Life & Health Insurance Licensing

Any life insurance policy that accumulates cash values must include a provision for policy loans after a certain period of time. In the state of Washington, that period of time is: 1. After 3 full years of premium payments. 2. On the 5th policy anniversary date. 3. On the 2nd policy anniversary date. 4. After 2 full years of premium payments.

1. After 3 full years of premium payments.

When an annuity is written, whose life expectancy is taken into account? 1. Annuitant 2. Beneficiary 3. Life expectancy is not a factor when writing an annuity. 4. Owner

1. Annuitant

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

4. Payor Benefit Rider (Payor Benefit Rider does not increase the Death Benefit; it only pays the premium if the payor is disabled or dies.)

If payment of a specific premium or subscription fee is required to provide coverage for a child, the policy or contract may require that the insurer be notified of the child's birth and pay any required fee within how many days after the child is born for coverage to continue? a)60 days b)90 days c)180 days d)31 days

60 days

How long does any person receiving written notification of the Commissioner's order have to respond and request a hearing? a)30 days b)60 days c)90 days d)120 days

90 days

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

Annually Renewable Term

While repairing the roof of his house an insured accidentally falls off and breaks his arm and sustains a head injury that results in total blindness of both eyes. His policy contains an Accidental Death & Dismemberment Rider. What is the extent of benefits that he will receive? a)Capital Sum b)50% of the Principal c)Reciprocal Amount d)Principal Sum

Capital Sum

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? a)Representation b)Adhesion c)Consideration d)Good faith

Consideration

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

Guaranteed insurability rider.

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.

Incontestability clause.

Who makes up the Medical Information Bureau? a)Former insured b)Physicians and paramedics c)Insurers d)Hospitals

Insurers

Which of the following statements is TRUE about a policy assignment? a)It transfers rights of ownership from the owner to another person. b)It is the same as a beneficiary designation. c)It permits the beneficiary to designate the person to receive the benefits. d)It authorizes an agent to modify the policy.

It transfers rights of ownership from the owner to another person.

The part of Medicare that helps pay for inpatient hospital care, inpatient care in a skilled nursing facility, home health care and hospice care, is known as a)Part D. b)Part A. c)Part B. d)Part C.

Part A

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)Prepaid plan. b)Indemnity plan. c)Reimbursement plan. d)Fee-for-service plan.

Prepaid plan.

An insured committed suicide 6 months after his life insurance policy was issued. The insurer will a)Pay nothing. b)Refund the premiums paid. c)Pay the policy's cash value. d)Pay the full death benefit to the beneficiary.

Refund the premiums paid.

Annuities can be used to fund which of the following? a)Group life insurance b)Estate creation c)Retirement plans d)Variable life insurance

Retirement plans

When the insured initiates the cancellation of a policy, the unearned premium will be refunded on a a)Per occurrence basis .b)Short rate basis. c)Extended term basis. d)Pro rata basis.

Short rate basis

Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option? a)Length of income period b)Amount of interest c)Size of each installment d)Predetermined length of time stated in the contract

Size of each installment

When an individual life insurance policy is being replaced by an insurer using an agent, the policyowner must be given an unconditional right to a full refund of premiums if the policy is returned within a)15 days. b)20 days. c)30 days. d)45 days.

b)20 days.

Which of the following is the basic source of information used by the company in the risk selection process? a)Warranty b)Consumer report c)Application d)Agent's report

c)Application

When is the insurer NOT required to deliver a policy summary to a policy applicant? a)When the policy death benefit is over $5,000 b)When the insurer provides a written statement of coverage c)When the insurer provides an illustration during the sale of a policy d)When the policy does not contain an unconditional refund provision

When the insurer provides an illustration during the sale of a policy

The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose? 1. Fixed amount option 2. Interest only option 3. Life income with period certain 4. Joint and survivor

2. Interest only option

What type of life insurance is most commonly used for group plans? 1. Whole life 2. Flexible premium whole life 3. Decreasing term 4. Annually renewable term

4. Annually renewable term

Which of the following are NOT fundable by annuities? 1. Cash accumulation for any reason 2. A person's retirement 3. Estate liquidation 4. Death benefits

4. Death benefits

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

An applicant submits an application to the insurer.

The relation of earnings to insurance provision allows the insurance company to limit the insured's benefits to his/her average income over what period of time? a)1 year b)18 months c)2 years d)6 months

2 years

What is the benefit of choosing extended term as a nonforfeiture option?

Choosing the nonforfeiture extended term option allows the policy owner to use the cash value to purchase a term insurance policy with a death benefit equal to that of the original whole-life policy. The policy is calculated from the insured's attained age.

An employee becomes insured under a PPO plan provided by his employer. If the insured decides to go to a physician who is not a PPO provider, which of the following will happen? a)The PPO will pay the same benefits as if the insured had seen a PPO physician. b)The PPO will pay reduced benefits. c)The PPO will not pay any benefits at all. d)The insured will be required to pay a higher deductible.

The PPO will pay reduced benefits.

Which of the following is true regarding a waiver of a surrender charge on an annuity contract? a)The surrender charge will be applied to all premature surrenders. b)The surrender charge waiver only applies to immediate annuity. c)The charge may be waived if the annuitant is confined to a long-term care facility for at least 30 days. d)The charge can only be waived if the annuitant needs the funds for medical expenses.

The charge may be waived if the annuitant is confined to a long-term care facility for at least 30 days.

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

They earn lower interest rates than fixed annuities.

Every order by the Commissioner suspending any insurance license must specify the period during which the suspension will be effective and may not last longer than a)12 months. b)18 months. c)2 years. d)6 months.

a)12 months.

Circulating deceptive sales material to the public is what type of Unfair Trade Practice? a)False advertising b)Defamation c)Coercion d)Misrepresentation

a)False advertising

Which term describes an individual who is domiciled and licensed as a resident producer in a state other than Washington? a)Nonresident producer b)Foreign producer c)Commissioned producer d)Alien producer

a)Nonresident producer

Equity indexed annuities a)Seek higher returns. b)Are more risky than variable annuities. c)Are security instruments. d)Invest conservatively.

a)Seek higher returns.

Which of the following is TRUE regarding a policy issued to a labor union insuring members of the organization for the benefit of persons other than the union or organization? a)Eligible members must include all members of the labor union. b)The policy must cover at least 25 members at date of issue. c)Premiums for the policy are paid by the policyholder (labor union) either entirely or in some combination with funds contributed by the insured members. d)All of the above are true.

All of the above are true.

What type of violation is transacting insurance without a license? a)Class A felony b)Gross misdemeanor c)Misdemeanor d)Class B felony

Class B felony

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

Gradually increases each year by the amount that the cash value increases.

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

Must be informed of the source of the report.

Which of the following riders would NOT cause the Death Benefit to increase? a)Guaranteed Insurability Rider b)Cost of Living Rider c)Accidental Death Rider d)Payor Benefit Rider

Payor Benefit Rider

All of the following are characteristics of group life insurance EXCEPT a)Certificate holders may convert coverage to an individual policy without evidence of insurability. b)Premiums are determined by the age, sex and occupation of each individual certificate holder. c)Amount of coverage is determined according to nondiscriminatory rules. d)Individuals covered under the policy receive a certificate of insurance.

Premiums are determined by the age, sex and occupation of each individual certificate holder.

Which of the following insurance policies are exempt from the Life Insurance Policy Illustration guidelines? a)Term Life Insurance b)Universal Life Insurance c)Variable Life Insurance d)Whole Life Insurance

Variable Life Insurance

An insurer must pay interest on death benefits payable under the terms of a life insurance policy a)Insuring the life of any person who was a resident of this state at the time of death. b)To any insured party upon written request for all term life insurance policies. c)Insuring the life of any person who was a resident of this state within 3 years of their death. d)Insuring the life of any person who was a nonresident of this state at the time of death.

a)Insuring the life of any person who was a resident of this state at the time of death.

All of the following statements concerning Medicaid are correct EXCEPT: 1. Individual states design and administer the Medicaid program under broad guidelines established by the federal government. 2. Individuals claiming benefits must prove they do not have the ability or means to pay for their own medical care. 3. Persons, at least 65 years of age, who are blind or disabled and financially unable to pay, may qualify for Medicaid Nursing Home Benefits. 4. Medicaid is a state funded program that provides health care to persons over age 65, only.

Medicaid is a state funded program that provides health care to persons over age 65, only.

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? a)Universal life b)Variable life c)Decreasing term d)Straight whole life

a)Universal life

If the benefits from a life insurance policy are not paid to the beneficiary within 90 days, what is the minimum interest rate the insurer will have to pay on the 91st day? a)3% b)5% c)8% d)11%

11% (8min +3)

Which of the following is TRUE about credit life insurance? 1. Debtor is the policy beneficiary. 2. Creditor is the policyowner. 3. Debtor is the annuitant. 4. Creditor is the insured.

2. Creditor is the policyowner.

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? 1. Reasonable expectations 2. Indemnity 3. Stop-loss 4. Consideration

2. Indemnity

Regarding the taxation of Business Overhead policies, 1. Premiums are deductible, and benefits are taxed. 2. Premiums are not deductible, and benefits are taxed. 3. Premiums are not deductible, but benefits are deductible. 4. Premiums are not deductible, but expenses paid are deductible.

1. Premiums are deductible, and benefits are taxed.

An insured is covered under 2 group health plans - under his own and his spouse's. He had suffered a loss of $2,000. After the insured paid the total of $500 in deductibles and coinsurance, the primary insurer covered $1,500 of medical expenses. What amount, if any, would be paid by the secondary insurer? a)$0 b)$500 c)$1,000 d)$2,000

$500

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin? 1. When the agent submits the application to the company and the company issues a conditional receipt 2. When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health 3. On the designated effective date 4. On the application date

2. When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

What is the penalty for the insurer who fails to refund premiums within 30 days after the free-look period? 1. 3% 2. 5% 3. 10% 4. 12%

3. 10%

The premium of a survivorship life policy compared with that of a joint life policy would be 1. As high. 2. Half the amount. 3. Lower. 4. Higher.

3. Lower.

How long is the grace period in group life insurance policies in this state? a)10 days b)15 days c)31 days d)45 days

31 days

An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?

The insurer will pay the full death benefit from the group policy to the beneficiary.

Which of the following is TRUE regarding a policy issued to a labor union insuring members of the organization for the benefit of persons other than the union or organization? 1. Eligible members must include all members of the labor union. 2. The policy must cover at least 25 members at date of issue. 3. Premiums for the policy are paid by the policyholder (labor union) either entirely or in some combination with funds contributed by the insured members. 4. All of the above are true.

1. Eligible members must include all members of the labor union.

Which is NOT true about beneficiary designations? a)Trusts can be valid beneficiaries. b)The beneficiary must have insurable interest in the insured. c)The beneficiary may be a natural person. d)The policy does not have to have a beneficiary named in order to be valid.

b)The beneficiary must have insurable interest in the insured.

Which of the following is NOT a characteristic of an insurable risk? a)The loss exposure must be large. b)The loss must be catastrophic. c)The loss must be due to chance. d)The loss must be measurable.

b)The loss must be catastrophic.

The term "conservation effort" deals with a)Charging the lowest possible premium for the highest possible benefit. b)Discouraging agents from terminating their appointments. c)Discouraging policyholders from dropping existing policies. d)Writing the least amount of policy provisions as possible in a given policy.

c)Discouraging policyholders from dropping existing policies.

What is the advantage of reinstating a policy instead of applying for a new one? a)The face amount can be increased b)The cash values have gained interest while the policy was lapsed c)The original age is used for premium determination d)Proof of insurability is not required

c)The original age is used for premium determination

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

c)Universal life. (As well as being a flexible premium policy, universal life is also an interest-sensitive policy. The insurer credits the cash value in the policy with a current (nonguaranteed) interest rate and backs the cash value with a contract (lower guaranteed) rate of interest.)

Which of the following is NOT true regarding policy loans? 1. An insurer can charge interest on outstanding policy loans. 2. A policy loan may be repaid after the policy is surrendered. 3. Money borrowed from the cash value is taxable. 4. Policy loans can be repaid at death.

3. Money borrowed from the cash value is taxable.

All of the following statements are true regarding installments for a fixed amount EXCEPT 1. This option pays a specific amount until the funds are exhausted. 2. The annuitant may select how big the payments will be. 3. The payments will stop when the annuitant dies. 4. Value of the account and future earnings will determine the time period for the benefits.

3. The payments will stop when the annuitant dies.

Within how many days from a pretrial hearing must insurance producers report to the Commissioner any criminal prosecutions brought against them? 1. 7 days 2. 10 days 3. 30 days 4. 60 days

30 Days