Life Insurance Final Exam Questions Part 1

What is the main difference between coinsurance and copayments? a) With copayments, the insured pays all of the cost. b) With coinsurance, the insurer pays all of the cost. c) Coinsurance is a set dollar amount. d) Copayment is a set dollar amount.

d) Copayment is a set dollar amount. With both, copayment and coinsurance provisions, the insured shares part of the cost for services with the insurer. Unlike coinsurance, a copayment has a set dollar amount that the insured will pay each time certain medical services are used.

What is the typical deductible for basic surgical expense insurance? $0 $100 $200 $500

$0 As with the other types of basic medical expense coverage, there is no deductible, but coverage is limited.

The maximum penalty that may be assessed for a single nonwillful violation of the Insurance Code is $1,000. $5,000. $10,000. $50,000.

$1,000 The Commissioner may impose a monetary fine up to $1,000 for each violation, or $5,000 for willful violations, where a person knew or reasonably should have known they were in violation.

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

The insured is also the policyowner of a whole life policy. What age must the insured attain in order to receive the policy's face amount?

100

What is the maximum period of time a temporary license can be in force?

15 months

How long is the free-look period on a Medicare supplement policy?

30 days

Which of the following is TRUE about nonforfeiture values? a) Policyowners do not have the authority to decide how to exercise nonforfeiture values, b) They are required by state law to be included in the policy. c) They are optional provisions d) A table showing nonforfeiture calues for the next 10 years must be included in the policy

B) they are required by state law to be included in the policy

In any case where there is a controversy or dispute between the insurance company and the insured, the soliciting agent is the agent of the

Company

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

An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring montly payment. What type of life insurance policy would be best suited to this situation?

Decreasing term

When a producer was reviewing a potential customer's converage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of...

Defamation

Which of the following terms is used to name the nontaxed return of unused premiums?

Dividend

All of the following could be considered rebates it offered to an insured in the sale of insurance EXCEPT a) An offer to share in commissions generated by the sale. b) Dividends from a mutual insurer. c) An offer of employment d) Stocks, securities, or bonds

Dividends from a mutual insurer.

The insurance policy, together with the policy application and any added riders for what is known as an

Entire contract

The provision that states that both the printed contract and a copy of the application form the contract between the policyowner and the insurer is call the...

Entire contract

Which of the following types of LTC is NOT provided in an institutional setting? A) Home health care B) Custodial care C) Skilled nursing care D) Intermediate care

Home health care

Which two terms are associated directly with the premium?

Level or flexible

Which of the following is NOT a type of whole life insurance?

Level term

An applicant who receives a preferred risk classification qualifies for

Lower premiums than a person who receives a standard risk.

Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to an insured is...

Monthly

Which provision concerns the insured's duty to provide the insurer with reasonable notice in the event of a loss?

Notice of Claim

An insured has health insurance that covers them at work and at home. This policy was written on what basis?

Occupational

A rider attached to a life insurance policy that provides converage on the insured's familiy members is called the...

Other-insured rider

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the

Other-insured rider

Prior to purchasing a Medigap policy, a person must be enrolled in which of the following?

Parts A and B Medicare

An insured pays her Majoy Medical Insurance premium annually on March 1, Last march she forgot to mail her premium to the company. On March 19, she had an accident and broke her leg. The insurance company would...

Pay the claim

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will...

Pay the policy proceeds only if it would have issued the policy.

Who might receive dividends from a mutual insurer?

Policyholders

Which of the following types of insurers is owned by stockholders?

Stock

Which of the following would an accident-only policy NOT cover? a) Surgery to repair a wrist damaged by tendonitis b) Hospitalization costs due to a boating accident c) Death from a motorcycle accident d0 Amputation of a leg that was burned during a house fire

Surgery to repair a wrist damaged by tendonitis

Which statement accurately describes group disability income insurance?

The exent of benefits is determined by the insured's income

When a life insurance policy was issued, the policy owner designated a primary and contingent beneficiary. Several years later, both the insured and the primary beneficiary died in the same car accident and it was impossible to determine who died first. Which of the following would receive the death benefit?

The insured's contingent beneficiary

Which of the following terms refers to the acts of soliciting insurance, making an insurance contract effective, and dealing with matters arising from that contract?

Transacting insurance

Which characteristic does NOT describe managed care?

Unlimited access to providers

With respect to the Consideration Clause, which of the following would be considered consideration on the part of the applicant for insurance? a) Providing warranties on the application b) Notice of policy cancellation c) Payment of premium d) Promise to renew the policy at the end of the policy period

c) Payment of premium The two types of consideration on the part of an insurance applicant are payment of premiums and representations on the application.

How often does an agent's insurance licensse expire?

Every 2 years

An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act?

Illegal under any circumstances

The paid-up addition option uses the dividend a) To reduce the next year's premium. b) To accumulate additional savings for retirement. c) To purchase a smaller amount of the same type of insurance as the original policy. d) To purchase a one-year term insurance in the amount of the cash value.

c) To purchase a smaller amount of the same type of insurance as the original policy. The dividends are used to purchase a single premium policy in addition to the face amount of the permanent policy.

The requirement that agents not commingle insurance monies with their own funds is known as

Fiduciary responsibility.

A client has a new individual disability income policy with a 20-day probationary period and a 30-day elimination period. Ten days later, the client breaks their leg and is off work for 45 days. How many days of disability benefits will the policy pay?

15 days

Which of the following disability income policies would have the highest premium?

15-day watiing period/10-year benefit period

Which of the following provisions would prevent an insurance company from paying a reimbursement claim to someone other than the policyowner?

Payment of Claims

An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase?

Payments for 15 years

In a life settlement contract, whom does the life settlement broker represent?

The owner

Which of the following best defines the "owner" as it pertains to life settlement contracts?

The policy owner of the life insurance policy

Which of the following statements pertaining to Medicare Part A is correct? a) Individuals who have ALS automatically qualify for Medicare Part A, regardless of age. b) Individuals who have the End Stage Renal Disease do not qualify for Medicare Part A. c) For the first 90 days of hospitalization, Medicare Part A pays 100% of all covered services, except for the initial deductible. d) Individuals entitled to Social Security disability are not eligible for coverage under Medicare Part A.

a) Individuals who have ALS automatically qualify for Medicare Part A, regardless of age. Persons under the age of 65, but entitled to Social Security disability benefits for 24 months, may qualify for Medicare, in addition to citizens or legal residents of the US age 65 and over who qualify for Social Security or railroad retirement benefits. Individuals with ESRD or ALS are automatically eligible for coverage under Medicare Part A.

Which of the following would be required to submit fingerprints with the license application? a) A nonresident producer renewing their nonresident license in this state b) A new producer applying for a resident license c) An individual applying for license reinstatement within 6 months before the license expiration date d) An active life insurance producer applying for a health insurance license

b) A new producer applying for a resident license (New applicants are required to submit electronic fingerprints through a vendor selected by the Department for a criminal background check. Active licensees who apply for additional licenses, and individuals who apply for the reinstatement of a license 6 months before the license expiration date, will not be required to submit fingerprints.)

What type of insurance would be used for a Return of Premium rider? a) Annually Renewable Term b) Increasing Term c) Level Term d) Decreasing Term

b) Increasing Term The 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.

Which of the following statements is NOT correct regarding Medicare? a) Medicare Part B provides physician services b) Medicare Advantage must be provided through HMOs. c) Medicare Advantage may include prescription drug coverage at no cost d) Medicare Part A provides hospital care

b) Medicare Advantage must be provided through HMOs