Final Exam Life & Health Insurance Texas
Which statement regarding the Misstatement of Age provision is considered to be true? - Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered -requires that a new policy must be applied for if a misstatement of age is found on current policy -misstatement of age provision is valid only during the contestable period -insurer may void the policy if a misstatement of age is discovered
- Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered
T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay? -the total premiums paid minus any policy loans -nothing -$50,000 $100,000
-$50,000 The suicide occurred outside the suicide clause period (normally 1-2 years), thus the face amount will be paid.
What percent of personal life insurance premiums is usually deductible for federal income tax purposes? -100% -75% -50% -0%
-0%
All of the following statements about traditional individual retirement accounts are false EXCEPT -10% penalty is applied to withdrawals after age 59 1/2 -withdrawals are normally tax free to the recipient -10% penalty is applied to withdrawals before age 59 ½ -contributions are not tax deductible
-10% penalty is applied to withdrawals before age 59 ½
A Long-Term Care policy must offer a MINIMUM benefit period of how many months? -12 months -18 months -36 months -48 months
-12 months
The USA Patriot Act was enacted in: -2001 -2002 -2003 -2004
-2001 to detect and deter terrorism
Every 12 months after the initial enrollment period an HMO must hold an open enrollment period of: -10 days -31 days -45 days -60 days
-31 days
The individual most likely to buy a Medicare Supplement policy would be a(n) -unemployed 64-year old female -62-year old male covered by Medicaid -68-year old male covered by Medicare -uninsured 60-year old male
-68-year old male covered by Medicare Available to those on Medicare
A temporary agent's license issued by the commissioner of insurance is valid for up to ___days -60 -90 -120 -180
-90
Which of the following types of care is not covered by long term care policy -Acupuncture -Skilled Care -Home Health Care -Custodial Care
-Acupuncture
Which of the following statements describes what an Accident and Health policyowner may NOT do? -File a covered claim -Assign ownership -Cancel the coverage -Adjust the premium payments
-Adjust the premium payments
Which of the following statements BEST describes what the Legal Actions provision of an Accident and Health policy requires? An insured must settle a claim within 60 days after proof of loss is submitted -An insured must wait at least 30 days after proof of loss has been submitted before a lawsuit can be filed -An insured must wait at least 60 days after Proof of Loss has been submitted before a lawsuit can be filed -An insured must settle a claim within 30 days after proof of loss is submitted
-An insured must wait at least 60 days after Proof of Loss has been submitted before a lawsuit can be filed
A life insurance policy would be considered a wagering contract WITHOUT? -Insurable interest -premium payment -Agent solicitation -Constructive delivery
-Insurable interest Without insurable interest, a life insurance policy would be considered a wagering contract
The policy provision that entitles the insurer to establish conditions the insured must meet while a claim is pending is -grace period -physical examination and autopsy -Entire contract -Time limit on certain defenses
-Time limit on certain defenses
Which of the following benefits is not required under a group health plan for drug and alcohol treatment? -Impatient treatment -Transportation to and from treatment facility -Group therapy -Outpatient treatment
-Transportation to and from treatment facility
a life insurance policyowner would like to take out a policy loan against the cash value in his whole life policy. The interest rate applied to the this loan may vary over time. This is referred to as a(n) ____ rate loan. -Fluctuating -Fixed -Variable -Increasing
-Variable The interest rate on a variable rate cash loan may vary over time
When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take? -Void the policy if found during the Contestable period -Void the policy, no matter when it is discovered -Void the policy at any time only if it is found to be material -Void the policy only if it is discovered during the Contestable period and proven to be material
-Void the policy only if it is discovered during the Contestable period and proven to be material
A $20,000 life insurance policy application is completed, however the producer does not collect the initial premium. At which point does the coverage go into effect? -When the applicant receives the policy and pays the initial premium -When the MIIB report is received -upon a completed medical examination -Upon policy approval
-When the applicant receives the policy and pays the initial premium
What is a Medicare? -a disability program -a hospital and medical expense insurance program -offers assistance in making health insurance premiums -part d provides payment for surgeon expenses
-a hospital and medical expense insurance program
P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase? -immediate -retroactive -deferred -universal
-deferred
What is the purpose of the USA Patriot Act? -detect and deter fraud -detect and deter alien insurance companies -detect and deter terrorism -detect and deter misrepresentations
-detect and deter terrorism
A Variable insurance policy: -guarantees a minimum rate of return -does not allow the policyowner to assume the investment risk -does not guarantee a return on its investment accounts -does not guarantee an assignment provision
-does not guarantee a return on its investment accounts
Which of the following statements is CORRECT about accelerated death benefits? -the full face amount is available as an accelerated benefit -those on social security disability automatically qualify for this benefit -this provision is usually provided with an increase in premium -must have a terminal illness to qualify
-must have a terminal illness to qualify
Which of these is NOT considered to be an element of an insurance contract? -the offer -acceptance -negotiating -consideration
-negotiating
If an insurance company issues a Disability Income policy that it cannot cancel or for which it cannot increase premiums, the type of renewability that best describes this policy is called? -noncancellable -conditionally renewable -cancellable -guaranteed renewable
-noncancellable
Which of the following is a valid reason for an enrollee to be cancelled by a health maintenance organization? -nonpayment of coverage -exceeding a specified number of claims -starting a cigarette habit -drinking alcohol
-nonpayment of coverage
Deductibles are used in health policies to lower... -the incidents of fraud -the coinsurance amount -overuse of medical services -adverse selection
-overuse of medical services
K owns a Whole Life policy. If K wants an increasing Death Benefit to protect against inflation, which divided option should she choose? -paid-up additional insurance -cash option -reduced premiums -accumulate with interest
-paid-up additional insurance
What does Medicare parts A and B cover? -part A covers hospitalization; part B. cover long term care -part A covers doctor's services; part B covers hospitalizations -part A covers hospitalizations; part B covers doctor's services -part A covers prescription drugs; part B covers disability
-part A covers hospitalizations; part B covers doctor's services
Whole Life insurance policies are contractually guaranteed to provide each of the following, EXCEPT: -cash value that will ultimately replace the death benefit -nonforfeiture benefit options -premiums that remain fixed for the life of the policy -partial withdrawal features beyond a surrender charge period
-partial withdrawal features beyond a surrender charge period
A business overhead expense policy would cover which of the following if a business owner becomes disabled: -contributions to employee retirement plans -utilities and office rent -owner's salary -meals and entertainment
-utilities and office rent
Policy that becomes a modified endowment contract (MEC): -will no longer allow for policy loans -must be placed in an irrevocable trust -can never be reinstated after a lapse -will lose many of its tax advantages
-will lose many of its tax advantages
When a policyowner cash surrenders a Universal Life insurance policy in it's early years, this may be considered a red flag for a(n): -Federal Fair Credit Act Violation -Tittle 18 Fraud Violation -Anti-Money Laundering violation Unfair trade practice violation
-Anti-Money Laundering violation
S is covered by a whole life policy. Which insurance product can cover his children? -Assignment provision -Payor benefit -Accelerated benefit rider -Child term rider
-Child term rider
E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be directed to? -F -The dissolved partnership -E's family -E's estate
-F
Which statement is true regarding a minor beneficiary? Normally, the death proceeds are required to. Be held in trust until the beneficiary reaches the age of 21 -Normally, a guardian is required to be appointed in the Beneficiary clause of the contract -The minor must pay the debts of the insured's estate receiving any of the proceeds -The minor entitled to receive the death proceeds immediately
-Normally, a guardian is required to be appointed in the Beneficiary clause of the contract
Which of these is considered a mandatory provision? -Payment of Claims -Insurance with Other Insurers -Misstatement of Age -Change of Occupation
-Payment of Claims directs where the claim benefits will go. The others are considered optional provisions
Which of the following is not a required provision in group life policies? -Free look -Incontestable -Conversion -Right to loan
-Right to loan
The insuring clause: -Specifies the additional time given to pay past due premiums -States the scope and limits of the coverage -States the amount of premium to be collected -Prohibits the insured from suing the insurer for at least 60 days after filing a written proof of loss
-States the scope and limits of the coverage
What would the Medical Information Bureau (MIB) identify? -Testing positive for marijuana use from a previous screening -Existing life insurance coverage with an other carriers -Credit Scores -Primary physician
-Testing positive for marijuana use from a previous screening
A statement made by an insured in an insurance application that must be true to the best of one's knowledge and which becomes a part of the contract is known as: -an insuring agreement -a mutual assent -a warranty -a representation
-a representation
Group/voluntary long-term care policy premiums are typically deducted from the employee's income and -are approximately the same premium as compared to individual long term care coverage -are more expensive as compared to individual long term coverage -are less costly as compared to individual long term care coverage -are substantially more costly as compared to the premiums for individual long term care coverage
-are less costly as compared to individual long term care coverage
A pilot applies for life insurance. the insurer approved the application with a $10 additional monthly premium modification due to the risk involved. The pilot declines the additional premium modification. The insurer will then likely issue the coverage with a(n) -aviation exclusion -graded benefit -disability rider -waiver of premium
-aviation exclusion
Which of the following is not included in a life insurance illustration -underwriting classification upon which the illustration is based -insurer's name -amount of death benefit -company's mortality table
-company's mortality table
A business overhead expense policy: -covers any loss of income by the business owner -covers business expenses such as rent and utilities -covers employee wages only -reimburses the company for any reduction in sales due to owner's disability
-covers business expenses such as rent and utilities
Additional coverage can be added to a Whole Life policy by adding a(n) -payor rider -accelerated benefit rider -decreasing rider -automatic premium loan rider
-decreasing rider
Which of the following health policy provisions states that the producer does NOT have the authority to change the policy or waive any of its provisions? -grace period -incontestable -entire contract -time limit on certain defenses
-entire contract
How often must an insurance agent license normally be renewed? -every 6 months -each year -every 2 years -every 3 years
-every 2 years
A(n) _______ contained in life insurance policy states that the policy will not cover certain risks -elimination -exclusion -limitation -curtailment
-exclusion
An underwriter determines that an applicant's risk should be reclassified due to a health issue. This policy may be issued with a(n): -extra premium -concealment clause -extended. Contestable period -exclusion for the medical condition
-extra premium
An insurance company organized under New York laws. And licensed to do business in TX. Is considered a(n) -reciprocal company -foreign company -alien company -export company
-foreign company
What is an organization that solicits insurance only to its members? -domestic society -singular company -limited liability company -fraternal benefit society
-fraternal benefit society
With Disability Income insurance, an insurance company may limit the monthly benefit amount a prospective policy holder may obtain because of the insured's -monthly expenditures at the time of disability -gross income at the time of purchase -gross income at the time of disability -occupation at the time of purchase
-gross income at the time of purchase
In a Key Employee life insurance policy, the third-party owner can be all of these EXCEPT: -applicant -owner -payor -insured
-insured
A domestic insurance company in Texas is considered a company that -owns real estate in TX -write insurance on risks located only in TX -is incorporated and formed in TX -honors the Charter of the National Association of Insurance Commissioners (NAIC)
-is incorporated and formed in TX
Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation? -premiums will be fully refunded minus a surrender charge -policy was not returned within the free-look period -policy was returned within the free -look period, premium will be fully refunded -premium will be fully refunded minus a prorated amount for period February 7 - February 13
-look period, premium will be fully refunded Free look period begins when the policy is delivered to policy owner
Which action will a life insurance company most likely take if an insured dies and it is discovered that the insured age was misstated on the application? -pay an amount reduced by a specific percentage of the face amount -pay nothing -pay an amount the premiums would have purchased at the insured's actual age -pay 50%. Of initial death benefit
-pay an amount the premiums would have purchased at the insured's actual age
What is considered to be a characteristic of a conditionally renewable health insurance policy? -premiums may increase at time of renewal -premium may increase at any time -policy may be renewed at the discretion of the insured -policy may be amended by the insurer at any time
-premiums may increase at time of renewal
An insured covered by accidental death and dismemberment (A D&D) insurance has just died. What will happen if the primary beneficiary had already died before the insured and contingent beneficiary? -proceeds will go to the primary beneficiary's estate -probate will decide who receives proceeds -proceeds will go to the contingent beneficiary -proceeds will go to the insured's estate
-proceeds will go to the contingent beneficiary
An example of rebating would be: -returning a portion of a premium as inducement to purchase insurance -advertising cheaper insurance rates than competitors -a mutual insurance company paying dividends to its policyowners -an offer of rated insurance coverage
-returning a portion of a premium as inducement to purchase insurance
Which of the following statements best describes dental care indemnity coverage? -services are reimbursed before the insurer receives the invoice -services are reimbursed after insurer receives the invoice -in-network dentists must always be used -very limited list of providers insured.
-services are reimbursed after insurer receives the invoice
What should an insured do if the insurer does not send claims forms within the time period set forth in a health policy's Claims Forms provision? -file lawsuit -submit claim in any form -wait for the claim form to arrive -resubmit the request for a claim form
-submit claim in any form which must be acceptance by the company as adequate proof of loss
Which of the following statements is CORRECT about an agent who is taking an insurance application? -the agent should avoid asking the applicant questions that may cause embarrassment -the agent should have the applicant initial any changes made on the application -the agent may allow a member of the applicant's immediate family to sign the application if the applicant is not available -the agent may answer routine questions on the application for the applicant
-the agent should have the applicant initial any changes made on the application
Life and health insurance policies are: -multilateral contracts -bilateral contracts -unilateral contracts -non-lateral contracts
-unilateral contracts
How long does an insurance company appointment remain in force? -1 year -2 years -3 years -until terminated
-until terminated
T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named a contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterward. How much of the death benefit will the mother receive? -$1,000,000 -$500,00 -$250,000 -$0
-$0 The mother receives $0 because T is still alive and the sole primary beneficiary, while the mother is still the contingent beneficiary.
A Hospital/Surgical Expense policy was purchased for a family of four in March of 2013. The policy was issued with a $500 deductible and a limit of four deductibles per calendar year. Two claims were paid in September 2013, each incurring medical expenses in excess of the deductible. Two additional claims were filed in 2014, each in excess of the deductible amount as well. What would be this family's out-of-pocket medical expenses for 2013? -$500 -$1,000 -$1,500 -$2,000
-$1,000 In this situation, the insured's maximum out of pocket expenses for 2013 would be $1k
An insured owns an individual Disability Income policy with a 30-day Elimination Period for sickness and accidents and a monthly indemnity benefit of $500. If the insured is disabled for 3 1/2 months, what is the MAXIMUM amount he would receive for an approved claim? -$500 -$1,000 -$1,250 -$1,750
-$1,250 3.5 months - 1 month elimination period= 2.5 months x $500 indemnity = $1,250
C was injured while deep sea diving and requires a hospital stay. C has a Major Medical policy with a 80/20 coinsurance clause and a $400 deductible. What is the MAXIMUM C will pay if the covered medical expenses are $2000? -$0 -$400 -$720 $1,000
-$720 $400 deductible + 20% of remaining medical bill = $720
an insured may assign up to _____ of policy ownership under an individual life insurance policy -25% -50% -75% -100%
-100%
in Texas, how long must a policy be in force before an insurance company must pay death benefits for suicide? -6 months -1 year -2 years -3 years
-2 years
According to the mandatory uniform policy provisions what is the maximum amount of time -7 days -10 days -31days -60 days
-31days
What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan -30% -40% -50% -60%
-50%
Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features? -Aleatory -Adhesion -Unilateral -Consideration
-Aleatory Insurance contracts are aleatory in that the amount the insured will pay in premiums is unequal to the amount that the insurer will pay in the event of a loss.
The Consideration clause in a life insurance contract contains what pertinent information? -Summary of Benefits -Offer and Acceptance -Entire Contract -Amount of premium payments and when they are due
-Amount of premium payments and when they are due The consideration clause in a life insurance policy specifies the amount and frequency of premium payments that the policyowners must take to keep the insurance in force.
In Texas, which of these statements regarding the Suicide clause is TRUE? -An insurer may not use suicide as a defense against payment after the 1st year -An insurer must always pay a death benefit when the cause of death was suicide -An insurance company may only deny a suicide death claim if an exclusionary rider is attached to the policy -An insurer may not use suicide as a defense against payment after the 2nd year
-An insurer may not use suicide as a defense against payment after the 2nd year
P died five years after purchasing a life policy. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will the insurer take? -Beneficiary will be denied the claim -Beneficiary will be denied the claim and refunded all paid premiums -Beneficiary will be paid the Death Benefit -Beneficiary will be paid partial Death Benefit
-Beneficiary will be paid the Death Benefit The incontestable clause prevents the insurer from cancelling the contract even for a material misrepresentation
G is an accountant who has ten employees and is concerned about how the business would survive financially if G became disabled. The type of policy which BEST addresses this concern is -Business overhead expense -disability income -Key employee life -Contributory
-Business overhead expense continue when business owner is disabled
When an insured changes to a more hazardous occupation, which disability policy provision allows an insurer to adjust policy benefits and rates? -Relation of earnings to insurance provision -Change of occupation provision -Conformity of state statues provision -Entire contract provisions
-Change of occupation provision
A Disability Income policyowner recently submitted a claim for a chronic neck problem that has now resulted in total disability. The original neck injury occurred before the application was taken 5 years prior. The neck injury was never disclosed to the insurer at the time of application. How will the insurer handle this claim? -Claim will be paid and coverage will remain in force. -claim will be denied and coverage will remain in force -claim will be denied and coverage will be canceled -claim will be denied, the coverage canceled and all premiums paid will be refunded
-Claim will be paid and coverage will remain in force. Because After a policy has been in force for 2 (sometimes 3) years, it enters the incontestable period, in which the insurer may not deny a claim based on information not disclosed at the time of application.
An evidence of coverage form may be issued by a Health Maintenance Organization (HMO) after being approved by the -Attorney General -NAIC -Commissioner -National HMO Association
-Commissioner
Which of the following correctly explains the actions should. Take if a customer wants to apply for an insurance policy? -Have a customer sign a blank application and take the application back to his office to complete prior to sending it off to the insurance company -Complete the application over the phone with a customer, signed the application for the customer, then send the application after the insurance company -Complete the application interview that information with the customer prior to obtaining the customer signature then send the application after the insurance company. - Have the customer fill out the application and send it to his office for him to sign, then send it off to the insurance company
-Complete the application interview that information with the customer prior to obtaining the customer signature then send the application after the insurance company.
Which of the following consists of an offer, acceptance, and consideration? -Warranty -Estoppel -Contract -Representation
-Contract
Which of these is considered a true statement regarding Medicaid? -Funded by both state and federal governments -Intended to be used by individuals age 65 and older -Provides disability income benefits -Automatically cover those receiving Social Security disability benefits
-Funded by both state and federal governments
Which of the following provisions specifies how long a policyowner's health coverage will remain in effect if the policyowner does not pay the premium when it is due? -Grace Period -Consideration -Waiver of Premium -Reinstatement
-Grace Period
All of these characteristics of Health reimbursement arrangement HRA except: -HRA is entirely funded by the employees -HRA is entirely funded by the employer -Reimbursement for eligible medical expenses are allowed -HRA can be offered with other health plans
-HRA is entirely funded by the employees HRA plans are employer-funded medical reimbursement plans
A medical care provider which typically delivers health services at its own local medical facility is known as: -Health Maintenance Organization -Regional provider -multiple employer trust -preferred provider organization
-Health Maintenance Organization
T owns an Accident & Health policy and notifies her insurance company that she has chosen a less hazardous occupation. Under the Change of Occupation provision, which of the following actions may her insurance company take? -Allow her to take a tax deduction on unearned premiums -Increase her policy's coverage amount -Decrease her policy's coverage amount -Nothing
-Increase her policy's coverage amount Change of occupation provision in an A&H Policy, if insured notifies the insurance company a less hazardous occupation, the insurance company may increase the policy's coverage
Which of the following groups may not be insured by a group life insurance policy? -Employees -Supervisors -Administrators -Individuals who are related by blood
-Individuals who are related by blood Excluded persons who are related by blood, marriage, or legal adoption
Which of these actions should a producer take when submitting an insurance application to an insurer? -Issue a binding receipt if no initial premium is submitted -Disclose to the applicant the amount of commissions to be earned on this transaction -Inform the insurer of relevant information not included on the application -Arrange for a copy of the. Attending physician statement (APS) to be sent to the producer
-Inform the insurer of relevant information not included on the application
What is the initial requirement for an insured to become eligible for benefits under the Waiver of Premium provision? -Insured must be unemployed -Insured must be hospitalized -Insured must demonstrate financial need -Insured must be under physician's care
-Insured must be under physician's care Under Waiver of Premium, which is a rider that will pay your premium while you're disabled, you must have a doctor certify that you meet the definition of disability as contained in the rider.
Variable annuities may invest premiums in each of the following, EXCEPT: -Common Stock -Money Market securities -Insurer's corporate business account -Junk bonds
-Insurer's corporate business account
What kind of life insurance beneficiary requires his/her consent when a change of beneficiary is made? -Irrevocable beneficiary -Tertiary beneficiary -Primary Beneficiary -Revocable Beneficiary
-Irrevocable beneficiary An irrevocable designation may not be changed without written consent of the beneficiary
Which of the following are not managed care organizations? -Point-of-Service plan (POS) -Preferred Provider Organization. (PPO) -Medical Information Bureau (MIB) -Health Maintenance Organization (HMO)
-Medical Information Bureau (MIB)
If a retiree on Medicare required five hospital stays in one year, which policy would provide the best insurance for excess hospital expenses? -long-term care -indemnity -Medicare supplement -Medicaid
-Medicare supplement
An applicant must receive an outline of coverage when an application is taken for a(n) -Endowment -Annuity -Medicare supplement policy -universal life policy
-Medicare supplement policy
Which of these statements is INCORRECT regarding a Preferred Provider Organization (PPO)? -PPO's normally have more providers to choose from as compared to an HMO -Prices are negotiated in advance for PPO providers -In-network PPO providers offer members better coverage of incurred expenses -PPO's are NOT a type of managed care systems
-PPO's are NOT a type of managed care systems
Which of the following statements about a Guaranteed Renewable Health Insurance policy is CORRECT? -Premiums normally decrease at time of renewal -Premiums normally increase at time of renewal -Policy can be renewed at any time by the company - Policy can be cancelled at any time by the company
-Premiums normally increase at time of renewal
What is the purpose of the time of payment of claims provision? -requires the insured to wait 60 days after submitting proof of loss before filing -Prevents delayed claim payments made by the insurer -requires a probation period for each claim filed by the insured -protects the insurer from frivolous lawsuits
-Prevents delayed claim payments made by the insurer
When an insured has the same disability within a specified time period and the insurance company provides the same benefits without a new waiting period, the second disability is covered under which of the following benefits? -Residual Disability -Presumptive Disability -Recurrent Disability -Repeat disability
-Recurrent Disability
What is Old Age and Survivors Health Insurance (OASDHI) also known as? -Medicare -Social Security -Medicaid -FICA
-Social Security
An individual Disability Income insurance applicant may be required to submit all the following information, except: -Medical History -Gross Income -Occupation -Spouse Occupation
-Spouse Occupation
Who owns a stock insurance company? -Board of directors -Stockholders -Agents -
-Stockholders
Which of these life insurance riders allows the applicant to have excess coverage? -Automatic Premium Loan Rider -Waiver of Premium rider -Guarantee insurability rider -Term rider
-Term rider
Who is liable when an insured suffers a loss on a policy sold by an agent through an insurer not authorized to conduct business in Texas? -The insured -The agent and the insured -The agent and the company -The commissioner of insurance
-The agent and the company Any agent that sells an insurance policy for an unauthorized insurer runs the risk of being responsible for unpaid claims if the unauthorized insurer does not
What is the underlying concept regarding level premiums? -Level premiums build cash value quicker in the early years -The early years are charged more than what is needed -The early years are charged less than what is needed -level premiums can only be paid annually
-The early years are charged more than what is needed
A policy of adhesion can only be modified by whom? -The agent -The applicant -The primary beneficiary -The insurance company
-The insurance company
The provision in a Group Health policy that allows the insurer to postpone coverage for a covered illness 30 days after the policy's effective date is referred to as the -Grace Period -Waiting Period -Postponement Period -Elimination Period
-Waiting Period gives insurance company the rights to delay coverage for a covered sickness for a specific number of days
P received Disability income benefits for 3 months then returns to work. She is able to work one month before her condition returns, leaving her disabled once again. What would the insurance company most likely regard this second period of disability as? -a presumptive disability -an occupational disability -a residual disability -a recurrent disability
-a recurrent disability A second period of disability from the same or related cause of a prior disability is called a recurrent disability.
Which provision is NOT a requirement in a group life policy? -conversion -grace period -incontestable period -accidental
-accidental
An insurer is not required to provide information on fraudulent claims if requested by -the Texas Department of Insurance -the Attorney General -the Commissioner -an insured
-an insured
An example of false advertising would be -paid testimonials from celebrity endorsements -an insurer exaggerating its dividends in a magazine advertisement -a producer spending more than $25 on marketing gifts for client -an insurer advertising in an insurance trade journal
-an insurer exaggerating its dividends in a magazine advertisement
With whom may an agent legally share commissions? -the insured -the applicant -the beneficiary -another agent with the same line of insurance
-another agent with the same line of insurance
A plan through the Marketplace may be purchased by -everyone over 18 years old -any legal resident (except those imprisoned) -any legal resident (including those imprisoned) -only those who might be eligible for Medicare
-any legal resident (except those imprisoned)
Before a life insurance policy is issued, which of these components of the contract is required? -applicant's signature on application -beneficiary's signature -a conditional receipt -attending physician statement (APS)
-applicant's signature on application
In order to establish a health reimbursement arrangement it must -be offered in conjunction with other employer provided health benefits -limit the benefits to prescription drugs only -be established by the employer -limit the amount of money the employee can contribute toward the account
-be established by the employer
Which of these circumstances is a Business Disability Buy-Sell policy designed to help in the sale of a business? -company becoming insolvent -death of business owner -business owner becoming disabled -key employee becoming disabled
-business owner becoming disabled
B the insurance agent tells his clients that their rights may be impaired if they fail to complete a release form within a given time period of time. B may be guilty of. -boycotting -rebating -coercion -discrimination
-coercion
On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take? -Collect initial premium -collect initial premium along with signed health statement -explain to the applicant the policy is no longer in effect due to change of health condition -collect initial premium and leave a binding receipt
-collect initial premium along with signed health statement
Major Medical policies typically -pay 100% of covered expenses -contain a deductible and coinsurance -requires of in-network facilities only -do not contain deductible and coinsurance
-contain a deductible and coinsurance
What type of group plan involves employees sharing the cost? -contributory plan -non-contributory plan -qualified plan -non-qualified plan
-contributory plan
Which of the following statements about health coverage for newborns is not true -coverage includes treatment of congenital defects -coverages continues after the first 31 days upon payment of first premium -coverage is limited to congenital defects -coverage begins moment of birth
-coverage is limited to congenital defects
What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time? -Modified whole life -20 years paid-up policy -endowment -decreasing term
-decreasing term has death benefit that adjusts periodically and is written for specific period of time
Company Z has a Cross Purchase Buy-Sell Agreement in place among its three founding partners. If the agreement is funded with individual life insurance, what would it require? -One policy is owned and paid for by the company -each partner must own a policy on the others -one policy is owned by the company and premiums are split equally among the partners -each partner owns their own individual policy
-each partner must own a policy on the others
P owns a $25,000 Life Policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before age 70. What kind of policy does P own? -straight life -modified life -whole life paid up at age 70 -endowment at age 70
-endowment at age 70 characterized by cash values that grow rapid ace so that the policy matures or endows at a specific date (before age 100)
S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase? -equity index insurance -endowment -graded whole life policy -return of premium policy
-equity index insurance
Information obtained from a phone conversation to the proposed insured can be found in which of these reports? -agents report -MIB report -inspection report -attending physician's report
-inspection report
Credit Life insurance is: -illegal in this state -insurance issued on a debtor to cover outstanding loan balances -not regulated in this state -insurance issued to a creditor to cover outstanding loan balances
-insurance issued on a debtor to cover outstanding loan balances
Which health policy clause specifies the amount of benefits to be paid -insuring -consideration -free-look -payment mode
-insuring
In a Life insurance contract, an insurance company's promise to pay stated benefits is called the -insuring clause -consideration clause -entire contract -owner's rights
-insuring clause
Which of the following claims are typically excluded from medical expense policies? -treatment for alcohol addiction -intentionally self inflicted injuries -treatment for mental illness -injuries sustained from. An automobile accident
-intentionally self inflicted injuries
Quarterly premium payments increase the annual cost of insurance because -insurer risk exposure is greater -Interest to the insurer is increased while administrative costs decreased -morality costs are greater -interest to the insurer is decreased while the administrative costs are increased
-interest to the insurer is decreased while the administrative costs are increased
A license may be denied, suspended, or revoked if the licensee -Engages in replacement of an existing policy -is found guilty of misrepresentation in obtaining license -Files bankruptcy -fails to meet a sales quota
-is found guilty of misrepresentation in obtaining license
Which of the following may not charge fees for insurance advice? -legal reserve agents -managing general agents -life and health insurance counselors
-legal reserve agents
Which of the following is NOT a limited benefit plan? -cancer policies -life insurance policies -dental policies -critical illness policies
-life insurance policies
Which Unfair Trade Practice involves an agent telling a prospective client that a policy's dividends are guaranteed? -Twisting -rebating -misrepresentation -sliding
-misrepresentation
Which of these is not an element of life insurance premiums? -mortality rate -insurer's expenses -interest credit -morbidity rate
-morbidity rate
M had an annual life insurance premium payment due January 1. She died on January 10 without making the premium payment. What action will the insurer take? -collect premium from M's estate -deny the claim -pay face amount minus the past due premium -subtract past due premium from the cash value
-pay face amount minus the past due premium In this situation, the insurer would pay the death benefit less the past-due premium because death occurred within the grace period.
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies? -beneficiary -insured -policyowner -insurer
-policyowner
Who has the right to change a revocable beneficiary? -beneficiary -agent -insurance agency -policyowner
-policyowner
Which is true concerning a variable life insurance policy? -policyowner controls where the investment will go and selects the amount of the premium payment -policyowner has no say where the investment will go but can choose the premium mode -the investment vehicle for this type of policy is held in the insurer's general portfolio -the death benefit can vary but the policyowner has no say in the premium amount paid
-policyowner controls where the investment will go and selects the amount of the premium payment
Which of the following is considered to be the time period after a health policy is issued, during which no benefits are provided for illness? -incontestable period -probationary period -trial period -subrogation period
-probationary period
A primary beneficiary has died before the insured in a life insurance policy. a contingent beneficiary also is named in the policy. Which of the following will occur when the insured dies? -proceeds will go to the primary beneficiary's estate -probate will decide who receives -proceeds will go to the contingent beneficiary -proceeds will go to the insured's estate
-proceeds will go to the contingent beneficiary
The Legal Actions provision of an insurance contract is designed to do all of the following, except: -Provide the insurer adequate time to research a claim -Protect the insured from having claim research delayed -protect the producer -give the insured guidelines for pursuing legal action against and insurer
-protect the producer
Which of these is not an example of doing insurance business? -selling shares of stocks -receiving an insurance application -collecting insurance premiums
-selling shares of stocks
S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation? -403(b) plan -deferred premium -single premium -period certain
-single premium
The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and -the initial premium -agreeing to a physical examination -delivery of policy -disclosure of any medical conditions
-the initial premium The consideration clause states that the policyowner's consideration consists of a completed application and the first initial payment premium.
Why would the insurance commissioner examine the records of an insurance company? -to determine the solvency of the company -to set insurance rates for company -to assist in underwriting -to assess the company's value
-to determine the solvency of the company
A foreign insurance company conducting Insurance business in Texas -is not subject to Texas insurance laws -was formed under the laws of another state -was formed under the laws of another country -is only authorized to write business outside the United States
-was formed under the laws of another state
When is the face amount of a whole policy paid? -at the policy's maturity date -when the insured dies or at the policy's maturity date, whichever happens first -When the policy is surrendered
-when the insured dies or at the policy's maturity date, whichever happens first
