Final Exam - Oklahoma Life and Health
A nonparticipating whole life insurance policy was surrendered for its $20,000 cash value. The total premiums paid had totaled $16,000. What were the federal income tax consequences to the policyowner on receipt of the cash value?
$16,000 was received tax-free and $4,000 as ordinary income
An insured has a $25,000 whole life insurance policy with $6,000 cash value available. Under the extended term nonforfeiture option, what is the amount of insurance available to the insured?
$25,000
An insured files for an accident and health insurance policy claim eight days after the premium due date. The benefit payable is $500 and the overdue premium is $200. Assuming that the policy pays on a first-dollar basis and contains the unpaid premium provision, how much will the insurer pay?
$300
Larry has a Major Medical Expense policy for his family with a $1,000 per family/per year deductible and an 80/20 coinsurance provision. If Larry's family files four claims of $400, $800, $100, and $700 in one year, how much will the insurance company pay?
$800
John received a one-time distribution of $50,000 from his modified endowment contract (MEC). Prior to that, the contract's cash value was $150,000, the contract investment amount was $100,000, and the death benefit was $500,000. What percentage of the $50,000 distribution was taxable as ordinary income?
100%
A survivorship life insurance policy usually covers how many lives?
2
A life insurance policy becomes incontestable after it has been in force for
2 years
The licensing period for a producer's license is a
2-year period
An insured must notify an insurer of a medical claim within how many days after an accident?
20
When a life insurance or annuity replacement policy is sold, the policy owner has a right to return the policy for a full refund of premium within
20 days
Under an Unfair Claims Settlement Practices Act, an insurer CANNOT request a refund of an overpayment paid to a claimant after
24 months
How long must a life insurance policy be in effect before the policyowner may use the nonforfeiture provision?
3 years
Following military service, an insured must submit a request for reinstatement to a private health insurer no later than how many days following the deactivation?
30
Group and individual health insurance policies that provide coverage to women must cover annual mammography screenings for women aged:
40 and older
Social Security disability income requirements state that in order to become fully insured on a permanent basis, you must have worked in a covered occupation for
40 quarters
The Oklahoma Insurance Commissioner is REQUIRED to examine domestic insurers AT LEAST every
5 years
At what age do most people become eligible for Medicare?
65
Which of the following is NOT a qualification to be licensed as a producer or adjuster?
A high school diploma
Which of the following is NOT covered by a comprehensive long-term care policy?
Acute Care
Which of the following statements accurately describes the "time limit on certain defenses"?
After a stated period of time, claims cannot be denied due to material misrepresentation on the application
What is a major difference between private commercial insurers and HMOs?
An HMO combines medical care delivery and funding in one organization
Which type of policy can group term life insurance normally be converted to?
An individual permanent life insurance policy
Which of the following is considered to be a prosthodontic dental procedure?
Bridgework
A policyowner suffers a covered accident and health insurance loss on June 30 and submits the proof of loss to the insurer July 10. If the policyowner cancelled the coverage on July 2, how will the insurance company handle the claim?
Claim must be paid after proof of loss is received
What must be given to a life insurance applicant when the agent receives an application and the initial premium?
Conditional Recepit
Each of the following is required of continuing education in the State of Oklahoma EXCEPT
Continuing education is NOT required for a producer's first renewal
Each of the following of required for continuing education in the State of Oklahoma EXCEPT
Continuing education is NOT required for a producer's first renewal
Which statement is true about a permanent disability under workers compensation coverage?
Coverage excludes nonoccupational injuries
An organization that requires healthcare services to be provided by a network of physicians and hospitals is known as a(n)
HMO
Which of the following health insurance provisions requires that the application becomes part of the policy?
Entire Contract clause
A Fraternal Benefit Society has each of the following characteristics EXCEPT
Exists For profit
All of the following are true regarding required immunization benefits for each child listed as a dependent on a health benefit plan EXCEPT:
Immunization benefits may not be subject to a schedule
Who is protected with the "other insurance with this insurer" provision?
Insurance company
James owns a business and purchased a policy that covers the business expense of finding a permanent or temporary employee to replace a disabled one. This type of disability coverage is called
Key employee coverage
What is the guaranteed cash value of a whole life insurance policy when the insured turns 65 years old?
Less than the policy's face amount
Which of these is NOT a common life insurance nonforfeiture option?
Life income annuity
Custodial care is normally covered under
Long-term care insurance
Each of the following will trigger a benefit under the presumptive disability provision, EXCEPT
Loss of any one limb
A producer may be disciplined by the Commissioner for which of the following actions?
Misappropriation of premium funds
Which of the following health insurance plans charges a premium that cannot be increased?
Noncancelable
A producer who is licensed in Oklahoma but resident in another state is called a
Nonresident producer
The responsibility for regulating the insurance continuing education requirements and approving insurance continuing education courses belongs to the
Oklahoma Insurance Department
How is the insured protected if a payor benefit rider is attached to the life insurance policy?
Premium payments are waived in the event the premium payor dies or becomes disabled
Which statement regarding the life insurance premium for a children's rider is true?
Premium remains the same no matter how many children
When must a producer provide disclosure about information practices to an applicant?
Prior to or at the time of signing the application
Which of the following could be a future use of the cash value that builds in a recently-purchased whole life insurance policy?
Provide supplemental income in 35 years
Insurance producer Karey offers insureds a $250 shopping card if they purchase an insurance product through her. What is this an example of?
Rebating, which is an unfair trade practice
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
Which of the following does a Medicare Advantage enrollee typically pay for?
Small co-pay per visit or per service
Which of the following would be the advantage of replacing an existing health insurance policy with a new one?
The existing policy no longer meets the needs of the insured
Which of the following is true regarding a person receiving a waiver of premium benefit?
The insured must be disable for a period of time
Who may terminate coverage under a cancelable health insurance policy?
The insurer or the insured
Which statement concerning a deferred annuity contract is correct?
The owner can be the beneficiary, annuitant, or neither
Which of these statements regarding the extended term insurance nonforfeiture option is accurate?
The premium to purchase the coverage comes from the policy's cash value
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
Under what circumstance does an accident and health insurer have the right to request an autopsy?
When not prohibited by state law
After an applicant reads and signs an insurance application, he/she should be conscious of the fact that
a false statement could lead to loss of coverage
Emergency health care coverage for Medicare enrollees traveling abroad is
a medicare supplemental additional benefit
Proceeds payable under a life insurance contract to a policyowner in anticipation of death or upon the occurrence of specified life-threatening conditions as defined by the policy are best described as:
accelerated benefits
Disability income insurance normally excludes coverage for disabilities that arise from
active military duty
Medicare Supplement coverage permits an open enrollment period on a guaranteed issue basis upon reaching
age 65
The highest mortality rate belongs to which group?
age 70 males
The absolute assignment of a life insurance policy results in
all incidents of ownership transferred to the assignee
According to Oklahoma law, which of the following must include coverage for equipment, supplies, and related services for the treatment of Type I and Type II diabetes when prescribed by a physician or other licensed health care provider?
all individual or group health contracts or agreements
An example of an alien insurer would be
an insurer formed according to the legal requirements of another country
In what situation could an insurance policy's coverage be modified?
applicant is a substandard risk
A producer may begin to solicit insurance ONLY when
appointed by an insurer
When does the insured stop making payments under a thirty-payment whole life policy?
at the time of death or 30 years after the policy's inception, whichever comes first
Insurers do business in Oklahoma only after a thorough financial review. MOST insurance policies written in Oklahoma are protected by the Guaranty Association established to protect policyowners in the event an admitted company
becomes financially insolvent
Who normally pays the premiums for group credit life insurance?
borrower
A preferred provider plan and an indemnity plan are similar in what way?
both pay on a fee-for-service basis
In a disability buy-sell agreement, the policies funding the agreement are owned by the
business entity
The guarantee of insurability option provides a long-term care policyowner the ability to
buy additional coverage at a later date
Which of the following is considered a limited accident and health plan?
cancer plan
A source of supplemental income for a life insurance policyowner can be derived from the
cash value
Which of the following is NOT a condition that must be met for an accidental death benefit to be paid?
cause of death must be from a job-related injury
Which of the these is NOT a true statement of the war exclusion?
civil insurrections apply
Which of the following does NOT help determine group health insurance premiums?
claims experience of the group
An accident and health insurance policy's premium requirements are set forth in which of the following provisions?
consideration clause
Which report contains information regarding an individual's general reputation and credit standing?
consumer report
Interest is credited to a fixed annuity no lower than the
contract guaranteed rate
Any employee insured under a group life insurance plan is normally
covered with term life insurance
Insurance that is designed to pay the balance of a loan if the insured dies before the loan has been repaid in full is
credit life
The requirements for continuing education apply to all of the following EXCEPT
customer service representatives
Health providers are compensated by a preferred provider organization (PPO) for normal dental procedures by what means?
decreased fee schedules
Which of these life insurance policies does NOT contain a cash value provision?
decreasing term life
Making or publishing any oral or written statement that is FALSE or maliciously critical of the financial condition of an insurer, and is calculated to injure any person engaged in the business of insurance is known as
defamation
Which of the following statements BEST describes employer contributions for employer provided health insurance?
employer contributions are deductible
Scott has a life insurance policy in which the dividends are left with the insurance company. This particular policy may be paid up when the cash value plus accumulated dividends
equal the net single premium for the same face amount at the insured's attained age
Which tax cost is normally associated with death?
federal estate tax
Medicare Part A does NOT provide coverage for
first 3 pints of blood
The "Use it or Lose it" rule applies to
flexible savings accounts
Rick owns a variable universal life policy and chooses a variable death benefit option. What will typically happen to the death benefit as a result of this selection?
fluctuate with changes in the cash account
A foreign insurance company is defined as one that is
formed under the laws of a state other than Oklahoma
A deliberate lie by an insured to the insurer to obtain a lower premium is an example of
fraud
An applicant for health insurance deliberately lies in order to obtain a lower premium rate. This is an example of
fraud
Insurable interest in one's own life is legally considered as
generally unlimited
An insurance producer would be found guilty of inducing a customer to purchase insurance in all of the following situations EXCEPT
giving the applicant merchandise worth $75 for the purchase of insurance
An insured may be required to sign which document at policy delivery to ensure there has not been any adverse medical conditions since the time of the application
good health statement
The Oklahoma Insurance Commissioner may place on probation, censure, suspend, revoke, or refuse to issue to an applicant for all of the following causes EXCEPT
having been convicted of a misdemeanor
Tonya has been diagnosed with kidney failure and is covered by group accident and health insurance through her large employer. Which of these accident and health plans will be primary during the months immediately following her diagnosis?
her employer's group accident and health plan
To legally receive a sales commission from an insurance company, an individual MUST
hold the appropriate license
Which life insurance clause prohibits an insurance company from questioning the validity of the contract after a stated period of time has passed?
incontestable clause
All of these are considered features of whole life insurance EXCEPT
initial premium is lower than for an equivalent amount of term insurance
Which health policy clause specifies the amount of benefits to be paid?
insuring
When compared to a fixed annuity, a variable annuity has what distinguishing feature?
investment risk is assumed by the purchaser
A policyowner has a life insurance policy where she had listed her age on the application as 5 years younger than her actual age. If she dies and the insurer discovers the misstatement of age, how much will the insurance company pay?
less than the face amount
Laura added a children's rider to her life insurance policy. What type of coverage was added?
level term
After the extended term life nonforfeiture option is chosen, the available insurance will be
level term for a stated period of time
According to Oklahoma Statute, commissions may be paid to
licensed and duly appointed producers
Straight whole life insurance can be accurately described in all of these statements EXCEPT
policy protection normally expires at age 65
Inpatient psychiatric care is covered under Part A Medicare for 190 days per
lifetime
Employees generally receive workers compensation benefits for
lost wages and medical expenses due to occupational accidents
It is the responsibility of the producer to report all of the following information to the Insurance Commissioner EXCEPT changes of his or her
marital status
Field underwriting by a producer
may result in the disclosure of hazardous activities of the applicant
The Insurance Commissioner may revoke a producer's license for each of the following violations, EXCEPT
misdemeanor conviction
A life policy that has premiums that are lower than normal during the early years is called
modified life
Periodic health claim payments must be made at least
monthly
Medicaid will pay for nursing home expenses under what condition?
must have financial need
Tim is covered by an accident and health insurance policy that may not be changed in any way by the insurer up to a stated age, as long as the premiums are paid. What type of policy is this?
noncancelable
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
A life insurance policy's contingent beneficiary is the
person who receives the death benefits if there is no named beneficiary
Which of these statements accurately portrays an adjustable life insurance policy?
policy can alternate between forms of term and whole life insurance
A signed good health statement may be requested by a life producer at the time of
policy delivery
The standard provisions of an accident and health insurance policy require that the
policy, endorsements, and attached papers constitute the "entire contract"
A Guaranteed Renewable provision allows
premiums which can only be increased per rate class
When a producer submits an application that discloses personal information regarding the applicant, who supplies the privacy notice?
producer
The automatic premium loan provision can be accurately described as a
provision that provides a policy loan to pay any premiums by the end of the grace period
Which of these occurrences could improve an insurer's ability to reduce premiums?
rate of earnings on investments increase
Jim is covered under a disability income policy. He is hurt while engaged in an occupation that is more hazardous than the occupation he specified in the policy. What action will the insurer likely take?
reduce the benefit level
When a lapsed policy's premium has been paid current, it has the potential of being
reinstated
Which of these is NOT considered the responsibility of a producer during the underwriting process?
selecting the final approval date
Kelly purchases a health insurance policy issued on a conditionally renewable basis. The insurance company has a right to refuse renewal of the policy for
specific reasons stated in the contract
Jonas is covered with disability insurance through his employer. The employer pays 75% of the premium, while Jonas pays the other 25%. What is Jonas' tax liability for any benefits paid from the disability plan?
taxes must be paid on 75% of the benefits received
When a ten year renewable term life insurance policy issued at age 45 is renewed, the premium rate will be the current rate for
ten year term insurance for a person aged 55
A form of an accelerated death benefit is a
terminal illness settlement benefit
Which statement concerning the Entire Contract provision in an individual accident and health insurance policy is TRUE?
the agent doesn't have the authority to change the policy or waive its provisions
Which statement concerning adjustable life insurance is accurate?
the face amount and premiums can be changed simultaneously by the policy owner
The insured's consideration given for a health insurance policy is
the first premium payment and the application
What would be considered an advantage of purchasing term life insurance?
the initial premium is lower compared to an equivalent amount of whole life coverage
James is covered with health insurance by two different insurers. The "insurance with other insurers" provision in an individual health insurance policy allows an insurer to pay benefits to the insured on a pro-rata basis when
the insurer was not notified prior to the claim that the insured has other health coverage
Under an adjustable life insurance policy, which of the following may NOT be changed without further underwriting?
the person insured
A life insurance illustration showing future premiums being paid out of nonguaranteed values must disclose that
the policy owner may need to resume premium payments depending on actual results
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
How is an insured's accident and health claim handled by an insurer if it occurs during the policy's grace period?
the unpaid premium may be subtracted from the reimbursement
The reason for backdating a policy is
to obtain a premium rate based on an earlier age
How is a collateral assignment used in a life insurance contract?
transfers specific ownership rights to a creditor
A false written or oral statement made by a producer for the purpose of replacing an existing policy to the detriment of the insured is
twisting
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
