Missed questions
Within what time period after completing prelicensing education must an applicant file a certificate of education completion with the commissioner?
12 months
To be eligible under HIPAA regulations, for how long should an individual converting to an individual health plan have been covered under the previous group plan?
18 months
HIPPA applies to groups of
2 or more
Following an injury, a policyowner covered under Medicare Parts A & B was treated by her physician on an outpatient basis. How much of her doctor's bill will she be required to pay out-of-pocket?
20% of covered charges above the deductible
For how many years must an agent keep a complete file of accident and sickness advertisements after their date of issue?
3 years
What is the maximum age for the qualifying for a catastrophic plan?
30
Within how many days does a licensee have to inform the commissioner of a change of address?
30
A flexible premium universal life insurance policy must provide a grace period of
30 days
Employer health plans must provide primary coverage for individuals with end-stage renal disease before Medicare becomes primary for how many months?
30 months
What is the waiting period on a Wavier of Premium in life insurance policies?
6 months
Licensees who are currently licensed, and have recently become residents of the state of Michigan may not have to complete any prelicensing education. To qualify for this exemption, they must apply to become resident licensees within a few days of establishing a legal residence within how many days?
90 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. *The misstatement age provision says that if a client has misstated her age, whether intentional or unintentional, they will adjust the benefit being paid. It doesn't matter when the mistake was found.
At age 30, an applicant wants to start an insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. Which of the following policies would most likely fit his needs?
Adjustable Life
Which of the following is a short-term annuity that limits the amounts paid to a certain fixed period or unit a certain fixed amount is liquidated?
Annuity certain *Annuity certain option allows the annuitant to select the time period or the amount of the benefits to be paid out. Under the installments for a fixed period, distribution begins on a specific date and stops on a specific date.
A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?
Automatic premium loan
Graded-premium whole life premiums are typically lower initially, but gradually increase for a period of 5 to 10 years. After the period of increase the premiums will
Be level thereafter
What does "liquidity" refer to in a life insurance policy?
Cash values can be borrowed at any time.
Most scheduled plans provide first-dollar benefits without
Coinsurance and deductibles
A producer who fails to separate premium monies from his own personal funds is guilty of?
Commingling
What term best describes the act of withholding material information that would be crucial to an underwriting decision?
Concealment
An insured is admitted to the hospital for surgery on a herniated disk. The insurance company monitors the treatment and progress in order to make sure that everything proceeds according to the insurer's schedule. This is called
Concurrent review
The purpose of managed care health insurance plans is to
Control health insurance claims expenses.
The gatekeeper of an HMO helps
Control specialist costs
What is another name for interest-sensitive whole life insurance?
Current assumption life
What is the important feature of a dental expense insurance plan that is NOT typically found in a medical expense insurance plan?
Diagnostic and preventive care
The authority granted to an agent through the agent's contract is referred to as
Express authority
In a direct transfer, how is money transferred from one retirement plan to a traditional IRA?
From trustee to trustee
Which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation?
Human life value approach (HLVA)
A child of the insured is incapable of self-support because of a physical handicap. The child has reached the limiting age for dependents. When can coverage continue under the health insurance policy?
If premium is paid, and proof of the dependent's handicap is provided within a specified period of time
Guarantee of insurability option in long-term care policies allows the insured to
Increase benefit levels without providing proof of insurability
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
Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity?
Insurer's guaranteed minimum rate of interest
An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an
Interest-sensitive Whole Life
Which of the following best describes annually renewable term insurance?
It is level term insurance
If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a
Joint life annuity
For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become
Larger
The reduction, decrease, or disappearance of value of the person or property insured in a policy by a peril insured against is known as
Loss
Which of the following is the basis for a claim against an insurance policy?
Loss
In health underwriting, it would be inappropriate to decline a risk using any of the following factors EXCEPT
Mental illness
What type of whole life insurance policy has premiums that are adjusted during the first years of the policy, the premiums are lower than those of a straight whole life policy, and in subsequent years the premiums are higher than those of a straight whole life policy?
Modified life *Modified life policies were developed to attract young professionals who have a large financial investment in their education and training, but starting their professional careers, they have limited resources to buy insurance. Modified life is a permanent policy, nut in the early years, the premiums are similar to that of a term policy; in later years, the premiums are increased to build cash values and cause the policy to endow.
In long-term care insurance, what type of care is provided with intermediate care?
Occasional nursing or rehabilitative care
Which universal life option has gradually increasing cash value in a level death benefit?
Option A
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?
Option B *under Option B the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases. At any point, the total death benefit will always be equal to the face amount of the policy plus the current amount of cash value.
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the
Other-insured rider
Which clause allows both the insured and dentist to know in advance which benefits will be paid?
Precertification
Dental Expense policies generally have a deductible that would apply to all of the following EXCEPT
Preventive care
In Medicare prescription drug plans, step therapy refers to
Prior authorization
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy
Required a premium increase each renewal *Annually Renewable Term policies' premiums are adjusted each year to the insured's attained age; however, the policy may be guaranteed renewable. Death benefits remain level, and as with any term policy, there are no cash values.
A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the
Revocable beneficiary
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a
Settlement option
It would be considered unfair discrimination to ask an insurance applicant about which of the following and then use that information as a rating factor to determine insurability?
Sexual orientation
Which of the following insurers are owned by stockholders?
Stock
In major medical insurance policies, when the insured's share of coinsurance reaches a certain amount, the insured is no longer obligated to pay it. This feature is known as
Stop-loss
Your client is planning to retire. She has accumulated $100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent, you should recommend
Straight life
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding the change?
The benefit can be increased by providing evidence of insurability
An insured purchased a noncancellable health insurance policy 1 year ago. Which of the following circumstances would NOT be a reason for the insurance company to cancel the policy?
The insured is in an accident and incurs a large claim
An insurance advertisement exaggerates the benefits of an insurance policy, due to human error at the insurer's advertising agency. Who will the Department of Insurance hold responsible for the exaggeration?
The insurer
What happens if a deferred annuity is surrendered before the annuitization period?
The owner will receive the surrender value of the annuity
The owner of the life insurance policy wishes to name two beneficiaries for the policy proceeds. What will the soliciting insurance producer say?
The policy owner can specify the way proceeds are split in the policy
What is the purpose of key person insurance?
To lessen the risk of financial loss because of the death of a key employee
The paid-up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy.
When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees
To renew the policy unit the insured has reached age 65 *The guaranteed renewable provision is similar to the noncancellable provision, with the exception that the insurer can increase the policy premium on the policy anniversary date. As with the noncancellable policy, coverage is generally not renewable beyond the insured's age 65.
Which of the following is true regarding health insurance? a) It could provide payments for loss of income b) Disability coverage is excluded c) It provides death benefit coverage
a) It could provide payments for loss of income
Every insurer marketing Long-Term Care insurance must establish marketing procedures to ensure all of the following EXCEPT a) LTC policies are marketed effectively to prospective insureds. b) Comparisons of policies are fair and accurate. c) Excessive insurance will not be sold. d) Every reasonable efforts is made to identify an applicant's other insurance.
a) LTC policies are marketed effectively to prospective insureds
All of the following entities regulate variable life policies EXCEPT a) The Guaranty Association. b) Federal government. c) The SEC. d) The Insurance Department.
a) The Guaranty Association.
Which of the following is NOT a goal of risk retention? a) To minimize the insured's level of liability in the event of loss b) To reduce expenses and improve cash flow c) To increase control of claim reserving and claims settlements d) To fund losses that cannot be insured
a) To minimize the insured's level of liability in the event of loss
Which of the following is INCORRECT concerning Medicaid? a) It is solely a federally administered program b) It provides medical assistance to low-income people who cannot otherwise provide for themselves c) It pays for hospital care, outpatient care, and laboratory and X-ray services d) The federal government provides about 56 cents for every Medicaid dollar spent
a) it is solely a federally administered program
Which of the following types of agent authority is also called "perceived authority"? a) Fiduciary b)Apparent c) Express d) Implied
b) Apparent
All of the following are true about group disability income insurance EXCEPT a) The longer the waiting period, the lower the premium b) Coverage applies both on and off the job c) Benefits are usually short term d) The waiting period starts at the onset of the injury or sickness
b) Coverage applies both on and off the job
Which of the following statements is CORRECT concerning the relationship between Medicare and HMOs? a) All HMOs and PPOs charge premiums beyond what is paid by Medicare b) HMOs may pay for services not covered by Medicare c) HMOs do not pay for services covered by Medicare d) Medicare Advantage is Medicare provided by an approved HMO only
b) HMOs may pay for services not covered by Medicare
Medicaid provides all of the following benefits EXCEPT a) Family planning services. b) Income assistance for work-related injury. c) Home health care services. d) Eyeglasses.
b) Income assistance for work-related injury.
Which of the following best describes a misrepresentation? a) Discriminating among individuals of the same insuring class b) Issuing sales material with exaggerated statements about policy benefits c) Making a deceptive or untrue statement about a person engaged in the insurance business d) Making a maliciously critical statement that is intended to injure another person
b) Issuing sales material with exaggerated statements about policy benefits
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT a) The insurer determines the amount for each payment b) It is a life contingency option c) it will pay the benefit only for the designated period of time d) the payments are not guaranteed for life
b) It is a life contingency option
Which of the following riders would NOT cause the death benefit to increase? a) Accidental Benefit Rider b) Payor Benefit Rider c) Guaranteed insurability Rider d) Cost of living rider
b) Payor Benefit Rider
In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describer? a) Conditional b) Unilateral c) unidirectional d) Aleatory
b) Unilateral
In disability insurance, if an insured is considered disabled if they cannot perform any job they are suited by prior education, training or experience, they fall under which definition of total disability? a) Statutory b) Own occupation c) Any occupation d) Typical
c) Any occupation
Which is TRUE about the cash surrender nonforfeiture option? a) The policy remains active for some time after the policyholder opts for cash surrender b) The policyholder receives the original cash value of the policy c) Funds exceeding the premium paid are taxable as ordinary income d) After the cash surrender, the insured is covered for a grace period of one month
c) Funds exceeding the premium paid are taxable as ordinary income
Which of the following is TRUE regarding the annuity period? a) It is also referred to as the accumulation period. b) It is the period of time during which the annuitant makes premium payments into the annuity. c) It may last for the lifetime of the annuitant. d) During this period of time the annuity payments grow interest tax deferred.
c) It may last for the lifetime of the annuitant.
The Ownership provision entitles the policyowner to do all of the following EXCEPT a) Assign the policy. b)Designate a beneficiary. c)Set premium rates. d)Receive a policy loan.
c) Set premium rates.
An agent is in the process of replacing the insured's current health insurance policy with a new one. Which of the following would be a proper action? a) Policies must overlap to cover pre-existing conditions. b) The old policy must be cancelled before the new one can be issued. c) The old policy should stay in force until the new policy is issued. d) There should be at least a 10-day gap between the policies.
c) The old policy should stay in force until the new policy is issued.
All of the following statements are true regarding installments for a fixed amount EXCEPT a) This option pays a specific amount until the funds are exhausted. b) The annuitant may select how big the payments will be. c) The payments will stop when the annuitant dies. d) Value of the account and future earnings will determine the time period for the benefits.
c) The payments will stop when the annuitant dies.
An employee is injured in a construction accident, rendering him unable to work for a year. Which of the following plans would provide him with medical expense coverage and income assistance? a) Long-term Care b) Social Security Disability c) Workers Compensation d) Major Medical Insurance
c) Workers Compensation
All the following can qualify as a trust EXCEPT a) A labor union that insures at least 25 members b) A group formed by two or more employers in the same field c) A group that has the commissioner's permission to issue a group health insurance policy d) An employer insuring at least 5 employees for the benefit of that employer
d) An employer insuring at least 5 employees for the benefit of that employer
The LEAST expensive first-year premium is found in which of the following policies? a) Increasing Term b) Decreasing Term c) Level Term d) Annually Renewable Term
d) Annually Renewable Term
Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? a) undercutting b) twisting c) slandering d) defamation
d) Defamation
An insurance company sells an insurance policy over the phone in response to a TV ad. Which of the following best describes this act? a) Independent agency marketing b) Illegal c) Insurance telemarketing d) Direct response marketing
d) Direct response marketing
In which of the following health plans are benefit payments attributed to employer contributions taxable to the employee? a) AD&D b) Disability Buy Out c) Medical Expense d) Group Disability Income
d) Group Disability Income
Which of the following types of LTC is NOT provided in an institutional setting? a) Custodial care b) Skilled nursing care c) Intermediate care d) Home health care
d) Home health care
In health insurance, if a doctor charges $50 more than what the insurance company considers usual, customary and reasonable, the extra cost a) Must be covered by the insurer b) Counts toward deductible c) Counts toward coinsurance d) Is not covered
d) Is not covered
Which of the following statements is NOT correct regarding Medicare? a) Medicare Advantage may include prescription drug coverage at no cost b) Medicare Part A provides hospital care c) Medicare Part B provides physician services d) Medicare Advantage must be provided through HMOs
d) Medicare Advantage must be provided through HMOs
An applicant buys a nonqualified annuity, but dies before the starting date. For which of the following beneficiaries would the interest in the annuity NOT be taxable? a) Charitable organization b) Dependents c) Annuitant d) Spouse
d) Spouse
Which of the following best describes taxation during the accumulation period of an annuity? a) The annuity is subject to state taxes only b) The annuity is subject to both state and federal taxation c) The growth is subject to immediate taxation d) Taxes are deferred
d) Taxes are deferred
All the following are requirements for life insurance illustrations EXCEPT a) They may only be used as approved b) They must identify nonguaranteed values c) They must differentiate between guaranteed and projected amounts d) They must be part of the contract
d) They must be part of the contract
In disability income insurance, the own occupation definition of disability applies
for the first 2 years of disability
A guaranteed renewable health insurance policy allows the
policyholder to renew the policy to a stated age, with the company having the rights to increase premiums on the entire class.
What is the maximum fine for submitting a false or fraudulent claim to the insurer?
$1,000
An employee quits her job where she has a balance of $10,000 in her qualified plan. The balance was paid out directly to the employee in order for her to move the funds to a new account. If she decides to rollover her plan to a Traditional IRA, how much will she receive from the plan administrator and how long does she have to complete the tax-free rollover?
$10,000 no tax consequences *During an IRA direct transfer (or direct rollover), the full amount gets reinvested from one plan to the other.
A noncontributory group disability income plan has a 30-day elimination period and offers benefits of $2,000 a month. If an employee is unable to work for 7 months due to a covered disability, the employee will receive
$12,000, all of which is taxable. *In noncontributory group health plans, the employer pays the entire cost, so the income benefits are included in the employee's gross income and taxed as ordinary income.
An employee will be taxed on the cost of group life insurance paid by the employer if the amount of coverage exceeds
$50,000