State Exam Simulator : 200 questions
Upon the direct request of a consumer, who asserts in good faith that he/she has been a victim of fraud, a consumer reporting agency must include a fraud alert in the file of the consumer for no less than
90 days
Which of these is NOT an advantage of term life insurance?
A cash benefit will be provided if the insured is alive at the end of the policy period
When is it acceptable for a producer to leave an applicant an incomplete illustration?
Never
How are the premiums for an individually-owned disability income policy treated for tax purposes?
No tax deduction
Which of the following would NOT have a restricted ability to enter into a contract?
Small employer
A nonparticipating whole life insurance policy was surrendered for its $20,000 cash value. The total premiums paid had totaled $16,000. What were the federal income tax consequences to the policyowner on receipt of the cash value?
$16,000 was received tax-free and $4,000 as ordinary income
A teacher recently retired at age 63 and has a tax sheltered annuity (TSA). Periodic deposits total $120,000 and the value of the contract is now worth $200,000. How much is taxed if the current value is surrendered today?
$200,000
An individual working part-time has a gross income of $5,000 for the year. If this individual has an IRA, what is the maximum deductible IRA contribution allowable?
$5,000
The grace period for a life insurance policy with an annual premium is usually
1 month
How long is individual medical expense insurance normally written for?
1 year
First-time homebuyers are able to withdraw up to how much from their qualified IRAs without incurring the 10% early withdrawal penalty?
10,000
What is the maximum number of employees (earning at least $5,000) that an employer can have in order to start a SIMPLE retirement plan?
100
Medicare will cover a maximum of how many days per benefit period in a skilled nursing facility?
100 days
What minimum percentage of all eligible employees must participate in a group life insurance plan if the premiums are completely paid for by the employer?
100%
John received a one-time distribution of $50,000 from his modified endowment contract (MEC). Prior to that, the contract's cash value was $150,000, the contract investment amount was $100,000, and the death benefit was $500,000. What percentage of the $50,000 distribution was taxable as ordinary income?
100% Funds withdrawn from an MEC are subject to last-in first-out (LIFO) tax treatment, which assumes that the investment or earnings portion of the contract's values is withdrawn first (making these funds fully taxable as ordinary income).
Which of the following best describes the tax treatment of medical expense policies for the self-employed?
100% of medical expense plan premiums are tax deductible
Individuals seeking Social Security disability income benefits must have a disability that will eventually lead to death, or be expected to last at least
12 months
The maximum prison sentence given under federal law for unfair and deceptive insurance practices is
15 years
A small employer group is an employer that employs how many?
2-50 employees
An insured must notify an insurer of a medical claim within how many days after an accident?
20
Within how many days must an insured be notified in writing if the owner or beneficiary of a viatical settlement changes?
20 days
Mary has a Health Savings Account (HSA). Distributions that she has made for anything other than qualified medical expenses are considered taxable and subject to a penalty of
20%
Based on age criteria only, which of the co-annuitants listed below would receive the largest monthly benefit payments in a joint and 100% survivor annuity?
71 and 73
Which of the following best describes a point-of-service (POS) plan?
A plan which combines indemnity plan features with those of an HMO
Which situation would not require the insured's consent when a life or health insurance policy is issued?
A policy is purchased by a parent for a minor child
In Nebraska, a group sickness and accident certificate of insurance must contain
A summary of policy features and benefits
Which benefit is normally payable to a life insurance policyowner when the insured's life expectancy has been severely limited?
Accelerated (living) benefit
Which statement regarding a single premium life insurance policy is NOT correct?
Additional premiums may be required under certain conditions
What is the reason that insurance companies require a minimum number of employees participating in a group insurance plan?
Adverse selection is minimized
Which of the following accurately describes the "time limit on certain defenses"?
After a stated period of time, claims cannot be denied due to material misrepresentation on the application
An insurer operating in the U.S. but headquartered outside the U.S. is
Alien Insurer
Which of the following situations would allow funds to be deposited into a rollover IRA?
An employee quits her job and receives $50,000 from her qualified plan
What type of policy can group term life insurance normally be converted to?
An individual permanent life insurance policy
Which statement is INCORRECT concerning a tax-sheltered annuity (TSA)?
Annual investment gains are included in participant's gross income
If a group endorses a sickness and accident insurance product in an advertisement, the public must be made aware of
Any control by the insurer over the group
Which of these statements regarding insurance is false?
As the number of insured units increases, the number of losses decreases
In Nebraska, qualified long-term care plans require each of the following EXCEPT
At least 3 days of prior hospitalization
In the event of premium default, which life insurance provision will use the cash value to keep the policy in force?
Automatic Premium Loan
A policyowner pays the first annual premium for a $50,000 life insurance policy and dies one month after the policy effective date. Which of these statements is normally true?
Beneficiary receives $50,000 income tax-free
What is the tax treatment of benefit payments for a non-qualified annuity?
Benefit payments are always fully taxable
Which of the following is true regarding inpatient psychiatric care under Medicare Part A?
Benefits are limited to 190 days lifetime
Which of these is NOT considered to be a cost connected with an individual's death?
Business Expense
For group health plans covering employees in more than one state, the state regulatory jurisdiction established for the plan may affect any of the following aspects EXCEPT
COBRA continuation of coverage
What could be the potential result of taking out a cash value loan on a life insurance policy?
Cash surrender value will be reduced if policy is forfeited
A comprehensive group policy also covers expenses related to vision care. Which of the following is not typically covered under a vision plan?
Cataract Surgery
Which of the following is NOT a condition that must be met for an accidental death benefit to be paid?
Cause of death must be from a job-related injury
Which would be described as a beneficiary designation by class?
Children of the insured
Which of the these is NOT a true statement of the war exclusion?
Civil insurrections apply
A policyowner suffers a covered accident and health insurance loss on June 30 and submits the proof of loss to the insurer July 10. If the policyowner cancelled the coverage on July 2, how will the insurance company handle the claim?
Claim must be paid after proof of loss is received
Prepaid dental plans differ from most other types of dental plans in what way?
Closed panel of dentists can only be used
Which of these is NOT considered a Federal punishment for unfair and deceptive insurance practices?
Community Service
The insurer's obligation to pay a claim depends on whether the insured or beneficiary has complied with all policy conditions. This makes the policy a(n)
Conditional contract
Which event must a producer report to the Director?
Conducting business under an assumed name
The policy provision that permits an employee to change from a group plan to an individual plan is called the
Conversion Policy
With regard to the use of nonpublic personal information, the phrase opt out means
Customers must be given the chance to stop disclosure
In what way is a life insurance policy affected by an accelerated benefit payment?
Decrease the death benefit
Which of these is NOT an underwriting responsibility of a life insurance agent?
Determining rate classification
Under which marketing system do insurers solicit customers by mass media advertising and mail without services of a producer?
Direct response
In Nebraska, Continuing Education credits are approved by
Director of Insurance
Individuals covered with employer-paid group health plans will normally receive tax-free benefits under all of these plans EXCEPT
Disability Income
Elimination periods normally apply to
Disability policies
Which of the following is NOT guaranteed in a whole life policy?
Dividened Scale
An employer has a group life insurance plan in place for his employees. How would an employee in poor health be treated in this situation?
Eligible for the same type of coverage as the other employees
Which life insurance policy option allows the policyowner to have coverage equal to the net death benefit of the lapsed policy?
Extended term nonforfeiture option
Which benefit supplement added to a life insurance policy insures an entire family?
Family term rider
Which tax cost is normally associated with death?
Federal estate tax
The coinsurance for skilled nursing facility services covered by Medicare after the 100% Medicare coverage ends is
Flat dollar amount per day
Select the appropriate response Rick owns a variable universal life policy and chooses a variable death benefit option. What will typically happen to the death benefit as a result of this selection?
Fluctuate with changes in the cash account
A major medical expense plan typically includes coverage for hospital room and board. Which of the following is normally covered under the category "room and board"?
General Nursing Care
Advertisements of Medicare Supplement Plans require state approval for each of the following EXCEPT
Government publications
Which of the following statements is NOT true concerning the relationship between group health insurance plans and Medicare? (assuming the business has more than 20 employees)
Group health coverage is NOT available for workers over the age of 65
An accident and health plan that typically covers only the services of approved providers is called a(n)
HMO plan
Kyle is an insured who disregarded an accident and health insurance policy provision that requires him to seek a second surgical opinion. What will the end result be?
He may be reimbursed for the surgical procedure at a reduced benefit level
Terry receives long-term physical therapy at her residence. What type of insurance would cover this service?
Home Health Care
Which of the following is NOT true of a preferred provider plan?
Hospitals can only initiate preferred provider plans
When an individual is planning to protect his family with life insurance, one method of doing so is called needs analysis. What exactly does needs analysis involve?
Identifies the needs of the individual and his/her dependents
In Nebraska, a long-term care policy may offer coverage
In which benefits are based on an individual's ability to perform the activities of daily living
Which of the following does NOT help determine group health insurance premiums?
Income level of group members
Which life insurance clause prohibits an insurance company from questioning the validity of the contract after a stated period of time has passed?
Incontestable Clause
Qualified long-term care policies must include all of the following provisions EXCEPT
Inflation protection
What happens when an initial offer is answered with a counteroffer?
Initial offer is void
Which of these procedures is NOT designed for ambulatory care centers?
Inpatient surgery
Who is protected with the "other insurance with this insurer" provision?
Insurance Company
Who is protected with the "other insurance with this insurer" provision?
Insurance company
Which statement regarding whole life insurance is accurate?
Insurance coverage can continue for life
Which of these statements is NOT true regarding a cash value loan against a life insurance policy?
Interest payments made by policyowner are deductible
When compared to a fixed annuity, a variable annuity has what distinguishing feature?
Investment risk is assumed by the purchaser
After the initial enrollment period for Medicare Part B has expired, when may an individual purchase again?
January through March of each year
All of these are duties that a producer may be required to perform when delivering an insurance policy EXCEPT
Leave a conditional receipt with client
A policyowner has a life insurance policy where she had listed her age on the application as 5 years younger than her actual age. If she dies and the insurer discovers the misstatement of age, how much will the insurance company pay?
Less than face amount
The amount received for a life insurance policy in a viatical settlement is
Less than the death benefit
Which of the following financial products creates an instant estate, no matter when the date of death?
Life insurance
Which of these do NOT indicate the presence of insurable interest in a life insurance contract?
Life long friendship
Which of the following is a syndicate established by a group of insurers to share underwriting duties?
Lloyde's Organization
Tim is confined to a nursing home but doesn't have a terminal illness. Which life insurance rider is designed to help pay for this type of expense?
Long Term Care Benefit rider
Which of the following relationships demonstrates insurable interest in the absence of economic interest?
Marriage Partners
An insurable interest in each other's lives may exist in absence of an economic interest when the individuals are
Marriage partners
Karen is considering replacing her individual accident and health insurance policy with another individual policy. She has had issues in the past with her gall bladder that would be considered a pre-existing condition. How will a pre-existing conditions exclusion affect Karen's new insurance contract?
May reduce her benefits
Which individual would be best suited for Medicare Supplement insurance?
Medicare enrollee
During the first two years a life insurance policy is in force, the insurer may contest a policy for all of the following reasons EXCEPT
Misstatement of age on application
Periodic health claim payments MUST be made at least
Monthly
Which of the following is TRUE about a qualified retirement plan that is "top heavy"?
More than 60% of plan assets are in key employee accounts
Select the appropriate response What is the eligibility requirement for Medicare Part B?
Must be eligible for Medicare Part A
Which of the following does NOT meet the requirements of "skilled nursing care"?
Must be provided exclusively in a hospital
Which of these is NOT used as selection criteria in the underwriting process of a life insurance application?
National Origin
Specialty care is provided by which of these health maintenance organization (HMO) providers?
Neurologist
The disability income policy most likely to have been issued on a substandard basis is
Non-cancelable with a health condition exclusion rider
Which of the following circumstances would allow an insurer to refuse the renewal of a small employer health plan?
Nonpayment of premiums
Long-term care policies normally cover expenses associated with
Nursing Home
How may an insurance company classify an accidental death benefit on a life policy?
Optional Policy rider
When a deferred annuity is surrendered, who must sign the authorization to do so?
Owner
A physician who accepts assignment on all Medicare claims is called a(n)
Participating Providor
A life annuity feature which provides benefit payments for a minimum number of years, no matter when the annuitant dies, is called
Period Certain
Twisting means
Persuading an insured, to the insured's detriment, to switch policies
A health insurance applicant is notified that a physical examination is required. Which of the following statements is correct?
Physical examinations are performed at the expense of the insurer
Which of these is NOT a factor that influences group health insurance underwriting?
Physical exams of group member
A disability income insurance policy was recently issued with a rating. What does this mean?
Policy owner will be charged an additional premium
Which of the following statements BEST describes disability buy-sell insurance policies?
Policy proceeds are typically received tax-free
The Law of Large numbers enables an insurer to
Predict loses
How are level term policies able to provide level premiums?
Premiums are averaged over the term of the policy
A pre-existing condition exclusion in an accident and health insurance policy pertains to
Prior Health Matters
Which of the following does NOT fall under "hospital care" in a typical health maintenance organization (HMO) plan?
Private duty nursing
Which of the following outlines the authority given to the Producer on behalf of the insurer?
Producer contract
Which benefit can be found in an equity indexed annuity, but not in a fixed annuity?
Protection against long-term inflation
The Director may suspend a producer's license when the producer
Rebates a portion of the commission to the insured
An insured covered under a Disability Income policy is disabled and collecting benefits for a period of two months. He returns to work and is again disabled from the same cause, whereupon benefits continue to be paid. This is an example of which of the following?
Recurrent Disability
Which of the following statements is INCORRECT about why the government provides insurance?
Reduce fraudulent claims
What happens to the death benefit of a life insurance policy if the insured elects a partial payment from the accelerated (living) benefit provision?
Reduced
Which of the following statements BEST describes the HIPAA portability rules for an individual who changes from one group medical plan to another?
Reduces or eliminates any pre-existing conditions excluded under the new plan
ABC Company is attempting to minimize the severity of potential losses within its company. The company is engaged in risk
Reduction
How do benefit payments fluctuate over time in a variable life annuity?
Reflects changes in the market value of assets in a separate account
Which of the following would most likely purchase an immediate annuity?
Retiree having a lump sum to invest
Which term describes the elimination of a hazard?
Risk Avoidance
Switching Life insurance policies without tax consequence is permitted under
Sectio 1035 rules
Which of these is NOT considered the responsibility of a producer in the underwriting process?
Selecting the final approval date
Assets that back the non-guaranteed values of variable life insurance products are held in which account?
Separate account set up by the insurer
Laura 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
If an individual would like to enroll in Medicare or seek public information about Medicare, which federal agency handles this?
Social Security Administration
A person can receive Medicare Part A Hospital benefits, regardless of age, as long as the person has received which of the following benefits for at least 24 months?
Social Security Disability
Which life insurance policy provision prohibits a beneficiary from "commuting, encumbering, withdrawing, or assigning" any portion of the proceeds prior to actual receipt from the company?
Spendthrift clause
XYZ Corp gives money to an employee to purchase a life insurance policy and allows the employee to select the beneficiary. What kind of plan is this?
Split dollar
Who regulates an insurer's claim settlement practices?
State insurance department
Steve has a group disability income policy where the premiums are paid by his employer. He elected to pay for additional residual disability coverage. Which of the following statements is true?
Steve will pay taxes on the disability benefit received from his employer, but will receive any residual disability benefits tax-free
Individuals who participate in an HMO plan are called
Subscribers
Which of the following is NOT a dividend option for a life insurance policy?
Surrender the policy's cash value
How does the cost for a survivorship life policy compare to the cost of combining two separate individual life insurance policies?
Survivorship life policy is lower
When a ten year renewable term life insurance policy issued at age 45 is renewed, the premium rate will be the current rate for
Ten year term insurance for a person aged 55
All parts of the Medicare program (except for public information and enrollment) are administered by which federal agency?
The Centers for Medicare and Medicaid Services
K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective?
The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured
All of these statements concerning group credit life insurance are false EXCEPT
The face amount is determined by the outstanding loan balance
Which of the following statements accurately describes the financial impact of total disability?
The financial impact may be worse than that of death
Which of these is a typical result of a concurrent review?
The length of time spent in the hospital is monitored
What is considered the collateral on a life insurance policy loan?
The policy's cash value
An advantage of owning a flexible premium life insurance policy would be
The policyowner can make policy changes without difficulty
Darrell has a group long-term disability income policy paid by his employer. Which of these statements is true?
The specified benefit amount is a percentage of his wages
What is the elimination period of an individual disability policy?
Time period a disabled person must wait before benefits are paid
In Nebraska, small group sickness & accident coverage can be terminated in each of the following circumstances EXCEPT
Timely payment of premium
Purchasing insurance is an example of risk
Transference
At what point are death proceeds paid in a joint life insurance policy?
When the first insured dies
A policyowner is permitted to take out a policy loan on a whole life policy at what point?
When the policy has a cash value
Which life insurance policy would be eligible to include an automatic premium loan provision?
Whole Life
If a sickness and accident insurance claim form is NOT supplied to the insured within 15 days after the notice of claim, the insured may comply with the proof of loss provision by submitting
Written proof of the occurrence and extent of loss
Emergency health care coverage for Medicare enrollees traveling abroad is
a Medicare Supplement additional benefit
Disability income insurance normally excludes coverage for disabilities that arise from
active military duty
A producer working for an insurance company may be personally liable for
acts performed which are prohibited in the agency contract
A reciprocal insurer typically has an administrator who manages the premiums collected from the group's members. This administrator is called a(n)
attorney-in-fact
In regards to health insurance, employees age 65 or older are typically required to
be offered the same group health benefits offered to the younger employees
Who normally pays the premiums for group credit life insurance?
borrower
Which of the following is considered to be a prosthodontic dental procedure?
bridgework
The principal source of information concerning an applicant's identity, age, and marital status is found in the
completed application
Proceeds of the viatical settlement contract could be subject to the claims of
creditors
When a sum of money undergoes capital liquidation, that sum will
decrease in size
What type of group plan is excluded from HIPAA statutes?
disability income
When underwriting an application for insurance, all of the following are considered unfair except
discriminating against applicants of DIFFERENT risk classes
A qualified profit-sharing plan is designed to
distribute a portion of company earnings to its employees
Non-occupational disability coverage is designed for
employees who suffer non-work related disabilities, since work-related disabilities are covered by Workers' Compensation
Emily is disabled. In order to become eligible for Social Security disability income benefits, she must be
fully insured, according to Social Security
When premiums are calculated, one factor would be the expenses of the
insurance company
Health care costs can be better controlled by utilizing preadmission testing. Preadmission testing can reduce the
length of hospitalization
How much is normally paid to a policyowner in a life (viatical) settlement?
less than death benefit
After the extended term life nonforfeiture option is chosen, the available insurance will be
level term for a stated period of time
An insurance policy may be issued with a preferred insurance premium in all of these situations EXCEPT
living in a rural area
Each of the following will trigger a benefit under the Presumptive Disability provision, EXCEPT
loss of any one limb
The owner of a single premium deferred annuity is entitled to do all of these EXCEPT
make multiple premium payments
Who typically makes the purchase payments in an individual annuity?
owner
If, at the time of an insured's death, the insurance company discovers that the insured's age was misstated on the application for life insurance, the company will most likely
pay the policy proceeds in the amount the premiums would have purchased at the insured's actual age
Dividends from a mutual insurance company are paid to whom?
policy Holders
Which action will trigger a penalty tax on premature distributions from a modified endowment contract (MEC)?
policy loans
Patrick purchased a long-term care policy. He has a health condition for which medical treatment was recommended by a physician within 6 months prior to the policy's effective date. This condition is called a(n)
pre-existing condition
The PRIMARY purpose of the replacement rule is to
protect policyowners from misrepresentations and loss of benefits
When a health insurance policy includes a Mandatory Second Surgical Opinion provision, the insured must
seek a second opinion for specified elective surgeries
When issuing disability income coverage on a substandard risk, an insurance company may
shorten the benefit period
Anyone who violates a cease and desist order may be penalized with
suspension or revocation of license
An insurable risk requires
that the chance of loss be calculable
In Nebraska, a long-term care policy which lapses may be reinstated within five months if
the covered individual was mentally incapacitated
Insurable interest in one's own life generally is regarded as
unlimited
A terminally ill policyowner decides to sell his life insurance policy to help support his family. This sale is called a(n)
viatical settlement
Some standard Medicare Supplement policies include which benefit?
vison care
An insurance company can be liable for a producer's unauthorized acts
when the agency contract is unclear concerning the authority given
The following are all elements of a valid contract EXCEPT
written evidence
