Final exam Insurance
An insurer is attempting to determine the insurability of an applicant and decides to obtain medical information from several different sources. Which of the following must be notified of the investigation?
applicant
When an insured terminates membership in the insured group, the insured can convert to what type of individual life insurance?
Whole life without proof of insurability
To be valid, an insurance policy must have all of the following EXCEPT
countersignature
Limited health insurance policy that will pay a lump sum to an insured diagnosed with a heart attack, stroke, or renal failure is known as
critical illness insurance
Which of the following is a preferred solution for reducing the cost of hospitalization?
outpatient services
An employee has a flexible spending account (FSA) with a $5,000 annual benefit. This year the employee used $3,000. What would be the amount of the benefit available to the employee next year?
$5,000
If an insured is injured while committing an illegal act and the insureds health policy contains the illegal Occupation provision, what percentage of the claim will be paid?
0%
According to the Limit Time on Certain Defenses provision, statements or misstatements made in the application at the time of issue cannot be used to deny a policy after the policy has been in force for a minimum of how many years?
2 years
Under the mandatory uniform provision Legal Actions, an insured is prevented from bringing a suit against the insurer to recover on a health policy prior to
60 days after written proof of loss has been submitted
What is the maximum age that a disabled insured worker may receive social security disability benefits?
65
Which of the following statements is NOT true regarding health insurance policy provisions?
All additional provisions written by insurers are cataloged by their respective states
What is the maximum loan amount a policyowner may withdraw from a variable universal life insurance policy?
An amount not exceeding the cash value
The benefits from a business overhead expense insurance policy
Are limited to covered expenses and are taxable to the business
In whole life insurance, when is the policy cash value scheduled to equal the face amount?
At the insured's age 100
An underwriter is reviewing an applicant with an extensive medical history. Which of the following would give the underwriter a better understanding of how the applicant has been treated for various illnesses?
Attending Physician's Statement
What specific kind of insurance is often written in conjunction with hospital expense policies and includes surgeon's and anesthesiologists fees?
Basic surgical expense insurance
Answers to questions in an insurance application are called representations and, as such, they are
Believed to be true to the best of the applicant's knowledge
In life insurance, which of the following is NOT required to have an insurance interest in the insured?
Beneficiary
Decreasing Term insurance is often used to
Cover a mortgage
Under which of the following conditions would life insurance proceeds be taxable by the federal government
If there is a transfer for value
Which of the following is NOT true regarding a deferred annuity?
Income payments begin within 1 year from the date of purchase
Which of the following is NOT true regarding a noncancellable policy?
Insurer can increase the premium above what is stated in the policy if claims experience is greater than expected
Dividends received on participating life insurance policies are
Not taxable because they are a return of unused premiums
When the owner of a participating whole life policy uses the dividend to provide more life insurance coverage, which of the following dividend options is being used?
Paid-up additions
Who can request changes to policy face value, premium payments, and policy plans?
Policy owner
Policies written on a third-party ownership basis are usually written to cover which of the following?
Policyowner's minor children or business associates
If a life insurance company uses HIV testing as part of its underwriting, when must an applicant be notified of the procedure?
Prior to performance of the test
Utilization management consists of an evaluation of the appropriateness, necessity and quality of health care, and may include
Prospective and concurrent review
Which of the following individuals would be a likely candidate to purchase a deferred annuity?
Someone who wants to grow retirement funds tax deferred
If a basic medical insurance plan's benefits are exhausted, what type of plan will then begin covering those losses?
Supplementary Major Medical
Which of the following policies would NOT offer a policy loan option?
Term life
When term insurance is added to the main policy to enhance the policy or provide added benefit or coverage, it is called a
Term rider
What is the cost of coverage based on for group life insurance?
The average age and the ratio of men to women
All of the following are true about key-person insurance EXCEPT
The death benefit is taxable to the business
What is the purpose of a disability buy-sell agreement?
To allow the business buyout in case of the owner's disability
If the policy summary for a life insurance policy is not given when the application is taken, when must the policy summary be given to the policyowner?
When the policy is delivered
The policy owner has an option to pledge the life insurance policy as collateral for a bank loan. This is called
collateral assignment
A husband and wife both incur expenses that are attributed to a single major medical insurance deductible. Which type of deductible do they have in their policy?
family
An annuity owner receives the same guaranteed payment every month. What type of annuity is it?
fixed
The guaranteed purchase option is also referred to as the
future increase option
If a loan request is for payment of due premiums on the policy, how soon must the insurer issue a loan?
immediately
Which of the following is the primary source of information that an insurer uses to evaluate an insureds risk for life insurance?
insurance application
All of the following must sign an application for health insurance EXCEPT the
insurer
Which of the following is provided by skilled medical personnel to those who need occasional medical assistance or rehabilitative care?
intermediate care
An agreement that is enforceable by law is known as what kind of contract?
legal
In the event an annuitant dies during the accumulation period, and there is a beneficiary named in the annuity, annuity benefits would be paid to the
named beneficiary
An insured purchase a health insurance policy with a renewability clause that states the policy is "guaranteed renewable." This means that as long as the required premiums are paid, the policy will continue until the insured
reaches 65
An insured, who is 44 years old, falls while mountain climbing on vacation. He is left paralyzed. After a year, doctors feel he will never recover from his injuries. From which of the following programs will he be able to collect disability income?
social security
Which to the following would be TRUE of both the fixed-period and fixed-amount settlement options?
Both guarantee that the principal and interest will be fully paid out
A dentist is off work for 4 months due to a disability. His dental assistants salary would be covered by
Business Overhead Insurance
In a variable life insurance policy, all of the following assets are held in the insurance company's general account EXCEPT
Cash surrender values
Which of the following is true of the taxation of cash values in a business life insurance policy?
Cash values grow tax deferred
An insured and his spouse recently had a child. Which of the following riders would allow the couple to insure the child for a limited period of time at a specified amount?
Children's term rider
An employee is covered under COBRA. His previous payment was $100 per month. His employer now collect $102 each month. Why does the employer collect an extra $2?
Cover employers administrative cost
When filling out an application for insurance, the applicant makes a mistake. If a fresh application were not available, what could the applicant do to properly correct the mistake?
Cross the incorrect answer out, write the correct one beside it, and initial the answer
Which of the following are considered activities of daily living in most long-term care policies
Eating and dressing
In order to reinstate a life insurance policy the insured must do all of the following EXCEPT
Pay next year's premium in advance
Life insurance creates immediate estate. Which of the following best explains this statement?
Payable to the beneficiary named
An Equity Indexed Annuity will grow based upon
Performance of a recognized index
Which of the following will NOT be included in the buyers guide?
Specific information about the policy
When an agent delivered an insurance policy to the insured; he collected the initial premium, as well as a document verifying that the insured had not had any injuries or illnesses since the application date. What is this called?
Statement of good health
what happens to the face amount of a whole life policy if the insured reaches age 100?
The face amount is paid to the insured
A man is an attorney when he applies for a health policy. He decides to become a professional bungee jumper. He files a claim. What should happen?
The insurance company will pay the claim according to the benefits available if the correct premium had been paid.
All of the following are true for the Survivorship Life policy EXCEPT
The premium is based on age of insured
Which of the following is TRUE regarding premium in a 10-year level premium policy?
The premium will remain level for 10 years
On an Accidental Death and Dismemberment (AD&D) policy, the death benefit payable is known as the
principal sum
All of the following are true of annually renewable term insurance EXCEPT
proof of insurability must be provided at each renewal
The purpose of the Fair Credit Reporting Act is to
protect consumers against the circulation of inaccurate or obsolete personal or financial information
Which of the following is NOT a characteristic of a Managed Care Plan?
risk retention
HMOs are known as what type of plans?
service
Which of the following is a daily nursing and rehabilitation care that can only be provided by a medical personnel, under direction of a physician?
skilled care
Which of the following are characteristics of a term life insurance
temporary protection, renewability, no cash value
Which of the following types of insurance products would be appropriate for an individual with low income and high insurance needs?
term insurance
A temporary insurance producer license
- Issued for 90 day period - cannot be renewed - Only ONE temp license per lifetime - Qualified training program= each 6 month period, 50% of temp producers obtain insurance license prior to expiration of temp
Core benefits are included in all Medicare supplemental policies. What percentage of Part B coinsurance is required?
20%
How long is the free look period of a Medicare supplement policy
30 days
Under Indiana conversion regulations for group life policies, how long from termination of employment does an employee have to cover to individual policy without evidence of insurability?
31 days
A subscriber has been treated for a medical condition by his primary care physician for 3 months with experimental remedies without a significant health improvement before being referred to a specialist. Which of the following types of plans does the subscriber have?
A gatekeeper HMO plan to control the costs
Which of the following best describes a rebate?
A producer returning part of her commission to her client, as an inducement to buy
All of the following are places where care can be administered for a medical plan except
Eye centers
A married couple wants to include the entire family in their whole life policy under one rider. Which of the following riders will help them achieve that goal?
Family term
What type of life policy does NOT typically require proof of insurability?
Group
Which of the following is NOT true regarding a producers appointment and termination?
Insurance producers may act as agents of an insurer without an appointment
Your client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure both beneficiaries are guaranteed an income for life. Which settlement option should this policy owner select?
Joint and survivor
An agent delivers a policy. He explains a policy change was made and asks the applicant to sign a statement acknowledging the changes were explained. The agent says the premium has not been paid and must be paid before the policy goes into effect. He collects a statement of good health, relinquishes the policy, and leaves. What did he do wrong?
Left without collecting premium
The "stop-loss" feature on a major medical policy is intended to
Limit insureds out of pocket expenses
Agents may be found guilty of defamation if they make false statements that are intended to
Maliciously criticize another insurance company
Regarding the PPACA health care tax credit, which of the following is true?
Persons receiving Medicaid are not eligible
If a producer changes the email address, which of the following needs to happen?
Producer must notify Commissioner within 30 days
J's retirement plan meets all federal requirements and entitles him to certain tax benefits as the owner of the plan. What term best describes J's retirement plan?
Qualified
What effect will the long-term care (LTC) rider have on the death benefit of a life insurance policy if LTC benefits were paid to the insured?
Reduce the death benefit
An individual purchases a life insurance policy and lists his parents as the beneficiaries. He is able to change beneficiaries at any time. What type of beneficiary designation does the policy have?
Revocable
What is the purpose of Rule 48, Accelerated Death Benefits and Viatical Settlements?
Terminal illness allows them to get benefits early
A viatical settlement is arranged between viatical company and
Terminally ill insured
An insured needs ongoing treatment for a diabetic condition. Under PPACA, which of the following is correct?
The condition must be covered under the insured's plan
What is the purpose of the Agents Report in the application process
To provide additional information about the applicant to the underwriters
Which of the following insurance products would require that a producer provide the Buyer's Guide and Policy Summary to the applicant?
Whole Life
Under the mandatory uniform provision "Notice of Claim", written notice of a claim must be submitted to the insurer within what time parameters?
Within 20 days
During policy solicitation, an insurer exaggerates the financial condition of one of its competitors, and makes it sounds worse than it is. This is an example of an unfair trade practice of
defamation
An insurer incorporated under the laws of another state but doing business in this state is considered
foreign
Medicare part b covers all of the following EXCEPT
long term care services
Following a covered loss, the Time Payment of Claims Provision requires that an insurance company pay disability income benefits no less frequently than
monthly
Among the applicants in the same class and life expectancy, which of the following factors can be used to influence premium rates?
occupation
every medicare supplement policy must have a notice to buyer on the front page that states which of the following
this policy may not cover all of your medical expenses
Which method of dealing with risk is applied when insurance is purchased
transfer
All of the following health insurance disability benefits are income tax free EXCEPT
Employer-paid group disability
The Uniform Provision Law that prevents an insurance company from altering its agreement with a policyholder by referring to documents or other items not contained in the policy is called the
Entire Contract provision
In order for an alumni association to be eligible for its members, all of these statements must be true EXCEPT when the association
Has been active for 5 years minimum
An insured has an individual disability income policy with a 30-day elimination period. He becomes disabled on June 1st for 15 days. When will he collect on his disability income payments?
He won't collect anything
Which of the following beneficiary designations cannot be changed by an insured without first receiving the consent of the beneficiary?
Irrevocable beneficiary
As an insurer's field underwriter, a producer has all of the following responsibilities EXCEPT
Issuing policies on behalf of the insurer
What happens to the copy of the application for health insurance once the policy is issued?
It becomes part of the entire contract
Which of the following best describes life annuity with period certain option?
It guarantees benefit payments for life of the annuitant and for a specified period for the beneficiary
Which of the following best describes a Major Medical Expense Policy?
It provides catastrophic medical coverage beyond basic benefits on a usual, customary and reasonable basis.
A Medicare supplement policy just have a free-look policy of at least
30 days
Which of the following is NOT true regarding the requirements for resident producers in Indiana?
A licensed resident producer in good standing in another state may also be a resident producer in Indiana
A viatical settlement is a transaction outside the life insurance company where the owner sells the life insurance policy for which of the following?
A percentage of the face amount of the policy
Which of the following best defines the Probationary Period in group Health policies?
A specified period of time that a person joining a group has to wait before becoming eligible for coverage
Which of the following allows someone living with a life threatening condition to sell their existing insurance policy and use the proceeds before their death?
A viatical statement
An insurer who transacts insurance in this state but who's articles of incorporation are register in Canada is considered what type of insurer?
Alien
Which of the following is true regarding the individual health insurance policies in Indiana?
All policies must have a notice of the right to re to be printed on first page
All of the following would qualify as a group for the purpose of purchasing group health insurance EXCEPT
An association of 35 people
Which of the following individuals may act as producer without a license?
An insurance company president who is solely responsible for the administration of the company
Which of the following is NOT an example of the company's location of incorporation?
Authorized
Chris works part-time in her fathers insurance company, but she does not have her insurance producer license. She may perform all of the following activities EXCEPT
Collect premiums for in force policies and explain coverages to clients that have existing policies written by her father.
Which of the following is true regarding examination of foreign companies by the Commissioner?
Commissioner may accept a company examination report from the Department of Insurance of the company's state of domicile
Which of the following is NOT required in a report to the Commissionar regarding an administrative action or criminal prosecution of a producer?
Complaint following hearing
When an individual obtains am insurance license for the primary purpose of writing their own insurance or the insurance for members of their immediate family, or business this is called
Controlled busienss
Which of the following statements is NOT true? A) A consultant is licensed to give advice for a fee. B) A consultant may not be compensated by a producer. C) a producer may act as a consultant D) a licensed consultant may hold a producer license
D) Licensed consultant cannot hold a producers license at the same time
According to the Life Insurance Solicitation Rule 24, what would be defined as cost?
Difference between what the insured pays in premium and what the he gets in return
What do Life Insurance Replacement (Rule 16.1), Advertising (Rule 13) and Solicitation (Rule 24) rules have in common?
Disclosure
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?
Extended term
Which of the following is true regarding pure life annuity settlement option
It provides the highest monthly benefit
An insured was seriously injured in a skiing accident that required him to be hospitalized for 5 weeks. His medical expense policy covered all of the following except
Loss of income while hospitalized
An example of an alien insurer doing business in this state is one formed under the laws of
Mexico
An insurance agent visits a potential client and explains various types of policies. The customer displays lack of interest, so the agent guarantees higher dividends than he knows would be possible. Which term describes what the agent has done?
Misrepresentation
Guaranteeing future dividends is considered to be unfair or deceptive act known as
Misrepresentation
All of the following may obtain a limited lines license in Indiana EXCEPT
Someone selling individual annuities
What term is used for insurance companies that have a Certificate of Authority to transact insurance?
admitted
Who is obligated to make sure all questions are answered and all necessary signatures are collected on the application
agent
Which of the following elements of an insurance contract requires payment of premium?
consideration
A loss resulting from which of the following would qualify for the accidental death rider coverage?
an automobile accident
In order to support informed underwriting decisions, an insurer may require an applicant to answer questions concerning all of the following EXCEPT
sexual orientation
A core Medicare supplement policy (Plan A) will cover all of the following expenses EXCEPT
Part A deductible
The frequency and the amount of the premium payment are known as what?
Premium Mode
How do premiums in variable universal life policies vary from those in variable whole life policies?
Premiums are flexible
Considering the principles of liquidity, how would the policyowner use today's cash values in a life insurance policy?
Use it for emergency expenses
If an insured is not entirely satisfied with a policy issued, the insured may return it to the insurance company and receive a refund of the entire premium paid, at which of the following times?
Within 10 days of when the policy was delivered
Whose responsibility is it to ensure that the application for health insurance is complete and accurate
agents
