Life and Health Exam 2018 ExamFX

What percentage of individually-owned disability income benefits is taxable? a) 0% b) 50% c) 100% d) amount paid by the insured

a) 0%

Which of the following best describes taxation during the accumulation period of an annuity? a) The annuity is subject to both state and federal taxation. b) The growth is subject to immediate taxation. c) Taxes are deferred. d) The annuity is subject to state taxes only.

c) Taxes are deferred.

When a producer changes address of their residence or office, the Insurance Department must be notified within: 1) 60 Days 2) 10 Days 3) 15 Days 4) 30 Days

4) 30 Days

Which of the following is considered a qualifying event under COBRA? 1) Marriage 2) Relocation 3) Promotion 4) Divorce

4) Divorce

The benefits received by the business in a Disability Buy-Sell policy are 1) Tax deductible 2) Partially taxable 3) Fully taxable 4) Income tax free

4) Income tax free

Which of the following would NOT be a violation of state insurance regulations? 1) Agent C uses her license to write only business other than controlled

1)

Which of the following is NOT covered under a long-term care policy? 1) Acute Care in a hospital 2) Adult day care 3) Hospice care 4) Home health care

1) Acute care in a hospital

The authority granted to an agent through the agent's contract is referred to as 1) Express Authority 2) Apparent Authority 3) Implied Authority 4) Absolute Authority

1) Express Authority

Which of the following is NOT true regarding a Certificate of Authority? 1) It is issued to group insurance participants. 2) It may be necessary for transacting business in a specific state. 3) It is equivalent to an insurance license 4)It is issued by the state department of insurance

1) It is issued to group insurance participants.

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report 1) Must be informed of the source of the report 2) Are entitled to obtain a copy of the report from the party who ordered it 3) Must be advised that a copy of the report is available to anyone who requests it. 4) May sue the reporting agency in order to get inaccurate data corrected

1) Must be informed of the source of the report

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is a) Personal b) Unilateral c) Conditional d) Aleatory

c) Conditional

Your client owns a Market Value Adjusted Annuity. In order to pay for a series of large, unexpected medical bills, he decides to surrender his policy prematurely. Which of the following will determine the penalty that the annuity owner will have to pay? a) There are no penalties imposed for surrendering annuities prematurely. b) Guaranteed minimum interest rate stipulated in the contract c) Current interest rate at the time of surrender d) Flat fee determined by an index of interest gains, combined with the amount of time the annuity would take to mature

c) Current interest rate at the time of surrender

Who can make a fully deductible contribution to a traditional IRA? 1) A person whose contributions are funded by a return on investment 2) An individual not covered by an employer-sponsored plan who has earned income 3) Anybody: all IRA contributions are fully deductible regardless of income level 4) Someone making contributions to an educational IRA

2) An individual not covered by an employer-sponsored plan who has earned income

Which of the following will not be an appropriate use a deferred annuity? 1) Accumulating funds in an IRA 2) Funding a child's college education 3) Creating an estate 4) Accumulating retirement funds

3) Creating an estate

What is the duration of the free-look period for Medicare supplement policies? 1. 10 Days 2. 15 Days 3. 30 Days 4. 60 Days

3. 30 Days

Which of the following is true regarding the insurance amount in a credit life policy? A) creditor can only insure debtor for the amount owed B) creditor may insure the debtor for an unlimited amount of coverage C) allowable amount of coverage is determined by the state insurance commissioner D) the amount of coverage can be greater than the amount owed

A) Creditor can only insure the debtor for the amount owed

Can an individual who belongs to a POS plan use an out-of-network physician? A) Yes, but they must use the POS physician first B) Yes, but they must the HMO physician first C) Yes, and they may use any preferred physician, even if not part of the HMO D) NO

C) Yes, and they may use any preferred physician, even if not part of the HMO

When contributions to an immediate annuity are made with before-tax dollars, which of the following is true of the distributions? A. There are no distributions B. Distributions are nontaxable C. Distributions are taxable D. Distributions can't begin prior to age 70 1/2

C. Distributions are taxable

Which of the following is true of a qualified plan? A) It does not need to have a vesting schedule B) It may discriminate in favor of highly paid employees. C) It may allow unlimited contributions. D) It has a tax benefit for both employer and employee

D) It has a tax benefit for both employer and empoloyee

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? 1) Survivorship Life policy 2) Second to die Policy 3) Family income policy 4) Joint Life Policy

Joint Life Policy

Regarding cost containment in medical plans, what type of review process do employers and insurers use to evaluate the utilization review process and the effectiveness of the professionals involved in large insurance claims?

Retrospective review

According to the requirements for small employers, an eligible employee may be any of the following EXCEPT a) A part-time employee. b) An inactive employee covered by Workers Compensation. c) A sole proprietor. d) An independent contractor.

a) A part-time employee.

An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe? a) Aleatory b) Good health c) Adhesion d) Conditional

a) Aleatory

Which of the following individuals is eligible for a Health Savings Account? a) Allison is insured by a High Deductible Health Plan (HDHP) b) Margaret is 68 years old c) Suzie is a dependent on her parent's tax returns d) Tomas is insured by a Low Deductible Health Plan (LDHP)

a) Allison is insured by a High Deductible Health Plan (HDHP)

Under HIPAA, which of the following is INCORRECT regarding eligibility requirements for conversion to an individual policy? a) An individual who was previously covered by group health insurance for 6 months is eligible. b) An individual who has used up COBRA continuation coverage is eligible. c) An individual who doesn't qualify for Medicare may be eligible. d) The gap of coverage for eligibility is a period of 63 or less days.

a) An individual who was previously covered by group health insurance for 6 months is eligible.

A father purchased a policy to provide coverage on himself, his wife, and their two children. All of them would need to prove insurability EXCEPT a) Any children born to them after the inception of the contract b) The father c) The mother d) The children

a) Any children born to them after the inception of the contract

Employer contributions made to a qualified plan: a) Are subject to vesting requirements b) May discriminate in favor of highly paid employees c) Are after-tax contributions d) Are taxed annually as salary

a) Are subject to vesting requirements

In a replacement situation, all of the following must be considered EXCEPT a) Assets b) Benefits c) Limitations d) Exclusions

a) Assets

Occasional visits by which of the following medical professionals will NOT be covered under LTC's home health care? a) Attending physician b) Registered nurses c) Licensed practical nurses d) Community-based organization professionals

a) Attending physician

Which of the following is NOT an enrollment period for Medicare Part A applicants? a) Automatic enrollment b) Initial enrollment c) Special enrollment d) General enrollment

a) Automatic enrollment

All of the following are personal uses of life insurance EXCEPT a) Buy-sell agreement. b) Survivor protection. c) Estate creation. d) Cash accumulation.

a) Buy-sell agreement.

Which of the following is NOT a characteristic or a service of an HMO plan? a) Contracting with insurance companies b) Providing free annual checkups c) Encouraging early treatment d) Providing care on an outpatient basis

a) Contracting with insurance companies

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) Settlement option b) Nontaxable exchange c) Nonforfeiture option d) Rollover

a) Settlement option

An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called a) Single premium whole life. b) Modified Endowment Contract (MEC). c) Level term life. d) Graded premium whole life.

a) Single premium whole life.

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as a) Survivor protection b) Life planning c) Survivorship insurance d) Juvenile protection provision

a) Survivor protection

Which of the following is NOT covered under Plan A in Medigap insurance? a) The Medicare Part A deductible b) Approved hospital costs for 365 additional days after Medicare benefits end c) The 20% Part B coinsurance amounts for Medicare approved services d) The first three pints of blood each year

a) The Medicare Part A deductible

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.

All of the following are ways in which a Major Medical policy premium is determined EXCEPT a) The average age of the group b) The amount of the deductible c) The coinsurance percentage d) The stop-loss amount

a) The average age of the group

In a life settlement contract, whom does the life settlement broker represent? a) The owner b) The insurer c) The beneficiary d) The life settlement intermediary

a) The owner

Which of the following is paid solely to advise clients? a) Advisor b) Consultant c) Producer d) Broker

b) Consultant

When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees a) To charge a lower premium every year the policy is renewed b) Not to change the premium rate for any reason c) To renew the policy indefinitely d) To renew the policy until the insured has reached age 65

d) To renew the policy until the insured has reached age 65

Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE? a) Distributions before age 59 1/2 incur a 10% penalty on policy gains. b) Policy loans are taxable distributions. c) Accumulations are tax deferred. d) Withdrawals are not taxable.

d) Withdrawals are not taxable.

Who chooses a primary care physician in an HMO? a) HMO subscribers do not have a primary care physician b) The insurer c) A referral physician d) The individual member

d) the individual member

Every small employer carrier must actively offer to small employers at least how many health benefit plans? a) One plan b) 2 plans c) 3 plans d) there is no minimum

d) there is no minimum

Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled? 1) Payor benefit 2) Jumping Juvenile 3) Juvenile Premium Provision 4) Waiver of Premium

1) Payor Benefit

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy? 1) Premiums are not tax deductible as a business expense. 2) Premiums are tax deductible by the key employee. 3) Premiums are tax deductible as a business expense. 4) Premiums are taxable to the employee.

1) Premiums are not tax deductible as a business expense.

A husband and wife are insured under group health insurance plans at their places of employment. Because their employers pay for their plans, each is covered as a dependent under their spouse's coverage. If the husband is hospitalized, how are the medical expenses likely to be paid? 1) The benefits will be coordinated 2) Neither plan would pay 3) Each plan will pay in equal shares 4) The insured will have to select a plan from which to collect benefits

1) The benefits will be coordinated

All of the following are general requirements of a qualified plan EXCEPT 1) The plan must provided an offset for social security benefits. 2) The plan must be communicated to all employees 3) The plan must be for the exclusive benefits of the employees and their beneficiaries. 4) The plan must be permanent, written, and legally binding

1) The plan must provided an offset for social security benefits.

What is the purpose of a Medicare Carve-out or Supplements? 1) They pay deductibles or copayments that are not paid by Medicare 2) They act as replacement insurance for Medicaid 3) They pay for excess expenses not paid by Medicare because of pre-existing conditions. 4) They act as excess insurance paying those covered expense not paid by Medicare because of previous disabilities

1) They pay deductibles or copayments that are not paid by Medicare

To be eligible under HIPAA regulations, for how long should an individual converting to an individual health plan have been covered under the previous group plan? 1. 18 Months 2. 5 years 3. 12 months 4. 63 days

1. 18 Months

when a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy? 1. it is reduced to the amount of what the cash value would buy as a single premium 2. it is increased when extra premiums are paid 3. it decreases over the term of the policy 4. it remains the same as the original policy, regardless of any differences in value

1. it is reduced to the amount of what the cash value would buy as a single premium

Within how many days after the receipt of the proceeds may the owner rescind the life settlement contact? 1) 10 Days 2) 15 Days 3) 30 Days 4) 60 days

2) 15 Days

Which of the following includes information regarding a person's credit, character, reputation, and habits? 1) Agent's report 2) Consumer Report 3) Consumer History 4) Insurability Report

2) Consumer Report

What is the advantage of having a qualified annuity? 1) Higher dividends 2) Favorable tax treatment 3) No filing with IRS 4) Receiving lump-sum settlement tax free

2) Favorable tax treatment

Medicaid provides all of the following benefits EXCEPT 1) Family planning services. 2) Income assistance for work-related injury. 3) Home health care services 4) Eyeglasses

2) Income assistance for work-related injury

What are the two components of a Universal policy? 1) Separate account and policy loans 2) Insurance and cash account 3) Insurance and investments 4) Mortality cost and interest

2) Insurance and cash account

Which clause allows both the insured and dentist to know in advance which benefits will be paid? 1) Fixed Rate 2) Precertification 3) Preadmission 4)Advanced Benefit Notification

2) Precertification

An agent is in the process of replacing the insured's current health insurance policy with a new one. Which of the following would be a proper action? 1) the old policy must be cancelled before the new one can be issued 2) the old policy should stay in force until the new policy is issued 3) there should be at least a 10-day gap between the policies 4) policies must overlap to cover pre-existing conditions

2) The old policy should stay in force until the new policy is issued

An association could buy group insurance for its members if it meets all of the following requirements EXCEPT: 1. Is contributory 2. Has at least 50 members 3. Has a constitution and by-laws 4. Holds annual meetings

2. Has at least 50 members

Annually renewable term policies provide a level death benefit for a premium that 1. fluctuates 2. increases annually 3. decreases annually 4. remains level

2. Increases annually

What type of insurance would be used for a Return of Premium rider? 1. Annually renewable term 2. Increasing term 3. Level term 4. Decreasing term

2. Increasing term

What is the main purpose of the Seven-pay Test? 1. It guarantees interest minimum 2. It determines if the insurance policy is an MEC 3. It requires level premium payments for 7 years 4. It ensures that the policy benefits are paid out in 7 years

2. It determines if the insurance policy is an MEC

Which of the following is an example of a Limited-Pay life policy: 1. Whole life 2. Life Paid-Up at age 65 3. Renewable term to age 70 4. Endowment maturing at age 65

2. Life Paid-Up at age 65

Who is involved in completing the agents report? 1. Attending physician and agent 2. Only the agent 3. The agent and the applicant 4. Only the underwrite, if no agent

2. Only the agent

In order for an insured under Medicare Part A to receive benefits for care in a skilled nursing facility, which of the following conditions must be met? 1. The insured must cover daily copayments 2. The insured must have first been hospitalized for 3 consecutive days. 3. The insured must have a Medicare supplement insurance policy 4. There is no benefit provided under Medicare Part A for skilled nursing care

2. The insured must have first been hospitalized for 3 consecutive days

An insurance company receives an application with some information missing and issues the policy anyway. What is this called? (Choose from the following options) 1. Aleatory 2. Waiver 3. Estoppel 4. Subrogation

2. Waiver

all of the following are true of key person insurance EXCEPT 1. the key employee is the insured 2. the plan is funded by permanent insurance only 3. there is no limitation on the number of key employee plans in force at nay one time 4. the employer is the owner, payor and beneficiary of the policy

2. the plan is funded by permanent insurance only

What is the elimination period for social security disability benefits? 1) 12 months 2) 3 months 3) 5 months 4) 6 months

3) 5 months

In order for costs to be covered under a dental plan, what is the minimum interval that must pass between routine dental exams? 1) 1 year 2) 3 months 3) 6 months 4) 9 months

3) 6 months

In individual health insurance coverage, the insurer must cover a newborn from the moment of birth, and in additional premium payment is required, allow how many days for payments? 1) 10 calendar days 2) 15 working days 3) 61 days of birth 4) Any reasonable period of time

3) 61 Days of Birth

Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy? 1) The Consideration Clause 2) Assignment Rights 3) Owner's Rights 4) The Entire Contract Provision

3) Owner's Rights

What documentation grants express authority to an agent? 1. Fiduciary Contract 2. State Provisions 3. Agent's contract with the principal 4. Agent's insurance license

3. Agent's contract with the principal

a rider attached to a life insurance policy that provides coverage on the insured's family members is called the: 1. juvenile rider 2. payor rider 3. other-insured rider 4. change of insured rider

3. Other-Insured rider

Graded-Premium Whole Life policy premiums are typically lower initially, but gradually increase for a period of 5 to 10 years. After the period of increase the premiums will: 1) Continue to increase. 2) Return to the initial premium amount. 3) Decrease again. 4)Be level thereafter.

4) Be level thereafter

A small hardware store owners involved in a car accident that renders him totally disabled for one year what type of insurance would help expenses of the company during the time of his disability 1) Key-person insurance 2) Disability buy-sell agreement 3) Business disability policy 4) Business overhead expense policy

4) Business overhead expense policy

An insurance producer just sold an insurance policy to his sister. What kind of business is this? 1) Illegal 2) Internal 3) Personal 4) Controlled

4) Controlled

What is an important feature of a dental expense insurance plan that is not typically found in a medical expense insurance plan? 1) A broad coverage area 2) a low monthly premium 3) low cost deductibles 4) Diagnostic and preventive care

4) Diagnostic and preventive care

Most LTC plans have which of the following features? 1) No elimination period 2) Variable premiums 3) Open enrollment 4) Guaranteed renewability

4) Guaranteed renewability

What authority is not stated in an agents contract but is required for the agent to conduct business? 1) Apparent 2) Assumed 3) Express 4) Implied

4) Implied

In an optionally renewable policy, the insurer has which of the following options? 1) Increase the grace period 2) Alter the due date so the policy can be cancelled sooner 3) Alter the amount of notice that the insured receives 4) Increase premiums

4) Increase premiums

Which of the following riders would NOT cause the Death Benefits to increase? 1) Guaranteed Insurability Rider 2) Cost of Living Rider 3) Accidental Death Rider 4) Payor Benefit Rider

4) Payor Benefit Rider

What is the purpose of COBRA? 1) To provide coverage for the dependents 2) To provide health coverage for people with low income 3) To protect the insureds against insolvent insurers 4.) To provide continuation of coverage for terminated employees

4) To provide continuation of coverage for terminated employees

Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe? 1. Transfer 2. Avoidance 3. Retention 4. Reduction

4. Reduction

the annuity owner dies while the annuity is still in the accumulation stage. which of the following is TRUE? 1. because the annuitization period has not started, the owner's estate will receive the money paid into the annuity 2. the insurance company will retain the cash value and pay back the premiums to the owner's estate 3. the money will continue to grow tax-deferred until the liquidation period, and then will be paid to the beneficiary 4. the beneficiary will receive the greater of the money paid into the annuity or the cash value

4. the beneficiary will receive the greater of the money paid into the annuity or the cash value

An applicant is discussing his options for Medicare supplement coverage with his agent. The applicant is 65 years old and has just enrolled in Medicare part a and part B. What is the insurance company obligated to do?

Offer the supplement policy on a guaranteed issue basis

Which of the following statements is NOT true concerning Medicaid? a) It consists of 3 parts: Part A: hospitalization, Part B: doctor's services, Part C: disability income. b) It is a state program. c) It is funded by state and federal taxes. d) It is intended to provide medical assistance for certain categories of people who are needy.

a) It consists of 3 parts: Part A: hospitalization, Part B: doctor's services, Part C: disability income.

Attempting to determine how much insurance an individual would require based upon their financial objectives is known as a) Needs approach. b) Human life value approach. c) Estate planning. d) Viatical approach.

a) Needs approach.

Which of the following is NOT one of the three basic types of coverages that are available, based on how the face amount changes during the policy term? a) Renewable b) Decreasing c) Level d) Increasing

a) Renewable

Which of the following is NOT the purpose of HIPAA? a) To provide immediate coverage to new employees who had been previously covered for 18 months b) To guarantee the right to buy individual policies to eligible individuals c) To prohibit discrimination against employees based on their health status d) To limit exclusions for pre-existing conditions

a) To provide immediate coverage to new employees who had been previously covered for 18 months

Under a pure life annuity, an income is payable by the company: a. only for the life of the annuitant b. until the principal and interest are exhausted c. for a guaranteed period of time, whether or not the annuitant survives to the end of that period d. for as long as either the annuitant or a named beneficiary is alive

a. only for the life of the annuitant

The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years? a) 1 year b) 2 years c) 5 years d) 7 years

b) 2 years

What is the maximum amount of controlled business allowed, in relation to the total premiums written to the general public? a) 6 times b) 9 times c) 3 times d) 5 times

b) 9 times

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) Pay the full amount of a claim because the contestable period has ended b) Adjust the claim benefit to reflect the insured's true age c) Deny any claims and cancel the policy d) Deny paying a claim based on misrepresentation

b) Adjust the claim benefit to reflect the insured's true age

The Omnibus Budget Reconciliation Act of 1990 requires that large group health plans must provide primary coverage for disabled individuals under a) Age 59½ who are retired. b) Age 65 who are not retired. c) Age 59½ who are not retired. d) Age 65 who are retired.

b) Age 65 who are not

Which of the following is NOT an example of insurable interest? a) Child in parent b) Debtor in creditor c) Business partners in each other d) Employer in employee

b) Debtor in creditor

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a a) Nonforfeiture option. b) Guaranteed insurability rider. c) Paid-up additions option. d) Cost of living provision.

b) Guaranteed insurability rider.

Credit Life insurance a) Has a maximum term for insurance of 20 years. b) Insures the life of a debtor. c) Is purchased on an installment basis. d) Insures the life of a creditor.

b) Insures the life of a debtor.

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

In cases where a covered employee is eligible for Medicare benefits to treat end stage renal disease with dialysis for kidney transplant, which of the following is correct? a) Medicare is primary for the first 12 months of treatment and then employer group insurance is secondary b) Medicare is the secondary payer during the first 30 months of treatment c) Medicare in the employer group insurance plan will share the cost equally d) Because Medicare does not cover treatment of ESRD the group plan will pay 100%

b) Medicare is the secondary payer during the first 30 months of treatment

Which of the following entities regulates variable life policies? a) the Federal Government only b) Securities and Exchange Commission (SEC) and the Insurance Department c) Financial Industry Regulatory Authority and the State Guarantee Association d) the Insurance Department only

b) Securities and Exchange Commission (SEC) and the Insurance Department

All of the following would be different between qualified and non-qualified retirement plans EXCEPT: a) IRS approval requirements b) Taxation on accumulation c) Taxation of withdrawals d) Taxation of contributions

b) taxation on accumulation

Contracts that are prepared by one party and submitted to the other party on a "take it or leave it" basis are classified as a. Binding contracts. b. Contracts of adhesion. c. Unilateral contracts. d. Aleatory contracts.

b. Contracts of adhesion

An insured has a primary group health plan and an excess plan, each covering losses up to $10,000. The insured suffered a loss of $15,000. Disregarding any copayments or deductibles, how much will the excess plan pay? a) $10,000 b) $7,500 c) $5,000 d) $0

c) $5,000

An insured was involved in an accident and could not perform her current job for 3 years. If the insured could reasonably perform another job utilizing similar skills after 1 month, for how long would she be receiving benefits under an "own occupation" disability plan? a) She would not receive any benefits. b) 3 years c) 2 years d) 1 month

c) 2 years

What is the maximum number of employees that a small employer can have? a) 10 b) 25 c) 50 d) 100

c) 50

A man is still employed at age 65 and is now eligible for Medicare. He wants to know what health insurance coverage he is eligible to receive. Which of the following options are available to him? a) Reapplication for group health b) Medicare only c) Both group health and Medicare d) Continuation of group health only

c) Both group health and Medicare

Which of the following policies is characterized by a provision where the premiums are lower in the early years of the policy and increase over time to a point where they become level for the remainder of the policy? a) Enhanced whole life b) Minimum deposit whole life c) Graded premium whole life d) Indeterminate premium whole life

c) Graded premium whole life

A medical insurance plan in which the health care provider is paid a regular fixed amount for providing care to the insured and does not receive additional amounts of compensation dependent upon the procedure performed is called a) Reimbursement plan. b) Fee-for-service plan. c) Prepaid plan. d) Indemnity plan.

c) Prepaid plan.

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.

If an insured continually uses the automatic premium loan option to pay the policy premium, a) The cash value will continue to increase. b) The insurer will increase the premium amount. c) The policy will terminate when the cash value is reduced to nothing. d) The face amount of the policy will be reduced by the automatic premium loan amount.

c) The policy will terminate when the cash value is reduced to nothing.

Which provision states that the insurance company must pay Medical Expense claims immediately? a) Legal Actions b) Relation of Earnings to Insurance c) Time of Payment of Claims d) Payment of Claims

c) Time of Payment of Claims

The paid-up addition option uses the dividend a) To reduce the next year's premium. b) To accumulate additional savings for retirement. c) To purchase a smaller amount of the same type of insurance as the original policy. d) To purchase a one-year term insurance in the amount of the cash value.

c) To purchase a smaller amount of the same type of insurance as the original policy.

Premiums paid by self-employed sole proprietors or partners for medical expense insurance are a) Not tax deductible b) Partially tax deductible c) Totally tax deductible d) Taxable

c) Totally tax deductible

Which of the ollowing Life Insurance policies would be considered interest sensitive? a)Whole life b)Increasing term c)Universal life d)Adjustable life

c)Universal life

What is a penalty tax for nonqualified distributions from a health savings account? a) 8% b) 10% c) 12% d) 20%

d) 20%

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 would be deducted from the death benefit paid to a beneficiary, if a partial accelerated death benefit had been paid while the insured was still alive? a) There are no deductions taken from death benefits. b) Penalty imposed for early withdrawal of the death benefit, plus the amount of earnings lost by the insurance company in interest income c) 10% federal death benefit income tax, plus the amount of the accelerated benefit d) Amount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit

d) Amount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit

Which of the following hospice expenses would NOT be covered in a cost-containment setting? a) Tylenol b) Morphine c) Special hospital bed d) Antibiotics

d) Antibiotics

What is the contract provision that allows the insurer to nonrenew health coverage if certain events occur? a) Optionally renewable b) Noncancellable c) Guaranteed renewable d) Conditionally renewable

d) Conditionally renewable

All other factors being equal, which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection? a) Least b) Most comprehensive c) Longest d) Greatest

d) Greatest

Which of the following is true regarding a term health policy? a) It is conditionally renewable. b) It is guaranteed renewable. c) It is noncancellable. d) It is nonrenewable.

d) It is nonrenewable.

If a life insurance policy has an irrevocable beneficiary designation, a) The beneficiary cannot be changed for at least 2 years. b) The owner can always change the beneficiary at will. c) The beneficiary cannot be changed. d) The beneficiary can only be changed with written permission of the beneficiary.

d) The beneficiary can only be changed with written permission of the beneficiary.

Which of the following describes the tax advantage of a qualified retirement plan? a) Distributions prior to age 59½ are tax deductible. b) Employer contributions are deductible as a business expense when the employee receives benefits. c) Employer contributions are not taxed when paid out to the employee. d) The earnings in the plan accumulate tax deferred.

d) The earnings in the plan accumulate tax deferred.

All of the following are characteristics of a group life insurance plan EXCEPT a) The participants receive a Certificate of Insurance as their proof of insurance. b) A minimum number of participants is required in order to underwrite the plan. c) The cost of the plan is determined by the average age of the group. d) There is a requirement to prove insurability on the part of the participants.

d) There is a requirement to prove insurability on the part of the participants

Underwriting is a major consideration when an insured wishes to replace her current policy for all of the following reasons EXCEPT 1) Benefits may change 2) Premiums always stay the same 3) Due to age or health, the policy may change dramatically 4) Pre existing conditions that were previously covered may not be covered under the replacing policy.

2) Premiums always stay the same

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT 1) Delivery receipt 2) Signed waiver of premium 3) Statement of good health 4) Payment of premium

2) Signed waiver of premium

What is the term used for an applicant's written request to an insurer for the company to issue a contract based on the information provided? 1) Insurance request form 2) Request for insurance 3) Application 4) Policy request

3) Application

Which of the following statements is NOT correct concerning COBRA Act of 1985? 1) It applies only to employers with 20 or more employees that maintain group health insurance plans for employees, 2) COBRA stands for Consolidated Omnibus Budget Reconciliation Act 3) It requires all employers, regardless of the number or age of employees, to provide extended group health coverage. 4) It covers terminated employees and/or their dependents for up to 36 months after a qualifying event.

3) It requires all employers, regardless of the number or age of employees, to provide extended group health coverage.

Which of the following is NOT true regarding Equity Indexed Annuities? 1) They have guaranteed minimum interest rates 2) They are less risky than variable annuities 3) They earn lower interest rates than fixed annuities 4) The insurance company keeps a percentage of the returns

3) They earn lower interest rates than fixed annuities

When a group disability insurance policy is paid entirely by the employer, benefits paid to disabled employees are A. taxable income to the employee B. deductible income to the employee C. deductible business expense to the employer D. taxable income to the employer

A. taxable income to the employee

Which of the following types of agent authority is also called "perceived authority"? A. Express B. Implied C. Fiduciary D. Apparent

D. Apparent

When a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount 1) Equal to the original policy for as long a period of time that the cash values will purchase.

Equal to the original policy for as long a period of time that the cash values will purchase.

The Waiver of Cost of Insurance rider is found in what type of insurance? a) Juvenile Life b) Universal Life c) Whole Life d) Joint and Survivor

b) Universal Life

Which of the following is NOT true of basic medical expense plans? a) Coverage for catastrophic medical expenses b) No deductibles c) First-dollar coverage d) Low dollar limits

a) Coverage for catastrophic medical expenses

Concerning group Medical and Dental insurance, which of the following statements is INCORRECT? a) Employee benefits are tax deductible the year in which they were received. b) Benefits received by the employee are free from federal tax income c) Premiums paid by the employer are deductible as a business expense. d) Employee paid premiums may be deducted if certain conditions are met.

a) Employee benefits are tax deductible the year in which they were received.

Which policy component decreases in decreasing term insurance? a) Face amount b) Cash Value c) Dividend d) Premium

a) Face amount

What insurance concept is associated with the names Weiss and Fitch? a) Guides describing company financial integrity b) Policy dividends c) Types of mutual companies d) Index used by stock companies

a) Guides describing company financial integrity

When a person applies for Medicare supplement insurance, whose responsibility is it to confirm that the applicant does not already have accident or sickness insurance in force? a) Insurer b) State government c) Active physician d) Agent

a) Insurer

Which of the following entities has the authority to make changes to an insurance policy? a) Insurer's executive officer b) Department of Insurance c) Broker d) Producer

a) Insurer's executive officer

What is the purpose of a conditional receipt? a) It is intended to provide coverage on a date earlier than the date of the issuance of the policy b) It guarantees the applicant that a policy would be issued in the amount applied for in the application c) It serves as proof that the agent has determined the applicant to be fully insurable for coverage by the insurance company d) It is given by the agent only to applicants who fully prepay all scheduled premiums in advance of policy issue

a) It is intended to provide coverage on a date earlier than the date of the issuance of the policy

In a Disability Income Policy, all of the following are considered presumptive disabilities except a) Loss of one eye b) Loss of hearing c) Loss of two limbs d) Loss of speech

a) Loss of one eye

Which of the following statements pertaining to Medicare is CORRECT? a) Medicare Part A is automatically provided when a qualified individual applies for Social Security benefits.

a) Medicare Part A is automatically provided when a qualified individual applies for Social Security benefits.

In cases where a covered employee is eligible for Medicare benefits to treat end-stage renal disease (ESRD) with dialysis or kidney transplant, which of the following is correct? a) Medicare is the secondary payer during the first 30 months of treatment. b) Medicare and the employer group insurance plan will share the cost equally. c) Because Medicare does not cover treatment of ESRD, the group plan will pay 100%. d) Medicare is primary for the first 12 months of treatment and the employer group insurance is secondary.

a) Medicare is the secondary payer during the first 30 months of treatment.

In an individual long-term care insurance plan, the insured is able to deduct the premiums from taxes. What income taxation will be imposed on the benefits received? a) No tax b) Tax deductible c) State income tax d) Federal income tax

a) No tax

A 55-year-old employee has worked part-time for his new employer for 3 months now, but has not been offered health insurance. What factor has limited the employee's eligibility? a) Number of hours worked per week b) The total amount of time worked for the company c) Age d) Income

a) Number of hours worked per week

How often must life settlement brokers renew their license? a) Once every 4 years b) Annually c) Semi-annually d) Once every 2 years

a) Once every 4 years

Which renewal option does NOT guarantee renewal and allows the insurance company to refuse renewal of a policy at any premium due date? a) Optionally renewable b) Conditionally renewable c) Guaranteed renewable d) Noncancellable

a) Optionally renewable

Which of the following factors would be an underwriting consideration for a small employer carrier? a) Percentage of participation b) Claims experience c) Health status d) Medical history of the employees

a) Percentage of participation

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy? a) Premiums are not tax deductible as a business expense b) Premiums are tax deductible by the key employee c) Premiums are tax deductible as a business expense d) Premiums are tax deductible to the employee

a) Premiums are not tax deductible as a business expense

A couple owns a life insurance policy with a Children's term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? a) Proof of insurability is not required b) Medical exam c) Her parent's federal income tax receipts d) Medical exam and parents' medical history

a) Proof of insurability is not required

Under which provision can a physician submit claim information prior to providing treatment? a) Prospective Review b) Concurrent Review c) Anticipatory Treatment d) Suspended treatment

a) Prospective Review

When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to a) Purchase a single premium policy for a reduced face amount b) Purchase a term rider to attach to the policy c) Pay back all premiums owed plus interest d) Receive payments for a fixed amount

a) Purchase a single premium policy for a reduced face amount

Under an extended term nonforfeiture option, the policy cash value is converted to a) The same face amount as in the whole life policy. b) The face amount equal to the cash value. c) A lower face amount than the whole life policy. d) A higher face amount than the whole life policy.

a) The same face amount as in the whole life policy.

Annuity contracts grow tax deferred. That means that a) There is no current income taxation upon the growth in the annuity. b) The annuitant's contributions are not taxed until the annuity is surrendered. c) As the annuity grows, only the interest is taxed. d) Upon surrender, all the benefits are received tax free.

a) There is no current income taxation upon the growth in the annuity.

Which of the following is true about nonforfeiture values? a) They are required by state law to be included in the policy b) They are optional provisions c) A table showing nonforfeiture values for the next 10 years must be included in the policy d) Policyowners do not have the authority to decide how to exercise nonforfeiture values

a) They are required by state law to be included in the policy

The death protection component of Universal Life Insurance is always a) Whole Life b) Adjustable Life c) Increasing Term d) Annually Renewable Term

d) Annually Renewable Term

An agent is completing an application for a long-term care policy. The agent is required to do all of the following EXCEPT a) Warn the applicant about the 10-day free-look period. b) Make sure the policy is appropriate for the applicant's needs. c) Provide the applicant with the Outline of Coverage. d) Ask where the applicant has another LTC policy in force.

a) Warn the applicant about the 10-day free-look period.

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

In order to collect Social Security benefits, the claimant must be able to demonstrate that the disability will last at least how long? a) For life b) 12 months c) 24 months d) Until age 65

b) 12 months

The minimum number of credits required for partially insured status for Social Security disability benefit is a) 4 Credits b) 6 Credits c) 10 Credits d) 40 Credits

b) 6 Credits

To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters? a) 4 credits b) 6 credits c) 10 credits d) 40 credits

b) 6 credits

When the policy premium wasn't submitted with the application, what should the agent obtain from the insured upon policy delivery? a) A unilateral contract b) A statement of good health c) A medical report d) A conditional contract

b) A statement of good health

All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT a) Employee and employer contributions are not counted as income to the employee for income tax purposes. b) At distribution, all amounts received by the employee are tax free. c) Employer contributions are tax deductible as ordinary business expense. d) Funds accumulate on a tax-deferred basis.

b) At distribution, all amounts received by the employee are tax free.

All of the following are true regarding Key Employee Disability Income insurance EXCEPT a) Premiums are not tax deductible b) Benefits are taxable to the employer c) The employer owns the policy d) Benefits are paid to the employer to retrain a new person

b) Benefits are taxable to the employer

Kevin and Nancy are married; Kevin is the primary breadwinner and has a health insurance policy that covers both him and his wife. Nancy has an illness that requires significant medical attention. Kevin and Nancy decide to legally separate, which means that Nancy will no longer be eligible for health insurance coverage under Kevin. Which of the following options would be best for Nancy at this point? a) Convert to an individual insurance policy within 31 days so she won't have to provide evidence of insurability. b) COBRA c) Apply for social security benefits d) Apply for group coverage under the same group policy that covers Kevin

b) COBRA

A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible? a) Ownership provision b) Collateral assignment c) Insurable interest d) Modification clause

b) Collateral assignment

What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident? a) Nonforfeiture Clause b) Common Disaster Clause c) Spendthrift Clause d) Settlement Clause

b) Common Disaster Clause

An insured is admitted to the hospital for surgery on a herniated disk. The insurance company monitors the treatment and progress in order to make sure that everything proceeds according to the insurer's schedule. This is called a) Schedule monitoring b) Concurrent review c) Prospective review d) Comprehensive review

b) Concurrent review

Which of the following are true about group disability Income insurance except: a) The longer the waiting period, the lower the premium b) Coverage applies both on and off the job c) Benefits are usually short term d) The waiting period starts at the onset of the injury or sickness

b) Coverage applies both on and off the job

Prior to issuance of a long-term care policy to an applicant age 80 or older, the insurer must obtain all of the following except: a) Copies of medical records b) Date of previous doctor visit c) Report of a physical examination or assessment d) Attending physician's report

b) Date of previous doctor visit

Which of the following is NOT a cost-saving service in a medical plan? a) Risk sharing b) Denial of coverage c) Preventive care d) Second surgical opinions

b) Denial of coverage

The provision that states that both the printed contract and a copy of the application form the contract between the policyowner and the insurer is called the: a) Master policy b) Entire contract c) Certificate of insurance d) Aleatory contract

b) Entire contract

What does "level" refer to in level term insurance? a) Interest rate b) Face amount c) Premium d) Cash Value

b) Face amount

In which of the following health plans are benefit payments attributed to employer contributions taxable to the employee? a) Medical Expense b) Group Disability Income c) AD&D d) Disability Buy Out

b) Group Disability Income

A new employee who meets HIPAA eligibility requirements must be issued health coverage on what basis? a) Indemnity b) Guaranteed c) Noncancellable d) Nondiscriminatory

b) Guaranteed

Which benefits would a disability plan most likely pay? a) Medical expenses associated with a disability b) Income lost by the insured's inability to work c) Rehabilitation costs d) Copayments

b) Income lost by the insured's inability to work

The Patient Protection and Affordable Care Act includes all of the following provisions EXCEPT: a) Coverage for preventive benefits b) Individual tax deduction for premiums paid c) Right to appeal d) No lifetime dollar limits

b) Individual tax deduction for premiums paid

Which of the following is true regarding the spendthrift clause? a) It is the same as irrevocable settlement clause b) It can protect the policy proceeds from creditors of the beneficiary c) It allows the beneficiary to select a different settlement option d) It is only used when the beneficiary is a minor

b) It can protect the policy proceeds from creditors of the beneficiary

Why is an equity indexed annuity considered to be a fixed annuity? a) It is not tied to an index like the S&P 500 b) It has a guaranteed minimum interest rate c) It has modest investment potential d) It has a fixed rate of return

b) It has a guaranteed minimum interest rate

All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT a) The insurer determines the amount for each payment b) It is a life contingency option c) It will pay the benefit only for a designated period of time d) The payments are not guaranteed for life

b) It is a life contingency option

Which of the following statements is true concerning the Accidental Death Rider? a) It is only available in group insurance b) It will pay double or triple the face amount c) It is also known as a triple indemnity rider d) This rider is only available to insureds over the age of 65

b) It will pay double or triple the face amount

If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specific age, what type of policy is this? a) Single premium policy b) Jumping juvenile policy c) Limited pay whole life policy d) Modified life insurance policy

b) Jumping juvenile policy

The provision which prevents the insured from bringing any legal action against the company for at least 60 days after proof of loss is known as a) Proof of loss b) Legal actions c) Time limit on certain defenses d) Payment of claims

b) Legal actions

Medicare advantage is also known as a) Medicare Part B b) Medicare Part C c) Medicare Part D d) Medicare Part A

b) Medicare Part C

Shortly after a replacement transaction on a Medicare supplement policy, the insured decided to cancel the policy, but is unsure whether the free-look provision applies. The insured could find that information in the a) Certificate of Coverage. b) Notice Regarding Replacement. c) Policy application. d) Buyer's Guide.

b) Notice Regarding Replacement.

Which of the following provisions is mandatory for health insurance policies? a) Intoxicants and narcotics b) Physical examination and autopsy c) Recurrent disability d) Unpaid premiums

b) Physical examination and autopsy

After the elimination period, a totally disabled insured qualified for benefits from a disability income policy that has a waiver of premium rider. What will happen to the premium that was paid into the policy during the elimination period? a) Premiums will be waived b) Premiums will be refunded c) Premiums will be retained by the company, but no further premium will be required for the duration of the disability d) Premiums will be prorated

b) Premiums will be refunded

Dental expense policies generally have a deductible that would apply to all of the following except a) Endodontics b) Preventive care c) Orthodontics d) Prosthodontics

b) Preventive care

What provision can reduce the disability benefit based upon the insured's current income? a) Rehabilitation benefit b) Relation of earnings to insurance c) Waiver of monthly premium d) Pro rata provision

b) Relation of earnings to insurance

What type of care is Respite care? a) 24 hour care b) Relief for a major care giver c) Daily medical care, given by medical personnel d) Institutional care

b) Relief for a major care giver

When an employee is still employed upon reaching age 65 and eligible for Medicare, which of the following is the employee's option? a) Wait until the next birthday to enroll b) Remain on the group health insurance plan and defer eligibility for medicare until retirement. c) Enroll in Medicare, while the company must provide additional retirement benefits d) Enroll in Medicare when eligible; otherwise, Medicare benefits will be forfeited.

b) Remain on the group health insurance plan and defer eligibility for medicare until retirement.

The advantage of qualified plans to employers is a) Taxable contributions. b) Tax-deductible contributions. c) Tax-free earnings. d) No lump-sum payments.

b) Tax-deductible contributions.

Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information? a) Consumer Privacy Act b) The Fair Credit Reporting Act c) Unfair Trade Practices Law d) The Guaranty Association

b) The Fair Credit Reporting Act

Which of the following is NOT the consideration in a policy? a) The promise to pay covered losses b) The application given to a prospective insured c) Something of value exchanged between parties d) The premium amount paid at the time of application

b) The application given to a prospective insured

In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports? a) The customer has no knowledge of this action. b) The customer's associates, friends, and neighbors provide the report's data. c) They provide additional information from an outside source about a particular risk. d) They provide information about a customer's character and reputation.

b) The customer's associates, friends, and neighbors provide the report's data.

How do employer contributions to a Health Savings Account affect the insured's taxes? a) The employer contributions are deducted from the individual insured's tax calculations b) The employer contributions are not included in the individual insured's taxable income c) The employer contributions are taxed at the same rate as the Social Security tax rate d) The employer contributions are taxed to the individual insured as income.

b) The employer contributions are not included in the individual insured's taxable income

Basic policy illustration formats must include all of the following EXCEPT a) The value upon surrender must be identified by the name given in the policy. b) The event of premium overpayments reimbursement must be identified by the name given in the policy. c) The guaranteed death benefits upon surrender must be clearly labeled guaranteed. d) The accumulation value of a policy must be identified by the name given in the policy.

b) The event of premium overpayments reimbursement must be identified by the name given in the policy.

The insuring clause of a disability policy usually states all of the following EXCEPT a) The types of losses covered. b) The method of premium payment. c) The identities of the insurance company and the insured. d) That insurance against loss is provided.

b) The method of premium payment.

Which of the following best describes what the annuity period is? a) The period of time from the effective date of the contract to the date of its termination b) The period of time during which accumulated money is converted into income payments c) The period of time from the accumulation period to the annuitization period d) The period of time during which money is accumulated in an annuity

b) The period of time during which accumulated money is converted into income payments

A temporary license may be issued without examination to all of the following, EXCEPT a) The surviving spouse of a deceased producer b) The spouse of a retired producer c) The legal guardian of a disable producer d) The designee of a producer entering active service in the U.S. Navy

b) The spouse of a retired producer

Under the Physical Exam and Autopsy provision, how many times can an insurer have the insured examined, at its own expense, while a claim is pending? a) 2 examinations per week of the claim processing period b) Unlimited c) None at all d) 1 examination per week of the claim processing period

b) Unlimited

An insured stops making payments on a loan taken from his cash value policy. What will most likely happen? a) the policy will be reduced to an extended term option. b) the policy will terminate when the loan amount with interest equals or exceeds the cash value c) the insurer will increase the interest rate on the loan and charge a penalty d) the insurer will not permit the policyowner to take out any more loans

b) the policy will terminate when the loan amount with interest equals or exceeds the cash value

The sole proprietor of a business makes a total salary of $50,000 a year. This year, his medical expenses have reached a total of $75,000. What amount may the sole proprietor deduct in regards to his medical expenses? a) $10,000 b) $25,000 c) $50,000 d) $75,000

c) $50,000

What is the maximum period that an insurer would pay benefits in accordance with an Additional Monthly Benefit rider? a) For the duration of the disability or the contract, depending on which ends first b) 1 month c) 1 year d) 2 years

c) 1 year

Any licensed person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to a) 3 years b) 5 years c) 10 years d) 12 years

c) 10 years

An insured has a major medical policy with a $500 deductible and a coinsurance clause of 80/20. If he incurs medical expenses of $4,000, the insurer would pay a) 3,500 b) 2,500 c) 2,800 d) 3,200

c) 2,800

Employer health plans must provide primary coverage for individuals with end-stage renal disease before Medicare becomes primary for how many months? a) 12 months b) 24 months c) 30 months d) 36 months

c) 30 months

What is the penalty for IRA distributions that are below the required minimum for the year? a) 10% b) 25% c) 50% d) 60%

c) 50%

If an annuitant dies during the accumulation period, what benefit (if any) will be included in the annuitant's estate? a) No benefits b) Premiums paid c) Accumulated cash value d) Full annuity benefit

c) Accumulated cash value

How can a new physician be added to the PPOs approved list? a) Pay an annual fee for being on the PPO list b) New physicians are only added once a year, and are selected by the PPO's board of directors c) Agree to follow the PPO Standards and charge the appropriate fees d) Fill out the appropriate paperwork and wait the 12 month pre-certification period

c) Agree to follow the PPO Standards and charge the appropriate fees

What document describes an insured's medical history, including diagnoses and treatments? a) Individual Medical Summary b) Comprehensive Medical History c) Attending Physician's Statement d) Physician's review

c) Attending Physician's Statement

Which of the following statements regarding business overhead expense policies is NOT true? a) Any benefits received are taxable to the business b) Leased equipment expenses are covered by the plan c) Benefits are usually limited to six months d) Premiums paid for BOE are tax-deductible

c) Benefits are usually limited to six months

Medicaid is sponsored by what kind of sources? a) Federal only b) State only c) Both state and federal d) Private companies

c) Both state and federal

Which of the following options best depicts how the eligibility of members for group health insurance is determined? a) By the physical conditions of the applicants at the time of employment b) In such a manner as to establish individual selection as to the amounts of insurance c) By conditions of employment d) Eligibility is not determined, but simply accepted

c) By conditions of employment

What limits the amount that a policyowner may borrow from a whole life insurance policy? a) Amount stated in the policy b) Face amount c) Cash value d) Premiums paid

c) Cash value

What is an important feature of a dental expense insurance plan that is not typically found in a medical expense insurance plan? a) A low monthly premium b) Low cost deductibles c) Diagnostic and preventive care d) A broad coverage area

c) Diagnostic and preventive care

The provision in a health insurance policy that ensures that the insurer cannot refer to any document that is not contained in the contract is the: a) Incontestability clause b) Legal action against us clause. c) Entire contract clause. d) Time limit on certain defenses clause,

c) Entire contract clause.

Which of the following statements pertaining to Medicare Part A is correct? a) Each individual covered by Medicare Part A is allowed one 90-day benefit period per year b) Medicare Part A is automatically provided when an individual qualifies for Social Security benefits at age 65 c) For the first 90 days of hospitalization, Medicare Part A pays 100% of all covered services, except for the initial deductible d) Individuals with ESRD do not qualify for Part A

c) For the first 90 days of hospitalization, Medicare Part A pays 100% of all covered services, except for the initial deductible

In a direct rollover, how is the money transferred from one plan to the new one? a) From the participant to the new plan b) From the original plan to the original custodian c) From trustee to trustee d) From trustee to the participant

c) From trustee to trustee

Which of the following is incorrect concerning medicaid? a) It pays for hospital care, outpatient care, and laboratory and X-ray services b) The federal government provides about 56 cents for every medicaid dollar spent c) It is solely a federally administered program d) It provides medical assistance to low-income people who cannot otherwise provide for themselves

c) It is solely a federally administered program

An insurer invests the money it receives from premiums paid by its insureds. Which of the following is TRUE regarding the interest earned on these investments? a) It is used to fund executive bonuses b) It is used to increase the death benefit. c) It is used to lower premiums. d) It is paid out as dividends.

c) It is used to lower premiums.

Which of the following is true regarding the annuity period? a) It is also referred to as the accumulation period b) It is the period of time during which the annuitant makes premium payments into the annuity c) It may last for the lifetime of the annuitant d) During this period of time the annuity payments grow interested tax deferred

c) It may last for the lifetime of the annuitant

Which of the following is true regarding the renewals of producer licenses? a) All producers must renew their licenses every even-numbered year. b) Licenses must be renewed annually. c) Licenses expire every 2 years on the last day of the producer's birth month. d) Licenses expire every 2 years on January 1st

c) Licenses expire every 2 years on the last day of the producer's birth month.

An individual's tendency to be dishonest would be indicative of a a) Pure Hazard b) Physical Hazard c) Moral Hazard d) Morale Hazard

c) Moral Hazard

Fred is the primary insured under a group health insurance plan at his place of employment. His wife, Jodi, is also covered by the plan. When Jodi gave birth to their first child, what must Fred do to have coverage for the child? a) Notify the employer within 10 days b) Notify the insurer immediately and provide proof of insurability c) Notify the insurer within 61 days in order for coverage to continue without any evidence of insurability d) Notify the insurer on the anniversary date of the plan

c) Notify the insurer within 61 days in order for coverage to continue without any evidence of insurability

Medicare Part A services do NOT include which of the following? a) Hospitalization b) Hospice c) Outpatient Hospital Treatment d) Post hospital Skilled Nursing Facility Care

c) Outpatient Hospital Treatment

Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value? a) Insured's annual expenses b) Effect of inflation on income over time. c) Predicted needs of the family after the insured's death. d) Insured's current and future income

c) Predicted needs of the family after the insured's death.

What is the term for the entity that an agent represents regarding contractual agreements with third parties? a) Designee b) Insured c) Principal d) Client

c) Principal

What would a physician utilize if he/she wanted to know if a treatment is covered under an insured's plan and at what rate it will be paid? a) Comprehensive review b) Supplementary chart c) Prospective review d) Concurrent review

c) Prospective review

All of the following are marketing arrangements used by insurers except a) Direct Response Marketing System b) Independent Agency System c) Reinsurance System d) General Agency System

c) Reinsurance System

Which of the following statements about a suicide clause in a life insurance policy is TRUE? a) Suicide is covered as long as the policy is in force. b) Suicide is excluded as long as the policy is in force. c) Suicide is excluded for a specific period of years and covered thereafter. d) Suicide is covered for a specific period of years and excluded thereafter.

c) Suicide is excluded for a specific period of years and covered thereafter.

Which of the following statements about group life is correct? a) The group sponsor receives a Certificate of Insurance. b) The policy can be converted to an individual term insurance policy. c) The cost of coverage is based on the ratio of men and women in the group. d) The premiums are higher than in an individual policy because there is no medical exam.

c) The cost of coverage is based on the ratio of men and women in the group.

A universal life insurance policy is best described as a/an a) Variable life with a cash value account b) Whole life policy with two premiums: target and minimum c) Flexible premium variable life policy d) Annually renewable term policy with a cash value account

d) Annually renewable term policy with a cash value account

Basic policy illustration formats must include all of the following EXCEPT a) The accumulation value of a policy must be identified by the name given in the policy. b) The value upon surrender must be identified by the name given in the policy. c) The event of premium overpayments reimbursement must be identified by the name given in the policy. d) The guaranteed death benefits upon surrender must be clearly labeled guaranteed.

c) The event of premium overpayments reimbursement must be identified by the name given in the policy.

Which of the following will vary the length of the grace period in health insurance policies? a) The length of time the insured has been insured b) The term of the policy c) The mode of the premium payment d) The length of any elimination period

c) The mode of the premium payment

Which of the following types of insurance policies would perform the function of cash accumulation? a) Credit Life b) Increasing term c) Whole life d) Term life

c) Whole life

The term "illustration" in a life insurance policy refers to a) a depiction of policy benefits and guarantees b) charts and graphs c) a presentation of non-guaranteed elements of a policy d) Pictures accompanying a policy

c) a presentation of non-guaranteed elements of a policy

What is the maximum monetary per willful violation of unfair trade practices regulations? a) $500 b) $1000 c) $5,000 d) $25,000

d) $25,000

An employee quits her job where she has a balance of $10,000 in her qualified plan. The balance was paid out directly to the employee in order for her to move the funds to a new account. Is she decides to rollover her plan to a traditional IRA, how much will she receive from the plan administrator and how long does she have to complete the tax-free rollover? a) $8,000, 30 Days b) $10,000, 60 Days c) $10,000, 30 Days d) $8,000, 60 Days

d) $8,000, 60 Days

Which of the following must a patient pay under Medicare Part B? a) 80% of covered charges above the deductible b) All reasonable charges above the deductible according to Medicare standards c) A per benefit deductible d) 20% of covered charges about the deductible

d) 20% of covered charges about the deductible

Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insured's death? a) A business partner of the insured b) The wife of the deceased insured c) The former wife of the deceased insured d) A minor son of the insured

d) A minor son of the insured

All of the following are essential benefits required to be included in all health plans purchased in the Marketplace except a) Hospitalization b) Maternity care c) Pediatric vision care d) Adult dental care

d) Adult dental care

Who can make a fully deductible contribution to a traditional IRA? a) Anybody: all IRA contributions are fully deductible regardless of income level b) Someone making contributions to an educational IRA c) A person whose contributions are funded by a return on investment d) An individual not covered by an employer-sponsored plan who has earned income

d) An individual not covered by an employer-sponsored plan who has earned income

Which of the following statements concerning buy-sell agreements is true? a) Premiums paid are deductible as a business expense b) Benefits received are considered income taxable c) Buy-sell agreements pay in the event of a medical emergency d) Buy-sell agreements are normally funded with a life insurance policy

d) Buy-sell agreements are normally funded with a life insurance policy

An insurance producer who by contract is bound to write insurance for only one insurance company or group of companies is classified as a/an a) Solicitor b) Broker c) Independent producer d) Captive agent

d) Captive agent

If the Commissioner believes that a producer may be in violation of an insurance law or regulation, what may the commissioner issue? a) Arrest warrant b) Writ on noncompliance c) Call to obey d) Cease and desist order

d) Cease and desist order

Which of the following terms describes a specific dollar amount of the cost of care that must be paid by the member? a) Cost Share b) Prepayment c) Contractual Cost d) Copayment

d) Copayment

Which type of dental treatment involves the dental pulp within the teeth? a) Oral Surgery b) Soft Dental c) Root Canal d) Endodontics

d) Endodontics

When a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount a) In lesser amounts for the remaining policy term of age 100. b) Equal to the cash value surrendered from the policy. c) The same as the original policy minus the cash value. d) Equal to the original policy for as long a period of time that the cash values will purchase.

d) Equal to the original policy for as long a period of time that the cash values will purchase.

Which of the following statements is correct concerning taxation of long-term care insurance? a) Benefits may be taxable as ordinary income b) Premiums may be taxable as income c) Premiums are not deductible in any case d) Excessive benefits may be taxable

d) Excessive benefits may be taxable

The authority granted to an agent through the agent's contract is referred to as a) Apparent authority b) Implied authority c) Absolute authority d) Express authority

d) Express Authority

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) Until the policy owner reaches age 65 b) For 20 years c) Until the policy owner's age 100, when the policy matures d) For 20 years or until death, whichever occurs first

d) For 20 years or until death, whichever occurs first

When an employee terminates coverage under a group insurance policy, coverage continues in force a) For 60 days b) Until the employee can obtain coverage under a new group plan c) Until the employee notifies the group insurance provider that coverage conversion policy is issued. d) For 31 days

d) For 31 days

The death benefit under the Universal Life Option B a) Decreases by the amount that the cash value increases b) Increases for the first few years of the policy, and then levels off c) Remains level d) Gradually increases each year by the amount that the cash value increases

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

Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost? a) Stop-loss b) Consideration c) Reasonable expectations d) Indemnity

d) Indemnity

The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the a) Incontestability clause b) Consideration clause c) Probationary period d) Insuring clause

d) Insuring clause

What is the benefit of experience rating? a) It helps employers with high claims experience to get group coverage b) It helps employees with low claims experience to become exempt from group premiums c) It allows employers with high claims experience to obtain insurance d) It allows employers with low claims experience to get lower premiums

d) It allows employers with low claims experience to get lower premiums

All of the following statements about medicare part B are correct except: a) It covers services and supplies not covered by Part A b) It is financed by a monthly premium c) It is financed by tax revenues d) It is a compulsory program

d) It is a compulsory program

Which statement is not true regarding a Straight Life Policy? a) The face value of the policy is paid to the insured at age 100. b) It usually develops cash value by the end of the third policy year. c) It has the lowest annual premium of the three types of Whole Life policies d) Its premium steadily decreases over time, in response to its growing cash value

d) Its premium steadily decreases over time, in response to its growing cash value

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) Interest-sensitive whole life b) Life annuity with period certain c) Increasing term d) Limited pay whole life

d) Limited pay whole life

Which of the following programs expands individual public assistance programs for people with insufficient income and resources? a) Medicare b) Social Security c) Unemployment compensation d) Medicaid

d) Medicaid

Can a group that is formed for the sole purpose of obtaining group insurance qualify for group coverage? a) No, a group of individuals cannot apply for group coverage unless represented by an association or trust. b) Yes, any group can apply for group coverage. c) Yes, but only if the group is over 35 people. d) No, the group must be formed for a purpose other than obtaining group insurance.

d) No, the group must be formed for a purpose other than obtaining group insurance.

Death benefits payable to a beneficiary under a life insurance policy are generally a) Subject to income taxation by the Federal Government. b) Exempt from income taxation if under $7,000. c) Exempt from income taxation if over $7,000. d) Not subject to income taxation by the Federal Government

d) Not subject to income taxation by the Federal Government

Premium payments for personally-owned disability income policies are a) Eligible for tax credits b) Tax deductible c) Tax deductible to the extent that they exceed 10% of the adjusted gross income of those itemizing deductions d) Not tax deductible

d) Not tax deductible

During replacement of life insurance, a replacing insurer must do which of the following? a) Guarantee a replacement for each existing policy b) Designate a new producer for a replaced policy c) Send a copy of the Notice Regarding Replacement to the Department of Insurance d) Obtain a list of all life insurance policies that will be replaced

d) Obtain a list of all life insurance policies that will be replaced

What type of beneficiary designation allows the benefit to pass from a deceased primary beneficiary to the beneficiary's heirs, instead of splitting the benefit among surviving primary beneficiaries? a) By class b) By the head c) Per capita d) Per stirpes

d) Per stirpes

Which of the following is the most common time for errors and omissions to occur on the part of an insurer? a) Policy renewal b) Underwriting c) Application process d) Policy delivery

d) Policy delivery

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

All of the following are considered basic benefits of an HMO plan except a) Preventive services b) Out of area coverage c) Diagnostic laboratory services d) Prescription drugs

d) Prescription drugs

If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may a) Require a higher premium b) Prolong the open enrollment period c) Increase medical requirements on existing members d) Require evidence of insurability

d) Require evidence of insurability

Which of the following is correct about Medicare? a) Part B is available to the insured at no cost b) It is a federal program for welfare recipients c) The program provides complete medical at no cost d) The program is divided into four parts (A-D)

d) The program is divided into four parts (A-D)

Which of the following statements is TRUE concerning irrevocable beneficiaries? a) They may be changed at any time. b) They can never be changed. c) They may be changed only on the anniversary date of the policy. d) They can be changed only with the written consent of that beneficiary.

d) They can be changed only with the written consent of that beneficiary.

All of the following are true regarding the guaranteed insurability rider EXCEPT: a. The insured may purchase additional coverage at the attained age. b. The insured may purchase additional insurance up to the amount specified in the base policy. c. It allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events. d. This rider is available to all insured with no additional premium

d. This rider is available to all insured with no additional premium