NWM Quiz questions P2
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 Health Reinsurance Association may issue special health care plans to small employers with ___ or fewer employees, the majority of whom are low-income eligible employees.
10
If a person is disabled at age 27 and meets Social Security's definition of total disability, how many work credits must he/she have earned to receive benefits?
12 credits
When appointing a producer, an insurer must file a notice of appointment to the Department of Insurance within
15 days
Which of the following disability income policies would have the highest premium?
15-day waiting period / 10-year benefit period
The time limit of certain defenses provision prohibits insurers from denying a claim due to misrepresentation, as long as the policy has been in force for at least
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?
20
The relation of earnings to insurance provision allows the insurance company to limit the insured's benefits to his/her average income over the last
24 months
What is the maximum age for qualifying for a catastrophic plan?
30
At what age may an individual make withdrawals from an HSA for nonhealth purposes without being penalized?
65
After a policy form has been submitted and accepted for review by the Department, within how many days must the determination be given to the insurer?
90 days
Which of the following is NOT true regarding the Notice Regarding Replacement?
A copy must be sent to the existing insurer
The term "illustration" in a life insurance policy refers to
A presentation of nonguaranteed elements of a policy
In Connecticut a temporary license may be issued for all of the following reasons EXCEPT
A producer's retirement
What is a material misrepresentation?
A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company
All of the following would be excluded from the regulation on life insurance solicitation EXCEPT
A term life policy
Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe?
Adhesion
Which of the following is another term for an authorized insurer?
Admitted
Group health insurance is characterized by all of the following EXCEPT
Adverse selection
How can a new physician be added to the PPO's approved list?
Agree to follow the PPO standards and charge the appropriate fees
What is reinsurance?
An agreement between a ceding insurer an assuming insurer
In insurance, an offer is usually made when
An applicant submits an application to the insurer
If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered
An unfair trade practice
The death protection component of Universal Life Insurance is always
Annually Renewable Term
A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?
Automatic premium loan
Which of the following is TRUE about a class designation?
Beneficiaries are not identified by name
Which of the following statements regarding Business Overhead Expense policies is NOT true?
Benefits are usually limited to six months
Which of the following best describes fixed-period settlement option?
Both the principal and interest will be liquidated over a selected period of time
All of the following are personal uses of life insurance EXCEPT
Buy-sell agreement
How are state Insurance Guaranty Associations funded?
By their members - authorized insurers
Genetic information that indicates a predisposition to a disease
Cannot be deemed a pre-existing condition by itself
A tax-sheltered annuity is a special tax-favored retirement plan available to
Certain groups of employees only
When a policyowner assigns interest in a whole life insurance policy, the new owner may do all of the following EXCEPT
Change the insured
Any payment to a producer from an insurer that is contingent on the sale of an insurance policy or contract is called a
Commission
What size companies are eligible for health reimbursement accounts (HRAs)?
Companies of all sizes
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
Conditions
An attempt by the existing insurer to dissuade a current policyowner from the replacement of existing life insurance is known as
Conservation
An insurance producer just sold an insurance policy to his sister. What kind of business is this?
Controlled
What is another name for interest-sensitive whole life insurance?
Current assumption life
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?
Decreasing term
What is an important feature of a dental expense insurance plan that is NOT typically found in a medical expense insurance plan?
Diagnostic and preventive care
Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled?
Disability Buy-Sell
This arrangement specifies who will purchase a disabled partner's interest in the event he or she becomes disabled
Disability buyout
When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered
Discrimination
Items stipulated in the contract that the insurer will not provide coverage for are found in the
Exclusions
When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n)
Executive bonus
What does "level" refer to in level term insurance?
Face amount
When an insurance agency published an advertising brochure, it emphasized the company's financial stability and sound business practices. In reality, its financial health is terrible, and the company will soon have to file for bankruptcy. Which of the following terms best describes the advertisement?
False financial statement
An insured is involved in an accident that renders him permanently deaf, although he does not sustain any other major injuries. The insured is still able to perform his current job. To what extent will he receive Presumptive Disability benefits?
Full benefits
Which of the following is another name for a primary care physician in an HMO?
Gatekeeper
Which of the following statements is CORRECT concerning the relationship between Medicare and HMOs?
HMOs may pay for services not covered by Medicare.
Which of the following is an eligibility requirement for all Social Security Disability Income benefits?
Have attained fully insured status
Which of the following would NOT be considered a purpose of life insurance solicitation regulations in Connecticut?
Help buyers choose most qualified insurance producers
A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium?
If the father is disabled for more than 6 months
The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the
Incontestability clause
Which of the following entities can legally bind coverage?
Insurer
In the event of loss, after a notice of claim is submitted to the insurer, who is responsible for providing claims forms and to which party?
Insurer to the insured
The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the
Insuring clause
In health insurance, if a doctor charges $50 more than what the insurance company considers usual, customary and reasonable, the extra cost
Is not covered
Which of the following is NOT true regarding a flexible spending account?
It does not have limits on contributions
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT
It is a life contingency option
Which is true regarding HMO coverage?
It is divided into geographic territories.
In which of the following situations is it legal to limit coverage based on marital status?
It is never legal to limit coverage based on marital status
If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy?
It is only taxable if the cash value exceeds the amount paid for premiums
Which statement is NOT true regarding a policy summary?
It must be combined with a sales illustration
Which of the following statements about the reinstatement provision is true?
It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated
An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium?
It will increase because the insured will be 5 years older than when the policy was originally purchased
Which of the following is NOT true regarding the accumulation period of an annuity?
It would not occur in a deferred annuity
The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called
Joint and survivor
Variable Whole Life insurance is based on what type of premium?
Level fixed
Which of the following settlement options in life insurance is known as straight life?
Life income
If a business owner becomes totally disabled, a Business Overhead Expense policy will pay all of the following EXCEPT
Loss of the owner's income
Which of the following best describes the unfair trade practice of defamation?
Making derogatory oral statements about another insurer's financial condition
Which of the following statements is NOT correct regarding Medicare?
Medicare Advantage must be provided through HMOs
An insured is covered under a Medicare policy that provides a list of network healthcare providers that the insured must use to receive coverage. In exchange for this limitation, the insured is offered a lower premium. Which type of Medicare policy does the insured own?
Medicare SELECT
An insured is involved in a car accident. In addition to less serious injuries, he permanently loses the use of his leg and is rendered completely blind. The blindness improves a month later. To what extent will the insured receive Presumptive Disability benefits?
No benefits
After the birth of a child, what must a primary insured do to ensure coverage for the child?
Notify the insurer within 121 days in order for coverage to continue without any evidence of insurability
An applicant is discussing his options for Medicare supplement coverage with his agent. The applicant is 65 years old and has just enrolled in Medicare Part A and Part B. What is the insurance company obligated to do?
Offer the supplement policy on a guaranteed issue basis
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
Which of the following applies to partial disability benefits?
Payment is limited to a certain period of time
Health care services include all of the following EXCEPT
Pharmaceutical supplies
Group Health Policy A is replaced by Group Health Policy B. An insured submitted a health claim under Policy A, before the replacement occurred. Now that Policy B is in effect, which policy, if either, will cover the insured's claim?
Policy A, because the prior insurer remains liable for claims made during its effective period
Which of the following has the right to convert the existing term coverage to permanent insurance?
Policyowner
In which of the following instances would the premium be tax deductible?
Premiums paid by an employer on a $30,000 group term life insurance plan for employees
What is the initial period of time specified in a disability income policy that must pass, after the policy is in force, before a loss can be covered?
Probationary period
Which of the following would be a lawful reason for the Commissioner to suspend a producer's license?
Producer failed to pay child support
Which of the following would NOT be considered grounds for the Commissioner to suspend an insurance producer's license?
Producer is found guilty of a misdemeanor
An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called?
Profit sharing plan
A Medicare SELECT policy does all of the following EXCEPT
Prohibit payment for regularly covered services if provided by non-network providers
Mr. X has 2 Medicare supplement policies issued by Company A. What would be the company's responsibility?
Provide information about Mr. X's policies in the annual report to the Commissioner
When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to
Purchase a single premium policy for a reduced face amount
Which of the following best describes a pure life annuity settlement option?
Pure life provides payments for as long as the annuitant is alive
Insurers may change which of the following on a guaranteed renewable health insurance policy?
Rates by class
Which rule would apply when an applicant is going to cash in an old policy and use the funds to purchase a new policy?
Replacement
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy
Required a premium increase each renewal
Under the Fair Credit Reporting Act, if a consumer challenges the accuracy of the information contained in a consumer or investigative report, the reporting agency must
Respond to the consumer's complaint
What should a producer do before taking an application for a Medicare supplement policy?
See if the issuance of the policy will give the applicant more than one Medicare policy
All of the following are the duties of the replacing producer where replacement is involved EXCEPT
Send a letter to the policyowner of the right to receive information regarding the existing policy
Which two terms are associated directly with the way an annuity is funded?
Single payment or periodic payments
Applicants for a license must furnish satisfactory evidence of all of the following to the Commissioner EXCEPT
State residency
A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as
Survivor protection
Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members?
Term rider
Which of the following is NOT covered under Plan A in Medigap insurance?
The Medicare Part A deductible
Which of the following information will be stated in the consideration clause of a life insurance policy?
The amount of premium payment
Insurable interest can be best described by which of the following?
The applicant must experience a financial loss due to an accident or sickness that befalls the insured
An insured who has an Accidental Death and Dismemberment policy loses her left arm in an accident. What type of benefit will she most likely receive from this policy?
The capital amount in a lump sum
Which statement accurately describes group disability income insurance?
The extent of benefits is determined by the insured's income
Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to
The insured
An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT?
The insured may choose to convert to term or permanent individual coverage
An insured submitted a notice of claim to the insurer, but never received claims forms. He later submits proof of loss, and explains the nature and extent of loss in a hand-written letter to the insurer. Which of the following would be true?
The insured was in compliance with the policy requirements regarding claims
An insurer hires a representative to advertise its company at a local convention. The representative lies about the details of some of the policies, in an attempt to secure more business for the company. Who is responsible for the representative's claims?
The insurer
Which of the following is NOT a feature of a guaranteed renewable provision?
The insurer can increase the policy premium on an individual basis
When Linda suffered a broken hip, she notified her agent, in writing, within 12 days of the loss. However, her agent did not notify the insurance company until 60 days after the loss. Which of the following statements correctly explains how this claim would be handled?
The insurer is considered to be notified since the notification to agent equals notification to the insurer.
How is it determined whether an insurer is allowed to write business in a state?
The insurer's domicile or location of incorporation will determine whether a company is domestic, foreign, or alien
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT
The interest is not taxable since it remains inside the insurance policy
Which of the following definitions would make it easier to qualify for total disability benefits?
The more liberal "own occupation"
All of the following are true regarding a decreasing term policy EXCEPT
The payable premium amount steadily declines throughout the duration of the contract
All of the following statements are true regarding installments for a fixed amount EXCEPT
The payments will stop when the annuitant dies
A policy with a 31-day grace period implies
The policy will not lapse for 31 days if the premium is not paid when due
If an insured continually uses the automatic premium loan option to pay the policy premium
The policy will terminate when the cash value is reduced to nothing
Which of the following statements regarding the Change of Beneficiaries Provision is false?
The policyowner has the right to change beneficiaries in any case
A policyowner names his five children as primary beneficiaries and his wife as a contingent beneficiary. If the policyowner and one of his children die, who would receive policy benefits?
The remaining 4 primary beneficiaries
Under an extended term nonforfeiture option, the policy cash value is converted to
The same face amount as in the whole life policy
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?
The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive
Which is generally true regarding insureds who have been classified as preferred risks?
Their premiums are lower
Regarding Medicare SELECT policies, what are restricted network provisions?
They condition the payment of benefits
Which of the following is NOT true regarding Equity Indexed Annuities?
They earn lower interest rates than fixed annuities
All of the following are true regarding the guaranteed insurability rider EXCEPT
This rider is available to all insureds with no additional premium
Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated?
Those who have been insured under the plan for at least 5 years
An insured notifies the insurance company that he has become disabled. What provision states that claims must be paid immediately upon written proof of loss?
Time of Payment of Claims
What kind of policy allows withdrawals or partial surrenders?
Universal life
All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT
Upon conversion, the death benefit of the permanent policy will be reduced by 50%
Which of the following types of policies allows for a flexible premium and a variable investment component?
Variable universal life insurance
Which of the following is a key distinction between variable whole life and variable universal life products?
Variable whole life has a guaranteed death benefit
If a producer has a name change, how soon must the licensee notify the Commissioner?
Within 30 days
How soon following the occurrence of a covered loss must an insured submit written proof of such loss to the insurance company?
Within 90 days or as soon as reasonably possible, but not to exceed 1 year
Which of the following is NOT a factor in determining qualifications for Social Security disability benefits?
Worker's occupation
An employee is injured in a construction accident, rendering him unable to work for a year. Which of the following plans would provide him with medical expense coverage and income assistance?
Workers Compensation
