Simulator Exam

An insured committed suicide one year after his life insurance policy was issued. The insurer will a) Pay the policy's cash value. b) Pay the full death benefit to the beneficiary. c) Pay nothing. d) Refund the premiums paid.

Refund the premiums paid.

When a life insurance policy stipulates that the beneficiary will receive payments in specified installments or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the planned installments? a) Spendthrift provision b) Settlement option c) Accelerated benefit provision d) Loan provision

Spendthrift provision

The sole proprietor of a business makes a total salary of $50,000 a year. This year, his medical expenses have reached a total of $75,000. What amount may the sole proprietor deduct in regards to his medical expenses? a) $10,000 b) $25,000 c) $50,000 d) $75,000

$50,000

An advertisement for a health insurance product was just published in the newspaper. What is the earliest date that this ad may claim its application is due? Within 6 a) 30 days. b) 5 years. c) 10 days. d) 1 year.

10 days.

In order to collect Social Security disability benefits, the claimant must be able to demonstrate that the disability will last at least a) For life. b) 12 months. c) 24 months. d) Until age 65.

12 months.

Every small employer carrier must actively offer to small employers at least how many health benefit plans? a) One plan b) 2 plans c) 3 plans d) There is no minimum.

2 plans

The issuer of any advertising material must comply with all state laws regarding advertising and must maintain copies of the advertising material for a period of a) 3 years. b) 6 months. c) 1 year. d) 2 years.

3 years.

If a new individual long-term care policyholder is not satisfied with a new policy, within how many days can the insured return the policy for a full premium refund? a) 30 b) 7 c) 10 d) 90

30

If person covered under a group policy loses coverage because of ineligibility or termination of employment, he or she is entitled to have an individual life insurance policy issued by the insurer without evidence of insurability if application is made and the first premium is paid to the insurer within a) 60 days b) 31 days c) 15 days d) 13 days

31 days

If a health insurance issuer decides to discontinue all of its health products, they may not provide any health insurance for at least how many years following the discontinuation? a) 10 b) 1 c) 7 d) 5

5

Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insureds' death? a) A business partner of the insured b) The wife of the deceased insured c) The former wife of the deceased insured d) A minor son of the insured

A minor son of the insured

If an annuitant dies during the accumulation period, what benefit (if any) will be included in the annuitant's estate? a) No benefits b) Policy loans c) Accumulated cash value d) Full annuity benefit

Accumulated cash value

A Universal Life Insurance policy is best described as a/an a) Variable Life with a cash value account. b) Whole Life policy with two premiums: target and minimum. c) Flexible Premium Variable Life policy. d) Annually Renewable Term policy with a cash value account.

Annually Renewable Term policy with a cash value account.

Which of the following annuity features makes it a suitable source of retirement income? a) Annuity withdrawals are tax free. b) Withdrawals are made on last in first out basis. c) Annuity payments are tax deferred. d) Annuities may provide income the annuitant cannot outlive.

Annuities may provide income the annuitant cannot outlive.

Employer contributions made to a qualified plan a) Are subject to vesting requirements. b) May discriminate in favor of highly paid employees. c) Are after-tax contributions. d) Are taxed annually as salary.

Are subject to vesting requirements.

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective? a) As of the first of the month after the policy issue b) As of the policy issue date c) As of the application date d) As of the policy delivery date

As of the application date

A dental plan that provides coverage based upon a specified maximum scheduled amount for each procedure and pays on a 'first dollar' basis with no deductible or coinsurance is a a) Basic or scheduled plan. b) Combination plan. c) Comprehensive plan. d) Nonscheduled plan.

Basic or scheduled plan.

In terms of Social Security, what is the name for the time period after the youngest child of a family turns 16 and before the surviving spouse may start receiving retirement benefits? a) Blackout period b) Nonpayment interval c) Benefit reduction d) Accumulation period

Blackout period

An applicant for an individual health policy failed to complete the application properly. Before being able to complete the application and pay the initial premium, she is confined to a hospital. This will not be covered by insurance because she has not met the conditions specified in the a) Consideration Clause. b) Insuring Clause. c) Pre-existing Conditions Clause. d) Eligibility Clause.

Consideration Clause.

Which of the following is NOT true of basic medical expense plans? a) No deductibles b) First-dollar coverage c) Low dollar limits d) Coverage for catastrophic medical expenses

Coverage for catastrophic medical expenses

An insured has medical insurance coverage through 2 different providers, both covering the same expenses on an expense-incurred basis. Neither company knows in advance that the insured has coverage through any other insurers. The insured submits a claim to both insurers. How should the claim be handled? a) The insured should receive full benefits from each insurer. b) Each insurer should pay a proportionate share of the claim. c) One of the insurers will pay fully, while the other will not pay any benefits. d) Once the insurers discover the duplicate coverage, the policies would most likely be cancelled, and no claim paid.

Each insurer should pay a proportionate share of the claim.

he authority granted to an agent through the agent's contract is referred to as a) Apparent authority. b) Implied authority. c) Absolute authority. d) Express authority.

Express authority.

In which of the following health plans are benefit payments attributed to employer contributions taxable to the employee? a) Group Disability Income b) AD&D c) Disability Buy Out d) Medical Expense

Group Disability Income

What option allows the insured to periodically increase benefit levels without providing evidence of insurability? a) Guarantee renewable b) Annual increase c) Level premium d) Guarantee of insurability

Guarantee of insurability

A new employee who meets HIPAA eligibility requirements must be issued health coverage on what basis? a) Indemnity b) Guaranteed c) Noncancellable d) Nondiscriminatory

Guaranteed

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

Illegal under any circumstances

Medicaid provides all of the following benefits EXCEPT a) Family planning services. b) Income assistance for work-related injury. c) Home health care services. d) Eyeglasses.

Income assistance for work-related injury.

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 a) Insuring clause. b) Misstatement of Age clause. c) Incontestability clause. d) Reinstatement clause.

Incontestability clause.

In order to minimize adverse selection, employer group dental plans may require employees who enroll after they were initially eligible to participate to do all of the following EXCEPT a) Submit evidence of insurability. b) Satisfy a longer probationary period. c) Reduce benefits for a period such as one year. d) Increase benefits for a period of one year.

Increase benefits for a period of one year.

What do individuals use to transfer their risk of loss to a larger group? a) Insurable interest b) Exposure c) Indemnity d) Insurance

Insurance

Which statement regarding insurable risks is NOT correct? a) Insurance cannot be mandatory. b) The insurable risk needs to be statistically predictable. c) An insurable risk must involve a loss that is definite as to cause, time, place and amount. d) Insureds cannot be randomly selected.

Insureds cannot be randomly selected.

During partial withdrawal from a universal life policy, which portion will be taxed? a) Loan b) Interest c) Cash value d) Principal

Interest

The mode of premium payment a) Is the factor that determines the amount of dividends in a policy. b) Is the method used to compute the cash surrender value of the policy. c) Does not affect the amount of premium paid. d) Is defined as the frequency and the amount of the premium payment.

Is defined as the frequency and the amount of the premium payment.

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

It can protect the policy proceeds from creditors of the beneficiary.

Which of the following is true regarding health insurance? a) It provides death benefit coverage. b) It only covers expenses related to health care. c) It could provide payments for loss of income. d) Disability coverage is excluded.

It could provide payments for loss of income.

What is the main purpose of the Seven-pay Test? a) It guarantees the minimum interest. b) It determines if the insurance policy is a MEC. c) It requires level premium payments for 7 years. d) It ensures that the policy benefits are paid out in 7 years.

It determines if the insurance policy is a MEC.

Which of the following statements about the reinstatement provision is true? a) It permits reinstatement within 10 years after a policy has lapsed. b) It provides for reinstatement of a policy regardless of the insured's health. c) It guarantees the reinstatement of a policy that has been surrendered for cash. d) It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated.

It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated.

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

Joint and survivor

In group insurance, what is the policy called? a) Entire contract b) Certificate of authority c) Certificate of insurance d) Master policy

Master policy

Who is involved in completing the agent's report? a) Attending physician and the agent b) Only the agent c) The agent and the applicant d) Only the underwriter, if no agent

Only the agent

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

Payment of Claims

An insurer wants to obtain information from investigators regarding an applicant for insurance. What must the insurer do in order to legally acquire this information? a) Sign a waiver that the information will be kept confidential b) Present the insured with a Disclosure Authorization Notice c) Receive written permission from the Department of Insurance d) Receive a signed statement from the insured which authorizes the investigation

Present the insured with a Disclosure Authorization Notice

Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insured for full disability benefits. Which disability policy provision does this describe? a) Dismemberment disability b) Partial disability c) Residual disability d) Presumptive disability

Presumptive disability

Equity indexed annuities a) Seek higher returns. b) Are more risky than variable annuities. 3 c) Are security instruments. d) Invest conservatively.

Seek higher returns.

If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a 4 5 a) Settlement option. b) Nontaxable exchange. c) Nonforfeiture option. d) Rollover.

Settlement option.

The legal process that gives the insurer, after payment of a loss, the right to seek recovery from a third party that was responsible for the loss is known as a) Subrogation. b) Adverse Selection. c) Right of Rescission. d) Principle of Indemnity.

Subrogation.

Which of the following authorities determines if a prospective agent qualifies to receive a license? a) Superintendent b) NAIC c) State Insurance Board d) Federal Association of Insurers

Superintendent

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

Survivor protection

All of the following entities regulate variable life policies EXCEPT a) The SEC. b) The Insurance Department. c) The Guaranty Association. d) Federal government.

The Guaranty Association.

Which of the following would provide an underwriter with information concerning an applicant's health history? a) A medical examination b) The agent's report c) The inspection report d) The Medical Information Bureau

The Medical Information Bureau

Which of the following statements about HRAs is TRUE? a) The account allows roll-over of unused balances at the end of the year at the employee's discretion b) The account only allows roll-over of half the unused balances at the end of the year c) The account does not allow roll-over of unused balances at the end of the year d) The account allows roll-over of unused balances at the end of the year at the employer's discretion

The account allows roll-over of unused balances at the end of the year at the employer's discretion

Due to gross misconduct, an insurer has terminated the contract of an independent agent. How long is the time period during which the agent may renew any policies still in force? a) The agent can renew any policies indefinitely. b) 1 year c) 3 years d) The agent cannot renew any policies.

The agent cannot renew any policies.

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 a beneficiary named in order to be valid. d) Trusts can be valid beneficiaries.

The beneficiary must have insurable interest in the insured.

Which of the following is a characteristic of a Reciprocal Insurance Exchange? a) Stock holders share in any profits b) Issues nonassessable policies c) The chief administrator of the insurer is called an "attorney-in-fact". d) Normally write all lines of insurance

The chief administrator of the insurer is called an "attorney-in-fact".

Which of the following statements about group life is correct? a) The cost of coverage is based on the ratio of men and women in the group. b) The premiums are higher than in an individual policy because there is no medical exam. c) The group sponsor receives a Certificate of Insurance. d) The policy can be converted to an individual term insurance policy.

The cost of coverage is based on the ratio of men and women in the group.

How do employer contributions to a Health Savings Account affect the insured's taxes? a) The employer contributions are not included in the individual insured's taxable income. b) The employer contributions are taxed at the same rate as the Social Security tax rate. c) The employer contributions are taxed to the individual insured as earned income. d) The employer contributions are deducted from the individual insured's tax calculations.

The employer contributions are not included in the individual insured's taxable income.

Which of the following best describes what the annuity period is? a) The period of time from the effective date of the contract to the date of its termination b) The period of time during which accumulated money is converted into income payments c) The period of time from the accumulation period to the annuitization period d) The period of time during which money is accumulated in an annuity

The period of time during which accumulated money is converted into income payments

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? a) Incontestability b) Physical Exam and Autopsy c) Legal Actions d) Time of Payment of Claims

Time of Payment of Claims

When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees a) To renew the policy indefinitely. b) To renew the policy until the insured has reached age 65. c) To charge a lower premium every year the policy is renewed. d) Not to change the premium rate for any reason.

To renew the policy until the insured has reached age 65.

How long will a life annuity with an installment refund pay? a) Until the balance of the initial premium is paid out in continued payments to the beneficiary after the annuitant dies. b) For guaranteed 20 years. c) Only until the annuitant dies.

Until the balance of the initial premium is paid out in continued payments to the beneficiary after the annuitant dies.

All of the following are true about group disability Income insurance EXCEPT a) The waiting period starts at the onset of the injury or sickness. b) The longer the waiting period, the lower the premium. c) Coverage applies both on and off the job. d) Benefits are usually short term.

Coverage applies both on and off the job.

Premium payments for personally-owned disability income policies are a) Eligible for tax credits. b) Tax deductible. c) Tax deductible to the extent that they exceed 10% of the adjusted gross income of those itemizing deductions. d) Not tax deductible.

Not tax deductible.

Which type of life insurance policy generates immediate cash value? a) Decreasing Term b) Continuous Premium c) Single Premium d) Level Term

Single Premium

What document describes an insured's medical history, including diagnoses and treatments? a) Individual Medical Summary 2 b) Comprehensive Medical History c) Attending Physician's Statement d) Physician's Review

Attending Physician's Statement