Insurance health and life
Under the USA Patriot Act, insurers are required to report receipt of cash payments in excess of:
$10,000
K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?
$20,000 death benefit
J has an Accidental Death and Dismemberment policy with a principal sum of $50,000. While trimming the hedges, J cuts off one of his fingers. What is the MAXIMUM J will receive from his policy?
$25,000
An employee with $25,000 group term life coverage was recently fired. This employees group coverage may be converted to a
$25,000 individual whole life policy
An example of false advertising would be *Paid testimonials from celebrity endorsements *An insurer exaggerating its dividends in a magazine advertisement *An agent spending more than $25 on marketing gifts for a client *An insurer advertising in an insurance trade journal
*An insurer exaggerating its dividends in a magazine advertisement (An insurance company may be judged guilty of false advertising if it exaggerates its dividends in a magazine advertisement.)
An insured may assign up to _________ of policy ownership under an individual life insurance policy.
100%
What is the MINIMUM benefit period that must be offered by a Long-Term Care policy?
12 months
In Texas, how long must a policy be in force before an insurance company must pay death benefits for suicide?
2 years
Insurer's may request a hearing within __________ if their policy is rejected
20 days
A new agent must complete at LEAST _____ hours of continuing education within 24 months of initial licensure.
24
An insured pays premiums o an annual basis for an individual health insurance policy. What is the MINMUM number of days for the Grace Period provision?
31
Every 12-months after the initial enrollment period, an HMO must hold an open enrollment period of
31 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
_____ of continuing education MUST be completed in the classroom or classroom equivalent.
50%
An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age?
59 1/2
The individual most likely to buy a Medicare Supplement policy would be a(n)
68-year old male covered by Medicare
A temporary agent's license issued by the Commissioner of Insurance is valid for up to
90
Which of these is an element of a Variable Life policy?
A fixed, level premium
All are true statements regarding the underwriting process, EXCEPT
AIDS and HIV virus exams can be conducted in a discriminatory fashion
P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?
Accidental Death and Dismemberment clause
Which of the following actions does the Commissioner of Insurance NOT have the power to conduct?
Activate insurance financial reserves
In health insurance policies, a waiver of premium provision keeps the coverage in force without premium payments:
After an insured has become totally disabled as defined in the policy
Under a Long Term Care policy, which benefit would be typically excluded or limited?
Alcohol rehabilitation
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
In Texas, which of the statements regarding the Suicide clause is True?
An Insurer may not use suicide as a defense payment after the first year
If an insured's age was misstated on a life insurance contract, the Misstatement of Age provision requires that any death benefit payable would be:
An amount that the premiums paid would have purchased at the current age
If an insured's age was misstated on a life insurance contract, the Misstatement of Age provision requires that any death benefit payable would be
An amount the premiums paid would have purchased at the current age
P is a forty year old woman and would like to purchase an annuity that will provide a lifetime income stream beginning at age sixty. Which of the following did she NOT buy?
An immediate annuity
All of the following statements regarding group health insurance is true, EXCEPT
An individual policy is given to each member
An insurer is NOT required to provide information on fraudulent claims if requested by
An insured
Which of the following statements BEST describes what the Legal Actions provision of an Accident and Health policy requires?
An insured must wait at least 60 days after Proof of Loss has been submitted before a lawsuit can be filed
A plan through the Marketplace may b purchased by
Any legal resident (except those imprisoned)
When can a policyowner change a revocable beneficiary?
Anytime
When does a Probationary Period provision become effective in a health insurance contract?
At the policy's inception
A certificate of ___________ permits an insurance company to transact business in Texas.
Authority
Medicare Part C is:
Available to those who are enrolled in Medicare Part A and B
Which of the following is a requirement for obtaining a Texas insurance agents license?
Be honest, trustworthy, and reliable
S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT
Beneficiary's age
The difference between group insurance and blanket health policies is:
Blanket health policies do not issue certificates
G is an accountant who has ten employees and is concerned about how the business would survive financially if G became disabled. The type of policy which BEST addresses this concern is
Business Overhead Expense
Which rider provides coverage for a child under a parent's life insurance policy?
Child term rider
B the insurance agent tells his clients that their rights may be impaired if they fail to complete a release form within a given period of time. B may be found guilty of
Coercion
On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains ad some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take?
Collect initial premium along with a signed health statement
The phase "transacting business" includes
Collecting premiums
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
Which of the following consists of an offer, acceptance, and consideration?
Contract
The Universal Life Policy is called an unbundled Life Policy because the policyowner can see the expense charges, the interest earned, and the:
Cost of insurance
Which of the following statements about health coverage for newborns in NOT true?
Coverage is limited to only congenital defects
What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?
Decreasing term
A CEO's personal assistant suffered injuries at home and as a result, was unable to work for four months. Which type of policy will pay a monthly benefit to the personal assistant?
Disability Income
Which of the following health policy provisions states that the producer does NOT have the authority to change the policy or waive any of its provisions?
Entire Contract
When an insurance company sends a policy to the insured with an attached application, the element that makes the application part of the contract between the insured and the insurer is called the
Entire Contract provision
When an insurance company sends a policy to the insured with an attached application, the element that makes the application part of the contract between the insured and the insurer is called the:
Entire Contract provision
Which of the following is NOT included in the policy face?
Exclusions
Which of these provisions is NOT required in life insurance policies?
Extended Term
What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's death?
Face amount plus the policy's cash value
N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What type of annuity did N purchase
Fixed Deferred
An insurance company organized under New York laws and licensed to do business in Texas is considered a(n)
Foreign company
What is an organization that solicits Insurance only to its members?
Fraternal benefit society
Which of the following provisions specifies how long a policyonwer's health coverage will remain in effect if the policy owner does not pay the premiums when its due?
Grace Period
Which of the following types of organizations are prepaid group health plans, where members pay in advance for the services of participating physicians and hospitals that have agreements?
HMO
Which type of provider is known for stressing preventative medical care?
Health Maintenance Organization (HMO)
S wants to open a tax-exempt Health Savings Account. To qualify for this type of account, Federal law dictates that S must be enrolled in a
High-deductible health plan. (To be eligible for a Health Savings Account, an individual must be covered by a high-deductible health plan (HDHP), must not be covered by other health insurance (does not apply to accident insurance, disability, dental care, vision care, long-term care), must not be eligible for Medicare, and can't be claimed as a dependent on someone else's tax return.)
In regards to representations or warranties, which of these statements is TRUE?
If material to the risk, false representation will void a policy
A long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following?
Inability of the insured to perform more than 2 Activities of Daily Living (ADL's)
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
Which of the following groups may NOT be insured by a group life insurance policy?
Individuals who are related by blood
Information obtained from a phone conversation to the proposed insured can be found in which of these reports?
Inspection report. (An inspection report may include information obtained by a telephone call to the proposed insured.)
What is being delivered during a policy delivery?
Insurance contract to the proposed insured
Credit Life insurance is:
Insurance issued on a debtor to cover outstanding loan balances
Variable annuities may invest premiums in each of the following, EXCEPT
Insurer's corporate business account
Which health policy clause specifies the amount of benefits to be paid?
Insuring
The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death is called a(n):
Insuring agreement
In a Life Insurance contract, an insurance company's promise to pay stated benefits is called the:
Insuring clause
Which of the following health insurance policy provisions specifies the health care services a policy will provide?
Insuring clause
How are policyowner dividends treated in regards to income tax?
Interest on accumulations is taxed
The phrase "This policy will only pay for a semi-private room" is an example of a(n)
Internal limit
Which of these arrangements allows one to bypass insurable interest laws?
Investor-Originated Life Insurance
Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements?
Legal Purpose (Insurable Interest)
When advertising, an insurance company must use its:
Legal corporate name
T has Disability Income policy that pays a monthly benefit of $5000. If T becomes partially disabled, what can he likely expect?
Less than $5,000 per month benefit regardless of the cause
Which of these are NOT an example of a nonforfeiture option?
Life Income
Which of these is NOT relevant when determining the amount f personal life insurance needed?
Local unemployment rate
An insurance company would MOST likely pay benefits under an Accidental Death and Dismemberment policy for which of the following losses?
Loss of eyesight due to an accidental injury
Which of these is an element of a Single Premium annuity?
Lump-sum payment
Which of the following health insurance coverages is BEST suited for meeting the expense of catastrophic illness?
Major Medical
Comprehensive Major Medical policies usually combine:
Major Medical with Basic Hospital/Surgical coverage
An applicant MUST receive an Outline of Coverage when an application is taken for a(n)
Medicare Supplement policy
A policyowner is allowed to pay premiums more than once a year under which provision?
Mode of Premium
Which of the following statements is CORRECT about accelerated death benefit?
Must have a terminal illness to qualify
Which of the following characteristics is associated with a large group disability income policy?
No medical underwriting
J purchased a Disability Income Policy that ONLY J can terminate and on which the rates will never increase above those illustrated in the policy. Which of the following types of policies did J purchase?
Noncancelable
An insurance agent has a fiduciary responsibility to all the following EXCEPT
Other agents
In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy?
Owner's Rights
Which of these statements is INCORRECT regarding a Preferred Provider Organization (PPO)
PPO's are NOT a type of managed care systems
What does Medicare Part A and Part B cover?
Part A covers hospitalization and Part B covers doctor's services
All of the following statements are true regarding a policy's Grace Period, EXCEPT
Past due premiums are waived
Which action will a life insurance company most likely take if an insured dies and it is discovered that the insureds age was misstated on the application?
Pay an amount the premiums would have purchased at the insureds actual age
Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyonwer becomes disabled?
Payor clause
On a life insurance policy, who is qualified to change the beneficiary designation?
Policy owner
On a Life Insurance policy, who is qualified to change the beneficiary designation?
Policyowner
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?
Policyowner
How does group insurance differ from individuals insurance?
Premiums are lower
P received Disability income benefits for 3 months then returns to work. She is able to work one month before her condition returns, leaving her disabled once again. What would the insurance company most likely regard this second period of disability as?
Recurrent Disability
K failed to pay a renewal premium within the time granted by the insurer. K then sends in a payment which the insurer subsequently accepts. Which policy provision specifies that coverage may be restored in this situation?
Reinstatement
T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?
Request of the change will be refused
When a person returns to work after a period of total disability but cannot earn as much as he or she did before the disability, this situation is called which of the following?
Residual disability
Which provisions allow a portion of any used medical benefits to be restored following a particular amount of benefit has been used, or after the policy has been in effect for a particular eroded of time?
Restoration of used benefit
An example of rebating would be
Returning a portion of a premium as inducement to purchase insurance
Which of the following is NOT a required provision in group life policies?
Right to Loan
Post-tax dollar contributions are found in:
Roth IRA investments
Which of these factors does NOT influence an applicant's need for life insurance?
Self-Maintance expenses
A prepared 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
To terminate an agents appointment, an insurance company must
Send termination notice to the Texas Department of Insurance
P is an employee who quits her job and wants to convert her group health coverage to an individual policy. After the expiration of COBRA laws, which of the following statements is TRUE?
She does NOT need to provide evidence of insurability
Upon delivery of a rated life insurance policy, the Producer must obtain each of the following, EXCEPT:
Signed HIPAA disclosure
Which mode of payment is NOT used by health insurance policies?
Single Premium
The percentage of an individual's Primary Insurance Amount (PIA) determines the benefits paid in which of the following programs?
Social Security Disability Income
Who owns a stock insurance company?
Stockholder
What should an insured do if the insurer does not send claims forms within the time period set forth in a health policy's Claim Forms provision?
Submit the claim in any form
Which of the following statements about the classification of applicants is INCORRECT?
Substandard applicants are never declined by underwriters
The premium paid by an employer for his employees group life insurance are usually considered to be:
Tax-deductible to the employer
T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase?
Ten-Year Endowment
What kind of life insurance product covers children under their parents policy?
Term rider
All of the statements about the Commissioner of Insurance are true EXCEPT
The Commissioner must be elected
On delivery of a policy, a signed statement of good health is typically requested if
The application was submitted without the initial premium
K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective?
The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured
J chooses a monthly premium payment mode on his Whole Life insurance policy. Which of these statements is correct?
The gross premium is higher on a monthly payment mode as compared to being paid annually
G is involved in an automobile accident as a result of driving while intoxicated and suffered numerous injures. According to the intoxicants and narcotics exclusion in G's policy, who is responsible for paying the medical bills?
The insured
A Medicare Supplement policy may be canceled for which of the following reasons?
The premium has not been paid by the insured
Which of the following characteristics is CORRECT about Interest Sensitive Whole Life?
There is a flexible premium payment (premium payments very)
Which of the following statements is true about most Blue Cross/Blue Shield organizations?
They are nonprofit organizations
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
Medicare is intended for all of the following groups EXCEPT
Those enrolled as a full-time student
How does a typical Variable Life Policy investment account grow?
Through mutual funds, stocks, bonds
What is the elimination period of an individual disability policy?
Time period a disabled person must wait before benefits are paid
Why would the insurance Commissioner examine the records of an insurance company?
To determine the solvency of the company
Which of the following types of policies BEST identifies one in which the cash value may fluctuate to reflect changing assumptions regarding mortality cost, interest, ad expense factors?
Universal Life
How long does an insurance company appointment remain in force?
Until terminated
Which of the following benefits is NOT required under a group health plan for drug and alcohol treatment?
Transportation to ad from a treatment facility
An example of an unfair claims settlement practice is
Turning down a claim without providing the basis of denial
ABC Insurance Company is actively engaging in boycott, coercion, and intimidation that results in the unreasonable restraint of trade. ABC is committing a prohibited act under Texas insurance laws covering
Unfair methods of competition
What is required for an agent whose license has been revoked?
Wait at least five years before applying for a new license
A foreign insurance company conducting insurance business in Texas
Was formed under the laws of another state
Whose life is covered on a life insurance policy that contains a payor benefit clause?
child
Which premium schedule results in the lowest cost to the policyowner?
annual
Group life insurance policies are generally written as:
annually renewable term
An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the
applicant's physician
Which of the following medical expenses does Cancer insurance NOT cover?
arthritis
When does a Guaranteed Insurability Rider allow the insured to buy additional coverage?
at future dates specified in the contract with no evidence of insurability required
In order to establish a Health Reimbursement Arrangement (HRA) it must,
be established by the employer
Who is NOT required to sign a life insurance application?
beneficiary
All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT
bilateral
The guarantee of insurability option provides a long-term care policyowner the ability to:
buy additional coverage at a later date
N has a Major Medical policy that only pays a portion of N's medical expenses. N is responsible for paying the remaining balance. This provision is known as
coinsurance
Insurance contracts are known as _____________ because certain future conditions or acts must occur before any claims can be paid.
conditional
A Business Overhead Expense policy
covers business expenses such as rent and utilities
Additional coverage can be added to a Whole Life policy by adding a(n)
decreasing term rider
What is the purpose of the U.S.A Patriot Act?
detect and deter terrorism
Which of the following does Social Security NOT provide benefits for?
dismemberment
With Disability Income insurance, an insurance company may limit the monthly benefit amount a prospective policy holder may obtain because of the insured's
gross income at the time of purchase
Variable Life products require a producer to
hold a Life Insurance license and a Securities license
With a Basic Medical Expense policy, what does the hospitalization expense cover?
hospital room and board
Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy?
increase face amount
An insurance company normally has 2 years to contest information provided on an accident and health application. This 2 year period begins on the date that the:
insurer dates the policy
A policyowner would like to change the beneficiary on a Life insurance policy and make the change permanent. Which type of designation would fulfill this need?
irrevocable
Pre-hospitalization authorization is considered an example of
managed care
Periodic health claim payments MUST be made at least:
monthly
Which of the following BEST describes a short-term medical expense policy?
nonrenewable
An example of rebating would be
offering a client something of value not stated in the contract in exchange for their business
Whole Life insurance policies are contractually guaranteed to provide each of the following, EXCEPT
partial withdrawal features beyond a surrender charge period
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
Statements made on an insurance application that are believed to be true to the best of the applicants knowledge are called:
representations
Life and Health insurance policies are
unilateral contracts
The part of a life insurance policy guaranteed to be true is called a(n):
warranty
A policy that becomes a Modified Endowment Contract (MEC)
will lose many of its tax advantages
T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?
"$0". The mother receives $0 because T is still alive and the sole primary beneficiary, while the mother is still the contingent beneficiary.
P is self-employed and owns an Individual Disability Income policy. He becomes totally disabled on June 1 and receives $2,000 a month for the next 10 months. How much of this income is subject to federal income tax?
$0
A Medical Information Report (MIB) report may disclose which of the following:
Prior use of marijuana
A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?
Waiver of Premium
An insured covered by a group Major Medical plan is hospitalized after sustaining injuries that resulted from an automobile accident. Assuming the plan had a $1,000 deductible and an 80/20 Coinsurance clause, how much will the INSURED be responsible to pay with $11,000 in covered medical expenses?
$3,000
The Insurance Commissioner must give how many days notice to holding a hearing regarding an agents unfair or deceptive practice?
30 days
An Evidence of Coverage form may be issued by a Health Maintance Organization (HMO) after being approved by the
Commissioner
Which of the following is NOT included in a life insurance illustration?
Company's mortality table
From what authority derives the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained on an applicant?
Fair Credit Report Act
a policy owner would like to change the beneficiary on an Accidental Death and Dismemberment (AD&D) insurance policy and make tech age permanent. Which type of designation would fulfill this need?
Irrevocable
What kind of Accidental Death and Dismemberment (AD&D) insurance beneficiary requires his/her consent when a change of beneficiary is made?
Irrevocable beneficiary
A domestic insurance company in Texas is considered a company that
Is incorporated and formed in Texas
Which of these is considered a mandatory provision?
Payment of Claims
What is considered to be a characteristic of a Conditionally Renewable Health Insurance Policy?
Premiums may increase at time of renewal
If an individual has an Accidental Death and Dismemberment policy and dies, an autopsy can be performed in all these situations EXCEPT
When the state prohibits this by law