Simulated Life and Health Insurance Exam
An insured owns a $50,000 whole life policy. The insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?
$50,000
When a policy is replaced, the replacing insurers must maintain a replacement register regarding that policy until the conclusion of the next regular examination by the insurance department of for
3 years
If an agent changes his residence address, he must notify the commissioner within
30 days
If an insured's cognitive impairment results in the lapse of an LTC, how long from the lapse may the insured request reinstatement?
5 months
A guaranteed renewable disability insurance policy
Is renewable at the insureds option to a specified age
Under which organization are the practicing providers compensated on a fee for service basis?
PPO
all of the following qualify for medicare health insurance except
a retired person age 50
What documentation grants express authority to an agent
agent's contract with the principal
spouse term rider
rider is level term insurance, typically expiring at age 65
What would help prevent a universal life policy from lapsing?
target premium
Which of the following best describes what the annuity period is?
the time during which accumulated money is converted into income payments
Which of the following is true regarding taxation of accelerated benefits under a life insurance policy?
they are tax free to the terminally ill
What is the purpose of coinsurance provisions?
to help insurance companies prevent overutilization of the policy
The minimum number of credits required for partially insured status for Social Security disability benefits is
6 credits
How long is an open enrollment period for medicare supplement policies
6 months
Equity Indexed Annuity
The annuity that has a guaranteed minimum interest rate, less risky than variable, and earn higher interest rates than fixed
who chooses a primary care physician in an HMO
The individual member
Insurers or agents soliciting partnership policies must provide each prospective applicant with the following except
a statement that the insured does not automatically qualify for medicare part A
Assuming that all of the following people are covered by a High Deductible Health Plan and are not claimed as dependents on anyone's tax returns, which would NOT be eligible for a Health Savings Account?
amanda is 67 and is covered by a basic medical expense policy
Who can make a fully deductible contribution to a traditional IRA?
an individual not covered by an employer-sponsored plan who has earned income
When an annuity is written, whose life expectancy is taken into account?
annuitant
When must insurable interest exist in a life insurance policy?
at the time of the application
Occasional visits by which medical professional will not be covered under LTC's home health care?
attending physician
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be
authorized
Which components must a life insurance policy have to allow policy loans?
cash value
A business owner was trying to obtain a bank loan, but the bank required proof of additional assets. The business owner decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?
collateral assignment
an insurance contract requires both the insured and insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic is this?
conditional
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?
consideration
An applicant for an individual health policy failed to complete the application properly. Before being able to complete the application and pay the initial premium, she is confined to a hospital. This will not be covered by insurance because she hasn't met the conditions specified in the
consideration clause
what is the difference between coinsurance and copayments
copayment is a set dollar amount
guaranteed insurability rider
coverage is purchased at the insured's attained age. this rider usually expires at the age of 40
which term describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance
defamation
Which agreement specifies how a business will transfer hands when one owner dies or becomes disabled?
disability buy-sell
What is true about occupational vs. non-occupational coverage?
disability insurance can be written as occupational or nonoccupational
Long-term care coverage may be available as any of the following options EXCEPT
endorsement to a health policy
The authority granted to an agent through the agent's contract is referred to as
express authority
Which policy component decreases in decreasing term insurance?
face amount
The requirement that agents not commingle insurance monies with their own funds is known as
fiduciary responsibility
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a
guaranteed insurability rider
A father purchases a life insurance policy on his teenage daughter and adds the payor of benefit rider. In which scenario will the rider waive the payment of premium
if the father is disabled for more than 6 months
The Patient Protection and Affordable Care Act includes all of the following provisions EXCEPT
individual tax deduction for premiums paid
The medical information bureau (MIB) was created to protect
insurance companies from adverse selection by high risk persons
In the event of loss, after a notice of claim is submitted to the insurer, who is responsible for providing claims forms and to which party?
insurer to the insured
Which of the following entities has the authority to make changes to an insurance policy?
insurer's executive officer
Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?
insuring clause
During partial withdrawal from a universal life policy, which portion will be taxed?
interest earned on withdrawn cash
The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?
interest only option
which best describes annually renewable term insurance
it is level term insurance
Which of the following statements about the reinstatement provision is true?
it requires the policyowner to pay all overdue premiums with interest before the policy is reinstated
Which statement is not true regarding straight life policy?
its premium steadily decreases over time, in response to its growing cash value
A married couple owns a permanent policy which covers both their lives and pays death benefit only upon death of the first insured. Which policy is this?
joint life policy
Under workers compensation, which of the following benefits are NOT included?
legal benefits
Variable whole life insurance is based on what type of premium?
level fixed
Which two terms are associated directly with the premium?
level or flexible
Which of the following is an example of a limited-pay life policy?
life paid-up at age 65
The premium of a survivorship life policy compared with that of a joint life policy would be
lower
Under the fair credit reporting act, individuals rejected for insurance due to information contained in a consumer report
must be informed of the source of the report
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?
mutual
Death benefits payable to a beneficiary under a life insurance policy are generally
not subject to income tax
An applicant is discussing his options for Medicare supplement coverage. The applicant has just enrolled in Medicare Parts A and B. What is the insurance company obligated to do
offer the supplement policy on a guaranteed issue basis
Don has both a basic expense and a major medical policy. He is injured in an accident, which requires several major surgeries. This quickly exhausts Don's basic expense policy. What must Don do before his major medical policy can pick up where the basic expense policy left off?
pay a special deductible on his major medical policy (corridor deductible)
Which of the following riders would not cause the death benefit to increase?
payor benefit rider
All of the following are covered by Part A medicare except
physician's and surgeon's services
Which document delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years?
policy summary
Underwriting is a major consideration when an insured wishes to replace her current policy for all of the following reasons EXCEPT
premiums always stay the same
which of the following is correct regarding business overhead expense insurance
premiums are tax deductible, benefits are not
A medicare SELECT policy does not
prohibit payment for regularly covered services if provided by non-network providers
Which of the following does not describe the principal goal of a preferred provider organization?
provide medical services only from the physicians in the network
An insurance policy that only requires a payment of premium at its inception, provides insurance protection for life, and matures at the insured's age 100 is called
single premium whole life
Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option?
size of each installment
Which of the following special policies covers unusual risks that are NOT normally included under Accidental Death and Dismemberment coverage?
special risk policy
Which insurers are owned by stockholders
stock insurance companies
Which term best describes the specified dollar amount beyond which the insured no longer participates in the sharing of expenses?
stop-loss limit
Medicare supplements specifically exclude all of the following EXCEPT
surgical expense of persons eligible for medicare
A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as
survivor protection
allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured
term rider
The annual contribution limit of a dependent care flexible spending account is set by
the IRS
What happens if a non-member physician is utilized under the POS plan?
the attending physician will be paid a fee for service, and the member patient will have to pay a higher coinsurance amount
A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then
the benefit is received tax free
An insured who has an accidental death and dismemberment policy loses her left arm in an accident. What type of benefit will she most likely receive?
the capital amount in a lump sum
Which entity is responsible for determining whether an advertisement might mislead or deceive a person of average education and intelligence?
the commissioner
Both the insured and the primary beneficiary die in the same car accident, and it was impossible to determine who died first. Which of the following would receive the death benefit?
the contingent beneficiary
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?
the date of the medical exam
In a disability policy, the elimination (or waiting) period refers to the period between:
the first day of disability and the day the insured starts receiving bnefits
Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to
the insured
An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT?
the insured may convert to term or permanent coverage
who is responsible for the contents of life insurance advertising
the insurer
Which is true regarding coinsurance?
the larger the percentage paid by the insured, the lower the premium
What is the advantage of reinstating a policy instead of applying for a new one?
the original age is used for premium determination
In a life settlement contract, whom does the life settlement broker represent?
the owner
What is the purpose of a fixed-period settlement option?
to provide a guaranteed income for a certain amount of time
What is the purpose of a conditional receipt?
to provide coverage on a date prior to policy issue
The paid-up addition option uses the dividend
to purchase a smaller amount of the same type of insurance as the original policy
When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees
to renew the policy until the insured has reached age 65
Which of the following is not a responsibility of an insurance agent?
underwriting the contract
According to the rights of renewability rider for cancellable policies, all of the following are correct about the cancellation of an individual insurance policy EXCEPT
unearned premiums are retained by the insurance companies
An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have.
universal life
A medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographic area is known as
usual, customary, and reasonable
Which is a statement that is guaranteed to be true and if untrue may breach an insurance contract?
warranty
Social security supplement or social security riders would provide for the payment of income benefits in each situation below except
when the amount payable under social security is more than the amount payable under the rider
