TX Life and Health Exam
An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy?
10 days.
In a noncontributory group policy...
100% of eligible employees must participate
Which of the following is TRUE for both equity indexed annuities and fixed annuities?
A. Both are considered to be more risky than variable annuities. B. They invest on a conservative basis. C. They have a guaranteed minimum interest rate. D. The are both tied to an equity index. ANSWER: C
An absolute assignment is a
A. Change of insurer B. Transfer of all ownership rights in a policy C. Transfer of some ownership rights in a policy D. Change of beneficiary ANSWER: B
Which of the following types of insurance policies is most commonly used in credit life insurance?
Decreasing term
Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled?
Disability Buy-Sell
On an Accidental Death and Dismemberment (AD&D) insurance policy, the death benefit payable is known as the
Principal Sum
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?
Replacement rule
Workers Compensation benefits are regulated by what entity?
State government
If an insurer requires a medical examination of an applicant in connection with the application for the life insurance, who is responsible for paying for the examination?
The insurer
Under an extended term nonforfeiture option, the policy cash value is converted to
The same face amount as in the whole life policy.
What is the purpose of coinsurance provisions?
To help the insurance company to prevent overutilization of the policy
What is the purpose of a fixed-period settlement option?
To provide a guaranteed income for a certain amount of time.
An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n)
Inspection Report
An example of an alien insurer doing business in this state is one formed under the laws of
Mexico
Which of the following is the closest term to an authorized insurer?
A. Legal B. Admitted C. Certified D. Licensed ANSWER: B
Each HMO enrollee must be provided
A. Nondisclosure agreement B. Evidence of coverage C. Buyer's Guide D. Certificate of authority ANSWER: B
Which of the following is true about the requirements regarding HIV exams?
A. Prior informed oral consent is required from 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. ANSWER: C
A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will
A. Reduce to the pre-surrender value. B. Continue to increase. C. Remain the same. D. Decrease over time. ANSWER: B
Which of the following is NOT an exclusions in a medical expense insurance policy?
A. Self-inflicted injuries B. Routine dental care C. Coverage for dependents D. Military duty ANSWER: C
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT
A. Signed waiver of premium B. Statement of good health C. Payment of premium D. Delivery receipt ANSWER: A
Which of the following would NOT be eligible for coverage under a key person?
A. The manager of a small store B. The owner of a shop C. The executive of a company D. The pharmacist in a drug store ANSWER: B
In an individual life insurance policy, when must the nonforfeiture benefits begin?
After 3 policy years
While a claim is pending, an insurance company may require
An independent examination as often as reasonably required.
The minimum interest rate on an equity indexed annuity is often based on
An index like the S&P 500.
What specific type of insurance is often written in conjunction with hospital expense policies and includes surgeons' and anesthesiologists' fees?
Basic surgical expense insurance.
The accelerated benefits provision will provide for an early payment of death benefit when the insured
Becomes terminally ill
Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process?
Buyer's Guide
How many consecutive months of coverage (other than in an acute care unit of a hospital) must LTC insurance provide in this state?
12
The death proceeds for life insurance policies must be paid to the claimant within what time period after due proof of death of the insured?
2 months.
An insurer must notify the consumer in writing that an investigative consumer report has been requested, within how many days of the initial request?
5 days
What is the maximum amount of time an insurer may delay payment of a claim without having to pay additional interest?
60 days.
Under the mandatory uniform provision Proof of Loss, the claimant must submit proof of loss within what time period after the loss?
90 days
What is the best description of a Major Medical Expense Policy?
A policy that provides catastrophic medical coverage beyond basic benefits on a usual, customary, and reasonable basis.
In Texas, life insurance policies that include illustrations must include which of the following disclosures?
A. "The illustration is not part of the insurance contract." B. "This illustration has not been approved" C. "This is an incomplete illustration" D. "The values in the illustration are guaranteed." ANSWER: A
Which of the following individuals could legally receive commissions from the sale of a life insurance policy?
A. A life and health insurance counselor B. A licensed life insurance agent C. A licensed insurance consultant D. An employee for a life insurance company who is not licensed ANSWER: B
Which of the following would NOT be considered a limited coverage policy?
A. Accident-only insurance B. Travel policy C. Major medical expense policy D. Special risk policy ANSWER: C
Which of the following terms refers to solicitation, negotiation, effectuation or advising related to an insurance contract?
A. Advertising B. Rescission C. Insurable interest D. Insurance transaction ANSWER: D
Which of the following is NOT a Medicaid qualifier?
A. Age B. Residency C. Insurability D. Income level ANSWER: C
Which of the following would be required to obtain a Certificate of Authority?
A. Agents B. Enrollees C. Subscribers D. The HMO ANSWER: D
In classifying a risk, the Home Office underwriting department will look at all of the following EXCEPT
A. Applicant's past income. B. Applicant's past medical history. C. Applicant's present physical condition. D. Applicant's current occupation. ANSWER: A
An applicant for a health insurance policy returns a completed application to her agent, along with a check for the first premium. She receives a conditional receipt two weeks later. Which of the following has the insurer done by this point?
A. Approved the application. B. Issued the policy. C. Neither approved the application nor issued the policy. D. Both approved the application and issued the policy. ANSWER: C
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 ANSWER: C
Life insurance can provide which of the following?
A. Creation of a future liability B. Liquidation of one's estate C. Survivor protection D. Protection against outliving one's assets ANSWER: C
Which of the following entities has the authority to make changes to an insurance policy?
A. Department of Insurance B. Broker C. Producer D. Insured's executive officer ANSWER: D
What is the best way to change an application?
A. Draw a line through the incorrect answer and insert the correct one. B. Start over with a fresh application. C. Erase the previous answer and replace it with the new answer. D. White-out the previous answer. ANSWER: B
Forcing a client to buy insurance from a particular lender as a condition of gather a loan is defined as
Coercion
What is the provision that provides for the sharing of expenses between the insured and the insurance company?
Coinsurance
An applicant gives her agent a completed application and the initial premium. What can her agent issue her that acknowledges the initial premium payment?
Conditional Receipt
An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. What is this called?
Consideration
Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as
Contracts of Adhesion.
In disability income insurance, the time between the onset of an injury or sickness and when benefits begin is known as the
Elimination Period
An insured is hospitalized with a back injury. Upon checking his disability income policy, he learns that he will not be eligible for benefits for at least 30 days. This indicates that his policy is written with a 30-day
Elimination period
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?
Equal to the original policy for as long as the cash value will purchase.
An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n)
Equity Indexed Annuity.
When life insurance proceeds are used to pay inheritance taxes and federal estate taxes, it is known as
Estate Conservation
Items stipulated in the contract that the insurer will not provide coverage for are found in the
Exclusions
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?
Extended Term
An agent selling variable annuities must be registered with
FINRA
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?
Fixed period.
What 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?
Free Look Period
What provision in a life or health insurance policy extends coverage beyond the premium due date?
Grace period
As it pertains to group health insurance, COBRA stipulates that
Group coverage must be extended for terminated employees up to a certain period of time at a the former employee's expense.
If the insured has the right to keep a long-term care insurance policy in force by making timely premium payments, and the insurer may not make any changes to the policy or decline to renew it, the policy is
Guaranteed renewable
An agent is ready to deliver a policy to an applicant but has not yet received payment. Upon delivery, the agent collects the applicant's premium check, answers any questions on the applicant may have, and then leaves. What did he forget?
He did not ask her to sign a statement of good health.
In Texas, how is the Commissioner of Insurance placed in office?
He is appointed by the Governor for a term of 2 years.
Before an agent delivers a policy, the insurer makes a last-minute change to the policy. The agent informs the insured of this change, and he accepts it. In response, what must the agent do?
He must have the insured sign a statement of acknowledgment that he is aware of the change.
An insured's hospital policy states that it will pay him a flat fee of $75/day for each day he is in the hospital. This policy pays benefits on what basis?
Indemnity
What type of health insurance plan provides broad medical expense coverage without requiring an insured to meet a deductible?
Indemnity
A guaranteed renewable disability insurance policy
Is renewable at the insured's option to a specific age.
What is the purpose of a free-look period in insurance policies?
It allows the insured to reject the policy with a full refund.
Your client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure than both beneficiaries are guaranteed an income for life. What settlement option should this policyowner select?
Joint and Survivor
The provision which prevents the insured from bringing any legal action against the company for at least 60 days after proof of loss is known as
Legal Actions
On a participating insurance policy issued by a mutual insurance company, dividends paid to the policyholder are
Not taxable since the IRS treats them as a return of a portion of the premium paid.
With respect to the entire contract clause in health policies, who has the authority to make changes to an existing policy?
Only an executive officer of the company.
A stock insurer is defined as an insurer
Owned by its stockholders.
In group insurance, the primary purpose of the Coordination of Benefits Provision is to
Prevent overinsurance
An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy?
She must convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan.
An agent makes a mistake on the application and then corrects his mistake by physically entering the necessary information. Who must then initial that change?
The applicant
An insurer is attempting to determine the insurability of an applicant and decides to obtain medical information from several different sources. Which entity must be notified of the investigation?
The applicant
What is the purpose of COBRA?
To provide continuation of coverage for terminated employees
When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees
To renew the policy until the insured reaches age 65
An insurance agent wants for a client to replace her current annuities plan with another one. He presents the new one in an incomplete and dishonest way, which makes the new contract seem far more appealing than the original one. The policyowner ends up surrendering her original contract and replacing it with the new one. What term best describes what the agent did?
Twisting
In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pat losses covered by the policy. What contract element does this describe?
Unilateral
Under an HMO, child immunization costs cannot be charged for children under what minimum age?
6
Under the mandatory uniform provision Legal Actions, an insured is prevented from bringing a suit against the insurer to recover on a health policy prior to
60 days after written proof of loss has been submitted.
What is the maximum age that a disabled insured worker may receive Social Security disability benefits?
65, because they are replace with retirement benefits.
In order for an alumni association to be eligible to purchase group health insurance for its members, all of these statements must be true EXCEPT
A. Has a constitution, by-law, and must hold at least one annual meeting. B. Is organized for reasons other than buying insurance. C. Has at least 100 members. D. Has been active for five years minimum. ANSWER: D
Cash Value guarantees in a whole life policy are called
Nonforfeiture Values
How many pairs of glasses in a 12-month period will a vision expense insurance plan cover?
One
An equity indexed annuity grows based upon what?
Performance of a recognized index.
An annuity would normally be purchased by an individual who wants to
Provide income for retirement
The provision in a health insurance policy that ensures that the insurer cannot refer to any other document that is not contained in the contract is called
The entire contract clause
In health insurance, the length of the grace period varies according to
The mode of premium payment. Grace Period may be 7, 10, or 30 days, depending on how frequently premium is paid.
What is the purpose of the impairment rider in a health insurance policy?
To exclude coverage for a specific impairment.
What is the purpose of the Fair Credit Reporting Act?
To protect consumers against the circulation of inaccurate or obsolete personal or financial information.
If an insured pays a health insurance premium each month, how long would the grace period be under this policy?
7 days.
Reports required by the Texas Department of Insurance based on complains about unfair settlement practices must contain information about all of the following EXCEPT
A. The resident state of the claimants B. The total number of claims C. The total number of complaints D. How the claim was settled ANSWER: A
An insurer mails an insurance policy to a new policyowner. When the insurer relinquishes control of the policy, the policy is considered
Delivered.
Under the mandatory uniform provision "Notice of Claim", written notice of a claim must be submitted to the insurer within what time parameters?
Within 20 days
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 what number of days must the hearing be held?
10 days.
Within how many days must an insured notify the insurer of a child's birth and pay any required fees?
31 days.
All of the following would be considered rebating EXCEPT
A. An agent offers the use of his lake house to a client as an inducement to buy an insurance policy from him. B. An agent offers to share his commission with a policyholder. C. An agent offers tickets to a baseball game as an inducement to buy insurance. D. An agent misrepresents policy benefits to convince a policyowner to replace policies. ANSWER: D
Long-term care coverage may be available as an of the following options EXCEPT
A. Endorsement to a life policy. B. Endorsement to a health policy. C. Group long-term care. D. Individual long-term care. ANSWER: B
All of the following are Nonforfeiture options EXCEPT
A. Extended term B. Reduced paid-up C. Interest only D. Cash surrender ANSWER: C
Issue age policy premiums increase in response to which of the following factors?
A. Inflation B. Age C. Increased benefits D. Increased deductible ANSWER: C
Which of the following is true regarding credit life insurance?
A. It has a maximum term of 20 years. B. It insures the life of the debtor. C. It is purchased on an installment basis. D. It insures the life of a creditor. ANSWER: B
Which of the following situations is it legal to limit coverage based on marital status?
A. It is never legal to limit coverage based on marital status. B. Excessive number of divorces, as defined by the Insurance Code. C. Legal separation during the application process. D. Divorce within the last six months of applying for insurance. ANSWER: A
Which of the following is a risk classification used by underwriters for life insurance?
A. Normal B. Excellent C. Standard D. Poor ANSWER: C
All of the following statements concerning Medicaid are correct EXCEPT
A. Persons, at least 65 years of age, who are blind or disabled and unable to pay, may qualify for Medicaid Nursing Home Benefits. B. Medicaid is a state funded program that provides health care to persons over age 65, only. C. Individual states design and administer the Medicaid program under board guidelines established by the federal government. D. Individuals claiming benefits must prove they do not have the ability or means for their own medical care. ANSWER: B
Which of the following long-term care benefits would provide coverage for care for functionally impaired adults on a less than 24-our basis?
A. Residential care B. Assisted living C. Home health care D. Adult day care ANSWER: D
Which of the following is TRUE regarding variable annuities?
A. The annuitant assumes the risk on investment. B. A person selling variable annuities is required to have only a life agent's license. C. The funds are invested in the company's general account. D. The company guarantees a minimum interest rate. ANSWER: A
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 ANSWER: A
What protects the insured from an unintentional lapse of policy due to a nonpayment of premium?
Automatic premium loan
A life insurance policy used to fund an agreement that contactually establishes the intent of someone to purchase a business upon the insured business owner's death is a
Buy-sell agreement
When the policy owner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?
Fixed amount
An insurer incorporate under the laws of another state but doing business in this state is considered
Foreign
Jared has both a basic expense and a major medical policy. He is injured in an accident, which requires several major surgeries. This quickly exhausts Jared's basic expense policy. What must Jared do before his major medical policy can pick up where the basic expense policy left off?
He must pay a special deductible on his major medical policy.
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
Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?
Insuring clause
What is the main purpose of the Seven-pay Test?
It determines if the insurance policy is an MEC.
Variable Whole Life insurance is base on what type of premium?
Level fixed
Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors?
Life expectancy
What does an annuity protect the annuitant against?
Living longer than expected
Guaranteeing future dividends is considered to be an unfair or deceptive act known as
Misrepresentation
What is the proper action by the insurer if a prospective insured submitted an incomplete application?
Return the policy to the applicant for completion
An insured want to name her husband as the beneficiary of her health policy. She also wishes to retain all of the rights of ownership. The insured should have her husband names as what kind of benificary?
Revocable
If the insured has NOT received the proper claim forms within 15 days of their notice to the insurer of a covered loss under a major medical policy, the insured has the right to do what?
Submit the description in their own words on a plain sheet of paper.
Which entity has the option of including optional provisions in health insurance polices?
The insurer
If an insured under a variable life insurance policy dies, how will the insurer respond to outstanding policy loans?
The loan amounts are deducted from the death benefit.
What will vary the length of the grace period in a health insurance policy?
The mode of premium payment
If a credit life policy is terminated upon the payment of the death benefit, what happens to the premium paid into the policy?
The premium is considered earned, so no refund is required.
How are contributions to a tax-sheltered annuity treated with regards to taxation?
They are not included as income for the employee, but they are taxable upon distribution.
What is true regarding taxation of accelerated benefits under a life insurance policy?
They are tax free to the terminally ill insured.
What is the purpose of settlement options?
They determine how death proceeds will be paid
A medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographic area is known as
Usual, customary, and reasonable
When is the earliest a policy may go into effect?
When the application is signed and a check is given to the agent.
The Patient Protection and Affordable Care Act (PPACA) includes all of the following provisions EXCEPT
A. Coverage for preventative benefits. B. No lifetime dollar limits. C. Individual tax deduction for premiums paid. D. Right to appeal. ANSWER: C
Which of the following does NOT have to be included on the first page of a Medicare supplement policy?
A. Premium rates B. Renewal Provisions C. Continuation Provision D. The company's right to change premiums ANSWER: A
Which of the following best describes the type of care provided by HMOs?
A. Preventative B. Elective C. Major medical D. Fee-for-service ANSWER: A
A Major Medical Expense policy would exclude coverage for all of the following treatments EXCPET
A. Drug addiction B. Eye refractions C. Dental care D. Cosmetic surgery ANSWER: A
Which provision may be added to a permanent life policy, at no cost, that insures that the policy will not lapse so long as there is cash value?
Automatic Premium Loan Option
If a loan request is for payment of due premiums on the policy, how soon must the insurer issue a loan?
Immediately
Keith reads an agreement on the first page of his policy which includes a list of losses that will be covered by his insurer. What is the name of this agreement?
Insuring Clause
When may HIV-related test results be provided to the MIB?
Only if the individual is not identified
Which of the following is a feature of a disability buyout plan?
A. Taxable benefits B. A short elimination period C. A lump-sum benefit payment option D. Tax deductible premiums ANSWER: C
When are the agents required to provide the outline of coverage to an applicant for individual long-term care policies?
At the time of policy solicitation
Following a covered loss, the Time Payment of Claims Provision requires that an insurance company pay disability income benefits no less frequently than
Monthly
What is the purpose of a buy-sell agreement?
To allow the business buyout in case of the owner's death.
Why do Health Maintenance Organizations offer prepaid services?
To encourage preventative medicine for individual members.
With Adjustable Life, the owner can change all of the following EXCEPT
A. The premium B. The length of time the coverage will last C. The insured D. The death benefit ANSWER: C
Which of the following is true regarding Medicare supplement policies?
A. They must contain a minimum of Plans A and B B. The must be available to those age 60 and over C. The must be at least guaranteed renewable D. The must have at least a 15-day free-look period ANSWER: C
Which of the following would NOT a trigger the payment of Accelerated Death Benefits?
A. Being permanently disabled B. Terminal illness C. Requiring an organ transplant for the insured to survive D. Being permanently institutionalized ANSWER: A
All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT
A. It builds cash value. B. If the insured lives to age 100, the policy matures, and the face amount is paid to the insured. C. It does not have a guaranteed death benefit. D. It is funded by a level premium. ANSWER: C
All of the following health insurance disability benefits are income tax free EXCEPT
A. Key-person disability. B. Personally-owned individual disability. C. Employer-paid group disability. D. Employee-paid group disability. ANSWER: C
An agent is in the process of replacing the insured's current health insurance policy with a new one. Which of the following would be a proper action?
A. There should be a 10-day gap between the policies. B. Policies must overlap to cover pre-existing conditions. C. The old policy must be cancelled before the new one can be issued. D. The old policy should stay in force until the new policy is issued. ANSWER: D
Which type of care meets the insured's personal needs, and is provided by nonmedical personnel?
Custodial Care
How many days' notice must an insurer provide to an insured regarding the lapse of a policy due to outstanding laons?
30 days.
The recipient of a Cease and Desist Order wants to contest the Commissioner's charge in court. Within what span of time must the request be made?
30 days.
Underwriting is a major consideration when an insured wishes to replace her current policy for all of the following reasons EXCEPT
A. Benefits may change B. Premiums always stay the same C. Due to age or health, the policy may change dramatically D. Pre-existing conditions that were previously covered may not be covered under the replacing policy. ANSWER: B
Which of the following is the distinguishing characteristic of the interest-adjusted net cost method?
A. Comparing interest rates at the designated point in time. B. Buying equity indexed life insurance. C. Keeping yearly premiums and dividends level. D. Considering the time value of money in comparing life insurance costs. ANSWER: D
Which of the following is true regarding coverage for drug and alcohol addiction treatment in group health insurance policies issued in this state?
A. Coverage is optional and may be offered at the discretion of the insurer. B. Coverage is not available. C. Benefits provided must be the same as for any other physical illness. D. Coverage cannot be less than for any other physical illness. ANSWER: C
During replacement of life insurance, a replacing insurer must do which of the following?
A. Send a copy of the Notice Regarding Replacement to the DOI B. Obtain a list of all life insurance policies that will be replaced C. Guarantee a replacement for each existing policy D. Designate a new producer for a replaced policy ANSWER: B
Which of the following statements is CORRECT?
A. Solicitation of insurance may not be associated with the federal government. B. An advertisement may mislead the public about corporate structure as long as it is not guaranteed. C. Advertisements may use terminology that may not be understood by the general public. D. Advertisements may imply false statements as long as they do not guarantee false statements. ANSWER: A
An insurer advertises a health policy that is covered by Life and Heath 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. The ad must also include the contact information of the association. B. The ad must also include the contact information of the Commissioner of Insurance. C. Mentioning the Guaranty Association is mandatory when advertising in the state of Texas. D. Mentioning the Guaranty Association in advertisements is considered to be unfair trade practice. ANSWER: D
If a person is compensated for a testimonial in an advertisement, which of the following statements should be included in the advertisement?
A. The author is the employee of the insurer B. Commissioned advertisement C. False advertising D. Paid endorsement ANSWER: D
All of the following TRUE statements regarding the accumulation at interest option EXCEPT
A. The interest is credited at a rate specified in the policy. B. The policyowner has the right to withdrawal the accumulations at any time. C. The interest is not taxable since it remains inside the insurance policy D. The annual dividend is retained by the company. ANSWER: C
Annually renewable term policies provide a level deal benefit for a premium that
Increases annually
Which of the following statements is a correct statement about annuities?
A. Fixed annuities have the annuitant assume the risk of investment. B. Fixed annuities do not provide protection against inflation. C. Variable annuities provide minimum guaranteed rate of interest. D. Variable annuities place the funds into a company's general account. ANSWER: B
Dividends received on participating life insurance policies are
A. Not taxable because they are a return on your investment. B. Taxable because they are a return of unused premiums. C. Not taxable because they are a return of unused premiums. D. Taxable because they are a return of your investment. ANSWER: C
Which of the following is NOT mandatory under the Uniform Provisions Law as applied to accident and health policies?
A. Probationary Period B. The Limit on Certain Defenses C. Physical Examinations and Autopsy D. Entire Contract ANSWER: A
All of the following are excluded from coverage in an individual health insurance policy EXCEPT
A. Purely cosmetic surgery. B. Treatment received in a government hospital. C. Mental illness. D. Experimental procedures. ANSWER: C
The provision that sets forth the basic agreement between the insurer and the insured and states the insurer's promise to pay the death benefit upon the insured's death is called the
Insuring Clause
Which statement best describes agreement as it relates to insurance contracts?
A. One party accepts the exact terms of the other party's offer. B. The intent of the contract must be legally acceptable to both parties. C. All parties must be capable of entering into a contract. D. Each party must offer something of value. ANSWER: A
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?
A. Payor Benefit B. Jumping Juvenile C. Juvenile Premium Provision D. Waiver of Premium ANSWER: A
An insured, who is 44 years old, falls while mountain climbing on a vacation. He is now paralyzed. After a year, doctors say that he will never recover from his injuries. From which of the following programs will he be able to collect disability income?
A. Medicare B. MediCal C. Worker's Compensation D. Social Security ANSWER: D
Which statement is NOT true regarding a Straight Life policy?
A. The face value of the policy is paid to the insured at age 100. B. It usually develops cash value by the end of the third policy year. C. It has the lowest annual premium of the three types of Whole Life policies. D. Its premium steadily decreases over time, in response to its growing cash value. ANSWER: D
An applicant is denied insurance beacuse of information found on a consumer report. What requires that the insurance company supply the applicant with the name and address of the consumer reporting company?
The Fair Credit Reporting Act
Which of the following types of insurance is investment based, has a level premium, and a nonguaranteed cash value?
A. Credit life B. Variable whole life C. Interest-based life D. Universal life ANSWER: B
Which of the following losses would likely be covered under the Accidental Death rider?
A. Death resulting from long-term disability. B. Death caused by a head-on collision. C. Suicide. D. Mountain-climbing accident. ANSWER: B
All of the following are consideration in an insurance policy EXCEPT
A. The Cash Value in a policy. B. The statements on an application. C. The premium paid at the time of the application. D. The promise to pay a covered loss. ANSWER: A
How may continuing education hours must be completed on the subject of ethics every license renewal period?
2
Which of the following statements regarding health insurance policy provisions is NOT true?
A. All individual policies contain Universal Mandatory Provisions B. Insurers may only offer optional provisions that are allowed by the state when the policy is delivered. C. Insurers may add provisions that are not in conflict with uniform standards. D. All additional provisions written by insurers are cataloged by their respective states. ANSWER: D
Which of the following is true regarding policy conversion from group to individual coverage?
A. If the insured dies during the conversion period, benefits will be forfeited. B. Insurer must require evidence of insurability. C. Conversion must occur within 31 days. D. The amount of individual coverage must be greater than in the group coverage. ANSWER: C
Which rider added to a life insurance policy can pay part of the death benefit to the insured to cover expenses incurred in a nursing or convalescent home?
Long-term care
Regarding the free-look provision, the insurance company
Must allow the policyowner to return the policy for a full refund.
Which dividend option increases the death benefit?
Paid-up additions
What is the purpose of a benefit schedule?
To state what and how much is covered in the plan.
Considering the principles of liquidity, how would the policyowner use today's cash values in a life insurance policy?
Use it for emergency expenses
Conversion to an individual whole life policy is permitted without evidence of insurability within how many days of the termination of employment?
31 days.
Which of the following terms relates to disability income insurance?
A. Coinsurance stop loss B. Deductibles C. Insurable interest D. Residual benefits ANSWER: D
It is the agents responsibility to notify the department on a monthly basis about all of the following EXCEPT
A. Felony convictions. B. Administrative actions taken against the agent in another state. C. Change in the agent's marital status. D. Change of mailing address. ANSWER: C
Which of the following is NOT required to be stated in the outline of coverage provided with a long-term care policy?
A. The policy number. B. The right to return the policy for a refund. C. Basic information about the insurance company. D. Basic information about supplementary policies. ANSWER: D
Which of the following is NOT true of life settlements?
A. They could be sold for a greater amount that their current cash value. B. They involve insurance policies with large face value. C. The seller must be chronically ill. D. They could be used for key person coverage. ANSWER: C
The classification "Small Employer" means any person or firm that during the preceding year employed how many employees?
At least 2 and no more than 50.
Hospital indemnity/hospital confinement indemnity will provide payment based on
The number of days confined in a hospital
All of the following are dividend options EXCEPT
A. Paid-up additions B. Accumulated at interest C. Reduction of premium D. Fixed-period installments ANSWER: A
Among people in the same class and life expectancy, which of the following factors can be used to influence premium rates?
A. Occupation B. Ancestry C. Marital Status D. Race ANSWER: A
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?
A. Reciprocal B. Nonprofit service organization C. Stock D. Mutual ANSWER: D
A license may NOT be denied, suspended, or revoked if the licensee
A. Submits an unsigned insurance policy application B. Engages in fraud. C. Deals with insurance outside the scope of the license. D. Materially misrepresents an insurance policy. ANSWER: A
An employee is insured under a group health policy is injured in a car wreck while performing her duties for her employer. This results in a long hospitalization period. Which of the following is ture?
A. The group plan will pay depending on the employee's recovery. B. The group plan will not pay because the employee was injured at work. C. The group plan will pay. D. The group plan will pay a proper portion of the employee's expenses. ANSWER: B
If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE?
A. The insurer may deny coverage, because of the information missing on the application. B. The policy will be interpreted as if the insurer waived its right to have an answer on the application. C. The policy will be interpreted as if the insurer did not have an answer to the question. D. The policy will be void. ANSWER: B
An agent receives an Emergency Cease and Desist Order for chronically misrepresenting his insurance policies. The agent knows that he did not commit the violations stated in the Emergence Cease and Desist Order. He wants to contest the charges in a court hearing. Which of the following is true?
A. The judge will determine when the hearing will be held. B. The hearing date can be set for any time within the next year, unless both parties agree to a later date. C. The hearing must be set exactly 10 days after the request is made. D. The hearing must be held within 10 days of receiving the letter, unless both parties agree to a later date. ANSWER: D
Which of the following is NOT an example of the company's location of incorporation?
A. Alien B. Authorized C. Domestic D. Foreign ANSWER: B
An insured becomes disabled at age 22 and can no longer work. She meets the definition of total disability under Social Security. What other requirement must the insured have met to receive Social Security disability benefits?
A. Have accumulated 40 work credits. B. Have reached the age of 25 C. Have completed 6 work credits in the past 3 years. D. Have accumulated 20 work credits in the past 10 years. ANSWER: C
All of the following are changes to health insurance plans introduced by the PPACA EXCEPT
A. Full-cost coverage for all medical expenses. B. Limited age for dependent children. C. Coverage for pre-existing conditions. D. Requirements for preventative care without deductibles or copays. ANSWER: A
If the insurance premiums were not tax deductible, what other taxation will this affect?
A. Taxation of interest B. Taxation of the policy's cash value C. Federal tax income D. Taxation of benefits ANSWER: D
All of the following are advantages of a qualified retirement plan EXCEPT
A. The income at retirement is tax free. B. The contribution is deductible to the employer. C. The contribution is not taxable to the employee when made. D. The funds grow tax deferred. ANSWER: A
What is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?
Warranty
What happens to the copy of the application for health insurance once the policy is issued?
It becomes part of the entire contract.
An individual is approaching retirement age and is concerned about having proper coverage should he have to be placed in a Long-Term Care (LTC) facility. His agent told him that LTC policies would provide necessary coverage at all of the following levels EXCEPT
A. Acute B. Custodial C. Intermediate D. Skilled ANSWER: A
Which of the following types of care could be provided at a community center?
A. Adult day care B. Respite care C. Intermediate care D. Skilled care ANSWER: A
An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?
Universal Life
Which of the following is INCORRECT?
A. Advertisements must not imply that the applicant's health will not be considered in issuing the policy unless true. B. Advertisements may not imply special treatment beyond policy terms. C. Testimonials used in advertisements may or may not apply to the policy advertised. D. Testimonials used in advertisements must be genuine. ANSWER: C
The type of policy that can be changed from one that does not accumulate cash value to one that does is called a
Convertible Term Policy
An employee has a Flexible Spending Account (FSA) with a $5,000 annual benefit. This year the employee used $3,000. What would be the amount of the benefit available to the employee next year?
$5,000