practice exam 3 - 130 questions
Which of the following receipts provides coverage for an insured immediately upon the payment of the premium?
Binding receipt
An annuity is similar to a whole life policy in that both require prepaid financing in order for the contracts to function appropriately. Which of the following best describes another common trait between an annuity and a life insurance policy?
Both may include a designated beneficiary
Alice applies for life insurance but pays no initial premium. The application is submitted to underwriting, is approved and a policy is issued. When the producer attempts to deliver the policy she learns that Alice is in the hospital. What should she do?
Do not delivery the policy nor collect the premium
All are covered under an Errors and Omissions policy, EXCEPT:
Fraudulent misappropriation of collected premiums
Health Maintenance Organizations are an alternative to health care provided by commercial insurers. Which of the following statements is true regarding HMOs?
HMOs deliver medical care.
An individual has been licensed for two years. He then adds an additional line of authority to his license. When will he be permitted to begin soliciting the new line of insurance ?
Immediately upon processing the appropriate paperwork
The Producer's Report will include which of the following:
Information not found elsewhere in the application
An insurance adviser may also be referred to as an:
Insurance analyst
Which of the following provides interest payments to the primary beneficiary following the death of the insured?
Interest only option
Which of the following beneficiary designations states that the policyowner may not change the designation without the knowledge and consent of the beneficiary?
Irrevocable beneficiary
The Fair Credit Reporting Act is a federal regulation enacted in 1971. Which of the following is its purpose?
It establishes procedures for consumer reporting agencies
Which of the following statements is true with regard to a Universal Variable life insurance policy?
It is a securities and investment product
Arthur signed an application for a $200,000 life insurance policy on June 12th and took a required medical exam on June 14th. He gave the producer the initial premium and received a conditional receipt at the time of application. The home office approved the policy and sent it to the producer on June 29th and the producer delivered the policy to Arthur on July 2nd. Arthur's insurance protection actually began on:
June 14th
An insurance producer who does not comply with state Continuing Education requirements will be subject to which of the following?
License suspension until compliant
A whole or straight life policy with a cash savings feature includes non-forfeiture options. Which of the following options will provide the policyowner with a smaller face amount of insurance for life?
Reduced paid-up insurance
Which of the following is not a dividend option?
Reduced paid-up insurance
The reinstatement clause is a Required Uniform A&H provision. Each of the following is true regarding the reinstatement provision, EXCEPT:
Reinstatement does not require proof of insurability
If an annuity contract owner dies during the pay-in phase and prior to the pay-out phase, the beneficiary will receive the greater of the accumulated value of the annuity or the amount of contributions. Any amount received in excess of premiums paid is:
Taxable as ordinary income
Which of the following is not owed a fiduciary duty by an insurance producer?
The Insurance Commissioner
An applicant has been denied insurance coverage because of information contained in a consumer report. According to the Fair Credit Reporting Act (FCRA), all of the following statements are true with regard to this scenario, EXCEPT:
The applicant has the right to secure the information in the report directly from the insurance company
During the underwriting process, who is the attending physician?
The applicant's physician
Each of the following are true regarding the misstatement of age provision, EXCEPT:
The policy may be void if the insurer discovers the misstatement during the first two years of the policy
What policy provision found in an accident and health policy allows an insurer to void the contract during the initial two years if it finds that the insured engaged in material misrepresentation on the application?
Time limit on certain defenses provision
Most forms of major medical policies include a deductible of some sort. What is the primary purpose of a policy deductible?
To eliminate smaller claims
Disability income policies may be referred to as contracts of indemnity. Insurers limit the monthly benefit amount one can purchase for which of the following reasons?
To prevent malingering on the part of an insured
Which of the following is the reason why a Commissioner, Superintendent or Director of insurance approves policy forms ?
To protect the public from unfair provisions
Nonforfeiture options provide a policyowner with each of the following choices, EXCEPT:
Using the cash value to fund the automatic premium loan
Most major medical insurance policies provide coverage for an insured's dependents. Coverage for dependent children is provided by such plans until:
a specified age
An insured who is covered by an HMO is known as which of the following?
a subscriber
Once a specific amount of benefit is initially covered by Part D of Medicare, a gap exists before more costs are covered. This gap in coverage that exists under the prescription drug plan is known as:
a donut hole
A producer that is found guilty of engaging in any unfair practice may be subject to a monetary penalty. In addition, he or she most probably will also receive which of the following?
a license suspension
Theresa is age 38 and purchases a twenty-pay whole life insurance policy. The death benefit is $50,000. It is attractive to Theresa since she will no longer be required to make premium payments at the end of the twenty-year period. When will her policy mature?
age 100
According to the Patient Protection Affordable Care Act (PPACA), children of an insured may be covered by their parents medical plan up to age:
age 26
Which of the following provisions is a required uniform health insurance provision?
change of beneficiary
All of the following are required uniform health insurance provisions, EXCEPT:
change of occupation
Health insurance policies must include twelve required uniform policy provisions. Each of the following is a required provision, EXCEPT:
change of occupation
Which of the following is not a penalty assessed a producer who engages in an unfair sales or marketing practice ?
community service
Each of the following is a required uniform policy provision, EXCEPT:
conformity with state statutes
Domestic insurance companies must be audited or examined by the Commissioner or Superintendent of Insurance on a regular basis in order to determine which of the following?
insurer solvency
Which of the following involves occasional nursing and rehabilitative care that must be based upon a doctor's orders and only performed by or under the supervision of skilled medical personnel ?
intermediate care
Traditional whole life policies include each of the following, EXCEPT:
joint life
An underwriter reviews applications and assesses risk. Each of the following may be a source of underwriting information, EXCEPT:
ledger statements
All are limited policies, EXCEPT:
major medical
Al purchases a disability income policy. The application is approved on March 4th. The contract is issued on March 10th. It is delivered by the producer on March 13th. When will the ten-day free-look period end?
march 23rd
An illegal comparison of insurance policies made by a producer which persuades an insured to lapse, surrender or cancel another policy currently in force is known as:
misrepresentation
Which of the following types of insurance companies is incorporated without capital stock or shares?
mutual insurer
All health policies include a renewability provision. Which of the following provides an insured with the most advantageous provision?
non cancelable
Health insurance policies all include a renewability provision. Premiums may not be increased on which type of health insurance policy?
non-cancelable
Which of the following is a dividend option?
one year term insurance
According to a permanent insurance policy's non-forfeiture options, a policy may not lapse when cash value is present. All of the following are types of these non-forfeiture options, EXCEPT:
one-year term insurance
A life insurance policy was issued to Bob four years ago. The insurer then learns of material misrepresentations when Bob dies. How will the insurer respond when the claim is filed by the beneficiary?
pay the claim
An outline of coverage must be provided to an applicant no later than the time of:
policy delivery
A life insurance dividend may be paid on a participating policy. Which of the following dividend options can be used when the policyowner is interested in minimizing his outlay of funds?
reduce the premium
John owns a whole life policy that pays a yearly dividend. If John decides to utilize the dividend to decrease his out-of-pocket funding, he has selected which of the following?
reduce the premium
An agent intentionally lists on the application that a sale is not intended to replace an existing contract. Later on, it is determined that the policy did in fact replace an existing contract. Which of the following best describes the action taken by the producer?
replacement
Tristar Computers is a partnership comprised of John, Bob, and Tim. They hold an equal financial interest in the partnership. After deciding to enter into a buy-sell agreement, their agent suggests they utilize a cross-purchase plan and fund it with life insurance. If this plan is utilized, how many life insurance policies will be purchased?
six
The "inability to perform any gainful activity with an expectation that the disability will last at least 12 months or result in death" describes what policies' description of being disabled?
social security disability
When a replacement of an insurance policy occurs, all States require that an insurer provide a "Notice Regarding Replacement" to a policyowner advising him or her of:
Any reduction of benefits that may occur due to the replacement
Each of the following elements must be included in a contract in order for it to be legal, EXCEPT:
An exclusion section
Which of the following entities is responsible for remitting a producer's appointment fee ?
An insurance company
An insurer which does not hold a certificate of authority and is not permitted to conduct insurance business in this State, best describes:
An unauthorized insurer
If an insured wishes to take legal action against an Accident & Health insurer because of its failure to pay a claim fairly or adequately, such legal action must be taken within what period of time after written proof of loss has been provided to the insurer?
3 years
The legal action provision states that any suit brought against the insurer by the policy owner must occur within how many years from the date the proof of loss was furnished?
3 years
According to the proof of loss form provision which appears in a health insurance policy, an insurer must send in a claim form to an injured insured within:
15 days of notification
Which of the following is considered to be underwriting criteria?
All information available for an underwriter to determine eligibility for coverage
Insurers selling LONG-TERM care insurance are required to provide a new purchaser with a free-look of at least:
30 DAYS
A policyowner may have his policy reinstated after a lapse if a reinstatement application is completed and approved. Once this application is submitted, an insurer must notify the insured of its approval or declination within:
45 days
Which of the following health insurance providers had as its original purpose the providing of preventive care?
A Health Maintenance Organization
Tom buys a deferred annuity. If he surrenders it prematurely he will receive a penalty of:
A decreasing percentage each year
Replacement is a transaction in which a new life insurance policy is to be purchased and due to this purchase, an existing life insurance policy has or will be lapsed, forfeited, surrendered or terminated. Which of the following would not be considered a replacement?
A policy continued as decreasing term insurance
Which of the following is usually not excluded in a disability income policy?
Accidental injuries that are self-inflicted
An MIB may contain information about:
An applicant's previous health history
Two partners enter into a buy-sell agreement. The business is worth $100,000. Both partners have an equal interest in the firm. Which of the following would be used to best support this agreement?
Buy $50,000 of life insurance on each partner
An optional health insurance policy provision which allows the insurer to adjust benefit payments under certain situations or permits the insured to receive a reduced premium in other circumstances, best describes:
Change of occupation
What provision found in a health insurance policy protects an insurer against an insured owning duplicate coverage or purchasing more insurance than needed?
Coordination of benefits
When an AD&D rider is added to a disability income policy, the policyowner must name a beneficiary. If a contingent beneficiary is listed, this individual:
Receives the proceeds if the primary beneficiary has predeceased the insured
Which of the following is not a minimum standard requirement for Medigap insurance?
Medigap plans must have a 20-day free-look
Whole life policies include various options available to the owner. Which of the following policy options protects an insured against the lapse of a policy?
Non-forfeiture options
Each of the following is necessary for an insurance license to be renewed, EXCEPT:
Passing a State examination
Why are pre-existing conditions so carefully scrutinized during a replacement sale?
Pre-existing conditions could prevent the new replacement policy from being issued or approved by the insurer
AD&D policies provide a benefit for the severance of a limb. In addition, such policies may also cover the loss of sight, speech and hearing. The loss of sight is an example of which of the following?
Presumptive disability
Each of the following are important life or health insurance underwriting factors, EXCEPT:
The initial premium
The waiver of premium rider, when added to a life insurance policy, would provide coverage in which of the following circumstances?
The insured suffers a total disability lasting eight months
Premiums for policies covering multiple insureds, such as a survivorship life plan, are based upon which of the following?
The joint probabilities of both proposed insureds
Joan is covered by a disability policy in her occupation as an inside salesperson. One of her hobbies is sky diving. She later leaves her job and becomes a paid instructor at a sky diving school. How will this affect her disability policy?
The monthly benefit will be reduced
Illustrations may appear in an insurance policy which allow a policyowner to assume what they may imply. If the policy jacket or face page includes a picture of a male, female and three children, it is reasonable for the owner to assume which of the following?
The policy covers the entire family
Which of the following insurers has its principal office in one particular State but is authorized to solicit or transact insurance products in this State?
foreign insurer
Intentional deception can most closely be associated with which of the following terms?
fraud
Bill is 48 years of age and opens an Individual Retirement Account (IRA). At what point does Bill have ownership of the funds in the account?
immediately
If a statement of continued good health must be submitted to an insurer, it must be completed by which of the following?
the applicant
Three business partners decide to purchase a disability buyout policy. Each partner is married with dependent children. If one of them becomes disabled, benefits will be paid by the policy to which of the following?
the business firm
Who will be paid death proceeds from a life insurance policy if the primary beneficiary predeceases the insured?
the contingent beneficiary
Under a hospital expense or reimbursement plan, covered benefits are paid to which of the following?
the insured
Which of the following is the person or entity primarily responsible for determining the suitability of a long-term care product for a prospective purchaser ?
the producer or agent
The Notice Regarding Replacement form must be provided to a client no later than:
time of application
In most cases, medical plan premiums are not deductible to an employee, but employer paid premiums are deductible to the employer. True or False?
true
Which of the following unfair trade practices is a form of misrepresentation?
twisting
premium. The producer provides the applicant with a receipt which specifies that the individual is covered for at least 60 days from the date of application. Which type of receipt was issued?
unconditional
Which of the following policies is characterized by a FLEXIBLE PREMIUM and DEATH BENEFIT and ALLOWS POLICYOWNER CONTROL of the investment aspect of the plan?
variable universal life