Insurance Missed Questions

What is a penalty tax for nonqualified distributions from a health savings account?

20%

Annually renewable term policies provide a level death benefit for a premium that

Increases annually

When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income?

Interest only

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

Attending Physician's Statement

What percentage of individually owned disability income benefits is taxable?

0%

How many pints of blood will be paid for by Medicare Supplement core benefits?

First 3

Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?

Fixed amount

Which Rider would NOT cause the Death Benefit to increase?

Payor benefit rider

Which of the following does the Insuring Clause not specify

A list of available doctors

If a dental plan is integrated, it is combined with what type of plan?

Medical

An applicant wants to buy a policy that has a cash value element. Which type should she buy?

Permanent

Which nonforfeiture option provides coverage for the longest period of time?

Reduced paid-up

Installing deadbolt locks on the doors of a home is an example of which method of handling risk?

Reduction

The insured had his wife named as the beneficiary. To ensure she had income for life after his death, he chose the life income settlement option. What won't be taken into account to determine the amount of payment?

The insured's age at death

Which life insurance policy would be considered interest sensitive?

Universal life

An insured committed suicide one year after his life insurance policy was issued. The insurer will

refund the premiums paid

Medicare Part B is not

A compulsory program

Anyone who willfully violates a cease and desist order can be fined up to

$100 per day

A licensed producer may be fined for nonwiilful and for willful violations of insurance laws with the following respective fine

$2,500/$5,000

Which of the following types of insurance policies is most commonly used in credit life insurance?

Decreasing term

Which of the following statements concerning buy-sell agreements is true?

Buy-sell agreements are normally funded with a life insurance policy

A health insurance plan that covers all accidents and sicknesses that are not specifically excluded from the policy is referred to as a

Comprehensive plan

Which of the following is true regarding the insurance amount in a credit life policy?

Creditor can only insure the debtor for the amount owed

Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled?

Disability buy-sell

Which of the following terms is used to name the nontaxed return of unused premiums

Dividend

An insured purchased a life insurance policy on his life and named his wife as primary beneficiary and his daughter as contingent. When would the daughter collect the death benefit?

If the primary beneficiary predeceases the insured

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?

Implied

Which is not true regarding an insured who is considered to be a standard risk?

The insured may have to pay slightly higher premiums

In an adjustible life policy all of the following can be changed by the policy owner except

The type of investment

According to the entire contract provision, what document must be made part of the insurance policy?

Copy of the original application

Which is not fundable by annuities?

Death benefits

Which of the following is true regarding the spendthrift clause in life insurance policies?

It can protect the policy proceeds from creditors of the beneficiary

When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?

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

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

Every small employer carrier must actively offer to small employers at least how many health benefit plans?

2 plans

In a group policy, who is issued a certificate of insurance?

The individual insured

Which nonforfeiture option has the highest amount of insurance protection?

Extended Term

What is term for how frequently a policyowner is required to pay the policy premium?

Mode

Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insured for full disability benefits. What disability policy provision does this describe?

Presumptive disability

Annuities can be used to fund which of the following?

Retirement plans

Which is true about HRAs

The account allows roll-over of unused balances at the end of the year at the employer's discretion

Which of the following is not a feature of a guaranteed renewable provision?

The insurer can increase the policy premium on an individual basis

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

3 days

A hospital indemnity policy will pay

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

What is the goal of the HMO

Early detection through regular checkups

Which is usually true of a participating life insurance policy?

It may pay dividends to policyowners

What is necessary in order to be eligible to receive benefits from a long-term care policy?

The insured must be unable to perform some activities of daily living

Individuals who itemize deductions can claim deductions for medical expenses not covered by health insurance that exceed what percent of their adjusted gross income?

10%

A policyowner cancels his life policy but instructs the insurance company to transfer the cash value of his policy to an annuity. This nontaxable transaction is called

1035 exchange

Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under an accident and health policy must contain

A statement that is sufficiently clear to identify the insured and the nature of the claim

If the insured under a disability income insurance policy changes to a more hazardous occupation after the policy has been issued, and a claim is filed, the insurance company should do which of the following?

Adjust the benefit in accordance with the increased risk

An insured misstated her age on an application for an individual health insurance policy. The insurance company found the mistake after the contestable period had expired. The insurance company will take which of the following actions regarding any claim that has been issued?

Adjust the claim benefit to reflect the insured's true age

An insured misstates her age at the time the life insurance application is taken. This misstatement may result in

Adjustment in the amount of death benefit

Which of the following individuals is eligible for a Health Savings Account

Allison is insured by a High Deductible Health Plan (HDHP)

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

Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?

Apparent

What limits the amount that a policyowner may borrow from a whole life insurance policy?

Cash value

All of the following would be considered rebates if offered to an insured in the sale of insurance EXCEPT

Dividends from a mutual insurer

If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?

Fixed period

Which of the following situations is legal to limit coverage based on a marital status?

It is never legal to limit coverage based on marital status

Which statement is not true regarding a straight life policy?

Its premium steadily decreases over time, in response to its growing cash value

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

Limited pay whole life

All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?

Lower

Which of the following programs expands individual public assistance programs for people with insufficient income and resources?

Medicaid

Which type of benefit helps to pay for accidental injuries that are not severe enough to qualify as disabilities?

Medical Reimbursement Benefit

Attempting to determine how much insurance an individual would require based upon their financial objectives is known as

Needs approach

The Director has just finished examining a domestic insurer. When is the Director next required to examine the same insurer?

No later than 5 years from now

Which of the following individuals must have insurable interest in the insured?

Policyowner

If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may

Require evidence of insurability

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 legal process that gives the insurer, after payment of a loss, the right to seek recovery from a third party that was responsible for the loss is known as

Subrogation

Regarding health insurance premiums, what isn't true

Substandard risks are not insurable and are always rejected

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as

Survivor protection

During the accumulation period in a non-qualified annuity, what are the tax consequences of a withdrawal?

Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 and a half

In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?

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

An agent wants to include an illustration written by his insurance company. Which of the following best describes the conditions under which she may use the illustration?

The illustration must stay exactly as it is

What is not the purpose of HIPAA

To provide immediate coverage to new employees who had been previously covered for 18 months

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

Income replacement contracts agree

To replace the insured's income up to a stated percentage if the insured suffers a loss due to a covered accident or sickness.

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?

Universal life

The Medical Information Bureau does not

have reports that are based upon information supplied by doctors and hospitals

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will

pay the policy proceeds only if it would have issued the policy

Which of the following is not the consideration in a policy

The application given to a prospective insured

In forming an insurance contract, when does acceptance usually occur?

When an insurer's underwriter approves coverage

Which type of care is not covered by Medicare?

long term care

Which of the following statements regarding conditional receipts is true?

They are temporary insuring agreements

What is the benefit of experience rating?

It allows employers with low claims experience to get lower premiums.

What is the period of coverage for events such as death or divorce under COBRA?

36 months

Employers can reduce health plan costs by coupling a HRS with

A high deductible health plan

Who is an insurance producer?

Any person licensed to sell, solicit, or negotiate insurance

All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT

It is a life contingency option

Premium payments for personally-owned disability income policies are

Not tax deductible

If $100,000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually?

$3,000

Which concept is associated with "exclusion ratio"?

Annuities payments

When a policyowner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called

Class designation

An applicant buys a nonqualified annuity, but dies before the starting date. For which of the following beneficiaries would the contract's interest NOT be taxable?

Spouse

When an employee covered under a health reimbursement account changes employers, the HRA

Stays with the employer

Which of the following best describes what the annuity period is?

The period of time during which accumulated money is converted into income payments

An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?

$9,800

Fines levied by the director in lieu of license revocation or suspension must be paid within

30 days

According to the Future Increase Option Ride (FIO), which of the following is NOT a qualifying event to increase an insured's benefit level?

Death of a spouse

Which term makes false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance

Defamation

Prior to purchasing a Medigap policy, a person must be enrolled in which of the following?

Parts A and B of Medicare

In a noncontributory health insurance plan, what percentage of eligible employees must participate?

100%

Under the Affordable Care Act, what percentage of preventive care must be covered without cost sharing?

100%

The death protection component of Universal Life Insurance is always

Annually renewable term

What happens when a policy is surrendered for its cash value?

Coverage ends and the policy cannot be reinstated

Risk retention doesn't involve

Premiums

Equity indexed annuities

Seek higher returns

Who determines the eligibility and contribution limits in a HRA

The employer determines both

When an annuity is written, whose life expectancy is taken into account?

Annuitant

An individual purchased a Medicare supplement policy in March and decided to replace it 2 months later. His history of coronary artery disease is considered a pre-existing condition. Which of the following is true?

The pre-existing condition waiting period fulfilled in the old policy will be transferred to the new policy. the new one picking up where the old one left off

Which is not an enrollment period for Medicare Part A applicants?

Automatic enrollment

Which of the following provisions in annuity contracts allow the owner to surrender the annuity if interest rates drop to a specified level?

Bail-out

Which is not required to be stated in the outline of coverage provided with a long-term care policy?

Basic information about supplementary policies

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

Cash option

Most scheduled plans provide first-dollar benefits without

Coinsurance and deductibles

As deductible amounts increase, premium amounts change in what way?

Decrease

In disability income insurance, the own occupation definition of disability applies

For the first 2 years of disability

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a

Guaranteed insurability rider

Which of the following entities must approve all Medicare supplement advertisements?

Insurance Commissioner or Director

The policyowner wants to make sure that upon his death. the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?

Interest only option

Which of the following is true regarding a term health policy?

It is nonrenewable

During replacement of life insurance, a replacing insurer must do which of the following?

Obtain a list of all life insurance policies that will be replaced

In order to transact insurance business in this state, an agency must meet all requirements but not

Obtain an insurance agency license

Decreasing term policy and premiums

Remain level

Workers Compensation benefits are regulated by which entity?

State government

Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce

Without receiving written consent from an insurance regulatory authority

The two types of assignments are

absolute and collateral

In a replacement situation, all must be considered except

assets

Rebates are not allowed

if it's in the best interest of the client

An insured has a $1,000 HRA account through his employer. He incurred $750 in medical expenses the first year of the plan. How much, if anything, will the insured be able to roll over toward the next year's expenses?

$250

What is the elimination period for Social Security disability benefits?

5 months

South Carolina statutes require that an employee who loses group coverage for any reason other than nonpayment of premium may continue coverage under the group policy for

6 months

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?

As of the application date

Which of the following is the most common time for errors and omissions to occur on the part of an insurer?

Policy delivery

What describes the specific information about a policy

Policy summary

Your client wants to know what the tax implications are for contributions to a health savings account. You should advice her that the contributions are

Tax deductible

The annuity owner dies during the accumulation period without naming a beneficiary. Annuity's cash value exceeds premiums paid. Which is true?

The cash value will be paid to the annuitant's estate

What is not a requirement of eligibility for Social Security disability

Being 65

What license or licenses are required to sell variable annuities?

Both life and securities

A producer is acting in what capacity when he or she is trying to obtain creditable information about an applicant for health insurance?

Field underwriter

Which of the following statements is true about a policy assignment?

It transfers rights of ownership from the owner to the next person

An insured purchased a life policy in 2010 and died in 2017. The insurance company discovers at that time that the insured had concealed information during the application process. What can they do?

Pay the death benefit

If an insured withdraws a portion of the face amount in the form of accelerated benefits for a terminal illness, how will that affect the payable death benefit?

The death benefit will be smaller

The paid-up addition option uses the dividend

To purchase a smaller amount of the same type of insurance as the original policy

The sole proprietor of a business makes $50,000 a year. His medical expenses reached $75,000.. What amount may he deduct?

$50,000

In order to collect Social Security disability benefits, the claimant must be able to demonstrate that the disability will last at least

12 months

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

5 days

In which Medicare supplemental policies are the core benefits found?

All plans

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

Annually renewable term

Which of the following is the term for the specific dollar amount that must be paid by an HMO member for a service

Copayment

When the director finds that a license has been obtained by fraud or misrepresentation, he may suspend the license

Immediately, but not for more than 2 years

All of the following statements are true of a combination dental plan EXCEPT

It is also known as a Superimposed Plan

If one takes Social Security retirement benefits at age 62, what needs to be done at age 65 to qualify for Medicare?

Nothing

In order to become licensed as a nonresident producer in this state, a person must do which of the following

Show proof of a valid license for the same line of authority in the home state

Which of the following is an example of a peril covered in an accident and health insurance policy?

Sickness

Which of the following is the best reason to purchase life insurance rather than annuitites?

To create an estate

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?

When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

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

An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe?

Aleatory

In reference to the standard Medicare Supplement benefit plans, what does the term standard mean?

All providers will have the same coverage options and conditions for each plan

Who can make changes to policy once it is in effect?

An executive officer of the insurer

Who can make a fully deductible contribution to a traditional IRA?

An individual not covered by an employer-sponsored plan who has earned income

Which of the following is a short-term annuity that limits the amounts paid to a certain fixed period or until a certain fixed amount is liquidated?

Annuity certain

In disability income insurance., if an insured is considered disabled if they cannot perform any job they are suited for by prior education, training or experience, they fall under which definition of total disability?

Any occupation

Which is not an advantage of an HRA for an employer

HRAs are defined benefit programs

Which of the following types of LTC is not provided in an institutional setting?

Home health care

Medicare Advantage is also known as

Medicare Part C

Which renewal provision(s) must be included in a long-term care policy issued to an individual?

Noncancellable and guaranteed renewable

Which of the following are the main factors taken into account when calculating residual disability benefits?

Present earnings and earnings prior to disability

If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a

Settlement option

Who is the beneficiary in a credit health policy?

The lending institution

Susan owns an individual long-term care insurance plan and is able to deduct the premiums from her taxes. What income taxation will be imposed on the benefits she receives?

None

Which of the following is not an allowable 1035 exchange?

A whole life insurance policy is exchanged for a term insurance policy

When benefits are paid directly to the insured under a health insurance policy, the policy provides benefits on what type of basis?

Reimbursement

Events in which a person has both the chance of winning or losing are classified as

Speculative risk

Which of the following insurers are owned by stockholder who have the usual rights of ownership, including the right of voting?

Stock

Under an extended term nonforfeiture option, the policy cash value is converted to

The same face amount as in the whole life policy

An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. The insured knows that his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilize?

Viatical settlement

Following hospitalization because of an accident, Bill was confined in a skilled nursing facility. Medicare will pay full benefits in this facility for how many days?

20

Concerning group Medical and Dental insurance, which of the following statements is INCORRECT?

Employee benefits are tax deductible the year in which they were received

Which of the following would be the beneficiary in credit life insurance?

Creditor

Which of the following is not allowed in credit life insurance?

Creditor requiring that a debtor buys insurance from a certain company

Which of the following is true regarding taxation of dividends in participating policies?

Dividends are not taxable

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

Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement?

Any form of life insurance

Issue age policy premiums increase in response to which of the following factors?

Increased benefits

Which is NOT true regarding the needs approach method of determining the value of an individual's life?

Need is predicted using the number of years until the insured's retirement

Shortly after a replacement transaction on a Medicare supplement policy. the insured decided to cancel the policy but is unsure whether the free-look provision applies. The insured could find that information in the

Notice Regarding Replacement

Which of the following is correct regarding the taxation of group medical expense premiums and benefits?

Premiums are tax deductible and benefits are not taxed

After the elimination period, a totally disabled insured qualified for benefits from a disability income policy that has a waiver of premium rider. What will happen to the premium that was paid into the policy during the elimination period?

Premiums will be refunded

Which is not a characteristic of a group long-term disability plan?

The benefit can be up to 50% of one's yearly income

An HSA holder who is 65 years old decides to use the money in the account for non-health expense. WHich of the following is true?

There will be a tax

What kind of policy allows withdrawals or partial surrenders?

Universal life