problems i get wrong on practice exam
A newly licensed General Lines agent must complete a MINIMUM of how many hours of continuing education within 24 months after initial license? 10 15 20 24
24
what is time of payment of claims?
A provision that requires claims be paid immediately, or within a stated number of days.
All of the following are considered to be typical characteristics describing the nature of an insurance contract EXCEPT Bilateral Unilateral Aleatory Adhesion
The correct answer is "Bilateral". Unilateral, aleatory, and adhesion are all special features of insurance contracts. Bilateral is not.
Which of the following actions by an insurance company is considered an unfair claims settlement practice? Requiring an insured to give a statement under oath Requiring the insured to submit a proof of loss statement before paying a claim Requesting a third-party arbitrator to resolve a disagreement with a claimant Denying an insured's claim without indicating the basis of denial under the policy
The correct answer is "Denying an insured's claim without indicating the basis of denial under the policy". Denying an insured's claim without indicating the basis of denial under the policy is considered an unfair claim settlement practice.
Which provision prevents an insurer from changing the terms of the contract with the policy owner by referring to documents not found within the policy itself? Policy Exclusion Incontestable Entire Contract Assignment
The correct answer is "Entire contract provision". The entire contract provision, found at the beginning of the policy, states that the policy document, the application (which is attached to the policy), and any attached riders constitute the entire contract. Nothing may be "incorporated by reference," meaning that the policy cannot refer to any outside documents as being part of the contract.
All of the following provisions must be included in life insurance policies EXCEPT Incontestability Entire Contract Extended Term Misstatement of Age
The correct answer is "Extended Term". All of these must be included in life insurance policies EXCEPT "Extended Term".
All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death EXCEPT Fixed Period Interest Only Fixed Amount Life Income
The correct answer is "Interest Only". The Interest Only option does NOT involve the systematic liquidation of the death proceeds.
Under the Nonforfeiture Law, a cash surrender value payment may be deferred by the insurance company for NO LONGER than how many months? 1 3 6 12
The correct answer is "6". A company shall reserve the right to defer payment of any cash surrender value for a period of six months after demand for payment of the cash surrender value and surrender of the policy.
In health insurance policies, a waiver of premium provision keeps the coverage in force without premium payments Whenever an insured is unable to work During the time an insured is confined in a hospital Following an accidental injury, but not during sickness After an insured has become totally disabled as defined in the policy
The correct answer is "After an insured has become totally disabled as defined in the policy". The waiver of premium provision keeps the coverage in force without premium payments if the insured has become totally disabled as defined in the policy.
Which type of contract liquidates an estate through recurrent payments? Universal life insurance Whole life insurance Annuity 401(k)
The correct answer is "Annuity". A contract that provides for the liquidation of all or part of an estate through periodic payments is known as an annuity.
When can a policy owner change a revocable beneficiary? Anytime After the consent of the current beneficiary Never Only if primary beneficiary dies
The correct answer is "Anytime". With a revocable beneficiary designation, the policy owner may change the beneficiary at any time without notifying or getting permission from the beneficiary.
Credit life insurance is typically issued with which of the following types of coverage? Annual Renewable Term Decreasing Term Individual Whole Life Group Term
The correct answer is "Decreasing Term". The type of insurance used for Credit life is typically decreasing term, with the term matched to the length of the loan period.
What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's death? Face amount plus the policy's cash value Face amount plus the policy's dividends The greater amount of the policy's death benefit or the cash value Face amount plus total premium paid throughout the life of the policy
The correct answer is "Face amount plus the policy's cash value". A Face Amount Plus Cash Value Policy is a contract that promises to pay at the insured's death the face amount of the policy plus a sum equal to the policy's cash value.
D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed? Limited-pay life Graded Premium Level term Endowment
The correct answer is "Level term". Life insurance written to cover a need for a specified period of time at the lowest premium is called level term insurance.
What action can a policy owner take if an application for a bank loan requires collateral? Utilize accelerated benefits provision Borrow against policy cash value and use as a down payment Assign policy ownership to the bank Name bank as beneficiary
The correct answer is "Assign policy ownership to the bank". A policy owner may assign ownership of the policy to a bank as collateral.
A policy loan is made possible by which of these life insurance policy features? Policy loan clause Cash value provision Owner's rights provision Consideration clause
The correct answer is "Cash value provision". The Cash value provision makes a policy loan possible.
What is the purpose of the Time of Payment of Claims provision? Requires the insured to wait 60 days after submitting Proof of Loss before filing a lawsuit Prevents delayed claim payments made by the insurer Requires a probation period for each claim filed by the insured Protects the insurer from frivolous lawsuits
The correct answer is "Prevents delayed claim payments made by the insurer". The purpose of the Time of Payment of Claims provision is to prevent the insurance company from delaying claim payments.
What kind of life insurance beneficiary requires his/her consent when a change of beneficiary is made? Irrevocable beneficiary Tertiary beneficiary Primary beneficiary Revocable beneficiary
The correct answer is "Irrevocable beneficiary". An irrevocable designation may not be changed without the written consent of the beneficiary.
Medicare: is a disability program is a hospital and medical expense insurance program offers assistance in making health insurance premiums Part D provides payment for surgeon expenses
The correct answer is "is a hospital and medical expense insurance program". Medicare is a hospital and medical expense insurance program.
T applies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or medical examination, whichever is later, provided that T is an acceptable risk. What item is given to T? Binding receipt Conditional receipt Warranty receipt Backdated receipt
The correct answer is "Conditional receipt". A conditional receipt binds the insurer to coverage as of the date of the application or medical exam, provided the proposed insured is determined to be an acceptable risk.
Which of the following BEST describes a short-term medical expense policy? Conditionally renewable Noncancellable Guaranteed renewable Nonrenewable
The correct answer is "nonrenewable". A typical short-term medical expense policy is best described as nonrenewable.
One becomes eligible for Social Security disability benefits after having been disabled for 3 months 5 months 6 months 12 months
The correct answer is "5 months". Disability income benefits are paid to the covered worker in the amount of the PIA after a 5-month waiting period.
K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary? Return of premiums paid Cash value plus interest $20,000 death benefit Face amount plus interest
20,000 death benefit
What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years? Family Lump Sum Policy Family Maintenance Policy Family Survivor Policy Family Income Policy
The correct answer is "Family Maintenance Policy". A Family Maintenance Policy pays a monthly income from the date of death of the insured to the end of the pre selected period. The payment of the face amount of the policy is payable at the end of such pre selected period.
P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase? Family Benefit policy Family Maintenance policy Family Income policy Family Survivor policy
The correct answer is "Family Maintenance policy". In this situation, a Family Maintenance policy should be purchased. In this situation, a Family Maintenance policy should be purchased. A Family Maintenance policy pays a monthly income from the date of death of the insured to the end of the pre selected period. The payment of the face amount of the policy is payable at the end of such pre selected period.
Which plan is intended to be used by a sole proprietor and the employees of that business? SEP Plan Keogh Plan Individual Retirement Account (IRA) SIMPLE Plan
The correct answer is "Keogh Plan". A Keogh Plan may be used by a sole proprietor only if the employees of the business are included.
Nursing home benefits must be provided for at least 12 consecutive months in which of the following types of policies? Blanket custodial Long-Term Care Critical Illness Medicare Supplements
The correct answer is "Long-Term Care". Long-Term Care policies are designed to provide nursing home benefits on an extended basis of at least twelve consecutive months.
K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this? Variable Life Adjustable Life Graded Premium Whole Life Modified Whole Life
The correct answer is "Modified Whole Life". The type of policy in this situation is a Modified Whole Life.
J has a Disability Income policy that does NOT provide benefits for losses occurring as the result of his employment. What kind of coverage is this? Limited coverage Workers' Compensation coverage Occupational coverage Nonoccupational coverage
The correct answer is "Nonoccupational coverage". The coverage provided by a Disability Income policy that does not provide benefits for losses occurring as the result of the insured's employment is called nonoccupational coverage.
Which of these statements is INCORRECT regarding a Preferred Provider Organization (PPO)? PPO's normally have more providers to chose from as compared to an HMO Prices are negotiated in advance for PPO providers In-network PPO providers offer members better coverage of incurred expenses PPO's are NOT a type of managed care systems
The correct answer is "PPO's are NOT a type of managed care systems". This is incorrect. PPO's ARE considered to be a managed health care system.
Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation? Premium will be fully refunded minus a surrender charge Policy was not returned within the free-look period, premium will not be refunded Policy was returned within the free-look period, premium will be fully refunded Premium will be fully refunded minus a prorated amount for the period of February 7 - February 13
The correct answer is "Policy was returned within the free-look period, premium will be fully refunded". The free- look period begins when the policy is delivered to policyowner.
M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son? Tertiary Irrevocable Revocable Contingent
The correct answer is "Revocable". With a revocable beneficiary designation, the policy owner may change the beneficiary at any time without notifying or getting permission from the beneficiary.
Which of these terms accurately defines an underwriter's assessment of information on a life insurance application? Risk classification Warranty review Insurable interest Inspection report
The correct answer is "Risk classification". Underwriting, another term for risk selection, is the process of reviewing the many characteristics that make up the risk profile of an applicant to determine if the applicant is insurable and, if so, at standard or substandard rates.
What is the underlying concept regarding level premiums? Level premiums build cash value quicker in the early years The early years are charged more than what is needed The early years are charged less than what is needed Level premiums can only be paid annually
The correct answer is "The early years are charged more than what is needed". The concept of level premiums charges more than needed in early years.
The Common Disaster clause provides that if both the insured and the named beneficiary were to die in a common accident, which of the following is true? This clause prevents the payment of proceeds to the insured's estate This clause provides the payment of proceeds to the beneficiary's estate The estate taxes in the insured's estate may be reduced The estate taxes in the beneficiary's estate may be reduced
The correct answer is "The estate taxes in the beneficiary's estate may be reduced". Under the Common Disaster clause, the estate taxes in the beneficiary's estate may be reduced.
Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling? Variable Life Credit Life Universal Life Interest-Sensitive Whole Life
The correct answer is "Variable Life". Because of the transfer of investment risk from the insurer to the policyowner, variable insurance products are considered securities contracts as well as insurance contracts.
When does a life insurance contract become effective if the initial premium is not collected during the application process? After all medical and personal information has been evaluated When insurer receives initial premium from the producer When producer delivers policy and collects initial premium After application has been approved by the underwriters
The correct answer is "When producer delivers policy and collects initial premium". Insurance becomes effective on delivery of the policy to the insured and payment of the initial premium to the producer.
An insurance company must provide information on fraudulent claims at the request of all of the following entities EXCEPT local law enforcement agencies the Commissioner of Insurance the Attorney General an insured
The correct answer is "an insured". On the written request of an authorized government entity (such as the Commissioner, Attorney General, or a local law enforcement agency), an insurer will provide to that entity any relevant information or material relating to a fraudulent matter under investigation.
An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the agent applicant's spouse National Association of Insurance Commissioners (NAIC) applicant's physician
The correct answer is "applicant's physician". Information received from the Medical Information Bureau about a proposed insured may be released to the proposed insured's physician.
An underwriter determines that an applicant's risk should be re categorized due to a health issue. This life insurance policy may be issued with a(n) extra premium exclusion for the medical condition extended Contestable period Concealment clause
The correct answer is "extra premium". If a company accepts a substandard risk, the premium may be higher than for a normal risk.
A life insurance policy would be considered a wagering contract WITHOUT insurable interest premium payment agent solicitation constructive delivery
The correct answer is "insurable interest". Without insurable interest, a life insurance policy would be considered a wagering contract.
An insurance company normally has 2 years to contest information provided on an accident and health application. This 2 year period begins on the date that the medical examination is given producer completes the application insurer dates the policy the first premium is paid
The correct answer is "insurer dates the policy". An insurance company can usually contest the information contained in an accident and health application for two years from the date the insurance company dates the policy.
Credit Life insurance is issued in any amount at the discretion of the applicant used in the event of loss of income issued in an amount not to exceed the amount of the loan coverage that waives the premiums on a loan payment in the event of total disability
The correct answer is "issued in an amount not to exceed the amount of the loan". Credit life insurance is designed to cover the life of a debtor and pay the amount due on a loan if the debtor dies before the loan is repaid.
Pre-hospitalization authorization is considered an example of managed care PPO care Medicaid Major Medical insurance
The correct answer is "managed care". Pre-hospitalization authorization is the insurer's approval of an insured entering a hospital. Many health policies require this as part of an effort to manage costs.
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies? beneficiary insured policyowner insurer
The correct answer is "policyowner". The policyowner (investor) benefits upon the death of the insured.