LIFE AND HEALTH PRACTICE EXAMS

Why is it that a death benefit from a life insurance contract cannot generally be paid to a beneficiary who is a minor?

The minor is not competent to control the funds

Federal law states that an insurance producer who engages in material misrepresentation that contributes to the liquidation or insolvency of an insurer, may be subject to a monetary penalty of up to:

$50,000

The minimum font size that can be used when printing a Long Term Care policy is:

12

A covered worker is considered to be "fully insured" if he or she possesses:

40 quarters of coverage

Which of the following is not a necessary underwriting tool to determine eligibility for insurance provided a premium was submitted with the application?

A Statement of Good Health

Proof that an employee is covered by a group insurance plan is demonstrated by the issuance of:

A certificate of coverage

Which of the following licensed individuals may provide insurance advice to a customer for a stipulated fee?

A consultant or adviser

Which of the following contract characteristics requires both the insurer and the policyowner to satisfy certain aspects before the contract can be executed?

A contract's conditional nature

Permanent or continuous premium whole life insurance includes a policy loan provision. All of the following statements are true regarding this policy provision, EXCEPT:

A delay clause of twelve months is included in a policy loan provision

A producer that is found guilty of engaging in any unfair practice may be subject to a monetary penalty. In addition, he or she most probably will also receive which of the following?

A license suspension

Special rules apply to life insurance under a qualified plan. If a qualified plan includes a life insurance death benefit, which of the following is true?

A portion of the life insurance premium under a qualified plan is taxable

Which of the following would not be considered rebating? A producer offers to pay a portion of the insured's premium. A producer provides a television set to a current customer. A producer offers season tickets to a prospective client. A producer offers an advantageous premium payment plan to an insured.

A producer offers an advantageous premium payment plan to an insured.

Which is not true regarding limited policies?

A producer's description of benefits is all that is required to be provided to the consumer

This medical condition originates or manifests within the body and causes physical harm to the insured:

A sickness

Statements made by an applicant which are recorded on an application are considered representations and not warranties. Which of the following best describes a warranty?

A statement or condition that the applicant represents to be absolutely true

Which of the following best describes an annuity?

A systematic reimbursement of funds

Which of the following policies would be best suited for an individual whose income fluctuates from year to year?

Adjustable whole life

A whole life policyowner's cash savings value will equal the policy's face amount at what age?

Age 100

Students attending a State university may receive health insurance coverage from which of the following policies?

Blanket policy

Blue Cross covers hospital costs while Blue Shield covers doctor's fees. Each of the following is true regarding Blue Cross and Blue Shield, EXCEPT:

Blue Cross and Blue Shield is not regulated by an Insurance Department since they are not considered to be insurers

Gains realized each year in a Universal Life policy are credited to which of the following?

Cash value

An applicant for a life insurance policy is found to be a substandard risk. If the insurance company's underwriting department approves the application, it will also most likely:

Charge a higher premium

A producer who attempts to intimidate a consumer with regard to an insurance transaction has engaged in:

Coercion

An insurer engaging in an unreasonable restraint of trade has committed which of the following unfair practices?

Coercion or boycott

Which of the following qualified plans promises to pay an employee a monthly benefit based upon his or her annual salary and length of service?

Defined benefit plan

The Commissioner of Insurance may place on probation, suspend, revoke or refuse to renew a producer license after a hearing if the producer has engaged in which of the following:

Engaged in coercive practices

Which of the following policy provisions prevents an insurer from denying a death claim in the future after the purchase of a life insurance policy?

Entire contract clause

Expenses connected with abortion procedures are covered under most medical plans and group health insurance policies. Which of the following is true regarding this type of covered medical expense ?

Expenses relating to abortion are covered just like any other covered medical expense

Whole life policies include several non-forfeiture values or options. What non-forfeiture option in this policy provides the greatest face amount of life insurance protection if selected?

Extended level term insurance

Ted is only able to pay $25 per month for a life insurance policy. Which of the following policies would provide the greatest face amount of life insurance for this premium?

Five year term life

Which of the following statements is true with regard to the conversion privilege that is available in group life insurance policies?

Group life coverage may be converted to an individual whole life plan within thirty-one days of employment termination without proof of insurability

An insurer that permits the producer to collect past due premiums in order to reinstate a lapsed policy even though the producer's contract does not allow such action, is an indication of:

Implied authority

What type of authority is not identified in an agency contract but is necessary in order for a producer to transact insurance?

Implied authority

Which of the following types of authority is not specifically identified in an agent contract with a principal but is necessary in order for the agent to conduct business transactions?

Implied authority

A producer completes an application but does not collect an initial premium. He later finds out that the proposed insured has been diagnosed with a serious illness after the application was completed. The producer should:

Inform the insurer of this new information immediately

There are several types of insurance licenses available in this state. Which of the following licenses allow the holder to provide insurance advice for a fee as long as the fee is in writing prior to the work being performed?

Insurance consultant or adviser

A life insurer's promise to pay the death benefit is found in which of the following provisions?

Insuring provision

Which of the following accurately describes an equity indexed annuity?

It is a form of non-variable annuity

Which of the following statements is true with regard to a Universal Variable life insurance policy?

It is a securities and investment product

Which statement regarding Workers' Compensation is incorrect?

It provides limited hospital benefits for work related illnesses and injuries

What type of annuity provides a certain amount of income for two or more persons with the income ceasing upon the death of the first person covered?

Joint life annuity

What type of insurance pays for the lost services of an employee who is disabled?

Key person insurance

A producer failing to remit premiums collected to an insurer has engaged in:

Larceny

A producer licensed in life or health insurance who fails to complete state required continuing education requirements is subject to which of the following?

License suspension

Jack owns a life insurance policy that requires that he pay premiums for a specified period only or until he dies, assuming this occurs prior to the end of the specified period. Which of the following types of policy does Jack possess?

Limited pay life

Which of the following statements is true with regard to limited health policies?

Limited policies must state clearly what coverage they provide

An individual disability income policy replaces a portion of lost earnings as a result total disability. All of the following may be covered by these policies, EXCEPT:

Loss of pension benefits

Which of the following requires a thirty-day right to return period ?

Medicare Supplement plan

In order to sell Variable Annuities, a producer must secure a life insurance license and a securities license. Each of the following statements is true regarding a variable annuity, EXCEPT:

Monthly benefits are level for life

According to HIPAA, an individual who has a gap of creditable coverage of 63 days or more:

Must satisfy the pre-existing condition exclusion period of any new health plan

Which of the following is a specialty provider ?

Neurologist

Which of the following best describes a type of pension plan where contributions to it are not tax-deductible?

Nonqualified plan

The ABC Truck Company receives $187,000 from the key employee policy it purchased that covered one of their national sales managers. How will this benefit be looked upon from a taxation perspective?

Not taxable as ordinary income

The Fair Credit Reporting Act states that an applicant for insurance must be notified:

Of any investigative report ordered by the insurer

Which of the following procedures would not be considered a major dental procedure?

Oral exams

A disability buy/sell or disability buy-out policy will provide coverage for which of the following:

Partners in the business

When a life insurance policy renews at the end of a specified period, what may the policyowner do in order to continue coverage?

Pay a higher premium for a new specified period

Which of the following is a Required Mandatory Uniform policy provision that appears in an accident and health contract?

Physical examination and autopsy

Most Commissioners of Insurance approve which of the following?

Premium rates charged for insurance contracts

Which of the following is true with regard to employer-paid disability insurance?

Premiums paid are tax-deductible to the business since they are a legitimate business expense

If selected and paid for, Part D of Medicare provides benefits for which of the following ?

Prescription drugs

An accident and health policy is comprised of many provisions. The purpose of the coordination of benefits provision in group health insurance is to:

Prevent profiting by owning an insurance policy

A life insurance policy is a legal contract between an insurer and policyholder. Prior to an application being approved by a life insurance company's underwriting department, the individual to be covered by the policy death benefit is known as the:

Proposed insured

A producer offering a kickback of commissions has engaged in:

Rebating

Waldo purchases a disability income policy covering him in his occupation as a teacher at a local high school. Six years later, Waldo accepts a new position as a demolition expert. What action will his insurer take after he notifies them of his occupational change?

Reduce the monthly benefit amount

All of the following are dividend options available in a participating life insurance policy, EXCEPT:

Reduced paid-up insurance

Nonforfeiture options are available to the owner of a cash value life insurance policy. Which of the following options provides the insured with life insurance for the greatest length of time?

Reduced paid-up insurance

Rhonda purchases a health insurance policy that is characterized as nonoccupational. This type of insurance contract would cover each of the following contingencies, EXCEPT:

Rhonda is hurt at work

The open enrollment period with regard to Medicare Supplement insurance plans is:

Six months

A traditional Individual Retirement Account (IRA) is available for which of the following?

Some individuals who also participate in a qualified pension plan

A premature distribution of an annuity contract is:

Subject to a 10% penalty

Participating policies may pay a dividend to a policyowner from surplus. Which of the following best describes the tax treatment of a dividend?

Tax-free

Which of the following should a producer consider when replacing a health insurance policy?

That benefits are similar and coverage for pre-existing conditions is not lost

Which of the following is an interval during which an employee may obtain coverage under a group medical plan and have the evidence of insurability requirement lessened or waived ?

The open enrollment period

Which of the following is not owed a fiduciary duty by an insurance producer?

The Insurance Commissioner

An applicant has been denied insurance coverage because of information contained in a consumer report. According to the Fair Credit Reporting Act (FCRA), all of the following statements are true with regard to this scenario, EXCEPT:

The applicant has the right to secure the information in the report directly from the insurance company

If whole life insurance is utilized to support a key person life insurance arrangement, which of the following is allowed to borrow against the policy's cash value?

The employer

Individual disability income policies pay monthly benefits to an insured who is totally disabled. The benefits received by an insured are taxable if:

The employer paid the premium

According to the Uniform Simultaneous Death Act, when an insured and the primary beneficiary are killed in a common disaster and it is not known who died first, what does the policy presume?

The insured survives the beneficiary

A dividend paid on a permanent life insurance policy is tax-exempt. Which of the following best describes the tax considerations of interest paid by the insurer on a policy dividend?

The interest is taxed as ordinary income

Which of the following receives tax deferral during the accumulation period of an annuity contract?

The interest or accumulations credited

The assignment or transfer of one's interest in a policy to another is allowed. Which of the following best describes the concept of assignment?

The legal transfer of the policyowner's rights and interest under a policy

Accident & Health policies generally include a renewability provision. Which of the following statements best describes a cancelable accident and health insurance policy?

The policy may be cancelled by the insurer at any time

The insured and primary beneficiary die in a common accident. The insured dies at the scene and the primary beneficiary dies thirty-six days later. To whom is the insured's $250,000 death benefit paid?

The primary beneficiary's estate

All of the following statements are TRUE concerning a cease and desist order that's violated by an insurance producer or agent, EXCEPT:

The producer may have his insurance license revoked without a hearing

Which of the following insurance principles states that even if an insurance contract allows for greater payment or compensation than the financial loss experienced, the insured or claimant may only receive a benefit for the actual loss amount?

The theory of indemnity

Which of the following is a primary purpose of the elimination period which appears in a Long-Term Disability policy?

To allow an insurer to lower costs for everyone's benefit

A Multiple Employer Trust is a vehicle that provides group health insurance benefits. What is the purpose of a MET?

To allow employers in common employments to band together to receive more cost effective group health benefits

A life or health insurer that underwrites risks properly and according to company guidelines will be more profitable than an insurer that does not engage in such activity. What is the primary purpose of underwriting?

To avoid adverse selection

What is the purpose of a credit disability insurance policy?

To cover an outstanding debt

Disability income policies may be referred to as contracts of indemnity. Insurers limit the monthly benefit amount one can purchase for which of the following reasons?

To prevent malingering on the part of an insured

Early withdrawal of annuity proceeds may result in penalties. Which of the following situations would not result in a 10% penalty tax for withdrawal of annuity proceeds?

Total disability

All of the following are factors which affect a life insurance risk, EXCEPT:

Unearned income

Which of the following provides a combination of level renewable term insurance and a cash value fund?

Universal life

Which of the following life insurance policies permits a beneficiary to receive a death benefit and the cash value upon the death of the insured?

Universal life option B

Which of the following life insurance policies provides a policyowner with flexibility and control over the investment portion of the contract?

Variable life policy

Dick owns a whole life policy with a face amount of $200,000. He has added an accidental death rider with the same face amount for an additional premium. A second rider has also been added which will prevent the policy from lapsing if Dick becomes disabled. This latter rider is known as the:

Waiver of premium rider

Which of the following is not an activity of daily living?

Working

An individual with a history of illegal or dishonest behavior is seeking to secure an insurance license. This may be accomplished as long as he or she receives which of the following?

Written permission from the Commissioner or Superintendent of Insurance

Is there any taxation benefit to an employer that pays employee medical benefit premiums?

Yes, employer paid premiums for employee benefits are tax deductible to the employer