Life Insurance Exam

If the insured pays a monthly premium for health insurance, how long would the grace period be on the policy?

10 days

A waiver of premium provision may be included w/ what type of health insurance policies?

Disability income

What happens to a policy's cash value under an extended term nonforfeiture option?

The cash value is converted to the same face amount as in the whole life policy

In the fixed-period settlement option, how will the number of installments for the death benefit proceeds determine the amount of the installments?

The longer the period selected, the smaller each installment will be

What is a probationary period in group health insurance?

The period of time that must lapse before an employee is eligible for group health insurance

What happens to the proceeds of a life insurance policy if there is no named beneficiary?

The proceeds are paid to the insured's estate

What is the purpose of a free-look period?

To allow the insured to return the policy with a full refund

What is the purpose of coinsurance in health insurance policies?

To prevent overutilization of the benefits

What is the purpose of establishing the target premium for a universal life policy?

To prevent the policy from lapsing

What is the purpose of the Automatic Premium Loan provision?

To prevent the unintentional lapse of a policy because of nonpayment of the premium

in what type of life insurance policies can the policyowner skip premium payments without the policy lapsing?

Universal Life

What life policy rider allows the company to forgo collecting the premium if the insured becomes disabled?

Waiver of premium

In an annuity, the accumulated money is converted into a stream of income during which phase?

annuitization period

What type of annuity can be purchased with a single premium?

immediate annuity

If the beneficiary of a life insurance policy receives death benefit payments that consist of principal and interest which portion if any will be taxed?

interest only

Who bears the investment risk on variable life?

the policy owner

An employee insured under a group health plan has been paying $25 monthly premium for his group health coverage. The employer has been contributing $75, for the total monthly cost of $100. If the employee leaves the company, what would be his maximum monthly premium for COBRA coverage?

$102 - The employer is permitted to collect a premium from the terminated employee at a rate of no more than 102% of the individuals group premium rate, the 2% charge is to cover the employers administrative costs

An insured decides to surrender his $100,000 whole life policy, the premiums paid into the policy added up to $15,000. At policy surrender the cash surrender value was $18,000. What part of the surrender value would be income taxable?

$3,000 - The difference between the premiums paid and the cash value would be taxable - In this example the difference between the premiums paid ($15,000) and the cash value ($18,000) = $3,000

If $100,000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually?

$3,000 If $100,000 of life insurance proceeds were used in a settlement option paying $13,000 per year for 10 years, $10,000 per year would be income tax free (as principal) and $3,000 per year would be income taxable (as interest)

What is the maximum health benefit that the Kansas life and health insurance guarantee association will pay for disability insurance benefits for any one individual?

$300,000

An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined and the cash value fell to $10,000. If the insured dies how much will be paid out?

$50,000 The cash value of a variable life insurance policy is not guaranteed and they CANNOT be lowered

An insured is covered under 2 group health plans- under his own and his spouses. He had suffered a loss of $2,000. After the insured paid the total of $500 in deductibles and coinsurance, the primary insurer covered $1,500 of medical expenses. What amount if any would be paid by the secondary insurer?

$500

if a person fails to file a required report the commissioner may impose a penalty of up to ___ for each violation along w/ an additional penalty of up t0 ____ a week after the report is due

$500, $100

Lyle has a $10,000 term life policy. He paid the $200 annual premium on Feb, 1. Lyle fails to renew the policy and dies on Feb, 28 of the following year. Minus interest, how much will the beneficiary receive?

$9,800 - Lyles' death occurred within the mandatory 31-day grace period. The past due premium is subtracted from the face amount

Warranty in life:

- Absolutely true statement upon which the validity of the insurance company depends - Breach of warranties can be considered grounds for voiding the policy

A licensed life and health producer may be appointed by a maximum of how many insurers:

- An insurance producer cannot act as an agent of an insurer unless the producer becomes an appointed agent of that insurer - Any company authorized to transact business in Kansas may appoint an insurance producer as their agent - Basically they can be appointed by as many as the Commissioner allows but usually one and also may be appointed to a nonresident if needed

Before an insurance company can issue a small employer group policy:

- An insurer must offer group medical coverage to all eligible employees of a smaller employer if the employee satisfied applicable waiting period - All carriers issuing or maintaining health benefit plans for small employers in Kansas must be members of the Kansas Small Employer health reinsurance program

Rebating in insurance:

- Any inducement offered to the insured in the sale of insurance products that is not specified in the policy - Rebates may include; i.) Rebates of premium ii.) Special favors or services iii.) Advantages in the dividends or other benefits iv.) Stocks, bonds, securities, and their dividends or profits

Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability?:

- Conversion privilege - The conversion privilege allows an individual to leave the group term plan and continue his or her insurance without providing evidence of insurability

The following individuals are NOT required to hold an insurance producer license:

- Employees whose activities are executive, administrative, administrative, etc. - A special agent assisting insurance producers by providing technical advice - A person whose activities are advertising without the intent to solicit insurance - a salaried full-time employee who counsels or advises his or her employer

Medical coverage of a newborn begins

- From the moment of birth - Notification of the insurer of newborn child must be given within 31 days of birth

Failure to comply w/ continuing education requirements:

- If the commissioner does not receive certification of successful course completion by the producers deadline the license will be suspended for 90 days or until the continuing education requirement has been completed - If it has been more than a year but less than 4 years the license may be reinstated by reapplying for a license, completing the outstanding continuing education requirements and pay the app, fee $90 and reinstatement fee $100 - After 4 years must pass exam again

Impairment rider

- Impairment (exclusion) rider: excludes coverage for a condition that would otherwise be covered - Elimination coverage for something specific such as back injury - Example: a customer may have suffered a back injury prior to applying for a disability policy, the company may agree to issue a disability policy but w/ an exclusion rider which would cover everything that isn't related to his back - Riders cause premiums to go up - There is no extra charge for an impairment rider nor is it reduced

Difference between health maintenance organizations and preferred provider organizations:

- PPOs do not provide care on a prepaid basis but physicians are paid a fee for service - Subscribers are not required to use physicians or facilities that have contracts w/ the PPO - Unlike HMOs, PPOs allow more flexibility between in-network and out-network providers in exchange for a higher premium

What is not true of policy loans?

- Policy loans can be made on policies that do not accumulate cash value - This is false because the policy loan option is only found in policies that contain cash value

All of the following individuals are exempt from producer licensing requirements except:

- Salespeople need producer license to conduct business - Or a semi-retired producer

Under kansas law continuation of group major medical coverage:

- Supplementary Major Medical Policies: used to supplement the coverage payable under a basic medical expense policy - If the time limitation is used up in the basic policy, the supplemental coverage will provide coverage thereafter - The basic expense policy will provide coverage on a first-dollar basis (no deductible) - After the limits of the basic policy are exhausted, the insured must pay a corridor deductible before the major medical coverage will pay benefits

the consideration given by the applicant in exchange for the promises of the insurance:

- The Consideration clause of an insurance contract includes the schedule and amount of premium payments (consideration= premiums paid) - Consideration in a life policy: Promise to pay a death benefit to a named beneficiary

insurance companies may use all of the following sources to obtain underwriting sources EXCEPT:

- The prohibited info, includes bankruptcies more than 10 years old, civil suits, records of arrest or convictions of crimes, or any other negative info, that is more than 7 years old - Negative info, includes customers delinquencies, late payments, insolvency or any other form of default - Also can't use disclosure authorization response - And the NAIU (National Association of Insurance Underwriters) -Marital status does not play a factor in underwriting

Under the affordable care act how long can pre existing conditions be excluded?

- The recently enacted health care reform (Affordable Care Act) eliminates pre-existing conditions restrictions in health insurance plans - Under a job-based plan this cannot exceed 12 months for regular enrollee or 18 months for a late-enrollee

Which answer about the amount of the group life death benefit that the beneficiary must disclose for federal income tax reasons is CORRECT?

- The recipient or beneficiary is not required to record any amount - reason: The death benefit received by the beneficiary of a life insurance policy is not taxable income, and the recipient is not required to pay taxes on it

Is it mandatory to provide inflation protection?

- Variable annuity serves as a hedge against inflation - Inflation protection is optional to insured

Does a person have the right to change the beneficiary designation on a life policy?

- a beneficiary cannot be changed after the death of an insured - When the insured dies the interest in the life insurance proceeds immediately transfer to the primary beneficiary named on the policy and only that designated person has the right to collect the proceeds

Violating insurance laws violation fees:

- a monetary fine of up to $1,000 for each non willful violation and up to $2,000 for each willful violation - suspension or revocation of license or certificate of authority - issuance of a cease and desist order

a beneficiary who must consent to a change in beneficiary designations:

- a policyowner is the only person who can change the beneficiary designation in most cases - If you have an irrevocable beneficiary or live in a community property state you need approval to make policy changes

he commissioner of insurance may examine the records of an insurance company in order to:

- examination of insurers books and records to ensure that the companies remain solvent and conduct business in compliance with state laws and regulations - - The commissioner must examine all insurance companies organized under the laws of Kansas before issuing a certificate of authority - commissioner does examination at least once every 5 years

Insuring clause life insurance:

- located on the first page of the policy - It is a general statement of agreement between the insurance company and the insured - Parties to the contract - Lists the length of coverage - Amount of premium and the amount of benefit paid out - identifies the insured and the insurance company and states what kind of loss (peril) is covered - Identifies rights and duties of each party

What is a binding receipt?

-Take effect immediately from the date of application - The insurance company can cancel or reject the binding receipt if the producer made a mistake, however; coverage is in effect until the binder is canceled or the policy is issued - Binding receipts are usually used with accident only policies

In group medical and dental expense insurance, what percentage of premium paid by the employer is deductible as a business expense?

100%

What percentage of a company's employees must take part in a noncontributory group life plan?

100% - If the employer pays all of the premium all employees must be covered to avoid adverse selection

How long is the required free-look period for replacement policies?

20 days

What must the patient pay under Medicare part B?

20% of covered charges above the deductible

A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. What policy would be best?

20-pay life accumulates cash value faster than straight life

Within how many months must a person be expected to die from a sickness in order to be classified as terminally ill?

24

What is the required free-look period for Medicare Supplement policies?

30 days

Within how many days must you notify the Commissioner's office of any changes of name, home or business address, or convictions?

30 days

When a disabled dependent child reaches the age limit for coverage how long does the policyowner have to provide proof of dependency for the dependent to remain covered under the policy?

31 days

How long is the commissioner's term in office?

4 years

what is the number of credits required for fully insured status for social security disability benefits?

40 - The term fully insured refers to someone who has earned 40 quarters of coverage (10 years of work times 4 max, annual credits)

What is the number of credits required for fully insured status for Social Security disability benefits?

40 - The term fully insured refers to someone who has earned 40 quarters of coverage (10 years of work times 4 max, annual credits)

An internal revenue code provision that specifically provides for an individual retirement plan for public school teachers is a

403(b) Plan (TSA)

An internal revenue code provision that specifically provides for an individual retirement plan for public school teachers is a:

403(b) Plan (TSA)

In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?

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

The minimum number of credits required for partially insured status for social security disability benefits is:

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

What is the penalty for excessive contributions to a traditional IRA?

6%

Under Kansas Medicare supplement regulation the maximum pre existing period is:

60 days or 6 months

The USA patriot act was signed into law after:

911

an insured has never shopped for insurance and would like to obtain literature describing policy types and concerns that he should consider as he reviews each one. What best meets his needs?

A buyers guide - For the consumer to learn of concerns they should consider when shopping for life insurance and must be presented at the time of application

twisting in insurance:

A misrepresentation or incomplete, or fraudulent comparison of insurance POLICIES that persuades the insured to cancel or switch

What is the name for an overfunded life policy ?

A modified endowment contract (MEC)

What is the capital sum in accidental death and dismemberment coverage?

A percentage of the principal sum

Who may contribute to a HR-10 plan?

A self-employed individual

Which statement is not true regarding a straight life policy? a.) Its premium steadily decreases over time in response to its growing value b.) The face value of the policy is paid to the insured at age 100 c.) It usually develops cash value by the end of the third policy year d.) It has the lowest annual premium of the three types of whole life policies

A, does not decrease over time provides a level guaranteed death benefit

Which of the following applicants would NOT qualify for a Keogh Plan? a.) Someone who works 400 hours per year b.) Someone who has been employed for more than 12 mo. c.) Someone who is over 25 years of age d.) Someone who works for a self-employed individual

A.) a person must have worked at least 1,000 hours per year to be eligible for a Keogh Plan

Which of the following applicants would NOT qualify for a Keogh Plan? a.) Someone who works 400 hours per year b.) Someone who has been employed for more than 12 mo. c.) Someone who is over 25 years of age d.) Someone who works for a self-employed individual

A.) someone who works 400 hours per year a person must have worked at least 1,000 hours per year to be eligible for a Keogh Plan

Which of the following types of policies pays a benefit if the insured goes blind?

AD&D (accidental death and dismemberment)

Which of the two types of policy assignments requires transfer of all ownership rights in the policy to a third party?

Absolute assignment

Which policy combines life and health coverage:

Accidental death and dismemberment

What are the two phases of annuity?

Accumulation and annuitization (or pay-in and pay-out)

In which Medicare supplemental policies are the core benefits found?

All plans (A-N)

What product provides income for a specified period of years or for life and protects a person against outliving their money?

An annuity

Group life insurance policies are written as what type of insurance?

Annually renewable term

The death protection component of a universal life policy is expressed as what type of coverage?

Annually renewable term

A universal life policy is best described as:

Annually renewable term policy with a cash value account

Who receives income payments from an annuity?

Annuitant

Disability income coverage specifies that the policy covers the insured if he is unable to perform any job for which he is qualified. In this case total disability is defined as:

Any occupation- more restrictive than other definitions

An agent is ready to deliver a policy to an applicant but has not yet received payment. Upon delivery the agent collects the applicant's premium check, answers any questions the applicant may have and then leaves. What did he forget to do?

Ask her to sign a statement of good health

An agent is ready to deliver a policy to an applicant but has not yet received payment. Upon delivery, the agent collects the applicant's premium check, answers any questions the applicant may have, and then leaves. What did he forget to do?

Ask her to sign a statement of good health

If an underwriter requires extensive info, about the applicant's medical history what report will best serve this purpose?

Attending physicians' statement

If an underwriter requires extensive information about the applicant's medical history, what report will best serve this purpose?

Attending physicians' statement

What protects the insured from an unintentional policy lapse due to a nonpayment of premium (life policy provisions)?

Automatic premium loan

What does liquidity mean in a life policy?

Availability of cash value

All of the following are business uses of life insurance EXCEPT: a.) Funding business continuation agreements b.) Funding against company's general financial loss c.) Compensating executives d.) Funding against financial loss caused by the death of a key employee

B.) funding against company's general financial loss

Which of the following is a feature of a variable annuity?

Benefit payment amounts are not guaranteed

What type of licensee represents the insured?

Broker

How is the state Insurance Guaranty Association funded?

By its members; all authorized insurers are required to contribute to a fund to provide for the payment of claims for insolvent insurers

how is the commissioner elected

By voting in an election; the commissioner is elected for a 4 year term, in case of vacancy the governor will appoint a person suitable until someone else is elected

Which of the following statements regarding the taxation of modified endowment contracts is FALSE? a.) Policy loans are taxable distributions b.) Accumulations are taxed deferred c.) Withdrawals are not taxable

C.) Withdrawals are not taxable

If the Commissioner/Superintendent finds a licensee engaging in an unfair method of competition or an unfair practice, what order will be issued?

Cease and desist order

A business owner was trying to obtain a bank loan to fund the purchase of a new business facility but the bank required proof of additional assets to secure the loan. The business owner decided to use her $250,000 life policy to secure the loan. What provision makes this possible?

Collateral assignment

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 policy had:

Common disaster

If the insureds share in the cost of health insurance premiums with the employer this would be known as what type of group health plan?

Contributory

What are the five basic characteristics of managed care plans?

Controlled access to providers, comprehensive case management, preventive care, risk sharing, and high quality care

what are the 5 basic characteristics of managed care plans?

Controlled access to providers, comprehensive case management, preventive care, risk sharing, and high-quality care

What is the general taxation rule for death benefits payable to the beneficiary of a life policy?

Death benefits are generally not subject to income taxes

Defamation:

Defamation occurs when an oral or written statement is made that is intended to injure a person engaged in the insurance business. Also applies to statements that are maliciously critical of the financial condition of any PERSON OR COMPANY

What type of disabilities will be covered by occupational coverage?

Disabilities that result from accidents or sicknesses that occur on or off the job

How are individually-owned disability income benefits taxed once received by the insured?

Disability benefits are not taxed; they are received income tax free

This arrangement specifies who will purchase a disabled partners interest in the event he or she becomes disabled:

Disability buy-out

What type of health insurance covers partners or corporate officers of a closely held business?

Disability buy-sell

What type of insurance provides funds for a business organization to purchase the business interest of a disabled partner?

Disability buy-sell

Under what employer provided plan are the benefits taxable to an employee in proportion to the amount of premium paid by the employer?

Disability income

Who qualifies for tax-sheltered annuities or 403(B) plans ?

Employees of nonprofit organizations under section 501(c)(3) and employees of public school systems

An annuity owner is funding an annuity that will supplement her retirement. Because she doesn't know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the standard and poor's 500 index. She would likely purchase a:

Equity indexed annuity

Life insurance may be used to pay state inheritance taxes and federal estate taxes eliminating the need to sell assets from the estate. What is this called?

Estate conservation

What benefits are provided by Medicare Part C?

Expanded benefits for a fee through private insurance programs such as HMOs or PPOs

An agent selling variable annuities must be registered w/

FINRA

What does the term level refer to in level term insurance?

Face amount

How many pints of blood will be paid for by Medicare supplement core benefits?

First 3 pints

When an insurance producer publishes an advertisement for a particular type of policy the producer must:

Follow the standards for the form and content of of advertisements

For what reason can a temporary license be issued?

For continuation of business in case the licensed producer dies or becomes disabled

For how long do short-term disability group plans pay benefits?

For up to 52 weeks

An insured is involved in an accident that renders him permanently deaf although he does not sustain any other injuries. The insured is still able to work, to what extent will he receive presumptive disability benefits?

Full benefits - Bc he lost total hearing which is included

what is an eligibility requirement for social security disability income benefits?

Fully insured status - Only available if worker is fully insured and only provided after a 5 month waiting period

What provision in a life policy extends coverage beyond the premium due date?

Grace period

if an insured fails to pay the premium when due the insureds health policy will remain in force for a specified period of time under what provision?

Grace period

Employer group plan must enroll in the plan within:

Group plans are usually supplemental to Workers comp

What type of policy issues certificates of insurance to the insureds?

Group policy

At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability is called:

Guaranteed insurability

What qualified plan is suitable for the self-employed?

HR-10 or Keogh

What are the two types of flexible spending accounts?

Health care accounts and dependent care accounts

In order to be eligible for coverage by an HAS an individual must also be covered by what type of health plan?

High deductible health plan (HDHP)

What type of hospital policy pays a fixed amount each day that the insured is in the hospital?

Hospital indemnity

What are some examples of qualified plans?

IRA, 401k, HR10, SEP, SIMPLE

When must a policy loan be paid?

If the loan is not paid back before death, the insurance company will reduce the face amount of the insurance policy when the claim is paid

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?

Illegal - It is illegal to participate in any boycott, coercion, or intimidation

A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are likely to use to provide these benefits?

Immediate annuity

In what form of payment must the contributions to a traditional IRA be made?

In cash (or cash equivalents)

What provision prevents an insurer from disputing or denying a claim due to misstatements on the application after a certain period of time?

Incontestability

An adjustable life policyowner may take all of the following actions without providing proof of insurability EXCEPT:

Increase the face amount

What type of life insurance would be used for a return of a premium rider?

Increasing term

What are the two components of a universal policy?

Insurance and cash account

During partial withdrawal from a universal life policy what portion if any will be taxed?

Interest earned on the withdrawn cash value

An insured purchased a life insurance policy. The agent told him that depending upon the companies investments and expense factors, the cash values could change from those shown in the policy as issue time. The policy is a:

Interest sensitive whole life

A guaranteed renewable disability insurance policy

Is renewable at the insured's option to a specified age

What is true about the mandatory free-look period in a life policy?

It commences when the policy is delivered

Intimidation in insurance:

It is illegal to be involved in any activity of boycott, coercion, or intimidation that is intended to restrict fair trade or to create a monopoly, this would include unfair behavior that influences clients and competing agents

in what situation is it legal to limit coverage based on marital status?

It is never legal to limit coverages based on marital status

What is incorrect concerning medicaid?

It is solely a federally administered program

What is true regarding the annuity period?

It may last for the lifetime of the annuitant

What is true concerning the accidental death rider?

It will pay double or triple the face amount

Mortality tables are used by insurance companies to predict what?

Life expectancy and the death rates for specific groups of individuals

What annuity settlement option provides income payments to the annuitant for the duration of his or her life and also guarantees payment for a specified number of years?

Life income with period certain

What life insurance settlement option guarantees payments for the lifetime of the recipient but also specifies a guaranteed period during which if the original recipient dies the payments will continue to a designated beneficiary?

Life income with period certain

What type of licenses are required to sell variable annuities?

Life license and securities license

Your client wants both protection and savings from the insurance and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

Limited pay whole life

The premium of a survivorship life policy compare with that of a joint life policy would be:

Lower

he premium of a survivorship life policy compared with that of a joint life policy would be:

Lower

If a settlement option is not chosen by the policyowner or the beneficiary, what option will be used by the insurer?

Lump-sum payment

A woman's health insurance policy dictates which doctor she is allowed to see. Her health providers share an assumed risk for their patients and encourage preventive care. What best describes the health system that the woman is using?

Managed care

What program expands individual public assistance programs for people with insufficient income and resources?

Medicaid

What is another name for medicare supplement plans?

Medigap

What type of policy is considered to be overfunded, as stated by IRS guidelines?

Modified endowment contract

The Time of Payment of Claims provision requires that an insurance company pay Disability Income benefits no less frequently than:

Monthly

An applicant for a health policy returns a completed application to her agent, along w/ a check for the first premium. She receives a conditional receipt two weeks later. Which of the following has the insurer done by this point?

Neither approved the application nor issued the policy

an applicant for a health policy returns a completed application to her agent, along w/ a check for the first premium. She receives a conditional receipt two weeks later. Which of the following has the insurer done by this point?

Neither approved the application nor issued the policy

How soon can income payments begin in an immediate annuity?

No later than 1 year from the time of annuity purchase

The coverage provided by a disability income policy that does not pay benefits for losses occurring as the result of the insureds employment is called?

Nonoccupationally coverage

An insured has health insurance that covers them at work and at home. This policy was written on what basis?

Occupational

What is the training requirement for producers who want to sell annuities in this state?

One-time 4-hour training course

A brain surgeon has an accident and develops tremors in her right arm. Which disability income policy definition of total disability will cover her for all losses?

Own occupation- less restrictive than other definitions

An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called:

Paid up additions

What part of Medicare is known as hospital insurance?

Part A

What Medicare part will cover lab services or diagnostic tests?

Part B

What is another name for Medicare Advantage plans?

Part C

Don has both a basic expense and a major medical policy. He is injured in an accident, which requires several major surgeries. This quickly exhausts Don's basic expense policy. What must Don do before his major medical policy can pick up where the basic expense policy left off?

Pay a special deductible on his major medical policy

Who qualifies for Medicare coverage?

People age 65 or older, or anyone who has been entitled to Social Security disability income benefits for 2 years, or who has chronic kidney disease

Who qualifies for Medicaid?

Person with insufficient income

When do you pay back a loan?

Policy loans, with interest, can be repaid in any of the following ways: - By the owner while the policy is in force - At policy surrender or maturity, subtracted from the cash value; or - At the insured's death, subtracted from the death benefit

Under what type of care do insurers negotiate contracts with health providers to allow subscribers access to health care services at a favorable cost?

Preferred provider organization (PPO)

What are the main factors taken into account when calculating residual disability benefits?

Present earnings and earnings prior to disability

Provisions of a life insurance policy will pay a stated amount to an insured if the insured is blinded

Presumptive disability

The primary purpose of the Coordination of Benefits provision found in most group Major Medical policies is to perform which of the following functions?

Preventing a claimant from profiting from an injury or sickness

Who issues Medicap policies?

Private insurers

Who issues Medigap policies?

Private insurers

who can usually be granted a temp. license?

Producer's spouse or designee in case the licensed producer dies or becomes disabled

How can an HMO member see a specialist?

Referral by the primary care physician

Todd has been informed that he has a hernia, he learns that his insurance company will cover 200 pts. worth of surgical expenses. each point represents $10 which means that $2,000 of his surgery will be covered. What system is this?

Relative Value

Disability income policies can provide coverage for a loss of income when returning to work only part-time after recovering from total disability. What is the benefit that is based on the insured's loss of earnings after recovery from a disability?

Residual disability

Equity indexed annuities:

Seek higher returns

What two terms are associated directly with the way an annuity is funded?

Single payment and periodic payments

What type of life insurance policy generates immediate cash value?

Single premium

What is another name for Old Age, Survivors, and Disability Insurance benefits?

Social Security

What benefit is based on a primary insurance amount (PIA)?

Social Security disability benefit

Recurrent disability clause

Specifies period of time during with the recurrence of an injury or illness is considered a continuation of a prior disability

workers comp. benefits are regulated by which entity?

State govt.

What policy would be classified as a traditional level premium contract?

Straight life

What are the personal uses of life insurance?

Survivor protection, estate creation and conservation, cash accumulation and liquidity

What policy is called "second-to-die"

Survivorship life

What is not correct about equity index annuities?

The annuitant receives a fixed amount of return

What is the entire contract in health insurance underwriting?

The application and the policy issued

hat is the entire contract in health insurance underwriting?

The application and the policy issued

a producer is collecting the initial premium on a health policy and gives the applicant a conditional receipt: What does this mean?

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 at a standard risk, and policy is issued exactly as applied for - This rule will not apply if a policy is declined, rated, or issued with riders excluding specific coverages

The policyowner of an adjustable life policy wants to increase the death benefit. What is correct regarding this change?

The death benefit can be increased by providing evidence of insurability

With the reduction of the premium dividend option, how is the dividend used?

The dividend is applied to the next year's premium (it reduces the next year's premium)

Which of the following describes the tax advantage of a qualified retirement plans

The earnings in the plan accumulate tax deferred

in which of the following situations would replacement rules apply?

The existing life insurance is converted into paid-up insurance - Replacement would involve converting an existing policy to a paid-up insurance

What policy component decreases in decreasing term insurance?

The face amount

An employee insured under a group health policy is injured in a car wreck while performing her duties for her employer. This results in a long hospitalization period, what happens?

The group plan will not pay b/c the employee was injured at work, the insured would have to rely on workers comp, for coverage

Which of the following statements is required by Long- Term care insurers when referring lo inflation protection in qualified Long-Term Care policies?

The insurance companies have the choice if they want to offer inflation protection

Under a unilateral life insurance policy which of the following parties makes the legally enforceable:

The insured

How does someone qualify for Social Security disability income benefits?

The insured must have the proper insured status (such as fully insured), meet the definition of disability, and satisfy the waiting period

How many days can you take legal action on disability to your insurance:

The insured must wait 60 days but no later than 3 years after proof of loss before legal action can be brought against the company

When planning for survivor protection in life insurance what needs to be considered?

The insured's current assets, liabilities, and survivors needs

What does the amount of disability benefit that an insured can receive depend on?

The insured's income at the time of policy application

Who is responsible for the costs associated with the examination of insurers?

The insurer who is being examined

What does double indemnity mean?

The insurer will pay a benefit of twice the face amount

Twins brother and sister each purchased a retirement annuity. When they retired at the same time, each selected the life income option. Both have similar life styles and are in good health. Which of the following is true with respect to their monthly annuity payments?

The mans payment will be larger - Annuities use mortality tables to determine the amount of money needed in retirement, because the life expectancy for women is greater the woman's payment in this example will be smaller since they need to last longer

One of the primary reasons for using deductibles in health policies is to reduce:

The overuse of medical services

If a retirement plan is qualified what does that mean?

The plan has favorable tax treatment

Which of the following statements is correct about a policy loan against a life insurance contract:

The policyholder must pay interest on a life insurance policy loan

Who assigns ownership rights on a life policy:

The policyowner, a life insurance policy owner can use an assignment to either assign ownership of the policy or a portion of the policy proceeds to someone else

A policyowner may change a revocable beneficiary:

The policyowner, without the consent or knowledge of the beneficiary, may change a revocable designation at any time

_____Is required to hold an appointment with an insurance company:

The producer or the agent

An applicant wants to purchase a $100,000 Accidental Death and Dismemberment (AD&D) policy on her spouse. The applicant is the primary beneficiary and her daughter is the contingent beneficiary Which of the following persons MUST sign the application?:

The spouse and the applicant

Why are policy loans not available on term insurance?

There is no cash value to borrow against

What is true regarding optional benefits with long-term care policies?

They are available for an additional premium

Which of the following is NOT true regarding equity indexed annuities

They earn lower interest rates than fixed annuities

What is the purpose of COBRA?

To allow continuation of health coverage for terminated employees

What is the role of the gatekeeper in an HMO plan?

To control costs for the services of specialists

What is the purpose of managed care health insurance plans?

To control health insurance claims expenses

What is the main purpose of the 7-pay test?

To determine if a life policy is a modified endowment contract

What is the main reason for purchasing an annuity?

To provide income that the annuitant cannot outlive

What is the purpose of respite in long term care insurance?

To provide relief for a major caregiver (usually a family member)

What is the purpose of a buy-sell agreement for health insurance policies?

To specify how the business will pass between owners when one of them dies or becomes disabled

Premiums paid by self-employed sole proprietors or partners for medical expense insurance are:

Totally tax deductible

T/F A primary beneficiary may not be a minor

True

Under Option B in a universal life policy, what happens to the death benefit?

Under Option B, the death benefit increases each year by the amount of the cash value increases

Under a unilateral life insurance policy which of the following parties makes it legally enforceable?

Under a unilateral insurance policy, the insurance company makes the legally enforceable promises

what policy would have an IRS required corridor or gap between the cash value and the death benefit?

Universal Life: option A

What kind of policy allows withdrawals or paartial surrenders?

Universal life

what type of policy allows the policyowner to pay more or less than the planned premium?

Universal life

Misrepresentation

Untrue statements on the application are considered misrepresentations and could void the contract

In a survivorship life policy, when does the insurer pay the death benefit?

Upon the last death

what would not be considered false or misleading advertising in the sale of life insurane?

Using testimonials from current policyholders - When advertising a life insurance product insurers are prohibited from illustrating false dividends, using small or obscure type sizes, using words or symbols similar to those used by govt, agencies, using false testimonials, creating the impression of limited policies, or using outdated, misleading, ambiguous, confusing or irrelevant info.

What type of annuity requires an agent to have a securities license?

Variable annuity

What policy allows a policyowner to take out a loan from the policy's cash value?

Variable universal life

What type of policy allows for a flexible premium and a variable investment component?

Variable universal life insurance

an insured under a life policy has been diagnosed w/ a terminal illness and has 6 mo. to live. the insured knows his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilize?

Viatical settlement - these allow an insured with a life-threatening condition to sell the existing policy in order to receive benefits when they are most needed. Viators typically receive a percentage of the policy's face value from the person who purchases the policy

what term is used to describe a person other than a viator that enters into or effectuates a viatical settlement contract?

Viatical settlement provider

What life policy rider allows the company to forgo collecting the premiums if the insured becomes disabled?

Waiver of premium

when is the initial enrollment period for Medicare part A?

When an individual first becomes eligible for Medicare starting 3 months before turning age 65 and ending 3 months after the 65th birthday

When is the initial enrollment period for Medicare Part A?

When an individual first becomes eligible for Medicare, starting 3 months before turning age 65 and ending 3 months after the 65th birthday

Social security supplement or social security riders would provide for the payment of income benefits EXCEPT

When the amount payable under social security is more than the amount payable under the rider - In this case only the difference will be paid

When is controlled business legal?

When the commissions from controlled business do not exceed the aggregate commissions on all the other business (specific limits may vary from state to state)

The main difference between immediate and deferred annuities is:

When the income payments begin

When would a 20-pay whole life policy endow?

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 however is completely paid off in 20 years

When should an agent obtain a statement of good health from the insured?

When the premium was paid upon policy delivery and not at the time of application

When does an adjustable life policy accumulate cash value?

When the premiums paid are more than the cost of the policy

When will a contingent beneficiary receive death benefits from a life insurance policy?

When the primary beneficiary dies before the insured

When can an irrevocable beneficiary be changed?

With the written consent of the beneficiary

Can an insured who belongs to a POS plan use an out-of-network physician?

Yes, but the copays and deductibles may be higher

All of the following are business uses of life insurance EXCEPT: a.) funding business continuation agreements b.) funding against company's general financial loss c.) compensating executives d.) funding against financial loss caused by the death of a key employee

b.) funding against company's general financial loss

After the first renewal a producer's license is renewed:

biennial

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

c.) the policyowner is entitled to policy loans

coverage for dependents according to COBRA is extended for how long?

coverage for dependents under COBRA may be extended to 36 months in the event of the employers divorce or death

The term "fixed" in a fixed annuity refers to all of the following EXCEPT: a.) Amount and length of payments b.) Death benefit c.) Guaranteed rate of interest d.) Equal annuity payments

death benefit

An individual has just borrowed $10,000 on a 5-year note from his bank, the note is due in installments, what type of life insurance policy would be best suited for this situation?

decreasing term

What is the term for a period of time immediately following a disability during which benefits are not payable?

elimination period

What types of groups are eligible for group health insurance?

employer-sponsored and association sponsored groups

a provision included in group disability income contracts but NOT included in an individual disability income contract is the:

entire contract provision

What type of premium do both universal life and variable universal life policies have?

flexible

As it pertains to group health insurance, COBRA stipulates that:

group coverage must be extended for terminated employees up to a certain period of time at the former employees expense

in order to be eligible for coverage by an HAS an individual must also be covered by what type of health plan?

high deductible health plan (HDHP)

The accelerated death benefit in a life insurance contract can be accessed:

if terminally ill

how are benefits received by the business from a key person disability insurance?

income tax free

An employee who owns an individual Disability Income policy is injured in an automobile accident and files Proof of Loss with the insurance company. Under the Payment of Claims provision in the policy, the company will likely pay the policy benefits to the

insured

Which of the following is NOT a type of whole life insurance? a.) Limited payment b.) Level term c.) Single premium d.) Straight life

level term

A whole life policy that requires that the policyowner only pays premiums for a specified number of years is known as:

limited pay whole life

Under an individual disability income policy, the benefits must be paid on at least what schedule?

monthly

what is the official name for the social security program?

old age survivors disability insurance

What is the official name for the social security program?

old age survivors' disability insurance

what UL option has a gradually increasing cash value and a level death benefit?

option A

What health policy provision states to whom the claim benefits must be paid?

payment of claims

Regarding the taxation of business overhead policies

premiums are deductible and benefits are taxed

What is the tax advantage of the employer paying premiums for its employees for disability income insurance?

premiums are deductible as a business expense

In what type of health plans are providers paid for services in advance, regardless of the services provided?

prepaid plans

Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insured for full disability benefits. What disability provision:

presumptive disability

What is the main principle of an HMO plan?

preventive care

A long term care policy is designed to provide

provides coverage for individuals who are no longer able to live an independent lifestyle and require living assistance at home or in a nursing home facility

when an insurer combines two periods of disability into one the insured must have suffered:

recurrent disability

What are the three types of social security benefits?

retirement, disability and survivors

What type of annuity is suitable for someone who wants to select the benefit option that will pay the largest amount only for as long as the annuitant lives?

straight life

What would help prevent a universal life policy from lapsing?

target premium

What entity decides if an advertisement is complete and truthful?

the commissioner

An insured with Medicare Part D has reached the initial benefit limit and must now pay a portion of prescription drugs costs. What is the term for this gap in coverage?

the donut hole

Which of the following describes the tax advantage of a qualified retirement plan?

the earnings in the plan accumulate tax deferred

When an employer provides noncontributory group term life insurance

the employer pays the entire cost of the plan

What is not covered under plan A in medigap insurance?

the medicare part A deductible

Which of the following statements is correct regarding a whole life policy?

the policyowner is entitled to policy loans

who assigns ownership rights on a life policy:

the policyowner, a life insurance policy owners can use an assignment to either assign ownership of the policy or a portion of the policy proceeds to someone else

If approved, what must a producer's advertisement include?

their full name and phone number

what is NOT true regarding partial disability?

this is a form of insurance that covers part-time workers

at what point must a life insurance applicant be informed of their rights that fall under the fair credit reporting act?

upon completion of the application

An insured under a life policy has been diagnosed w/ a terminal illness and has 6 mo. to live. The insured knows his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilize?

viatical settlement these allow an insured w/ a life-threatening condition to sell the existing policy in order to receive benefits when they are most needed. Viators typically receive a percentage of the policy's face value from the person who purchases the policy

Which of the following provisions of an individual Accident and Health policy allows for nonpayment of premiums in the event of the insured's total disability?

waiver of premium

The least expensive first year premium is found in what policy?

Annually renewable term

What are usual/reasonable and customary charges based on?

Average charge for a given procedure in the specific geographic area

Under what nonforfeiture option does the company pay the policy's surrender value and have no further obligations to the policy owner?

Cash surrender

What type of beneficiary is next in line after the primary beneficiary?

Contingent beneficiary

What type of life insurance is best suited to cover a mortgage?

Decreasing term

What is required to qualify an individual to contribute to a traditional IRA?

Earned income

What are the two classifications of annuities according to the time when annuity payments begin?

Immediate and deferred

A return of premium term life policy is written as what type of term coverage?

Increasing

What provision allows the policyowner to reactivate a lapsed life insurance policy within a specified period of time with proof of insurability?

Reinstatement

What elements of an adjustable life policy can be changed by the policyowners?

The amount and payment period of the premium, the face amount, and the period for protection

What does the term double indemnity mean?

The insurer will pay a benefit of twice the face amount

What type of life insurance policy offers pure death protection?

term

What type of premium is charged on a straight life policy?

A level premium for the life of the insured

Under the mandatory uniform provision notice of claim the first notice of injury or sickness covered under an accident and health policy must contain:

A statement that is sufficiently clear to identify the insured and the nature of the claim

A policy owner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?

Automatic premium loan - This is a special type of loan that prevents the unintentional lapse of a policy due to nonpayment of the premium

What are the three nonforfeiture options in life insurance policies?

Cash surrender, reduced paid-up, and extended term

In variable universal life insurance to what policy component does the term variable refer?

Cash value and death benefit

In variable universal life insurance, to what policy component does the term "variable" refer?

Cash value and death benefit

According to the taxation rules of life insurance policies, how are cash value increases taxed?

Cash value growth is taxed deferred

What happens to the cash value when a whole life insurance policy matures?

Cash value is paid to the policy owner

What type of assignment is used to secure the payment of a debt with an existing life insurance policy?

Collateral assignment

If more than one family member covered under the same major medical policy is injured in the same accident, the family has only has to pay one deductible, this is due to:

Common accident provision

What is the main difference between coinsurance and copay?

Copay is a set dollar amount while coinsurance is a percentage of expenses

What is another name for interest-sensitive whole life insurance

Current assumption life

If the annuitant dies before the annuitization period starts, what will the beneficiary receive?

Either the amount paid into the annuity or the cash value, whichever is greater

What type of annuity credits its interest based upon an index such as S&P 500?

Equity indexed annuity

What nonforfeiture option is automatically selected by the company if not chosen by the policyowner?

Extended term

What policy component must decrease in decreasing term insurance?

Face amount

An annuity purchased with multiple payments that begin income payments after one year from the moment of purchase is known as what type of annuity?

Flexible premium deferred annuity

What are the characteristics of the group that underwriters will consider before issuing a group life policy?

Groups size, purpose, financial strength and turnover

What type of life insurance policy is life paid up at age 65

Limited pay whole life

What are policy dividends?

Return of unused premiums

Under what nonforteiture option does the company pay the policy's surrender value and have no further obligations to the policy owner?

Revocable

An insurance policy that only requires a payment of premium at its inception provides insurance protection for the life of the insured and matures at the insured's age 100 is called:

Single premium whole life

What type of whole life insurance policy generates immediate cash value?

Single premium whole life

Who bears the investment risk in a fixed annuity?

the insurer

Who bears the investment risk on whole life?

the insurer

If an insured terminates membership in a group policy to what type of insurance can the insured convert the coverage?

whole life

Life insurance vs. annuities

Life: risk of dying to soon, creates an estate and pays a death benefit Annuities: risk of living to long, liquidates estate and pays an annuity benefit (while living)

With a single premium deferred annuity when will the annuity payments become available?

No sooner than 1 year after the annuity purchase

Can a business or a corporation be an annuitant?

No, an annuitant must always be a natural person

Upon surrender of a life policy, what portion of the cash value will be taxed?

Only the portion in excess of the premium paid

What are the death options in universal life policies?

Option a: level death benefit or Option B: increasing death benefit

What dividend option can increase the death benefit of the existing life policy?

Paid-up additions

What dividend option is automatically selected by the company if not chosen by the policyowner?

Paid-up additions

What type of life insurance offers an applicant a cash value element?

Permanent insurance (usually, whole life)

What is the advantage of reinstating a life insurance policy as opposed to applying for a new one?

Policy premium in a reinstated policy will be set according to the insured's original age

With the interest only settlement option, what happens to the policy's death benefit?

Policy proceeds are retained by the insurance company; only the interest is paid to the beneficiary

What is the primary purpose of a 401K

Provide retirement income

Insurers may change what on a guaranteed renewable health insurance policy?

Rates by class

What nonforfeiture option provides coverage for the longest period of time?

Reduced paid-up

What health policy provision describes the insured's right to cancel coverage?

Renewability provision