Insurance Exam Practice A

Sam directly transferred $10,000 from one qualified plan to another. What is the tax circumstance on this direct transfer?

$10,000 and no tax

What is the Social Security elimination period for disability benefits?

5 months

What penalty is applied to annuity distributions taken after 70 ½?

50%

Bill was 76 years old when he decided to collect his IRA benefits paid with his immediate annuity. What kind of penalty is Bill expected to pay?

50% tax penalty on the amount not distributed by age 70 ½.

A pre-existing condition, is a condition for which an employee has sought Medical advice, diagnosis, or treatment within the previous __ months.

6

Benefit periods for Individual Short Term Disability policies vary between what periods of time?

6 months to 2 years

All of the following qualify to own Group Life insurance except:

A group desiring low cost coverage

Choose from the following a group that represents a bad risk for underwriters?

A group with adverse selection features

Carrie has coverage with two different providers and is covered on an expense incurred basis. She had surgery on her throat and filed claims with both of her insurers. She didn't notify her companies in advance about her other coverage or her surgery. What would her insurers pay?

A proportionate amount

When an annuitant dies with cash refund option, what will their beneficiary receive?

A refund of the original amount, minus the payments already made

A statement made on an insurance application by a client become a part of an insurance contract and are considered to be:

A representation

When an insured has a policy that only covers Medical costs associated with accidents, what is it called?

Accidents only

The cash value of a Universal Life policy can be used in many ways without the policy lapsing. Which of the following is not allowed?

Allow the cash value to go to a negative amount

A producer who is appointed with more than one insurer is considered to be:

An Independent Producer

In reference to Life Insurance and Contract Law, a person most likely will have an insurable interest in insuring a person's life if:

An economic interest exists for the continuance for an insured's life

When can an insurer rescind a policy due to an unintentional omission of information on an application?

An insurer may not rescind a policy due to an unintentional omission of information on an application

During which payment mode will a service fee not be applied?

Annually

What annuity allows an annuitant to select the time period or amount of benefits?

Annuity Certain

What special provisional feature of an annuity allows an owner to surrender their annuity if interest rates drop a certain amount within a specific time?

Bail out

Barbara has a fixed annuity. Who bears the risk of her account?

Barbara's insurance company

Which of the following is not considered in recommending a suitable annuity?

Beneficiary's age

Which schedule lists the type and an amount payable in a Medical Plan?

Benefit Schedule

Group Disability Income insurance is best described by which of the following?

Benefits are determined by an insured's income

What term relates to giving up an insurance policy voluntarily?

Cancellation

Under the Patient Protection and Affordable Care Act, all of the following are essential preventive care services except:

Cervical Cancer exams

When advertising, the identity of the insurer shall be:

Clear

Mr. Potter owns a Market Value Adjusted Annuity. He has accumulated a large gambling debt, and some unanticipated Medical expenses, so he made the decision to surrender his annuity. Unfortunately, his annuity is premature. Which of the following will affect the penalty he will have to pay?

Current interest rates

What must an HMO Health plan offer to handle inquires about an insured's Health coverage?

Customer Service Center

Which of the following would not be an exclusion from a Life insurance policy?

Death while being a fare paying passenger on a plane

What kind of policy may include a Waiver of Premium Provision?

Disability Income

Which is true regarding Immediate Annuity contributions made with before tax dollars?

Distributions are taxable

Don wants to reinstate his policy instead of applying for a new one. What will be his advantage of reinstating his policy?

Don's original age will be used for his premium determination

What are Major Medical Insurance Plans that cover expenses in and out of Medical facilities called?

Eligible plans

That NAIC activities include drafting model legislation and:

Exchanging information and developing uniformity in regulatory practices

Larry is eligible for full Social Security retirement, disability and death benefits. What type of insured level describes Larry's present status?

Fully insured

What kind of benefits are in eligible Health plans?

High Maximum benefits

Ken applied for a Medicare Supplement. Who must make sure he does not already have a Health policy in force?

His insurer

Who has jurisdiction with the Commissioner over alleged discrimination factors?

Human relations commission

Bob wants to pay in more funds to shorten his premium paying period. Which policy will give Bob this flexibility?

Interest sensitive

What report is very thorough and contains information gained from an applicant's neighbors and friends?

Investigative Consumer Report

Which of the following is most closely related to an Equity Indexed Annuity?

It is invested aggressively

Adam has a Whole Life policy. He would like to use his dividends to pay off his policy. What dividend option should Adam use?

Paid up option

In which part of an application would information be found on an applicant's Medical background?

Part 2

Who has the authority to change a premium payment, face value, and policy loans?

Policyowner

Disability benefits can be reduced based on an insured's present income. Which provision will allow this to occur?

Relation of Earnings to Insurance Provision

Statements made on an application that an applicant believes to be true are known as:

Representations

What type of account is associated with a Variable Annuity?

Separate

What metal level plan under the PPACA, will cover 70% of the costs?

Silver

Old Age Survivors Disability Insurance is the official name of what program?

Social Security

Which of the following is not a beneficiary?

Standard

Members of the Armed Forces can obtain _________, also called SGLI.

Term Group Life Insurance

Who is the owner and the beneficiary of a Key Person Life Insurance Policy?

The employer is the owner and beneficiary of the policy

Joe is a beneficiary that just received the principal and interest. What is taxable as income?

The interest

If Ed dies and he has two of his best friends as beneficiaries, which one will get the first claim to his proceeds?

The primary beneficiary will receive the proceeds

If a policy provision conflicts with state statutes, which of the following will occur?

The provision may be altered to conform to state statues if the Conformity of State Statues Provision is included in the policy

How are MEC policy loans taxed?

They are taxed on a LIFO basis MEC loans will be taxed on a last in first out basis (LIFO).

Which of the following statements best describes the HMO gatekeeper concept?

To control costs

What is the main reason for the target premium of a Universal Life policy?

To keep the policy in force

Who makes the final decision regarding a risk?

Underwriting

All of the following correctly apply to a Life policy that provides a straight $50,000 of coverage for a period of 3 years except:

Variable

Which of the following is not a Social Security benefit?

Welfare

When does the Free Look period begin?

When the policy is received

Which characteristic is not a requirement for group coverage?

Work on a referral basis

An agent cannot disclose any personal information without:

Written authorization from an insured

What clause permits an insured to pay benefits to a person not named in a policy as its beneficiary?

facility of payment

Money borrowed from a policy loan:

is not taxable

Of the three types of term, which one has the highest premium?

level

A Medical Insurance plan in which the Health Care provider is paid a regular fixed amount for providing care to an insured and does not receive additional amounts of compensation dependent upon the procedure performed, is called ?

prepaid plan

In what time must a Section 1035 Exchange take place?

there is not a required time

Contracts that are prepared and submitted on a "take it or leave it" basis, are classified as:

Contract of adhesion

What must an HMO Health plan offer to handle inquires about an insured's Health coverage?

Customer service center

What type of Buy Sell agreement involves a partnership?

Entity Plan

What clause permits an insured to pay benefits to a person not named in a policy as its beneficiary?

Facility of Payment

When a producer obtains credible information about an applicant for Health insurance, in what capacity is their position?

Field underwriter

Which of the following is not associated with a Variable Annuity?

General account

Dan purchased a $75,000, 5 year Level Term policy. Which of the following about this coverage is not correct?

If Dan dies after the 5th year, only his cash value will be paid

Kate had a $50,000 Life policy with a $65.00 premium. Last month, 14 days after her policy premium was due, she died of a heart attack. What will her beneficiary receive from her death benefit?

If a premium is due and an insured dies, the beneficiary will receive the balance after the premium is deducted from the amount.

Any ambiguity in an insurance contract will be interpreted:

In the favor of the insured

At the time of an application for disability benefits, what factor determines the amount of an insured's coverage?

Income

An Industrial Life Insurance Policy has a face amount that is:

Industrial Insurance is written in small amounts with a face value of less than $1,000.

Which of the following is an advance utilization management tool to determine if a procedure is covered under a Health Plan?

Prospective Review

When a replacement is involved, a replacing insurance company is responsible for all of the following EXCEPT:

Provide a copy of the Notice Regarding Replacement of Life Insurance to an applicant

An employee receives a Certificate of Insurance. What information is not included in their certificate?

Premium amount

Which of the following best relates to a nontaxable transaction?

1035

To receive Social Security Disability benefits one must waitduring an elimination period. How long would an insured wait?

5 months

All of the following are true regarding Business Overhead Expense policies except:

Benefits are limited to 5 months

How does reinsurance benefit the insurer?

It helps protect against catastrophic losses

Mr. and Mrs. Cohen's retirement annuity pays them $947 per month. If Mr.Cohen dies his wife will continue to receive $346 per month as long as she lives. When his wife dies, their payments will stop. What settlement option did the Cohen's select?

Joint and survivorship

What kind of insurance is associated with a Spouse Term Rider?

Level

When may an individual with a Health Savings Account determine their employer's contribution limit to their account?

Never

Which of the following is not a primary characteristic of a Major Medical Plan?

No catastrophic protection

What is the income taxation on Individual Long Term Care benefits?

No tax

What kind of policy is for short term?

Non-renewable

Coleman, Inc. has 243 employees that are covered under their group plan. Which of the following would describe their group?

Noncontributory

In Franchise groups, how many Master Policies will be issued?

None

When using the Needs Approach to determine the amount of Life Insurance needed, it is necessary to determine all of the following except:

The accumulative earning power of the income earner, along with the other sources of passive income

Sam lost his right arm in an accident covered under his Accidental Death & Dismemberment policy. What will Sam receive from his policy?

The capital amount in a lump sum

Which is correct about a One Year Dividend Option?

The dividend is used to buy an additional policy

An insurer hires a representative to advertise its company at a local convention. The representative lies about the details of some of the policies, in an attempt to secure more business for the company. Who is responsible for the representative's actions?

The insurer

Which of the following best describes the purpose of the Seven Pay Test?

To determine if a policy is overfunded