HEALTH AND ACCIDENT FOUR
A decreasing term life policy would be the most appropriate for: Select one: a. A 41 year old lawyer who wants a policy to pay his mortgage if he dies b. A 66 year old retired electrician c. A 57 year old schoolteacher that doesn't want any risk d. A 35 year old doctor with a lawyer wife and a child
a
An Accident and Health policy contains a Consideration clause which states: Select one: a. That the applicant pays the initial premium. b. That insurable interest must exist between the parties of the contract. c. That the entire contract includes any attachments made to the policy. d. Details of certain claims that may be excluded under the policy.
a
Capitation is used in: Select one: a. HMOs b. HSAs c. HRAs d. PPOs
a
Jacob, James and Jonathan are triplets, and all applied for the same type of insurance coverage at the same time. For James and Jonathan the rates were the same. Jacob's rate was quite a bit higher. What is the most likely reason for this difference? Select one: a. Risk classification b. Consideration c. Third-party ownership d. Insurable interest
a
Life insurance death benefits that can be accessed tax-free when the insured is still alive are called: Select one: a. Accelerated benefits b. Chronically ill benefits c. Life settlements d. Viatical settlements
a
Riders covering additional insureds can be added to life policies and cover all but which of the following? Select one: a. Younger siblings of the policyholder b. Step children c. Legally adopted children d. Biological children
a
Sally is a self-employed software programmer that works from home. If she becomes unable to work due to a disability, which type of policy would pay her rent? Select one: a. Individual disability income policy b. Group disability income policy c. Business overhead expense policy d. Workers' Compensation
a
Sue's hospital bill is $4,500. Her major medical policy has a $500 deductible and then it pays 80% of the remaining bill. The policy also has a maximum out-of-pocket of $2,000. How much of the total bill will the insurance company pay? Select one: a. $3,200 b. $3,600 c. $3,800 d. $4,000
a
The rider that you would pick if you want to be able to add coverage in the future, without having to show proof of insurability: Select one: a. Guaranteed insurability b. Waiver of premium c. Consideration d. Payor
a
What contract term means only one party to a contract's promises are legally enforceable? Select one: a. Unilateral b. Conditional c. Aleatory d. Adhesion
a
What is the biggest source of information used in underwriting? Select one: a. Application b. MIB c. HIPAA d. Representations
a
What is the main purpose of the MIB? Select one: a. The sharing of medical information and data among its member companies. b. Make recommendations on premiums rates for substandard risks. c. To provide data for the purpose of rating large group health plans using experience rating. d. To accumulate and provide data on dread diseases to members.
a
What right of renewability guarantees insurability, but does not guarantee premiums? Select one: a. Guaranteed renewable b. Guaranteed insurability c. Optionally renewable d. Noncancelable
a
What type of insurer is formed under the laws of anyplace outside the United States? Select one: a. Alien b. Unincorporated c. Foreign d. Domestic
a
What type of premiums payment can employers deduct as an ordinary business expense? Select one: a. Group b. Joint life if part of a business partnership c. Key employee d. Buy/sell agreements
a
Which of the following could be used to prevent a lapse in the payment of life insurance premiums? Select one: a. Automatic premium loan b. Cash loan c. Partial Surrender d. Waiver of premium
a
Which of the following is NOT a feature of the Patient Protection and Affordable Care Act? Select one: a. The premium tax credit is always paid to the individual as soon as they pay their premium. b. Older Americans will receive larger tax credits for larger premiums. c. The premium tax credit is fixed based on a benchmark plan. d. The premium tax credit is fully refundable.
a
Which of the following is NOT a nonforfeiture option that will protect the value of a health insurance policy in the event of default in the payment of premiums? Select one: a. Lengthened Benefit Period b. Reduced, Paid Up Coverage c. Extended Term Coverage d. Shortened Benefit Period
a
Which type of life policy would best suit someone who retires in good health with a large amount of cash, whose investment goals are conservative? Select one: a. Single premium whole life insurance b. Limited premium whole life insurance c. Level term insurance d. Continuous premium straight life insurance
a
Who has the right to change the beneficiary on a life policy? Select one: a. The policyowner b. The insured c. The beneficiary d. The insurer
a
What type of policy allows an insurer to cancel a policy if certain circumstances stated in the contract happen? Select one: a. Conditionally renewable b. Noncancelable c. Optionally renewable d. Cancelable
a A conditionally renewable policy allows the insurer to cancel the policy if certain stated conditions happen. Examples of conditions are losing a job or reaching a specified age, such as 65.
How does the IRS treat disability income benefits when the employer pays the policy premiums? Select one: a. They are fully taxable. b. The first 6 months are taxable. c. The first 3 months are taxable. d. The are not taxable.
a Disability income benefits from an employer-paid group policy are fully taxable.
The life insurance rider that pays the face amount plus the total premiums paid into the policy is known as: Select one: a. Return of premium b. Return of cash value c. Waiver of premium d. Payor rider
a The return of premium rider pays the total amount of premiums paid into the policy as long as the insured dies within a certain time period specified in the policy. The death benefit is comprised of the face amount plus the total premiums paid into the policy.
A Texas insurance agent must complete how many continuing education credit hours each license period? Select one: a. 16 b. 24 c. 30 d. 36
b
Alex's life policy lapsed, which Nonforfeiture option would the insurer send him the value of the policy? Select one: a. Reduction of premium b. Cash surrender c. Cash payment d. Reduced paid-up
b
An insurance applicant submits an application with a premium. After underwriting, the insurer sends back the policy, rated, with an impairment rider. What should the producer tell the applicant at delivery? Select one: a. Explain that the policy is rated. b. Explain the issue and collect an additional premium. c. Nothing d. Tell the applicant that they were declined.
b
Cindy has a new medical plan that provides both health care services and health care insurance. She is covered by: Select one: a. A Multiple Employer Trust (MET) b. An HMO (Health Maintenance Organization) c. Medicaid d. Medicare
b
Does a loan on the cash value of a life insurance policy accrue interest, and if so, how is the interest handled? Select one: a. No, the loan does not accrue interest, he is borrowing his own money. b. Yes, the interest can be paid annually, or added to the loan. c. Yes, the interest is added to the premium payment. d. None of the above
b
Dylan tells the insurer to keep the dividend and apply it to his next premium. He is using which dividend option? Select one: a. Reduced paid-up b. Reduction of premium c. Paid-up addition d. Accumulate at interest
b
How are dividends treated for tax purposes? Select one: a. Always taxed b. Never taxed c. Depends on persons income d. Depends on the type policy
b
How many continuing education credit hours must Texas agents complete during each license period? Select one: a. 15 b. 24 c. 30 d. 32
b
How many days does an insured have to file a notice of claim? Select one: a. 15 days b. 20 days c. 45 days d. 90 days
b
Kim's policy remained in force for a certain number of days even though she forgot to pay the premium. The provision that allows this is called: Select one: a. The insuring clause b. The grace period provision c. The consideration clause d. The automatic premium loan
b
Long-term care plans are written as: Select one: a. Optionally renewable b. Guaranteed renewable c. Conditional renewable d. Cancellable
b
The fact that the application is part of the policy is stated in: Select one: a. The ownership clause b. The entire contract c. The options d. The insuring clause
b
The insurer has a maximum of how many days after receiving notice of a claim to provide claims forms? Select one: a. 7 days b. 15 days c. 45 days d. 60 days
b
To become a licensed insurance agent in Texas , a person must be how many years of age? Select one: a. 17 b. 18 c. 19 d. 21
b
To determine the coverage and benefits to pay for a surgery based on what is considered fair and common for an area is: Select one: a. Relative value scale b. Usual, reasonable, and customary c. Subrogation d. Concurrent review
b
What type of insurer is formed under the laws of Texas? Select one: a. Foreign b. Domestic c. Unincorporated d. Alien
b
When an insured completed his health policy application, his producer did not take a premium when he submitted it to the insurer. When the producer delivers the policy to the applicant, he needs to do all of the following EXCEPT: Select one: a. Ask the applicant to complete a statement of continued good health. b. Issue the applicant a conditional receipt. c. Explain the policy and provisions to the applicant. d. Collect the initial premium from the applicant.
b
Which of the following would not be allowed in the advertising of life insurance policies in Texas? Select one: a. Comparisons with other insurers b. Mentioning rumors about competitors c. Having testimonials from famous actors d. Guaranteed interest rates for specific time periods
b
Who of the following might take out a credit life policy? Select one: a. A father who is hoping his son will be a professional ballplayer b. A car dealer who is financing someone's car c. A husband whose wife has cancer d. A man who has paid cash for an expensive piece of electronics
b
With a Guaranteed Insurability rider on a Disability Income policy, the: Select one: a. The insurer is not allowed to cancel the policy. b. The insured can buy additional disability income coverage without proving evidence of insurability. c. Insured is allowed to assign the policy to a family member. d. The insurer will not require a medical examination in order to issue the policy.
b
What right of renewability does not guarantee insurability if certain circumstances happen and allows the insurer to increase premiums? Select one: a. Noncancelable b. Conditionally renewable c. Optionally renewable d. Cancelable
b Conditionally renewable policies allow the insurer the right not to renew the contract for a reason specified in the policy. An example of a condition is a change to a dangerous job. Policy premiums can also be increased.
Which of the following statements is not true about the tax liabilities for individual life insurance policies? Select one: a. If a policy is surrendered for its cash value some of the cash value may be subject to ordinary income tax. b. Policy loans are taxable as income. c. Policy premiums are not deductible for an individual life insurance policy. d. Accelerated benefits are tax free if they are qualified.
b Policy loans are not taxable as income because they are regarded as a debt against the policy.
Blake died 20 days after his group life insurance coverage was terminated. He did not apply for individual coverage. Which of the following is true? Select one: a. His beneficiary will receive 50% of the death benefit. b. His beneficiary will receive the full death benefit. c. His beneficiary will receive the death benefit minus the initial premium for the converted coverage. d. His beneficiary will not receive the death benefit because his group coverage was terminated.
b The insured is covered under the group policy during the conversion period. The full death benefit will be paid to Blake's beneficiary.
All of the following are typical groups that would be eligible for group life insurance, EXCEPT: Select one: a. A public employee association b. A funeral trust c. A family d. A group of creditors
c
At what age would a qualified retirement plan distribution be premature? Select one: a. 65 b. 60 c. 59 1/2 d. 70 1/2
c
Barbara allows her comprehensive major medical plan to lapse. If her policy is reinstated on March 20th and she contracts mononucleosis on March 29th, what benefits will she receive? Select one: a. Only hospitalization coverage b. Full c. None d. Partial
c
HSAs are frequently used with: Select one: a. PPOs b. HMOs c. HDHPs d. POSs
c
How often is the Commissioner required to conduct an examination of every insurance company? Select one: a. Every year b. Every 2 years c. Every 5 years d. There is no time frame for examinations.
c
If an applicant misstates their age on an insurance application, what does the insurer do when it is discovered at claim time? Select one: a. Deny the claim because he fraudulently misrepresented his age on the application. b. Cancel the policy. c. Adjust the claim benefits to reflect what he would have been entitled to if his real age had been given. d. Pay the claim in full because it is no longer contestable.
c
If more than one beneficiary is named, who is the first in line? Select one: a. Revocable b. Contingent c. Primary d. Irrevocable
c
In most Disability Income policies, the Elimination Period applies: Select one: a. To claims for accidents only. b. During the first 10 days of the contract. c. To each disability separately. d. Only to the first time an insured becomes disabled.
c
On November 5, Zoe fills out an application for a life policy. On November 6, the agent accepts the premium for the policy. The policy is delivered on November 7. Which date does the Free Look period start? Select one: a. November 5 b. November 6 c. November 7 d. November 17
c
Sam works for large corporation and is eligible for both his company's health plan and Medicare. Which plan would be primary? Select one: a. They will split the cost. b. Medicare c. Work d. He can pick.
c
The manner in which the proceeds of a life policy are handled are specified in what provision? Select one: a. Insuring clause b. Payment options c. Settlement options d. Dividend options
c
The open enrollment period for a group HMO lasts for how many days? Select one: a. 15 days b. 20 days c. 30 days d. 60 days
c
The policyowner's obligation to pay the premium is the: Select one: a. Assignment Clause b. Entire Contract c. Consideration Clause d. Insuring Clause
c
The services are provided on a prepaid per person basis called capitation in: Select one: a. POSs b. PPOs c. HMOs d. HSAs
c
What document authorizes an insurer to engage in the insurance business? Select one: a. Deed of insurance b. Insurance authorization license c. Certificate of authority d. Certificate of insurance
c
What is the advantage of a Waiver of Premium provision in a life policy? Select one: a. Reduce an insured's premiums. b. Increase an insured's coverage. c. Waive an insured's premiums if he/she becomes disabled. d. All of the above.
c
What is the maximum amount of time an insurance policy may be backdated? Select one: a. 1 month b. 3 months c. 6 months d. 1 year
c
Which of the following is an improper form of policy replacement? Select one: a. Discrimination b. Defamation c. Twisting d. Rebating
c
Which of the following is not one of the elements required to make a contract legal? Select one: a. Legal purpose b. Competent parties c. Ambiguities d. Offer and acceptance
c
Which of the following must happen before an HIV test is performed on an applicant? Select one: a. The insurer must inquire about the applicant's sexual orientation. b. The insurer must inform the state Department of Health of upcoming test. c. A consent form must be signed by the applicant prior to the test. d. The Insurer must inform all non-entitled parties to the upcoming test.
c
Which of the following would prevent someone from becoming an insurance agent? Select one: a. Being a nonresident b. Being only 18 years of age c. Having committed dishonest activity d. Passing the licensing exam more than 6 months ago
c
Samson has a policy that allows the insurer to cancel the policy at any date specified in the contract, and to raise his premiums. Which type of policy is it? Select one: a. Cancelable b. Conditionally renewable c. Optionally renewable d. Noncancelable
c An optionally renewable policy allows the insurance company to cancel the policy for any reason, on dates set in the contract. The insurer can also increase the premiums.
Tyler owns a major medical policy with 70/30 coinsurance and a $3,000 deductible. If he submits a claim for $20,000, how much will he pay? Select one: a. $3,000 b. $5,100 c. $8,100 d. $20,000
c Hell pay $8,100. The math works out $20,000 - $3,000 = $17,000. Then $17,000 x .30 = $5,100. Then add the $3,000 deductible with the $5,100 coinsurance ($3,000 + $5,100= $8,100).
Investment risk is completely taken by the policyowner is what type policy? Select one: a. Adjustable life b. Whole life c. Variable universal life d. Universal life
c In a variable universal life policy the policyover has all the investment risk.
A health policy will usually exclude losses related to all of the following, EXCEPT: Select one: a. Self-inflicted injuries b. Losses incurred while committing a felony c. Losses incurred while engaging in an illegal occupation d. Losses from an auto accident when the insured was at fault
d
A life insurance policy in Texas must contain all the following provisions, EXCEPT: Select one: a. Incontestability b. Legal action c. Assignment d. Settlement
d
A program that includes prehospitalization authorization is an example of: Select one: a. Social Security disability b. Major medical c. Workers' Compensation d. Managed care
d
All of the following are duties of a producer when delivering a policy to an applicant EXCEPT: Select one: a. Collection of any premiums due. b. Explanation of all riders and exclusions. c. Review of the benefits and conditions. d. Arranging to keep the policy in his office for safe-keeping.
d
All of the following are true for a person to be appointed Commissioner of Insurance in Texas, EXCEPT: Select one: a. The Commissioner must have prior experience in insurance. b. The Commissioner can be an attorney or a CPA. c. The Commissioner must have no conflict of interest. d. The Commissioner must have 10 years experience in business or government.
d
All of the following are true regarding advertising of life insurance policies in Texas, EXCEPT: Select one: a. The full licensed name of the insurer must appear on the advertisement. b. Advertisements must contain the premium rate. c. Advertisements must not be misleading. d. Agents are responsible for the form and content of advertisements.
d
An agent who gives a prospective client a flat screen TV as an incentive to purchase an insurance policy is engaging in what unfair trade practice? Select one: a. False advertising b. Boycott, coercion and intimidation c. Disparagement d. Rebating
d
An agent's appointment remains in force: Select one: a. For 2 years b. For 4 years c. Until canceled by the Commissioner d. Until terminated or surrendered
d
An insured became disabled in February of 2014. She had bought a disability income policy in October of 2012. Her disability was due to a condition that existed prior to October 2012 but was not excluded from her policy. The insurer will: Select one: a. Pay 50% of the claim. b. Deny the claim based on fraudulent misrepresentation. c. Deny the claim because it is the result of a pre-existing condition. d. Pay the claim in full.
d
Errors & Omissions are most likely to occur during: Select one: a. Underwriting b. Delivery c. The application process d. A replacement
d
If Adam's license is suspended or revoked, how long must he wait to apply for a new license? Select one: a. 60 days after the effective date of the revocation b. 120 days after the effective date of the revocation c. 1 year after the effective date of the revocation d. 5 years after the effective date of the revocation
d
If an individual has a chronic medical condition, how is the insurer likely to handle this situation when issuing an individual health policy? Select one: a. The insurer will include a Disability Income rider. b. The insurer will issue a Waiver of Premium rider. c. The insurer will include a Double Indemnity rider. d. The insurer will exclude the condition with an Impairment rider.
d
If the cash values of an annuity are invested in securities, it is a: Select one: a. Fixed annuity b. Immediate annuity c. Deferred annuity d. Variable annuity
d
In a life policy, a statement of good health is needed when: Select one: a. The statement of good health is always needed. b. The application includes the premium. c. The statement of good health is never needed. d. The application does not include the premium.
d
Information obtained by a phone call to an applicant, may be included in which of the following reports? Select one: a. Producer's report b. Medical Information Bureau (MIB ) report c. Physician's report d. Inspection report
d
Mr. Johnson is looking at Medicare Supplement policies. These policies are designed primarily to: Select one: a. Provide additional disability coverage. b. Provide supplement retirement benefits. c. Offset Medicare costs. d. Provide benefits not covered by Medicare.
d
On April 9, an application is submitted without the initial premium. The insurer requires a medical exam, and it is completed on April 14. On April 18, the insurer issued the policy, and the producer delivers it on April 21. When is coverage effective? Select one: a. April 9 b. April 14 c. April 18 d. April 21, after the statement of good health is signed, and the initial premium is paid.
d
Over-funded life insurance policies where the proceeds are subject to taxation are called: Select one: a. Section 1035 exchange b. Roth IRAs c. Section 457 deferred compensation. d. MECs
d
Richard is thinking about transferring some of the ownership rights of his policy to his brother Randy. What term is used for this type of transfer? Select one: a. Change of beneficiary b. Insurable interest c. Endorsement d. Assignment
d
Shane and Casey both have health plans from work that covers their son Cash. Which plan is primary? Select one: a. Shane since he is the father. b. The plans split the cost. c. Casey since she works for a bigger company. d. The parent with the earliest birthday in the year is primary.
d
The benefit that encourages the disabled policy owner to try to return to work is: Select one: a. Residual disability b. COLA c. Waiver of premium d. Recurrent disability
d
Tina has a policy that only covers cancer-related medical expenses. What kind of policy does she have? Select one: a. Accident only b. AD&D c. Stop-loss d. Dread disease
d
What is the grace period for life insurance policies in Texas? Select one: a. 7 days b. 10 days c. 15 days d. 31 days
d
When an HMO's license is suspended, who are the only people that can be enrolled? Select one: a. Seniors over 65 b. All of the above c. New spouses d. Newborns
d
Which of the following factors does not influence the amount that an individual receives as monthly income under Social Security? Select one: a. Age b. PIA c. Insured status (fully/currently) d. Sex
d
Who must consent to have an HIV lab test? Select one: a. Producers b. Underwriters c. Agents d. Subject of the test
d
Comprehensive major medical health policies typically have an Eligible Expenses provision that specifies coverage for all but: Select one: a. Services of nurses. b. Services of doctors. c. Semi-private room and board. d. Experimental services.
d Experimental and investigative services are not normally considered eligible expenses.
What type of insurance contract is prepared by the insurer and not negotiated? Select one: a. Aleatory b. Conditional c. Unilateral d. Adhesion
d Insurance contracts are contracts of adhesion. In a contract of adhesion there is only one author, the insurance company.
Which rider on Diane's life policy will help her out when she is confined to a nursing home with a terminal illness? Select one: a. Consideration b. Accidental death rider c. Return of premium rider d. Accelerated benefit rider
d The accelerated benefit allows Diane to receive a portion of the death benefit of her policy, prior to her death. The insured must have been diagnosed as terminally ill in order for this benefit to be paid.
An insured has returned to work after a disability, but is unable to perform all of his previous duties. Which of the following definitions would cover his permanent partial disability? Select one: a. Long-term disability b. Own occupation c. Any occupation d. Residual disability
d The definition of residual disability would cover this type of disability.
