Licence IDK
How are the variable annuities regulated?
By state and federal agencies
What document describes an insured's medical history, including diagnoses and treatments?
Attending Physician's Statement
What does "level" refer to in level term insurance?
Face amount
Insurance is the transfer of
Risk.
How are state Insurance Guaranty Associations funded?
By their members - authorized insurers
Which of the following statements concerning group health insurance is CORRECT?
The employer is the policyholder.
All of the following are requirements for producer license renewal EXCEPT
Renewal examination
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?
Those who have been insured under the plan for at least 5 years
Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option?
It does not guarantee that the entire principal amount will be paid out.
Who is responsible for paying producer appointment fees?
The appointing insurer
A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then
The benefit is received tax free.
An Adjustable Life policyowner can change which of the following policy features?
The coverage period
All of the following are true regarding a decreasing term policy EXCEPT
The payable premium amount steadily declines throughout the duration of the contract.
All of the following statements are true regarding installments for a fixed amount EXCEPT
The payments will stop when the annuitant dies.
Which of the following is an example of a producer's fiduciary duty?
The trust that a client places in the producer in regard to handling premiums.
When would a 20-pay whole life policy endow?
When the insured reaches age 100
What is the civil penalty for the first violation of the Pennsylvania Insurance Fraud Prevention Act?
$5,000
A Return of Premium term life policy is written as what type of term coverage?
Increasing
What type of care is Respite care?
Relief for a major care giver
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
How soon after the due date should the insurer pay the agent appointment fees?
Within 30 days
A Universal Life insurance policy has two types of interest rates that are called
Guaranteed and Current.
After a hearing, if the Commissioner finds that a licensee is in violation of the state insurance laws, the Commissioner can do any of the following EXCEPT
Imprison the licensee.
Which of the following is TRUE regarding the accumulation period of an annuity?
It is a period during which the payments into the annuity grow tax deferred.
What is the purpose of a conditional receipt?
It is intended to provide coverage on a date prior to the policy issue.
Which renewability provision allows an insurer to terminate a policy for any reason, and to increase the premiums for any class of insureds?
Optionally renewable
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the
Other-insured rider.
Which of the following insurance options would be considered a risk-sharing arrangement?
Reciprocal
Equity indexed annuities
Seek higher returns
Who is the beneficiary in a credit health policy?
The lending institution
What happens if a deferred annuity is surrendered before the annuitization period?
The owner will receive the surrender value of the annuity.
Which of the following determines the cash value of a variable life policy
The performance of the policy portfolio
The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as
The policy contains sufficient cash value to cover the cost of insurance
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
A producer licensed in Pennsylvania must notify the Insurance Department of any change of address in his or her residence or business address within how many days?
30
In order for a foreign insurer to do business in this state, it must apply for and obtain
A certificate of authority
Which of the following would be required to be licensed as an insurance producer?
A salaried employee who advertises and solicits insurance
A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?
Automatic premium loan
A man is still employed at age 65 and is now eligible for Medicare. He wants to know what health insurance coverage he is eligible to receive. Which of the following options are available to him?
Both group health and Medicare
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
Which of the following is NOT a characteristic or a service of an HMO plan?
Contracting with insurance companies
The type of policy that can be changed from one that does not accumulate cash value to the one that does is a
Convertible Term Policy
Which provision allows the policyholder a period of time, while coverage is in force, to examine a health insurance policy and determine whether or not to keep it?
Free Look Period
A couple near retirement is planning for their golden years. They want to make sure that their retirement annuity provides monthly benefits for the rest of their lives. Should one of them die, the other would still like to continue receiving benefits. Which settlement option should they choose?
Joint and Survivor
Which of the following premium modes would result in the highest annual cost for an insurance policy?
Monthly
A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents what type of hazard?
Morale
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?
Mutual
A producer has become disabled. In order to keep his business going, what may his designee do?
Obtain a temporary license
The Ownership provision entitles the policyowner to do all of the following EXCEPT
Set premium rates.
When the insured initiates the cancellation of a policy, the unearned premium will be refunded on a
Short rate basis.
Which of the following is an example of a peril covered in an accident and health insurance policy?
Sickness
Which settlement option provides a single beneficiary with income for the rest of his/her life?
Single Life
All of the following statements about equity index annuities are correct EXCEPT
The annuitant receives a fixed amount of return.
Which of the following is NOT a feature of a noncancellable policy?
The insurer may terminate the contract only at renewal for certain conditions.
Which of the following determines the cash value of a variable life policy?
The performance of the policy portfolio
Which of the following best describes what the annuity period is?
The period of time during which accumulated money is converted into income payments
A producer's license must be renewed
Biennially.
Which of the following does a producer NOT have the authority to do?
Issue policies
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 insurers are owned by stockholders who have the usual rights of ownership, including the right of voting?
Stock
How do employer contributions to a Health Savings Account affect the insured's taxes?
The employer contributions are not included in the individual insured's taxable income.
An insurer may provide commissions to an agent for the sale of a long-term care policy only if the first year commission is NOT greater than what percentage of the first year premium?
50%
All of the following individuals may qualify for Medicare health insurance benefits EXCEPT
A retired person age 50
An insured gave birth to her first child by Caesarean section. Her health insurance covered a stay of up to 96 hours in the hospital, but her doctor allowed her and the baby to leave after only 72 hours. What other coverage must the insured's health insurance now allow her?
At least 1 home health care visit within 48 hours of discharge from the hospital
If an insurer appoints a producer, which authority must be notified?
Department of Insurance
Which of the following authorities monitors the financial strength of insurers?
Department of Insurance
Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income?
Depreciation period
An insured is hospitalized with a back injury. Upon checking his disability income policy, he learns that he will not be eligible for benefits for at least 30 days. This indicates that his policy is written with a 30-day
Elimination period.
Which types of insurance companies marketing long-term care insurance coverage must establish procedures to assure that any comparison of policies by its agents will be fair and accurate?
Every company is required to establish marketing procedures.
A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium?
If the father is disabled for more than 6 months
A man purchased a $90,000 annuity with a single premium, and began receiving payments 2 months after that. What type of annuity is it?
Immediate
Which of the following best describes a bail-out provision?
It allows the owner to surrender the annuity without a charge.
Which of the following statements is NOT true concerning Medicaid?
It consists of 3 parts: Part A: hospitalization, Part B: doctor's services, Part C: disability income.
Which of the following applies to the 10-day free-look privilege?
It permits the insured to reject the policy with a full refund.
Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices?
Making comparisons between different policies
Which type of Medicare policy requires insureds to use specific healthcare providers and hospitals (network providers), EXCEPT in emergency situations?
Medicare SELECT
What term is used to describe when a medical caregiver contracts with a health organization to provide services to its members or subscribers, but retains the right to treat patients who are not members or subscribers?
Open panel
When an individual is covered under two health insurance policies that have duplicate benefits which could make a claim for benefits because of an injury or illness profitable, it is called
Overinsurance.
Which of the following licensees is classified as a representative of the insurance company and not allowed to represent an insured or claimant?
Producer
All of the following are penalties a producer may face for violating the insurance laws of this state EXCEPT
Re-examination.
If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept?
Reasonable expectations
When a life insurance policy stipulates that the beneficiary will receive payments in specified installments or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the planned installments?
Spendthrift provision
All of the following are unfair claims settlement practices EXCEPT
Suggesting negotiations in settling the claim.
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
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.
The Affordable Care Act requires all U.S. citizens and legal residents to have qualifying health care coverage. This is known as
The individual mandate.
What must happen when an individual policy or annuity has been personally delivered to the policyowner?
The policyowner must sign a delivery receipt.
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?
Universal Life - Option A
When is the insurability conditional receipt given?
When the premium is paid at the time of application
Under the Affordable Care Act, a special enrollment period allows an individual to enroll in a qualified health plan within how many days of a qualifying event?
60 days
Which of the following groups would probably be covered by blanket insurance?
A university's sports team
The equity in an equity index annuity is linked to
An index like Standard & Poor's 500.
The death benefit in a variable universal life policy
Depends on the performance of a separate account.
Which of the following is an example of an agent's fiduciary responsibilities?
Forwarding premiums to the insurer
Which of the following is an eligibility requirement for all Social Security Disability Income benefits?
Have attained fully insured status
All of the following are licensing requirements for a business entity, EXCEPT
Having all employees complete continuing education courses once every 2 years.
The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the
Incontestability clause.
Annually renewable term policies provide a level death benefit for a premium that
Increases annually.
Which document is used to assess risk associated with an applicant's lifestyle and character?
Investigative Consumer Report
All of the following are characteristics of group life insurance EXCEPT
Premiums are determined by the age, sex and occupation of each individual certificate holder.
All of the following are characteristics of group life insurance EXCEPT (2)
Premiums are determined by the age, sex and occupation of each individual certificate holder.
All of the following are true regarding key person disability income insurance EXCEPT
Premiums are tax deductible as a business expense.
An insured committed suicide one year after his life insurance policy was issued. The insurer will
Refund the premiums paid.
When benefits are paid directly to the insured under a health insurance policy, the policy provides benefits on what type of basis?
Reimbursement
In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to
The contingent beneficiary
A long-term care policy may NOT lapse because of unpaid premiums, unless the insurer gives at least
30 days' notice
The Omnibus Budget Reconciliation Act of 1990 requires that large group health plans must provide primary coverage for disabled individuals under
Age 65 who are not retired.
An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an
Authorized insurer.
All of the following are true of the Key Person disability income policy EXCEPT
Benefits are considered taxable income to the business.
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?
Consideration
Which of the following reports will provide the underwriter with the information about an insurance applicant's credit?
Consumer report
All of the following are features and requirements of the Living Needs Rider EXCEPT
Diagnosis must indicate that death is expected within 3 years.
Which type of insurance provides funds for a business organization to purchase the business interest of a disabled partner?
Disability Buy-Sell
An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?
Disclosure rule
Which of the following will NOT be considered unfair discrimination by insurers?
Discriminating in benefits and coverages based on the insured's habits and lifestyle
Circulating deceptive sales material to the public is what type of Unfair Trade Practice?
False advertising
Health coverage becomes effective when the
First premium has been paid and the application has been approved
Which of the following factors about the insured determines the amount of disability benefit that the insured will receive?
Income
Which of the following statements is TRUE about a policy assignment?
It transfers rights of ownership from the owner to another person
An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied?
Material misrepresentation
Which of the following provisions would prevent an insurance company from paying a reimbursement claim to someone other than the policyowner?
Payment of Claims
With respect to the Consideration Clause, which of the following would be considered consideration on the part of the applicant for insurance?
Payment of premium
An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this?
Reinstatement provision
Annuities can be used to fund which of the following?
Retirement plans
A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the
Revocable beneficiary.
Which of the following is NOT covered under Part B of a Medicare policy?
Routine dental care
Nonforfeiture values guarantee which of the following for the policyowner?
That the cash value will not be lost
In order to become licensed to become a viatical settlement provider, an application must be made with
The Insurance Department
A man works for Company A and his wife works for Company B. The spouses are covered by health plans through their respective companies that also cover the other spouse. If the husband files a claim
The insurance through his company is primary.
Which of the following is NOT a feature of a guaranteed renewable provision?
The insurer can increase the policy premium on an individual basis.
Which of the following is TRUE about nonforfeiture values?
They are required by state law to be included in the policy.
Which of the following is NOT a goal of risk retention?
To minimize the insured's level of liability in the event of loss
What kind of policy allows withdrawals or partial surrenders?
Universal life
An insured owes his insurer a premium payment. Since then, he incurs medical expenses. The insurer deducts the unpaid premium amount from the claim amount and pays the insured the difference. What provision allows for this?
Unpaid premium
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
According to OBRA, what is the minimum number of employees required to constitute a large group?
100
An employee insured under a group health plan has been paying $25 monthly premium for his group health coverage. The employer has been contributing $75, for the total monthly cost of $100. If the employee leaves the company, what would be his maximum monthly premium for COBRA coverage?
$102
Once it has been reasonably proven that a person has knowingly violated the Insurance Code regarding unfair methods of competition, the Department may impose a civil penalty of
$5,000 for each violation
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
What is the maximum age for qualifying for a catastrophic plan?
30
If a licensed person is moving to Pennsylvania, he or she may become licensed as a resident if they submit a completed application within how many days of establishing residence in Pennsylvania with proof of licensing from their prior home state?
90
Which of the following hospice expenses would NOT be covered in a cost-containment setting?
Antibiotics
According to the provisions of the Patient Protection and Affordable Care Act, all of the following are required preventive care services EXCEPT
Cervical cancer exams for all women starting at age 40.
An insured is receiving hospice care. His insurer will pay for painkillers but not for an operation to reduce the size of a tumor. What term best fits this arrangement?
Cost-containment
A key person insurance policy can pay for which of the following?
Costs of training a replacement
What happens when a policy is surrendered for its cash value?
Coverage ends and the policy cannot be reinstated.
hat happens when a policy is surrendered for its cash value?
Coverage ends and the policy cannot be reinstated.
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 statements is correct concerning taxation of long-term care insurance?
Excessive benefits may be taxable
Under a typical health insurance policy, claims that result from injuries while the insured was intoxicated or under the influence of drugs are generally
Excluded.
What type of insurance would be used for a Return of Premium rider?
Increasing Term
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?
Life income with period certain
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of
Misrepresentation.
All of the following are requirements for producer license renewal EXCEPT
Renewal examination.
The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive?
$100,000
An individual was just caught acting as an exclusive general agent - even though he is not properly licensed. Assuming that this occurred in a single day, what is the maximum penalty he faces?
A third degree misdemeanor and a $1,000 fine
What documentation grants express authority to an agent?
Agent's contract with the principal
What does "liquidity" refer to in a life insurance policy?
Cash values can be borrowed at any time.
According to the entire contract provision, what document must be made part of the insurance policy?
Copy of the original application
Which of the following are the main factors taken into account when calculating residual disability benefits?
Present earnings and earnings prior to disability
A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?
The insured's premiums will be waived until she is 21.
For the purpose of insurance, risk is defined as
The uncertainty or chance of loss
Underlying assets for variable annuity contracts must be maintained in what type of account?
Separate account
Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information?
The Fair Credit Reporting Act
An insurer wishes to compare the information given in an insurance application with previous insurance applications by the same applicant but for different companies. What organization can help the insurer accomplish this?
The Medical Information Bureau
Which of the following applies to partial disability benefits?
Payment is limited to a certain period of time.
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
5 days
Benefit periods for individual short-term disability policies will usually continue from
6 months to 2 years
A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called
Cost of living rider.
All of the following are Nonforfeiture options EXCEPT
Interest only
What are the licensing requirements for someone who sells variable universal life insurance?
Life insurance and securities
When an applicant purchased a life insurance policy, the agent dated the application 4 months prior. When asked by the applicant, the agent said he was allowed to backdate policies up to 6 months if it would
Lower the insured's premium.
The coverage provided by a disability income policy that does not pay benefits for losses occurring as the result of the insured's employment is called
Nonoccupational coverage.
Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive
Nothing; the payments will cease.
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.
All of the following are true regarding rebates EXCEPT
Rebates are allowed if it's in the best interest of the client.
Which of the following is NOT true regarding a Variable Universal Life policy?
The death benefit is fixed.
The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT
The insured's age at death.
Which of the following statements regarding conditional receipts is true?
They are temporary insuring agreements
What do long-term care policies offer to policyholders to account for inflation?
They offer the option of purchasing coverage that raises benefit levels accordingly.
If an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about
Whether an insurable interest exists between the individuals.
When can a Long-Term Care policy deny a claim for losses incurred because of a pre-existing condition?
Within 6 months of the effective date of coverage
The insurance code identifies all of these as prohibited acts that can cause suspension, revocation or denial of an insurance producer license for a licensee or applicant, with the exception of
Commission of any misdemeanor.
An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act?
Illegal under any circumstances
All of the following are true about variable products EXCEPT
The premiums are invested in the insurer's general account.
Which of the following occupations would have the lowest disability insurance premiums?
Personal Trainer
In a noncontributory health insurance plan, what percentage of eligible employees must participate in the plan before the plan can become effective?
100%
The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEP
The insured's age at death.
A group of 15 skydivers met at a seminar and began talking about life insurance during a break. Because it was expensive to get individual life insurance, they decided to band together to form a small group so that they could qualify for group life insurance. After they applied for group life insurance, they were rejected. Why?
The purpose of the group was to purchase life insurance.
What is the purpose of establishing the target premium for a universal life policy?
To keep the policy in force
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
An insured's long-term care policy is scheduled to pay a fixed amount of coverage of $120 per day. The long-term care facility only charged $100 per day. How much will the insurance company pay?
$120 a day
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
The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called
Waiver of premium.
A Medicare SELECT policy does all of the following EXCEPT
Prohibit payment for regularly covered services if provided by non-network providers
In respect to the consideration clause, which of the following is consideration on the part of the insurer?
Promising to pay in accordance with the contract terms
Pertaining to insurance, what is the definition of a fiduciary responsibility?
Promptly forwarding premiums to the insurance company
An employee becomes insured under a PPO plan provided by his employer. If the insured decides to go to a physician who is not a PPO provider, which of the following will happen?
The PPO will pay reduced benefits.
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
Elijah and Mary are to receive the proceeds of a life insurance policy jointly until the first one dies. If either one should die within a specified time, the other one will receive benefits until the end of the specified time. This settlement option is known as:
Joint Life with Term Certain
In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment?
The annuitant will receive the higher of either the guaranteed minimum rate or current rate.
Which of the following is NOT the consideration in a policy?
The application given to a prospective insured