1 - State Exam Simulator - 150 Practice Exam Questions
J has an Accidental Death and Dismemberment policy with a principal sum of $50,000. While trimming the hedges, J cuts off one of his fingers. What is the MAXIMUM J will receive from his policy?
$25,000
An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a
$25,000 individual whole life policy
An insured covered by a group Major Medical plan is hospitalized after sustaining injuries that resulted from an automobile accident. Assuming the plan had a $1,000 deductible and an 80/20 Coinsurance clause, how much will the INSURED be responsible to pay with $11,000 in covered medical expenses?
$3,000
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
If a producer is found guilty of a felony, he/she is required to notify the Commissioner within how many days?
30
Within how many days must a producer notify the Commissioner of a change in address?
30
Medicare Supplement insurance is guaranteed issue if the policy effective date is within how many months of the insured's Medicare Part B starting date?
6
Which of these is an element of a Variable Life policy?
A fixed, level premium
Which provision is NOT a requirement in a group life policy?
Accidental
Under which of the following circumstances do the benefits under COBRA continuation coverage expire?
All group health plans are eliminated by the employer
The Consideration clause in a life insurance contract contains what pertinent information?
Amount of premium payments and when they are due
What is considered to be a characteristic of an immediate annuity?
Benefit payments start within one payment period of purchase
Which of the following policy features allows an insured to defer current health charges to the following year's deductible instead of the current year's deducitble?
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
Whose life is covered on a life insurance policy that contains a payor benefit clause?
Child
S is covered by a whole life policy. Which insurance product can cover his children?
Child term rider
P is a Major Medical policyowner who is hospitalized as a result of injuries sustained from participating in a carjacking. How will the insurer most likely handle this claim?
Claim will be denied
How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period?
Claims are denied under the Suicide clause of the policy
Which of the following violations is considered an unfair trade practice?
Coercion
Which of the following reimburses its insureds for covered medical expenses?
Commercial insurers
Insurance policies offered on a "take it or leave it" basis are considered what?
Contracts of Adhesion
When an employee is required to pay a portion of the premium for an employer/employee group health plan, the employee is covered under which of the following plans?
Contributory
What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?
Convertible Term
What type of life policy covers 2 lives and pays the face amount after the first one dies?
Decreasing term
F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?
Decreasing term policy
Which contract permits the remaining partners to buy-out the interest of a disabled business partner?
Disability Buy-Sell
Which of the following statements BEST describes the intent of a Coinsurance clause in a Major Medical policy?
Discourages overutilization of the insurance coverage
What type of policy would only provide coverage for specific types of illnesses (cancer, stroke, etc)?
Dread disease insurance
The federal income tax treatment of employer-provided group health insurance can be accurately described as
Employee's coverage paid for by the employer is tax-deductible to the employer as a business expenditure
Which health policy clause stipulates that an insurance company must attach a copy of the application to the policy to ensure that it is part of the contract?
Entire Contract
Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself?
Entire Contract
D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to?
Ex-wife
Which of these statements describe a Modified Endowment Contract (MEC)?
Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract
What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's death?
Face amount plus the policy's cash value
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
Family Maintenance Policy
Which of these is considered a true statement regarding Medicaid?
Funded by both state and federal governments
Which of the following provisions specifies how long a policyowner's health coverage will remain in effect if the policyowner does not pay the premium when it is due?
Grace Period
Bryce purchased a disability income policy with a rider that guarantees him the option of purchasing additional amounts of coverage at predetermined times without requiring to provide evidence of insurability. What kind of rider is this?
Guaranteed insurability rider
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
An advertisement for an Accident & Health policy may include statistical information under which of the following circumstances?
If the statisitical information is accurate and the source is cited
When must insurable interest exist for a life insurance contract to be valid?
Inception of the contract
What is being delivered during a policy delivery?
Insurance contract to the proposed insured
If a contract of adhesion contains questionable language, to whom would the interpretation be in favor of?
Insured
All of these statements about the Waiver of Premium provision are correct EXCEPT
Insured must be eligible for Social Security disability for claim to be accepted
Who makes the legally enforceable promises in a unilateral contract?
Insurer
The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death is called a(n)
Insuring agreement
In a Life insurance contract, an insurance company's promise to pay stated benefits is called the
Insuring clause
Which of the following health insurance policy provisions specifies the health care services a policy will cover?
Insuring clause
Which of these arrangements allows one to bypass insurable interest laws?
Investor-Originated Life Insurance
Which statement regarding third-party ownership of a life insurance policy is true?
It is used extensively in estate-planning as well as business circumstances
Which of the following statements is CORRECT about a domestic insurance company in Kansas?
It must be organized under Kansas insurance laws
What MUST an insurance company use in its advertising?
Its true corporate name
Which plan is intended to be used by a sole proprietor and the employees of that business?
Keogh Plan
Which of these are NOT an example of a Nonforfeiture option?
Life Income
Which of these would be considered a Limited-Pay Life policy?
Life Paid-Up at Age 70
Life insurance that covers an insured's whole life with level premiums paid over a limited time is called
Limited-Pay Life
In Major Medical Expense policies, what is the intent of a Stop Loss provision?
Limits an insured's out-of-pocket medical expenses
Which type of policy is considered to be overfunded, as stated by IRS guidelines?
Modified Endowment Contract
All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for
Modified Whole Life
In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy?
Owner's Rights
A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision?
Payor provision
A certificate of authority does which of the following?
Permits an insurance company to transact business in Kansas
The individual who provides general medical care for a patient as well as the referral for specialized care is known as a
Primary Care Physician
T is covered by two health insurance plans: a group plan through his employer and his spouse's plan as a dependent. When T submits a claim, his employer's plan is considered what type of carrier under the Model Group Coordination of Benefits provision?
Primary carrier
Which of these is NOT a type of agent authority?
Principal
What is the consideration given by an insurer in the Consideration clause of a life policy?
Promise to pay a death benefit
What must the policyowner provide to the insurer for validation that a loss has occurred?
Proof of Loss
T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this?
Renewable
The annuity that represents the largest possible monthly payment to an individual annuitant is a(n)
Straight Life annuity
What should an insured do if the insurer does not send claims forms within the time period set forth in a health policy's Claims Forms provision?
Submit the claim in any form
What type of life policy covers two people and pays upon the death of the last insured?
Survivorship
What kind of life insurance product covers children under their parent's policy?
Term rider
What type of life insurance incorporates flexible premiums and an adjustable death benefit?
Universal Life
When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take?
Void the policy only if it is discovered during the Contestable period and proven to be material
The provision in a Group Health policy that allows the insurer to postpone coverage for a covered illness 30 days after the policy's effective date is referred to as the
Waiting Period
If an individual has an Accidental Death and Dismemberment policy and dies, an autopsy can be performed in all these situations EXCEPT
When the state prohibits this by law
An insurance producer is BEST defined as
a person who has a contract with an insurance company to represent it
Under the Affordable Care Act, eligibility for dependent children can be determined by which of the following?
age
An insurance company formed under the laws of Canada would be known in Kansas as
an alien company
A producer may legally share commissions only with
another producer who is licensed in the same line of insurance
Continuing education hours for producers may be granted for participation in all of the following activities EXCEPT
attending a sales meeting
A producer is an individual who has been authorized by an insurer to be its representative and to perform all of the following acts EXCEPT
authorize payment of certain claims
A producer may only sell products from an insurer after
being properly appointed by the insurer
A life insurance application must be signed by all of these EXCEPT
beneficiary
An insurance producer who convinces a prospective insured to purchase a policy by exaggerating the benefits of the policy may be found guilty of
misrepresentation
A Long-Term Care policy that provides for home health care must provide coverage that is equivalent to at LEAST
one-half of one year's coverage available for nursing home benefits
The Replacement of Life Insurance and Annuities regulation is designed to protect the interest of the
policyowner
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?
policyowner
A Limited-Pay Life policy has
premium payments limited to a specified number of years
After notice and a hearing, the Insurance Commissioner may revoke a producer's license for all of the following reasons EXCEPT the
producer is found to be insolvent
The primary purpose of regulation of the insurance industry is to
promote the public welfare by maintaining the solvency of insurance companies
Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called
representations
The Commissioner of Insurance may suspend or revoke the license of a producer who takes any of the following actions EXCEPT
represents more than one insurance company
What is the primary factor that determines the benefits paid under a disability income policy?
wages
Credit Life insurance is
issued in an amount not to exceed the amount of the loan
Insurance producer licenses normally must be renewed every
two years
A 15-year mortgage is best protected by what kind of life policy?
15-year decreasing term
The Commissioner of Insurance may issue a temporary producer's license for a maximum of how many days?
180
What is Old Age and Survivors Health Insurance (OASDHI) also known as?
Social Security
Which statement is TRUE regarding a group accident & health policy issued to an employer?
The employer is the policyowner and each employee receives a certificate of coverage
All of these statements about Equity Indexed Life Insurance are correct EXCEPT
The premiums can be lowered or raised, based on investment performance
How does a typical Variable Life Policy investment account grow?
Through mutual funds, stocks, bonds
Major Medical policies typically
contain a deductible and coinsurance
A variable insurance policy
does not guarantee a return on its investment accounts
Non-occupational disability coverage is designed for
employees who suffer non-work related disabilities, since work-related disabilities are covered by Workers' Compensation
All of these are characteristics of an Adjustable Life policy EXCEPT
face amount can be adjusted using policy dividends
Basic Medical Expense insurance
has lower benefit limits than Major Medical insurance
With a Basic Medical Expense policy, what does the hospitalization expense cover?
hospital room and board
Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy?
increase face amount
Medicare Part B does NOT cover
inpatient hospital services
An insurance advertisement that tends to make a prospect want to find out more about a specific policy is referred to as an
institutional advertisement
When transacting insurance business, the producer legally represents the
insurance company
A certificate of authority permits an
insurance company to transact business
Which of the following is an example of rebating?
returning a portion of a premium as inducement to purchase insurance
An insurer must offer group medical coverage to all eligible employees of a small employer if the employee
satisfied an applicable waiting period
All of the following activities could result in the suspension of a producer's license EXCEP
selling any replacement policy that causes an insured to lapse an existing policy
A stock insurance company is owned by it's
stockholders
To verify if replacement is involved in a Medicare Supplement sale, insurance law requires that a question about replacement appear on
the application form
The investment gains from a Universal Life Policy usually go toward
the cash value
Which of the following statements is correct regarding an employer/employee group health plan?
the employer receives a master policy and the employees receive certificates
The amount of coverage on a group credit life policy is limited to
the insured's total loan value
A temporary license is issued by the Commissioner of Insurance to allow
the personal representative of a deceased producer to provide service to existing policyowners
A disability elimination period is best described as a
time deductible
The Kansas Life and Health Insurance Guaranty Association was established to provide funds
to protect an insured in the event of an insurer's insolvency
T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?
$0
An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age?
59 1/2
What does the insuring agreement in a Life insurance contract establish?
An insurer's basic promise
Which premium schedule results in the lowest cost to the policyowner?
Annual
Which type of contract liquidates an estate through recurrent payments?
Annuity
When an insurance application is taken by a producer, which of these statements is true?
Any changes made on the application require the applicant's initials
Any changes made on an insurance application requires the initials of whom?
Applicant
A Disability Income policyowner recently submitted a claim for a chronic neck problem that has now resulted in total disability. The original neck injury occurred before the application was taken 5 years prior. The neck injury was never disclosed to the insurer at the time of application. How will the insurer handle this claim?
Claim will be paid and coverage will remain in force
Which of these actions is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan?
Collateral assignment
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, provided that T is an acceptable risk. What item is given to T?
Conditional receipt
What type of group plan involves employees sharing the cost?
Contributory plan
A characteristic of Preferred Provider Organizations (PPOs) would be:
Discounted fees for the patient
Under a trustee group life policy, who would be eligible for a certificate of coverage?
Employee
When an insurance company sends a policy to the insured with an attached application, the element that makes the application part of the contract between the insured and the insurer is called the
Entire Contract provision
Which of these statements is INCORRECT regarding the federal income tax treatment of life insurance?
Entire cash surrender value is taxable
N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot?
Exclusion
What type of renewability guarantees premium rates and renewability?
Guaranteed renewable
Which of these retirement plans can be started by an employee, even if another plan is in existence?
Individual Retirement Account (IRA)
Which of these actions should a producer take when submitting an insurance application to an insurer?
Inform insurer of relevant information not included on the application
Which of the following types of health coverage frequently uses a deductible?
Major Medical policy
Comprehensive Major Medical policies usually combine
Major Medical with Basic Hospital/Surgical coverage
Which of the following are NOT managed care organizations?
Medical Information Bureau (MIB)
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
A policyowner is allowed to pay premiums more than once a year under which provision?
Mode of Premium
According to the Time Payment of Claims provision, the insurer must pay Disability Income benefits no less frequently than which of the following options?
Monthly
Which of the following statements is CORRECT about accelerated death benefits?
Must have a terminal illness to qualify
P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to
P only
Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation?
Policy was returned within the free-look period, premium will be fully refunded
Which of these options can an individual use their medical flexible spending account to pay for?
Prescription drugs
T files a claim on his Accident and Health policy after being treated for an illness. The insurance company believes that T misrepresented his actual health on the initial insurance application and is, therefore, disputing the claim's validity. The provision that limits the period during which the company may dispute a claim's validity is called
Time Limit on Certain Defenses
The policy provision that entitles the insurer to establish conditions the insured must meet while a claim is pending is
Time Limit on Certain Defenses
Which Accident and Health policy provision addresses preexisting conditions?
Time Limit on Certain Defenses
Why is an applicant's signature required on a life insurance application?
To attest that the statements on the application are accurate to the best of the applicant's knowledge
Which of the following phrases refers to the fees charged by a healthcare professional?
Usual, customary, and reasonable expenses
The provision in a health insurance policy that interrupts premiums being paid to the insurer while the insured is disabled is called the
Waiver of Premium
Disability policies do NOT normally pay for disabilities arising from which of the following?
War
What does the ownership clause in a life insurance policy state?
Who the policyowner is and what rights the policyowner is entitled to
What action will an insurer take if an interest payment on a policy loan is not made on time?
automatically add the amount of interest due to the loan balance
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
When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n)
exclusion
With Optionally Renewable Health policies, the insurer may
review the policy annually and determine whether or not to renew it
An individual Disability Income insurance applicant may be required to submit all of the following information EXCEPT
spouse's occupation
The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is
the cost
A noncontributory group term life plan is characterized by
the entire cost of the plan is paid for by the employer
A level premium indicates
the premium is fixed for the entire duration of the contract
Which of the following statements BEST defines usual, customary, and reasonable (UCR) charges?
The maximum amount considered eligible for reimbursement by an insurance company under a health plan
If an insurance company issues a Disability Income policy that it cannot cancel or for which it cannot increase premiums, the type of renewability that best desribes this policy is called
noncancellable
A Hospital/Surgical Expense policy was purchased for a family of four in March of 2013. The policy was issued with a $500 deductible and a limit of four deductibles per calendar year. Two claims were paid in September 2013, each incurring medical expenses in excess of the deductible. Two additional claims were filed in 2014, each in excess of the deductible amount as well. What would be this family's out-of-pocket medical expenses for 2013?
$1,000
What is the MINIMUM number of Activities of Daily Living (ADL) an insured must be unable to perform to qualify for Long Term Care benefits?
2
How are surrender charges deducted in a life policy with a rear-end loaded provision?
Deducted when the policy is discontinued
A CEO's personal assistant suffered injuries at home and as a result, was unable to work for four months. Which type of policy will pay a monthly benefit to the personal assistant?
Disability Income
An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the
Fair Credit Reporting Act
What action should a producer take if the initial premium is NOT submitted with the application?
Forward the application to the insurer without the initial premium
An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period?
Full face amount minus any past due premiums
How are policyowner dividends treated in regards to income tax?
Interest on accumulations is taxed
Which of the following actions will an insurance company most likely NOT take if an applicant, who has diabetes, applies for a Disability Income policy?
Issue the policy with an altered Time of Payment of Claims provision
The provision that defines to whom the insurer will pay benefits to is called
Payment of Claims
Which of these statements concerning an Individual Straight Life annuity is accurate?
Payments are made to an annuitant for life
Which of these do NOT constitute policy delivery?
Policy issued with a rating
When an employee is terminated, which statement about a group term life conversion is true?
Policy proceeds will be paid if the employee dies during the conversion period
Which of the following statements about a Guaranteed Renewable Health Insurance policy is CORRECT?
Premiums normally increase at time of renewal
K is the insured and P is the sole beneficiary on a life insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true?
Proceeds will be paid to K's estate if P dies within a specified time
All of these are considered sources of underwriting information about an applicant EXCEPT
Rating Services
A Disability Income policyowner suffers a disability which was due to the same cause as a previous disability. Both disabilities occurred within a five-month period. The insurer may cover the second disability without a new elimination period under the
Recurrent Disability provision
Which of these provisions require proof of insurability after a policy has lapsed?
Reinstatement
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 producer who notices 5 questions on a life application were not answered. What actions should P take?
Set up a meeting with the applicant to answer the remaining questions
S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation?
Single Premium
Which of the following statements describes the purpose of the Insuring clause in Health and Accident policies?
States the scope and limits of the coverage
Which of the following statements about the classification of applicants is INCORRECT?
Substandard applicants are never declined by underwriters
Which statement regarding a Key Employee Life policy is NOT true?
The beneficiary is named by the key employee
D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive?
The full face amount
When determining the monthly benefit amount for a Disability Income policy, the factor that limits the amount a prospective insured may purchase is
income
The first portion of a covered Major Medical insurance expense that the insured is required to pay is called the
initial deductible
