Comprehensive exam 1
Which of the following is not covered by Medicare Part A?
Outpatient hospital treatment Covered in part B
B's policy had a $1k annual premium. B has not paid it for 2 years and wants to put the policy back in force. The insurer charges 10% interest on overdue premiums. What does B have to pay in order to reinstate their policy?
2 years of premiums, plus interest due on overdue premium amounts
The normal waiting period for benefits under the disability income rider is
3-6 months
A Medicare supplement or LTC policy's free look period is:
30 days
The Medicare Supplement Right of Return Provision (free look period) allows the buyer a period of _____ to return a policy and receive a full refund.
30 days
Which of the following life insurance policies does not develop a cash value?
5 year term
Generally, an individual is eligible to enroll in Medicare at age:
65
All of the following are underwriting criteria taken into account by the insurer in the underwriting of individual life insurance cases except:
Education level completed
Insurance covering the liability of a producer or agency is called ______
Errors and Omissions
When producer Pete delivers a policy, he should also do which of the following?
Explain the policy fully
ERISA sets minimum standards for _____ pension plans.
Private
With Long-Term Care Insurance coverage, the longer the _________is, the higher the premium is
Benefit period
Policy replacement is the process of:
Cancelling an existing policy and issuing a new policy
Mona let her permanent policy lapse. She discovered there was $2,498 in cash remainaing in the policy and decided to reduce her debt load. She exercised which Nonforfeiture Option?
Cash surrender
An individual can make changes to their group life insurance plan at any time for any one of the following reasons except:
Changing health insurance carriers and deductibles
All of the following are exclusions under an LTC policy, except:
Chemical dependency on one's own prescription drugs
In a legal sense, an insurance premium is the insureds ___________
Consideration Something of value exchanged under the terms of a contract, and is a required element of a legal contract.
The deductible that applies after the Basic Plan is exhausted and the Supplemental Major Medical Coverage begins is called:
Corridor deductible
With a modified premium whole life contract, premium payments
are lower in the early years of the contract
The bank may require its borrowers to have a life insurance policy to secure a loan in the event of the borrower's death. Which provision gives the bank proportional protection but not control of the policy?
collateral assignment
Part A of Medicare pays for:
hospital expenses
When an insured decides to change her mode of premium payment from annually to monthly, the total premium due would:
increase
Which provision is a Mandatory Uniform Provision?
legal actions
Whole Life is also known as ________ protection.
permanent
P has a traditional participating whole life insurance policy with a death benefit of $100k, $5k in dividend additions, and a $4k policy loan and loan interest. P reaches age 100. What is the amount the insurance company owes P?
$101k $100k + $5k - $4k = $101k
H has an annuity funded with after-tax contributions. So far, H has placed $10k into the policy and it is now worth $25k. If H cashes out the annuity, what is Hs cost basis?
$10k. The amount contributed is after tax dollars and is considered the cost basis
A $100k life insurance policy has an Accidental Death double indemnity rider, and an outstanding $10k policy loan. Following the accidental death of the insured, the beneficiary will receive:
$190k The face amount is $200k due to the double indemnity rider. $200k - $10k = $190k
The Commissioner may issue a temporary license for a period of _______ days
180
The commissioner will examine domestic insurers at least once every _____ years
5
COBRA is a federal law requiring employers with _____ or more employees to provide the option to continue the employee's existing health coverage for dependents for up to _____ months following qualifying events.
20 employees 36 months
The standard nonforfeiture law does not apply to term of ______ years or less insurance, reinsurance, group insurance, pure endowment, annuity or reversionary annuity contracts
20 years
How many credit hours of Continuing Education Cousy a producer complete every renewal period?
24 (w/ 3hrs in ethics)
Each producer must complete _____ credit hours of CE every _____ months (the amount of time for a licensing period) in approved courses
24; 24
The producer must notify the Commissioner within ____ days of any change in legal name, address, or email address
30 days
A producer must inform the Commissioner of a change of address within:
30 days of the change
Tom elects the Life Income with 10-year Period Certain settlement option. Tom dies in year 6. The beneficiary receives payments for _______.
4 years If a recipient dies prior to the end of the period certain, the payments continue to another beneficiary until the end of the period certain
HIPPAA defines a pre existing condition as one for which the insured received medical advice, diagnosis, care, or treatment within the past _____ months.
6
The insurer reserves the right to defer the payment of any cash surrender value for a period of _____ months after the demand with surrender of the policy
6
Per Oklahoma Law, after receiving a proof of loss the insurer must provide a written offer of settlement or rejection of the claim within:
60 days
Per Oklahoma Law, it is the duty of the insurer receiving a proof of loss to submit a written offer of settlement or rejection of the claim to the insured within ______ days of the receipt of that proof of loss
60 days
A social security retirement benefit recipient will receive the greatest benefit starting at which of the following ages?
65
Joe has a whole life policy with a guaranteed insurability rider. He was 21 at the time the policy was issued. If he exercises all of the options at the ages specified under the typical rider, how many policies will he end up with?
7 Under the typical guaranteed insurability rider, options to buy additional polices of the same type and face amount at ages 25, 28, 31, 34, 37, and 40, therefore he would buy 6 more to bring his total policies owned to 7
Which of the following is false?
A full time non elected government employee, other than a teacher, may not apply for any insurance license
Which of the following is correct regarding a Managing general agent?
A managing general agent is an individual, corporation or a partnership that is appoint as an independent contractor by one or more insurers, to supervise each insurers business
Which of the following is true?
A person cannot sell any class of insurance unless they're licensed for it
Which of the following disability income benefits would be received free of federal income tax?
A personal disability income insurance policy benefit
Which of the following statements is true regarding the Standard Nonforfeiture Law?
A specified paid up nonforfeiture benefit becomes effective unless the policy owner is elects another option within 60 days after the due date of the premium in default
Which of the following is correct regarding a temporary license?
A temporary license may be issued to the surviving spouse of a disabled or deceased producer
All of the following are true regarding the accelerated death benefit rider except:
Accelerated death benefits have to be repaid if the insureds health improves
Which type of rider pays out a capital sum in case an insured loses a limb or their eyesight?
Accidental death and Dismemberment Dismemberment pays out a capital sum when there is a loss of limb, eyesight, fingers, or toes.
All for the following are true regarding an Attending Physicians Statement, except:
An MIB report can be used in place of an APS
If the policyowner specifies the time over which all installments are to be paid, he/she has chosen which Setllement option?
Fixed period
G is concerned about the future and living a comfortable retirement. Which products listed below is ideally suited to help G prepare for his retirement goal?
An annuity An annuity is designed to provide a steady stream of income to an individual, typically upon retirement. It protects against outliving one's retirement income by providing an income for life.
All of the following are transactions that qualify as a 1035 exchange, except:
An equity indexed annuity into a variable universal life insurance policy
Which of the following statements is true?
An insurance transaction is the solicitation and inducement to buy insurance
All of the following are advantages of having a buy sell agreement in place, except:
Premiums are tax deductible
Which of the following is NOT an example of a prohibited practice?
Backdating
All of the following are characteristics of Group Life Insurance, except:
Group is typically written utilizing Permanent insurance
Which of the following is true of coverage for Autism?
Insurers cannot terminate coverage due to an Autism diagnosis
Which of the following statements is NOT correct?
Commissions paid to agents for small employer policy sales may be varied due to the small employers claims experience and group
Which of the following is not considered an advertisement?
Communications not intended for dissemination to the public
Which of the following is true of credit insurance?
Credit insurance is sold in connection with a credit contract with installment payments scheduled for less than 15 years
An initial amount the insured must meet per year before benefits are paid is known as the:
Deductible
Permitting individuals of the same class and equal life expectancy to be charged different rates for life insurance or annuities is an example of what type of unfair trade practice?
Discrimination
Even though this rider can pay out upon death, it also pays out a benefit if the insured loses a limb, eyesight, or hearing as a result of an accident. What is this rider benefit called?
Dismemberment
Insurance companies writing disability income generally have an occupational classification system based on considerations of all of the following except:
Earning potential
The insurance commissioner is:
Elected by the public
Which of the following statements is false with respect to continuing education requirements?
Excess hours awarded in a compliance period may not be carried over to another compliance period
An insured has a $175k permanent life insurance policy and is having difficulty keeping up with the premium payments. Which nonforfeiture option would allow him to forego the premiums and retain the same face amount until the cash surrender value is exhausted?
Extended term Continues the same coverage until the cash value from which the premium is paid is exhausted
A person convicted of violating insurance laws will be:
Fines up to $5k and imprisoned for 1-5 years
The term 'mode' refers to the:
Frequency of premium paymenst
The exclusion ratio states that once the entire cost basis has been recovered from a non qualified annuity income benefit payout then any further payments are ______.
Fully taxable since the excess payments must represent only earnings Once the entire cost basis is recovered than any remaining payments are fully taxable as ordinary income
All of the following riders will waive the premiums in the event of a disability, except:
Guaranteed insurability Provides the insured with the right to buy coverage at specified times in the future
The ______ gives the owner of a variable annuity the ability to withdraw a maximum percentage of the annuity value until the initial investment amount has been recouped
Guaranteed minimum withdrawal benefit
Which of the following identifies the parties to the contract and the perils it covers and the circumstances under which the insurer will pay a life insurance policy claim?
Insuring clause
The ________ settlement industry has increased awareness of STOLI/IOLI
Life
Which of the following is NOT a hazard category used in insurance underwriting?
Incidental
Debit life insurance is classified as which of the following?
Industrial
Option Uniform Provisions are included in the contract at the _____ option
Insurers
Which of the following best describes 'Capital Retention/Conservation' in an effort to meet an income objective?
Investment earnings are paid out
If an annuity lifetime benefit is selected, in most cases it is an _________ election.
Irrevocable
Generally speaking, all of the following are true of insurance, EXCEPT:
It eliminates risk No form of insurance can totally eliminate risk
Cranston wants a Settlement Option for his beneficiary that will guarantee the beneficiary an income as long as the beneficiary lives. Cranston should choose:
Life Income Only
Which of the following Whole life insurance policies has the lowest annual premium payment per $1k of coverage for a 35 year old, all other factors being equal?
Ordinary Straight Whole Life
All of the following policies end when an insured does, except:
Joint survivorship. The policy continues until the second insured dies
The ______ branch is responsible for interpreting and determining the constitutionality of the statutes
Judicial
Pete is a valuable veteran of 21 years at Joe's Garage working with 24 people and filling in for Joe when he is not in. Joe wants to insure Pete to offset any losses and the costs of trying to find, recruit and train a replacement, should Pete become disabled. What type of policy should Joe purchase?
Key Employee Insurance
Of the following, which best describes a Straight Whole Life Policy?
Level guaranteed premium and face value for the life of the insured
Albert owns a life insurance policy insuring his son David. He wants a settlement option that, if David were to die, would provide guaranteed payments to Albert and his wife until both die. Alberts producer should recommend:
Life income joint and survivor
Which of the following is not among the powers and duties of the Commissioner?
Maintain an ownership in insurance companies as needed to enforce the insurance laws
Which of the following is most likely to pay the highest premium for a disability income policy, all other factors being equal?
Male, age 40, firefighter
Which statement is false?
Mandatory Second Surgical Opinion is when the physician submits claim information prior to treatment, to determine in advance of the procedure is covered
Which of the following correctly describes the practice of twisting?
Misleading an insured in order to induce them to terminate or exchange an existing policy for a different one
With regard to examinations by the commissioner, the commissioner:
Must conduct a financial examination of an insurer at least once every 5 years
A generic brochure was developed by the ________ to assist prospective buyers of life insurance, which includes descriptions of all the basic types of life insurance and comparisons of their relative costs.
NAIC
At what age may a minor contract for life insurance?
Not less than 15 years of age
At what age may a minor contract for life or health insurance?
Not less than 15 years of age at nearest birthday
Frank has a life insurance policy in which he chooses to have the dividends increase the death benefit. Which Dividend Option did he select?
Paid-up additions Purchases single premium additional permanent benefits at the insureds attained age
Tom is the insured/owner of a $500k life insurance policy and dies leaving four surviving children, Mary, Carrie, Larry, and Barry, and each child receives $125k upon his death. This is an example of what type of distribution?
Per Capita To share equally
What should a producer do if the policy applies for is issued at a higher rate than was expected?
Personally deliver the policy, explain the rating, reinforce the value, and collect the additional premium
All of the following are TRUE of Policy Loan Rate provisions, except:
Policies with fixed interest loan rates have a maximum interest rate of 10% Max interest rate is 8%
A personalized computer generated illustration detailing premiums, cash values, interest rates, and surrender values is called ______
Policy summary
The individual who has the ownership rights of a policy is called the:
Policyowner
Which of the following is NOT an unfair claims practice?
Promptly acknowledging communications pertinent to a claime
The purpose of Social Insurance Supplemental rider is to:
Provide benefits in case an insured is declined Social Security disability benefits
Most often, life policies pay death claims in a single lump sum. The options that allow benefits to be paid other than lump sum are called _____________.
Settlement options
Karen, age 50, withdraws $1,000 from her Health Savings Account (HSA) for a purpose other than a qualified medical expense. As a result of this action:
The $1,000 is taxed as ordinary income, with an additional $200 penalty tax applied The 20% Penalty tax is not applied if 65 or older
Providing employment in connection with an insurance transaction is known as:
Rebating/inducement
Lyle owns a $50,000 20-Pay Life Policy that he lets lapse at the end of the fourth year. The Nonforfeiture Option providing the longest period of coverage would be:
Reduced Paid-Up Provides the longest period of coverage
The ______ provision specifies what an insured must do, if the policy has lapsed, in order to put it back in force?
Reinstatement
Statements made by the applicant on a life insurance application are considered to be:
Representations Statements that are believed to be true to the best of your knowledge
Which of the following exclusions applies to Long-Term Care coverage
Rest Cures
Individual Term policies are generally stand-alone policies, but may be written with other types of policies as a/an:
Rider. Through a rider, term coverage may be added to a Permanent Policy. A Term Rider cannot be added to a Term Policy.
________ individuals pay a FICA tax amount equal to the total of an employer and employee amouny
Self employed
At the time of her retirement at age 62, Jolene chose a Life Income Payment Option to have her annuity distributed. Five years later, when her health declines, she needs the distribution to be increased. How is this accomplished?
She cannot change the distribution once commenced. A lifetime annuity payment option typically may not be changed once selected.
Once the gross amount of dollars required to fund an insured's needs has been determined using the needs analysis approach, what is the next step?
Subtract any assets available to fund financial needs after death
Which of the following types of coverage has a corridor deductible?
Supplemental major medical
________ are allowed as a way to access the annuity policies values without having to elect a settlement option while still maintaining the policy in force.
Systemic withdrawals
Which is not a qualifying event for the continuation of dependent coverage under the Consolidated Omnibus Budget Reconciliation Act?
Termination of the employee for theft
A producer is not considered to be holding a license for the purpose of controlled business as long as
The commissions do not exceed 25% of the aggregate commissions earned during any 12 month period
With regard to examinations, which of the following statements is NOT correct?
The expense of examination of an insurer or of any person is paid by the Department
The Mode of Premium provision addresses:
The frequency of premium payment
All of the following are reasons why a new policy issued through a term conversion costs more, except:
The insured's health has changed for the worse
Which rating classification is typically used in the senior marketplace so that policies can be issued without a medical exam?
The lien plan
If an employee is age 65 and still working, which of the following statements is correct?
The older employee must be offered the same benefits as younger employees
All of the following provisions of an adjustable life policy may be changed to meet the policy holders needs, except:
The person named as the insured on the policy
Each of the following choices are true of whole life, except:
The policy can be converted into a term life insurance plan at anytime
Which of the following statements about Annual Renewable Term premiums is TRUE?
The premium increases over time as the insured's age increases Term premiums increase as the insureds age increases
Which of the following are incorrect regarding suitability standards for LTC insurance?
The producer must not focus on the consumers ability to pay for long term care insurance or the consumers existing insurance, but rather focus on the consumers goals and needs for LTC
Which of the following is true of the Oklahoma Life and Health Guaranty Association?
The purpose is to protect insureds, policy owners, and beneficiary from the insolvency of an insurance company
If an applicant is a minor, who signs the application?
Their guardian
First to die and last to die life insurance policies have in common all of the following except:
They both continue in force after one of the named insureds dies
How long would a policyowner have to pay premiums on a term life policy to age 65 that was taken out at age 35?
To the earlier of the insureds death, or to age 65
Which of the following policies offers the least guarantees?
Variable universal life
If an insured is concerned about being unable to pay the premiums on his or her whole life policy in the event of a total disability, which of the following riders should be added to the policy?
Waiver of Premium Would waive premiums for a disabled insured.
Which of the following policies could be expected to have the lowest premium?
Whole life
What is the purpose of nonforfeiture values?
Without them, any cash values would be retained by the insurer when the policy lapses due to non payment of premium
Which of the following accidents would not be covered under the terms of a policy using 'accidental means' to define a covered loss?
Zachary breaks his ankle when he tries to jump abroad a street trolley that has already started moving
An _________ assignment is considered permanent.
absolute
Overseas foreign travel emergency coverage is a Medicare Supplement:
additional benefit
Confidential information shared by the producer to the insurer and does not become part of the policy is the ________
agent's report
Information about an applicants work behavior or character gathered from neighbors or co-workers would be included on an?
inspection report Is a general report of the applicants finances, character, morals, works, hobbies, and other habits.
What taxes apply to the benefits under an individual Disability Income Policy on which the insured has paid the premiums?
no tax
The name of the beneficiary designation that will pay a deceased beneficiary's share to the heirs of that beneficiary who predeceases the insured is called:
per stirpes Known as through the roots so their heirs of a deceased beneficiary will stand in for them and collect the deceased beneficiary's share of the proceeds
Normally, when the insurer determines that the insured is an acceptable risk, the insurer will send the policy to the ____________.
producer
All of the following are eligible to participate in HR-10 KEOGH Plan except:
silent partner