South Dakota Life and Health Final Exam
Many small business owners worry how their business would survive financially if the owner becomes disabled. The policy which Best addresses this concern is:
Business Overhead Expense
Which of these circumstances is a Business Disability Buy-Sell policy designed to help in the sale of a business?
Business owner becoming disabled
J is a subscriber to a plan which contracts with doctors and hospitals to provide medical benefits at a preset price. What type of plan does J belong to?
Health Maintenance Organization (HMO)
K is an annuitant currently receiving payments. If she were to die before receiving payments equal to the correct value, a beneficiary will continue receiving payments until an amount equal to the contract value has been paid. This is called a(n)
Installment Refund annuity
If a retiree on Medicare required five hospital stays in one year, which policy would provide the best insurance for excess hospital expenses?
Medicare Supplement
Which of the following actions may result in a producer's license being suspended?
Misappropriation of premiums
What type of renewability guarantees premium rates and renewability?
Noncancellable
Which statement is true regarding a minor beneficiary
Normally, a guardian is required to be appointed in the Beneficiary clause of the contract
Which statement is true regarding a minor beneficiary?
Normally, a guardian is required to be appointed in the Beneficiary clause of the contract
Under what system do a group of doctors and hospitals in a designated area contract with an insurer to provide services at a prearranged cost to the insured?
PPO
What does Medicare Parts A and B cover
Part A covers hospitalization; Part B covers doctor's services
The insured and insurance company will share the cost of the covered losses under which health policy feature?
Payment of Claims provision
Which of these statements concerning an Individual Straight Life annuity is accurate?
Payments are made to an annuitant for life
Which Long Term Care insurance statement is true?
Pre-existing conditions must be covered after the coverage has been in force for six months
Which of the following is considered to be the time period after a Health Policy is issued, during which no benefits are provided for illness?
Probationary Period
Which of the following statements is true about most Blue Cross/Blue Shield organizations?
They are nonprofit organizations
The Common Disaster clause provides that if both the insured and the sole name beneficiary were to die in a common accident, which of the following is true?
This clause provides the payment of proceeds to the insured's estate
Medicare is intended for all of the following groups, EXCEPT:
Those enrolled as a full-time student
What type of reinsurance contract involves two companies automatically sharing their risk exposure?
Treaty
Licensed producers in South Dakota are authorized to
solicit, receive, and forward applications to the insurer
An example of rebating would be
splitting the commission with the buyer on a sale of insurance
A contract owner terminates an annuity before the income payment period begins. The owner will then receive
the current contract surrender value
A noncontributory group term life plan is characterized by:
the entire cost of the plan is paid for by the employer
An individual who purchases a Life annuity is given protection against:
the risk of living longer than expected
A term life insurance policy matures:
upon the insured's death during the term of the policy
J's Major Medical policy has a $2,000 deductible and an 80/20 Coinsurance clause. If J is hospitalized and receives a bill for $10,000, J would pay
$3,600= $2,000+20% of the remaining bill
An individual has a Major Medical policy with a $5,000 deductible and an 80/20 Coinsurance clause. How much will the INSURED have to pay if a total of $15,000 in covered medical expenses are incurred?
$7,000
Individual health insurance policies must provide a minimum free-look period of _____ days upon policy delivery.
10
The free-look period provided in a life insurance policy is usually ____ days.
10
Basic inpatient alcohol treatment must be covered for at least ___ days per year.
30
How long is he typical free look period for Long Term care insurance policies
30 days
S is employed by a large corporation that provides group health coverage for its employees and their dependents. If S dies, the company must allow his surviving spouse and dependents to continue their group health coverage for a maximum of how many months under COBRA regulations?
36
What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan?
50%
Qualified Long-Term Care policies may take into consideration an applicant's pre-existing conditions for a maximum of not more than __ month(s) prior to the effective date of coverage.
6
G is an accountant who has ten employees and is concerned about how the business would survive financially if G became disabled. The type of policy which BEST addresses this concern is
Business Overhead Expense
Which of the following statements about noncontributory employee group life insurance is FALSE?
A minimum number of employees is required to participate
Which of the following types of care is typically not covered in a Long-Term Care policy?
Acupuncture
The Consideration clause in a life insurance contract contains what pertinent information?
Amount of premium payments and when they are due
At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid?
At the time of application
A pilot applies for Life insurance. The insurer approves the application with a $10 additional monthly premium modification due to the risk involved. The pilot declines the additional premium modification. The insurer will then likely issue the coverage with a(n)
Aviation Exclusion
Which of the following is included under newborn child health coverage?
Birth abnormalities
Which of the following policy features allows an insured to defer current health chargers to the following year's deductible instead of the current year's deductible?
Carryover provision
When an insured changes to a more hazardous occupation, which disability policy provision allows an insurer to adjust policy benefits and rates?
Change of occupation provision
On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take?
Collect initial premium along with a signed health statement
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. Assuming that T is an acceptable risk, what item is given to T?
Conditional receipt
According to the Affordable Care Act (ACA), which of the following coverages is NOT required?
Coverage for cosmetic surgery
Which statement regarding the Misstatement of Age provision is considered to be true?
Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered
P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase?
Deferred
A 45 year-old woman won $100,000 in a scratch-off lottery ticket. She purchased an annuity that will pay her $1,500 per month beginning at age 60. Which of these annuities did this woman purchase?
Deferred Fixed annuity
Which contract permits the remaining partners to buy-out the interest of a disabled business partner?
Disability Buy-Sell
B is a teacher who was injured in a car accident and cannot work. She is now receiving monthly benefits as a result of this accident. Which type of policy does B have?
Disability Income
K becomes ill after traveling overseas and is unable to work for 3 months. What kind of policy would cover her loss of income?
Disability Income
Which of the following does Social Security NOT provide benefits for?
Dismemberment
What type of policy would only provide coverage for specific types of illnesses (cancer, stroke, etc)?
Dread disease insurance
Company Z has a Cross Purchase Buy-Sell Agreement in place among its three founding partners. If the agreement is funded with individual life insurance, what would it require?
Each partner must own a policy on the other partners
Long Term Care policies will usually pay for eligible benefits using which of the following methods?
Expense incurred (reimbursement)
An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the
Fair Credit Reporting Act
An example of misrepresentation is
Falsifying the terms, benefits, advantages, or conditions of an insurance policy
Taking receipt of premiums and hold them for the insurance company is an example of:
Fiduciary responsibility
A producer is meeting with a client to determine whether an annuity would be suitable for purchase. Which of the following topics needs to be discussed with this client?
Financial status of the client
What is being delivered during a policy delivery?
Insurance contract to the proposed insured
If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of?
Insured
Who has the option to renew a Renewable Term policy?
Insured
If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act?
Insured's contingents beneficiary
A policyowner would like to change the beneficiary on an Accidental Death and Dismemberment (AD&D) insurance policy and make the change permanent. Which type of designation would fulfill this need?
Irrevocable
What kind of Accidental Death and Dismemberment (AD&D) insurance beneficiary requires his/her consent when a change of beneficiary is made
Irrevocable beneficiary
K is an insured under a life insurance policy owned by a third party. Which of these statements is true?
K has no ownership rights
K, age 45, and his wife, age 43, have three children. They purchase a Family Policy that covers K's wife to age 65. All of these situations will pay a death benefit EXCEPT
K's wife dies at age 66
Which of the following NOT information needed to determine the suitability of an annuity recommendation?
Level of education
Which of these is an element of a Single Premium annuity?
Lump-sum payment
When an insured has the same disability within a specified time period and the insurance company provides the same benefits without a new waiting period, the second disability is covered under which of the following benefits?
Recurrent Disability
R had received full disability income benefits for 6 months. When he returns to work, he is only able to resume half his normal daily workload. Which provision pays reduced benefits to R while he is not working at full capacity?
Residual Disability
A prepaid application for individual Disability Income insurance was recently submitted to an insurer. When the insurer received the Medical Information Bureau (MIB) report, the report showed that the applicant had suffered a stroke 18 months ago, something that was not disclosed on the application. Which of the following actions would the insurance company NOT take?
Send a notice to the MIB that the applicant was declined
P is a new employee and will be obtaining non-contributory group Major Medical insurance from her employer. Which of the following actions must she take during the open enrollment period?
Sign an enrollment card
K has inherited a large sum of money. K purchases an annuity with this sum on July 1, and starts receiving payments August 1. These payments will continue for as long as she and her spouse lives. Which type of annuity did K purchase?
Single Premium Immediate Joint with Survivor Annuity
What kind of life insurance product covers children under their parent's policy?
Term rider
G is involved in an automobile accident as a result of driving while intoxicated and suffers numerous injuries. According to the Intoxicants and Narcotics exclusion in G's policy, who is responsible for paying the medical bills?
The insured
Additional coverage can be added to a Whole Life policy by adding a(n):
decreasing term rider
R becomes disabled and owns an individual Disability Income policy. When is R eligible to receive disability benefits?
Upon satisfying the elimination period requirement
A(n) ________ annuity pays benefits based on units rather than stated dollar amounts.
Variable
What type of annuity has a cash value that is based upon the performance of it's underlying investment funds?
Variable
The provision in a health insurance policy that suspends premiums being paid to the insurer while the insured is disabled is called the:
Waiver of Premium
What type of rider would be added to an Accident and Health policy if the policy if the policyowner wants to ensure the policy will continue if he/she ever becomes totally disabled?
Waiver of Premium rider
Disability policies do NOT normally pay for disabilities arising from which of the following?
War
An example of misrepresentation is
a producer misleading or failing to adequately disclose the title and true nature of a policy offered to a potential insured
A Cost of Living rider gives the insured
additional death benefits. The Cost of Living rider can be purchased with many different types of life insurance. This type of coverage is designed to help you hedge your bets against inflation. For example, if you purchase this rider, your policy is going to increase in value if inflation increases.
According to Affordable Care Act (ACA), a dependent child's eligibility
age
How long does the coverage normally remain on a limited-pay life policy?
age 100
Group life insurance policies are generally written as:
annually renewable term
An order issued by the Director that prohibits a specific practice listed in the order is called a(n)
cease and desist order
A variable insurance policy:
does not guarantee a return on investment accounts
M becomes disabled and is unable to work for six months. M dies soon after from complications arising from this disability. M has a Disability Income policy that pays $2,000 a month. Which of the following statements BEST describes what is owed to her estate?
earned, but unpaid benefits will be paid
The reason for a business having a Business Overhead Expense Disability Plan is to cover
fixed business expenses
With Disability Income insurance, an insurance company may limit the monthly benefit amount a prospective policy holder may obtain because of the insured's
gross income at the time of purchase
S wants to open a tax-exempt Health Savings Account. To qualify for this type of account, Federal law dictates that S must be enrolled in a
high-deductible health plan
Which of the following will a Long Term Care plan typically provide benefits for?
home health care
When determining the monthly benefit amount for a Disability Income policy, the fact that limits the amount a prospective insured may purchase is:
income
A life insurance applicant must be provided with a Buyer's Guide
no later than policy delivery
The Notice of Claims provision requires a policyowner to:
notify an insurer of a claim within a specified time
A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a:
profit-sharing plan
