Final Exam

Q and H are co-primary beneficiaries on the $100,000 Accidental Death and Dismemberment policy insuring their mother. Their father is the contingent beneficiary. If Q dies of cancer and the mother is killed in an auto accident two months later, the father will receive a MAXIMUM of?

$0

L is injured from a fall and permanently disabled. L will be eligible to file for Social Security benefits after he has been disabled for how many months?

5

Which of the following items may be used to include coverage for children under their parent's insurance policy?

A Term rider

Which of the following items binds the insurer to coverage as of the date of the application or medical examination, whichever is later, provided that the proposed insured is determined to be an acceptable risk?

A conditional receipt

Which of the following elements of a contract is necessary before a life policy will be issued?

A prospect's signature on an application

Insurance companies may use all of the following sources to obtain underwriting information about an applicant EXCEPT?

Actuarial rating bureaus

All of the following policies are considered interest sensitive life products EXCEPT?

Adjustable Life

The total cost of a life policy is lowest when the premiums are paid on which of the following schedules?

Annually

An insured who has a Disability Income policy that pays a $1,500 monthly benefit becomes disabled for a period of one year. The insured later dies as a result of complications from the disability. In this situation, which of the following describes the rights of the insured's estate?

Any earned but unpaid benefits will be paid

A policyowner may change a revocable beneficiary at which of the following times?

At any time

Which of the following provisions would keep a Whole Life policy in force if a required premium payment is not made and sufficient cash value exists from which the premium can be paid?

Automatic Policy Loan

W, an architect who has five employees, is concerned about how the business would survive financially if W became ill and was disabled. Which of the following policies would BEST meet W's needs?

Business Overhead Expense

Because Life & Health Insurance policies are offered on a "take it or leave it" basis they are referred to as which of the following types of contracts?

Contracts of Adhesion

An insured who exchanged a Term policy for a Whole Life policy without providing evidence of insurability probably exercised which of the following policy provisions?

Conversion privilege

Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability?

Conversion privilege

In most Term Life policies, which of the following provisions allows the insured to change the policy to a permanent life policy without providing evidence of insurability?

Conversion provision

Which of the following factors is MOST important when an insured owner is trying to decide whether to convert term insurance at the insured's original age or the insured's attained age?

Cost of insurance

Which of the following policies provides a specified income benefit when the insured person becomes unable to work because of illness or accident?

Disability Income

Which of the following policies will pay monthly benefits to a surgeon who is unable to work as a result of injuries sustained in a car accident?

Disability Income

A 44-year old accountant purchased an Annuity that will begin paying a guaranteed $1,000 a month at age 65 for life. Which of the following Annuities was purchased?

Fixed Deferred

Coverage for the cost of a regular physical examination for preventative care would most likely be provided by a?

Health Maintenance Organization

Which of the following plans contracts with doctors and hospitals to provide medical benefits to subscribers at a predetermined price?

Health Maintenance Organization (HMO)

Which of the following statements about Equity Indexed Life Insurance is INCORRECT?

If the actual investment differs from what was expected, the premiums will be either lowered or raised

Which of the following statements is CORRECT about a minor beneficiary?

In most cases, insurers require that a guardian be appointed in the beneficiary clause of the policy or that a guardian be designated in the will

In a life insurance policy, the promise by the insurer to pay certain benefits is the?

Insuring clause

B is the owner and insured in a Single Premium Universal Life Insurance contract. B wants to name a charitable entity as beneficiary and make the change permanent. Which is the best type of designation to assure B's wishes?

Irrevocable

Which of the following statements about an Incontestable clause is CORRECT?

It allows an insurer to contest a claim during the Contestable Period

Which of the following conditions is typical of a Major Medical policy?

It contains a deductible and coinsurance

Which of the following statements is CORRECT about Basic Medical Expense insurance?

It generally has lower benefit limits than major medical

Which of the following statements is CORRECT about Medicare?

It is a hospital and medical expense insurance program

Which of the following statements about Medicaid is correct?

It is financed by both the federal and state governments

Which of the following statements is CORRECT about third-party ownership of a life insurance policy?

It is widely used in business insurance and estate-planning situations

Which of the following statements is CORRECT about Credit Life Insurance?

It shall be issued in an amount not to exceed the total amount of indebtedness

An example of a Limited-Pay Life policy is?

Life Paid-Up at Age 65

For which of the following losses would an insurance company MOST likely pay benefits under an Accidental Death and Dismemberment policy?

Loss of eyesight due to an accidental injury

An unemployed Medicare subscriber is admitted to a hospital on three separate occasions in one year. Which of the following policies would provide the subscriber the BEST coverage for excess hospital charges?

Medicare Supplement

Which of the following statements describes the income tax treatment of policyowner dividends?

Only interest on accumulations is taxed

The annual premium on an insured's life policy was due September 4. If he died on September 21 without paying the premium, the insurance company would take which of the following actions?

Pay the Death benefit less the past-due premium

Which of the following statements is CORRECT about the premium payment schedule for a Whole Life Policy?

Premiums are payable throughout the insured's lifetime, and coverage continues until the insured's death

Under Social Security, which of the following determines the full amount of retirement benefits for an eligible person?

Primary Insurance Amount (PIA)

On September 9, S applied for a life insurance policy and submitted the first annual premium. The policy was issued October 3 but the producer did not deliver it to S until October 18. On October 24, S returned the policy to the insurance company and request the return of her premium. In this situation, the insurance company will take which of the following actions?

Refund the entire premium because the policy was returned within the Free Look period

Which of the following Term policies guarantees the insured the right to continue term coverage after expiration of the initial policy period?

Renewable

Which of the following information is included in the Consideration clause of a Life or Health policy?

Schedule and amount of premium payments

The purpose of the insuring clause in a Health and Accident policy is to?

Specify the scope and limits of the coverage provided

A church member recently pledged $10,000 to the church to replace a roof, which will need replacement in 10 years. If the member wants to be sure that the $10,000 will be available when needed, the member should purchase which of the following $10,000 policies?

Ten-Year Endowment

Credit policies MUST be issued in which of the following forms?

Term

Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period?

Term

Which type of coverage when selected will allow an applicant to have excess life insurance coverage?

Term Rider

If a primary beneficiary dies before the insured and a contingent beneficiary is also named in the policy, which of the following will occur when the insured dies?

The contingent beneficiary will receive the proceeds

A producer takes an application for individual insurance and accepts a check from the client. The producer mails the check and application to the insurance company. A member of the company's underwriting department notices that the application is signed but the check is not. In this situation, if the applicant is approved by the insurance company, coverage will be effective as of which of the following dates?

The date the producer delivered the policy collected the initial premium and obtained a statement indicating that there is no change in the insured's health

A company wants to purchase a Key Employee Life policy. Which of the following statements is INCORRECT?

The employee names the beneficiary

Which of the following reflects the definition of a Modified Endowment Contract (MEC)?

The guideline level premium being the maximum level that can be paid into a policy and still have it qualify as a life insurance contract

Under the Intoxicants and Narcotics exclusion, if an insured suffers severe injuries in a fall while intoxicated, who is liable for the medical bills?

The insured

Which of the following statements is CORRECT if the premiums on a participating policy are waived because of an insured's disability?

The insurer will continue to pay declared dividends

Which of the following features is typical of Term insurance?

The policy expires at the end of the policy period

Which of the following statements is CORRECT about a Variable Universal Life policy?

The policyowner directs the investment of cash values and chooses the timing and amount of premium payments

For an individual disability policy that is paid for on an annual premium basis, the Grace Period provision is a MINIMUM of how many days?

Thirty-one

The applicant's signature is required on a life insurance application for which of the following reasons?

To represent that the statements on the application are true to the best of the applicant's knowledge

Which of the following policies is designed to provide flexible premiums and an adjustable death benefit?

Universal Life

A producer is required to register with the National Association of Securities Dealers (NASD) in order to sell which of the following policies?

Variable Life

Which of the following provisions in a Group Health policy gives an insurance company the rights to delay coverage for a covered sickness for a specified number of days after the effective date of the policy?

Waiting Period

A rider on a life insurance policy that guarantees that the premium will be paid if the insured is disabled for a specified period of time is referred to as?

Waiver of Premium

Under an Accidental Death Policy, in which of the following circumstances will an autopsy NOT be performed?

When it is prohibited by law

Under an Accidental Death and Dismemberment policy, in which of the following will an autopsy NOT be performed?

When it is prohibited by law

An insurance policy on the life of another person is valid if the policyowner has an insurable interest in the insured at which of the following times?

When the application is made

A guaranteed insurability option in a Whole Life Policy permits the policyowner to purchase, without evidence of insurability, stated amounts of?

Whole Life insurance at specified times

The Z Company takes out a Key Employee policy on its director of operations. Several years later the employee leaves Z company, joins A Company and is killed in an automobile accident while the Key Employee policy is still in force. In this situation, the insurance company will pay the proceeds to which of the following entities?

Z Company

A method of providing life insurance on the children of a person who is covered by a life insurance policy is by?

a child term rider

All of the following statements about the classification of applicants are correct EXCEPT?

a substandard applicant can never be rejected outright by the insurer.

Prospect K claimed to be five years younger than K's true age when applying for an Accidental Death and Dismemberment (AD&D) policy. A standard policy was issued and three years later K died in an auto accident. If the insurance company discovers the misstatement when the claim is submitted, it will MOST likely?

adjust the death benefit to what the premiums paid would have purchased at the insured's actual age

A common exclusion for which disability contract would NOT pay is a disability due to?

an act of war

A contract that provides for the liquidation of all or part of an estate through periodic payments is known as?

an annuity

An underwriter reviews an applicant's personal medical history and determines that the risk should be reclassified. In this situation, the life insurance policy may be issued with?

an extra premium

If a forty-five year old individual bought an annuity to provide income for life beginning at age sixty-five, the insured did NOT buy?

an immediate annuity

Most group life insurance policies are written as?

annually renewable term

If a life policyowner wants to take out a bank loan and the bank insists on collateral, the insured may?

assign the policy to the bank

P, covered for the past 10 years under P's employer's group life contract retires at age 59 1/2 can elect to?

convert to a permanent policy at the individual rates

The benefits under COBRA continuation coverage will end if the?

employer terminates all group health plans

A producer takes a life insurance application without collecting the initial premium. The policy will go into effect after all of the following actions occur EXCEPT the?

expiration of the Free Look period

Adjustable Life insurance is designed to meet an insured's need for?

flexible premiums

A Basic Hospital policy pays expenses for?

hospital room and board

The hospitalization expense of the Basic Medical Expense Policy pays for?

hospital room and board

Life insurance written to cover a need for a specified period of time at the lowest premium is called?

level term insurance

A Life annuity offers protection against the risk of?

living longer than anticipated

All of the following data on an insured may affect the underwriting of a life insurance policy EXCEPT the insured's?

marital status

P is both the policyowner and the insured under a $100,000 Whole Life policy. The beneficiary is P's mother. When P marries, ownership of the policy is transferred to P's spouse. If P dies without making any other changes, the policy proceeds will be payable to P's?

mother only

A typical short-term medical expense policy is best described as?

nonrenewable

If a business owner becomes disabled, a Business Overhead Expense policy would cover?

office rent and telephone bills

Investor-Originated Life Insurance (IOLI) is an arrangement in which the death of the insured benefits the?

owner

In a life insurance policy, the Consideration clause states that the policyowner's consideration consists of completing the application and?

paying the initial premium

If an insured has an outstanding policy loan with interest due at the time of death, the insurer will recover the monies by deducting the amount from the?

policy proceeds

The governing body of a mutual insurance company is elected by the?

policyholders

The purpose of the Grace Period in an Accidental Death and Dismemberment policy is to give the?

policyowner additional time to pay overdue premiums

M is covered by a group health insurance plan through his employer. M is also covered as a dependent on his spouse's group health plan. Under the Model Group Coordination of Benefits provision, when M files a claim, his employer's plan is considered the?

primary carrier

An underwriter's evaluation of information on a life insurance application is also known as?

risk classification

Under the Claims Forms provision of a health policy, if the insurance company fails to send out the claim forms within the time period required by the provision, the insured should?

submit the claim in any form, which must be accepted by the company as adequate proof of loss

A policyowner decides to use dividends from a life insurance policy to purchase paid-up additions. The policyowner asks a producer to explain how the amount of the paid-up addition that is purchased each year will be determined. The producer's explanation includes all of the following facts EXCEPT?

the age of the beneficiary

The definition of usual, customary and reasonable (UCR) charges is?

the maximum amount an insurer will consider eligible for reimbursement under a health insurance plan

Under a group Credit Life policy, the amount of insurance on the life of a debtor is limited to?

the total amount of the insured's loan

If an annuity's cash value is based on the results of investment funds, the annuity is considered to be?

variable