Stimulation Test #10
Representations in insurance contracts qualify as
implied warranties
Which Universal option has a gradually increasing cash value and a level death benefit?
option A
To be eligible under HIPAA regulations, for how long should an individual converting to an individual health plan have been covered under the previous group plan?
18 months
What is the penalty for excessive contributions to an IRA?
6%
Under the Affordable Care Act, a special enrollment period allows an individual to enroll in a qualified health plan within how many days of a qualifying event?
60 days
An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits?
A portion of the benefit up to a limit is tax free, the rest is taxable income
A guaranteed purchase or guaranteed increase rider could allow an insured to do all of the following EXCEPT
Add a new spouse or child to the policy, without proof of insurability
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 that describe?
Aleatory
Which of the following is NOT true of Section 1035 Policy Exchange?
Any exchange made under Section 1035 of the Internal Revenue Code must be completed within 30 days
The risk management technique that is used to prevent a specific loss by not exposing oneself to that activity is called
Avoidance
Which of the following statements concerning buy-sell agreements is true?
Buy-sell agreements are normally funded with a life insurance policy
Which of the following life insurance policies does NOT build cash value?
Guaranteed universal life
An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied?
Material misrepresentation
Which of the following information about the applicant is NOT included in the General Information section of the application for insurance?
Medical backgroud
Which of the following is correct concerning the taxation of premiums in a key person life insurance policy?
Premiums are not tax deductible as a business expense
All of the following are the responsibilities of every long term care insurer in California EXCEPT
Provide enough business to solicit long term care insurance
Another name for a substandard risk classification is
Rated
Which of the following entities may NOT be an insurer?
The Commissioner
All of the following entities regulate variable life policies EXCEPT
The Guaranty Association
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?
The PPO will pay reduced benefits
Your client has a Social Insurance Supplement (SIS) rider on his disability policy. After he becomes disabled, he receives payments from the company. Shortly thereafter, he also begins receiving Social Security benefit payments. Which of the following will happen?
The SIS payment will be reduced dollar for dollar by the Social Security benefit payment
What determines the penalty for surrendering a market value adjusted annuity prematurely?
The current interest rate at the time of surrender
Which of the following describes the tax advantage of a qualified retirement plan?
The earnings in the plan accumulate tax deferred
Who choses a primary care physician in a HMO?
The individual member
Which is generally true regarding insureds who have been classified as preferred risks?
Their premiums are lower
Which of the following is true regarding commissions for Medicare supplement policies?
They are permitted up to a certain amount for each policy
When is the insurability conditional receipt given?
When the premium is paid at the time of application
What source pays for individual disability income premiums?
after tax dollars
First Dollar Coverage refers to a type of insurance which
has no deductible
Under a pure life annuity, an income is payable by the company
only for the life of the annuitant
All of the following statements about equity index annuities are correct EXCEPT
the annuitant receives a fixed amount of return
Which of the following is NOT a characteristic of a group long term disability plan?
the benefit can be up to 50% of ones yearly income
An employer offers group life insurance to its employees for the amount of $10,000. Which of the following is true?
the cost of coverage is a deductible expense by the employer
Which of the following is true regarding a market value adjusted annuity?
the owner is guaranteed a fixed interest rate for a specific period of time
All of the following are true regarding a decreasing term policy EXCEPT
the payable premium amount steadily declines throughout the duration of the contract
All of the following statements are true regarding installments for a fixed amount EXCEPT
the payments will stop when the annuitant dies
What is the main difference between a life agent and a life analyst?
the way each is compensated
How can insurers obtain information on an applicant's avocations and the way they will affect a risk?
through the use of a questionnaire
All of the following are true regarding the Medical Information Bureau EXCEPT
MIB reports are bases upon information supplied by doctors and hospitals
Which of the following statements is NOT correct regarding Medicare?
Medicare Advantage must be provided through HMO's
Which type of Medicare policy requires insureds to use specific healthcare providers and hospital (network providers), EXCEPT in emergency situations?
Medicare SELECT
Which type of Medicare policy requires insureds to use specific healthcare providers and hospitals (network providers), EXCEPT in emergency situations?
Medicare SELECT
An insured had $500 left in his Health Reimbursement Account when he quit his job. What happens to that money?
The insured can have access to the $500 at his previous employer's discretion
What is the name of a clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military?
War or military service
An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it?
deferred
A new employee who meets HIPAA eligibility requirements must be issued health coverage on what basis?
guaranteed
Which of the following annuity riders ensures that the owner will receive from an annuity at least the amount paid for the annuity?
guaranteed lifetime withdrawal
Annually renewable term policies provide a level death benefit for a premium that
increases annually
Which provision of a life insurance policy states the insurers duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?
insuring clause
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT
it is a life contingency option
Which of the following statements about the reinstatement provision is true?
it requires the policy owner to pay all overdue premiums with interest before the policy is reinstated
If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age, what type of policy is this?
jumping juvenile policy
The premium of a survivorship life policy compared with that of a joint life policy would be
lower
Which operating division of an insurer is responsible for advertising, promoting, and distributing the insurer's products to the public
marketing and sales
In a POS plan, benefits for covered services when self-referring (without having your primary care physician arrange for the service) are generally
more expensive
Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive
nothing, the payment will cease
Which of the following can surrender a deferred annuity contract?
only the annuity owner
An insured purchases a life policy in 2010 and died in 2017. The insurance company discovers at that time that the insured had misstated information during the application process. What can they do?
pay the death benefit
An HMO is regarded as an organized system of health care that provides a comprehensive array of medical services on a
prepaid basis
A man decided to purchase a $100,000 Annually Renewable Term Life Policy to provide additional protection until his children finished college. He discovered that his policy
required a premium increase each renewal
Which type of beneficiary is changeable at any point?
revocable
A domestic insurer issuing variable contracts must establish one or more
separate accounts
Under Credit Disability Policy, until what point will payments to a Creditor be made for the Insured?
until the disability ends or the debt is satisfied, whichever is sooner
Which of the following statements is TRUE about a policy assignment?
It transfers rights of ownership from the owner to another person
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT
The policy is owned by the company
Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
Twisting
Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insured's death?
a minor son of the insured
Disability income coverage specifies that the policy covers the insured if he is unable to perform any job for which he is qualified. In this case, total disability is defined as
any occupation- more restrictive than other definitions
An individual wants to transact business as a life agent in this state. In addition to obtaining a life agent license, what else must the applicant have?
appointment
During a pre-selection interview, an agent is allowed to do all of the following EXCEPT
ask questions that are not on the application but that are important for underwriting
When must insurable interest exist in a life insurance policy?
at the time of application
A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?
collateral assignment
A health insurance policy that pays a lump sum if the insured suffers a heart attack or stroke is known as
critical illness
What required provision protects against unintentional policy lapse?
grace period
Which of the below statements does NOT describe a Blue Cross and Blue Shield Plan?
services are paid for at time of use
When an employee covered under a health reimbursement account changes employers, the HRA
stays with the employer
Which of the following is TRUE regarding variable annuities?
the annuitant assumes the risks on investment
What is the purpose of annuity riders?
to allow investors to obtain additional benefit
The purpose of having an elimination period in a policy is to accomplish which of the following?
to allow the client some flexibility in determining their own premium
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
Under what circumstances would a life insurance contract qualify as a standard policy?
under no circumstances
The maximum penalty for failure to print an individual agent's license number on printed documents is
$1,000
At what age may an individual make withdrawals from an HSA for nonhealth purposes without being penalized?
65
If a person is disabled at age 27 and meets Social Security's definition of total disability, how many work credits must he/she have earned to receive benefits?
12 credits
All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT
At distribution, all amounts received by the employee are tax free
An insured noticed that his policy stated that he "shall" keep all flammable liquids at least ten feet from an ignition source and "may" consider storing flammable liquids in another location. Based on the policy language, where must the insured keep liquids in relation to ignition sources?
At least 10 feet away