ExamFX Practice Test

which of the following components must a life insurance policy have t o allow policy loans? a. cash value b. dividends c. flexible premiums d. face amount

a. cash value

when health care insurers negotiate contracts with health care providers or physicians to provide health care services for subscribers at a favorable cost it is called a) point of service plan b) preferred provided org. c.) managed care d) indemnity plan

b) preferred provided org.

all of the following LTC coverage would allow an insured to receive care at home EXCEPT a) home health care b) skilled care c) custodial care in insured's house d) respite care

b) skilled care

in life insurance policies, cash value increase a. grow tax deferred b. are income taxable immediately c. are taxed annually d. are only taxed when the owner reaches age 65

b. are income taxable immediately

The premium of a survivorship life policy compared with that of a joint life policy would be a. half the amount b. lower c. higher d. as high

b. lower

all of the following are true about group disabililty income insurance EXCEPT a) waiting period starts onset of the injury or sickness b)longer the waiting period the lower the premium c) coverage applies both and off the job d) benefits are usually short term

c) coverage applies both and off the job

which of the following insureds have a right to cancel an individual life policy for a full refund within 30 days of policy delivery? a. only insureds who have depends b. only preferred insureds c. insured who are 60 years of age or older d. all insured

c. insured who are 60 years of age or older

when is the general enrollment period? (GEP) January1 - march 31

January1 - march 31

all of the following statements about MEDICARE PART B are correct EXCEPT a. it covers services and supplies not covered by part A b. it is financed by monthly premium c. it is financed by tax revenues d. it is compulsory program

a

What does "level" refer to in level term insurance? a. interest rate b. face amount c. premium d. cash value

b. face amount

though the purpose of health insurance, as with all insurance, is to "indemnify" or restore the client pre-loss condition, there is a possibility that the insured will not be paid back the entire amount of the care expenses. This occurs if the amount of the loss exceeds what? a. a stated % of insurer's return on investment b. policy limits c. the insurer's stop-loss d. state statutory limits

b. policy limits

all of the following are examples of risk retention EXCEPT a. self-insurance b. premiums c. deductible d. copayments

b. premiums

when an insured receives a written binder, a. the insured will be guarantee premium rates for a specific amount of time b. the insured will not have to submit an application to the insurer c. the insured's coverage will be effective immediately d. the insured will be locked into a contract for at least 2 years

c. the insured's coverage will be effective immediately

()()() For senior agents, the requirement for continuing education for California Partnership for long-term care policies is a) 4horus each reporting period b) 4hour each year c.) 8 hour each reporting period d) 8 hour each year

c.) 8 hour each reporting period

which of the following best describes a non-medical application? no require medical exam

d. medical portion of application that asks for medical information BUT DOES NOT REQUIRE A MEDICAL EXAM

when is the medicare open enrollment period? oct15-dec7th

oct15-dec7th

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? 1. expenses 2. estimated longevity 3. outstanding debt 4. mortgages

2. estimated longevity

IRA use immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distribution. what kind of penalty would the IRA owner pay? a) 50% tax on the amount not distributed as required b) no penalizes, since owner is older 59 1/2 c) 10% withdrawl d) 15% withdrawl

a) 50% tax on the amount not distributed as required

which concept is associated with exclusion ration? a. annuity payment b. dividend distribution c. how exlusion rider affect an insurance premium d. policy provisions

a. annuity payment

According to the entire contract provision, what document must be made part of the insurance policy? a. copy of the original application b. buyers guide c. agents report d. outline of coverage

a. copy of the original application

a set of legal or regulatory conditions that affect an insurer's ability to collect premiums commensurate with the level of risk incurred would be consider an a. legal hazard b. underwriting gamble c. legal peril d. fiduciary risk

a. legal hazard

a women's health insurance policy dictates which doctor she is allowed to see... what best describes the health system that the women is using? a. managed care b. comprehensive health c. major medical d. group health

a. managed care

An insured is involved in an accident that renders him permanently deaf, although he does not sustain any other major injuries. The insured is still able to perform his current job. To what extent will he receive Presumptive Disability benefits? a. no benefits b. full benefits c. partial benefits d. full benefits until the blindness lifts

a. no benefits must require lost of 2 limbs and total perm blindness. if it is temporary they receive no benefits

If a firm has 80 employees that are actively engaged in business on at least 50% of its working days during the preceding calendar year, what is its classification? a. small employer b. large employer c. participating plan d. association

a. smaller employer

a fathers owns a life insurance policy on his 15 year old daughter. the policy contains the optional payor benefit rider. if the father becomes disabled, what will happen to the life insurance premiums? a. the insured's premium will be waived until she is 21 b. the premium will become tax deductible until the insured's 18 birthday c. since it is the policy owner, and not the insured, who has become disabled, the life insurance policy will not be affected. d. pay premiums for 6 months

a. the insured's premium will be waived until she is 21

all of the following are personal uses of life insurance EXCEPT a. cash accumulation b. buy-sell agreement c. survivor protection d. estate creation

b. buy-sell agreement

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a a. nonforfeiture option b. guaranteed insurability rider c. paid up addition option d. cost of living provision

b. guaranteed insurability rider

The limits of a health reimbursement account are set by a. federal regulation b. the employer c. the state statues d. the insurer

b. the employer

annually renewable term policies provide a level death benefit for a premium that a. decreases annually b. remains level c. flucatuates d. increases annually

d. increases annually

in determining how material a piece of information is to each part of a contract, the value is not determined by the event itself but solely by which of the following? a. interpretation b amount of information c. truthfulness of such statement made d. influence this info. would have in forming an estimate of advantage and disadvantages of the contract

d. influence this info. would have in forming an estimate of advantage and disadvantages of the contract

insurance is the transfer of a. loss b. hazard c. peril d. risk

d. risk

the insurance policy, together with the policy application and any added riders form what is known as a a) entire contract b)certification coverage c) contract adhesion d) blanket policy

a) entire contract

Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT a ) the loss may be intentional b) the loss must not be catastrophic c) loss produced by risk must be definite c) number of homogenous exposure unit to make losses

a ) the loss may be intentional

Underwriting a group health insurance plan that is paid for by the employer requires all of the following EXCEPT a) individual members of the group may select the level of benefits for their own coverage b) the plan is based on other than individual selection c) all eligible employees must be covered d)coverage for plan participants is uniformed

a) individual members of the group may select the level of benefits for their own coverage

attempting to determine how much insurance a family would require based on financial object is known as a) needs approach b) HLVA c) estate planning d) vitatical approach

a) needs approach

qualified medical expenses paid for participants in MSA are a) not taxable b) taxable if they exceed the amount of the deductible c)taxable for up to 50% of benefits paid d) fully taxable

a) not taxable

an insured pays her Major medical insurance premium annually. she forgot to mail her premium. she had an accident and broken leg insurance company would... a) pay the claim b) hold the claim as pending until end of grace period c) deny claim d) pay half of her claim b/c the insured had an outstanding premium

a) pay the claim accident occurred during the grace period

Installing deadbolt locks on the doors of a home is an example of which method of handling risk? a) reduction b) avoidance c)transfer d)self insurance

a) reduction

An adjustable life policy owner can change which of the following policy features? a) the coverage period b) mortality expense c) investment account d) insured

a) the coverage period

Medi-cal may be avalible to persons over age 65 if a) they have medical or long term care claims not paid by medicare b) they have no pension or retirement plan c) they do not own medicare supplyment insurnace policy d) they are not married

a) they have medical or long term care claims not paid by medicare

When is the insurability conditional receipt given? a. after the application has been approved and the premiums have been paid b. when an insured individual needs to obtain an insurability receipt for tax purposes c. the application is approved before the premium is paid d. when premium is paid at the time of application

a. after the application has been approved and premiums has been paid

an insured receives an annual life insurance dividend check. what term best describes the arrangement? a. cash option b. reduction of premium c. annual dividend d. accumulation of interest

a. cash option

the current interest rate on a equity indexed annuity is often based on a. index like standard and poor's 500 b. the return from the insurance company separate account c. the annuitant individual stock portfolio d. the insurance company general account investment

a. index like standard and poor's 500

Which of the following statement is NOT correct regarding Medicare? a. medicare advantage must be provided through HMOs b. medicare advantage may include prescription drug coverage at no cost c. medicare part A provides hospital care d. medicare part B provides phyisican services

a. medicare advantage must be provided through HMOs

which of the following premium modes would result in the highest annual cost for an insurance policy? a. monthly b. quarterly c. semi-annual d. annual

a. monthly

which of the following type of annuities will generally provide the highest monthly income? a. straight life b. joint and survivor c. installment refund d. life with a 10 year period certain

a. straight life

the adjustable life policyowner can change which of the following policy features? a. the coverage period b. the mortality expense c. the investment account d. the insured

a. the coverage period

if the business wants to buy a disability income policy on a key employee, which of the following is considered the beneficiary? a. the employer b. the insurer c. the employee d. the producer

a. the employer

how do employers contributions to a HSA affect the insureds taxes? a. the employer contribution are not included in the individual insured's taxable income b. the employer are taxed at the same rate as the social security tax rate c. the employer contributions are taxed to the individual insured as earned income d. the employer contribution are deducted from the individual insured tax calculations

a. the employer contribution are not included in the individual insured's taxable income

which statement is NOT true regarding underwriting group health insurance? a. the group is assessed individually for insurability b. the premium are reassessed annually c. the cost of the policy is partially determined by the ratio of males to females in the group d. everyone in the group is covered, regardless of their medical history

a. the group is assessed individually for insurability

In underwriting a substandard risk, which of the following is INCORRECT? a) additional exclusions could be included to modify the underlying policy coverage b) a discounted premium would be charged c) the policy could be modified in the coverage or amount of coverage requested d) the applicant could be rejected for coverage

b) a discounted premium would be charged

which of the following is NOT covered under LTC policy? a) home care b) acute care in hospital c). adult care d. hospice care

b) acute care in hospital

factual statements about the insured or the risk in an insurance policy is considered a) material representation b) expressed warranty c) representation d) implied warranty

b) expressed warranty

in disability income insurance, the own occupation definition of diability applies a) as long as an individual is unable to work b) for the first 2 years of a disability c) during the waiting period d) during the elimination period

b) for the first 2 years of a disability

Units with the same or similar exposure to loss are referred to as a) law of large number b) homogenous c)catastrophic loss exposure d) insurable risk

b) homogenous

which of the following is true about labor union, fraternals, and co-ops? a) the offer low premium b) they may opt for self-insured medical and disability plan c)they may only obtain insurance plans thru commerical insurers d) they deliver coverage at a much higher cost than regular insurers

b) they may opt for self-insured medical and disability plan

according to the code, how many separate requirements should an insurance policy have? a. 4 b. 6 c. 8 d. 10

b. 6

which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on part of the insurance company? a. warranty b. aleatory c. adhesion d. subrogation

b. aleatory

In an annuity, the accumulated money is converted into a stream of income during which phase? a. conversion period b. annuitization period c. payment period d. amortization period

b. annuitization period is the time during which accumulated money is converted into a income stream

a small business owner is insured under disability policy funs a buy-sell agreement. if the owner dies or becomes disabled, the policy would provide which of the following? a. disability insurance for the owner b. cash to the owner business partner to accomplished a buyout c. the rent money for the building d. business manager salary

b. cash to the owner business partner to accomplished a buyout

which of the following is NOT a standard level of care? a) intermediate nursing care b. hospice care c. home care and communtiy based care d. custodial care

b. hospice care

During the accumulation period in a nonqualified annuity, what are the tax consequences of a withdrawal? a. neither interest nor principle is taxed, but penalties may be imposed b. taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 1/2 c. nontaxable principle may be withdrawn first, but 10% penalty will be imposed if under age 59 1/2 d. both interest and principal are taxed; no other penalties are imposed

b. taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 1/2

which is not covered under plan a in medigap insurance?

b. the medicare PART A deductible

which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation? a) blackout approach b) lumpsum approach c) HLVA approach d) needs approach

c) HLVA approach human life value approach is determined by the loss of income that would result with the death of the insured, after making adjustments for expenses, inflation, etc.

All of the following statement concerning ADD coverage are correct EXCEPT...

c) death benefit are paid only if the death occurs within 24r of an accident it is 90 DaYS, not 24 hours

a contract which one party undertakes to indemnify another against loss is called a) risk b) indemnity c) insurance d) adverse selection

c) insurance

whats the benefit of choosing extended term as a nonforefieture option? a) it allows for coverage to continue beyond maturity date b) it can be converted to a fixed annuity c) it has the highest amount of insurance protection d) it matures at age 100

c) it has the highest amount of insurance protection

All the factors are FALSE when used to provide data and statistics to an insurer in order to project losses and the subsequent cost of insuring risks in a group disability policy, EXCEPT a) the number of eligible participants in the group b) the number of group carriers c) stability, price, longevity with a particular carrier d) experienced , expenses, interest

c) stability, price, longevity with a particular carrier

which answer is true about extension of benefits in group disability policies? a) extensions of benefits helps prevent a disabled person from acquiring coverage after there has been change to health b) extensions of benefit may not be terminated c) the benefits are extended if a disabled person coverage terminates as a result of a discontinued group plan d) under a group health plan, benefits can be extended for 30 days after discontinuance of employment

c) the benefits are extended if a disabled person coverage terminates as a result of a discontinued group plan

which of the following is another term for an authorized insurer? a. licensed b. legal c. admitted d. certified

c. admitted

which of the following is TRUE about class designation? a. it is not allowed. b. it determines the succession of beneficiaries c. beneficiaries are not identified by name d. beneficiaries must be part of the insured's immediate family

c. beneficiaries are not identified by name

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a a. cost of living provision b. nonforfeiture option c. guarantee insurability rider d. paid up addition option'

c. guarantee insurability rider

which of the following statement is TRUE concerning the Accidental Death Rider? a. this rider is only available to insured over the age of 65 b. it is only available in group insurance c. it will pay double or triple the face amount d. it is also known as a triple indemnity rider

c. it will pay double or triple the face amount occurs within 90 days of such an accident

which of the following will be included in a policy summary? a. comparisons with similar policies b. primary and secondary beneficiary designations c. premium amounts and surrender values d. copies of illustrations and application

c. premium amounts and surrender values

which two terms are associated directly with the way an annuity is funded? a. immediate or differed b. renewable or convertible c. single payment or period payment d. increasing or decreasing

c. single payment or period payment

A Medicare insured uses a participating provider, pays the required deductible and receives the necessary treatment. Who is responsible for filing the claim for the rest of the bill? a. medicare, after receiving a notification from the insured b. both the insured and health care provider c. the health care provider d. the insured

c. the health care provider

which is true regarding MIB Except, a) MIB info report is underwriter coded b) MIB reports contain previous insurance info c) insurers may refuse to accept an applicant solely due to MIB report d) MIB reports are based upon information supplied by doctors and hospital

d) MIB reports are based upon information supplied by doctors and hospital

which of the following would be exempt from the jurisdiction of CDI? a) insurer that provides coverage for chiropractic services b) agent transacting insurance in the state of california c) health care services plan d) admitted insurer subject to jurisdiction in nevada

d) admitted insurer subject to jurisdiction in nevada

in insurance, an offer is usually made when a) insurer approves the application and receives the initial premium b) agent hands the policy to the policyholder c) an agent explains a policy to potential applicant d) an applicant submits an application to the insurer

d) an applicant submits an application to the insurer

An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his a)experienced rating b) group rating c) insurers' schedule rate d) attained age

d) attained age

which nonforfeiture option has the highest amount of insurance protection? a) conversion b) decreasing term c) reduced paid up d) extended term

d) extended term

the automatic premium loan is activated at the end of the a) free look period b) elimination period c) policy period d) grace period

d) grace period

The death benefit under the Universal Life Option B a) decrease by amount that the cash value increases b) increases for the first few year c) remains level d) gradually increases each year by the amount that the cash value increases

d) gradually increases each year by the amount that the cash value increases

which describes best the effect of Accelerated benefit provision would have on the benefits paid to the beneficiary? a) it will not affect the benefits paid to the beneficiary b) it will reduce the benefits by 70% c) it will increase the benefits paid to the beneficiary d) it will decrease the benefits paid to the beneficiary

d) it will decrease the benefits paid to the beneficiary

An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability. which policy provision allow this? a) wavier of premium provision b) incontestable clause c) grace period d) reinstatement provision

d) reinstatement provision

If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back? a) the policy beneficiary receives the full death benefit b) the policy beneficiary takes over loan payment c) the policy rendered null and void d) the balance of the loan will be taken out of the death benefit

d) the balance of the loan will be taken out of the death benefit

An employee insured under a group health plan has been paying $25 monthly premium for his group health coverage. The employer has been contributing $75, for the total monthly cost of $100. If the employee leaves the company, what would be his maximum monthly premium for COBRA coverage? a. 25 b. 25.50 c. 100 d. 102

d. 102 102% of 100 total premium is 102 2% charge is cover the employers adminsitartive cost

A Medicare SELECT policy does all of the following EXCEPT a. make full and fair disclose in writing provision b. provide full coverage under the policy for covered services c. provide for continuation of coverage in event Medicare selection policy discontinues d. Prohibits payment for regularly covered services if provided by non-network providers

d. Prohibits payment for regularly covered services if provided by non-network providers

In underwriting a substandard risk, which of the following is INCORRECT? a. the policy could be modified in the coverage or amount of coverage requested b. the applicant could be rejected for coverage c. additional exclusions could be included to modify the underlying policy coverage d. a discounted premium would be charged

d. a discounted premium would be charged

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer? a. certificated b. qualified c. approved d. authorized

d. authorized

Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner? a. reduced paid - up b. paid - up option c. extended term d. cash surrender

d. cash surrender

Concerning AIDS and HIV risks, all of the following acts may subject an insurer to liability claims or fines EXCEPT a. not providing counseling contracts and educational information about HIV and AIDS b. disclosing test results to third party without applicants consent c. requiring applicants to pay for HIV test in order to be underwritten d. declining applicant for a positive HIV test result

d. declining applicant for a positive HIV test result

the mode of premium payment a. is the factor that determines the amount of dividends in a policy b. is the method used to compute the cash surrender value of the policy c. does not affect the amount of premium paid d. is defined as the frequency and the amount of the premium payment

d. is defined as the frequency and the amount of the premium payment

an insured covered under a medicare policy a list of network healthcare providers... in exchange for this limitations the insured is offered a lower premium. which type of medicare policy does this insured own? a) medicare part a b. medicare supplement c. medicare advantage d. medicare SELECT

d. medicare SELECT requires insureds to use specific healthcare providers and hospitals, except in emergency situations. in return the insured pays lower premium amounts

when calculating the amount a policy owner may borrow from a variable life policy, what must be substracted from the policy's cash value? a. the face amount b. mortality cost. c. the cash surrender amount d. outstanding loans and interest

d. outstanding loans and interest

***To achieve the profitable distribution of exposures, a. the most coverage goes to average risk and preferred risk b. poor risk and average risk make up the majority of coverage c. a majority of coverage goes to preferred risk d. preferred risk and poor risk are balanced, with average risk in the middle

d. preferred risk and poor risk are balanced, with average risk in the middle

which of the following policies would be classified as traditional level premium contract? a. adjustable life b. universal life c. variable universal life. d. straight life

d. straight life this have a level guarantee face amount and level premium for the life of the insured

which of the following is NOT a feature guaranteed renewable provision? a) the insured has a unilateral right to renew policy b. coverage is not renewable beyond 65 c. the insured benefits cannot be reduced d. the insurer can increase the policy premium on an individual basis

d. the insurer can increase the policy premium on an individual basis

which of the following describes the taxation of annuity when money is withdrawn during the accumlation phase? a. withdrawn amounts are taxed on a first in , last out basis b. taxes are deferred on withdrawn amounts, but flat penalty is charged c. taxes are deferred on withdrawn amounts d. withdrawn amounts are taxed on a last in, first out basis

d. withdrawn amounts are taxed on a last in, first out basis

After three years of making payments into a flexible premium deferred annuity, the owner decides to surrender the annuity. The insurer returns all the premium payments to the owner, except for a predetermined percentage. What is this percentage called?

surrender charges