Insurance Overall Test
Examples of those covered under a Limited Risk Plan areI. Elton John's HandsII. Dread DiseasesIII. A Test PilotIV. Airplane Passengers I II I & IV II & IV
II & IV
Billy Bob and his family are covered under his employer's group health insurance plan. Billy Bob's 16 year old daughter becomes pregnant. The baby is born premature and the Bob family is at a loss as to how they will pay these medical costs. Which statement by the agent would be the most correct? "There is no coverage." "The insurance company will pay after 18 months." "There is coverage on the baby from the moment of birth up to the first 18 months." "Wasn't me."
"There is coverage on the baby from the moment of birth up to the first 18 months."
Dude paid a total of $25,000 for his $100,000 life insurance policy. He borrows $35,000 against the cash value. How much will Dude have to report as a gain? $35,000 $25,000 $10,000 $0
$0
If 100 men, age 25, desired to provide their beneficiary with $10,000, how much would each have to pay if we knew three were going to die? $30 $300 $3000 $309
$300
Gullible, age 27, is advised by his agent to purchase life insurance to cover a 20-year, $50,000 amortized business-improvement loan. Which of the following plans would adequately protect Gullible at the minimum premium outlay? $50,000 Whole Life policy $50,000 20-Year Endowment policy $50,000 Level Term policy for 20 years $50,000 Decreasing Term policy for 20 years
$50,000 Decreasing Term policy for 20 years
Maurice takes a $500 loan against a $10,000 whole life policy with a 5% interest rate. Maurice dies one year later and had not repaid the loan. How much will the benefit be? $10,000 $9,500 $9450 $9475
$9475
Which of the following are eligible for Medicare benefits?1. folks aged 65 and over2. folks under age 65 receiving Social Security disability benefits3. folks with chronic liver problems4. folks with chronic kidney problems 1, 2, & 3 1, 2, & 4 1, 3, & 4 all the above
1, 2, & 4
Features that may be included in most Term policies include which of the following?1. Convertibility2. Renewability3. Waiver of Premium provision 1 and 2 only 1 and 3 only 2 and 3 only 1, 2, and 3
1, 2, and 3
Patches owns a 30-Pay Life policy that he purchased at the age of 30. The policy will endow at age: 60 65 70 100
100
Which of the following statements concerning Multiple Employer Trusts (METs) are true?1. They are designed for employers with a large number of employees.2. They may be self-funded or funded with contracts from insurance companies.3. The employer must join the trust.4. Employees receive a policy. 1, 2, & 3 2 & 3 2, 3, & 4 All the above
2, 3, & 4
A Life with 20 yr. period certain annuity would pay: only 20 years 20 yrs. or life of the annuitant whichever is longer until both spouses die until the first spouse dies
20 yrs. or life of the annuitant whichever is longer
An insurer may not deliver a policy, application, certificate rider, endorsement, or annuity contract until such forms have been approved by the Office of Insurance Regulation, and such forms have to have been filed with the office at least how many days before delivery to a consumer? 15 days 30 days 45 days 60 days
30 days
Which type of annuity plan allows for pre-tax dollars to be invested? 501 c 3 403 b terminus remaindus trustus no wonus pitifulmus
403 b
A cancellable policy may be cancelled by the insurance company for any reason with-in how many days? 10 days 15 days 25 days 45 days
45 days
Regarding eligibility requirements in a group life plan, for the plan to receive favorable tax treatment the government requires the plan to cover what percentage of the eligible employees? 25% 70% 75% 100%
70%
The term FIRST DOLLAR often is used to describe benefits payable by which type of policy? A Hospital Indemnity policy A Disability Income policy A Business Overhead Expense policy A Major Medical policy
A Hospital Indemnity policy
Which of the following statements about the Reinstatement Provision is not true? A new incontestable period begins at reinstatement A new suicide period begins at reinstatement All loans must be repaid Evidence of insurability is required
A new suicide period begins at reinstatement
When a policy owner notifies the company in writing of a beneficiary change, this is called: A written method An absolute method A revocable method A recording method
A recording method
The statement "there is no attempt to value financial loss" would be applied to which of the following? A valued contract An indemnity contract The doctrine of subrogation All of the above
A valued contract
Which of the following would probably NOT be considered in underwriting a health insurance risk? An individual's personal habits An individual's credit rating An individual's medical history An individual's marital status
An individual's marital status
An insured commits suicide within the first two years of the life insurance policy, which course of action will the insurance take? Pay full benefits Pay the death benefit but subtract the premium Deny the claim Deny the claim and return the premium
Deny the claim and return the premium
The Bureau of Unclaimed Property is part of which Division? Division of Accounting and Auditing Division of Consumer Services Division of the Consumer Advocate Division of Banking
Division of Accounting and Auditing
A single-employer self-insured health plan covering the employers, employees and their dependents is directly regulated by: The state ERISA Both the state and ERISA Neither the state nor ERISA
ERISA
Florida law requires HMOs and EPOs to provide direct access to dermatologists, without a referral, how many times with-in a 12 month period? One time Three times Five times HMOs & EPOs always require a referral
Five times
When benefits are paid to a policyowner covered under a Hospital Expense policy, the policy is considered to be which of the following? Service Limited Fixed-Rate plan Special Risk
Fixed-Rate plan
Which of the following is not considered a group permanent plan? Group ordinary insurance Group paid-up insurance Group single payment insurance Group Universal Life
Group single payment insurance
Wilma the widow is receiving payments under the fixed period settlement option. The company is currently paying the payments at an interest rate of 5%. If, in the future, the company elects to raise the interest rate to Wilma, what effect would this have on her payout? There is not a chance this could happen. The period would be longer. Her payments would be higher. Wilma would be very very happy.
Her payments would be higher.
A Dually Licensed Agent: Is an agent representing two insurance companies Has completed this course and passed the State exam Holds an insurance and a securities license at the same time Was administered the oath by Tom Dually
Holds an insurance and a securities license at the same time
Which of the following statements about Medicaid is/are true?I. It is one of the major parts of Medicare.II. It is intended to provide medical assistance for certain categories of people who are needy.III. It supplements Medicare for those over age 65, who qualify.IV. It is funded entirely by the State Government. II, III, and IV I and II only II & III IV only
II & III
Ibey Broke, age 62, has been paying premiums for many years on his Whole Life policy, which now has a cash value of $9,850. If Ibey decided to drop the policy, which of the following would apply? Ibey would forfeit a major part of the $9,850 to pay for the cost of protection under the policy. Ibey could elect to surrender his policy for a lump-sum cash payment of $9,850, less any policy indebtedness. Ibey would forfeit the entire $9,850, if the policy is surrendered. Ibey will have to take a reduced paid up policy.
Ibey could elect to surrender his policy for a lump-sum cash payment of $9,850, less any policy indebtedness.
Which of the following types of policies' cash may NOT be affected by stock market/mutual funds? Variable Life Equity Indexed Universal Life Modified Whole Life Variable Universal Life
Modified Whole Life
Golan Hites purchases a health insurance policy and is told that the insurance company cannot raise the premium or terminate the coverage. Which of the following types of renewability clauses does this policy contain? Optionally Renewable Conditionally Renewable Guaranteed Renewable Non-cancelable
Non-cancelable
Which of the following are NOT eligible for Medicare coverage? People age 65 and older eligible for Social Security People age 65 and older not eligible for Social Security, but willing to pay a monthly premium People of any age who have been entitled to S.S. Disability benefits People with any life threatening condition
People with any life threatening condition
All of the following statements concerning group credit life are true except: The creditor must have a minimum of 100 debtors per year. The amount of insurance may not exceed the amount of the loan. Premiums are paid entirely by the creditor. Debtors can not be forced to obtain coverage from the creditor.
Premiums are paid entirely by the creditor.
The Florida Guarantee Association: Protects the insured if the insurer becomes insolvent Protects the insurer if the insurer becomes insolvent Protects the agent if the insurer becomes insolvent Protects the insurer if the insured becomes insolvent
Protects the insured if the insurer becomes insolvent
A guaranteed insurability rider attached to a disability policy allows the insured to do which of the following? Purchase additional amounts of insurance based on inflation Purchase additional amounts of insurance based on an earnings test Purchase additional amounts of insurance up to age 65 Purchase additional amounts of insurance every three years
Purchase additional amounts of insurance based on an earnings test
Ways in which DIVIDENDS may be used by the policyowner include all the following EXCEPT: Purchase extended term insurance Applied to reduce the premium Left to accumulate with interest Used to buy additional paid-up insurance
Purchase extended term insurance
Which of the following is not true concerning the FICA tax? It is a tax used to partially fund the Medicare system. After one's salary has reached the maximum taxable wage base, only a portion of the FICA tax will be applied. There is no cap on the Medicare portion of the FICA tax. The FICA tax has no limits as to the retirement portion.
The FICA tax has no limits as to the retirement portion.
The Financial Services Commission consists of all the following except: The Chief Financial Officer The Governor The Agriculture Commissioner The Insurance Commissioner
The Insurance Commissioner
The agency of state government involved in the regulation of the Insurance industry in the state of Florida are: The Office of Insurance Regulation The Department of Insurance The Office of financial Regulation The Securities & Exchange Commission
The Office of Insurance Regulation
An applicant has been denied insurance coverage because of information contained in a consumer report. According to the Fair Credit Reporting Act, all of the following statements are true about this situation EXCEPT: The applicant has the right to obtain a copy of the consumer report directly from the insurance company that used the report. The applicant has the right to obtain disclosure of the substance of the information in the consumer report from the reporting agency. The applicant has the right to obtain the names of all people contacted within the past 6 months. Applicants must be notified within 3 days that a report has been requested.
The applicant has the right to obtain a copy of the consumer report directly from the insurance company that used the report.
The insured and the primary beneficiary are in an accident together. The insured dies at the scene and the beneficiary dies 15 days later. If the common disaster provision in the policy is 14 days, which of the following is correct? The benefit is paid to the primary beneficiary's estate. The benefit is paid to a secondary beneficiary. The benefit is paid to the policyowner. The benefit is paid to the policyowner's estate.
The benefit is paid to the primary beneficiary's estate.
Which of the following statements concerning Long Term Care policies is correct? The benefits are tax-free if the policy is " qualified" The premium is not affected by the deductible Provides broad coverage for non-organic mental conditions They are written as non-cancellable contracts
The benefits are tax-free if the policy is " qualified"
An insured has a life insurance policy with a Long Term Rider. He attempted suicide and failed, leaving him incapable of performing two activities of daily living (ADLs). Which of the following course of action would the insurance company take? The insurance company would pay a percentage of the face amount each month for a long term care facility The company would pay nothing The company would pay a % of the face amount for the accelerated death benefit The company would pay the full face amount for the accelerated death benefit
The company would pay nothing
Which of the following statements concerning deferred compensation and salary continuation plans are correct? The employee funds the salary continuation plan, the employer funds the deferred compensation plan. The employer funds the salary continuation plan, the employee funds the deferred compensation plan. The employee funds both the salary continuation and the deferred compensation plans. The employer funds both the salary continuation and the deferred compensation plans.
The employer funds the salary continuation plan, the employee funds the deferred compensation plan.
Many major medical policies include a provision whereby when expenses reach a certain dollar amount, the insured no longer shares in the cost of expenses: the insurer pays 100% of remaining covered charges. This is referred to as the: maximum benefit benefit restoration coinsurance percentage stop-loss limit
stop-loss limit
In a sales transaction, the producer will represent the: the company the policyowner/insured both
the company
In group health insurance, unlike most personal insurance, Maternity expenses are treated as any other claim. true false
true
In a three-person partnership, a buy/sell Cross-Purchase plan requires each partner to purchase how many life insurance policies? two policies three policies six policies nine policies
two policies
Regarding Limited Risk, Special Risk, and Disability Income policies, which statement is true? Accidental means are more limiting than accidental results. Accidental results is more limiting than accidental means. Accidental results and accidental means do not apply to these types of policies. My interest in this subject matter is about shot.
Accidental means are more limiting than accidental results.
Rooster has had a disability income policy for two months. The policy has a 6-month elimination period and a 30-day probationary period. When Rooster becomes disabled after being run over by a bus tomorrow, when will his benefits begin? Benefits will begin 30 days after the accident. Benefits will begin in the 6th month after the accident. Benefits will begin in the 7th month after the accident. Benefits will begin immediately.
Benefits will begin immediately.
The NAIC developed: The Advertising Code The Unfair Trade Practices Act Both Neither
Both
All of the following statements concerning Deferred Compensation plans are correct except: They may be used by businesses to discriminate in favor of key employees. Contributions may be tax deducted. They do not receive favorable tax treatment. May be set up at the employee's request.
Contributions may be tax deducted.
At what time can a person continue working without fear of having their social security check reduced? FRA Age 59 1/2 Age 62 Age 65
FRA
Define a legal reserve: The amount set aside by Federal Reserve Bank as required by law Future liabilities paid to policyholders A leeway provision None of the above
Future liabilities paid to policyholders
How much Disability Income can be purchased is determined by: Age Health Occupation Income
Income
Which of the following is not a determining factor in the payout of an annuity? Interest Rate Inflation Rate Principal Amount Length of the payout period
Inflation Rate
What is dollar cost averaging? Total number of shares of stock divided by the price A method of group investing Investing equal amounts of money at regular intervals A guaranteed investment strategy in which gaining outweighs loss
Investing equal amounts of money at regular intervals
Which of the following is true about coinsurance? Coinsurance applies to the deductible as well as to claim payments. Premiums are higher for a policy that contains a coinsurance provision than for one that does not. It helps control overutilization of benefits. Insurance companies can change the coinsurance ratio after the policy has been issued.
It helps control overutilization of benefits.
Which of the following is not considered a primary risk factor in health insurance? Physical Condition Moral Hazards Morbidity statistics Occupation
Morbidity statistics
Lupe has an individual disability income policy with a 30 day elimination period. He is sick and out of work for 15 days and then goes back to work. When would the benefit be paid? Day 1 Day 15 Day16 Never
Never
All of the following are characteristics of Medicaid except? It is part of the Social Security Act & is fully funded by subsidized grants from the federal government to states for their medical public assistance plans It is supported by the federal government & was added to the Social Security Act of 1965 to provide assistance to states for their medical public assistance plans to help needy persons It is generally available to low income individuals who are blind, disabled or under the age of 21 It is available to those who receive Social Security benefits regardless of age and may also be used to supplement Medicare
It is part of the Social Security Act & is fully funded by subsidized grants from the federal government to states for their medical public assistance plans
Which of the following statements about the Fair Credit Reporting Act is correct? It prohibits insurance companies from obtaining reports on applicants from outside investigative agencies It provides that consumers have the right to question reports made about them by investigative agencies It applies to reports about applicants that are made by insurance agents to their companies It prohibits insurance companies from rejecting an application based on a credit report
It provides that consumers have the right to question reports made about them by investigative agencies
All of the following statements about life insurance and the risk it covers are true EXCEPT: Life insurance is a mechanism for pooling and sharing risks. As the number of separate risks of the same type increases, the amount of loss within a given group becomes more certain. The probability of an individual insured's death increases each year until it becomes a certainty. Life insurance is like a mutual fund in that a certain sum of money must be set aside each year to meet the contractual obligations of the insured.
Life insurance is like a mutual fund in that a certain sum of money must be set aside each year to meet the contractual obligations of the insured.
Which part of Medicare requires premium payment by most eligible participants? Part A, basic hospital insurance Part B, supplementary medical insurance Respite Care All of the above
Part B, supplementary medical insurance
An annuitant, age 65, chooses a life income with a 20 year period certain. Which of the following statements concerning this option is true? If the annuitant died at age 75, his beneficiary would receive income for 20 years All payments would cease at age 85 Payments will continue for the life of the annuitant, no matter how long that life lasts There are no survivorship options with a life annuity
Payments will continue for the life of the annuitant, no matter how long that life lasts
In a Basic Surgical policy, which of the following pays per point? Relative Value Surgical Schedule Reasonable and Customary Surgical Point
Relative Value
"Twisting" in policy replacement involves all the below except: Any form of misrepresentation Failure to disclose all relevant facts Stripping cash values to make outside investments Replacing policies after full disclosure of all relevant values and facts
Replacing policies after full disclosure of all relevant values and facts
The USA PATRIOT Act requires financial institutions to do all of the following, except: Develop new compliance systems and training Designate anti-money laundering officers Share information with other financial institutions and enforcement entities Share information with credit reporting agencies
Share information with credit reporting agencies
Pamella is the sole proprietor of a craft shop. She decides it is time to start her retirement planning. In order to obtain the maximum legal amount in a qualified plan which should she choose? Individual Retirement Account Simplified Employee Pension Individual Retirement Account with a Spousal contribution -401k plan
Simplified Employee Pension
Larry was a chainsaw juggler who had purchased a $5000 per month disability benefit back in his chainsaw juggling days. He was issued a standard policy for which he had been paying premiums for five years. In the evenings he finished medical school and has since been practicing medicine as a surgeon. Having sliced off his hand with a scalpel he submits a claim. Which course of action would the company most likely follow? The company would pay the $5000 per month. The company would pay a higher benefit to reflect what the premium would have purchased at a surgeon's occupational classification. The company would pay the $5000 and refund any premium. The company would deny the claim.
The company would pay the $5000 and refund any premium.
When an application for health insurance is submitted without an initial premium, the earliest effective date is: The date the application is taken by the agent. The date the insurance company issues the policy. The date the policy is received by the agent. The date the policy is delivered to the prospect by the agent and the premium is collected.
The date the policy is delivered to the prospect by the agent and the premium is collected.
All the needs that arise when a breadwinner dies arise when the breadwinner becomes disabled except: The final expense fund The education fund The monthly income fund The housing fund
The final expense fund
After conversion to a payout mode, a decrease in the rate of interest has what affect on the payout of a fixed annuity? The monthly payment will be lower The monthly payout will not be affected The annuity will pay for a shorter amount of time The payment will fluctuate
The monthly payout will not be affected
Whichofollowing statements is true about Basic Hospital, Medical, and Surgical Expense Policies? They have high deductibles. The benefits provided are usually equal to the actual expenses incurred. They usually have a stated limit for specific expenses. Benefits are provided for loss of income.
They usually have a stated limit for specific expenses.
An individual becomes licensed, then appointed by a domiciled insurance company. He subsequently writes insurance on all his relatives. Which statement would be correct? This is called controlled business and is encouraged because family members would rather deal with someone they know. This is controlled business and could subject the agent to revocation of his license. This is rebating and is allowed. This is rebating and is not allowed.
This is controlled business and could subject the agent to revocation of his license.
Miami Mutual rewards their clients with a matching deposit of 10% into their annuity when they open an account. Which statement below is correct? This is rebating and would be allowed. This is rebating and would not be allowed. This is twisting and would be allowed. This is twisting and would not be allowed.
This is rebating and would be allowed.
Extensions of Benefit is a term used in the health insurance industry which relates to claims that occurred while a policy was in force and then later the policy is no longer in effect but the insured is still disabled. If an HMO terminates coverage, how long will the HMO be responsible for the insured's disability? Until 12 months have expired or another carrier assumes coverage, whichever is earliest Until 12 months have expired or another carrier assumes coverage, whichever is latest Will pay for life as long as the insured was covered while the policy was in force Coverage terminates when the policy is terminated
Until 12 months have expired or another carrier assumes coverage, whichever is earliest
A health insurance policy includes an endorsement indicating the insurer will allow the policy to continue in force without further premiums if the insured is totally and permanently disabled. What endorsement is attached to this policy? Guaranteed insurability Impairment Rider Multiple indemnity Waiver of premium
Waiver of premium
Coverage under COBRA terminates When the employee becomes eligible for Medicare When the employee becomes eligible for Medicaid When a dependent child no longer qualifies as a "dependent child" When a worker was terminated for gross misconduct
When a worker was terminated for gross misconduct
Which of the following does NOT constitute "constructive delivery"? Mailing the policy to the agent and the agent delivers it Mailing the policy to the agent and the agent does not deliver it Mailing the policy to the client When the policy is delivered and an inspection receipt obtained
When the policy is delivered and an inspection receipt obtained
All of the following describe an unaffiliated agent except: a licensed agent a limited lines agent one who is not appointed by an insurer one who is self-appointed
a limited lines agent
The spendthrift trust clause: protects the beneficiary from the claims of the beneficiary's creditors it shelters life insurance proceeds that have not yet been paid out to a beneficiary states that the proceeds are not assignable all of the above
all of the above
Under the Basic Hospital Expense policy, what would not be covered under the miscellaneous expense benefit? anesthesia anesthesiologist use of the operating room drugs
anesthesiologist
A STANDARD RISK applicant submits an application REQUIRING a medical exam and receives a CONDITIONAL RECEIPT for his premium. The policy is first effective: as of the date of the application. as of the date the policy is issued. as of the completion of the required medical examination. as of the delivery date of the policy.
as of the completion of the required medical examination.
The policy owner can do which of the following with out the irrevocable beneficiary's permission? change the premium mode cancel the contract refuse to pay the premium take a loan
change the premium mode
Mammy had a $100,000 policy which had $25,000 of cash value. Mammy used the cash value to purchase a Variable Universal policy with the same insurer that allowed her to choose the investments. Which word best describes this? replacement twisting churning fiscal responsibility
churning
With regard to group health insurance policies, pre-existing conditions are generally: excluded permanently excluded for no more than 12 months covered for up to 80% of the policy limit covered immediately
covered immediately
In a Basic Hospital Expense policy, the miscellaneous expense limits are a multiple of what factor? daily room and board physician's expense surgical expense reasonable & customary
daily room and board
Which of the following is NOT an objective of the State Partnership program for long term care? stimulating the sale of long term care insurance removing the fear of impoverishment improving the understanding of the financing of long term care eliminating the need for Medicaid
eliminating the need for Medicaid
All of the following are primary risk factors in underwriting individual health insurance policies, EXCEPT: geographical location moral hazard occupation physical condition
geographical location
In a typical split-dollar policy the employer and the employee split the cost of the insurance. On an annual basis, the employer's outlay is equal to the: cash value half of the premium increase in cash value full premium
increase in cash value
The _________ clause states the insurance company will pay the death proceeds. consideration entire contract insuring reinstatement
insuring
All of the following are methods of tax deducting life insurance premiums except: key person life business creditors employer group life life insurance by an ex-spouse as part of an alimony decree
key person life
As compared to individual disability income policies, group disability income policies are generally: more costly and have less liberal provisions more restrictive in terms of covered medical expense less costly and have more liberal provisions tied more closely to Social Security disability benefits
less costly and have more liberal provisions
The annuity rule applies to all of the following except: life income fixed period fixed amount lump sum
lump sum
When must individuals complete an application for blanket insurance? only for blanket policies issued to an HMO for the subscribers only for blanket policies issued to a health care provider covering patients in both cases of the blanket poliy being issued to the HMO and a blanket policy being issued to a health care provider never
never
Required Provision 7 indicates that, except in the absence of the insured's legal capacity, if it was not reasonably possible for the insured to provide proof of loss as required in a policy, the latest time the proof of loss may be furnished is: three years from the time proof is otherwise required one year from the time proof is otherwise required within 90 days of a final notice from the insurer unlimited
one year from the time proof is otherwise required
Which of the following statements concerning par and non-par policies is correct? premiums for par policies are higher than non-par the cash value for a par policy will be higher, assuming everything else is equal but the premium premiums for non-par policies are higher the cash value for a non-par policy will be higher, assuming everything is equal but the premium
premiums for par policies are higher than non-par
Concealing coverage within a policy is considered: fraud sliding misrepresentation rebating
sliding