Missed Practice Exam Questions

Difference between warranties and material misrepresentations

A warranty in insurance is a statement guaranteed to be true A material misrepresentation is an untrue statement unintentionally made by insured that, if discovered, would alter the underwriting decision of the insurance company.

An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? a)Guaranteed insurability option b)Dividend options c)Guaranteed renewable option d)Nonforfeiture options

Guaranteed insurability option The guaranteed insurability option allows the insured to purchase specific amounts of additional insurance at specific times without proving insurability.

Which of the following best describes annually renewable term insurance?a)It is level term insurance. b)It requires proof of insurability at each renewal. c)Neither the premium nor the death benefit is affected by the insured's age. d)It provides an annually increasing death benefit.

It is level term insurance. Annually renewable term is a form of level term insurance that offers the most insurance at the lowest cost.

Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to an insured is a)Within 45 days. b)Weekly. c)Biweekly. d)Monthly.

Monthly. If a claim involves disability income benefits, the policy must pay those benefits not less frequently than monthly. In all other cases, the company may specify the time period of 45 or 60 days for payment of claims.

What is the maximum benefit that must be provided by health insurance policies for treatment for withdrawal from alcoholism or drug abuse? a) $1,500 b) $2,500 c) $9,000 d) Unlimited amount

a) $1,500

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

a) It is a compulsory program.

An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe? a) Reduction of Premium b) Accumulation at Interest c) Cash option d) Flexible Premium

a) Reduction of Premium The Reduction of Premium option allows the policyholder to apply policy dividends toward the next year's premium. The dividend is subtracted from the premium amount, yielding the new premium due for the next year.

Hospital indemnity/hospital confinement indemnity policy will provide payment based on a) The number of days confined in a hospital. b) The type of illness. c) The premiums paid into the policy. d) The medical expense incurred.

a) The number of days confined in a hospital.

Which of the following is a short-term annuity that limits the amounts paid to a specific fixed period or until a specific fixed amount is liquidated? a)Annuity certain b)Fixed annuity c)Refund life d)Variable annuity

a)Annuity certain Annuity certain option allows the annuitant to select the time period or the amount of the benefits to be paid out. Under the installments for a fixed period, distribution begins on a specific date and stops on a specific date.

Which statement accurately describes the Change of Beneficiary provision? a)Any policy that has a death benefit must also have a Change of Beneficiary provision. b)Spouses are automatically irrevocable beneficiaries, with the exception of divorce or death. c)Beneficiaries can only be changed in the event of divorce, death, or severe psychiatric disorders. d)Changing beneficiaries requires the consent of the original beneficiary.

a)Any policy that has a death benefit must also have a Change of Beneficiary provision. Any policy that has a death benefit must also have a Change of Beneficiary provision. This allows the policyowner to change beneficiaries without the original beneficiary's consent, unless that person was designated as an irrevocable beneficiary.

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. Qualified plans must have a vesting requirement.

Which of the following is used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced? a)Cost comparison methods b)Policy cost guides c)Consumer price indices d)Policy cost indices Cost comparison methods are used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced.

a)Cost comparison methods Cost comparison methods are used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced.

The death benefit in a variable universal life policy a)Depends on the performance of a separate account. b)Is guaranteed to be higher than when the policy is originally issued. c)Is fixed. d)Always equals the face amount stated in the policy.

a)Depends on the performance of a separate account. The death benefit is not fixed, and may increase or decrease over the life of the policy depending on the investment performance of the underlying sub-account. It cannot, however, decrease below the initial face amount of the policy.

Long-term care coverage may be sold in all of the various ways EXCEPT a)Endorsement to health policy. b)Group long-term care. c)Individual long-term care. d)Endorsement to life policy.

a)Endorsement to health policy. Long-term care insurance policies may be purchased on an individual or group basis, or as an endorsement to a life insurance policy.

All of the following are dividend options EXCEPT a)Fixed-period installments. b)Accumulated at interest c)Reduction of premium. d)Paid-up additions.

a)Fixed-period installments. Fixed-period installments is a settlement option, and not one of the dividend options.

Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid? a)Insuring clause b)Entire contract clause c)Beneficiary clause d)Consideration clause

a)Insuring clause The insuring clause states that the insurer agrees to provide life insurance for the named insured which will be paid to a designated beneficiary when proof of loss is received by the insurer. It states the party to be covered by the policy and names of the beneficiary who will receive the policy proceeds in the event of the insured's death. If no beneficiary is named, the policy proceeds will be paid to the insured's estate.

A guaranteed renewable disability insurance policy a)Is renewable at the insured's option to a specified age. b)Is renewable at the option of the insurer to a specified age of the insured. c)Is guaranteed to have a level premium for the life of the policy. d)Cannot be cancelled by the insured before age 65.

a)Is renewable at the insured's option to a specified age. Guaranteed renewable means that the insured has the right to keep the policy until a specific age; however, while the insurer cannot increase the rates on an individual basis, the insurer can increase the rates for all insureds by class.

Which Universal Life option has a gradually increasing cash value and a level death benefit? a)Option A b)Juvenile life c)Term insurance d)Option B

a)Option A Under Option A, the death benefit remains level while the cash value gradually increases. The death benefit will increase at a later date in order to maintain a gap between the cash value and the death benefit before the policy matures.

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the a)Other-insured rider. b)Change of insured rider. c)Juvenile rider. d)Payor rider. The other-insureds rider is useful in providing insurance for more than one family member. The type of insurance offered by this rider is usually term insurance, with the right to convert to permanent insurance.

a)Other-insured rider. The other-insureds rider is useful in providing insurance for more than one family member. The type of insurance offered by this rider is usually term insurance, with the right to convert to permanent insurance.

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

a)Outpatient Hospital Treatment Outpatient treatment is covered under Part B.

An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident, and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do? a)Pay a reduced death benefit b)Pay the full death benefit c)Pay nothing; there was a misrepresentation on the application d)Pay the full death benefit and refund excess premium

a)Pay a reduced death benefit The incontestability clause prevents an insurer from denying a claim due to statements in an application after the policy has been in force for 2 years. However, it does not apply to statements relating to age, sex and identity.

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will a)Pay the policy proceeds only if it would have issued the policy. b)Pay the policy proceeds up to an established limit. c)Not pay the policy proceeds under any circumstances. d)Automatically pay the policy proceeds.

a)Pay the policy proceeds only if it would have issued the policy. The conditional receipt says that coverage will be effective either on the date of the application or the date of the medical exam, whichever occurs last, as long as the applicant is found to be insurable as a standard risk, and policy is issued exactly as applied for.

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? a)Payor Benefit b)Jumping Juvenile c)Juvenile Premium Provision d)Waiver of Premium

a)Payor Benefit If the payor (usually a parent or guardian) becomes disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age, such as 21.

Which of the following is called a "second-to-die" policy? a)Survivorship life b)Family income c)Juvenile life d)Joint life

a)Survivorship life Survivorship life (also referred to as "second-to-die" or "last survivor" policy) is much the same as joint life in that it insures two or more lives for a premium that is based on a joint age.

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then a)The benefit is received tax free. b)The benefit is subject to the exclusionary rule. c)IRS has no jurisdiction. d)The benefit is received as taxable income.

a)The benefit is received tax free. Should a key person die, the benefit is treated as a reimbursement to the business for loss of services from that key person.

Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner? a)Third-party ownership b)An irrevocable beneficiary c)A buy-sell agreement d)Family term rider

a)Third-party ownership Contracts that are owned by someone other than the insured are known as third-party ownership. Most policies involving third-party ownership are written in business situations or for minors in which the parent owns the policy.

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

a)To renew the policy until the insured has reached age 65. The guaranteed renewable provision is similar to the noncancellable provision, with the exception that the insurer can increase the policy premium on the policy anniversary date. As with the noncancellable policy, coverage is generally not renewable beyond the insured's age 65.

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)Unlimited b)None at all c)1 examination per week of the claim processing period d)2 examinations per week of the claim processing period

a)Unlimited The Physical Exam and Autopsy provision allows the insurer to examine the insured as much as is reasonably necessary while the claim is being processed, provided that the insurer pays the expenses.

All of the following are correct about the required provisions of a health insurance policy EXCEPT a) The entire contract clause means the signed application, policy, endorsements, and attachments constitute the entire contract. b) A reinstated policy provides immediate coverage for an illness. c) Proof-of-loss forms must be sent to the insured within 15 days of notice of claim. d) A grace period of 31 days is found in an annual pay policy.

b) A reinstated policy provides immediate coverage for an illness. Accidental injury is covered immediately, but to protect the insurer against adverse selection, losses resulting from sickness are covered only if the sickness occurs at least 10 days after the reinstatement date.

An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming? a) Unauthorized b) Foreign c) Alien d) Domestic

b) Foreign

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 The grace period is 7 days if the premium is paid weekly, 10 days if paid monthly, and 31 days for all other modes.

Once the person meets the stringent requirements for disability benefits under Social Security, how long is the waiting period before any benefits will be paid? a)90 days b)5 months c)12 months d)Benefits will be paid immediately.

b)5 months Under Social Security disability benefits, a person will have to wait five months before any benefits will be paid. Actual benefit payments start with the sixth month of disability.

Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within a)60 days of a loss. b)90 days of a loss. c)20 days of a loss. d)30 days of a loss.

b)90 days of a loss.

Which is NOT a characteristic of group health insurance? a)The actual policy is called the "master contract". b)A policy is issued to each insured individual. c)Dependents of insureds can be covered under group health plans. d)Group coverage may be converted to individual coverage if the group contract is ended.

b)A policy is issued to each insured individual. The actual policy, called the "master contract", is issued to the group sponsor only; the individuals covered under the policy are issued certificates of insurance as proof that they are covered under the master contract. Dependents are covered under group plans. If the group contract is terminated, insureds may convert to individual policies without having to provide proof of insurability.

All of the following statements concerning workers compensation are correct EXCEPT a)Benefits include medical, disability income, and rehabilitation coverage. b)A worker receives benefits only if the work related injury was not his/her fault. c)Workers compensation laws are established by each state. d)All states have workers compensation.

b)A worker receives benefits only if the work related injury was not his/her fault. Workers Compensation benefits are payable when a worker is injured by a work-related injury, regardless of fault or negligence.

If more than one family member covered under the same major medical policy is injured in the same accident, the family only has to pay one deductible. This is due to the a)Elimination period. b)Common accident provision. c)Integrated deductible. d)Carry-over provision.

b)Common accident provision. Under the common accident provision, only one deductible applies for all family members involved in the same accident.

Which type of a hospital policy pays a fixed amount each day that the insured is in a hospital? a)Medigap b)Indemnity c)Surgical d)Blanket

b)Indemnity A Hospital Indemnity policy pays a fixed amount each day the insured is hospitalized, unrelated to medical expenses.

The corridor deductible derives its name from the fact that it is applied between the basic coverage and the a)Limited coverage. b)Major medical coverage. c)Comprehensive expense coverage. d)Interval expense coverage.

b)Major medical coverage. The corridor deductible derives its name from the fact that it is applied between the basic coverage and the major medical coverage.

Which provision concerns the insured's duty to provide the insurer with reasonable notice in the event of a loss? a)Consideration b)Notice of Claim c)Loss Notification d)Claims Initiation

b)Notice of Claim The Notice of Claim Provision spells out the insured's duty to provide the insurer with reasonable notice in the event of a loss.

An insured pays her Major Medical Insurance premium annually on March 1. Last March she forgot to mail her premium to the company. On March 19, she had an accident and broke her leg. The insurance company would a)Pay half of her claim because the insured had an outstanding premium. b)Pay the claim. c)Hold the claim as pending until the end of the grace period. d)Deny the claim.

b)Pay the claim. Because the accident occurred during the grace period, the insurance company will pay the claim.

All of the following statements concerning an employer sponsored nonqualified retirement plan are true EXCEPT a)The plan is not approved for favorable tax treatment by the IRS. b)The employer can receive a current tax deduction for any contributions made to the plan. c)The plan is a legal method of accumulating money for retirement needs. d)The plan can discriminate as to who may participate.

b)The employer can receive a current tax deduction for any contributions made to the plan. Employers do not receive a current tax deduction for any contributions made to a nonqualified plan. The plans are legal; however, they do not qualify for any favorable tax treatment under the IRS rules.

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

b)The mode of the premium payment The grace period is 7 days on a policy with a weekly premium mode; 10 days if a monthly premium mode; 31 days on other premium modes.

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE? a)The insurer may deny coverage later, because of the information missing on the application. b)The policy will be interpreted as if the insurer waived its right to have an answer on the application. c)The policy will be interpreted as if the insured did not have an answer to the question. d)The policy will be void.

b)The policy will be interpreted as if the insurer waived its right to have an answer on the application. Any unanswered questions need to be answered before the policy is issued. If a policy is issued with questions left unanswered, the contract will be interpreted as if the insurer waived its right to have an answer for the question, and will not be able to deny coverage later because of unanswered questions.

Which of the following is TRUE regarding the premium in term policies? a)Decreasing term policy will have a decreasing premium. b)The premium is level for the term of the policy. c)Only level term policy has a level premium. d)The premium in term policies is not based on the insured's age.

b)The premium is level for the term of the policy. The premium on a term life insurance policy is level throughout the term of the policy. Only the amount of the death benefit may change. This does not apply to annual renewable term insurance, in which the premium increases annually according to the attained age.

Most policies will pay the accidental death benefits as long as the death is caused by the accident and occurs within a) 30 days. b) 60 days. c) 90 days. d) 120 days.

c) 90 days.

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

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

c) It is a life contingency option. the installments for a fixed period annuity settlement option, the annuitant selects the time period for the benefits; the insurer determines how much each payment will be. This option pays for a specific amount of time only, and there are no life contingencies.

Which provision states how much time must pass between two like illnesses in order for the second one to be covered under a new set of benefits? a) Relapse Provision b) Corridor Clause c) Recurrent Disability Provision d) Disability Relapse Clause

c) Recurrent Disability Provision

A policyowner names his five children as primary beneficiaries and his wife as a contingent beneficiary. If the policyowner and one of his children die, who would receive policy benefits? a) The insured's estate b) The wife (contingent beneficiary) c) The remaining 4 primary beneficiaries d) The oldest surviving primary beneficiary

c) The remaining 4 primary beneficiaries If multiple primary beneficiaries are named in a policy, each will receive an equal percentage of the death benefit. In this case, since there are four remaining primary beneficiaries, they would receive the death benefit in equal shares. Only if all of the primary beneficiaries die, the contingent beneficiary would receive the entire death benefit.

A Medicare supplement must have a free look provision of at least a)10 days. b)15 days. c)30 days. d)45 days.

c)30 days.

Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under an accident and health policy must contain a)An estimate of the total amount of medical and hospital expense for the loss. b)A complete physician's statement. c)A statement that is sufficiently clear to identify the insured and the nature of the claim. d)A statement from the insured's employer showing that the insured was unable to work.

c)A statement that is sufficiently clear to identify the insured and the nature of the claim. The Insurance Code requires that each policy must include, "Written notice of claim must be given to the insurer within 20 days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible".

Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be a)Based on the issue age of the insured. b)Discounted. c)Adjusted to the insured's age at the time of renewal. d)Determined by the health of the insured.

c)Adjusted to the insured's age at the time of renewal. If a level term product is renewed at the end of the term period the premium will be based upon the attained age of the insured.

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

c)Any children born to them after the inception of the contract.

Disability income coverage specifies that the policy covers the insured if he is unable to perform any job for which he is qualified. In this case, total disability is defined as a)Own occupation - more restrictive than other definitions. b)Own occupation - less restrictive than other definitions. c)Any occupation - more restrictive than other definitions. d)Any occupation - less restrictive than other definitions.

c)Any occupation - more restrictive than other definitions. If total disability is defined as any occupation, it means the coverage will apply only if the insured cannot find any means of income whatsoever. This is more strict than own occupation, where a person merely has to prove that they cannot perform the job for which they were previously trained.

An individual is insured under his employer's group Disability Income policy. The insured suffered an accident while on vacation that left him unable to work for 4 months. If the disability income policy pays the benefit, which of the following would be true? a)For the business, payments are not considered tax deductible as an ordinary business expense. b)The insured can deduct his medical expense benefits from his income tax. c)Benefits that are attributable to employer contributions are fully taxable to the employee as income. d)The insured has to wait 2 more months to start receiving the benefits.

c)Benefits that are attributable to employer contributions are fully taxable to the employee as income. Group disability income premium payments are considered tax deductible by the business as an ordinary business expense. In a plan funded entirely by the employer, income benefits are included in the employee's gross income and taxed as ordinary income

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)Aleatory contracts. b)Binding contracts. c)Contracts of adhesion. d)Unilateral contracts.

c)Contracts of adhesion. Insurance policies are written by the insurer and submitted to the insured on a take- it-or-leave-it basis. The insured does not have any input into the contract, but simply adheres to the contract.

In a disability policy, the probationary period refers to the time a)Between the 10th day of an illness-related disability and the first payment. b)Between the first day of disability and the actual receipt of payment for the disability incurred. c)During which illness-related disabilities are excluded from coverage. d)Between the first day of disability and the day the disability must continue before the insured receives any benefits.

c)During which illness-related disabilities are excluded from coverage The probationary period limits coverage on new policies for certain illness-related conditions

An insured is hospitalized with a back injury. Upon checking his disability income policy, he learns that he will not be eligible for benefits for at least 30 days. This indicates that his policy is written with a 30-day a)Probationary period. b)Waiver of benefits period. c)Elimination period. d)Blackout period.

c)Elimination period. The elimination period is the time immediately following the start of a disability when benefits are not payable. This is used to reduce the cost of providing coverage and eliminates the filing of many claims.

What type of insurance would be used for a Return of Premium rider?a)Decreasing Term b)Annually Renewable Term c)Increasing Term d)Level Term

c)Increasing Term The Return of Premium Rider is achieved by using increasing term insurance. When added to a whole life policy it provides that at death prior to a given age, not only is the original face amount payable, but also all premiums previously paid are payable to the beneficiary.

Which of the following entities can legally bind coverage? a)Federal Insurance Board b)Agent c)Insurer d)The insured

c)Insurer Only insurers, not agents, can bind coverage.

An applicant for a health insurance policy returns a completed application to her agent, along with a check for the first premium. She receives a conditional receipt two weeks later. Which of the following has the insurer done by this point? a)Approved the application b)Issued the policy c)Neither approved the application nor issued the policy d)Both approved the application and issued the policy

c)Neither approved the application nor issued the policy

All of the following are covered by Part A of Medicare EXCEPT a)Post-hospital nursing care. b)Home health services. c)Physician's and surgeon's services. d)In-patient hospital services. Physician's and surgeon's services are covered under Part B.

c)Physician's and surgeon's services. Physician's and surgeon's services are covered under Part B.

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

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

Workers Compensation benefits are regulated by which entity? a)Insurer b)Federal government c)State government d)Employer

c)State government The state government offers and regulates Workers Compensation benefits, which vary slightly from state to state.

A licensed agent in Utah wants to become a nonresident agent in Nevada in the same line of insurance. Considering that all other requirements are met, which of the following would most likely happen? a)The agent's current license will be cancelled. b)The agent will have to pass the examination and pay required fees. c)The agent will be exempt from education and examination requirements. d)The agent will have to relocate to Nevada. Nonresident licenses are not allowed.

c)The agent will be exempt from education and examination requirements.

An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a Traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer? a) $8,000, no tax consequence b) $8,000, tax on growth only c) $10,000, tax on growth only d) $10,000, no tax consequence

d) $10,000, no tax consequence During an IRA direct transfer (or direct rollover), the full amount gets reinvested from one plan to the other.

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT a) An offer of employment. b) Stocks, securities, or bonds. c) An offer to share in commissions generated by the sale. d) Dividends from a mutual insurer.

d) Dividends from a mutual insurer. Dividends paid to policyholders of a mutual insurer are not considered to be a rebate because the policy specifies that they might be paid.

When an agent is handling premium funds while conducting business, the insurance agent acts in a(n) a) Accounting capacity. b) Financial capacity. c) Special capacity. d) Fiduciary capacity.

d) Fiduciary capacity. Money designated as premium belongs to the insurance company. An agent is handling this money in a position of trust. Fiduciary is the term that refers to the handling of money.

Life income joint and survivor settlement option guarantees a) Payment of interest on death proceeds. b) Payout of the entire death benefit. c) Equal payments to all recipients. d) Income for 2 or more recipients until they die.

d) Income for 2 or more recipients until they die. Life Income Joint and Survivor option guarantees an income for two or more recipients for the duration of their lives. Most contracts stipulate that the surviving partner will receive a reduced payment after the other dies, although some will continue to pay the same amount. There is no guarantee that all the life insurance proceeds will be paid out.

A domestic insurer issuing variable contracts must establish one or more a) Liability accounts. b) Annuity accounts. c) General accounts. d) Separate accounts.

d) Separate accounts. Any domestic insurer issuing variable contracts must establish one or more separate accounts. The insurer must maintain in each separate account assets with a value at least equal to the reserves and other contract liabilities connected to the account.

Which of the following is a key distinction between variable whole life and variable universal life products? a) Variable universal life is regulated solely through FINRA. b) Variable whole life allows policy loans from the cash value. c) Variable universal life has a fixed premium. d) Variable whole life has a guaranteed death benefit.

d) Variable whole life has a guaranteed death benefit. Variable universal life insurance may or may not have a minimum death benefit, unlike variable whole life insurance which guarantees a minimum death benefit.

For how many days of skilled nursing facility care will Medicare pay benefits? a)30 b)60 c)90 d)100

d)100 Treatment in a skilled nursing facility is covered in full for the first 20 days. From days 21 to 100, the patient must pay the daily copayment. There are no Medicare benefits provided for treatment in a skilled nursing facility beyond 100 days.

What is the number of credits required for fully insured status for Social Security disability benefits? a)4 b)10 c)30 d)40 The term "fully insured" refers to someone who has earned 40 quarters of coverage (10 years of work times 4 maximum annual credits).

d)40 The term "fully insured" refers to someone who has earned 40 quarters of coverage (10 years of work times 4 maximum annual credits).

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. A universal policy has two components: an insurance component and a cash account. The insurance component (or the death protection) of a universal life policy is always annual renewable term insurance.

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. A universal policy has two components: an insurance component and a cash account. The insurance component (or the death protection) of a universal life policy is always annual renewable term insurance.

The provision that provides for the sharing of expenses between the insured and the insurance company is a)Stop-loss. b)Deductible. c)Divided cost. d)Coinsurance.

d)Coinsurance. The larger the percentage that is paid by the insured, the lower the required premium will be.

An applicant for an individual health policy failed to complete the application properly. Before being able to complete the application and pay the initial premium, she is confined to a hospital. This will not be covered by insurance because she has not met the conditions specified in the a)Insuring Clause. b)Pre-existing Conditions Clause. c)Eligibility Clause. d)Consideration Clause.

d)Consideration Clause. The consideration clause specifies that both parties to the contract must give some valuable consideration. The payment of the premium is the consideration given by the applicant. Because the applicant had not paid an initial premium, she is not covered by insurance.

A small company offers group health insurance to its employees, but recently has decided to terminate the health insurance contract, leaving the workers without insurance. What can the employees do regarding their insurance? a)Sue the employer b)Apply for another group health insurancec )Request a refund of unearned premium d)Convert to an individual health policy

d)Convert to an individual health policy It is perfectly legal for a company to terminate the master contract of a group health insurance policy. When this happens, the insureds can convert to individual health policies within a specified period of time, without having to provide proof of insurability.

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

d)Diagnostic and preventive care Dental expense insurance is a form of medical expense health insurance that covers the treatment, care and prevention of dental disease and injury to the insured's teeth. An important feature of a dental insurance plan which is typically not found in a medical expense insurance plan is the inclusion of diagnostic and preventive care (teeth cleaning, fluoride treatment, etc.).

Which of the following statements about occupational vs. nonoccupational coverage is TRUE? a)Group medical expense policies and individual medical expense policies always cover both occupational and nonoccupational injuries. b)Individual disability policies never cover nonoccupational injuries. c)Only group disability income policies can be written on an occupational basis. d)Disability insurance can be written as occupational or nonoccupational.

d)Disability insurance can be written as occupational or nonoccupational. All disability insurance can be written on either an occupational or nonoccupational basis.

The insurance policy, together with the policy application and any added riders form what is known as a(n) a)Certificate of coverage. b)Contract of adhesion. c)Blanket policy. d)Entire contract.

d)Entire contract. When a policy is issued, a copy of the application, any riders and amendments are attached to the back of the policy and become part of the entire contract.

When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option? a)Fixed period b)Life income period certain c)Extended term d)Fixed amount

d)Fixed amount When the fixed amount settlement option is chosen, the policyowner sets the amount of each installment. The insurer will determine how long the installments are to be paid.

What are the 2 types of Flexible Spending Accounts? a)Health Care Accounts and Health Reimbursement Accounts b)Medical Savings Accounts and Dependent Care Accounts c)Medical Savings Accounts and Health Reimbursement Accounts d)Health Care Accounts and Dependent Care Accounts

d)Health Care Accounts and Dependent Care Accounts There are 2 types of Flexible Spending Accounts: a Health Care Account for out-of-pocket health care expenses, and a Dependent Care Account to help pay for dependent care expenses which make it possible for an employee and his or her spouse, if applicable, to work.

Which of the following is true of a children's rider added to an insured's permanent life insurance policy? a)It is permanent insurance. b)The policy covers only the natural children of the insured. c)Each child covered must show evidence of insurability. d)It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.

d)It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age. Children's rider is term insurance covering all of the children in the family, including newly born children, and is convertible to permanent insurance upon a child reaching the maximum age without evidence of insurability.

Which of the following is NOT true regarding a nonqualified retirement plan? a)Contributions are not currently tax deductible. b)It can discriminate in benefits and selecting participants. c)Earnings grow tax deferred. d)It needs IRS approval.

d)It needs IRS approval. Nonqualified retirement plans do not meet the IRS requirements for favorable tax treatment of deductions and contributions; therefore, they do not need to be approved by IRS.

Which of the following is true about the premium on the children's rider in a life insurance policy? a)It decreases when the oldest child reaches the age of 21. b)It increases when a newborn baby is added to the policy. c)It decreases when an adopted child is added to the policy. d)It remains the same no matter how many children are added to the policy.

d)It remains the same no matter how many children are added to the policy. The premium does not change on the inclusion of additional children; it is based on an average number of children.

Variable Whole Life insurance is based on what type of premium?a)Increasing b)Flexible c)Graded d)Level fixed

d)Level fixed Variable Whole Life insurance is a level fixed premium investment-based product.

If a business owner becomes totally disabled, a Business Overhead Expense policy will pay all of the following EXCEPT a)Rent. b)Utilities. c)Employee payroll. d)Loss of the owner's income.

d)Loss of the owner's income. If business owners want coverage for the loss of their own income due to total disability, they need to purchase a separate individual disability income policy.

Which of the following statements is TRUE concerning whole life insurance? a)Dividend interest is not taxable. b)Premiums are tax deductible. c)Policy loans are tax deductible. d)Lump-sum death benefits are not taxable.

d)Lump-sum death benefits are not taxable. Dividend interest is taxable; policy loans are not tax deductible, and premiums are not tax deductible.

Untrue statements on the application unintentionally made by insureds that, if discovered, would alter the underwriting decision of the insurance company, are called a)Fraudulent statements. b)Warranties. c)Common errors. d)Material misrepresentations.

d)Material misrepresentations.

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

d)Medicaid is a state funded program that provides health care to persons over age 65, only. Medicaid is a government funded (both state and federal) program designed to provide health care to poor people of all ages.

Which of the following best describes gross annual premium? a)Annual loading b)Basic insurance rate plus commissions c)Expense premium d)Net premium plus expenses Gross annual premium is net premium plus expenses (loading).

d)Net premium plus expenses Gross annual premium is net premium plus expenses (loading).

A guaranteed renewable health insurance policy allows the a)Policyholder to renew the policy to a stated age and guarantees the premium for the same period. b)Policy to be renewed at time of expiration, but the policy can be canceled for cause during the policy term. c)Insurer to renew the policy to a specified age. d)Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class.

d)Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class. Coverage is guaranteed, but rates can be adjusted for the entire class.

Shelia has an embolism in her brain. After a week-long hospitalization and subsequent bed rest, she is allowed to work again. Three months later, she develops a second brain embolism. Which provision would determine whether a new set of benefits would cover the second embolism? a)Elimination Period Provision b)Relapse Clause c)Corridor Clause d)Recurrent Disability Provision

d)Recurrent Disability Provision The Recurrent Disability Provision specifies the amount of time that must lapse between two like illnesses in order for the second illness to be covered under a new set of benefits. It is to the insured's advantage for the second illness to be considered a relapse, because this would allow the insured to avoid paying a second deductible and waiting through a second elimination period.

In the event of a loss, business overhead insurance will pay for a)Loss of profits. b)Salary of the business owner. c)Medical bills of the business owner. d)Rent. Business overhead insurance is designed to pay the ongoing business expenses of a small business owner while they are disabled and unable to work. It does not pay the salary of the business owner or their loss of profits. However, it will provide the funds needed to pay the salary of employees other than the owners and their other ongoing business expenses, such as rent.

d)Rent. Business overhead insurance is designed to pay the ongoing business expenses of a small business owner while they are disabled and unable to work. It does not pay the salary of the business owner or their loss of profits. However, it will provide the funds needed to pay the salary of employees other than the owners and their other ongoing business expenses, such as rent.

Disability income policies can provide coverage for a loss of income when returning to work only part-time after recovering from total disability. What is the benefit that is based on the insured's loss of earnings after recovery from a disability? a)Recurrent disability b)Partial disability c)Income replacement d)Residual disability

d)Residual disability A residual disability will pay an amount to make up the difference between what the insured would have earned before the loss.

The period of time immediately following a disability during which benefits are not payable is a)The probationary period. b)The grace period. c)The blackout period. d)The elimination period.

d)The elimination period. The elimination period is a waiting period, expressed in days, not dollars, imposed on the insured from the onset of disability until benefit payments commence.

Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to a)Creditors. b)Beneficiary of the death benefit. c)The spouse of the insured. d)The insured.

d)The insured. Payments for loss of life benefits are to be made to the designated beneficiary. If no beneficiary has been named, payment proceeds are to be paid to the deceased insured's estate. Claims other than death benefits are to be paid to the insured or the insured's estate, unless otherwise assigned by the insured.

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? a)Concealment b)Indemnity c)Representation d)Warranty

d)Warranty A warranty in insurance is a statement guaranteed to be true. When an applicant is applying for an insurance contract, the statements he or she makes are generally not warranties but representations. Representations are statements that are true to the best of the applicant's knowledge.

All of the following benefits are available under Social Security EXCEPT a)Old-age and retirement benefits. b)Disability benefits. c)Death benefits. d)Welfare benefits.

d)Welfare benefits. Social Security is an entitlement program, not a welfare program.