LIFE AND HEALTH #3

What is the purpose of the Insurance Guaranty Association? a) To prevent unfair trade practices b) To protect policyowners against insurer insolvency c) To protect insurance companies against insurance fraud d) To provide double indemnity for the insured's loss

b

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? a) Single life b) Fixed-amount c) Life income with period certain d) Joint and survivor

c

As deductible amounts increase, premium amounts change in what way? a) Remain the same. Changes in premium amounts do not affect deductible amounts. b) Either increase or decrease. c) Decrease d) Increase

c

A Universal Life insurance policy has two types of interest rate that are called a) Option A and Option B b) Fixed and Variable c) Minimum and Target d) Guaranteed and Current

d

Which of the following statements best describes the effect the Accelerated Benefit provision would have on the benefits paid to the beneficiary? a) It will not affect the benefits paid to the beneficiary. b) It will reduce the benefits by 70%. c) It will increase the benefits paid to the beneficiary. d) It will decrease the benefits paid to the beneficiary.

d

All of the following information about a customer must be used in determining annuity suitability EXCEPT a) Beneficiary's age. b) Tax status. c) Financial experience. d) Annual income.

a

All of the following statements about equity index annuities are correct EXCEPT a) The annuitant receives a fixed amount of return. b) They have a guaranteed minimum interest rate. c) The interest rate is tied to an index such as the Standard & Poor's 500. d) They invest on a more aggressive basis aiming for higher returns.

a

An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of a) Concealment. b) Waiver. c) Fraud. d) Breach of warranty.

a

An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? a) False advertising b) Unfair claims c) Twisting d) Defamation

a

An insured is upset that her new health insurance policy was delivered to her by certified mail and not through her agent. Which of the following is true? a) There is nothing wrong with this form of policy delivery. b) The insured should complain to the insurer. c) The insured should ask for a new policy to be delivered. d) The policy will not be legal until it is delivered by an agent.

a

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? a) The Medical Information Bureau b) The State Department of Insurance c) Social Security d) The National Association of Insurance Commissioners

a

Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value? a) Predicted needs of the family after the insured's death. b) Insured's current and future income. c) Insured's annual expenses. d) Effect of inflation on income over time.

a

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: a) Joint Life with Term Certain b) Joint Life c) Joint and Survivor d) Joint and Last Survivor

a

To avoid violations of unfair claims settlement regulations, insurers are required to acknowledge the receipt of a claim within how many days? a) 10 days b) 15 days c) 30 days d) 45 days

a

Violation of unfair discrimination law may result in all of the following penalties EXCEPT a) Fines of up to $1,000 for each act. b) Suspended licenses. c) Refusal to renew licenses. d) Fines of up to $500 for each act.

a

What is the purpose of coinsurance provisions? a) To help the insurance company to prevent overutilization of the policy b) To have the insured pay premiums to more than one company. c) To ensure payment to the doctors and hospitals d) To share liability among different insurance companies

a

Which of the following authorities monitors the financial strength of insurers? a) Department of Insurance b) National Association of Insurance Commissioners c) Financial Industry Regulatory Authority d) Insurance companies

a

Which of the following entities established the Do-Not-Call Registry? a) The Federal Trade Commission b) The Better Business Bureau c) The NAIC d) The Consumer Protection Agency

a

Which of the following is the most common time for errors and omissions to occur on the part of an insurer? a) Policy delivery b) Policy renewal c) Underwriting d) Application process

a

Which of the following statements is NOT correct concerning the COBRA Act of 1985? a) It requires all employers, regardless of the number or age of employees, to provide extended group health coverage. b) It covers terminated employees and/or their dependents for up to 36 months after a qualifying event. c) It applies only to employers with 20 or more employees that maintain group health insurance plans for employees. d) COBRA stands for Consolidated Omnibus Budget Reconciliation Act.

a

Which renewability provision are you most likely to see on a travel accident policy? a) Period of time b) Noncancellable c) Optionally renewable d) Conditionally renewable

a

All of the following are Nonforfeiture options EXCEPT a) Reduced paid-up b) Interest only c) Cash surrender d) Extended term

b

All of the following are characteristics of group life insurance EXCEPT a) Certificate holders may convert coverage to an individual policy without evidence of insurability. b) Premiums are determined by the age, sex and occupation of each individual certificate holder. c) Amount of coverage is determined according to nondiscriminatory rules. d) Individuals covered under the policy receive a certificate of insurance.

b

An applicant wants to buy a policy that has a cash value element. Which type should she buy? a) Term b) Permanent c) Stock d) Investment

b

How are contributions to a tax-sheltered annuity treated with regards to taxation? a) They are taxed as income for the employee, but are tax free upon withdrawal. b) They are not included as income for the employee, but are taxable upon distribution. c) They are never taxed. d) They are taxed as income for the employee.

b

In a survivorship life policy, when does the insurer pay the death benefit? a) If the insured survives to age 100 b) Upon the last death c) Upon the first death d) Half at the first death, and half at the second death

b

In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT a) The amount of insurance. b) The type of investment. c) The length of coverage. d) The premium.

b

Rebating is an unfair trade practice and is regulated by law. All of the following would be considered to be rebating EXCEPT a) An agent offers tickets to a baseball game as an inducement to buy insurance. b) An agent uses misrepresentation to convince a person to cancel an existing policy and take a new policy from him. c) An agent offers the use of his lake house to person as an inducement to buy. d) An agent offers to share his commission with a policyholder.

b

The clause that protects the proceeds of a life insurance policy from creditors after the death of the insured is known as the a) Beneficiary protection clause. b) Spendthrift clause. c) Benefit protection clause. d) Incontestability clause.

b

Which is NOT true about beneficiary designations? a) Trusts can be valid beneficiaries. b) The beneficiary must have insurable interest in the insured. c) The beneficiary may be a natural person. d) The policy does not have to have a beneficiary named in order to be valid.

b

Which law was passed to authorize the NAIC to develop a standardized model for Medicare supplements policies? a) Advertisement Regulation Act b) OBRA c) COBRA d) Act Against Deceptive Advertising

b

Which of the following best describes the MIB? a) It is a rating organization for health insurance. b) It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance. c) It is a government agency that collects medical information on the insured from the insurance companies. d) It is a member organization that protects insured against insolvent insurers.

b

Which statement regarding insurable risks is NOT correct? a) An insurable risk must involve a loss that is definite as to cause, time, place and amount. b) Insureds cannot be randomly selected. c) Insurance cannot be mandatory. d) The insurable risk needs to be statistically predictable.

b

Who must pay for the cost of a medical examination required in the process of underwriting? a) Department of Insurance b) Insurer c) Applicant d) Underwriters

b

A 37-year-old owns a policy with a Guaranteed Insurability Rider. The policyowner would like to increase the benefit amount offered by the policy. What documentation will be required? a) Medical records b) Attending physician's report c) No documentation d) Proof of insurability

c

All of the following qualify for Medicare Part A EXCEPT a) Anyone who is at the end stage of renal disease. b) Anyone who is over 65, not covered by Social Security, and is willing to pay premium. c) Anyone who is willing to pay a premium. d) Anyone that qualifies through Social Security.

c

If an agent wishes to sell variable life policies, what license must the agent obtain? a) Surplus Lines b) Personal Lines c) Securities d) Adjuster

c

The interest earned on policy dividends is a) Tax deductible. b) 40% taxable, similar to a capital gain. c) Taxable. d) Nontaxable.

c

The term "illustration" in a life insurance policy refers to a) Pictures accompanying a policy. b) Charts and graphs. c) A presentation of nonguaranteed elements of a policy. d) A depiction of policy benefits and guarantees.

c

What is the civil penalty for violating a cease and desist order of the Commissioner? a) $1,000 b) $5,000 c) $10,000 d) $50,000

c

When a person applies for Medicare supplement insurance, whose responsibility is it to confirm that the applicant does not already have accident or sickness insurance in force? a) Active physician b) Agent c) Insurer d) State government

c

Which nonforfeiture option provides coverage for the longest period of time? a) Paid-up option b) Accumulated at interest c) Reduced paid-up d) Extended term

c

Which of the following best describes fixed-period settlement option? a) The death benefit must be paid out in a lump sum within a certain time period. b) Income is guaranteed for the life of the beneficiary. c) Both the principal and interest will be liquidated over a selected period of time. d) Only the principal amount will be paid out within a specified period of time.

c

Which of the following is NOT a characteristic or a service of a HMO plan? a) Encouraging early treatment b) Providing care on an outpatient basis c) Contracting with insurance companies d) Providing free annual checkups

c

Which of the following is NOT an advantage of an HRA for an employer? a) HRAs give smaller employers an opportunity to compete with larger employers in the benefits offered to employees b) HRAs permit an employer to reduce health plan costs by coupling the HRA with a high-deductible (and usually lower-cost) health plan c) HRAs are defined benefit programs d) Employer contributions are tax-deductible

c

Which of the following is NOT covered under a "core" policy, Plan A in Medigap insurance? a) The 20% Part B coinsurance amounts for Medicare approved services. b) The first three pints of blood each year. c) The Medicare Part A deductible. d) Approved hospital costs for 365 additional days after Medicare benefits end.

c

Which of the following statements is NOT true concerning Medicaid? a) It is funded by state and federal taxes. b) It is intended to provide medical assistance for certain categories of people who are needy. c) It consists of 3 parts: Part A: hospitalization, Part B: doctor's services, Part C: disability income. d) It is a state program.

c

Which of the following statements is correct regarding a whole life policy? a) The policy premium is based on the attained age. b) The death benefit may increase or decrease during the policy period. c) The policyowner is entitled to policy loans. d) Cash values are not guaranteed.

c

Your client has a Social Insurance Supplement (SIS) rider on his disability policy. After he becomes disabled, he receives payments from the company. Shortly thereafter, he also begins receiving Social Security benefit payments. Which of the following will happen? a) The SIS rider will discontinue paying benefits. b) Both plans will continue to pay fully. c) The SIS payment will be reduced dollar-for-dollar by the Social Security benefit payment. d) Social Security will discontinue benefits until the SIS rider expires.

c

A producer has successfully completed 52 hours of CE. How many hours can the producer apply to her current reporting period, and how many hours can she carry forward to the next reporting period? a) 28 hours will be applied to the current reporting period, and 24 can be applied to the period immediately following. b) 26 hours will be applied to the current reporting perio and the remaining 26 can be applied to the period immediately following. c) Only 24 hours of the 52 earned may applied to this reporting period. d) 24 hours will be applied to the current reporting period, and 24 can be applied to the period immediately following. The excess 4 hours may not be carried over.

d

Adopting parents must inform their insurer that a child has been added to the family within a) 30 days. b) 1 year. c) 60 days. d) 31 days.

d

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT a) Any type of insurance policy may be used. b) The employer pays a bonus to a selected employee to fund the policy. c) It is considered a nonqualified employee benefit. d) The policy is owned by the company.

d

An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits? a) Principal is tax free, but interest is taxed. b) The entire benefit will be received tax free. c) The entire living benefit is considered taxable income. d) A portion of the benefit up to a limit is tax free; the rest is taxable income.

d

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? a) Waiver b) Utmost Good Faith c) Estoppel d) Material misrepresentation

d

Group disability income insurance premiums paid by the employer are a) Taxable to the employee. b) Tax deductible by the employee. c) Tax deferred to the employer. d) Deductible by the employer as an ordinary business expense.

d

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 a) $1,000 for each violation. b) $2,000 for each violation. c) $3,000 for each violation. d) $5,000 for each violation

d

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? a) As of the policy delivery date b) As of the first of the month after the policy issue c) As of the policy issue date d) As of the application date

d

What do long-term care policies offer to policyholders to account for inflation? a) They do not account for inflation. b) They automatically increase premiums to account for inflation. c) They pay a dividend that increases every 7 years. d) They offer the option of purchasing coverage that raises benefit levels accordingly.

d

What is the term for the entity that an agent represents regarding contractual agreements with third parties? a) Client b) Designee c) Insured d) Principal

d

What limits the amount that a policyowner may borrow from a whole life insurance policy? a) Premiums paid b) Amount stated in the policy c) Face amount d) Cash value

d

What type of beneficiary designation allows the benefit to pass from a deceased primary beneficiary to the beneficiary's heirs, instead of splitting the benefit among surviving primary beneficiaries? a) By class b) By the head c) Per capita d) Per stirpes

d

When is the insurability conditional receipt given? a) After the application has been approved and the premium has been paid b) When an insured individual needs to obtain an insurability receipt for tax purposes. c) If the application is approved before the premium is paid d) When the premium is paid at the time of application

d

Which is true regarding HMO coverage? a) It is divided based on the average tax bracket of a family. b) It is divided by state. c) HMOs provide nationwide coverage. d) It is divided into geographic territories.

d

Which of the following best describes what the annuity period is? a) The period of time from the accumulation period to the annuitization period b) The period of time during which money is accumulated in an annuity c) The period of time from the effective date of the contract to the date of its termination d) The period of time during which accumulated money is converted into income payments

d

Which of the following determines the cash value of a variable life policy? a) The company's general account b) The policy's guarantees. c) The premium mode d) The performance of the policy portfolio

d

Which of the following is called a "second-to-die" policy? a) Family income b) Juvenile life c) Joint life d) Survivorship life

d

Which of the following statements concerning Medicare Part B is correct? a) It is provided automatically to anyone who qualifies for Part A. b) It pays on a first dollar basis. c) It pays 100% of Medicare's standards for reasonable charges. d) It pays for physician services, diagnostic tests, and physical therapy.

d

Within how many days must a producer respond to an inquiry from the Commissioner? a) 3 days b) 10 days c) 15 days d) 30 days

d