ExamFX readiness exam #3

Conrad receives $50,000 for a $100,000 Accidental Death and Dismemberment policy as a result of the loss of his left arm in an accident. Conrad has received the 1. Principal Amount 2. Capital Amount 3. Contributory Amount 4. Primary Amount

2. Capital Amount

An insured decides to surrender his Whole Life insurance policy. The cash value at surrender is higher than the premiums paid into the policy, due to interest. What part of the surrender value would be income taxable? 1. The entire cash value amount 2. The difference between the premiums paid and the cash value 3. Nothing 4. The amount equal to the premiums paid

2. The difference between the premiums paid and the cash value

An employee that becomes ineligible for group coverage because of termination of employment or change in status, must exercise extension of benefits under COBRA 1. Within 10 days 2. Within 60 days 3. Within 30 days 4. Before termination is complete

2. Within 60 days

In health insurance, the length of the grace period varies according to the 1. Length of the benefit period 2. Age of the insured 3. Mode of premium payment 4. Length of the waiting period

3. Mode of premium payment

Which of the following best describes the type of care provided by HMOs? 1. Major medical 2. Fee-for-service 3. Preventive 4. Elective

3. Preventive

Health insurance rates may be based upon all of the following EXCEPT 1. Age 2. Medical history 3. Religion 4. Gender

3. Religion

Which of the following is INCORRECT concerning Modified Endowment Contracts (MECs)? 1. An MEC must always pass the 7-pay test 2. A life insurance policy failing the 7-pay rest is classified as an MEC 3. A primary purpose of the regulations governing MECs was to reduce incentives for the use of life insurance as a short-term investment vehicle 4. A distribution from an MEC may be subject to a 10% penalty if withdrawn prior to 59 1/2

1. An MEC must always pass the 7-pay test

What is it called when a doctor accepts the Medicare approved amount? 1. Assignment 2. Consent 3. Verification 4. Acceptance

1. Assignment

Which of the following is NOT true regarding an optionally renewable policy? 1. Insurer can only cancel the policy for reasons stipulated in the contract 2. Renewability is at the option of the insurer 3. Nonrenewal can happen on the policy anniversary date 4. Policy premiums can increase at renewal

1. Insurer can only cancel the policy for reasons stipulated in the contract

For a contract to be enforceable by law, the purpose of the contract must be 1. Legal and not against public policy 2. For financial gain 3. For the benefit of the general public 4. Of pure intent

1. Legal and not against public policy

Medicare Part A services do NOT include which of the following? 1. Private Day Nursing 2. Post hospital Skilled Nursing Facility Care 3. Hospitalization 4. Hospice Care

1. Private Day Nursing

An annuity would normally be purchased by an individual who wants to 1. Provide income for retirement 2. Provide a death benefit to the surviving family 3. Earn a higher rate of interest 4. Create an estate

1. Provide income for retirement

What is the purpose of key-person insurance? 1. To cover decreased business revenues as a result of the death of a key employee 2. To provide key employees with life insurance coverage 3. To provide retirement benefits to key employees 4. To give senior managers the ability to purchase shares in the business

1. To cover decreased business revenues as a result of the death of a key employee

An aleatory contract is based on what kind of exchange? 1. Unequal exchange of values 2. Equal amounts for pay in and pay out 3. Balanced benefits 4. Exchange of equal obligations

1. Unequal exchange of values

An annuity has accumulated the cash value of $70,000, of which $30,000 is from premium payments. The annuitant dies during the accumulation phase. The beneficiary will receive 1. $30,000 2. $70,000 3. $1,000,000 (combination of the cash value and premiums paid) 4. A survivor benefit determined by the insurance company

2. $70,000

Core benefits are included in all Medicare supplemental policies. What percentage of Part B coinsurance is required? 1. 15% 2. 20% 3. 35% 4. 10%

2. 20%

How long is the grace period for an individual life insurance policy in California? 1. 3 months 2. 60 days 3. 1 month 4. 7 to 10 business days

2. 60 days

What is the maximum loan amount a policyowner may withdrawal from a variable universal life insurance policy? 1. An amount up to the face amount of the policy 2. Nothing loans are not allowed under variable universal life 3. An amount equal to the first year of premium payments 4. An amount not exceeding the cash value

4. An amount not exceeding the cash value

Which of the following is NOT an example of the company's location of incorporation? 1. Domestic 2. Foreign 3. Alien 4. Authorized

4. Authorized

Which of the following is NOT a typical type of Long-Term Care coverage? 1. Skilled nursing care 2. Residential care 3. Home health care 4. Child day care

4. Child day care

A limited health insurance policy that will pay a lump sum to an insured diagnosed with a heat attack, stroke, or renal failure is known as 1. Accidental death and dismemberment 2. Hospital confinement indemnity 3. Dread disease insurance 4. Critical illness insurance

4. Critical illness insurance

While completing a life insurance application the applicant realized that she should have answered an earlier question differently. What should the agent do to make the necessary change? 1. White-out the information, make the change, and have the applicant initial the change 2. Cross out the incorrect information and provide an explanation to the insurance company 3. Nothing, only a company officer can make any changes 4. Cross out the incorrect information, write in the correct answer, and have the applicant initial the change

4. Cross out the incorrect information, write in the correct answer, and have the applicant initial the change

Hazards are conditions or situations that 1. Decrease the likelihood of a loss occurring 2. Determine the likelihood of a loss occurring 3. Guarantee that a loss will occur 4. Increase the likelihood of a loss occurring

4. Increase the likelihood of a loss occurring

Which of the following used to be called Medicare + Choice Plans? 1. Medical Insurance 2. Medicare Supplement Plans 3. Original Medicare Plan 4. Medicare Advantage Plans

4. Medicare Advantage Plans

The insured dies 6 months after the policy issue date. Upon death of the insured, it is determined that the insured made a material misstatement on the application. What is the most likely course of action for the insurer? 1. An administrative hearing by the Department of Insurance 2. A hearing by a court of law to determine the appropriate actions 3. No course of action allowed since the policy has already been issued 4. Rescind the policy

4. Rescind the policy