question

According to the law of large numbers, how would losses be affected if the number of similar insured units increases?

answer

Predictability of losses will be improved

question

Which of the following can be defined as "the potential for loss"?

answer

Risk

question

An insurer has a contractual agreement which transfers a portion of its risk exposure to another insurer. What type of contractual arrangement is this?

answer

Reinsurance contract

question

Which of these statements regarding insurance is false?

answer

As the number of insured units increases, the number of losses decreases

question

The powers directly given to an agent in an agency contract are called

answer

express

question

Which of these is true regarding the exchange of consideration among parties involved in an insurance contract?

answer

Can be unequal

question

What is the reason that insurance companies require a minimum number of employees participating in a group insurance plan?

answer

Adverse selection is minimized

question

What type of policy can group term life insurance normally be converted to?

answer

An individual permanent life insurance policy

question

Any employee insured under a group life insurance plan is normally

answer

protected by term life insurance

question

Which of these is NOT relevant when determining the amount of personal life insurance needed?

answer

Local unemployment rates

question

What is considered a valid reason for small businesses to insure the lives of its major shareholders?

answer

Fund a buy-sell agreement

question

Employers often purchase life insurance on a key employee in order to

answer

help offset the cost of finding and training a replacement if the employee dies

question

Which of the following is NOT considered to be an expense for surviving family members of a deceased wage earner?

answer

Unemployment tax expenses

question

An insurance policy may be issued with a preferred insurance premium in all of these situations EXCEPT

answer

living in a rural area

question

The initial premium for a life insurance policy is typically paid in what way?

answer

It is typically obtained by the producer and forwarded to the insurer

question

The Medical Information Bureau consists of members from which group?

answer

Insurance companies

question

When does the agent give a premium receipt for a life insurance application?

answer

When the initial premium has been collected with the application

question

Which of these is NOT an underwriting responsibility of a life insurance agent?

answer

Determining the final rate classification

question

After an applicant reads and signs an insurance application, he/she should be conscious of the fact that

answer

a false statement could lead to loss of coverage

question

The time limit an individual has to "rollover" funds from an IRA or qualified plan is

answer

60 days

question

Contributions made by an employee to a qualified retirement plan are required to be

answer

subject to a vesting schedule

question

An employee welfare plan exempt from ERISA regulations would be

answer

church plans

question

How are qualified Roth IRA distributions normally treated for tax purposes?

answer

Received income tax-free

question

What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan?

answer

50%

question

What does a 401(k) plan generally provide its participants?

answer

Salary-deferral option

question

How long do most states allow an insurance company to delay the payment of a cash surrender under the Delayed Payment provision?

answer

6 months

question

A contingent beneficiary is described as the

answer

person who receives the death benefits if the primary beneficiary dies before the insured

question

Life insurance premiums are based on what three factors?

answer

Mortality, interest, expenses

question

Which settlement option makes minimum guaranteed dollar payments over a stated number of years?

answer

Fixed-Period

question

Which life insurance settlement option pays lifetime benefits to two or more people?

answer

Joint and survivor

question

What is considered a valid reason for an insurer's refusal to pay policy proceeds directly to a minor?

answer

Minors are normally not capable of handling money in a reasonable manner

question

Which statement regarding the life insurance premium for a children's term rider is true?

answer

Premium remains the same no matter how many children

question

A life insurance policy provision that has the potential to reduce the death benefit is called the

answer

accelerated (living) benefit

question

Which statement regarding the waiver of premium rider is accurate?

answer

Cash payment is not directly provided to the policyowner

question

How long can an insurer legally defer paying the cash value of a surrendered life insurance policy?

answer

6 months

question

Which of these would NOT be a valid reason to add the waiver of premium rider to a life insurance policy?

answer

Allows a policyowner to take out a policy loan to cover premium payments in the event of total disability

question

A life insurance policy that includes a return of premium rider will pay the beneficiary how much upon the insured's death?

answer

Total premiums paid plus the policy face amount

question

Which life insurance policy option allows the policyowner to have coverage equal to the net death benefit of the lapsed policy?

answer

Extended term nonforfeiture option

question

A policyowner has a life insurance policy where she had listed her age on the application as 5 years younger than her actual age. If she dies and the insurer discovers the misstatement of age, how much will the insurance company pay?

answer

Less than the face amount

question

What happens to the death benefit of a life insurance policy if the insured elects a partial payment from the accelerated (living) benefit provision?

answer

Reduced

question

The absolute assignment of a life insurance policy results in

answer

the assignee receives all incidents of ownership

question

Which of the following is NOT subject to the promise to pay in an insuring clause?

answer

How the premium is calculated

question

A life insurance policyowner would like a dividend option that results in a limited current outlay of funds. Which dividend option would be chosen?

answer

Reduction of premium payment

question

What kind of life policy typically offers mortgage protection?

answer

Decreasing term

question

When would evidence of insurability be required for a person already covered with a variable universal life policy?

answer

The death benefit is increased

question

A survivorship life insurance policy usually covers how many lives?

answer

2

question

At what point are death proceeds paid in a joint life insurance policy?

answer

When the first insured dies

question

What kind of life insurance policy allows a policyowner the choice of investments along with flexible premium payments?

answer

Variable universal life

question

All of these statements concerning group credit life insurance are false EXCEPT

answer

The face amount is determined by the outstanding loan balance

question

Which statement concerning an adjustable life insurance policy is FALSE?

answer

Evidence of insurability is required when there is a change in premium

question

An advantage of owning a flexible premium life insurance policy would be

answer

The policyowner can make policy changes without difficulty

question

The insurance coverage in a variable life insurance policy may vary based on the value of

answer

its underlying investments

question

Which of these is NOT an allowable deduction made from premium payments of the cash value of a variable life insurance policy?

answer

Federal premium taxes

question

Which of the following combinations best describe a universal life insurance policy?

answer

A flexible premium deposit fund and a monthly renewable term insurance policy

question

What is the effect of the market value adjustment in a market value adjustment annuity?

answer

Transfers some of the investment risk to the policyowner

question

The contract owner in a single premium deferred annuity (SPDA)

answer

makes only one premium payment

question

When compared to a fixed annuity, a variable annuity has what distinguishing feature?

answer

Investment risk is assumed by the insurer

question

When does the owner's contractual rights begin under an individual annuity contract?

answer

Time of purchase

question

Which statement is INCORRECT concerning a tax-sheltered annuity (TSA)?

answer

Annual investment gains are included in participant's gross income

question

Which event triggers a deferred annuity to start making benefit payments to the annuitant?

answer

When the contract is annuitized

question

Under which circumstance is the interest rate guaranteed within a market value adjusted annuity?

answer

When the contract has been held for a stated time period

question

Which of the following is NOT a valid contract exchange?

answer

An annuity exchanged for a life insurance policy

question

Which of the following is NOT a function of accident and health insurance?

answer

Pays a death benefit as a result of natural causes

question

Which of the following statements BEST describes employer contributions for employer provided health insurance?

answer

Employer contributions are deductible

question

An accident and health insurance policy defines an injury as "bodily injury by accidental means". For an injury to be covered on this policy, what is required?

answer

Both the cause and resultant injury must be accidental

question

Pete is covered by a group health insurance plan which covers employees in multiple states. This plan is governed by the laws of which state?

answer

Where the master contract was issued

question

Trade association groups that are eligible for group medical benefits normally are

answer

in the same industry

question

Bert's spouse passed away recently. Bert was covered under his spouse's group family health insurance plan but now is covered under COBRA. How much of the active-employee cost may be passed on to Bert for continued coverage?

answer

Maximum of 102%

question

What type of employee welfare plans are not subject to ERISA regulations?

answer

Church plans

question

In regards to health insurance, employees age 65 or older are typically required to

answer

be offered the same group health benefits offered to the younger employees

question

ABC Partnership is a business with a limited number of partners. Which disability buy-sell agreement is best suited for this business?

answer

Cross purchase agreement

question

Individuals covered with employer-paid group health plans will normally receive tax-free benefits under all of these plans EXCEPT

answer

Disability income

question

How are benefit payments from individually-owned medical expense policies treated for tax purposes?

answer

Exempt from income taxes

question

Mary is the sole proprietor of her business and has a family health plan. She would like to deduct the premiums from her taxes. What percentage of her premiums are tax deductible?

answer

100%

question

Which of the following situations would a medical exam NOT be required for an individual health insurance applicant?

answer

Applicant's family members have a history of cancer

question

The disability income policy most likely to have been issued on a substandard basis is

answer

Non-cancelable with a health condition exclusion rider

question

Which of the following is NOT a basic underwriting action for accident and health insurance?

answer

Removing uniform policy provisions

question

Which of these noncontributory group plans would a claim likely result in the payment of federal income taxes?

answer

Disability income

question

An applicant for accident and health insurance has a risk factor that is similar to a majority of the insurer's other applicants. What will be the likely outcome of this applicant?

answer

Issued with a standard premium rate

question

Which of the following are used by most insurers when determining the premiums for large groups?

answer

Experience rating

question

Which individual would be best suited for Medicare Supplement insurance?

answer

Medicare enrollee

question

Terry receives long-term physical therapy at her residence. What type of insurance would cover this service?

answer

Home health care

question

Mary has a Health Savings Account (HSA). Distributions that have been made for anything other than qualified medical expenses are considered taxable and subject to a penalty of

answer

20%

question

Which of these statements regarding Major Medical Expense insurance is NOT true?

answer

Benefits are paid on a capitation basis

question

Major Medical policies are typically characterized by which of the following?

answer

Flat deductible

question

What do Limited accident and health policies normally cover?

answer

A specific illness or event

question

Which of the following would permit an insurer to delay a covered disability policy claim?

answer

Elimination period

question

A person can receive Medicare Part A Hospital benefits, regardless of age, as long as the person has received which of the following benefits for at least 24 months?

answer

Social Security Disability

question

Medicare can be described as

answer

a federal health insurance program for individuals over the age of 65 or permanently disabled

question

Medicare will cover a maximum of how many days per benefit period in a skilled nursing facility?

answer

100 days

question

Tonya has been diagnosed with kidney failure and has group accident and health insurance through her large employer. Which of these accident and health plans will be primary during the months following her diagnosis?

answer

Her employer's group accident and health plan

question

What is the minimum number of employees needed for a small employer medical expense plan in Ohio?

answer

2

question

For long-term care insurance, when does Ohio require provision of a written notice of available insurance counseling programs?

answer

When coverage is solicited

question

All of the following are examples of unfair claim settlement practices EXCEPT

answer

Denying unsubstantiated claims on a timely basis

question

In regards to the Affordable Care Act (ACA), which of these is NOT a role of a health insurance exchange?

answer

Contact the employer if an employee stops coverage under a plan offered in the exchange

question

Which statement is true if a member suffers a broken leg while outside the insuring corporation (HIC) service area?

answer

The injury will be covered as an emergency health service

question

To resolve written grievances received, each HIC specialty plan must establish

answer

a complaint system

question

The main purpose of an Ohio health insuring corporation (HIC) solicitation document is to

answer

provide a detailed medical plan description

question

All of the following statements about HICs are true EXCEPT:

answer

Benefits are usually provided on a reimbursement basis

question

In Ohio, health insuring corporation (HIC) complaint responses must include a notice of the right to appeal the HIC's decision to

answer

The HIC's complaint system administrator

question

What action can an insurer take to discourage malingering and false disability claims?

answer

When an insured has two disability policies with the same insurer, the insurer sets limits on the amount of benefits an insured can collect

question

Which of the following is NOT true of a preferred provider plan?

answer

Hospitals can only initiate preferred provider plans

question

The courts will normally interpret a policy in favor of the insured when the meaning of the policy is not clear. This is because an insurance policy is a(n)

answer

contract of adhesion

question

A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a(n)

answer

risk retention group

question

Which of the following does medical expense insurance NOT typically cover?

answer

Treatment in a government facility

question

An enrollee in an HIC may have her coverage cancelled for all of the following reasons EXCEPT

answer

excessive illnesses

question

If an agent misleads or fails to adequately disclose the title and true nature of a policy offered to a potential insured, it may be considered

answer

Misrepresentation

question

In Ohio, what must an HIC establish and maintain to provide reasonable procedures for the resolution of written complaints initiated by subscribers concerning services provided?

answer

complaint system

question

With whom may the subscriber of an HIC file an appeal regarding the resolution of a complaint concerning services provided?

answer

Peer Review Committee

question

A Keogh plan is a(n)

answer

qualified retirement plan for the self employed

question

Tori has an annuity that pays her a $500 per month income benefit for life or for ten years, whichever is longer. What kind of annuity is this?

answer

Fixed life annuity with period certain

question

What is covered under a limited accident and health insurance policy?

answer

Limited perils and amounts

question

Kyle is an insured who disregarded an accident and health insurance policy provision that requires him to seek a second surgical opinion. What will the end result be?

answer

He may be reimbursed for the surgical procedure at a reduced benefit level

question

Some standard Medicare Supplement policies include which benefit?

answer

Hospice care

question

Which of the following best describes the tax treatment of medical expense policies for the self-employed?

answer

100% of medical expense plan premiums are tax deductible

question

In long-term care insurance, what is the length of time for which claims will be paid?

answer

Benefit period

question

Assets that back the non-guaranteed values of variable life insurance products are held in which account?

answer

Separate account set up by the insurer

question

Which of the following is a syndicate established by a group of insurers to share underwriting duties?

answer

Lloyd's organization

question

When a ten-year renewable term life insurance policy issued at age 45 is renewed, the premium rate will be the current rate for

answer

Ten year term insurance for a person aged 55

question

Which of the following can be defined as a cause of a loss?

answer

Peril

question

The benefit period of Medicare Part A begins on the first day the insured

answer

is admitted into a hospital

question

When an agent engages in unfair practices, all of the following are true EXCEPT

answer

The Director's decision is final

question

Who does a viatical settlement broker represent?

answer

The viator

question

According to the Affordable Care Act (ACA), under what circumstances would lifetime limits and annual limits be permitted on a health plan or insurance policy?

answer

When the insured not considered essential benefit

question

What must the claimant do if the proper forms are not provided by the insurer?

answer

Proceed by providing written verification of the loss

question

Before a policyowner replaces an existing individual health insurance policy, all of the following types of provisions in the new policy need to be reviewed EXCEPT

answer

Experience rating

question

In Ohio, a group accident and health certificate of insurance must contain

answer

A listing of policy features and benefits

question

A preferred provider plan and an indemnity plan are similar in what way?

answer

Both pay on a fee-for-service basis

question

Which group is the Do Not Call Registry designed to protect against?

answer

Telemarketers

question

An accident and health insurer has just received written proof of loss from one of its insureds. The insured must now wait 60 days before

answer

bringing legal action against the insurer

question

Who regulates an insurer's claim settlement practices?

answer

State insurance departments

question

A disability income insurance policy was recently issued with a rating. What does this mean?

answer

Policyowner will be charged an additional premium

question

When group benefits under COBRA have expired, a fully insured group policy can be converted to a(n)

answer

individual health policy

question

Mary is an employee who is covered with a disability income policy through her employer. She pays for the portion of the premium attributable to the cost of residual disability benefits, while her employer pays for the remainder. What are the tax implications of this policy?

answer

Residual benefits will be received income tax-free

question

The major medical deductible carryover period normally applies to expenses incurred during the last ___ months of the plan year.

answer

3

question

How does an underwriter take into account an applicant's marital status?

answer

When determining who is eligible for dependent coverage

question

Andy is in need of health care performed by skilled medical practitioners, but only on an intermittent basis. What level of care will his doctor likely prescribe?

answer

Intermediate care

question

Which of the following statements regarding hospital pre-admission authorization is NOT true?

answer

It encourages weekend admission

question

ABC Corporation purchases and is beneficiary of an individual disability income insurance policy on a key employee. Which of the following statements is true?

answer

Benefits are received tax-free by the company

question

Patrick purchased a long-term care policy. He has a health condition for which medical treatment was recommended by a physician within 6 months prior to the policy's effective date. This condition is called a(n)

answer

pre-existing condition

question

Christopher is issued an insurance policy that contains an attached agreement which alters the terms of the policy. This attached agreement is called a(n)

answer

endorsement

question

An employer pays the accident and health insurance premiums for its employees. The premiums paid by the employer are

answer

deductible to the business

question

Which of the following is a true statement regarding a Medicare Supplement policy purchased during the open enrollment period?

answer

The policy will be issued regardless of health

question

Which of the following describes the act of insuring a risk against possible loss?

answer

Risk transfer

question

An agreement is reached when an insurance contract is formed. Which of the following is NOT considered to be an element of an agreement?

answer

Equity

question

An insured, age 67, is covered under a disability income policy. What will the insurer require in order for the insured to continue coverage?

answer

The insured must work for a stated number of hours per week

question

Under an adjustable life insurance policy, which of the following may NOT be changed without further underwriting?

answer

The person insured

question

According to the IRS, a company may NOT do which of the following in regards to funds in a qualified retirement plan?

answer

Repossess the funds for business purposes

question

Which of the following is NOT a dividend option for a life insurance policy?

answer

Surrender the policy's cash value

question

A life insurance beneficiary died after receiving only six payments under the policy's life income settlement option. What happens with the remaining balance of the death proceeds?

answer

Kept by the insurance company

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