Review
An insured's long-term care policy is scheduled to pay a fixed amount of coverage of $120 per day. The long-term care facility only charged $100 per day. How much will the insurance company pay?
$120 a day
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?
$2,500
An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. How much will the beneficiary receive from the policy?
$200,000
What is the maximum allowed value of a gift that an agent can give to an insured without violating the regulation on rebating?
$25
An insured has a $1,000 HRA account through his employer. He incurred $750 in medical expenses the first year of the plan. How much, if anything, will the insured be able to roll over toward the next year's expenses?
$250
An insured decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable?
$3,000
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?
$3,000
Before he died, an annuitant had received $12,500 in monthly benefits from his $25,000 straight life annuity. He was also the insured under a $50,000 paid-up whole life policy that named his wife as primary beneficiary. Considering both contracts, how much will the annuitant's spouse receive in benefits?
$50,000
An insured is covered under 2 group health plans - under his own and his spouse's. He had suffered a loss of $2,000. After the insured paid the total of $500 in deductibles and coinsurance, the primary insurer covered $1,500 of medical expenses. What amount, if any, would be paid by the secondary insurer?
$500
How many hours of continuing education can be carried over from one licensing period to the next?
0
An insured owns a general disability policy and is injured during a war, rendering him disabled. What will be the extent of benefits that he will receive?
0%
In all health care plans under the Affordable Care Act (ACA), how many essential benefit categories are there?
10
For how many days of skilled nursing facility care will Medicare pay benefits?
100
S is a sole business proprietor who owns a medical expense plan. What percentage of the cost of the plan may he deduct?
100%
How many consecutive months of coverage (other than in an acute care unit of a hospital) must LTC insurance provide in this state?
12
A client has a new individual disability income policy with a 20-day probationary period and a 30-day elimination period. Ten days later, the client breaks their leg and is off work for 45 days. How many days of disability benefits will the policy pay?
15 days
In response to alleged fraud violation, an insurer must respond to the Department's request for relevant information to an investigation within
15 days.
How long is the incontestability period in group life insurance policies issued in Texas?
2 years
The time limit of certain defenses provision prohibits insurers from denying a claim due to misrepresentation, as long as the policy has been in force for at least
2 years.
What is a penalty tax for nonqualified distributions from a health savings account?
20%
The relation of earnings to insurance provision allows the insurance company to limit the insured's benefits to his/her average income over the last
24 months.
The Patient Protection and Affordable Care Act mandates that insurers provide coverage for dependent children up to age of
26
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
3 days
If an HMO policy is cancelled for nonpayment of the amounts due under the contract, how long of a notice must the insurer give the insured?
30 days
If an agent suspects that insurance fraud is being committed, within how many days must the agent notify the Insurance Fraud Unit of the Department of Insurance?
30 days
Conversion to an individual whole life policy is permitted without evidence of insurability within how many days of the termination of employment?
31 days
How long is the grace period in group policies?
31 days
Within how many days must an insured notify the insurer of a child's birth and pay any required fees?
31 days
In the event a policy lapses due to nonpayment of premium, within how many days would the policy be automatically reinstated once the outstanding premium is paid?
45 days
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
5 days
The Insurance Commissioner may examine the affairs of any insurer as often as necessary, but not less frequently than once every
5 years
Upon revocation of a license, a producer cannot receive another license for
5 years.
What percentage of continuing education hours must be in a classroom setting?
50%
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?
50/50
In order to maintain coverage under COBRA, how soon from termination of employment must an employee exercise extension of benefits?
60 days
Individuals who itemize deductions can claim deductions for medical expenses not covered by health insurance that exceed what percent of their adjusted gross income?
7.5%
If an insurance company offers Medicare supplement policies, it must offer which of the following plans? a)A-N b)A c)A and B d)A-J
A
An investor buys a life policy on an elderly person in order to sell it for a life settlement. This is an example of
A STOLI policy.
If a policyowner surrenders his life insurance policy that has been in force for 5 years within 60 days after the premium due date, what will the insurer be required to pay?
A cash surrender value
Which of the following statements is NOT true concerning insurable interest as it applies to life insurance? a)A married person has an insurable interest in their spouse. b)An individual has an insurable interest in their own life. c)A debtor has an insurable interest in the life of a lender. d)Business partners have an insurable interest in each other.
A debtor has an insurable interest in the life of a lender.
The benefits for individual disability plans are based on
A flat amount.
Most HMOs operate through what type of system?
A group enrollment system either at their place of employment or as a member of an association
Employers can reduce health plan costs by coupling a Health Reimbursement Account (HRA) with
A high deductible health plan.
What is the primary difference between Health Maintenance Organization (HMO) network models and group models?
A network-model HMO contracts with multiple physician groups to provide services to members.
Who is a third-party owner?
A policyowner who is not the insured
An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits? a)The entire living benefit is considered taxable income. b)A portion of the benefit up to a limit is tax free; the rest is taxable income. c)Principal is tax free, but interest is taxed. d)The entire benefit will be received tax free.
A portion of the benefit up to a limit is tax free; the rest is taxable income.
All of the following are correct about the required provisions of a health insurance policy EXCEPT a)The entire contract clause means the signed application, policy, endorsements, and attachments constitute the entire contract. b)A reinstated policy provides immediate coverage for an illness. c)Proof-of-loss forms must be sent to the insured within 15 days of notice of claim. d)A grace period of 31 days is found in an annual pay policy.
A reinstated policy provides immediate coverage for an illness.
The free-look provision allows for which of the following? a)A guarantee that the policy will be issued b)A right to return the policy for a full premium refund c)Immediate coverage when the application is submitted d)A guarantee that the policy will not lapse if the premium is overdue
A right to return the policy for a full premium refund
A deductible is
A specified dollar amount that the insured must pay first before the insurance company will pay the policy benefits.
What is a material misrepresentation?
A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company
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 statement that is sufficiently clear to identify the insured and the nature of the claim.
To which of the following situations does the Replacement Regulation apply?
A whole life policy reissued with reduction in cash value
When the insured purchased his health policy he was a window washer. He has since changed occupations and now manages a library. If the insurer is notified of the insured's change of occupation, the insurer should
Adjust the benefit in accordance with the decreased risk.
An insured misstated her age on an application for an individual health insurance policy. The insurance company found the mistake after the contestable period had expired. The insurance company will take which of the following actions regarding any claim that has been issued?
Adjust the claim benefit to reflect the insured's true age
Which of the following is another term for an authorized insurer?
Admitted
All of the following statements about the continuing education requirement in this state are true EXCEPT a)It requires satisfactory completion of 24 hours of approved training every 2 years. b)All licensed agents must comply by January 1 of even-numbered years. c)It does not allow excess credit hours to be carried forward to the next reporting period. d)Hours may be completed using independent self-study courses or classroom study.
All licensed agents must comply by January 1 of even-numbered years.
In which Medicare supplemental policies are the core benefits found?
All plans
Long-term care policies MUST cover
Alzheimer's disease.
Assuming that all of the following people are covered by a High Deductible Health Plan and are not claimed as dependents on anyone's tax returns, which would NOT be eligible for a Health Savings Account? a)Andy is 55 and is covered under a dental care policy b)Jenny is 60 and also has a long-term care insurance plan c)Joe is 40 and is not covered by any other health insurance d)Amanda is 67 and is covered by a basic medical expense policy
Amanda is 67 and is covered by a basic medical expense policy
When an insured purchased her disability income policy, she misstated her age to the agent. She told the agent that she was 30 years old, when in fact, she was 37. If the policy contains the optional misstatement of age provision
Amounts payable under the policy will reflect the insured's correct age.
All of the following would be considered rebating EXCEPT a)An agent offers the use of his lake house to a client as an inducement to buy an insurance policy from him. b)An agent offers to share his commission with a policyholder. c)An agent offers tickets to a baseball game as an inducement to buy insurance. d)An agent misrepresents policy benefits to convince a policyowner to replace policies.
An agent misrepresents policy benefits to convince a policyowner to replace policies.
Who is considered a nonresident agent?
An agent who resides in another state, but is licensed to write insurance in Texas.
Which of the following products provides income for a specified period of years or for life, and protects a person against outliving their money?
An annuity
Which of the following would be required to be licensed as an insurance producer? a)An insurance adjuster who is not a local agent and is not acting as an adjuster for an insurer b)An employee who solicits insurance and receives a commission c)An attorney in fact for a Lloyd's plan d)A salaried full-time employee who performs clerical and administrative duties
An employee who solicits insurance and receives a commission
All of the following are examples of third-party ownership of a life insurance policy EXCEPT a)When an insured purchased a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company. b)An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan. c)An insured couple purchases a life insurance policy insuring the life of their grandson. d)A company purchases a life insurance policy on their manager, who is an important part of the operation.
An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan.
If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant's a)Habits. b)Prior insurance. c)Ancestry. d)Credit history.
Ancestry
The LEAST expensive first-year premium is found in which of the following policies?
Annually Renewable Term
A Universal Life Insurance policy is best described as a/an
Annually Renewable Term policy with a cash value account.
When an annuity is written, whose life expectancy is taken into account?
Annuitant
In an annuity, the accumulated money is converted into a stream of income during which time period?
Annuitization period
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?
Application
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
The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?
As of the application date
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
In a replacement situation, all of the following must be considered EXCEPT a)Exclusions. b)Assets. c)Benefits. d)Limitations.
Assets.
SIMPLE Plans require all of the following EXCEPT a)Employees must receive a minimum of $5,000 in annual compensation. b)At least 1,000 employees. c)No other qualified plan can be used. d)No more than 100 employees.
At least 1,000 employees.
To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested?
At the time of application
An insured's premium increases as a result of her age. Which type of policy does she have?
Attained Age
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
Attained age.
An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an
Authorized insurer.
A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?
Automatic premium loan
Which of the following is NOT required to be stated in the outline of coverage provided with a long-term care policy? a)Basic information about supplementary policies b)The policy number c)The right to return the policy for a refund d)Basic information about the insurance company
Basic information about supplementary policies
All of the following are requirements of eligibility for Social Security disability income benefits EXCEPT a)Fully insured status. b)Waiting period of 5 months. c)Being age 65. d)Inability to perform any gainful work.
Being age 65.
Which of the following is a feature of a variable annuity? a)Payments into the annuity are kept in the company's general account. b)Interest rate is guaranteed. c)Securities license is not required. d)Benefit payment amounts are not guaranteed.
Benefit payment amounts are not guaranteed.
All of the following are true of the Key Person disability income policy EXCEPT a)The income may be used to find a replacement for the key employee. b)Benefits are considered taxable income to the business. c)Premiums are not deductible to the business. d)It is typically written to protect the company in the event a key employee becomes disabled and is unable to work.
Benefits are considered taxable income to the business.
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.
Benefits are taxable to the employer.
Which of the following is NOT true regarding an annuity certain? a)It is a short-term annuity. b)Benefits stop at the annuitant's death. c)It will pay until a fixed amount is liquidated. d)There are no life contingencies.
Benefits stop at the annuitant's death.
Which of the following best describes fixed-period settlement option? a)Only the principal amount will be paid out within a specified period of time. b)The death benefit must be paid out in a lump sum within a certain time period. c)Income is guaranteed for the life of the beneficiary. d)Both the principal and interest will be liquidated over a selected period of time.
Both the principal and interest will be liquidated over a selected period of time.
In comparison to a policy that uses the accidental means definition, a policy that uses the accidental bodily injury definition would provide a coverage that is
Broader in general.
All of the following are personal uses of life insurance EXCEPT a)Cash accumulation. b)Buy-sell agreement. c)Survivor protection. d)Estate creation.
Buy-sell agreement.
Which of the following components must a life insurance policy have to allow policy loans? a)Flexible premiums b)Face amount c)Cash value d)Dividends
Cash value
What does "liquidity" refer to in a life insurance policy?
Cash values can be borrowed at any time.
Which of the following must an insurer obtain in order to transact insurance within a given state? a)Business entity license b)Insurer's license c)Certificate of authority d)Producer's certificate
Certificate of authority
According to the provisions of the Patient Protection and Affordable Care Act, all of the following are required preventive care services EXCEPT a)Cervical cancer exams for all women starting at age 40. b)Diet counseling for adults. c)Well-woman visits and counseling. d)Screenings for autism and behavioral disorders in children.
Cervical cancer exams for all women starting at age 40.
A man is injured while robbing a convenience store. How does his major medical policy handle the payment of his claim?
Claim is denied if his policy contains the Illegal Occupation provision.
When a policyowner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called
Class designation.
A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases an insurance policy from the bank in the amount of the loan. This is an example of
Coercion
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as
Coercion.
The provision that provides for the sharing of expenses between the insured and the insurance company is
Coinsurance.
Which entity has the authority to grant a temporary insurance agent's license?
Commissioner of Insurance
If more than one family member covered under the same major medical policy is injured in the same accident, the family only has to pay one deductible. This is due to the
Common accident provision.
Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT
Conditions.
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?
Consideration
An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called
Consideration.
In Texas, the state's continuing education requirement
Consists of completing 24 hours of CE each biennium.
Which of the following includes information regarding a person's credit, character, reputation, and habits? a)Consumer history b)Insurability report c)Agent's report d)Consumer report
Consumer report
Which of the following reports will provide the underwriter with the information about an insurance applicant's credit? a)Inspection report b)Agent's report c)Any federal report d)Consumer report
Consumer report
Which of the following provisions states the insurer's right to change premium amounts?
Continuation Provision
Which of the following is NOT a characteristic or a service of an HMO plan? a)Encouraging early treatment b)Providing care on an outpatient basis c)Contracting with insurance companies d)Providing free annual checkups
Contracting with insurance companies
Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as
Contracts of adhesion.
The gatekeeper of an HMO helps
Control specialist costs.
In a relative value system of determining coverage for a given procedure, what term describes the total amount payable per point?
Conversion factor
Which of the following is the term for the specific dollar amount that must be paid by an HMO member for a service? a)Cost share b)Copayment c)Deductible d)Premium
Copayment
Which of the following is NOT an exclusion in medical expense insurance policies? a)Routine dental care b)Coverage for dependents c)Military duty d)Self-inflicted injuries
Coverage for dependents
The type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called
Credit life.
Which of the following would be the beneficiary in credit life insurance? a)Borrower b)Creditor c)Insured d)Company
Creditor
What is another name for interest-sensitive whole life insurance?
Current assumption life
Which of the following is NOT typically excluded from life policies? a)Death that occurs while a person is committing a felony b)Death due to war or military service c)Death due to plane crash for a fare-paying passenger d)Self-inflicted death
Death due to plane crash for a fare-paying passenger
An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?
Decreasing term
Group disability income insurance premiums paid by the employer are
Deductible by the employer as an ordinary business expense.
Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? a)Slandering b)Defamation c)Undercutting d)Twisting
Defamation
When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of
Defamation.
An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it?
Deferred
Which of the following actions is NOT in violation of the Unfair Claims Settlement Practices Act? a)Refusing to pay claims without conducting a reasonable investigation b)Failure to respond promptly on claims communications c)Delaying a settlement because there is an additional insurance policy on a loss d)Denying an unsubstantiated claim
Denying an unsubstantiated claim
The death benefit in a variable universal life policy
Depends on the performance of a separate account.
Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income? a)Annuitization period b)Pay-out period c)Liquidation period d)Depreciation period
Depreciation period
A waiver of premium provision may be included with which kind of health insurance policy?
Disability income
Which of the following statements about occupational vs. nonoccupational coverage is TRUE? a)Group medical expense policies and individual medical expense policies always cover both occupational and nonoccupational injuries. b)Individual disability policies never cover nonoccupational injuries. c)Only group disability income policies can be written on an occupational basis. d)Disability insurance can be written as occupational or nonoccupational.
Disability insurance can be written as occupational or nonoccupational.
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?
Discrimination
When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered
Discrimination.
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT a)An offer of employment. b)Stocks, securities, or bonds. c)An offer to share in commissions generated by the sale. d)Dividends from a mutual insurer.
Dividends from a mutual insurer.
An HMO policy may be cancelled or nonrenewed if the insured
Does not reside in the HMO service area.
The Commissioner has full power and authority to do all of the following EXCEPT a)Issue Certificates of Authority. b)Enforce the Insurance Code. c)Issue cease and desist orders. d)Draft insurance laws.
Draft insurance laws.
Other than for a qualified life event, when can a change be made in benefits for a Flexible Spending Account (FSA)?
During the open enrollment period
In a disability policy, the probationary period refers to the time
During which illness-related disabilities are excluded from coverage.
What is the goal of the HMO?
Early detection through regular checkups
Which of the following is NOT covered by Health Maintenance Organizations (HMOs)? a)Routine physicals b)Well-baby care c)Elective services d)Immunizations
Elective services
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.
In disability income insurance, the time between the onset of an injury or sickness and when benefits begin is known as the
Elimination period.
The HMO Act of 1973 required employers to offer an HMO plan as an alternative to regular health plans if the company had more than 25 employees. How has this plan since changed?
Employers are no longer forced to offer HMO plans.
Long-term care coverage may be available as any of the following options EXCEPT a)Endorsement to a life policy. b)Endorsement to a health policy. c)Group long-term care. d)Individual long-term care.
Endorsement to a health policy.
Long-term care coverage may be available as any of the following options EXCEPT a)Individual long-term care. b)Endorsement to a life policy. c)Endorsement to a health policy. d)Group long-term care.
Endorsement to a health policy.
The insurance policy, together with the policy application and any added riders form what is known as a(n)
Entire contract.
The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the
Entire contract.
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 Index. She would likely purchase a(n)
Equity Indexed Annuity.
How often must agents renew their insurance licenses?
Every 2 years
Each HMO enrollee must be provided
Evidence of coverage.
In the Executive Bonus plan, who is the owner of the policy, and who pays the premium?
Executive is the owner, and the executive pays the premium.
Which policy component decreases in decreasing term insurance?
Face amount
An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?
Fair Credit Reporting Act
How many pints of blood will be paid for by Medicare Supplement core benefits?
First 3
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?
Fixed period
When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer?
Foreign
Which provision allows the policyholder a period of time, while coverage is in force, to examine a health insurance policy and determine whether or not to keep it?
Free Look Period
An insured is involved in an accident that renders him permanently deaf, 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
Which of the following is another name for a primary care physician in an HMO? a)Referring physician b)Specialist c)Gatekeeper d)Subscriber
Gatekeeper
Life insurance death proceeds are
Generally not taxed as income.
What provision in a life or health insurance policy extends coverage beyond the premium due date?
Grace period
What required provision protects against unintentional lapse of the policy?
Grace period
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a
Guaranteed insurability rider.
Which of the following is available to employers of all sizes? a)LPAs b)HSAs c)HRAs d)MSAs
HRAs
Concerning insurance, the definition of a fiduciary responsibility is
Handling insurer funds in a trust capacity.
An association could buy group insurance for its members if it meets all of the following requirements EXCEPT a)Has a constitution and by-laws. b)Holds annual meetings. c)Is contributory. d)Has at least 50 members.
Has at least 50 members
An insured becomes disabled at age 22 and can no longer work. She meets the definition of total disability under Social Security. What other requirement must the insured have met to receive Social Security disability benefits?
Have accumulated 6 work credits in the past 3 years
Which of the following is CORRECT concerning taxation of disability income benefits? a)If the employer paid the entire premium, the employer must pay all taxes on the benefits paid. b)If the insured employee paid the entire premium, the insured must pay all taxes on the benefits paid. c)If a portion of the premium is paid by the employer, the insured employee must pay taxes on all benefits received. d)If all premiums are paid by the insured employee, benefits are received income tax-free.
If all premiums are paid by the insured employee, benefits are received income tax-free.
When would a misrepresentation on the insurance application be considered fraud?
If it is intentional and material
An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?
Illegal
An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act?
Illegal under any circumstances
Which of the following riders would NOT increase the premium for a policyowner? a)Payor benefit rider b)Waiver of premium rider c)Multiple indemnity rider d)Impairment rider
Impairment rider
Medicaid provides all of the following benefits EXCEPT a)Family planning services. b)Income assistance for work-related injury. c)Home health care services. d)Eyeglasses.
Income assistance for work-related injury.
Issue age policy premiums increase in response to which of the following factors? a)Inflation b)Age c)Increased benefits d)Increased deductible
Increased benefits
Annually renewable term policies provide a level death benefit for a premium that
Increases annually.
What type of insurance would be used for a Return of Premium rider?
Increasing Term
An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that?
Inspection Report
Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be?
Installments for a fixed period
Which of the following occupations would NOT directly help to qualify someone for the office of Commissioner of Insurance? a)Executive in business administration b)Practicing attorney c)Insurance agent d)Certified public account
Insurance agent
The Medical Information Bureau (MIB) was created to protect
Insurance companies from adverse selection by high risk persons.
Which of the following entities can legally bind coverage?
Insurer
All of the following are Nonforfeiture options EXCEPT a)Extended term b)Reduced paid-up c)Interest only d)Cash surrender
Interest only
The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?
Interest only option
When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will
Issue the policy anyway and pay the face value to the beneficiary.
Which of the following best describes a misrepresentation? a)Discriminating among individuals of the same insuring class b)Issuing sales material with exaggerated statements about policy benefits c)Making a deceptive or untrue statement about a person engaged in the insurance business d)Making a maliciously critical statement that is intended to injure another person
Issuing sales material with exaggerated statements about policy benefits
What statement best describes the free look provision? a)It allows the company to obtain an inspection and medical examination on the proposed insured prior to issuing the policy. b)It allows for the proposed insured to carefully look over the policy before applying for it. c)It allows the insured to return the policy within 10 days for a full refund of premiums if dissatisfied for any reason. d)It allows the proposed insured to carefully look over the application prior to filling it out.
It allows the insured to return the policy within 10 days for a full refund of premiums if dissatisfied for any reason.
Which of the following is correct about a group health insurance policy? a)It cannot exclude coverage for VA hospital treatment. b)It cannot provide coverage for handicapped children. c)It cannot exclude coverage from an occupational accident. d)It cannot exclude newborn children from coverage.
It cannot exclude newborn children from coverage.
Which of the following statements is NOT true concerning Medicaid? a)It is funded by state and federal taxes. b)It is intended to provide medical assistance for certain categories of people who are needy. c)It consists of 3 parts: Part A: hospitalization, Part B: doctor's services, d)Part C: disability income. It is a state program.
It consists of 3 parts: Part A: hospitalization, Part B: doctor's services, Part C: disability income.
Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? a)It is a life contingency option. b)The beneficiary receives the remainder of the principal amount upon the annuitant's death. c)Payments can be made in installments and as a single cash refund. d)It does not guarantee that the entire principal amount will be paid out.
It does not guarantee that the entire principal amount will be paid out.
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 "use-or-lose" basis.
It does not have limits on contributions.
Why is an equity indexed annuity considered to be a fixed annuity?
It has a guaranteed minimum interest rate.
What is the benefit of choosing extended term as a nonforfeiture option?
It has the highest amount of insurance protection.
Which of the following is correct regarding credit life insurance? a)It has a maximum term of 20 years. b)It insures the life of a debtor. c)It is purchased on an installment basis. d)It insures the life of a creditor.
It insures the life of a debtor.
All of the following statements about Medicare Part B are correct EXCEPT a)It covers services and supplies not covered by Part A. b)It is financed by monthly premium c)It is financed by tax revenues d)It is a compulsory program.
It is a compulsory program.
All of the following statements about Medicare Part B are correct EXCEPT a)It is financed by monthly premium b)It is financed by tax revenues. c)It is a compulsory program. d)It covers services and supplies not covered by Part A.
It is a compulsory program.
Which of the following is TRUE regarding the accumulation period of an annuity?
It is a period during which the payments into the annuity grow tax deferred.
Which is true regarding HMO coverage? a)HMOs provide nationwide coverage. b)It is divided into geographic territories. c)It is divided based on the average tax bracket of a family. d)It is divided by state.
It is divided into geographic territories.
What is the purpose of a conditional receipt?
It is intended to provide coverage on a date prior to the policy issue.
Which of the following is NOT true regarding a Certificate of Authority? a)It is equivalent to an insurance license. b)It is issued by the state department of insurance. c)It is issued to group insurance participants. d)It may be necessary for transacting business in a specific state.
It is issued to group insurance participants.
When a reduced paid-up nonforfeiture option is chosen, what happens to the face amount of the policy?
It is reduced to the amount of what the cash value would buy as a single premium.
Which of the following statements about the reinstatement provision is true? a)It permits reinstatement within 10 years after a policy has lapsed. b)It provides for reinstatement of a policy regardless of the insured's health. c)It guarantees the reinstatement of a policy that has been surrendered for cash. d)It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated.
It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated.
Which of the following statements is TRUE concerning the Accidental Death Rider? a)It is only available in group insurance. b)It will pay double or triple the face amount. c)It is also known as a triple indemnity rider. d)This rider is only available to insureds over the age of 65.
It will pay double or triple the face amount.
Which of the following is true of a PPO? a)Claim forms are completed by members on each claim. b)No copayment fees are involved. c)Its goal is to channel patients to providers that discount services. d)The most common type of PPO is the staff model.
Its goal is to channel patients to providers that discount services.
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.
Which two terms are associated directly with the premium?
Level or flexible
Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors?
Life expectancy
What are the licensing requirements for someone who sells variable universal life insurance?
Life insurance and securities
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
Which of the following programs expands individual public assistance programs for people with insufficient income and resources?
Medicaid
Which of the following information about the applicant is NOT included in the General Information section of the application for insurance?
Medical background
Which of the following statements is NOT correct regarding Medicare? a)Medicare Part B provides physician services. b)Medicare Advantage must be provided through HMOs. c)Medicare Advantage may include prescription drug coverage at no cost d)Medicare Part A provides hospital care.
Medicare Advantage must be provided through HMOs.
To sign up for a Medicare prescription drug plan, individuals must first be enrolled in
Medicare Part A.
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of
Misrepresentation.
All of the following are grounds for cancellation of an HMO plan EXCEPT a)Misconduct. b)Misstatement of age on the application. c)Nonpayment of premium. d)Not residing in the HMO service area.
Misstatement of age on the application.
All of the following are grounds for cancellation of an HMO plan EXCEPT a)Misstatement of age on the application. b)Nonpayment of premium. c)Not residing in the HMO service area. d)Misconduct.
Misstatement of age on the application.
Which of the following is NOT true regarding policy loans? a)A policy loan may be repaid after the policy is surrendered. b)Money borrowed from the cash value is taxable. c)Policy loans can be repaid at death. d)An insurer can charge interest on outstanding policy loans.
Money borrowed from the cash value is taxable.
Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to an insured is
Monthly
Regarding the free-look provision, the insurance company
Must allow the policyowner to return the policy for a full refund.
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report
Must be informed of the source of the report.
An insured purchased an insurance policy 5 years ago. Last year, the insured received a dividend check from the insurance company that was not taxable. This year, the insurer did not send a check. From what type of insurer did the insured purchase the policy?
Mutual
Using a class designation for beneficiaries means
Naming beneficiaries as a group.
The primary eligibility requirement for Medicaid benefits is based upon
Need.
An applicant for a health insurance policy returns a completed application to her agent, along with a check for the first premium. She receives a conditional receipt two weeks later. Which of the following has the insurer done by this point?
Neither approved the application nor issued the policy
An insured is involved in a car accident. In addition to less serious injuries, he permanently loses the use of his leg and is rendered completely blind. The blindness improves a month later. To what extent will the insured receive Presumptive Disability benefits?
No benefits
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
Death benefits payable to a beneficiary under a life insurance policy are generally
Not subject to income taxation by the Federal Government
Premium payments for personally-owned disability income policies are
Not tax deductible.
Which provision concerns the insured's duty to provide the insurer with reasonable notice in the event of a loss?
Notice of Claim
During replacement of life insurance, a replacing insurer must do which of the following?
Obtain a list of all life insurance policies that will be replaced
During replacement of life insurance, a replacing insurer must do which of the following? a)Guarantee a replacement for each existing policy b)Designate a new producer for a replaced policy c)Send a copy of the Notice Regarding Replacement to the Department of Insurance d)Obtain a list of all life insurance policies that will be replaced
Obtain a list of all life insurance policies that will be replaced
An insured has health insurance that covers them at work and at home. This policy was written on what basis?
Occupational
What is another name for social security benefits?
Old Age, Survivors, and Disability Insurance
Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy? a)The Entire Contract Provision b)The Consideration Clause c)Assignment Rights d)Owner's Rights
Owner's Rights
If a health care plan has characteristics of an HMO and PPO, what type of plan is it?
POS
Under which of the following organizations are the practicing providers compensated on a fee-for-service basis? a)Open panel b)PPO c)HMO d)Blue Cross/Blue Shield
PPO
Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early? a)Paid-up additions b)Dividend Accumulation option c)Paid-up option d)Accumulation at Interest
Paid-up option
Which of the following statements is INCORRECT concerning Medicare Part B coverage? a)Part B will pay 80% of covered expenses, subject to Medicare's standards for reasonable charges. b)It is a voluntary program designed to provide supplementary medical insurance to cover physician services, medical services and supplies not covered under Part A. c)Part B coverage is provided free of charge when an individual turns age 65. d)Participants under Part B are responsible for an annual deductible.
Part B coverage is provided free of charge when an individual turns age 65.
Don has both a basic expense and a major medical policy. He is injured in an accident, which requires several major surgeries. This quickly exhausts Don's basic expense policy. What must Don do before his major medical policy can pick up where the basic expense policy left off?
Pay a special deductible on his major medical policy
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
Pay the claim.
An insured purchased a life policy in 2010 and died in 2020. The insurance company discovers at that time that the insured had misstated information about her insurance history on the application. What will the insurer do?
Pay the death benefit
A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will
Pay the policy proceeds only if it would have issued the policy.
Which of the following provisions would prevent an insurance company from paying a reimbursement claim to someone other than the policyowner? a)Proof of Loss b)Payment of Claims c)Change of beneficiary d)Entire Contract Clause
Payment of Claims
An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase?
Payments for 15 years
Which of the following riders would NOT cause the Death Benefit to increase? Cost of Living Rider Accidental Death Rider Payor Benefit Rider Guaranteed Insurability Rider
Payor Benefit Rider
Which of the following provisions is mandatory for health insurance policies? a)Intoxicants and narcotics b)Physical examination and autopsy c)Recurrent disability d)Unpaid premiums
Physical examination and autopsy
All of the following are covered by Part A of Medicare EXCEPT a)Physician's and surgeon's services. b)In-patient hospital services. c)Post-hospital nursing care. d)Home health services.
Physician's and surgeon's services.
All of the following are mandatory life insurance policy provisions EXCEPT a)Incontestability. b)Grace period. c)Policy backdating. d)Misstatement of age.
Policy backdating.
All of the following are true regarding insurance policy loans EXCEPT a)The policy will terminate if the loan plus interest equals or exceeds the cash value of the policy. b)Policyowners can borrow up to the full amount of their whole life policy's cash value. c)Policy loans can be made on policies that do not accumulate cash value. d)The amount of the outstanding loan and interest will be deducted from the policy proceeds when the insured dies.
Policy loans can be made on policies that do not accumulate cash value.
A guaranteed renewable health insurance policy allows the
Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class.
Which of the following has the right to convert the existing term coverage to permanent insurance? a)Beneficiary b)Producer c)Policyowner d)Insurer
Policyowner
Which of the following individuals must have insurable interest in the insured? a)Underwriter b)Producer c)Policyowner d)Beneficiary
Policyowner
Underwriting is a major consideration when an insured wishes to replace her current policy for all of the following reasons EXCEPT a)Due to age or health, the policy may change dramatically. b)Pre-existing conditions that were previously covered may not be covered under the replacing policy. c)Benefits may change. d)Premiums always stay the same.
Premiums always stay the same.
Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy? a)Premiums are tax deductible by the key employee. b)Premiums are tax deductible as a business expense. c)Premiums are taxable to the employee. d)Premiums are not tax deductible as a business expense.
Premiums are not tax deductible as a business expense.
Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insured for full disability benefits. Which disability policy provision does this describe?
Presumptive disability
In respect to the consideration clause, which of the following is consideration on the part of the insurer? a)Offering an unconditional contract b)Explaining policy revisions to the applicant c)Promising to pay in accordance with the contract terms d)Offering a secondary policy to the applicant
Promising to pay in accordance with the contract terms
The Gramm-Leach-Bliley Act was passed to
Protect private customer information filed with a financial institution.
Which of the following answers does NOT describe the principal goal of a Preferred Provider Organization? a)Provide medical services at a reduced cost b)Provide medical services only from physicians in the network c)Provide the subscriber a choice of physicians d)Provide the subscriber a choice of hospitals
Provide medical services only from physicians in the network
Which of the following answers does NOT describe the principal goal of a Preferred Provider Organization? a)Provide the subscriber a choice of hospitals b)Provide medical services at a reduced cost c)Provide medical services only from physicians in the network d)Provide the subscriber a choice of physicians
Provide medical services only from physicians in the network
When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to
Purchase a single premium policy for a reduced face amount.
What form of the annuity settlement options provides payments to an annuitant for the rest of the annuitant's life and ceases at the annuitant's death?
Pure life
Which of the following best describes a pure life annuity settlement option? a)Benefits are paid for a fixed period of time, specified when the policy begins to pay. b)Pure life provides payments for as long as both the annuitant and the spouse are living. c)Pure life provides payments for as long as the annuitant is alive. d)Pure life guarantees that all the proceeds will be paid out.
Pure life provides payments for as long as the annuitant is alive.
Another name for a substandard risk classification is
Rated.
Insurers may change which of the following on a guaranteed renewable health insurance policy?
Rates by class
For which of the following actions can an agent's license be suspended or revoked?
Rebates of premiums
An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of
Rebating.
Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as
Rebating.
When an insurer combines two periods of disability into one, the insured must have suffered a
Recurrent disability.
Which nonforfeiture option provides coverage for the longest period of time?
Reduced paid-up
According to the state nonforfeiture law for life insurance policies, insurers must offer at least one of the following nonforfeiture options EXCEPT a)Shortened benefit period b)Reduction of premium c)Reduced paid-up d)Extended term
Reduction of premium
An insured died by suicide one year after the life insurance policy was issued. The insurer will
Refund the premiums paid.
The Federal Fair Credit Reporting Act
Regulates consumer reports.
The regulations regarding replacement apply to which of the following? a)Replacement of existing policy by the same insurer b)Credit life c)Group life d)Renewable term
Renewable term
Which health insurance provision describes the insured's right to cancel coverage? a)Insuring clause b)Cancellation provision c)Renewal provision d)Policy duration provision
Renewal provision
Which health insurance provision describes the insured's right to cancel coverage? a)Policy duration provision b)Insuring clause c)Cancellation provision d)Renewal provision
Renewal provision
In the event of a loss, business overhead insurance will pay for
Rent.
Which rule would apply if an agent knows that an insured is going to cash in an old policy and use the funds to purchase new insurance?
Replacement
Disability income policies can provide coverage for a loss of income when returning to work only part-time after recovering from total disability. What is the benefit that is based on the insured's loss of earnings after recovery from a disability?
Residual disability
Under the Fair Credit Reporting Act, if a consumer challenges the accuracy of the information contained in a consumer or investigative report, the reporting agency must
Respond to the consumer's complaint.
When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy, as well as a refund of all of the premiums paid. Which rider is attached to the policy?
Return of premium
Which is the appropriate action by the insurer if a prospective insured submitted an incomplete application?
Return the application to the applicant for completion
A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the
Revocable beneficiary.
Which of the following is NOT covered under Part B of a Medicare policy? a)Lab services b)Physician expenses c)Routine dental care d)Home health care
Routine dental care
Which of the following statements concerning a Simplified Employee Pension plan (SEP) is INCORRECT? a)SEPs have a higher tax deductible contribution limit than an IRA. b)Employer contributions are not included in the employee's gross income. c)SEPs are suitable for large companies. d)SEPs allow the employer to make annual tax deductible contributions up to 25% of an employee's earned income.
SEPs are suitable for large companies.
Which of the following best details the underwriting process for life insurance? a)Selection, classification, and rating of risks b)Solicitation, negotiation and sale of policies c)Issuance of policies d)Reporting and rejection of risks
Selection, classification, and rating of risks
Methods used to pay the death benefits to a beneficiary upon the insured's death are called
Settlement options.
All of the following are considered unfair trade practices in the business of insurance EXCEPT a)Defamation. b)Sharing commissions. c)Boycott. d)Rebating.
Sharing commissions.
All of the following are considered unfair trade practices in the business of insurance EXCEPT a)Sharing commissions. b)Boycott. c)Rebating. d)Defamation.
Sharing commissions.
An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy?
She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan.
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT a)Payment of premium. b)Delivery receipt. c)Signed waiver of premium. d)Statement of good health.
Signed waiver of premium.
An IRA purchased by a small employer to cover employees is known as a
Simplified Employee Pension plan.
Which type of life insurance policy generates immediate cash value?
Single Premium
Company Y had 20 employees on staff last year. Which of the following terms most precisely labels the company's group insurance classification? a)Large group b)Small group c)Small employer d)Class B
Small employer
Which benefit is based on the person's Primary Insurance Amount (PIA)? a)Accidental death benefit b)Long-term care benefit c)Social Security disability benefit d)Death benefit in a universal life policy
Social Security disability benefit
Which of the following types of insurers is owned by stockholders? a)Fraternal b)Stock c)Mutual d)Reciprocal
Stock
The transfer of an insured's right to seek damages from a negligent party to the insurer is found in which of the following clauses?
Subrogation
Which of the following riders is often used in business life insurance policies when the policyowner needs to change the insured under the policy? a)Payor benefit rider b)Substitute insured rider c)Term rider d)Guaranteed insurability rider
Substitute insured rider
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 first 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
Telling a client that his first premium will be waived if he purchases the insurance policy today
An agent discovers his newest client was the result of a referral. To show his thanks to the referring customer, the agent could
Thank the customer.
Nonforfeiture values guarantee which of the following for the policyowner?
That the cash value will not be lost
All of the following employees may use a 403(b) plan for their retirement EXCEPT a)A school bus driver. b)A part-time classroom aide. c)The vice president of a charitable organization. d)The CEO of a private corporation.
The CEO of a private corporation.
Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information? a)The Guaranty Association b)Consumer Privacy Act c)The Fair Credit Reporting Act d)Unfair Trade Practices Law
The Fair Credit Reporting Act
All of the following entities regulate variable life policies EXCEPT a)The Insurance Department. b)The Guaranty Association. c)Federal government. d)The SEC.
The Guaranty Association.
All of the following entities regulate variable life policies EXCEPT a)The SEC. b)The Insurance Department. c)The Guaranty Association. d)Federal government.
The Guaranty Association.
The annual contribution limit of a Dependent Care Flexible Spending Account is set by
The IRS.
Which of the following is NOT covered under Plan A in Medigap insurance? a)The first three pints of blood each year b)The Medicare Part A deductible c)Approved hospital costs for 365 additional days after Medicare benefits end d)The 20% Part B coinsurance amounts for Medicare approved services
The Medicare Part A deductible
An employee becomes insured under a PPO plan provided by his employer. If the insured decides to go to a physician who is not a PPO provider, which of the following will happen? a)The PPO will not pay any benefits at all. b)The insured will be required to pay a higher deductible. c)The PPO will pay the same benefits as if the insured had seen a PPO physician. d)The PPO will pay reduced benefits.
The PPO will pay reduced benefits.
If an applicant does not receive a copy of the new insurance policy, who would be held responsible?
The agent
Whose responsibility is it to determine if all of the questions on an application have been answered?
The agent
Which of the following information will be stated in the consideration clause of a life insurance policy? The conditions for insurability The amount of premium payment The parties to the contract The time period allowed for the payment of premium
The amount of premium payment
The initial amount of credit life insurance may NOT exceed
The amount to be repaid under the contract.
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true? a)A corporation can be an annuitant as long as the beneficiary is a natural person. b)The contract can be issued without an annuitant. c)The annuitant must be a natural person. d)A corporation can be an annuitant as long as it is also the owner.
The annuitant must be a natural person.
All of the following statements about equity index annuities are correct EXCEPT a)The interest rate is tied to an index such as the Standard & Poor's 500. b)They invest on a more aggressive basis aiming for higher returns. c)The annuitant receives a fixed amount of return. d)They have a guaranteed minimum interest rate.
The annuitant receives a fixed amount of return.
Which is true regarding obtaining underwriting sources? a)It is illegal to obtain information from outside sources in order to determine an applicant's insurability. b)The applicant must be informed of the sources contacted and how the information is being gathered. c)The insurer does not need to inform the applicant of how the information is gathered; informing only of the source is sufficient. d)The insurer only needs to inform the applicant of how the information is being gathered; it is not necessary to disclose the sources.
The applicant must be informed of the sources contacted and how the information is being gathered.
Which is true regarding obtaining underwriting sources? a)The insurer only needs to inform the applicant of how the information is being gathered; it is not necessary to disclose the sources. b)It is illegal to obtain information from outside sources in order to determine an applicant's insurability. c)The applicant must be informed of the sources contacted and how the information is being gathered. d)The insurer does not need to inform the applicant of how the information is gathered; informing only of the source is sufficient.
The applicant must be informed of the sources contacted and how the information is being gathered.
Which of the following is true about the requirements regarding HIV exams? a)Results may be disclosed to the agent and the underwriter. b)Prior informed oral consent is required from the applicant. c)HIV exams may not be used as a basis for underwriting. d)The applicant must give prior informed written consent.
The applicant must give prior informed written consent.
What happens if a non-member physician is utilized under the Point-Of-Service plan?
The attending physician will be paid a fee for service, but the member patient will have to pay a higher coinsurance amount.
If the annuitant dies during the accumulation period, who will receive the annuity benefits?
The beneficiary
An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. If the applicant dies the following day, which of the following is TRUE? a)The application will be voided. b)The beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy. c)The premium would be returned to the insured's estate because the policy was not issued. d)The death claim will be rejected.
The beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy.
The annuitant dies while the annuity is still in the accumulation stage. Which of the following is TRUE? a)The owner's estate will receive the money paid into the annuity. b)The insurance company will retain the cash value and pay back the premiums to the owner's estate. c)The money will continue to grow tax-deferred until the liquidation period, and then will be paid to the beneficiary. d)The beneficiary will receive the greater of the money paid into the annuity or the cash value.
The beneficiary will receive the greater of the money paid into the annuity or the cash value.
Which of the following is an example of liquidity in a life insurance contract? a)The flexible premium b)The money in a savings account c)The cash value available to the policyowner d)The death benefit paid to the beneficiary
The cash value available to the policyowner
Which of the following is TRUE regarding the insurance amount in a credit life policy? a)The creditor may insure the debtor for an unlimited amount of coverage. b)Allowable amount of coverage is determined by the State Insurance Commissioner. c)The amount of coverage can be greater than the amount owed. d)The creditor can only insure the debtor for the amount owed.
The creditor can only insure the debtor for the amount owed.
In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?
The customer's associates, friends, and neighbors provide the report's data.
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?
The date of medical exam
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.
The period of time immediately following a disability during which benefits are not payable is
The elimination period.
Who is the owner and who is the beneficiary on a Key Person Life Insurance policy?
The employer is the owner and beneficiary.
For an individual who is eligible for Medicare at age 65, and who is still employed and covered under the employer's plan, which of the following is true? a)The employer plan continues, and Medicare is not available until the individual is retired. b)The employer plan is primary coverage, and Medicare is secondary coverage. c)The employer plan is secondary coverage, and Medicare is primary coverage. d)The employer plan is discontinued, and Medicare is primary coverage.
The employer plan is primary coverage, and Medicare is secondary coverage.
For an individual who is eligible for Medicare at age 65, and who is still employed and covered under the employer's plan, which of the following is true? a)The employer plan is discontinued, and Medicare is primary coverage. b)The employer plan continues, and Medicare is not available until the individual is retired. c)The employer plan is primary coverage, and Medicare is secondary coverage. d)The employer plan is secondary coverage, and Medicare is primary coverage.
The employer plan is primary coverage, and Medicare is secondary coverage.
The limits of a health reimbursement account are set by
The employer.
In a disability policy, the elimination (or waiting) period refers to the period between
The first day of disability and the day the insured starts receiving benefits.
In which of the following situations would Social Security Disability benefits NOT cease? a)The individual has undergone therapy and is no longer disabled b)The individual's son gets a part-time job to help support the family c)The individual reaches age 65 d)The individual dies
The individual's son gets a part-time job to help support the family
In which of the following situations would Social Security Disability benefits NOT cease? a)The individual reaches age 65 b)The individual dies c)The individual has undergone therapy and is no longer disabled d)The individual's son gets a part-time job to help support the family
The individual's son gets a part-time job to help support the family
Who bears all of the investment risk in a fixed annuity?
The insurance company
Which of the following best describes the "first-dollar coverage" principle in basic medical insurance? a)The insurer covers the first claim on the policy. b)Deductibles and coinsurance are taxed first. c)The insured is not required to pay a deductible. d)The insured must first pay a deductible.
The insured is not required to pay a deductible.
Which of the following is correct regarding selecting a primary care physician in a PPO plan? a)Out-of-network providers may be used for an additional premium. b)The insured may choose medical providers not found on the preferred list. c)An insured must receive pre-certification prior to visiting a preferred provider. d)Insureds typically pay lower out-of-pocket costs for out-of-network providers.
The insured may choose medical providers not found on the preferred list.
In order for an insured under Medicare Part A to receive benefits for care in a skilled nursing facility, which of the following conditions must be met?
The insured must have first been hospitalized for 3 consecutive days.
An insured submitted a notice of claim to the insurer, but never received claims forms. He later submits proof of loss, and explains the nature and extent of loss in a hand-written letter to the insurer. Which of the following would be true?
The insured was in compliance with the policy requirements regarding claims.
When a life insurance policy was issued, the policyowner designated a primary and a contingent beneficiary. Several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. Which of the following would receive the death benefit? a)The insurance company b)The insured's estate c)The primary beneficiary's estate d)The insured's contingent beneficiary
The insured's contingent beneficiary
When a life insurance policy was issued, the policyowner designated a primary and a contingent beneficiary. Several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. Which of the following would receive the death benefit? a)The insured's estate b)The primary beneficiary's estate c)The insured's contingent beneficiary d)The insurance company
The insured's contingent beneficiary
A 40-year old man buys a whole life policy and names his wife as his only beneficiary. His wife dies 10 years later. He never remarries and dies at age 61, leaving 2 grown-up children. Assuming he never changed the beneficiary, the policy proceeds will go to
The insured's estate.
A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?
The insured's premiums will be waived until she is 21.
Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to
The insured.
Which of the following is NOT a feature of a guaranteed renewable provision? a)The insured has a unilateral right to renew the policy for the life of the contract. b)Coverage is not renewable beyond the insured's age 65. c)The insured's benefits cannot be reduced. d)The insurer can increase the policy premium on an individual basis.
The insurer can increase the policy premium on an individual basis.
When Linda suffered a broken hip, she notified her agent, in writing, within 12 days of the loss. However, her agent did not notify the insurance company until 60 days after the loss. Which of the following statements correctly explains how this claim would be handled? a)The insurer may settle this claim for less than it otherwise would have had the notification been provided in a timely manner. b)The insurer may deny the claim since it was not notified within the required 20-day time frame. c)The insurer is considered to be notified since the notification to agent equals notification to the insurer. d)The insurer may delay the payment of this claim for up to 6 months.
The insurer is considered to be notified since the notification to agent equals notification to the insurer.
Which of the following is NOT a feature of a noncancellable policy? a)The guarantee to renew coverage usually applies until the insured reaches 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.
The insurer may terminate the contract only at renewal for certain conditions.
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.
The insurer will pay the full death benefit from the group policy to the beneficiary.
Which of the following statements is true regarding coinsurance? a)The larger the percentage that is paid by the insured, the higher the required premium will be. b)The smaller the percentage that is paid by the insured, the lower the required premium will be. c)The smaller the percentage that is paid by the insured, the more consistent the required premium will be. d)The larger the percentage that is paid by the insured, the lower the required premium will be.
The larger the percentage that is paid by the insured, the lower the required premium will be.
If an insured under a variable life insurance policy dies, how will the insurer respond to outstanding policy loans?
The loan amounts are deducted from the death benefit.
The insuring clause of a disability policy usually states all of the following EXCEPT a)The types of losses covered. b)The method of premium payment. c)The identities of the insurance company and the insured. d)That insurance against loss is provided.
The method of premium payment.
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
The mode of the premium payment
Which of the following is NOT required on an illustration used in the sale of a life insurance policy? a)Underwriting or rating classification upon which the illustration is based b)The name of the primary and secondary beneficiaries c)Generic name of policy d)Name of insurer
The name of the primary and secondary beneficiaries
An agent is in the process of replacing the insured's current health insurance policy with a new one. Which of the following would be a proper action? a)Policies must overlap to cover pre-existing conditions. b)The old policy must be cancelled before the new one can be issued. c)The old policy should stay in force until the new policy is issued. d)There should be at least a 10-day gap between the policies.
The old policy should stay in force until the new policy is issued.
What is the advantage of reinstating a policy instead of applying for a new one? a)Proof of insurability is not required. b)The face amount can be increased. c)The cash values have gained interest while the policy was lapsed. d)The original age is used for premium determination.
The original age is used for premium determination.
All of the following are true regarding a decreasing term policy EXCEPT a)The death benefit is $0 at the end of the policy term. b)The contract pays only in the event of death during the term and there is no cash value. c)The face amount steadily declines throughout the duration of the contract. d)The payable premium amount steadily declines throughout the duration of the contract.
The payable premium amount steadily declines throughout the duration of the contract.
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.
The payable premium amount steadily declines throughout the duration of the contract.
All of the following statements are true regarding installments for a fixed amount EXCEPT a)Value of the account and future earnings will determine the time period for the benefits. b)This option pays a specific amount until the funds are exhausted. c)The annuitant may select how big the payments will be. d)The payments will stop when the annuitant dies.
The payments will stop when the annuitant dies.
Which of the following determines the cash value of a variable life policy? a)The company's general account b)The policy's guarantees. c)The premium mode d)The performance of the policy portfolio
The performance of the policy portfolio
Which of the following best describes what the annuity period is? a)The period of time from the effective date of the contract to the date of its termination b)The period of time during which accumulated money is converted into income payments c)The period of time from the accumulation period to the annuitization period d)The period of time during which money is accumulated in an annuity
The period of time during which accumulated money is converted into income payments
All of the following are true of key person insurance EXCEPT a)The key employee is the insured. b)The plan is funded by permanent insurance only. c)There is no limitation on the number of key employee plans in force at any one time. d)The employer is the owner, payor and beneficiary of the policy.
The plan is funded by permanent insurance only.
The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as
The policy contains sufficient cash value to cover the cost of insurance.
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT a)Any type of insurance policy may be used. b)The employer pays a bonus to a selected employee to fund the policy. c)It is considered a nonqualified employee benefit. d)The policy is owned by the company.
The policy is owned by the company.
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT a)The employer pays a bonus to a selected employee to fund the policy. b)It is considered a nonqualified employee benefit. c)The policy is owned by the company. d)Any type of insurance policy may be used.
The policy is owned by the company.
An individual applies for a life policy. Two years ago he suffered a head injury from an accident, so he cannot remember parts of his past, but is otherwise competent. He has also been hospitalized for drug abuse, but does not remember this when applying for insurance. The insurer issues the policy and learns of his history one year later. What will probably happen?
The policy will not be affected.
A policy with a 31-day grace period implies
The policy will not lapse for 31 days if the premium is not paid when due.
All of the following would be eligible to establish a Keogh retirement plan EXCEPT a)A hair dresser who operates her business at her house. b)The president and employee of a family corporation. c)A sole proprietor of a service station who employs four employees. d)A sole proprietor of film development store with no employees.
The president and employee of a family corporation.
How does a member of an HMO see a specialist?
The primary care physician refers the member.
Under an extended term nonforfeiture option, the policy cash value is converted to
The same face amount as in the whole life policy.
Which of the following is NOT true of life settlements? a)They could be used for key person insurance. b)They could be sold for an amount greater than the current cash value. c)They involve insurance policies with large face amounts. d)The seller must be terminally ill.
The seller must be terminally ill.
On a health insurance application, a signature is required from all of the following individuals EXCEPT a)The agent. b)The spouse of the policyowner. c)The proposed insured. d)The policyowner.
The spouse of the policyowner.
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?
The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.
An HSA holder who is 65 years old decides to use the money in the account for a nonhealth expense. Which of the following is true? a)There will be no taxes and no penalties. b)There will be a tax and a 20% penalty. c)There will be a 20% penalty. d)There will be a tax.
There will be a tax.
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)Policyowners 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.
They are required by state law to be included in the policy.
An insured makes regular contributions to his Health Savings Account. How are those contributions treated in regards to taxation?
They are tax deductible.
Which of the following statements is most correct concerning the changing of an irrevocable beneficiary? a)They 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.
They can be changed only with the written consent of that beneficiary.
What is the purpose of settlement options?
They determine how death proceeds will be paid.
Which of the following is true regarding Medicare supplement policies? a)They must have at least a 15-day free-look period. b)They must contain a minimum of Plans A and B. c)They must be available to those aged 60 and over. d)They must be at least guaranteed renewable.
They must be at least guaranteed renewable.
All of the following are true regarding the guaranteed insurability rider EXCEPT a)The insured may purchase additional insurance up to the amount specified in the base policy. b)It allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events. c)This rider is available to all insureds with no additional premium. D)The insured may purchase additional coverage at the attained age.
This rider is available to all insureds with no additional premium.
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
Time of Payment of Claims
Which of the following is the best reason to purchase life insurance rather than an annuity? To create regular income payments To liquidate a sum of money over a lifetime To create an estate To liquidate a sum of money over a period of years
To create an estate
What is the purpose of establishing the target premium for a universal life policy?
To keep the policy in force
Insurers usually do not reimburse claimants for 100% of income lost due to disability. What is the reason for insurer limitations on coverage amounts?
To provide an incentive for the insured to return to work
When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees
To renew the policy until the insured has reached age 65.
Premiums paid by self-employed sole proprietors or partners for medical expense insurance are
Totally tax deductible.
According to the rights of renewability rider for cancellable policies, all of the following are correct about the cancellation of an individual insurance policy EXCEPT a)The insurer must provide the insured a written notice of the cancellation. b)Claims incurred before cancellation must be honored. c)An insurance company may cancel the policy at any time. d)Unearned premiums are retained by the insurance company.
Unearned premiums are retained by the insurance company.
After filing a claim, an insured tells the insurer that there is more than one insurance policy in force. That insurer sets aside the claim until it hears what the other company will pay. The insurer's action will be classified as
Unfair.
What kind of policy allows withdrawals or partial surrenders?
Universal life
A medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographic area is known as
Usual, customary and reasonable.
Which of the following products requires a securities license? a)Fixed annuity b)Equity Indexed annuity c)Deferred annuity d)Variable annuity
Variable annuity
Which of the following is a key distinction between variable whole life and variable universal life products? a)Variable whole life allows policy loans from the cash value. b)Variable universal life has a fixed premium. c)Variable whole life has a guaranteed death benefit. d)Variable universal life is regulated solely through FINRA.
Variable whole life has a guaranteed death benefit.
Manny has been injured in an accident. Although she is still receiving benefits from her policy, she does not have to pay premiums. Her policy includes
Waiver of Premium rider.
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?
War or military service
Social Security Supplement (SIS) or Social Security Riders would provide for the payment of income benefits in each of the situations below EXCEPT a)If the insured has been denied coverage under Social Security. b)When the amount payable under Social Security is more than the amount payable under the rider. c)When used to replace or supplement benefits payable under other social insurance programs. d)When the insured is eligible for Social Security benefits but before the benefits begin.
When the amount payable under Social Security is more than the amount payable under the rider.
When is the earliest a policy may go into effect?
When the application is signed and a check is given to the agent
When would a 20-pay whole life policy endow?
When the insured reaches age 100
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
With the policy.
How soon following the occurrence of a covered loss must an insured submit written proof of such loss to the insurance company?
Within 90 days or as soon as reasonably possible, but not to exceed 1 year
Which of the following is NOT a factor in determining qualifications for Social Security disability benefits? a)Number of work credits earned b)Worker's occupation c)Worker's PIA d)Worker's age
Worker's occupation
Can an individual who belongs to a POS plan use an out-of-network physician?
Yes, and they may use any preferred physician, even if not part of the HMO