Practice exam
Under the affordable care act, what percentage of preventative care must be covered without cost of sharing
100% The act requires that 100% a preventative care, be covered without cost sharing
All accident and health insurance policies issued in this state must include a grace period of at least
30 days
If an agent changes his recent address within how many days must the agent notify the commissioner of the change?
30 days The commissioner must be notified of any changes of names or addresses within 30 days of the change
An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under this policy
31 days
In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage a person must have been insured under the group plan for how many years
5 years If the master contract is terminated, every individual who has been on the plan for at least five years, will be allowed to convert to individual insurance of the same coverage
Unreimbursed medical expenses paid for the insured may be claimed as deductions if the expenses exceed what percentage of the adjusted gross income?
7.5%
A health insurance policy that pays a lump sum if the insured suffers a heart attack or stroke, is known as
A critical illness policy covers multiple illnesses, such as heart attack, stroke, renal failure, and pays a lump-sum benefit to the insured upon the diagnosis (and survival) of any of the illnesses covered by the policy.
Which of the following does the insuring clause not specify
A list of available doctors
All of the following would be excluded from the regulation on life insurance solicitation except
A term life policy The regulation on life insurance solicitation does not apply to the sale of annuities credit, life and group, life, insurance, variable life, insurance policies, and life insurance policies issued in connection with pension and welfare plans that are subject to ERISA
What is the maximum period of time during which an insurer may contest fraudulent misstatements made in a health insurance application?
As long as the policy is in force An insurer can contest a fraudulent misstatement as long as the policy is in force. No other statement or misstatement made in the application at the time of issue will be used to deny a claim after the policy has been in force for 2 years.
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?
Ask her to sign a statement of good health If the premium is not collected until the policy is delivered, the agent must receive a statement of good health, which acknowledges that the insured's health status has not changed since the policy was approved.
In a replacement situation, all of the following must be considered EXCEPT
Assets In a replacement situation the agent must be careful to compare the benefits, limitations and exclusions found in the current and the proposed replacement policy.
What coverage, written in conjunction with hospital expense policies, covers surgeons' fees, anesthesiologist, and the operating room?
Basic Surgical Expense Basic surgical expense coverage include surgeon, fees, anesthesiologist, and the operating room when it's not covered as a miscellaneous medical item
Which of the following statements concerning a buy sell agreement is true?
Buy-sell agreements are normally funded with a life insurance policy
Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision making process
Buyer's Guide The buyers guide is a consumer publication that explains life insurance in general terms in order to assist the applicant in the decision making process it is a generic guide that does not address the specific policy of the insurer, instead explaining life insurance in a way that average consumers can understand
All of the following are duties and responsibilities of producers at the time of application EXCEPT
Change any incorrect statement on the application by personally initialing next to the corrected statement. Any changes to information on an application must be initialed by the applicant.
Which of the following includes information regarding a persons credit, character, reputation, and habits
Consumer report Consumer reports include written and/or oral information regarding a consumer's credit, character, reputation, and habits collected by a reporting agency from employment records, credit reports, and other public sources.
Which of the following is not an exclusion in medical expense insurance policies?
Coverage for dependents
All of the following statements concerning accidental death and dismemberment coverage are correct, except
Death benefits are paid only if death occurs within 24 hours of an accident Under an accidental death and dismemberment insurance policy, the death benefit will be paid if the accidental death occurs within 90 days of the accident not 24 hours
What is an important feature of a dental expense insurance plan that is not typically found in a medical expense insurance plan
Diagnostic and preventive care Dental expense insurance is a form of medical expense health insurance that covers the treatment, care and prevention of dental disease and injury to the insured's teeth. An important feature of a dental insurance plan which is typically not found in a medical expense insurance plan is the inclusion of diagnostic and preventive care (teeth cleaning, fluoride treatment, etc.)
A producer must do all the following when delivering a new policy to the insured, except
Disclose commissions earned from the sale of the policy.
Who can provide skilled nursing care?
Doctor Skilled nursing care is daily nursing and rehabilitative care that can only be provided by medical personnel, under the direction of a physician. Skilled care is almost always provided in an institutional setting.
Insurers must screen all marketing plans to ensure that an advertisement does NOT use as the name of any kind of an annuity contract any phrase that
Does not include the word "annuity" unless accompanied by other clear language indicating it is an annuity.
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
Elimination Period The time immediately following the start of a disability when benefits are not payable
Concerning group Medical and Dental insurance, which of the following statements is INCORRECT?
Employee benefits are tax deductible the year in which they were received.
An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of
False advertising False advertising is the illegal practice of advertising or circulating materials that are untrue, deceptive, or misleading
An insured is involved in an accident that renders him permanently death although he does not sustain any other major injuries the insured is still able to perform his current job to what extent will he receive presumptive disability benefits
Full benefits Presumptive disability plans offer full benefits for specified conditions. These policies typically require the loss of at least two limbs (Loss of use does not qualify in some policies), total and permanent blindness, or lose of speech or hearing. Benefits are paid, even if the insured is able to work.
At the time the insured purchased her life insurance policy, she added a ride that would allow her to purchase additional insurance in the future without having to prove insurability. This writer is called
Guaranteed insurability Guaranteed insurability is a rider that is included at the time of application (or can be added at a later date) which allows the insured to increase the amount of insurance without proving evidence of insurability
Which of the following is an eligibility requirement for all Social Security disability income benefits
Have attained fully insured status Although Social Security offers many benefits, such as retirement survivors, and Medicare, only those who have attained fully insured status are eligible for disability income benefits contributing to Social Security for 40 quarters (10 years) attains fully insured status
Medicaid provides all of the following benefits EXCEPT
Income assistance for work-related injury.
Which type of a hospital policy pays a fixed amount each day that the insured is in a hospital
Indemnity A Hospital Indemnity policy pays a fixed amount each day the insured is hospitalized, unrelated to medical expenses.
Which type of a hospital policy pays a fixed amount each day that the insured is in a hospital?
Indemnity A Hospital Indemnity policy pays a fixed amount each day the insured is hospitalized, unrelated to medical expenses.
In health insurance if a doctor charges $50 more than what the insurance company considers usual customary and reasonable the extra cost
Is not covered - An insurance company will pay the usual, reasonable, or customary amount for a given procedure based upon the average charge for that procedure.
What is not a benefit of a POS plan?
It allows guaranteed acceptance of all applicants.
Which of the following is not true regarding a flexible spending account
It does not have limits on contributions a flexible spending account (FSA) is a form of cafeteria plan benefit funded by salary reduction. The employees are allowed to deposit a certain amount of they paycheck into an account before paying income taxes. FSA benefits are subject to annual maximum and "use-or-lose" rule
All of the following statements are true regarding installments for a fixed annuity settlement option, except.
It is a life contingency option. Under the installment for a fixed annuity settlement option the annuity selects the time period for the benefits. The insured determines how much each payment will be. This option pays for specific amount of time only and there are no life contingencies.
Which of the following is incorrect concerning Medicaid
It is solely a federally administered program. Medicaid is an assistance program for persons with insufficient income and/or resources to pay for health care. States administer the program that is financed by federal and state funds.
Which of the following statements about the reinstatement provision is true
It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated.
Which statement is not true regarding a straight life policy
Its premium steadily decreases over time, in response to its growing cash value.
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
The provision which prevents the insured from bringing any legal action against the company for at least 60 days after proof of loss is known as
Legal actions. This mandatory provision requires that no legal action to collect benefits may be started sooner than 60 days after the proof of loss is filed with the insurer. This gives the insurer time to evaluate the claim.
Your client wants both protection and savings from the insurance and is willing to pay premium until retirement at age 65. What would be the right policy for this client
Limited pay whole life Premium payments will seize at her age 65, but coverage will continue to her death age or 100
An applicant who receives a preferred risk classification qualifies for
Lower premiums than a person who receives a standard risk.
Which of the following information about the applicant is NOT included in the General Information section of the application for insurance?
Medical background Part 1 - General Information of the application includes the general questions about the applicant, including name, age, address, birth date, gender, income, marital status, and occupation. The applicant's medical background is addressed in Part 2 - Medical Information
If a life insurance policy develops cash value faster than a 7 pay whole life contract, it is?
Modified Endowment Contract
The primary eligibility requirement for Medicaid benefits is based upon
Need Medicaid is a program operated by the state with some federal funding to provide medical care for those in need
Bethany studies in England for a semester. While she is there, she is involved in a train accident that leaves her disabled. If Bethany owns a general disability policy, what will be the extent of benefits that she receives?
None since general disability does not cover war, military service, intentional injuries, overseas residence, or felony injuries
All the following are covered by part A of Medicare, except
Physician's and surgeon's services
Which of the following will be included in a policy summary
Premium amounts and surrender values A policy summary must be delivered along with the policy and will provide the producer's name and address, the insurance company's home office address, the generic name of the policy issued, and premium, cash value, surrender value and death benefit figures for specific policy years.
All of the following are characteristics of group life insurance, except
Premiums are determined by the age, sex and occupation of each individual certificate holder.
Which of the following is correct concerning the taxation of premiums and a key person life insurance policy
Premiums are not taxed deductible as a business expense The business cannot take a tax deduction for the expense of the premium. However, if the key employee dies, the benefits paid to the business are usually received tax free.
An agent offers his clients free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of
Rebating
Which of the following statements is correct about a standard risk classification in the same age group with similar lifestyles
Standard risk is representative of the majority of people. Standard risk are representative of the majority of people in their age, and with similar lifestyles, they are the average risk
Which of the following types of annuities will generally provide the highest monthly income?
Straight life Pure or straight life annuity settlement option will only pay for as long as the annuitant lives; therefore, it has the potential to provide the highest monthly income. Any time a "period certain" option is included, it will reduce the monthly payout amount because, even if the annuitant dies, the company must continue to pay benefits for the period certain.
Medicare supplements specifically exclude all of the following, except
Surgical expenses of persons eligible for Medicare. Medicare supplement policies are designed primarily as supplements to reimburse under Medicare for the hospital, medical or surgical expense of persons eligible for Medicare. These policies do not include Medicare advantage plans, outpatient prescription drug plans, or any healthcare pre-payment plan that provides benefits related to Social Security.
Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?
The beneficiary will only receive payments of the interest earned on the death benefit.
If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy?
The death benefit will be smaller
Which statement accurately describes group disability income insurance
The extent of the benefits is determined by the insured's income. Group plans usually specify the benefits based on a percentage of the worker's income. Short-term group plans usually provide maximum benefit periods of 13-26 weeks. Group long-term plans provide monthly benefits usually limited to 60% of the individuals income. Group disability plans also have a minimum participation requirements - usually the employee must have worked for 30-90 days before becoming eligible for coverage.
In which of the following situations would Social Security disability benefits not cease?
The individual's son gets a part-time job to help support the family Benefits cease when the individual reaches age 65, dies or is no longer disabled. If a person has been receiving Social Security disability benefits at the time he or she turned 65 the disability benefits cease, and are replaced by Social Security retirement benefits at death family benefits will continue as survivor benefits will continue for an adjustment period of three months if an individual no longer satisfies the definition of disability
Insured Z's health insurance policy year begins in January. His policy contains a carry-over provision. In November, he has a small claim which is less than his deductible. Which of the following is true?
The insured may carry over the amount of this year's expenses to next year, which will help satisfy next year's deductible
Which of the following is not a feature of a non-cancellation policy
The insurer may terminate the contract only at renewal for certain conditions The insurance company cannot cancel a non-cancellation policy nor can the premium be increased beyond what is stated in the policy. The insured has the right to renew the policy for the life of the contract however, the guarantee to renew coverage usually only applies until the insured reaches age 65.
Which of the following is not a feature of a noncancellable policy?
The insurer may terminate the contract only at renewal for certain conditions.
All the following statements are true, regarding installments for a fixed amount, except
The payments will stop when the annuitant dies. Installments for a fixed amount option has no life contingencies. A specific amount of benefits will be paid until funds are exhausted whether or not the annuitant is living.
All of the following are true of key person insurance, except
The plan is funded by permanent insurance only. key person coverage may be funded by ANY type of life insurance.
Which of the following best defines the owner as it pertains to life settlement contracts?
The policyowner of the life insurance policy
A policyowner names his five children as primary beneficiaries and his wife as a contingent beneficiary. If the policyowner and one of his children die, who would receive policy benefits?
The remaining 4 primary beneficiaries
An insured buys a Medicare supplement insurance policy from a new insurer this policy will replace one provider to her, by another insurer which of the following must provide her with a notice of replacement?
The replacing insurer
An outline of coverage must be given to the applicant for a long term care policy no later than?
The time of initial solicitation
An insured makes regular contributions to his Health Savings Account. How are those contributions treated in regards to taxation?
They are tax deductible an individual covered by a high deductible health plan can make a tax - deductible contribution to an HSA & use it to pay for out-of-pocket medical expenses.
All of the following are requirements for life insurance illustrations except
They must be part of the contract. An illustration may not be altered by an agent and must clearly state that it is not part of the contract. It is legal to list nonguaranteed values in the contract, but they must be specifically labeled as projected, not guaranteed values.
Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated
Those who have been insured under the plan for at least 5 years
What is the purpose of key person insurance?
To lessen the risk of financial loss because of the death of a key employee
According to the rights of renewability rider for cancellable policies, all the following are correct about the cancellation of an individual insurance policy, except
Unearned premiums are retained by the insurance company.
What kind of policy allows withdrawals or partial surrenders?
Universal life Universal Life products allow the partial withdrawal, or surrender, of the policy cash value.
Under the Physical Exam and Autopsy provision, how many times can an insurer have the insured examined, at its own expense, while a claim is pending?
Unlimited The Physical Exam and Autopsy provision allows the insurer to examine the insured as much as is reasonably necessary while the claim is being processed, provided that the insurer pays the expenses.
Which characteristics does not describe managed care?
Unlimited access to providers
Which of the following life insurance policies allows a policyowner to take out a loan from the policys cash value
Variable Universal Life
Which of the following determines whether disability insurance benefits are taxed
Whether the premiums are tax deductible The taxation status of benefits, is often determined by whether the premium has been tax deducted
Can an individual who belongs to a POS plan use an out of network physician?
Yes, they can use any physician even if not part of the HMO
Under which installment option does annuitant select the amount of each payment, and the insurer determines how long they will pay benefits
a fixed amount
Which of the following information will be stated in the consideration clause of a life insurance policy
amount of premium payment The consideration clause states that the value offered by the insured is the premium and statements made in the application, so it will include the information about the amount and frequency of premium payments.
If the annuitant dies during the accumulation period, who will receive the annuity benefits?
beneficiary either the amount paid into the plan or the cash value, whatever is greater
What type of insurance would be used for a Return of Premium rider?
increasing term 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 riders added to a life insurance policy can pay part of the death benefit to the insured to cover expenses incurred in a nursing or convalescent home?
long term care
If a settlement option is not chosen by the policyowner or the beneficiary, which option will be used?
lump sum
What is the initial period of time specified in a disability income policy that must pass after the policy is in force before a loss can be covered?
probationary period
The Federal Fair Credit Reporting Act
regulates consumer reports