greater the premium charged. Reducing the coinsurance will increase the premium.
1 Which of the following documents used in the underwriting process contains specific medical details about an applicant?
Attending physician statement (APS) If an underwriter wants to obtain specific medical details about an applicant, it will request a statement from the applicants position. This is called an attending physician statement
#56.Once the initial benefit limit in Medicare Part D is reached, how is the beneficiary affected?
The beneficiary is then responsible for a portion of prescription drug costs
#111 Variable Life insurance is regulated by all of the following entities EXCEPT
The US. Department of Treasury Variable products are comprised of both insurance and securities. As a result, they are regulated by the SEC, FINRA, and the state department regulating insurance.
#103. What is the exclusion ratio used to determine?
The annuity benefit to be excluded from taxes The exclusion ratio is used to determine the annuity amounts to be excluded from taxes.
#27. A licensee fails to earn the required CE credits by the expiration of the 90-day grace period, and the license has been terminated for education How much time does the licensee have to meet the CE requirement to be considered for license reinstatement
1 year Reinstatement can occur up to l year following the termination as long as the producer has met the CE requirements, submitted an application for licensure, and paid the required fees.
#112 According to the metal level classification of health plans, what percentage of health care costs will be covered under a gold plan?
80% According to the metal level classification of health plans, the gold plan is expected to cover 80% of the cost for an average population, and the participants would cover the remaining 20%
#123.An adjustable life policy can assume the form of
Either term insurance or permanent insurance Adjustable life was developed in an effort to provide the policyowner with the best of both worlds (term and permanent coverage), An adjustable life policy can assume the form of either term insurance or permanent
2 An insured driver is involved in an accident in which he is disabled and his passenger and the other driver are injured. Which of the following will be covered by his disability income policy?
His lost income Disability income insurance is designed to provide periodic payments when an insured is unable to work because of sickness or injury
#21 Which source of underwriting information includes information on an applicant's character, general reputation, personal habits, and mode of living?
Investigative consumer report An investigative consumer report includes information on an applicant's character, general reputation, personal habits, and mode of living that is obtained through investigation.
#68. Which of the following statements is TRUE regarding an Agent's Report during the policy application process?
It provides the agents personal observations concerning the proposed insured The agents report provides the agents personal observations concerning the proposed insured. The Agents Report does not become a part of the entire contract although it is a part of the application process.
#63.Your client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this policyowner select?
Joint and Survivor Under the Joint and Survivor settlement option, payments will continue until the death of the last beneficiary
#88 An insurance agent visits a potential client and explains various types of policies. The customer displays a lack of interest, so the agent guarantees higher dividends than he knows would be possible. Which term describes what the agent has done?
Misrepresentation Misrepresentation is the act of portraying sales material that is false, misleading or deceptive as to policy benefits or terms, the payment of dividends, etc. This refers to all forms of communication.
#12 When a dentist uses mechanical devices to straighten teeth, it is known as
Orthodontics Orthodontics refers to braces, prosthodontics to bridgework, endodontics to root canals, and periodontics to the treatment of gum disease
#124.Which of the following acts prohibits labor unions from organizing jurisdictional strikes, political strikes, or mass picketing?
Taft-Hartley Act The Taft-Hartley Act specifically prohibited the unions to organize jurisdictional strikes, political strikes, mass picketing, or make monetary donations to federal political campaigns
#66.Ininsurance,what is the term used for the cause of a loss?
PERIL The cause of a loss is called a peril.
#118. An applicant misstates his age on his application for a health insurance policy. He states that he is 39, but his actual age is 49. When he files a claim, what will most likely happen?
Benefits paid will be those that would have been purchased at the correct age If the insured misstated his or her age at the time of the application, the benefits paid will be those that the premium would have purchased at the correct age. This provision is similar to the one found in life insurance policies.
3. And insured recently received his major medical insurance policy. On 20 days after the policy issue, while recreational rockclimbing, the insured suffered a fall that require hospitalization, surgery and physical therapy to repair his broken leg. Which of the following is true?
Both deductible and car insurance payments will be in required Major medical plans have blanket coverage, and high maximum limits but require both a deductible and coinsurance after the claim is submitted. Accidents are covered without an elimination or waiting.
#22 Which of the following best describes a rebate?
A producer retuming part of her commission to her client, as an inducement to buy Returning part of a commission to a client as an inducement to buy is considered rebating. Requiring an insured to buy insurance as a condition to a loan is coercion. Selling insurance primarily to oneself, family and friends is known as controlled business. Misrepresenting policy provisions or coverages at issue is an unfair claims practice.
130.Which risk classification is representative of the majority of people in a certain age group and with similar lifestyles?
Standard Standard risks are representative of the majority of people in their age and with similar lifestyles
#87 The frequency and the amount of the premium payment are known as what?
Premium mode Premium payment mode refers to the frequency the policyowner pays the premium.
115.Which of the following best describes the type of care provided by HMOs?
Preventive HMOs emphasize preventive health care as a method of reducing medical expenses by early detection of health problems before they may require major more costly treatment
#35.Carlos's health insurance policy pays benefits according to a list which indicates the amount that is payable under each type of covered treatment or procedure. Carlos's policy provides benefits on a
Scheduled basis This type of payment covers the cost of treatment, not to exceed the maximum shown in the schedule.
#79.Which method of dealing with risk is applied when insurance is purchased?
Transfer Transfer is the basic principal of insurance under which the risk of financial loss is assigned to another party. Insurance is the most common method of transferring risk from an individual or group to an insurance company.
135.What is the purpose of the gatekeeper in an HMO?
Controlling costs Initially the member chooses a primary care physician, or gatekeeper. If the member needs the attention of a specialist, the primary care physician must refer the member. This helps keep the member away from the higher priced specialists unless it is truly necessary.
#93.If an employee remains on an employer group health plan within a company that has 20 employees and signs up for Medicare, which of the following coverages will be primary?
Employer Group Health Plan If an employee remains on the group health plan and signs up for Medicare, Medicare will be the primary coverage for groups with fewer than 20 employees, and the group coverage will be primary for groups with 20 or more employees.
#149.A disability income policy has a waiting period of 7 days. If the insured is disabled for 15 days, how many days of benefits will the policy pay?
8 days The waiting or elimination period is the time and insured must wait between the onset of an accident or illness and when benefits start being paid. An insured with a 7-day waiting period who was off work for 15 days would only have 8 days of coverage.
#148 Which of the following would be required to become licensed as an insurance producer?
A customer service representative who solicits no more than one policy a year A person does not require an insurance producer license if he or she only performs clerical tasks or advertises without intent to solicit insurance. However, once there is solicitation or commissions, a license is required
#144.Alof the following are places where care can be administered for a medical plan EXCEPT
Eye centers Today health care insurers are not only stock and mutual insurance companies, and Blue Cross/Blue Shield, but also health maintenance organizations and preferred provider organizations. Care is administered not only in the Doctor's office or the hospital but also in surgicenters, urgent care centers, and skilled nursing facilities
#141 Which of the following is NOT one of the requirements for obtaining a nonresident license in Michigan?
The applicant must complete prelicensing education and examination in the nonresident state Those individuals who wish to transact insurance in Michigan that are not residents of the state may obtain a nonresident license if they hold a current resident insurance license in their home state and is at least18 years old. A nonresident license is based on the resident license the person holds being in good standing. Anyone who was previously licensed for the same qualifications in another state is not required to complete any prelicensing education or examination.
#147.For which of the following reasons may group coverage NOT be discontinued?
The company's stock value lowers Group health coverage may not be renewed or may be discontinued because of nonpayment of premium, fraud, violation of participation or contribution rules, the issuer ceases to offer that particular coverage, or movement outside the service area or association membership cessation.
#75.Under the mandatory uniform provision "Notice of Claim" written notice of a claim must be submitted to the insurer within what time parameters?
Within 20 days This mandatory provision requires the insured to give the insurer, or its agent, written notice of a claim within 20 days of the loss or as soon as reasonably possible. If the nature of disability is such that the insured is legally incapacitated, this requirement is waived.