Texas Health and Life Insurance ExamFX
Which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting? AStock BMutual CReciprocal DFraternal
A Stock
Which of the following is another name for a primary care physician in an HMO? AReferring physician BSpecialist CGatekeeper DSubscriber
C Gatekeeper
If the insured has the right to keep a long-term care insurance policy in force by making timely premium payments, and the insurer may not make any change to the policy or decline to renew it, the policy is APermanent. BConditional. CGuaranteed renewable. DIrrevocable.
C Guaranteed renewable
Which of the following is NOT an example of insurable interest? AEmployer in employee BChild in parent CDebtor in creditor DBusiness partners in each other
C. Debtor in creditor
Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member? AChildren's rider BAdditional insured rider CFamily term rider DSpouse rider
C. Family Term Rider
Which Universal Life option has a gradually increasing cash value and a level death benefit? AOption A BJuvenile life CTerm insurance DOption B
A Option A
When an insurer combines two periods of disability into one, the insured must have suffered a ARecurrent disability. BPartial disability. CResidual disability. DPresumptive disability.
A Recurrent diability
For how many days of skilled nursing facility care will Medicare pay benefits? A60 B90 C100 D30
C 100
Universal Life policies inclued what two components?
Insurance coverage and a cash account.
An insured has endured multiple surgeries and hospitalizations for an illness during the summer months. Her insurer no longer bills her for medical expenses. What term best describes the condition she has met?
Stop-loss limit
When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n) AExecutive bonus. BKey person policy. CFraternal association. DAleatory contract.
A Executive Bonus
Which of the following provisions would prevent an insurance company from paying a reimbursement claim to someone other than the policyowner? APayment of Claims BChange of beneficiary CEntire Contract Clause DProof of Loss
A Payment of Claims
In an HMO, a Primary Care Physician is called a APreferred provider. BProducer. CSubscriber. DGatekeeper.
D Gatekeeper
In which Medicare supplemental policies are the core benefits found? AAll plans BPlans A and B only CPlan A only DPlans A-D only
A All plans
Which of the following products will protect an individual from outliving his or her money? AAnnuity BJoint and survivor policy CAdjustable life policy DPermanent life insurance
A An Annuity
All of the following are correct about the required provisions of a health insurance policy EXCEPT
A reinstated policy provides immediate coverage for an illness.
What is the typical deductible for basic surgical expense insurance? A$0 B$100 C$200 D$500
A. $0
An agent makes a mistake on the application and then corrects his mistake by physically entering the necessary information. Who must then initial that change? AApplicant BExecutive officer of the company CInsured DAgent
A. Applicant
The term "fixed" in a fixed annuity refers to all of the following EXCEPT ADeath benefit BGuaranteed rate of interest CEqual annuity payments DAmount and length of payments
A. Death Benefit
If an agent wishes to sell variable life policies, what license must the agent obtain? ASecurities BAdjuster CSurplus Lines DPersonal Lines
A. Securities
The Commissioner of Insurance issues a Cease and Desist Order to an agent. If the agent wishes to contest the charges in court, how many days after the order was issued does the agent have to make the request? A10 days B30 days C60 days D90 days
B 30 days
Which of the following special policies covers unusual risks that are NOT normally included under Accidental Death and Dismemberment coverage? ACredit Disability BSpecial Risk Policy CLimited Risk Policy DSpecified Disease Policy
B Special Risk Policy
The Patient Protection and Affordable Care Act mandates that insurers provide coverage for dependent children up to age of A18 B19 C21 D26
D 26
COBRA applies to employers with at least A60 employees. B50 employees. C20 employees. D80 employees.
C 20 Employees
Within how many days must an insured notify the insurer of a child's birth and pay any required fees? A90 days B180 days C31 days D60 days
C 31 days
When delivering a policy, which of the following is an agent's responsibility? AApprove or decline the risk BCollect medical statement from physician CCollect payment at time of delivery DIssue the policy if the applicant is present
C Collect payment
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT AThe employer pays a bonus to a selected employee to fund the policy. BIt is considered a nonqualified employee benefit. CThe policy is owned by the company. DAny type of insurance policy may be used.
C The policy is owned by the company The policy is owned by the employee
In the Executive Bonus plan, who is the owner of the policy, and who pays the premium? ABoard of directors is the owner, and the board of directors pays the premium. BCompany is the owner, and the company pays the premium. CExecutive is the owner, and the executive pays the premium. DCompany is the owner, but the executive pays the premium.
C. Executive is the owner and the executive pays the premium.
Variable Life insurance is based on what kind of premium? ADecreasing BGraded CLevel fixed DIncreasing
C. Level Fixed
What kind of policy allows withdrawals or partial surrenders? ATerm policy BVariable whole life CUniversal life D20-pay life
CUniversal life
An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a Traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer? A$8,000, no tax consequence B$8,000, tax on growth only C$10,000, tax on growth only D$10,000, no tax consequence
D $10,000 no tax consequence
What percentage of a company's employees must take part in a noncontributory group life plan? A0% B25% C75% D100%
D 100%
This arrangement specifies who will purchase a disabled partner's interest in the event he or she becomes disabled. AKey-person insurance BEmployee benefit plan CDisability buyout DBusiness overhead expense
Disability buyout
If an applicant does not receive a new insurance policy, who would be held responsible? AThe agent BThe state CThe insurer DThe applicant
A. The Agent
An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term? AThe insured may renew the policy for another 10 years, but at a higher premium rate. BThe insured must provide evidence of insurability to renew the policy. CThe insured may only convert the policy to another term policy. DThe insured may renew the policy for another 10 years at the same premium rate.
A. The insured may renew the policy for another 10 years, but at a higher premium rate.
When would a 20-pay whole life policy endow? AWhen the insured reaches age 100 BAt the insured's age 65 CAfter 20 payments DIn 20 years
AWhen the insured reaches age 100
What happens when a policy is surrendered for its cash value? AThe policy can be converted to term coverage. BCoverage ends and the policy cannot be reinstated. CCoverage ends but the policy can be reinstated at any time. DThe policy can be reinstated by paying back all policy loans and premiums.
B. Coverage ends and the policy cannot be reinstated.
Which type of life insurance policy generates immediate cash value? AContinuous Premium BSingle Premium CLevel Term DDecreasing Term
B. Single Premium
A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as AJuvenile protection provision BSurvivor protection CLife planning DSurvivorship insurance
B. Survivor Protection
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? ARepresentation BAdhesion CConsideration DGood faith
C. Consideration
In a direct rollover, how is the money transferred from one plan to the new one? AFrom the participant to the new plan BFrom the original plan to the original custodian CFrom trustee to trustee DFrom trustee to the participant
C. From trustee to trustee
Fixed annuities provide all of the following EXCEPT AMinimum guaranteed rate of interest. BFuture income payments. CHedge against inflation. DEqual monthly payments for life.
CHedge against inflation.
What is the purpose of the buyer's guide? A.To Allow the consumer to compare the costs of different policies B. To provide the name and address of the agent. C. to list all policy riders. D. To provide information about the policy.
A.To Allow the consumer to compare the costs of different policies
Which statement is NOT true regarding a Straight Life policy? AIt has the lowest annual premium of the three types of Whole Life policies. BIts premium steadily decreases over time, in response to its growing cash value. CThe face value of the policy is paid to the insured at age 100. DIt usually develops cash value by the end of the third policy year.
B. Its premium steadily decreases over time, in response to its growing cash value
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy ARequired a premium increase each renewal. BBuilt cash values. CRequired proof of insurability every year. DDecreased death benefit at each renewal.
ARequired a premium increase each renewal.
The death benefit in a variable universal life policy AAlways equals the face amount stated in the policy. BDepends on the performance of a separate account. CIs guaranteed to be higher than when the policy is originally issued. DIs fixed.
BDepends on the performance of a separate account.
An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this? AWaiver of premium provision BIncontestable clause CGrace period DReinstatement provision
D. Reinstatement Provision
Anyone who violates the Insurance Code of Texas may be fined up to A$25,000. B$5,000. C$10,000. D$20,000.
A $25,000
All of the following statements concerning workers compensation are correct EXCEPT AA worker receives benefits only if the work related injury was not his/her fault. BWorkers compensation laws are established by each state. CAll states have workers compensation. DBenefits include medical, disability income, and rehabilitation coverage.
A A worker receives benefits only if the work related injury was not his/her fault
The insurers are allowed to disclose the HIV-related test result to all of the following EXCEPT AAnother insurer. BThe insured's doctor. CA reinsurer involved in the underwriting process. DThe Texas Department of Health.
A Another Insurer
What is the goal of the HMO? AEarly detection through regular checkups BProviding free health services CLimiting the deductibles and coinsurance to reduce costs DProviding health services close to home
A Early detection through regular checkups
Temporary licenses issued in Texas AExpire in 90 days. BExpire in 1 year. CAre renewable for a like period. DAre issued to licensees for the sale of replacement policies.
A Expire in 90 days
A husband and wife both incur expenses that are attributed to a single major medical insurance deductible. Which type of policy do they have? AFamily BCombined CJoint DMutual
A Family
How many pints of blood will be paid for by Medicare Supplement core benefits? AFirst 3 BNone; Medicare pays for it all CEverything after first 3 D1 pint
A First 3
A Medicare supplement plan must have at least which of the following renewal provisions? AGuaranteed renewable BConditionally renewable CNonrenewable DNoncancellable
A Guranteed Renewable
Who might receive dividends from a mutual insurer? APolicyholders BSubscribers CStockholders DAgents
A Policyholders
All of the following are unfair claims settlement practices EXCEPT ASuggesting negotiations in settling the claim. BRefusing to pay claims without conducting a reasonable investigation. CFailing to adopt and implement reasonable standards for settling claims. DFailing to acknowledge pertinent communication pertaining to a claim.
A Suggesting negotiations in settling the claim
Which of the following statements is most correct concerning the changing of an irrevocable beneficiary? AThey can be changed only with the written consent of that beneficiary. BThey may be changed at any time. CThey can never be changed. DThey may be changed only on the anniversary date of the policy.
A They can be changed only with the written consent of that beneficiary
Which of the following is NOT true regarding partial disability? AThis is a form of insurance that covers part-time workers. BThe insured can still report to work and receive benefits. CBenefit payments are typically 50% of the total disability benefit. DAn insured would qualify if he couldn't perform some of his normal job duties.
A This is a form of insurance that covers part-time workers
All of the following are correct about the required provisions of a health insurance policy EXCEPT AA reinstated policy provides immediate coverage for an illness. BProof-of-loss forms must be sent to the insured within 15 days of notice of claim. CA grace period of 31 days is found in an annual pay policy. DThe entire contract clause means the signed application, policy, endorsements, and attachments constitute the entire contract.
AA reinstated policy provides immediate coverage for an illness.
Two attorneys at law and operate their practice as a partnership. They want to start a program through their practice that will provide retirement benefits for themselves and three employees. They would likely choose AHR-10 (Keogh Plan). BSection 457 Deferred Compensation Plan. C403(b) plan. D401(k) plan.
AHR-10 (Keogh Plan).
In which of the following instances would the premium be tax deductible? APremiums paid by an employer on a $30,000 group term life insurance plan for employees BPremiums paid by an individual on his/her own life insurance CPremiums paid by a mother on her son's policy DPremiums paid by an employer on the life of a key person
APremiums paid by an employer on a $30,000 group term life insurance plan for employees
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? AShe can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan. BShe will still be covered under the group plan, but will have to pay an individual policy premium. CShe can only convert her coverage without proof of insurability if she has the master policy. DShe must apply for a new policy, which requires her to provide proof of insurability.
AShe can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan.
Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is CORRECT? APremiums are determined by age, occupation, and individual underwriting. B100% participation of members is required in noncontributory plans. CEach member covered receives a policy. DCoverage cannot be converted when an individual leaves the group.
B 100% participation of members is required in noncontributory plans
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? ACollect a late payment fee BAsk her to sign a statement of good health COffer her a secondary policy DAsk the applicant to sign a statement that acknowledges that the policy had been delivered
B Ask her to sign a statement of good health
The classification "Small Employer" means any person that during the preceding year employed AAt least 10 and not more than 100 persons. BAt least 2 and not more than 50 persons. CAt least 3 and not more than 25 persons. DAt least 5 and not more than 75 persons.
B At least 2 and not more than 50 persons
All of the following are business uses of life insurance EXCEPT AFunding business continuation agreements. BFunding against general company financial loss. CCompensating executives. DFunding against financial loss caused by the death of a key employee.
B Funding against general company financial loss
Most LTC plans have which of the following features? AOpen enrollment BGuaranteed renewability CNo elimination period DVariable premiums
B Guranteed Renewability
Who must pay for the cost of a medical examination required in the process of underwriting? ADepartment of Insurance BInsurer CApplicant DUnderwriters
B Insurer
Credit Life insurance AHas a maximum term for insurance of 20 years. BInsures the life of a debtor. CIs purchased on an installment basis. DInsures the life of a creditor.
B Insures the life of a debtor
What is the term for how frequently a policyowner is required to pay the policy premium? AConsideration BMode CSchedule DGrace period
B Mode
Which of the following is NOT true regarding policy loans? AA policy loan may be repaid after the policy is surrendered. BMoney borrowed from the cash value is taxable. CPolicy loans can be repaid at death. DAn insurer can charge interest on outstanding policy loans.
B Money borrowed from the cash value is taxable
The coverage provided by a disability income policy that does not pay benefits for losses occurring as the result of the insured's employment is called AWorkers compensation. BNonoccupational coverage. CUnemployment coverage. DOccupational coverage.
B Nonoccupational coverage
On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are AGuaranteed. BNot taxable since the IRS treats them as a return of a portion of the premium paid. CPaid at a fixed rate every year. DTaxable as ordinary income.
B Not taxable since the IRS treats them as a return of a portion of the premium paid.
All of the following are mandatory life insurance policy provisions EXCEPT AGrace period. BPolicy backdating. CMisstatement of age. DIncontestability.
B Policy Backdating
All of the following statements concerning an employer sponsored nonqualified retirement plan are true EXCEPT AThe plan is not approved for favorable tax treatment by the IRS. BThe employer can receive a current tax deduction for any contributions made to the plan. CThe plan is a legal method of accumulating money for retirement needs. DThe plan can discriminate as to who may participate.
B The employer can receive a current tax deduction for any contributions made to the plan.
Who is the owner and who is the beneficiary on a Key Person Life Insurance policy? AThe key employee is the owner and the employer is the beneficiary. BThe employer is the owner and beneficiary. CThe employer is the owner and the key employee is the beneficiary. DThe key employee is the owner and beneficiary.
B The employer is the owner and beneficiary
Which statement accurately describes group disability income insurance? AShort-term plans provide benefits for up to 1 year. BThe extent of benefits is determined by the insured's income. CIn long-term plans, monthly benefits are limited to 75% of the insured's income. DThere are no participation requirements for employees.
B The extent of benefits is determined by the insured's income
Which of the following entities can legally bind coverage? AAgent BInsurer CThe insured DFederal Insurance Board
B. Insurer
Which of the following policy components contains the company's promise to pay? AEntire contract provision BInsuring clause CPremium mode DConsideration clause
B. Insuring Clause
On a health insurance application, a signature is required from all of the following individuals EXCEPT AThe agent. BThe spouse of the policyowner. CThe proposed insured. DThe policyowner.
B. The spouse of the policy owner.
Under the Physical Exam and Autopsy provision, how many times can an insurer have the insured examined, at its own expense, while a claim is pending? A2 examinations per week of the claim processing period BUnlimited CNone at all D1 examination per week of the claim processing period
B. Unlimited
If an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about AWhich individual will pay the premium. BWhether an insurable interest exists between the individuals. CThe gender of the applicant. DThe type of policy requested.
B. Whether an insurable interest exist between the individuals.
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? A10 days B15 days C30 days D45 days
C 30 Days
Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within A30 days of a loss. B60 days of a loss. C90 days of a loss. D20 days of a loss.
C 90 days of a loss
The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the AInsuring clause. BMisstatement of Age clause. CIncontestability clause. DReinstatement clause.
C Incontestability Clause
Which of the following is correct about a group health insurance policy? AIt cannot provide coverage for handicapped children. BIt cannot exclude coverage from an occupational accident. CIt cannot exclude newborn children from coverage. DIt cannot exclude coverage for VA hospital treatment.
C It cannot exclude newborn children from coverage
With respect to the Consideration Clause, which of the following would be considered consideration on the part of the applicant for insurance? AProviding warranties on the application BNotice of policy cancellation CPayment of premium DPromise to renew the policy at the end of the policy period
C Payment of premium
All of the following are to be included in the application for a certificate of authority to act as an HMO EXCEPT AA schedule of charges for the first 12 months. BFinancial records of the organization applying. CRecords of previous insurers. DA map of the geographic area to be served.
C Records of previous insurers
Which of the following is NOT covered under Part B of a Medicare policy? ALab services BPhysician expenses CRoutine dental care DHome health care
C Routine Dental Care
In a group policy, who is issued a certificate of insurance? AThe insurance company BThe employer CThe individual insured DThe health care provider
C The individual insured
All of the following information must be included in the evidence of coverage for an HMO plan EXCEPT AExamples of information to appear in the blanks. BHMO's toll-free telephone number. CThe insurance agent's name and license number. DA schedule of benefits.
C The insurance agent's name and license number
Hospital indemnity/hospital confinement indemnity policy will provide payment based on AThe premiums paid into the policy. BThe medical expense incurred. CThe number of days confined in a hospital. DThe type of illness.
C The number of days confined in a hospital
Which of the following is true regarding Medicare supplement policies? AThey must contain a minimum of Plans A and B. BThey must be available to those aged 60 and over. CThey must be at least guaranteed renewable. DThey must have at least a 15-day free-look period.
C They must be at least guaranteed renewable
Which of the following is the best reason to purchase life insurance rather than annuities? ATo create regular income payments BTo liquidate a sum of money over a lifetime CTo create an estate DTo liquidate a sum of money over a period of years
C To create an estate
What is the purpose of coinsurance provisions? ATo ensure payment to the doctors and hospitals BTo share liability among different insurance companies CTo help the insurance company to prevent overutilization of the policy DTo have the insured pay premiums to more than one company.
C To help the insurance company to prevent the over utilization of the policy
What is the name of the insured who enters into a viatical settlement? AContingent BViatical broker CViator DThird party
C Viator
Which of the following is NOT an example of a business use of Life Insurance? AExecutive Bonuses BKey Person CWorkers Compensation DBuy-sell Funding
C Workers Compensation
An employee is injured in a construction accident, rendering him unable to work for a year. Which of the following plans would provide him with medical expense coverage and income assistance? ALong-term Care BSocial Security Disability CWorkers Compensation DMajor Medical Insurance
C Workers compensation
Which of the following is NOT true regarding a Variable Universal Life policy? AThe cash values are not guaranteed. BThe death benefit is fixed. CThe policyowner can participate in some of the investment decisions. DThe minimum death benefit is guaranteed.
C. The Death benefit is fixed.
Whose responsibility is it to determine if all of the questions on an application have been answered? AThe applicant BThe beneficiary CThe agent DThe insurer
C. The agent
Which of the following is NOT true regarding the annuitant? AThe annuitant receives the annuity benefits. BThe annuitant must be a natural person. CThe annuitant cannot be the same person as the annuity owner. DThe annuitant's life expectancy is taken into consideration for the annuity.
C. The annuitant cannot be the same person as the annuity owner.
Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to ABeneficiary of the death benefit. BThe spouse of the insured. CThe insured. DCreditors.
C. The insured
In a life settlement contract, whom does the life settlement broker represent? AThe beneficiary BThe life settlement intermediary CThe owner DThe insurer
C. The owner
All of the following are true regarding a decreasing term policy EXCEPT AThe contract pays only in the event of death during the term and there is no cash value. BThe face amount steadily declines throughout the duration of the contract. CThe payable premium amount steadily declines throughout the duration of the contract. DThe death benefit is $0 at the end of the policy term.
C. The payable premium amount steadily declines throughout the duration of the contract.
Which of the following determines the cash value of a variable life policy? AThe policy's guarantees. BThe premium mode CThe performance of the policy portfolio DThe company's general account
C. The performance of the policy portfolio.
Which of the following types of insurance policies would perform the function of cash accumulation? ACredit life BIncreasing term CWhole life DTerm life
C. Whole Life
Who can make a fully deductible contribution to a traditional IRA? ASomeone making contributions to an educational IRA BA person whose contributions are funded by a return on investment CAn individual not covered by an employer-sponsored plan who has earned income DAnybody: all IRA contributions are fully deductible regardless of income level
CAn individual not covered by an employer-sponsored plan who has earned income
All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT AFunds accumulate on a tax-deferred basis. BEmployee and employer contributions are not counted as income to the employee for income tax purposes. CAt distribution, all amounts received by the employee are tax free. DEmployer contributions are tax deductible as ordinary business expense.
CAt distribution, all amounts received by the employee are tax free.
What document describes an insured's medical history, including diagnoses and treatments? AIndividual Medical Summary BComprehensive Medical History CAttending Physician's Statement DPhysician's Review
CAttending Physician's Statement
Which of the following statements is NOT correct concerning the COBRA Act of 1985? AIt applies only to employers with 20 or more employees that maintain group health insurance plans for employees. BCOBRA stands for Consolidated Omnibus Budget Reconciliation Act. CIt requires all employers, regardless of the number or age of employees, to provide extended group health coverage. DIt covers terminated employees and/or their dependents for up to 36 months after a qualifying event.
CIt requires all employers, regardless of the number or age of employees, to provide extended group health coverage.
In abasic expense policy, after the limits of the basic policy are exhausted, the insured must pay what kind of deductible? AFull BHalf CNone DCorridor
D Corridor
Conversion to an individual whole life policy is permitted without evidence of insurability within how many days of the termination of employment? A14 B28 C30 D31
D 31 Days Terminated employees and their dependents have 31 days to convert to an individual policy issued without evidence of insurability. The new policy can be any type of insurance EXCEPT term. The premium will be based on the current age of the insured.
A hospital indemnity policy will pay AIncome lost while the insured is in the hospital. BAll expenses incurred by the stay in the hospital. CAny expenses incurred by the stay in the hospital, minus coinsurance payments and deductibles. DA benefit for each day the insured is in a hospital.
D A benefit for each day the insured is in a hospital
Which of the following is true regarding the insurance amount in a credit life policy? ACreditor may insure the debtor for an unlimited amount of coverage. BAllowable amount of coverage is determined by the State Insurance Commissioner. CThe amount of coverage can be greater than the amount owed. DCreditor can only insure the debtor for the amount owed.
D Creditor can only insure the debtor for the amount owed.
Which of the following is NOT allowed in credit life insurance? ACreditor having a collateral assignment on the policy BCreditor requiring that a debtor has a life insurance CCreditor becoming a policy beneficiary. DCreditor requiring that a debtor buys insurance from a certain insurer
D Creditor requiring that a debtor buys insurance from a certain insurer
A health insurance policy that pays a lump sum if the insured suffers a heart attack or stroke is known as AMajor medical. BAD&D. CMedical expense. DCritical illness.
D Critical Illness
Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled? AProprietary Transfer BAbsolute assignment CTransfer of Ownership DDisability Buy-Sell
D Disability Buy-Sell
Which of the following is NOT true regarding policy loans? APolicy loans can be repaid at death. BAn insurer can charge interest on outstanding policy loans. CA policy loan may be repaid after the policy is surrendered. DMoney borrowed from the cash value is taxable.
D Money borrowed from the cash value is taxable
Which of the following is NOT a feature of a guaranteed renewable provision? AThe insured has a unilateral right to renew the policy for the life of the contract. BCoverage is not renewable beyond the insured's age 65. CThe insured's benefits cannot be reduced. DThe insurer can increase the policy premium on an individual basis.
D The insurer can increase the policy premium on an individual basis.
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT AAny type of insurance policy may be used. BThe employer pays a bonus to a selected employee to fund the policy. CIt is considered a nonqualified employee benefit. DThe policy is owned by the company.
D The policy is owned by the company. It is owned by the employee.
All of the following benefits are available under Social Security EXCEPT AOld-age and retirement benefits. BDisability benefits. CDeath benefits. DWelfare benefits.
D Welfare Benefits
Upon the submission of a death claim under a life insurance policy, when should the insurer pay the policy benefit? AOn the next anniversary of the policy BImmediately after receiving written proof of loss CWithin 30 days DWithin 2 months
D Within 2 months
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? APolicy Request BInsurance Request Form CRequest for Insurance DApplication
D. Application
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 AConsideration. BLegal purpose. COffer and acceptance. DConditions.
D. Conditions
Insurers may change which of the following on a guaranteed renewable health insurance policy? ACoverage BIndividual rates CNo changes are permitted. DRates by class
D. Rates By Class
The Probationary Period is AThe number of days the insured has to determine if he/she will accept the policy as received. BThe stated amount of time when benefits may be reduced under certain conditions. CThe number of days that must expire after the onset of an illness before benefits will be earned. DA specified period of time that a person joining a group has to wait before becoming eligible for coverage.
DA specified period of time that a person joining a group has to wait before becoming eligible for coverage.
In a disability policy, the probationary period refers to the time ABetween the first day of disability and the day the disability must continue before the insured receives any benefits. BBetween the 10th day of an illness-related disability and the first payment. CBetween the first day of disability and the actual receipt of payment for the disability incurred. DDuring which illness-related disabilities are excluded from coverage.
DDuring which illness-related disabilities are excluded from coverage.
Which of the following is INCORRECT concerning a noncontributory group plan? AThey help to reduce adverse selection against the insurer. BThey require 100% employee participation. CThe employer pays 100% of the premiums. DThe employees receive individual policies.
DThe employees receive individual policies.
Which of the following is an example of liquidity in a life insurance contract? AThe money in a savings account BThe cash value available to the policyowner CThe death benefit paid to the beneficiary DThe flexible premium
B. The cash value available to the policy owner.
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? AAgent's Report BUnderwriter's Report CInspection Report DMedical Information Bureau's report
C. Inspection Report
Which of the following information will be stated in the consideration clause of a life insurance policy? AThe parties to the contract BThe time period allowed for the payment of premium CThe conditions for insurability DThe amount of premium payment
D The amount of premium payment
Which of the following is NOT the consideration in a policy? AThe promise to pay covered losses BThe application given to a prospective insured CSomething of value exchanged between parties DThe premium amount paid at the time of application
B. The application given to a prospective insured.
Which of the following products requires a securities license? A. Equity Indexed Annuity B. Deferred Annuity C. Variable Annuity D. Fixed Annuity
C. Variable Annuity
Which of the following products requires a securities license? AFixed annuity BEquity Indexed annuity CDeferred annuity DVariable annuity
D. Variable Annuity
If an annuitant dies before annuitization occurs, what will the beneficiary receive? AEither the amount paid into the plan or the cash value of the plan, whichever is the greater amount BEither the amount paid into the plan or the cash value of the plan, whichever is the lesser amount CAmount paid into the plan DCash value of the plan
A Either the amount paid into the plan or the cash value of the plan, which ever is the greater amount
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) AEquity Indexed Annuity. BVariable Annuity. CFlexible Annuity. DImmediate Annuity.
A Equity Indexed Annuity
All of the following are true regarding a decreasing term policy EXCEPT AThe payable premium amount steadily declines throughout the duration of the contract. BThe death benefit is $0 at the end of the policy term. CThe contract pays only in the event of death during the term and there is no cash value. DThe face amount steadily declines throughout the duration of the contract.
A. The payable premium amount steadily declines throughout the duration of the contract.
Which of the following products requires a securities license? AVariable annuity BFixed annuity CEquity Indexed annuity DDeferred annuity
A. Variable annuity
Before a customer's agent delivers his policy, the insurer makes a last-minute change to the policy. The agent informs the customer of this change, and he accepts it. What must the agent do now? AThe agent should ask the customer to sign a statement acknowledging that he is aware of the change. BNothing. After the explanation, the agent is not legally bound to do anything else. CThe agent must notify the beneficiary of the change in policy. DIf the change would affect the premium, the agent must have the customer sign a statement acknowledging the change.
AThe agent should ask the customer to sign a statement acknowledging that he is aware of the change.
The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as AThe next month's premium is sufficient to cover both the current premium amount and the skipped amount. BThe policy contains sufficient cash value to cover the cost of insurance. CThe previous premium payments were high enough to create an excess of premium. DThe policyowner cannot skip premiums without the policy lapsing.
B. The policy contains sufficient cash value to cover the cost of insurance.
What is the purpose of a conditional receipt? AIt is given by the agent only to applicants who fully prepay all scheduled premiums in advance of policy issue. BIt is intended to provide coverage on a date earlier than the date of the issuance of the policy. CIt guarantees the applicant that a policy will be issued in the amount applied for in the application. DIt serves as proof that the agent has determined the applicant to be fully insurable for coverage by the insurance company.
BIt is intended to provide coverage on a date earlier than the date of the issuance of the policy.
Which of the following would be considered a nonmedical insurance application? AAn application that does not ask any questions about the applicant's medical history BAn application submitted with the Agent's Report CAny application for life insurance DAn application on which the medical information is completed by the applicant and the agent only.
D. An application on which the medical info is completed by the applicant and agent alone.
Which of the following is NOT true regarding the accumulation period of an annuity? AIt is the period during which the annuity payments earn interest. BIt is the period over which the annuitant makes payments into an annuity. CIt is also known as the pay-in period. DIt would not occur in a deferred annuity.
DIt would not occur in a deferred annuity.
What is the main purpose of the Seven-pay Test? AIt ensures that the policy benefits are paid out in 7 years. BIt guarantees interest minimum. CIt determines if the insurance policy is an MEC. DIt requires level premium payments for 7 years.
C. It determines if the insurance policy is an MEC.
Which of the following is true about the mandatory free look in a Life Insurance policy? AIt commences when the policy is delivered. BIt commences when the application is signed. CIt applies only to term life insurance policies. DIt is optional on all life insurance policies.
A It commences when the policy is delivered.
All of the following statements about equity index annuities are correct EXCEPT AThe annuitant receives a fixed amount of return. BThey have a guaranteed minimum interest rate. CThe interest rate is tied to an index such as the Standard & Poor's 500. DThey invest on a more aggressive basis aiming for higher returns.
AThe annuitant receives a fixed amount of return.
Who must pay for the cost of a medical examination required in the process of underwriting? AApplicant BUnderwriters CDepartment of Insurance DInsurer
D. Insurer
Which of the following is TRUE regarding the accumulation period of an annuity? AIt is also referred to as the annuity period. BIt is a period of time during which the beneficiary receives income CIt is limited to 10 years. DIt is a period during which the payments into the annuity grow tax deferred.
D. It is a period during which the payments into the annuity grow tax deferred.
Which of the following is NOT true of life settlements? AThey could be used for a key person coverage. BThey could be sold for an amount greater than the current cash value. CThey involve insurance policies with large face amounts. DThe seller must be terminally ill.
D. The seller must be terminally ill.
What document describes an insured's medical history, including diagnoses and treatments? APhysician's Review BIndividual Medical Summary CComprehensive Medical History DAttending Physician's Statement
DAttending Physician's Statement
Which of the following is TRUE regarding the annuity period? ADuring this period of time the annuity payments grow interest tax deferred. BIt is also referred to as the accumulation period. CIt is the period of time during which the annuitant makes premium payments into the annuity. DIt may last for the lifetime of the annuitant.
DIt may last for the lifetime of the annuitant.
Which of the following is NOT true regarding the annuitant? AThe annuitant's life expectancy is taken into consideration for the annuity. BThe annuitant receives the annuity benefits. CThe annuitant must be a natural person. DThe annuitant cannot be the same person as the annuity owner.
AThe annuitant's life expectancy is taken into consideration for the annuity
An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term? AThe insured may renew the policy for another 10 years at the same premium rate. BThe insured may renew the policy for another 10 years, but at a higher premium rate. CThe insured must provide evidence of insurability to renew the policy. DThe insured may only convert the policy to another term policy.
BThe insured may renew the policy for another 10 years, but at a higher premium rate.
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? AApproved the application BIssued the policy CNeither approved the application nor issued the policy DBoth approved the application and issued the policy
CNeither approved the application nor issued the policy
The premiums paid by the employer in a business life insurance policy are ANever taxable to the employee. BTax deductible by the employer. CTax deductible by the employee. DAlways taxable to the employee.
B. Tax deductible by the employer
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? AThe insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums. BThe insured's premiums will be waived until she is 21. CThe premiums will become tax deductible until the insured's 18th birthday. DSince it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected.
B. The insured's premiums will be waived until she is 21.
An insured has a primary group health plan and an excess plan, each covering losses up to $10,000. The insured suffered a loss of $15,000. Disregarding any copayments or deductibles, how much will the excess plan pay? A$10,000 B$7,500 C$5,000 D$0
$5,000 Once the primary plan has paid its full promised benefit, the insured submits the claim to the secondary, or excess, provider for any additional benefits payable.
If the insured under a disability income insurance policy changes to a more hazardous occupation after the policy has been issued, and a claim is filed, the insurance company should do which of the following? AAdjust the benefit in accordance with the increased risk BCancel the policy CIncrease the premium DExclude coverage for on-the-job injury
A Adjust the benefit in accordance with the increased risk
In a replacement situation, all of the following must be considered EXCEPT AAssets. BBenefits. CLimitations. DExclusions.
A Assets
Social Security was created to protect against all of the following EXCEPT ABad investment choices. BSickness in old age. CPremature death. DDisability.
A Bad investment choices
Which of the following is NOT required to be stated in the outline of coverage provided with a long-term care policy? ABasic information about supplementary policies BThe policy number CThe right to return the policy for a refund DBasic information about the insurance company
A Basic information about supplementary policies
All of the following statements are correct regarding Credit Life Insurance EXCEPT ABenefits are paid to the borrower's beneficiary. BThe amount of insurance permissible is limited per borrower. CPremiums are usually paid by the borrower. DBenefits are paid to the creditor.
A Benefits are paid to the borrower's beneficiary. In Credit Life Insurance, the creditor is the beneficiary for the amount of benefit equal to the outstanding balance of the loan.
A small hardware store owner is involved in a car accident that renders him totally disabled for half a year. Which type of insurance would help him pay for expenses of the company during the time of his disability? ABusiness overhead expense policy BKey-person insurance CDisability buy-sell agreement DBusiness disability policy
A Business overhead expense policy
In order for an insurer to legally transact insurance, it must obtain which of the following? ACertificate of Authority BPower of Authority CDirector's Decree DAuthorization of Power
A Certificate of Authority
Under the Privacy Rule for HIPAA, protected information includes all individually identifiable health information AHeld or transmitted in any form. BTransmitted electronically only. CHeld in a computer format. DHeld or transmitted in paper form.
A Held or transmitted in any form
An HMO subscriber no longer meets plan eligibility requirements. When can the insurer cancel coverage? AImmediately BNo sooner than after 15 days CNo sooner than after 30 days DNever: coverage is noncancellable
A Immediately
If HMO coverage is terminated for misconduct detrimental to the delivery of services, the termination is effective AImmediately. BNo sooner than 10 days after a notice to the insured. CNo sooner than 15 days after a notice to the insured. DNo sooner than 15 days after a notice to the insured.
A Immediately
A typical Accidental Death & Dismemberment policy covers all of the following losses EXCEPT AIncome. BEyesight. CLimb. DLife.
A Income
In long-term care (LTC) policies, as the benefit period lengthens, the premium AIncreases. BRemains unchanged. CLTC premiums are not based on benefit periods. DDecreases.
A Increases
Which of the following entities can legally bind coverage? AInsurer BThe insured CFederal Insurance Board DAgent
A Insurer
In the event of loss, after a notice of claim is submitted to the insurer, who is responsible for providing claims forms and to which party? AInsurer to the insured BInsured to the insurer CInsurer to the Department of Insurance DInsured to the Department of Insurance
A Insurer to the insured
What type of health insurance policy provides an employer with funds to train a replacement if a valued employee becomes disabled? AKey Person Disability BGroup Disability CDisability Buy-Sell DBusiness Overhead
A Key Person Disability
Which of the following statements pertaining to Medicare Part A is correct? AMedicare Part A is automatically provided when an individual qualifies for Social Security benefits at age 65. BFor the first 90 days of hospitalization, Medicare Part A pays 100% of all covered services, except for the initial deductible. CIndividuals with ESRD do not qualify for Part A. DEach individual covered by Medicare Part A is allowed one 90-day benefit period per year.
A Medicare Part A is automatically provided when an individual qualifies for Social Security benefits at age 65
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy? AMutual BReciprocal CNonprofit service organization DStock
A Mutual
Prior to purchasing a Medigap policy, a person must be enrolled in which of the following? AParts A and B of Medicare BAll four parts of Medicare CAny private insurance policy DOnly Part A of Medicare
A Parts A and B of Medicare
Which of the following would basic medical expense coverage NOT cover? ASurgeon's services BMental illness CMaternity DHospice
A Surgeon's services
Which of the following would an accident-only policy NOT cover? ASurgery to repair a wrist damaged by tendonitis. BHospitalization costs due to a boating accident CDeath from a motorcycle accident DAmputation of a leg that was burned during a house fire
A Surgery to repair a wrist damaged by tendinitis
A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as ASurvivor protection BLife planning CSurvivorship insurance DJuvenile protection provision
A Survivor Protection
The expense for an autopsy covered under the physical exam and autopsy provision is paid by AThe insurer. BThe state's autopsy fund. CThe limits of coverage under the health insurance policy. DThe estate of the insured.
A The Insurer
Which of the following definitions would make it easier to qualify for total disability benefits? AThe more liberal "own occupation" BThe more strict "any occupation" CThe more liberal "any occupation" DThe more strict "own occupation"
A The more liberal "own occupation"
In a life settlement contract, whom does the life settlement broker represent? AThe owner BThe insurer CThe beneficiary DThe life settlement intermediary
A The owner
All of the following are true of key person insurance EXCEPT AThe plan is funded by permanent insurance only. BThere is no limitation on the number of key employee plans in force at any one time. CThe employer is the owner, payor and beneficiary of the policy. DThe key employee is the insured.
A The plan is funded by permanent insurance only
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT AThe policy is owned by the company. BAny type of insurance policy may be used. CThe employer pays a bonus to a selected employee to fund the policy. DIt is considered a nonqualified employee benefit.
A The policy is owned by the company
Which of the following is true regarding optional benefits with long-term care policies? AThey are available for an additional premium. BOnly standard benefits are available with LTC policies. CThey are offered at no additional cost to the insured. DThey are included in all policies.
A They are available for an additional premium.
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 AUnearned premiums are retained by the insurance company. BThe insurer must provide the insured a written notice of the cancellation. CClaims incurred before cancellation must be honored. DAn insurance company may cancel the policy at any time.
A Unearned premiums are retained by the insurance company
An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. The insured knows that his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilize? AViatical settlement BEstate liquidation CNonpayment of premium DChange of beneficiary
A Viatical settlement
When may an insured deduct unreimbursed medical expenses paid under a long-term care policy? AWhen the expenses exceed a certain percentage of the insured's adjusted gross income BOnly if the insured is age 65 or older CAll LTC expenses are tax deductible. DOnly if the insured does not itemize the expenses
A When the expenses exceed a certain percentage of the insured's adjusted gross income
In order to establish or operate an HMO, a certificate of authority from the Commissioner is required. Which of the following does NOT need to be included in the certificate of authority? AA list of the names, addresses and official positions of those responsible for the applicant's affairs BA copy of the forms of evidence of coverage to be issued to enrollees CA list of proposed subscribers DA copy of the applicant's rules and regulations regarding internal affairs
A list of proposed subscribers
What is the purpose of coinsurance provisions? ATo help the insurance company to prevent overutilization of the policy BTo have the insured pay premiums to more than one company. CTo ensure payment to the doctors and hospitals DTo share liability among different insurance companies
A. To help the insurance company to prevent over utilization of the policy.
If an agent has completed 35 hours of continuing education in one renewal period, how many CE hours will the agent have to complete in the next renewal period? A11 B24 C35 D0
B 24 Agents must complete 24 hours of continuing education every renewal period. All CE hours must be completed during the reporting period; licensees are not allowed to carry over excess hours to the next reporting period.
How long is an open enrollment period for Medicare supplement policies? A90 days B6 months C1 year D30 days
B 6 Months
The minimum number of credits required for partially insured status for Social Security disability benefits is A4 credits. B6 credits. C10 credits. D40 credits.
B 6 credits
If an insurance company offers Medicare supplement policies, it must offer which of the following plans? AA-N BA CA and B DA-J
B A An insurance company must make available to each applicant a policy form offering the basic core benefits (Plan A) if it will offer any Medicare Supplement policies. An insurance company does not have to issue all or any of the plans B through N.
Most HMOs operate through what type of system? AA group formed principally for the purpose of obtaining HMO coverage BA group enrollment system either at their place of employment or as a member of an association CIndividual fee-for-service system DIndividual subscribers
B A group enrollment system either at their place of employment or as a member of an association
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? APay the full amount of a claim because the contestable period has ended BAdjust the claim benefit to reflect the insured's true age CDeny any claims and cancel the policy DDeny paying a claim based on misrepresentation
B Adjust the claim benefit to reflect the insure's true age
All of the following are examples of third-party ownership of a life insurance policy EXCEPT AWhen an insured purchased a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company. BAn insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan. CAn insured couple purchases a life insurance policy insuring the life of their grandson. DA company purchases a life insurance policy on their manager, who is an important part of the operation.
B An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan
A key person insurance policy can pay for which of the following? AHospital bills of the key employee BCosts of training a replacement CLoss of personal income DWorkers compensation
B Cost of training a replacement
Which of the following would be the beneficiary in credit life insurance? ABorrower BCreditor CInsured DCompany
B Creditor
A health insurance policy that pays a lump sum if the insured suffers a heart attack or stroke is known as AMedical expense. BCritical illness. CMajor medical. DAD&D.
B Critical Illness
A partnership buy-sell agreement in which each partner purchases insurance on the life of each of the other partners is called a AStock redemption plan. BCross-purchase plan. CKey person plan. DSplit-dollar plan.
B Cross-purchase plan
Items stipulated in the contract that the insurer will not provide coverage for are found in the AConsideration clause. BExclusions. CInsuring clause. DBenefit Payment clause.
B Exclusions
In the Executive Bonus plan, who is the owner of the policy, and who pays the premium? ACompany is the owner, and the company pays the premium. BExecutive is the owner, and the executive pays the premium. CCompany is the owner, but the executive pays the premium. DBoard of directors is the owner, and the board of directors pays the premium.
B Executive is the owner and the executive pays the premium
Where in the policy must the HMO insurer provide information about the HMO's name, address, and toll-free number? AIn the buyer's guide BOn the face page CAnywhere in the document as deemed appropriate by the insurer DIn the policy appendix
B On the face page
Underwriting is a major consideration when an insured wishes to replace her current policy for all of the following reasons EXCEPT ABenefits may change. BPremiums always stay the same. CDue to age or health, the policy may change dramatically. DPre-existing conditions that were previously covered may not be covered under the replacing policy.
B Premiums always stay the same
Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy? APremiums are taxable to the employee. BPremiums are not tax deductible as a business expense. CPremiums are tax deductible by the key employee. DPremiums are tax deductible as a business expense.
B Premiums are not tax deductible as a business expense
Which of the following would be a qualifying event as it relates to COBRA? AEligibility for Medicare BTermination of employment due to downsizing CTermination of employment for stealing DEligibility for coverage under another group plan
B Termination of employment due to downsizing
Which of the following is true about the requirements regarding HIV exams? AHIV exams may not be used as a basis for underwriting. BThe applicant must give prior informed written consent. CResults may be disclosed to the agent and the underwriter. DPrior informed oral consent is required from the applicant.
B The applicant must give prior informed written consent
An insured loses her left arm in an accident that is covered by her Accidental Death and Dismemberment policy. What kind of benefit will she most likely receive from this policy? AThe principal amount in monthly installments BThe capital amount in a lump sum CThe principal amount in a lump sum DThe capital amount in monthly installments
B The capital amount in a lump sum
Which of the following describes the tax advantage of a qualified retirement plan? AEmployer contributions are not taxed when paid out to the employee. BThe earnings in the plan accumulate tax deferred. CDistributions prior to age 59½ are tax deductible. DEmployer contributions are deductible as a business expense when the employee receives benefits.
B The earnings in the plan accumulate tax deferred.
All of the following are true of key person insurance EXCEPT AThe key employee is the insured. BThe plan is funded by permanent insurance only. CThere is no limitation on the number of key employee plans in force at any one time. DThe employer is the owner, payor and beneficiary of the policy.
B The plan is funded by permanent insurance only
What is the purpose of COBRA? ATo protect the insureds against insolvent insurers BTo provide continuation of coverage for terminated employees CTo provide coverage for the dependents DTo provide health coverage for people with low income
B To provide continuation of coverage for terminated employees
Which of the following would be an example of a limited accident and health insurance policy? AA long-term care policy BA dread disease policy CAn accidental death and dismemberment policy DA Medicare policy
B. A dread disease 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 APay half of her claim because the insured had an outstanding premium. BPay the claim. CHold the claim as pending until the end of the grace period. DDeny the claim.
B. Pay the Claim.
In a group health policy, a probationary period is intended for people AWho want lower premiums. BWho joined the group after the effective date. CWho had a pre-existing condition at the time they joined the group. DWho have additional coverage through a spouse.
B. Who joined the group after the effective date.
All of the following statements concerning Accidental Death and Dismemberment coverage are correct EXCEPT AAccidental death and dismemberment insurance is considered to be limited coverage. BDeath benefits are paid only if death occurs within 24 hours of an accident. CAccidental death benefits are paid only if death results from accidental bodily injury as defined in the policy. DDismemberment benefits are paid for certain disabilities that are presumed to be total and permanent.
BDeath benefits are paid only if death occurs within 24 hours of an accident.
Death benefits payable to a beneficiary under a life insurance policy are generally AExempt from income taxation if over $7,000. BNot subject to income taxation by the Federal Government. CSubject to income taxation by the Federal Government. DExempt from income taxation if under $7,000.
BNot subject to income taxation by the Federal Government.
All of the following are characteristics of group life insurance EXCEPT ACertificate holders may convert coverage to an individual policy without evidence of insurability. BPremiums are determined by the age, sex and occupation of each individual certificate holder. CAmount of coverage is determined according to nondiscriminatory rules. DIndividuals covered under the policy receive a certificate of insurance.
BPremiums are determined by the age, sex and occupation of each individual certificate holder.
The sole proprietor of a business makes a total salary of $50,000 a year. This year, his medical expenses have reached a total of $75,000. What amount may the sole proprietor deduct in regards to his medical expenses? A$10,000 B$25,000 C$50,000 D$75,000
C $50,000 The proprietors of a business may deduct the cost of a medical expense plan because they are considered to be self-employed individuals instead of employees. The deduction cannot legally exceed the taxpayer's earned income for the year even if the cost of the medical expense plan exceeds this amount (in this scenario, $50,000).
Who is a third-party owner? AAn employee in a group policy BAn irrevocable beneficiary CA policyowner who is not the insured DAn insurer who issues a policy for two people
C A policyowner who is not the insured
Which of the following individuals is eligible for a Health Savings Account? ASuzie is a dependent on her parent's tax returns BTomas is insured by a Low Deductible Health Plan (LDHP) CAllison is insured by a High Deductible Health Plan (HDHP) DMargaret is 68 years old
C Allison is insured by a HDHP
In which of the following locations would skilled care most likely be provided? AIn an outpatient setting BAt a physician's office CIn an institutional setting DAt the patient's home
C An Institutional setting
While a claim is pending, an insurance company may require AThe insured to be examined only once annually. BAn independent examination only once every 45 days. CAn independent examination as often as reasonably required. DThe insured to be examined only within the first 30 days.
C An independent examination as often as reasonably required
All of the following qualify for Medicare Part A EXCEPT AAnyone who is at the end stage of renal disease. BAnyone who is over 65, not covered by Social Security, and is willing to pay premium. CAnyone who is willing to pay a premium. DAnyone that qualifies through Social Security.
C Anyone who is willing to pay a premium
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? AInsurance Request Form BRequest for Insurance CApplication DPolicy Request
C Application
To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested? AWhen the policy is delivered BAt the initial interview CAt the time of application DWhen the applicant's credit is checked
C At the time of application
Which of the following would NOT be considered a misrepresentation on the part of the insurer? AEmbellishing the benefits provided in the policy BOverstating returns on policy dividends CBackdating policies to secure a lower premium for the insured DImplying that term insurance has cash value
C Backdating policies to secure a lower premium for the insured
HMOs that contract with outside physicians to provide health care service to their subscribers compensate those providers on a AFee-for-service basis BUsual, reasonable or customary basis CCapitation basis DMedicare allowable basis
C Capitation basis
What does "liquidity" refer to in a life insurance policy? AThe policyowner receives dividend checks each year. BThe insured is receiving payments each month in retirement. CCash values can be borrowed at any time. DThe death benefit replaces the assets that would have accumulated if the insured had not died.
C Cash values can be borrowed at anytime.
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 a life insurance policy from the bank in the amount of the loan. This is an example of ADefamation. BTwisting. CCoercion. DLoading.
C Coercion
A partnership buy-sell agreement in which each partner purchases insurance on the life of each of the other partners is called a ASplit-dollar plan. BStock redemption plan. CCross-purchase plan. DKey person plan.
C Cross-purchase plan
For a retirement plan to be qualified, it must be designed for the benefit of AEmployer. BIRS. CEmployees. DKey employee.
C Employees
Each HMO enrollee must be provided ANondisclosure agreement. BCertificate of authority. CEvidence of coverage. DBuyer's guide.
C Evidence of Coverage
The usage of words or symbols that are similar to what entity is prohibited in life insurance advertisements? ADepartment of Insurance BStock CFederal government DInsurer
C Federal Government
When an employee terminates coverage under a group insurance policy, coverage continues in force AUntil the employee can obtain coverage under a new group plan. BUntil the employee notifies the group insurance provider that coverage conversion policy is issued. CFor 31 days. DFor 60 days.
C For 31 days
If a retirement plan or annuity is "qualified," this means AIt accepts after-tax contributions. BIt is noncancellable. CIt is approved by the IRS. DIt has a penalty for early withdrawal.
C It is approved by the IRS
Under workers compensation, which of the following benefits are NOT included? AIncome benefits BDeath benefits CLegal benefits DMedical and rehabilitation benefits
C Legal Benefits
All of the following are grounds for cancellation of an HMO plan EXCEPT ANot residing in the HMO service area. BMisconduct. CMisstatement of age on the application. DNonpayment of premium.
C Misstatement of age on the application
Where in the long-term care policy must the insurer state the renewal provision? AIn the policy appendix BAnywhere the insurer deems appropriate COn the first page DIn the Provisions and Exclusions section
C On the first page
If a person is compensated for a testimonial in an advertisement, which of the following statements should be included in the advertisement? AThe author is the employee of the insurer BCommissioned advertisement CPaid endorsement DInsurer is not responsible for the contents of the testimonial
C Paid Endorsement
Which of the following applies to partial disability benefits? APayment is based on termination of employment. BBenefits are reduced once an insured is no longer under a doctor's care. CPayment is limited to a certain period of time. DAn insured is entitled to a principal sum benefit for the partial loss of a limb.
C Payment is limited to a certain period of time.
Which of the following best defines the "owner" as it pertains to life settlement contracts? AA fiduciary for the contract BThe insurance provider CThe policyowner of the life insurance policy DA financial entity that sponsors the transaction
C The policyowner of the life insurance policy
Hospice care is intended for AHome health visits from a participating home health agency. BThe caregiver. CThe terminally ill. DPeople in need of acute care.
C The terminally Ill
Which of the following CANNOT be included along with illustrations used to sell life insurance? ARating information BOriginal death benefit CVanishing premium information DName of the insurer
C Vanishing premium information
A brain surgeon has an accident and develops tremors in her right arm. Which disability income policy definition of total disability will cover her for all losses? A"Any occupation" - less restrictive than other definitions B"Any occupation" - more restrictive than other definitions C"Own occupation" - less restrictive than other definitions D"Own occupation" - more restrictive than other definitions
C"Own occupation" - less restrictive than other definitions In theory, the brain surgeon could find other work, but because her disability income policy specifies that she is covered for her own occupation, she would be wholly covered.
An insured is involved in a car accident. In addition to general, 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 he receive Presumptive Disability benefits? APartial benefits BFull benefits until the blindness lifts CNo benefits DFull benefits
C. No benefits
Before a customer's agent delivers his policy, the insurer makes a last-minute change to the policy. The agent informs the customer of this change, and he accepts it. What must the agent do now? AThe agent must notify the beneficiary of the change in policy. BIf the change would affect the premium, the agent must have the customer sign a statement acknowledging the change. CThe agent should ask the customer to sign a statement acknowledging that he is aware of the change. DNothing. After the explanation, the agent is not legally bound to do anything else.
CThe agent should ask the customer to sign a statement acknowledging that he is aware of the change.
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? AThe insurer will pay the death benefit minus one month's premium. BThe insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one. CThe insurer will pay the full death benefit from the group policy to the beneficiary. DThe insurer will pay a reduced death benefit to the beneficiary.
CThe insurer will pay the full death benefit from the group policy to the beneficiary.
Is it illegal for an insurance company to advertise that it is the leader of the financial industry and therefore pays the most claims each year? ANo, as long as the advertisement has a disclaimer that all facts are misleading. BNo CYes; advertisements must not mislead the public in terms of financial standing. DYes, as long as no one can prove otherwise.
CYes; advertisements must not mislead the public in terms of financial standing.
An applicant for an individual health policy failed to complete the application properly. Before being able to complete the application and pay the initial premium, she is confined to a hospital. This will not be covered by insurance because she has not met the conditions specified in the AEligibility Clause. BConsideration Clause. CInsuring Clause. DPre-existing Conditions Clause.
Consideration clause
An employee quits her job where she has a balance of $10,000 in her qualified plan. The balance was paid out directly to the employee in order for her to move the funds to a new account. If she decides to rollover her plan to a Traditional IRA, how much will she receive from the plan administrator and how long does she have to complete the tax-free rollover? A$8,000, 30 days B$10,000, 60 days C$10,000, 30 days D$8,000, 60 days
D $8000 60 Days
Who is a third-party owner? AAn insurer who issues a policy for two people BAn employee in a group policy CAn irrevocable beneficiary DA policyowner who is not the insured
D A policyowner who is not the insured.
Which of the following is NOT covered under a long-term care policy? AAdult day care BHospice care CHome health care DAcute care in a hospital
D Acute care in a hospital
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 AIncrease the benefit. BReturn any unearned premium. CConsider decreasing the premium. DAdjust the benefit in accordance with the decreased risk.
D Adjust the benefit in accordance with the decreased risk
An insured in a group policy has misstated his age on the insurance application. As a result, the insurer will most likely ACancel the coverage. BImpose a fine on the insured. CIssue an amended policy. DAdjust the premium.
D Adjust the premium
An advertisement must accurately represent which of the following? AThe insurer's assets BThe insurer's corporate structure CThe insurer's financial standing DAll of the above
D All of the above
An agent makes a mistake on the application and then corrects his mistake by physically entering the necessary information. Who must then initial that change? AExecutive officer of the company BInsured CAgent DApplicant
D Applicant
Employer contributions made to a qualified plan AMay discriminate in favor of highly paid employees. BAre after-tax contributions. CAre taxed annually as salary. DAre subject to vesting requirements.
D Are subject to vesting requirements
An insured's premium increases as a result of her age. Which type of policy does she have? AAge-Oriented BIncreasing Term CAge-Based DAttained Age
D 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 AExperience Rating. BGroup rate. CInsurer's scheduled rate. DAttained age.
D Attained age
Which of the following is NOT true regarding Workers Compensation? ABenefits are not regulated by the federal government. BBenefits vary from state to state. CBenefits are regulated by the state government. DBenefits are offered by the insurer.
D Benefits are offered by the insurer
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 AMore limited in general. BMore limited in duration. CBroader in duration. DBroader in general.
D Broader in general
Which of the following provisions states the insurer's right to change premium amounts? APremium Provision BInsurer's Rights CCoverage Limitations DContinuation Provision
D Continuation Provision
A small company offers group health insurance to its employees, but recently has decided to terminate the health insurance contract, leaving the workers without insurance. What can the employees do regarding their insurance? ASue the employer BApply for another group health insurance CRequest a refund of unearned premium DConvert to an individual health policy
D Convert to an individual health poicy
Which of the following is a specific dollar amount or a percentage of the cost of care that must be paid by an HMO member? ADeductible BPremium CCost share DCopayment
D Copayment
Which of the following is a specific dollar amount or a percentage of the cost of care that must be paid by the member? ACost share BPrepayment CContractual cost DCopayment
D Copayment
What is the main difference between coinsurance and copayments? AWith copayments, the insured pays all of the cost. BWith coinsurance, the insurer pays all of the cost. CCoinsurance is a set dollar amount. DCopayment is a set dollar amount.
D Copayment is a set dollar amount
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT AAn offer of employment. BStocks, securities, or bonds. CAn offer to share in commissions generated by the sale. DDividends from a mutual insurer.
D Dividends from a mutual insurer
Which of the following is considered a qualifying event under COBRA? AMarriage BRelocation CPromotion DDivorce
D Divorce
If an insured is not required to pay a deductible, what kind of coverage does he/she have? ACorridor BMajor medical CComprehensive DFirst dollar
D First Dollar
When an employee terminates coverage under a group insurance policy, coverage continues in force AFor 60 days. BUntil the employee can obtain coverage under a new group plan. CUntil the employee notifies the group insurance provider that coverage conversion policy is issued. DFor 31 days.
D For 31 days
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? ADomestic BAlien CNonadmitted DForeign
D Foreign
What is the minimum renewability standard for long-term care policies issued in this state? ACancellable. BPermanent. CConditionally renewable. DGuaranteed renewable.
D Guaranteed renewable
Issue age policy premiums increase in response to which of the following factors? AIncreased deductible BInflation CAge DIncreased benefits
D Increased benefits
Which of the following is INCORRECT concerning Medicaid? AIt provides medical assistance to low-income people who cannot otherwise provide for themselves. BIt pays for hospital care, outpatient care, and laboratory and X-ray services. CThe federal government provides about 56 cents for every Medicaid dollar spent. DIt is solely a federally administered program.
D It is a solely federally administered program
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? AFull B50% C25% DNone
D None
If one takes Social Security retirement benefits at age 62, what needs to be done at age 65 to qualify for Medicare? AApply for coverage through the state BAppear for a physical at the Social Security office CApply at a local Social Security office DNothing
D Nothing
What is the major difference between a stock company and a mutual company? AAmount of death benefit BNumber of producers CTypes of whole life policies DOwnership
D Ownership
Under the Accidental Death and Dismemberment (AD&D) coverage, what type of benefit will be paid to the beneficiary in the event of the insured's accidental death? ACapital sum BDouble the amount of the death benefit CRefund of premiums DPrincipal sum
D Principal sum
What is the initial period of time specified in a disability income policy that must pass, after the policy is in force, before a loss can be covered? AContestable period BElimination period CGrace period DProbationary period
D Probationary period
In respect to the consideration clause, which of the following is consideration on the part of the insurer? AOffering a secondary policy to the applicant BOffering an unconditional contract CExplaining policy revisions to the applicant DPromising to pay in accordance with the contract terms
D Promising to pay in accordance with the contract terms
If an applicant does not receive a new insurance policy, who would be held responsible? AThe state BThe insurer CThe applicant DThe agent
D The Agent
Which of the following would be required to obtain a Certificate of Authority? AAgents BEnrollees CSubscribers DThe HMO
D The HMO
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? AThe insured must have a Medicare supplement insurance policy. BThere is no benefit provided under Medicare Part A for skilled nursing care. CThe insured must cover daily copayments. DThe insured must have first been hospitalized for 3 consecutive days.
D The Insured must have first been hospitalized for 3 consecutive days
A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then AThe benefit is subject to the exclusionary rule. BIRS has no jurisdiction. CThe benefit is received as taxable income. DThe benefit is received tax free.
D The benefit is received tax free.
Who chooses a primary care physician in an HMO? AHMO subscribers do not have a primary care physician BThe insurer CA referral physician DThe individual member
D The individual member
Which of the following best describes the "first-dollar coverage" principle in basic medical insurance? AThe insured must first pay a deductible. BThe insurer covers the first claim on the policy. CDeductibles and coinsurance are taxed first. DThe insured is not required to pay a deductible.
D The insured is not required to pay a deductible
Which of the following best defines the "owner" as it pertains to life settlement contracts? AA financial entity that sponsors the transaction BA fiduciary for the contract CThe insurance provider DThe policyowner of the life insurance policy
D The policyowner of the life insurance policy
Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated? AThose who have worked in the company for at least 3 years BThose who have dependents CThose who have no history of claims DThose who have been insured under the plan for at least 5 years
D Those who have been insured under the plan for at least 5 years
What is the purpose of key person insurance? ATo provide health insurance to the families of key employees BTo insure retirement benefits are available to all key employees CTo maintain an account that insures the owner of a company remains solvent DTo lessen the risk of financial loss because of the death of a key employee
D To lessen the risk of financial loss due to the death of a key employee
Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE? ADistributions before age 59 1/2 incur a 10% penalty on policy gains. BPolicy loans are taxable distributions. CAccumulations are tax deferred. DWithdrawals are not taxable.
D Withdrawals are not taxable
Which of the following is NOT an example of a business use of Life Insurance? ABuy-sell Funding BExecutive Bonuses CKey Person DWorkers Compensation
D Workers Compensation
A life insurance policy used to fund an agreement that contractually establishes the intent of someone to purchase a business upon the insured business owner's death is a AKey person policy. BSplit-dollar plan. CStock redemption plan. DBuy-sell agreement.
D buy-sell agreement
Which of the following includes information regarding a person's credit, character, reputation, and habits? AConsumer history BInsurability report CAgent's report DConsumer report
D. Consumer Report
When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n) AKey person policy. BFraternal association. CAleatory contract. DExecutive bonus.
D. Executive bonus
How soon following the occurrence of a covered loss must an insured submit written proof of such loss to the insurance company? AAs soon as possible BWithin 20 days CWithin 60 days DWithin 90 days or as soon as reasonably possible, but not to exceed 1 year
D. Within 90 days or as soon as reasonably possible, but not to exceed 1 year.
An employee insured under a group health policy is injured in a car wreck while performing her duties for her employer. This results in a long hospitalization period. Which of the following is true? AThe group plan will pay. BThe group plan will pay a portion of the employee's expenses. CThe group plan will pay depending on the employee's recovery. DThe group plan will not pay because the employee was injured at work.
DThe group plan will not pay because the employee was injured at work. Because the employee's injuries were work related, the group health policy would not respond. The insured would have to rely on worker's compensation for coverage.
What is the main purpose of the regulation on life insurance policy illustrations? ATo compare life policies BTo help producers submit proper reports to the department of insurance CTo present a life policy in a visual way DTo help customers make educated decisions in buying life insurance
DTo help customers make educated decisions in buying life insurance
What is the purpose of COBRA? ATo provide coverage for the dependents BTo provide health coverage for people with low income CTo protect the insureds against insolvent insurers DTo provide continuation of coverage for terminated employees
DTo provide continuation of coverage for terminated employees
Under what condition are group disability income benefits received by an employee NOT taxable as income? AWhen the employer makes all the premium payments. BWhen the employee is 59 ½. CWhen the amount of the benefit is equal or less than the amount of contributed by the employer. DWhen the benefits received are equal or less than the employee's percentage of the contribution.
DWhen the benefits received are equal or less than the employee's percentage of the contribution.
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? AAsk the applicant to sign a statement that acknowledges that the policy had been delivered BCollect a late payment fee CAsk her to sign a statement of good health DOffer her a secondary policy
C. Ask her to sign a statement of good health
All of the following are duties and responsibilities of producers at the time of application EXCEPT AChange any incorrect statement on the application by personally initialing next to the corrected statement. BExplain the nature and type of any receipt the producer is giving to the applicant. CProbe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information. DCheck to make sure that there are no unanswered questions on the application.
A. Change any incorrect statement on the application by personally initialing next to the corrected statement.
An insurer is attempting to determine the insurability of an applicant and decides to obtain medical information from several different sources. Which entity must be notified of the investigation? AThe applicant BThe Commissioner of Insurance CThe medical examiner DThe State Department of Insurance
A. The Applicant
Which of the following is another term for the accumulation period of an annuity? APremium period BLiquidation period CAnnuity period DPay-in period
D Pay in Period
Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be ADetermined by the health of the insured. BBased on the issue age of the insured. CDiscounted. DAdjusted to the insured's age at the time of renewal.
D. Adjusted to the insured's age at the time of renewal.
Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company? AAdhesion BSubrogation CWarranty DAleatory
D. Aleatory
Who is a third-party owner? AAn irrevocable beneficiary BA policyowner who is not the insured CAn insurer who issues a policy for two people DAn employee in a group policy
B. A policy owner who is not the insured.
If the annuitant dies during the accumulation period, who will receive the annuity benefits? AInsurance company BEstate CBeneficiary DOwner
C. Beneficiary
An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called ASingle premium whole life. BModified Endowment Contract (MEC). CLevel term life. DGraded premium whole life.
A. Single Premium Whole Life
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid AFor 20 years or until death, whichever occurs first. BUntil the policyowner's age 65. CFor 20 years. DUntil the policyowner's age 100, when the policy matures.
AFor 20 years or until death, whichever occurs first.
An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an AInterest-sensitive Whole Life. BCredit Life. CAnnual Renewable Term. DAdjustable Life.
AInterest-sensitive Whole Life.
The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years? A1 year B2 years C5 years D7 years
B. 2 years
In terms of parties to a contract, which of the following does NOT describe a competent party? AThe person must be mentally competent to understand the contract. BThe person must have at least completed secondary education. CThe person must not be under the influence of drugs or alcohol. DThe person must be of legal age.
B. The person must have at least completed secondary education.
Which policy component decreases in decreasing term insurance? ADividend BPremium CFace amount DCash value
C Face Amount
An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy? ANothing B$50,000 C$100,000 D$200,000
C. $100000
Which of the following products will protect an individual from outliving his or her money? AAdjustable life policy BPermanent life insurance CAnnuity DJoint and survivor policy
C. Annuity
Which of the following best describes fixed-period settlement option? AThe death benefit must be paid out in a lump sum within a certain time period. BIncome is guaranteed for the life of the beneficiary. CBoth the principal and interest will be liquidated over a selected period of time. DOnly the principal amount will be paid out within a specified period of time.
C. Both the principal and interest will be liquidated over a selected period of time
Which of the following is TRUE about nonforfeiture values? AA table showing nonforfeiture values for the next 10 years must be included in the policy. BPolicyowners do not have the authority to decide how to exercise nonforfeiture values. CThey are required by state law to be included in the policy. DThey are optional provisions.
C. They are required by state law to be included in the policy.
Which of the following is TRUE for both equity indexed annuities and fixed annuities? ABoth are considered to be more risky than variable annuities. BThey invest on a conservative basis. CThey have a guaranteed minimum interest rate. DThey are both tied to an equity index.
C. They have a guaranteed minimum interest rate.
All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT AMost term policies contain a convertibility option. BUpon conversion, the premium for the permanent policy will be based upon attained age. CUpon conversion, the death benefit of the permanent policy will be reduced by 50%. DEvidence of insurability is not required.
C. Upon conversion, the death benefit of the permanent policy will be reduced by 50%
Which is true regarding obtaining underwriting sources? AThe insurer only needs to inform the applicant of how the information is being gathered; it is not necessary to disclose the sources. BIt is illegal to obtain information from outside sources in order to determine an applicant's insurability. CThe applicant must be informed of the sources contacted and how the information is being gathered. DThe insurer does not need to inform the applicant of how the information is gathered; informing only of the source is sufficient.
CThe applicant must be informed of the sources contacted and how the information is being gathered.
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? AAs of the policy delivery date BAs of the first of the month after the policy issue CAs of the policy issue date DAs of the application date
D As of the application date.
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 AConditions. BUtmost good faith. CAcceptance. DConsideration.
D. Consideration
Which of the following is true about the premium on the children's rider in a life insurance policy? AIt decreases when the oldest child reaches the age of 21. BIt increases when a newborn baby is added to the policy. CIt decreases when an adopted child is added to the policy. DIt remains the same no matter how many children are added to the policy.
DIt remains the same no matter how many children are added to the policy.
Which of the following is true regarding health insurance underwriting for a person with HIV? AThe person may not be declined for medical coverage solely based on HIV status. BA person may be declined for HIV but not AIDS. CThe person may be declined. DThe person may only be declined if he/she has symptoms.
AThe person may not be declined for medical coverage solely based on HIV status.
Which of the following best describes what the annuity period is? AThe period of time from the accumulation period to the annuitization period BThe period of time during which money is accumulated in an annuity CThe period of time from the effective date of the contract to the date of its termination DThe period of time during which accumulated money is converted into income payments
DThe period of time during which accumulated money is converted into income payments
The Federal Fair Credit Reporting Act ARegulates telemarketing. BPrevents money laundering. CRegulates consumer reports. DProtects customer privacy.
C. Regulates consumer reports
All of the following are examples of third-party ownership of a life insurance policy EXCEPT AA company purchases a life insurance policy on their manager, who is an important part of the operation. BWhen an insured purchased a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company. CAn insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan. DAn insured couple purchases a life insurance policy insuring the life of their grandson.
CAn insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan.
Which nonforfeiture option provides coverage for the longest period of time? AExtended term BPaid-up option CAccumulated at interest DReduced paid-up
D. Reduced Paid-Up
Equity indexed annuities AAre more risky than variable annuities. BAre security instruments. CInvest conservatively. DSeek higher returns.
D. Seek higher returns.
Which of the following is an example of a limited-pay life policy? ARenewable Term to Age 70 BLevel Term Life CStraight Life DLife Paid-up at Age 65
DLife Paid-up at Age 65
All of the following are personal uses of life insurance EXCEPT ACash accumulation. BBuy-sell agreement. CSurvivor protection. DEstate creation.
B Buy-Sell Agreement
Which of the following is true about the requirements regarding HIV exams? AResults may be disclosed to the agent and the underwriter. BPrior informed oral consent is required from the applicant. CHIV exams may not be used as a basis for underwriting. DThe applicant must give prior informed written consent.
DThe applicant must give prior informed written consent.
