Oklahoma Life & Health

As part of Social Security benefits, a one-time payment of $_______ may be made paid to a surviving spouse after a taxpayer's death. A 255 B 250 C 125 D 100

A 255 Death benefits paid to the family of a covered worker is a one-time payment of $255 made after the taxpayer's death. This benefit may be paid to a surviving spouse or minor children if they meet certain requirements.

Jeanne has a $100,000 whole life insurance policy that has $1,000 of dividend additions, a $6,000 outstanding loan that includes unpaid interest, and a monthly premium of $500. If she dies during the grace period, which of the following insurance settlements would be permitted? A $94,500 B $92,500 C $93,000 D $100,000

A $94,500 It is prohibited for any settlement to be less than the amount of the death benefit, plus dividends, less policy loans and loan interest outstanding, less any unpaid premium.

Which of the following statements is FALSE regarding Credit Life Insurance? A The amount of coverage is dependent upon the duration of the loan B Usually the individual debtor pays the premium monthly C The insurance will terminate if the debt is prepaid or refinanced D The creditor must apply the insurance proceeds to the discharge of the loan

A The amount of coverage is dependent upon the duration of the loan The amount of the coverage is dependent upon the amount of indebtedness, not the duration of the loan.

If an insurer is successful in challenging the claim on a life insurance policy, what happens next? A The insurer refunds all premiums received B The insurer reports this to the MIB C The insurer will reprimand the producer D The insurer will demand a return of the policy

A The insurer refunds all premiums received

When a life insurance policy's ownership is changed from the original owner to a new owner without payment, this is known as a(n) ___________. A Viatical settlement B Absolute assignment C Life settlement D Collateral assignment

B Absolute assignment

What is a way to provide additional life insurance protection for a temporary period of time without having to acquire an additional life insurance policy? A Choose death benefit option B on a Variable Universal Life insurance policy B Add a term rider to a new or existing policy C Choose death benefit option B on a Universal Life insurance policy D Buy a Joint Life policy

B Add a term rider to a new or existing policy

Amounts paid out under the accelerated benefits rider: A Are also considered to be accidental death benefits B Are deducted from the policy's death benefit C Can be used as a Medicare supplement policy D May be used as a disability income benefit if disabled

B Are deducted from the policy's death benefit An accelerated or living benefits rider allows insureds who need funds for health care to collect some or all of the policy's death benefit while they are still living. The amount withdrawn is deducted from the policy's death benefit.

Surrender charges typically ____________ over time. A Increase B Decrease C Vary D Remain the same

B Decrease Surrender charges decrease over time until they disappear at which time the cash value and the cash surrender value are the same amount.

Which of the following types of buy-sell agreements provides for a business to purchase a life insurance policy on each business partner? A Stock Redemption Agreement B Entity Plan C Cross Purchase Plan D Key Employee Plan

B Entity Plan The Entity Buy Sell Plan is a contract in which the business entity buys a life insurance policy on each of the owners. The Cross Purchase Plan requires each business partner to purchase a policy on the other business partners. The Stock Redemption Agreement is not for business partners, but for shareholders in a closely held corporation. The Key Employee Plan is not a buy-sell agreement.

Which of the following is a reason why "class" designations of beneficiaries may be a problem? A They prevent contingent beneficiaries from being named B They are vague descriptions of beneficiaries that could result in a court having to decide which person(s) will or will not receive the policy proceeds C They are intended to allow unnamed persons to share policy proceeds D They specify the exact persons who may claim policy proceeds

B They are vague descriptions of beneficiaries that could result in a court having to decide which person(s) will or will not receive the policy proceeds Class designations of beneficiaries are intended to provide benefits to a number of unnamed persons but can be problematic when there is insufficient understanding about who is being named as a beneficiary. "All my children" does not clearly identify which children are included - the children of a former marriage, the current marriage, or both. Likewise, "My minor children" disregards the fact that children will eventually become adults, and can unintentionally exclude a child as a result.

The net amount at risk to the insurance company at the endowment date is: A The total of the premiums paid to date B Zero C The face amount D The cash values

B Zero Net amount at risk is the difference between the face amount and cash surrender value. Since the policy endows, there is no spread between them. Therefore, there is no net amount at risk to the insurer.

With a Noncontributory Group Life Plan, what percentage of the employer's employees must participate? A 75% B 50% C 100% D 90%

C 100% A Noncontributory Group Life Plan is one in which the participant does not pay premiums. State law requires that 100% of eligible employees are covered. The insurer can be certain that all employees will enroll and it will not be subject to adverse selection.

To be included in an employer-sponsored group plan, an employee must be employed full time by any of the following, except: A The immediate group B A silent partner C A subsidiary of the firm D An active partner

C A subsidiary of the firm

Which of the following is a likely outcome if a buy-sell agreement in a two person partnership is not in place when one of the partners dies? A The agreement will need to go through the probate process B Partnership transfer taxes are due within 9 months C The surviving spouse of the deceased becomes the other partner D The value of the business will increase

C The surviving spouse of the deceased becomes the other partner

To be Currently Insured under Social Security, a worker must have at least _____ work credits during the 13-quarter period ending with the quarter in which the worker dies, becomes disabled, or reaches retirement age. A 12 B 20 C 3 D 6

D 6

A mandatory participation rate for noncontributory group plans is designed to: A Achieve economies of scale B Maximize the premium an insurer collects C Allow the employer to obtain the greatest premium discount D Reduce adverse selection

D Reduce adverse selection

Benefits that may be received monthly under Social Security include all of the following, except: A Retirement benefits for spouses of workers as early as age 62 B Retirement benefits for workers as early as age 62 C Survivor's benefits for dependent children until age 18 (19 if still in school) D Survivor's benefits for widows and widowers no earlier than age 62

D Survivor's benefits for widows and widowers no earlier than age 62 Benefits that may be received monthly under Social Security include retirement benefits as early as age 62 for workers and their spouses, and survivor's benefits for children up to age 18 (19 if still in school) and for widows and widowers as early as age 60.

C has duplicate coverage with companies X and Y ($2,000 with X and $3,000 with Y). If C suffers a loss of $1,000, based on the insurance with other insurers provision, how much will company X have to pay out as a claim? A $400 B $1,000 C Zero D $600

A $400 Under the insurance with other insurers provision, each company will pay in proportion to the total coverage that is in force. Dividing company X's coverage amount with the total coverage in force results in the proportion company X must pay: 2,000/5,000 = 40%. Multiplying the amount of the loss by company X's proportion results in company X's share of the loss: $1,000 x 40% = $400.

A $500,000 policy is sold for $50,000. After the sale, the new owner pays $10,000 in life insurance premiums while the insured is alive. Upon death of the insured, how much of the death benefit is taxable? A $440,000 B $60,000 C $450,000 D $500,000

A $440,000 A $500,000 policy is sold for $50,000. After the sale the new owner pays $10,000 in life insurance premiums while the insured is alive. Upon death of the insured $60,000 ($50,000 + $10,000) of the death benefit is received income tax free to the beneficiary while $440,000 is taxable ($500,000 - $60,000).

A family has a $1,000 annual family deductible with a coinsurance provision of 80/20. The family's claims for the year are $200, $300, $400, $500, $300, and $300, totaling $2,000. The insurer is responsible for paying: A $800 B $1,200 C $1,600 D $2,000

A $800

A SIMPLE plan is available to companies that have ______ employees or less. A 100 B 75 C 50 D 35

A 100

An insured should receive necessary claim forms within _____ days after notice of claim. A 15 B 10 C 20 D 5

A 15

COBRA applies to employers with: A 20 or more employees B 10 or fewer employees C 2 to 50 employees D 51 or more employees

A 20 or more employees

Once a policy has been in force for ___ years, the policyowner can borrow from the insurer a sum equal to, or at the option of the policyowner, less than the cash value of the policy at the end of the current policy year and of any dividend additions. A 3 B 5 C 1 D 4

A 3

A Medicare Supplement or LTC policy's free look period is: A 30 days B 15 days C 60 days D 45 days

A 30 days

Payment of the first premium and an application must be submitted to an insurer for individual coverage within how many days to convert group coverage to an individual policy not requiring proof of insurability? A 31 days B 10 days C 7 days D 45 days

A 31 days

To be considered fully insured under Social Security, a worker generally needs how many quarter credits? A 40 B 80 C 20 D 10

A 40

Which of the following is a typical benefit period for a group long-term disability benefit? A 5 years B 13 weeks C 26 weeks D 52 weeks

A 5 years Group long-term disability is often characterized by benefit periods of 2 years, 5 years, to age 65, or lifetime.

The insurer reserves the right to defer the payment of any cash surrender value for a period of ___ months after the demand with surrender of the policy. A 6 B 10 C 5 D 3

A 6

If a life insurance policy does not pass the ___ -pay test, it will be deemed a MEC. A 7 B 3 C 5 D 10

A 7

Policies issued on or after July 1, 1982, must include a provision permitting a maximum interest rate of not more than 8% per annum (per year) A 8 B 9 C 10 D 15

A 8

P is 75. P's required minimum distribution for this year is $10,000. P only withdraws $2,000. What is the consequence to P for this? A A $4,000 tax penalty B A $8,000 tax penalty C A $2,000 tax penalty D A $1,000 tax penalty

A A $4,000 tax penalty Failure to take all or part of an annual RMD incurs a 50% penalty tax on the amount not distributed. $10,000 - $2,000 = $8,000 x 50% = $4,000.

Which of the following statements is NOT correct with regard to advertising for health insurance? A A direct response insurer may advertise the low cost of a plan due to no agent being involved B Advertisements must disclose any waiting, elimination, probationary or similar time periods C No advertisement may contain descriptions of a policy limitation, exception or reduction, worded in a positive manner D Advertisements must be truthful and not misleading

A A direct response insurer may advertise the low cost of a plan due to no agent being involved

Until yesterday, J. J. worked for his father's company and was covered by the company's large group health plan. He stopped working to go to college. He is 26 years of age and wants to keep the same coverage until he earns his degree in approximately 24 months. Which of the following statements is true? A A good option for J.J. is to exercise the COBRA option under his father's group plan B As a student, J.J. is still covered under his father's group plan C J.J. can obtain coverage under COBRA, but it won't be the same coverage he had under his father's group plan D J.J.'s only option is to buy a personal plan of coverage

A A good option for J.J. is to exercise the COBRA option under his father's group plan Since J.J has lost his dependent status, but still wants the same group coverage, he can continue that coverage under COBRA for up to 36 months.

Which of the following disability income benefits would be received free of federal income tax? A A personal disability income insurance policy benefit B Business overhead expense insurance C Employee paid-group insurance through a Cafeteria Plan D Employer-paid group insurance

A A personal disability income insurance policy benefit

If a life insurance applicant's answers on the application indicate that he/she is in good health, when in fact the applicant has a disease that he/she is not aware of, the statement on the application is considered: A A representation B A warranty C Fraudulent D A concealment

A A representation

The _________ include bathing, continence, dressing, eating, toileting, and transferring. A Activities of Daily Living B Assisted living conditions C Declining health conditions D Skilled care needs

A Activities of Daily Living The Activities of Daily Living (ADLs) include bathing, continence, dressing, eating, toileting, and transferring.

Who among the following is NOT considered an eligible employee for purposes of small employer health insurance? A An individual who works on a substitute basis B An individual who works on a full-time basis and has a normal workweek of at least 30 hours C An employee who has a normal workweek of at least 24 hours and does not have other health coverage D A partner is included as an employee under a health benefit plan

A An individual who works on a substitute basis An individual who works on a substitute or temporary basis is not an eligible employee for purposes of small employer health insurance.

The two primary definitions of disability are "any occupation" and "own occupation." Which of these statements best describes the difference between the two definitions? A An own occupation policy is less restrictive because it is easier to qualify for benefits B An any occupation policy is less restrictive because it is harder to qualify for benefits C An own occupation policy is more restrictive because it is harder to qualify for benefits D An any occupation policy is more restrictive because it is easier to qualify for benefits

A An own occupation policy is less restrictive because it is easier to qualify for benefits An "own occupation" policy is less restrictive because one must only be unable to perform the essential duties of their occupation at the time of disability. An "any occupation" would not pay benefits if the insured could perform the duties of any occupation for which he/she was suited by reason of education, training, or prior experience, and is considered more restrictive.

All of the following tax-free exchanges of life insurance and annuities are permitted, EXCEPT: A Annuity to life insurance B Life insurance to long term care insurance C Life insurance to an annuity D Annuity to long term care insurance

A Annuity to life insurance

Which of the following is NOT an example of a prohibited practice? A Backdating B Defamation C Rebating D Twisting

A Backdating

Hank was in the hospital last month for 2 days for which he received a check for $200. This month Hank was in the hospital for 5 days for which he received a check for $500. These checks are most likely: A Benefit payments from a Hospital Income or Indemnity Policy B Refunds from his doctor C Refunds of premium D Payments from Medicare

A Benefit payments from a Hospital Income or Indemnity Policy A Hospital Income or Indemnity Policy pays a specified dollar amount per day of hospitalization directly to the insured.

Under which business-related use of Disability Income Insurance would the premiums be tax-deductible? A Business Overhead Expense Coverage B Disability coverage purchased to fund an entity purchase plan C Key Person Disability Income D Disability coverage purchased to fund a cross purchase plan

A Business Overhead Expense Coverage Business Overhead Expense Coverage is deductible as an ordinary business expense. Any benefits received would be taxable.

A person who purchases a Medicare Supplement policy cannot enroll in Medicare Part _________. A C B A C B D D

A C A person who purchases a Medicare Supplement policy cannot enroll in a Medicare Advantage Plan Part C.

Which of the following statements is NOT correct? A Commissions paid to agents for small employer policy sales may be varied due to the small employer's claims experience and group size B A health benefit plan cannot deny, exclude, or limit benefits for losses incurred more than 12 months following the effective date of an individual's coverage due to a preexisting condition C The Small Employer Health Insurance Reform Act does not apply to a health benefit plan issued to a small employer group through a bona fide association health plan D Each small employer carrier must actively market health benefit plan coverage to all eligible small employers in Oklahoma

A Commissions paid to agents for small employer policy sales may be varied due to the small employer's claims experience and group size

The insurer's underwriter may find information about an applicant's moral character, hobbies, work and general reputation from a: A Consumer Investigative Report B Attending Physician Statement C Agent's Report D Medical Examination

A Consumer Investigative Report

If a policy is written with unclear definitions, conditions and provisions which are hidden in the contract, and the insured files a law suit. In the court of law, the contract would be construed in favor of the insured because it is a: A Contract of adhesion B Contract of indemnity C Unilateral contract D Contract of utmost good faith

A Contract of adhesion This is called: 'Ambiguities in a Contract of Adhesion', which states that: any unclear or ambiguous language in the contract goes against the party that wrote the contract: The Insurance Company. Therefore, the insured wins the settlement since the insured had No input in the wording of the contract.

Which statement would be considered inaccurate regarding the underwriting of a group plan? A Contributory plans require 100% employee participation B The cost of a group policy is determined by the type, size, and average age of the group and claims experience with previous insurers C The corporate home office of the group normally is the group's address D The insurer can require a minimum percentage of the group to be enrolled to guard against adverse selection

A Contributory plans require 100% employee participation

Which provision in a health insurance plan is used to avoid overinsurance when a person is covered by more than one plan? A Coordination of Benefits B Schedule of Benefits C Extension of Benefits D Primary Care Coverage

A Coordination of Benefits

Which of the following is not a Metal plan category? A Copper B Bronze C Gold D Silver

A Copper The four Metal categories are bronze, silver, gold, and platinum.

A(n)__________ plan is when business partners buy life insurance policies on one another. A Cross Purchase B Industrial C Partnership D Entity

A Cross Purchase

With a Variable Life Policy, which of the following is guaranteed? A Death benefit B Dividends C Cash value D Investment returns

A Death benefit

All of the following are things a producer should do when meeting with the client after the policy has been issued, except: A Disclose the amount of commission earned on the sale B Review any endorsements and riders C Go over the benefits and ratings D Explain the policy to the applicant

A Disclose the amount of commission earned on the sale

Permitting individuals of the same class and equal life expectancy to be charged different rates for life insurance or annuities is an example of what type of unfair trade practice? A Discrimination B Prohibited underwriting C Boycott D Unfair claim practice

A Discrimination

Key Person Life Insurance is written for the benefit of the ______. A Employer B Employer's retirement plan C Employee's spouse D Employee

A Employer

Jamie has a $200,000 permanent policy and cannot continue making the premium payments. She still, however, wants the peace of mind of being covered for the same $200,000 in death benefit although it may be for an abbreviated period of time. The Nonforfeiture Option Jamie should choose is: A Extended Term B Reduced Paid-Up C One-Year Term D Paid-Up Additions

A Extended Term

All of the following plans allow participants to retain benefits amounts remaining at the end of the plan year for future use, except: A FSAs B MSAs C HRAs D HSAs

A FSAs

Regarding Medicare Part B, which of the following is not true? A For citizens over the age of 65, there is no additional premium or cost B Provides coverage for outpatient services C All recipients pay a monthly premium D It is optional coverage for those eligible for Part A

A For citizens over the age of 65, there is no additional premium or cost Part B - Medical Insurance (Physicians, Surgeons, and Outpatient expenses) is a voluntary program of government-subsidized insurance requiring participants to make premium payments.

If overdue premiums are paid during the __________ period, the policy will remain in effect. A Grace B Nonforfeiture C Loan D Extended premium paying

A Grace

All of the following are accurate statements, except: A Group insurance normally covers occupational injury or disease B In group insurance, the employer receives a Master Policy and each employee receives a Certificate of Insurance C The Coordination of Benefits provision is designed to help reduce overinsurance D In group insurance, the contract is between the employer and the insurer

A Group insurance normally covers occupational injury or disease

An insurance policy labeled _________ cannot be cancelled for any reason other than nonpayment of premium. A Guaranteed renewable B Free access C Guaranteed issue D Noncancellable

A Guaranteed renewable

What law provides the right of employees to continue health insurance coverage when changing employers by removing any restrictions against waiting periods and coverage in a new group health plan, as long as the employee has had creditable coverage? A HIPAA B PPACA C ERISA D COBRA

A HIPAA When covered under a group health plan, the Health Insurance Portability and Accountability Act (HIPAA) provides an employee and his/her dependents with the right to enrollment in a new employer's group health plan at the earliest possible moment when an employee begins new employment within 63 days of leaving the former group plan.

_______________ is the process of selection, classification and rating, and determining if someone is insurable. A Home office underwriting B Field underwriting C The agent's report D Completing the application

A Home office underwriting

Amy owns her own individual Medical Expense Policy. Which of the following is true about the taxation of her premiums and medical expenses? A If she itemizes deductions and her medical expenses, including premiums, exceed 10% of her adjusted gross income, the portion exceeding that amount may be deducted B In all cases, the premiums for Medical Expense policies are deductible, but expenses are not C Only unreimbursed medical expenses, excluding premiums, are deductible D Benefits she receives from her policy are taxable to the extent they exceed her premiums

A If she itemizes deductions and her medical expenses, including premiums, exceed 10% of her adjusted gross income, the portion exceeding that amount may be deducted

Failure to repay a loan or loan interest will void a life insurance policy: A If the total amount due equals or exceeds the policy's cash values B After the loan has been outstanding for more than 5 years C If interest rates increase by more than 3% in any 1 year D After the insurer calls in the loan with 30 days advance notice

A If the total amount due equals or exceeds the policy's cash values

Providing employment in connection with an insurance transaction is known as: A Inducement B Rebating C Misrepresentation D Defamation

A Inducement

Which of the following is true of coverage for Autism? A Insurers cannot terminate coverage due to an Autism diagnosis B An insurer can discriminate against individuals under the age of 18 who have been diagnosed with Autism C Autism coverage is not available D Insurers can terminate coverage due to an Autism diagnosis

A Insurers cannot terminate coverage due to an Autism diagnosis

An insured is covered for medical expense at work. A friend and the insured join the U.S. Army. How does this affect the insured's group medical insurance? A It ceases immediately when the insured is sworn in B It is coordinated with the military medical plan C It has no effect as long as the insured is not a pilot D It may be continued under COBRA for 18 months

A It ceases immediately when the insured is sworn in

For which of the following can the Commissioner revoke a license? A Knowingly accepting insurance business from an individual who is not licensed B Owing child support C Being accused of a felony D Accepting insurance business from a licensed individual

A Knowingly accepting insurance business from an individual who is not licensed

An Individual Retirement Account (IRA) may be funded with all of the following, except: A Life Insurance B Annuities C Certificates of Deposit (CDs) D Mutual Funds

A Life Insurance Life insurance does not meet the IRS qualifications for funding an IRA.

A program designed to provide increased assistance to those who are unable to pay for their medical needs is known as: A Medicaid B State Supplemental Payment Program C Supplemental Security Income D Medicare Part A

A Medicaid

How does Medicaid differ from Medicare? A Medicaid is a federal-state partnership providing health care benefits for low income persons B Medicaid is health insurance for persons who do not have access to group health insurance C Medicaid is only for persons over age 21 and under age 65 D Medicaid is optional coverage for Medicare beneficiaries

A Medicaid is a federal-state partnership providing health care benefits for low income persons Medicaid is a federal-state partnership that provides health care to persons whose incomes are under 138% (percentage dependent on Medicaid expansion) of the Federal Poverty Level.

All of the following are factors used in the calculation of health insurance premiums, except: A Mortality Table B Morbidity Table C Expense to administer the policy D Interest earnings

A Mortality Table

Which of the following is a limited form of medical expense coverage added to a disability income policy? A Non-disabling injury rider B Social insurance supplement rider C Additional monthly benefit rider D Hospital confinement rider

A Non-disabling injury rider A Non-Disabling Injury Rider does not pay disability income, but pays medical expenses related to an injury that does not result in total disability (emergency room, x-rays, durable medical equipment, etc.). It is a limited form of medical expense coverage added to a disability income policy.

____________ plans do not meet the requirements of federal law to be eligible for favorable tax treatment. A Non-qualified B Pension C ERISA D Qualified

A Non-qualified

Raymond owns an Accidental Death and Dismemberment Policy with a principal sum of $50,000, and a capital sum of $25,000. After owning the policy for several months, Raymond dies as the result of coronary artery disease. Lynn, his beneficiary, can expect to receive what amount of benefit from the policy? A None B $25,000 C $75,000 D $50,000

A None Lynn will receive no benefit from this policy since Raymond died of coronary artery disease, and not as the result of an accident.

Group health plans usually cover: A Nonoccupational injury or disease B Neither occupational nor nonoccupational injury disease C Occupational injury or disease D Both occupational and nonoccupational injury or disease

A Nonoccupational injury or disease

If the annuitant, now deceased, was receiving income from a pure life or straight life annuity, how much goes into the annuitant's estate for valuation? A Nothing B The cost basis and the remaining tax-deferred earnings C The tax-deferred earnings D The cost basis

A Nothing If the annuitant was receiving income from a pure life or straight life annuity, the annuity has no residual values at the annuitant's death and nothing goes into the annuitant's estate for valuation.

How often may a person perform a rollover from one IRA to another? A Once a year B Once each quarter C Once every 2 years D Every 6 months

A Once a year

In respect to Accident and Sickness Insurance advertising, all of the following are true, except: A Only a comparison of benefits is required when insurers advertise by comparisons of like products B An agent must include the full name of the insurer when advertising a certain type of policy C Insurers may include statistical information as long as it is accurate and the source is named D Insurers are accountable for the accuracy of statements used in any personal testimonials they utilize in the advertising of their products

A Only a comparison of benefits is required when insurers advertise by comparisons of like products

When an individual is covered by a three-tiered, consumer driven health plan, the second source or tier of payment usually comes from a/an: A Out-of-pocket funds B Flexible Spending Account C High Deductible Health Plan D Health Savings Account

A Out-of-pocket funds The Tier 1 source is usually a pre-tax plan, which may often cover less than the deductible of an associated High Deductible Health Plan. The participant covers such gaps with out-of-pocket funds.

For what type of provider are services covered in or out of a network by a combination of a medical expense plan and/or an HMO? A POS B PPO C ASO D MPP

A POS The question describes a POS (Point-of-Service) plan. POS plans were developed to include a larger number of providers than HMO plans.

All of the following are characteristics of a 401(k) plan, except: A Post retirement distributions are made federal income tax free B Employee contributions are made pre-tax C Employer contributions are not taxed in the year they are made D Balances grow tax deferred

A Post retirement distributions are made federal income tax free Because 401(k) accounts are funded with untaxed contributions, all distributions are fully taxable in the year received.

An insured owns a disability income policy that has a waiver of premium rider in the event they suffer a total disability. 5 years after the issuance of the policy, the insured suffers a disability and is unable to work for 18 months before returning to work. The rider has a 3-month waiting period. Which of the following best describes the benefits of the waiver of premium rider? A Premiums will be waived retroactively to the beginning of the disability B Since the disability was not permanent, no benefits are received from the rider C All premiums will be waived during the period of disability, except for the first 3 months D The first 3 months' premium waived

A Premiums will be waived retroactively to the beginning of the disability The insured would have had to have paid the first three months premium until he/she was on claim, then the company would have refunded those premiums and waived the rest of the premiums while he was still on claim.

HMOs usually require patients to select a _____________________ as the person who will oversee and direct their basic health care in most cases. A Primary Care Physician B Medical social worker C Insurance agent or broker D Care coordinator

A Primary Care Physician

Upon joining an HMO, the plan will require the subscriber to select a: A Primary Care Physician B Participating hospital C Out of network primary care physician D Specialty physician

A Primary Care Physician

Which of the following is the proper sequence of beneficiaries? A Primary, contingent, tertiary B Primary, tertiary, contingent C Estate, contingent, primary D Primary, estate, tertiary

A Primary, contingent, tertiary

Which of the following is NOT true regarding a group insurance plan? A Proof of insurability is required to be eligible B Premiums are determined based on the underwriting of the group as a whole C Group coverage is often available for dependents and eligible employees D The employer chooses the coverages

A Proof of insurability is required to be eligible

A person may not fund an HSA unless they also do which of these? A Purchase a High Deductible Health Plan B Designate up to $2500 of pre-tax income to be withheld for payment of medical expenses C Purchase basic health insurance through an Exchange D Fully fund their 401(k), 403(b), or Roth IRA

A Purchase a High Deductible Health Plan

The Unpaid Premiums Optional Uniform Provision allows an insurer to: A Reduce the amount of a claim payment by the premium due B Charge interest on past due premiums C Cancel the policy during the grace period D Charge the insured a credit charge if premiums are not paid

A Reduce the amount of a claim payment by the premium due An insurer can withhold unpaid premiums, to which it has a legal right, when paying a claim that has occurred during the grace period. Both the insurer and the insured are 'indemnified' in this manner.

Beth exercised an owner's option on a life policy to stop paying premiums but continue to be covered until she was age 100. Which Nonforfeiture Option did she choose? A Reduced Paid-Up B Paid-Up Option C Paid-Up Additions D Extended Term

A Reduced Paid-Up

Which of the following are ways that the insurer can issue disability income coverage for a substandard risk? A Reduced benefit, higher premiums, rider excluding coverage B COLA waiver, future purchase waiver, waiver of premium C Higher premium, higher benefit, shorter elimination period D Rated up in age, graded benefit, temporary lien

A Reduced benefit, higher premiums, rider excluding coverage

What type of disability income insurance is designed help a small business continue to make regular monthly payments on its long-term financial commitments in the event of the owner's disability? A Reducing term B Business overhead expense C Key employee D Buy-sell

A Reducing term Disability Reducing Term helps a small business that has long-term financial commitments requiring regular monthly payments to meet its obligations. The amount of the benefit remains the same monthly, but the benefit period reduces.

"Company expenses to issue and administer a policy include allof the following, except:" A Refund of unearned premium B Operating costs C Commissions paid to the producer D Employee salaries

A Refund of unearned premium

K owns a variable annuity with an assumed interest rate of 4%. If the actual performance of the separate account(s) is 4%, the effect on this month's income benefit check will be such that it: A Remains the Same B All Depends on the Separate Account(s) Selected C Becomes Lower D Becomes Higher

A Remains the Same If the actual return is lower than the AIR, the monthly annuity payment will be reduced. If the actual return is equal to the AIR, the monthly annuity payment will remain the same as the previous month. If the actual return is greater than the AIR, the monthly annuity payment will increase from the previous month.

The elimination period in a disability income insurance policy: A Serves as a time deductible before benefits are payable B Describes how long the policy must be in force before claims can be considered C Addresses where accidents and sicknesses must not occur in order for a claim to be payable D Defines which causes of loss are eliminated from potential claim payment

A Serves as a time deductible before benefits are payable

Under the Entire Contract provision, all of the following may be part of the agreement between the insured and the insurer, except: A Statements made to the applicant by the producer during the application process B A copy of the application C The policy D Any riders or endorsements

A Statements made to the applicant by the producer during the application process

The interest earned on dividends is: A Taxable B Tax-deferred C Nontaxable D Tax-deductible

A Taxable

Under COBRA, coverage for dependents of an employee may continue up to 36 months for any of the following events, except: A Termination of the employee B Divorce or legal separation between employee and spouse C Death of the employee D The employee's eligibility for Medicare benefits

A Termination of the employee

The term "usual, customary, and reasonable" refer to which of the following? A The average charge for a medical procedure, treatment, or service in a defined geographical area B The most commonly performed operations or treatments in a given territory C A non-physician's evaluation and approval of a medical procedure recommended by a patient's physician or surgeon D The standard accepted medical procedure for a given illness or injury

A The average charge for a medical procedure, treatment, or service in a defined geographical area

Which statement is true regarding taxation of health insurance? A The benefits received from a group Disability Income Policy paid entirely by the employer are fully taxable as income to the employee B The benefits received from a personally owned Disability Income Policy are subject to federal income taxes C The benefits received from a Major Medical Insurance Policy are usually subject to federal income tax D The benefits received from a group Accidental Death and Dismemberment Policy are taxable to the recipient

A The benefits received from a group Disability Income Policy paid entirely by the employer are fully taxable as income to the employee

A producer is not considered to be holding a license for the purpose of controlled business as long as: A The commissions do not exceed 25% of the aggregate commissions earned during any 12-month period B The commissions do not exceed 15% of the aggregate commissions earned during any 12-month period C The commissions do not exceed 50% of the aggregate commissions earned during any 12-month period D Not more than 25% of the total volume of premiums per year is derived from controlled business

A The commissions do not exceed 25% of the aggregate commissions earned during any 12-month period

Policy loan provisions include all of the following, EXCEPT: A The death benefit of a policy is automatically reduced when a loan is requested B Unpaid interest is added to the value of the loan C Interest is charged annually D Outstanding loans will be deducted from the face amount at time of claim

A The death benefit of a policy is automatically reduced when a loan is requested

If an application is submitted with a question left unanswered, which of the following should occur? A The insurer would require an answer before issuing a policy B The insurer would waive the question C The insurer would deny the application D The insurer would require an answer when a claim occurred

A The insurer would require an answer before issuing a policy

When a disability buy-sell is funded by the partnership, what is the tax liability? A The premiums are not deductible and the value of the benefit is not taxable as income B The premiums are not tax deductible and the value of the benefit is taxable as income C The premiums are tax deductible and the value of the benefit is not taxable D The premiums are tax deductible and the value of the benefit is taxable as income

A The premiums are not deductible and the value of the benefit is not taxable as income

Harry and Sally were equal partners in a catering business worth $400,000. They entered into a buy-sell agreement that provided funding whether one of them died or was disabled. The annual premium for each of the disability insurance policies was $2,000. All of the following statements are correct, except: A The premiums are tax deductible B Harry and Sally would receive the policy benefit, which each would use to buy out the disabled partner, on an income tax free basis C Harry and Sally are each respectively named as the beneficiary on the policy which each of them owns D Harry and Sally each own the policy on the other partner

A The premiums are tax deductible

An application for health insurance is completed by a producer and signed by the applicant. The applicant remembers information that needs to be added to the application before being submitted to the insurer and contacts the producer, who has returned to the office. Which of the following statements is correct? A The producer must meet with the applicant in person to update the information and have the applicant initial the changes B Once the application is signed, answers reported on the application cannot be changed C The applicant will have the opportunity to correct any information when the policy is delivered D The producer can make any changes necessary with verbal consent of the applicant

A The producer must meet with the applicant in person to update the information and have the applicant initial the changes

Premiums paid by employees for group health insurance are only deductible to the extent that ______________________. A They exceed 10% of adjusted gross income B They exceed the national average cost of health insurance C They exceed what the employer pays for the coverage D They are not offset by contributions to a FSA

A They exceed 10% of adjusted gross income

A Taft-Hartley Trust would be formed to provide health and welfare benefits to which of these employees? A Union-represented B Managerial C Part-time D Disabled

A Union-represented

All of the following will determine whether or not an IRA contribution is deductible, except: A Whether the IRA owner is over a specified age B Whether the IRA owner has gross income that exceeds a certain amount C Whether the IRA owner is a participant in an employer sponsored retirement plan D Whether the IRA owner chooses a Roth or a Traditional IRA

A Whether the IRA owner is over a specified age An individual's age does not determine whether or not a contribution is deductible. Age may determine whether a contribution can be made, but not if it is deductible. All other choices determine if the contribution is deductible or nondeductible.

Harry was hospitalized and in a coma for 6 months. When does proof of loss for this claim have to be submitted? A Within 1 year, unless he suffers legal incapacity B Within 2 years, covered under the contestable period C An executor would be appointed by the courts to handle the necessary paperwork D Anytime, since he was in a coma and obviously could not submit a claim

A Within 1 year, unless he suffers legal incapacity The Proof of Loss Provision (a Mandatory Uniform Provision) stipulates that the insured must provide proof of the loss within 90 days of the loss, or within in the shortest time possible, but not to exceed 1 year unless the insured suffers legal incapacity. Since Harry was in a coma for 6 months, it would not have been possible for him to file a claim within the 90-day time period.

Does the insured have the right to change the beneficiary designation of a health insurance policy? A Yes, unless the beneficiary is designated as irrevocable B Yes, the beneficiary designation is always revocable in health policies C No, the beneficiary designation in health policies is always irrevocable D No, only the insurer has that right in health policies

A Yes, unless the beneficiary is designated as irrevocable

An insured is covered under a major medical plan where she works. The plan has a $300 deductible, 80/20 co-insurance, and a $5,000 stop-loss including deductible. A severe injury is suffered and the total covered cost for treatment is $28,000. How much will the insurance company cover? A $22,160 B $23,000 C $28,000 D $5,000

B $23,000 The insured will pay $5,000 since this is the stop-loss in the contract. The insurance company will pay the balance of $23,000. The insurance company picks up 100% of the costs after the insured satisfies the deductible and co-insurance up to the total out of pocket amount of $5,000.

Jay receives an annual disability benefit of $10,000. His employer contributed 75% of the premium. How much of Jay's benefit is subject to income tax? A None B $7,500 C $10,000 D $2,500

B $7,500

One of your clients just reinstated his health insurance plan. When is coverage effective for sickness and accident? A Immediately for both accident and sickness B 10 days for sickness, and immediately for accidental injuries C 30 days for sickness, immediate coverage for accidents D 10 days for accident and 48 hours for sickness

B 10 days for sickness, and immediately for accidental injuries

Which of the following traditional whole life policies has the highest first-year annual premium, all other factors being equal? A 40-pay life B 10-pay life C 20-pay life D 30-pay life

B 10-pay life

The Social Security blackout period for surviving spouses begins when the youngest child reaches age ______, and ends when the surviving spouse reaches age ______. A 18/65 B 16/60 C 18/60 D 16/62

B 16/60

If enrolled in an accredited elementary or secondary school, a covered child can continue receiving Survivor Benefits up to what age? A 20 B 19 C 17 D 21

B 19

The 'time limit on certain defenses' generally terminates the insurance company's right to void a claim more than _________ years from the date of policy issue. A 1 B 2 C 10 D 5

B 2

The Standard Nonforfeiture Law does not apply to term of ___ years or less insurance, reinsurance, group insurance, pure endowment, annuity or reversionary annuity contracts. A 30 B 20 C 15 D 25

B 20

One of the changes to take effect following passage of the PPACA was to allow children to remain covered under a parent's policy to age: A 18 B 26 C 29 D 21

B 26

A Small Employer is defined as any person, firm, corporation, partnership, or association that is actively engaged in business and has ______ employees or less. A 2 B 50 C 100 D 20

B 50

A qualified Long-Term Care Policy may exclude losses incurred from preexisting conditions for no longer than ______ months from the effective date of coverage. A 3 B 6 C 12 D 8

B 6

What is the age that is used to determine when the owner of a traditional IRA must begin to take Required Minimum Distributions? A 62 B 70 1/2 C 60 D 65

B 70 1/2

Which of the following is correct regarding a Managing general Agent? A A Managing general Agent does not have authority to appoint and terminate producers for the insurer B A Managing general Agent is an individual, corporation or a partnership that is appointed as an independent contractor by one or more insurers, to supervise each insurer's business C A Managing general Agent is an employee of an insurer who supervises the insurer's business D A Managing general Agent is not appointed by an insurer

B A Managing general Agent is an individual, corporation or a partnership that is appointed as an independent contractor by one or more insurers, to supervise each insurer's business

In order to purchase a Medicare Supplement, an eligible individual usually must have Medicare Parts __________. A B and C B A and B C A and D D A and C

B A and B

A disability income policy may provide a benefit for loss of time from employment in which of these ways? A A flat benefit only B A flat benefit amount or a percentage of pretax income C A daily amount for each day hospitalized and a lesser amount for each day at home D A percentage of pretax income only

B A flat benefit amount or a percentage of pretax income

Which of the following best describes Third-Party Ownership? A A key employee buying a life insurance policy on him/herself B A policy owned by one person insuring the life of another person C A business partner buying a life insurance policy on him/herself D A policy owned by the insured

B A policy owned by one person insuring the life of another person

Part B of Medicare excludes which of the following medical expenses? A Clinical laboratory services B A regular dental checkup C Home health care D Outpatient hospital treatment

B A regular dental checkup

A limited lines producer is authorized to sell all of the following, except: A Crop Hail insurance B Accident and health C Travel accident D Credit insurance

B Accident and health

Timothy owns an individual A&H policy, and in the event of an accident, he is required to prove only that the injury itself is unforeseen and unintended. Tim's policy is based on which of the following definitions of accident? A Accidental Means B Accidental Bodily Injury C Accidental Dismemberment D Accidental Death

B Accidental Bodily Injury Tim's policy is based on Accidental Bodily Injury (or, Accidental Injury) as opposed to Accidental Means. Under the Accidental Means definition, both the cause and the result must be unintended and not under the control of the insured.

Which of the following is incorrect regarding the group underwriting process? A Evidence of insurability is not required since premiums are adjusted annually by evaluating the group and the claims experience B Adverse selection is not a concern for group contracts C The insurer's office location is not a cost factor D New employees usually become eligible to enroll after a waiting period

B Adverse selection is not a concern for group contracts

Which of the following establishes a cost basis in an annuity? A Tax deferred interest B After-tax contributions C Tax deferred gains D Pre-tax contributions

B After-tax contributions Cost basis is established with any after-tax premiums deposited into the annuity.

All of the following are true about riders, except: A Most riders are added at the time of policy issue B All riders are available free of charge and can be added at anytime without proof of insurability C Once a rider drops from the policy, the additional premium will also drop D Riders added after the policy has been issued usually require evidence of insurability

B All riders are available free of charge and can be added at anytime without proof of insurability

Which of the following are false regarding the Life and Health Insurance Guaranty Association? A It prevents financial loss to policyholders when an insurer becomes insolvent B An insurer has the option of becoming a member of the Association C The Association is not liable for more than $300,000 in benefits for life insurance and $500,000 for basic hospital, medical and surgical insurance D Other member insurers are assessed to provide money for the claims of an insolvent insurer

B An insurer has the option of becoming a member of the Association

Open enrollment periods are offered on a(n) ______ basis that allows individuals to enroll without evidence of insurability or to make changes. A Bi-annual B Annual C Quarterly D Semi-annual

B Annual

Which product, offered by insurers is specifically designed to allow an individual's savings to be distributed to him/her periodically over his/her entire life, regardless of how long he/she lives? A Participating Whole Life B Annuities C Universal Life Insurance D Variable Life Insurance

B Annuities

All of the following statements regarding a group Accidental Death and Dismemberment policy are incorrect, except: A The premiums paid by the employer are not deductible as a business expense to the employer B Any benefits received are not taxable to the recipient C The premiums paid by the employer are considered part of the employee's income D Accidental Death and Dismemberment Insurance is not available on a group basis, only on an individual basis

B Any benefits received are not taxable to the recipient

When may an employer deduct the premiums it pays for an employee's life insurance benefit? A An employer cannot ever deduct premiums it pays for an employee's life insurance benefit B As long as the business does not derive a direct benefit from the policy C If the business does not receive more than 50% of the death benefit D Employers can always deduct the premiums it pays for an employee's life insurance benefit

B As long as the business does not derive a direct benefit from the policy As long as the insurance death benefit is not payable to the employer when an employee dies, the premiums paid for the life insurance are deductible to the business.

In a long-term care policy transaction, when must the outline of coverage be provided to the applicant? A At the time of premium collection B At the time of initial solicitation and prior to the application C At the time of delivery D At the time of issuance

B At the time of initial solicitation and prior to the application

Which of the following terms best describes the maximum length of time that disability income benefits will be paid to the disabled insured? A Elimination period B Benefit period C Coverage period D Disability period

B Benefit period

What type of disability income insurance provides funds to cover business expenses when the business owner becomes disabled? A Buy-sell B Business overhead expense C Reducing term D Key employee

B Business overhead expense

Which of the following is not considered an advertisement? A Communications urging purchase of insurance B Communications not intended for dissemination to the public C A TV commercial from an insurer D Sales communications intended for dissemination to the public

B Communications not intended for dissemination to the public

Which type of insurance policy combines Basic Medical Expense Coverage with Major Medical Coverage? A Surgical Expense B Comprehensive Major Medical C Hospital Expense D Supplemental Major Medical

B Comprehensive Major Medical

Jasper owns a policy that combines the best features of Basic Medical Expense Plans and Major Medical Insurance into a single policy to give him the most complete hospital coverage. Jasper owns a: A Blanket Major Medical Policy B Comprehensive Major Medical Policy C Supplementary Major Medical Policy D Combination Major Medical Policy

B Comprehensive Major Medical Policy

If a premium is collected at the time of the application, the producer will issue a: A Contestable receipt B Conditional receipt C Sales receipt D Guaranteed receipt

B Conditional receipt The conditional receipt provides coverage at the time of application as long as the coverage is issued. If a loss occurs prior to the issuance of the policy, the insurer would have to prove the policy would not have been issued, or pay the claim.

In a universal life policy, the two adjustments usually made to the cash value account are: A Premiums and guaranteed interest are charged B Cost of insurance protection is charged and current interest is credited C Guaranteed interest is credited as long as the insurer has had a favorable investment return D Cost of insurance protection is credited and current interest is charged

B Cost of insurance protection is charged and current interest is credited

If the insurer issues a policy after receiving an application for health insurance in which preexisting conditions were inadvertently omitted, what would be the consequence to the insured's coverage if a preexisting condition caused a claim shortly after being issued? A The policy would be cancelled B Coverage would be as stipulated in the policy because the company issued the policy even though the question was left blank C The policy would be reissued D The policy would be sent back to underwriting for approval

B Coverage would be as stipulated in the policy because the company issued the policy even though the question was left blank If a policy is issued with questions unanswered, the contract will be interpreted as if the question had not been asked and is therefore waived by the insurer. However, if the insurer can demonstrate that an inadvertent omission is a material concealment, the policy may be voided, because intentional or unintentional concealment allows the insurer to void the policy.

Which of the following is true of credit insurance? A It is appropriate to offer any person a special advantage on any service not set out in a contract entered B Credit insurance is sold in connection with a credit contract with installment payments scheduled for less than 15 years C The debtor does not have the right to furnish the insurance either through the insurer of his/her choice or through assignment of an existing policy written on the life of the debtor D The person processing the indebtedness contract must inform the debtor of coverage criteria after completion of the contract

B Credit insurance is sold in connection with a credit contract with installment payments scheduled for less than 15 years

If a policy requires the payment of an additional premium for the continuation of coverage for a newborn, the insurer must be notified within 31 days of the ______. A Hospitalization date B Date of birth C First day of the month of birth D Policy date

B Date of birth

In which of the following plans does the company assume all of the investment risk? A Defined contribution B Defined benefit C Simplified Employee Pension (SEP) D Profit-sharing

B Defined benefit The company assumes the responsibility for making sure money will be available to fund a pension for retiring workers when a defined benefit plan is in place.

Employment-based plans are governed under which of the following federal acts? A COBRA B ERISA C FCRA D FICA

B ERISA

Under HIPAA, coverage may be nonrenewed for all of the following reasons, except: A Participation requirements not fulfilled B Frequency of claims C Noncompliance with plan provisions D Nonpayment of premium

B Frequency of claims

To be eligible for social security disability the insured worker must be: A Paralyzed B Fully insured C Partially disabled D Eligible for Workers' Compensation

B Fully insured

As long as the premium is paid, a Medigap policy is __________ renewable. A Optionally B Guaranteed C Partially D Conditionally

B Guaranteed

Sylvia is a participant in a Preferred Provider Organization and finds that if she opts to use a provider outside the network: A Her PPO will pay only if the circumstances for care were precipitated by an emergency B Her PPO will pay a reduced amount with Sylvia paying the balance C Her PPO will cover any charges in full D Her PPO will not pay at all

B Her PPO will pay a reduced amount with Sylvia paying the balance

Medicare benefit payments are made to the medical provider: A Only if the claim is being made under Part A B If the benefit has been assigned C If the provider is secondary D Only if the claim is being made under Part B

B If the benefit has been assigned Part A claim payments are made directly to the provider. Part B claim payments can be paid directly to the doctor or provider by assignment.

Cash values within an ordinary straight whole life insurance policy _______ over time. A Remain constant B Increase C Decrease D Vary

B Increase Cash values increase over time as premium is paid in and interest is reflected in the cash values shown in the policy's nonforfeiture table.

What is the requirement for inflation protection in an LTC policy? A Inflation protection must be purchased B Inflation protection must be offered C Inflation protection cannot be sold to persons over age 75 D Inflation protection is only available to persons over age 75

B Inflation protection must be offered

All of the following are exclusions under an LTC policy, except: A Chemical dependency on one's own prescription drugs B Injury arising due to committing a felony C Nervous or mental disorders that have no demonstrable organic cause D Rest cures

B Injury arising due to committing a felony

Taxation applies to any ________ on the cash value paid out as a withdrawal of a Universal Life policy. A Dividend B Interest C Refund of premium D Capital gain

B Interest

How may the premium in a guaranteed renewable policy be increased? A It may be increased according to the increased risk of the insured's health status B It may be increased for all similarly situated insureds based on age C It may be increased only in relation to the number of claims paid in the past year D It may not be increased at all

B It may be increased for all similarly situated insureds based on age A guaranteed renewable policy must be renewed upon payment of the current premium. If the insurer wants to raise the premium for an individual insured, it must increase the premium for all insureds that are "similarly situated" - persons who are the same age, all persons in the same state, all persons who own the same policy by "form number". Premium increases cannot be the result of an individual's claims history or a change health status.

Which statement is incorrect concerning an Accidental Death and Dismemberment Policy? A It usually provides that the death benefit (principal sum) will also be paid if the insured loses sight in both eyes or loses any two limbs B It provides a specified payment for a specified injury C It may be written separately or added to a Health/Disability or Life Policy as a rider D A smaller amount (capital sum) may be paid for the loss of sight in one eye or the loss of one limb

B It provides a specified payment for a specified injury

A policy that only covers cancer is considered a: A Hospital Income plan B Limited sickness plan C Blanket Insurance plan D AD&D plan

B Limited sickness plan Critical Illness, Dread Disease, or Limited Sickness Plans provide specific benefits for a specified sickness, such as Cancer Plans and Heart Disease Plans.

In an Accidental Death & Dismemberment policy, the capital sum provides benefits for which of the following losses? A Death from accidental causes B Loss of limb or eyesight from accidental causes C Death from all causes D Loss of limbs or eyesight from a disease, such as diabetes

B Loss of limb or eyesight from accidental causes The capital sum in an Accidental Death and Dismemberment policy will pay benefits for dismemberment - loss of a limb/eyesight/hearing only in losses due to an accident. The death benefit payable is referred to as the principal sum not the capital sum.

Which of the following is not among the powers and duties of the Commissioner? A Enforcing taxation of insurers B Maintain an ownership in insurance companies as needed to enforce the insurance laws C Act to protect the best interests of the public and insurers D Conducting investigations, examinations, and hearings associated with administering the insurance laws

B Maintain an ownership in insurance companies as needed to enforce the insurance laws The Commissioner may not have any ownership in insurance companies.

Replacement of health or disability insurance generally requires that the new policy must do which of these? A Promise to increase the benefits provided without an increase in premium B Materially improve the insured's position in all or nearly all respects C Increase the premium and reduce the benefits provided D Lower the insured's annual premium by a minimum of 5%

B Materially improve the insured's position in all or nearly all respects

With _______, the patient must pay 20% of covered charges plus the deductible. A None of the answers listed B Medicare Part B C A Medicare Supplement D Medicaid

B Medicare Part B

A Medicare beneficiary enrolled in a Medicare Advantage plan may have any of these other insurance plans except which one? A Life insurance with cash value in excess of $1500 B Medicare supplement C Long-term care D Disability income

B Medicare supplement

Which of the following correctly describes the practice of Twisting? A Entering into any agreement to commit an act of boycott, coercion, or intimidation resulting in an unreasonable restraint of the business of insurance B Misleading and convincing an insured to surrender, lapse or exchange an existing policy for a different one, to the insured's detriment C Representing to the applicant that a specific coverage or product is required by law in conjunction with the purchase of insurance when such coverage or product is not required D Offering anything of value to a client that is not already a part of the policy, as an incentive to purchase insurance

B Misleading and convincing an insured to surrender, lapse or exchange an existing policy for a different one, to the insured's detriment

Which Act was implemented in order to protect consumers from questionable Medicare Supplement Policy marketing practices? A HIPAA B NAIC Model Law C OASDHI D COBRA

B NAIC Model Law

A replacing insurer must assume liability for paying ongoing existing claims under which law? A HIPAA B No-Loss, No-Gain C ERISA D COBRA

B No-Loss, No-Gain

When an individual pays the full cost of disability income insurance, a disabled employee's benefit will be ____________________. A Taxable in part, up to 60% of the employee's pretax wage B Nontaxable in full, regardless of the employee's wage C Nontaxable up to 60% of the employee's pretax wage DTaxable in full, regardless of the employee's wage

B Nontaxable in full, regardless of the employee's wage

Any employee-paid group life insurance premiums are __________. A Tax-deferred B Not tax-deductible C Tax-deductible D Tax-exempt

B Not tax-deductible Any employee-paid group life insurance premiums are not tax-deductible.

What is the additional premium cost to have the automatic premium loan provision included in a permanent policy? A 10% of the face amount B Nothing C It varies by insurer and type of policy D 10% of the base policy premium

B Nothing

Bill is a retired military officer suffering from complications caused by Agent Orange exposure during his military service. He is now hospitalized in the local Veterans Administration Hospital and has incurred $54,510 in medical expenses to date. The private health insurance he now owns will likely pay: A One-half ($27,255) and the government will pay the rest B Nothing, as the loss would likely be excluded under his private health insurance C The full $54,510 or the policy limit, whichever is lesser D One-fourth ($13,627.50) and the government will pay the remaining three-fourths

B Nothing, as the loss would likely be excluded under his private health insurance The private policy that Bill now owns would pay nothing because the care he received was in a governmental facility, which is a standard exclusion under his private policy.

A procedure used by dental insurance carriers to determine the benefit to be paid is known as: A Pretreatment Examination B Precertification C Preliminary Evaluation D Least Coverage Provision

B Precertification

Barry has just been hired by OPQ Corporation and finds that he cannot enroll for coverage under OPQ's group health insurance plan for 30 days. This 30-day period is known as a: A Elimination Period B Probationary Period C Policy Period D Deductible

B Probationary Period

Which statement is false regarding Social Security Disability benefits? A To collect disability benefits, an employee must be unable to engage in any kind of gainful work because of a medically determined physical or mental condition that has lasted, or is expected to last, at least 12 months or to result in death B Qualification for benefits is contingent only upon the employee's having 45 work credits and being unable to perform his or her usual job C The benefit for a qualifying disabled worker is a percentage of the PIA D The waiting period is 5 months

B Qualification for benefits is contingent only upon the employee's having 45 work credits and being unable to perform his or her usual job To be 'fully' insured for Social Security Disability benefits, an individual must have 40 quarters of credit and the disability must last 12 months, or be expected to result in death. In addition to satisfying the 5-month waiting period, the person must be unable to perform 'any substantial gainful activity.'

Which of the following is not an example of a cost containment measure? A Precertification for cancer therapy B Replacement C Mandatory second opinion D Utilization review

B Replacement Mandatory second opinions, utilization review and precertification are all considered cost containment measures. Replacement can apply to any policy that is cancelled when a new policy is issued and is not specific to managed care plans.

A limited pay life policy: A Start off with small premium payments and then they increase, but only up to a specified limit B Requires premium payments for a specified number of years or until a specified age is reached C Is offered in limited face amounts only D Can only be purchased by individuals on a specified limited income

B Requires premium payments for a specified number of years or until a specified age is reached

Which of the following is not a factor in premium determination? A Mortality B Reserves C Expenses D Interest

B Reserves

Sara applies for a $100,000 30 year level term life insurance policy. The producer quoted her a price of $750 annually if issued as applied for. She wants to make sure that the policy premiums are taken care of just in case she has a total disability. The policy is issued but the premium is now $825. What is the most likely reason why the overall premium increased? A Sara just increased the face amount of the policy and the premiums reflect that B Sara now has added a waiver of premium rider, which requires an additional premium payment C Sara was most likely issued a policy type other than applied for D The policy was not issued at the underwriting class quoted

B Sara now has added a waiver of premium rider, which requires an additional premium payment

Blue Cross and Blue Shield have traditionally offered benefits under the form of: A Compensation contracts B Service contracts C Indemnity contracts D Reimbursement contracts

B Service contracts

_________ Options allow for the distribution of the life insurance death benefit to the named beneficiary or contract owner, as the situation warrants. A Dividend B Settlement C Accumulation D Nonforfeiture

B Settlement

Which of the following would always be considered a Modified Endowment Contract? A Limited Pay Whole Life B Single Premium Whole Life C Variable Whole Life D Straight or Continuous Pay Whole Life

B Single Premium Whole Life Single Premium Whole Life would always be a MEC as it would always fail the 7-Pay Test.

All of the following causes of death are covered under an AD&D policy, except: A Explosion B Stroke C Murder D Auto accident

B Stroke Death must be accidental to be covered under an AD&D policy. A stroke is considered a sickness.

Which of the following insurance policies may be written in conjunction with a Basic Medical Expense Coverage and utilizes a Corridor Deductible after the basic plan benefits have been exhausted? A Hospital Expense B Supplementary Major Medical C Surgical Expense D Comprehensive Major Medical

B Supplementary Major Medical

Which policy utilizes a Corridor Deductible after Basic Medical Expense Coverage benefits have been exhausted and before Major Medical benefits begin? A Surgical Expense B Supplementary Major Medical C Comprehensive Major Medical D Hospital Expense

B Supplementary Major Medical

Which one of the following is the initial source of underwriting information? A The medical exam B The application C The attending physician statement D The investigative consumer report

B The application The application is the starting point for underwriting. It is considered a vital document because it is usually attached to and made part of the contract. It also contains the signatures of the agent, the insured, and the owner if different from the insured. It is usually the application that determines which other sources may be needed.

How are employee FICA taxes collected? A The employer makes a one-time payment at the end of the tax year including extensions B The employer withholds the employee's tax and pays it along with the employer's portion C The employee mails it in to the Social Security Administration monthly D The employee mails it in to the IRS quarterly

B The employer withholds the employee's tax and pays it along with the employer's portion

A 67-year-old individual works for a large company and plans on working until at least age 70. The individual signed up for Medicare at age 65 and the employer has a group health insurance plan. If a loss occurs, how will the claim be handled? A The employer group health plan will cover it all B The group health plan will be the primary payor while Medicare will be the secondary payor C Medicare will be the primary payor while the group health plan will be the secondary payor D Medicare will cover it all

B The group health plan will be the primary payor while Medicare will be the secondary payor Since the individual is currently employed, over 65, and the company has a health insurance plan, the primary payor will be the company health insurance plan. Medicare will take on the secondary payor role.

When an insured is discharged from the military, what happens to health insurance coverage that was in place prior to being called up for active military service? A The insured will have to go through the normal waiting period as if it were a reinstatement B The insured will be permitted to resume coverage and premiums without any waiting periods C The insured will have to apply for new coverage, but can obtain a military discount D The insured will be subject to service-related pre-existing condition exclusions

B The insured will be permitted to resume coverage and premiums without any waiting periods Under the military suspension provision, individual plans may suspend coverage (and premium) during active military service. When the insured is no longer serving, these individuals will be permitted to resume coverage and premiums without any waiting periods.

What is "defined" in a defined contribution plan? A The percentage or amount of an employee's distributions from the plan B The percentage or amount of an employee's deposits to the plan C The percentage of the employee's income provided as life insurance to the employee D The employer's percentage or amount of distribution to an employee from the plan

B The percentage or amount of an employee's deposits to the plan In a defined contribution plan, the employee chooses how much of his/her pay to contribute to the plan each payroll period. The employer deducts that amount from the employee's pay before income tax is calculated and remits that amount to the plan's custodian for the benefit of the employee.

If a child is covered under more than one group health insurance plan how is it determined which carrier is primary? A The younger parent's plan will become primary B The plan covering the parent whose birthday occurs first in the calendar year will be the children's primary coverage C The parent whose date of birth is closest to the end of the year determines which is primary D The date of birth of the child that is closest to either parent becomes primary

B The plan covering the parent whose birthday occurs first in the calendar year will be the children's primary coverage

All of the following are false statements regarding group disability plans, except: A Benefits are not available to individuals employed beyond age 65 B The plans are typically written on a non-occupational basis C The plans usually cover work-related disabilities D There is individual medical underwriting

B The plans are typically written on a non-occupational basis

Which of the following best describes the consideration on the part of an insurer? A The acceptance of the contract B The promise to pay in the event of a covered claim C The purpose of the contract must be legal D The offer of the contract

B The promise to pay in the event of a covered claim

Which provision states that the insurance company must pay claims immediately? A Payment of Claims B Time of Payment of Claims C Legal Actions D Relation of Earnings to Insurance

B Time of Payment of Claims

What can an employee do in order to obtain coverage when they have a preexisting condition and find that their job was just eliminated? A Apply for Medicaid benefits B Utilize the group plan's conversion privilege C Find an experienced agent and apply to insurance companies that specialize in insuring high risk applicants D Apply for Medicare benefits

B Utilize the group plan's conversion privilege The conversion privilege allows eligible employees the option to convert from the group plan into an individual plan without having to prove insurability so long as they act within 31 days.

What is the purpose of nonforfeiture values? A It is a way for the insurance company to charge extra for this optional benefit B Without them, any cash values would be retained by the insurer when the policy lapses due to non-payment of premium C Federal insurance law requires them D The NAIC mandates nonforfeiture values

B Without them, any cash values would be retained by the insurer when the policy lapses due to non-payment of premium

What is the maximum annual contribution to an FSA, which is allowed by law? A 10% of AGI B 20% C $2,550 D There is no limit

C $2,550

L is no longer eligible for the employer's $50,000 group life insurance plan. L dies 28 days later without sending in the required conversion paperwork. What will their beneficiaries receive? A Nothing, since L is no longer in the group plan B $50,000 C $50,000, less any premiums due D Nothing, since L has not paid the required premium

C $50,000, less any premiums due The conversion period is also a grace period. In the event a terminated or ineligible employee dies during the conversion period, whether they were going to elect individual coverage or not, a death claim will be paid by the group policy, less the premium due for the benefit.

When funds are transferred from one qualified plan to the trustee of an IRA or another plan, there is a _______ day requirement. A 90 B 30 C 0 D 60

C 0

An insured purchases a disability income policy with a 90-day elimination period. If a disability lasts 100 days, the insured would be entitled to receive benefits for: A 100 days B 90 days C 10 days D 190 days

C 10 days

COBRA applies to employers with ______ or more employees. A 15 B 30 C 20 D 10

C 20

The insurer must guarantee the policyholder at least a _____-day right to return the policy after delivery for a full refund of premium. A 31 B 30 C 20 D 21

C 20

For an employee to be eligible to participate in an employer's group health insurance plan, he/she must be considered full-time and work a minimum of _____ hours as established by the Affordable Care Act. A 50 B 35 C 30 D 40

C 30

What happens if a traditional IRA account owner fails to start taking required minimum distributions on time or for the proper amount? A Withholdings go from 20% to 30% for each and every future withdrawal B The tax rate that normally applies doubles C 50% tax penalty on the excess accumulation D Investment choices get restricted until the account is back in compliance

C 50% tax penalty on the excess accumulation

In a Medicare Supplement replacement sale, if the original policy has been in force for less than ______ months, the replacing insurer shall waive any time periods applicable to preexisting conditions to the extent that they have already been satisfied under the original policy. A 12 B 9 C 6 D 3

C 6

How much time after a qualifying event has occurred and notice is given of their right to continue insurance does an employee or dependent have to elect continuation of the group health plan under COBRA? A 90 days B 36 months C 60 days D 18 months

C 60 days

Under the Legal Actions Mandatory Uniform Provision, an insured must wait at least _____ days after providing proof of loss before he or she can take legal action against the insurer. A 180 days B 45 days C 60 days D 90 days

C 60 days

The Bronze plan covers _______ of medical expenses. A 70% B 80% C 60% D 50%

C 60% The Bronze plan covers 60%. A catastrophic plan covers 50%; and a silver plan covers 70%.

Originally, Medicare was for U.S. citizens age _______ and over. A 55 B 62 C 65 D 60

C 65 An amendment to the Social Security Act by Congress in 1965 created the Medicare program that was designed primarily for our citizens age 65 or over and was expanded to cover those persons of any age diagnosed with End Stage Renal Disease (ESRD) or Lou Gehrig's disease (ALS) who are currently insured under Social Security.

It's the duty of the insurer receiving a proof of loss to submit a written offer of settlement or rejection of the claim to the insured within _____ days of receipt of that proof of loss. A 60 B 45 C 90 D 30

C 90

All of the following are scenarios in which an insured would automatically qualify for total disability benefits whether or not they could actually continue working EXCEPT: A A small business owner contracts a throat disease that causes the inability to speak B A truck driver is involved in an accident and loses both legs C A dancer slips and falls and sprains an ankle D A drummer in a band loses hearing

C A dancer slips and falls and sprains an ankle Presumptive disability includes loss of use of any two limbs, total and permanent blindness, and loss of speech or hearing.

Which of the following is false? A A producer is any individual, general partnership, general corporation, or limited liability company that negotiates insurance on behalf of an insurer B Anyone practicing as a producer, consultant, customer service representative, limited insurance agent, managing general agent, surplus lines broker, fraternal benefit society representative, or life insurance solicitor must be properly licensed C A full-time non-elected government employee, other than a teacher, may not apply for any insurance license D A full-time non-elected government employee may apply for a life and health insurance license

C A full-time non-elected government employee, other than a teacher, may not apply for any insurance license

Which of the following statements is false? A A high-deductible health plan is usually issued with a health savings account (HSA) B A high-deductible health plan is a consumer-driven health plan C A low-deductible health plan is usually issued with a health savings account (HSA) D A health savings account (HSA) is exempt from the requirement to offer coverage for state-mandated health benefits

C A low-deductible health plan is usually issued with a health savings account (HSA)

A Tax Sheltered Annuity may be established and funded by which of the following? A A professional law firm B Johnson Accountants, Inc. C A not-for-profit community hospital association D XYZ's Catering, a small unincorporated business

C A not-for-profit community hospital association 403(b) plans are established for nonprofit organizations.

Which of the following statements is true regarding the Standard Nonforfeiture Law? A The Standard Nonforfeiture Law applies to group life insurance B The Standard Nonforfeiture Law applies to term insurance C A specified paid-up nonforfeiture benefit becomes effective unless the policyowner elects another option within 60 days after the due date of the premium in default D The insurer may not defer the payment of any cash surrender value after the demand with surrender of the policy

C A specified paid-up nonforfeiture benefit becomes effective unless the policyowner elects another option within 60 days after the due date of the premium in default

In the event a policy is delivered by an agent to the insured, and the premium payment is to be collected at the time of this delivery, normally what else must the agent obtain to make the delivery complete? A An affidavit from the applicant B Postage and handling fees C A statement of good health D Additional payment reflecting lost interest

C A statement of good health

The period of time over which a single sum or periodic deposits grow within an annuity is referred to as the: A Benefit Period B Savings Period C Accumulation Period D Growth Period

C Accumulation Period

Insurable interest for life insurance is necessary only at the time of: A Death B Policy delivery C Application D Policy renewal

C Application

Concerning COBRA, which of the following is correct? A Provides employees and dependents 36 months of continuation of coverage after termination of employment B Provides 36 months of continuation of coverage for disabled participants C Applies to employers with 20 or more employees D Provides 18 months of continuation of coverage for dependents of Medicare-eligible employees

C Applies to employers with 20 or more employees

A stay at home father wants to open up an IRA. What is required in order for him to do so? A Be under the age of 59 1/2 B Be a first time homeowner C Be married to a spouse that has earned income D Have the money available to afford to do so

C Be married to a spouse that has earned income

All of the following signatures would be required on a life insurance application for an adult, except that of the: A Applicant B Producer C Beneficiary D Insured

C Beneficiary

What does it mean if dental benefits are scheduled? A Two scheduled visits to the dentist are allowed per year B A dentist must get insurance company pre-approval of any and all procedures ahead of time C Benefits are limited to specified maximums per procedure D A dentist must get insurance company pre-approval of all visits

C Benefits are limited to specified maximums per procedure

It is determined that Charles, an agent representing the Timely Payment Insurance Company, has misled the consuming public in an advertisement for one of the company's products. As a result of such action, which of the following is true? A Only the Timely Payment Insurance Company will be held accountable B Only Charles' immediate supervisor will be held accountable C Both Charles and the Timely Payment Insurance Company will be held accountable D Only Charles will be held accountable

C Both Charles and the Timely Payment Insurance Company will be held accountable

Which of the following is FALSE regarding Settlement Options? A A policyowner may change a previously chosen settlement option before the insured dies B Settlement Options are used when the owner wants to convert a lump sum death benefit to an income stream for the beneficiary C Both principal and interest received as a result of a settlement option are taxed as ordinary income to the beneficiary, as received D If the policyowner has chosen an option prior to death, the beneficiary cannot change it at time of claim

C Both principal and interest received as a result of a settlement option are taxed as ordinary income to the beneficiary, as received

Annuities and life insurance are similar in all of the following ways, except: A Both provide owners with all of the contractual rights B Both provide some form of death benefit C Both use the same term to identify the person whose life is the subject of the contract D Both may have a named beneficiary

C Both use the same term to identify the person whose life is the subject of the contract

Before telephoning a prospect for the first time, a producer must do which of the following? A Send a letter to the prospect advising them that a follow-up phone call will be coming B Obtain certification under the TCPA to be able to call any phone number in America C Check the company and national Do Not Call lists to be sure the phone number is not restricted D Make sure they have memorized the company-approved telephone solicitation script

C Check the company and national Do Not Call lists to be sure the phone number is not restricted The TCPA requires that no unsolicited phone calls be made to any phone number listed in the national Do Not Call list managed by the Federal Trade Commission (the list must not be more than 31 days old).

In order to receive a stock dividend, the policyowner must own ____________. A Variable universal life B Equity indexed life C Common stock of the insurer D Variable life

C Common stock of the insurer

Which of the following is NOT a required benefit for health insurance? A Diabetes coverage B Maternity coverage C Cosmetic surgery D Mammography screening

C Cosmetic surgery

Basic health care expense plans are frequently referred to as "first dollar" plans. This means _______________________. A The insurance company pays the first dollar of every claim, and the insured pays the rest B The insured pays the first dollar of every claim, and the insurer pays 80% after that C Coverage is provided, often at 100% of the expense, from the first day of the plan year, up to a stated maximum benefit and without a deductible D Beneficiaries receive the first dollar of refund when an insured dies and passes the claim to the insurance company

C Coverage is provided, often at 100% of the expense, from the first day of the plan year, up to a stated maximum benefit and without a deductible

Which of the following plans is commonly known as a pension? A Profit-sharing B Keogh C Defined benefit D 401(k)

C Defined benefit

An annuity held within a traditional IRA ____________. A Makes the tax-deferral aspect of the annuity tax-free B Generates tax credits upon withdrawal C Does not provide any additional tax-deferral benefit D Allows for withdrawals prior to age 59 1/2 without any tax penalty

C Does not provide any additional tax-deferral benefit An annuity already has a tax-deferred element to it. An annuity inside a traditional IRA does not provide any additional tax-deferral benefit; however, the annuity may provide other benefits that other investments cannot.

All of the following are correct regarding employer group health insurance plan's eligibility requirements EXCEPT: A Employees must sign up during the enrollment period to avoid providing proof of insurability B Employees must be considered full-time and actively at work C Employees can enroll at any time without restrictions D Newly hired employees must usually satisfy a probationary period before they can enroll in the plan

C Employees can enroll at any time without restrictions

All of the following are characteristics of a qualified retirement plan, EXCEPT: A Employee contributions are either pretax or tax deductible B Employer contributions are immediately tax deductible to the employer C Employers in private industry are required to establish pension plans D The penalty for premature distributions may be waived for death, disability, qualified education costs, medical expenses and first -time homebuyers

C Employers in private industry are required to establish pension plans Qualified retirement plans receive favorable tax treatment, such as deductible premiums to the employer, pretax or deductible premiums to the employee, and waived penalties for the listed situations. ERISA is a federal law that sets minimum standards for employers who establish pension plans in private industry, but does not require employers to establish a plan.

Which of the following statements is false with respect to continuing education requirements? A A limited lines producer is not required to comply with the continuing education requirements B A license may terminate if the licensee fails to comply with the continuing education requirements and has not been granted an extension of time to comply C Excess hours awarded in a compliance period may not be carried over to another compliance period D A newly licensed producer completes the credit hours 2 years after his/her license was issued

C Excess hours awarded in a compliance period may not be carried over to another compliance period

Home Health Care benefits under a LTC Policy may be limited or excluded by: A Limiting benefits to services provided by Medicare-certified providers B Requiring a need for care in a nursing home C Excluding benefits for conditions caused by war or acts of war D Requiring the existence of an acute condition

C Excluding benefits for conditions caused by war or acts of war Home Health Care benefits may be excluded when a condition results from war or acts of war.

Right to Examine is the same as: A Elimination Period B Waiting Period C Free Look Period D Probationary Period

C Free Look Period Right to Examine is another term for the Free Look Period. Owner's (or Insured's) Right of Rescission is one more term that means the same thing. A policy returned during the Free Look period is void, no claims are payable, and all premiums paid are refunded.

In which ONE of the following situations would an insurance company most likely use an impairment rider? A S is looking to buy a disability income policy, but is unemployed B F has cancer and is looking to buy a cancer only policy to help with the cost of treatment C G is looking to obtain a health insurance policy, but is concerned about a current heart condition D T, age 70, wants to buy an individual disability income policy, but is retired and receiving home health care

C G is looking to obtain a health insurance policy, but is concerned about a current heart condition An impairment rider excludes coverage for a specific ailment or condition that otherwise would be covered, so the applicant is still able to obtain coverage for other health care needs.

All of the following statements regarding a Modified Endowment Contract are correct, EXCEPT: A Distributions on gains withdrawn from a MEC prior to age 59 1/2 are subject to a 10% penalty in addition to taxation B A policy that fails the 7-pay test will be deemed a MEC C If a policy is deemed a MEC, the owner has 7 years to receive a refund of excess premiums and remove the MEC status D Distributions received from a MEC are subject to a LIFO tax treatment

C If a policy is deemed a MEC, the owner has 7 years to receive a refund of excess premiums and remove the MEC status A policy that does not pass the 7-Pay Test will be deemed a Modified Endowment Contract for the life of the contract.

Which of the following statements is false with respect to paying claims? A Insurers must respond within 30 days to any pertinent written communication from a claimant B Producers and insurers must respond to any inquiry from the Commissioner within 30 days from the date of the inquiry C Insurers must respond within 90 days to any pertinent written communication from a claimant D An insurer must settle or reject a claim within 90 days of receiving proof of loss

C Insurers must respond within 90 days to any pertinent written communication from a claimant

Which of the following distributions in a life insurance policy is taxable? A Withdrawal of cost basis B Policy loans C Interest paid on a death benefit settlement option D Cash dividend from a participating policy

C Interest paid on a death benefit settlement option

All of the following are alternatives an insurer may have when asked to insure a substandard risk, EXCEPT: A Limit the coverages of the policy B Attach a rider to the policy excluding certain coverages or conditions C Issue the policy with a waiting period after which the insurer may cancel the policy D Charge a higher than standard premium

C Issue the policy with a waiting period after which the insurer may cancel the policy If a policy is issued substandard, the insurer may charge a higher premium, limit the coverage, or attach an impairment rider which excludes specific conditions in the policy.

What is a High Deductible Health Plan? A It is a tax-favored savings account established by an employer for each covered employee B It is a health plan offered by large companies who are trying to minimize the growing cost of providing employee health insurance C It is a health plan which requires the insured to absorb a relatively high deductible in exchange for a greatly reduced out-of pocket-premium D It is a tax-favored Health Reimbursement Account established by an employer for its highly-compensated executives

C It is a health plan which requires the insured to absorb a relatively high deductible in exchange for a greatly reduced out-of pocket-premium A High Deductible Health Plan is designed for those who are proactive about managing their health care expenses. By opting for this type of plan the premium savings can be substantial. If an insured stays healthy they also save out of pocket costs for health care such as for office visits, prescriptions, medical tests, etc. These savings can be used to fund a Health Savings Account.

All of the following are TRUE about the Automatic Premium Loan (APL) Provision, except: A It must be elected by the policyowner B It can be cancelled at any time by the policyowner C It is available on any type of life insurance policy D It becomes effective, if elected, at the end of the grace period

C It is available on any type of life insurance policy

What is the benefit of a credit disability insurance plan? A It prevents foreclosure on a person's home in the event of any disability lasting more than one year B It automatically pays 100% of the balance of a person's debt if they become permanently disabled C It makes the minimum monthly payment on a person's debt for a stated period of time D It waives the repayment of credit card debt during the entire time a person remains totally disabled

C It makes the minimum monthly payment on a person's debt for a stated period of time

Which of the following is correct concerning an LTC policy? A It may provide coverage for only skilled nursing care and not any lower levels of care B A policy may be canceled or nonrenewed on the basis of age C It may define a preexisting condition as a condition for which advice or treatment was recommended or received within 6 months of the effective date of coverage D A new waiting period may be established when existing coverage is converted or replaced by another policy

C It may define a preexisting condition as a condition for which advice or treatment was recommended or received within 6 months of the effective date of coverage

The optional guaranteed purchase option rider allows the insured to purchase additional coverage in all of the following situations, except: A Marriage B Reaching a specified age or date C Job change D Birth of a child

C Job change The Guaranteed Purchase Option (Guaranteed Insurability, Future Increase) Rider guarantees that on specified dates, ages, or occurrences, such as marriage, birth of a child, etc., the insured may purchase additional monthly benefits, if income justifies it, without proof of insurability. Rates are based on attained age.

In those instances in which the death of a valued employee could cause financial hardship for a company, the company might acquire additional funds through which type of coverage? A Business Reimbursement B Preferred Insured C Key Person D Employer-Employee Cross Purchase

C Key Person

Withdrawals from a non-qualified annuity that is not part of an annuitization are taxed on which of the following methods? A Weighted average B Cost basis identification C Last-in, first-out basis (LIFO) D First-in, last-out basis (FIFO)

C Last-in, first-out basis (LIFO)

What is the easiest and best way to assure that the life insurance policy's death proceeds don't end up in probate court process? A Make sure the client has a will that is current and in an easily accessible location B Name the estate as beneficiary C List a primary and contingent beneficiary by their full name and relationship to the insured D Ascertain that the client has a trust that is filed with the County court

C List a primary and contingent beneficiary by their full name and relationship to the insured

Instead of electing to annuitize the annuity, what is another common option chosen? A Selling the annuity in the secondary market place B Choosing a Period Certain C Lump sum distribution D Electing a Fixed Amount

C Lump sum distribution The annuitant has the option of cashing out the annuity in a lump sum instead of electing to receive a stream of income.

The _________ was created in order to alert insurer home office underwriters of errors, omissions, or misrepresentations made on insurance applications. A Consumer Investigative Report B The agent's report C MIB D Attending Physician's Statement

C MIB

All of the following are individual underwriting factors, EXCEPT: A Age B Gender C Marital status D Tobacco use

C Marital status Individual underwriting factors include age, gender, tobacco use, occupations and hobbies, physical condition, moral hazard, health history, and the plan applied for.

The benefits received from which of the following personal policies are received tax-free? A Medical expense insurance only B Medical expense insurance and disability income insurance C Medical expense insurance, long-term care insurance, and disability income insurance D Medical expense insurance and long-term care insurance

C Medical expense insurance, long-term care insurance, and disability income insurance

Which of the following statements is not true? A Medicare Part A does not pay for the first three units of blood needed in a year B Medicare Part A is premium-free for most persons covered by Social Security C Medicare Part A pays for outpatient hospital expenses such as Emergency Room D Lifetime reserve days under Medicare Part A are not renewable

C Medicare Part A pays for outpatient hospital expenses such as Emergency Room Medicare Part A only pays inpatient hospital expenses and, under certain circumstances, will also pay for skilled nursing care, home health care, and hospice care.

When employers who self-fund their employee benefits form a larger group in order to offer health insurance benefits to each employer's workers, it is called a (an): A Premium Discount Plan B Insurance Alliance C Multiple Employer Welfare Association (MEWA) D Trade Association

C Multiple Employer Welfare Association (MEWA) A MEWA allows larger employers that self-fund employee benefits to form a group to reduce the cost of providing those benefits. A MEWA provides economy of scale, as would a Multiple Employer Trust (MET) for smaller employers.

With regard to examinations by the Commissioner, the Commissioner: A May, but is not required to examine insurance companies B Must conduct a financial examination of an insurer at least once every 3 years C Must conduct a financial examination of an insurer at least once every 5 years D Must conduct a financial examination of an insurer at least once every 10 years

C Must conduct a financial examination of an insurer at least once every 5 years

All disability policies cover ___________________________ disabilities, which are those occurring outside work. A Occupational B Noncontributory C Nonoccupational D Contributory

C Nonoccupational

F has a $100,000 face amount term life policy for which F paid $10,000 in premium to date. F dies and the benefit is paid out to G, the beneficiary. What amount of the death benefit received is taxable as income to G? A $90,000 B $50,000 C Nothing D $100,000

C Nothing Lump sum death proceeds are not taxable as income to a named beneficiary.

In Disability Income underwriting, the single most important rating factor from an underwriting standpoint is the applicant's: A Health B Gender C Occupation D Finances

C Occupation

When underwriting group life, the underwriter treats the group as if it were: A Two groups, with all the males in one group and all the females in the other B A substandard risk C One individual D A number of separate individuals

C One individual

Angela's health policy was considered a limited insurance policy because it: A Contained exclusions for certain types of losses B Only covered Angela and not any of her family members C Only covered specific losses named in the policy for limited dollar amounts D Only covered loss of income and not long-term care

C Only covered specific losses named in the policy for limited dollar amounts A limited policy, as opposed to a comprehensive policy, only covers specific named conditions for a limited dollar amount. The comprehensive policy covers all conditions that are neither excluded, nor specifically limited, up to the general policy limits.

HMOs are established as either ________, which means the doctor can work with anyone, including HMO members, or ________, which means the doctor can only work with HMO members. A Staff model, group model B Open group, specified group C Open panel, closed panel D Variable group, fixed group

C Open panel, closed panel

All of the following types of dental treatment are found in a dental insurance plan EXCEPT: A Prosthodontics B Endodontics C Orthotics D Periodontics

C Orthotics Dental treatments available in dental insurance plans include: restorative, oral surgery, Endodontics, Periodontics, Prosthodontics, and orthodontics.

Which of the following is not provided under Part A of Medicare? A Home Health Care B Post-hospital Skilled Nursing Facility Care C Outpatient Medical Treatment D Hospice Care

C Outpatient Medical Treatment

A Business Overhead Expense policy, as a form of disability insurance, provides payments for all of the following except _________________________. A Employee wages B Taxes, utilities, rent C Owner's income D Raw materials used to manufacture goods sold

C Owner's income

All of the following are coverages provided under a Basic Hospital Expense Policy, except: A Board B Semi-private room C Physician/Surgeon expenses D Miscellaneous hospital expenses

C Physician/Surgeon expenses

The __________ has the right to change the premium mode. A Revocable beneficiary B Irrevocable beneficiary C Policyowner D Insured

C Policyowner

If an insured pays a premium that is lower than others that are in the same class, this insured is considered to be rated as? A Substandard B Reduced C Preferred D Standard

C Preferred

Recurrent disability: A Protects an insured who is unable to perform one or more duties of any occupation B Requires an individual to meet the definition of Social Security disability before any benefits are payable C Protects an insured who becomes disabled for the same loss and does not have to meet a new waiting period D Requires an individual to be unable to perform all duties of any occupation

C Protects an insured who becomes disabled for the same loss and does not have to meet a new waiting period

An insured took out a disability income policy while working in a low hazardous occupation. When filing a claim for disability income benefits, after a job related accidental injury, the insurance company discovered the insured changed jobs 2 years prior to the loss. The new job would have been classified as more hazardous. The insurance company will most likely: A Reduce the benefit payment dollar for dollar to account for the premium underpayment B Pay no benefit since the insured failed to inform the insurance company on a timely basis of the change in occupation C Reduce the benefit to an amount the actual premium paid would have purchased under the proper job classification D Pay the benefit as contracted for since the policy is over two years old

C Reduce the benefit to an amount the actual premium paid would have purchased under the proper job classification

A firm with 50 employees replaces its existing group health plan. With regard to ongoing existing claims, the replacing insurer will be: A Required to keep paying them under the Dual Choice Provision B Allowed to deny claims over 60 days old under ERISA C Required to continue paying them under the No Loss-No Gain law D Required to stop paying them under COBRA

C Required to continue paying them under the No Loss-No Gain law The No Loss-No Gain law (a.k.a. the Hold Harmless Agreement) establishes mandatory risk transfer.

Which of the following terms means that the policyowner can change the beneficiary designation at any time and for any reason? A Per capita B Irrevocable C Revocable D Per stirpes

C Revocable

In a Universal Life policy, the minimum separation between the cash value and the death benefit is called the _______. A The cash value B The earned interest C Risk corridor D The MEC limit

C Risk corridor

A third party administrator is utilized in which of the following plans? A Fully insured plans B Commercial insurance plans C Self-funded plans D HMOs

C Self-funded plans

Which of the following policies would be deemed a MEC? A 10-pay Whole Life B Universal Life C Single Premium Whole Life D Variable Universal Life

C Single Premium Whole Life Since a single premium life insurance policy clearly does not pass the 7-pay test, it will automatically be deemed a MEC.

All of the following are used as the primary insurance policy for the insured, except: A Medicare B TRICARE Standard C TRICARE for Life D TRICARE Prime

C TRICARE for Life TRICARE for life is like a Medicare Supplement, so it is secondary to Medicare. All of the other plans are designed to be primary insurers.

All of the following statements about the future increase option rider are true EXCEPT: A Additional coverage obtained will be at premium rates based on the insured's attained age B To guard against overinsurance the insurer will limit that amount of additional coverage that can be applied for on each option date C The additional coverage is available at each option date regardless of the insured's current earned income D It enables an insured to purchase additional disability insurance protection, regardless of insurability, at specified future dates

C The additional coverage is available at each option date regardless of the insured's current earned income The insured's current earned income must warrant the additional coverage applied for on the option date otherwise it will not be issued. This is to guard against overinsurance.

All of the following regarding credit life are true, except: A The form of coverage is normally decreasing term insurance B Usually the creditor pays the premium C The coverage is on the life of the debtor D It can be either in the form of individual or group coverage

C The coverage is on the life of the debtor Usually the individual debtor pays the premium.

With regard to examinations, which of the following statements is NOT correct? A The Commissioner may initiate actions or proceedings pursuant to an examination B The Commissioner may examine, as often as the Commissioner deems advisable, the records of any insurance agent, solicitor, broker, general agent, adjuster, or insurer representative C The expense of examination of an insurer or of any person is paid by the Department D The Commissioner must report to the Governor annually regarding examinations of insurers

C The expense of examination of an insurer or of any person is paid by the Department

Who pays for any reports or Medical Exams required as part of the underwriting process for insurance? A The insured B The policyowner C The insurance company D The producer

C The insurance company

When an accident and health policy is terminated, how are covered expenses that were incurred while the policy was still in force handled? A The insurer is no longer liable for paying those expenses B The state guaranty fund pays for those expenses C The insurer must pay for those expenses D The insurer is not liable for those expenses, but must refund the premium for the period during which they were incurred

C The insurer must pay for those expenses

If an insured changes occupations and the new occupation is in a higher risk class than the former occupation, what does the change of occupation provision allow the insurance company to do in the event a disability claim is presented, but the insured failed to inform the insurer of the change? A The insurer may deny the claim due to misrepresentation B The insurer may first collect the past due higher premium before approving the claim C The insurer will reduce the benefit proportionally in relation to the actual premium paid based on the higher risk classification D The insurer must pay the claim according to the contract, as stated in the insuring clause

C The insurer will reduce the benefit proportionally in relation to the actual premium paid based on the higher risk classification

An individual is approved for a health insurance policy effective March 1. On March 4, the insured breaks his arm playing basketball with some friends, is treated at the local emergency room, and submits a bill for $2500 to his insurance company. On March 9, the insured decides to cancel the insurance and requests a refund of the $3000 annual premium he has paid. What will the insurance company do? A The company will send a short rate refund because the insured requested the cancellation B The company will only refund $500 because it is liable for his $2,500 claim C The insurer will refund the insured's $3,000 and has no responsibility to pay his claim D The insurer will not cancel the policy because the insured has already filed a claim

C The insurer will refund the insured's $3,000 and has no responsibility to pay his claim A policy cancelled during the free look period is void from the beginning, and no claims are payable. The Insured must receive a full refund of the premium he paid, and must also retain liability for 100% of the expense for his broken arm.

Which of the following are incorrect regarding suitability standards for LTC insurance? A Suitability standards must be used to determine if the purchase of LTC insurance is appropriate for the needs of the applicant B An insurer must train its agents in the use of its suitability standards C The producer must not focus on the consumer's ability to pay for long term care insurance or the consumer's existing insurance, but rather focus on the consumer's goals and needs for LTC D An insurer must maintain a copy of its suitability standards and make them available for inspection upon request by the Commissioner

C The producer must not focus on the consumer's ability to pay for long term care insurance or the consumer's existing insurance, but rather focus on the consumer's goals and needs for LTC Agents must address the consumer's ability to pay for LTC insurance, as well as address on the consumer's goals and needs for long-term care and the consumer's existing insurance.

What advantage do persons have when applying for a Medicare Supplement insurance plan at the same time they are first eligible for Medicare? A They will be subject to preexisting condition waiting periods, higher premiums, and exclusions B They will be issued noncancellable policies C They cannot be declined for the insurance D They will be accepted at preferred rates even if declared substandard by underwriting

C They cannot be declined for the insurance An applicant may not be declined for insurance when applying for a Medicare Supplement insurance policy within the first 6 months after enrolling in Medicare Part B for the first time.

Which of the following is not a core benefit in a Medicare Supplement policy? A Coinsurance amounts payable under Part B B Up to 365 days of hospital charges after Medicare benefits run out C Up to 365 days of long-term care expenses after three days of hospitalization D The first three units of blood administered in a calendar year

C Up to 365 days of long-term care expenses after three days of hospitalization Basic (or Core) Benefits in Medicare Supplement insurance do not include coverage for LTC expenses.

Certain disability and health care insurance products may be subject to specific advertising regulations. In general, insurance producers should do which of these? A Duplicate ads of other agents seen in newspapers or magazines, changing only the name, address, and phone number for their agency B Avoid all advertising since it is costly and does not often produce consistent results C Use company-provided advertisements for each product they wish to market D Create and use their own product-specific advertising

C Use company-provided advertisements for each product they wish to market

Benefit payments made on a ____________ basis are not scheduled, but are based on the average fee charged by all doctors in a given geographical area. A Pre-paid B Reimbursement C Usual, customary, and reasonable (UCR) D Fee-for-service

C Usual, customary, and reasonable (UCR)

Franchise plans are also known as: A Small group plans B McGroup plans C Wholesale plans D Mini-group plans

C Wholesale plans

According to the Proof of Loss provision, how long does an insured have, under normal circumstances, to furnish the insurer with evidence of a claim? A Within 30 days of the loss B Within 45 days of the loss C Within 90 days of the loss D Within 60 days of the loss

C Within 90 days of the loss

All of the following are possible business uses of Disability Income Insurance, except: A Buy-Sell B Key Employee Insurance C Workers' Compensation D Business Overhead Expense

C Workers' Compensation

What is the insured's responsibility with regard to notifying the insurance company of a loss under a disability policy? A Notice of claim must be filed not less than 60 days nor more than 1 year following the loss B It is up to the insured's doctor or the hospital to notify the insurance company of a claim C Notice of a claim may be filed at any time within one year of the loss D Notice of claim must be filed within 20 days of the loss, or as soon as possible

D Notice of claim must be filed within 20 days of the loss, or as soon as possible Unless reasonably prevented from doing so, an insured must notify the insurance company of a claim in writing within 20 days of the loss. In practice, the insured's physician or the hospital makes the notification for the insured, but it remains the responsibility of the insured.

K has a loan of $5,000 outstanding against her $25,000 traditional whole life policy. If K dies, how much will her beneficiaries receive? A $5,000 B $30,000 C $25,000 D $20,000

D $20,000

Nathan is insured under a group disability plan which requires that he pay 1/3 of the premium. Nathan is currently drawing a $6,000 monthly benefit from the plan. How much of the $6,000 is subject to income tax? A Zero B $6,000 C $2,000 D $4,000

D $4,000 Since the employer pays 2/3 of the monthly premium, then 2/3 of the monthly benefit ($4,000) would be taxable as income to Nathan.

Gloria needs to use her annuity as a long-term savings plan rather than as a short-term tax shelter, otherwise she will incur a ____% penalty tax against any taxable withdrawals prior to age 59 1/2. A 20% B 5% C 15% D 10%

D 10%

In noncontributory group health plans, how many eligible employees must be covered by the plan? A At least 50% B 75% C At least 90% D 100%

D 100%

Notice of claim is required within _____ days of loss. A 90 B 10 C 15 D 20

D 20 Under the Notice of Claim Provision (a Mandatory Uniform Provision), the insured is required to notify the insurer, in writing, within 20 days of any loss.

A Medicare Supplement Policy must include, as a core benefit, Medicare Part B coinsurance in the amount of _______. A 15% B 10% C 25% D 20%

D 20%

COBRA is a federal law requiring employers with _____ or more employees to provide the option of continuing the employee's existing health coverage for dependents for up to _____ months following qualifying events. A 15, 36 B 25, 45 C 20, 18 D 20, 36

D 20, 36

To be considered terminally ill, federal law defines a terminal illness as one which is expected to result in the person's death within how many months? A 36 B 12 C 6 D 24

D 24 Federal law establishes 24 months as a person's maximum life expectancy to be defined as terminally ill. For the activation of an accelerated death benefit rider, and for the purpose of limiting such claims, insurance companies often define terminal illness as one which would result in death within 12 months.

Which of the following is a typical benefit period for a group short-term disability benefit? A To age 65 B 5 years C 2 years D 52 weeks

D 52 weeks Short-Term Disability Income plans are characterized by maximum benefits for periods of rather short duration, such as 13, 26, or 52 weeks.

Which of the following would likely be treated as a common exclusion found in major medical policies? A A retired commercial airline pilot receiving medical care B A college student who is seriously injured in an unintentional accident and needs physical therapy C The spouse of an honorably discharged Navy veteran who visits their primary care physician D A U.S. citizen, who owns and resides in a home in Costa Rica, needs an operation

D A U.S. citizen, who owns and resides in a home in Costa Rica, needs an operation

A Hospital Indemnity Plan pays for: A Prescription drugs administered in the hospital B Costs associated with emergency room treatment after a deductible and coinsurance amount have been met C Usual, reasonable, and customary charges based on the geographic location of where the services were performed D A daily hospital benefit on a daily limit as stated in the policy

D A daily hospital benefit on a daily limit as stated in the policy Hospital Income or Indemnity pays directly to the insured a specified dollar amount per day during hospitalization. Payment is based solely on the number of days the insured is hospitalized. It pays the daily amount stated in the policy.

Which of the following statements about Section 1035 transactions is TRUE? A A 1035 allows an annuity to be exchanged for life insurance B Any surrender charges satisfied on the old policy carry over into the new policy C All surrender charges are waived on any existing policy D A new application is required when moving into a new life insurance policy

D A new application is required when moving into a new life insurance policy If an existing policy has a surrender charge, it is still applied. The new policy requires evidence of insurability, and new surrender charges will apply to the new policy if it has them.

Which of the following persons may contribute to an HR-10 Keogh Plan? A A corporate executive B An unemployed person C An employee of the YMCA D A self-employed musician

D A self-employed musician An HR-10 Keogh plan is designed to provide unincorporated self-employed individuals the opportunity to fund retirement in a tax-advantaged method.

Which of the following is correct regarding a temporary license? A The duration of a temporary license may not exceed 80 days B A temporary license may be issued for up to 180 days after successfully completing the licensing examination C A temporary license may not be issued to an employee of a business entity D A temporary license may be issued to the surviving spouse of a disabled or deceased producer

D A temporary license may be issued to the surviving spouse of a disabled or deceased producer

A typical hospital indemnity insurance plan provides payment of benefits in which of the following ways? A In an amount equal to the insured's copay or coinsurance amounts B As reimbursement for necessary medical expenses paid by the insured C According to a written schedule of benefits for common procedures and treatments D According to a daily or monthly benefit amount without regard to actual medical expenses

D According to a daily or monthly benefit amount without regard to actual medical expenses Hospital indemnity plans provide stated cash benefits for each day an insured is confined in an acute care hospital. Benefits may be increased when the insured is confined in a specialized unit such as intensive care ("ICU") or direct observation ("DOU").

Experience rating utilizes _______ in determining the rate the insurer will charge for group coverage in each year of coverage. A The plan sponsor's credit rating B Credit rating of all participants C Actual loss experience of everyone in that zip code D Actual loss experience of the group

D Actual loss experience of the group

All of the following are transactions that qualify as a 1035 exchange, except: A A traditional whole life policy into a universal life policy B A variable annuity into a fixed annuity C An equity indexed annuity into a variable annuity D An equity indexed annuity into a variable universal life insurance policy

D An equity indexed annuity into a variable universal life insurance policy

Group long-term disability benefits are paid for: A 5 years B 2 years C Up to age 65 D As long as the policy specifies

D As long as the policy specifies While this coverage is often characterized by benefit periods of 2 years, 5 years, to age 65, or lifetime, the best answer to this question is based on the specifications of the policy.

Some traditional whole life policies offer a(n) __________ feature to keep the policy in force if there are sufficient cash values to do so. A Bank loan B Collateral C Cash surrender D Automatic premium loan

D Automatic premium loan

What type of disability income insurance pays a lump sum enabling certain businesses to cover the cost of purchasing a disabled business owner's interest in the business? A Business overhead expense B Reducing term C Key employee D Business disability buyout

D Business disability buyout

Rank the following renewability provisions in order from least favorable to most favorable in terms of benefit to an insured: A Guaranteed renewable, optionally renewable, conditionally renewable B Guaranteed renewable, noncancellable, cancellable C Noncancellable, guaranteed renewable, optionally renewable D Cancellable, conditionally renewable, guaranteed renewable

D Cancellable, conditionally renewable, guaranteed renewable The renewability provisions in order from lowest to highest in terms of benefit to an insured/policyowner are: cancellable/nonrenewable, optionally renewable, conditionally renewable, guaranteed renewable, and noncancellable.

All of the following are required uniform provisions in individual health insurance policies EXCEPT: A Entire contract B Reinstatement C Grace period D Change of occupation

D Change of occupation

Which of the following is a Managed Care Provision used by insurers to monitor hospital stays? A Prospective Review B Precertification C Utilization Review D Concurrent Review

D Concurrent Review Once an insured is admitted to the hospital, the insurer monitors the insured's hospital stay to make certain that everything is proceeding on schedule through the Concurrent Review Provision.

Health Savings Accounts and Health Reimbursement Arrangements are both types of what form of health insurance? A Employer-sponsored group health plans B Flexible spending arrangements C Individual and Group Medical IRAs D Consumer-driven health plans

D Consumer-driven health plans HSAs and HRAs are two of the more popular Consumer-driven health plan options available in America. HSAs allow individuals to set aside their own money on a pre-tax basis for the later payment of health care expenses (employers can also contribute). HSAs can be either individual or group plans. HRAs are only group plans and are funded exclusively with employer contributions.

What benefit does COBRA provide to employees when an employee is terminated? A Continuation of life and health insurance if an employee quits or is fired or laid-off B Continuation of health insurance at the employee's expense for up to 36 months C Continuation of health insurance at the employer's expense for up to 29 months D Continuation of health insurance at the employee's expense for up to 18 months

D Continuation of health insurance at the employee's expense for up to 18 months In the event an employee is terminated for any reason other than gross misconduct, COBRA provides for continuation of the group health plan for the employee and his/her dependents for up to 18 months (29 months if a person is disabled at the time of a qualifying event). The employee can be required to pay up to 102% of the cost of the insurance. Life insurance is not covered under COBRA.

A Roth IRA is unique for which of the following reasons? A Contributions are tax deductible and distributions are taxable B Contributions are tax deductible and distributions are nontaxable C Contributions are nondeductible and distributions are taxable D Contributions are nondeductible and distributions are nontaxable

D Contributions are nondeductible and distributions are nontaxable Roth retirement plans are funded with after-tax (nondeductible) money. Under current tax law, distributions are received tax-free, including all gains.

Which of the following statements is false with respect to credit life insurance? A Insurance protection may not extend more than 15 days beyond the final date of debt retirement B The policy must be delivered no later than 30 days after the insurance commences C The debtor has the right to furnish the insurance either through the insurer of his/her choice or through assignment of an existing policy written on the life of the debtor D Credit insurance is sold in connection with a credit contract with installment payments scheduled for any number of years

D Credit insurance is sold in connection with a credit contract with installment payments scheduled for any number of years

The Social Security Survivor Benefit is based on the Primary Insurance Amount of the: A Beneficiary B Recipient C Survivor D Deceased

D Deceased

When a policy is mailed to an insured by an insurer, it is considered to be: A Issued B Purchased C Rated D Delivered

D Delivered A policy may be delivered by registered or certified mail with a signed receipt of delivery. 'Constructive delivery' occurs when the insurer places the policy with the delivery service and no longer has physical custody of the policy.

An insured may find it more difficult to qualify for benefits, but will enjoy a lower premium, when a more restrictive definition of _________ is found in a Disability Income policy. A Presumptive B Benefit C Rehabilitation D Disability

D Disability

All of the following are common exclusions found in dental insurance plans EXCEPT: A Cosmetic procedures that is not necessary for sound dental health B Expenses for oral hygiene instructions and plaque control programs C Coverage for teeth that are missing at the time coverage takes effect D Emergency dental treatment

D Emergency dental treatment While emergency dental treatment is covered it can be limited in benefit amount if treatment is obtained outside the plan's service area.

All of the following regarding employer group life insurance are true, except: A Employer-paid premiums do not constitute taxable income to the employee unless the death benefit exceeds $50,000 B Premiums paid by an employer are tax-deductible to the business as an ordinary and necessary business expense C Death benefit proceeds paid to an employee's named beneficiary are received income tax-free D Employee-paid premiums are tax-deductible to the employee

D Employee-paid premiums are tax-deductible to the employee Premiums paid by an employee are not eligible for a tax deduction.

All of the following are true regarding ERISA qualified plans, except: A The plan must be IRS approved B A vesting schedule must be established C The plan must benefit employees and beneficiaries D Employers must establish a pension plan

D Employers must establish a pension plan Establishing a corporate pension plan is optional; however, if one is established it must meet the ERISA requirements in order to qualify for favorable tax treatment.

The Minimum Benefit Standards under a qualified LTC policy include all of the following, except: A Every LTC policy must offer optional inflation protection to offset the increased costs of care B Every LTC policy must include basic policy requirements in the policy provisions C An Outline of Coverage must be delivered to an applicant on the initial solicitation and prior to the presentation of the application form D Every LTC policy must be issued as noncancellable

D Every LTC policy must be issued as noncancellable

For which of the following may any funds remaining at year-end not be rolled over to the next year? A Health Savings Account B Individual Retirement Account C Medical Savings Account D Flexible Spending Account

D Flexible Spending Account

In Life Insurance, a Children's Rider covers a newborn at 14 days of age. In Health Insurance, a newborn is covered: A 3 months after birth B 48 hours after birth C 72 hours after birth D From the moment of birth

D From the moment of birth

What is the purpose of a respite care benefit in a Long-Term Care policy? A Provides care for a person who is terminally ill B Covers the cost of insurance when a person is disabled C Covers care in an adult day care facility D Gives a primary care giver a break

D Gives a primary care giver a break

Newborn children are covered under health insurance plans beginning ___________. A On the 31st day following birth B On the 14th day following birth C On the 15th day following birth D Immediately at birth and for at least 31 days

D Immediately at birth and for at least 31 days Newborn children are automatically covered during the first 31 days following their birth. To continue coverage under a group or individual policy, the primary insured/subscriber must formally apply for coverage for the child before 31 days have elapsed and pay any additional premium required. The child cannot be declined for insurance at that time.

The Modified Endowment Contract (MEC) rules were put into place because: A Too many consumers were being sold life insurance when they thought they were buying annuities B Life insurance companies needed to become more competitive with other financial institutions C The federal government needed a new source of tax revenue D Individuals were overfunding life insurance policies and using them as tax-free investment vehicles instead of a way to protect survivors against the financial cost of one's death

D Individuals were overfunding life insurance policies and using them as tax-free investment vehicles instead of a way to protect survivors against the financial cost of one's death Prior to 1988, individuals were using life insurance policies in place of investment vehicles to avoid paying taxes.

Which of the following manufactures and sells insurance coverage in the form of insurance policies or contracts of insurance? A Insurance agents B Applicants/insureds C Insurance agencies D Insurance companies

D Insurance companies

What is the purpose of a probationary period in a disability income policy? A It allows the insurance company to avoid all claims made in the first 10-30 days of the policy B It allows the employer to fire the employee up to 90 days after being hired without liability for any disability which may have occurred C It allows the insurance company to avoid any claims due to accidental causes in the first few days of the policy D It allows the insurance company to avoid illness claims made in the first 10-30 days of the policy

D It allows the insurance company to avoid illness claims made in the first 10-30 days of the policy

All of the following are differences between a PPO plan and an HMO, EXCEPT: A Freedom to choose any service provider B Use of a Primary Care Physician C Providers charge a discounted fee negotiated in advance D It is a managed care plan

D It is a managed care plan

Which is the best description of a Limited Accident Policy? A It only provides coverage for a limited time after an accident B It provides coverage for any type of accident, but not sickness C It is limited in geographical scope (i.e., only in the state where it was written) D It provides specific benefits for specific injuries from specific causes

D It provides specific benefits for specific injuries from specific causes

Martha's Disability Income policy contains a definition of 'Presumptive Disability'. Each of the following situations would meet this definition, except: A Loss of hearing B Loss of speech C Loss of sight D Loss of a finger

D Loss of a finger Presumptive Disability involves the loss of two or more limbs, not the loss of a finger.

Medical exams are requested in all of the following situations, except: A Insured's advanced age B Past health history C High amounts of coverage D Low amount of premium

D Low amount of premium

A(n) _________________ is issued to the sponsor of the group, and employees receive an outline of coverage or other summary of benefits, which offers information about the plan's major benefits and principal exclusions. A Individual policy B Certificate of insurance C Certificate of authority D Master policy

D Master policy

Which of the following is not a government-sponsored plan of health care? A Medicaid B Medicare C Social Security disability insurance D Medicare Supplement

D Medicare Supplement Medicare Supplement plans are available from commercial insurance companies and are not government-sponsored.

ERISA requires that those who establish qualified plans must meet certain ___________standards. A Ethical B Maximum C Voluntary D Minimum

D Minimum

Michelle's corporation chose a high-deductible health plan (HDHP) because it: A Needed one in order to offer its 1,000 employees an FSA B Needed an HDHP to coordinate with the MSA it intended to establish for its 700 full time employees C Was concerned about covering catastrophic costs, not the cost of preventative medical treatments D Needed an HDHP to coordinate with the HSA they intended to offer its 700 full time employees

D Needed an HDHP to coordinate with the HSA they intended to offer its 700 full time employees All such plans cover preventative costs, and HDHPs are not needed to establish an FSA. As for MSAs, they specifically for small business and the self-employed. HSAs are the only plan that meet the criteria of the question.

An aunt and uncle purchase a life insurance policy on their niece, for whom they are the legal guardians. Both guardians perish in an accident some time later. Who receives the death benefit? A The contingent beneficiary B The niece's estate C The primary beneficiary D No claim is paid out

D No claim is paid out

A company owned by stockholders that does NOT pay dividends to policyholders is considered: A Participating B Noncontributory C Contributory D Nonparticipating

D Nonparticipating

When the employer pays some or all of the cost of medical insurance for its employees, the annual amount of each employee's claims is _______________________. A Taxable to the employer B Taxable to the insurance company C Deductible to the employer D Not taxable to the employee

D Not taxable to the employee Medical insurance premiums paid by the insured's employer are deductible to the employer and not taxable to the employee. The benefits paid are not taxable to the employee because the employee did not derive any income benefit. Taxes, if any, would be paid by the service provider.

One of the most important underwriting factors in disability income insurance is ________. A Marital status B Pre-tax (Gross) Income C Number of quarters paid into social security D Occupation

D Occupation

Which of the following elimination periods found in a disability income policy will result in the highest premium? A One year B 90 days C 60 days D One month

D One month

When the annuitant dies during the accumulation phase of the annuity, the beneficiary receiving the death benefit must pay income tax on any gain from the policy at _________ tax rates. A Short-term capital gain B Alternative Minimum Tax (AMT) C Long-term capital gain D Ordinary income

D Ordinary income

Which of the following statements is NOT correct concerning policy loans? A Fixed interest on a policy loan may not exceed 8% per annum B If adjustable interest rate is used, the maximum rate for each policy must be determined at regular intervals at least once every 12 months C Insurers may establish adjustable interest rates for policy loans D Policy loans can be made after the policy has been in effect for 6 months

D Policy loans can be made after the policy has been in effect for 6 months 3 full years of policy premiums must be paid before a loan can be made.

The following statement is true concerning the income received from an individually owned disability income policy: A Premiums are tax sheltered, Income benefit taxable B Premiums are tax sheltered, Income benefit not taxable C Premiums paid with after tax dollars, Income benefit taxable D Premiums paid with after tax dollars, Income benefit not taxable

D Premiums paid with after tax dollars, Income benefit not taxable

Steve Borden, a kindergarten teacher, was in a boating accident and lost both legs. Although he will continue to teach, his disability policy pays full benefits because of this provision: A Partial Disability B Residual Disability C Total Disability D Presumptive Disability

D Presumptive Disability

Which of the following terms and definitions do not match? A Consideration Clause - states the amount and frequency of the premium B Entire Contract Clause - includes policy, provisions, a copy of the application, and any riders, waivers, or endorsements C Payment of Claims - paid to the policyowner unless otherwise specified or there is an assignment of benefits D Probationary Period - found in disability insurance policies before benefits are payable after a loss occurs

D Probationary Period - found in disability insurance policies before benefits are payable after a loss occurs Probationary Period - specified period of time before coverage goes into effect for pre-existing conditions.

Which of the following is NOT an unfair claims practice? A Failing to attempt, in good faith, to promptly, fairly, and equitably settle a claim in which the insurer's liability has become reasonably clear B Refusing to pay a claim without investigating it C Misrepresenting pertinent policy facts or provisions to claimants D Promptly acknowledging communications pertinent to a claim

D Promptly acknowledging communications pertinent to a claim

A disability that is presumed to result from the same or a related cause of prior disability is a ________________. A Delayed disability B Presumptive disability C Residual disability D Recurrent disability

D Recurrent disability

The ____________ market is a private source of coverage of last resort for individuals or businesses that have been rejected by voluntary market insurers. A Reciprocal B Reinsurance C Self-insured D Residual

D Residual

A court reporter develops arthritis making it impossible to continue this employment. The reporter now has other employment at a reduced salary and receives a monthly benefit from an insurance contract due to which of the following policy provisions? A Total Disability B Partial Disability C Recurrent Disability D Residual Disability

D Residual Disability Residual Disability recognizes one's ability to continue to work, but at a reduction of earnings.

Which of the following terms refers to the risk management technique of assuming the responsibility for a loss? A Reduction B Avoidance C Transfer D Retention

D Retention

Interest only, life income with refund, lump sum, and life income only are all forms of which of these life insurance policy options? A Dividend options B Beneficiary options C Nonforfeiture options D Settlement options

D Settlement options

__________ life insurance is when an insured is induced into purchasing life insurance with the sole intent of selling that policy once issued to third party investors for an amount less than the death benefit, but greater than its cash values. A Senior B Viatical C Life settlement D Stranger originated

D Stranger originated

Concerning eligibility for a 403(b) retirement plan, which of the following would not qualify? A School principal B School janitor C School teacher D Student athlete receiving a scholarship and a stipend

D Student athlete receiving a scholarship and a stipend A 403(b) Tax Sheltered Annuity is a retirement plan specifically for public school employees, not students.

Which of the following is NOT a common rating classification? A Standard B Substandard C Preferred D Subrated

D Subrated

Managed health care plans generally refer to covered persons as ____________. A Members B Participants C Insureds D Subscribers

D Subscribers Because most HMO and PPO plans are operated by corporations that were organized specifically to provide health care benefits and do not offer other forms of insurance, they tend to refer to covered persons as subscribers rather than insureds.

To encourage annuity holders to leave funds in the policy until retirement, insurance companies can assess a(n) __________ for withdrawals. A Interest penalty B Tax penalty C Fine D Surrender charge

D Surrender charge

To eliminate the use of life insurance as a short-term, tax-free savings vehicle, what tax law change took place? A Employer-paid premiums were made non-tax-deductible B Loan interest became tax-deductible C Death benefits became income-taxable D The Modified Endowment Contract (MEC) rules were put into place

D The Modified Endowment Contract (MEC) rules were put into place The rule states that if a policy is funded too quickly, it will be classified as a Modified Endowment Contract (MEC). MEC rules impose stiff penalties to eliminate the use of life insurance as a short-term, tax-free savings vehicle.

Which of the following items does not become part of the insurance contract as defined in the entire contract clause? A The application B The medical examination report C Information regarding hobbies D The agent's report

D The agent's report The agent's report is neither part of the application, nor part of the insurance contract. The agent's report is a confidential communication between the agent and the insurer.

What is the primary source of underwriting information for an individual health insurance policy? A A medical exam B The agent's report C The inspection report D The application

D The application

All of the following regarding convertible term life insurance is true, except: A Conversion can be based on either the attained or original issue age of the insured B Conversion is without evidence of insurability C The new premium will be higher on the conversion policy compared to the original policy D The conversion can take place at any time

D The conversion can take place at any time The right to convert the existing term policy to a permanent policy without evidence of insurability is only available during the conversion period specified in the contract.

What is the risk to the purchaser in a viatical settlement transaction? A The check given to the seller does not clear the bank B The insured dies sooner than expected C The purchaser paid too little for the policy D The insured does not die within the time period anticipated

D The insured does not die within the time period anticipated

The process of calculating life insurance net premium requires consideration of all of the following, except: A The insured's age B The rate of interest assumed C The insured's gender D The morbidity rates to be used

D The morbidity rates to be used

Each of the following choices are true of whole life, except: A As an insured ages, the premiums remain the same B They have nonforfeiture values and options are offered C The death benefit and cash values are guaranteed D The policy can be converted into a term life insurance plan at anytime

D The policy can be converted into a term life insurance plan at anytime

All of the following are correct regarding Key Person Insurance, except: A The policy is owned by the employer B The policy can be term or permanent C The policy is source of funds to replace any lost revenue due to the death of the employee D The policy primarily insures the employee's retirement plan

D The policy primarily insures the employee's retirement plan

If a client owns an equity-indexed product, what happens if the market falls in value by a large amount? A The policy's values are reduced in proportion to the loss B The policy's values are reduced on a dollar-for-dollar basis C The policy's losses must first be made up before any future interest can be credited D The policy's values can never be impaired due to negative index performance

D The policy's values can never be impaired due to negative index performance

Which of the following are incorrect regarding suitability standards for long-term care insurance? A An insurer must maintain a copy of its suitability standards and make them available for inspection upon request by the Commissioner B An insurer must train its agents in the use of its suitability standards C Suitability standards must be used to determine if the purchase of long-term care insurance is appropriate for the needs of the applicant D The producer must not focus on the consumer's ability to pay for long-term care insurance or the consumer's existing insurance, but rather focus on the consumer's goals and needs for long-term care

D The producer must not focus on the consumer's ability to pay for long-term care insurance or the consumer's existing insurance, but rather focus on the consumer's goals and needs for long-term care

Which of the following is true of the Oklahoma Life and Health Guaranty Association? A The Association consists only of life insurers authorized to transact business in Oklahoma B The association will be liable for any additional or punitive damage C The Association consists only of health insurers authorized to transact business in Oklahoma D The purpose is to protect insureds, policyowners and beneficiaries from the insolvency of an insurance company

D The purpose is to protect insureds, policyowners and beneficiaries from the insolvency of an insurance company

A comprehensive Long-Term Care policy will provide benefits in each of the following settings except _________________. A The home of the insured B Intermediate care nursing facility C Hospice care in a family member's home D Therapeutic care in an acute care hospital

D Therapeutic care in an acute care hospital

Under what provision will a disability policy provide benefits if the insured is totally disabled because of donating an organ to another individual? A Residual Disability B Total Disability C Permanent Disability D Transplant

D Transplant

In addition to language similar to the any occupation definition of total disability, Social Security's definition of disability also includes which of the following statements? A Unable to sit, stand, or lie down for extended periods of time B Unable to perform more than 50% of one's customary duties C Unable to qualify for benefits under any personal or state-sponsored disability insurance plan D Unable to perform any substantial gainful activity

D Unable to perform any substantial gainful activity

Managed Health Care attempts to contain health care costs by controlling the behavior of participants through all of the following, except: A Preventive care B Risk-sharing C Comprehensive case management D Unlimited access to providers

D Unlimited access to providers Managed Health Care attempts to contain health care costs by controlled access to providers, not unlimited access.

When is an entity buy-sell agreement plan used? A When the owners are not in the financial position to buy the policies on their own B When the entity needs an additional tax deduction C When insurability is an issue D When the entity buys life insurance on each of the owners

D When the entity buys life insurance on each of the owners Under an entity plan, a business entity enters into an agreement in which it is obligated to purchase the deceased's owner's interest. The entity typically buys life insurance policies on each of the owners and then would name itself as the beneficiary of each policy.

Which of the following is true regarding coinsurance? It is: A Paid prior to the deductible B The initial out of pocket expense before benefits are payable C Always written as 80%-20% D Written as a percentage and has a maximum out of pocket expense for the insured

D Written as a percentage and has a maximum out of pocket expense for the insured

All of the following are true about a buy/sell agreement, except: A It provides the funds necessary to carry out the terms of the agreement B It contractually establishes the intent to buy and sell a business interest C It can only be funded with term life insurance D It contractually establishes a price for the business interest

The agreement contractually establishes a price with the intent to purchase, at a predetermined value, the assets of a business should one of the contract participants predecease the other participant(s). It is funded with life insurance to assure that the funds are available to carry out the agreement, but it can be funded with permanent or term insurance.

Typically, how many days can elapse before an overdue premium will cause a policy to lapse? A 30 B 10 C 7 D 28

A 30

A contract that is designed to accumulate value over time with the intent to distribute the funds over the lifetime of an individual is called _________________. A An endowment B An annuity C Whole life insurance D Variable life insurance

B An annuity

What is "fixed" in a fixed annuity? A The annuitant B The interest crediting rate C The beneficiary D The investment option in the separate account

B The interest crediting rate

While life insurance may accumulate money that a person could use in retirement, none promise the same long term benefit of a non-qualified annuity, which is ________________. A A stream of income the annuitant cannot outlive B Tax-free money for college education or other qualified expenses C Tax-deferred growth of principal D Tax-free payments for the lifetime of a beneficiary

A A stream of income the annuitant cannot outlive Although both annuities and life insurance offer tax-deferred growth of principal, the long term benefit of an annuity is the lifetime income stream available at any time to the annuitant.

What is meant when a life insurance policy becomes incontestable? A After 2 years, the insurer will not refuse to pay a death claim based on misinformation in the original application for insurance B After 2 years, the insurer will not argue about which beneficiary is primary or contingent C After 2 years, the insurer will only pay for suicide if the insured was insane at the time of death D After 2 years, the policyowner cannot sue the insurer for misstatements made by the producer in the sale of the policy

A After 2 years, the insurer will not refuse to pay a death claim based on misinformation in the original application for insurance

All of the following are examples of third-party ownership, except: A An employee voluntary life insurance plan B An entity purchase plan C A cross purchase plan D A key employee plan

A An employee voluntary life insurance plan

If a father were to add a Child Rider to a policy to cover his children, when would coverage become effective for a newborn? A At 14 or 15 days of age B At birth C At 14 or 15 weeks of age D At 1 year of age

A At 14 or 15 days of age

What is the fastest way to pay up an ordinary whole life policy? A Buy a single premium policy B Borrow against the policy's cash values to pay off any premium balance C Use the dividend features available D Double up on premium payments

A Buy a single premium policy A single premium life policy only requires one premium payment to be made therefore this would pay up the policy the quickest.

What type of annuity is designed to start benefit payments many years from now and subjects the owner to investment risk? A Deferred variable B Immediate indexed C Immediate variable D Deferred fixed

A Deferred variable A deferred variable annuity exposes the annuity holder to investment risk with income benefit payments starting more than one year after purchase.

Which of the following is a characteristic of a contributory plan? A Eligible employees pay a portion of the premium B Employers must enroll 100% of eligible employees C Part-time employees must be eligible to participate D Dependents of eligible employees must pay 75% of the premium

A Eligible employees pay a portion of the premium In a contributory group insurance plan, eligible employees pay a portion of the premium. Part-time employees are usually not eligible. Dependents of an eligible employee do pay a required percentage of premium, the amount varies as determined by the employer. A contributory plan requires at least 75% participation of eligible employees. Noncontributory group plans require 100% participation.

The ________ is the amount payable to the beneficiary upon death of the insured named in a life insurance policy. A Face amount B Loan value C Premium refund D Cash value

A Face amount

The _________ gives the owner of a variable annuity the ability to withdraw a maximum percentage of the annuity value until the initial investment amount has been recouped. A Guaranteed minimum withdrawal benefit B Group annuity C Joint and survivor annuity benefit D Retirement income annuity

A Guaranteed minimum withdrawal benefit The guaranteed minimum withdrawal benefit provides variable annuity owners with a measure of protection against loss, without requiring them to annuitize.

In the event a parent becomes disabled or dies while paying premiums on a life insurance policy for a minor child, which provision would allow the policy to continue in force until the child reaches a predetermined age? A Payor Benefit (Waiver of Payor Premium) B Minor Child Rider C Return of Premium Rider D Cost of Premium Rider

A Payor Benefit (Waiver of Payor Premium A Payor benefit rider waives the policy premium in the event of the death or total disability of the premium payor. Usually found in policies covering children to the child's age 21 or 25

Annuities may be funded with either a lump sum or on either a ______ or a ______ basis. A Periodic, flexible B Guaranteed, discretionary C Life, periodic D Permanent, temporary

A Periodic, flexible

A primary purpose of key person life insurance is to: A Provide the business with money to recruit and train a replacement employee B Provide the family of the deceased employee with up to ten years of the employee's lost future income C Provide the business with money to pay vested retirement benefits to the heirs of the employee as a lump sum D Protect the business against the death of any employee earning at least $50,000 per year

A Provide the business with money to recruit and train a replacement employee A valuable employee with highly specialized knowledge or skills, or who adds significant value to the revenue/profitability of the company is a key person, and wages alone is not a criterion. The death of such a person can negatively impact the business operations. The company may use the death benefit proceeds for any purpose, but one of the most common uses is to cover the expense of recruiting, hiring, and training a replacement, which may take months to accomplish.

An employee who is covered under an employer group life insurance plan may assume all of the following are TRUE of the opportunity of conversion, except: A The employee chooses which type of insurance to convert to B The policy to which the employee converts is individual permanent insurance C The premiums are greater than what was being paid for the group life insurance D No proof of insurability is required

A The employee chooses which type of insurance to convert to

All of the following are true regarding industrial life insurance, except: A The grace period is 1 week B The method of settlement upon death is lump sum C The policies are marketed house to house by debit agents D Debit agents are also known as home service agents

A The grace period is 1 week The grace period is 4 weeks in length with the method of settlement upon death being lump sum.

Which of the following do Fixed and Variable Annuities have in common? A The types of settlement options available at annuitization B Vulnerability to loss of purchasing power over the long run C Who bears the investment risk of the annuity policy D A guarantee of a minimum rate of interest credited during the accumulation period

A The types of settlement options available at annuitization One thing Fixed Annuities and Variable Annuities have in common is the basic types of settlement options available at annuitization: life income, fixed period, fixed amount, etc. The way that the benefit amount is determined may be different, but the payment pattern is the same for both types of annuities.

A partial withdrawal is permitted on which of the following policies? A Universal Life B Whole Life C Variable Whole Life D Current Assumption Whole Life

A Universal Life

Which of the following policies must be sold by prospectus? A Variable Whole Life B Universal Life C Equity Indexed Whole Life D Ordinary Whole Life

A Variable Whole Life Variable Whole Life is a security. It is required that the producer have a securities registration in order to sell it and the policy must be sold with a prospectus detailing all fees, charges, risks, and expenses.

All of the following are life insurance policy prohibited provisions, except: A Voiding a policy for failing to repay any policy loan or loan interest when the total outstanding policy debt is greater than the policy's cash value B Settlements for less than the face amount plus dividends minus the sum of outstanding policy loans, loan interest, and unpaid premium C Limiting the time to bring legal action against an insurer to less than 1 year D Backdating a policy more than 6 months to save age in order to lower the policy premium

A Voiding a policy for failing to repay any policy loan or loan interest when the total outstanding policy debt is greater than the policy's cash value If the policy no longer has sufficient collateral to sustain the total outstanding policy debt then the insurer can require that the outstanding debt be reduced or the policy can be cancelled.

A "Joint and ½ Survivor" distribution option means which of the following statements is correct? A When one of the joint annuitants dies, the survivor's continuing payments will be one-half of the total payment both were receiving B There are two annuitants named in the policy and each contributes one-half of the monthly premium or the lump sum that establishes the annuity C The annuitant receives a full share of the annuity payment and the spouse receives an additional one-half of that D The annuitant receives a full share of the annuity payment each month, and the beneficiary receives a one-half share of the payment

A When one of the joint annuitants dies, the survivor's continuing payments will be one-half of the total payment both were receiving

Industrial life insurance is typically sold in face amounts of : A $10,000 to $20,000 B $1,000 or less C Up to $50,000 D $5,000 multiples

B $1,000 or less Industrial insurance is typically marketed to low-income persons. Face amounts are available in $1,000 increments (or less). Some states limit the amount of coverage on any one life to no more than $10,000. Premiums are most often paid in cash to an agent on a weekly or monthly basis.

A retiree elected the Life Income with 10 Year Period Certain. He/she dies the day after receiving 119 monthly payments. The beneficiary will receive _______ more payment(s): A 6 B 1 C 10 D 12

B 1 Since the retiree died within the period certain (10 years or 120 months), the contingent payee would receive the balance of the payments. Since the retiree has received 119 monthly payments, only one guaranteed payment remains.

In order for a worker to be qualified for all of the benefits available from Social Security how many credits must be earned? A 6 credits in the last 13 quarters B 40 credits C 30 credits D 1 credit for each year of work between age 20 and age 40

B 40 credits

A Variable Annuity is different from a Fixed Annuity because it must be sold with which of the following documents? A A copy of the insurer's business formation documents B A prospectus C A copy of the producers licensing exam test score D Regulator approved sales literature

B A prospectus A prospectus is a disclosure document that provides the prospective buyer with information about all fees, charges, expenses, and risks. It must be provided by the producer prior to sale of the variable annuity.

Which of the following is truly a Key Person (Key Employee)? A The company's truck driver B An executive sales manager C A rank-and-file employee D The company bookkeeper

B An executive sales manager In a Key Person Insurance plan, the key person is part of the management team, is more highly paid than the other employees, is respected by customers and vendors, and has direct responsibilities for sales, production, or service.

The spendthrift laws of each state protect life insurance proceeds against the claims of which of the following? A Creditors of the insured only B Creditors of any beneficiary C Contingent beneficiaries only D Primary beneficiaries only

B Creditors of any beneficiary

Mr. Zamboni is the owner and the annuitant of an annuity. Mrs. Zamboni, the designated beneficiary, will be able to assume all ownership rights and tax-deferral if Mr. Zamboni should die ___________. A After age 55 B During the Accumulation Period C Before age 70 1/2 D During the Distribution Period

B During the Accumulation Period

Which of the following correctly describes the effect of the Common Disaster Clause? A If the primary and contingent beneficiary die when the boat they were sailing in sinks, it is presumed that the primary beneficiary outlived the contingent beneficiary for claims paying purposes B If an insured and primary beneficiary both are killed when the bus they are riding in goes over a cliff and if it cannot be determined who died first, the insured or primary beneficiary, the insured will be presumed to have survived the primary beneficiary so the contingent beneficiary will be able to receive the death proceeds C If the insured and primary beneficiary are killed in an auto accident in which both were in the car at the time of the crash, an autopsy will be required in order to determine which passenger died first D If an insured and contingent beneficiary both die in a train wreck, it is presumed that the insured died first in order to protect the primary beneficiary's right to claim the death benefit

B If an insured and primary beneficiary both are killed when the bus they are riding in goes over a cliff and if it cannot be determined who died first, the insured or primary beneficiary, the insured will be presumed to have survived the primary beneficiary so the contingent beneficiary will be able to receive the death proceeds

What is different about a corporate owned nonqualified annuity compared to an individually owned nonqualified annuity? A It does not provide a death benefit guarantee of principal to the beneficiary B Interest or gains are taxable as income in the year earned C Interest or gains are taxable as capital gains, not ordinary income D It earns a rate of interest limited by the IRC

B Interest or gains are taxable as income in the year earned Corporate owned annuities must be associated with a qualified retirement plan for the corporation to avoid current income taxation. There are no interest rate limitations for annuities in the IRC. All annuities provide a death benefit guarantee prior to annuitization; a corporate owner of an annuity will name itself as the beneficiary.

All else being equal, which of the following will receive the largest income benefit payment from an annuity? A Female age 80 B Male age 80 C Female age 70 D Male age 70

B Male age 80 The older male will receive the largest income benefit as he will have the shortest remaining life expectancy.

Tom is the insured/owner of a $500,000 life insurance policy and dies leaving four surviving children, Mary, Carrie, Larry, and Barry, and each child receives $125,000 upon his death. This is an example of what type of distribution? A Pro Forma B Per Capita C Pro Rata D Per Stirpes

B Per Capita The question is describing per capita as a class beneficiary designation. In other words, to share equally.

To help protect against ___________, group plans have a probationary period set by the group sponsor. A Inventory shrinkage and bad hires B Preexisting conditions and immediate claims C Lazy and unmotivated employees D High employee turnover

B Preexisting conditions and immediate claims

All of the following are ways in which an annuity can be classified based on its premium funding method, except: A Flexible B Reinvestment C Single D Periodic

B Reinvestment Single, Flexible, and Periodic are the ways in which an annuity is classified based on premium payment.

Which of the following is true in regard to an Entity Purchase Plan? A The owners are named as beneficiaries in the policy acquired B The business enters into an agreement to purchase the deceased's interest in the business C It is an incentive plan for key employees D The entity buys life insurance on non-owner key employees

B The business enters into an agreement to purchase the deceased's interest in the business An entity purchase plan is one in which life insurance provides the funds necessary to buy out the business interest of the deceased.

In a credit life plan, who is the beneficiary? A The children of the insured B The creditor C The husband of the insured D The wife of the insured

B The creditor Credit life insurance is a group form of life insurance that is owned by and benefits only the creditor in the event of the death of the borrower. It may be issued as an indeterminate amount of coverage, as for a credit card, or it may be a single premium type of coverage in the form of decreasing term for a short term debt such as an automobile loan.

If a buy-sell agreement were not in place, all of the following could happen, except: A Surviving business owner(s) may suffer a loss of income B The estate transfer may be sped up due to emergency business liquidation C Share(s) of ownership transfer to surviving relatives D Asset reduction due to forced liquidation

B The estate transfer may be sped up due to emergency business liquidation The estate transfer may be delayed due to forced business liquidation.

The grace period in a life insurance policy is typically 31 days and provides for the: A The policyowner to reinstate the policy before it lapses B The payment of the premium after the due date without a penalty or lapse in coverage C The payment of the premium after the due date with a maximum 5% penalty D The insurance company to delay payment of the death benefit while it determines the validity of the proof of death

B The payment of the premium after the due date without a penalty or lapse in coverage

What is the primary advantage to the policyowner in the reinstatement of a life insurance policy? A All policy loans that were outstanding at the time of lapse are forgiven and full cash value is restored B The policyowner continues to enjoy the benefits that were provided in the original policy, including the original premium C The insured is not required to prove insurability if under age 40 D The insurance company cannot start a new period of contestability

B The policyowner continues to enjoy the benefits that were provided in the original policy, including the original premium

Q has an ordinary straight whole life insurance policy for $100,000. Due to a change in circumstances, Q finds that there is now a need for more coverage, but the budget is not sufficient for another similar policy. What can Q do to satisfy the need for additional coverage at a low price? A Use the cash values of the policy to cover the difference B Ask for an increase in the existing policy's face amount C Add a term rider D Add an accidental death rider

C Add a term rider Adding a term life insurance rider will allow for the additional coverage to be put into place at an affordable price, without having to acquire another policy. Ordinary straight whole life does not allow for an increase in face amount, as it is a fixed benefit policy.

A Buy-Sell Agreement A Specifies the conditions and requirements that are necessary to sell the business to a third party if a business owner dies unexpectedly B Describes which relatives of a business owner have the right to purchase that person's interest in the business C Assures the continuation of the business by providing benefits to the surviving business partners to buyout a business partner's interest in the event one of them dies unexpectedly D Provides the business with funds in the event of the death of a key person who is not an owner

C Assures the continuation of the business by providing benefits to the surviving business partners to buyout a business partner's interest in the event one of them dies unexpectedly

The Master Policy for a group life plan goes to the employer. What does a participating employee receive? A Copy of the Master Policy B Change of beneficiary form C Certificate of Insurance D Claim form package

C Certificate of Insurance The employees in a group life plan receive a Certificate of Insurance that describes the benefit, identifies the insurance company and policy and certificate numbers, and provides information about changing beneficiaries or filing a claim.

In a group life insurance plan, the employee has control over which of the following? A Choice of insurance company B Mode of premium payments C Choice of beneficiary D Type of policy

C Choice of beneficiary In group life insurance the sponsor of the plan (the employer) has control over all facets of the coverage and cost, but the choice of beneficiary is left to the participant (the employee). A group life plan may not benefit the sponsor of the plan.

With a life insurance policy, in the event of the premature death of the insured, who has first claim to the policy benefits? A Per stirpes beneficiary B Estate of the insured C Primary beneficiary D The probate court

C Primary beneficiary

From a tax standpoint, what is the benefit of receiving income benefit payments as opposed to cashing out an annuity after it has been held for several decades? A Only the beneficiaries of any residual values pay any income taxes B A lower tax rate is applied because an income benefit payment option was selected C Taxes are only due on the amount of tax-deferred earnings in each payment D Taxes are deferred until the very last payment

C Taxes are only due on the amount of tax-deferred earnings in each payment Cashing out an annuity exposes all of the tax-deferred earnings to income taxation upon receipt of the payment. Settlement options help to spread the tax affect over many years as the payments are received.

All of the following are characteristics of Home Service (Industrial) Insurance, except: A Industrial policies generally have a face amount of $1,000 or less B The settlement option is a lump sum payment C The Grace Period is 10 days D A Debit Agent sells policies house-to-house

C The Grace Period is 10 days The Grace Period under industrial policies is 4 weeks, not 10 days.

All of the following are parties to a life insurance contract, except: A The insured B The policyowner C The beneficiary D The insurer

C The beneficiary While beneficiaries are named, they are not a party to a life insurance policy.

Which of the following is the least important when it comes to determining the cost of the group life insurance plan? A Size of the group B The group' claims C The health of each member of the group D The nature of the work involved

C The health of each member of the group Since evidence of insurability is not usually required, the health of each member of the group is not used when determining premiums of the group.

The insuring agreement in a life insurance policy states which of the following? A The insurance company will not pay death claims in the event of suicide or other exclusion named in the policy unless all premiums are paid in advance B The policyowner will indemnify the insurance company of the policy proceeds if the beneficiary is not named in the application C The obligation of the insurance company to pay the policy proceeds upon presentation of valid proof of the death of the insured which occurred while the policy is in force D The insurance company may refuse to pay a death claim in the event a mistake is found in the original application for insurance at the time of the insured's death

C The obligation of the insurance company to pay the policy proceeds upon presentation of valid proof of the death of the insured which occurred while the policy is in force

All of the following are correct pertaining to Decreasing Term, except: A The death benefit decreases B Its most common use is in credit life insurance C The premium declines throughout the term of the policy D The premium stays level

C The premium declines throughout the term of the policy A decreasing term policy has a death benefit that reduces over a defined number of years, but the premium remains the same in all years.

The LMC Partnership has 3 partners and is concerned about what would happen to their $300,000 business if one of the partners should die. If they consider a buy-sell agreement, then each partner would have to buy a policy in the amount of $__________ on the other partners. A $150,000 B $75,000 C $100,000 D $50,000

D $50,000 If there are 3 partners in a company valued at $300,000, then each would have a $100,000 interest in the company. Each partner would purchase a policy on the other partners, providing for a total of 6 policies (3x2 = 6). Each policy would be valued at $50,000 (6 x $50,000 =$300,000).

Which of the following will receive the smallest monthly income benefit check if an annuity is annuitized? A 62 year old male B 65 year old female C 55 year old male D 50 year old female

D 50 year old female The younger ages receive the smaller payments because they can be paid out for a longer period of time. Females also receive smaller income checks due to a longer life expectancy

The lowest monthly Social Security retirement benefit would occur if started at age _______. A 70 B 63 C 65 D 62

D 62

What must an insurance producer have in order to market variable annuities? A A copy of the current prospectus to give to a customer prior to or at the time of the first appointment B A variable contracts insurance agent license issued by his/her resident state's regulator C A good business reputation and no convictions listed in 18 U.S.C. 1033, the Federal Violent Crime Control and Law Enforcement Act D A securities license as a variable contracts and investment company representative in addition to a life agent license

D A securities license as a variable contracts and investment company representative in addition to a life agent license A licensed life agent also needs a securities license to be able to transact variable life or annuity contracts. Each of the other answer choices is an accurate statement but does not answer the question appropriately.

What is the name of the rider (benefit) that, in the event of a claim, the policy normally pays double or triple the face amount if death was a result of an accident. A Occupational B Auto Insurance C Additional Indemnity D Accidental Death

D Accidental Death

All of the following are correct regarding an annuity, EXCEPT: A An annuity can be paid with a single premium or periodic premium B The accumulation in an annuity grows tax-deferred C An annuity can be immediate or deferred D An immediate annuity must start providing income within 3 years of the first premium payment

D An immediate annuity must start providing income within 3 years of the first premium payment An immediate annuity must start providing income within a year of the first premium payment.

Which of the following beneficiary designations is a class designation? A Mary Smith - spouse B Frank Jones - son C Bank of Springfield - creditor D Any children of this marriage

D Any children of this marriage A class designation is when the beneficiary is not directly identified by name.

Ed purchased policies on behalf of his grandchildren. He wanted to be certain they could purchase additional policies at specified ages. He was able to do this by adding which rider? A Waiver of Premium Rider B Child Rider C Cost of Living Rider D Guaranteed Insurability Rider

D Guaranteed Insurability Rider

Industrial insurance is also known as: A Surplus lines B Ordinary C Group D Home service

D Home service

The proceeds from a _________ plan provide the necessary funds to recruit, hire, and train a replacement employee. A Entity B Group C Cross purchase D Key employee

D Key employee

Fred owns a 40-Pay Life Policy. He designated his wife, Ethel, as primary beneficiary. Upon Fred's death, Ethel receives a set amount for life. Fred chose which Settlement Option? A Extended Term B Joint Life C Fixed Period D Life Income Only

D Life Income Only

Which of these annuity distribution options promises the largest possible payment to a single annuitant? A Installment refund B Life income with period certain C Lump sum refund D Life income only

D Life income only

Dividend options do not include which of the following choices? A Paid-up additional insurance B Reduce premiums due C Refund in cash D Lifetime income

D Lifetime income

With regard to the waiver of premium rider, after the disability a policyowner normally: A Must reapply for the insurance B Must repay the premiums paid by the company during disability C Must prove insurability to continue the policy on an annual basis D Need not repay the premiums paid by the company during disability

D Need not repay the premiums paid by the company during disability

A flexible premium deferred annuity permits all of the following EXCEPT: A Limited partial surrenders each year not subject to a surrender charge B Annuitization at any time. A deferred annuity may not be annuitized as long as there is a surrender charge applicable to the principal value C Scheduled and unscheduled additions of principal at any time prior to annuitization D Payments to the annuitant beginning within one month of the issuance of the contract

D Payments to the annuitant beginning within one month of the issuance of the contract By definition, a flexible premium annuity allows the addition of more principal value at any time prior to annuitization of the contract. If an annuity begins payments to the annuitant within one month of policy issue it would be a Single Premium Immediate Annuity ("SPIA"); SPIAs must begin payments within one year of policy issue.

If the annuity policyowner and annuitant are the same person and the designated beneficiary is the annuitant's spouse, what happens if the annuitant dies during the accumulation phase? A If the annuitant dies prior to age 59 1/2, then the spouse pays tax plus an additional 10% tax on all of the proceeds B If the annuitant dies after age 70 1/2, then the payout is entirely income tax free C The spouse receives the death benefit subject to taxation of the deferred earnings D The IRS code allows for the surviving spouse to become the new owner and tax deferral continues

D The IRS code allows for the surviving spouse to become the new owner and tax deferral continue

Which of the following meets the criterion for being a natural group for group life insurance purposes? A All members of the group live within the same zip code B The group has at least 500 members C Members of the group all have a college degree D The group was formed for a purpose other than for procuring or reducing the cost of insurance

D The group was formed for a purpose other than for procuring or reducing the cost of insurance To be eligible for a group plan, the group must be a natural group, meaning it was formed for a purpose other than for procuring or reducing the cost of insurance.

A contingent beneficiary has the right to which of the following? A The policy proceeds if the primary beneficiary is a minor child B Share in the death benefit with the primary beneficiary C Prevent the policyowner from taking a loan against the cash value D The policy proceeds only when there is no primary beneficiary

D The policy proceeds only when there is no primary beneficiary

Which of the following is a major risk to an employee covered under an employer's group life insurance plan? A Employers pick up all or part of the cost of the insurance B Open enrollment is offered on an annual basis C The sponsor is issued a master policy D The sponsor can elect to discontinue the plan

D The sponsor can elect to discontinue the plan If employees are relying solely on an employer's group life insurance coverage for their protection needs, they need to be made aware that the plan sponsor can discontinue the plan.

A grandparent purchases a life insurance policy on a granddaughter this is an example of _________. A Two Party Ownership B Key Person Insurance C Wealth Transfer D Third-Party Ownership

D Third-Party Ownership When someone other than the insured is the policyowner, then this is referred to as third-party ownership.

When the owner and annuitant is the same person, a spouse beneficiary is permitted what choice under the Internal Revenue Code if the annuitant dies prior to annuitizing the contract? A A one-time opportunity to convert the proceeds to a Roth IRA without taxation B There are no choices, when the annuitant dies, the principal value must be distributed to the beneficiary, who may choose the distribution option if none was selected in advance C The option to withdraw all funds tax-free in the form of a §1035 exchange to life insurance D To adopt the annuity as his/her own and become the annuitant or to name another annuitant

D To adopt the annuity as his/her own and become the annuitant or to name another annuitant The spouse-beneficiary may adopt the annuity as his/her own. As the owner, he/she may name a new annuitant and/or beneficiary, or assign ownership to another person for value.

Timothy is the insured/owner of a universal life insurance policy and is concerned that in the event of disability, the policy might lapse. Which rider would keep the policy from lapsing if he became disabled? A Guaranteed Insurability Rider B Return of Premium Rider C Waiver of Premium Rider D Waiver of Cost of Insurance

D Waiver of Cost of Insurance