Comprehensive Exam
K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary? - face amount plus the interest - $20000 death benefit - return of premiums paid - cash value plus interest
$20,000 death benefit
An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a
$25,000 individual whole life policy
Which of the following is a characteristic of a variable annuity? -does not provide a transfer of ownership -underlying equity investments -selling this product requires only a life license -Does not have a surrender charges
-underlying equity investments
P is self-employed and owns an Individual Disability Income policy. He becomes totally disabled on June 1 and receives $2,000 a month for the next 10 months. How much of this income is subject to federal income tax?
0$
An accident/health policy holder has ___ days to return the policy and receive a full refund on premiums 10 21 14 7
10
All of the statements about traditional individual retirement accounts are false EXCEPT -Contributions are not tax deductible - 10% penalty is applied to withdrawals after age 59 1/2 - withdrawals are normally tax free to the recipient - 10% penalty is applied to withdrawals before age 59 1/2
10% penalty is applied to withdrawals before age 59 1/2
A group health policy's approved premium rate is guaranteed by the insurer for an initial period of at LEAST __ months
12
a 15-year martgage is best protected by what kind of life policy?
15 year decreasing term
A terminated employee must have been covered for at least __ months under a group health insurance policy immediately prior to termination in order to be eligible for continuation on coverage 6 12 3 1
3
ABC insurance company fails to pay death proceeds after satisfactory proof of loss was submitted. ABC must then begin paying interest on the death proceeds after __ days of receiving proof of loss -40 -10 -60 -30
30
Before an insurer can increase the rates for individual accident and health policy owners, the insurer must provide written notice at least __ days before the effective rate increase. 30 40 50 60
30
According to the Mandatory Uniform Policy Provisions, what is the maximum amount of time after the premium due date during which the policy remains in force even though the premium has not been paid? 10 31 7 60
31
An individual life insurance policy issues in NC MUST have a grace period for premium payment of how many days?
31
M's insurance company denied a reinstatement application for her lapsed health insurance policy. The company did not notify M of this denial. How many days from the reinstatement application date does the insurance company have to notify M of the denial before the policy will be automatically placed back in force? 45 10 60 30
45
V is insured under an individual Disability Income policy with a 30-day Elimination period. On July 1, he is involved in an accident and temporarily disabled. He returns to work on December 1. How many months of benefit are payable? 5 4 6 4 1/2
5
how long must every insurance agent maintain all records, books, and documents related to each insurance transaction 3 years 6 5 4
5 years
An eligible employee has a MAXIMUM of __ days after their first day of employment to be added to group health coverage 10 30 60 90
90
C is a key employee at ABC Incorporated. If a Key Employee life policy is purchased on her life, which of these statements would be true?
ABC is the policyowner, C is the insured, and ABC in the beneficiary
The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n)
AD&D rider
B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of
Additional whole life coverage at specified times
S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made?
Automatic Policy Loan
An applicant for a nonresident agent license MUST meet which of the following requirements?
Be licensed as an agent in the agents state of domicile
T is receiving $3,000/month from a Disability Income policy in which T's employer had paid the premiums. How are the $3,000 benefit payments taxable?
Benefits are taxable to T
A physician opens up a new practice and qualifies for a $7000/month disability income policy. What rider would the physician add if he wants the ability to increase his policy benefits as his practice and income grow?
Guaranteed Insurability Option Rider
A medical care provider which typically delivers health services as its own local medical facility is known as a - regional provider - multiple employer trust - preferred provider organization - health maintenance organization
Health maintenance organization HMO
The life and health insurance Guaranty Association in NC has regulations that apply ONLY to
Life and health policies issues by companies authorized in NC
Which of the following health insurance coverages is BEST suited for meeting the expenses of a catastrophic illness?
Major Medical
Comprehensive Major Medical policies usually combine:
Major medical with basic hospital/surgical coverage
Which type of policy is considered to be overfunded, as stated by IRS guidelines?
Modified Endowment Contract
Which of these statements is INCORRECT regarding a PPO? -PPO are not a type of managed care systems -prices are negotiated in advance for PPO providers -in network PPO providers offer members better coverage of incurred expenses -PPO normally have more providers to chose from as compared to an HMO
PPO are not a type of managed care systems
A policy owner is able to chose the frequency of premium payments through what policy feature?
Premium mode
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
Before accepting the initial premium for a prearranged funeral contract, the agent must make these disclosures except: -The amount of commission that the agent will receive -the relationship between the prearrangement and the life insurance policy -the fact that the life insurance policy will be funding the prearrangement -the nature of the relationship of everyone involved
The amount of commission the the agent will receive
Essential Benefits without annual and lifetime limits are required on any health insurance policy purchased -through medicare -through commerical providers -through mutual insurers -through the federal marketplace
Through the federal marketplace
In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?
Unilateral
Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?
Variable Life
Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?
Variable universal life
Q would like to purchase $100,000 of permanent protection on his wife and $50,000 of Term coverage on himself under the same policy. What kind of policy should Q purchase?
Whole life policy with other insured rider
Medical treatment in Tax-supported institutions cover the cost of Cerebral palsy alcoholism and drugs respiratory illness all of the above
all of the above
An annuity promises that, if the annuitant dies before receiving payments equal to the correct value, the payments will be continued to a beneficiary until an amount equal to the contract value has been paid. This type of annuity is called a joint life annuity an installment refund annuity a cash refund annuity
an installment refund
A life insurance company cannot declare a policy lapsed or forfeited within one year after default in premium payment, unless it has mailed a notice indicating the amount of premium due. this requirement only applies to policies with a(n) insurable interest annual premium schedule monthly premium schedule specific provision initiated by the insured
annual premium schedule
Group/voluntary long-term care policy premiums are typically deducted from the employee's income and
are less costly compared to individual long term care coverage
The Life and Health insurance guarant association is funded by authorized insurers in this state. one the the roles of this organization is to
assist in the prevention of insurer insolvencies
Medicaid was designed to assist individuals who are
below a specific income limit
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies? insured policyowner beneficiary insurer
beneficiary
a life insurance application must be signed by all of these except the insured beneficiary the policyowner the agent
beneficiary
what is considered to be a characteristic of an immediate annuity?
benefit payments start within one payment period of purchase
The situation in which a group of physicians are salaried employees and conducted business in an HMO facility are called
closed panel
In NC, an agent obtains their license from the
commissioner of insurance
All of the following statements about health coverage for newborns are correct except
coverage during the first year is limited to congenital defects
Which statement regarding the Misstatement of Age provision is considered to be true?
coverage will be adjusted to reflect the insured true age if a misstatement of age is discovered
F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?
decreasing term policy
Additional coverage can be added to a Whole Life policy by adding a(n)
decreasing term rider
The circulation of written literature that is maliciously creitical of an insurer's financial condition is called
defamation
G purchased a $50,000 single premium, Straight Life Annuity 2 years ago. G has been receiving monthly payments from the annuity. When G dies, the insurer
does not have to make any further payments
A variable insurance policy: Does not guarantee a return on its investment accounts guarantees a minimum rate of return does not guarantee an assignment provision does not allow the policyowner to assume the investment risk
does now guarantee a return on its investment accounts
an insurance company formed under NC laws is referred to as a
domestic company
in a disability insurance policy, which of these clauses acts as a deductible -elimination period -deductible period -probationary period -wavier period
elimination period
Non-occupational disability coverage is designed for
employees who suffer non-work related disabilities, since work related disabilities are covered by worker's comp
All of these are considered to be a benefit of social security except for survivorship disability retirement unemployment
eneemployment
Which health policy clause stipulates that an insurance company must attach a copy of the application to the policy to ensure that it is part of the contract?
entire contract
which of the following policy provisions prohibits an insurance company from incorporating external documents into an insurance policy?
entire contract
Health insurance benefits not covered due to an act of war are
excluded by the insurer in the contract provisions
The sections of an insurance contract which limit coverage are called
exclusions
Which of the following is NOT included in the policy face? free look provision name of the insurer name of the insured exclusions
exclusions
Term insurance has which of the following characteristics? -endows at the end of the policy period -expires at the end of the policy period -builds cash value -has nonforfeiture options
expires at the end of the policy period
which of these is considered a true statement regarding Medicaid? provides disability income benefits funded by both state and federal governments intended to be used by individuals age 65 and older automatically covers those receiving social security disability benefits
funded by both state and federal governments
Bryce purchased a disability income policy with a rider that guarantees him the option of purchasing additional amounts of coverage at predetermined times without requiring to provide evidence of insurability. What kind of rider is this?
guaranteed insurability rider
when determining the monthly benefit amount for a disability income policy, the factor that limits the amount a prospective insured may purchase is age income medical condition occupation
income
T owns an Accident & Health policy and notifies her insurance company that she has chosen a less hazardous occupation. Under the Change of Occupation provision, which of the following actions may her insurance company take?
increase policy coverage amount
Which of the following is NOT regulated by the insurance information and privacy protection act? insurance companies limited representatives insurance regulators agents
insurance reglators
Which of the following claims are typically excluded from Medical expense policies -car accident -alcohol treatment -intentionally self inflicted injuries -treatment for mental illness
intentionally self inflicted injuries
A policyowners rights are limited under which beneficiary designation?
irrevocable
in NC, a domestic insurance company is defined as a company that
is incorporated and formed in NC
Which of the follow statements is CORRECT about a domestic insurance company in NC? - it must honor the charter of the national association of insurance commissioners NAIC -It must own real estate in NC - it must write insurance on risks located on in NC - It must be organized under NC insurance laws
it must be organized under NC insurance laws
Which of the following statements is correct about the period in which a term policy con be converted? it is the same in all contract it waves according to the contracts
it waves according to the contracts
Which of the following situations does a critical illness plan cover? leukemia alcohol or rehab severe car accident asthma
leukemia
if a life insurance company becomes insolvent, the fund that guarantees policyowners payments of death benefit is known as the
life and health insurance guaranty association
Accelerated Death Benefits Provision in a life insurance policy is also known as
living benefit
an insurance company would most likely pay benefits under an accidental death and dismemberment policy for which of the following
loss of eyesight due to accidental injury
When a life insurance policy exceeds certain IRS table values, the result would create which of the following? 1035 exchange modified endowment contract endowment an investment
modified endowment contract
M purchases a $70,000 Life Insurance Policy with premium payments of $550 a year for the first 5 years. At the beginning of the sixth year, the premium will increase to $800 per year but will remain level thereafter. The face amount will remain at $70,000 throughout the life of the policy. The type of policy that M has purchased is -grader premium life - indeterminate premium life -modified premium life - adjustable life
modified premium life
`Which of the following BEST describes how a PPO is less restrictive than a HMO
more physicians to choose from
K sent a renewal premium payment to her insurer that would extend her coverage beyond the policy's maximum age limit. If the insurer accepts this premium, it -must continue the coverage to the end of the period of time for which the premium was accepted -can refuse to pay the claim at anytime -will lose its certificate of authority -is considered a form of misrepresentation
must continue the coverage to the end of the period of time for which the premium was accepted
J purchased a Disability Income Policy that ONLY J can terminate and on which the rates will never increase above those illustrated in the policy. Which of the following types of policies did J purchase? Conditionally renewable noncancelable guaranteed renewable optionally renewable
noncancellable
An accident policy will most likely pay a benefit for a(n) -critical illness -self inflicted injury -off the job accident -on the job accident
off the job accident
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
Which of these characteristics is consistent with a straight life policy?
premiums are payable for as long as there is insurance coverage in force
Which of the following actions is NOT possible with a Universal Life Policy? -policy's cash value may be used to pay premiums -premium payments may be made at unscheduled times -premiums may be applied as credit against income tax -face amount may be adjusted
premiums may be applied as credit against income tax
which of the following statements about a guaranteed renewable health insurance policy is correct
premiums normally increase at time of renewal
Which is these is NOT a type of agent authority? -Prinicipal _Implied - apparent - express
principal
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 payable to K's estate if P dies with a specified time
The purpose of the Rules Governing Life insurance and annuity replacements is to
reduce the opportunity for misrepresentation and incomplete disclosure
K failed to pay a renewal premium within the time granted by the insurer. K then sends in a payment which the insurer subsequently accepts. Which policy provision specifies that coverage may be restored in this situation? consideration free look reinstatement grace period
reinstatement
when an existing life insurance policy is terminated so that a new life insurance policy can be purchased, this transaction is called
replacement
Which provision allows a portion of any used medical benefits to be restored following a particular amount of benefit has been used of after the policy has been in effect for a particular period of time?
restoration of used benefit
The commissioner may issue an annually renewable _____ valid for representing an insurer in a foregin country or on a US military base
restricted license
Which of these terms accurately define an underwriter's assessment of information on a life insurance application? warranty review insurable interest risk classification inspection report
risk classification
P is a producer who notices 5 questions on a life application were not answered. What actions should P take?
set up a meeting with the applicant to answer the remaining questions
Which of the following is the reimbursement of benefits for the treatment of a beneficiary's injuries caused be a third party?
subrogation
Which of the following costs would a basic hospital/surgical policy most cover? care given at a nursing home treating a wound from a soldier injured at war lost income caused by hospital stay surgically removing a facial birthmark
surgically removing a facial birthmark
Which statement regarding a key employee life policy is NOT true - the application must be signed by the key employee -the company purchases, owns, pays the premiums ans is the beneficiary -its purpose is to prevent financial loss that may ensue if a key employee dies - the beneficiary is named by the key employee
the beneficiary is named by the key employee
In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and - a medical information report - the initial premium - attending physician statement -forward it immediately to the insurer
the initial premium
A policy of adhesion can only be modified by whom?
the insurance company
G is involved in an automobile accident as a result of driving while intoxicated and suffers numerous injuries. According to the Intoxicants and Narcotics exclusion in G's policy, who is responsible for paying the medical bills?
the insured
T was insured under an individual Disability Income policy and was severely burned in a fire. As a result, T became totally disabled. The insurer began making monthly benefit payments, but later discovered that the fire was set by T in what was described as arson. What actions will the insurer take?
the insurer will rescind the policy, deny the claim, and recover all payments made
Under a Renewable Term policy,
the renewal premium is calculated on the basis of the insured's attained age
Why is an applicant's signature required on a life insurance application?
to attest that the statements on the application are accurate to the best of the applicant's knowledge
An agent inducing an insured to lapse, forfeit, or surrender insurance through misrepresentation is committing the illegal act of
twisting
life and health insurance policies are ___ contracts -non lateral -multi lateral -bilateral -unilateral
unilateral
which of the following policies combines investment choices with a form of term coverage? universal life limited-pay life adjustable life variable universal life
variable universal life
S is a life insurance policyowner and enters into a written agreement to receive immediate cash in exchange for the sale and transfer of her life insurance policy. this agreement is referred to as a(n) Equity cash arrangement cash conversion viatical settlement 1035 exchange
viatical settlement
What type of insurance offers permanent life coverage with premiums that are payable for life
whole life
