Final Exam
Sole proprietors are permitted tax deductions for health costs paid from their earnings in the amount of . costs that exceed 7 1/2 % of AGI . costs that exceed 10% of AGI . 100% of costs · no deduction permitted
100% of costs
For individual health insurance, coverage for pre-existing conditions may be excluded for up to ___ months after issuance of the policy . 18 . 12 . 6 . 3
12
To be classified as a small employer in Michigan, an employer must employ . 1-10 employees . 2-50 employees . 1-25 employees . 2-100 employees
2-50 employees
Michigan requires that a licensee complete ____ hours of continuing education on the subject of ethics every reporting period. . 1 . 2 . 3 . 4
3
In Michigan, legal action can be taken for up to ___ year(s) against an insurer for failure to pay health insurance claims after proof of loss was submitted. . 1 . 2 . 3 . 4
3 (According to Michigan law it is 6)
In Michigan, legal action may be taken against an insurer for up to ___ years for failing to pay a life insurance claim after proof of loss was submitted. . 4 . 5 . 6 . 7
6
A rollover from a Traditional IRA to another IRA MUST be done within ___ days to avoid tax consequences. . 15 . 30 . 60 . 90
60
In determining whether a pre-existing condition applies, the enrollee CANNOT have more than how many days' gap in health insurance? . 60 . 63 . 65 . 70
63
A producer has allowed his/her license to lapse by failing to complete the required continuing education credits. The license may be reinstated by completing the requirement within ___ days of the renewal date. . 45 . 60 . 90 . 120
90
HIPAA considers which of the following as "individually identifiable health information"? . A person's employment history . A person's net income . A person's hire date . A person's health claim information
A person's health claim information
An error was made on Mary's life insurance application. Which of the following areas do errors commonly occur on applications and for which the incontestable clause does NOT apply? . Marital status · Age . Address . Income
Age
Under which circumstance do consumer privacy regulations allow an insured's financial information be released? . An insured has missed a premium payment and is beyond the grace period . A govemment agency would like personal information on an insurer's policyowners . An insured has requested a full refund beyond the policy's free-look period · An authorized agency makes a written request to the insurer during an insurance fraud investigation
An authorized agency makes a written request to the insurer during an insurance fraud investigation
The deeds and actions of a producer indicate what kind of authority? . Express · Apparent . Implied · Conditional
Apparent
Which of the following is included in the entire contract according to the entire contract provision? . Investigative report . Occupational rating . Clauses · Application
Application
Which of the following nursing home options would BEST suit an individual who needs some nursing care and supervision but NOT full-time care? . Custodial care homes . Assisted living facilities . Skilled nursing facilities · Congregate housing
Assisted living facilities
Which type of business insurance is meant to cover the costs of continuing to do business while the owner is disabled? . Disability overhead policy . Business continuation policy . Disability buy-sell policy . Business overhead expense policy
Business overhead expense policy
In Michigan, a person providing insurance advice to a person or business for a fee is required to hold which license? · Adjuster · Producer · Counselor . Limited lines
Counselor
All of the following are core benefits of Medicare Supplement Plan A EXCEPT . Deductible payments for the first 60 days of hospitalization under Medicare hospitalization insurance . Medicare Part A hospice coinsurance or copayment . Medicare Part B coinsurance or copayment · The first three pints of blood received
Deductible payments for the first 60 days of hospitalization under Medicare hospitalization insurance
A form of medical health insurance covering the treatment and care of gum disease is called · Medicaid · Major Medical . Franchise health policy . Dental expense insurance
Dental expense insurance
All of these are typically sources of underwriting information for life or health insurance EXCEPT . Consumer reports . Medical Information Bureau (MIB) reports . Disclosure authorization response . Attending physician's statement (APS)
Disclosure authorization response
A doctor who accepts Medicare Assignment agrees to which of the following? . Doctor may charge up to a maximum of 15% more than Medicare pays for the service . Doctor is not bound by Medicare's limitations on charges . Doctor cannot charge more than Medicare's scheduled coverage . Doctor bills the Medicare beneficiary directly for services performed
Doctor cannot charge more than Medicare's scheduled coverage
The ___ reserves the right to renew a small employer health plan. · Employees · Employer . Commissioner . NAIC
Employer
Which of the following would be considered a possible applicant and contract policyholder for group health benefits? . Human resource department . Employer . Insured employee . Insurance company
Employer
What is the name of the provision which states that a copy of the application must be attached to the policy when issued? . Policy Summary . Buyer's Guide . Entire Contract . Entire Policy
Entire Contract
One of the most important considerations when replacing health insurance would be the . Age of the insured . Exclusions on a new policy . Occupation of the insured · Cost
Exclusions on a new policy
Which of the following is considered to be an act of misrepresentation? . Sharing commissions with other licensed producers . Replacing an existing policy with a new one . Giving back part of a producer's commission as an incentive for a sale . Falsifying the terms, benefits, advantages, or conditions of an insurance policy
Falsifying the terms, benefits, advantages, or conditions of an insurance policy
Paul the producer has provided a false statement in relation to an insurance claim. Which illegal act has been committed? · Intimidation . Rebating · Subrogation · Fraud
Fraud
When a qualified plan starts making payments to its recipient, which portion of the distributions is taxable? · Principal . Contributions made by employee . Contributions made by employer · Gains
Gains
How is Medicare Part B funded? · Employer taxes . Payroll taxes . User premiums · General tax revenue and user premiums
General tax revenue and user premiums
Which type of long-term care benefit would be most appropriate for a stroke victim who requires speech therapy administered at her home? . Respite care . Continuing care · Home health care · Custodial care
Home health care
What does the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 allow an employee to do? . In the event of employment termination, group health insurance can be kept if the employee pays the premiums . Receive a tax credit to help offset the cost of health insurance . Remain on their current coverage for 30 months . In the event of employment termination, group health insurance can be kept if the employer pays the premiums
In the event of employment termination, group health insurance can be kept if the employee pays the premiums
How is the cost of a policy affected when a policyowner pays premiums more frequently? . Not affected . Increases . Decreases · Depends on the type of coverage
Increases
An insurer is REQUIRED to offer which of the following to each long-term care applicant at the time of purchase? · Lifetime level premiums . Conditional renewability . Deflation protection · Inflation protection
Inflation protection
Which of the following is present when an applicant stands to lose value if the insured dies? . Insurability . Offer and acceptance · Insurable interest . Consideration
Insurable interest
The principle of insurable interest, in regards to a life insurance contract, is accurately described in which statement? . An agent establishes insurable interest · An individual does not have insurable interest on his or her own life . Insurable interest only pertains to business arrangements . Insurable interest can be based on the love and affection of individuals related by blood or law
Insurable interest can be based on the love and affection of individuals related by blood or law
Sharon is the policyowner of a $50,000 life insurance policy. Her son, Mike, is the beneficiary. If Sharon MUST obtain Mike's signature in order to change the beneficiary, what kind of beneficiary designation is this? . Tertiary . Contingent . Revocable · Irrevocable
Irrevocable
A Medicare Supplement policy issued in the state of Michigan is required to provide each of the following EXCEPT . It must cover intermediate and outpatient care for substance abuse · It must be guaranteed renewable · It must include outpatient prescription drug coverage · It must have a free-look period of 30 days
It must include outpatient prescription drug coverage
The authority granted to a licensed producer is provided via the . producer's apparent authority · written contract . Law of Agency . Principal Capacity
Law of Agency
Insurance companies determine risk exposure by which of the following? · Insurable interest . Insurance exchanges . Law of large numbers and risk pooling · Population table data
Law of large numbers and risk pooling
Coming from an insurance point of view, which of the following is the main risk associated with disability? . Loss of limbs . Loss of income . Decreased work skills · Decreased mobility
Loss of income
Small employers who are sponsored by an insurer to provide group benefits to its employees are called . Fraternal Benefit Society · Surplus lines brokers . Lloyd of London · MEWA
MEWA
Which of the following is Medicare Part B also known as? . Hospital insurance . Medical insurance . Long-term care insurance · Medigap
Medical insurance
The purpose of Medicare Supplement Insurance is to address gaps in Medicare coverage, which can include . Medicare in-hospital deductible · replacing HMO coverage . covering chiropractic treatment . treatment provided in a government hospital
Medicare in-hospital deductible
When an insured has a major medical plan with first dollar coverage, how does this impact the benefits paid? . No deductible payment is required . Deductible specified in the contract is payable by the insured · Insured must pay a percentage of covered losses . An initial deductible plus a percentage of the remaining covered loss is owed by the insured
No deductible payment is required
What makes an insurance policy a unilateral contract? . Only the insured pays the premium . Only the insured can change the provisions . Only the insurer is legally bound . Only the insured is legally bound
Only the insurer is legally bound
Chris is an insured bricklayer who severed his left hand in an automobile accident. Although his primary duty cannot be performed, Chris is also a substitute high school teacher. He collects a full disability income check every month. How does his policy define total disability? . Recurrent . Any occupation . Own occupation · Presumptive
Own occupation
Which of the following provides Medicare supplement policies? . Medicare · Medicaid . Private insurance companies · Associations and employers
Private insurance companies
Which of the following is a reinstatement condition? · Proof of insurability . Changes in the insuring clause . Premium increase . Premium decrease
Proof of insurability
Which of these is the BEST example of misrepresentation? . Making a public advertisement that contains false or malicious information about an insurance company . Unfairly discriminating against a person in any way on an insurance-related matter . Publishing a false financial statement regarding an entity . Providing incorrect, misleading, incomplete, or materially untrue information in a license application
Providing incorrect, misleading, incomplete, or materially untrue information in a license application
What is the primary feature of a viatical settlement? . No interest on policy loans . Reduced death benefit prepayment · Longer contestable period . Lower premiums
Reduced death benefit prepayment
An individual who removes the risk of losing money in the stock market by never purchasing stocks is said to be engaging in . Risk reduction . Risk transference . Risk avoidance . Risk retention
Risk avoidance
Which of these will have the highest monthly payout upon annuitization? . Life with period certain . Joint and survivor life . Straight life . Joint life
Straight life
Which of the following actions is REQUIRED by a producer who is replacing an existing life insurance policy? . Keep replacement records on file for at least 10 years . Notify the existing insurer of the proposed replacement . Submit to the replacing insurer a list of the policies to be replaced . Offer the insured a 60-day free-look period
Submit to the replacing insurer a list of the policies to be replaced
What does the word "level" in Level Term describe? · The period of coverage · The face amount . The premium payments · The cash value
The face amount
What is a corridor in relation to a Universal Life insurance policy? . The gap between the total death benefit and the policy's cash value · The gap between when a claim is filed and when the death benefit is received . The amount of interest that has accumulated in the policy's cash value . The point in time when the policy's cash value reaches $0
The gap between the total death benefit and the policy's cash value
What will the beneficiary receive if an annuitant dies during the accumulation period? . The greater of the accumulated cash value or the total premium paid · The lesser of the accumulated cash value or the total premium paid . The interest earned on the accumulated cash value . Nothing
The greater of the accumulated cash value or the total premium paid
Under which circumstance may a minor receive proceeds from a death benefit? · The minor must be at least 13 years old · The minor must have been born in the United States . The minor must not have a criminal record . The minor must have an appointed guardian
The minor must have an appointed guardian
Bob and Tom start a business. Since each partner contributes an important element to the success of the business, they decide to take life insurance policies out on each other, and name each other as beneficiaries. Eventually, they retire and dissolve the business. Bob dies 12 months later. The policies continue in force with no change. Both partners are still married at the time of Bob's death. In this situation, who will receive Bob's policy proceeds? . Tom's spouse . Bob's estate . Bob's spouse . Tom
Tom
All of the following activities require an insurance producer's license EXCEPT · Underwriting . Negotiating · Selling · Soliciting
Underwriting
A producer's license is required for all of these activities EXCEPT . Underwriting insurance · Soliciting insurance · Negotiating insurance · Selling insurance
Underwriting insurance
An individual can enroll in a Part C Medicare Advantage Plan at what time? . When becoming eligible for Medicaid . At age of retirement . Age 59 1/2 . When becoming eligible for Medicare
When becoming eligible for Medicare
When are group disability benefits considered to be tax-free to the insured? . When the recipient pays the premiums · When the employer pays the premiums . When both the employer and recipient pay the premiums . When benefits paid are equal to or lower than the recipient's salary
When the recipient pays the premiums
People with higher loss exposure have the tendency to purchase insurance more often than those at average risk. This is called · risk retention . preexisting conditions . law of large numbers · adverse selection
adverse selection
A disability income policy can prevent an insured from earning a higher income than if he/she were working by utilizing · elimination periods . probationary periods . benefit limits · deductibles
benefit limits
An insured has a health plan that pays established amounts in accordance with a list of injuries, surgical procedures, or other losses. This list is called a . loss chart . benefit summary · benefit schedule · coverage menu
benefit schedule
An accident and health insurer has just received written proof of loss from one of its insureds. The insured must now wait 60 days before . submitting another claim · bringing legal action against the insurer . the insurer will pay the claim . purchasing more insurance from this insurer
bringing legal action against the insurer
Which of the following is NOT a required provision in an accident and health insurance policy? . legal actions . grace period . change of occupation · reinstatement
change of occupation
All of the following are included as part of a contract in the entire contract provision EXCEPT the · riders . application · changes made by the producer . policy
changes made by the producer
Ownership of a life insurance policy may be temporarily transferred with a(n) . collateral assignment · absolute assignment · transferable assignment · beneficiary assignment
collateral assignment
Any change of address by a licensee requires notice within 30 days to which of the following? . Governor . Attorney General . Insurer · commissioner
commissioner
All of these are standard exclusions found in a life insurance policy EXCEPT . hazardous occupations . aviation · disability · war
disability
Under group health insurance, a certificate of coverage is issued to the · employer · employee . producer . sponsor
employee
Purchasing a life insurance policy in order to avoid the forced sale of assets upon death is called . estate funding · capital withholding . capital gains · estate conservation
estate conservation
A life insurance policy normally contains a provision that restricts coverage in the event of death under all of the following situations EXCEPT . fare-paying passenger . pilot of personal airplane . suicide · war
fare-paying passenger
A Medicare supplement plan can be canceled by the insurer . after the probation period . for any changes in the insured's health . anytime · for nonpayment of premiums
for nonpayment of premiums
If a producer diverts funds from an insurer, he/she may be found guilty of . malfeasance · fraud . subrogation · misappropriation
fraud
ABC Insurance Agency is entering each applicant who purchases insurance through their agency into a drawing to win a free trip. This is an unlawful insurance practice known as . illegal inducement · false advertising · concealment · fraud
illegal inducement
A proposed insured for a health insurance policy was treated for heart disease within the past year. When applying for health insurance, the heart disease treatment . does not count as a preexisting condition · is not required to be reported on the application · indicates a preexisting condition · is irrelevant to underwriting
indicates a preexisting condition
The Do Not Call Registry offers exemptions for calls placed from all of the following EXCEPT · charities . political organizations . insurance sales calls . surveys
insurance sales calls
An accident and health policy that provides reimbursement benefits makes them payable to the · provider . facility providing service · insured · insured's spouse
insured
Producer commissions may NOT be paid to . licensed and appointed producers . licensed and appointed producers who are sharing commissions . non-resident producers · licensed producers not appointed by an insurer
licensed producers not appointed by an insurer
A provision in a whole life policy that allows a policyowner to terminate the policy in return for a reduced paid-up policy of the same type is called a(n) . insuring clause · payor provision . reinstatement provision · nonforfeiture provision
nonforfeiture provision
States that have "no loss no gain" laws require a replacing policy to · keep the same type of coverage as the policy it replaces . not charge a different premium from the policy it replaces · pay for half of any ongoing claims under the policy it replaces . pay for ongoing claims under the policy it replaces
pay for ongoing claims under the policy it replaces
According to the principle of Utmost Good Faith, the insured will answer questions on the application to the best of their knowledge and pay the required premium, while the insurer will deal fairly with the insured and its · underwriting · issuance of the policy . promises made · legal reserve
promises made
Which of these is NOT the responsibility of a producer? · represent the insurer . forward applications to the insurer . represent the insured · collect initial premiums
represent the insured
Health insurance involves two perils, accident and · death . sickness . disability · liability
sickness
Proceeds from a life insurance policy are protected from the beneficiary's creditors by which clause? . protection clause . creditor clause · spendthrift trust clause · beneficiary trust clause
spendthrift trust clause
In an insurance contract, the applicant's "consideration" is the . offer and acceptance . premium only . statements made in the application and the premium . statements made in the application only
statements made in the application and the premium
A(n) ___ company is owned by its shareholders . mixed . interactive . stock · mutual
stock
An insurer has the right to recover payment made to the insured from the negligent party. These rights are called · contributory . indemnity · estoppel · subrogation
subrogation
The type of multiple protection coverage that pays on the death of the last person is called a(n) . joint life policy . survivorship life policy . annuity joint policy · dual life policy
survivorship life policy
What types of life insurance are normally used for key employee indemnification? . term, whole, and universal life insurance . increasing term insurance . joint, credit, and group life insurance . adjustable, permanent, and limited-pay life insurance
term, whole, and universal life insurance
Signatures for an insurance application MUST be obtained by the producer from all of the following sources EXCEPT · the producer . the insured · the policyowner . the beneficiary
the beneficiary
If an insured dies during the grace period with no premiums paid . the policy would be payable, minus the premium amount . the policy would be payable only after the beneficiary makes past due premium payment · all past premiums will be refunded with interest · the claim would be denied
the policy would be payable, minus the premium amount
A disability elimination period is best described as a . time deductible · dollar deductible · eligibility period . probation period
time deductible
According to the Taft-Hartley Act, group insurance premium payments made by an employer MUST be paid to the · trust . state . insurance company .administrator
trust
"Maximum benefits" refers to the . upper limit of the total lifetime benefits the insurance company will pay . upper limit percentage of what the insurance company will pay for coinsurance . upper limits of what the insured will pay in out-of-pocket expenses . upper limits of what an insurance company will pay for any particular claim
upper limit of the total lifetime benefits the insurance company will pay
Funding for Medicare Part B is partially provided by . Municipal bonds . State bonds . private insurers · user premiums
user premiums
A policyowner can receive an immediate payment before the insured dies by using a(n) . viatical settlement contract · buy-sell arrangement · adhesion agreement · spendthrift plan
viatical settlement contract
An example of naming a beneficiary by class would be . "To the children born of my union with Ned Jackson: David Jackson, Jennifer Jackson, and Scott Jackson" . "To the child born of my union with Ned Jackson: Scott Jackson" . "To the children born of my union with Ned Jackson" . "To Ned Jackson"
"To the children born of my union with Ned Jackson"
