Life, Health, and Accident Insurance Exam Louisiana

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This state provided for a temporary license for all of the following EXCEPT (Choose from the following options) 1. A producer's retirement. 2. The death of a producer. 3. A producer's disability. 4. A producer's time in the military service.

A producer's retirement.

All of the following statements are correct regarding Credit Life Insurance EXCEPT (Choose from the following options) 1. Benefits are paid to the borrower's beneficiary. 2. The amount of insurance permissible is limited per borrower. 3. Premiums are usually paid by the borrower. 4. Benefits are paid to the creditor.

Benefits are paid to the borrower's beneficiary.

Which of the following would describe a legal document which would dictate who can buy a deceased partner's share of a business and for what amount? a) Split dollar agreement b) Buy-sell agreement c) Profit and loss agreement d) Key person agreement

Buy-sell agreement A Buy-Sell agreement (also referred to as a business continuation agreement) is a legal contract that determines what will be done with a business in the event that an owner dies or becomes disabled.

A producer was originally licensed on April 1st, 2001. The producer's birthday is on October 17th. The producer last renewed her license in 2012. By what date must the producer renew her license again? a) April 1st, 2013 b) April 1st 2014 c) October 17th, 2014 d) October 31st, 2014

October 31st, 2014 Producers need to submit a license renewal application every 2 years. License renewals must be completed by the last day of the producer's birth month.

An insured's disability income policy includes an additional monthly benefit rider. For how many years can the insured expect to receive payment from the insurer before Social Security benefits begin? a) 5 b) 3 c) 2 d) 1

1 The additional monthly benefit rider stipulates that the insurer will pay benefits comparable to what Social Security would pay. After a year, the insurer ends the benefit and assumes that Social Security will begin benefit payment.

The Probationary Period is (Choose from the following options) 1. The number of days the insured has to determine if he/she will accept the policy as received. 2. The stated amount of time when benefits may be reduced under certain conditions. 3. The number of days that must expire after the onset of an illness before benefits will be earned. 4. A specified period of time that a person joining a group has to wait before becoming eligible for coverage.

A specified period of time that a person joining a group has to wait before becoming eligible for coverage. The Probationary Period is the waiting period that new employees would normally have to satisfy before becoming eligible for benefits.

What is the difference between the Medicare approved amount for a service or supply and the actual charge? a) Actual charge b) Limiting charge c) Coinsurance d) Excess charge

Excess charge Excess Charge is the difference between the Medicare approved amount for a service or supply and the actual charge.

In long-term care (LTC) policies, as the benefit period lengthens, the premium (Choose from the following options) 1. LTC premiums are not based on benefit periods. 2. Decreases. 3. Increases. 4. Remains unchanged.

Increases. LTC policies define the benefit period for how long coverage applies, after the elimination period. The longer the benefit period, the higher the premium will be.

Regarding long-term care policies, which of the following would NOT be included in activities of daily living? (Choose from the following options) 1. Eating 2. Sleeping 3. Bathing 4. Dressing

Sleeping Normally to be eligible for benefits from a long-term care policy, the insured must be unable to perform some of their activities of daily living (ADLs). ADLs include bathing, dressing, toileting, transferring (or mobility), continence, and eating.

What is the number of credits required for fully insured status for Social Security disability benefits? (Choose from the following options) 1. 4 2. 10 3. 30 4. 40

40 The term "fully insured" refers to someone who has earned 40 quarters of coverage (10 years of work times 4 maximum annual credits).

Which of the following best describes a misrepresentation? (Choose from the following options) 1. Making a maliciously critical statement that is intended to injure another person 2. Discriminating among individuals of the same insuring class 3. Issuing sales material with false statements about policy benefits 4. Making a deceptive or untrue statement about a person engaged in the insurance business

Issuing sales material with false statements about policy benefits Misrepresentation is issuing, publishing or circulating any illustration or sales material that is false, misleading or deceptive as to policy benefits or terms, the payment of dividends, etc. This includes oral statements.

Equity indexed annuities (Choose from the following options) 1. Seek higher returns. 2. Are more risky than variable annuities. 3. Are security instruments. 4. Invest conservatively.

Seek higher returns.

Who has the legal title of the property in a trust? (Choose from the following options) 1. Beneficiary 2. Guardian 3. Trustee 4. Grantor

Trustee The person who receives the legal title of the property to be used for the benefit of the trust beneficiary is called the "trustee".

Which of the following entities has the authority to make changes to an insurance policy? a) Department of Insurance b) Broker c) Producer d) Insurer's executive officer

Insurer's executive officer Only an executive officer of the company, not an agent, has authority to make any changes to the policy. The insurer must have the insured's written agreement to the change.

Any licensed person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to a) 3 years. b) 5 years. c) 10 years. d) 12 years.

10 years. Anyone engaged in the business of insurance whose activities affect interstate commerce, and who knowingly makes false material statements may be fined, imprisoned for up to 10 years or both. If the activity jeopardized the security of the accompanied insurer, the punishment can be up to 15 years.

A licensed life producer has completed 12 of his continuing education hours for this period. How many more will he have to finish? a) 3 b) 8 c) 10 d) 12

12 All licensed insurance producers must complete 24 hours of continuing education every 2 years.

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? (Choose from the following options) 1. 3 2. 20 3. 100 4. 80

20 Following hospitalization for at least three days, if medically necessary, Medicare pays for all covered services during the first 20 days in a skilled nursing facility. Days 21 through 100 require a daily copayment.

What is the period of coverage for events such as death or divorce under COBRA? (Choose from the following options) 1. 36 months 2. 60 days 3. 31 days 4. 12 months

36 months

At what age may an individual make withdrawals from an HSA for nonhealth purposes without being penalized? (Choose from the following options) 1. 55 2. 59 1/2 3. 62 4. 65

65 After age 65, a withdrawal from an HSA used for a nonhealth purposes will be without a penalty, although taxed.

Naming a "trust" as the beneficiary of a life insurance policy can accomplish all of the following for the policyowner, EXCEPT (Choose from the following options) 1. Give the policyowner flexibility in disbursing the proceeds of a death benefit. 2. Receive death benefits on behalf of beneficiaries who are minor children. 3. Allow the trustee to transfer the assets of the trust to their personal account. 4. Establish an account to fund the insured's children's education.

Allow the trustee to transfer the assets of the trust to their personal account. A trustee is paid a fee to administer the trust; however, he or she cannot access the funds personally.

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered a) A required disclosure. b) A legal representation of the Association. c) An unfair trade practice. d) A misrepresentation.

An unfair trade practice. It is an unfair trade practice to make any statement that an insurer's policies are guaranteed by the existence of the Insurance Guaranty Association.

An underwriter is reviewing the medical questions in the application and needs further information due to a medical situation the applicant had in the past. What will the underwriter require? (Choose from the following options) 1. Sworn health affidavit from the applicant 2. Statement of Continued Good Health 3. Attending Physician Statement 4. A complete medical record

Attending Physician Statement The APS is used to obtain medical DETAILS about a specific condition which has shown up in the application; the insurance company orders the information directly from the physician, using a signed authorization which was part of the application.

The risk management technique that is used to prevent a specific loss by not exposing yourself to that activity is called (Choose from the following options) 1. Sharing. 2. Avoidance. 3. Transfer. 4. Reduction.

Avoidance. Risk avoidance is elimination of risk of loss by avoiding any exposure to an event that could give rise to such loss.

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? (Choose from the following options) 1. Consideration 2. Legal purpose 3. Contract of adhesion 4. Acceptance

Consideration

When must an IRA be completely distributed when a beneficiary is not named? a) Due date of beneficiary's tax return including extensions. b) December 31 of the year following the year of the owner's death. c) Due date of the deceased owner's final tax return including extensions. d) December 31 of the year that contains the fifth anniversary of the owner's death.

December 31 of the year that contains the fifth anniversary of the owner's death. If the owner dies before distributions have begun, the entire interest must be distributed in full on or before December 31 of the calendar year that contains the fifth anniversary of the owner's death, unless the owner named a beneficiary.

The requirement that agents not commingle insurance monies with their own funds is known as (Choose from the following options) 1. Premium accountability. 2. Express authority. 3. Accepted accounting principal. 4. Fiduciary responsibility.

Fiduciary responsibility. Money collected with respect to an insurance transaction must be held in a position of trust by the agent or broker.

Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits? (Choose from the following options) 1. Variable period 2. Variable amount 3. Fixed period 4. Fixed amount

Fixed amount Under the installments for a fixed amount option, the annuitant selects the amount of each payment, and the insurer determines how long they will pay benefits. This option pays a specific amount until the funds are exhausted. There are no life contingencies.

The annuity purchased with multiple payments, whose benefit is paid more than one year after the purchase is known as which type of annuity? a) Single Premium Deferred Annuity b) Flexible Premium Deferred Annuity c) Single Premium Immediate Annuity d) Flexible Premium Immediate Annuity

Flexible Premium Deferred Annuity The Flexible Premium Deferred Annuity (FPDA) is purchased with multiple payments, such as a portion of each paycheck. The benefit payments begin sometime after one year from the date of purchase (e.g. payouts start at age 65).

Benefit periods for individual short-term disability policies will usually continue from (Choose from the following options) 1. Six months to 2 years. 2. Two years to age 65. 3. One week to 4 weeks. 4. Three months to 3 years

Six months to 2 years.

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy? (Choose from the following options) 1. $20,000 2. $25,000 3. $50,000 4. The face amount will be determined by the insurer.

$50,000 The face of the term policy would be the same as the face amount provided under the whole life policy.

An insured has an Accidental Death & Dismemberment policy with a principal value of $50,000. He loses sight in both eyes in a hunting accident. How much will he receive? (Choose from the following options) 1. $25,000 2. $0 3. $50,000 4. $100,000

$50,000 The policy will usually pay the principal amount for the loss of both eyes, or two or more limbs.

An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy? (Choose from the following options) 1. $0 2. $200 3. $9,800 4. $10,000

$9,800 In this scenario, the death occurred within the mandatory 30-day grace period. Past due premium would be subtracted from the face amount of the policy.

Most policies will pay the accident death benefits as long as the death is caused by the accident and occurs within a) 30 days. b) 60 days. c) 90 days. d) 120 days.

90 days. Most policies will pay the accidental death benefit as long as the death is caused by the accident and occurs within 90 days.

In order for Wild Life of Havana to do business in this state, it must apply for and obtain (Choose from the following options) 1. A local waiver. 2. Four corporate character references. 3. A certificate of authority. 4. A state proclamation.

A certificate of authority. Any insurance company doing business in this state must obtain a certificate of authority.

The Omnibus Budget Reconciliation Act of 1990 requires that large group health plans must provide primary coverage for disabled individuals under a) Age 59½ who are not retired. b) Age 65 who are retired. c) Age 59½ who are retired. d) Age 65 who are not retired.

Age 65 who are not retired. The Omnibus Budget Reconciliation Act of 1990 requires that large group health plans (100 employees or more) must provide primary coverage for disabled individuals under age 65 who are not retired.

An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe? a) Adhesion b) Conditional c) Aleatory d) Good health

Aleatory In an aleatory contract, unequal amounts are exchanged between payments and benefits. In this instance, the insured receives a large benefit for a small price.

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.

Anyone who is willing to pay a premium. For Medicare Part A, a person must be age 65 or otherwise qualify.

Which of the following is a feature of a variable annuity? a) Securities license is not required. b) Benefit payment amounts are not guaranteed. c) Payments into the annuity are kept in the company's general account. d) Interest rate is guaranteed.

Benefit payment amounts are not guaranteed. Under a variable annuity, the issuing insurance company does not guarantee a minimum interest rate or the benefit payment amounts. The annuitant's payments into the annuity are invested in the insurer's separate account. Agents selling variable annuities are required to have a securities license in addition to their life agent's license.

Which of the following statements concerning buy-sell agreements is true? a) Benefits received are considered income taxable. b) Buy-sell agreements pay in the event of a medical emergency. c) Buy-sell agreements are normally funded with a life insurance policy. d) Premiums paid are deductible as a business expense.

Buy-sell agreements are normally funded with a life insurance policy. A buy-sell agreement is simply a contract that establishes what will be done with a business in the event that an owner dies. Buy-sell agreements are normally funded with a life insurance policy.

Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process? a) Illustrations b) Buyer's Guide c) Insurance Index d) Policy Summary

Buyer's Guide The Buyer's Guide is a consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process. It is a generic guide that does not address the specific policy of the insurer, instead explaining life insurance in a way that the average consumer can understand.

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? (Choose from the following options) 1. Claims Saving 2. Cost-containment 3. Selective Coverage 4. Limited Coverage

Cost-containment In a cost-containment setting, daily needs and pain relief are provided for hospice patients, but curative measures are not.

Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? a) Undercutting b) Twisting c) Slandering d) Defamation

Defamation Defamation is making statements which are false as to the financial condition of any insurer and which are calculated to injure any person engaged in the business of insurance.

Bill made his living as an insurance producer at one time but is no longer licensed. Under which of the following circumstances would it be acceptable for him to accept a commission? a) Under no circumstances b) If he meets a new client and ends up selling a policy c) If he receives a deferred commission from insurance that he transacted while he was licensed d) If he refers a potential client to a colleague, who then makes a sale

If he receives a deferred commission from insurance that he transacted while he was licensed It is legal for a formerly licensed producer to accept commissions if the transaction that produced the current commission was made while the producer was properly licensed.

Which of the following riders would NOT increase the premium for a policyowner? (Choose from the following options) 1. Payor benefit rider 2. Waiver of premium rider 3. Multiple indemnity rider 4. Impairment rider

Impairment rider The impairment rider excludes a specified condition from coverage, therefore, reducing benefits. An insurance company will not charge extra for a rider that reduces benefits.

The amount of disability benefits that an insured receives often depends upon the insured's (Choose from the following options) 1. Income at the time of the application. 2. Marital status at the time of the application. 3. Number of children at the time of the application. 4. Medical history at the time of the application.

Income at the time of the application.

What type of insurance would be used for a Return of Premium rider? a) Level Term b) Decreasing Term c) Annually Renewable Term d) Increasing Term

Increasing Term The Return of Premium Rider is achieved by using increasing term insurance. When added to a whole life policy it provides that at death prior to a given age, not only is the original face amount payable, but also all premiums previously paid are payable to the beneficiary.

Who makes up the Medical Information Bureau? (Choose from the following options) 1. Former insured 2. Physicians and paramedics 3. Insurers 4. Hospitals

Insurers The Medical Information Bureau is made up of insurers so the companies can compare the information they have collected on a potential insured with information other insurers may have discovered.

Concerning Medicare Part B, which statement is INCORRECT? a) It offers limited prescription drug coverage. b) It provides partial coverage for medical expenses not fully covered by Part A. c) It is fully funded by Social Security taxes (FICA). d) It is known as hospital insurance.

It is fully funded by Social Security taxes (FICA). Part B is funded by monthly premiums and from the general revenues of the federal government.

In which of the following situations is it legal to limit coverage based on marital status? (Choose from the following options) 1. Legal separation during the application process 2. Divorce within the last six months of applying for insurance 3. It is never legal to limit coverage based on marital status. 4. Excessive number of divorces, as defined by the Insurance Code

It is never legal to limit coverage based on marital status. Availability of insurance benefits or coverage may not be denied based on sex or marital status. Marital status may be considered for the purpose of defining persons eligible for dependent benefits.

In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium? (Choose from the following options) 1. It will likely be the average premium issued to standard risks. 2. The applicant's habits and health do not affect the premiums. 3. It will likely be lower because the applicant is a preferred risk. 4. It will likely be higher because the applicant is a substandard risk.

It will likely be higher because the applicant is a substandard risk. Applicants are considered substandard risks because of physical condition, personal or family history of disease, occupation, or dangerous habits. Substandard risks are usually issued a higher premium than standard risks.

A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that? (Choose from the following options) 1. Survivorship Life Policy 2. Second-to-Die 3. Family Income Policy 4. Joint Life Policy

Joint Life Policy Joint life policies cover the lives of two insureds; rates are blended. Upon the death of the first insured, the policy ends.

The provision which prevents the insured from bringing any legal action against the company for at least 60 days after proof of loss is known as (Choose from the following options) 1. Payment of claims. 2. Proof of loss. 3. Legal actions. 4. Time limit on certain defenses.

Legal actions. This mandatory provision requires that no legal action to collect benefits may be started sooner than 60 days after the proof of loss is filed with the insurer. This gives the insurer time to evaluate the claim.

Which of the following is an example of a limited-pay life policy? (Choose from the following options) 1. Renewable Term to Age 70 2. Level Term Life 3. Straight Life 4. Life Paid-up at Age 65

Life Paid-up at Age 65 Limited Pay Whole Life premiums are all paid by the time the insured reaches age 65. The policy endows when the insured turns 100. It is the premium paying period that is limited, not the maturity.

Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices? a) Exaggerating the benefits provided in the policy b) Stating that the competitors will arbitrarily increase their premiums each year c) Making comparisons between different policies d) Stating that the insurance policy is a share of stock

Making comparisons between different policies Making accurate comparisons of policies is not illegal.

Which of the following best describes an unfair trade practice of defamation? (Choose from the following options) 1. Refusing to deal with other insurers 2. Making derogatory oral statements about another insurer's financial condition 3. Assuming the name and identity of another person 4. Issuing false advertising material

Making derogatory oral statements about another insurer's financial condition Making oral or written statements directly or indirectly which are derogatory or maliciously critical of another insurer would be an example of an unfair trade practice of defamation.

Which Universal Life option has a gradually increasing cash value and a level death benefit? (Choose from the following options) 1. Term insurance 2. Option B 3. Option A 4. Juvenile life

Option A Under Option A, the death benefit remains level while the cash value gradually increases. The death benefit will increase at a later date in order to maintain a gap between the cash value and the death benefit before the policy matures.

All of the following are examples of risk retention EXCEPT (Choose from the following options) 1. Copayments 2. Self-insurance 3. Premiums 4. Deductibles

Premiums Retention is a planned assumption of risk, or acceptance of responsibility for the loss by an insured through the use of deductibles, copayments, or self-insurance.

All of the following are beneficiary designations EXCEPT a) Primary. b) Specified. c) Tertiary. d) Contingent.

Specified Beneficiary designations determine the order in which benefits will be paid: primary or contingent, which includes secondary and tertiary.

Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT (Choose from the following options) 1. The loss produced by the risk must be definite. 2. The loss may be intentional. 3. The loss must not be catastrophic 4. There must be a sufficient number of homogeneous exposure units to make losses reasonably predictable.

The loss may be intentional. To insure intentional losses would be against public policy.

A producer's license has been revoked for a violation of the Insurance Code. When can the producer apply for a new license? a) 5 years after the revocation b) Never: once a license is revoked, producers cannot get licensed again c) 2 years after the revocation d) Within 1 year of the revocation

Within 1 year of the revocation If a producer license has been revoked, the producer may file another license application within 1 year from the effective date of revocation, or within 5 years from the date of final court order if judicial review of revocation is sought.

An insurance policy specifies that it will pay $600 for a specific loss. The policyowner suffers a loss of $535. How much will the policy pay? a) $300 b) $500 c) $535 d) $600

$535 Applying the principle of indemnity, the insurer will pay the actual cost of the loss, up to the limit stated in the policy. In this case, the insurer will pay $535.

Which of the following losses will be covered by a group medical expense policy? (Choose from the following options) 1. An intentionally self-inflicted injury 2. An elective cosmetic surgery 3. A pre-existing condition 4. An injury resulting from active military duty

A pre-existing condition Pre-existing conditions can no longer be excluded from coverage by individual or group medical expense policies. All the other examples are exclusions from coverage.

Which of the following is TRUE about a class designation? (Choose from the following options) 1. Beneficiaries must be part of the insured's immediate family. 2. It is not allowed. 3. It determines the succession of beneficiaries. 4. Beneficiaries are not identified by name.

Beneficiaries are not identified by name. A class of beneficiary is using a designation such as "my children". This can be a vague term if the insured has been married more than once, or has adopted or illegitimate children. Many insurers encourage the insured to name each child specifically and to state the percentage of benefit they are to receive.

The minimum fine for violating the Insurance Code is (Choose from the following options) 1. $500. 2. $1,000. 3. $1,500. 4. $2,000.

$1,000. Statutes limit the fine to 'up to $1,000', unless the person knew the act was in violation, in which case it may be increased to as much as $25,000.

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act? a) $100 per violation b) Revocation of license c) $2,500 d) $1,000

$2,500 Inspection reports cover moral and financial information regarding a potential insured, usually supplied by private investigators and credit agencies. Companies that use inspection reports are subject to the rules outlined in the Fair Credit Reporting Act.

A producer has been notified by the Commissioner to stop using an unapproved trade name. How many days does the producer have to change the trade name before facing a fine? (Choose from the following options) 1. 30 days 2. The name must be changed immediately. 3. 5 business days 4. 10 days

10 days A producer who continues to use a unapproved trade name for 10 or more days after being notified will face a fine of up to $5,000.

In a noncontributory health insurance plan, what percentage of eligible employees must participate in the plan before the plan can become effective? a) 100% b) 75% c) 50% d) 25%

100% One hundred percent of eligible employees must participate in a non-contributory health insurance plan for the plan to become effective.

A licensed life producer has completed 12 of his continuing education hours for this period. How many more will he have to finish? (Choose from the following options) 1. 3 2. 8 3. 10 4. 12

12 All licensed insurance producers must complete 24 hours of continuing education every 2 years.

A temporary license in this state is valid for a) 30 days. b) 60 days. c) 90 days. d) 180 days.

180 days. A temporary license is good for 180 days.

HIPAA applies to groups of a) At least 10. b) At least 100. c) More than 2, fewer than 50. d) 2 or more.

2 or more. HIPAA applies to groups of two or more.

What is the minimum required number of continuing education credits in ethics every licensing period? (Choose from the following options) 1. 3 2. 5 3. 10 4. 12

An insurance company forwards fixed annuity premiums to their general account, where the money is invested. The guaranteed minimum interest is set at 3%. During an economic downswing, the investments only drew 2.5%. What interest rate will the insurer pay to its policyholders? (Choose from the following options) 1. 3% this payment. The overpayment this time will be subtracted from the next time the rate exceeds 3%. 2. 3% regardless of what the investment draws since that's the guaranteed rate 3. 2.5% 4. 3%

3% Insurance companies promise guaranteed minimums on the fixed annuities (3% in this scenario). This means that if the investments draw less than 3%, the company will have to pay 3% anyway. If the investments earn over 3%, the company will pay that excess.

The minimum number of credits required for partially insured status for Social Security disability benefits is (Choose from the following options) 1. 4 credits. 2. 6 credits. 3. 10 credits. 4. 40 credits.

6 credits. To be considered partially insured, an individual must have earned 6 credits during the last 13-quarter period.

Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within a) 60 days of a loss. b) 90 days of a loss. c) 20 days of a loss. d) 30 days of a loss.

90 days of a loss. Under the Uniform Required Provisions, proof of loss under a health insurance policy normally should be filed within 90 days of a loss.

In underwriting a substandard risk, which of the following is INCORRECT? a) The policy could be modified in the coverage or amount of coverage requested. b) The applicant could be rejected for coverage. c) Additional exclusions could be included to modify the underlying policy coverage. d) A discounted premium would be charged.

A discounted premium would be charged. A substandard risk is one below the insurer's standard or average risk guidelines. An individual can be rated as substandard for any number of reasons-- poor health, dangerous occupation, or dangerous avocations. Some substandard risks are rejected outright, while others will be accepted for coverage at a higher premium.

In underwriting a substandard risk, which of the following is INCORRECT? (Choose from the following options) 1. The policy could be modified in the coverage or amount of coverage requested. 2. The applicant could be rejected for coverage. 3. Additional exclusions could be included to modify the underlying policy coverage. 4. A discounted premium would be charged.

Which statement best defines a Multiple Employer Welfare Arrangement (MEWA)? (Choose from the following options) 1. A group health plan that covers medical expenses arising from work related injuries 2. A joining together by employers to provide health benefits for employee 3. A plan that provides hospice care for terminally ill employees 4. A government health plan that provides health care for the unemployed

A joining together by employers to provide health benefits for employee A MEWA provides benefits for a number of member groups.

All of the following events will terminate a producer's certificate of appointment EXCEPT a) A producer's license is suspended or revoked by the Department of Insurance. b) A new Commissioner is put into office. c) A producer's license expires and is not renewed. d) A termination issued by the appointing insurer.

A new Commissioner is put into office. An appointment by an insurer is based upon the person maintaining a valid insurance license. Though the appointment is made by the head of the Insurance Department, that person leaving the office does not terminate existing appointments.

A tornado that destroys property would be an example of which of the following? (Choose from the following options) 1. A pure risk 2. A loss 3. A physical hazard 4. A peril

A peril A peril is the cause of loss insured against in an insurance policy.

Which of the following conditions would a disability income policy most likely NOT require in order to qualify for benefits? (Choose from the following options) 1. The insured must be confined to the house 2. The insured must provide proof of disability 3. A specified income status prior to the disability 4. The insured must be under a physician's care

A specified income status prior to the disability Some Disability Income policies require that the insured must be under the care of a physician and possibly confined to his/her house in order to be eligible for disability benefits. Even though disability income benefits are limited to a percentage of earned income, to qualify for benefits, a person must meet the disability definition.

The insured's health policy only pays for medical costs related to accidents. Which of the following types of policies does the insured have? (Choose from the following options) 1. Restrictive 2. Accidental Death 3. Comprehensive 4. Accident-only

Accident-only Accident-only policies cover medical benefits related to an accident. Medical conditions related to sickness are not covered.

L's insurer has made all of the decisions regarding the provisions included in her policy. L finds an objectionable provision and wants to negotiate it with the insurer but is not allowed to do so. Her only options are to reject the policy or accept it as is. Which contract feature does this describe? (Choose from the following options) 1. Conditional 2. Personal 3. Adhesion 4. Unilateral

Adhesion A contract of adhesion is prepared by only the insurer; the insured's only option is to accept or reject the policy as it is written.

What kind of LTC benefit would provide coverage for care for functionally impaired adults on a less than 24-hour basis? a) Home Health Care b) Adult Day Care c) Residential Care d) Respite Care

Adult Day Care Adult day care is designed for those who require assistance with various ADLs on a daily basis, but not around the clock (for example, while their primary caregivers are at work). Custodial care is usually the only service provided by Adult Day Care facilities.

A producer's license has been revoked a second time for violating the Insurance Code. When can the producer apply for a new license? (Choose from the following options) 1. After the revocation period 2. Never: once a license is revoked the second time, producers cannot get licensed again. 3. Within 5 years of the revocation 4. Within 1 year of the revocation

After the revocation period

In flexible premium payment plans, the term "flexible" refers to the a) Death benefit. b) Interest rate. c) Cash value. d) Amount of premium.

Amount of premium. In a Flexible Premium Deferred Annuity (FPDA), the annuity is purchased with multiple payments that can vary from year to year, (e.g. a portion of each pay check), and the benefit payments begin sometime after one year from the date of purchase (e.g. payouts start at age 65).

When an insured purchased her disability income policy, she misstated her age to the agent. She told the agent that she was 30 years old, when in fact, she was 37. If the policy contains the optional misstatement of age provision a) The elimination period will be extended 6 months for each year of age misstatement. b) Because the misstatement occurred more than 2 years ago, it has no effect. c) Amounts payable under the policy will reflect the insured's correct age. d) The contract will be deemed void because of the misstatement of age.

Amounts payable under the policy will reflect the insured's correct age. If an insured misstates his or her age upon policy application, the optional misstatement of age provision will change the payable benefit to that which would have been purchased at the insured's actual age.

When an insured purchased her disability income policy, she misstated her age to the agent. She told the agent that she was 30 years old, when in fact, she was 37. If the policy contains the optional misstatement of age provision (Choose from the following options) 1. Because the misstatement occurred more than 2 years ago, it has no effect. 2. Amounts payable under the policy will reflect the insured's correct age. 3. The contract will be deemed void because of the misstatement of age. 4. The elimination period will be extended 6 months for each year of age misstatement.

In an annuity, the accumulated money is converted into a stream of income during which time period? (Choose from the following options) 1. Payment period 2. Amortization period 3. Conversion period 4. Annuitization period

Annuitization period The "annuitization period" (annuity period) is the time during which accumulated money is converted into an income stream.

When must an insurance company present an outline of coverage to an applicant for a Medicare supplement policy? (Choose from the following options) 1. Only upon the applicant's request 2. At the time of application 3. When the policy is delivered 4. Within 30 days of policy delivery

At the time of application For Medicare supplement policies, the insurance company must present an Outline of Coverage to all applicants at the time of the application.

All of the following are utilized by an underwriter in order to underwrite an applicant EXCEPT (Choose from the following options) 1. Agent's report. 2. Attending physician report. 3. Investigative consumer report. 4. Birth certificate.

Birth certificate. There are a number of reports utilized by the underwriter in determining the underwriting outcome of any particular application. Each of the following reports are of great significance to the process. Other reports used are MIB report and a medical

Which of the following is a true comparison between annuities and life insurance? a) Both provide a lifetime income. b) Neither annuities nor life insurance subject to income taxes. c) Both annuities and life insurance use mortality tables. d) Annuities serve the same function as life insurance.

Both annuities and life insurance use mortality tables. Annuities are not life insurance; they do not pay a face amount upon the death of the annuitant. In most cases, the payment phase stops upon the death of the annuitant. Annuities use mortality tables, which reflect a longer life expectancy than the tables used in life insurance.

What does "liquidity" refer to in a life insurance policy? a) The policyowner receives dividend checks each year. b) The insured is receiving payments each month in retirement. c) Cash values can be borrowed at any time. d) The death benefit replaces the assets that would have accumulated if the insured had not died.

Cash values can be borrowed at any time. Liquidity in life insurance refers to availability of cash to the insured through cash values.

If the Commissioner believes that a producer may be in violation of an insurance law or regulation, what may be issued? a) Arrest warrant b) Writ of noncompliance c) Call to obey d) Cease and desist order

Cease and desist order The Commissioner will issue a cease and desist order when he/she believes that a producer could be in violation of an insurance law or regulation.

When a producer could be in violation of an insurance law or regulation, the Commissioner will issue a (Choose from the following options) 1. Stop-action order. 2. Cease and desist order. 3. Suspension order. 4. Noncompliance order

Cease and desist order. The Commissioner will issue a cease and desist order when a producer could be in violation of an insurance law or regulation.

A California insurer wants to transact business in Louisiana. What document must it first receive? (Choose from the following options) 1. Foreign Insurer Clearance 2. Guaranty Solvency Certificate 3. Certificate of Authority 4. Interstate Commerce License

Certificate of Authority All insurers, regardless of the state in which they are chartered, must obtain a Certificate of Authority from the Louisiana Insurance Department before they can transact insurance in the state.

What process will the insurance company use to monitor the insured's hospital stay to make sure that everything is proceeding according to schedule? (Choose from the following options) 1. Corridor deductible 2. Precertification review 3. Concurrent review 4. Prospective review

Concurrent review Under the concurrent review process, the insurance company will monitor the insured's hospital stay to make sure that everything is proceeding according to schedule and that the insured will be released from the hospital as planned.

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT a) Consideration. b) Legal purpose. c) Offer and acceptance. d) Conditions.

Conditions. Conditions are part of the policy structure. Consideration is an essential part of a contract.

When Ken purchased his health policy he was a window washer. He has since changed occupations and now manages a library. Upon notifying the insurer of his change of occupation, the insurer should (Choose from the following options) 1. Return any unearned premium. 2. Consider decreasing the premium. 3. Adjust the benefit in accordance with the decreased risk. 4. Increase the benefit.

Consider decreasing the premium. Changing to a less hazardous occupation qualifies Ken for a lower rate.

Which of the following reports will provide the underwriter with the information about an insurance applicant's credit? a) Inspection report b) Agent's report c) Any federal report d) Consumer report

Consumer report Consumer reports include written and/or oral information regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources.

The rider that may be added to a Disability Income policy that allows for an increase in the benefit amount under certain conditions is called a) Waiver of Premium. b) Double Indemnity. c) Residual benefits. d) Cost of Living (COLA).

Cost of Living (COLA). The purchasing power of fixed disability benefits may be eroded due to inflation and increases in the cost of living. This rider is used to protect against these trends by increasing the monthly benefits automatically once the insured has been receiving benefits for 12 months, if the cost of living increases.

A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change? a) Value Adjustment Rider b) Return of Premium Rider c) Inflation Rider d) Cost of Living Rider

Cost of Living Rider The Cost of Living rider annually adjusts the policy's face value in accordance with the national rate of inflation or deflation. This rider adjusts the face amount of the policy to correspond with the rate of inflation, in order to keep the initial value of the policy constant over time.

Which of the following is NOT an essential element of an insurance contract? a) Consideration b) Agreement c) Legal purpose d) Counteroffer

Counteroffer In order for insurance contracts to be legally binding, they must have 4 essential elements: agreement - offer and acceptance, consideration, competent parties, and legal purpose. Counteroffer is not required.

A 70-year-old individual who bought a Part B Medicare policy 2 months ago just began kidney dialysis treatments this week. The individual is now applying for a Medicare supplement policy, which would begin in 8 months. Which of the following could the insurer do to avoid paying for the dialysis? (Choose from the following options) 1. Permanently exclude coverage for dialysis 2. Deny the supplement policy 3. Charge a higher premium 4. Declare a pre-existing condition

Declare a pre-existing condition If an applicant is aged 65 or greater and applies for Medicare supplement coverage while covered under Part B Medicare insurance, an insurer cannot alter the price of coverage based on prior claims experience or health status, provided that the application was made during the first 6 months of Part B coverage. The insurer may, however, exclude benefits during the first 6 months based upon a pre-existing condition for which the policyholder received treatment during the 6 months before it became effective.

An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation? a) Variable life b) Universal life c) Whole life d) Decreasing term

Decreasing term A decreasing term policy's face amount decreases as the amount of debt is reduced.

When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of (Choose from the following options) 1. Discrimination. 2. Nothing, unless the remarks were in writing 3. Defamation. 4. Misrepresentation.

Defamation. A producer or broker who makes oral or written statements intended to injure another producer or insurer is guilty of the unfair trade practice of defamation.

Which of the following is NOT a cost-saving service in a medical plan? a) Second surgical opinions b) Risk sharing c) Denial of coverage d) Preventive care

Denial of coverage Cost-saving services, also known as case management provisions, include the following: controlled access of providers, large claim management, preventive care, hospitalization alternatives, second surgical opinions, preadmission testing, catastrophic case management, risk sharing, and providing high quality of care.

According to the Fair Credit Reporting Act, all of the following would be considered negative information about a consumer EXCEPT (Choose from the following options) 1. Late payments. 2. Failure to pay off a loan. 3. Disputes regarding consumer report information. 4. Tax delinquencies.

Disputes regarding consumer report information. As defined by the Act, negative information includes information regarding a customer's delinquencies, late payments, insolvency or any other form of default. Customer disputes are not considered negative information, and in fact, must be included in consumer reports.

According to the Fair Credit Reporting Act, all of the following would be considered negative information about a consumer EXCEPT a) Tax delinquencies. b) Late payments. c) Failure to pay off a loan. d) Disputes regarding consumer report information.

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? (Choose from the following options) 1. Mutual and stock companies. 2. No companies are required to establish marketing procedures. 3. Every company is required to establish marketing procedures. 4. Any company that uses any form of media to market policies that yield no less than 20% of its business.

Every company is required to establish marketing procedures. Every insurer marketing long-term care coverage must establish marketing procedures to assure that any comparison of its policies by its agents is accurate and fair. Companies must also have marketing guidelines to ensure that excessive insurance is not sold or issued to clients.

Insurance companies that hold a Certificate of Authority to transact insurance in Louisiana must be examined how often? a) Each year b) Every two years c) Every four years d) Every five years or as often as the Commissioner feels is necessary.

Every five years or as often as the Commissioner feels is necessary. Insurers will be examined at least every five years or more often if based on the recommendation of the Louisiana Insurance Guaranty Association.

In the Executive Bonus plan, who is the owner of the policy, and who pays the premium? a) Company is the owner, but the executive pays the premium. b) Board of directors is the owner, and the board of directors pays the premium. c) Company is the owner, and the company pays the premium. d) Executive is the owner, and the executive pays the premium.

Executive is the owner, and the executive pays the premium. Executive buys the policy and pays the premium, and the employer reimburses the executive for cost (or pays a bonus in the amount of the premium). Since the executive is receiving compensation, the amount paid by the employer would be considered taxable income.

Committing insurance fraud is considered a/an a) Misdemeanor. b) Error and omission. c) Ethics violation. d) Felony.

Felony. Any person who knowingly commits insurance fraud will be guilty of a felony and will be subject to a prison term of up to 5 years or a fine of up to $5,000 for each count.

The annuity purchased with multiple payments, whose benefit is paid more than one year after the purchase is known as which type of annuity? (Choose from the following options) 1. Single Premium Deferred Annuity 2. Flexible Premium Deferred Annuity 3. Single Premium Immediate Annuity 4. Flexible Premium Immediate Annuity

An insurance company assures its new policyholders that their premium costs will not increase for a period of at least five years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next two years. What term best describes this act? (Choose from the following options) 1. Defamation 2. Unfair discrimination 3. Errors and omissions 4. Fraud

Fraud According to Title 18, Sections 1033 & 1034 of the US Code, any oral or written statements by any person engaged in the business of insurance that are false or any omissions of material fact are considered unlawful insurance fraud. This includes statements made on an application for insurance, renewal of a policy, claims for payment or benefits, premiums paid, and financial condition of an insurer.

What phase begins after a new policy is delivered? a) Grace period b) Free-look period c) Insurability period d) Elimination period

Free-look period The Free-Look Period occurs after a policy is delivered. This period allows the insured to review the policy and return it for a refund of the premium within a certain time interval.

The automatic premium loan provision is activated at the end of the (Choose from the following options) 1. Free-look period 2. Elimination period. 3. Policy period. 4. Grace period.

Grace period. Provided there is sufficient cash value in the policy, this provision triggers a loan at the end of the grace period to keep a policy in force.

As it pertains to group health insurance, COBRA stipulates that (Choose from the following options) 1. Retiring employees must be allowed to convert their group coverage to individual policies. 2. Terminated employees must be allowed to convert their group coverage to individual policies. 3. Group coverage must be extended for terminated employees up to a certain period of time at the employer's expense. 4. Group coverage must be extended for terminated employees up to a certain period of time at the former employee's expense.

Group coverage must be extended for terminated employees up to a certain period of time at the former employee's expense. COBRA requires employers with 20 or more employees to continue group medical insurance for terminated workers and dependents for up to 18 months to 36 months. The employee can be required to pay up to 102% of the coverage's premium.

An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice? a) A legal advertising strategy b) Unfair Discrimination c) Defamation d) Illegal

Illegal It is illegal to participate in any boycott, coercion, or intimidation that is intended to restrict fair trade or create a monopoly.

An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act? (Choose from the following options) 1. Legal, provided that the information can be verified 2. Illegal until endorsed by the Guaranty Association 3. Legal, provided that the other insurers are paid royalties for the usage of their names 4. Illegal under any circumstances

Illegal under any circumstances When a company criticizes the financial situation of another company, with the intention of injuring that company, it has committed an illegal trade practice called "defamation."

Which benefits would a disability plan most likely pay? a) Medical expenses associated with a disability b) Income lost by the insured's inability to work c) Rehabilitation costs d) Copayments

Income lost by the insured's inability to work Disability benefits are paid to those who are unable to work as they normally would, due to an accident or illness. Benefits are designed to help the insured recover income lost as a result of the disability. The amount of benefits that an insured receives is determined by the insured's earned income and is usually limited to a certain percentage of that amount.

What type of insurance would be used for a Return of Premium rider? (Choose from the following options) 1. Decreasing Term 2. Annually Renewable Term 3. Increasing Term 4. Level Term

The mode of premium payment (Choose from the following options) 1. Is the method used to compute the cash surrender value of the policy. 2. Does not affect the amount of premium paid. 3. Is defined as the frequency and the amount of the premium payment. 4. Is the factor that determines the amount of dividends in a policy.

Is defined as the frequency and the amount of the premium payment. The mode refers to the frequency the policyowner pays the premium: monthly, quarterly, semiannually, or annually. The amount of premium will change accordingly.

The insurer may suspect that a moral hazard exists if the policyholder a) Is prone to depression. b) Is indifferent to activities that may be dangerous. c) Always drives over the speed limit. d) Is not honest about his health on an application for insurance.

Is not honest about his health on an application for insurance. Moral hazards refer to those applicants that may lie on an application for insurance, or in the past, have submitted fraudulent claims against an insurer.

When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will (Choose from the following options) 1. Negotiate a reduced settlement with the beneficiary due to the unusual circumstances involved. 2. Return the premium to Y's estate, since it has no obligation to pay the death claim. 3. Keep the premium and reject the risk on the basis that the applicant died before the policy could be issued. 4. Issue the policy anyway and pay the face value to the beneficiary.

Issue the policy anyway and pay the face value to the beneficiary. The conditional receipt says that coverage will be effective either on the date of the application or the date of the medical exam, whichever occurs last, as long as the applicant is found to be insurable as a standard risk, and policy is issued exactly as applied for.

Which of the following is NOT true about a group annuity? (Choose from the following options) 1. It can be noncontributory. 2. It can be qualified. 3. It can be tax deferred. 4. It can be owned by individual employees.

It can be owned by individual employees. Group annuity contracts can be obtained through an employer. Group annuities can be qualified, where an employer provides retirement benefits for employees through a tax-deferred annuity.

Which of the following is true regarding the spendthrift clause in life insurance policies? a) It is only used when the beneficiary is a minor. b) It is the same as irrevocable settlement clause. c) It can protect the policy proceeds from creditors of the beneficiary. d) It allows the beneficiary to select a different settlement option.

It can protect the policy proceeds from creditors of the beneficiary. The spendthrift clause in a life insurance policy prevents the beneficiary's reckless spending of benefits, and protects the policy proceeds from creditors of the beneficiary or policyowner.

Which of the following is TRUE regarding the annuity period? (Choose from the following options) 1. It may last for the lifetime of the annuitant. 2. During this period of time the annuity payments grow interest tax deferred. 3. It is also referred to as the accumulation period. 4. It is the period of time during which the annuitant makes premium payments into the annuity.

It may last for the lifetime of the annuitant.

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? (Choose from the following options) 1. Joint and Survivor 2. Joint life 3. Life with period certain 4. Straight life

Joint and Survivor

A married couple's retirement annuity pays them $250 per month. The husband dies and his wife continues to receive $125.50 per month for as long as she lives. When the wife dies, payments stop. What settlement option did they select? a) Joint annuity b) Cash refund annuity c) Straight life d) Joint and survivor

Joint and survivor Under a joint settlement option, payments would stop at the first death, but under the joint and survivor, payment would continue until both recipients die. Usually, the surviving beneficiary receives 1/2 or 2/3 of the amount received when both beneficiaries were alive.

A fixed annuity contract provides for a) Level benefit payment. b) An increasing payment amount. c) Investing in stocks and bonds. d) Protection from inflation.

Level benefit payment. A fixed annuity provides for a level benefit payment amount. During the payout phase of a fixed annuity, the amount of benefit is guaranteed. However, with the fixed payment in times of inflation the benefit payment will have less purchasing power.

A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this? (Choose from the following options) 1. Term to specified age 2. Ordinary life policy 3. Limited pay whole life 4. Level term

Level term A 20-year term policy is written to provide a level death benefit for 20 years.

Which of the following is an example of a limited-pay life policy? a) Renewable Term to Age 70 b) Level Term Life c) Straight Life d) Life Paid-up at Age 65

Which of the following best describes an unfair trade practice of defamation? a) Assuming the name and identity of another person b) Issuing false advertising material c) Refusing to deal with other insurers d) Making derogatory oral statements about another insurer's financial condition

Which of the following programs is made up of 4 parts, where the first part is paid for by FICA, and the second part is financed by premiums and payroll taxes? a) Medicare b) Blue Cross c) Blue Shield d) Medicaid

Medicare Medicare has four parts: A, B, C and D. Part A, Hospital Insurance, is financed through a portion of the payroll tax (FICA). Part B, Medical Insurance, is financed from monthly premiums paid by insureds and from the general revenues of the federal government. Part C allows people to receive all of their health care services through available provider organizations, and Part D is for prescription drug coverage.

In health underwriting, it would be inappropriate to decline a risk using any of the following factors EXCEPT (Choose from the following options) 1. Blindness. 2. Mental illness. 3. Genetic characteristics. 4. Marital status.

Mental illness. Insurers cannot decline a risk based on blindness or deafness, genetic characteristics, marital status, or sexual orientation. Mental illness is part of the prospective insured's physical condition and can be used in determining the underwriting decision.

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 a) Concealment. b) Unfair claim practice. c) Rebating. d) Misrepresentation

Misrepresentation. Issuing or circulating any sales material that is false or misleading would be considered misrepresentation and is illegal.

An individual's tendency to be dishonest would be indicative of a (Choose from the following options) 1. Moral hazard. 2. Morale hazard. 3. Pure hazard. 4. Physical hazard.

Moral hazard.

A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents what type of hazard? a) Moral b) Legal c) Physical d) Morale

Morale A morale hazard is someone who has an indifferent attitude towards an insurance company. He is careless or irresponsible because he knows his loss will be covered by insurance.

Which of the following documents must be provided to the policyowner or applicant during policy replacement? a) Buyer's Guide and Policy Summary b) Policy illustrations c) Notice Regarding Replacement d) Disclosure Authorization Form

Notice Regarding Replacement During policy replacement, the replacing producer must present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the producer.

ABC Insurance Company wishes to begin transacting business in Louisiana. Before it can do so, it must do which of the following? a) Receive permission from the Governor of Louisiana b) Receive a letter of clearance from ABC's home state c) Obtain approval of each of its corporate officers and executives d) Obtain a certificate of authority

Obtain a certificate of authority All insurers, regardless of the state in which they are chartered, must obtain a Certificate of Authority from the Louisiana Insurance Department before they can transact insurance in the state.

During replacement of life insurance, a replacing insurer must do which of the following? a) Send a copy of the Notice Regarding Replacement to the Department of Insurance b) Obtain a list of all life insurance policies that will be replaced c) Guarantee a replacement for each existing policy d) Designate a new producer for a replaced policy

Obtain a list of all life insurance policies that will be replaced The replacing insurance company must require from the producer a list of the applicant's life insurance or annuity contracts to be replaced and a copy of the replacement notice provided to the applicant, and send each existing insurance company a written communication advising of the proposed replacement.

In long-term care insurance, what type of care is provided with intermediate care? (Choose from the following options) 1. Daily care, but not nursing care 2. Intensive care 3. Occasional nursing or rehabilitative care 4. Nonmedical daily care

Occasional nursing or rehabilitative care Intermediate care is nursing and rehabilitative care provided by medical personnel for stable conditions that require assistance on a less frequent basis than skilled care.

Which renewability provision allows an insurer to terminate a policy for any reason, and to increase the premiums for any class of insureds? a) Conditionally renewable b) Cancellable c) Guaranteed renewable d) Optionally renewable

Optionally renewable The renewability provision in an optionally renewable policy gives the insurer the option to terminate the policy for any reason on the date specified in the contract (usually a renewal date). Furthermore, this provision allows the insurer to increase the premium for any class of optionally renewable insureds.

The part of Medicare that helps pay for inpatient hospital care, inpatient care in a skilled nursing facility, home health care and hospice care, is known as a) Part B. b) Part C. c) Part D. d) Part A.

Part A. Medicare Part A pays for these services, subject to copayments and limitations on the number of days of care.

An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do? (Choose from the following options) 1. Pay the full death benefit and refund excess premium 2. Pay a reduced death benefit 3. Pay the full death benefit 4. Pay nothing; there was a misrepresentation on the application

Pay a reduced death benefit The incontestability clause prevents an insurer from denying a claim due to statements in an application after the policy has been in force for 2 years. However, it does not apply to statements relating to age, sex and identity.

An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do? a) Pay nothing; there was a misrepresentation on the application b) Pay the full death benefit and refund excess premium c) Pay a reduced death benefit d) Pay the full death benefit

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will (Choose from the following options) 1. Pay the policy proceeds only if it would have issued the policy. 2. Pay the policy proceeds up to an established limit. 3. Not pay the policy proceeds under any circumstances. 4. Automatically pay the policy proceeds.

Pay the policy proceeds only if it would have issued the policy.

Which of the following provisions would prevent an insurance company from paying a reimbursement claim to someone other than the policyowner? a) Entire Contract Clause b) Proof of Loss c) Payment of Claims d) Change of beneficiary

Payment of Claims The Payment of Claims provision states that the claims must be paid to the policyowner, unless the death proceeds need to be paid to a beneficiary.

An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase? (Choose from the following options) 1. Payments for 20 years 2. Payments for life 3. Nothing 4. Payments for 15 years

Payments for 15 years With any period certain, death of the annuitant within the stated period will provide payments to the beneficiary only for the remainder of the period certain.

If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights? a) The insured and the policyowner b) Beneficiary c) Insured d) Policyowner

Policyowner Only the policyowner has the ownership rights under the policy, and not the insured or the beneficiary.

After the elimination period, a totally disabled insured qualified and started receiving benefits from his disability income policy that has a waiver of premium rider. What will most likely happen to the premiums paid into the policy during the elimination period? a) Premiums will be retained by the company, but no further premium will be required for the duration of the disability. b) Premiums will be prorated. c) Premiums will be waived. d) Premiums will be refunded.

Premiums will be refunded. Premiums that were paid by the insured during the elimination period are usually refunded once the insured qualifies to begin receiving benefits.

An underwriter may reject an application for health insurance if the rejection is based upon which of the following? a) Blindness b) Genetic characteristics (such as sickle cell) c) Prescription usage d) Sexual preference

Prescription usage The selection criteria used in the underwriting process for health insurance policies must be based only on the considerations of age, gender, occupation, physical condition (except blindness or deafness), avocation, and moral and morale hazards, and not on genetic characteristics, marital status or sexual orientation.

In respect to the consideration clause, which of the following is consideration on the part of the insurer? (Choose from the following options) 1. Offering an unconditional contract 2. Explaining policy revisions to the applicant 3. Promising to pay in accordance with the contract terms 4. Offering a secondary policy to the applicant

Promising to pay in accordance with the contract terms The consideration clause requires the insurer to promise to pay in accordance to the terms stated in the contract.

The purpose of insurance regulation is to a) Keep producers honest. b) Make insurance companies pay taxes. c) Promote the public welfare. d) Make insurance statutes uniform between states.

Promote the public welfare. The purpose of the State Insurance Department is to protect the public's interest in matters concerning insurance.

Which of the following factors determines the amount of each installment paid in a Life Income Option arrangement? a) Projected life insurance and health insurance b) Recipient's life expectancy and amount of principal c) Projected income d) Recipient's health and death benefits

Recipient's life expectancy and amount of principal The recipient's life expectancy and the amount of principal determine the amount of each installment paid in the Life Income Option arrangement.

A producer in another state wants to become a producer in Louisiana. The other state gives the same privileges to Louisiana producers wanting to be licensed in that state as it does to its own producers. Louisiana, therefore, extends the licensing privileges to the prospective producer of the other state. What is this called? (Choose from the following options) 1. Subrogation 2. Reciprocity 3. Fair exchange 4. Controlled business

Reciprocity "Reciprocity" occurs when the state in which the person resides accords the same privilege to residents of Louisiana

A producer in another state wants to become a producer in Louisiana. The other state gives the same privileges to Louisiana producers wanting to be licensed in that state as it does to its own producers. Louisiana, therefore, extends the licensing privileges to the prospective producer of the other state. What is this called? a) Fair exchange b) Controlled business c) Subrogation d) Reciprocity

Reciprocity "Reciprocity" occurs when the state in which the person resides accords the same privilege to residents of Louisiana.

Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe? (Choose from the following options) 1. Retention 2. Reduction 3. Transfer 4. Avoidance

Reduction The insured's change in lifestyle and habits would likely reduce the chances of health problems.

An insured committed suicide one year after his life insurance policy was issued. The insurer will (Choose from the following options) 1. Pay the policy's cash value. 2. Pay the full death benefit to the beneficiary. 3. Pay nothing. 4. Refund the premiums paid.

Refund the premiums paid. If the insured commits suicide within 2 years following the policy effective date, the insurer's liability is limited to a refund of premium.

Because of financial obligations, John felt that he needed more insurance than the insurer was willing to issue. John's insurance producer told him that he could maximize the death benefit without increasing the face amount by the use of a(n) a) Return of premium rider. b) Payor rider. c) Waiver of premium rider. d) Automatic premium loan rider.

Return of premium rider. With the "return of premium" rider attached to the policy, upon the insured's death, the benefit paid will be the face amount plus an amount equal to all the premiums paid on the contract.

Rod wants to pay his initial life insurance premium in advance. Which of the following best describes his situation? (Choose from the following options) 1. Rod can pay his premium as early as he wants, even with his application. 2. Rod can pay his premium only after the policy has been issued, regardless of its delivery status. 3. Rod cannot pay his policy in advance; it is payable only when the agent delivers the policy. 4. Rod cannot pay his policy is advance; it is payable either when the agent delivers the policy or anytime during the first initial month.

Rod can pay his premium as early as he wants, even with his application.

The Ownership provision entitles the policyowner to do all of the following EXCEPT (Choose from the following options) 1. Receive a policy loan. 2. Assign the policy. 3. Designate a beneficiary. 4. Set premium rates.

Set premium rates. The insurer sets premium rates based upon underwriting considerations.

Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option? a) Size of each installment b) Predetermined length of time stated in the contract c) Length of income period d) Amount of interest

Size of each installment The size of each installment determines the length of time that benefits are received under the Fixed Amount settlement option. It logically follows that larger installments translate into shorter benefit periods.

Which of the following policies would be classified as a traditional level premium contract? (Choose from the following options) 1. Universal Life 2. Variable Universal Life 3. Straight Life 4. Adjustable Life

Straight Life Straight whole life policies have a level guaranteed face amount and a level premium for the life of the insured.

All of the following are unfair claims settlement practices EXCEPT a) Failing to adopt and implement reasonable standards for settling claims. b) Failing to acknowledge pertinent communication pertaining to a claim. c) Suggesting negotiations in settling the claim. d) Refusing to pay claims without conducting a reasonable investigation.

Suggesting negotiations in settling the claim. When settling claims, negotiation can come into play.

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 a) Juvenile protection provision b) Survivor protection c) Life planning d) Survivorship insurance

Survivor protection Life insurance can provide the funds necessary for the survivors of the insured to be able to maintain their lifestyle in the event of the insured's death. This is known as survivor protection.

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 (Choose from the following options) 1. Juvenile protection provision 2. Survivor protection 3. Life planning 4. Survivorship insurance

Which of the following is an example of a producer being involved in an unfair trade practice of rebating? a) Making deceptive statements about a competitor b) Telling a client that his first premium will be waived if he purchased the insurance policy today c) Inducing the insured to drop a policy in favor of another one when it's not in the insured's best interest d) Charging a client a higher premium for the same policy as another client in the same insuring class

Telling a client that his first premium will be waived if he purchased the insurance policy today Rebating is defined as offering any inducement in the sale of insurance products that is not specified in the policy, including money, reductions in commissions, promises, and personal services. Both the offer and acceptance of a rebate are illegal.

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.

The SIS payment will be reduced dollar-for-dollar by the Social Security benefit payment. A Social Insurance Supplement (SIS) rider pays a disability benefit in an amount close to what Social Security would pay. If Social Security benefit payments begin, the SIS payment will be reduced dollar-for-dollar by the Social Security benefit payment.

Which of the following is an example of apparent authority of an agent appointed by an insurer? a) The agent has business cards and stationery printed. b) The agent puts up a sign with the insurer's logo without express permission. c) The agent accepts a premium payment after the end of the grace period. d) The agent accepts a premium payment during the grace period.

The agent accepts a premium payment after the end of the grace period. An agent who accepts a premium after the end of the grace period appears to the client to have the authority to prevent the policy from lapsing. In fact, the agent has no such power. The power to use business cards, stationery and signage may be either express (written) or implied (not written), but in either case, it is allowed.

An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. If the applicant is killed in an automobile accident the next day, a) The premium would be returned to the insured's estate because the policy was not issued. b) The company could reject the death claim because the underwriting process was never completed. c) The company could reject the application on the basis that the insured's death was not caused by an ongoing medical problem. d) The beneficiary would receive $25,000 if it was determined that the insured qualified for the policy applied for.

The beneficiary would receive $25,000 if it was determined that the insured qualified for the policy applied for. The conditional receipt provides that when the applicant pays the initial premium, coverage is effective on the condition that the applicant proves to be insurable either on the date the application was signed or the date of the medical examination, if one is required.

Which of the following is NOT a characteristic of a group long-term disability plan? a) The benefit period may be to age 65. b) The benefit can be up to 66 2/3% of one's monthly income. c) The benefit can be up to 50% of one's yearly income. d) The elimination period is the same as in the short-term plan's benefit period.

The benefit can be up to 50% of one's yearly income. The maximum benefit is based upon monthly income.

Which of the following is true regarding a waiver of a surrender charge on an annuity contract? a) The surrender charge will be applied to all premature surrenders. b) The surrender charge waiver only applies to immediate annuity. c) The charge may be waived if the annuitant is confined to a long-term care facility for at least 30 days. d) The charge can only be waived if the annuitant needs the funds for medical expenses.

The charge may be waived if the annuitant is confined to a long-term care facility for at least 30 days. Annuity contracts provide for a waiver of surrender charges if the annuitant is confined to a Long-term Care facility for at least 30 days.

What type of information is NOT included in a certificate of insurance? a) The procedures for filing a claim b) The length of coverage c) The cost the company is paying for monthly premiums d) The policy benefits and exclusions

The cost the company is paying for monthly premiums The individuals covered under the insurance contract are issued certificates of insurance. The certificate tells what is covered in the policy, how to file a claim, how long the coverage will last, and how to convert the policy to an individual policy.

In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports? (Choose from the following options) 1. The customer has no knowledge of this action. 2. The customer's associates, friends, and neighbors provide the report's data. 3. They provide additional information from an outside source about a particular risk. 4. They provide information about a customer's character and reputation.

The customer's associates, friends, and neighbors provide the report's data. Both consumer reports and investigative consumer reports provide additional information from an outside source about a customer's character and reputation, and both types of reports are used under the Fair Credit Reporting Act. The main difference is that the information for investigative consumer reports is obtained through an investigation and interviews with associates, friends and neighbors of the consumer.

When a fixed annuity owner pays his/her insurance company a monthly annuity premium, where is this money placed? a) Each contract's separate account b) The annuity owner's account c) The insurance company's general account d) Forwarded to an investor

The insurance company's general account Fixed annuities guarantee a minimum amount of interest to be credited to the purchase payment. The insurance company can afford to make guarantees because the money of a fixed annuity is placed in the general account of the insurance company, which is part of its investment portfolio. The company makes conservative enough investments to insure a guaranteed rate to the annuity owners.

Which of the following are generally NOT considered when underwriting group insurance? (Choose from the following options) 1. The group's past claim experience 2. The size of the group 3. The insureds' medical history 4. The nature of the group

The insureds' medical history Group life insurance is written on a group, not individual basis. Each individual completes an application that identifies the participant and beneficiary. Then, the group is judged based on its nature and past claim experience. Generally, medical questions are not necessary.

A man is enrolled in Part A of Medicare and not Part B. Three months into coverage, he applies for a Medicare supplement policy. Which of the following is true? a) The insurer cannot deny coverage but can raise premium amounts. b) The insurer can deny coverage. c) The application must be approved by the state department of insurance. d) The insurer cannot exclude pre-existing conditions from coverage for 6 months.

The insurer can deny coverage. Under the Omnibus Budget Reconciliation Act (OBRA) of 1990, Medicare Supplement insurance may not be denied on the basis of an applicant's health status, claims experience, or medical condition during the first six months after a Medicare beneficiary age 65 or older first enrolls in Part B of Medicare. This is referred to as the "open enrollment period." In this case, the insured was enrolled in Part A coverage, so this law would not apply.

Which of the following is NOT a feature of a noncancellable policy? a) The guarantee to renew coverage usually applies until the insured reaches certain age. b) The insured has the right to renew the policy for the life of the contract. c) The insurer may terminate the contract only at renewal for certain conditions. d) The premiums cannot be increased beyond the amount stated in the policy.

The insurer may terminate the contract only at renewal for certain conditions. The insurance company cannot cancel a noncancellable policy, nor can the premium be increased beyond what is stated in the policy. The insured has the right to renew the policy for the life of the contract; however, the guarantee to renew coverage usually only applies until the insured reaches age 65.

What is the difference between a single premium and a flexible premium payment options in a deferred annuity? (Choose from the following options) 1. The amount of benefit 2. The purpose of the annuity 3. The number of payments that purchase the annuity 4. The time of income payouts

The number of payments that purchase the annuity The only difference between a single premium deferred annuity and a flexible premium deferred annuity payment options is the number of payments that purchase the annuity. SPDAs are purchased with a single payment; FPDAs are purchased with multiple payments.

All of the following statements are true regarding installments for a fixed amount EXCEPT a) Value of the account and future earnings will determine the time period for the benefits. b) This option pays specific amount until the funds are exhausted. c) The annuitant may select how big the payments will be. d) The payments will stop when the annuitant dies.

The payments will stop when the annuitant dies. Installments for a fixed amount option has no life contingencies. A specific amount of benefits will be paid until funds are exhausted whether or not the annuitant is living.

All of the following are true of key person insurance EXCEPT (Choose from the following options) 1. The plan is funded by permanent insurance only. 2. There is no limitation on the number of key employee plans in force at any one time. 3. The employer is the owner, payor and beneficiary of the policy. 4. The key employee is the insured.

The plan is funded by permanent insurance only.

An agent tries to sell insurance over the phone to an applicant who appears to be confused, but is eventually able to give enough information for the application to be completed. After the policy was issued, the agent talked to the insured's family, and they explained that the insured was recovering from a surgery and might have been under the influence of medication at the time of application. Which of the following is true? (Choose from the following options) 1. The policy is not legal; agents cannot sell insurance over the phone. 2. The policy may be voided if it can be proven that the applicant was not capable of making a buying decision at the time of application. 3. The policy will remain in force as long as there are no material misrepresentations on the application. 4. The policy is legal since the applicant was able to give all required information.

The policy may be voided if it can be proven that the applicant was not capable of making a buying decision at the time of application. When an insurer and insured enter into a contract, both parties must be of legal age and mentally competent. Because the applicant was confused, it is possible she was suffering from pain or could have been affected by medication, or was having other issues; therefore, if it can be proven that the applicant was incapable of making a buying decision during the application and acceptance process, the policy could be voided.

Which of the following statements is correct regarding a whole life policy? (Choose from the following options) 1. The policy premium is based on the attained age. 2. The death benefit may increase or decrease during the policy period. 3. The policyowner is entitled to policy loans. 4. Cash values are not guaranteed.

The policyowner is entitled to policy loans Whole life policies offer level premium based on the issue age, guaranteed, level death benefit, cash value that is scheduled to equal the face amount at the insured's age 100, and living benefits, which include policy loans.

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? a) The group has not been established for long enough. b) The purpose of the group was to purchase life insurance. c) Their profession poses too high of a risk for the insurer. d) There are not enough people in the group to qualify for group life insurance.

The purpose of the group was to purchase life insurance. In order to qualify for small group life insurance, a group must be formed for a purpose other than attaining life insurance.

An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries? a) The beneficiary will receive 2/3 of the lump sum up front, and the remaining 1/3 will be paid over time. b) The beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies. c) One of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies. d) The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.

The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive. When the reduced option is written as "joint and 2/3 survivor," the surviving beneficiary receives 2/3 of what was received when both beneficiaries were alive.

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

The type of investment. Typically, the owner of an adjustable life policy has the following privileges: increasing or decreasing the premium, changing the premium-paying period, increasing or decreasing the face amount of coverage, or changing the period of protection.

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

They are not included as income for the employee, but are taxable upon distribution. Funds contributed are excluded from the employee's current taxable income, but are taxable upon withdrawal.

Which of the following is TRUE about nonforfeiture values? a) Policyowners do not have the authority to decide how to exercise nonforfeiture values. b) They are required by state law to be included in the policy. c) They are optional provisions. d) A table showing nonforfeiture values for the next 10 years must be included in the policy.

They are required by state law to be included in the policy. Nonforfeiture values are required by state law to be included in the policy, and cannot be altered by the policyowner. A table showing the nonforfeiture values for the next 20 years must be included in the policy.

Which of the following is NOT true regarding partial disability? (Choose from the following options) 1. This is a form of insurance that covers part-time workers. 2. The insured can still report to work and receive benefits. 3. Benefit payments are typically 50% of the total disability benefit. 4. An insured would qualify if he couldn't perform some of his normal job duties.

This is a form of insurance that covers part-time workers.

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? (Choose from the following options) 1. Those who have worked in the company for at least 3 years 2. Those who have dependents 3. Those who have no history of claims 4. Those who have been insured under the plan for at least 5 years

Those who have been insured under the plan for at least 5 years If the master contract is terminated, every individual who has been on the plan for at least 5 years will be allowed to convert to individual insurance of the same coverage.

What is the purpose of key person insurance? a) To provide health insurance to the families of key employees b) To insure retirement benefits are available to all key employees c) To maintain an account that insures the owner of a company remains solvent d) To lessen the risk of financial loss because of the death of a key employee

To lessen the risk of financial loss because of the death of a key employee A business can suffer a financial loss because of the premature death of a key employee that has specialized knowledge, skills or business contacts. A business can lessen the risk of such loss by the use of key person insurance.

The paid-up addition option uses the dividend (Choose from the following options) 1. To reduce the next year's premium. 2. To accumulate additional savings for retirement. 3. To purchase a smaller amount of the same type of insurance as the original policy. 4. To purchase a one-year term insurance in the amount of the cash value.

To purchase a smaller amount of the same type of insurance as the original policy. The dividends are used to purchase a single premium policy in addition to the face amount of the permanent policy.

Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount? a) Variable life b) Adjustable life c) Universal life d) Flexible life

Universal life The policyowner has the flexibility to increase the amount of premium going into the policy and to later decrease it again. In fact, the policyowner may even skip paying a premium and the policy will not lapse as long as there is sufficient cash value at the time to compensate for the nonpayment of premium.

Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount? (Choose from the following options) 1. Flexible life 2. Variable life 3. Adjustable life 4. Universal life

Under what condition are group disability income benefits received by an employee NOT taxable as income? a) When the employer makes all the premium payments. b) When the employee is 59 ½. c) When the amount of the benefit is equal or less than the amount of contributed by the employer. d) When the benefits received are equal or less than the employee's percentage of the contribution.

When the benefits received are equal or less than the employee's percentage of the contribution. Benefits received by the employee that are attributable to his or her portion of the contribution are not taxable as income.

When would a 20-pay whole life policy endow? a) After 20 payments b) In 20 years c) When the insured reaches age 100 d) At the insured's age 65

When the insured reaches age 100 A limited-pay whole life policy, just like straight life, endows for the face amount if the insured lives to age 100. The premium is, however, completely paid off in 20 years.

The Commissioner is elected to a term that lasts for how many years? (Choose from the following options) 1. 3 2. 4 3. 5 4. 10

4 The Commissioner is elected to a 4-year term.

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered (Choose from the following options) 1. An unfair trade practice. 2. A misrepresentation. 3. A required disclosure. 4. A legal representation of the Association.

An unfair trade practice. It is an unfair trade practice to make any statement that an insurer's policies are guaranteed by the existence of the Insurance Guaranty Association.

A France-based insurer would like to do business in Louisiana. What document must it first receive? (Choose from the following options) 1. Certificate of Authority 2. Transcontinental Commerce Clearance 3. Alien Insurer License 4. International Certificate of Incorporation

Certificate of Authority

A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of (Choose from the following options) 1. Defamation. 2. Twisting. 3. Coercion. 4. Loading.

Coercion. This is an example of the illegal practice of coercion.

The provision in a health insurance policy that ensures that the insurer cannot refer to any document that is not contained in the contract is the (Choose from the following options) 1. Time limit on certain defenses clause. 2. Incontestability clause. 3. Legal action against us clause. 4. Entire contract clause.

Entire contract clause. Entire contract is a mandatory provision that is required by law.

What phase begins after a new policy is delivered? (Choose from the following options) 1. Grace period 2. Free-look period 3. Insurability period 4. Elimination period

Free-look period The Free-Look Period occurs after a policy is delivered. This period allows the insured to review the policy and return it for a refund of the premium within a certain time interval.

Under the Affordable Care Act, which classification applies to health plans based on the amount of covered costs? (Choose from the following options) 1. Grandfathers and non-grandfathered 2. Risk classification 3. Metal level classification 4. Guaranteed and nonguaranteed

Metal level classification Plans other than self-insured plans will be classified into 4 levels determined by how much of one's expected health care costs are covered. The 4 plans are bronze, silver, gold, and platinum. This is called metal level classification.

A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents what type of hazard? (Choose from the following options) 1. Moral 2. Legal 3. Physical 4. Morale

Morale A morale hazard is someone who has an indifferent attitude towards an insurance company. He is careless or irresponsible because he knows his loss will be covered by insurance.

What was created to keep telemarketers from calling consumers who do not wish contacted? (Choose from the following options) 1. Call Control Registry 2. National Do Not Call Registry 3. Confidential No Call Act 4. Freedom of Information Act

National Do Not Call Registry The National Do Not Call Registry was created to allow consumers the choice to not be contacted by telemarketers

All of the following are general requirements of a qualified plan EXCEPT (Choose from the following options) 1. The plan must be permanent, written and legally binding. 2. The plan must provide an offset for social security benefits. 3. The plan must be communicated to all employees. 4. The plan must be for the exclusive benefits of the employees and their beneficiaries.

The plan must provide an offset for social security benefits. Plans must meet the general requirements established by IRS

Under the Physical Exam and Autopsy provision, how many times can an insurer have the insured examined, at its own expense, while a claim is pending? (Choose from the following options) 1. None at all 2. 1 examination per week of the claim processing period 3. 2 examinations per week of the claim processing period 4. Unlimited

Unlimited The Physical Exam and Autopsy provision allows the insurer to examine the insured as much as is reasonably necessary while the claim is being processed, provided that the insurer pays the expenses.

A producer didn't realize that he had committed an act in violation of the Insurance Code. How much would he probably be penalized? (Choose from the following options) 1. $0 2. $500 3. $1,000 4. $25,000

$1,000 Statutes limit the fine to 'up to $1,000', unless the person knew the act was in violation, in which case it may be increased to as much as $25,000.

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? (Choose from the following options) 1. $102 2. $25 3. $25.50 4. $100

$102

When a resident producer changes his residence address, the Insurance Department must be notified within (Choose from the following options) 1. 10 days. 2. 15 days. 3. 30 days. 4. 60 days.

10 days.

According to OBRA, what is the minimum number of employees required to constitute a large group? (Choose from the following options) 1. 50 2. 100 3. 15 4. 20

100 There must be at least 100 employees in order to qualify for OBRA large-group status. The act states that plans must provide primary coverage for disabled individuals under age 65 who are not retired.

The Commissioner is elected to a term that lasts for (Choose from the following options) 1. 4 years. 2. 5 years. 3. 8 years. 4. 10 years.

4 years

What is the maximum amount of time that could pass before an insurer's financial stability would be examined? (Choose from the following options) 1. 4 years 2. 5 years 3. 10 years 4. 15 years

5 years Insurers will be examined at least every five years or more often if based on the recommendation of the Louisiana Insurance Guaranty Association.

Which of the following would NOT be an exclusion in a long-term care policy? (Choose from the following options) 1. Alcoholism 2. A pre-existing condition 3. Alzheimer's disease 4. Treatment payable by Medicare

Alzheimer's disease While normally mental and nervous disorders or disease are excluded in long-term care policies, Alzheimer's disease is not. The rest are all possible exclusions.

Rebating is an unfair trade practice and is regulated by law. All of the following would be considered to be rebating EXCEPT (Choose from the following options) 1. An agent offers tickets to a baseball game as an inducement to buy insurance. 2. An agent uses misrepresentation to convince a person to cancel an existing policy and take a new policy from him. 3. An agent offers the use of his lake house to person as an inducement to buy. 4. An agent offers to share his commission with a policyholder.

An agent uses misrepresentation to convince a person to cancel an existing policy and take a new policy from him. Using misrepresentation to convince a person to cancel an existing policy and buy a new one is called "twisting."

Which of the following is NOT true regarding uniform mandatory provisions concerning claims? (Choose from the following options) 1. If the insured is 2 years late in filing a proof of loss, the claim can be denied. 2. An insured must notify the insurer of a claim on forms prescribed by the insurer. 3. If the insured is several days late in filing proof of loss form, the claim cannot be denied if the insured can show good cause. 4. The insured is customarily required to give notice of claim within 20 days.

An insured must notify the insurer of a claim on forms prescribed by the insurer. If forms are not furnished, written proof of the occurrence, nature of the loss, and extent of loss must be submitted to the insurer.

Which of the following options best depicts how the eligibility of members for group health insurance is determined? (Choose from the following options) 1. Eligibility is not determined, but simply accepted 2. By the physical conditions of the applicants at the time of employment 3. In such a manner as to establish individual selection as to the amounts of insurance 4. By conditions of employment

By conditions of employment The individual employer normally must provide insurance coverage to all full-time employees. The employer can specify within some limitations how many hours are considered full time, and whether both salaried and hourly employees will be covered. The employer can also legally exclude a particular group of employees from the eligible class of employees.

An insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit? (Choose from the following options) 1. The primary and contingent beneficiaries share death benefits equally 2. With the primary beneficiary's written consent 3. If the insured died from accidental means 4. If the primary beneficiary predeceases the insured

If the primary beneficiary predeceases the insured The daughter, as contingent beneficiary, would need to outlive the insured and primary beneficiary.

Which of the following factors about the insured determines the amount of disability benefit that the insured will receive? (Choose from the following options) 1. Age 2. Income 3. Gender 4. Marital status

Income Disability benefits are paid to those who are unable to work as they normally would, due to an accident or illness. Benefits are designed to help the insured recover income lost as a result of the disability. The amount of benefits that an insured receives is determined by the insured's earned income and is usually limited to a certain percentage of that amount

In an optionally renewable policy, the insurer has which of the following options? (Choose from the following options) 1. Shorten the notice that the insured receives 2. Increase premiums 3. Increase the grace period 4. Alter the due date so the policy can be cancelled sooner

Increase premiums Optionally renewable policies allow the insurer to cancel a policy for any reason whatsoever. Policies can only be cancelled by class on the policy anniversary or premium due date (renewal date). If the insurer elects to renew coverage, it can also increase the policy premium.

Why is an equity indexed annuity considered to be a fixed annuity? (Choose from the following options) 1. It is not tied to an index like the S&P 500. 2. It has a guaranteed minimum interest rate. 3. It has modest investment potential. 4. It has a fixed rate of return.

It has a guaranteed minimum interest rate. While equity indexed annuities earn higher interest rates than fixed annuities, both types of annuities guarantee a specific minimum interest rate.

Which of the following is true regarding the taxation of the premium in group accidental death and dismemberment policies? (Choose from the following options) 1. It is taxed to the employee as ordinary income. 2. It is received tax-free by the employees. 3. It is deductible as an ordinary business expense. 4. It is deductible by the employees.

It is deductible as an ordinary business expense. Premiums for group accidental death and dismemberment policies are deductible to the employer as an ordinary business expense.

Which of the following statements concerning Medicare Part B is correct? (Choose from the following options) 1. It pays on a first dollar basis. 2. It pays 100% of Medicare's standards for reasonable charges. 3. It pays for physician services, diagnostic tests, and physical therapy. 4. It is provided automatically to anyone who qualifies for Part A

It pays for physician services, diagnostic tests, and physical therapy. For those who have purchased the coverage, Part B pays 80% of out-patient medical cost after a deductible has been met. Part B covers physician and outpatient hospital services, and other medical and health services, such as diagnostic tests, and physical therapy.

Which of the following is true regarding a single life settlement option? (Choose from the following options) 1. Payments continue until the entire principal is exhausted. 2. Proceeds are paid out in a lump sum. 3. It provides income for a specified period of time. 4. It provides income the beneficiary cannot outlive.

It provides income the beneficiary cannot outlive. The Single Life Option can provide a single beneficiary income for the rest of his/her life. Upon the death of the beneficiary, the payments stop.

Concerning Juvenile Life insurance, which of the following statements is INCORRECT? (Choose from the following options) 1. Usually a parent or guardian is the applicant for insurance on the life of a minor. 2. It can be a limited premium payment policy. 3. Juvenile Life is classified as any life insurance written on the life of a minor. 4. Juvenile Life is classified as any life insurance purchased by a minor.

Juvenile Life is classified as any life insurance purchased by a minor. Juvenile Life insures the life of a minor. It does not need to be purchased by a minor.

Which of the following is NOT true regarding the Needs Approach method of determining the value of an individual's life? (Choose from the following options) 1. Need is predicted using the number of years until the insured's retirement. 2. Coverage is based on the predicted needs of that family. 3. The death of an insured must be premature. 4. It must be assumed that the death of the insured will occur immediately.

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

A producer was originally licensed on April 1st, 2001. The producer's birthday is on October 17th. The producer last renewed her license in 2012. By what date must the producer renew her license again? (Choose from the following options) 1. April 1st, 2013 2. April 1st 2014 3. October 17th, 2014 4. October 31st, 2014

October 31st, 2014 Producers need to submit a license renewal application every 2 years. License renewals must be completed by the last day of the producer's birth month.

Which renewability provision allows an insurer to terminate a policy for any reason, and to increase the premiums for any class of insureds? (Choose from the following options) 1. Cancellable 2. Guaranteed renewable 3. Optionally renewable 4. Conditionally renewable

Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy? (Choose from the following options) 1. The Consideration Clause 2. Assignment Rights 3. Owner's Rights 4. The Entire Contract Provision

Owner's Rights Policyowners can learn about their ownership rights by referring to the policy.

According to the PPACA Metal Levels classification, if a health plan is expected to cover 90% of the cost for an average population, and the participants would cover the remaining 10%, what type of plan is that? (Choose from the following options) 1. Bronze 2. Silver 3. Gold 4. Platinum

Platinum Bronze level benefit plans pay 60% of expected health care costs; silver level plans pay 70%; gold level plans pay 80%, and platinum level plans pay 90%.

All of the following are true regarding insurance policy loans EXCEPT (Choose from the following options) 1. The amount of the outstanding loan and interest will be deducted from the policy proceeds when the insured dies. 2. The policy will terminate if the loan plus interest equals or exceeds the cash value of the policy. 3. Policyowners can borrow up to the full amount of their whole life policy's cash value. 4. Policy loans can be made on policies that do not accumulate cash value.

Policy loans can be made on policies that do not accumulate cash value. The policy loan option is only found in policies that contain cash value.

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy? (Choose from the following options) 1. Premiums are taxable to the employee. 2. Premiums are not tax deductible as a business expense. 3. Premiums are tax deductible by the key employee. 4. Premiums are tax deductible as a business expense.

Premiums are not tax deductible as a business expense. The business cannot take a tax deduction for the expense of the premium. However, if the key employee dies, the benefits paid to the business are usually received tax free.

The Gramm-Leach-Bliley Act was passed to (Choose from the following options) 1. Protect private customer information filed with a financial institution. 2. Define insurance as interstate commerce. 3. Allow consumers access to credit and private consumer reports. 4. Allow insurance companies access to medical information for underwriting purposes.

Protect private customer information filed with a financial institution.

An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of (Choose from the following options) 1. Twisting. 2. Controlled business. 3. Rebating. 4. Coercion.

Rebating. When producers give or promise anything of value that is not specified in the policy, they are guilty of rebating.

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? (Choose from the following options) 1. Incontestable clause 2. Grace period 3. Reinstatement provision 4. Waiver of premium provision

Reinstatement provision A lapsed policy may be reinstated within 3 years by paying back premiums, with interest, and proving insurability.

Abigail's father dies leaving her the designated beneficiary on his life insurance policy. She is surprised to see that in addition to the face amount of the policy, she will also receive a refund of all of the premiums he had paid. Which rider is attached to the policy? (Choose from the following options) 1. Premature death 2. Return of premium 3. Cost of living 4. Decreasing term

Return of premium The Return of Premium Rider pays the beneficiary not only the face amount of the policy but also the amount that had been paid in premiums. The rider stipulates that death must occur prior to a certain age in order for the premium amount to be returned; hence, this particular rider has an expiration date. The Return of Premium Rider is funded by using increasing term insurance.

All of these people's signatures are required on a health insurance application EXCEPT (Choose from the following options) 1. The agent. 2. The spouse of the policyowner. 3. The proposed insured. 4. The policyowner.

The spouse of the policy owner. Every health insurance application requires the signature of the proposed insured, the policyowner (if different than the insured), and the agent who solicits the insurance.

How long will the beneficiary receive payments under the single life settlement option? (Choose from the following options) 1. For a specified period of time 2. Until the insured's age 100 3. Until the beneficiary's death 4. Until the insured's death

Until the beneficiary's death The Single Life Option can provide a single beneficiary income for the rest of his/her life. Upon the death of the beneficiary, the payments stop.

Which of the following would least likely be considered a legitimate need that would be paid by insurance proceeds? (Choose from the following options) 1. Travel expenses for family to come to the funeral 2. Debt cancellation 3. Day care 4. Vacation travel expenses

Vacation travel expenses There are many legitimate need-based expenses that can be paid by life insurance proceeds, from groceries to retirement income. Vacation travel expenses are most likely to be considered a luxury and not a need.

An agent is completing an application for a long-term care policy. The agent is required to do all of the following EXCEPT (Choose from the following options) 1. Warn the applicant about the 10-day free-look period. 2. Make sure the policy is appropriate for the applicant's needs. 3. Provide the applicant with the Outline of Coverage. 4. Ask where the applicant has another LTC policy in force.

Warn the applicant about the 10-day free-look period.

Which of the following is NOT a way to determine the interest rate in a Universal Life Policy? (Choose from the following options) 1. Estimate market conditions for the life of the policy 2. Declare the annual rate by the company's board of directors 3. Tie current interest rates to Treasury Bills 4. Maintain a profit margin between the interest credited on in-force policies and the interest earned on their own investment portfolio

Estimate market conditions for the life of the policy

Which of the following best describes fixed-period settlement option? (Choose from the following options) 1. Only the principal amount will be paid out within a specified period of time. 2. The death benefit must be paid out in a lump sum within a certain time period. 3. Income is guaranteed for the life of the beneficiary. 4. Both the principal and interest will be liquidated over a selected period of time.

Both the principal and interest will be liquidated over a selected period of time. Under the fixed-period option (also called period certain), a specified period of years is selected, and equal installments are paid to the recipient. Both the principal and interest are liquidated together over the selected period of time.

An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision? (Choose from the following options) 1. Second-to-Die 2. Common Disaster 3. Accidental Death 4. Survivor Life

Common Disaster Under the Uniform Simultaneous Death Law, Common Disaster provision, the law will assume that the primary beneficiary dies first in a common disaster as long as the beneficiary dies within this specified period of time following the death of the insured (usually 30 days). This provides that the proceeds will be paid to either the contingent beneficiary or the insured's estate, if no contingent beneficiary is designated.

Which of the following reports will provide the underwriter with the information about an insurance applicant's credit? (Choose from the following options) 1. Inspection report 2. Agent's report 3. Any federal report 4. Consumer report

A policy which covers medical costs related to a specific condition is called a (Choose from the following options) 1. Condition-Specific Policy. 2. Specific Condition Policy. 3. Limited Coverage Policy. 4. Dread Disease Policy.

Dread Disease Policy. Dread Disease policies cover medical expenses for a particular medical condition, such as cancer or heart disease.

Which of the following is true regarding taxation of dividends in participating policies? (Choose from the following options) 1. Dividends are taxable in some life insurance policies and nontaxable in others. 2. Dividends are considered income for tax purposes. 3. Dividends are not taxable. 4. Dividends are taxable only after a certain amount is accumulated annually.

Dividends are not taxable. Dividends are not considered to be income for tax purposes, since they are the return of unused premiums. The interest earned on the dividends, however, is subject to taxation as ordinary income.

Life, Health, and Accident Insurance Exam Louisiana

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