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