Questions for State Examine
#109. The causes of loss insured against in an insurance policy are known as
a)Losses b)Risks c)Hazards d)Perils
#40. An insured has an Accidental Death & Dismemberment policy with a principal value of $50,000. He loses sight in both eyes in a hunting accident. How much will he receive?
a) $25,000 b) $0 c) $50,000 d) $100,000
#16. Every small employer carrier must, as a condition of transacting business in this state with small employers, actively offer to small employers at least how many health benefit plans?
a) 10 b) 25 c) 2 d) 5
#10. How long must an insurer keep the receipt of policy delivery to the policyowner if the delivery was by mail?
a) 4 years b) 5 years c) 1 year d) 2 years
#8. When delivering a new policy a producer must also deliver a document containing the producer's name, office address, the insurer's home office address, and the generic type of policy issued. This document also includes premium amounts, cash values, surrender values and death benefits for specific policy years. What is this document called?
a) A privacy notice b) A buyer's guide c) A policy summary d) A notice regarding replacement
#51. A health insurance policy lapses but is reinstated within an acceptable timeframe. How soon from the reinstatement date will coverage for accidents become effective?
a) After 14 days b) After 21 days c) After 31 days d) Immediately
#45. In any case where there is a controversy or dispute between the insurance company and the insured, the soliciting agent is the agent of the
a) Applicant. b) Insured. c) Company. d) Beneficiary.
#9. Your client uses $50,000 in inheritance money to purchase a single premium immediate annuity. How soon can he begin receiving income payments?
a) At age 65 b) After 2 years c) No later than 1 year from the time of purchase d) No sooner than 6 months from the time of purchase
#47. When can a Long-Term Care policy deny a claim for losses incurred because of a pre-existing condition?
a) At any time b) At no time c) Within 6 months of the effective date of coverage d) Within 12 months of the effective date of coverage
#15. Which of the following best describes gross annual premium?c) Annual cost of mortality plus expenses
a) Basic insurance rate plus commissions b) Expense premium c) Annual cost of mortality plus expenses d) Annual loading
#3. Which type of life insurance policy generates immediate cash value?
a) Decreasing Term b) Continuous Premium c) Single Premium d) Level Term
#53. How often must producer licenses renew in Louisiana?
a) Every year b) Every 2 years c) Every 3 years d) Every 5 years
#27. All of the following are true of the federal tax advantages of a qualified plan, EXCEPT
a) Funds accumulate on a tax-deferred basis. b) Contributions made to a qualified plan are not counted as income to the employee for income tax purposes. c) At distribution, all amounts received by the employee are free of taxes. d) Employer contributions made to a qualified plan are tax deductible as ordinary business expense.
#4. If Tom's policy allows him to make periodic additions to the face amount at standard rates, without proving insurability, his policy includes a
a) Guaranteed insurability option. b) Guaranteed renewable option. c) Conversion option. d) Nonforfeiture option.
#24. Will's health insurance includes a Narcotics & Intoxicants provision. Will has been drinking alcohol before leaving his house and driving his car into an embankment. After the police arrive on the scene, they determine that Will has been drinking. Will his policy pay for his injuries?
a) He will receive no benefits. b) The extent of Will's benefits depends upon which variation of this provision is attached to Will's policy. c) Yes, he will get full benefits. d) He will only receive partial benefits
#42. Issue age policy premiums increase in response to which of the following factors?
a) Increased deductible b) Inflation c) Age d) Increased benefits
#1. The policy, in combination with the application, is joined together into one entity called the
a) Insurance Contract b) Contract Provision c) Whole Policy d) Entire Contract
#44. Which of the following are responsible for making premium payments in an HMO plan?
a) Insureds b) Payors c) Subscribers d) Producers
#149. If a retirement plan or annuity is "qualified," this means
a) It has a penalty for early withdrawal. b) It accepts after-tax contributions. c) It is noncancellable. d) It has favorable tax treatment.
#7. Which type of care is NOT covered by Medicare? a) Long-term care
a) Long-term care b) Hospice c) Respite d) Hospital Hospice care, which includes respite care, and hospital care are included in Medicare Part A.
#43. All of the following statements describe a MEWA EXCEPT (Multiple Employer Welfare Arrangement)
a) MEWAs can be sponsored by insurance companies. b) MEWA employers retain full responsibility for any unpaid claims. c) MEWAs can be self-insured. d) MEWAs are groups of at least 3 employers.
#13. Which of the following statements is NOT correct? b) Medicare Advantage must be provided through HMOs
a) Medicare Part B provides physician services. b) Medicare Advantage must be provided through HMOs. c) Medicare Advantage may include prescription drug coverage at no cost d) Medicare Part A provides hospital care.
#30. In cases where a covered employee is eligible for Medicare benefits to treat end-stage renal disease (ESRD) with dialysis or kidney transplant, which of the following is correct?
a) Medicare is primary for the first 12 months of treatment and the employer group insurance is secondary. b) Medicare is the secondary payer during the first 30 months of treatment. c) Medicare and the employer group insurance plan will share the cost equally. d) Because Medicare does not cover treatment of ESRD, the group plan will pay 100%.
#25. Arrange the following from the lowest yearly cost to highest according to premium payment mode.
a) Monthly, quarterly, annual b) Quarterly, monthly, annual c) Annual, monthly, quarterly d) Annual, quarterly, monthly
#32. Attempting to determine how much insurance an individual would require based upon their financial objectives is known as
a) Needs Approach. b) Human Life Value Approach. c) Estate Planning. d) Viatical Approach.
#20. Cameron is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he feels he can afford at this time, he wants to be sure that additional coverage will be available in the future. He should include in this policy a
a) Nonforfeiture option. b) Guaranteed insurability option. c) Conversion option. d) Guaranteed renewable option.
#65. While you are reviewing Patrick's employer's contributions to his Health Savings Account with him, he asks you how the contributions affect his taxes. You should advise him that HSA contributions are
a) Not included in the individual taxable income. b) Taxed at the same rate as the Social Security tax rate. c) Taxed at the personal income tax rate. d) Excluded from corporate tax calculations.
#48. Medicare Part A services do NOT include which of the following?
a) Post hospital Skilled Nursing Facility Care b) Hospitalization c) Hospice Care d) Outpatient Hospital Treatment
#97. All of the following statements are correct regarding Credit Life Insurance EXCEPT
a)Benefits are paid to the borrower's beneficiary. b)The amount of insurance permissible is limited per borrower. c)Premiums are usually paid by the borrower. d)Benefits are paid to the creditor.
#2. Under a disability income policy, the insurer does not pay a monthly benefit that is equal to the insured's previous income. The reason for paying a benefit amount that is less than the insured's income is to
a) Prevent overutilization and malingering. b) Prevent the insured from obtaining excess insurance. c) Enable the insurer to provide affordable coverage. d) Enable the insurer to reduce variable costs.
#19. Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled?
a) Proprietary Transfer b) Absolute assignment c) Transfer of Ownership d) Disability Buy-Sell
#50. To be eligible for a Health Savings Account, an individual must be covered by a
a) Qualified plan. b) Health plan with no deductible. c) High-deductible health plan. d) Low-deductible health plan.
#41. If a dental plan is integrated, it is combined with what type of plan?
a) Secondary dental b) Supplemental c) Life d) Medical
#22. Your client wants to know what the tax implications are for contributions to a Health Savings Account. You should advise her that the contributions are
a) Subject to personal income taxes. b) Post-tax dollars. c) Subject to capital gains taxes. d) Tax deductible.
#29. An insurer wishes to compare the information given in an insurance application with previous insurance applications by the same applicant but for different companies. What organization can help the insurer accomplish this?
a) The Medical Information Bureau b) The State Department of Insurance c) Social Security d) The National Association of Insurance Commissioners
#6. An employee becomes insured under a PPO plan provided by his employer. If the insured decides to go to a physician who is not a PPO provider, which of the following will happen?
a) The PPO will pay reduced benefits. b) The PPO will not pay any benefits at all. c) The insured will be required to pay a higher deductible. d) The PPO will pay the same benefits as if the insured had seen a PPO physician.
#17. What method is used to determine the taxable portion of each annuity payment?
a) The excise ratio b) The annuity to age ratio c) The marginal tax formula d) The exclusion ratio
#36. Which statement accurately describes group disability income insurance?
a) There are no participation requirements for employees. b) Short-term plans provide benefits for up to 1 year. c) The extent of benefits offered is determined by the insured's income. d) In long-term plans, monthly benefits are limited to 75% of the insured's income.
#28. Which of the following is true regarding Medicare supplement policies?
a) They must contain a minimum of Plans A and B. b) They must be available to those aged 60 and over. c) They must be guaranteed renewable. d) They must have a 15-day free-look period.
#18. A man has been diagnosed with a form of leukemia that is associated with a high mortality rate. His oncologist has given him approximately six months to live. The man is already swamped with debt and realizes that his financial state will worsen even more with his upcoming medical expenses. What option could he utilize right now?
a) Viatical Settlement b) Liquidity c) Surrender d) Change of Beneficiary
#35. Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die?
a) Whole Life b) Ordinary Life c) Joint Life d) Decreasing Term
#125. When a resident producer changes his residence address, the Insurance Department must be notified within
a)10 days. b)15 days. c)30 days. d)60 days.
#98. How long must an insurer keep the receipt of policy delivery to the policyowner if the delivery was by mail?
a)4 years b)5 years c)1 year d)2 years
#91. Most policies will pay the accident death benefits as long as the death is caused by the accident and occurs within
a)60 days. b)90 days. c)120 days. d)30 days.
#99. If a telemarketer wants to make an unsolicited sales call to a potential customer, what is the earliest time the telemarketer can call the prospect's residence?
a)7 am b)8 am c)9 am d)Noon
#139. An underwriter is reviewing the medical questions in the application and needs further information due to a medical situation the applicant had in the past. What will the underwriter require?
a)A complete medical record b)Sworn health affidavit from the applicant c)Statement of Continued Good Health d)Attending Physician Statement
#117. In terms of Social Security, what is the name for the time period after the youngest child of a family turns 16 and before the surviving spouse may start receiving retirement benefits?
a)Accumulation period b)Blackout period c)Nonpayment interval d)Benefit reduction
#120. An insured covered under a group health policy has a dependent child who is physically handicapped and unable to work. Until what age will the child be covered under the insured's policy as a dependent?
a)Age 26 b)Unlimited age c)Age 21 d)Age 24
#86. An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe?
a)Aleatory b)Good health c)Adhesion d)Conditional
#57. If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association that would be considered
a)An unfair trade practice. b)A misrepresentation. c)An accurate statement. d)A legal representation of the Association.
#92. What types of services may NOT be provided under the long-term care's assisted living care?
a)Assistance with dressing and bathing b)Reminders regarding medication c)Visits by a registered nurse d)Linens and personal laundry service
#56. HIPAA applies to groups of (Health Insurance Portability & Accountability)
a)At least 100. b)More than 2, fewer than 50. c)2 or more. d)At least 10.
#108. If an insurance company offers Medicare supplement policies, it must offer which of the following plans?
a)B-N b)A-D c)A d)A & B
#66. What type of beneficiary designation allows the benefit to pass from a deceased primary beneficiary to the beneficiary's heirs, instead of splitting the benefit among surviving primary beneficiaries?
a)By the head b)Per capita c)Per stirpes d)By class
#88. When compared with the administrative cost found in individual coverage, the per capita administrative cost in group health insurance is
a)Comparable. b)Equal. c)Lower. d)Higher.
#129. An insured is admitted to the hospital for surgery on a herniated disk. The insurance company monitors the treatment and progress in order to make sure that everything proceeds according to the insurer's schedule. This is called
a)Comprehensive review. b)Schedule monitoring. c)Concurrent review. d)Prospective review.
#75. A policy which covers medical costs related to a specific condition is called a
a)Condition-Specific Policy. b)Specific Condition Policy. c)Limited Coverage Policy. d)Dread Disease Policy.
#82. Evaluating information that establishes adverse selection risk is the purpose of which stage of insurance?
a)Contract negotiation b)Contract Review c)Application d)Underwriting
#135. Your client owns a Market Value Adjusted Annuity. In order to pay for a series of large, unexpected medical bills, he decides to surrender his policy prematurely. Which of the following will determine the penalty that that annuity owner will have to pay?
a)Current interest rate at the time of surrender b)Flat fee determined by an index of interest gains, combined with the amount of time the annuity would take to mature c)There are no penalties imposed for surrendering annuities prematurely. d)Guaranteed minimum interest rate stipulated in the contract
#133. Under which plan does preventative dental treatment not apply toward the deductible?
a)Focused b)Provisional c)Limited d)Nonscheduled
#63. In a direct rollover, how is the money transferred from one plan to the new one?
a)From the participant to the new plan b)From the original plan to the original custodian c)From trustee to trustee d)From trustee to the participant
#83. Regarding long-term care coverage, as the elimination period gets shorter, the premium
a)Gets lower. b)Gets higher. c)Remains constant. d)Premiums are not based on elimination periods.
#95. A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?
a)Her parents' federal income tax receipts b)Medical exam and parents' medical history c)Proof of insurability is not required. d)Medical exam
#69. Tyler applied for an individual health insurance policy. While completing the application, his agent told him that all of the following statements would be underwriting factors EXCEPT
a)His job requires that he flies regularly on a commercial airline. b)His avocations include scuba diving. c)Three years ago, he was convicted of DUI. d)His use of tobacco.
#140. Which of the following terms best describe a Term-to-65 contract's premium and death benefit respectively?
a)Increasing; level b)Decreasing; level c)Increasing; increasing d)Level; level
#73. What would be considered a disadvantage of owning a fixed annuity?
a)Investment risks being carried by the annuity owners b)Interest rate dependence on stock performance c)Guaranteed minimum interest rate d)Decrease in purchasing power of the benefit in times of inflation
#126. Which of the following is true about the premium on the children's rider in a life insurance policy?
a)It decreases when the oldest child reaches the age of 21. b)It increases when a newborn baby is added to the policy. c)It decreases when an adopted child is added to the policy. d)It remains the same no matter how many children are added to the policy.
#78. Which of the following statements is NOT true concerning Medicaid?
a)It is intended to provide medical assistance for certain categories of people who are needy. b)It consists of 3 parts: Part A: hospitalization, Part B: doctor's services, Part C: disability income. c)It is a state program. d)It is funded by state and federal taxes.
#101. Which of the following is a feature of a single premium immediate annuity?
a)It is purchased through periodic payments. b)Income payments start at age 65. c)It is also referred to as a deferred annuity. d)Income payments start within one year.
#87. An insurer invests the money it receives from premiums paid by its insureds. Which of the following is true regarding the interest earned on these investments?
a)It is used to offer lower-rate ancillary policies. b)It is used to fund executive bonuses c)It is often used as a consistent means of profit. d)It is used to lower premiums.
#127. What is the benefit of choosing extended term as a nonforfeiture option?
a)It matures at age 100 b)It allows for coverage to continue beyond maturity date c)It can be converted to a fixed annuity d)It has the highest amount of insurance protection
#68. Which of the following is NOT true regarding the Needs Approach method of determining the value of an individual's life?
a)It must be assumed that the death of the insured will occur immediately. b)Need is predicted using the number of years until the insured's retirement. c)Coverage is based on the predicted needs of that family. d)The death of an insured must be premature.
#94. Which of the following would be a unique benefit life insurance has over other types of insurance?
a)Its proceeds are paid to the beneficiary. b)It may perform the function of cash accumulation. c)It is a contract between the policyowner and the insurer. d)It guarantees income when needed.
#113. The factor added to the net premium to cover the costs of the insurer in obtaining and maintaining the business is called
a)Legal reserve. b)Dividend accumulation. c)Premium tax. d)Expenses.
#100. An insured is receiving hospice care. His insurer will pay for painkillers but not for an operation to reduce the size of a tumor. What term best fits this arrangement?
a)Limited Coverage b)Claims Saving c)Cost-containment d)Selective Coverage
#55. Which of the following is NOT a way to determine the interest rate in a Universal Life Policy?
a)Maintain a profit margin between the interest credited on in-force policies and the interest earned on their own investment portfolio b)Estimate market conditions for the life of the policy c)Declare the annual rate by the company's board of directors d)Tie current interest rates to Treasury Bills
#77. What certification must an insurer receive before it can transact insurance in Louisiana?
a)NAIC Charter Certificate b)Certificate of Authority c)Solvency Clearance d)Guaranty Clearance
#106. Which law was passed to authorize the NAIC to develop a standardized model for Medicare supplements policies? (National Association of Insurance Commissions)
a)OBRA b)COBRA c)Act Against Deceptive Advertising d)Advertisement Regulation Act
#145. Which of the following is NOT considered to be a basic service, under a nonscheduled plan?
a)Oral surgery b)Fillings c)Dentures d)Endodontics
#79. An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase?
a)Payments for 15 years b)Payments for 20 years c)Payments for life d)Nothing
#128. A rider attached to a life insurance policy that provides coverage on the insured's family members is called the
a)Payor rider. b)Other-insured rider. c)Change of insured rider. d)Juvenile rider.
#141. A long-term care shopper's guide must be presented at what point?
a)Prior to the time of application b)At the time of application c)Between the completion of the application and the delivery of the policy d)At the time of policy delivery
#90. The sole beneficiary of a life insurance policy dies before the insured. If the policyowner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to
a)Probate. b)The state. c)The beneficiary's estate. d)The insured's estate.
#150. The regulation of the insurance industry primarily rests with
a)The NAIC. b)Private insurers. c)The federal government. d)The state.
#85. All of the following are true of Key Person insurance EXCEPT
a)The key employee is the insured. b)The plan is funded by permanent insurance only. c)There is no limitation on the number of key employee plans in force at any one time. d)The employer is the owner, payor and beneficiary of the policy.
#134. All of the following would be factors in rating a health insurance policy EXCEPT
a)The nationality of the applicant. b)The occupation of the applicant. c)Type of benefits provided in the contract. d)The deductible and copayment selected.
#102. If a policy is rated-up, which of the following is true?
a)The number of exclusions decreases. b)The number of benefits increases. c)The premium increases. d)The premium decreases.
#61. All of the following are true regarding a decreasing term policy EXCEPT
a)The payable premium amount steadily declines throughout the duration of the contract. b)It has a lower premium than level term. c)The contract pays only in the event of death during the term and there is no cash value. d)The face amount steadily declines throughout the duration of the contract.
#143. Hospital indemnity/hospital confinement indemnity policy will provide payment based on
a)The type of illness. b)The premiums paid into the policy. c)The medical expense incurred. d)The number of days confined in a hospital.
#72. Which of the following is true regarding METs?
a)They make deals with local hospitals to provide low cost coverage to the needy. b)They provide insurance for larger corporations. c)They provide insurance companies with medical information on applicants. d)They allow several small employers purchase less expensive insurance together.
#132. Which of the following is NOT true regarding partial disability?
a)This is a form of insurance that covers part-time workers. b)The insured can still report to work and receive benefits. c)Benefit payments are typically 50% of the total disability benefit. d)An insured would qualify if he couldn't perform some of his normal job duties.
#89. Which of the following statements is true concerning the Accidental Death Rider?
a)This rider is only available to insureds over the age of 65. b)It is only available in group insurance. c)It will pay double or triple the face amount. d)It is also known as a triple indemnity rider.
#112. In a survivorship life policy, when does the insurer pay the death benefit?
a)Upon the last death b)Upon the first death c)Half at the first death, and half at the second death d)If the insured survives to age 100