Life and Health Insurance exam
An annuity may be referred to as a systematic reimbursement of an estate. A type of annuity which provides lifetime benefits for the annuitant and upon the annuitant's death, a lump-sum settlement of any undistributed cost of the annuity, is known as a: Joint life annuity Life annuity with 15 years certain Life annuity with installment refund Cash refund annuity
Cash refund annuity
Medical treatment provided for an individual who is injured as a result of attempted suicide is generally: Included in a major medical plan Subject to limitations in the policy Covered in full Excluded
Subject to limitations in the policy
An underwriter may accept a risk but charge an extra premium for a: Preferred risk Standard risk Substandard risk Declined risk
Substandard risk
All of the following statements are true with regard to a tax-deferred annuity, EXCEPT: TDAs are utilized by tax-exempt organizations such as nonprofit entities TDAs use a salary reduction rather than a tax deduction TDAs are used to provide retirement income to recipients TDAs accumulate interest on a tax-free basis
TDAs accumulate interest on a tax-free basis
Each of the following is a form of risk classification utilized by life or health insurance underwriters, EXCEPT: Tabular risk Preferred risk Standard risk Substandard risk
Tabular risk
Permanent insurance plans include various options available to the policyowner. What whole life insurance policy options protect a policyowner against an unintentional coverage lapse? Non-forfeiture option Settlement option Dividend option Endowment option
Non-forfeiture option
Which of the following is a dividend option? Surrender for cash Extended term insurance One year term insurance Fixed amount
One year term insurance
What provision found in a life insurance policy allows an insurer to assess an extra charge if the policyowner makes payments on a quarterly basis? Owner's rights provision Premium paying provision Consideration provision Automatic premium provision
Premium paying provision
Which of the following provides benefits for artificial devices such as bridgework? Prosthodontics Endodontics Periodontics Orthodontics
Prosthodontics
Which of the following is not a minimum standard requirement for Medigap insurance? Medigap plans must be guaranteed renewable for life Medigap plans must have a 20-day free-look Medigap plans must cover preexisting conditions after six months Medigap plans must have annual automatic adjustments to reflect changes in medicare deductibles and copayments
Medigap plans must have a 20-day free-look
The policyowner wishes to provide for the care of her minor child in the event of premature death. To accomplish this, the owner should probably designate as beneficiary: A spouse as a revocable beneficiary The estate of the deceased A favorite charitable organization A trust
A trust
Which of the following indicates the person upon whose life the annuity income amount is determined in an immediate annuity? Contract owner Annuitant Beneficiary Policyholder
Annuitant
In the event a Long Term Care policy is replaced, a Notice Regarding Replacement form must be provided to and signed by the applicant at what time? Anytime during the underwriting process At time of policy application The Notice Regarding Replacement only applies to disability income policies Within 30 days following policy delivery
At time of policy application
An Accident & Health insurer pays a claim and later finds that the insured's injury was the result of engaging in a felony. What will the insurer do? Deny the claim and return the premium Deny the claim Attempt to recover the claim payment Assess an extra premium
Attempt to recover the claim payment
Annuity contracts may be funded with any of several methods of payment. Which of the following is not a recognized method of funding this contract? Flexible premium Level premium Lump-sum premium Certain premium
Certain premium
An optional health insurance policy provision which allows the insurer to adjust benefit payments under certain situations or permits the insured to receive a reduced premium in other circumstances, best describes: Payment of claims Change of occupation Relation of earnings to insurance provision Time limit on certain defenses
Chance of occupation
Which of the following is a power or duty of the Superintendent or Commissioner of Insurance? Examines domestic companies once every two years Prosecutes producers who break insurance laws Sets life insurance premium rates Computes the reserves of life insurance companies
Computes the reserves of life insurance companies
A life insurance policy is a legal contract. All of the following must be present in order for this type of contract to be legal and enforceable in a court of law, EXCEPT: A paid premium and representations of the applicant Conditional receipt Offer and acceptance Legal capacity
Conditional receipt
It is the fiduciary responsibility of a producer to account for all funds collected from a consumer. If a producer does not remit a renewal premium to the insurer, which of the following will occur? Coverage will lapse since the premium was not paid Coverage will not lapse since payment to a producer is payment to the insurer The producer will be prosecuted by the Insurance Commissioner The producer will have to attend an ethics course
Coverage will not lapse since payment to a producer is payment to the insurer
There are several types of insurance licenses available in this state. Which of the following licenses allow the holder to provide insurance advice for a fee as long as the fee is in writing prior to the work being performed? Managing general agent Resident producer Nonresident producer Insurance consultant or adviser
Insurance consultant or adviser
A social device used for the transfer of risk through the pooling or accumulation of premiums best describes which of the following? The definition of insurance The concept of risk A hazard Risk
The definition of insurance
When an insurer agrees in advance to assume a portion of a risk written by another insurance company, which of the following forms of reinsurance has occurred? Reciprocal reinsurance Facultative reinsurance Treaty reinsurance Replacement cost reinsurance
Treaty reinsurance
A hazard is a condition present that increases the chance of loss. Which of the following would be considered a hazard? Residing in a gated community Using tobacco products Increasing the replacement cost of property A garage suffers fire damage
Using tobacco products
Bill is covered by a Comprehensive Major Medical policy with base coverage of $5,000. The policy includes a $500 corridor deductible and 80/20 coinsurance. If the insured suffers an excluded $10,000 hospitalization loss, how much will the insurer pay? $1,400 $0 $7,600 $8,600
$0
Eleven years ago, Tom bought a life insurance policy from Jack who is an agent for Benefit Mutual Life. The policy will pay Tom's wife, Lauren, $1,000 per month for twenty years when he dies. Once the monthly income ends, the insurer will pay Lauren a death benefit of $50,000. What type of plan did Tom purchase? A $50,000 whole life policy with a family policy rider A $50,000 whole life policy A $50,000 whole life policy with a family income rider A $50,000 whole policy with a family maintenance rider
A $50,000 whole policy with a family maintenance rider
An underwriter may accept all risks, EXCEPT: Preferred risks Standard risks Substandard risks Declined risks
Declined risks
Which of the following would qualify someone for medical care benefits under Medicaid? Insufficient income Lost wages Total disability Blindness
Insufficient income
A beneficiary of a straight life annuity with a period certain payout option can choose to receive the remaining installments or elect to: receive only the interest each month. forfeit any remaining values. convert to a permanent whole life policy. receive any additional monies by using the cash refund option.
receive any additional monies by using the cash refund option
A person age 54 withdraws funds from a tax-sheltered annuity (TSA). What penalty will be assessed? 50% 20% 10% 70%
10%
According to the proof of loss form provision which appears in a health insurance policy, an insurer must send in a claim form to an injured insured within: 60 days of notification 20 days of notification 15 days of notification 90 days of notification
15 days of notification
A survivorship life insurance plan is a specialty type of contract. This type of policy is generally purchased in order to cover how many individuals? 3 2 5 7
2
Insurers offer several types of specialized life insurance plans. A type of life insurance plan that couples cash value life insurance with reducing term life is known as: Family policy Family maintenance policy Family income policy Family endowment
Family income policy
Family policies usually provide death benefit coverage: For the primary insured only For all family members although the benefits differ For the working spouses only That may be assigned to the tertiary beneficiary
For all family members although the benefits differ
An insurer that is licensed to sell insurance in Michigan but has its principal office in Illinois is considered to be which of the following in the former? Authorized insurer Foreign insurer Alien insurer Surplus lines insurer
Foreign insurer
Jennifer pays a $75 premium each month for life insurance coverage. Her insurer promises to pay a much greater benefit to a beneficiary if she dies prematurely. This is an indication that the life insurance contract possesses which of the following features? It is an aleatory contract It is a contract of adhesion It is a conditional contract It is a bilateral contract
It is an aleatory contract
In which of the following circumstances is cosmetic surgery covered by a health insurance policy? It results from an accident It is elective It is necessary It is usual, customary, and reasonable
It results from an accident
A producer licensed in life or health insurance who fails to complete state required Continuing Education requirements is subject to which of the following? License suspension License renewal A monetary penalty of up to $25,000 A monetary penalty of not more than $5,000
License suspension
Which of the following statements is true with regard to limited health policies? Limited policies protect against gaps in coverage that exist in other plans Limited policies provide benefits for cancer only Limited policies must state clearly what coverage they provide Limited policies cover scheduled surgical expenses if not covered by major medical plans
Limited policies must state clearly what coverage they provide
Which of the following is a vehicle that provides health insurance benefits for small businesses with common employments? Multiple employer welfare arrangement Employer administered plan Residual market pools Joinder groups
Multiple employer welfare arrangement
Qualified plans are those that are approved by the IRS. In order to receive "qualified" status, the plan must meet all of the following conditions, EXCEPT: Must be in writing Must not be discriminatory Must comply with the exclusion ratio formula Must satisfy minimum age and service standards
Must comply with the exclusion ratio formula
According to a permanent insurance policy's non-forfeiture options, a policy may not lapse when cash value is present. All of the following are types of these non-forfeiture options, EXCEPT: One-year term insurance Cash surrender Extended level term insurance Reduced paid-up insurance
One-year term insurance
What type of dental procedure provides care for the tissue and gums that surround the teeth? Restorative Endodontics Periodontics Prosthodontics
Periodontics
Which of the following provides the core benefits to consumers when they purchase a Medicare Supplement plan? Plan A Plan B Plan C Plan J
Plan A
An outline of coverage must be provided to an applicant no later than the time of: Policy application Policy submission Policy delivery The conclusion of the 10-day free-look
Policy delivery
Insurance companies use age 100 to calculate life insurance death benefits because: They assume everyone will have died by that age It allows them to charge higher premiums It makes sure they never have to pay a death benefit They assume that mortality rates will decrease by then
They assume everyone will have died by that age
Which of the following is true regarding an irrevocable beneficiary? This beneficiary has the right to receive a copy of the policy This designation may be changed at any time by the policy owner This beneficiary has no rights in the policy This designation may be changed by the owner at his or her discretion
This beneficiary has the right to receive a copy of the policy
An insurer incorporated, chartered or formed under the laws of this State is referred to as: An alien insurer A foreign insurer A domestic insurer An unauthorized insurer
A domestic insurer
Which of the following is not considered a rebate? Any valuable consideration used as an inducement to contract insurance, not specified in the policy Stocks and bonds given as an inducement to contract A favorable payment plan provided to a policyholder A personal service offered as an inducement to contract insurance, not specified in the policy
A favorable payment plan provided to a policyholder
Which of the following would not be considered rebating? A producer offers to pay a portion of the insured's premium A producer provides a television set to a current customer A producer offers season tickets to a prospective client A producer offers an advantageous premium payment plan to an insured
A producer offers an advantageous premium payment plan to an insured
An insured submits a claim form that has been intentionally and falsely altered in order to receive a benefit. Which term best describes this submission? Material misrepresentation Misrepresentation Theft Fraud
Fraud
Walter Bruce purchases a Medigap plan. This type of plan must always include which of the following? Policy loan provision Free-look provision Non-cancelable provision Beneficiary provision
Free-look provision
Which of the following statements is true with regard to the conversion privilege that is available in group life insurance policies? Group life coverage may be converted to an individual plan of whole life within thirty days of termination of employment Group life coverage may be converted to an individual term life plan upon termination of employment Group life coverage may be converted to an individual whole life plan within thirty-one days of employment termination without proof of insurability Group life coverage may be converted to an individual whole life plan within thirty-one days of employment termination as long as proof of insurability is provided
Group life coverage may be converted to an individual plan of whole life within thirty days of termination of employment
An individual has applied for health insurance and given the producer the initial premium. The producer provides the applicant with a receipt that specifies that the individual is covered for at least 60 days from the date of application. Which type of receipt was issued? Insurability receipt Approval receipt Tentative Unconditional
Unconditional
A group life insurance plan whose premium is shared by the employer and employees best describes: A noncontributory plan A contributory plan An employer-pay-all plan A self-funded plan
A contributory plan
Al purchases a disability income policy. The application is approved on March 4th. The contract is issued on March 10th. It is delivered by the producer on March 13th. When will the ten-day free-look period end? March 13th March 23rd March 22nd March 24th
March 23rd
A 10% penalty is assessed the owner of an annuity contract on the taxable portion of a deferred annuity if a surrender occurs prior to: Age 100 Age 65 Age 59 1/2 Age 65 1/2
Age 59 1/2
When an insured files a claim with an insurer, he or she cannot take any legal action against the insurance company until what period of time passes? 3 years 30 days 2 years 60 days
60 days
Which of the following policies is characterized by the lowest initial annual premium? Ten-pay life Whole life policy Modified whole life Thirty-pay whole life
Modified whole life
If an insured wishes to guarantee his or her future insurability, what provision or option may be added to a disability income policy? A waiver of disability Cost of living rider Return of premium provision Guaranteed purchase option
Guaranteed purchase option
Medicare is a federally sponsored program providing health care for individuals age 65 and older. The original two primary parts of the Medicare program include: Hospital insurance and hospice care Inpatient hospital services and home health care Hospital insurance and supplementary medical expenses Disability benefits and home health care services
Hospital insurance and supplementary medical expenses
Which of the following best describes self-insurance? Purchasing coverage from an insurer Transferring risk to another party Identifying and funding one's losses Incorporating
Identifying and funding one's losses
Employer-paid group medical premiums are deductible to the employer. How are group medical benefits received by the employee taxed? They are taxed as ordinary income They are taxed at the marginal withholding rate of the employee Only 50% of the benefit is subject to taxation Medical benefits are not taxable to the employee because they are not considered an income
Medical benefits are not taxable to the employee because they are not considered an income
If a statement of continued good health must be submitted to an insurer, it must be completed by which of the following? MIB The applicant Consumer reporting agency The beneficiary
The applicant
Which of the following is the policyowner of a key-employee disability policy? The employee The beneficiary The business The creditor
The business