Health and Life Practice Exam
What is the typical deductible for basic surgical expense insurance? a)$0 b)$100 c)$200 d)$500
a)$0
All of the following are correct about the required provisions of a health insurance policy EXCEPT a)A reinstated policy provides immediate coverage for an illness. b)Proof-of-loss forms must be sent to the insured within 15 days of notice of claim. c)A grace period of 31 days is found in an annual pay policy. d)The entire contract clause means the signed application, policy, endorsements, and attachments constitute the entire contract.
a)A reinstated policy provides immediate coverage for an illness.
Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under an accident and health policy must contain a)A statement that is sufficiently clear to identify the insured and the nature of the claim. b)A statement from the insured's employer showing that the insured was unable to work. c)An estimate of the total amount of medical and hospital expense for the loss. d)A complete physician's statement.
a)A statement that is sufficiently clear to identify the insured and the nature of the claim.
Which of the following is NOT true regarding coverage for adopted children? a)Adopted children are covered for an unlimited period of time. b)Coverage for adopted children is the same as for other dependents. c)Premium must be received by the insurance company no later than 31 days from the date of adoption for the coverage to continue. d)Adopted children are automatically covered for 31 days without a premium payment.
a)Adopted children are covered for an unlimited period of time.
A Universal Life Insurance policy is best described as a/an a)Annually Renewable Term policy with a cash value account. b)Variable Life with a cash value account. c)Whole Life policy with two premiums: target and minimum. d)Flexible Premium Variable Life policy.
a)Annually Renewable Term policy with a cash value account.
Which of the following is considered a qualifying event under COBRA? a)Divorce b)Marriage c)Relocation d)Promotion
a)Divorce
In a disability policy, the probationary period refers to the time a)During which illness-related disabilities are excluded from coverage. b)Between the first day of disability and the day the disability must continue before the insured receives any benefits. c)Between the 10th day of an illness-related disability and the first payment. d)Between the first day of disability and the actual receipt of payment for the disability incurred.
a)During which illness-related disabilities are excluded from coverage.
The premium of a survivorship life policy compared with that of a joint life policy would be a)Lower. b)Higher. c)As high. d)Half the amount.
a)Lower.
An insured is covered by a disability income policy that contains an accidental means clause. The insured exits a bus by jumping down the steps and breaks an ankle. What coverage will apply? a)No coverage will apply, since the injury could have been foreseen. b)No coverage will apply, since disability income policies cover sickness only. c)Coverage will apply since the break was accidental. d)Coverage will apply, but will be reduced by 50%.
a)No coverage will apply, since the injury could have been foreseen.
An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident, and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do? a)Pay a reduced death benefit b)Pay the full death benefit c)Pay nothing; there was a misrepresentation on the application d)Pay the full death benefit and refund excess premium
a)Pay a reduced death benefit
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT a)Signed waiver of premium. b)Statement of good health. c)Payment of premium. d)Delivery receipt.
a)Signed waiver of premium.
Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option? a)Size of each installment b)Predetermined length of time stated in the contract c)Length of income period d)Amount of interest
a)Size of each installment
The most the Insurance Guaranty Association will pay for net cash surrender values is a)$1,000,000. b)$100,000. c)$250,000. d)$500,000.
b)$100,000.
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the a)Payor rider. b)Other-insured rider. c)Change of insured rider. d)Juvenile rider.
b)Other-insured rider.
Another name for a substandard risk classification is a)Elevated. b)Rated. c)Controlled. d)Declined.
b)Rated.
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a a)Rollover. b)Settlement option. c)Nontaxable exchange. d)Nonforfeiture option.
b)Settlement option.
A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true? a)The amount distributed is subject to ordinary income tax. b)The amount of the distribution is reduced by the amount of a 20% withholding tax. c)No taxes are due since the plan participant is over age 59 1/2. d)There is a 10% early withdrawal penalty.
b)The amount of the distribution is reduced by the amount of a 20% withholding tax.
Insured Z's health insurance policy year begins in January. His policy contains a carry-over provision. In November, he has a small claim which is less than his deductible. Which of the following is true? a)The insured must satisfy this year's deductible, but next year's deductible will begin when or if he makes a claim in the following calendar year. b)The insured may carry over the amount of this year's expenses to next year, which will help satisfy next year's deductible. c)The deductible will be waived. d)The insured is now eligible for an integrated deductible until the new policy year.
b)The insured may carry over the amount of this year's expenses to next year, which will help satisfy next year's deductible.
Which provision states that the insurance company must pay Medical Expense claims immediately? a)Relation of Earnings to Insurance b)Time of Payment of Claims c)Payment of Claims d)Legal Actions
b)Time of Payment of Claims
Individuals who itemize deductions can claim deductions for medical expenses not covered by health insurance that exceed what percent of their adjusted gross income? a)5% b)7% c)10% d)15%
c)10%
How long is a free-look period for replacement of policies? a)3 working days b)10 day c)20 day d)30 day
c)20 day
In the event an employer wishes to purchase life insurance on an employee, within how many days of receiving a written notice must the employee consent to be insured? a)7 days b)10 days c)30 days d)60 days
c)30 days
For how long is an insurance company allowed to defer policy loan requests? a)30 days b)60 days c)6 months d)1 year
c)6 months
All of the following are examples of third-party ownership of a life insurance policy EXCEPT a)A company purchases a life insurance policy on their manager, who is an important part of the operation. b)When an insured purchased a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company. c)An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan. d)An insured couple purchases a life insurance policy insuring the life of their grandson.
c)An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan.
When must an insurance company present an outline of coverage to an applicant for a Medicare supplement policy? a)Within 30 days of policy delivery b)Only upon the applicant's request c)At the time of application d)When the policy is delivered
c)At the time of application
Which of the following is the term for the specific dollar amount that must be paid by an HMO member for a service? a)Premium b)Cost share c)Copayment d)Deductible
c)Copayment
How many pints of blood will be paid for by Medicare Supplement core benefits? a)Everything after first 3 b)1 pint c)First 3 d)None; Medicare pays for it all
c)First 3
Rule 38.1 is also known as a)Individual employer plans. b)No-loss, no-gain insurance. c)Group Coordination of Benefits. d)Employee-sponsored groups.
c)Group Coordination of Benefits.
What is the main purpose of the Seven-pay Test? a)It ensures that the policy benefits are paid out in 7 years. b)It guarantees the minimum interest. c)It determines if the insurance policy is a MEC. d)It requires level premium payments for 7 years.
c)It determines if the insurance policy is a MEC.
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy? a)It decreases over the term of the policy. b)It remains the same as the original policy, regardless of any differences in value. c)It is reduced to the amount of what the cash value would buy as a single premium. d)It is increased when extra premiums are paid.
c)It is reduced to the amount of what the cash value would buy as a single premium.
What is the other term for the cash payment settlement option? a)Face amount b)Proceeds c)Lump sum d)Principal amount
c)Lump sum
The LEAST expensive first-year premium is found in which of the following policies? a)Increasing Term b)Decreasing Term c)Level Term d)Annually Renewable Term
d)Annually Renewable Term
How many consecutive months of coverage (other than in an acute care unit of a hospital) must LTC insurance provide in this state? a)24 b)36 c)6 d)12
d)12
To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested? a)When the applicant's credit is checked b)When the policy is delivered c)At the initial interview d)At the time of application
d)At the time of application
Which of the following is correct regarding the taxation of group medical expense premiums and benefits? a)Premiums are not tax deductible and benefits are taxed. b)Premiums are not tax deductible and benefits are not taxed. c)Premiums are tax deductible and benefits are taxed. d)Premiums are tax deductible and benefits are not taxed.
d)Premiums are tax deductible and benefits are not taxed.
Under the Accidental Death and Dismemberment (AD&D) coverage, what type of benefit will be paid to the beneficiary in the event of the insured's accidental death? a)Capital sum b)Double the amount of the death benefit c)Refund of premiums d)Principal sum
d)Principal sum
Insurers may change which of the following on a guaranteed renewable health insurance policy? a)Coverage b)Individual rates c)No changes are permitted. d)Rates by class
d)Rates by class
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? a)Recurrent disability b)Partial disability c)Income replacement d)Residual disability
d)Residual disability
Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must a)Defend the report if the agency feels it is accurate. b)Change the report. c)Send an actual certified copy of the entire report to the consumer. d)Respond to the consumer's complaint.
d)Respond to the consumer's complaint.
Which of the following is called a "second-to-die" policy? a)Family income b)Juvenile life c)Joint life d)Survivorship life
d)Survivorship life
Which of the following is NOT a feature of a guaranteed renewable provision? a)The insured has a unilateral right to renew the policy for the life of the contract. b)Coverage is not renewable beyond the insured's age 65. c)The insured's 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.
Insurance producers who willfully violate the Indiana Insurance Code are committing a Class A misdemeanor. What is the maximum punishment they may be subjected to? a)Maximum of 30 days of jail time b)A one-year jail sentence and a fine not to exceed $3,000 c)A fine of up to $25,000 d)Up to 365 days in jail
d)Up to 365 days in jail
Which of the following is NOT true regarding regulations of viatical settlements? a)Providers are subject to examinations. b)Providers must disclose information on alternatives to a viatical settlement. c)Regulations apply to contracts, companies and providers. d)Viatical brokers do not need to be licensed insurance producers.
d)Viatical brokers do not need to be licensed insurance producers.
All of the following are true regarding viatical settlement regulations in Indiana EXCEPT a)Insureds are required to submit a disclosure on their medical condition and competence. b)Producers must provide the insured with the information on alternatives to a viatical settlement. c)All viatical producers must be licensed. d)Viatical contracts allow for a 10-day free-look period.
d)Viatical contracts allow for a 10-day free-look period.
All of the following are true of the key person disability income policy except A) Benefits are considered taxable income to the business B) Premiums are not deductible to the business C) Is typically written to protect the company in the event a key employee become disabled or is unable to work D) The income maybe used to find a replacement for the key employee
A) Benefits are considered taxable income to the business
All of the following are requirements that you must meet in order to obtain an Indiana insurance Producer's license except: A) Make application with the Dept. of Insurance B) Pass the licensing examination given by the Commissioner or persons selected by the Commissioner C) Obtain the sponsorship of an admitted insurance company D) Complete an approved prelicensing course
C) Obtain the sponsorship of an admitted insurance company
What percentage of individually-owned disability income benefits is taxable? a)0% b)50% c)100% d)Amount paid by insured
a)0%
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? a)Option B b)Corridor option c)Variable option d)Option A
a)Option B
Under the Unfair Competition Statute a. Financial institutions may require insurance on the lives of debtors. b. Premiums may not be based upon the age or gender of an applicant. c. Participating policies must guarantee dividends. d. Rebates may be paid to consumers, if it is in "the public interest."
a. Financial institutions may require insurance on the lives of debtors.
In the event a policy lapses due to nonpayment of premium, within how many days would the policy be automatically reinstated once the outstanding premium is paid? a)10 days b)25 days c)30 days d)45 days
d)45 days
An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy? a)7 days b)10 days c)31 days d)60 days
b)10 days
What type of insurance would be used for a Return of Premium rider? a)Annually Renewable Term b)Increasing Term c)Level Term d)Decreasing Term
b)Increasing Term
Within how many days after the initial pretrial hearing date must an insurance producer report criminal prosecution of the producer to the Commissioner? a)7 days b)15 days c)30 days d)60 days
c)30 days
Variable Whole Life insurance is based on what type of premium? a)Flexible b)Graded c)Level fixed d)Increasing
c)Level fixed
If the Commissioner finds you guilty of violating Producer Licensing Law, all of the following may occur EXCEPT: A) You may have your license revoked or suspended B) You may be jailed for up to 365 days C) You may be fined up to $10,000 D) A hearing will be held, should you request it.
B) You may be jailed for up to 365 days
Which of the following allows the insured to relieve a minor insured from premium payments if the minors parents have died or become disabled? A) Waiver of premium B) Payor benefit C) Jumping juvenile D) Juvenile premium provision
B) payor benefit
All of the following are true regarding controlled business EXCEPT: A) Controlled business includes insurance written on your parents. B) Controlled business includes insurance written on yourself. C) The limit for controlled business is 25% of the premium that you write in a year. D) The limit for controlled business is 25% of your commission income in a twelve month period.
C) The limit for controlled business is 25% of the premium that you write in a year (Controlled business is any insurance written on your interests, those of your employer, employees, or immediate family)
A Producer may collect both a consulting fee and a commission in the same transaction if: A) The Producer is also licensed as a consultant. B) The Producer is also licensed as a surplus lines Producer. C) The Producer is also a licensed broker D) The Producer makes full disclosure in writing about the compensation arrangements prior to the time that the transactions occurs.
D) The Producer makes full disclosure in writing about the compensation arrangements prior to the time that the transactions occurs.
If a new individual long-term care policyholder is not satisfied with a new policy, within how many days can the insured return the policy for a full premium refund? a)30 b)7 c)10 d)90
a)30
Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within a)90 days of a loss. b)20 days of a loss. c)30 days of a loss. d)60 days of a loss.
a)90 days of a loss.
Which of the following will be EXEMPT from continuing education requirements? a)A limited lines credit producer b)A 65-year-old insurance producer who has been licensed for over 20 years c)A producer who is licensed in more than one line of authority d)An attorney in good standing
a)A limited lines credit producer
Which type of a hospital policy pays a fixed amount each day that the insured is in a hospital? a)Indemnity b)Surgical c)Blanket d)Medigap
a)Indemnity
Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid? a)Entire contract clause b)Beneficiary clause c)Consideration clause d)Insuring clause
d)Insuring clause
Under Rule 24, Life Insurance Solicitation, producer's duties include all of the following EXCEPT a)Clarifying to the applicant that the producer will be receiving a commission for the transaction. b)Informing the applicant of the name of the company that the producer represents. c)Advising the applicant that the dividends in the policy are not guaranteed. d)Providing the applicant with a signed copy of the Important Notice Regarding Replacement.
d)Providing the applicant with a signed copy of the Important Notice Regarding Replacement.
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy a)Built cash values. b)Required proof of insurability every year. c)Decreased death benefit at each renewal. d)Required a premium increase each renewal.
d)Required a premium increase each renewal.
Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members? a)Accidental death and dismemberment rider b)Guaranteed insurability rider c)Change of insured rider d)Term rider
d)Term rider
A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then a)The benefit is subject to the exclusionary rule. b)IRS has no jurisdiction. c)The benefit is received as taxable income. d)The benefit is received tax free.
d)The benefit is received tax free.
You know that your client is currently insured under a life policy, but you are making a sale presentation to that client for a new life policy. You must provide the client with the Important Notice Regarding the Replacement of Life Insurance and a copy of the sale proposal under all of the following situations EXCEPT a)The client is exchanging her whole life policy for a reduced paid-up. b)The client will have to borrow almost 50% of the existing policy's cash value to purchase the new policy. c)The new policy will have a lower cash value. d)The client is converting from an existing term policy to whole life.
d)The client is converting from an existing term policy to whole life.
Which of the following is INCORRECT concerning a noncontributory group plan? a)They help to reduce adverse selection against the insurer. b)They require 100% employee participation. c)The employer pays 100% of the premiums. d)The employees receive individual policies.
d)The employees receive individual policies.
An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT? a)The insured would not need to prove insurability for a conversion policy. b)The insured may convert coverage to an individual policy within 31 days. c)The premium for individual coverage will be based upon the insured's attained age. d)The insured may choose to convert to term or permanent individual coverage.
d)The insured may choose to convert to term or permanent individual coverage.
Which of the following is true regarding taxation of accelerated benefits under a life insurance policy? a)They are always taxable to chronically ill insured. b)They are always taxed. c)There is a 10% penalty for early distribution of the death benefit. d)They are tax free to terminally ill insured.
d)They are tax free to terminally ill insured.
If the Commissioner issues a cease-and-desist order and you continue the same activities, you can be fined up to which of the following amounts per violation of that order? A) $1,000 B) $5,000 C) $25,000 D) $50,000
C) $25,000
An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits? a)A portion of the benefit up to a limit is tax free; the rest is taxable income. b)Principal is tax free, but interest is taxed. c)The entire benefit will be received tax free. d)The entire living benefit is considered taxable income.
a)A portion of the benefit up to a limit is tax free; the rest is taxable income.
An insured misstated her age on an application for an individual health insurance policy. The insurance company found the mistake after the contestable period had expired. The insurance company will take which of the following actions regarding any claim that has been issued? a)Adjust the claim benefit to reflect the insured's true age b)Deny any claims and cancel the policy c)Deny paying a claim based on misrepresentation d)Pay the full amount of a claim because the contestable period has ended
a)Adjust the claim benefit to reflect the insured's true age
If an employee terminates her employment, which of the following provisions would allow her to continue health coverage under an individual policy, if requested within 31 days? a)Conversion b)Replacement c)Grace period d)Renewability
a)Conversion
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid a)For 20 years or until death, whichever occurs first. b)Until the policyowner reaches age 65. c)For at least 20 years. d)Until the policyowner's age 100, when the policy matures.
a)For 20 years or until death, whichever occurs first.
Which one of the following is an eligibility requirement for Social Security disability income benefits? a)Fully insured status b)Experiencing at least one year of disability c)Being at least 50 years of age d)Currently employed status
a)Fully insured status
Which is TRUE about the cash surrender nonforfeiture option? a)Funds exceeding the premium paid are taxable as ordinary income. b)After the cash surrender, the insured is covered for a grace period of one month. c)The policy remains active for some time after the policyholder opts for cash surrender. d)The policyholder receives the original cash value of the policy.
a)Funds exceeding the premium paid are taxable as ordinary income.
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? a)Guaranteed insurability option b)Dividend options c)Guaranteed renewable option d)Nonforfeiture options
a)Guaranteed insurability option
The type of dental plan which is incorporated into a major medical expense plan is a/an a)Integrated dental plan. b)Supplemental dental plan. c)Stand-alone dental plan. d)Blanket dental plan.
a)Integrated dental plan.
The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose? a)Interest only option b)Life income with period certain c)Joint and survivor d)Fixed amount option
a)Interest only option
Every insurer marketing Long-Term Care insurance must establish marketing procedures to ensure all of the following EXCEPT a)LTC policies are marketed effectively to prospective insureds. b)Comparisons of policies are fair and accurate. c)Excessive insurance will not be sold. d)Every reasonable efforts is made to identify an applicant's other insurance.
a)LTC policies are marketed effectively to prospective insureds.
All of the following long-term care coverages would allow an insured to receive care at home EXCEPT a)Skilled care. b)Custodial care in insured's house. c)Respite care. d)Home health care.
a)Skilled care.
All of the following entities regulate variable life policies EXCEPT a)The Guaranty Association. b)Federal government. c)The SEC. d)The Insurance Department.
a)The Guaranty Association.
Which of the following would provide an underwriter with information concerning an applicant's health history? a)The Medical Information Bureau b)A medical examination c)The agent's report d)The inspection report
a)The Medical Information Bureau
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT a)The employer pays a bonus to a selected employee to fund the policy. b)It is considered a nonqualified employee benefit. c)The policy is owned by the company. d)Any type of insurance policy may be used.
c)The policy is owned by the company.
Which of the following life insurance policies allows a policyowner to take out a loan from the policy's cash value? a)Credit term life b)Decreasing term life c)Variable universal life d)Increasing term life
c)Variable universal life
Which of the following is a key distinction between variable whole life and variable universal life products? a)Variable whole life allows policy loans from the cash value. b)Variable universal life has a fixed premium. c)Variable whole life has a guaranteed death benefit. d)Variable universal life is regulated solely through FINRA.
c)Variable whole life has a guaranteed death benefit.
All of the following are true regarding viatical settlement regulations in Indiana EXCEPT a)Producers must provide the insured with the information on alternatives to a viatical settlement. b)All viatical producers must be licensed. c)Viatical contracts allow for a 10-day free-look period. d)Insureds are required to submit a disclosure on their medical condition and competence.
c)Viatical contracts allow for a 10-day free-look period.
When is the earliest a policy may go into effect? a)When the insurer approves the application b)After the underwriter reviews the policy c)When the application is signed and a check is given to the agent d)When the first premium is paid and the policy has been delivered
c)When the application is signed and a check is given to the agent
When would a 20-pay whole life policy endow? a)After 20 payments b)In 20 years c)When the insured reaches age 100 d)At the insured's age 65
c)When the insured reaches age 100
What is the period of coverage for events such as death or divorce under COBRA? a)60 days b)31 days c)12 months d)36 months
d)36 months
What is the waiting period on a Waiver of Premium rider in life insurance policies? a)30 days b)3 months c)5 months d)6 months
d)6 months
Regarding a PPO, which of the following is correct when selecting a primary care physician? a)The insured may choose medical providers not found on the preferred list and still retain coverage. b)The insured is allowed to receive care from any provider, but if the insured selects a PPO provider, the insured will realize lower out-of-pocket costs. c)If a non-network provider is used, the insured's out-of-pocket costs will be higher. d)All of the above are correct
d)All of the above are correct
Which of the following is NOT true regarding Workers Compensation? a)Benefits are not regulated by the federal government. b)Benefits vary from state to state. c)Benefits are regulated by the state government. d)Benefits are offered by the insurer.
d)Benefits are offered by the insurer.
Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled? a)Proprietary Transfer b)Absolute assignment c)Transfer of Ownership d)Disability Buy-Sell
d)Disability Buy-Sell
An agent selling variable annuities must be registered with a)Department of Insurance. b)The Guaranty Association. c)SEC. d)FINRA.
d)FINRA.
Which of the following riders would NOT cause the Death Benefit to increase? a)Guaranteed Insurability Rider b)Cost of Living Rider c)Accidental Death Rider d)Payor Benefit Rider
d)Payor Benefit Rider
Which of the following statements regarding the Change of Beneficiaries Provision is false? a)A policyowner can change beneficiaries without the consent of the former revocable beneficiary. b)The policyowner cannot change beneficiaries if he/she has chosen to have an irrevocable beneficiary, unless the policyowner has the permission of the irrevocable beneficiary. c)All policies that allow a death benefit must at least provide the option of a change of beneficiary provision. d)The policyowner has the right to change beneficiaries in any case.
d)The policyowner has the right to change beneficiaries in any case.
Which of the following is TRUE for both equity indexed annuities and fixed annuities? a)They are both tied to an equity index. b)Both are considered to be more risky than variable annuities. c)They invest on a conservative basis. d)They have a guaranteed minimum interest rate.
d)They have a guaranteed minimum interest rate.
According to the rights of renewability rider for cancellable policies, all of the following are correct about the cancellation of an individual insurance policy EXCEPT a)The insurer must provide the insured a written notice of the cancellation. b)Claims incurred before cancellation must be honored. c)An insurance company may cancel the policy at any time. d)Unearned premiums are retained by the insurance company.
d)Unearned premiums are retained by the insurance company.
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit? a)Universal Life - Option A b)Universal Life - Option B c)Equity Indexed Universal Life d)Variable Universal Life
a)Universal Life - Option A
What is the purpose of COBRA? a)To provide continuation of coverage for terminated employees b)To provide coverage for the dependents c)To provide health coverage for people with low income d)To protect the insureds against insolvent insurers
a)To provide continuation of coverage for terminated employees
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? a)Universal life b)Variable life c)Decreasing term d)Straight whole life
a)Universal life
All of the following may obtain a limited insurance Producer's license except: A) a person selling baggage insurance in a transportation terminal B) a person selling travel accident insurance in a transportation terminal C) a person selling title insurance to the purchaser of real estate D) a person selling limited insurance to the purchaser of real estate
D) a person selling limited insurance to the purchaser of real estate
Which of the following is NOT true regarding a business entity? a)Business entity does not need an insurance license. b)It may be licensed as an insurance producer. c)It must have a designated individual producer to be responsible for the business entity's compliance with the insurance laws. d)Business entities may act as insurance producers.
a)Business entity does not need an insurance license.
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? a)The annuitant must be a natural person. b)A corporation can be an annuitant as long as it is also the owner. c)A corporation can be an annuitant as long as the beneficiary is a natural person. d)The contract can be issued without an annuitant.
a)The annuitant must be a natural person.
Which of the following determines whether disability insurance benefits are taxed? a)Whether the premiums were tax deductible b)State statutes c)Contract provisions d)If the total of benefits paid meets the minimum state taxation standard
a)Whether the premiums were tax deductible
Which of the following is NOT a factor in determining qualifications for Social Security disability benefits? a)Worker's occupation b)Worker's PIA c)Worker's age d)Number of work credits earned
a)Worker's occupation
Though the Commissioner may issue a limited insurance Producer's license without requiring an examination, he currently administers an exam to which of the following limited insurance Producers? a. Funeral Directors selling pre-need burial plans. b. Those selling flight policies in transportation terminals. c. Those selling baggage insurance in transportation terminals. d. Those selling title insurance in connection with real estate transactions.
a. Funeral Directors selling pre-need burial plans.
Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is CORRECT? a)Premiums are determined by age, occupation, and individual underwriting. b)100% participation of members is required in noncontributory plans. c)Each member covered receives a policy. d)Coverage cannot be converted when an individual leaves the group.
b)100% participation of members is required in noncontributory plans.
If a person is disabled at age 27 and meets Social Security's definition of total disability, how many work credits must he/she have earned to receive benefits? a)40 credits b)12 credits c)20 credits d)6 credits
b)12 credits
When producers change the address of their residence or office, the Insurance Department must be notified within a)14 days. b)30 days. c)31 days. d)60 days.
b)30 days.
The minimum number of credits required for partially insured status for Social Security disability benefits is a)4 credits. b)6 credits. c)10 credits. d)40 credits.
b)6 credits.
Which of the following does the Insuring Clause NOT specify? a)The name of the insured b)A list of available doctors c)Covered perils d)The insurance company
b)A list of available doctors
Which of the following will NOT qualify for a limited lines producer license? a)A person selling insurance from a lending institution in connection with a b)A person selling endowments. c)A person selling travel accident insurance d)A person selling insurance on real estate transactions
b)A person selling endowments.
Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe? a)Personal b)Adhesion c)Unilateral d)Conditional
b)Adhesion
When an insured purchased her disability income policy, she misstated her age to the agent. She told the agent that she was 30 years old, when in fact, she was 37. If the policy contains the optional misstatement of age provision a)Because the misstatement occurred more than 2 years ago, it has no effect. b)Amounts payable under the policy will reflect the insured's correct age. c)The contract will be deemed void because of the misstatement of age. d)The elimination period will be extended 6 months for each year of age misstatement.
b)Amounts payable under the policy will reflect the insured's correct age.
In Indiana all of the following may act as insurance consultants EXCEPT a)A trust officer of a bank acting in the normal course of his duties. b)An individual who holds both the producer's and consultant's license. c)An attorney acting within his professional capacity. d)A licensed insurance producer.
b)An individual who holds both the producer's and consultant's license.
Employer contributions made to a qualified plan a)Are taxed annually as salary. b)Are subject to vesting requirements. c)May discriminate in favor of highly paid employees. d)Are after-tax contributions.
b)Are subject to vesting requirements.
All of the following are dividend options EXCEPT a)Paid-up additions. b)Fixed-period installments. c)Accumulated at interest d)Reduction of premium.
b)Fixed-period installments.
Under workers compensation, which of the following benefits are NOT included? a)Death benefits b)Legal benefits c)Medical and rehabilitation benefits d)Income benefits
b)Legal benefits
Which of the following is TRUE regarding the premium in term policies? a)Decreasing term policy will have a decreasing premium. b)The premium is level. c)Only level term policy has a level premium. d)The premium in term policies is not based on the insured's age.
b)The premium is level.
Which of the following is TRUE about nonforfeiture values? a)Policyowners do not have the authority to decide how to exercise nonforfeiture values. b)They are required by state law to be included in the policy. c)They are optional provisions. d)A table showing nonforfeiture values for the next 10 years must be included in the policy.
b)They are required by state law to be included in the policy.
What is the purpose of the Insurance Guaranty Association? a)To prevent unfair trade practices b)To protect policyowners against insurer insolvency c)To protect insurance companies against insurance fraud d)To provide double indemnity for the insured's loss
b)To protect policyowners against insurer insolvency
All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT a)Upon conversion, the premium for the permanent policy will be based upon attained age. b)Upon conversion, the death benefit of the permanent policy will be reduced by 50%. c)Evidence of insurability is not required. d)Most term policies contain a convertibility option.
b)Upon conversion, the death benefit of the permanent policy will be reduced by 50%.
Once a complaint has been filed with the Commissioner regarding an unfair claims practice, the Commissioner a)Within 10 days request a report from the company in violation. b)Within 10 business days will send a copy of the complaint to the company involved. c)Within 20 business days will inform the complaining party of the action taken. d)Within 20 days will suspend the company's certificate of authority.
b)Within 10 business days will send a copy of the complaint to the company involved.
When can a Long-Term Care policy deny a claim for losses incurred because of a pre-existing condition? a)At no time b)Within 6 months of the effective date of coverage c)Within 12 months of the effective date of coverage d)At any time
b)Within 6 months of the effective date of coverage
A brain surgeon has an accident and develops tremors in her right arm. Which disability income policy definition of total disability will cover her for all losses? a)"Any occupation" - less restrictive than other definitions b)"Any occupation" - more restrictive than other definitions c)"Own occupation" - less restrictive than other definitions d)"Own occupation" - more restrictive than other definitions
c)"Own occupation" - less restrictive than other definitions
Under the Affordable Care Act, a special enrollment period allows an individual to enroll in a qualified health plan within how many days of a qualifying event? a)10 days b)30 days c)60 days d)90 days
c)60 days
Insurers marketing long-term care products must complete how many hours of continuing education during the first 2 years of a 4-year license renewal period? a)4 hours b)5 hours c)8 hours d)10 hours
c)8 hours
When the insured purchased his health policy he was a window washer. He has since changed occupations and now manages a library. If the insurer is notified of the insured's change of occupation, the insurer should a)Return any unearned premium. b)Increase the premium. c)Adjust the benefit in accordance with the decreased risk. d)Replace the policy with a new one.
c)Adjust the benefit in accordance with the decreased risk.
A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision? a)Incontestability period b)Assignment c)Automatic premium loan d)Waiver of premium
c)Automatic premium loan
Which of the following is NOT typically excluded from life policies? a)Death that occurs while a person is committing a felony b)Death due to war or military service c)Death due to plane crash for a fare-paying passenger d)Self-inflicted death
c)Death due to plane crash for a fare-paying passenger
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client? a)Life annuity with period certain b)Increasing term c)Limited pay whole life d)Interest-sensitive whole life
c)Limited pay whole life
Traditional IRA contributions are tax deductible based on which of the following? a)Owner's age b)IRA limit c)Owner's income d)How long the plan has been in force
c)Owner's income
If a health care plan has characteristics of an HMO and PPO, what type of plan is it? a)MET b)FSA c)POS d)HIPAA
c)POS
Under which of the following organizations are the practicing providers compensated on a fee-for-service basis? a)Blue Cross/Blue Shield b)Open panel c)PPO d)HMO
c)PPO
Which of the following applies to partial disability benefits? a)Payment is based on termination of employment. b)Benefits are reduced once an insured is no longer under a doctor's care. c)Payment is limited to a certain period of time. d)An insured is entitled to a principal sum benefit for the partial loss of a limb.
c)Payment is limited to a certain period of time.
The insurer discovered that one of the applicants for life insurance missed a couple of questions on the application. What must the insurer do with the application? a)Acknowledge the missed questions with a signature and continue the policy issue process b)Proceed with issuing a policy c)Return to the applicant for completion d)Answer the missed questions for the applicant
c)Return to the applicant for completion
Which of the following is NOT a feature of a guaranteed renewable provision? a)Coverage is not renewable beyond the insured's age 65. b)The insured's benefits cannot be reduced. c)The insurer can increase the policy premium on an individual basis. d)The insured has a unilateral right to renew the policy for the life of the contract.
c)The insurer can increase the policy premium on an individual basis.
What is the purpose of coinsurance provisions? a)To guarantee payment to the doctors and hospitals b)To share liability among different insurance companies c)To help the insurance company to prevent overutilization of the policy d)To have the insured pay premiums to more than one company
c)To help the insurance company to prevent overutilization of the policy
As set forth in Indiana law, all of the following are considered to be unfair insurance trade practices EXCEPT a. Making a maliciously critical statement about the financial condition of an insurance company. b. Making an untrue, deceptive or misleading statement about a competitor. c. Lowering the premiums paid by an employer for group insurance based upon loss experiences. d. Restraining trade.
c. Lowering the premiums paid by an employer for group insurance based upon loss experiences.
An applicant for an individual health policy failed to complete the application properly. Before being able to complete the application and pay the initial premium, she is confined to a hospital. This will not be covered by insurance because she has not met the conditions specified in the a)Insuring Clause. b)Pre-existing Conditions Clause. c)Eligibility Clause. d)Consideration Clause.
d)Consideration Clause.
The gatekeeper of an HMO helps a)Determine who will be allowed to enroll in an HMO program. b)Prevent double coverage. c)Determine which doctors can participate in an HMO plan. d)Control specialist costs.
d)Control specialist costs.
Which is TRUE about the cash surrender nonforfeiture option? a)After the cash surrender, the insured is covered for a grace period of one month. b)The policy remains active for some time after the policyholder opts for cash surrender. c)The policyholder receives the original cash value of the policy. d)Funds exceeding the premium paid are taxable as ordinary income.
d)Funds exceeding the premium paid are taxable as ordinary income.
A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium? a)If the father is disabled for at least a year b)If the daughter is disabled for more than 3 months c)If the daughter is disabled for any length of time d)If the father is disabled for more than 6 months
d)If the father is disabled for more than 6 months
An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act? a)Legal, provided that the information can be verified b)Illegal until endorsed by the Guaranty Association c)Legal, provided that the other insurers are paid royalties for the usage of their names d)Illegal under any circumstances
d)Illegal under any circumstances
A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that? a)Survivorship Life Policy b)Second-to-Die c)Family Income Policy d)Joint Life Policy
d)Joint Life Policy
In long-term care insurance, what type of care is provided with intermediate care? a)Nonmedical daily care b)Daily care, but not nursing care c)Intensive care d)Occasional nursing or rehabilitative care
d)Occasional nursing or rehabilitative care
An insured has health insurance that covers them at work and at home. This policy was written on what basis? a)Nonoccupational b)Short-term c)Extended d)Occupational
d)Occupational
If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than a)Upon issuance of the policy. b)Within 30 days after the first premium payment was collected. c)Prior to filling out an application for insurance. d)With the policy.
d)With the policy.
What is the duration of the free-look period for Medicare supplement policies? a)10 days b)15 days c)30 days d)60 days
c)30 days
An insured is hospitalized with a back injury. Upon checking his disability income policy, he learns that he will not be eligible for benefits for at least 30 days. This indicates that his policy is written with a 30-day a)Probationary period. b)Waiver of benefits period. c)Elimination period. d)Blackout period.
c)Elimination period.
Which of the following is another name for a primary care physician in an HMO? a)Referring physician b)Specialist c)Gatekeeper d)Subscriber
c)Gatekeeper
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)Guaranteed insurability rider. d)Paid-up additions option.
c)Guaranteed insurability rider.
Which of the following riders would NOT increase the premium for a policyowner? a)Waiver of premium rider b)Multiple indemnity rider c)Impairment rider d)Payor benefit rider
c)Impairment rider
Which nonforfeiture option provides coverage for the longest period of time? a)Paid-up option b)Accumulated at interest c)Reduced paid-up d)Extended term
c)Reduced paid-up
The interest earned on policy dividends is a)Tax deductible. b)40% taxable, similar to a capital gain. c)Taxable. d)Nontaxable.
c)Taxable.
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT a)The interest is credited at a rate specified by the policy. b)The policyholder has the right to withdraw the accumulations at any time. c)The interest is not taxable since it remains inside the insurance policy. d)The annual dividend is retained by the company.
c)The interest is not taxable since it remains inside the insurance policy.
Which of the following statements is correct regarding a whole life policy? A) Cash values are not guaranteed B) The policy premium is based on the attained age C) The death benefit me increase or decrease during the policy period D) Policyowner is entitled to policy loans
D) Policyowner is entitled to policy loans
If the Commissioner has reason to believe that you have violated the Unfair Competition Law, several events may occur. These include all of the following EXCEPT: A) The Commissioner may conduct a hearing after giving you at least 5 days written notification B) Based upon his findings, at a hearing the Commissioner can issue a cease-and-desist order C) You may request a judicial review of the Commissioner's order. D) You are subject to a fine of not more than $1,000 for each violation, not to exceed $5,000 in any 6-month period
D) You are subject to a fine of not more than $1,000 for each violation, not to exceed $5,000 in any 6-month period (The limits for fines are $25,000 per violation for unknowing violation and $50k per violations of the law)
Which of the following is NOT a feature of a noncancellable policy? a)The insurer may terminate the contract only at renewal for certain conditions. b)The premiums cannot be increased beyond the amount stated in the policy. c)The guarantee to renew coverage usually applies until the insured reaches certain age. d)The insured has the right to renew the policy for the life of the contract.
a)The insurer may terminate the contract only at renewal for certain conditions.
Which of the following will vary the length of the grace period in health insurance policies? a)The mode of the premium payment b)The length of any elimination period c)The length of time the insured has been insured d)The term of the policy
a)The mode of the premium payment
Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner? a)Third-party ownership b)An irrevocable beneficiary c)A buy-sell agreement d)Family term rider
a)Third-party ownership
When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees a)To renew the policy until the insured has reached age 65. b)To charge a lower premium every year the policy is renewed. c)Not to change the premium rate for any reason. d)To renew the policy indefinitely.
a)To renew the policy until the insured has reached age 65.
What is the maximum age for qualifying for a catastrophic plan? a)26 b)30 c)45 d)62
b)30
Which is NOT a characteristic of group health insurance? a)The actual policy is called the "master contract". b)A policy is issued to each insured individual. c)Dependents of insureds can be covered under group health plans. d)Group coverage may be converted to individual coverage if the group contract is ended.
b)A policy is issued to each insured individual.
A 63-year-old man is planning to be employed until age 68. When will he be eligible for Medicare? a)Age 69 ½ if no longer employed b)Age 65, regardless of his employment status c)As soon as he retires at age 68 d)Age 70, if still employed
b)Age 65, regardless of his employment status
The death protection component of Universal Life Insurance is always a)Decreasing Term b)Annually Renewable Term c)Whole Life d)Adjustable Life
b)Annually Renewable Term
Which statement accurately describes the Change of Beneficiary provision? a)Changing beneficiaries requires the consent of the original beneficiary. b)Any policy that has a death benefit must also have a Change of Beneficiary provision. c)Spouses are automatically irrevocable beneficiaries, with the exception of divorce or death. d)Beneficiaries can only be changed in the event of divorce, death, or severe psychiatric disorders.
b)Any policy that has a death benefit must also have a Change of Beneficiary provision.
Occasional visits by which of the following medical professionals will NOT be covered under LTC's home health care? a)Community-based organization professionals b)Attending physician c)Registered nurses d)Licensed practical nurses
b)Attending physician
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.
Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called? a)Adverse selection b)Discrimination c)Law of large numbers d)Misrepresentation
b)Discrimination
All of the following are Nonforfeiture options EXCEPT a)Reduced paid-up b)Interest only c)Cash surrender d)Extended term
b)Interest only
A guaranteed renewable disability insurance policy a)Cannot be cancelled by the insured before age 65. b)Is renewable at the insured's option to a specified age. c)Is renewable at the option of the insurer to a specified age of the insured. d)Is guaranteed to have a level premium for the life of the policy.
b)Is renewable at the insured's option to a specified age.
Which of the following programs expands individual public assistance programs for people with insufficient income and resources? a)Unemployment compensation b)Medicaid c)Medicare d)Social Security
b)Medicaid
Which of the following is NOT true regarding policy loans? a)A policy loan may be repaid after the policy is surrendered. b)Money borrowed from the cash value is taxable. c)Policy loans can be repaid at death. d)An insurer can charge interest on outstanding policy loans.
b)Money borrowed from the cash value is taxable.
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? a)The death benefit can be increased only by exchanging the existing policy for a new one. b)The death benefit can be increased by providing evidence of insurability. c)The death benefit cannot be increased. d)The death benefit can be increased only when the policy has developed a cash value.
b)The death benefit can be increased by providing evidence of insurability.
An employee insured under a group health policy is injured in a car wreck while performing her duties for her employer. This results in a long hospitalization period. Which of the following is true? a)The group plan will pay depending on the employee's recovery. b)The group plan will not pay because the employee was injured at work. c)The group plan will pay. d)The group plan will pay a portion of the employee's expenses.
b)The group plan will not pay because the employee was injured at work.
When an applicant applies for Medicare supplement insurance, whose responsibility is it to confirm whether the applicant has an accident or sickness insurance policy in force? a)The soliciting agent's b)The insurer's c)The applicant's d)A primary care physician's
b)The insurer's
Under an extended term nonforfeiture option, the policy cash value is converted to a)A higher face amount than the whole life policy. b)The same face amount as in the whole life policy. c)The face amount equal to the cash value. d)A lower face amount than the whole life policy.
b)The same face amount as in the whole life policy.