AD Banker Comprehensive Exam

Which of the following is considered not to be an Essential Health Benefit? A Mental health services B Behavioral health treatment C Personal care D Ambulatory patient services

C

Which of the following is correct pertaining to underwriting a group health policy? A Group insurance cannot be based upon community experience B The average age of the group is not taken into consideration C Premiums are generally re-evaluated annually and may be based upon prior claims D All participants are always eligible immediately

C

Which of the following might be eligible to participate in an MSA? A Dan, who is employed by a large company with over 200 employees B Henry, who is retired and on Medicare Part A only C Charles, who works for a small bakery with only 15 employees D Betty, is unemployed and currently on Medicaid

C

Which of the following policies would allow the business to deduct premiums paid? A An individually purchased disability income policy paid for through employee payroll deduction B A disability income policy used to fund a Buy-Sell Agreement C Business overhead expense insurance D A disability income policy on a key employee with the employer paying the premiums and is also the beneficiary

C

Which of the following statements is FALSE regarding Medigap policies? A Medigap policies may not duplicate benefits provided by Medicare B Losses resulting form sickness may not be treated differently than losses resulting from accidents C A Medigap policy provides the same coverage as a Medicare policy D Except for nonpayment of premium, coverage may not be terminated on a spouse solely because the insurer has reason to terminate coverage on an insured

C

Which of the following statements is FALSE regarding credit health insurance? A Even if the creditor pays the full cost of the insurance, the debtor must be made aware of the coverage B The accidental death benefit may not exceed the total amount of indebtedness, nor may the monthly disability benefit exceed the monthly loan payment amount C Credit health insurance operates like an HMO and provides death benefit protection regardless of the cause of death D Credit health insurance may be sold as either group or individual insurance

C

Which of the following statements is NOT true about the tax treatment of Social Security? A Taxes to finance Social Security benefits are paid equally by employees and employers B Self-employed people must pay both the employer and the employee share of Social Security taxes C Employee paid payroll deductions for Social Security are tax deductible to the employee D Employers may take a tax deduction for contributing on behalf of their employees

C

Which statement concerning individual A&H policy renewal provisions is most correct from the perspective of the insured? A The more favorable the renewal provision to the insured, the lower the cost B The renewal provision has no impact on the cost of the policy to the insured C The more favorable the renewal provision to the insured, the higher the cost D Renewal provisions only apply to property and casualty contracts and are not included under individual A&H policies

C

With _______, the patient must pay 20% of covered charges plus the deductible. A None of the answers listed B Medicaid C Medicare Part B D A Medicare Supplement

C

Insurers generally calculate premiums on: A A weekly basis B An annual basis C A monthly basis D A daily basis

B

A Medicare Supplement Policy must include, as a core benefit, Medicare Part B coinsurance in the amount of _______. A 10% B 15% C 25% D 20%

D

Primary support for Medicare Part A comes from: A Local tax revenues B Federal bond fund C Medicaid D Social Security payroll taxes

D

Residual Disability Income pays funds to the insured, to make up for what the insured would have earned after returning to work, and while recovering from ___________. A Short-term disability B Partial disability C Long-term disability D Total disability

D

Right to Examine is the same as: A Elimination Period B Probationary Period C Waiting Period D Free Look Period

D

The Medicare home health care benefit will provide for which of the following services? A Hospitalization care B Prescription drugs C Groceries D Medical supplies

D

The Time Limit on Certain Defenses (Incontestable) period is _____ years under individual health and disability contracts. A 7 B 3 C 5 D 2

D

The ___________ decides which dividend option is in effect and can change their election at any time. A Board of Directors B Beneficiary C Insurer D Policyowner

D

The applicant, if other than the proposed insured, must have: A A valid state issued drivers license B A relationship to the insured's named beneficiary C The insured's permission to be the applicant D An insurable interest in the life of the insured

D

The first year commission for the sale of a Medicare supplement policy may be no more than ________ of the commission paid for selling or servicing the policy in the second year. A 50% B 500% C 100% D 200%

D

The following statement is true concerning the income received from an individually owned disability income policy: A Premiums paid with after tax dollars, Income benefit taxable B Premiums are tax sheltered, Income benefit taxable C Premiums are tax sheltered, Income benefit not taxable D Premiums paid with after tax dollars, Income benefit not taxable

D

The head of the state department of insurance has all of the following powers, except: A Approving rates and rate increases for regulated lines of insurance B Imposing penalties for violations of the insurance code, including but not limited to fines, suspensions or revocations of licenses and Certificates of Authority, and requesting that the Attorney General prosecute a violator C Subpoenaing witnesses and administering oaths in order to further any examination, investigation, or hearing on insurance matters D Creating and establishing new premium rates for insurance companies operating in the state

D

The insured may select a managed care version of a traditional Medicare Supplement Policy at a lower premium by choosing a policy that limits care to a specific list of hospitals and physicians. This would be called a: A Medicaid Supplement Policy B Medicaid Select Policy C Medicare Supplement Policy D Medicare Select Policy

D

The most effective way to ensure that the applicant will accept the policy when it is issued is: A To collect the initial premium upon policy delivery, not at the time of application B To deliver the policy with a gift certificate to a local restaurant C Offer to pay the first premium for them D To have the applicant pay the initial premium at the time of application

D

The settlement option that provides for the proceeds plus interest to be paid in installments for a specified period of time is called the: A Life income period certain option B Joint life option C Fixed amount option D Fixed period option

D

The type of policy that can be changed from one that does not accumulate cash values to one that does is a: A Universal life policy B Variable life policy C Permanent policy D Convertible term policy

D

The waiting period from the start of a disability to be eligible to apply for Social Security disability is: A 3 months B 12 months C 6 months D 5 months

D

To make insurance more affordable and protect the insurance company from paying out too much in claims, insurers will: A Reserve the risk B Retain the risk C Deny the risk D Reinsure the risk

D

Under an annuity with a Joint Life Payment Option, what will the survivor receive upon the death of the first annuitant? A The remaining period certain B The undistributed balance C The same amount they were receiving together D Nothing

D

What is a postmortem dividend? A A second dividend declared after the initial dividend had been paid out B A dividend declared but held for future payout C A dividend declared and paid out at least one year after an insured's death D A dividend earned, but not yet paid, in the year of the insured's death and paid with the death claim

D

What type of disability income insurance pays a benefit to a business to help in the search, cost, and hiring of a replacement when an employee becomes disabled and is unable to work for the company? A Buy-sell B Reducing term C Business overhead expense D Key employee

D

When an applicant for life insurance faces potential financial loss in the event of injury or sickness of an insured, it is said the applicant has: A Beneficiary status B Incidents of ownership C Indemnity rights D Insurable interest

D

The maximum liability of the Life and Disability Insurance Guaranty Association for cash values, for any one life is: A $200,000 B There is no limit C $100,000 D $300,000

C

The insurer's underwriter may find information about an applicant's moral character, hobbies, work and general reputation from a: A Consumer Investigative Report B Medical Examination C Agent's Report D Attending Physician Statement

A

What type of policy pays weekly or monthly benefits for loss of income due to sickness or injury? A Disability Income B Medical Income C Subcontractors Income D Death Benefit

A

An insurer may reserve the right to defer the payment of a cash surrender value for up to _________ months after demand is made and the policy is surrendered. A 6 months B 2 months C 1 month D 3 months

A

An insured may find it more difficult to qualify for benefits, but will enjoy a lower premium, when a more restrictive definition of _________ is found in a Disability Income policy. A Disability B Transplant C Rehabilitation D Benefit

A

How large must a group plan be for the requirement to include maternity benefits on the same basis as nonmaternity benefits to apply? A 20 members B 5 members C 30 members D 15 members

15

An insured should receive necessary claim forms within _____ days after notice of claim. A 15 B 5 C 10 D 20

A

A Taft-Hartley Trust is established by one or more: A Labor unions or associations B Employers in a Multiple Employer Trust C Employees working for more than one employer D Credit unions in the same area

A

A certain major medical policy states a maximum number of days for which convalescent care will be paid as well as a maximum number of X-rays that will be paid for under any one claim. These are examples of: A Inside limits B Designated benefits C Common policy limits D Stand alone limits

A

A limited pay life policy: A Requires premium payments for a specified number of years or until a specified age is reached B Start off with small premium payments and then they increase, but only up to a specified limit C Is offered in limited face amounts only D Can only be purchased by individuals on a specified limited income

A

A minor aged ______ years or older may contract for insurance on his or her own life. A 15 B 10 C 14 D 12

A

A non-school employer can set up a TSA plan for their employees under which of the following IRC section? A 501(c)(3) B 401(k) C 408(a) D 403(b)

A

A producer gathers information about the applicant for the insurer in order to avoid adverse selection. This is considered to be: A Field underwriting B Application process C Law of large numbers D Principle of indemnity

A

A product designed to provide coverage for necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital is called: A Long-Term Care B Outpatient Care C Retirement Benefits D Medicare Supplement

A

A whole life policy: A Requires the insured to pay premiums for life and endows at age 100 B Requires the insured to pay premiums to age 65 and endows at age 120 C Requires the insured to pay premiums to age 90 and endows at age 100 D Is a single premium policy that endows at a specific age specified in the contract

A

All of the following are common complaints filed by clients against Errors and Omissions policies, except: A Failure of the agent to share the commission with the client B Failure to obtain proper coverage C Quoting inflated information D Misrepresenting the plan of coverage

A

All of the following statements regarding an insurance application are correct, except: A It is not included as part of the contract B It is a formal written request by an applicant to an insurer requesting a policy C It is the primary source of information for underwriting purposes D It must be signed by at least the applicant and producer

A

An annuity or pure endowment contract may be reinstated within __________ from the default in premium payments, unless the cash surrender value has been paid. A 1 year B 3 months C 6 months D 2 years

A

An individual long-term care insurance policy may not be terminated for nonpayment of premium unless the insurer has give notice to the insured and any designated persons at least _____ days before the effective date of the termination. A 30 B 60 C 45 D 20

A

An individual purchased a fixed annuity with flexible premiums. When she annuitized the policy, she chose the Life Income 10-Year Certain option. What would the beneficiary receive if the annuitant dies 4 years after the annuity payout began? A 6 more years of payments B Nothing C The undistributed balance D 10 more years of payments

A

An insurance contract is an aleatory contract. This means: A Equal value is not given by both parties to the contract B The contract must be for a legal purpose C Parties to the contract must have the legal capacity to enter into the contract D Statements made in the application are guaranteed to be true in all respects

A

An insured forgets to pay his insurance premium. Instead of the policy lapsing, the premium is paid by the company. This would suggest that a __________ policy was purchased. A Whole Life B Decreasing term C Level term D Renewable term

A

As compared to individual disability income policies, group disability income policies are generally: A Less costly and have more liberal provisions B Written an occupational basis only C More costly than an individual disability policy D Less costly and is more heavily underwritten than an individual plan

A

Benefits received from an individual Long-Term Care Policy are not subject to ______, regardless of the deductibility of the premiums paid for the plan. A Income tax B Sales tax C Deductibles D Premiums

A

Collateral for a policy loan is: A The cash value of the policy itself B The premiums applied to the cash value account minus the load C Not required at all D Provided by the policy's death benefit

A

Dividends if declared are paid __________. A Annually B Monthly C Quarterly D Semi-annually

A

Each of the following is a source of life insurance policy dividends, except: A Guaranteed cash value accumulations B Reductions in operating expenses C Savings in mortality D Additional interest earnings

A

For hospital stays of over 90 days, patients can draw from a pool of 60 reserve days that may be used: A Once in a lifetime B Every year C When ever needed D 0nce every 5 years

A

For nonroutine treatments, a comprehensive policy generally pays: A A specified percentage of the reasonable and customary charges B For catastrophic health losses only C 100% of the medical expenses D For inpatient hospital treatment only

A

Fred purchased a $100,000 policy naming his wife, Wilma, as primary beneficiary, and his only child, Pebbles, to receive any proceeds if Wilma dies before Fred, or if she dies after Fred, but before receiving all the policy proceeds. Fred elected the interest settlement option for Wilma, with the right of withdrawal after 5 years. No settlement option was stipulated for Pebbles. Fred dies on May 6th, 1991. When Fred dies, his insurance company will make settlement by paying: A Interest in periodic payments to Wilma B $100,000 total death benefit amount to Wilma immediately C Nothing, until a period of 5 years has elapsed D Equal lump sum payments to both Wilma and Pebbles immediately

A

George, who has a group policy, may upon leaving his place of employment: A Convert it to permanent insurance without proof of insurability, within a specified period B May continue his current coverage with no change in premium C May convert it to permanent insurance provided he does so within 90 days and can prove insurability D Convert it to an individual term insurance plan, without proof of insurability

A

How can an annuity payout an income benefit income tax free? A Purchase the annuity within a Roth IRA account B When the annuity was purchased as a Traditional IRA with premiums tax deductible C When the annuity payout is going to the estate of the deceased D When the annuitant is over age 70 1/2

A

If Greg's policy on his own life has a guaranteed insurability rider, it means that he can purchase more insurance: A On his own life at certain specified ages without proof of insurability B On his own life at specified periods of time at a fixed guaranteed premium C Anytime before the age of 65 D On his own life at specified periods, but must prove insurability

A

If a policyowner has a $100,000 policy with an accumulated cash value of $6,000, the policyowner can borrow up to: A The entire accumulated cash value of $6,000, less interest for 1 year B Never more than the full face amount of the policy C The total amount of premiums paid into the policy D 50% of the accumulated cash value

A

If an insured has an outstanding loan of $5,000 on a policy with a face amount of $25,000, at death the company will: A Pay the beneficiary $20,000, after subtracting the amount of the outstanding loan B Cancel the policy C Pay the beneficiary the full $25,000 face amount D Institute a required loan repayment schedule before allowing the death claim to be processed

A

If the insurer issues a health insurance policy without an initial premium, the producer must obtain a signed: A Statement of Good Health B Standard provisions endorsement C Rider that the policy is acceptable D Statement of increased health risks

A

In a universal life policy, the two adjustments usually made to the cash value account are: A Cost of insurance protection is charged and current interest is credited B Cost of insurance protection is credited and current interest is charged C Guaranteed interest is credited as long as the insurer has had a favorable investment return D Premiums and guaranteed interest are charged

A

In order for a claimant to be eligible for _______ benefits, they must qualify based upon need. A Medicaid B Medicare Supplement C Long-Term Care D Medicare

A

Information about an applicant's work behavior or character gathered from neighbors or co-workers would be included on an? A Inspection Report B Agent's Report C APS D MIB

A

Legally speaking, a producer has a __________ duty when handling life insurance premiums and applications for an insurer. A Fiduciary B Undisputed C Negotiated D Professional

A

Michelle is 65 and starting to receive Social Security benefits. To receive Medicare Part A, she needs to: A Do nothing B Complete an open enrollment application C Complete an open enrollment application along with the first months premium D Enroll in Medicare Part B at the same time

A

Non-financial regulatory activities are known as: A Market conduct B Risky conduct C Hazardous conduct D Financial conduct

A

On which of the following policies would any proceeds be taxable? A Business overhead expense insurance B The death benefit proceeds of an individually purchased life insurance policy paid to a beneficiary C A key employee disability income policy paid for and owned by the business and the business is the beneficiary D A disability policy that is used to fund a buy-sell agreement

A

Part B of Medicare excludes which of the following medical expenses? A A regular dental checkup B Clinical laboratory services C Outpatient hospital treatment D Home health care

A

Policies are considered incontestable after: A 2 years B 3 months C 6 months D 9 months

A

Required/Mandatory Provision 'Proof of Loss' indicates that except in the absence of the insured's legal capacity, if it was not reasonably possible for the insured to provide proof of loss as required in a policy, the latest time the proof of loss may be furnished is: A 1 year from the time proof is otherwise required B 6 months from the time proof is otherwise required C 5 years from the time proof is otherwise required D Within 60 days of the time proof is otherwise required

A

Should an insured become totally and permanently disabled two months before the cut-off date for the waiver of premium rider: A The insured remains eligible for all provisions B No benefits would be available due to the 6 month elimination period usually required, which would exceed the 2 months remaining on the rider C All provisions in the policy are now voided D The waiver of premium will only continue for the remaining two months

A

Susan, age 65, inherits a substantial sum of money and wants to have the money distributed to her over the rest of her life starting next month. Which product offered by the life insurance industry will allow her to accomplish her objective? A Single Premium Immediate Annuity B Flexible Premium Deferred Annuity C Single Premium Deferred Annuity D Flexible Premium Immediate Annuity

A

TSAs are tax-sheltered retirement programs for employees of all the following kinds of organizations, except: A Corporations B Religious C Educational D Charitable

A

The Coordination of Benefits Provision is designed to: A Give insureds as much coverage as possible while eliminating overinsurance B Encourage insureds to purchase and maintain as much additional coverage as possible C Permit insurers the right to pay or not pay a claim at their discretion D Prevent overinsurance

A

The Life and Disability Insurance Guaranty Association provides a maximum liability benefit in the event an insurer becomes insolvent. The benefit amount is limited to: A $100,000 for cash value on one life and $300,000 for all benefits B $100,000 for cash value on one life and $250,000 for all benefits C $50,000 for cash value on one life and $150,000 for all benefits D $100,000 for cash value on one life and $500,000 for all benefits

A

The _________ alerts insurer home office underwriters of errors, omissions, or misrepresentations made on insurance applications. A MIB B Medical Doctors Association C Federal Insurance Information Bureau D State Insurance Inspection Department Report

A

The factors that determine the amount of each payment under the fixed period settlement option are: A Length of the fixed period, face amount of the policy and interest B Age of the beneficiary only C Length of the fixed period, face amount of the policy, interest, and age of the beneficiary D Length of the fixed period payout only

A

The insurance industry is primarily regulated at the _________ level. A State B County C Federal D Insurers

A

The main purpose of the spendthrift clause contained in a settlement option is to prevent the beneficiary from doing all of the following, except: A Purchasing a new car once the claim has been settled and proceeds have been paid out according to the beneficiary designations B Transferring the proceeds of the policy C Encumbering the proceeds of the policy D Commuting the proceeds of the policy

A

The nonforfeiture option that provides the most life insurance protection is the: A Extended term option B Reduced paid-up option C Paid up additions option D Cash surrender option

A

The type of annuity that guarantees to pay total income at least equal to the purchase price of the contract is a: A Refund life annuity B Pure life annuity C Joint life annuity D Joint life and survivorship annuity

A

To be able to start operations, a mutual company must have all of the following, except: A A minimum number of stockholders B The advanced premium payment for each application C A minimum number of applications for insurance D A minimum surplus as specified by the state

A

Under a Key Employee Disability Income Policy, the employer is the: A All of the answers listed B Recipient of the proceeds C Premium Payor D Policyowner

A

Under the Legal Actions Mandatory Uniform Provision, an insured must wait at least _____ days after providing proof of loss before he or she can take legal action against the insurer. A 60 days B 90 days C 180 days D 45 days

A

Under what circumstances do major medical policies usually provide for restoration of benefits? A Restoration usually occurs after a specified dollar amount of benefits has been exhausted and after the insured has proven insurability B Restoration of benefits must occur every policy anniversary regardless of the amount of benefits exhausted C Anytime benefit limits have been exhausted D Under no circumstances do major medical policies provide restoration of benefits

A

Under what conditions would there be a limit as to how much premium can be deposited into an annuity? A If the annuity is funding a qualified retirement plan and the IRS imposes a limit on that type of plan B If the stock market falls by more than 25% C If the producer has sold more annuity premiums than their quota D If interest rates rise more than 10%

A

Upon written demand by a person aggrieved, the Commissioner must hold a hearing within: A 30 days after receipt of the demand B 20 days after receipt of the demand C 10 days after receipt of the demand D 14 days after receipt of the demand

A

What is the easiest and best way to assure that the life insurance policy's death proceeds don't end up in probate court process? A List a primary and contingent beneficiary by their full name and relationship to the insured B Name the estate as beneficiary C Make sure the client has a will that is current and in an easily accessible location D Ascertain that the client has a trust that is filed with the County court

A

What type of disability income policies are most likely used to cover only nonoccupational disability as opposed to both occupational and nonoccupational? A Short-term disability policies B Workers' Compensation C Disability income rider to an individual life policy D Long-term disability policies

A

When an employee pays part of the premiums for group disability insurance: A The benefits are received tax free to the extent that the employee paid the premiums B All of the disability income benefits received by the employee are fully taxable C All of the disability income benefits are received totally income tax free to the employee D All of the employee paid premiums are tax deductible to the employee

A

Which of the following are included in Part I of a Health Insurance Application? A The gender of the applicant B Medical background C Family health history D Present health

A

Which of the following describes why Alabama encourages the purchase of Long-Term Care Insurance through its LTC 'Partnership Program'? A All of the answers listed B Allows Medicaid to disregard some or all of your assets for Medicaid eligibility C Requires Medicaid to disregard some or all of your assets during estate recovery D Provides you with asset protection

A

Which of the following has primary responsibility for ensuring that the application is filled out completely? A Producer B Home office underwriter C Insurer D Actuary

A

Which of the following is not a Mandatory Uniform Provision of an Accident and Health policy? A Waiver of Premium B Time limit on Certain Defenses C Proof of Loss D Payment of Claims

A

Which of the following policies could be expected to have the lowest premium? A Whole life B Endowment to age 65 C Single pay life D 10-pay life

A

Which of the following provided the federal government the right to regulate the insurance industry, regarding fraud and false statements? A McCarran/Ferguson Act B COBRA Act C HIPAA Act D Gramm-Leach-Bliley Act

A

Which of the following statements about the average number of people who die each year is true? A It is called the mortality rate B It is called the principle of indemnity C It is called the predictability rate D It is called the principle of life insurance

A

Which of the following will cover the cost of inpatient blood transfusions after the first 3 pints? A Long-Term Care B Medicare Part D C Medicare Part B D Medicare Part A

A

Which provision allows medical expenses from the last 3 months of a calendar year to be used during the next calendar year to meet a deductible? A Carryover provision B Family deductible C Common accident provision D Stop loss provision

A

Who is Alabama's current Commissioner of Insurance? A Jim Ridling B Walter Bell C Bob Riley D Fob James

A

With a modified premium whole life contract, premium payments: A Are lower in the early years of the contract B Are invested in the stock market C Never change for the life of the policy D Are modified throughout the life of the plan and may fluctuate at the insurer's discretion

A

With health and life insurance a/an _________ is required at the time of the application. A Insurable interest B Beneficiary status C Indemnity interest D Ownership right

A

_____________ consists of groups of underwriters called syndicates, each of which specializes in insuring a particular type of risk. A Lloyds of London B Risk retention insurers C Self insurers D Reciprocal insurers

A

_____________ insurance allows for insurance coverage to be obtained when not available from admitted carriers. A Surplus lines B Foreign C Brokerage D Fraternal

A

Concerning the Paid-Up Additions Dividend Option, all of the following are true, except: A Paid-up additions increase the amount of future dividends credited B Eventually, no more premiums will be due on the policy C Paid-up additions have their own increasing cash values D These single premium additions do not change the face value of the original policy

B

Coordination of Benefits is a provision designed to reduce ________ when an insured is covered under multiple health plans. A Continuation of coverage B Overinsurance C Extension of benefits D Excess coverage

B

A group deferred annuity or an individual deferred annuity would be most likely used: A Both answers B To fund a defined benefit plan C Neither answer D To fund a defined contribution plan

B

A health benefit plan that provides coverage for surgical services for a mastectomy must provide screening mammography for women age 50 or older at least every: A 2 years B Year C 5 years D 3 years

B

A licensee must inform the Commissioner of a change of legal name or address within ______ days of the change. A 10 B 30 C 90 D 180

B

A life insurance policy is incontestable, except for nonpayment of premiums, after it has been in force during the lifetime of the insured for ______ from its date of issue. A 1 year B 2 years C 3 months D 6 months

B

A qualified plan pre-mature withdrawal tax penalty can be waived in all of the following circumstances, except: A Disability B Buying a first vacation home C Qualified educational expenses D Death

B

A variable life policy: A Has a fixed death benefit B Death benefit varies to reflect the investment results of the underlying separate account, but never falls below a guaranteed minimum C Guarantees a minimum return on the cash value account D Has flexible premiums that can be changed as well as frequency

B

All of the following are eligible to participate in a HR-10 Keogh Plan, except: A Manager B Silent partner C Sales person D Secretary

B

All of the following are producer responsibilities to the applicant, except: A Reviewing and evaluating the applicant's current insurance coverage, limits, and risks B Offering and selling only the lowest premium policy C Forwarding premium on to the insurer on a timely basis D Seeking and gaining knowledge of the applicant's insurance needs

B

An insured has paid $1,000 in annual premiums for her permanent life insurance policy for 12 years. Now upon surrendering the policy she is due to receive $15,000 of cash value. How much of this cash value is taxable? A Zero B $3,000 C $15,000 D $12,000

B

An insured with an individual LTC policy is deducting the premiums he is paying for the plan on his income taxes. Once he begins to receive benefits from this plan, what will be the tax consequences on this income? A Fully taxed B Not taxable C Tax-deferred D 7.5% is taxable

B

Comprehensive dental plans usually provide: A Non-routine dental care without any regard to deductibles or coinsurances B Routine dental care services without deductibles or coinsurance C Routine care without deductibles, but subject to coinsurance D Routine care such as preventative care is provided after satisfying a required deductible

B

Each of the following would be found in the insuring clause of an insurance policy, except: A Definitions B General information about the named insured C General scope of coverage D Conditions under which benefits are payable

B

Guaranteed Renewable means: A Renewable only at the option of the insurer B Renewable with adjustable premiums, by classification only C Renewable with guaranteed premium D Renewable with adjustable premiums determined by frequency of claim

B

How are employer paid premiums on a group life insurance plan treated for tax purposes? A As compensation in lieu of cash B As an ordinary and necessary business expense C As a personal expense paid on behalf of the employee D A barter transaction

B

If a policyowner paid $18,000 in premiums for a policy that is cashed in for $21,000, how much of the policy's cash surrender value would be subject to federal income tax? A $18,000 B $3,000 C Zero D $21,000

B

If an insured currently has a policy with a waiver of premium rider and should change to a more hazardous occupation, the insurance company will: A Void the policy B Continue the waiver of premium rider C Increase the premium D Cancel the waiver of premium rider

B

If an insured pays a premium that is lower than others that are in the same class, this insured is considered to be rated as? A Substandard B Preferred C Reduced D Standard

B

In group insurance, the evidence of a contract between the insurer and the employer or association is: A The underwriting certificate of completion B The policy C The certificate of insurance D The approval certification

B

Jay, who is employed by Carson Company, is assigned to work temporarily in another state. While in the other state, Jay is injured on the job. He is entitled to benefits of the Workers' Compensation law in the state in which he was hired even though his injury occurred in a different state. This indicates that the Workers' Compensation law in the state where Jay was hired: A Is competitive B Includes extraterritorial provisions C Has COBRA provisions D Is monopolistic

B

Loan values and retirement income are: A Considered part of the final expenses of life insurance B Called the living benefits of life insurance C Not available from any type of life insurance policy D Features that are only available on term policies

B

One of your clients just reinstated his health insurance plan. When is coverage effective for sickness and accident? A 30 days for sickness, immediate coverage for accidents B 10 days for sickness, and immediately for accidental injuries C Immediately for both accident and sickness D 10 days for accident and 48 hours for sickness

B

Precertification, Mandatory Second Surgical Opinion, and Concurrent Review are provisions in health insurance policies known as: A Policy Abilities Provisions B Case Management Provisions C Miscellaneous Provisions D Protect Insurer Provisions

B

Regarding COBRA, which of the following is not true? A It provides continuation of coverage for 36 months for a surviving spouse B It covers participants who have resigned for 36 months following the date of their resignation C It provides continuation of coverage for 36 months for an individual losing dependent status D It provides continuation of coverage for 29 months for the disabled

B

Social Security disability benefits become available to eligible workers after a waiting period of: A 30 days B 5 months C 1 year D 90 days

B

Statements made on the application are considered true to the best of the applicant's knowledge and belief are considered to be: A Waivers B Representations C Concealments D Warranties

B

The Lucrative Lozenge Company provides a $5,000 monthly income to retirees who served as senior executives. This benefit is not available to other retirees of the company. This is an example of a: A Qualified plan B Nonqualified plan C 401(k) D Keogh Plan

B

The cost basis of a life insurance policy is __________. A Cash values in excess of premiums paid B Premiums paid less dividends or withdrawals C Dividends left on deposit at interest plus the policy's cash values D Cash values plus any outstanding policy loans

B

The field underwriter is the _________ and is not a determiner of insurability. A Paramedical examiner B Producer C Medical doctor D Actuary

B

The minimum capital required to form and organize a new domestic stock life insurance company in Alabama is: A $500,000 B $1,000,000 C $50,000 D $2,000,000

B

The reinsurance agreement that allows the reinsurer an opportunity to reject coverage for individual risks or price them higher due to their higher risk is known as a(n) ___________ agreement. A Treaty B Facultative C Reciprocal D Residual

B

The specified period that must elapse before new coverage is effective for nonaccidental losses is known as which of the following? A Waiting period B Probationary period C Morbidity table D Exclusion

B

The waiver of premium rider normally expires at age: A 55 B 60 C 70 D 65

B

To receive a license as a resident insurance producer, an applicant must be at least: A 21 years old B 18 years old C 19 years old D 20 years old

B

Under Workers' Compensation, a disability that is a permanent physical impairment leaving the individual incapable of performing the previous regular occupation, but capable of performing some other type of work, is a: A Residual disability B Permanent partial disability C Temporary disability D Recurrent disability

B

Which of the following Annuities would potentially be the most negatively impacted by the overall stock market falling in value? A Fixed B Variable C Indexed D Market adjusted annuity

B

Which of the following IS true about an HMO under Alabama Law? A The Commissioner of insurance may not accept an examination report made by an HMO's home state B The Commissioner of insurance can regulate them but cannot impose a fine C The Commissioner may not examine the affairs of an HMO and its providers as often as possible to protect the general public D The Commissioner of insurance can regulate them and impose a fine

B

Which of the following Medicare Supplement policies have Core Benefits? A Plan A only B Plans A through N C Plans C through J only D Plan A through C only

B

Which of the following acts established the Federal Government's right to regulate the insurance industry in situations involving fraud and false statements made in insurance transactions which might lead to jeopardizing the financial soundness of an insurance company? A TAMRA Act B McCarran-Ferguson Act C HIPAA Act D COBRA Act

B

Which of the following beneficiary designations prevents a policyowner from assigning the policy, taking a policy loan, or surrendering the policy without the beneficiaries consent? A Named B Irrevocable C Incontestable D Class

B

Which of the following best describes the consideration on the part of an insurer? A The offer of the contract B The promise to pay in the event of a covered claim C The purpose of the contract must be legal D The acceptance of the contract

B

Which of the following best describes the general tax rules regarding employer sponsored group disability income insurance plans? A Premiums are not deductible, the benefits are taxable B Premiums are deductible, the benefits are taxable C Premiums are deductible, the benefits are not taxable D Premiums are not deductible, the benefits are not taxable

B

Which of the following is NOT a characteristic of life insurance as property? A It may be paid for in installments B It requires a fund portfolio manager C It creates an immediate estate D It requires no physical maintenance

B

Which of the following is NOT a common exclusion for a dental expense policy? A The 5-year replacement exclusion B The preventative care exclusion C The missing tooth exclusion D The cosmetic exclusion

B

Which of the following is true about a policy that pays for room and board expenses on a indemnity basis? A The policy pays a stated amount per day in the hospital with no limit regardless of the number of days B The policy pays a specified, pre-established amount per day for a maximum number of days C The policy pays a percentage of the total cost per day in the hospital up to 30 days D The policy pays only a percentage of what is considered to be usual, customary, and reasonable

B

Which of the following provides the basis for the benefit amount paid to an insured under a disability income rider? A The length of time income payments are to be paid out B The face amount of the policy C The elimination period D The amount of monthly benefit selected

B

Which of the following statements is NOT true concerning a coordination of benefits situation? A The group insurer for the person with the claim is primary B Where children are involved, the primary group insurer is the insurer for the parent who is oldest by age at the time of claim C The group insurer for the spouse of the person with the claim is secondary D Where children are involved, the primary group insurer is the insurer for the parent whose birthday comes first in the year

B

Which of the following would NOT be permitted as a Section 1035 policy exchange? A A life contract exchanged for an annuity contract B An annuity contract exchanged for a life contract C An endowment contract exchanged for an annuity contract D A life contract exchanged for an endowment contract

B

Which of the following would be considered a speculative risk? A The possibility your car is totaled in an auto accident B The possibility the painting you bought might be a long-lost masterpiece C The possibility you will die on the job at a young age D The possibility you will become disabled

B

Which product, offered by insurers is specifically designed to allow an individual's savings to be distributed to him/her periodically over his/her entire life, regardless of how long he/she lives? A Universal Life Insurance B Annuities C Participating Whole Life D Variable Life Insurance

B

Which rider would eliminate coverage for a preexisting condition? A None of these B Impairment Rider C Return of Premium Rider D Lifetime Benefit Rider

B

Which statement best describes the term reserve? A That amount that enables the insurer to provide sales bonuses and incentives for their commissioned sales staff B That amount that, when increased by future premiums on outstanding policies, and interest on those premiums will enable the company to meet future death claims C That amount, required by law, that the company must hold in reserve to pay only cash value accumulations on permanent insurance policies D That amount insurer's maintain in reserve to guarantee that they can profit from future death claims

B

Which statement concerning individual A&H policy renewal provisions is most correct from the perspective of the insured? A The renewal provision has no impact on the cost of the policy to the insured B The more favorable the renewal provision to the insured, the higher the cost C Renewal provisions only apply to property and casualty contracts and are not included under individual A&H policies D The more favorable the renewal provision to the insured, the lower the cost

B

Why should a policyowner be especially careful when deciding to increase the amount of an outstanding policy loan? A If the loan amount, plus interest charged exceeds the face amount at death, the beneficiary would owe the insurance company the balance of the loan B If the outstanding loan balance, plus interest, equals or exceeds the cash value of the policy, the company could cancel the insurance C If a loan payment is not established within one year, the insurance company may cancel the policy

B

With a Business Overhead Expense Policy, all of the following are claims that are covered, except: A Employee labor B The salary or profit of the business owner C Utilities D Office rent

B

With a Profit Sharing Plan contributions must generally be made in at least ________ consecutive years. A 2 out of the last 6 B 3 out of the last 5 C 3 out of the last 7 D 1 out of the last 5

B

TEFRA is intended to: A Require labor unions to establish a trust for employee pension accounts B Regulate and standardize Medicare supplement plans C Prevent group plans from discriminating in favor of key employees D Regulate social insurance programs

C

Term insurance differs from permanent insurance in that term: A Builds cash value and provides limited death benefit options only B Costs more than permanent insurance C Builds no cash value, pays a death benefit only D Provides a variety of living benefits

C

A Medicare SELECT policy differs from a regular Medicare Supplement (Medigap) policy in that it: A Is provided through Medicaid B Provides more coverages C Is a managed care version of the traditional Medicare Supplement policy D Costs more

C

A Medicare supplement policy may not limit benefits for losses incurred more than ________ from the effective date of coverage because they involve a preexisting condition. A 30 days B 1 year C 6 months D 90 days

C

A SEP uses employer funded _______ accounts. A Defined Benefit B Profit Sharing C IRA D 401(k)

C

A company that is licensed to sell insurance in a particular state is: A A domiciled company B A nonadmitted company C An authorized company D A foreign companyA company that is licensed to sell insurance in a particular state is:

C

A contract that is drafted by an insurer and receives no input or alteration from the insured, is considered a(n): A Unilateral Contract B Conditional Contract C Contract of Adhesion D Aleatory Contract

C

A plan in which employees select health benefits from a variety of coverage options, based on their individual coverage needs is a: A COBRA continuation plan B HIPAA plan C Cafeteria plan D Staff model plan

C

A policy that pays surgical expense benefits does not schedule the approved benefit payable for every type of surgery. Instead, surgeries not listed are paid on the basis of a comparison to one or more types of commonly-performed major surgeries that are scheduled. Under this arrangement, the unscheduled surgeries are paid on the basis of: A Their stated value B Their limited value C Their relative value D Their common value

C

A producer must keep complete records pertaining to transactions under the producer's license for at least: A 6 months B 1 year C 3 years D 3 months

C

A split-dollar plan: A Is part of an entity buy-sell agreement B Insures key employees and is for the sole benefit of the employer in the event of the employees death C Divides the cost of additional insurance for an employee between that employee and the company D Is a qualified retirement plan for the employee with which premiums are split between both the employer and employee

C

Accident and Health Insurance provides coverage for two major categories of perils. They are: A Driving under the influence and driving while intoxicated B On the job and off the job C Accidental injury and sickness D Automobile and home health care

C

All of the following are elements of a contract, except: A Offer and acceptance B Legal purpose C Authority D Consideration

C

All of the following are true regarding advertising in life insurance, except: A Premiums cannot be referred to as 'deposits', 'deposit premiums', or 'investments', they may be referred to as 'premiums' only B Advertisements may not omit the words 'life insurance' or 'annuity' from a policy's name C Premiums cannot be mentioned in an advertisement at all D Any reference to policy dividends must state that they are not guaranteed

C

All of the following are true regarding the States Second Injury Fund, except: A It limits the employers liability for a previously disabled employees second injury B It is funded by assessments against insurers and those who self insure C It is used to relieve the state of any burden for Workers' Compensation benefits D It promotes the employment of previously injured or handicapped workers

C

All of the groups are considered to be exempt from the Affordable Care Act's requirement to purchase coverage, except: A Members of a religion opposed to acceptance of health care benefits B Undocumented immigrants C Those who must pay less than 9.5% of their income for health insurance D Those whose household income does not require the filing of a tax return

C

An annuitant has a temporary annuity certain, and dies shortly after the payments start but before the certain period of 10 years has elapsed. Any money remaining is: A Subject to probate and will be disbursed according to state law B Paid out for the beneficiary's entire life C Paid to the beneficiary for the rest of the certain period D Placed into an insurance trust account

C

An indeterminate premium policy offers: A Whole life insurance with a flexible payment schedule of premiums and flexible face amount of coverage B A limited payment schedule C A low initial premium with succeeding premiums based on the company's investment return, mortality and expenses D An interest sensitive premium on a whole life policy

C

An insurance company, upon receiving proof of death, may not delay a death claim settlement beyond a period of: A 1 month B 3 months C 2 months D 6 months

C

Assets in a separate account are valued at: A Their market value first quoted to the applicant B Their guaranteed rate of interest C Their market value on the date of valuation D Their market value at any given time

C

Before Cranston was disabled, he was a full time engineer earning about $70,000 annually. Now, two years later, he is able to work part-time, earning about $25,000 annually. It is likely that Cranston would be classified as: A Totally disabled B Permanently disabled C Partially disabled D Completely disabled

C

Eligibility for the payment of benefits under a long-term care insurance policy may require either a deficiency in the ability to perform no more than _______ of the activities of daily living or the presence of cognitive impairment. A 0 B 4 C 3 D 5

C

If a premium is collected at the time of the application, the producer will issue a: A Contestable receipt B Guaranteed receipt C Conditional receipt D Sales receipt

C

If an annuitant withdraws funds from their annuity prior to age 59 1/2 what is the tax consequence? A Tax on the tax deferred portion of the withdrawal along with a 15% tax penalty B Tax on the entire withdrawal plus a 10% tax penalty C Tax and 10% penalty tax on the withdrawal that represents earnings D Tax on cost basis and 10% tax penalty on the tax deferred portion of the withdrawal

C

If the Commissioner denies a request for an extension to comply with the continuing education requirements, the licensee must complete the continuing education requirements within _______ days after being notified of the denial. A 20 B 45 C 30 D 60

C

In order to be valid, a contract must be between individuals considered legally able to enter into an agreement. This principle is known as: A Restricted persons B Considerations C Competent parties D Agreement

C

In the event a policy is delivered by an agent to the insured, and the premium payment is to be collected at the time of this delivery, normally what else must the agent obtain to make the delivery complete? A Postage and handling fees B Additional payment reflecting lost interest C A statement of good health D An affidavit from the applicant

C

Industrial life insurance is a form of life insurance written under policies with face amounts of: A $25,000 or less B $4,500 or less C $2,500 or less D $3,500 or less

C

Insurable interest for life insurance is necessary only at the time of: A Death B Policy renewal C Application D Policy delivery

C

It is the _________ who issues a Certificate of Authority enabling an insurer to conduct insurance business within a particular state. A Secretary of State B State Senate C State Insurance Commissioner D State Congress

C

Jeanne has a $100,000 whole life insurance policy that has $1,000 of dividend additions, a $6,000 outstanding loan that includes unpaid interest, and a monthly premium of $500. If she dies during the grace period, which of the following insurance settlements would be permitted? A $93,000 B $92,500 C $94,500 D $100,000

C

Managed Health Care attempts to contain costs by controlling the behavior of participants in all of the following ways, except: A Controlled Provider Access B Copayments and/or coinsurance C Partial Case Management D Preventive Care

C

Medicare supplement policies must provide a 'free look' period of: A 15 days B 25 days C 30 days D 20 days

C

Once issued, the application becomes part of the ___________, when attached. A Part 2 B Agent's Report C Entire contract D Part 1

C

Required Provision 'Reinstatement' addresses reinstatement of a lapsed policy. According to this provision, when an insured applies for reinstatement and receives a conditional receipt, how long does the insurer have to approve or deny reinstatement before the policy will be automatically reinstated? A 90 days from the date of the conditional receipt B 120 days from the date of the conditional receipt C 45 days from the date of the conditional receipt D 20 days from the date of the conditional receipt

C

The ____________ market is a private source of coverage of last resort for individuals or businesses that have been rejected by voluntary market insurers. A Reciprocal B Reinsurance C Residual D Self-insured

C

The exclusion ratio states that once the entire cost basis has been recovered from a non-qualified annuity income benefit payout then any further payments are __________. A Taxed at the favorable annuity continuation income rates B Taxed as capital gain but only 50% of the gain is applied C Fully taxable since the excess payments must represent only earnings D Still tax favored for annuitants over the age of 70

C

The grace period for an individual health insurance policy being paid on a quarterly basis is: A 10 days B 45 days C 31 days D 7 days

C

The main benefit of 501(c)9 trusts is: A Costs of setting up these trusts are always lower than other types of plans B That distributions from the trust are always received tax-free C Contributions to these trusts may be deducted immediately, instead of when benefits are distributed D Contributions to these trusts are not tax deductible at all

C

The mathematical probability table used by insurance companies to determine loss due to sickness or injury is the: A Rate Table B Mortality Table C Morbidity Table D Claims Table

C

The maximum liability of the Life and Disability Insurance Guaranty Association for all benefits, including cash values, for any one life is: A $100,000 B $250,000 C $300,000 D There is no limit

C

The reinsurance agreement that automatically accepts all new risks presented by the company seeking or requesting reinsurance from the reinsurer is known as a ____________ agreement. A Reciprocal B Facultative C Treaty D Residual

C

The relationship of a person who acts on behalf of a company whereby the person's actions can bind the company is known as: A Surplus lines or excess insurance B The law of large numbers C The law of agency D Brokerage business

C

The situation below that most likely calls for the purchase of term insurance is: A Roger is age 62 and is approaching retirement after working for a corporation for 30 years B Mary is 44 years old, is a career school teacher and has no children C George has two years of medical school to complete; he and his wife have one child D Kathy, age 60 and married, has two adult children, both of which are married

C

The tendency for poor risks to seek and be covered for insurance more than average risks is known as: A Adverse hazard B Adverse risk C Adverse selection D Adverse rating

C

The type of disability coverage purchased by a small business owner, to cover ongoing overhead in the event of the owner becoming disabled, would be called: A Disability Reducing Term B Buy-Sell Agreement C Business Overhead Expense D Key Employee Insurance

C

Third-party ownership refers to: A A situation where the beneficiary has no insurable interest in the insured B A situation where the beneficiary is irrevocable C A situation where the policyowner is someone other than the insured D A situation where the applicant is someone other than the payor

C

To address adverse selection what can an insurer legally do? A Limit the amount of coverage issued B Raise the premium higher than most people can afford to pay C Establish and enforce sound underwriting practices D Not offer policies to those over age 55

C

To reduce its exposure to claims from a substandard disability risk, an insurer may take all of the following actions, except: A Charge additional premium B Reduce the amount of benefit C Remove all of the exclusion riders D Increase the elimination period

C

Twisting involves which of the following? A Making false statements on an application for insurance B Making derogatory remarks about another insurance company's financial condition C Policy replacement D Offering a gift in exchange for the prospect to purchase

C

Under Optional Provision 'Unpaid Premiums', when premiums are unpaid at the time a claim is submitted, the insurer may: A Deny the claim because the policy has actually lapsed due to unpaid premiums B Require the unpaid premium be paid before allowing any claim to be processed C Deduct unpaid premiums from benefits before paying the claim D Charge interest on any overdue premiums due at the time of the claim

C

Under a credit health policy, what is the maximum amount of any accidental death benefit included? A $50,000 B None of the answers listed C The amount of outstanding indebtedness at any given time D Double the amount of the original indebtedness

C

Unless revoked or suspended, an insurance producer license will remain in effect for: A 2 years B To age 65 C As long as the license renewal fee is paid and the continuing education requirements are met D 3 years

C

Warren and Wilma have a joint life policy. Warren dies and the policy pays nothing. Later on, Wilma dies and the policy death benefit is paid to the beneficiary. This is called a: A Variable life policy B Level term policy C Survivorship or second-to-die policy D Reduced paid up policy

C

When there is enough cash value within a life policy to pay the premium, the Automatic Premium Loan provision prevents the policy from: A Converting B Renewing C Lapsing D Surrendering

C

Which of the following IS NOT a type of illustration under the Alabama regulation governing life insurance illustrations? A Supplemental illustration B Basic illustration C Annualized Illustration D In force illustration

C

Which of the following can be listed on an illustration? A The insurer's name, producers name, address, and the policy generic name B The proposed insured's name, age, gender, and the initial death benefit C All of the answers listed D The dividend option selected or any nonguaranteed elements

C

With regard to life insurance policies, loading refers to: A The amount of money the insurance company reserves for expected mortality costs B The amount the company anticipates for dividend payout C Assignment of the appropriate share of the company's operating expenses to each policy D Surrender charges applied to the cash surrender of the policy

C

With regard to the waiver of premium rider, after the disability a policyowner normally: A Must prove insurability to continue the policy on an annual basis B Must reapply for the insurance C Need not repay the premiums paid by the company during disability D Must repay the premiums paid by the company during disability

C

_______ income benefits received by an employee are subject to taxation in proportion to the amount of premium that the employer paid. That income attributable to the employee's premium is not taxable. A Medical B Long-Term Care C Disability D Dental

C

_________ consist(s) of the amount of premium that is returned to the policyowner if the insurer achieves lower mortality and expense costs than expected. A The death benefit B A policy loan C A dividend D The cash value

C

_________ refers to the jurisdiction where an insurer was formed or incorporated. A Authorized B Approved C Domicile D Admitted

C

'Annuity Period' refers to which of the following? A The process in determining the cost basis of an annuity B The time in which the annuity is accumulating and earning interest C The period of time in which an annuity is subject to a 10% premature withdrawal penalty D The time during which payments are made to the annuitant

D

A Short-Term Disability Policy generally is for a disability lasting for: A 2 weeks B 2-3 years C 3-5 years D Not more than 2 years

D

A document that provides information to the home office of an insurer for underwriting purposes is called a(n): A Rider B Amendment C Claim Form D Application

D

A licensee must inform the Commissioner of a change of legal name or address within ______ days of the change. A 180 B 90 C 10 D 30

D

A producer who is acting as an agent is representing: A The insured, the applicant and the beneficiary B Always the insured C The insured and the insurer D Always the insurer

D

All Medicare supplement (or Medigap) policies must: A Provide the same benefits as Medicare Part A B Provide the same benefits as Medicare Part B C Offer a 10 day free look provision D Have the same core benefits

D

All of the following statements about noncancellable policies are true, except: A A noncancellable policy is also called a noncancellable and guaranteed renewable policy B The insurer may regain the right to cancel or not to renew when the insured reaches an age specified in the policy C The only right to cancel the noncancellable policy is for nonpayment of premium D The insurer may choose not to renew the policy, but only on the policy renewal or anniversary date

D

Allen purchases an estate builder (jumping juvenile) policy for his 5-year old son, Donald. Suppose that when Donald reaches age 21 his father presents him with the policy as a gift. Which of the following statements is NOT correct? A Donald has enjoyed protection against the problems of premature death B The premium will continue to be based on his original age of 5 C The face value of Donald's policy has increased by 5 times D Donald must change the beneficiaries immediately

D

An annuity or pure endowment contract must provide a grace period of: A 15 days B 20 days C 4 weeks D 1 month of at least 30 days

D

An annuity policyowner may do all of the following, except: A Select or change the settlement option prior to death B Name and change the beneficiary C Change the annuity date D Determine the policy's interest credit

D

An applicant who fails two examinations for the same line of authority must wait ______ to take another examination for that line of authority. A 1 year B 2 years C 6 months D 3 months

D

Payment of the first premium and an application must be submitted to an insurer for individual coverage within how many days to convert group coverage to an individual policy not requiring proof of insurability? A 45 days B 7 days C 10 days D 31 days

D

An individual jumps off a roof and breaks his leg. Which of the following statements is correct? A Jumping of the roof was an accident and breaking his leg was intentional B Jumping off the roof was intentional and breaking his leg was intentional C Jumping off the roof was an accident and breaking his leg was an accident D Jumping off the roof was intentional and breaking his leg was an accident

D

An insured allows a permanent policy to lapse. Unless otherwise instructed, the insurance company: A May apply the cash values to purchase additional paid up insurance B May exercise any nonforfeiture option it deems appropriate C Applies the remaining cash values into a deferred annuity D Will automatically institute the extended term option

D

An insurer can deny an otherwise valid claim under a long-term care insurance policy solely on the basis of a misrepresentation that is material to the acceptance for coverage: A None of the answers listed B If the policy has been in force for less than 3 months C Anytime they desire D If the policy has been in force for less than 6 months

D

Any extra premium charged for the waiver of premium rider: A Must be paid separately and in addition to the primary premium B Earns interest and increases the cash value of the policy C Increases the face amount of the policy D Does not apply to the policy's cash value

D

Controlled business may be defined as insurance sold: A To individuals needing an increased amount of term insurance B To existing clients only C To anyone willing to buy D To the producer, the producer's family and friends, and the producer's business associates

D

Death benefits paid under Workers' Compensation: A Are limited to two times your annual salary B Are $1,000 and must be requested within 90 days from the date of death C Are not provided D Include both a one-time burial allowance and a weekly benefit for a surviving spouse and /or children

D

Dental policies that limit benefits to specified maximums per procedure, with first dollar coverage are: A Reimbursement B Non-scheduled C Blanket D Scheduled

D

Distributions from a qualified retirement plan: A Are always fully taxable B May only be received in interest only payments C Are always received tax-free D Are received tax-free only if they result from previously taxed contributions

D

ERISA requires which of the following? A That every plan has the same vesting schedule B That employers establish pension plans for their employees C Employers must be able to benefit equally with the employees and beneficiaries D Qualified plans must meet certain minimum standards

D

Each of the following statements about policy loans is correct, except: A A policy loan cannot be made on a policy until it has been in force long enough to accumulate some cash value B If a policy has cash value, the insurance company cannot refuse to lend the policyowner money C The loan value of a policy cannot exceed the current cash value D Policy loans may be made on any type of policy

D

Each of the following would be an element in the definition of fraud, except: A A false statement on the application that is material to the acceptance of the risk B Withholding of known material facts C Intentional material misrepresentation with the intent of causing injury to another party D An individual warrants a fact stated on the application

D

If a company wishes to share information about a customer's health with a third party: A The customer must opt-out of allowing disclosure immediately B The company must pay a fee to the customer before the information may be shared C The customer must pay a fee for this privilege D The customer must actively opt-in to allowing the disclosure

D

In Alabama, the Commissioner of insurance is: A Appointed by the house of representatives B Appointed by the president of the United States C Voted into office by primary elections D Appointed by the governor

D

In a whole life insurance policy: A The insurance protection remains level throughout the policy period, and the cash value does not impact the amount of insurance protection at all B The cash value is equal to the face amount of insurance throughout the life of the policy C The cash value provides no living benefits until the policy endows D The cash value is greatest at the end of the policy period, and the insurance protection is greatest at the start of the policy

D

In many jurisdictions, permanent policies are required to have some cash value by the end of: A The fourth year B The first year C The second year D The third year

D

In the context of replacement, the term 'conservation' means any attempt by the: A Insured to negotiate a lower premium with the agent B All the answers listed C Insured to cancel the policy in an attempt to conserve premium dollars D Existing insurer or its agent to continue existing life insurance in force

D

In which of the following circumstances would the accidental death benefit not apply? A Death caused by an automobile accident B Death caused as the result of being a passenger on a regularly scheduled airline C Death caused as a direct result of an occupational accident D Death caused by an intentional act

D

Incidental limitations refer to which of the following? A Annuity payout options B Taxation of Roth IRAs C Roth IRAs D The amount of life insurance that may be included in a qualified retirement plan

D

John has had his individual Health and Disability Income policies for many years. While intoxicated, he was injured as the driver in a single car accident. Who covers the medical expenses for John? A His health policy pays all expenses B Health covers medical; disability covers income C Medicaid pays the medical expenses D John is liable for all expenses

D

Managed Health Care attempts to contain costs by controlling the behavior of participants in all of the following ways, except: A Preventive Care B Controlled Provider Access C Copayments and/or coinsurance D Partial Case Management

D

One of the benefits of an annuity in regards to taxes is: A Premiums are tax deferred B Premiums are tax deductible C Death benefits are income tax free D Earnings are tax deferred during the accumulation phase

D

When converting a group life policy to an individual policy, the departing group member's new policy must be a: A Fixed deferred annuity B Decreasing term policy C 20 year term life policy D Permanent or whole life policy

D

When medical expense policies do not state specific benefit dollar benefit amounts, but instead base payments upon the charges for like services in the same geographical area, benefits are designated as which of the following? A Blanket charges B Scheduled charges C Specified charges D Usual, customary, and reasonable charges

D

When underwriting group life insurance: A The underwriter requires each employee to have a paramedical exam B The underwriter requires complete family history from each employee C The underwriter generally focuses on individual members of the group, rather than the group as a whole D The underwriter generally focuses on the group as a whole, rather than on individual members

D

Which is the proper term for a company owned by its policyowners? A A charitable insurance company B A reciprocal insurance company C A domestic insurance company D A mutual insurance company

D

Which of the following Annuities can it be said that it has 'upside potential, but no downside risk' when it comes to the stock market overall? A Market Value Adjustment B Variable C Fixed D Indexed

D

Which of the following can be listed on a life insurance illustration? A Neither answer B Both answers C Guaranteed Dividend D Non Guaranteed projections

D

Which of the following death benefits is paid out to the beneficiary income tax free? A An annuity whose annuitant dies during the accumulation phase B An annuity whose annuitant dies during the distribution phase C An annuity whose annuitant dies when used for retirement income planning D Life insurance when the insured dies while the policy is in force

D

Which of the following is NOT considered one of the essential elements of a contract? A Competent Parties B Legal Purpose C Offer and Acceptance D Conditions

D

Which of the following is NOT one of the categories of benefits incorporated by State Workers' Compensation Laws? A Disability benefits B Rehabilitation benefits C Medical benefits D Long-term care coverage

D

Which of the following is true of Medicare Part B? A Provides coverage for inpatient services B It is free for those who qualify C It covers routine dental checkups D Benefits are funded by a combination of taxes and premium dollars and coverage is elective

D

Which of the following may an insurer purchase for its separate account? A More than 10% of the total issued and outstanding voting securities of any single issuer B Both answers are correct C Securities of a subsidiary of the insurer D Neither answer is correct

D

Which of the following will receive the smallest monthly income benefit check if an annuity is annuitized? A 65 year old female B 62 year old male C 55 year old male D 50 year old female

D

Which of the following would NOT be a likely consideration in determining premium rates for group health insurance? A Degree of occupational hazard associated with the group B Length of the waiting period C Maximum indemnity period D Whether the company produced a profit or a loss in the previous year

D

Which of these is a Mandatory Uniform Provision? A Illegal Occupation B Conformity with State Statutes C Misstatement of Age D Legal Actions

D

Which part of Medicare requires premium payments by most eligible participants? A Intermediate care B Part A, Hospital Insurance C Custodial care D Part B, Medical Insurance/Outpatient

D