LH Practice Exam Questions

Gene, the manager of FHE, Inc., provides a group health plan for his employees. If the plan is a contributory one, and Gene has 100 employees, how many of his employees need to participate?

75

If the BIG Co. has a contributory group life insurance program, what percentage of its employees must participate in the plan?

75%

Agent R, an authorized agent, told E that her arthritis condition would be covered by her insurance policy, though arthritis was one of the pre-existing condition exclusions. Agent R made a note of it on the policy when it was delivered and signed the change. One month later E's arthritis acted up, needing a doctor's care. Why didn't the insurer pay E's claim?

: Agent R did not have authority to make any changes to the policy.

Which of the following statements is true of how Long-Term Care benefits can be paid out of life insurance policy benefits?

: The insured must be confined to a long term care facility.

When classifying risks in accident health and disability insurance, those individuals with higher than average risk because of poorer health or hazardous occupations or hobbies, and thus may have higher premiums or a limited type of policy are:

A Substandard Risk

Which of the following would not be covered by a Special Risk policy?

A businessman dealing in illegal drugs

All but which of the following could qualify as a group to purchase group health insurance benefits?

A group of sole proprietors who join together to purchase health insurance benefits

What is the Equivalent Level Annual Dividend?

A level amount per $1,000 of death benefit which if paid at the beginning of each policy year and accrued at 5% interest would be equal to allowing dividends to accumulate at 5% interest to the end of the 10th and 20th years.

An HMO has:

A limited service area and a limited choice of providers.

Groups eligible for group insurance coverage include all but which of the following?

A sole proprietor with 1 other employee

AB Company wants to change disability insurers to one that will offer similar coverage at a far reduced premium. What are AB's options if the new insurer will not cover one of AB's employees because of a serious pre-existing condition?

AB Company may not change plans.

C's insurance policy would not pay her medical bills or any other compensation when she was admitted to the hospital with pneumonia. What type of policy Does C have?

Accident Insurance

Which of the following statements about Partnership LTC policies is correct? Partnership LTC policies:

Allow individuals to keep a certain amount of assets before Medicaid will begin paying any bills.

M married at age 17 and told her spouse she was 21. When applying for a life insurance policy, she put her birth date as January 22, 1979 instead of January 22, 1983. What will the insurer do if this fact is discovered before the death benefit is paid out?

Any excess in premiums paid will be returned at the time the death benefit is paid.

Roth IRA contributions:

Are not tax deductible.

Jolene has a group disability policy through her place of employment as well as an individual disability policy. Which of the following statements is not true of her individual policy if Jolene becomes disabled?

Benefits will provide long term coverage after the group benefits are used up.

What method of determining the needed amount of life insurance assumes that the principal sum will be kept, only interest or investment earnings will be dispersed, and allows payments to continue indefinitely?

Capital retention

Which of the following options in regard to Standard Non-forfeiture Law allows the policyholder to receive the policy's cash value or cash accumulation as a lump sum?

Cash Surrender Value Option

How does Universal Life's Option B help the policy avoid becoming a MEC?

Cash values are added to the death benefit

To avoid adverse selection, an insurance company may not do which of the following?

Charge very high premiums for Jewish history teachers.

What is not a term associated with Social Security?

Childhood disability benefits

A dental plan with benefits paid at the usual and customary rate in a particular geographic area is a:

Comprehensive Dental Plan

When an insured has been receiving treatment and the physician must verify with the insurer if coverage can continue, the insurance company is using what type of cost containment procedure?

Concurrent review -is the review of service to determine if care will be covered on an ongoing inpatient or outpatient level of care or as a new certification request basis prior to the expiration of the current certified number of days/visits/treatments.

Which part of the insurance policy contains information concerning the exchange of something of value between the insurance company and the insured i.e. the premium the insured must pay in exchange for the insurer's promise to insure?

Consideration Clause

Governmental Insurance:

Covers certain types of insurance with high risks that private insurers cannot or will not insure.

A dental insurance plan must state all of the following except:

Deductions

T has an IRA worth $250,000. If he withdraws the funds at age 58, how much of a tax penalty will be assessed?

$25,000

P is covered by Medicare Part A. She has multiple sclerosis and needs a wheel chair, for which she is approved through Medicare. If the wheelchair costs $1,500, how much does P need to pay as the coinsurance amount?

$300

H has a Basic Medical policy with coverage of $3,000, and a Major Medical policy with $2 million in lifetime benefits, a $700 deductible, and 80/20 coinsurance. If there are actual costs of $25,000, H will owe how much?

$4,960

O's employer offers a group health plan with an individual deductible of $1,000. If O pays the maximum allowable amount into an HSA, how much must the employer contribute to O's HSA-or face a penalty?

$650 Contributions to an HSA are limited to 65% of the deductible for an individual

The year of cessation must be identified in policy illustrations if policy coverage ends before this age.

100

After the insured makes a claim, the insurer has how long to open communications with the insured, acknowledge receipt of the claim, and provide necessary claim forms?

15 days

How much Social Security tax does R need to pay if he is self-employed?

15.3% of his income

Harvey's son William just turned 10 years old. How much longer will William be able to continue to receive coverage under his family's health insurance plan?

16 years

What is the free look period of a life insurance policy transaction when it involves replacing one policy with another?

20 days

M is a self-employed dentist. She makes $360,000 a year. Which of the following percentages is the maximum M may invest in a SEP?

25%

Trevor's wife Laura gave birth to their third child today. How many days do they have to notify their health insurer of the birth?

30 days

Joseph is a self-employed cabinet maker who must pay 100% of the Social Security tax owed on his income. How much of this is income tax deductible for him?

50%

How long could Raymond keep his group health coverage when his employment was terminated?

6 months

All of the following are tax-shelter pension plans EXCEPT:

Section 1035 plans

A Viatical Agreement allows a policy owner to:

Sell the policy to another person or organization for a sum of money less than the face amount if the insured is terminally ill.

A whole life policy, one premium payment and that the policy remains in effect for life are all characteristics of a:

Single Premium Policy

Which of the following is an example of a Limited Pay Whole Life policy?

Single Premium Whole Life

Lloyd's of London is an example of what type of insurance company?

Syndicate

Which federal law pertains to inspection reports?

The Fair Credit Reporting Act

Which of the following cannot be used as a security collateral assignment for a loan?

The cash value within a term life insurance policy

Who pays the pure insurance portion of the premium on a split-dollar life insurance policy contract?

The employee

Which of the following is correct about a Decreasing Term Policy?

The face amount decreases each year for the term of the policy.

Which of the following is NOT a characteristic of a group credit life policy but IS correct about an individual credit life policy?

The insured may choose the beneficiary.

What is the amount payable as a death benefit in an AD and D policy generally referred to as?

The principal sum

Which of the following rights was NOT given by the Fair Credit Reporting Act of 1970 to persons applying for an insurance policy?

The right to be given notice of certain activities that the insurer will perform in gathering information about them for underwriting purposes

In a disability contract, presumptive disability refers to:

The sudden loss of hearing or speech.

F and J have a Family Maintenance policy. Which of the following is true?

The term portion of the policy begins at the insured's death.

Which of the following is a characteristic of combined term and permanent insurance plans?

They offer higher amounts of insurance at a lower cost than straight whole life insurance.

All of the following are true of Keogh plans except:

Up to 25% of income may be contributed.

Which of the following individuals will need to pay a premium for Medicare Part A?

V, a 62 year-old widow, whose husband worked in Medicare covered government employment while he was alive.

Specific, guaranteed statements made in answer to specific questions made in the health insurance application made in regard to such things as nicotine use and dangerous recreational activities are what?

Warranties

Zack was found guilty of indirectly encouraging the making of maliciously critical comments regarding the financial condition of one of his competitors. Of what was Zack found guilty?

Zack was found guilty of indirectly encouraging the making of maliciously critical comments regarding the financial condition of one of his competitors. Of what was Zack found guilty?

In a Whole Life policy, the age of 100 is significant because the insurance company:

assumes the insured will die no later than that age

C submitted an application to FEC Insurance for a 30 Year Term policy with a face value of $300,000. If she does not submit a premium with the application it is an:

invitation to make an offer

Any periodic benefit payments must be paid at least

monthly.

When one LTC policy replaces another, the replacing policy:

must waive any pre-existing condition applicable periods that were already satisfied by the replaced policy.

Which of the following could sell insurance in this state?

non-resident licensed producer.

An optionally renewable policy is:

one which the insurer may elect not to renew for any reason, but can only do so on the policy due date

The disclosure authorization notice which an insurance producer gives to an applicant must be approved by:

the insurance commissioner.

A Contract of Adhesion is:

written and the terms are decided by only one party.

A family deductible is a feature of what type of insurance policy?

Major Medical

One of the main differences between ordinary and industrial life insurance is:

Method of premium collection and premium mode

Which of the following is not an example of misrepresentation?

Presenting the company's audited financial statements to gain the trust of a client

To be insurable, a risk must have the chance of a loss but not the certainty of loss. This characteristic is described by the term:

Pure risk

E injured his back in a boating accident and cannot return to work. In following the required Time of Payment of Claims provision, how often must the insurer pay disability benefits to E?

Monthly

Agent Donna, in an effort to produce more business, decides to hold a drawing for a cruise for people who purchase a new policy within a specified time. This is an example of what?

Rebating

Which of the following is not a possible feature for a Basic Medical Policy?

Reimbursement of daily room and board while hospitalized for as long as necessary

Tricare coverage is for:

Retired military personnel not eligible for Medicare.

L purchases a $100,000 Whole Life policy on her own life and names her husband J as the beneficiary. Seven years later, J and L are divorced, and L remarries, but forgets to change her beneficiary. Two months later, J dies in a car accident. Who will receive the death benefit?

No death benefit will be paid.

G, a neurosurgeon, has a "Your Occupation" and a "Specialist Occupation" policy. If G is involved in a serious boating accident and becomes unable to work as either a neurosurgeon or any other type of doctor, what policy provision would prevent G from collecting on both policies receiving duplication of benefits?

Non-Duplication and Coordination of Benefits

The health insurance policy provision that prevents an insurer from changing the premium rate or modifying the coverage in any manner is called:

Non-cancelable.

A provision that allows an insured to receive 25% or 50% of one month's disability benefit for an injury that does not qualify the insured for total or partial disability benefits is called a(n):

Non-disabling injury medical reimbursement benefit

For which of the following reasons would a producer's license be voluntarily terminated?

Not meeting continuing education requirements

What is an example of double indemnity concerning an accidental death rider?

Payment of an additional amount equal to the policy face value if the insured is killed in an accident.

If an insurance policy requires separate deductibles for each illness or accident, what type of deductible is in use?

Per cause

Which of the following is a correct statement concerning group health insurance plans?

Plans issued by stock insurance companies usually provide for refunds on an experience-rating basis.

Which of the following would not be a utilization management procedure?

Pre-paid service option

Which of the following is a characteristic of a Modified Premium Whole Life policy?

Premiums are low initially and increase after a period of 3 or 5 years, staying level after this initial increase.

Which of the following statements about multiple employer trusts is not correct?

METs provide coverage only on a self-funded basis.

Which of the following riders is not an optional rider with regards to an accelerated benefit provision?

Disability Income Rider

Which of the following statements is CORRECT about insurable interest in a life insurance contract?

Everyone has unlimited insurable interest in his or her own life.

S is 53 years old and wants to invest a large sum of money in an annuity. This money is the main investment S has for retirement. Which annuity should S's agent encourage her to use?

Fixed annuity

All of the following would be eligible for coverage under a group health insurance policy EXCEPT:

Four members of an association who do not have insurance available through their individual places of employment.

Which organization does not usually cover medical fees incurred by services rendered outside the network?

HMO

An insurance producer may not ask if the applicant has ever:

Had a blood test for AIDS.

The owner of an annuity is the person who:

Has the rights of possession to the cash that is in the annuity.

If Robert chooses to stay with his current insurer even after he becomes eligible for Medicare Part D, which of the following is true?

He will have to pay a penalty fee to obtain Part D later.

Which of the following is taken into account while underwriting a health policy:

How often the applicant has made claims in the past

The right of an agent representative of an insurance company to have business cards with the company logo made is what?

Implied directive

H owns an annuity. If H dies before annuitizing the policy and has not chosen a particular payout option and written it into the policy, how will the benefits be paid?

In one lump sum

Which of the following is not a reason for which an insurance license would be suspended, revoked, or refused for continuation?

Indictment of a felony involving moral turpitude

All of the following are eligible for Medicare Part A with no premium except?

Individuals who retire at age 67 and did not pay Medicare taxes.

Which of the following statements about Workers Compensation is not correct?

Injuries or illness not covered through health insurance is covered through Workers Comp.

Which of the following checks for moral or character risks, including the applicant's financial condition?

Inspection report