Practice test #4

Which of the following best describes the aleatory nature of an insurance contract?

Exchange of unequal values

Which nonforfeiture option has the highest amount of insurance protection?

Extended term

Every two years, producers are required to fulfill continuing education requirements. How many of these credit hours must be dedicated to ethics?

1

Which of the following disability income policies would have the highest premium?

15-day waiting period / 10-year benefit period

How long must a life insurance policy be in force before the owner can enter into a viatical settlement contract?

2 years

An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits?

A portion of the benefit up to a limit is tax free; the rest is taxable income.

What amount of care is provided in LTC's intermediate care?

Daily care by medical personnel

A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits?

Immediate annuity

In which of the following locations would skilled care most likely be provided?

In an institutional setting

What is the main purpose of the Seven-pay Test?

It determines if the insurance policy is an MEC.

Variable Whole Life insurance is based on what type of premium?

Level fixed

Which of the following settlement options in life insurance is known as straight life?

Life income

which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices?

Making comparisons between different policies

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?

Premiums are not tax deductible as a business expense.

An insurance agent is subject of an administrative hearing by the Commissioner. The costs associated with the hearing included witness fees and fees for reproduction of documents for the record. Which of the following will be responsible for covering the costs?

The agent

Under an extended term nonforfeiture option, the policy cash value is converted to

The same face amount as in the whole life policy

An insured makes regular contributions to his Health Savings Account. How are those contributions treated in regards to taxation?

They are tax deductible

Which of the following is true regarding taxation of accelerated benefits under a life insurance policy?

They are tax free to terminally ill insured

Which provision states that the insurance company must pay Medical Expense claims immediately?

Time of Payment of Claims

What is the purpose of a fixed-period settlement option?

To provide a guaranteed income for a certain amount of time

Which characteristic does NOT describe managed care?

Unlimited access to providers

If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant's

ancestry

What type of policy allows the insurance company to cancel a policy at any time?

cancellable

Who is a person, other than a viator, that enters into a viatical settlement contract?

provider

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?

warranty

In order to maintain coverage under COBRA, how soon from termination of employment must an employee exercise extension of benefits?

60 days

An insurance producer licensed in life and/or health must complete 12 hours of continuing education courses every

Every 2 years

All of the following are true regarding rebates EXCEPT

Rebates are allowed if it's in the best interest of the client.

Which of the following entities ultimately decides if an advertisement is complete and truthful?

The commissioner

If the Commissioner does not receive certification of successful course completion by the deadline, the producer's license will be suspended until he or she completes the education requirement or for

90 days

To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested?

At the time of application

The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called

Joint and survivor

With regard to group health conversion, written application and payment of the first premium must be made to the insurer within how many days after the date of termination of insurance?

31

If a person is disabled at age 27 and meets Social Security's definition of total disability, how many work credits must he/she have earned to receive benefits?

12 credits

When a hearing is scheduled, the Commissioner must give notice to all interested parties as to the time, place and purpose of a hearing within how many days of the hearing?

15 days

The relation of earnings to insurance provision allows the insurance company to limit the insured's benefits to his/her average income over the last

24 months

What is the period of coverage for events such as death or divorce under COBRA?

36 months

In the event a policy lapses due to nonpayment of premium, within how many days would the policy be automatically reinstated once the outstanding premium is paid?

45 days

Once the person meets the stringent requirements for disability benefits under Social Security, how long is the waiting period before any benefits will be paid?

5 months

In life insurance contracts in this state, dividend payments may be deferred for up to how many years?

5 years

In Kansas, which of the following provisions is legal?

Cancellation of a policy if amount of loan is more than loan value

If more than one family member covered under the same major medical policy is injured in the same accident, the family only has to pay one deductible. This is due to the

Common accident provisoon

What characteristic makes whole life permanent protection?

Coverage until death or age 100

What is another name for interest-sensitive whole life insurance?

Current assumption life

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT

Dividends from a mutual insurer.

Underwriting a group health insurance plan that is paid for by the employer requires all of the following EXCEPT

Individual members of the group may select the level of benefits for their own coverage.

An investor buys a life policy on an elderly person in order to sell it for a life settlement. This is an example of

A Stoli policy (Stranger originated life insurance policies are usually purchased by people who have no relationship with the insured with the intention of selling them for life settlements.

In which of the following situations is it legal to limit coverage based on marital status?

It is never legal to limit coverage based on marital status

All of the following are mandatory life insurance policy provisions EXCEPT

Policy backdating

An insured notifies the insurance company that he has become disabled. What provision states that claims must be paid immediately upon written proof of loss?

Time of Payment of Claims

Which of the following determines whether disability insurance benefits are taxed?

Whether the premiums were tax deductible

Which of the following statements is TRUE concerning the Accidental Death Rider?

It will pay double or triple the face amount