2 - State Exam Simulator - 150 Practice Exam Questions

Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability?

Conversion privilege

What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years?

Family Maintenance Policy

At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid?

At the time of application

An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period?

Full face amount minus any past due premiums

Insurance policies offered on a "take it or leave it" basis are considered what?

Contracts of Adhesion

Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled?

Payor clause

The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called

Reinstatement

J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions?

Reinstatement provision

S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?

Return of premium rider

J would like to maintain the right to change beneficiaries. Which beneficiary designation should be used?

Revocable

M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son?

Revocable

What is Old Age and Survivors Health Insurance (OASDHI) also known as?

Social Security

What type of life insurance are credit policies issued as?

Term

What kind of life insurance product covers children under their parent's policy?

Term rider

What is the underlying concept regarding level premiums?

The early years are charged more than what is needed

D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive?

The full face amount

J chooses a monthly premium payment mode on his Whole Life insurance policy. Which of these statements is correct?

The gross premium is higher on a monthly payment mode as compared to being paid annually

Which of these is considered a statement that is assured to be true in every respect?

Warranty

What does the ownership clause in a life insurance policy state?

Who the policyowner is and what rights the policyowner is entitled to

To be eligible for Social Security disability benefits, an employee must be unable to perform

any occupation

M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT

free-look period has expired

With a Basic Medical Expense policy, what does the hospitalization expense cover?

hospital room and board

Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy?

increase face amount

The first portion of a covered Major Medical insurance expense that the insured is required to pay is called the

initial deductible

D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?

Level term

How are surrender charges deducted in a life policy with a rear-end loaded provision?

Deducted when the policy is discontinued

M is insured under a basic Hospital/Surgical Expense policy. A physician performs surgery on M. What determines the claim M is eligible for?

Determined by the terms of the policy

The federal income tax treatment of employer-provided group health insurance can be accurately described as

Employee's coverage paid for by the employer is tax-deductible to the employer as a business expenditure

Which of the following provisions specifies how long a policyowner's health coverage will remain in effect if the policyowner does not pay the premium when it is due?

Grace Period

J is a subscriber to a plan which contracts with doctors and hospitals to provide medical benefits at a preset price. What type of plan does J belong to?

Health Maintenance Organization

S wants to open a tax-exempt Health Savings Account. To qualify for this type of account, Federal law dictates that S must be enrolled in a

High-deductible health plan

For which of the following expenses does a Basic Hospital policy pay?

Hospital room and board

Which type of policy is considered to be overfunded, as stated by IRS guidelines?

Modified Endowment Contract

Which of these is NOT considered to be a right given to a policyowner?

Modify a provision in the insurance contract

A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the

Policy Loan provision

Which statement is true concerning a Variable Universal Life policy?

Policyowner controls where the investment will go and selects the amount of the premium payment

How does group insurance differ from individual insurance?

Premiums are lower

Which statement is correct regarding the premium payment schedule for whole life policies?

Premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured

What type of life insurance incorporates flexible premiums and an adjustable death benefit?

Universal Life

A Business Overhead Expense policy would cover which of the following if a business owner becomes disabled?

Utilities and office rent

When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have

insurable interest in the proposed insured

P purchases a $50,000 term life insurance policy in 2005. One of the questions on the application ask if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary?

$50,000 minus any outstanding policy loans

An individual has a Major Medical policy with a $5,000 deductible and an 80/20 Coinsurance clause. How much will the INSURED have to pay if a total of $15,000 in covered medical expenses are incurred?

$7,000

Under which of the following circumstances do the benefits under COBRA continuation coverage expire?

All group health plans are eliminated by the employer

Any changes made on an insurance application requires the initials of whom?

Applicant

What is considered to be a characteristic of an immediate annuity?

Benefit payments start within one payment period of purchase

Which of these circumstances is a Business Disability Buy-Sell policy designed to help in the sale of a business?

Business owner becoming disabled

Whose life is covered on a life insurance policy that contains a payor benefit clause?

Child

How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period?

Claims are denied under the Suicide clause of the policy

N has a Major Medical policy that only pays a portion of N's medical expenses. N is responsible for paying the remaining balance. This provision is known as

Coinsurance

Which of these are NOT an example of a Nonforfeiture option?

Life Income

Which of these would be considered a Limited-Pay Life policy?

Life Paid-Up at Age 70

An insurance company would MOST likely pay benefits under an Accidental Death and Dismemberment policy for which of the following losses?

Loss of eyesight due to an accidental injury

A person who is insured within a group contract will be given a

certificate

The situation in which a group of physicians are salaried employees and conduct business in an HMO facility is called a(n)

closed panel

The incontestable clause allows an insurer to

contest a claim during the contestable period

Health insurance benefits NOT covered due to an act of war are

excluded by the insurer in the contract provisions

What kind of special need would a policyowner require with an Adjustable Life insurance policy?

flexible premiums

Credit Life insurance is

issued in an amount not to exceed the amount of the loan

Basic Hospital and Surgical policy benefits are

lower than the actual expenses incurred

Which of these is NOT considered to be an element of an insurance contract?

negotiating

M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the

policy proceeds

A Limited-Pay Life policy has

premium payments limited to a specified number of years

Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called

representations

What is the Suicide provision designed to do?

safeguard the insurer from an applicant who is contemplating suicide

An immediate annuity consists of a

single premium

In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and

the initial premium

The amount of coverage on a group credit life policy is limited to

the insured's total loan value

All of these are considered to be a benefit under Social Security EXCEPT for

unemployment

When is the face amount paid under a Joint Life and Survivor policy?

upon death of the last insured

The provision in a Group Health policy that allows the insurer to postpone coverage for a covered illness 30 days after the policy's effective date is referred to as the

waiting period

T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?

$50,000

What type of policy would offer a 40-year old the quickest accumulation of cash value?

20-pay life

An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age?

59 1/2

Which of these is an element of a Variable Life policy?

A fixed, level premium

Which provision is NOT a requirement in a group life policy?

Accidental

Which premium schedule results in the lowest cost to the policyowner?

Annual

A Key Employee policy is taken out by Company X on its vice president. Ten years later, this employee leaves Company X and begins working for Company Y. If this individual were to die and the policy is still in force and unchanged, where would the death proceeds be directed?

Company X

K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used?

Conditional

T applies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or medical examination, whichever is later, provided that T is an acceptable risk. What item is given to T?

Conditional receipt

What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability?

Conversion

When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?

Conversion provision

What provision in a life insurance policy states that the application is considered part of the contract?

Entire Contract provision

D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to?

Ex-wife

Which Federal law allows an insurer to obtain an inspection report on a potential insured?

Fair Credit Reporting Act

What action should a producer take if the initial premium is NOT submitted with the application?

Forward the application to the insurer without the initial premium

What action will an insurer take if an interest payment on a policy loan is not made on time?

automatically add the amount of interest due to the loan balance

What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?

Convertible Term

K has a life insurance policy where her husband is beneficiary and her daughter is contingent beneficiary. Under the Common Disaster clause, if K and her husband are both killed in an automobile accident, where would the death proceeds be directed?

Daughter

What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?

Decreasing term

If a contract of adhesion contains questionable language, to whom would the interpretation be in favor of?

Insured

All of these statements about the Waiver of Premium provision are correct EXCEPT

Insured must be eligible for Social Security disability for claim to be accepted

The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death is called a(n)

Insuring agreement

Which of these arrangements allows one to bypass insurable interest laws?

Investor-Originated Life Insurance

A policyowner would like to change the beneficiary on a Life insurance policy and make the change permanent. Which type of designation would fulfill this need?

Irrevocable

Which statement is true regarding a minor beneficiary?

Normally, a guardian is required to be appointed in the Beneficiary clause of the contract

S filed a written Proof of Loss for a Disability Income claim on September 1. The insurance company not responded to the claim. S can take legal action against the insurer beginning

November 1

What determines the full amount of Social Security retirement benefits a qualified individual is entitled to receive?

Primary Insurance Amount (PIA)

T is covered by two health insurance plans: a group plan through his employer and his spouse's plan as a dependent. When T submits a claim, his employer's plan is considered what type of carrier under the Model Group Coordination of Benefits provision?

Primary carrier

What is the consideration given by an insurer in the Consideration clause of a life policy?

Promise to pay a death benefit