Insurance Exam - Missed questions

All the following statements are false regarding licensing EXCEPT

Applicants must pass a state licensing exam

Which nonforfeiture option has the highest amount of insurance protection?

Extended Term - same face amount as the original policy, but for a shorter period of time.

An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of?

False Advertising

An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming?

Foreign

What happens if a non-member physician is utilized under the Point of Service plan?

The attending physician will be paid a fee for service, but the member patient will have to pay a higher coinsurance amount - they won't have to pay out of pocket.

If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back?

The balance of the loan will be taken out of the death benefit.

Which of the following is NOT a feature of a noncancellable policy?

The insurer may terminate the contract only at renewal for certain conditions

When may an insurance company use suicide as a defense against paying a death claim?

When death occurs within a specified period of time after the policy was issued

When would a 20-pay whole policy endow?

When the insured reaches 100

Which of the following is NOT a factor in determining qualifications for Social Security disability benefits?

Workers occupation - occupation doesn't matter as long as they have earned the required amount of work credits.

Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium?

Automatic premium loan - not required but is commonly added to contracts with a cash value at no additional charge.

To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters?

6 credits

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered

An unfair trade practice

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?

$50,000 - the face of the term policy would be the same as the face amount provided under the whole life policy.

What is the closest term to "authorized insurer"?

'Admitted'

In Kansas, which of the following provisions is legal? 1) Cancellation of a policy if amount of loan is more than loan value 2) Backdating a policy more than 6 months 3) Deferring dividends more than 5 years 4) Cancellation of a policy if amount of loan is less than loan value

1) Cancellation of a policy if amount of loan is more than loan value

An insured decides to replace his life insurance policy. The current agent must submit all of the following to the new agent EXCEPT 1) The application. 2) A copy of the replacement notice. 3) The insured's first premium payment for the new policy. 4) None of the above. The agent must submit all of these items.

3) The insured's first premium payment for the new policy

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?

5 days

Which of the following manages the Kansas Life and Health Insurance Guaranty Association?

Board of Directors

An insured receives an annual life insurance dividend check. What term best describes this arrangement?

Cash option

To legally transact insurance in this state, an insurer must obtain which of the following?

Certificate of Authority

Which of the following entities ultimately decides if an advertisement is complete and truthful?

Commissioner

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is

Conditional

An insured is involved in an accident that renders him permanently deaf, although he does not sustain any other major injuries. The insured is still able to perform his current job. To what extent will he receive Presumptive Disability benefits?

Full benefits - still pays because there is total loss of speech.

Regarding LTC coverage, as the elimination period gets shorter, the premium

Gets higher

What is the main purpose of the Seven-pay Test?

It determines if the insurance policy is a MEC (Modified Endowment Contract) - the cumulative premiums paid during the first seven years of a policy must not exceed the total amount of net level premiums that would be required to pay the policy up using guaranteed mortality costs and interest.

Which of the following is NOT true regarding policy loans?

Money borrowed from the cash valuable is taxable - Policy loans can be repaid at any time, including surrender and death. An insurer can charge interest on outstanding policy loans.

An applicant for a health insurance policy returns a completed application to her agent, along with a check for the first premium. She receives a conditional receipt two weeks later. Which of the following has the insurer done by this point?

Neither approved the application nor issued the policy.

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the

Other-insured rider - this is useful in providing insurance for more than one family member.

If an insured continually uses the automatic premium loan option to pay the policy premium,

The policy will terminate when the cash value is reduced to nothing.

Social Security disability definition includes of the all following EXCEPT

Disability expected to last for at least 6 months - must be disabled for 12

Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called?

Discrimination

The purpose of the Life and Health Insurance Guaranty Association is to

Help protect policy owners and beneficiaries against financial lost caused by the insolvency of an insurance company.

to be eligible for a Health Savings Account, an individual must be covered by a

High-deductible health plan (HDHP)

Company C is developing its own advertising script to be used in their radio advertising campaign for their LTC policies. Which of the following words or phrases would be allowed?

'Benefits paid directly to you'

In all health care plans under the Affordable Care Act (ACA), how many essential benefit categories are there?

10

An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy?

10 days - grace period is 7 days if premium is paid weekly, 10 days if monthly, and 31 days for all other modes.

If an employee has been continuously insured under a group health policy for at least 3 months prior to termination, the employee will be entitled to how many months of continued coverage (maximum)?

18 months

The Commissioner has full power and authority to do all of the following EXCEPT: 1) Issue cease and desist orders 2) Draft insurance laws. 3) Issues Certificates of Authority 4) Enforce the Insurance Code

2) Draft insurance laws

In which of the following situations would replacement rules apply? 1) The new contract is with the same insurer and a conversion privilege is being exercised. 2) The existing life insurance is a nonconvertible term policy with less than 10 years to expire. 3) The solicitation is made by mail. 4) The existing life insurance is converted into paid-up insurance.

2) The existing life insurance is converted into paid-up insurance.

COBRA applies to employers with at least

20 employees

The relation of earnings to insurance provision allows the insurance company to limit the insureds benefits to his/her average income over the last

24 months

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?

3 days

An individual is insured under his employers group disability income policy. the insured suffered an accident while on vacation that left him unable to work for 4 months. If the disability income policy pays the benefit, which of the following would be true?

Benefits that are attributable to employer contributions are fully taxable to the employee as income - In a plan funded entirely by the employer, income benefits are included in the employee's gross income and taxed as ordinary income

An applicant for an individual health policy failed to complete the application properly. Before being able to complete the application and pay the initial premium, she is confined to a hospital. This will not be covered by insurance because she has not met the conditions specified in the

Consideration Clause - both parties in contract must give valuable consideration.

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?

Date of the medical exam.

Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance?

Defamation

All of the following statements concerning dividends are true EXCEPT

Dividend amounts are guaranteed in the policy - this is false because dividends can't be guaranteed.

When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer?

Foreign

In life insurance policies, cash value increases

Grow tax deferred - Generally life insurance cash values are only income taxed if the policy is surrendered and the cash value exceeds the premiums paid.

Which of the following riders would NOT increase the premium for a policy owner?

Impairment Rider - excludes a specified condition from coverage.

Which of the following entities has the authority to make changes to an insurance policy?

Insurer's executive officer - not the Department of Insurance or an agent.

Who makes up the MIB?

Insurers

Which of the following is NOT true concerning Medicaid?

It consists of 3 parts: A-Hospitalization, B-Doctor's Services, C-disability income -- it's funded by state and federal taxes that provide medical care for the needy. Parts A and C are part of Medicare.

Which of the following is TRUE regarding the accumulation period of an annuity?

It is a period during which the payments in to the annuity grow tax deferred.

Under the Accidental Death and Dismemberment (AD&D) coverage, what type of benefit will be paid to the beneficiary in the event of the insured's accidental death?

Principal sum - in case of loss of sight or accidental dismemberment, a percentage of that principal sum will be paid by the policy, often referred to as the capital sum.

Who is a person, other than a viator, that enters into a viatical settlement contract?

Providor

Another name for a substandard risk classification is

Rated

What document describes an insured's medical history, including diagnoses and treatments?

Attending Physician's Statement

Which provision states that the insurance company must pay Medical Expense claims immediately?

Time of Payment Claims

Which health insurance provision describes the insureds right to cancel coverage? a) Insuring clause b) Cancellation provision c) Renewal provision d) Policy duration provision

c) Renewal position - included in life and health. Required by HIPPA

A hospital indemnity policy will pay

A benefit for each day the insured is in a hospital.

Which of the following individuals will be eligible for coverage on the Health Insurance Marketplace?

A permanent resident lawfully present in the U.S.

The term "illustration" in a life insurance policy reverts to

A presentation of non guaranteed elements of a policy.

Which of the following products provides income for a specified period of years or for life, and protects a person against outliving his or her money?

An annuity - a contract used to accumulate funds that are to be distributed at a specific time in the future as a period payment of accumulated funds.

All other factors being equal, the least expensive first-year premium payment is found in

Annually Renewable Term - "purest form" - death benefit remains level, but the premium increases each year the insureds attained age.

The death protection component of Universal Life Insurance is always

Annually Renewable Term - Universal life has two components: insurance component and a cash account. Insurance component is always annually renewable term.

What is the maximum period of time during which an insurer may contest fraudulent misstatements made in a health insurance application?

As long as the policy is in force.

What is the purpose of a conditional receipt?

It is intended to provide coverage on a date earlier than the date of the issuance of the policy.

Which of the following is true of a children's rider added to an insured's permanent life insurance policy?

It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.

The premium of a survivorship life policy compared with that of a joint life policy would be

Lower - since death benefit is not paid until the last death, the joint life expectancy in a sense is extended, resulting in a lower premium than that which is typically charged for joint life

Which of the following applies to partial disability benefits?

Payment is limited to a certain period of time - typically 50% of the total disability benefit.

Which of the following provisions would prevent an insurance company from paying a reimbursement claim to someone other than the policy owner?

Payment of Claims - claims must be paid to the policy owner, unless the death proceeds need to be paid to a beneficiary.

Which of the following provides specific information about the products that are being considered and must be left with a prospective insured at the time of application?

Policy Summary

An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of

Rebating

What effect do accelerated benefits have on the life policy's death benefit?

Reduce the death benefit

A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide addition protection until his children finished college. He discovered that his policy

Required a premium increase each renewal - these policies are adjusted each year to the insureds attained age; however the policy may be guaranteed renewable.

An insured wants to name her husband as the beneficiary of her health policy. She also wishes to retain all of the rights of ownership. The insured should have her husband named as what type of beneficiary?

Revocable

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?

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

Which of the following describes the tax advantage of a qualified retirement plan?

The earnings in the plan accumulate tax deferred

Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated?

The longer the elimination period, the lower the cost of coverage.

Twins brother and sister each purchased a retirement annuity. When they retired at the same time, each selected the life income option. Both have similar life styles and are in good health. Which of the following is true with respect to their monthly annuity payments?

The man's payments will be larger - annuities use mortality tables to determine the amount of money need in retirement. Life expectancy of women is greater so the payments will need to last longer.

What is the advantage of reinstating a policy instead of applying for a new one?

The original age is used for premium determination

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 policy owner?

Third-party ownership - most policies involving third-party ownership are written in business situations or for minors in which the parents owns the policy.

What is the purpose of coinsurance provisions?

To help the insurance company to prevent over utilization of the policy - the purpose is to control costs and discourage over utilization of the policy.

When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees

To renew the policy until the insured has reached age 65

All of the following LTC coverages would allow an insured to receive care at home EXCEPT

Skilled care - almost always provided in an institutional setting.

The annual contribution limit of a Dependent Care Flexible Spending Account is set by

The IRS - they set limits for the annual contribution for Dependent Care Accounts

Which of the following is TRUE regarding the premium in term policies?

The premium is level - regardless of type of policy, premium is level throughout the term. Only the amount of the death benefit can be changed.