Insurance Exam Prep - Final

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

When an employee is terminated, how long does this employee have to convert group life coverage to an individual plan?

31 days

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

K becomes ill after traveling overseas and is unable to work for 3 months. What kind of policy would cover her loss of income?

Disability income

An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period?

Full face amount minus any past due premiums

Bryce purchased a disability income policy with a rider that guarantees him the option of purchasing additional amounts of coverage at predetermined times without requiring to provide evidence of insurability. What kind of rider is this?

Guaranteed insurability rider

Which is the state's high-risk pool coverage for residents who cannot obtain coverage through the traditional insurance market?

Iowa comprehensive health insurance association

According to the Affordable Care Act (ACA), a dependent child's eligibility status is determined by

age

A universal life policy is sometimes referred to as an unbundled life policy because the owner can see the interest earned, cost of insurance, and the

expense charges

Once the insurance company receives a notice of claim, they have ___ days to send the claim form

15

R had received full disability income benefits for 6 months. When he returns to work, he is only able to resume half his normal daily workload. Which provision pays reduced benefits to R while he is not working at full capacity?

Residual Disability

S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?

Return of premium rider

What action can a policyowner take if an application for a bank loan requires collateral?

Assign policy ownership to the bank

An insurance company receives E's application for an individual health policy. E did not complete all of the medical history questions because she could not remember the exact dates. E signed the policy and submitted it to the insurance company anyway. A few weeks later, E suffers a heart attack and is hospitalized without completing the medical history questions and paying the initial premium. E is not insured. Which of the following clauses details the conditions that E did not meet?

Consideration clause

In a disability income policy, which of these clauses acts as a deductible?

Elimination period

What is the purpose of the Iowa Life and Health Insurance Guaranty Association

Ensure that claims filed against insolvent insurance companies will be paid

Long term care policies will usually pay for eligible benefits using which of the following methods?

Expense incurred

Which of the following statements about Health Reimbursement Arrangement (HRA) is correct?

If the employee paid for qualified medical expenses, the reimbursements may be tax-free.

The provision that defines to whom the insurer will pay benefits to is called

Payment of Claims

A prepaid application for individual Disability Income insurance was recently submitted to an insurer. When the insurer received the Medical Information Bureau (MIB) report, the report showed that the applicant had suffered a stroke 18 months ago, something that was not disclosed on the application. Which of the following actions would the insurance company NOT take?

Send a notice to the MIB that the applicant was declined

Which of these life insurance riders allows the applicant to have excess coverage

Term rider

Who is normally considered to be the owner of a 403(b) tax-sheltered annuity?

The employee

What type of policy covers two lives and pays the face amount after the first one dies?

Joint life policy

During the course of a Medicare supplement sale, T the producer determines there is an existing policy being replaced. Which of these actions is T not required to perform?

Notify the replaced insurance company

Which of these is NOT a required group life policy provision

Accidental Death and Dismemberment

When an insured changes to a more hazardous occupation, which disability policy provision allows an insurer to adjust policy benefits and rates?

Change of occupation provision

Which of the following reimburses its insured for covered medical expenses?

Commercial Insurers

F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?

Decreasing term policy

Additional Coverage can be added to a Whole Life Policy by adding an:

Decreasing term rider

Which dependent of an insured is eligible for coverage under a health insurance policy issued by the Iowa Comprehensive Health Insurance Association?

One who is incapable of self-sustaining employment due to a physical handicap

Which of the following is considered an element of a variable Life Policy

Underlying equity investment

ABC insurance company failed to accept a valid proof of loss statement. This is considered to be an

Unfair claims practice

ABC Insurance Company has accepted a life insurance application which contains unanswered questions. The company then makes the application part of the life contract. In this situation, the insurer has

Waived one of its legal rights

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

Benefit payments start within one payment period of purchase

Iowa's 10-day free-look period for life insurance policies begins at the

date of delivery

Non-occupational disability coverage is designed for

employees who suffer non-work-related disabilities, since work-related disabilities are covered by Workman's Compensation.

Before holding a hearing regarding an agent's unfair or deceptive practice, the Insurance Commissioner MUST give how many days notice?

10

In Iowa, monthly premium health insurance policies must provide a grace period of at least

10 days

The required free-look period in a Medicare Supplement policy is ___ days

30

M's insurance company denied a reinstatement application for her lapsed health insurance policy. The company did not notify M of this denial. How many days from the reinstatement application date does the insurance company have to notify M of the denial before the policy will be automatically placed back in force?

45 days

Q is severely injured in an automobile accident and becomes totally disabled. How many months must Q be disabled before being able to apply for Social Security disability benefits?

5 months

The Common Disaster clause provides that if both the insured and the sole named beneficiary were to die in a common accident, which of the following is true?

This clause provides the payment of proceeds to the insured's estate

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

Time Limit on Certain Defenses

At what point does a Whole Life Insurance policy endow?

When the cash value equals the death benefit

An agent gives an insured a conditional receipt; when does coverage begin?

When the conditions of the receipt are met

A cost of living rider gives the insured

additional death benefits

An individual covered under a Group Life insurance policy is considered to be a(n)

certificate holder

Which of the following permits an insurance company to transact business in Iowa

certificate of authority

Which of these statements is NOT true regarding health coverage for a newborn?

coverage is limited to only congenital defects

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

noncancellable

The ___ must provide an insured with proper disclosure concerning the replacement of an insurance policy

producer

C is a key employee at ABC Incorporated. If a Key Employee life policy is purchased on her life, which of these statements would be true?

ABC is the policyowner, C is the insured, and ABC is the beneficiary

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

Entire cash surrender value is taxable

P has recently signed an application for insurance. The insurer MUST advise her in writing that an investigative consumer report may be conducted according to

Fair Credit Reporting Act

All of the following statements regarding a Tax Sheltered Annuity (TSA) are true except

Income derived from the TSA is received income tax-free

T owns an Accident & Health policy and notifies her insurance company that she has chosen a less hazardous occupation. Under the Change of Occupation provision, which of the following actions may her insurance company take?

Increase her policy's coverage amount

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 conversation period