Exam 2
If an insured wishes to take legal action against an Accident & Health insurer because of its failure to pay a claim fairly or adequately, such legal action must be taken within what period of time after written proof of loss has been provided to the insurer? 2 years 60 days 1 year 3 years
3 years
Group conversion to an individual plan must take place within what period of time following employment termination? 30 days 31 weeks 31 days 60 days
31 days
A straight life policy includes a policy loan provision which stipulates that loans against the cash value are subject to a maximum fixed interest rate of: 8% 4% 10% 6%
8%
Jack's employer payroll deducts 10% of his weekly check toward premiums for group disability coverage. If Jack receives a monthly benefit from this policy in the future, what amount will be taxable? 50% None 10% 90%
90%
An outline of coverage must be provided to a prospective buyer when he or she is attempting to purchase which of the following ? A Medicare Supplement or a Long-Term Care Policy Life Insurance or a Limited Policy Medicaid or a Disability Income Policy Dental Insurance or a Long-Term Care Plan
A Medicare Supplement or a Long-Term Care Policy
Which of the following choices best describes the term loss exposure? A condition, sometimes hazardous, brought about by the nature of an insured's activities The chance of financial loss The predictability of a loss The acceptance of too many claims
A condition, sometimes hazardous, brought about by the nature of an insured's activities
In which of the following situations would insurable interest exist? A former employee and his employer An individual's grown married child A married couple who is wealthy Parents who are separating
A married couple who is wealthy
Most major medical insurance policies provide coverage for an insured's dependents. Coverage for dependent children is provided by such plans until: A specified age The dependent child graduates from high school The dependent child graduates from college The dependent child secures employment
A specified age
A person age 40 desires a life insurance policy that will allow him to increase or decrease the death benefit in the future. What would you recommend that he purchase? Renewable term policy Whole life policy Modified life policy Adjustable life policy
Adjustable life policy
Which of the following acts on behalf of a principal? An assistant principal An agent An insurer The entire teaching staff
An agent
Term life insurance may be converted at any time without proof of insurability. All of the following statements pertaining to the conversion privilege of group term life insurance are correct, EXCEPT: An insured employee generally has 31 days following termination of employment in which to convert the group insurance An insured employee must convert to the same type of term life coverage as was provided under the group plan Insureds who convert their coverage to individual plans generally pay a premium rate according to their attained age An insured employee may exercise the conversion privilege regardless of his or her insurability
An insured employee must convert to the same type of term life coverage as was provided under the group plan
The individual accepting a rebate in an insurance transaction is known as: An offeror An assignor An offeree A lessee
An offeree
An insurer must provide to each insured a confidentiality statement with regard to privacy issues within which of the following time frames? Annually Biennially Every three years Every five years
Annually
In the event a Long Term Care policy is replaced, a Notice Regarding Replacement form must be provided to and signed by the applicant at what time? Anytime during the underwriting process At time of policy application The Notice Regarding Replacement only applies to disability income policies Within 30 days following policy delivery
At time of policy application
Howard contributes more than the allowable amount to his traditional Individual Retirement Account (IRA). This means that Howard will: Be assessed a penalty Not be taxed on the contribution amount Have the contribution limit increased Receive account appreciation
Be assessed a penalty
Diana's policy has a clause that reads as follows: "Should the primary beneficiary and the insured die as a result of the same accident and the primary beneficiary fails to survive the insured by 14 days, it will be assumed that the beneficiary predeceased the insured." Which of the following is responsible for this clause? Common disaster provision Entire contract provision Facility-of-payment provision Uniform Mortality Act
Common disaster provision
Sara purchases a whole life policy with a death benefit of $450,000. What type of rider can Sara add to her policy to cover her spouse in case he dies in an accident? Payor rider Dependent rider Accidental death rider Dismemberment rider
Dependent rider
A false representation by a producer which, if relied on, may cause harm or injury to an individual involves which of the following legal principles? Waiver Estoppel Parole evidence Reinsurance
Estoppel
Whole life policies include several non-forfeiture values or options. What non-forfeiture option in this policy provides the greatest face amount of life insurance protection if selected? Surrender for cash Extended level term insurance Reduced paid-up insurance Fixed term option
Extended level term insurance
Which non-forfeiture value allows for the greatest amount of life insurance protection in the event of non-payment of premium? Paid-up additions Surrender for cash Reduced paid-up insurance Extended term insurance
Extended term insurance
Which of the following medical expense plan features provides for a continuation of benefits when a covered employee is totally disabled at the time of plan termination? Disabled employees provision Extension of benefits Election period Open enrollment period
Extension of benefits
If an employee has an annuity provided by his employer, such employee has what type of annuity? Individual Group Corporate Association
Group
Which of the following is NOT generally governed by replacement regulations? Group life insurance Limited pay life insurance Universal life insurance Term life insurance
Group life insurance
A rider is an additional attachment to a life insurance policy and can provide a benefit or restrict coverage. Which of the following statements is true regarding the following life insurance policy benefit riders? Guaranteed insurability provides the insured with the option to purchase additional amounts of insurance without a medical exam Accelerated death benefits are two times the face amount of the policy The cost of the automatic premium loan provision is related to the health history of the insured and the face amount of the policy Waiver of premium benefits protect the insured by providing disability income benefits
Guaranteed insurability provides the insured with the option to purchase additional amounts of insurance without a medical exam
Dan owns a life insurance policy that is classified as a modified endowment contract. He withdraws some of the cash value to pay for medical expenses. Which of the following statements is true? He will be subject to a penalty if the withdrawal is made prior to age 70 1/2 He is not permitted to withdraw cash prior to age 59 1/2 He will not be subject to a penalty no matter what his age He will be assessed a penalty if the withdrawal is prior to age 59 1/2
He will be assessed a penalty if the withdrawal is prior to age 59 1/2
A major medical policy provides coverage for medical expenses and hospital care. Each of the following is a characteristic of this type of insurance, EXCEPT: An initial deductible Home health care Coinsurance Larger limits of insurance
Home health care
The Internal Revenue Service has various regulations which apply to individual and corporate owned annuities. In which of the following situations will the interest earned on a corporate owned annuity be tax-deferred? When the corporation designates a natural person as beneficiary If the corporation lists itself as the annuitant If the corporation designates a natural person as the annuitant When the firm requests such tax treatment
If the corporation designates a natural person as the annuitant
A licensed producer who engages in material misrepresentations in such volume as to threaten the solvency of the insurer which sponsored him or her may be subject to which of the following? Decreased productivity The death penalty Lifetime renewals Imprisonment
Imprisonment
Certain elements are required in order for a risk to be insurable. Which of the following is NOT an element of insurable risk? The loss must be accidental and not intentional The loss must cause financial harm The loss must be measurable and definable In a robust economy, premiums charged can be excessive provided the public is willing to pay higher premiums
In a robust economy, premiums charged can be excessive provided the public is willing to pay higher premiums
Interest-sensitive whole life policies, such as universal life, use varying interest rates: In order to determine future premiums In order to determine cash values In order to determine death benefits In order to determine non-forfeiture values
In order to determine cash values
Interest is paid on the cash savings feature of a whole life insurance policy. How is the annual increase of the cash value taxed? It is tax-deferred It is tax-exempt It is taxable as a capital gain It is taxed as ordinary income
It is tax-deferred
What often occurs with the deductible for preventative dental care? It is waived by the dentist It is waived by the insurer It is a required payment Deductibles do not exist in dental care plans
It is waived by the insurer
An endowment pays a benefit at the earlier of death or at the end of a specified period. Which of the following is true regarding an endowment? It possesses an accelerated cash value Its cash value will equal its death benefit at age 100 Its premiums are flexible during the endowment period The cash value is not guaranteed
It possesses an accelerated cash value
Which of the following statements regarding Workers' Compensation is incorrect? It provides coverage for an employer against third-party suits It provides limited hospital benefits for work-related illnesses and injuries It provides disability, rehabilitation, hospital and funeral benefits It only provides coverage for job-related or compensable illnesses or injuries
It provides limited hospital benefits for work-related illnesses and injuries
A producer who uses health insurance premiums collected for his own personal use has engaged in: Illegal inducement Defamation Rebating Larceny
Larceny
Jack is a 73-year-old retiree with limited assets. He is interested in receiving custodial care if he should need it in the future. Which of the following would provide benefits for this type of care? Medicaid Medicare Part A Medicare Supplement insurance Medicare Part B
Medicaid
Which of the following types of insurance companies is owned by its policyholders? Foreign insurer Stock insurer Domestic insurer Mutual insurer
Mutual insurer
A stock insurer and a mutual insurer differ according to: Ownership Profits Capital Domicile
Ownership
Which of the following is not a type of preventive care? Palliative care Pap smears Mammograms Annual physical
Palliative care
Life insurance policies issued by mutual companies may pay dividends to policyholders each year from surplus accumulated. Such policies are also referred to as: Surplus lines insurance Participating policies Universal life plans Dividend reinvestment contracts
Participating policies
A policy is purchased covering a 14-year-old child. The premiums for the policy are waived when the child's parents are killed in an accident. Which of the following allowed for the waived premium? Guaranteed insurability rider Waiver of premium rider Payor rider Accidental death rider
Payor rider
An individual enrolls in Part B of Medicare once the appropriate paperwork is completed and he or she: Pays the monthly premium Pays 80% of the monthly premium Pays 20% of the monthly premium Satisfies the stated deductible
Pays the monthly premium
Which of the following is a Required Mandatory Uniform policy provision that appears in an accident and health contract? Illegal occupation Physical examination and autopsy Recurrent disability Relation of earnings to insurance
Physical examination and autopsy
Which of the following policy provisions protects an insurer against a small claim that may be present prior to coverage being provided under a new health insurance policy? Pre-existing conditions provision Coordination of benefits provision Duplicate coverage provision Common accident provision
Pre-existing conditions provision
What provision found in a life insurance policy allows an insurer to assess an extra charge if the policyowner makes payments on a quarterly basis? Owner's rights provision Premium paying provision Consideration provision Automatic premium provision
Premium paying provision
Which of the following best describes the deductibility of individual dental premiums? Premiums are deductible to the insured Premiums are not deductible by an insured Premiums are deductible up to $500 per year Premiums are deductible if they are payroll-deducted by the employer
Premiums are not deductible by an insured
Tax law may also influence premiums paid for life insurance protection. Which of the following statements pertaining to life insurance premiums is correct? Premiums for policies in which the insured is someone other than the policyowner are tax-deductible The premiums paid by a husband for an individual policy that insures a spouse are tax-deductible A corporation may purchase key-person life insurance and deduct the premiums as a business expense Premiums for group term life insurance covering employees are tax-deductible, assuming certain requirements are satisfied
Premiums for group term life insurance covering employees are tax-deductible, assuming certain requirements are satisfied
An accident and health policy is comprised of many provisions. The purpose of the coordination of benefits provision in group health insurance is to: Prevent profiting by owning an insurance policy Make the insured whole again following a loss Increase benefits for necessary surgery Reduce outpatient benefit payments
Prevent profiting by owning an insurance policy
The Consolidated Omnibus Budget Reconciliation Act (COBRA) provides for the continuation of group health insurance coverage for an individual or dependents under specific circumstances. All of the following are considered to be applicable special circumstances, EXCEPT: Promotion Death Termination of employee Divorce
Promotion
A life insurance policy is a legal contract between an insurer and policyholder. Prior to an application being approved by a life insurance company's underwriting department, the individual to be covered by the policy death benefit is known as the: Policyowner Applicant Proposed insured Insured
Proposed insured
All of the following are true regarding the rehabilitation rider added to a disability income policy, EXCEPT: Assists an insured in returning to work Requires an additional premium for this additional coverage Offsets reasonable expenses for rehabilitation, training or tuition to prepare for a new career Provides benefits that will assist insured only in returning to their previous occupation
Provides benefits that will assist insured only in returning to their previous occupation
All of the following may be used in order to manage the premiums charged for medical insurance, EXCEPT: Deductibles Coinsurance Provisions Stop loss limit
Provisions
According to U.S. Federal law 1033, which of the following entities is subject to federal interstate commerce regulations? Canada Mexico Puerto Rico Japan
Puerto Rico
Which of the following is not a dividend option? Accumulate at interest Reduce the premium Reduced paid-up insurance Cash
Reduced paid-up insurance
"A policy that is lapsed or surrendered, or one that is converted into a reduced paid-up contract" best describes: Replacement Restitution Rescission Policy Fulfillment
Replacement
An agent intentionally lists on the application that a sale is not intended to replace an existing contract. Later on, it is determined that the policy did in fact replace an existing contract. Which of the following best describes the action taken by the producer? Replacement Defamation Larceny Rebating
Replacement
All of the following are covered by a basic dental insurance plan, EXCEPT: X-rays Fluoride treatments Cleanings Restorations
Restorations
The outline of coverage for an A&H policy must include all of the following choices, EXCEPT: Exclusions Limitations Reductions Riders
Riders
An individual who eliminates her exposure to loss has engaged in: Risk sharing Risk retention Risk reduction Risk avoidance
Risk avoidance
Jerry lives in a mountainous area where the chance of windstorm losses are greater than the average. He is rebuilding his residence and decides to construct a flatter roof covering the entire structure. Which of the following best describes the action that Jerry has taken? Risk reduction Risk avoidance Risk prevention Hazard avoidance
Risk reduction
Which is NOT TRUE with regard to state required Workers' Compensation coverage? It is mandatory work-related coverage It is considered the "exclusive" remedy for work-related injuries or sicknesses Some states do not permit private carriers to sell Workers' Compensation insurance Self-insuring is the only method an employer can use for providing coverage
Self-insuring is the only method an employer can use for providing coverage
Whole life insurance provides death protection and a cash savings feature. Which of the following policies is potentially the least expensive over the life of the contract? Single premium whole life policy Whole life policy An endowment Limited payment policy
Single premium whole life policy
Which of the following long-term care insurance benefits provides 24-hour nursing care? Skilled nursing care Intermediate nursing care Adult day care Respite care
Skilled nursing care
An annuity is a systematic liquidation of funds. What type of annuity would you as an agent recommend your client purchase in order to protect against outliving one's income? Fixed annuity Flexible premium deferred Straight life annuity Joint and survivor annuity
Straight life annuity
An insured who is covered by a Blue Cross and Blue Shield plan is also known as a: Subscriber Beneficiary Policyowner Provider
Subscriber
A hospital expense plan provides coverage for an insured who suffers an illness or is injured accidentally. Each of the following is covered by a medical expense policy, EXCEPT: Surgical expenses Room and board expenses X-ray expenses Lab tests
Surgical expenses
A market value adjusted (MVA) annuity is a variation of a variable annuity. Which of the following is not true with regard to this type of annuity? The market value adjustment may increase or decrease When an adjustment is made it is based upon current interest rates The guaranteed interest rate applies if the annuity is surrendered early Regulation of these annuities is under FINRA
The guaranteed interest rate applies if the annuity is surrendered early
There are two parties involved in an insurance contract. Which of the following has the right to determine the language or wording to be included in the contract? The insured The insurer The policyowner The consumer
The insurer
All of the following are true with regard to an annuity contract, EXCEPT: The owner possesses the right to designate a beneficiary The owner possesses the right to withdraw funds The owner possesses the right to designate the annuitant The owner possesses the right to terminate the contract
The owner possesses the right to terminate the contract
Term life insurance is less expensive initially than whole life insurance and provides "pure" or temporary protection. Each of the following is true regarding term life insurance, EXCEPT: It provides temporary insurance for a limited period of time The policy matures at the end of the term period It may be converted to an individual whole life plan It does not build equity
The policy matures at the end of the term period
What is the purpose of a credit disability insurance policy? To provide an individual with protection for loss of income To cover an outstanding debt To protect a financial institution in the event of insolvency To provide an insured with protection against superannuation
To cover an outstanding debt
Which of the following unfair trade practices is a form of misrepresentation? Larceny Rebating Twisting Embezzlement
Twisting
Insurance carriers that specialize in offering health care to small groups must make available at least how many health plans to the small employer? Five Two Ten Twenty
Two
With regard to medical plans and group insurance, the Health Insurance Portability and Accountability Act (HIPAA) applies to groups of: Three or more Two or more Five or more Less than fifty
Two or more
Which of the following life insurance policies provides a policyowner with flexibility and control over the investment portion of the contract? Adjustable life policy Whole life policy Variable life policy Continuous premium life policy
Variable life policy
In order for an insurance policy to be legal, there must be a valid offer and acceptance present. The offer is usually made in which of the following instances? When the policy is issued by the underwriting department When the application is submitted to the underwriting department When the policy is delivered to the policyowner by the producer When the insurer approves the application
When the application is submitted to the underwriting department
The grace period in an individual health insurance policy with an annual premium is: 60 days 7 days 10 days 31 days
31 days
Which of the following is not a necessary underwriting tool to determine eligibility for insurance provided a premium was submitted with the application? A Statement of Good Health An agent's report The MIB Consumer Report
A Statement of Good Health
Which of the following best describes a return of unused premium? Pro rata return Interest Policy surrender A dividend
A dividend
An insurer incorporated, chartered or formed under the laws of this State is referred to as: An alien insurer A foreign insurer A domestic insurer An unauthorized insurer
A domestic insurer
Which of the following is not considered a rebate? Any valuable consideration used as an inducement to contract insurance, not specified in the policy Stocks and bonds given as an inducement to contract A favorable payment plan provided to a policyholder A personal service offered as an inducement to contract insurance, not specified in the policy
A favorable payment plan provided to a policyholder
A producer that is found guilty of engaging in any unfair practice may be subject to a monetary penalty. In addition, he or she most probably will also receive which of the following? A referral A license suspension A deviated rating A temporary license
A license suspension
Special rules apply to life insurance under a qualified plan. If a qualified plan includes a life insurance death benefit, which of the following is true? A portion of the income under a qualified plan is taxable as a capital gain A portion of the life insurance premium under a qualified plan is taxable A portion of the interest under a qualified plan is tax-free A portion of the basis under a qualified plan is taxable
A portion of the life insurance premium under a qualified plan is taxable
All of the following statements are true with regard to a traditional Individual Retirement Account (IRA), EXCEPT: Income distributed from an IRA at retirement is taxed as ordinary income A premature distribution is subject to a 10% penalty Contributions are tax-deductible in some cases A premature distribution penalty is applied if the owner becomes disabled and receives proceeds
A premature distribution penalty is applied if the owner becomes disabled and receives proceeds
Which of the following best describes the interval of time between the purchase of an annuity contract and the initial distribution of income payments paid to the annuitant? Annuity period Accumulation period Policy period Distribution period
Accumulation period
A shopper for insurance is concerned about the financial stability of the company with which she intends to do business. What item would give her the best picture of an insurance company's financial health? The insurer's reserves The number of reinsurance agreements a company is involved in The State Commissioner's Authorization Letter An independent rating service
An independent rating service
Insurers send confidentiality statements about privacy issues to a policyholder on which of the following bases? Annually Biennially Triennially Every five years
Annually
Tony applies for life insurance on March 8th. The application is sent to underwriting on March 9th. Approval is provided by the insurer on March 17th. The policy is issued March 19th and the agent delivers it to Tony on March 22nd. When will the free-look period end? March 22nd April 1st March 31st April 2nd
April 1st
A reciprocal organization is managed by a(n): Risk retention group Attorney-in-fact Broker Managing partner of an insurance distribution network
Attorney-in-fact
An underwriter reviews Accident & Health applications to assess an individual risk. Sound and competent underwriting helps the underwriter and insurer to accomplish which of the following? Remit greater commissions Increase production Avoid adverse selection Increase persistency
Avoid adverse selection
Which of the following best describes a producer who, by contract, is bound only to place insurance business with the insurer who sponsors him or her? Independent agent Captive agent Soliciting agent Sub-agent
Captive agent
Qualified distributions may be made by the owner or beneficiary of a qualified plan prior to age 59 1/2 if they are due to any of the following, EXCEPT: Disability Death Career change First time home purchase
Career change
An annuity may be referred to as a systematic reimbursement of an estate. A type of annuity which provides lifetime benefits for the annuitant and upon the annuitant's death, a lump-sum settlement of any undistributed cost of the annuity, is known as a: Joint life annuity Life annuity with 15 years certain Life annuity with installment refund Cash refund annuity
Cash refund annuity
Health insurance policies must include twelve required uniform policy provisions. Each of the following is a required provision, EXCEPT: Change of occupation Reinstatement provision Notice of claim Change of beneficiary
Change of occupation
All of the following are qualified plans, EXCEPT: 401(k) plan Simplified employee pension Deferred compensation plan Section 457 deferred compensation plan
Deferred compensation plan
An HMO must include coverage for which of the following? Elective cosmetic surgery Emergency room treatment Loss of earnings Routine dental care
Emergency room treatment
The Commissioner of Insurance may place on probation, suspend, revoke or refuse to renew a producer license after a hearing if the producer has engaged in which of the following? Shared commissions with a fellow producer Was convicted of a traffic violation Failed to explain the terms, benefits and conditions of a policy Engaged in coercive practices
Engaged in coercive practices
The Commissioner or Superintendent of Insurance approves premium rates on policies to be issued in this State to make sure that they are not unfairly discriminatory. This means that an insurer may submit rates to the Insurance Department on which of the following bases? Retrospective Use and file Concurrent File and use
File and use
The Producer's Report will include which of the following? Information not found elsewhere in the application The estimated premium The estimated mortality rate Contact information of the attending physician
Information not found elsewhere in the application
Each of the following is excluded under an individual long-term care insurance policy, EXCEPT: Intentionally self-inflicted injury Treatment for alcohol abuse Care for benefits provided by Workers' Compensation Institutional care received within the U.S.
Institutional care received within the U.S.
Which of the following statements is true regarding a Multiple Employer Welfare Arrangement (MEWA)? It allows small employers to band together to receive less expensive premiums It permits small employers to receive premium credits for good safety experience It allows employees with physical impairments to receive adequate medical care coverage It permits insurers to lower the cost of health care through the accumulation of premiums
It allows small employers to band together to receive less expensive premiums
In 1974 Congress enacted the Employment Retirement Income Security Act (ERISA). This Act is also referred to as the Pension Reform Act. Which of the following is true with regard to this federal law? It is designed to protect employers against claims by employees It is designed to protect the interests of participants in employee benefit plans and their beneficiaries It is designed to prohibit discrimination against employees who have reached a specific age with regard to wages and benefits It allows for affiliations and mergers between employers in the securities, insurance, and banking industries
It is designed to protect the interests of participants in employee benefit plans and their beneficiaries
Annuities may be classified according to the number of lives covered. What type of annuity is best suited for a couple who is retired and desire income for as long as they both live? Life annuity Annuity certain Joint annuity Joint and survivor annuity
Joint and survivor annuity
Some life insurance policies may cover more than one individual. A life insurance contract which insures two or more individuals with the proceeds paid upon the death of the first to die is known as a: Joint and survivor policy Survivorship life policy Joint life policy Family policy
Joint life policy
An unincorporated self-employed individual who wishes to maximize her annual qualified retirement plan contributions would select a: Keogh Plan Roth IRA Rollover plan Profit sharing plan
Keogh Plan
A Business Overhead Expense (BOE) Policy provides benefits when an owner is totally disabled. Which of the following is covered by this policy? Accidental death benefits Labor or utility costs Disability income paid to the employees Buy-out expenses
Labor or utility costs
Which of the following settlement options provides the beneficiary with an amount of monthly income for life plus interest? Fixed amount Interest only Fixed period Life income
Life income
All are limited policies, EXCEPT: Cancer only insurance Prescription drugs Vision Major medical
Major medical
If a producer lies on an application for life insurance coverage, the misstatements by the producer may be referred to as: Waivers Rebates Misrepresentations Warranties
Misrepresentations
Accident & Health policies are characterized by twelve required uniform policy provisions. Which of the following is NOT a required uniform policy provision? Grace period Misstatement of age Reinstatement Legal action
Misstatement of age
Premiums paid by the owner of a buy-sell disability policy are: Tax-deductible to the owner Not tax-deductible to the owner Paid for life Submitted to the State Buy-Sell Fund
Not tax-deductible to the owner
Which of the following would be best served by a buy-sell agreement funded with life insurance? A sole proprietorship An employee who cannot afford premiums One of four corporate owners who desires future control of the business A municipality with part-time employees
One of four corporate owners who desires future control of the business
Which of the following summarizes the benefits and features of a long-term care policy ? Outline of coverage Limitation and exceptions Underwriting considerations An impairment rider
Outline of coverage
Part A of Medicare provides hospital insurance. All of the following are covered benefits under Part A of Medicare, EXCEPT: Outpatient hearing exams Skilled nursing care Inpatient hospital care Hospice care
Outpatient hearing exams
Waldo purchases a disability income policy covering him in his occupation as a teacher at a local high school. Six years later, Waldo accepts a new position as a demolition expert. What action will his insurer take after he notifies them of his occupational change? Cancel the policy Reduce the monthly benefit amount Reduce the annual premium amount Nonrenew the policy on its next anniversary date
Reduce the monthly benefit amount
Group plan sponsors may include all of the following, EXCEPT: Employer groups Labor Unions Customer groups Self-employed individuals
Self-employed individuals
What action should a beneficiary take if an insurer refuses to pay a legitimate claim? Take legal action against the insurer Pay an additional premium Accept half the benefit Purchase another policy
Take legal action against the insurer
Benefits received from an AD&D policy are: Taxable Tax-free Tax-deferred Tax sheltered
Tax-free
When an individual receives a qualified distribution from a Roth IRA, the benefit received is: Tax-free Taxable as ordinary income Taxable as a long-term gain Taxable as a short-term gain
Tax-free
A whole life policy allows the owner to borrow against cash values as they accumulate. Interest payable on a whole life policy loan is generally due on which of the following dates? The anniversary date of the policy The anniversary date of the loan The first day of the year The last day of the fiscal year
The anniversary date of the policy
When purchasing LTC coverage an individual selects the level of benefit he or she desires. Most plans offer at least three daily benefits such as $100, $150 or $200. Most policies also provide the same level of benefits for institutional care but only a percentage of that benefit for home health care. Which of the following is true with regard to such benefits? The benefit for home health care will be greater than that for skilled nursing care The benefit for skilled nursing care is less than the benefit for custodial care The benefit for intermediate care is less than that provided for home health care The benefit for skilled nursing care is greater than that provided for home health care
The benefit for skilled nursing care is greater than that provided for home health care
Which of the following is the policyowner of a key-employee disability policy? The employee The beneficiary The business The creditor
The business
A fixed annuity is characterized by guarantees. Which of the following determines the guaranteed rate of this annuity? The investment performance of the insurer The fixed rate amount specified in the contract The investment philosophy of the owner Standard & Poor's bond index
The fixed rate amount specified in the contract
A Point of Service (POS) plan is a hybrid arrangement that combines the aspects of a traditional HMO and a PPO. Such plans allow treatment inside or outside the "network". If the POS plan requires that a member insured provide notification of treatment outside the network, which of the following generally must be notified ? The medical provider The gatekeeper The network manager The provider contractor
The gatekeeper
What would a 68-year-old individual be subject to pay under Medicare if he or she spent 55 days in a hospital for treatment of a covered illness? The coinsurance amount The hospital deductible 20% of the total charges The full amount of charges
The hospital deductible
Some types of loss are not insurable. Those types that are insurable must satisfy several requirements in order to be a proper risk for insurance. Therefore, in order to be insurable, a possible loss must be characterized by each of the following, EXCEPT: There must be a satisfactory number of homogeneous exposure units to make losses more predictable The loss must not be catastrophic The loss must not be accidental The loss must be measurable and definite
The loss must not be accidental
Each of the following factors is of primary importance when underwriting life or health insurance, EXCEPT: The occupation of the proposed insured Medical history of the proposed insured The marital status of the proposed insured The age and sex of the proposed insured
The marital status of the proposed insured
Which of the following parties may change the beneficiary designation in a life insurance policy? The policyowner The contingent beneficiary The insured The insured's estate representative
The policyowner
Which of the following best describes the responsibility of a producer when delivering an insurance policy? The producer should review the benefits, provisions and exclusions appearing in the policy with the policyowner The producer should review only the subjects that the policyowner questions The producer should review with the policyowner the health history of the proposed insured The producer should review with the policyowner the health history of the insured
The producer should review the benefits, provisions and exclusions appearing in the policy with the policyowner
Which of the following is true regarding a deferred annuity that is surrendered by its owner prior to annuitization? The beneficiary receives the cash value The surrender value is guaranteed The surrender value is decreased The surrender value is increased
The surrender value is guaranteed
Which answer best describes the non-forfeiture feature of an annuity? The value of the death benefit after inheritance taxes The value of the fund less any surrender charges The guaranteed interest rate plus an inflation factor A mandatory free withdrawal clause
The value of the fund less any surrender charges
Which of the following best describes the beneficiary designation of "per stirpes"? Proceeds are only paid to a secondary beneficiary Through the root or family line Proceeds are payable to specific designees To an immediate family member not named individually
Through the root or family line
What policy provision found in an accident and health policy allows an insurer to void the contract during the initial two years if it finds that the insured engaged in material misrepresentation on the application? Reinstatement provision Time limit on certain defenses provision Misrepresentation provision Owner's rights provision
Time limit on certain defenses provision
Dick is covered by a group life policy paid for by his employer. The face amount of coverage is $25,000. If Dick terminates his employment and wishes to convert his group coverage to an individual policy, to what type of insurance will he generally convert? Universal life Level term life insurance Decreasing term insurance Individual term life insurance
Universal life
A variable life policy is characterized by investing cash values in stocks, bonds, or mutual funds. Which of the following statements is not true concerning this form of life insurance protection? The amount of the variable life death benefit is dependent upon the performance of securities Variable life provides a guaranteed minimum death benefit Variable life cash values are deposited in a separate account Variable life includes a flexible premium
Variable life includes a flexible premium
Which of the following parties transfers ownership of a life insurance policy to a viatical settlement firm? Viator Viatee Viatical settlement broker Beneficiary
Viator
In what case will Medicare cover expenses incurred in a nursing home or skilled nursing facility? When an individual pays the Part A premium When approved by the attending physician Once the individual completes a hospital stay of at least 90 days If the individual's next of kin agrees to such care
When approved by the attending physician
George has received $25,000 from a $100,000 straight life annuity. He is also covered by a $100,000 straight life policy. If George dies today, what will be paid to his survivors? $0 $100,000 $175,000 $200,000
$100,000
George is covered by a whole life policy with a face amount of $200,000. There is an outstanding policy loan on the policy in the amount of $12,000. George dies without repaying the loan. What will be paid to his beneficiary when the claim is filed? $100,000 $200,000 $212,000 $188,000
$188,000
Artie owns a disability income policy with a monthly benefit of $1,000. The policy includes a 30-day elimination period. If Artie is disabled for three months, how much of a benefit will he collect? Nothing $1,000 $3,000 $2,000
$2,000
Which of the following best identifies the definition of being partially disabled? Unable to perform your own occupation Unable to perform any occupation for which you are suited by training and experience Unable to perform any occupation Unable to perform some, but not all of your normal duties or occupation
Unable to perform some, but not all of your normal duties or occupation
The promise that an insurer provides to a policyowner in a health insurance policy best describes which of the following? Warranty Waiver Estoppel Consideration
Consideration
In most States, licensed producers must satisfy which of the following in order to maintain their insurance license? Continuing Education (CE) requirements Production requirements A manageable loss ratio Recapitalization requirements
Continuing Education (CE) requirements
Common exclusions found in a disability policy would include all the following, EXCEPT: War Intentionally self-inflicted injuries Private aviation Crime prevention
Crime prevention
If an insured wishes to guarantee his or her future insurability, what provision or option may be added to a disability income policy? A waiver of disability Cost of living rider Return of premium provision Guaranteed purchase option
Guaranteed purchase option
By legal definition, an agent represents his appointing company, whereas a broker represents: His client Himself Both his client and himself A professional insurance association
Both his client and himself
Roger surrenders his whole life policy and receives $10,000. His total premiums paid during the past fifteen years totaled $8,000. How much of the surrender value will be taxable? $10,000 None $8,000 $2,000
$2,000
A person age 54 withdraws funds from a tax-sheltered annuity (TSA). What penalty will be assessed? 50% 20% 10% 70%
10%
Which of the following is provided to an applicant when a premium is collected along with an application for life insurance? A producer or agent's report A conditional receipt The entire contract A ten-day free-look
A conditional receipt
Jayne wishes to purchase an annuity. She is currently age 45. She wants to receive income once she retires. What type of annuity should Jayne purchase? An immediate annuity A deferred annuity A joint life annuity A variable annuity
A deferred annuity
Policies providing hospice care benefits are not required to cover: Care for terminally ill persons Home health care Ambulance expenses Psychological treatment benefits
Home health care