Life & Health Exam Question Bank
Charla wants to serve as a producer for Commissions Galore Insurance Company. In addition to obtaining her producer's license, what else must happen before she can officially transact insurance for CGIC?
Must be appointed specifically by CGIC
Mortality-Interest+Expense=
Gross premium
As it pertains to group health insurance, COBRA stipulates that
Group coverage must be extended for terminated employees up to a certain period of time at the former employee's expense
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additonal coverage will be available in the future. Which of the following options should be included in the policy?
Guaranteed Insurability Option
Events or conditions that increase the chances of an insured loss occurring are referred to as
Hazards
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 policy owner
Impairment rider
Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?
Implied
Premium payments for personally-owned disability income policies are
Not tax deductible
Insurance company wants to obtain the insurance history of an applicant. Which source releases coded information to insurers regarding information included on previous insurance applications?
Medical Information Bureau
Which is not covered under Plan A in medigap insurance
Medicare Part A deductible
Which of the following is NOT correct
Medicare advantage must be provided through HMO s
During a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant. This describes
Misrepresentation
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of
Misrepresentation
If one takes Social Security retirement benefits at age 62, what needs to be done at age 65 to qualify for Medicare?
Nothing
Which of the following statements is most correct concerning the changing of an irrevocable beneficiary?
They can be changed only with the written consent of that beneficiary
When employees are actively at work on the date coverage can be transferred to another insurance carrier, what happens to coinsurance and deductibles?
They carry over from the old plan to the new plan
Which of the following is true for both equity indexed annuities and fixed annuities?
They have a guaranteed minimum interest rate
Best reason to purchase life insurance rather than annuities
To create an estate
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
A health insurance policy may cover all of the following risks except
War related injuries
While repairing the roof of his house an insured accidentally falls off and breaks his arm and sustains a head injury that results in total blindness of both eyes. His policy contains an Accidental Death and Dismemberment Rider. What is the extent of benefits that he will receive?
Principal sum
Which of the following are the main factors taken into account when calculating residual disability benefits?
Present earnings and earnings prior to disability
Pertaining to insurance, what is the definition of a fiduciary responsibility?
Promptly forwarding premiums to the insurance company
Insurers may change which of the following on a guaranteed renewable health insurance policy?
Rate by class
Which of the following would be a typical maximum benefit offered by major medical plans?
$1 milliion
Producer intentionally violates the insurance code to increase his commissions. How much would he be penalized?
$25,000
An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?
$9800
For how many days of skilled nursing facility care will Medicare pay benefits?
100
The widower of an agent was issued a temporary license 30 days ago. How much longer can he legally serve under this license?
150 days (180 days total)
What is a penalty tax for non-qualified distributions from a health savings account?
20%
What is the duration of the free-look period for Medicare supplement policies
30 days
What is the elimination period for Social Security disability benefits?
5 months
In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?
5 years
To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters?
6 credits
What is the waiting period on a Waiver of Premium rider in life insurance policies?
6 months
Benefit periods for individual short-term disability policies will usually continue from
6 months to 2 years
If an employer provides long-term group disability insurance for its employees, what percentage of monthly wages are lower paid employees eligible to collect?
66 and 2/3%
Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within
90 days of a loss
Jason is insured under his employer's group health insurance. He splits the cost of the premiums with his employer. This is an example of
A contributory plan
All of the following could own group life policies except
A group needing low-cost life insurance
Which of the following named beneficiaries would not be able to receive the death benefit directly from the insurer in the event of the insured's death?
A minor son of the insured
All of the following are correct about the required provisions of a health insurance policy except
A reinstated policy provides immediate coverage for an illness
Mike Armstrong is a producer and wants to operate under the name The Insurance Palace. What kind of license would this require?
Agency
When transacting business in this state an insurer formed under the laws of another country is known as a/an
Alien insurer
Which of the following individuals is eligible for a health savings account?
Allison is insured by a High Deductible Health Plan (HDHP)
Long term care insurance policies must cover which of the following?
Alzheimer's disease
Under HIPAA, which of the following is INCORRECT regarding eligibility requirements for conversion to an individual policy?
An individual who was previously covered by group health insurance for 6 months is eligible
To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested?
At the time of the application
An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his
Attained age
What document describes an insured's medical history, including diagnosis and treatments?
Attending Physician's Statement (APS)
When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is
Conditional
Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT
Conditions
An applicant wants to buy a life insurance policy in which he can count on receiving the same benefits as stated in the contract. Which type should he buy?
Fixed
Regarding long-term care coverage, as the elimination period gets shorter, the premium
Gets higher
Which type of a hospital policy pays a fixed amount each day that the insured is in a hospital?
Indemnity
All of the following are differences between individual and group health insurance except
Individual insurance does not require medical examinations while group insurance does require medical examinations
The Patient Protection and Affordable Care Act includes all of the following provisions except
Individual tax deduction for premiums paid
Which of the following refers to "Own Occupation" disability?
Insured is unable to perform duties of the occupation for which he/she was educated/trained
Credit life insurance
Insures the life of the debtor
All are nonforfeiture options except
Interest only
The policy owner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policy owner choose?
Interest only option
In a group health policy, a probationary period is for people who
Join the group after the effective date
The provision which prevents the insured from bringing any legal action against the company for at least 60 days after proof of loss is known as
Legal actions
All of the following statements describe a MEWA except
MEWAs are groups of at least 3 employers
In group insurance, what is the policy called?
Master policy
A long-term care insurance shopper's guide must be provided in the format developed by which of the following
NAIC
An insured is involved in a car accident. In addition to general, less serious injuries, he permanently loses the use of his leg and is rendered completely blind. The blindness improves a month later. To what extent will he receive Presumptive Disability benefits?
No benefits
Insured didn't pay premium. Policy lapsed, filled a reinstatement app and another premium- reinstated shortly thereafter. 5 days after the reinstatement, he had a consultation with a general physician. Which part of the consultation costs will be covered?
None
An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use?
Paid up option
An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use?
Paid- up options
The part of Medicare that helps pay for inpatient hospital care, inpatient care in a skilled nursing facility, home health care and hospice care, is known as
Part A
An insured has a level term life insurance policy that is guaranteed renewable and also includes a re-entry provision. The re-entry provision would allow the insured to renew the policy and
Pay a lower renewal premium by proving insurability
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 now?
Pay the death benefit
Which of the following methods to designate a beneficiary literally means "by the head"?
Per capita; each person named as beneficiaries would receive equal portions
If the policy owner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?
Policy owner
Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value?
Predicted needs of the family after the insured's death; Human Life Value Approach to determing the value of an individual's life requires the calculation of probable future earnings of the insured, which involves wages, expenses, inflation, amount of time until retirement, and the time value of money. Predicted needs of the family after the insured's death are used in the needs approach.
An underwriter may reject an application for health insurance if the rejection is based upon which of the following?
Prescription Usage
What would a physician utilize if he/she wanted to know if a treatment is covered under an insured's plan and at what rate it would be paid?
Prospective review
Giving a client an inducement to a sale not stated in the policy is an unlawful practice known as
Rebating
Rod wants to pay his initial life insurance premium in advance. Which of the following best describes his situation?
Rod can pay his premium as early as he wants, even with his application
Which settlement option provides a single beneficiary with income for the rest of his/her life?
Single life
All of the following long-term care coverages would allow an insured to receive care at home except
Skilled Care
All of the following are beneficiary designations except
Specified
Stipulates that the beneficiary will receive payments in specified installments or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the planned installments
Spendthrift provision
When the policy premium wasn't submitted with the application, what should the agent obtain from the insured upon policy delivery?
Statement of Good Health
Traditional IRA contributions are
Tax deductible
All of the following would be different between qualified and non qualified retirement plans except
Taxation on accumulation
The National Do Not Call Registry was created to regulate
Telemarketers
Individual wants to purchase a life policy. His agent asks if the transaction will involve replacing any existing life policies. if he replies yes, which of the following best describes the agent's next step?
The agent must provide a replacement notice to the applicant
Which of the following is not a characteristic of a group long-term care disability plan?
The benefit can be up to 50% of one's yearly income
A husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouse's coverage. If one of them incurs hospital expenses, how will those expenses likely be paid?
The benefits will be coordinated
What is the advantage of reinstating a policy instead of applying for a new one?
The original age is used for premium determination
All of the following statements concerning the use of life insurance as an executive bonus are correct except
The policy is owned by the company
All of the following are true about variable products except
The premiums are invested in the insurer's general account
Which of the following is not a goal of risk retention?
To minimize the insured's level of liability in the event of loss
Which of the following is not the purpose of HIPAA
To provide immediate coverage to new employees who had been previously covered for 18 months
When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees
To renew the policy until the insured has reached age 65.
Who has the legal title of the property in a trust
Trustee
Evaluating information that establishes adverse selection risk is the purpose of which stage of insurance?
Underwriting
The Waiver of Cost of Insurance rider is found in what type of insurance?
Universal Life
Which of the following life insurance policies would be considered interest sensitive?
Universal Life
A temporary license in this state is valid for
180 days
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
With a Single Premium Deferred Annuity (SPDA), when are the benefits paid?
After more than 1 year
The First Street Church plans to sponsor a summer camp for the youth of their congregation. They would like to purchase insurance that would pay benefits should one of the youth get injured while participating in the camp activities. The type of policy they would likely need is a/an
Blanket
Which of the following is a true comparison between annuities and life insurance?
Both annuities and life insurance use mortality tables
Which of the following options best depicts how the eligibility of members for group health insurance is determined?
By conditions of employment
Which is true about the cash surrender nonforfeiture option?
Funds exceeding the premium paid are taxable as ordinary income
What type of policy allows the insurance company to cancel a policy at any time?
Cancellable
What type of annuity promises to pay a beneficiary, in a lump sum, the difference between the amount paid into the contract and the benefits received prior to the annuitant's death?
Cash refund annuity
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as
Coercion
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?
Consideration; The binding force in any contract is consideration. Consideration on the part of the insured is the payment of premiums and the health representations made in the application. Consideration on the part of the insurer is the promise to pay in the event of loss
Which of the following provisions must be included on the first page of Medicare supplement policies. This provision explains the right to change premium amounts
Continuation provision
If an employee terminates her employment, which of the following provisions would allow her to continue health coverage under individual policy, if requested within 31 days?
Conversion
A 7% inflation because economic hardship. Policy owner notices that the face of her life insurance policy has been raised 7% as a result. What policy rider?
Cost of living rider
Which of the following would be the beneficiary in credit life insurance
Creditor
Which of the following expenses is not covered by a health insurance policy?
Funeral
Which component increases in the increasing term insurance?
Death benefit
On a major medical insurance policy, the amount that an insured must pay on a claim before the insurer will pay is known as
Deductible
What would be an advantage to naming a contingent (secondary) beneficiary in a life insurance policy?
Determines who receives policy benefits if the primary beneficiary is deceased
All of the following are features and requirements of the Living Needs Rider except
Diagnosis must indicate that death is expected within 3 years
Which will not be considered unfair discrimination by insurer
Discriminating in benefits and coverages based on the insured's habits and lifestyle
The period of time immediately following a disability during which benefits are not payable is
Elimination Period; The elimination period is a waiting period, expressed in days, not dollars imposed on the insured from the onset of disability until benefit payments commence.
The insurance policy, together with the policy application and any added riders form what is known as
Entire contract
The provision that states that both the printed contract and a copy of the application form the contract between the policy-owner and the insurer is called the
Entire contract
Which of the following are the authorities that an agent can hold?
Express and implied
Which nonforfeiture option has the highest amount of insurance protection?
Extended term
An agent selling variable annuities must be registered with
FINRA
Which policy component decreases in decreasing term insurance?
Face amount; Decreasing term policies feature a level premium and a death benefit that decreases each year over the duration of the policy term.
Health coverage becomes effective when the
First premium has been paid and the application has been approved.
Annually renewable term policies provide a level death benefit for a premium that
Increases annually
What type of insurance would be used for a Return of Premium Rider?
Increasing Term; Return of premium rider is achieved by using increasing term insurance. When added to a whole life policy it provides that at death prior to a given age, not only is the original face amount payable, but also all premiums previously paid are payable to the beneficiary.
An applicant is discussing his options for Medicare supplement coverage with his agent. The applicant is 65 years old and has just enrolled in Medicare Part A and Part B. What is the insurance company obligated to do?
Offer the supplement policy on a guaranteed issue basis
Which Universal Life option has a gradually increasing cash value and a level death benefit?
Option A
When an employee is still employed upon reaching age 65 and eligible for medicare, which of the following is the employee's option?
Remain on the group health insurance plan and defer eligibility for medicare until retirement
Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must
Respond to the consumer's complaint
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?
The death benefit can be increased by providing evidence of insurability
All of the following entities regulate variable life policies except
The guaranty association
In a group policy, who is issued a certificate of insurance?
The individual insured
In which of the following cases would any occupation disability income policy pay the benefits
The insured is unable to perform any jobs in the field related to the insured's education and experience
The expense for an autopsy covered under the physical exam and autopsy provision is paid by
The insurer
All of the following are true statements regarding the accumulation at interest option except
The interest is not taxable since it remains inside the policy
Which of the following statements regarding the taxation of modified endowment contracts is false
Withdrawals are not taxable
Credit Life Insurance
insures the life of a debtor
Which of the following is not provided by an HMO?
reimbursement
Your client uses $50,000 in inheritance money to purchase a single premium immediate annuity. How soon can he begin receiving income payments?
No later than 1 year from the time of purchase
Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a
Premium Receipt
All of the following are true regarding key person disability income insurance except
Premiums are tax deductible as a business expense
An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer?
$10,000, no tax consequence
Which of the following is an example of a limited-pay life policy?
Life paid-up at age 65
Most policies will pay the accident death benefits as long as the death is caused by the accident and occurs within
90 days
Which of the following would be deducted from the death benefit paid to a beneficiary, if a partial accelerated death benefit had been paid while the insured was still alive
Amount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit.
Which of the following individuals must be licensed as an insurance agent?
An employee of an insurer who receives commissions only on a few policies a year
While a claim is pending, an insurance company may require
An independent examination as often as reasonably required
Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?
Apparent
in which of the following cases would a credit disability policy be issued?
If an individual is in debt to a specific creditor, payments will be made for him/her until the return to work
A couple near retirement is planning for their golden years. They want to make sure that their retirement annuity provides monthly benefits for the rest of their lives. Should one of them die, the other would still like to continue receiving benefits. Which settlement option should they choose?
Joint and Survivor
If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age, what type of policy is this?
Jumping Juvenile Policy
Concerning Juvenile Life insurance, which of the following statements is INCORRECT?
Juvenile life is classified as any life insurance purchased by a minor
An insured owns a term life policy with a guaranteed renewable options. When the end of the policy draws near, the insured answers medical questions in order to prove insurability and qualifies for a discounted premium rate. Which option best describes the scenario?
Re-entry; Some policies contain a re-entry option where the insured, upon the end of a term policy with guaranteed renewable option, may answer medical questions to prove insurability and qualify for a discounted premium rate.
Which of the following factors determines the amount of each installment paid in a life income option arrangement?
Recipient's life expectancy and amount of principal
Which of the following insurance options would be considered a risk-sharing arrangement?
Reciprocal; When insurance is obtained through a reciprocal insurer, the insureds are sharing the risk of loss with other subscribers of that reciprocal
Which nonforfeiture option provides coverage for the longest period of time?
Reduced paid-up
An insured who has an accidental death and dismemberment policy loses her left arm in an accident. What type of benefit will she most likely receive from this policy?
The capital amount in a lump sum
Under an extended term nonforfeiture option, the policy cash value is converted to
The same face amount as in the whole life policy; under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former policy
In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT
The type of investment
Which type of life insurance policy allows the policy owner to pay more or less than the planned premium?
Universal Life
