Indiana Life & Health Insurance Exam Review
Which of the following would be a typical maximum benefit offered by major medical plans?
$1 million
The most the Insurance Guaranty Association will pay for net cash surrender values is
$100,000
an insured decides to surrender his $100,000 Whole Life Policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable.
$3,000
An employee quits her job where she has a balance of $10,000 in her qualified plan. The balance was paid out directly to the employee in order for her to move the funds to a new account. If she decides to rollover her plan to a Traditional IRA, how much will she receive from the plan administrator and how long does she have to complete the tax-free rollover?
$8,000, 60 days
What is the maximum period that an insurer would pay benefits in accordance with an Additional Monthly Benefit rider?
1 year
An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy?
10 days
In a noncontributory health insurance plan, what percentage of eligible employees must participate in the plan before the plan can become effective?
100%
What is a standard time limit for a pre-existing condition period in an ICHIA policy?
3 months
How many days after a final disposition must an insurance producer report administrative action or criminal prosecution to the Director?
30 days
To attain currently insured status under Social Security, a worker must have earned at least how many work credits during the last 13 quarters?
6 credits
How long is an open enrollment period for Medicare supplement policies?
6 months
Under the Affordable Care Act, a special enrollment period allows an individual to enroll in a qualified health plan within how many days of a qualifying event?
60 days
Which statement best defines a Multiple Employers Welfare Arrangement (MEWA)?
A joining together by employers to provide health benefits for employees
An insured misstated her age on an application for an individual health insurance policy. The insurance company found the mistake after the contestable period had expired. The insurance company will take which of the following actions regarding any claim that has been issued?
Adjust the claim benefit to reflect the insured's true age
Which of the following would be considered an unfair claims settlement practice?
Advising the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered
When transacting business in this state an insurer formed under the laws of another country is known as an:
Alien insurer
In insurance, an offer is usually made when
An applicant submits an application to the insurer. In insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy.
A universal life insurance policy is best described as a/an
Annually Renewable Term policy with a cash value account
What document describes an insureds medical history, including diagnoses and treatments?
Attending Physicians Statement. An attending physicians statement (APS) is the best way for an underwriter to evaluate an insureds medical history. The report includes past diagnoses treatments, length of recovery time, and prognoses.
Which of the following is NOT an enrollment period for Medicare Part A applicants? a) Special enrollment b) General enrollment c) Automatic enrollment d) Initial enrollment
Automatic enrollment
Which of the following options best depicts how the eligibility of members for group health insurance is determined?
By conditions of employment
A new insurance company wants to begin conducting insurance in Indiana. What will it need to receive before it can legally open for business?
Certificate of Authority
If a company transacts any business of insurance without a certificate of authority, what is the maximum penalty that can be charged to the director of that company?
Civil penalty of $25,000
A man is injured while robbing a convenience store. How does his major medical policy handle the payment of his claim?
Claim is denied if his policy contains the Illegal Occupation provision
An insured is admitted to the hospital for surgery on a herniated disk. The insurance company monitors the treatment and progress in order to make sure that everything proceeds according to the insurers schedule. This is called.
Concurrent review. Under the concurrent review process, the insurance company will monitor the insureds hospital stay to make sure that everything is proceeding according to schedule and that the insured will be released from the hospital as planned.
Which of the following is used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced?
Cost comparison methods
When an insured died, his survivors were eligible for limited benefits under his Social Security account. What was the insured's status?
Currently insured
Which of the following types of insurance policies is most commonly used in credit life insurance?
Decreasing term
Which of the following would most directly affect the purchasing power of benefits paid on a fixed annuity?
Economic inflation
If an annuitant dies before annuitization occurs, what will the beneficiary receive?
Either the amount paid into the plan or the cash value of the plan, whichever is the greatest amount
Which of the following best describes the aleatory nature of an insurance contract?
Exchange of unequal values. An aleatory contract is a contract in which unequal amounts or values are exchanged. The amount of premium the insured pays is much less than assumed by the insurer.
The authority granted to an agent through the agent's contract is referred to as
Express Authority
Which of the following limited lines producer's licenses would require life producer's relicensing education and examination?
Funeral director insurance
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a
Guaranteed Insurability rider
An insured becomes disabled at age 22 and can no longer work. She meets the definition of total disability under Social Security. What other requirement must the insured have met to receive Social Security disability benefits?
Have accumulated 6 work credits in the past 3 years
To be eligible for a Health Savings Account, an individual must be covered by a
High-deductible health plan
Which of the following riders would NOT increase the premium for a policyowner?
Impairment rider
In which of the following locations would skilled care most likely be provided?
In an institutional setting
In long-term care (LTC) policies, as the benefit period lengthens, the premium
Increases
What type of annuity guarantees to pay an income to the annuitant each year as longs he lives, and upon death, the annuity will refund the remaining payments to a beneficiary?
Installment refund annuity
In the event of loss, after a notice of claim is submitted to the insurer, who is responsible for providing claims forms and to which party?
Insurer to the insured
During partial withdrawal from a universal life policy, which portion will be taxed?
Interest
What is the benefit of choosing extended term as a nonforfeiture option?
It has the highest amount of insurance protections
Which of the following best describes annually renewable term insurance?
It is a level term insurance
Which of the following best describes the MIB?
It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance.
An insurer invests the money it receives from premiums paid by its insureds. Which of the following is TRUE regarding the interest earned on these investments?
It is used to lower premiums
Variable Life insurance is based on what kind of premium?
Level fixed
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?
Limited pay whole life
All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?
Lower
To sign up for a Medicare prescription drug plan, individuals must first be enrolled in
Medicare Part A
Under the Affordable Care Act, which classification applies to health plans based on the amount of covered costs?
Metal level classification
What is the name of a clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military?
Military service or war
Premium payments for personally-owned disability income policies are
Not tax deductible
Prior to purchasing a Medigap policy, a person must be enrolled in which of the following?
Parts A and B of Medicare
An insured purchased a life policy in 2010 and died in 2017. The insurance company discovers at that time that the insured had concealed information during the application process. What can they do?
Pay the death benefit
What type of beneficiary designation allows the benefit to pass from a deceased primary beneficiary to the beneficiary's heirs, instead of splitting the benefit among surviving primary beneficiaries?
Per stirpes
Which of the following is correct regarding the taxation of group medical expense premiums and benefits?
Premiums are tax deductible and benefits are not taxed
Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insured for full disability benefits. Which disability policy provision does this describe?
Presumptive disability
An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe?
Reduction of Premium
To sell variable life insurance policies, an agent must receive all of the following EXCEPT
SEC registration. Agents selling variable life products must be registered with FINRA, have a securities license, and must be licensed within the state to sell life insurance. SEC registration is for securities, not agents.
Which of the following statements concerning a Simplified Employee Pension plan (SEP) is INCORRECT
SEPs are suitable for large companies
Which type of life insurance policy generates immediate cash value?
Single premium
Which of the following is NOT covered under Basic Hospital Expense Coverage?
Surgeon's fees
What characteristics must an annuity have if it is used to accumulate funds in an IRA?
Tax-qualified
If an insurer becomes insolvent, which of the following would pay benefits to policyholders?
The Guaranty Association
If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back?
The balance of the loan will be taken out of the death benefit
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the application had to submit to a medical exam. If the policy is issued, what would the policy's effective date?
The date of medical exam. If the company acknowledges
The period of time immediately following a disability during which benefits are not payable is...
The elimination period. This is a waiting period, not dollars, imposed on the insured from the onset of disability until benefit payments.
A father owns a life insurance policy on his 15-year old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?
The insured's premiums will be waived until she is 21
What is the advantage of reinstating a policy instead of applying for a new one?
The original age is used for premium determination. The reinstatement provision allows the policyowner an opportunity to put lapsed policy back in force, subject to proving continued insurability. If the policyowner elects to reinstate the policy, as opposed to purchasing a new policy, the reinstated policy is restored to its original status.
All of the following are general requirements of a qualified plan EXCEPT
The plan must provide an offset for social security benefits. Plans must meet the general requirements established by IRS.
All of the following are true about variable products EXCEPT
The premiums are invested in the insurers general account. Insurers selling variable products invest their customers monies in a separate account, which is very similar to a mutual fund. Since there is no guaranteed rate of return customers must bear the investment risk.
Which provision states that the insurance company must pay Medical Expense claims immediately?
Time of Payment of Claims
Why do group health providers usually require a certain amount of participation in the plan by eligible employees?
To guard against adverse selection and reduce cost
What is the purpose of a fixed period settlement option?
To provide a guaranteed income for a certain amount of time
When is the earliest a policy may go into effect?
When the application is signed and a check is given to the agent
Which of the following determines whether disability insurance benefits are taxed?
Whether the premium were tax deductible
When can a Long-Term Care policy deny a claim for losses incurred because of a pre-existing condition?
Within 6 months of the effective date of coverage
All of the following may be exempt from the whole or part of the Indiana licensing examination EXCEPT a) A candidate applying for a surplus lines producer license b) A Chartered Life Underwriter applying for a Life license c) A resident producer in another state under certain conditions d) A person selling credit life and credit health insurance
a) A candidate applying for a surplus lines producer license
Which of the following statements regarding Business Overhead Expense policies is NOT true? a) Benefits are usually limited to six months b) Premiums paid for BOE are tax deductible c) Any benefits received are taxable to the business d) Leased equipment expenses are covered by the plan
a) Benefits are usually limited to six months
All of the following are unfair claims settlement practices EXCEPT: a) Suggesting negotiations in settling the claim b) Refusing to pay claims without conducting a reasonable investigation c) Failing to adopt and implement reasonable standards for settling claims d) Failing to acknowledge pertinent communication pertaining to a claim
a) Suggesting negotiations in settling the claim
All of the following are true regarding a decreasing term policy EXCEPT a) The payable premium amount steadily declines throughout the duration of the contract b) The death benefit is $0 at the end of the policy term c) The contract pays only in the event of death during the term and there is no cash value d) The face amount steadily declines throughout the duration of the contract
a) The payable premium amount steadily declines throughout the duration of the contract
An insurance contract must contain all of the following to be considered legally binding EXCEPT: a) Competent parties b) Beneficiary's consent c) Offer and acceptance d) Consideration
b) Beneficiary's consent
Which of the following is INCORRECT concerning a noncontributory group plan? a) The employer pays 100% of the premiums b) The employees receive individual policies c) They help to reduce adverse selection against the insurer d) They require 100% employee participation
b) The employees receive individuals policies
Which of the following does the Insuring Clause NOT specify? a) The insurance company b) The name of the insured c) A list of available doctors d) Covered perils
c) A list of available doctors
All of the following are personal uses of life insurance EXCEPT: a) Estate creation b) Cash accumulation c) Buy-sell agreement d) Survivor
c) Buy-sell agreement
A long-term care insurance shopper's guide must be provided in the format developed by which of the following? a) Director b) Medical Information Bureau c) NAIC d) Office of Insurance Regulation
c) NAIC
Which of the following would NOT be eligible for a health insurance policy from the Indiana Comprehensive Health Insurance Association? a) A person who has been rejected for the same coverage by at least 1 carrier b) A person who can only be insured at a higher rate by another insurer c) A federally-eligible d) A person who applied for Medicaid 90 days prior to applying for the Association policy
d) A person who applied for Medicaid 90 days prior to applying for the Association policy
All of the following apply to defined benefit plans EXCEPT a) Benefits are based on a specified formula that incorporates years of service, salary and age of retirement b) The employer is responsible for providing promised retirement benefits c) They are qualified plans and cannot discriminate d) Contributions are tied to the company profits
d) Contributions are tied to the company profits
Which of the following is NOT a government-funded insurance program? a) Old-Age, Survivors and Disability Insurance (Social Security b) Medicare c) Medicaid d) Federal Deposit Insurance Corporation (FDIC)
d) Federal Deposit Insurance Corporation (FDIC)
An association could buy group insurance for its members if it meets all of the following EXCEPT: a) Has a constitution and by laws b) Holds annual meetings c) Is contributory d) Has at least 50 members
d) Has at least 50 members
Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT a) The loss must not be catastrophic b) There must be a sufficient number of homogenous exposure units to make losses reasonably predictable c) The loss produced by the risk must be defined d) The loss may be intentional
d) The loss may be intentional
An individual applies for a life policy. Two years ago he suffered a head injury from an accident, so he cannot remember parts of his past, but is otherwise competent. He has also been hospitalized for drug abuse, but does not remember this when applying for insurance. The insurer issues the policy and learn of his history one year later. What will probably happen? D a) The policy will be voided b) The insurer will sue the insured for committing fraud c) Because the insured is currently not a drug user, his policy will not be affected d) The policy will not be affected
d) The policy will not be affected
All of the following are true regarding vatical settlement regulations in Indiana EXCEPT a) Insured are required to submit a disclosure on their medical condition and competence b) Producers must provide the insured with the info on alternatives to a viatical settlement c) All viatical producers must be licensed d) Viatical contracts allow a 10-day free-look period
d) Viatical contracts allow for a 10-day free-look period