Life insurance - Test #2
Monthly-Premiums individual health insurance policies must provide a Grace Period of at least
10 days
John purchased a Family Income Policy at age 40. The Policy has a 20-year rider period. If John were to die at age 50. How long would his family receive an income?
10 years
In a modified endowment contract, the penalty tax imposed on premature withdrawals is
10%
Under a 10-year vesting schedule, what percentage of employer contributions must be vested after 10 years of service?
100%
What type of policy would offer a 40-year-old the quickest accumulation of cash value?
20-pay life
During the underwriting process for a group health policy, it was discovered that 15 out of 50 members of the group have major health issues. How would the insurer handle this?
Accept or reject the whole group
If an insured dies because of an accident , which type of life insurance rider will provide additional coverage?
Accidental death rider
How long does the Coverage normally remain on a Limited Pay Life Policy?
Age 100
Which of the following pieces of information is NOT gathered during the personal financial planning process?
An individual's civic organization memberships
An applicant has revealed conditions that require more information. Which of the following is needed next?
Attending physician's statement
The difference between group insurance and blanket health policies is?
Blanket health policies do not issue certificates
The Guarantee of insurability option provides a long term care policy owner the ability to
Buy additional coverage at a later date
Henry is covered by a Term Life Policy and does not make the required premium payment which was due August 1. He dies September 15. What action will the insurer take?
Claim will be DENIED
An insurance company receives an application for an individual Health Policy. Joan did not complete all of the medical history questions because she could not remember the exact dates. She signed the policy and submitted it to the insurance company anyway. A few weeks later, Joan suffers a heart attack and is hospitalized without completing the medical history questions and paying the initial premium. Joan is not insured. Which of the following clauses details the condition that Joan did not meet?
Consideration Clause
Which of the following is NOT true regarding a family policy that covers children?
Conversion of child's coverage to permanent insurance requires evidence of insurability
What kind of Life Insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?
Convertible Term
Which of the following BEST describes a Hospital Indemnity Policy?
Coverage that pays a stated amount per day of a covered hospitalization
What type of Life Policy has a Death Benefit that adjusts periodically as is written for a specific period of time?
Decreasing Term
A characteristic of preferred provider organizations (PPO's) would be?
Discounted Fees for the patient
What Type of Policy would only provide coverage for specific types of illness (cancer, stroke, etc)?
Dread disease insurance
Manuel is a disabled person as defined by the Americans with Disabilities Act (ADA). As such, he is unable to perform any of the following life activities EXCEPT
Driving
What does ESOP stand for?
Employee Stock Ownership Plan
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 provision prevents an insurer from changing the Terms of the Contract with the Policy Owner by referring to documents not found within the policy itself?
Entire contract
Which of these statements describe a Modified Endowment Contract MEC?
Exceeds the maximum amount of Premium that can be paid into a policy and still have it recognized as a life insurance contract
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
Family Maintenance Policy
Which of the following is NOT included in comprehensive major medical plans?
First-dollar coverage
Which of these is an element of a Variable Life Policy?
Fixed Level Premium
Which of the following provisions specifies how long a Policy Owner's insurance coverage will remain in effect, if the policy owner does not pay the Premium when it is due?
Grace Period
Which Type of Provider is known for stressing preventative medical care?
Health Maintenance Organizations (HMO's)
A 66 year old is covered under a GROUP Health Plan, while employed with a business that has 40 employees. If she injures herself while walking in the park, what coverage would be considered Primary?
Her Group Health Plan
Which will a Long Term Care Plan typically provide benefits for?
Home Healthcare
Which of the following is NOT included under long-term care insurance?
Hospital acute care
Which of the following types of policies pays a stated amount for each day an individual is hospitalized?
Hospital confinement indemnity
Under the Payment of Claims provision, when are benefits typically payable after proof of loss is received?
Immediately
Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life Policy?
Increase Face Amount
How does rising morbidity rates affect health insurance?
Increased premiums
Restoring an insured to the same condition as before a loss is an example of the principle of
Indemnity
Medicare Part B does NOT cover?
Inpatient Hospital Services
Which of the following insurance policy provisions specifies the benefits of services a policy will provide?
Insuring Clause
Credit Life Insurance is
Issued in an amount not to exceed the amount of the loan
What type of Life Policy covers 2 lives and pays the face amount after the first one dies?
Joint Life Policy
1. What kind of annuity pays income to two annuitants until their deaths?
Joint and survivor annuity
Which of the following situations does a critical illness plan cover?
Leukemia
Which of the following is considered to be any situation that has the potential for loss?
Loss exposure
Which of the following is NOT an element of an insurable risk?
Loss must be catastrophic
What does the grace period allow a life insurance policyowner to do?
Make a premium payment after the due date without any loss of coverage
One important function of an insurance company is to identify and sell to potential customers. Which of these BEST describes this function?
Marketing
The Health Insurance Program which is administered by each state and funded by both the Federal and state governments is called?
Medicaid
What are members of the Medical Information Bureau (MIB) required to report?
Medical ailments discovered during the underwriting process
If a retiree on Medicare required Five Hospital Stays in one year, which policy would provide the best insurance for excess hospital expenses?
Medicare Supplement
Which of the following plans will cover medical costs that Medicare doesn't cover?
Medicare Supplement
John buys a policy where the premium stays Fixed for the First Five Years. The Premium then increases in year 6 and stays level thereafter all the while the death benefit remains the same. What kind of Policy is this?
Modified Whole Life
Which of these Life Products is not considered interest sensitive?
Modified Whole Life
Which of the following describes the increase in the probability of a loss due to an insured's dishonest tendencies?
Moral hazard
Which of the following BEST describes how Preferred Provider Organization (PPO) is less restrictive than a Health Maintenance Organization (HMO)?
More physicians to choose from
Which of the following describes the number of deaths in a year compared to the number of people in a select group?
Mortality rate
Who benefits in Investor Originated Life Insurance (IOLI) when the insured dies?
Policy Owner
When an accidental death benefit is added to a whole life policy, how does this affect the policy's cash value?
Policy's cash value is not affected
Which of the following is NOT an insurer policy expense?
Premiums
Which of these characteristics is consistent with Straight Life Policy?
Premiums are payable for as long as there is Insurance Coverage in force
Which of the following is NOT a factor in determining the morbidity of a group of individuals?
Race
After a policy has lapsed, which provision allows the insured to continue coverage?
Reinstatement provision
If a material warranty violation on the part of the insured is found, what recourse does an insurer have?
Rescind the policy
What is the Suicide Provision designed to do?
Safeguard the Insurer, from an Applicant who is contemplating suicide
Which of the following provisions is NOT required in HMO contracts certificates?
Seven-Day grace period
What must an applicant do in order to authorize the release of an attending physician report?
Sign a consent form
Henry would like to be assured $10,000 is available in 10 years to replace a Roof of his house. What kind of $10,000 Policy should he purchase?
Ten Year Endowment
What type of Life Insurance gives the greatest amount of Coverage for a limited period of time?
Term Life
The most important factor to consider when determining whether to convert Term Insurance at the insured's attained age or the insured's original age is?
The Cost
John was actively serving in the Marines, when he was killed in an automobile accident, while on leave. His $100,000 whole Life Policy contains a "War Exclusion" clause. How much will his beneficiaries receive?
The FULL face amounts
The Consideration Clause, in an Insurance Policy indicates that a policy owner's consideration consists of a completed application and?
The Initial Premium
What are residual disability income insurance payments based on?
The amount of the insured 's income is reduced by the disability
The investment gain from a Universal Life Policy usually goes toward?
The cash value
Which of the following is NOT considered a definition of risk?
The cause of a loss
What type of changes can be made to a guaranteed renewable health insurance policy?
The premium rates of the policyowner
All of these statements about Equity Indexed Life Insurance are correct EXCEPT
The premiums can be lowered or raised, based on investment performance
How does a Typical Variable Life Policy investment account grow?
Through mutual funds, stocks, bonds
The risk selection process is primarily given to which insurance company department?
Underwriting
Which Policy requires an Agent to register with the National Association of Securities Dealers NASD, before selling?
Variable Life
Which type of Life Policy contains a monthly mortality charge as well as self-directed investment choices?
Variable Universal Life
An annuitant would like to determine the current value of her annuity. To do this, she multiplies the number of "accumulation units" she owns times the unit value of the "separate account." What kind of annuity BEST matches this description?
Variable annuity
In what situation does a waiver of premium provision keep a health insurance policy in force without premium payments?
When an insured becomes totally disabled
At what point does a self-insured group qualify for stop-loss coverage?
When claims exceed a specified limit in a set period of time
When is the Face Amount of a whole Life Policy paid?
When the insured dies or at the policy maturity date whichever happen first
If the initial premium is not collected during the application process, when does an insurance contract become effective?
When the producer agent delivers the policy and collects the initial premium
What type of Insurance offers Permanent Life Coverage with premiums that are payable for life?
Whole Life
What determines the Social Security normal retirement age?
Year in which worker was born
The systematic liquidation of a sum of money is provided by a(n)
annuity
According to Social Security, an individual with 6 credits of coverage during the previous 13-quarter period is considered to be:
currently insured
The probability of death, listed by year, is demonstrated in
mortality tables
An insurer owned by its policyholders is called a
mutual insurer
A unilateral contract is one in which
only one party (the insurer) makes any kind of legally enforceable promise
In a life insurance policy, the entire contract consists of
policy and attached application
Minimum participation standards exist for group health insurance plans to
prevent adverse selection
In a renewable-term life insurance policy, the contract will usually.
require a higher premium payable at each renewal
Life insurance creates an immediate estate. This phrase means:
the insured's estate receives the death benefit
Kim is insured under a disability income insurance policy with an "own-occupation" clause. She was recently injured in an automobile accident and can no longer perform the tasks of her job. Kim is now considered to be
totally disabled
A life insurance policy where the insured can choose where the cash value can be invested is called
whole life
A worker is entitled to Social Security disability benefits if all of the following are true, EXCEPT for:
worker cannot perform his or her current job, but is actively seeking other employment
