Alabama Life and Health (Exam FX Simulation - attempt 1)
Attempting to determine how much insurance an individual would require based upon their financial objectives is known as
Needs Approach
Which provision of a life insurance policy states the insurers duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?
Insuring clause
All the following are Nonforfeiture options EXCEPT
Interest only
When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will
Issue the policy anyways
All of the following statements about Medicare Part B are correct EXCEPT
It is a compulsory program
Which of the following best describes annually renewable term insurance?
It is level term insurance
Which of the following is not true regarding a non-qualified retirement plan?
It needs IRS approval.
Insured buys a 5 year level premium term policy with a face amount of $10000. Policy also contains renewability and convertibility options. When insured renews in 5 years, what happens to the premium?
It will increase because the insured will be 5 years older than when the policy was originally issued.
What law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?
Law of large numbers
Variable life insurance is based on what kind of premium?
Level Fixed
According to the entire contract provision, what document must be made part of the insurance policy?
Copy of the original application
In a basic expense policy, after the limits of the basic policy are exhausted, the insured must pay what kind of deductible?
Corridor
Which of the following is not true of basic medical expense plans?
Coverage for catastrophic medical expenses
If an IRA annuitant dies after the annuity has been paid up, what effect will this have on the annuitant's estate?
The entire value of the contributions and benefits will be included
An insurance advertisement exaggerates the benefits of an insurance policy, due to human error at the insurer's advertising agency. Who will the Department of Insurance hold responsible for the exaggeration?
The insurer
An applicant is considered to be high-risk, but not so much that the insurer wants to deny coverage. Which of the following is NOT true?
The insurer will issue a conditional coverage
Your customer doesn't mind paying a higher premium as long as he gets a life insurance product that would allow for a faster growth of the cash value. What kind of policy would you recommend?
An endowment policy
Which of the following would be the basic source of information used by the company in the risk selection process?
Application
What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident?
Common Disaster Clause
An insurance producer who is late in filing an application for license renewal will be charged a fee of
$50
A person who fails to segregate premium monies from his own personal funds is guilty of
Commingling
When the insurer stipulates the time period for payment of claims, how soon must the insurer pay a death benefit claim after receiving the proof of death?
2 months
Insurance policies are incontestable if they have been in effect for at least
2 years
An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?
$50,000
The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case what will the policy beneficiary receive?
$100,000
The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years?
2 years
What is a penalty tax for non qualified distributions from a health savings account
20%
A producer licensed in Alabama must notify the Insurance Department of any change of address in his or her residence or business address within how many days?
30 days
When an employee terminates coverage under a group insurance policy, coverage continues in force for
31 days
In order to quality for conversion from a group life policy to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?
5 years
Jason is insured under his employers group health insurance he splits the cost of the premiums with his employer this is an example of
A Contributory plan
Underwriting for disability insurance is unique due to the type of risk involved. Which of the following situations illustrates this?
A construction worker pays a higher premium and receives a poorer classification of disability.
All of the following are correct about the required provisions of health insurance policy EXCEPT
A reinstated policy provides immediate coverage for an illness
Which of the following is NOT an allowable 1035 exchange
A whole life insurance policy is exchanged for a term insurance policy.
When transacting business in this state an insurer formed under the laws of another country is known as a/an
Alien Insurer
which term describes a situation in which people who are the most likely to have claims are the most likely to seek insurance
Adverse Selection
How often must the Commissioner or an examiner designated by the Commissioner examine domestic insurance companies?
As often as the commissioner deems necessary, but not less frequently than once every 5 years
At what point must an outline of coverage be delivered
At the time of the application or upon delivery of the policy
Insurance policies ensure that after a loss proceeds will go to the
Beneficiary
A man bought an individual health insurance policy for himself. Which of the following roles does he now legally have?
Both subscriber and insured
Who must sign the "Notice Regarding Replacement"?
Both the applicant and agent
A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?
Collateral assignment??
How many pints of blood will be paid for by medicare supplement core benefits?
First 3
As deductible amounts increase premium amounts change in what way
Decrease
Which of the following statements about occupational vs nonoccupational coverage is true
Disability insurance can be written as occupational or nonoccupational
An insured has medical insurance coverage through 2 different providers, both covering the same expenses on an expense-incurred basis. Neither company knows in advance that the insured has coverage through any other insurers. The insured submits a claim to both insurers. How should the claim be handled?
Each insurer should pay a proportionate share of the claim
Which of the following entities is not an insurer but organization formed to provide insurance benefits for members of an affiliated lodge or religious organization?
Fraternal Benefit Society
Which of the following is NOT a type of information that needs to be gathered in order to determine the value of someone's life when using the needs approach?
Estimated longevity
All of the following actions can be described as twisting EXCEPT
Explaining to client the advantages of permanent insurance over term and suggesting changing policies.
Using names or titles that have tendency to misrepresent the true nature of a policy is an example of what illegal practice?
False Advertising
The requirement that agents not commingle insurance monies with their own funds is known as
Fiduciary responsibility
Most LTC plans have which of the following features?
Guaranteed renewability
What is the proposal used in the selling of life insurance that depicts the non-guaranteed elements of the policy over a period of time?
Illustration
What type of annuity can be purchased with a single premium and provides benefits payments immediately?
Immediate
The form of life annuity which pays benefits throughout the lifetime of the annuitant and also guarantees payment for a minimum number of years is called
Life income with period certain
If a settlement option is not chosen by the beneficiary or policyowner, which option will be used?
Lump Sum
In group insurance, what is the policy called?
Master Policy
Which of the following statements is correct?
Medicare will cover nursing home care if it is part of the treatment for a covered illness
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of?
Misrepresentation
Which provision concerns the insured's duty to provide the insurer with reasonable notice in the event of a loss?
Notice of Claim
During replacement of life insurance, a replacing insurer must do which of the following?
Obtain a list of all life insurance policies that will be replaced
An applicant is discussing his options for Medicare supplement coverage with his agent. The applicant is 65 years old and has just enrolled in Medicare Part A and Part B. What is the insurance company obligated to do?
Offer the supplement policy on a guaranteed issue basis
Medicare Part A services do NOT include which of the following?
Outpatient Hospital Treatment
What is the major difference between a stock company and a mutual company?
Ownership
Which of the following provisions is mandatory for health insurance policies?
Physical examination and autopsy
All of the following are true regarding insurance policy loans EXCEPT
Policy loans can be made on policies that do not accumulate cash value
What universal life option has a gradually increasing cash value and a level benefit?
Single Life
underwriting is a major consideration when an insured wishes to replace her current policy for all of the following reasons EXCEPT
Premiums always stay the same
A medical insurance plan in which the health care provider is paid a regular fixed amount for providing health care to the insured and does not receive additional amounts of compensation dependent upon the procedure performed is called
Prepaid plan??
Which of the following statements is an accurate comparison between private and government insurers?
Private insurers may be authorized to transact insurance by state insurance departments.
Pertaining to insurance, what is the definition of a fiduciary responsibility?
Promptly forwarding premiums to the insurance company
Paul is a producer in Louisiana and wants to become a producer in Alabama. The Commissioner will waive certain examination requirements, provided that louisiana would waive these same requirements if an alabama producer sought licensure in Louisiana. What term is used to describe this phenomenom?
Reciprocity
Following a career change, and insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe?
Reduction
Disability income policies can provide coverage for a loss of income when returning to work only part-time after recovering from total disability. What is the benefit that is based on the insured's loss of earnings after recovery from a disability
Residual disability
annuities can be used to fund which of the following
Retirement Plans
Which is the appropriate action by the insurer if a prospective insured submitted an incomplete application?
Return the application to the applicant for completion
A formal arrangement of providing health care benefits without providing any financial protection to the principal is referred to as what type of plan?
Self-Insurance
Which of the Statements below does NOT describe a Blue Cross Blue Shield Plan?
Services are paid for at the time of use
Methods used to pay death benefits to a beneficiary upon the insured's death
Settlement Options
Which of the following would an accident-only policy NOT cover?
Surgery to repair a wrist damaged by tendonitis
nonforfeiture values guarantee which of the following for the policyowner
That cash will not be lsot
before transacting insurance under an assumed or artificial name, a license must first obtain approval from
The Commissioner
Which of the following entities was created to protect insureds against an insurer's insolvency?
The Life and Disability Insurance Guaranty Association
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?
The annuitant must be a natural person
If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back?
The balance of the loan will be taken out of the death benefit
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, which of the following is true
The beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy
An employee quits his job on May 15 and doesn't convert his group life policy to an individual policy for 2 weeks. he dies an accident on June 1. which of the following statement best describes what will happen?
The insurer will pay the full death benefit from the group policy to the beneficiary
Which of the following entities will most likely regulate an insurer's advertisement on local tv station
The marketing department of the insurance company
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
The paid-up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy
A medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographic area is known as
Usual, customary and reasonable.
Which of the following would be least likely to be considered a legitimate need that would be paid by insurance proceeds?
Vacation travel expenses
All of the following cases show when a Small Employer Medical plan cannot be renewable EXCEPT
When the employer chooses to renew the plan
When would a 20-pay whole life policy endow?
When the insured reaches age 100
what is the contract provision that allows the insurer to nonrenew health coverage if certain events occur?
conditionally renewable
In health insurance, if a doctor charges $50 more than what the insurance company considers usual, customary and reasonable, the extra cost
is not covered
If an insured continually uses the automatic premium loan option to pay the policy premium
the policy will terminate when the cash value is reduced to nothing
which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE?
withdrawals are not taxable
