TX Health Life & Annuity

Which of the following statements is true about a Long Term Care policy?

hospitalization is usually required before benefits can begin

Which of the following is true about sharing of commissions between producers?

must have the same licenses

A person has the aviation exclusion applied to their policy, how will this effect their premiums?

no increased premium

An employer offers Group Term Life insurance in the amount of $10,000 for which the employer pays $5 per policy. Which of the following statements is true?

no taxes need to be reported in this transaction - Nothing is taxable in Group Life insurance on the test.

When an insurer decides to discontinue coverage at the end of the term, this is known as?

non-renewal

Which of the following disability provisions would not cover on the job injuries?

nonoccupational

A short term major medical policy is most likely written as:

nonrenewable

A 30 year level term is best described as?

not convertible without a rider

All of the following are required provisions in a life insurance contract, EXCEPT:

outline of coverage

Residual disability is similar to what?

partial disability

An applicant applies for a nonmedical (No Part 2 of app) insurance and pays the premium 4 days later; before underwriting is complete, the insured dies of an illness. How will the insurer respond?

pay the claim

J normally pays her premiums annually on July 1st. She has a claim midway through the month, but pays her premiums immediately on July 31st. How will the insurer decide the claim?

pay the claim

Which of the following insurers is created with an attorney-in-fact?

reciprocal

Which of the following best describes the insureds rights in a third party ownership contract

the insured has no rights

Which of the following is true about an assignment?

the insurer is not liable for the assignment consequences - Insurers are not liable for assignments. An assignment means that you name a new policyowner, it is the transfer of ownership from one policyowner to another.

The provision of a policy that determines the method of payment would be best described as:

the premium payment mode

When must an insurable interest exist in life insurance?

at the time of application

Under a life insurance contract, all of the following are deemed nonforfeiture options except:

automatic premium loan

Agents may charge a fee for services in which scenario?

fees represent a reasonable business expense

J has a Major Medical HMO with a $100 deductible, 80 20 coinsurance and a 90 day deductible rollover every calendar year. J filed a claim for $50 in November 2013 and in March files a $3,000 claim. How much will the insurer pay of the March claim?

$2,360

An accidental death and dismemberment policy will generally pay what amount of the principle for loss of a hand?

1/2

T pays a monthly premium of 100 for her health insurance. What would be the duration of the grace period under her policy?

10 days

Which of the following is not true about a universal life insurance policy?

fixed premiums

All of the following could qualify for Medicare except:

full-time college student

Which of the following MUST be provided for by an Health Maintenance Organization by LAW?

Preventative Care

When a doctor refers to the insurer for the costs of an operation before the procedure, this is an example of what?

Prospective Review

Which of the following is NOT true about a Health Reimbursement Account:

funds are solely contributed by the employee

Which of the following would likely happen should an insured die while receiving disability benefits?

any earned benefits will be paid and excess premium will be refunded

A person has a 25,000 claim and is covered by two health insurance plans. Their primary insurer pays 13,500 of the claim. How much will their secondary insurer pay of this claim?

11,500

What is the minimum benefit period for Long Term Care?

12 months

Under HIPAA, what is the lowest amount of members for any group health plan?

2 members

An insured with a 1 month old infant is looking for a $250,000 death benefit for twenty years with the lowest premium. Which would you consider most suitable?

20 year level term because the insured needs a static death benefit (250k) and term because it is lower than whole life. 20 pay are both whole life and increasing term the death benefit would have changed.

In this state, how many hours of ethics training is required in continuing education?

3

A 30 year old wishes to purchase a life policy to plan for their retirement at age 60. This policy needs to be considered permanent and continue to build cash value along with having an adequate death benefit. Which policy should be purchased?

30 pay life

How many hours prelicensing course does an agent with a temporary license need to take before their test?

40

A person who has a temporary license must receive how much insurance training prior to receiving their general license?

40 hours

K has a 100 deductible and 80/20 coinsurance on her Major Medical POS plan. Upon having a claim of 2,000, how much will K be responsible for?

480

When will the 10% tax penalty disappear on an IRA?

59 1/2

All of the following are correct about the required provisions of a health insurance policy EXCEPT:

A reinstated policy provides immediate coverage for an illness.

The dividend option if used will create a taxable event is known as:

Accumulation of Interest

Which of the following is NOT a duty of the commissioner of insurance?

Activate claims reserves

A Limited Pay policy will provide coverage until when?

Age 100

When is a free look period effective?

At the time of delivery

C is looking for a comprehensive health policy to cover his occasional sicknesses. Which type of policy did C most likely not purchase?

Basic Hospital and Surgery policy

Which of the following is CORRECT about a basic hospital policy:

Benefits are less than major medical

The insured has a life income policy with a period certain of 10 years, which is correct?

Benefits are paid for life, or 10 years, whichever is greater

An insured has a loss on May 30th, then cancels the policy on June 1st. If the insured provided proof of loss to the insurer on June 8th, which will happen?

Benefits will be paid immediately.

Which of the following would still have to take the state exam to become licensed?

Certified Public Accountant (CPA)

The form that allows an insured to change whom will receive the payment of claims is known as what?

Change of beneficiary

Which rider will allow a child temporarily covered on their parent's policy to continue coverage on their own after age 18?

Child's Term Rider

A basic hospital policy will pay for which of the following?

Convalescent care for 31 days

An agent gives an insured a conditional receipt; when does coverage begin?

Date of medical exam.

An insurer discovers that the insured has HIV/AIDS in their blood-work, how will the insurer respond?

Deny the application

Which of the following is true about the taxation in life insurance?

Dividend interest is taxable each year.

Most major medical plans cover medical expenses both in and out of the hospital and have high maximum limits. What is the term used to describe this?

Eligible

All of the following are found on the face page of a policy, EXCEPT:

Exclusions

J submits his application and premium on August 28th, the policy goes through underwriting on September 2nd and is delivered on September 6th. When J returns the policy on September 12th, what will most likely happen?

Full premiums will be refunded - J is still in the Free Look period and will receive all of his money back. The period is 10 days for all policies, except Medicare and Long Term Care which is 31 days.

Which of the following is NOT true about a health savings account funds?

Funds do not roll over next year

A person over the age of 65 and is still working, that has Medicare and Group health, which plan is primary?

Group health insurance would be primary even if the person has Medicare.

The type of renewability option that provides for coverage until 65 without premiums increasing would be best described as:

Guaranteed - Noncancelable

Which provision in a disability policy will allow the insured to increase their benefits?

Guaranteed Insurability

K has a Disability Income policy providing coverage until age 65, but it includes a provision which allows the insurer to adjust rates based off of her class rating. What is the most likely renewability option?

Guaranteed renewable (Medicare Supplement and LTC) means that the insurer has to renew you every year, but the rates will adjust. Noncancelable means that the insurer will have to renew you, but your premiums stay the same.

Which of the following cash account policies may the insured not take a withdrawal from at any time they want?

Immediate Annuity

Which of the following life insurance policies would be best suited for an insured seeking safe growth that will never lose value, as well as hopefully maintaining protection against inflation?

Indexed Universal Life - Indexed products have a guaranteed minimum interest rate for safety and are tied to markets such as the S&P 500 which normally out-pace inflation. Variable products are higher risk but may have higher returns and Fixed products are the safest investment but may be affected more by inflation.

Which of the following entities has the authority to make modifications to an insurance policy?

Insurer's executive officer

Which of these statements is not found in a non-forfeiture table?

Interest Only

An insured takes a loan from a whole life policy but decides not to pay back the loan. Which of the following will most likely apply?

Interest will be deducted from the cash value

Which of the following is TRUE about a long term care insurance policy?

It is written as guaranteed renewable

J has an Accidental Death & Dismemberment policy in the amount of $100,000 with his mother as primary beneficiary. J is involved in a car accident and dies, 2 months later J's mother dies. How was the death benefit paid?

J's mother received the death benefit

R has a disability policy without the recurrent disability definition and a 1 month elimination period. R injures his back on January 1st and recovers 3 weeks later. R again injuries his back on June 1st and is disabled until December 31st. When would benefits begin?

July 1st

K has a life insurance policy with H and L named as beneficiaries. L dies young at age 18 and H died in a car accident. 2 months later when K dies, under the common disaster clause, who will receive the benefits?

Ks estate

Under which clause would the insured be unable to sue an insurer within the first 60 days of a claim?

Legal Actions Clause

Which type of settlement option does period-certain apply to?

Life Income - The period certain clause may be added to a Life Income settlement option. If the insured has a 20 year period certain attached to Life Income and the insured dies 5 years into the benefits. The remaining 15 years of income will go to the insured's beneficiary and then payments will cease.

Which of the following whole life policies would be the overall lowest cost to an insured?

Life Paid Up @ 65 would be lower the lower cost WHOLE life policy due to the insured saving on interest to the insurer by paying off the policy earlier than Straight Life.

Which of the following is the least expensive whole life policy from these options?

Life Paid up @ 65

The type of insurance policy contingent upon being ineligible to complete 2 Activities of Daily Living (ADL's)

Long Term Care covers nursing homes, home health care and custodial care for at least 12 months if the insured cannot perform 2 ADL's. An ADL is the first things you do when you wake up, such as eating, bathing, moving, etc. If you cannot do 2 activities of daily living, the insurance company will begin paying for your nursing home.

An outline of coverage is required to be given during the sales process of which policies?

Medicare Supplement or Long Term Care

Children would automatically be covered in which of the following scenarios?

Newborn and adopted children

Which type of Disability Income option would be best suited for a person covered by Workers Compensation?

Non Occupation

Which must a person with a noncontributory disability policy complete during the probationary period?

Only sign an enrollment card. Noncontributory insurance is paid for by the employer (the employee did not contribute), thus there is no need to pay premiums. Dependents are not required to be added and noncontributory plans have no medical underwriting.

Which type of policy may be canceled by the insurer on set dates listed in the policy?

Optionally renewable

Which of the following riders will waive the insureds premium until a child reaches a certain age?

Payor Benefit

Which of the following will NOT receive a copy of the Medical Information Bureau report?

Policyowner who is not the insured

Which of the following statement is TRUE of a whole life policy?

Premiums are set prices and do not vary

V, age 30, has a noncancelable disability policy for which she has paid off in full until age 65. When V is killed in a jet ski accident at age 49, what will the insurer do with the excess premiums V paid?

Refund unearned premium

Which type of life insurance policy has an increasing premium?

Renewable Term

Under COBRA, which of the following provisions must be included in all states for an employee?

Right of conversion without proving insurability

W and S purchase a buy sell agreement on their company, and names himself as beneficiary. The company becomes insolvent two months later and W dies. Even though there is no insurable interest, how will these benefits be paid?

S receives the full benefits

What is the best policy for estate planning and business purposes?

Survivorship policies (Last to Die) are perfect for estate purposes. It allows the death benefit to be paid to the children after both parents are deceased, then the children use the money to pay off the taxes.

Which of the following would help prevent a fixed or variable universal life policy from lapsing?

Target premium is the amount the insured should pay in universal life to keep the policy in force and at no risk of lapsing. The target premium only applies to universal life policies.

An employer purchases a long term care policy for an insured, how are benefits taxed?

Tax Free

A Long Term Care extra expense policy will pay for which of the following services?

custodial - Long Term Care insurance covers nursing homes, home health care, adult day care, custodial care for people who are unable to perform two Activities of Daily Living.

N has a life insurance policy with the guaranteed insurability rider (future increase option). N is age 25 and asks his agent how many more times he can use the rider. What would the agent most likely respond with?

The Guaranteed Insurability rider, also known as future increase option, only allows you to increase the benefits every 3 years until age 40. 40 - 25 = 15 years, 15/3 = 5 times.

Which clause specifically applies to Pre-Existing Conditions?

The Time Limit on Certain Defenses provides a 2 year period the insurer may deny a claim and void a policy due to a material misrepresentation on a policy. This applies to pre-existing conditions

D is a small entrepreneur of a 15 person company who is shopping for a retirement plan to add as a benefit for her employees. D wishes to remain a sole proprietor and realizes her options are limited due to this fact. Which type of retirement plan should the agent recommend?

The answer is Keogh due to the sole proprietorship nature of the business. The SEP would be a better option and is also for sole proprietors, but for your state test choose Keogh if you see sole proprietorship.

Partners X and Y enter into a business contract that is going very well. They decide they need to protect the business and purchase a 50/50 buy-sell policy covering each others interests in the business. Which of the following best describes this agreement?

The benefits are tax free

An office manager decides to change occupation to a construction worker. Under the change of occupation provision, when a disability occurs, which of the following will most likely occur?

The claim would be denied

COBRA benefits would be terminated in which of these scenarios?

The employer has canceled the health plan

An insured has a 20 Pay Whole Life policy in the amount of $20,000 with an Accidental Death and Dismemberment rider that pays double indemnity. The insured died due to cancer, what amount will the beneficiary receive?

The full $20,000 was paid, the ADD rider would have doubled it or tripled it only if the insured died due to an accident, but the insured die due to cancer.

Which of the following is CORRECT about waiver of premium?

The insured will have to satisfy a few months waiting period before it kicks in

An applicant has given an agent an unsigned check. The agent sends the check in to the insurer alongside with the application. The insurer sends the check back to the agent, when would coverage begin?

The policy begins when the premium is paid and the policy is issued.

Who is the only party that can change the beneficiary?

The policyowner

What is the primary purpose of the Employee Retirement Income Security Act (ERISA)?

To set fiduciary standards and procedures for handling qualified retirement accounts

T purchases insurance on herself and names her husband as primary beneficiary, together they have three children. The husband dies in May of 2013 and T dies on April 2nd 2014. Who will receive the benefits?

Ts estate. Since there is no beneficiary listed, the death benefit goes to the insureds estate.

N paid for his Long Term Disability policy with a lump sum in 2006. In 2008, N died, which of the following most likely occurred?

Unearned premiums are returned - Unearned premiums are premiums that the insurer collected, but never provided insurance for. Since N died early, his unearned premiums are due back to his estate because the insurer did not earn the money.

Which of the following investment products have producers who are regulated by the National Association of Securities Dealers (NASD):

Variable Life

The transfer of ownership of a policy completed by the policyowner is best described under which term?

assignment - Assignment is the transfer of ownership; there are two types of assignments, absolute (permanent, one way) and collateral (partial/temporary). The question does not say if it is temporary or permanent, so the best answer is assignment.

When must benefits begin in a Traditional IRA?

When must benefits begin in a Traditional IRA?

G is purchasing insurance and pays his initial premium, while the producer issues the appropriate receipt. The underwriter decides to issue the policy with an attached exclusion rider, of which G agrees to. When did G's policy go into effect?

When the policy was issued with the attached rider

Which of the following best describes split-dollar insurance?

When the premiums are split among employer and employee

A person pays for a policy on August 3rd and the policy is issued on August 5th. The agent hand delivers the policy on August 18th and the insured returns it on August 24th, what will most likely occur?

a full refund is made to the insured - The customer is within the 10 day free look period, when they return it they can receive a full refund. The free look period begins at the time of delivery.

In regards to having a minor as a beneficiary, which of the following would determine how the benefits of an Endowment contract would be paid upon the death of a parents (insureds) death?

a legal guardian would be appointed or a legal guardian designation was listed on the policy and they would be in charge of the funds

A 65-To-Term-Whole-Life policy would have which of the following?

a level premium

Which of the following would NOT be required to obtain a life insurance license?

a person selling life insurance under $25,000 face amount

Which of the following best describes a Modified Endowment Contract?

a whole life policy with payments made too early

A student pilot is applying for life insurance and receives the standard rate with no increases in premiums. What did the insurer most likely do?

added an aviation exclusion

Which of the following best describes a contract written on a "take it or leave it" basis?

adhesion

Which of the following is not an interest sensitive policy?

adjustable life

Part C of Medicare covers what?

advantage (coinsurance)

A producer is offering a life insurance product to a customer and the customer has questions. After all questions are answered, the customer pays the initial premium and the producer issues the conditional receipt. Later on the policy is issued. When did the insured originally become covered?

after all conditions were met

A producer submits prepaid rated up application. Upon underwriting the policy, the classification is rated up again. Upon delivering the policy, what must occur?

an amended application and more premium must be collected

Which of the following is true about the taxation of a participating insurer?

any amount earned in excess of the dividend is taxable each year

Long Term Care and Medicare supplement policies must receive an outline of coverage when?

at the time of application

An agent makes a social media post exagerating an insurers dividend. What has this agent committed?

false advertising

Which of the following is true about the reinstatement provision included in an accident and health policy?

back premiums may not be collected for past due premiums longer than 90 days

X is searching for a survivorship permanent policy to provide for estate taxes in the event of death. X meets with producer Y to purchase the policy, tells producer Y that he is price conscious and would like to save as much money as possible. What can Y advise X to do for the lowest annual premium that still meets his needs?

backdate policy Backdating a policy may lower premiums by using a lower issue age; policies may be backdated up to 6 months A term policy would be much cheaper as well; however, it would not meet his estate conservation taxes goal if he were to live a long life since term is temporary insurance.

Which of the following is true about the Social Security waiting period?

benefits will not begin until the 5th month and paid on the 6th month

Which rider will allow the insured to add their child onto the policy?

child term rider

M has a major medical policy that she pays her premium once per year in May. M has forgotten to pay her premium for May and June and is involved in an accident on June 28th. How will the insurer respond to this claim?

claim is denied

The insured paid for the premium upfront, but the underwriter rated up the policy. When the agent delivers the policy, what must the agent do?

collect more premium and an amended application

All of the following are benefits under Social Security EXCEPT:

compensation

All of the following are TRUE about Adjustable Life EXCEPT:

death benefits may be increased without proving insurability

W has completed an application, paid for his policy and received a conditional receipt for his disability policy. W becomes disabled before the medical exam occurs, what will the insurer most likely do with his claim?

deny claim and refund premium

A Certificate of Coverage is required to have which of the following?

effective dates

Costs paid for by a medical policy are referred to:

eligible expenses

What has the largest impact on a disability insurance premiums?

elimination period

The type of policy that is designed for rapid cash value growth is known as:

endowment contract

The portion of a contract that states the agent may make no changes to the contract is known as:

entire contract

The non-forfeiture option that provides an insured with coverage for a specified period of time can be best described as?

extended term

W is currently 45 and looking to purchase a contract that will provide retirement income for him at the age of 65. Which policy would he most likely not have purchased?

immediate annuity

What is the MOST important factor of disability insurance when determining benefits?

income

A return of premium rider is written as which type of insurance?

increasing term

Which of the following is NOT a characteristic of group insurance?

insureds are issued separate policies

The entire contract clause states that only which party may make changes to the contract?

insurer

The legal purpose of a unilateral contract falls on whose responsibility?

insurer

The clause where the insured may find the "promise to pay" is known as:

insuring

Which portion of the contract may the insured find the benefits covered in the policy?

insuring

The promises of an insurer is found in which clause?

insuring clause, consideration clause

Which settlement option is NOT a systematic liquidation of funds?

interest only

Which of the following policies may be used to circumvent the insurable interest clause in a life insurance contract?

investor originated life insurance

A person wants to name a charity as the permanent beneficiary of his life insurance. Which of the following best describes his designation?

irrevocable

A claims form was not furnished to the insured, which of the following is true about Proof of Loss?

it is submitted by any reasonable method

Which of the following is true about a single premium whole life policy?

less expensive than straight life - Single premium policies will be the least overall costing form of whole life insurance.

All of the following may be considered limited plans, except:

life insurance

Which of the following is a Limited Pay policy?

life paid up at 65

Which of the following is a benefit of a survivorship policy?

lower cost than traditional life

A plan with coinsurance would most likely be which plan?

major medical - Major medical means deductibles and coinsurance. Managed care would be savings of costs. Consumer driven health insurance has high deductibles and comprehensive plans cover accidents and sickness.

Hospice is considered which aspect of health insurance?

managed care

When an insurer evaluates claims and handles risk appropriately, which method of risk handling is being used?

management

Which of the following is a required provision in a Disability Income policy?

payment of claims

All of the following are non-forfeiture options except:

policy loan - Non-forfeiture refers to the three ways an insured can receive their cash value when a policy is surrendered. Extended Term, Reduced Paid Up and Cash Surrender value are the three non-forfeiture options.

Which of the following highlights the benefits and exclusions in a life insurance contract?

policy summary

Which of the following statements is true about the misstatement of age provision?

policy will remain in effect - Misstatement of age does not allow the policy to be voided/canceled; if the insured used a lower age, the benefits will be reduced to the correct amount the premium would have purchased. If the age is misstated higher, the insured would likely receive a premium refund. The incontestability clause does not apply to age, sex or identity.

When a person choose a premium payment mode less than the maximum, what will most likely occur?

premiums increase due to processing fees

Under the coordination of benefits clause, when an insured has two insurance plans and one pays, this is known as:

primary insurance

A pre-authorization form is which part of managed care?

prospective review

When the policyowner wishes to conserve their right in regards to a beneficiary, they should name the beneficiary as which of the following?

revocable

A basic hospital plan would most likely cover:

room and board

A major medical health contract can have its premiums paid in all of the following methods except:

single premium

Which of the following best describes statements made on an application by the insured?

statements are substantially true

How are disability benefits paid?

tax free

An applicant decides to purchase insurance on their spouse and names the applicant as primary beneficiary and their daughter as contingent beneficiary. Out of all included, who must sign the application?

the applicant and their spouse

An irrevocable beneficiary may only be changed by whom?

the beneficiary themselves

The primary beneficiary becomes deceased before the insured. When the insured dies, who will most likely receive the benefits?

the contingent beneficiary if listed

A father is going to purchase a term life insurance policy on his 18 year old son. Which of the following signatures are required?

the father and the son

Which of the following is a correct assertion about the waiver of premium rider?

the insurance company will pay premiums after a short probationary period

In a Buy Out policy which of the following would you consider to be true?

the shareholders and owners are the recipients of the benefits

The insured has a disability policy including the payment of claims provision. What is the purpose of this provision?

to determine who gets paid in a claim

F is a worker at a construction company which does not provide for Workers Compensation benefits. When F becomes disabled, he files a claim under his group disability policy. The insurer determines he is permanently disabled. What best describes his disability status?

totally disabled

A Major Medical health insurance policy is considered which?

unilateral

The legal portion of a contract stating an insurer bears the burden is known as which?

unilateral

A major difference between universal life and an annuity in regards to cash value would be?

universal life will be more expensive than an annuity

A policy with flexible premiums and cash value with an investment component is known as:

variable universal life