MISSOURI LIFE & HEALTH INSURANCE EXAMFX #1
The provision in a health insurance policy that ensures that the insurer cannot refer to any document that is not contained in the contract is the A: Entire contract clause B: Time limit on certain defenses clause C: Incontestability clause D: Legal action against us clause
A
What are three basic coverages for medical expense insurance? A: Hospital, surgical, medical B: Basic, major, overhead C: Medical, dental, vision D: Reimbursement, preventive, service
A
A life insurance policy has a legal purpose if both of which of the following elements exist? A: Underwriting and reciprocity B: Offer and counteroffer C: Policy owners and named beneficiaries D: Insurable interest and consent
D
If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than A: Upon issuance of the policy. B: Within 30 days after the first premium payment was collected. C: Prior to filling out an application for insurance. D: With the policy.
D
What is the purpose of establishing the target premium for a universal life policy? A: To accumulate cash value faster B: To pay up the policy faster C: To cover all policy expenses D: To keep the policy in force
D
What is the purpose of settlement options? A: They are guarantees built into the policy. B: They guarantee a return of excess premiums. C: They provide the beneficiary with the income he/she cannot outlive. D: They determine how death proceeds will be paid.
D
All of the following are true regarding a decreasing term policy EXCEPT A: The payable premium amount steadily declines throughout the duration of the contract. B: The death benefit is 0$ at the end of the policy term. C: The contract pays only in the event of death during the term and there is no cash value. D: The face amount steadily declines throughout the duration of the contract.
A
All of the following are true regarding insurance policy loans EXCEPT A: Policy loans can be made on policies that do not accumulate cash value B: The amount of the outstanding loan and interest will be deducted from the policy proceeds when the insured dies. C: The policy will terminate if the loan plus interest equals or exceeds the cash value of the policy. D: Policy owners can borrow up to the full amount of their whole life policy's cash value.
A
An insurer is attempting to determine the insurability of an applicant and decides to obtain medical information from several different sources. Which entity must be notified of the investigation? A: The applicant B: The commissioner of insurance C: The medical examiner D: The state department of insurance
A
In a disability income policy, all of the following are considered presumptive disabilities EXCEPT A: Loss of one eye B: Loss of hearing C: Loss of two limbs D: Loss of speech
A
In the event of loss, after a notice of claim is submitted to the insurer, who is responsible for providing claims forms, and to which party? A: Insurer to the insured B: Insured to the insurer C: Insurer to the department of insurance D: Insured to the department of insurance
A
Long-term care insurance policies must cover which of the following? A: Alzheimer's disease B: All mental disorders C: Treatment of alcoholism D: Injuries caused by an act of war
A
What is the name of a clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military? A: War or military service B: Limited benefit C: Aviation D: Hazardous occupation
A
What percentage of individually-owned disability income benefits is taxable? A: 0% B: 50% C: 100% D: Amount paid by insured
A
When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income? A: Interest only B: Both principal and interest C: Neither principal nor interest D: Principal only
A
Which is TRUE about the cash surrender nonforfeiture option? A: Funds exceeding the premium paid are taxable as ordinary income. B: After the cash surrender, the insured is covered for a grace period of one month. C: The policy remains active for some time after the policyholder opts for cash surrender. D: The policyholder receives the original cash value of the policy.
A
Which of the following is NOT covered under part B of a medicare policy? A: Routine dental care B: Home health care C: Lab services D: Physician expenses
A
Which of the following is the required number of participants in a contributory group plan? A: 75% B: 100% C: 25% D: 50%
A
Which of the following long-term care benefits would provide coverage for care for functionally impaired adults on a less than 24-hour basis? A: Adult day care B: Residential care C: Assisted living D: Home health care
A
Which of the following premium modes would result in the highest annual cost for an insurance policy? A: Monthly B: Quarterly C: Semi-annual D: Annual
A
Which of the following terms describes the specified dollar amount beyond which the insured no longer participates in the sharing of expenses? A: Stop-loss limit B: Probationary limit C: First-dollar coverage D: Corridor deductible
A
A health insurance policy lapses but is reinstated within an acceptable timeframe. How soon from the reinstatement date will coverage for accidents become effective? A: Immediately B: After 14 days C: After 21 days D: After 31 days
A
What is the term for how frequently a policy owner is required to pay the policy premium? A: Consideration B: Mode C: Schedule D: Grace period
B
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled? A: Waiver of premium B: Payor benefit C: Jumping juvenile D: Juvenile premium provision
B
Which of the following is NOT a type of whole life insurance? A: Limited payment B: Level term C: Single premium D: Straight life
B
A key person insurance policy can pay for which of the following? A: Worker's compensation B: Hospital bills of the key employee C: Costs of training a replacement D: Loss of personal income
C
In the event, of a policy lapse due to nonpayment of premium, within how many days would the policy be automatically reinstated once the outstanding premium is paid? A: 10 days B: 25 days C: 30 days D: 45 days
C
A policy owner names his five children as primary beneficiaries and his wife as a contingent beneficiary. If the policy owner and one of the children dies, who would receive policy benefits? A: The oldest surviving primary beneficiary B: The insured's estate C: The wife (contingent beneficiary) D: The remaining 4 primary beneficiaries
D
Level-term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be A: Determined by the health of the insured B: Based on the issue age of the insured C: Discounted D: Adjusted to the insured's age at the time of renewal
D
The mode of premium payment A: This is the factor that determines the number of dividends in a policy. B: This is the method used to compute the cash surrender value of the policy. C: Does not affect the amount of premium paid. D: Is defined as the frequency and the amount of the premium payment.
D
A 65-year-old enrolls for benefits under medicare part B and submits an application for a medicare supplement policy two months later. For which of the following reason may the insurer deny the application? A: Material misrepresentation B: Health status C: Claims experience D: Medical condition
A
A 71-year-old female recently purchased a life insurance policy with graded death benefits. If the policy has graded death benefits for three years, which of the following must be true? A: The third year of the policy must have a death benefit equal to 65% of the total face amount. B: The third year of the policy must have a death benefit equal to 95% of the total face amount. C: The third year of the policy must have a death benefit equal to 50% of the total face amount. D: The third year of the policy must have a death benefit equal to 80% of the total face amount.
A
An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the standard and poor's 500 indexes. She would likely purchase a(n) A: Equity-indexed annuity B: Variable annuity C: Flexible annuity D: Immediate annuity
A
An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? A: False advertising B: Unfair claims C: Twisting D: Defamation
A
An insured is hospitalized with a back injury. Upon checking his disability income policy, he learns that he will not be eligible for benefits for at least 30 days. This indicates that his policy is written with a 30-day A: Elimination period B: Blackout period C: Probationary period D: Waiver of benefits period
A
Circulating deceptive sales material to the public is what type of unfair trade practice? A: False advertising B: Defamation C: Coercion D: Misrepresentation
A
Health insurance policies are required to provide coverage for general anesthesia for dental care provided to all of the following EXCEPT A: Senior citizens above age 65 B: Children under age 5 C: A severely disabled person D: A person with a behavioral condition requiring hospitalization when dental care is provided
A
In Missouri, it is illegal to receive a commission from the sale of insurance UNLESS A: The payee holds a valid insurance producer license. B: The payor holds a valid insurance producer license. C: The insured gives written consent allowing the commission to be split. D: The payor and payee both hold valid insurance producer licenses.
A
In which of the following situations would an individual be permitted to exercise conversion privileges in a group health insurance policy? A: The individual's employment was terminated. B: The individual failed to make premium payments. C: The individual was covered by the group policy for 2 months. D: The individual's group policy was replaced with another policy.
A
In which of the following situations would an individual be permitted to exercise conversion privileges in a group long-term care policy? A: The individual's employment was terminated. B: The individual failed to make premium payments. C: The individual was covered by the group policy for 2 months. D: The individuals group policy was replaced with another policy.
A
The premium charged for exercising the guaranteed insurability rider is based on the insureds A: Attained age B: Assumed age C: Average age D: Issue age
A
What is the purpose of a conditional receipt? A: It is intended to provide coverage on a date prior to the policy issue. B: It guarantees that a policy will be issued in the amount applied for. C: It serves as proof that the applicant has been determined insurable. D: It is given only to applicants who fully prepay the premium.
A
What is the term used for an applicant's written request to an insurer for the company to issue a contract, based on the information provided? A: Application B: Policy request C: Insurance request form D: Request for insurance
A
What is the time limit to contest life insurance policies in Missouri? A: 2 years B: 3 years C: 5 years D: 1 year
A
Which of the following is true of benefits provided in a health insurance policy for insureds that are diagnosed with diabetes? A: Benefits may be subject to deductibles and copayments not greater than those applied to any other covered illness. B: Benefits are limited to treatment received in a hospital or physician's office. C: Benefits must be provided without deductibles or copayments. D: Benefits for diabetes care and treatment must be added as an optional coverage.
A
Which of the following statements is true, regarding the continuing education requirements for nonresident producers? A: The producer does not need to meet Missouri CE requirements if he/she is meeting the home-state CE requirements. B: The producer does not need to meet Missouri CE requirements if the producer has been transacting Missouri insurance under this license for at least 15 years. C: Regardless of the producer's home state and whether the producer is meeting those requirements, Missouri CE credits must be earned, as well. D: The producer does not need to meet Missouri CE requirements if the producer has been transacting Missouri insurance under this license for at least 10 years.
A
Which of the following would be considered an illegal inducement to purchase insurance? A: Confirming future dividends in a life insurance proposal. B: Mailing an agency brochure to a prospective client. C: List the insurance companies the agency represents in a letter. D: Inviting prospective clients to the grand opening of the producer's new office.
A
Which one of the following is an eligibility requirement for social security disability income benefits? A: Fully insured status B: Experiencing at least one year of disability C: Being at least 50 years of age D: Currently employed status
A
Which statement is NOT true regarding underwriting group health insurance? A: The group is assessed individually for insurability. B: The premiums are reassessed annually. C: The cost of the policy is partially determined by the ratio of males to females in the group. D: Everyone in the group is covered, regardless of their medical history.
A
With respect to the consideration clause, which of the following is a consideration on the part of the insurer? A: Promising to pay in accordance with the contract terms B: Offering a secondary policy to the applicant C: Offering an unconditional contract D: Explaining policy revisions to the applicant
A
A policy with a 31-day grace period implies A: The policy benefits must be paid within 31 days after a claim is submitted. B: The policy will not lapse for 31 days if the premium is not paid when due. C: The policyholder may return the policy for a full refund within 31 days. D: The policy is incontestable after 31 days of delivery.
B
A waiver of premium provision may be included with which kind of health insurance policy? A: Dread disease B: Disability income C: Basic medical D: Hospital indemnity
B
Albert Jones, CPCU, has prepared an insurance course and obtained approval for the course for 6 hours of continuing education credits. Al presented this course to various agent groups during the continuing education term on four different occasions. How many continuing education credit hours may Al claim for his own license renewal? A: 0 B: 6 C: 12 D: 24
B
All health insurance policies issued in this state must provide coverage for maternity services. How many hours of inpatient care must be provided to a mother after delivery by the caesarian section? A: At least 48 B: At least 96 C: At least 24 D: At least 36
B
All individual health policies issued in the state of Missouri which provide coverage for hospital treatment must also provide coverage for treatment of alcoholism, which may be limited to how many days? A: There is no limit to the treatment of chemical dependency B: 30 C: 60 D: 180
B
All of the following are duties and responsibilities of producers at the time of the application EXCEPT A: Check to make sure that there are no unanswered questions on the application. B: Change any incorrect statement on the application by personally initialing next to the corrected statement. C: Explain the nature and type D: Probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information.
B
All of the following are legitimate reasons for a group health insurance policy non-renewal EXCEPT A: Insurer discontinues all group coverage in the service area. B: Any misrepresentation by the plan sponsor on the application for insurance. C: Not enough employees participating in the group plan. D: Nonpayment of premium.
B
All of the following are requirements to obtain an insurance producer license in Missouri EXCEPT A: Pass a written examination on the line(s) of insurance for which a license is sought. B: Attend an approved pre-licensing course. C: Be at least 18 years of age. D: Be of good moral character.
B
All of the following are true regarding rebates EXCEPT A: Dividends are not considered to be rebates. B: Rebates are allowed if it is in the best interest of the client. C: Rebates are only allowed if specifically stated in the policy. D: Rebating can be anything of monetary value given as an inducement to purchase insurance.
B
An insured has an illness that was diagnosed in part by video-conferencing between her doctor and a doctor in another city. This consultation would have been paid for by the insured's health insurance if given face-to-face. How much will her health insurance pay for the service? A: The insurance will not cover this service. B: The insurance will cover the service as it would a face-to-face consultation. C: The insurance will cover 75% of the service. D: The insurance will cover 50% of the service.
B
An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy? A: 7 days B: 10 days C: 31 days D: 60 days
B
An insurer cannot transact business until it obtains a/an A: Insurer's license B: Certificate of Authority C: State insurer's certificate D: Director's statement of approval
B
Colorectal screenings performed under individual and group health policies are required to be in compliance with the standards set by which of the following organizations? A: American fellowship of physicians B: American cancer society C: Colorectal Center of America D: American association of doctors
B
Individual and group health policies in this state will cover which of the following procedures for women? A: A baseline mammogram for women over 65 B: A mammogram every year for women aged 50 and over C: A biennial mammogram for all women D: A mammogram for any woman with any familial history of any disease
B
Long-term care policies MUST cover A: A pre-existing condition B: Alzheimer's disease C: Treatment payable by medicare D: Alcoholism
B
The chief officer of the department of insurance is the director. All the following statements concerning the director are true EXCEPT A: The director is appointed by the governor. B: The director may serve as an officer or director for an unauthorized insurer. C: The director must be experienced in the matter of insurance. D: The director must be a citizen of the state of Missouri.
B
Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called? A: Adverse selection B: Discrimination C: Law of large numbers D: Misrepresentation
B
What is a requirement for notifying the director of any change of address? A: Within 10 days, by any means of communication B: Within 30 days, in writing C: Within 15 days, in writing D: Within 45 days, by any means of communication
B
Which of the following is TRUE regarding the insurance amount in a credit life policy? A: The amount of coverage can be greater than the amount owed. B: The creditor can only insure the debtor for the amount owed. C: The creditor may insure the debtor for an unlimited amount of coverage. D: Allowable amount of coverage is determined by the state insurance commissioner.
B
Which of the following is an example of a producer being involved in an unfair trade practice of rebating? A: Making deceptive statements about a competitor. B: Telling a client that his premium will be waived if he purchases the insurance policy today. C: Inducing the insured to drop a policy in favor of another one when it is not in the insured's best interest. D: Charging a client a higher premium for the same policy as another client in the same insuring class.
B
Which of the following licensees could be exempt from renewing their license biennially on the anniversary date of issuance? A: A producer whose appointment with an insurer has been revoked. B: A licensee called to active duty with the U.S. Armed forces. C: A producer who has not written any insurance business in Missouri in the past year. D: A producer who attains age 60.
B
Which of the following provisions in group life policies prevents the insurer from denying a claim due to statements on the application after a certain period of time? A: Payment of claims B: Incontestability C: Waiver of premium D: Grace period
B
Which of the following reports will provide the underwriter with information about an insurance applicant's credit? A: Any federal report B: Consumer report C: Inspection report D: Agent's report
B
Which of the following types of insurance policies is most commonly used in credit life insurance? A: Equity-indexed life B: Decreasing term C: Increasing term D: Whole life
B
Which of the following would provide an underwriter with information concerning an applicant's health history? A: The inspection report B: The Medical Information Bureau C: A medical examination D: The agent's report
B
Which rider, when attached to a permanent life insurance policy, provides an amount of insurance for every family member? A: Additional insured rider B: Family term rider C: Spouse rider D: Children's rider
B
Which statement is NOT true regarding a straight life policy? A: It has the lowest annual premium of the three types of whole-life policies B: Its premium steadily decreases over time, in response to its growing cash value. C: The face value of the policy is paid to the insured at age 100. D: It usually develops cash value by the end of the third policy year.
B
A producer in another state wants to become a producer in Missouri. The other state gives the same privileges to Missouri producers wanting to be licensed in that state as it does its own producers. Missouri, therefore, extends the privileges of its producers to the prospective producer of the other state. What is this called? A: Equanimity B: Equal privilege C: Reciprocity D: Fair exchange
C
All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT A: Most term policies contain a convertibility option. B: Upon conversion, the premium for the permanent policy will be based on attained age. C: Upon conversion, the death benefit of the permanent policy will be reduced by 50%. D: Evidence of insurability is not required.
C
During the replacement of life insurance, a replacing insurer must do which of the following? A: Designate a new producer for a replacement policy. B: Send a copy of the notice regarding the replacement to the department of insurance. C: Obtain a list of all life insurance policies that will be replaced. D: Guarantee a replacement for each existing policy.
C
How long must an insurer retain an advertisement for its long-term care policies? A: 1 year B: 2 years C: 3 years D: 5 years
C
How must a replacing producer respond to an applicant wishing to replace existing life insurance? A: The producer must request the permission of the existing insurer. B: The producer has no specific duties. C: The producer must provide the applicant with a notice regarding a replacement. D: The producer must collect the existing policies and turn them over to the replacing insurer.
C
In a long-term care policy, pre-existing condition limitations A: Never have specific exclusions. B: Are not permitted. C: Must appear as a separate paragraph and be clearly labeled. D: Apply 12 months from the effective date of coverage.
C
In individual health insurance coverage, the insurer must cover a newborn from the moment of birth, and if additional premium payment is required, how many days should be allowed for payment? A: Within 10 calendar days B: Within 15 working days C: Within 31 days birth D: Within a reasonable period of time
C
Life income joint and survivor settlement option guarantees A: Payout of the entire death benefit B: Equal payments to all recipients C: Income for 2 or more recipients until they die D: Payment of interest on death proceeds
C
Life insurers are prohibited from including any of the following in advertisements EXCEPT A: Explanations that premiums may be withdrawn. B: A guarantee of company earnings. C: Policy appraisals and analyses. D: Endorsements by government entities.
C
Social security was created to provide all of the following benefits EXCEPT A: Disability income B: Retirement income C: Unemployment income D: Survivor's benefits
C
The act of trying to discourage a policyholder from dropping his/her policy is called A: Baiting B: Bargaining C: Conservation effort D: Dissuasive effort
C
The minimum interest rate on an equity-indexed annuity is often based on A: The annuitant's individual stock portfolio. B: The insurance company's general account investments. C: An index like the standard and poor's 500. D: The returns from the insurance company's separate account.
C
The president of a manufacturing company has offered one of the company's officers a special individual annuity plan that is unavailable to lower-echelon employees. This plan would be funded with before-tax corporate dollars, and it does not meet government approval standards. This annuity plan is A: Subject to government standards B: Illegal C: A non-qualified annuity plan D: An executive annuity plan
C
Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to A: Beneficiary of the death benefit B: The spouse of the insured C: The insured D: Creditors
C
What is the maximum percent of customary charges for immunizations that a health care provider may charge? A: 25% B: 50% C: 100% D: 150%
C
Which of the following determines the length of time that benefits will be received under the fixed-amount settlement option? A: Length of income period B: Amount of interest C: Size of each installment D: Predetermined length of time stated in the contract
C
Which of the following includes information regarding a person's credit, character, reputation, and habits? A: Insurability report B: Agent's report C: Consumer report D: Consumer history
C
Which of the following is NOT covered by Health Maintenance Organizations (HMOs)? A: Routine physicals B: Well-baby care C: Elective services D: Immunizations
C
Which of the following is TRUE regarding variable annuities? A: The company guarantees a minimum interest rate. B: A person selling variable annuities is required to have only a life agent's license. C: The annuitant assumes the risks on investment. D: The funds are invested in the company's general account.
C
Which of the following protects the insured from an unintentional policy lapse due to nonpayment of premium? A: Reinstatement B: Reduced paid-up option C: Automatic premium loan D: Extended term
C
Which of the following will vary the length of the grace period in health insurance policies? A: The length of time the insured has been insured B: The term of the policy C: The mode of the premium payment D: The length of any elimination period
C
Which provision concerns the insured's duty to provide the insurer with reasonable notice in the event of a loss? A: Claims initiation B: Consideration C: Notice of claim D: Loss notification
C
Which provision states that the insurance company must pay Medical Expense claims immediately? A: Legal actions B: Relation of earnings to insurance C: Time of payment of claims D: Payment of claims
C
Within how many days of a final disposition must a producer provide all legal documentation to the director? A: 10 days B: 20 days C: 30 days D: 60 days
C
A policy owner would like to replace an existing policy with a new one. After having compared the two policies, the insurer has advised the policyholder not to continue the replacement process. What is the insurer's action called? A: Coercion B: Retaining C: Intervening cause D: Conservation
D
An individual long-term care policy must be delivered to the applicant within how many days after its approval? A: 45 days B: 10 days C: 15 days D: 30 days
D
An individual obtained a life insurance policy in March, but 3 months later was deemed clinically insane by the state of Missouri. Five months later the insured takes his own life. What type of death benefits will the policy beneficiaries receive? A: Since her policy was only in effect for 2/3 of a year, the beneficiary will receive exactly 2/3 of the death benefits. B: No benefits will be received because the insured was deemed clinically insane by a high court. If the insured had not been declared insane, the beneficiary would have received full death benefits. C: No death benefits are ever received for deaths that are ruled as suicides. D: No benefits will be received because the policy was not in effect for at least one year; however, all premium payments will be returned.
D
An individual who is a resident of another state may obtain a Missouri nonresident license without testing provided A: He is currently licensed in the state where he is domiciled. B: He obtained that license by passing a test suitable to the Missouri Department. C: The state where he lives affords the same privilege to residents of Missouri. D: All of these requirements are met.
D
An insured has a life insurance policy with graded death benefits. In the first year of the policy, the death benefit is less than 50% of the face amount on the policy. What amount must the policy contain in accidental death benefits during the graded death benefit period? A: Half the face amount of the policy B: The same amount as the general death benefits C: There is no requirement D: Full face amount of the policy
D
Assignability provision in a life insurance policy relates to A: The insured's right to convert from group to individual policy. B: The company's right to replace a policy. C: The company's right to add new riders to the policy. D: The insured's right to designate a new beneficiary.
D
For how many days of skilled nursing facility care will medicare pay benefits? A: 30 B: 60 C: 90 D: 100
D
In the event, the policy lapses due to nonpayment of premium, within how many days would the policy be automatically reinstated once the outstanding premium is paid? A: 10 days B: 25 days C: 30 days D: 45 days
D
In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium? A: It will likely be the average premium issued to standard risks. B: The applicant's habits and health do not affect the premiums. C: It will likely be lower because the applicant is a preferred risk. D: It will likely be higher because the applicant is a substandard risk.
D
No insurance policy form can be issued, delivered, or used in this state unless it has been A: Reviewed by the department and approved by the governor. B: Developed by the director. C: Filed with and approved by the guaranty association. D: Approved by the department of insurance.
D
R has a life insurance policy that specifically excludes his death from being covered should it occur in an act of war. Where must this be spelled out in the policy? A: In the binder of the policy under exclusions B: In the excluded provisions section C: On the convertible coverage page D: On the face of the policy
D
What is required of an insurer should an insured commit suicide prior to one year of elapsing under a life insurance policy? A: Half the paid premiums must be returned. B: No premiums are to be refunded, but half the death benefits will be given to the beneficiary. C: Full death benefits will be paid out to the beneficiary. D: All paid premiums must be returned.
D
What is the maximum period of time during which an insurer may contest fraudulent misstatements made in a health insurance application? A: 90 days after the effective policy date B: 6 months after the effective policy date C: 1 year after the effective policy date D: As long as the policy is in force
D
What is the purpose of COBRA A: To provide coverage for the dependents B: To provide health coverage for people with low income C: To protect the insureds against insolvent insurers D: To provide continuation of coverage for terminated employees
D
What is the purpose of a fixed-period settlement option? A: To settle the insurance company's liability B: To provide a guaranteed income for life C: To provide a guaranteed amount of money each month D: To provide a guaranteed income for a certain amount of time
D
Which of the following is the term for the specific dollar amount that must be paid by an HMO member for a service? A: Deductible B: Premium C: Cost share D: Copayment
D
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: A business partner of the insured B: The wife of the deceased insured C: The former wife of the deceased insured D: A minor son of the insured
D
Which of the following would be the beneficiary in credit life insurance? A: Insured B: Company C: Borrower D: Creditor
D
Who maintains responsibility for claims made in an advertisement on behalf of an insurance company? A: The producer B: The department of insurance C: The writer D: The insurer
D
Whose responsibility is it to determine if all of the questions on an application have been answered? A: The insurer B: The applicant C: The beneficiary D: The agent
D
How is it determined whether an insurer is allowed to write business in a state? A: The insurer's domicile or location of incorporation will determine whether a company is domestic, foreign, or alien. B: The insurer's domicile will determine whether an insurance company is domestic, foreign, or alien. C: The insurer's location of incorporation will determine whether a company is domestic, foreign, or alien. D: The insurer's net income will determine whether a company will be allowed to write business in a state.
A
All of the following are true regarding key employee disability income insurance EXCEPT A: Premiums are not tax deductible for the employer. B: Benefits are taxable to the employer. C: The employer owns the policy. D: Benefits are paid to the employer to retrain a new person.
B
An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it? A: Graded premium life B: Limited-pay life C: Variable life D: Adjustable life
B
An insured pays her major 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 A: Pay half of her claim because the insured had an outstanding premium. B: Pay the claim. C: Hold the claim pending until the end of the grace period. D: Deny the claim
B
An insured purchased a life insurance policy on his life naming his wife as the primary beneficiary, and his daughter as a contingent beneficiary. Under what circumstances could the daughter collect the death benefit? A: If the insured died from accidental means. B: If the primary beneficiary predeceased the insured. C: When the insured dies, the primary and contingent beneficiaries share death benefits equally. D: With the primary beneficiary's written consent
B
If $100,000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually? A: $7,000 B: $3,000 C: $13,000 D: $10,000
B
In a disability policy, the elimination (or waiting) period refers to the period between A: During which any specific illness or accident is excluded from coverage. B: The first day of disability and the day the insured starts receiving benefits. C: The effective date of the policy and the date the first premium is due. D: Coverage under a disability policy and coverage under social security.
B
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 describe? A: Conditional B: Unilateral C: Unidirectional D: Aleatory
B
Life insurance death proceeds are A: Taxed as ordinary income B: Generally not taxed as income C: Taxable to the extent that they exceed 7.5% of the beneficiary's adjusted gross income D: Taxed as a capital gain
B
Ray has an individual major medical policy that requires a coinsurance payment. Ray very rarely visits his physician and would prefer to pay the lowest premium possible. Which coinsurance arrangement would be best for Ray? A: 90/10 B: 50/50 C: 75/25 D: 80/20
B
Under the mandatory uniform provision notice of claim, the first notice of injury or sickness covered under an accident and health policy must contain A: A statement from the insured's employer showing that the insured was unable to work B: An estimate of the total amount of medical and hospital expenses for the loss. C: A complete physician's statement. D: A statement that is sufficiently clear to identify the insured and the nature of the claim.
D
Which nonforfeiture option provides coverage for the longest period of time? A: Extended term B: Paid-up option C: Accumulated at interest D: Reduced paid-up
D
A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible? A: Collateral assignment B: Insurable interest C: Modification clause D: Ownership provision
A
What is the typical deductible for basic surgical expense insurance? A: $0 B: $100 C: $200 D: $500
A
If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it? A: A legal (but unethical) contract B: Unilateral C: Adhesion D: Conditional
B
Which of the following is NOT true regarding the annuitant? A: The annuitant must be a natural person. B: The annuitant cannot be the same person as the annuity owner. C: The annuitant's life expectancy is taken into consideration for the annuity. D: The annuitant receives the annuity benefits
B
Which of the following is true regarding the taxation of accelerated benefits under a life insurance policy? A: There is a 10% penalty for early distribution of the death benefit. B: They are tax-free to terminally ill insured. C: They are always taxable to chronically ill insured. D: They are always taxed.
B
Which of the following statements is most correct concerning the changing of an irrevocable beneficiary? A: The may be changed only on the anniversary date of the policy. B: They can be changed only with the written consent of that beneficiary. C: They may be changed at any time. D: They can never be changed.
B
All of the following statements concerning Medicaid are correct EXCEPT A: Individuals claiming benefits must prove they do have the ability or means to pay for their own medical care. B: Persons, at least 65 years of age, who are blind or disabled and financially unable to pay, may qualify for Medicaid nursing home benefits. C: Medicaid is a state-funded program that provides health care for persons over age 65, only. D: Individual states design and administer the Medicaid program under broad guidelines established by the federal government.
C
An insured has endured multiple surgeries and hospitalizations for an illness during the last few months. Her insurer no longer bills her for medical expenses. Which of the following allows for that? A: Waiver of premium B: Maximum loss C: Stop-loss limit D: Grace period
C
Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as A: Aleatory contracts B: Binding contracts C: Contracts of adhesion D: Unilateral contracts
C
In a basic expense policy, after the limits of the basic policy are exhausted, the insured must pay what kind of deductible? A: Half B: None C: Corridor D: Full
C
L has a major medical policy with a $500 deductible and 80/20 coinsurance. L is hospitalized and sustains a $2,500 loss. What is the maximum amount that L will have to pay? A: $1,000 (deductible + 20% of the entire bill) B: $2,500 (the entire bill) C: $900 (deductible + 20% of the bill after the deductible [20% of $2,000]) D: $500 (amount of deductible)
C
What happens when a policy is surrendered for its cash value? A: The policy can be reinstated by paying back all policy loans and premiums. B: The policy can be converted to term coverage. C: Coverage ends and the policy cannot be reinstated. D: Coverage ends but the policy can be reinstated at any time.
C
Which is NOT true about beneficiary designations? A: The policy does not have to have a beneficiary named in order to be valid. B: Trusts can be valid beneficiaries. C: The beneficiary must have an insurable interest in the insured. D: The beneficiary may be a natural person.
C
Which of the following describes taxation of individual disability income insurance premiums and benefits? A: Premiums are tax deductible, but benefits are not taxable. B: Premiums are tax deductible, and benefits are taxable. C: Premiums are not tax deductible, and benefits are not taxable. D: Premiums are not tax deductible, but benefits are taxable.
C
Which of the following entities can legally bind coverage? A: Federal insurance board B: Agent C: Insurer D: The insured
C
Which of the following is NOT a feature of a noncancellable policy? A: The guarantee to renew coverage usually applies until the insured reaches a certain age. B: The insured has the right to renew the policy for the life of the contract C: The insurer may terminate the contract only at renewal for certain conditions. D: The premiums cannot be increased beyond the amount stated in the policy
C
Which of the following is NOT true regarding a flexible spending account? A: It provides an opportunity to receive benefits on a pretax basis. B: It is a cafeteria plan. C: It does not have limits on contributions. D: It operates on a "use-or-lose" basis.
C
Which of the following is TRUE about nonforfeiture values? A: A table showing nonforfeiture values for the next 10 years must be included in the policy. B: Policy owners do not have the authority to decide how to exercise nonforfeiture values. C: They are required by state law to be included in the policy. D: They are optional provisions
C
Which of the following will be included in a policy summary? A: Comparisons with policies B: Primary and secondary beneficiary designations C: Premium amounts and surrender values D: Copies of illustrations and application
C
According to the entire contract provision, what document must be made part of the insurance policy? A: Buyer's guide B: Agent's report C: Outline of coverage D: Copy of the original application
D
All of the following would be different between qualified and non-qualified retirement plans EXCEPT A: Taxation of withdrawals B: Taxation of contributions C: IRS approval requirements D: Taxation on accumulation
D
An agent is ready to deliver a policy to an applicant but has not yet received payment. Upon delivery, the agent collects the applicant's premium check, answers any questions the applicant may have, and then leaves. What did he forget to do? A: Offer her a secondary policy B: Ask the applicant to sign a statement that acknowledges that the policy had been delivered C: Collect a late payment fee D: Ask her to sign a statement of good health
D
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 A: Experience rating B: Group rate C: Insurer's scheduled rate D: Attained age
D
In order to maintain coverage under COBRA, how soon from termination of employment must an employee exercise extension of benefits? A: 7 days B: 10 days C: 30 days D: 60 days
D
The paid-up addition option uses the dividend A: To purchase one-year term insurance in the amount of cash value. B: To reduce the next year's premium. C: To accumulate additional savings for retirement. D: To purchase a smaller amount of the same type of insurance as the original policy.
D
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? A: Legal purpose B: Contract of adhesion C: Acceptance D: Consideration
D
Which two terms are associated directly with the premium? A: Fixed or variable B: Term or permanent C: Renewable or convertible D: Level or flexible
D
A hospital indemnity policy will pay A: A benefit for each day the insured is in a hospital. B: Income lost while the insured is in the hospital. C: All expenses incurred by the stay in the hospital. D: Any expenses incurred by the stay in the hospital, minus coinsurance payments and deductibles.
A
A return of premium term life policy is written as what type of term coverage? A: Increasing B: Decreasing C: Renewable D: Level
A
The annuitant dies while the annuity is still in the accumulation stage. Which of the following is TRUE? A: The money will continue to grow tax-deferred until the liquidation period, and then will be paid to the beneficiary. B: The beneficiary will receive the greater of the money paid into the annuity or the cash value. C: The owner's estate will receive the money paid into the annuity. D: The insurance company will retain the cash value and pay back the premiums to the owner's estate.
B
The primary purpose of disability income insurance is to A: Reimburse loss of income to a family due to the death of the insured. B: Replace income lost due to a disability. C: Reimburse medical expenses and/or lost income due to accidents at work. D: Reimburse lost income while in the hospital.
B
The provision that states that both the policy and a copy of the application form the contract between the policy owner and the insurer is called the A: Complete contract B: Entire contract C: Total contract D: Aleatory contract
B
To sell variable life insurance policies, an agent must receive all of the following EXCEPT A: A life insurance license B: SEC registration C: FINRA registration D: A securities license
B
In a replacement situation, all of the following must be considered EXCEPT A: Limitations B: Exclusions C: Assets D: Benefits
C
Which of the following statements is TRUE about a policy assignment? A: It authorizes an agent to modify the policy. B: It transfers rights of ownership from the owner to another person. C: It is the same as a beneficiary designation. D: It permits the beneficiary to designate the person to receive benefits.
B
An employee quits his job on May 15 and doesn't convert his group life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen? A: The insurer will pay the death benefit minus one month's premium. B: The insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one. C: The insurer will pay the full death benefit from the group policy to the beneficiary. D: The insurer will pay a reduced death benefit to the beneficiary.
C
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? A: The capital amount in monthly installments B: The principal amount in monthly installments C: The capital amount in a lump sum D: The principal amount in a lump sum
C
