Health Insurance Agent Exam

P is self-employed and owns an Individual Disability Income policy. He becomes totally disabled on June 1 and receives $2000 a month for the next 10months. How much of this income is subject to federal income tax?

$0 - Disability income benefits that derive from an individual policy which has paid entirely by the policy owner is not subject to federal income tax

Which type of renewability best describes a disability income policy that covers an individual until the age of 65, but the insurer has the rate to change the premium rate for the overall risk class?

Guaranteed Renewable

Which type of provider is known for stressing preventative medical care and routine physical examinations

HMO

All of these are characteristics of a Health Reimbursement Arrangement (HRA) EXCEPT

HRA is entirely funded by the employee

The Health Insurance Portability and Accountability Act (HIPAA) gives privacy protection for:

Health Information

In life insurance, the needs approach is used mostly to establish:

How much life insurance a client should apply for

When determining the monthly benefit amount for disability income policy, the factor that limits the amount a prospective insured may purchase is:

Income

Who makes the legally enforceable promises in a unilateral insurance policy?

Insurance company

What is being delivered during a policy delivery?

Insurance contract to the proposed insured

The clause in an Accident and Health policy which defines the benefit amounts the insurer will pay is called the:

Insuring clause

Which of the following health insurance policy provisions specifies the health care services a policy will provide

Insuring clause

which of the following actions will an insurance company most likely NOT take if an applicant, who has diabetes, applies for a disability income policy.

Issue the policy with an altered Time of Payment of Claims provision

K's whole life insurance policy lapsed two months ago due to nonpayment. she would now like to reinstate the policy. All of these statements are correct about the policy's reinstatement EXCEPT:

K will forfeit the right to use the automatic loan provision upon reinstatement

Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements?

Legal Purpose (Insurable interest) - STOLI arrangement is used to circumvent state insurable interest statues

In Major Medical Expenses policies, what is the objective of a Stop Loss provision

Limits an insureds out-of-pocket medical expenses

Rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The widow qualifies for the:

Marital deduction

A disability income policy that only the policyowner can terminate and which the rates will never go up is considered to be

Noncancellable

Which of the following documents must an agent submit to the replacing insurance company during the replacement of an existing life insurance policy?

Notice to existing and replacing insurers of intention to replace

Which of the following correctly describes a certificate of authority

Permits an insurance company to transact business in Georgia

The underwriting process involves all of these except for:

Policy loan

M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the:

Policy proceeds

The purpose of the Rules Governing Advertisements of Life Insurance and Annuities is to

assure full disclosure to the public of all material and relevant information

What is considered to be a characteristic of an immediate annuity?

benefit payments start within one payment period of purchase

The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers (and their families) whose employment has been terminated the right to:

continue group health benefits

A combination of whole life insurance and _________ term insurance is referred to as a family income policy

decreasing

What is the purpose of the U.S.A Patriot Act?

detect and deter terroism

An employer that offers a qualified retirement plan to its employees is eligible to:

make tax-deductible contributions to the plan

Under a Guaranteed Renewable health insurance policy, the insurer

may cancel the policy for nonpayment only

In Georgia, an accident and sickness policy that is paid on a quarterly basis requires a grace period of

31 days

all of the following statements about traditional individual retirement accounts are false EXCEPT

10% penalty is applied to withdrawals before the age 59 1/2

In georgia, monthly-premium accident and sickness insurance policies must provide a grace period of at least

10days

A 15-year mortgage is best protected by what kind of life policy?

15-year decreasing term

Insurers may request a hearing within ____days if their policy is rejected

20

One becomes eligible for Social Security disability benefits after having been disabled for

5 months

What is Medicare?

A hospital and medical expense insurance program

A "reimbursement policy" pays what amount of covered Long-term Care expenses?

Actual covered expenses up to the daily maximum

Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features?

Aleatory - Insurance contracts are aleatory in that the amount the insured will pay in premiums is unequal to the amount that the insurer will pay in the event of a loss

Which of the following statements is CORRECT regarding the tax treatment of a lump-sum payment paid to a life insurance policy's primary beneficiary

All proceeds are income tax free in the year they are received

The amount of monthly disability benefits payable under Social Security is affected by which of the following factors?

Amount of benefits available from other sources

A(n) ______________ of benefits of a Health Policy transfers payments to someone other than the policyowner.

Assignments

S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made?

Automatic Policy Loan -The automatic policy loan provision will keep a whole life policy in force if a required premium payment is not made and there is sufficient cash value.

What action will an insurer take if an interest payment on a policy loan is not made on time?

Automatically add the amount of interest due to the loan balance

Which type of policy would pay an employee's salary if the employer was injured in a bicycle accident and out of work for 6 weeks?

Business Overhead Expense -This covers fixed business expenses in the event of the owner becoming unable to work due to an accident or illness

Which of the following BEST describes a hospital indemnity policy?

Coverage that pays a stated amount per day of a covered hospitalization

Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?

Decreasing Term

S takes out an accident and sickness insurance policy which contains a provision that states that the agent does not have the authority to change the policy or waive any of its provisions. Which health policy provision is this?

Entire Contract

Which of the following policy provisions prohibits an insurance company from incorporating external documents into an insurance policy?

Entire Contract

Which of these statements is INCORRECT regarding the federal income tax treatment of life insurance?

Entire cash surrender value is taxable

All of these characteristics of an adjustable life policy, EXCEPT:

Face amount can be adjusted using policy dividends

The payments on Q's annuity are no less than $250 quarterly. Which of the following annuities does Q own?

Flexible Installment deferred

In the state of Georgia, every policyowner must be offered which of the following?

Free-look period

The life and health insurance Guaranty Association is

Funded by admitted insurance companies through assessments

When an employee is terminated, which statement about a group term life conversion is true?

Policy proceeds will be paid if the employee dies during the conversion period - an individual MUST apply for individual permanent coverage within 31days after the date of group coverage termination

Which of these statements accurately describes the Waiver of Premium provision in an accident Health policy?

Premiums are waived after the insured has been totally disabled for a specified time period

Which of the following statements about a guaranteed renewable health insurance policy is CORRECT?

Premiums normally increase at time of renewal

Which of these options can an individual use their medical flexible spending account to pay for?

Prescription drugs

Which of these is NOT a type of agent authority?

Principal

An insurance agent is in violation of the Rules Governing Advertisement of Life Insurance and Annuities if the agent takes which of the following actions during a sales presentation?

Refers to guaranteed dividends

Which type of policy pays benefits to a policyholder covered under a Hospital Expense policy?

Reimbursement

Which of the following states BEST describes dental care indemnity coverage?

Services are reimbursed after insurer receives the invoice

The insuring clause

States the scope and limits of the coverage

What type of life policy covers two people and pays upon the death of the last insured?

Survivorship

A(n) _________ rider may be used to included coverage for children under their parents life insurance policy.

Term

what type of life insurance are credit policies issued as?

Term

Who would be eligible for a temporary license issued in Georgia?

The personal representative of a deceased agent to provide service to existing policyowners

The advantage of reinstating an original life policy is

The premiums are based on a younger age

an individual who purchases a life annuity is given protection against:

The risk of living longer than expected

The policy provision that entitles the insurer to establish conditions the insured must meet while a claim is pending is:

Time Limit of Certain Defenses

A disability elimination period is best described as a:

Time deductible

Why would the commissioner examine an insurers records?

To determine the solvency of the insurer - The commissioner may examine the records of an insurance company to determine the solvency of the company

Life insurance companies are required to establish and maintain an anti-money laundering compliance program according to which federal regulation?

USA Patriot Act

A Variable Annuity has which of the following characteristics?

Underlying Equity investments

A _____________ annuity pays benefits based on units rather than state dollar amounts

Variable

What is the primary factor that determines the benefits paid under a disability income policy?

Wages

Y purchased $100,000 worth of permanent protection on himself and $50,000 worth of 10-year Term coverage for his wife on the same policy. Which of these policies did Y purchase?

Whole life policy with an other insured rider

All students attending a large university could be covered by

a blanket policy

Prior to a hearing that could potentially revoke an agent's license, what is required by the commissioner?

giving written notice to an agent

Which of the following actions require a policyowner to provide proof of insurability in an adjustable life policy.

increase face amount

when advertising, an insurer is required to use its

true corporate name

The free-look provision begins

upon receipt of the policy by the policyowner

An agent gives a conditional receipt to a client for an insurance policy after collecting initial premium. When will the policy become effective?

when the conditions of the receipt are met