Exam part 1
Where will a life insurance policy's proceeds be directed to if all the beneficiaries die before the insured?
insured estate
in what ways are insurance policies said to be aleatory?
involves the potential for unequal exchange of value
When a policy loan is requested by a policyowner and it requires the consent of the beneficiary, what kind of beneficiary designation is this?
irrevocable beneficiary
which of the following statements regarding hospital pre admission authorization is not true?
it encourages weekend admission
which statement regarding the certificate of insurance is accurate
it indicates evidence of an employees insurance coverage
Ken is age 65 and has 2 years until he receives Social Security retirement income benefits. At his current age, which is true about Medicare Part A Hospital Insurance coverage?
it is available through application to social security
in regards to health insurance what is meant by the term privacy policy
it is the policy that will pay up to its limits before any other policy pays
the initial premium of life insurance policy is typically paid in what way
it is typically obtained by a producer and forward to the insurer
A retired couple would like to maximize the income derived from their life savings and have it payable until they both die. Which annuity would be their best choice?
joint and survivor annuity
a life insurance beneficiary died after receiving six months of payment under the policys life income settlement option. what happens with the remaining balance of the death proceeds?
kept by the insurance company
which of the folliwing is associated with an immediate annuity
lack of accumulation period
what will medicare charge if someone doesn't enroll in certain medicare programs or plans when they're first eligible ?
late enrollment penalty
How much is normally paid to a policyowner in a life (viatical) settlement?
less than the death benefit
what is the guaranteed cash value of a whole life insurance policy when the insured turns 65 years old?
less than the policys face amount
during the early years of a whole life insurance policy, the cash value will normallyy be sent to
less than the total premiums paid
all of these are common limiting factors with dental insurance except for
limited placed on number of teeth that may be treated annually
in a disability income contract an insured is considered to be totally disabled under the presumptive disability provision if he/she
loses the ability to speak
the annuitant is a single premium deferred annuity SPDA
makes only one premium payment
skilled nursing facility expenses are sometimes covered by (blank) but only if the insured was hospitalized prior to entering the facility
medicare
which of the following may be considered an act of misrepresentation
misleading or failing to adequately disclose the title and true nature of a policy offered to a client
which of these is considered to be an unfair claims settlement practice
misrepresenting pertinent policy provisions relating to coverage after a loss
which of the following is not a valid reason for an insurer to contest a life insurance policy during the policys first two years of existence
misstatement of age
which of the following is true about a qualified retirement plan that is top heavy?
more than 60% of plan assists are in key employee accounts
medicare supplement insurance requires an individual to be at least how old for open enrollment?
no minimum age
An insured is covered with a health insurance policy. If the insured would like to cancel the policy, he/she must
notify the insurance company in writing
which element of contract constitutes a definite and unqualified proposal by one party to another?
offer
If a producer surrenders their license, how long must they wait to re-apply for the same license?
one year
Autopsies may be requested by an accident and health insurer
only if not prohibited by state law
The authority to change the beneficiary in an individual annuity lies with the
owner
When a deferred annuity is surrendered, who must sign the authorization to do so?
owner
which of the following is not true of participants in multiple employer trusts
participants must purchases all coverages the trust offers
Employers often purchase life insurance on a key employee in order to
pay for finding and training a replacement if the employee dies prematurely
which of the following is not a function of accident and health insurance?
pays a death benefit as a result of natural causes
Mark is covered by a policy that uses the regular occupation (own-occ) definition of total disability. Using this definition, he will be considered disabled if unable to
perform the substantial and material duties of his regular occupation
which of the following can be defined as a cause of loss
peril
a life annuity feature which provides benefit payments for a minimum number of years no matter when The annuity dies is called
period certain
Kim is covered under two medical expense plans. Plan A pays up to $5,000. Plan B pays up to $4,000. If she incurs $7,000 in expenses, the coordination of benefits provision dictates that
plan A pays up to 5k and plan B pays up to 2k
which statement regarding an adjustable life insurance policy is not true?
policy loans are not permitted
which of the following guidelines does not apply under pregnancy provision of the civil rights act
post termination extensions of medical benefit must apply equally to pregnancy
a guaranteed renewable provision allows
premiums which can only be increased per rate class
After joining a health maintenance organization (HMO), a subscriber will typically select a
primary care physician
a pre existing condition exclusion in an accident and health insurance policy pertains to
prior health matters
what is the name of the period of time during which a new employee is ineligible for group health insurance coverage?
probationary period
A statement MUST be signed by the ________ for any illustrations used in the sale of a life insurance policy.
producer
When a producer submits an application that discloses personal information regarding the applicant, who supplies the privacy notice?
producer
Under federal law, which of the following actions is unlawful and subject to civil or criminal penalties?
producer embezzling funds from an insurer
the genetic information nondiscrimination act of 2008 bars all of the following except
prohibits the use of genetic information in health insurance unless the applicant signs a waiver
which of the following could be a future use of the cash value that builds in a recently purchased whole lifee insurance policy?
provide supplement income in 35 years
the ACA must ensure a sufficient choice of (blank) in the marketplace
providers
An insured is entitled to coverage under a policy that a prudent person would expect it to provide. This principle is called
reasonable expectations
which of the following disability income provisions allows two periods of disability to be counted as one?
recurrent disability
Omar is covered by a disability income policy. He is hurt while performing an occupation more hazardous than the occupation listed in his policy. The policy's change of occupation provision will have what effect?
reduce the benefit level
a long term care policy owner is replacing existing coverage with a new policy replacement regulations require a(n)
replacement notice
T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?
request of the change will be refused
What is the insurer responsible for when a producer is acting within the scope of authority granted in the agency contract?
responsible for acts by the producer that are authority only
Sylvia purchased an annuity for $100,000 from the proceeds of an inheritance. No further payments are permitted and the income stream begins in 15 years. This contract is a(n)
single premium deferred annuity
if an individual would like to enroll in medicare or seek public information of medicare which federal agency handles this?
social security administration
Christine is receiving benefits provided from her disability income insurance. As compared to her previous earnings, the disability benefits should be
somewhat less
which life insurance policy provision prohibits a beneficiary from commuting encumbering withdrawing or assigning any portion of proceeds prior to actual receipt from the company?
spendthrift clause
which of the following entities does not establish regulations for variable insurance products
state attorney general
An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately has the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee?
subject to federal income tax withholding
a group health certificate for coverage issued in Arizona must contain a(n)
summary of policys features and benefits
Under a deferred annuity, which contract feature initially charges a 5-10% fee that eventually reduces to $0 after a stated amount of time?
surrender charge
The interest paid during an annuity's payout period is considered
taxable as ordinary income
which of the following statements is true if the owner of an IRA names their spouse as beneficiary but then dies before any distributions are paid
the account can be rolled into the surviving supposes ira
which statement regarding the joint and survivor life insurance settlement option is not true?
the amount of each installment is larger than the single life income option
fee-for-service is a method of administering health insurance benefit payments in which
the cost of each service is scheduled
all of these statements concerning group life credit insurance are false except
the face amount is baed on the outstanding loan balance
what would be considered an advantage of purchasing term life insurance?
the initial premium is lower
which statement regarding a fixed period settlement option is correct
the installment payment amount is determined by the total number of installments
which of the following is not a valid reason for an insurer to refuse renewal of an individual accident and health insurance policy?
the insured is currently in poor health.
which of the following is true regarding a person receiving a waiver of premium benefit
the insured must be disabled for a period of time
When a producer acts within the scope of his/her contractual authority, which of the following is legally responsible for these actions?
the insurer
which of the following is a true statement regarding a medicare supplement policy purchased during the open enrollment period
the policy will be issued regardless of health
which of these must be disclosed in a universal life policy?
the policys surrender charges
A material change in a modified endowment contract (MEC) results in
the seven pay test adjusted for cash value applies again
how does a continuous premium whole life policy differ from a limited payment whole life policy
the time period in which premiums will be paid
When does the owner's contractual rights begin under an individual annuity contract?
time of purchase
What is the elimination period of an individual disability policy?
time period a disabled person must wait before benefits are paid
Why were Exchanges implemented by the Affordable Care Act (ACA)?
to create a one stop market for standardized health insurance plans
which of the following best describes the purpose of HIPPA
to reduce a pre existing condition waiting period when coverage is sought for a new medical plan
The owner's cost basis for a non-qualified deferred annuity is typically the same as the
total premiums paid
How is a collateral assignment used in a life insurance contract?
transfers specific ownership rights to a creditor
Typically, states will permit the grouping of two or more small employers in the same industry for obtaining group health insurance at a favorable rate. This grouping of employers is known as a multiple employer
trust
What is the face amount of a $50,000 graded death benefit life insurance policy when the policy is issued?
under 50k initially but increases overtime
which of the folliwng statements about universal life insurance is not true
universal life insurance normally has a minimum guaranteed cash value for duration of policy
In an individual retirement account (IRA), rollover contributions are
unlimited by dollar amount
what type of life insurance policy allows a policy owner the choice of investments along with flexible premium payments
variable universal life
If a producer replaces a client's existing life insurance policy with a new one, which of these actions is advisable?
wait until the new policy is issued and delivered before surrounding existing policy
an insurances company failure to to enforce a contracts provision is called
waiver
during the application process a statement made by an applicant that becomes part of the contract is considered to be a(n)
warranty
An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?
when the conditions of the receipt are met
when does the producer give a premium receipt for a life insurance application
when the initial premium has been paid with the application
a health insurer must provide a proof of loss form
within 15 days of receipt of the notice of loss
the following are all elements of a core contract except
written evidence
a policy owner pays the first annual premium for a 50k life insurance policy and dies one month after the policy effective date, which of these statements is normally true?
beneficiary receives 50k income tax free
what is the tax treatement of benefit payments for a non qualified annuity?
benefit payments are always taxable.
Pat is covered by a disability income insurance policy that covers disabilities arising from a work-related illness or injury. The amount of his disability income payments for an on-the-job injury may be reduced by
benefits paid under workers compensation
The refusal of doing business with an individual or business is called a(n)
boycott
a health reimbursement arrangement must be established
by the employer
a comprehensive group policy also covers expenses related to vision care which is typically not covered under a vision plan?
cataract surgery
which of these is not a true statement of war exclusion?
civil insurrections apply
which of the following statements is true regarding accident and health insurance claims that reimburse on an indemnity basis
claims can be sent directly to the insured
Chris has a single major medical contract which covers all medical expenses. His plan is considered to be
comprehensive
What does a Mandatory Second Surgical Opinion provision provide to an employer-paid health insurance plan?
containment of the employers premium payment cost
Jill has a group health plan with an employer that covers employees in more than one state. Which of the following aspects is NOT affected by the state regulatory jurisdiction established for this plan?
continuation of coverage under COBRA
an annuity accumulation period may
continue after the purchase payment stop
the policy provision that permits an employee to change from group life coverage to an individual life policy is called the
conversion provision
in what situation would disability income insurance premiums be a deductible expense
corporation paying for a group disability income coverage for its employees
Al surrenders his life insurance policy for its cash value. The total of the premiums paid into the policy minus total dividends received in cash or used to offset premiums is referred to as the
cost basis
which of the following disability buy sell agreements is best suited for businesses with a limited number of partners?
cross purchase agreement
Linda is covered with long-term care insurance and has early-stage Alzheimer's. She is still able to reside in her home while receiving primary care, as opposed to moving into a nursing home. All of the following long-term benefits encourage this EXCEPT for
custodial care
to protect information systems producers brokers and insurance companies must implement and maintain
cybersecurity policy
what effect does interest income have upon insurance premiums
decreases premium
In what way is a life insurance policy affected by an accelerated benefit payment?
decreases the death benefit
which of the following is generally a form of group credit life insurance?
decreasing term insurance
The amount of a covered loss to be paid by the insured before a major medical expense policy begins to pay is called the
deductible
if a life insurance applicant is shown future premiums are to be paid out of non guaranteed values the illustration used in the sales presentation must
disclose that premium payments may need to be resumed depending on actual results
a qualified profit sharing plan is designed to
distribute a portion of company earnings to its employees
disability income policies provide protection for which of the following
economic death
which of the following would permit an insurer to delay a covered disability policy claim?
elimination period
Christopher is issued an insurance policy that contains an attached agreement which alters the terms of the policy. This attached agreement is called a(n)
endorsement
The application is part of the annuity contract according to the
entire contract clause
which statement best defines what a policy title means on an insurance policy?
every policy must have a title on the face and on the back briefly describing the policy
Terry suffers an injury at his workplace which is covered by workers compensation. Terry also has a medical expense insurance policy. Under medical expense insurance policies, losses that are covered by workers compensation are typically
excluded from coverage
how are benefit payments from individually owned medical expense policies treated for tax purposes
exempt from income taxes
the powers directly given to a producer in an agency contract are called
express
An appointed producer's implied authority is derived from
express authority
which life insurance policy option allows the policy owner to have coverage equal to the net death benefit of the lapsed policy
extended term nonforfeiture option
which statement concerning a decreasing term life policy is accurate?
face amount decreases over the policy period
A consumer who has been recently denied insurance, credit, or employment based on an unfavorable consumer report MUST be advised as such. Which of the following does this statute originate from?
fair credit reporting act
Which benefit supplement added to a life insurance policy insures an entire family?
family term rider
When an annuity contract has been fully surrendered, how will the surrender charges affect the final contract settlement?
final contract settlement will be reduced
how long does one premium payment cover in a single premium whole life policy?
full life of the policy
John has a criminal record in which he was convicted of a felony that involved dishonesty. Under Federal law, how would John be able to engage in insurance transactions?
given written consent by the state insurance regulatory agency
The administrator for a corporate pension plan bought an accumulation annuity contract for its 2,000 employees. All 2,000 participating employees received certificates of participation. What kind of contract is this?
group deferred annuity
a large corporation pension plan purchased an accumulation annuity contract where all of the participating employees received certificates of participation what is this contract called?
group deferred annuity
what is the name of the rider that provides an additional purchase option in a life insurance policy?
guaranteed insurability rider
a life annuity with period certain is characterized as
guaranteeing benefits payments for a stated minimum number of years
a condition that increases the possibility of financial loss is called
hazard
Kyle is an insured who disregarded an accident and health insurance policy provision that requires him to seek a second surgical opinion. What will the end result be?
he may be reimbursed for the surgical procedure at a reduced benefit level
Terry receives long-term physical therapy at her residence. What type of insurance would cover this service?
home health care
which of the following is not true of a preferred plan provider?
hospitals can only initiate preferred provider plans
a single premium deferred annuity sometimes contains a bailout feature. which statement regarding this feature is correct?
if the interest rates falls below a specified level the Surender charge is waived
In a staff model HMO, enrollees normally have which of the following pharmacy options available to them?
in house pharmacy
all of these are considered features in whole life insurance except
initial premium is lower than for an equivalent amount of term insurance
Medicare Part A typically covers
inpatient drugs
Who must sign a rider attached to a health insurance policy in order for it to be valid?
insured and producer
what is another term used for pure life annuity
Life Income
which action will trigger a penalty tax on a premature distributions from a modified endowment contract MEC?
Policy loans
Steve has a group disability income policy where the premiums are paid by his employer. He elected to pay for additional residual disability coverage. Which of the following statements is true?
Steve will pay taxes on the disability benefits received from his employer
Who is the beneficiary in a life insurance policy?
The stated person or entity who is designated to receive the death proceeds
which of the following combinations best describes a universal life insurance policy
a flexible premium deposit fund and a monthly renewable term insurance policy
a health plan offered by private insurance companies is
a medicare supplement
which of the following describes coverage for the medicare part b coinsurance
a medicare supplement core benefit
which of the following would most likely purchase an immediate annuity?
a retiree having a lump sum to invest
disability income insurance normally excludes coverage for disabilities that arise from
active military duty
an (blank) insurer operates in the U.S but is headquartered outside the us
alien
which of the following distinguishes field underwriting from the home office underwriting
an agent has personal contact with applicant
which of these individuals may not obtain a temporary producer license?
an employee of a retired producer license
which of the following situations would allow funds to be deposited into a rollover IRA
an employee quits her job and receives 50k from her qualified plan
When a large sum of money is used to structure monthly payments, which product is typically used?
an immediate annuity
Rick is a disabled worker receiving Social Security benefits. What are his wife and dependent children eligible for?
an income benefit which is a percentage of his primary insurance amount
which is an accurate description of the premium in a graded premium life insurance policy
annual increases in premium for a stated number of years then remains level
The surrender charge on many deferred annuity contracts are waived when the
annuitant dies or becomes disabled
in what situation could an insurance policys coverage be modified
applicant is substandard risk
which of the following situations would a medical exam not be required for an individual health insurance applicant
applicants family members have a history of cancer
the affordable care act establishes exchanges in order to
assists individuals and small businesses when making their health insurance purchase
an insured has been court ordered to provide a Childs health insurance upon this order the insurer must allow the enrollment of this child
at any time
If a disability income policy contains a cost-of-living adjustment rider, benefits must typically be increased
at least one a year from when benefits began
Kate received a group accident and health termination notice. How many days does she have to apply for a converted policy?
31
Greg had recently been terminated from his job that covered him for group life insurance. How long does he have to convert his coverage to an individual policy?
31 days
Newborn children are automatically covered under an existing family medical plan at the moment of birth for a period of at least
31 days
Arizona allows a maximum of how many attempts in a 12-month period, before having to wait one year before attempting the exam again?
4 attempts
a policy owner decides to surrender the cash value of a whole life insurance policy the insurer has up to (blank) to delay this payment
6 months
how many hours of initial long term care training must a producer complete before soliciting long term care products
8
the telemarketing sales rule states that this time is the latest someone is to be called
8am-9pm
According to the telemarketing sales rules, what is the earliest time of day calls are permitted.
8am.
A single-life annuity only has ONE
Annuitant
Which tax cost is normally associated with death?
Federal estate tax
a family counseling benefit is typically offered under which of these coverages?
Hospice care
Premature IRA distributions are assessed a penalty tax of
10%
a premature distribution from a modified endowment contract MEC incurs a penalty tax of
10%
what is the maximum social security disability benefit amount an insured can receive?
100% of insurers primary insurance account PIA
Individuals seeking Social Security disability income benefits must have a disability that will eventually lead to death, or be expected to last at least
12 months
a nonparticipating whole life insurance policy was surrendered for its 20k cash value the total premiums paid had totaled 16k what are the federal income tax consequences to the policy owner on receipt of the cash value?
16k received tax free and 4k received as ordinary income
which of the following waiting periods would result in the lowest premiums for a disability income policy?
180 days
a survivorship life insurance policy usually covers how many lives?
2
non qualified medical expense distributions from a health savings account have a tax penalty of
20%
an insured has a 25,000 whole life insurance policy with 6k cash value available under the extended term of nonforfeiture option what is the amount of insurance to be insured?
25k
an insurer must keep advertising materials and records for at least how many years
3 years
how long must a producer maintain customer records for an insurance transaction
3 years
