exam review 2

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act? Revocation of license $2,500 $1,000 $100 per violation

$2,500

An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. How much will the beneficiary receive from the policy? a)$0 b)$100,000 c)$200,000 d)$100,000 plus the total of paid premiums

$200,000

An insured is covered under 2 group health plans - under his own and his spouse's. He had suffered a loss of $2,000. After the insured paid the total of $500 in deductibles and coinsurance, the primary insurer covered $1,500 of medical expenses. What amount, if any, would be paid by the secondary insurer? a)$0 b)$500 c)$1,000 d)$2,000

$500

The relation of earnings to insurance provision allows the insurance company to limit the insured's benefits to his/her average income over the last a)6 months. b)12 months. c)18 months. d)24 months.

24 months.

The Commissioner of Insurance issues a cease and desist order and immediately receives a request for the charges to be reviewed in a hearing. Within how many days must the hearing be held? a)10 b)14 c)30 d)60

30

The Commissioner of Insurance issues a cease and desist order to an agent. If the agent wishes to contest the charges in court, how many days after the order was issued does the agent have to make the request? a)10 days b)30 days c)60 days d)90 days

60 days

Which of the following is NOT a possible penalty for a violation of the Insurance Code? a)An administrative penalty b)Payment of restitution c)A cease and desist order d)A fine up to $100,000

A fine up to $100,000

To which of the following situations does the Replacement Regulation apply? a)An immediate annuity purchased with proceeds from an existing policy b)Coverage under a binding receipt issued by the same company c)A whole life policy reissued with reduction in cash value d)Group life insurance

A whole life policy reissued with reduction in cash value

How can a new physician be added to the PPO's approved list? a)Pay an annual fee for being on the PPO list. b)New physicians are only added once a year, and are selected by the PPO's Board of Directors. c)Agree to follow the PPO standards and charge the appropriate fees. d)Fill out the appropriate paperwork and wait the 12 month pre-certification period.

Agree to follow the PPO standards and charge the appropriate fees.

All of the following are true about group disability income insurance EXCEPT a)Benefits are usually short term b)The waiting period starts at the onset of the injury or sickness. c)The longer the waiting period, the lower the premium. d)Coverage applies both on and off the job.

Coverage applies both on and off the job.

What is another name for interest-sensitive whole life insurance? a)Current assumption life b)Variable life c)Term life d)Adjustable life

Current assumption life

Which of the following is true regarding taxation of dividends in participating policies? a)Dividends are taxable only after a certain amount is accumulated annually. b)Dividends are taxable in some life insurance policies and nontaxable in others. c)Dividends are considered income for tax purposes. d)Dividends are not taxable.

Dividends are not taxable.

For a retirement plan to be qualified, it must be designed for the benefit of a)Employer. b)IRS. c)Employees. d)Key employee.

Employees.

Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to an insured is Within 45 days. Weekly. Biweekly Monthly.

Monthly.

Which of the following provisions is mandatory for health insurance policies?a)Physical examination and autopsy b)Recurrent disability c)Unpaid premiums d)Intoxicants and narcotics

Physical examination and autopsy

What is the initial period of time specified in a disability income policy that must pass, after the policy is in force, before a loss can be covered? a)Contestable period b)Elimination period c)Grace period d)Probationary period

Probationary period

Which of the following answers does NOT describe the principal goal of a Preferred Provider Organization? a)Provide medical services only from physicians in the network b)Provide the subscriber a choice of physicians c)Provide the subscriber a choice of hospitals d)Provide medical services at a reduced cost

Provide medical services only from physicians in the network

Your client is planning to retire. She has accumulated $100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent, you should recommend a)Installment refund. b)Joint and survivor. c)Straight life. d)Life income with period certain.

Straight life.

Which of the following would provide an underwriter with information concerning an applicant's health history? a)The Medical Information Bureau b)A medical examination c)The agent's report d)The inspection report

The Medical Information Bureau

The initial amount of credit life insurance may NOT exceed a)An amount set by statute and adjusted regularly for inflation. b)The borrower's monthly income. c)The borrower's annual income. d)The amount to be repaid under the contract.

The amount to be repaid under the contract.

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? a)The death benefit can be increased only by exchanging the existing policy for a new one. b)The death benefit can be increased by providing evidence of insurability .c)The death benefit cannot be increased. d)The death benefit can be increased only when the policy has developed a cash value.

The death benefit can be increased by providing evidence of insurability.

In a disability policy, the elimination (or waiting) period refers to the period between a)Coverage under a disability policy and coverage under Social Security. b)During which any specific illness or accident is excluded from coverage. c)The first day of disability and the day the insured starts receiving benefits. d)The effective date of the policy and the date the first premium is due.

The first day of disability and the day the insured starts receiving benefits.

Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner? a)An irrevocable beneficiary b)A buy-sell agreement c)Family term rider d)Third-party ownership

Third-party ownership

ich of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?a)Indemnity b)Representation c)Warranty d)Concealment

Warranty

Following an injury, a policyowner covered under Medicare Parts A & B was treated by her physician on an outpatient basis. How much of her doctor's bill will she be required to pay out-of-pocket? a)A per office visit deductible b)20% of covered charges above the deductible c)80% of covered charges above the deductible d)All reasonable charges above the deductible according to Medicare standards

20% of covered charges above the deductible

The minimum number of credits required for partially insured status for Social Security disability benefits is 4 credits 6 credits 10 credits 40 credits

6 credits

A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases an insurance policy from the bank in the amount of the loan. This is an example of a)Loading. b)Defamation. c)Twisting. d)Coercion.

Coercion.

Which policy component decreases in decreasing term insurance? a)Cash value b)Dividend c)Premium d)Face amount

Face amount

Which is TRUE about the cash surrender nonforfeiture option? a)Funds exceeding the premium paid are taxable as ordinary income. b)After the cash surrender, the insured is covered for a grace period of one month. c)The policy remains active for some time after the policyholder opts for cash surrender. d)The policyholder receives the original cash value of the policy.

Funds exceeding the premium paid are taxable as ordinary income.

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a a)Cost of living provision. b)Nonforfeiture option. c)Guaranteed insurability rider. d)Paid-up additions option.

Guaranteed insurability rider.

An association could buy group insurance for its members if it meets all of the following requirements EXCEPT a)Has a constitution and by-laws. b)Holds annual meetings. c)Is contributory. d)Has at least 50 members.

Has at least 50 members.

When a reduced paid-up nonforfeiture option is chosen, what happens to the face amount of the policy? a)It is reduced to the amount of what the cash value would buy as a single premium. b)It is increased when extra premiums are paid. c)It decreases over the term of the policy .d)It remains the same as the original policy, regardless of any differences in value.

It is reduced to the amount of what the cash value would buy as a single premium.

Variable Whole Life insurance is based on what type of premium? a)Flexible b)Graded c)Level fixed d)Increasing

Level fixed

Which of the following settlement options in life insurance is known as straight life? a)Fixed period b)Interest only c)Fixed amount d)Life income

Life income

What is the other term for the cash payment settlement option? a)Face amount b)Proceeds c)Lump sum d)Principal amount

Lump sum

If a dental plan is integrated, it is combined with what type of plan? a)Secondary dental b)Supplemental c)Life d)Medical

Medical

Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive a)Nothing; the payments will cease. b)Guaranteed minimum benefit. c)The amount paid into the annuity. d)The remainder of the principal.

Nothing; the payments will cease.

Where in the policy must the HMO insurer provide information about the HMO's name, address, and toll-free number? a)On the face page b)Anywhere in the document as deemed appropriate by the insurer c)In the policy appendix d)In the buyer's guide

On the face page

An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase? a)Payments for life b)Nothing c)Payments for 15 years d)Payments for 20 years

Payments for 15 years

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then a)The benefit is received tax free. b)The benefit is subject to the exclusionary rule. c)IRS has no jurisdiction. d)The benefit is received as taxable income.

The benefit is received tax free.

In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports? a)The customer has no knowledge of this action. b)The customer's associates, friends, and neighbors provide the report's data. c)They provide additional information from an outside source about a particular risk. d)They provide information about a customer's character and reputation.

The customer's associates, friends, and neighbors provide the report's data.

Under an extended term nonforfeiture option, the policy cash value is converted to a)A lower face amount than the whole life policy. b)A higher face amount than the whole life policy .c)The same face amount as in the whole life policy. d)The face amount equal to the cash value.

The same face amount as in the whole life policy.

An agent explains the details of a life insurance policy to a client. The agent does not realize, however, that the state has recently rewritten two of the provisions. As a result, the agent inadvertently misrepresents the policy, making it more attractive than it really is. What best describes this situation? a)Misrepresentation b)Deceptive claim settlement practice c)There is no misconduct d)Fraud

There is no misconduct

An HSA holder who is 65 years old decides to use the money in the account for a nonhealth expense. Which of the following is true? a)There will be no taxes and no penalties. b)There will be a tax and a 20% penalty. c)There will be a 20% penalty. d)There will be a tax.

There will be a tax.