Practice Final Exam Questions 2 of 2

All money received by a licensee is received in what type of capacity? Select one: a. Executive b. Fiduciary c. Estate d. Discriminatory

All money representing premiums received by a licensee must be received by the licensee as a fiduciary. The correct answer is: Fiduciary

Which of the following individuals needs to be licensed as an insurance producer? Select one: a. Advertiser b. Underwriter c. Broker d. Executive officer of insurer

Any person who does not transact insurance or receive a commission is not required to be licensed as an insurance producer. The correct answer is: Broker

Tina has a policy that only covers cancer-related medical expenses. What kind of policy does she have?

Dread disease policies are limited policies that pay for a specific disease or medical condition. The correct answer is: Dread disease

Sam works for large corporation and is eligible for both his company's health plan and Medicare. Which plan would be primary?

Employer sponsored health plans are always primary, and Medicare is secondary, as long as the company plan has more than 20 employees. The correct answer is: Work

Question text In Alaska, group life policies must cover a minimum of how many individuals? Select one: a. 2 b. 5 c. 10 d. 25

Group life policies must cover at least 2 individuals. The correct answer is: 2

Question text If a person is terminated from employment how much time do they have to convert from a group life insurance policy to an individual life insurance policy?

If a person is terminated from employment and the group life insurance policy has provided for conversion, that person is entitled to an individual policy of life insurance without disability or other supplementary benefits so long as the first premium is paid to the insurer within 31 days after termination. The correct answer is: 31 days

Over-funded life insurance policies where the proceeds are subject to taxation are called: Select one: a. MECs b. Roth IRAs c. Section 1035 exchange d. Section 457 deferred compensation.

Modified endowment contracts are over-funded life insurance policies in which proceeds are subject to taxation. The correct answer is: MECs

The Beauty Shop Cosmetic Company purchases a life insurance policy on Anna, the company's leading salesperson. Which business continuation plan does this company have? Select one: a. Split-dollar b. Executive bonus plan c. Section 303 plan d. Key person insurance

The Beauty Shop Cosmetic Company purchased key person insurance. Anna is a key employee, because she is responsible for much of the company's profitability. The correct answer is: Key person insurance

What group consists of all licensed hospital or medical service corporations in Alaska and offers policies for major medical coverage, plus all health maintenance organizations and licensed and self-funded multiple employer welfare arrangements?

The Comprehensive Health Insurance Association (CHIA) is comprised of all licensed medical service corporations in Alaska and offers policies for medical coverage as well as HMOs and self-funded multiple employer welfare arrangements. The correct answer is: Comprehensive Health Insurance Association

If James has an increasing term policy, which of the following must increase?

The death benefit increases. The correct answer is: The death benefit

An insured has returned to work after a disability, but is unable to perform all of his previous duties. Which of the following definitions would cover his permanent partial disability?

The definition of residual disability would cover this type of disability. The correct answer is: Residual disability

Who has the right to change the beneficiary on a life policy?

The policyowner has the right to change the beneficiary. The correct answer is: The policyowner

Which of the following is an improper form of policy replacement?

Twisting is an improper type of replacement along with churning. Twisting is replacing another companys policy, whereas churning is replacing a policy within the same company.

A life insurance policy can be reinstated within: Select one: a. 1 year b. 2 years c. 3 years d. 4 years

Unless a life policy has been surrendered for its cash surrender value, the cash surrender value has been exhausted, or the paid-up term insurance has expired, the policy will be reinstated at any time within 3 years from the date of premium default. The correct answer is: 3 years

The beneficiary designation that allows the policy to be changed without the beneficiary's consent:

A revocable beneficiary means the policy can be changed without the consent. An irrevocable beneficiary means the policy cannot be changed without the beneficiaries consent. The correct answer is: Revocable

A firm license covers all lines and classes of authority of: Select one: a. Only the managers and supervisors b. Only the insurance producers c. Each individual employee that has paid the firm fee d. Each individual employee of the firm

A firm license covers all lines and classes of authority of each individual employee of the firm. A firm may not be licensed unless each employed insurance producer, managing general agent, surplus lines broker, and adjuster is licensed as an individual in the firm. The correct answer is: Each individual employee of the firm

What type of insurer is formed under the laws of a state other than Alaska?

A foreign insurer is one formed under the laws of any other state. The correct answer is: Foreign

Question text What right of renewability guarantees insurability, but does not guarantee premiums?

A guaranteed renewable policy does not allow the insurer to cancel the policy, but it allows the insurer to increase the premiums. The correct answer is: Guaranteed renewable

What kind of contract pays an income to an insured until the insured dies?

A life annuity would pay income until the insured died. The correct answer is: Life annuity

Question text Who manages all or part of the insurance business of an insurer and acts as the insurer's agent? Select one: a. Producer b. Managing general agent c. Insurance administrator d. Independent adjuster

A managing general agent is defined as a person who manages all or part of the insurance business of an insurer and acts as the insurers agent. The correct answer is: Managing general agent

Insurance advertisements must not be: Select one: a. Incomplete, deceptive, or hard to follow b. Untrue, comparative, or incomplete c. Untrue, deceptive, or misleading d. Uninteresting, deceptive, or misleading

A person may not make, publish or circulate an advertisement, announcement, or statement containing a statement with respect to the business of insurance, which is untrue, deceptive, or misleading. The correct answer is: Untrue, deceptive, or misleading

Question text A program that includes prehospitalization authorization is an example of:

A preauthorization program is an example of managed care. The correct answer is: Managed care

Which type of life policy would best suit someone who retires in good health with a large amount of cash, whose investment goals are conservative?

A single premium whole life insurance would best suit this person. Buying insurance with a single premium is less than the policy would cost with continuous payments. It has immediate cash value, and is not front-end-loaded. The correct answer is: Single premium whole life insurance

What refers to any person, firm, corporation, partnership, limited liability company, or association actively engaged in business that employs at least 2, but not more than 50 employees?

A small employer refers to any person, firm, corporation, partnership, limited liability company, or association actively engaged in business that employs between two and 50 employees. The correct answer is: A small employer

Question text In a life policy, a statement of good health is needed when: Select one: a. The application does not include the premium. b. The application includes the premium. c. The statement of good health is always needed. d. The statement of good health is never needed.

A statement of good health is needed when the application does not include the initial premium with the application. The correct answer is: The application does not include the premium.

Phil and Sarah bought a life policy in which both are insured. Sarah dies before Phil. If the policy pays the death benefit after Phil dies, it is a: Select one: a. Joint life b. Survivorship life c. Guaranteed renewable d. Convertible term

A survivorship life policy pays after the second person or last survivor dies. Joint life pays the death benefits after the first person dies. The correct answer is: Survivorship life

Jeff has limited financial resources, but finds himself in a position where he needs a good deal of protection. A __________would probably best suit his needs at this time.

A term policy would give him the most protection for the least money up front. The correct answer is: Term policy

Life insurance death benefits that can be accessed tax-free when the insured is still alive are called: Select one: a. Accelerated benefits b. Viatical settlements c. Life settlements d. Chronically ill benefits

Accelerated benefits allow policyowners to use a policy's death benefits tax-free while they are still alive, or if they are terminally or chronically ill. The correct answer is: Accelerated benefits

What is the term for companies that are authorized to transact insurance in the state of Alaska?

Admitted, or authorized, companies are insurers that are authorized via certificate of authority issued by the Director to transact insurance in the state of Alaska. The correct answer is: Admitted companies

What is another the term for authorized insurers?

Admitted, or authorized, companies are insurers that are authorized via certificate of authority issued by the Director to transact insurance in the state of Alaska. The correct answer is: Admitted insurers

Samson has a policy that allows the insurer to cancel the policy at any date specified in the contract, and to raise his premiums. Which type of policy is it?

An optionally renewable policy allows the insurance company to cancel the policy for any reason, on dates set in the contract. The insurer can also increase the premiums. The correct answer is: Optionally renewable

The Acme Brick Company wants to provide additional benefits to certain classes of employees under a group health plan. They can do this as long as the classes are not based on:

As long as the additional benefits are not based on the gender of the employee, they may be offered to certain classes of employees in a group health plan. The correct answer is: The gender of the employee.

The insurer has a maximum of how many days after receiving notice of a claim to provide claims forms?

Claims forms must be provided to the claimant a maximum of 15 days after receiving a notice of claim. The correct answer is: 15 days

What right of renewability does not guarantee insurability if certain circumstances happen and allows the insurer to increase premiums? Select one: a. Noncancelable b. Cancelable c. Conditionally renewable d. Optionally renewable

Conditionally renewable policies allow the insurer the right not to renew the contract for a reason specified in the policy. An example of a condition is a change to a dangerous job. Policy premiums can also be increased. The correct answer is: Conditionally renewable

Health insurance policies that provide coverage for members of the policyholder's family must cover a newborn child:

Coverage for newborns begins from te moment of birth. The correct answer is: From the moment of birth

If an agent were to publish literature that is false or maliciously critical of another insurer calculated to injure a person engaged in the business of insurance, the agent would be committing:

Defamation is circulating of any oral or written statement or any pamphlet, circular, article, or literature which is false or maliciously critical of or substantially misrepresents the financial condition of an insurer and which is calculated to injure any person engaged in the business of insurance. The correct answer is: Defamation

How does the IRS treat disability income benefits when the employer pays the policy premiums?

Disability income benefits from an employer-paid group policy are fully taxable. The correct answer is: They are fully taxable.

How are dividends treated for tax purposes? Select one: a. Always taxed b. Never taxed c. Depends on persons income d. Depends on the type policy

Dividends are never taxed. They are considered a return of premiums. The correct answer is: Never taxed

Paul has a basic medical policy. It will pay for: Select one: a. Doctor visits b. Hospital visits c. Outpatient care d. Prescription drugs

Doctor visits are covered under basic medical policies. The correct answer is: Doctor visits

What type of premiums payment can employers deduct as an ordinary business expense? Select one: a. Key employee b. Joint life if part of a business partnership c. Buy/sell agreements d. Group

Employers can deduct premium payments for group insurance. The correct answer is: Group

All of the following insurers must hold a certificate of authority to transact insurance in Alaska, EXCEPT: Select one: a. Mutual insurer b. Stock insurer c. Domestic insurer d. Surplus lines insurer

Excess and surplus lines insurers are unauthorized insurers, and therefore do not hold certificates of authority, but are permitted to transact excess and surplus lines insurance in Alaska. The correct answer is: Surplus lines insurer

Comprehensive major medical health policies typically have an Eligible Expenses provision that specifies coverage for all but:

Experimental and investigative services are not normally considered eligible expenses. The correct answer is: Experimental services.

Jacob, James and Jonathan are triplets, and all applied for the same type of insurance coverage at the same time. For James and Jonathan the rates were the same. Jacob's rate was quite a bit higher. What is the most likely reason for this difference? Select one: a. Consideration b. Risk classification c. Third-party ownership d. Insurable interest

For some reason Jacob's risk classification was different. The correct answer is: Risk classification

The services are provided on a prepaid per person basis called capitation in:

HMOs pay for services on a prepaid per person basis, which is called capitation. The correct answer is: HMOs

Tyler owns a major medical policy with 70/30 coinsurance and a $3,000 deductible. If he submits a claim for $20,000, how much will he pay?

Hell pay $8,100. The math works out $20,000 - $3,000 = $17,000. Then $17,000 x .30 = $5,100. Then add the $3,000 deductible with the $5,100 coinsurance ($3,000 + $5,100= $8,100). The correct answer is: $8,100

If an individual has a chronic medical condition, how is the insurer likely to handle this situation when issuing an individual health policy?

If an applicant has a chronic medical condition, or existing medical condition, the insurer could exclude the condition with an Impairment rider. The correct answer is: The insurer will exclude the condition with an Impairment rider.

An insurance applicant submits an application with a premium. After underwriting, the insurer sends back the policy, rated, with an impairment rider. What should the producer tell the applicant at delivery?

If the policy is rated, the producer needs to explain the issue and collect an additional premium. The correct answer is: Explain the issue and collect an additional premium.

Mr. Jones, the insured, committed suicide after the expiration of the suicide clause in his life insurance policy. The insurer is obligated to:

If the suicide clause has expired, the insured must pay the death benefit. The correct answer is: Pay the death benefit.

In what form of advertising does an agent secures information from individuals without their knowing his real purpose, which is to contact them and seek to sell them insurance?

In cold lead advertising, the insurer or producer might invite seniors to sign up for a chance to win a cruise or a vacation, but the real purpose is to secure their contact information to build a list of prospective clients. This method is prohibited in this state. The correct answer is: Cold lead advertising

An individual life insurance policy must contain a table showing all of the following, EXCEPT: Select one: a. Amount paid b. Loan value c. Cash surrender values d. Nonforfeiture benefits

Individual life insurance policies are required to contain a table showing in figures the loan value, the cash surrender values, and the nonforfeiture benefits. The correct answer is: Amount paid

In life insurance, insurable interest must be present at the time of: Select one: a. Application b. Delivery c. Death d. Never

Insurable interest must be present when the application is made. The correct answer is: Application

What should an insurer do if there is reason to believe that a fraudulent claim has been made?

Insurers, who have reason to believe that a fraudulent claim has been made, or that business practices in violation of state regulations have been committed, must disclose this information in a report to the Director. The correct answer is: Report to the Director

Long-term care plans are written as: Select one: a. Optionally renewable b. Guaranteed renewable c. Conditional renewable d. Cancellable

Long-term care policies are usually not cancellable by the insurance company, but the company does have the right to increase premiums. The correct answer is: Guaranteed renewable

Long-term care policies must provide at least how many months of consecutive coverage? Select one: a. 6 months b. 12 months c. 18 months d. 24 months

Long-term care policies must provide at least 12 months of consecutive coverage for each covered person on an expense-incurred or indemnity basis. The correct answer is: 12 months

When an agent or insurer does not truthfully explain the terms, benefits, limitations, or exclusions of an insurance policy, or makes untrue statements of fact or law, or fails to state material facts or other disclosures as required by law, this is:

Misrepresentation is when an agent or an insurer misrepresents the terms, benefits, limitations, or exclusions of a policy. The agent or insurer makes untrue or misleading statements of fact or law, and fails to state material facts or other disclosures as required by law. The correct answer is: Misrepresentation

Which of the following offers the broadest service area and broadest selection of providers?

PPO's offer the broadest service area and broadest selection of providers. The correct answer is: PPO

Question text In Alaska, boycott, coercion and intimidation are considered as which of the following? Select one: a. Unfair trade practices b. Unfair claim settlement practices c. Marketing methods d. Criminal acts

Participation or coordination of an act of boycott, coercion, or intimidation unreasonably restraining the business of insurance is an unfair trade practice and is prohibited. The correct answer is: Unfair trade practices

The manner in which the proceeds of a life policy are handled are specified in what provision?

Payment of claims is specified in the settlement options. The correct answer is: Settlement options

Jamie has a renewable term policy. Which of the following is not an incorrect statement about this type of policy.

Renewability is the insurer's option - is the only correct statement. The correct answer is: Renewability is the insurer's option.

Question text When Jason filled out his application his statements had to be ______________ to be considered legal.

Representations, made to the best of Jason's knowledge, are considered legal. The correct answer is: Representations

Sally is a self-employed software programmer that works from home. If she becomes unable to work due to a disability, which type of policy would pay her rent? Select one: a. Individual disability income policy b. Group disability income policy c. Business overhead expense policy d. Workers' Compensation

Since she is self-employed, an individual disability income policy would cover her. The correct answer is: Individual disability income policy

Question text If petitioned for a hearing, the Director must grant or deny the petition within: Select one: a. 20 days b. 30 days c. 45 days d. 60 days

The Director has 30 days after receipt of a complaint to grant or refuse a hearing on the matter. The correct answer is: 30 days

Question text In most Disability Income policies, the Elimination Period applies: Select one: a. To claims for accidents only. b. To each disability separately. c. Only to the first time an insured becomes disabled. d. During the first 10 days of the contract.

The Elimination Period is applied to each disability separately and is usually 30 days. The correct answer is: To each disability separately.

When can the Insurance Director examine the records of an insurer? Select one: a. Anytime b. Only with 48 hours notice c. Only with a court order d. Only when a complaint is filed

The Insurance Director may conduct an examination of any company as often as necessary. The correct answer is: Anytime

What is the main purpose of the MIB?

The Medical Information Bureau is a trade organization that maintains medical information used by life and health insurers. It shares that information with member companies. The correct answer is: The sharing of medical information and data among its member companies.

What part of the policy directs the insurer on the recipients of benefits?

The Payment of Claims provision stipulates to whom claim payments are made. The correct answer is: Payment of Claims provision

Question text A Waiver of Premium provision in a Disability Income policy allows:

The Waiver of Premium allows the insured to keep his coverage in force while disabled and unable to pay the premiums. The correct answer is: The insured to maintain a policy in force while unable to pay premiums when disabled.

The policyowner's obligation to pay the premium is the:

The consideration clause states that a policyowner must pay a premium in exchange for the insurer's promise to pay benefits, and the frequent premium payments. The correct answer is: Consideration Clause

Question text The entire contract provision in a health and accident policy includes what 2 basic parts?

The entire contract provision in an insurance contract states that the complete agreement between the insured and the insurer is contained in the contract. This includes the policy and any attached papers, including declarations, exclusions, conditions, and endorsements. The other answers are incorrect because they are too limited. The contract includes all attached papers. The correct answer is: Policy and any attached papers

Becky is a 31 years old and knows she needs to start a retirement plan. She currently works in a bakery and is worried about how inflation would affect her retirement plan. Which annuity would be a good fit for her needs?

The flexible premium deferred annuity would probably be the best fit for her needs. The correct answer is: Flexible premium deferred annuity

On November 5, Zoe fills out an application for a life policy. On November 6, the agent accepts the premium for the policy. The policy is delivered on November 7. Which date does the Free Look period start?

The free look starts upon delivery of a life policy, which is November 7th. The correct answer is: November 7

Kim's policy remained in force for a certain number of days even though she forgot to pay the premium. The provision that allows this is called:

The grace period allows the policy to remain in force for a specified number of days beyond the premium due date. The correct answer is: The grace period provision

If Dan pays his health insurance premium quarterly and fails to make payment on April 1, his grace period will expire: Select one: a. May 1 b. June 1 c. June 30 d. July 1

The grace period for all premium periods over monthly is 31 days. His grace period would expire on May 1. The correct answer is: May 1

If an applicant states their age is 30 on an application for life insurance, when they were actually 37, what is the insurer likely to do? Select one: a. Pay the full death benefit based on the stated age. b. Refund the premiums paid without interest. c. Pay the death benefit based on the applicant's actual age. d. Void the policy for misrepresentation and fraud.

The insurance company will pay the death benefit, but it will be reduced based on what the premium should have been with the applicant's correct age. Take note: even an intentional misstatement of age is not considered material enough to void the policy. The correct answer is: Pay the death benefit based on the applicant's actual age.

The fact that the application is part of the policy is stated in:

The insurance policy itself (including any riders and endorsements/amendments) and the application, if attached to the policy, comprise the entire contract between all parties. The correct answer is: The entire contract

What should the insured do if the insurer fails to send the correct forms, under the Claims Forms provision of a health policy?

The insured can submit the claim on any form and the insurer must accept it as proof of loss. The correct answer is: Create their own form on which to submit the claim.

No legal action may be brought to recover on an individual health insurance policy until how many days after the insured has furnished written proof of loss? Select one: a. 30 days b. 60 days c. 90 days d. 120 days

The insured may not file suit against the insurer for 60 days after providing proof of loss. This gives the insurer time to investigate and process the claim. The correct answer is: 60 days

An individual has a disability income policy with a Change of Occupation clause when he changes to a new more hazardous job. He neglects to inform the insurer. What happens if one year later he files a claim when he becomes disabled?

The insurer would pay the claim according what the premiums would have purchased had the hazardous occupation been known. The correct answer is: The insurer will pay the claim based on what the premiums would have purchased had the hazardous occupation been known.

If an applicant misstates their age on an insurance application, what does the insurer do when it is discovered at claim time?

The insurer would pay the claim but adjust the benefits (downward) to reflect what he would have been entitled to if his real age had been given. The correct answer is: Adjust the claim benefits to reflect what he would have been entitled to if his real age had been given.

What approach calculates the amount of money a family needs immediately upon the death of the insured to pay for their expenses and basic necessities? Select one: a. Human life value b. Needs c. Salary d. Social Security blackout

The needs approach calculates the amount of money a family needs immediately upon the death of the insured to pay for their expenses and basic necessities. The correct answer is: Needs

What is the advantage of a payor benefit rider? Select one: a. It provides disability income. b. It provides additional insurance if the death is a result of an accident. c. It provides a temporary waiver of premium if the person paying the premium dies. d. It cancels the policy without penalty and returns premiums paid.

The payor rider provides a temporary waiver of premium. The correct answer is: It provides a temporary waiver of premium if the person paying the premium dies.

The entire individual life insurance contract includes: Select one: a. Application only b. Policy only c. Application and policy d. Application, policy and Buyer's guide

The policy, or the policy and the application, if attached, constitutes the entire contract between the parties, and neither party may make agreements as to the insurance, which are not expressed in the policy. The correct answer is: Application and policy

If more than one beneficiary is named, who is the first in line?

The primary beneficiary is the first in line, and the contingent is the second in line. The correct answer is: Primary

All of the following are duties of a producer when delivering a policy to an applicant EXCEPT: Select one: a. Review of the benefits and conditions. b. Explanation of all riders and exclusions. c. Collection of any premiums due. d. Arranging to keep the policy in his office for safe-keeping.

The producer should not keep the policy in his office - the client needs to have possession of the policy. The correct answer is: Arranging to keep the policy in his office for safe-keeping.

The benefit that encourages the disabled policy owner to try to return to work is:

The recurrent disability provision encourages a person with a disability to try and go back to work. It specifies a certain number of days that a recurrence of the disability is considered a continuation, not a new disability. Therefore it does not have a new elimination period. The correct answer is: Recurrent disability

In Alaska, how many hours of continuing education are producers required to complete during each compliance period? Select one: a. 12 b. 20 c. 24 d. 36

To renew licenses, producers must complete at least 24 hours of continuing education during each 2-year period. The correct answer is: 24

Transacting insurance does NOT include which of the following? Select one: a. Sale b. Solicitation c. Adjudication d. Negotiation

Transacting insurance includes solicitation, inducement, preliminary negotiations, executing a contract of insurance or medical care coverage, and transactions of matters subsequent to the execution and arising out of a contract. The correct answer is: Adjudication

Inducing a policyholder to switch insurance companies without regard to bad consequences is: Select one: a. Boycott b. Churning c. Twisting d. Defamation

Twisting is knowingly making misleading representations or incomplete or fraudulent comparisons of insurance policies in order to induce a person to lapse, forfeit, surrender, terminate, retain, assign, or convert a policy in order to sell a policy for another company. The correct answer is: Twisting

To determine the coverage and benefits to pay for a surgery based on what is considered fair and common for an area is:

Under the usual, reasonable, and customary method, an insurer looks at what is considered reasonable and customary for a geographic area. The correct answer is: Usual, reasonable, and customary

Question text What type group plan requires 75% participation? Select one: a. Contributory b. Noncontributory c. Consideration d. Contributing

With a contributory plan, the group members share the cost of the coverage with the employer, and must have at least 75% participation. The correct answer is: Contributory

Which of the following is not included in health insurance in the state of Alaska? Select one: a. Disablement or expense resulting from sickness or childbirth b. Incurred expenses while preventing sickness c. Workers' Compensation d. Bodily injury, disablement, or death by accident and resulting expenses

Workers' Compensation Insurance is not included in the definition of health insurance. It provides coverage for liabilities of the workplace. The correct answer is: Workers' Compensation

What type policy would pay the death benefits after the first person dies, if it covers two or more lives?

Joint life pays the death benefits after the first person dies. A survivorship life policy pays after the second person or last survivor dies. The correct answer is: Joint life

Question text Life insurance applications require a signature from: Select one: a. The agent b. The insured c. The policyowner d. All of the above

A life insurance application requires the agent, proposed insured, and the policy owner if different from the insured to sign it. The correct answer is: All of the above

A producer must hold a life insurance line of authority and complete how many hours in a training course in order to sell annuities?

A producer must hold a life insurance line of authority and complete a one-time 4 credit hour training course approved by the Director covering annuities. The correct answer is: 4 hours

At what age would a qualified retirement plan distribution be premature?

A qualified retirement plan distribution would be premature if made before 59 1/2 , and subject to a 10% tax penalty. The correct answer is: 59

In Alaska, an individual life insurance policy has a grace period of:

In Alaska, individual life insurance policies have a grace period of 30 days. The correct answer is: 30 days

Investment risk is completely taken by the policyowner is what type policy?

In a variable universal life policy the policyover has all the investment risk. The correct answer is: Variable universal life

Question text Shane and Casey both have health plans from work that covers their son Cash. Which plan is primary?

In determining the coordination of benefits, the parent's birthday that is the earliest in the year has primary coverage. In a divorce, whichever parent has custody is primary. The correct answer is: The parent with the earliest birthday in the year is primary.

Gregory recently purchased a one-year term insurance policy. At the end of the year, he can purchase an identical policy without having to show proof of insurability. Why type of policy did he purchase?

It is a renewable term policy that allows the policyowner to purchase another identical policy at the end of the year without proving insurability. The correct answer is: Renewable term

Which of the following is not one of the elements required to make a contract legal?

Ambiguities are things that are unclear in a contract. The correct answer is: Ambiguities

Dylan is looking at buying an equity-indexed life policy; it will likely be tied to:

An Equity - Indexed life policy is tied to and equity index. Examples of an equity index include the S & P 500 or the Dow Jones Industrial Average. The correct answer is: Dow Jones Industrial Average

Information obtained by a phone call to an applicant, may be included in which of the following reports?

An Inspection report can include information obtained by a phone call to a prospective insured. The correct answer is: Inspection report

Question text What is the maximum fine per violation for committing an unintentional unfair trade practice violation?

If a person commits an unfair trade practice or act, the Director may serve upon that person a cease and desist order requiring the person to discontinue actions which caused the violation, and a maximum fine of $2,500 per violation. The correct answer is: $2,500

Errors & Omissions are most likely to occur during:

Errors & Omissions are most likely to occur during a policy replacement. The correct answer is: A replacement

What is the advantage of a Waiver of Premium provision in a life policy?

If an insured becomes totally disabled before a certain age, this provision would waive the premiums. The correct answer is: Waive an insured's premiums if he/she becomes disabled.

Which of the following statements is not true about the tax liabilities for individual life insurance policies?

Policy loans are not taxable as income because they are regarded as a debt against the policy. The correct answer is: Policy loans are taxable as income.

How frequently must producer licenses be renewed?

Producer licenses must be renewed every 2 years to remain in effect. The correct answer is: Every 2 years

A health policy will usually exclude losses related to all of the following, EXCEPT:

Select one: a. Self-inflicted injuries b. Losses incurred while committing a felony c. Losses incurred while engaging in an illegal occupation d. Losses from an auto accident when the insured was at fault Losses from an accident will not be excluded unless the insured is engaged in the other activities listed. The correct answer is: Losses from an auto accident when the insured was at fault

What is a key difference between a stock insurer and a mutual insurer?

Stock insurers are owned by investors (stockholders); mutual insurers are owned by policyholders. The correct answer is: Stock insurers are owned by investors; mutual insurers are owned by policyholders.

The Director performs all of the following duties, EXCEPT: Select one: a. Issues certificates of authority and licenses b. Examines insurance companies c. Administers oaths d. Writes and amends insurance statutes

The Director does not write insurance laws. Legislators write laws. The correct answer is: Writes and amends insurance statutes

Richard is thinking about transferring some of the ownership rights of his policy to his brother Randy. What term is used for this type of transfer?

This type of transfer is referred to as an assignment. The correct answer is: Assignment

Does a loan on the cash value of a life insurance policy accrue interest, and if so, how is the interest handled?

Yes, the loan does accrue interest. The interest can be paid annually, or added to the loan. The correct answer is: Yes, the interest can be paid annually, or added to the loan.

Question text Premiums may only be financed by the licensee or:

Your answer is incorrect A person may not enter into any insurance transaction in which the premium is financed by someone other than the licensee, unless the person providing the financing is licensed as a premium financer. The correct answer is: A premium financer

What is the dependent age limit for individual health insurance policies in Alaska?

The dependent age limit for individual health insurance policies in Alaska is 23. The correct answer is: 23

Cindy has a new medical plan that provides both health care services and health care insurance. She is covered by: Select one: a. Medicare b. A Multiple Employer Trust (MET) c. An HMO (Health Maintenance Organization) d. Medicaid

She is covered under an HMO. The correct answer is: An HMO (Health Maintenance Organization)

Question text An agent offering to waive the prospective client's first life insurance premium is engaging in which of the following unfair practices?

The agent is engaging in rebating, which is permitting to make a contract of insurance other than as plainly expressed in the contract. The correct answer is: Rebating

What are the benefits of a life insurance policy that the policyholder does not lose, even if the policy lapses?

The benefits of a life insurance policy that the policyholder does not forfeit, even if the policy lapses, are called nonforfeiture values. The correct answer is: Nonforfeiture values

Alex's life policy lapsed, which Nonforfeiture option would the insurer send him the value of the policy?

The cash surrender option allows the policyowner to receive the policy's cash value. The correct answer is: Cash surrender

Riders covering additional insureds can be added to life policies and cover all but which of the following?

The children's term rider does not apply to younger siblings of the policyholder. Only children of the policyholder can be covered under the children's term rider. The correct answer is: Younger siblings of the policyholder

Question text Which of the following policies would pay for a company's rent, utilities, and other operating expenses if the owner becomes disabled? Select one: a. Business overhead expense b. Business buy-out c. Key employee d. Workers' Compensation

A Business overhead expense policy pays a company's operating expenses, such as rent or payroll, if an owner becomes disabled. It will not pay the owner's salary. The correct answer is: Business overhead expense

Question text A POS (Point od Service) plan is a combination of: Select one: a. HMO and PPO b. POS and PPO c. HSA and HMO d. PPO and HSA

A POS is a type of HMO combined with a PPO that allows the member to use in or out of network services, giving the member more choices. Using out-of-network providers has a higher coinsurance. The correct answer is: HMO and PPO

A decreasing term life policy would be the most appropriate for: Select one: a. A 57 year old schoolteacher that doesn't want any risk b. A 35 year old doctor with a lawyer wife and a child c. A 66 year old retired electrician d. A 41 year old lawyer who wants a policy to pay his mortgage if he dies

A decreasing term life policy would be the most appropriate for a 41 year old lawyer who wants a policy to pay his mortgage if he dies. The correct answer is: A 41 year old lawyer who wants a policy to pay his mortgage if he dies

What type of insurer is formed under the laws of Alaska? Select one: a. Domestic b. Alien c. Foreign d. Mutual

A domestic insurer is one formed under the laws of this state. The correct answer is: Domestic

What happens if a person is owed deferred compensation, but becomes unlicensed before being paid? Select one: a. The person cannot be paid. b. The person may be paid with approval from the Director. c. The person may be paid if prior approval was obtained from the insurer. d. The person may be paid with no stipulations.

A licensee may not compensate a person, other than a licensee who is acting within the scope of his license, for transaction of insurance in Alaska except as in the following cases: an unlicensed person, who refers a potential customer to a licensee within the stipulations and a person, who is no longer licensed in Alaska, may be paid deferred compensation for if the person was licensed at the time of sale. The correct answer is: The person may be paid with no stipulations.

Which of the following statements regarding viatical settlements is false? Select one: a. A viatical settlement provider must apply for a license with the Director, submit the required information, and pay the required fee. b. All viatical settlement contract forms, disclosure statements, and advertising materials must be filed and approved by the viatical settlement provider. c. The Director may conduct examinations of any viatical settlement provider, at the expense of the person examined. d. Except when required, a viatical settlement provider may not disclose to another person the identity of the viator or insured of an insurance policy.

All viatical settlement contract forms, disclosure statements, and advertising materials must be filed and approved by the Director. The correct answer is: All viatical settlement contract forms, disclosure statements, and advertising materials must be filed and approved by the viatical settlement provider.

How many days does an insured have to provide proof of loss? Select one: a. 15 days b. 20 days c. 60 days d. 90 days

An insured has 90 days from the time of loss to provide the insurer proof of loss. The correct answer is: 90 days

A loan may be made on a life insurance policy after: Select one: a. 1 year b. 2 years c. 3 years d. 4 years

Any policy of life insurance may, after 3 full years' premiums have been paid and after the policy has a cash surrender value, and no premium is in default beyond the grace period, the insurer must advance an amount equal to or less than the loan value of the policy upon the policyowner's request for policy loan. The correct answer is: 3 years

Which of the following statements about large group health insurance is correct? Select one: a. With unusual exceptions, benefits are paid directly to health care provider. b. Written notice of sickness or injury must be provided to the insurer within 30 days after the event. c. The insurer must provide forms to the policyholder for filing proof of loss within 5 days of notice. d. A civil action may not be brought after the expiration of 5 years after written proof of loss is furnished.

Benefits are paid directly to the health care provider unless the beneficiary takes certain cautionary steps. The insured must provide notice of illness or injury within 20 days the illness or injury occurred. In return, the insurer must provide the insured with claim forms within 15 days of receiving notice. A civil action may not be brought after the expiration of 3 years after written proof of loss is furnished. The correct answer is: With unusual exceptions, benefits are paid directly to health care provider.

Question text A small employer is a business that employs a maximum of: Select one: a. 10 employees b. 25 employees c. 50 employees d. 100 employees

By definition in the state of Alaska, a small employer employs no more than 50 employees and no fewer than 2. The correct answer is: 50 employees

Controlled business is usually written on all the following, EXCEPT: Select one: a. The licensee b. Relatives c. Employees d. Friends

Controlled business is using an insurance license principally to procure insurance for the licensee, relatives, personal business, or employees. The correct answer is: Friends

On April 9, an application is submitted without the initial premium. The insurer requires a medical exam, and it is completed on April 14. On April 18, the insurer issued the policy, and the producer delivers it on April 21. When is coverage effective? Select one: a. April 9 b. April 14 c. April 18 d. April 21, after the statement of good health is signed, and the initial premium is paid.

Coverage begins on April 21, after the statement of good health is signed, and the initial premium is paid. The correct answer is: April 21, after the statement of good health is signed, and the initial premium is paid.

Question text On January 3, an application is submitted without the initial premium. The insurer requires a medical exam, and it is completed on January 15. On January 20, the insurer issued the policy standard, and the producer delivers it on January 22. When is coverage effective? Select one: a. January 3 b. January 15 c. January 20 d. January 22, after the statement of good health is signed, and the initial premium is paid.

Coverage begins on January 22, after the statement of good health is signed, and the initial premium is paid. The correct answer is: January 22, after the statement of good health is signed, and the initial premium is paid.

What are the two most common adjustments made during a month with a universal life insurance policy? Select one: a. Decrease premium and increase death benefit b. Cost of death protection deducted and current interest rate credited c. Lengthen premium-paying period and increase death benefit d. None of the above

Each month, the cost of the death protection is deducted from the cash value, and the current interest rate is credited. The correct answer is: Cost of death protection deducted and current interest rate credited

The most common plan used with an HSA is: Select one: a. POS b. PPO c. HMO d. HDHP

HSAs (Health Savings Accounts) are frequently used with HDHPs (high deductible health plans). The correct answer is: HDHP

HSAs are frequently used with: Select one: a. POSs b. PPOs c. HMOs d. HDHPs

HSAs (Health Savings Accounts) are frequently used with HDHPs (high deductible health plans). The correct answer is: HDHPs

What is the improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim? Select one: a. Illegal conversion of funds b. False use of statistics c. Unfair claims settlement d. Twisting

Illegal conversion of funds is the misappropriating, converting, or illegally withholding funds from an insurer, HMO, insured, or beneficiary. False use of statistics is when statistics are used that are not relevant to the policy. Advertisements may not imply the statistics were derived from the policy advertised unless it is true. The source of statistics must be disclosed in the advertisement and may not be more than five years old. Unfair claim settlement is the improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. The correct answer is: Unfair claims settlement

Which of the following contains information that is not required in the content of a policy? Select one: a. The names of the parties and the subject of the insurance b. The license number of the agent and the risks of the insurance c. The time the policy takes effect and the duration of the policy d. The premium and the conditions

Neither the license number of the agent nor the risks of insurance are required in the policy; however all of the other information above must be included in the policy. The correct answer is: The license number of the agent and the risks of the insurance

All of the following are true regarding nonresident producer licensing, EXCEPT: Select one: a. Nonresident licensees' home state is not Alaska. b. Nonresident licensees are not required to pass the Alaska licensing exam. c. Nonresident licensees must hold a valid producer license in their home state. d. Nonresident licensees must plan on moving to Alaska within 6 months.

Nonresidents may receive a nonresident producer license in Alaska even if they have no plans for moving. The correct answer is: Nonresident licensees must plan on moving to Alaska within 6 months.

How many years must records pertaining to insurance transactions be kept? Select one: a. 3 years b. 5 years c. 6 years d. 10 years

Records of transactions within the last 5 years must be retained and kept open for examination and inspection by the Director. The correct answer is: 5 years

In Alaska, the Director of Insurance is: Select one: a. Elected for a 4-year term b. Appointed by the governor for a 4-year term that may be renewed no more than 2 times c. Appointed by the governor and state legislative committee on Insurance and Commerce d. Appointed by the Commissioner of the Community and Economic Development Department

The Director of Insurance is appointed by the Commissioner of Community and Economic Development. He holds the highest office within the Department of Insurance and remains in office at the pleasure of the Commissioner. The correct answer is: Appointed by the Commissioner of the Community and Economic Development Department

Which rider on Diane's life policy will help her out when she is confined to a nursing home with a terminal illness? Select one: a. Return of premium rider b. Accidental death rider c. Consideration d. Accelerated benefit rider

The accelerated benefit allows Diane to receive a portion of the death benefit of her policy, prior to her death. The insured must have been diagnosed as terminally ill in order for this benefit to be paid. The correct answer is: Accelerated benefit rider

Which of the following must happen before an HIV test is performed on an applicant? Select one: a. The insurer must inquire about the applicant's sexual orientation. b. A consent form must be signed by the applicant prior to the test. c. The Insurer must inform all non-entitled parties to the upcoming test. d. The insurer must inform the state Department of Health of upcoming test.

The applicant must consent to the test and sign a consent form before the test is performed. The correct answer is: A consent form must be signed by the applicant prior to the test.

Question text Which of the following could be used to prevent a lapse in the payment of life insurance premiums? Select one: a. Automatic premium loan b. Cash loan c. Partial Surrender d. Waiver of premium

The automatic premium loan allows the insurer to tap into the cash value of a policy to pay an overdue premium. The correct answer is: Automatic premium loan

Sue's hospital bill is $4,500. Her major medical policy has a $500 deductible and then it pays 80% of the remaining bill. The policy also has a maximum out-of-pocket of $2,000. How much of the total bill will the insurance company pay?

The bill is $4,500. Subtract $500 for the deductible. The company will pay 80% of the balance, which is .80 x $4,000 = $3,200. The correct answer is: $3,200

Blake died 20 days after his group life insurance coverage was terminated. He did not apply for individual coverage. Which of the following is true? Select one: a. His beneficiary will not receive the death benefit because his group coverage was terminated. b. His beneficiary will receive the death benefit minus the initial premium for the converted coverage. c. His beneficiary will receive the full death benefit. d. His beneficiary will receive 50% of the death benefit.

The insured is covered under the group policy during the conversion period. The full death benefit will be paid to Blake's beneficiary. The correct answer is: His beneficiary will receive the full death benefit.

An insured in a group life insurance policy is allowed a grace period of at least: Select one: a. 10 days b. 15 days c. 30 days d. 31 days

The insured of a group life insurance policy is allowed a grace period of at least 31 days to pay any subsequent premiums due on the policy. The correct answer is: 31 days

When an insured completed his health policy application, his producer did not take a premium when he submitted it to the insurer. When the producer delivers the policy to the applicant, he needs to do all of the following EXCEPT: Select one: a. Collect the initial premium from the applicant. b. Explain the policy and provisions to the applicant. c. Issue the applicant a conditional receipt. d. Ask the applicant to complete a statement of continued good health.

The producer does not need to issue the applicant a conditional receipt when he delivers the policy. The correct answer is: Issue the applicant a conditional receipt.

The producer realizes that the prospective client omitted information about a prior illness. What should the producer do? Select one: a. The producer has no responsibility to report the omitted information. b. Nothing, because the MIB will catch it c. Tell the prospective client that a claim might be rejected later due to the omission. d. Assume the client will not make a claim until the incontestability period is over.

The producer has the duty to inform the prospective insured that a claim might be rejected later on with possible repercussions. This is a form of fraud, and a claim might be rejected on this basis. The correct answer is: Tell the prospective client that a claim might be rejected later due to the omission.

If a company reinstates a health policy, when does coverage begin for losses caused by sickness? Select one: a. Immediately b. 10 days c. 14 days d. 30 days

The reinstatement provision states that a reinstated health policy will cover only sickness losses that begin more than 10 days after reinstatement. The correct answer is: 10 days

An Accident and Health policy contains a Consideration clause which states: Select one: a. That the applicant pays the initial premium. b. That insurable interest must exist between the parties of the contract. c. That the entire contract includes any attachments made to the policy. d. Details of certain claims that may be excluded under the policy.

The statement that the applicant pays the initial premium is contained in the Consideration clause. The correct answer is: That the applicant pays the initial premium.

Which of the following statements is correct when pertaining to coordination of benefits by a group long-term disability plan with Social Security? Select one: a. Social Security only pays after group benefits have been exhausted. b. Group and Social Security benefits pay a combined maximum limit. c. Group only pays after Social Security benefits are depleted. d. After group benefits are exhausted, half of the allowable Social Security benefits are paid.

They can be integrated when group and Social Security benefits pay a combined maximum limit. The correct answer is: Group and Social Security benefits pay a combined maximum limit.

An insured became disabled in February of 2014. She had bought a disability income policy in October of 2012. Her disability was due to a condition that existed prior to October 2012 but was not excluded from her policy. The insurer will: Select one: a. Pay the claim in full. b. Pay 50% of the claim. c. Deny the claim because it is the result of a pre-existing condition. d. Deny the claim based on fraudulent misrepresentation.

Under these circumstances, the insurer will pay the claim in full. The correct answer is: Pay the claim in full.

Which of the following unfair trade practices is characterized by charging different rates for individuals of the same class and equal expectation of life? Select one: a. Illegal inducement b. Rebating c. Unfair discrimination d. Misrepresentation

Unfair discrimination is allowing any inequity in the rates charged, dividends, benefits or any other term or condition of the policy between individuals of the same class and equal expectation of life. The correct answer is: Unfair discrimination

If the cash values of an annuity are invested in securities, it is a: Select one: a. Fixed annuity b. Deferred annuity c. Variable annuity d. Immediate annuity

Variable annuity The correct answer is: Variable annuity

According to the Physical Examination and Autopsy provision, who is responsible for paying the cost of examining the insured? Select one: a. The policyowner b. The insured c. The insurer d. The medical provider

Where not prohibited by law, the insurer may request that a physical examination or autopsy of the insured be performed while a claim is pending. The cost of such procedure is the insurer's responsibility. The correct answer is: The insurer

What type of insurance contract is prepared by the insurer and not negotiated?

Insurance contracts are contracts of adhesion. In a contract of adhesion there is only one author, the insurance company. The correct answer is: Adhesion

What document authorizes an insurer to engage in the insurance business?

A certificate of authority issued to an insurer authorizes the insurer to engage in the business of insurance in Alaska. The correct answer is: Certificate of authority

Nick has a policy that the insurer can cancel when he turns 65. Which type of policy is it?

A conditionally renewable policy allows the insurer to cancel the policy if certain stated conditions happen. Examples of conditions are losing a job or reaching a specified age, such as 65. The correct answer is: Conditionally renewable

What type of policy allows an insurer to cancel a policy if certain circumstances stated in the contract happen?

A conditionally renewable policy allows the insurer to cancel the policy if certain stated conditions happen. Examples of conditions are losing a job or reaching a specified age, such as 65. The correct answer is: Conditionally renewable

A copy of which of the following forms must be attached to the policy at the time of issue of a group life insurance policy?

A copy of the application must be attached to the policy at the time of issue. The correct answer is: The application for the insurance policy

How many days does an insured have to file a notice of claim?

A notice of claim must be given to the insurer within 20 days. The correct answer is: 20 days

What contract term means only one party to a contract's promises are legally enforceable?

A unilateral contract is one in which only one party to the contract's promises are legally enforceable. The correct answer is: Unilateral

What unfair trade practice manipulates through the prospect of something desirable?

Coercion generally manipulates through the prospect of something desirable. The correct answer is: Coercion

Capitation is used in:

HMOs pay for services on a prepaid per person basis, which is called capitation. The correct answer is: HMOs

Question text The Director may suspend, revoke or refuse to issue or renew an agent license for all of the following reasons, EXCEPT:

The Director may suspend, revoke or refuse to issue or renew an agent license if the person was CONVICTED of a felony, had a license revoked in another jurisdiction, or cheated on a licensing examination. The correct answer is: Having been arrested for a felony

What guarantees Jason the right to question the source and validity of consumer information used to rate a policy?

The Fair Credit Reporting Act (Insurance Information and Privacy Protection Act), give him the right to question the source and validity of the information. The correct answer is: Fair Credit Reporting Act

What is the biggest source of information used in underwriting?

The application is the biggest source of information used in underwriting. The correct answer is: Application

The rider that you would pick if you want to be able to add coverage in the future, without having to show proof of insurability:

The guaranteed insurability rider allows the insured to add coverage in the future, without having to show proof of insurability. However, the insurer can charge a higher premium due to a higher attained age. The correct answer is: Guaranteed insurability

With a Guaranteed Insurability rider on a Disability Income policy, the:

The guaranteed insurability rider allows the insured to purchase additional disability income coverage at future dates regardless of insurability. The correct answer is: The insured can buy additional disability income coverage without proving evidence of insurability.

Which of the following factors does not influence the amount that an individual receives as monthly income under Social Security?

The insured's sex does not influence the amount. The correct answer is: Sex

Question text How soon must an insurer file an appointment notice with the Director after appointing an agent?

The insurer must file a notice regarding appointment of an agent within 30 days after the agency contract is established. The correct answer is: Within 30 days

Dylan tells the insurer to keep the dividend and apply it to his next premium. He is using which dividend option?

The reduction of premium dividend option allows the insurer to keep the dividend and apply it to the next premium. Remember dividends are not taxed. The correct answer is: Reduction of premium

The life insurance rider that pays the face amount plus the total premiums paid into the policy is known as:

The return of premium rider pays the total amount of premiums paid into the policy as long as the insured dies within a certain time period specified in the policy. The death benefit is comprised of the face amount plus the total premiums paid into the policy. The correct answer is: Return of premium

Jennifer made an additional premium payment on her Adjustable Life policy. Which of the following is not a way that her policy is affected by this payment?

The value of her nonforfeiture options may increase - but not decrease. The correct answer is: The value of nonforfeiture options may decrease.

Upon exhaustion of Medicare hospital inpatient coverage, a Medicare Supplement plan must cover what percent of Part A expenses?

Upon exhaustion of Medicare hospital inpatient coverage, Medicare Supplement plan must cover 90 percent of the Medicare Part A expenses. The correct answer is: 90 percent