Pearson vue Texas life and health insurance test questions
An individual purchased a $100,000 Joint life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy? A. nothing B. $50,000 C. $100,000 D. $200,000
$100,000
An insured purchase a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefits. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receives as a settlement? A. 0 B. $100,000 C. $200,000 D. $100,000 plus the total of paid premiums
$200,000
L has a major medical policy with a $500 deductible and 80/20 coinsurance. L is hospitalized and sustains a $2,500 loss. What is the maximum amount that L will have to pay? A. $900 (deductible + 20% of the bill after the deductible [ 20% of 2,000] B. $500 (amount of deductible) C.$1,000 (deductible + 20% of the entire bill) D. $2,500 ( the entire bill)
$900 (deductible + 20% of the bill after the deductible [ 20% of 2,000]
Following an injury, a policyowner covered under Medicare Parts A&B was treated by her physician on an outpatient basis. How much of her doctor's bill will she be required to pay-out-of-pocket? A. 20% of covered charges above the deductible B. 80% of covered charges above the deductible C. All reasonable charges above the deductible according to Medicare standards D. A per office visit deductible
20% of covered charges above the deductible
Partial disability usually pays what percentage of the total disability benefit?
50%
Ray has an individual major medical policy that requires a coinsurance payment. Ray very rarely visits his physician and would prefer to pay the lowest premium possible. Which coinsurance arrangement would be best for Ray? A. 50/50 B.75/75 C.80/20 D. 90/10
50/50
Most policies will pay the accidental death benefits as long as the death is caused by the caused by the accident and occurs within A. 30 days B. 60 days C. 90 days D. 120 days
90 days
A straight life policy has what type of premium? A. A decreasing annual premium for the life of the insured B. A variable annual premium for the life of the insured C. A level annual premium for the life of the insured D. An increasing annual premium for the life of the insured
A level annual premium for the life of the insured
Which of following is a feature of a disability buy out plan? A. A lump-sum benefit payment option B. Tax deductible premiums C. Taxable benefits D. A short elimination period
A lump-sum benefit payment option
All of the following statements about Medicare Part B are correct EXCEPT A. It is a compulsory program B. It covers services and supplies not covered by Part A C. It is financed by monthly premium D. It is financed by tax revenues
A. It is a compulsory program
What is the purpose of the Life Insurance Guaranty Association? A. To help protect policyowners and beneficiaries against financial loss caused by the insolvency of an insurance company B. To encourage life insurance to write substandard business C. To allow agents to continue to solicit insurance, even if the company they represent is financially impaired D. To protect the reputation of the insurance Department if they issue a Certificate of Authority to a company that becomes insolvent
A. To help protect policyowners and beneficiaries against financial loss caused by the insolvency of an insurance company
The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called A. Waiver of premium B. Guaranteed insurability C. Waiver of cost of insurance D. Payor benefit
A. Waiver of premium
Group health insurance is characterized by all of the following EXCEPT A. A Master contract B. Lower administrative costs C. Conversion privilege D. Adverse selection
Adverse selection
What is the maximum period of time during which an insurer may contest fraudulent misstatements made in a health insurance application? A. 90 days after the effective policy date B. 6 months after the effective policy date C. 1 year after the effective policy date D. As long as the policy is in force
As long as the policy is in force
To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested A. At the time of application B. When the applicant's credit is checked C. When the policy is delivered D. At the initial interviewer
At the time of application
The premium charged for exercising the guaranteed insurability Rider is based upon the insured's A. Average age B. Issue age C. Attained age D. Assumed age
Attained age
An underwriter is reviewing an applicant with an extensive medical history. Which of the following would give the underwriter a better understanding of how the applicant has been treated for various illnesses?
Attending physician's statement
An insured's long-tern care policy is scheduled to pay fixed amount of coverage of $120 per day. The long-term care facility only charged $100 per day. How much will the insurance company pay? A. 20% of the total cost B. $120 a day C. $100 a day D. 80% of the total cost
B. $120 a day
How is emergency care covered for a member of an HMO? A. An HMO emergency specialist will cover the patient B. A member of an HMO can receive care in or out of the HMO service area, but care is preferred in the service area C. A member of an HMO may receive care at any emergency facility, at the same cost as if in his or her own service area D. HMOs have salaried member physicians, but they do not cover emergency care
B. A member of an HMO can receive care in or out of the HMO service area, but care is preferred in the service area
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? A. The date of the application B. The date of the medical exam C. The date of policy delivery D. The date of issue
B. The date of the medical exam
What license or licenses are required to sell variable annuities? A. No license is required B. Both a life insurance license and a securities license C. Only a life insurance license D. Only a securities license
Both a life insurance license and a securities license
Which of the following is a feature of a variable annuity? A. Interest rate is guarantee B. Securities license is not required C. Benefit payment amounts are not guaranteed D. Payments into the annuity are kept in the company's general account
C. Benefit payment amounts are not guaranteed
In comparison to a policy that uses the accidental means definition, a policy that uses the accidental bodily injury definition would provide coverage that is A. More limited in duration B. Broader in duration C. Broder in general D. More limited in general
C. Broader in general
Another term used to describe "no deductible" is A. Total coverage B. Immediate cooperative C. First-dollar basis D. Comprehensive
C. First-dollar basis
Which provision allows the policyholder a period of time, while coverage is in force, to examine a health insurance policy and determine whether or not to keep it? A. Elimination period B. Probationary period C. Free Look period D. Grace period
C. Free look period
An applicant who receives a preferred risk classification qualifies for A. Higher premiums than a person who receives a sub-standard risk B. Higher premiums than a person who receives a standard risk C. Lower premiums than a person who receives a standard risk D. Dividends payable for lack of claims
C. Lower premiums than a person who receives a standard risk
Which of the following is a risk classification used by underwriters for life insurance? A. Normal B. Excellent C. Standard D. Poor
C. Standard
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? A. Adhesion B. Consideration C. Good faith D. Representation
Consideration
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? A. consideration B. Legal purpose C. Contract of adhesion D. Acceptance
Consideration
Which of the following includes information regarding a person's credit, character, reputation, and habits? A. Consumer history B. Insurability report C. Agent's report D. Consumer report
Consumer report
An insured pays $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. Good health B. Adhesion C. Conditional D. Aleatory
D. Aleatory
The premium charged for exercising the guaranteed insurability Rider is based upon the insured's A. Assumed age B. Average age C. Issue age D. Attained age
D. Attained age
*What is the purpose of settlement options? A. They are guarantees built into the policy B. They guarantee a return of excess premiums C. they provide the beneficiary the income he/she cannot outlive D. Determines how the death benefit will be paid to the beneficiary
D. Determines how the death benefit will be paid to the beneficiary
Which of the following best describes the aleatory nature of an insurance contract? A. Only one of the parties being legally bound by the contract B. Ambiguities are interpreted in favor of the insured C. Policies are submitted to the insurer on a take-it-or-leave-it basis D. Exchange of unequal values
D. Exchange of unequal values
Which is TRUE about the cash surrender nonforfeiture option? A. After the cash surrender, the insured is covered for a grace period of one month B. The policy remains active for some time after the policyholder opts for cash surrender C. The policyholder receives the original cash value of the policy D. Funds exceeding the premium paid are taxable as ordinary income.
D. Funds exceeding the premium paid are taxable as ordinary income.
Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? A. It is life contingency option B. The beneficiary receives the remainder of the principal amount upon the annuitant's death C. Payments can be made in installments and as a single cash refund D. It does not guarantee that the entire principal amount will be paid out
D. It does not guarantee that the entire principal amount will be paid out
Which of the following determines the cash value of a variable life policy? A. The performance of the policy portfolio B. The company's general account C. The policy's guarantees D. The premium mode
D. The premium mode
Regarding long-term care coverage, as the elimination period gets shorter, the premium A. Remains constant B. Premiums are not based on elimination periods C. Decreases D. Increases
Increases
Annually renewable term policies provide a level death benefit for a premium that A. Decreases annually B. Remains Level C. Fluctuates D. Increases annually
Increases annually
Who must pay for the cost of a medical examination required in the process of underwriting? A. Department of Insurance B. Insurer C. Applicant D. Underwriters
Insurer
Which of the following is provided by skilled medical personnel to those who need occasional medical assistance or rehabilitative care?
Intermediate care
Which of the following is NOT true regarding a flexible spending account? A. It is cafeteria plan B. It does not have limits on contributions C. It operates on "use-or-use" basis D. It provides an opportunity to receive benefits on pretax basis
It does not have limits on contributions
Why is an equity indexed annuity considered to be fixed annuity? A. It has modest investment potential B. It has a fixed rate of return C. It is not tied to an index like the S&P 500 D. It has a guaranteed minimum interest rate
It has a guaranteed minimum interest rate
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT A. The payments are not guaranteed for life B. The insurer determines the amount for each payment C. It is a life contingency option D. It will pay the benefit only for a designated period of time
It is a life contingency option
The premium of a survivorship life policy compared with that of a joint life policy would be A. Half the amount B. Lower C. Higher D. As high
Lower
The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the A. One-year option B. Paid-up option C. Accelerated endowment D. Paid-up additions
One-year option
Under which of the following organizations are the practicing provides compensated on a fee-for-service basis? A. Open panel B. PPO C.HMO D. Blue cross/ Blue shield
PPO
Workers Compensation benefits are regulated by which entity? A. Insurer B. Federal Government C. State government D. Employer
State government
Who is obligated to make sure all questions are answered and all necessary signatures are collected on the application?
The Agent
Which of the following is NOT covered under Plan A in Medicap insurance? A. The first three pints of blood each year B. The Medicare Part A deductible C. Approved hospital costs for 365 additional days after Medicare benefits end D. The 20% Part B coinsurance amounts for Medicare approved services
The Medicare Part A deductible
Which is NOT true about beneficiary designations? A. The beneficiary must have insurable interest in the insured B. The beneficiary may be a natural person C. The policy does not have to have beneficiary named in order to be valid D. Trusts can be valid beneficiaries
The beneficiary must have insurable interest in the insured
Who is the owner and who is the beneficiary on a key person life insurance policy? A. The key employee is the owner and beneficiary B. The key employee is the owner and the employer is the beneficiary C. The employer is the owner and beneficiary D. The employer is the owner and the key employee is the beneficiary
The employer is the owner and beneficiary
With Adjustable Life, the owner can change all of the following EXCEPT
The insured
If an insurer requires a medical examination of an applicant in connection with the application for life insurance, who is responsible for paying the cost of the examination? A. The examiner B. The applicant C. The insurer D. The cost of the examination will be waived
The insurer
All of the following are true regarding a decreasing term policy EXCEPT A. The death benefits $0 at the end of the policy term B. The contract pays only in the event of death during the term and there is no cash value C. The face amount steadily declines throughout the duration of the contract D. The payable premium amount steadily declines throughout the duration of the contract
The payable premium amount steadily declines throughout the duration of the contract
On a health insurance application, a signature is required from all of the following individuals EXCEPT A. The spouse of the policyowner B. The proposed insured C. The policyowner D. The agent
The spouse of the policyowner
What is the purpose of coinsurance provisions? A. To share liability among different insurance companies B. To help the insurance company to prevent overutilization of the policy C. To have the insured pay premiums to more than one company D. To guarantee payment to the doctors and hospitals
To help the insurance company to prevent overutilization of the policy
Which of the following product requires a securities license? A. Fixed annuity B. Equity Indexed annuity C. Deferred annuity D. Variable annuity
Variable annuity
When is the earliest a policy may go into effect? A. When the insurer approves the application B. After the underwriter reviews the policy C. When the application is signed and a check is given to the agent D. When the first premium is paid and the policy has been delivered
When the application is signed and a check is given to the agent
Most LTC plans have which of the following features? A. Open enrollment B. Guarantee renewability C. NO elimination period D. Variable premiums
guarantee renewability
Which of the following entities can legally bind coverage? A. Insurer B. The insured C. Federal insurance board D. Agent
insurer
If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights? A. Policyowner B. The insured and the policyowner C. Beneficiary D. Insured
policyowner
When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy, as well as a refund of all of the premiums paid A. Return of premium B. cost of living C. decreasing term D. Accidental death
return of premium
Which of the following special policies covers unusual risks that are NOT normally included under Accidental Death and dismemberment coverage? A. Specified disease policy B. Credit disability C. Special risk policy D. Limited risk policy
special risk policy
Children's rider attached to whole life policies are usually issued as what type of insurance? A. Term B. Variable life C. Adjustable life D. Whole life
term
All of the following are true of key person insurance EXCEPT A. The plan is funded by permanent insurance only B. There is no limitation on the number of key employee plans in force at any time C. The employer is the owner, payor and beneficiary of the policy D. The key employee is insured
the plan is funded by permanent insurance only
Which of the following explains the policyowner's right to change beneficiaries, choose options, and receives proceeds of a policy? A. The entire contract provision B. The consideration clause C. Assignment rights D. owner's right
D. owner's right
Which of the following would NOT be eligible for coverage under key person?
The owner of the shop
An insurer advertises a health policy that is covered by the Life and Health Insurance Guaranty Association. The advertisement includes a short list of benefits and approximate rates. The end of the advertisement includes statement that protection is provided by the Guaranty Association. Which of the following is true? A. Mentioning the Guaranty Association in advertisement is considered to be unfair trade practice B. The advertisement must also include the contact information of the association C. The advertisement must also include the contact information of the Commissioner of Insurance D. Mentioning the Guaranty Association is mandatory when advertising in the state of Texas
A. Mentioning the Guaranty Association in advertisement is considered to be unfair trade practice
Which of the following is considered a presumptive disability under a disability income policy A. Loss of two limbs B. Loss of an eye C. Loss of hearing in one ear D. Loss of one hand or foot
A. loss of two limbs
An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits? A. The entire living benefits is considered taxable income B. A portion of the benefits up to a limit is tax-free; the rest is taxable income C. Principle is tax free, but interest is taxed D. The entire benefits will be received tax free
B. B. A portion of the benefits up to a limit is tax-free; the rest is taxable income
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount? A. The same as the original policy minus the cash value B. Equal to the original policy for as long as the cash values will purchase C. In lesser amounts for the remaining policy term of age 100 D. Equal to the cash value surrendered from the policy
B. Equal to the original policy for as long as the cash values will purchase
With respect to the consideration clause, which of the following would be considered consideration on the part of the applicant for insurance? A. Providing warranties on the application B. Notice of policy cancellation C. Payment of premium D. Promise to renew the policy at the end of the policy period
C. Payment of premium
Which of the following is true about the requirement regarding HIV exams? A. Prior informed oral consent is required from be used the applicant B. HIV exams may not be used as a basis for underwriting C. The applicant must give prior informed written consent D. Results may be disclosed to the agent and the underwriter
C. The applicant must give prior informed written consent
Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned , will be paid to A. Beneficiary of the death benefit B. The spouse of the insured C. The insured D. Creditors
C. The insured
An insured purchased a noncancelable health insurance policy 1 year ago. Which of the following circumstances would NOT be a reason for the insurance company to cancel the policy? A. The insured reaches the maximum age limit specified in the policy B. Within two years of the application, the insurer discovers a misrepresentation C. The insured is an accident and incurs a large claim D. The insured does not pay the premium
C. The insured is an accident and incurs a large claim
All of the following are true of an annuity owner EXCEPT A. The owner has the right to name the beneficiary B. The owner is the party who may surrender the annuity C. The owner must be the party to receive benefits D. The owner pays the premiums on the annuity
C. The owner must be the party to receive benefits
The commissioner of Insurance issues a Cease and Desist Order and immediately receives a request for the charges to be reviewed in a hearing. Within how many days must the hearing be held? A. 10 B.14 C. 30 D.60
C.30
When delivering a policy, which of the following is an agent's responsibility? A. Issue the policy if the applicant is present B. Approve or decline C. Collect medical statement from physician D. Collect payment at time of delivery
Collect payment at time of delivery
The gatekeeper of an HMO helps A. Determine who will be allowed to enroll in HMO program B. Prevent double coverage C. Determine which doctors can participate in an HMO plan D. Control specialist costs
Control specialist costs
A key person insurance policy can pay for which of the following? A. Cost of training a replacement B. Loss of personal income C. Workers compensation D. Hospital bills of the key person
Cost of training a replacement
In the event of a divorce, which of the following would allow a divorce to continue receiving group health coverage under a insured spouse's plan for an additional 36 months? A. Social security B. Routine dental care C. Coverage for dependents D. Military duty
Coverage for dependents
A partnership buy-sell agreement in which each partner purchases insurance on the life of each of the other partners is called a A. split-dollar plan B. Stock reduction plan C. Cross-purchase plan D. Key person plan
Cross-purchase plan
Which of the following long-term care benefits would provide coverage for care for functionally impaired adults on a less than 24-hour basis? A. Residential care B. Assisted living C. Home health care D. Adult day care
D. Adult day care
A father purchases a life insurance policy on his teenage daughter and adds the Payor benefits rider. In which of the following scenarios will the rider waive the payment of premium? A. If the father is disabled for at least a year B. If the daughter is disabled for more than 3 months C. If the daughter is disabled for any length of time D. If the father is disabled for more than 6 months
D. If the father is disabled for more than 6 months
Death benefits payable to a beneficiary under a life insurance policy are generally A. Subject to income taxation by the federal government B. Exempt from income taxation if under $10,000 C. Exempt from income taxation if over $10,000 D. Not subject to income taxation by the federal government
D. Not subject to income taxation by the federal government
Which of the following best describes the "first-dollar coverage" principle in basic medical insurance? A. The insured must first pay a deductible B. The insurer covers the first claim on the policy C. Deductibles and coinsurance are taxed first D. The insured is not required to pay a deductible
D. The insured is not required to pay a deductible
This arrangement specifies who will purchase a disabled partner's interest in the event he or she becomes disabled A. Business overhead expense B. Key-person insurance C. Employee benefit plan D. Disability buyout
Disability buyout
The insurance policy, together with the policy application and any added riders from what is known as a(n) A. Certificate of coverage B. Contract of adhesion C. Blanket policy D. Entire contract
Entire contract
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? A. Guaranteed insurability option B. Dividend options C. Guaranteed renewable option D. Nonforfeiture options
Guaranteed insurability option
A guaranteed renewable disability insurance policy A. Is renewable at the insured's option to a specified age B. Is renewable at the option of the insurer to a specified age of the insured C. Is guaranteed to have a level premium for the life of the policy D. Cannot be cancelled by the insured before age 65
Is renewable at the insured's option to a specified age
Which of the following best describes annually renewable term insurance? A. Neither the premium nor the death benefit is affected by the insured's age B. It provides an annually increasing death benefit C. It is level insurance D. It requires proof of insurability at each renewable
It is level insurance
When a reduced paid -up nonforfeiture option is chosen, what happens to the face amount of the policy? A. It is increased when extra premiums are paid B. It decreases over the term of the policy C. It remains the same as the original policy, regardless of any differences in value D. It is reduced to the amount of what the cash value would buy as a single premium
It is reduced to the amount of what the cash value would buy as a single premium
Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die? A. Ordinary life B. Joint life C. Decreasing Term D. Whole life
Joint life
all of the following statements concerning Medicaid are correct EXCEPT A. Individual states design and administer the Medicaid program under broad guidelines established by the federal government B. Individuals claiming benefits must prove they do not have the ability or means to pay for their own medical care C. Persons, at least 65 years of age, who are blind or disabled and financially unable to pay, may qualify for Medicaid Nursing Home benefits D. Medicaid is a state funded program that provides health care to persons over age 65, only
Medicaid is a state funded program that provides health care to persons over age 65, only
After a back injury, an insurer is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive? A. Payment for life B. Yearly premium waiver and monthly income C. Monthly premium waiver and monthly income D. Percentage of medical costs paid by the insurer
Monthly premium waiver and monthly income
A guaranteed renewable health insurance policy allows the A. Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class B. Policyholder to renew the policy to a stated age and guarantees the premiums for the same period C. Policy to renewed at time of expiration, but the policy can canceled for cause during the policy term' D. Insurer to renew the policy to specified age
Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class
Which is true regarding obtaining underwriting sources? A. It is illegal to obtain information from outside sources contacted and how the information is being gathered B. The applicant must be informed of the sources contacted and how the information is being gathered C. The insurer does not need to inform the applicant of the information is gathered; informing only of the source is sufficient D. The insurer only needs to inform the applicant of how the information is gathered; it is not necessary to disclose the sources
The applicant must be informed of the sources contacted and how the information is being gathered
Which of the following is true regarding elimination periods and the cost of coverage? A. The longer the elimination period, the higher the cost of coverage B. Elimination periods have no effect on the cost of coverage C. The longer the elimination period, the lower the cost of coverage D. The shorter the elimination period, the lower the cost of coverage
The longer the elimination period, the lower the cost of coverage
Which of the following best defines the "owner" as it pertains to life settlement contracts? A. A financial entity that sponsors the transaction B. A fiduciary for the contract C. The insurance provider D. The policyowner of the life insurance policy
The policyowner of the life insurance policy
