23232
_______ took out a medicare supplement insurance policy and also has a preexisting condition. in this situation, a preexisting condition is defined as a condition for which medical advice was given or received within _____ of the effective date of coverage
6 months
____ is injured and provides notice of a health claim to his insurer. he later recieves the required claims forms. within how many days of the loss must he file proof of loss with the insurance company?
90
number of days a claimant has to submit proof of loss with insurance company
90
Which of the following is an example of a "nonforfeiture value"?
AFTER A POLICY OWNER CANCELS HIS/HER PERMAN
individual tendencies that arise from an attitude or state of mind, causing indifference to loss is what kind of hazard?
Morale
a is named irrevocable beneficiary of b's life insurance policy. which of the following statements is correct?
b needs a's permission to borrow the policy's loan value, ,
who is NOT required to sign a life insurance application?
beneficiary
____ 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. assuming that ____ is an acceptable risk, what item is given to ___?
binding receipt
speculative risk
buying land with the anticipation of it going up in value
term rider
can be attached to a permanent life insurance policy to add more coverage for alimited time
permanent insurance
combines insurance protection with a cash accumulation
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
______ applies for insurance, pays the initial premium, and receives a document from the agent. this document indicates that if the policy is issued, coverage begins on the date of the document. this document is called a(n)
conditional receipt
_______ applies for an insurance policy and pays the first premium. the receipt given for the first premium is called a(n)
conditional receipt
mutual reliance of truthfulness on both parties
contract of utmost good faith
allows a policyowner to increase the level of coverage to keep up with inflation
cost of living rider
replacement regulation in al does NOT apply to:
credit life insurance
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
is frequently used for mortgage protection
decreasing term
collateral assignment
describes a situation where a policyowner transfers a portion of his or her righrt in an insurance policy to another party in order to secure a debt to that party
disability income policies
designed to pay you enough to maintain your current standard of living
what is the purpose of the usa patriot act?
detect and deter terrorism
provides lump sum benefits instead of periodic payments
disability buy sell insurance
when an estate is named beneficiary to a life insurance policy, the policy proceeds are
distributed according to the state law
which of the following is NOT a factor typically used by insurers to classify risk?
education level
which of these statements is INCORRECT regarding the federal income tax treatment of life insurance?
entire cash surrender value is taxable
____ has an insurance policy that has a guaranteed minimum cash value, a guaranteed death benefit, fixed premiums, and grows at a rate reflected by a selected fund index. which type of life policy fits this description?
equity indexed life
an underwriter determines that an applicant''s risk should be recategorized due to a health issue. this policy may be issued with a(n)
exclusion for the medical condition
the agreement between a producer and the insurance company specifies the authority given to a producer to act on behalf of the insurer. this is called:
expressed authority
considered the "automatic" nonforfeiture option
extended term
an insurance applicant must be informed of an investigation regarding his/her reputation and character according to the
fair credit reporting act
from what authority derives the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained on an applicant?
fair credit reporting act
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
___ completes an application for life insurance but does not pay the initial premium. all of these actions must occur before ___ 's policy goes into effect EXCEPT
free-look period has expired
___ is an employee coverred by a group life plan througb her employer.. when ___ is terminated, her employer fails to inform her about the plan's conversion option. 2 weeks later, ___ dies in an automobile accident. how will this situation be handled?
full benefits must be paid by the insurer
the life and health insurance marketing system utilizing non-employee agents that represent just one insurance company and are often paid an allowance to cover office expense and staffing is the
general agency system
the minimum renewability level for a long term care (LTC) policy
guaranteed renewable
if insurance premiums are paid more frequently than annually, the policyowner can expect to
have a higher total outlay of dollars for the coverage for that year
which of these will NOT result in an increase in life insurance policy dividends?
higher reserves
how would a contingent beneficiary receive the policy proceeds in an accidental death and dismemberment (AD&D) policy?
if the primary beneficiary dies before the insured
_______ the producer just sold an insurance policy to a client, explaining that he has the authority to issue the policy. pat was not specifically granted this power from the insurance company. ___ is exercising:
implied authority
do NOT build cash balue and could not utilize the automatic premium loan provision
increasing term insurance policies
this is NOT used in this policy
increasing term policy
which of these actions should a producer take when submitting an insurance application to an insurer?
inform insurer of relevant information not included on the application
what is being delivered during a policy deliver?
insurance contract to the proposed insured
if the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the uniform simultaneous death act?
insured's contingent beneficiary
survivorship life policy
insures the lives of two people and pays the death benefit upon the death of the second insured person
a life insurance beneficiary has chosen a settlement option in which the principal never decreases unless the beneficiary makes a withdrawal. this settlement option is called the
interest only option
the cash value growth of a universal life policy is:
interest sensitive
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
a policyowner's rights are limited under which beneficiary designation?
irrevocable
what kind of life insurance beneficiary requires his/her consent when a change of beneficiary is made?
irrevocable beneficiary
certificate of insurance
is issued to each individual covered by the group life insurance
a life insurance policy owned by a third party:
is used largely in estate planning as well as business situations
a life insurance producer's agency agreement normally authorizes the licensee to do all of the following except
issue policies
which of the following best describes the function of insurance?
it spreads financial risk over a large group to minimize the loss to any one individual
the principle that the larger the amount of exposures that are combined into a group, the more certainty there is to the amount of loss incurred in any given period is known as
law of large numbers
which of the following insurance concepts is founded on the ability to predict the approximate number of deaths or frequency of disabilities within a certain group during a specific time?
law of large numbers
admitted company
licensed to solicit insurance in a specific state
this policy would cover an individual unable to perform two or more activities of daily living (ADLs)
long term care (LTC)
the purpose of the _____________ program is to allow seniors to shelter assets from the spend down requirements of medicaid
long term care partnership
which of these factors do NOT play a role in the underwriting of a life insurance policy?
marital status
an insurance premium can be defined as
money paid to an insurance company for benefits provided in the policy
the premium payment mode which results in the highest total premium is
monthly
which is NOT true regarding medicare supplement policies?
must include a minimum 20 day free look provision
insurance policies issued by companies which are owned by stockholders and do not pay policy dividends are owned by stockholders and do not pay policy dividends are known as
non-participating policies
policy dividends for life insuracne are:
not guaranteed
when the gross premium of a life insurance policy is computed, which of these factors is NOT included?
number of beneficiaries
rebating
offering to give a prospect anything of value not specified in the contract in order to persuade the prospect to purchase the insurance
why are insurance contracts said to be contracts of adhesion?
one party writes
p and q are married and have three children. p is the primary beneficiary on q's accidental death and dismemberment (AD&D) policy and q's sister r is the contingent beneficiary. p, q, and r are involved in a car accident and q and r are killed instantly. the accidental death benefits will be paid to
p only
_____ owns a 20 year life annuity certain and dies before the period of 20 years has elapsed. what happens to any monies left?
paid to the beneficiary for the rest of the certain period
insurance policies issued by companies that allow their policyowners to participate in the favorable experienceof the company through payment of dividends are known as...
participating policies
a policy owner with an automatic premium loan provision must:
pay back the loan amount to keep the policy's cash value at its max
a policy owner with an automatic premium loan provision must:
pay back the loan amount to keep the policy's cash value at its maximum
non-participating policies
policies issued by companies which are owned by stockholders and do not pay policy dividends are known as:
NOT guaranteed by a whole life policy
policy dividends
which of these do NOT constitute policy deliver?
policy issued with a rating
the underwriting process involves all of these EXCEPT for
policy loan
q applied for life insurance and submitted the initial premium on jan 1. the policy was issued feb 1, but it was not delivered by the agent until feb 7. q is dissatisfied and returns the policy feb 13. how will the insurer handle this situation?
policy was returned within the free look period, premium will be fully refunded
who elects the governing body of a mutual insurance company?
policyholders
on a life insurance policy, who is qualified to change the beneficiary designation?
policyowner
which of these describe a participating life insurance policy?
policyowners are entitled to receive dividends
usually operate on a fee for service basis, not on a prepaid basis
preferred provider organization (PPO)
this could result in a lapsed policy
premium was not paid during the grace period
the applicant's consideration in an insurance contract:
premiums
an accidental death and dismemberment (AD&D) policy will pay the ___ upon the accidental loss of two of the insured's primary parts
principal sum
is paid upon the insured's accidental death (or loss of any two primary body members)
principal sum
consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine
probability of making timely premium payments
k is the insured and p is the sole beneficiary on a life insurance policy. both are involved in a fatal accident where k dies before p. under the common disaster provision, which of these statements is true?
proceeds will be paid to p's estate
an insured covered by life insurance has just died. what will happen if the primary beneficiary had already died before the insured and contingent beneficiary?
proceeds will go to the contingent beneficiary
adverse selection
purchasing insurance because of an expected loss
all of these are considered sources of underwriting information about an applicant EXCEPT
rating services
which of the following dividend options allows the continuation of cash value accumulation?
reduced paid-up insurance
____ is receiving annuity payments that has not yet been paid an amount which is equal to the purchase price of the annuity. if they were to die, their beneficiary would continue receiving annuity payments until this amount has been reached. what type of annuity is this?
refund life annuity
an insurance company that cedes a portion of an insured's coverage to another insurer is said to be engaged in
reinsurance
guarantees the insured''s insurability
renewable term
the premium will increase at renewal
renewable term insurance
alabama's annuity disclosure regulation:
requires the delivery of a buyer's guide and a disclosure document to an annuity applicant
the stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called
reserves
_______ has a waiver of premium rider on his life insuranc epolicy. he becomes disabled for three years, during which the insurance company waives $3,000 in premiums. when ____ recovers, he must:
resume paying premiums again
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
_______ has the right to change the beneficiary designation on her life insurance policy. _____'s beneficiary is a(n)
revocable beneficiary
underwriter's assessment of information on a life insurance policy
risk classification
the proceeds of a life insurance policy can be paid in a form other than a lump sum payment. these forms of payment are called
settlement optins
buying land with the anticipation of it going up in value is an example of
speculative risk
which entity is responsible for the majority of regulation imposed on the insurance industry?
state government
stop-loss limit
states that after the insured has paid a specific amount torward the covered expense, the insurer will pay 100% of the remaining expenses
the highest premium payment would be charged to which risk classification?
substandard
does NOT build cash value
term insurance
capitation
the HMO concept that service providers are paid a fixed monthly fee for each member
c is trying to determine whether to convert her convertible term life policy to whole life insurance using her original age or attained age. what factor would affect her decision the most?
the cost
what is the underlying concept regarding level premiums?
the early years are changed more than what is needed
vesting
the employee's right to the employer's contributions or benefits attributable to the contributions if employment terminates prior to retirement
___ 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
capitation
the health maintenance organization (HMO) concept that service providers are paid a fixed monthly fee for each member
in order for coveerage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and
the initial premium
which of the following provisions may NOT be adjusted in an adjustable life policy?
the insured
all of these statements concerning a key employee life policy is true, EXCEPT
the key employee names the beneficiary
which of the following statements does not describe an element of an insurable risk?
the loss must not be due to chance
under this condition the insurance company may cancel a life insurance policy
the outstanding policy loan exceeds the cash value of the policy
which statement regarding the change of beneficiary provision is true?
the policyowner can change the beneficiary
a level premium indicated
the premium is fixed for the entire duration of the contract
which of the following is TRUE concerning the fixed period option?
the principal amount gradually decreases to zero
interest only option
the settlement option under which the principal never decreases unless the beneficiary withdraws
the objective of insurance is
the transfer of risk
implied authority
the unwritten authority that is not expressly granted, but which the agent is assumed to have in order to transact the business of the principal
concealment
the withholding of facts in an insurance application
______ is covered under a nonoccupational group health policy. he is hurt while traveling for business and requires hospital stay. his group health policy refuses to pay for hospital expenses because
this is considered a job related accident
________ surrenders his whole life policy ten years after it was purchased. what can he expect?
to pay taxes on the cash value in excess of premium paid
purchasing disability insurance best represents which treatment of risk?
transference
buying insurance is one of the most effective ways of
transferring risk
what type of reinsurance contract involves two companies automatically sharing their risk exposure?
treaty
an issued policy can never be changed by a producer
true
risk is best defined as the
uncertainty of loss
in the insurance business, risk can best be defined as
uncertainty regarding financial loss
at what point must a life insurance applicant be informed of their rights that fall under the fair credit reporting act?
upon completion of the application
general agency system
uses non employee agents that represent just one insurance company and are often paid an allowance to cover office expense and staffing
what do major medical policies typically cover?
usual, customary, and necessary expenses
a group disability income policy will:
usually pay short term benefits of less than 2 years in duration
_________ is a life insurance policyowner who has transferred her ownership to a third party in exchange for a percentage of the death benefit. what is this called?
viatical settlement agreement
which parts of a life insurance policy are guaranteed to be true?
warranty
reinsurance
when an insurer surrenders part of an insured's coverage to another insurance company
when does a life insurance contract become effective if the initial premium is not collected during the application process?
when producer delivers policy and collects initial premium
when does "adverse selection" exist?
when the risks accepted for insurance has a HIGHER likelihood of experiencing loss than an average group
when does adverse selection exist?
when the risks accepted for insurance has a higher likelihood of experiencing loss than an average group
minimum grace period for life insurance policy sold in alabama is:
30 days
what age can an IRA owner start making withdrawals and NOT be subjected to a tax penalty?
59 1/2
t and s are named co-primary beneficiaries on a $500,000 accidental death and dismemberment policy insuring their father. their mother was named contingent beneficiary. five years later, s dies of natural causes and the father is killed in a scuba accident shortly afterwards. how much of the death benefit will the mother receive?
$0
a disability policy in al that is paid on a monthly basis is required to have a grace period of:
10 days
what will the insurance company pay once the stop loss is exceeded on a major medical policy?
100%
________, the insurance producer, has allowed his license to lapse. he would like to reinstate his license without retaking a prelicense course or passing a written examination. to do this, _ ____ must reinstate the license within __ months from the renewal date
12
the notice of claim provision states that the insured notify the insurance company within ___ days of a claim
20
years a producer must keep complete records pertaining to his/her insurance transactions
3
_____ purchased an immediate annuity with quartlery payments. when will this annuity start making payments
3 months after the annuity is bought
within ___ days of a written demand myst the commissioner of insurance hold a hearing
30
within how many calendar days must all clean electronic health insurance claims be paid in al?
30
noncancellable poliy: the premium rate CAN be increased over time
FALSE
What type of reinsurance contract involves two companies automatically sharing their risk exposure?
Treaty
what type of reinsurance contract involves two companies automatically sharing their risk exposure?
Treaty
foreign nonadmitted
a company domiciled in another state that has NOT received a license from the insurance commissioner to do business in this state
typically, a disability income rider will pay:
a monthly income for as long as the insured remains totally and completely disabled
straight life annuity
a periodic income to the annuitant for life
a substandard or special class risk typically results in
a premium that is HIGHER than for a normal risk
individual retirement account (IRA)
a retirement plan that can be started by an emplyoee, even if another plan is in existence
defined benefit plan
a retirement plan that promises a specified benefit to the employee at retirement
convertable term
a term policy that allows the policyowner to switch to permanent insurance
turned over all rights in a policy over to an assignee
absolute assignment
_________ is an office clerk at the time she purchases a disability income policy. she later changes her career to a king crab fisherman. if she ever becomes injured on the boat, the change of occupation provision states taht the insurer can:
adjust the benefits
john purchases insurance because he expects to experience a loss. this is known as
adverse selection
"nonforfeiture value"
after a policyowner cancels his/her permanent policy, the cash value accumulation must be made available to the policyowner
requires the delivery of a buyer's guide and a disclosure document to an annuity applicant
alabma's annuity disclosure regulation
an example of a life insurance beneficiary is a(n)
all of these
paid up additions option
allows a policyowner to use his/her dividends to buy life insurance on a single premium basis
paid-up additions option
allows a policyowner to use his/her dividends to buy life insurance on a single premium basis
which of the following is not an example of insurable interest?
an airline insuring the lives of its passengers
domestic company
an insurance company incorporated and licensed to do business in this state
foreign company
an insurance company licensed to do business in al, but incorporated in another state
which of the following statements concerning a life insurance policy is TRUE?
an issued policy can never be changed by a producer
which premium schedule results in the lowest cost to the policyowner?
annual
_______ is retired and looking to invest a lumpsum of money through an insurance company. which product would be best suited for this?
annuity
when an insurance application is taken by a producer, which of these statements is true?
any changes made on the application require the applicant's initials
when can a poliowner change a revocable beneficiary?
anytime
any changes made on an insurance application requires the initials of whom?
applicant
an incomplete life insurance application submitted to an insurer will result in which of these actions?
application will be returned to the writing agent
how is the alabama life and disability insurance guaranty association able to pay claimns for insolvent insurers?
assessments against other admitted insurers in al
future income option
at certain ages or dates, an insured cna increase the stated benefit
limits or excludes coverage when the insured is riding in only certain kinds of air travel
aviation exclusion