IN State Insurance Exam
All of the following statements regarding regulations for life insurance policies in Indiana are true EXCEPT
A cash settlement benefit must be paid to the beneficiary no later than 6 months after the receipt of proof of death Explanation - cash settlement benefit must be paid to the beneficiary NLT than 2 months after the receipt of proof of death
Which of the following statements is NOT TRUE?
A licensed consultant may hold a producer's license Explanation - Insurance consultants advise others about their insurance needs and coverages. They are compensated by the people they advise, not by producers and insurers. While producers may act as consultants, they cannot hold both licenses
Which of the following is NOT true regarding the requirements for resident producers in Indiana?
A licensed resident producer in good standing in another state may also be a resident producer in Indiana.
HMOs are known as what type of plans? a) Service b) Health savings c) Consumer driven d) Reimbursement
A) Service
What term is used for insurance companies that have a certificate of authority to transact insurance?
Admitted
Which of the following statements is NOT true regarding health insurance policy provisions?
All additional provisions written by insurers are cataloged by their respective states
Which of the following statements is incorrect concerning MEC's?
An MEC must always pass 7-pay test
All of the following could qualify as a group for the purpose of purchasing group health insurance EXCEPT
An association of 35 people Explanation - Group insurance may be issued to employer, employee, or other groups that are together for a purpose other than purchasing insurance
Which of the following individuals may act as a producer without a license?
An insurance company president who is solely responsible for the administration of the company
Which statement below is INCORRECT regarding the type of term insurance that fits best with the applicant's needs?
Applicants who may require a larger death benefit in the future should buy convertible term insurance Reasoning - Convertible term insurance converts to a cash value policy with the same death benefit but a higher premium
The full premium was submitted with the application for life insurance and the policy was issued 2 weeks later as requested. When does the policy coverage become effective?
As of the application date. Explanation - If the full premium was submitted with the application and the policy was issued as requested, the policy coverage effective date would generally coincide with the date of the application.
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash option Explanation - Cash option allows the insurer to send the policyholder an annual, nontaxable dividend check
Which of the following is NOT required in a report to the Commissioner regarding an Administrative action or criminal prosecution of a producer?
Complaint following hearing Explanations - Producers must report Admin actions and criminal prosecutions to the Commissioner within 30 days after an initial pretrial hearing. The report must include a copy of the initial complaint filed against the producer the order resulting from the hearing, and any other relevant documentation
An applicant gives her agent a completed application and the initial premium. What can the agent issue her that acknowledges initial premium payment?
Conditional Receipt
Which of the following statements is true regarding SIMPLE plans?
Contributions and earnings are tax-deferred until funds are withdrawn Explanation - Participating employees may defer up to a specified amount each year, and the employer can then contribute an amount equal to 3% of the employees annual compensation. Contributions and earnings are both tax-deferred until funds are withdrawn.
Decreasing term insurance is often used to...
Cover a mortgage
When filling out an application for insurance, the applicant makes a mistake. If a fresh application were not available what could the applicant do to correct it?
Cross incorrect one out, write the correct one beside it, and initial the answer
An employee dies having 6 quarters of coverage during the previous 13-quarter period. What status of coverage does the employee have under Social Security?
Currently insured Reasoning - Before becoming fully insured, workers can achieve being partially insured if he or she has earned 6 work credits during the 13 quarter period ending with a quarter in which the insured dies or becomes disabled
Which of the following meets the insureds personal needs and is provided by nonmedical personnel?
Custodial care Explanation - This is for meeting personal needs such as assistance in eating, dressing, or bathing, provided under a doctor's orders
An insured needs ongoing treatment for a diabetic condition. Under the PPACA, which of the following is correct? a) The condition is covered if the insured's plan specifies the condition b) Treatment is subject to pre-existing conditions exclusion c) Treatment is subject to an annual dollar maximum d) The condition must be covered under the insured's plan
D Explanation - Under PPACA, chronic conditions like diabetes, must be covered as an essential service under the plan. Lifetime or annual treatment dollar limits are not allowed
An insurer mails an insurance policy to a new policyowner. When the insurer relinquishes control of the policy, the policy is considered
DELIVERED Reasoning - When the insurer relinquishes control of the policy by mailing it to the Policyowner, policy is considered legally delivered.
Which of the following losses would likely be covered under the Accidental death rider?
Death caused by a head on collision
All of the following health insurance disability benefits are income tax free EXCEPT
Employer paid group disability
The Uniform Provision Law that prevents an insurance company from altering its agreement with a policyholder by referring to documents or other items not contained in the policy is called the
Entire Contract Provision
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?
Equal to the original policy for as long as the cash values will purchase Explanation - With this option, the cash value is used as a single premium to purchase the same face amount as the original policy for as long of a period of time as the cash will buy at the insureds current age
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?
Extended term
A husband and wife both incur expenses that are attributed to single major medical insurance deductible. Which type of deductible do they have in their policy?
FAMILY Reasoning - With family deductible, expenses for 2 or more family members can satisfy a common deductible in a given year, regardless of amount of expenses incurred by other family members
A husband and wife both incur expenses that are attributed to a single major medical insurance deductible. Which type of deductible do they have in their policy?
Family Explanation - Expenses for two or more family members can satisfy a common deductible in a given year, regardless of the amount of expenses incurred by other family members
The Indiana Health Coverage Programs (IHCP) administer healthcare benefits through which of the following options?
Fee for service and managed care Explanation - healthcare benefits are administered through 2 delivery systems: fee for service delivery system and managed care delivery system
J is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did J choose?
Fixed Amount Explanation - a fixed option pays a fixed, specified amount in installments until the principal and interest are exhausted. Recipient selects a specified fixed dollar amount to be paid until it is gone.
Which of the following is a correct statement about annuities?
Fixed annuities do not provide protection against inflation
All of the following are changes to health insurance plans introduced by the PPACA EXCEPT
Full cost coverage for all medical expenses Explanation - Under the PPACA, health insurance plans will receive a metal classification according to % of costs covered
What type of life policy does NOT typically require proof of insurability?
Group Group policies usually do not require proof of insurability from individual insureds
An insured has an individual disability income policy with a 30 day elimination period. He becomes disabled on June 1st for 15 days. When will he collect on his disability income payments?
HE WONT COLLECT ANYTHING Explanation - Did not satisfy the elimination period
In order for the alumni association to be eligible to purchase group health insurance for all its members, all of these statements must be true except when the association...
Has been active for 5 years minimum Reasoning - An association must be organized for reasons other than buying insurance, have at least 100 members, have constitution, by laws, and must hold annual meetings. Association group must have been active for at least 2 years.
Which of the following is NOT correct concerning taxation of disability income benefits?
If paid by the individual, the premiums are tax deductible
Under which of the following conditions would life insurance proceeds be taxable by the Fed gov't?
If there is a transfer of value Reasoning - If life insurance proceeds are collected in a lump sum payment, they are generally not subject to federal taxation. If benefit payment results in a transfer of value, (If policy is sold to another person) it may not be exempt from taxation.
Which of the following riders would NOT increase the premium for a Policyowner?
Impairment rider
An insured's hospital policy states that it will pay him a flat fee of $75 per day each day he is hospitalized. The policy pays benefits on what basis?
Indemnity
Who would be allowed catch up contributions?
Individuals age 50 or older
To purchase insurance, the Policyowner must face the possibility of losing money, or something of value in the event of loss. What is this concept called?
Insurable Interest
What advantage does the "recurrent" disability provision provide to the insured under a disability income policy?
It eliminates the imposition of a second elimination period for the same disability
The annual open enrollment period for state insurance exchanges runs from November through
January Annual enrollment period is currently scheduled from November 1 - January 31
Your client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this Policyowner select?
Joint and Survivor Explanation - Payments will continue until the death of the last beneficiary
An annuitant pays the annual premium on the 14th of each month. Which best describes this arrangement?
Level Explanation - Main ways to pay annuities premium are: single premium, which is a single lump sum payment, and in periodic premium, in which the premium is paid in multiple installments. Periodic Premiums can be either paid level or flexible
Which of the following would NOT be considered a limited coverage policy?
Major medical expense insurance
A temporary insurance producer license...
May be issued to the surviving spouse of a diseased producer Explanation - A temporary insurance producer license may be issued for a maximum period of 180 days to the surviving spouse of a diseased or disabled producer. License may be revoked and it would expire at the time thee owner disposes of the business.
A producer may act as a consultant if he or she
Meets the compensation disclosure requirements Explanation - Producer may act as a consultant and accept both a fee and commission for the same transaction, if he or she provides to the insured a written agreement on the fees, and discloses the fact that he or she will receive compensation for sale of the policy and method of compensation prior to the sale, solicitation, negotiation, or renewal of a policy
An insurance agent visits a potential client and explains various types of different policies. The customer displays a lack of interest so the agent guarantees higher dividends than he knows would be possible.Which term describes what the agent has done?
Misrepresentation
With respect to thee entire contract clause in health policies who has the authority to make changes in an existing policy?
Only an XO of a company
When may HIV-related test results be provided to the MIB?
Only if the individual is NOT identified
Which of the following would NOT be eligible for coverage under Key Person Life Insurance?
Owner of a shop Reasoning - owner is the principal, not the key person.
Which dividend option increases the death benefit?
Paid-up additions Explanation: Uses the dividend to purchase small amounts of the same type of insurance as the original policy. Additional insurance is paid up by the dividend
A core Medicare Supplement policy (Plan A) will cover all of the following expenses except:
Part A deductible Explanation - Plan A is the core benefits only and does not include coverage for Part A deductibles
An insured pays her Major Medical Insurance Premium annually on March 1. Last March she forgot to mail her premium to the company. On March 19, she had an accident and broke her leg. The insurance company would
Pay the claim Explanation - Because the accident occurred during the grace period, the insurance company will pay the claim.
Regarding the PPACA health care tax credit, which of the following is true?
Persons receiving Medicaid are not eligible
Policies written on a third-party ownership basis are usually written to cover:
Policyowners minor children or business associates
What is the difference between a straight life policy and and 20 pay whole life policy?
Premium payment period Explanation - Limited pay whole life policy, just like straight life, endows for the face amount if the insured lives to age 100. The premium is completely paid off in 20 years
In group insurance, the primary purpose of the Coordination of Benefits Provision is to
Prevent overinsurance
Which of the following is NOT mandatory under the Uniform Provision Law as applied to accident and health policies?
Probationary period
All of the following are true of annually renewable term insurance EXCEPT
Proof of insurability must be provided at each renewal Explanation - ART is a form of level term insurance, in which the death benefit remains level and policy may be guaranteed to be renewable each year without proof of insurability, but the premium increases annually according to the insured's attained age
The Guaranteed Insurability Rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT
Purchase of a new home Explanation - Only applies at marriage, birth of a child, and or every 3 years or so between ages of 25 and 40
Which of the following is a provision found in life insurance policies?
Reinstatement
All of the following would be classified as limited insurance coverage EXCEPT
Supplement Social Security coverage Explanation- This is a rider to a disability policy
If a basic medical insurance plan's benefits are exhausted, what type of plan will then begin covering those losses?
Supplementary major medical Explanation - Supplemetary Major medical policies are used to supplement coverage payable under a basic medical expense policy. After the policy pays, the supplemental major medical will provide coverage for expenses that were not covered by the basic policy, and expenses that exceed the maximum. If time limitation is used up in the basic policy the supplemental coverage will provide coverage after.
Which of the following statements regarding HIV testing is NOT true?
Test results must be sent to the Department of Insurance
Which of the following is true regarding examination of foreign companies by the Commissioner?
The Commissioner may accept a company exam report from the Dept of Insurance at the companys state of domicile
In life insurance, which of the following is NOT required to have an insurable interest in the insured?
The beneficiary
Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?
The beneficiary will only receive payments of the interest earned on the death benefit.
Life Insurance creates an immediate estate. Which of the following best explains this statement?
The face value of the policy is payable to the beneficiary upon the death of the insured
With Adjustable Life, the owner can change all of the following EXCEPT
The insured
Insured Z's health insurance policy year begins in January. His policy contains a carry-over provision. In November, he has a small claim which is less than his deductible. Which of the following is true?
The insured may carry over the amount of this year's expenses to next year, which will help satisfy next year's deductible.
Which of the following statements is INCORRECT?
The insurer does not have the right to conduct an autopsy.
An agent who knowingly misrepresents material information for the purpose of inducing an insured to lapse, forfeit, change or surrender a life insurance policy or annuity has committed an illegal practice known as
Twisting
Considering the principles of liquidity, how would the Policyowner use today's cash values in a life insurance policy?
Use it for emergency expenses Explanation - Liquidity in life insurance refers to availability of cash to the insured. Some life insurance policies offer cash values that can be borrowed at any time and used for immediate needs
Which of the following type of insurance is investment based, has a level fixed premium, and a non guaranteed cash value?
Variable whole life Explanation - Variable life insurance is a level fixed premium investment based product. It is a combo of decreasing term insurance and an investment fund
If the policy summary for a life insurance policy is not given when the application is taken, when must the policy summary be given to the Policyowner?
When the policy is delivered
Under the mandatory uniform provision Notice of Claim, written notice of a claim must be submitted to the insurer within what time parameters?
Within 20 days
A whole life policy is surrendered for a reduced paid up policy, the cash value in the new policy will...
continue to increase Reasoning - The new policy continues to build its own cash value and will remain in force until the insured's death or maturity
Where are premiums from fixed annuities invested?
general account
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...
$70,000 Reasoning - If annuitants death is during the accumulation period, beneficiary will receive the amount of premiums paid into the plan or cash value, whichever is greater.
According to the metal level classification of health plans, what % of health care costs will be covered under a gold plan?
80%
All of the following may obtain a limited insurance license in Indiana without an examination EXCEPT
A person acting as a funeral director selling funeral policies
The Probationary period is
A specified period of time that a person joining a group has to wait before becoming eligible for coverage
Which of the following best defines the Probationary Period in group health policies?
A specified period of time that a person joining a group has to wait before becoming eligible for coverage
Which of the following would NOT trigger the payment of Accelerated Death Benefits?
Being permanently disabled
In addition to participation requirements, How does an insurer guard against adverse selection when underwriting group health?
By requiring that the insurance be incidental to the group
Which of the following is NOT true regarding a deferred annuity?
Income payments begin within one year from the date of purchase
Which of the following is NOT True regarding a producer's appointment and termination?
Insurance producers may act as agents of an insurer without an appointment
Riley reads an agreement on the first page of her policy which includes a list of losses that will be covered by her insurer. What is the name of this agreement?
Insuring clause
What is NOT a benefit of a POS plan?
It allows guaranteed acceptance of all applicants. Explanation - a different choice can be made every time a need arises for medical services
Dividends received on participating life insurance policies are
NOT taxable because because they are a return of unused premiums
All of the following are consideration in an insurance policy except
The cash value in a policy
A viatical settlement is a transaction outside the life insurance company where the owner sells the life insurance policy for which of the following?
% of the face amount of the policy
How long is the grace period for individual life insurance policy?
1 month
Your client is a sole proprietor and wishes to include his family on a medical expense plan. How much of the cost of medical expense plan can be deducted?
100%
Under the Mandatory uniform provision Legal Actions, an insured is prevented from bringing a suit against the insurer to recover on a health policy prior to...
60 days after written proof of loss has been submitted Reasoning - Insuredd must wait 60 days but no later than 3 years, after proof of loss, before legal action can be Brought against the company
Under the mandatory uniform provision Proof of Loss, the claimant must submit proof of loss within what time period after the loss?
90 days
All of the following are characteristics of group health insurance plans, EXCEPT... a) parties that hold a group health insurance contract are the employees and employer b) cost of insuring an individual is less than what would be charged for comparable benefits under an individual plan c) Employers may require employees to contribute to premium payments d) Benefits under a group plan are more extensive than those under individual plans
A - The contract for coverage is between the employer and insurance company. Only one policy is issued (master contract) to the employer; covered employees receive a certificate of insurance.