HW Life, Health, Accident – Flashcards
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If the agent fails to obtain an applicant's signature on the application, the agent must: a) Sign the application, stating it was by the agent b) Send the application to the insurer with a note explaining the absence of the signature c) Return the application for a signature d) Sign the application for the applicant.
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Answer: C All applications must have the appropriate authorized signature
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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: a) For 20 years or until death, whichever occurs first b) Until the policy owner's age is 65 c) For 20 years d) Until the policy owner's age is 100, when the policy matures
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Answer: A Under a 20-pay life policy, all of the premiums necessary to cause the policy to endow at the insured's age 100 are paid during the first 20 years: however, if the insured dies before all of the planned premiums are paid; the beneficiary will receive the face amount as a death benefit
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Based on Human Life Value Approach, which of the following is not used to calculate and individuals' life value? a)Predicted needs of the family after the insured's death b) Insured's current and future income c) Insured's anbnual expenses d) Effect of inflation on income over time
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Answer: A The Human Life Value Approach to determining the value of an individual's life requires the calculation of probable future earnings of the insured, which involves wages, expenses, inflation, amount of time until retirement, and the time value of money. Predicted needs of the family after the insured's death are used in the needs approach.
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Waiter purchased a 15-year level term life insurance policy with a face amount of 100,000. The policy contained an accidental death rider, offering a double indemnity benefit. Waiter was severely injured in an auto accident, and after 10 weeks of hospitalization, he died from the injuries. What amount would his beneficiary receive as a settlement? a) 100,000 plus the total of paid premiums b) 0 c) 100,000 d) 200,000
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Answer: D The beneficiary would most likely receive twice the face value of the policy since his fatal injuries were caused by an accident and he died within the 90 day benefit limit stipulated in most policies.
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All of the following statements concerning Waiver of Premium riders are correct EXCEPT: a) Once activated, the Waiver of Premium will continue until the insured's recovery or the maturity of the policy whatever occurs first b) An insured who has recovered from a disabling injury will be required to repay the insurer for any premiums that were waived c) Waiver of Premium riders require that disablement needs to last for a certain period of time d) There is a maximum age limit for the Waiver of Premium rider to activate.
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Answer: B Premiums which are waived under the rider do not require repayment upon the insured's recovery
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All of the following statements are Medicare supplement insurance policies are correct EXCEPT a) Medigap policies cover the cost of extended nursing home care b) Medigap policies cover Medicare deductibles and copayments c) Medigap policies supplement Medicare payments d) Medigap policies are issued by private insurers
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Answer: A Medigap policies do not cover the cost of extended nursing home care. Medigap plans are designed to fill the gap in coverage attributable to Medicare's deductibles, copayment requirements, and benefit periods. These plans are issued by private insurance companies
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Who must a business entity designate as being responsible for its compliance with insurance laws? a) Anyone b) An employee approved by the commissioner c) A licensed producer d) A lawyer
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Answer: C The business entity must have designated a licensed producer as responsible for the business entity's compliance with the insurance laws, rules, and regulations of New Hampshire.
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Which of the following health care plans would most likely provide the insurer/subscriber with comprehensive health care coverage? a) Medical-surgical expense plan b) Basic medical expense plan c) Health Maintenance Organization plan d) Group dental insurance plan
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Answer: C HMO's provide a package of comprehensive health care services that include routine physicals, immunizations, well baby care, family planning, etc. as well as the treatment of sickness and injury
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Andrea wants to apply for an individual's life insurance policy. She has a nearly flawless health history and wants only limited coverage. Which type of information is the least that would probably be required? a) Application for insurance b) Attending physician's statement c) Statement of good health d) Paramedical report
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Answer: A When smaller amounts of insurance are requested and there is no prior medical history of concern, the home office underwriter may make an underwriting decision solely on the basis of the application
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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 fixed, the insurance company should do which of the following: a) Adjust the benefit in accordance with the increased risk b) Cancel the policy c) Increase the premium d) Exclude coverage for on-the-job delivery
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Answer: A A part of the premium rating concerns the hazard of occupation
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Which of the following is an example of a limited-pay life policy? a) Level Term Life b) Striaght Life c) Life Paid-up at Age 65 d) Renewable Term to Age 70
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Answer: C Limited pay whole life premiums are all paid by the time the insured reaches Age 65. The policy endows when the insured turns 100. It is the premium paying period that is limited, not the maturity
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Which of the following statements is correct concerning taxation of a long-term care insurance? a) Excessive benefits may be taxable b) Benefits may be taxable as ordinary income c) Premiums may be taxable as income d) Premiums are not deductible in any case
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Answer: A Regardless of whether or not the insured can deduct individual long-term care premiums, the benefits are received income tax free by the individual. Excessive benefits as determined by statute are taxable as ordinary income
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Joe Schmoe thinks it would be a good idea to use an assumed business name for his insurance business, instead of his legal name. What must he do before he can do business under the name of Joe Insurakon? a) Joe must notify the Commissioner, but can begin using the assumed name for business immediately. b) Joe cannot use an assumed name for business c) Joe musty notify and get approval from the Commissioner d) Joe must legally change his name to Joe Insurakon
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Answer: C An insurance producer doing business under any name other than the producer's legal name is required to notify and obtain approval from the commissioner prior to using the assumed name.
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An insurance company assures its new policyholders that their premium costs will not increase for a period of at least five years. However, due to increasing financial strain, they plan to raise premium costs of all insureds by 10% over the next 2 years. What term best describes this act? a) Unfair discrimination b) Errors and omission c) Fraud d) Defamation
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Answer: C According to Title 18, Sections 1033 and 1034 of the US code, any oral or written statement by any person engaged in the business of insurance that are false or any omissions of material fact are considered unlawful insurance fraud. This includes statements made on an application for insurance, renewal of a policy, claims for payment or benefits, premiums, paid, and financial condition of an insurer
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The most the insurance guaranty Association will pay for net cash surrender values is: a) 500,000 b) 1,000,000 c) 100,000 d) 250,000
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Answer: C The insurance guarantee association will not pay more than 100,000 for net cash surrender and net cash withdrawal values.
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All of the following are true regarding the guaranteed insurability rider EXCEPT: a) The insured may purchase additional insurance up to the amount specified in the base policy b) It allows the insured to purchase additional amount of insurance without proving insurability only at specified dates or events c) This rider is available to all insured d) The insured may purchase additional coverage at the attained age
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Answer: C The guaranteed insurability rider may be structured to allow for specific additional amounts of insurance to be purchased at specific ages, dates, and events without proving insurability, however, the coverage is purchased at the insured's attained age and the maximum allowable purchase is specified in the base policy. This rider usually expires at the insured's age 40.
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How are funds contributed to a tax-sheltered annuity treated for taxation? a) The contributions are taxed as income for the employee b) The contributions are not included as income for the employee, but are taxable upon distribution c) The contributions are never taxed d) The contributions are taxed as income for the employees
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Answer: B Funds contributed are excluded from the employee's current taxable income, but are taxable upon withdrawal
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An insured was involved in an accident and could not perform her current job for 3 years. If the insured could reasonably perform another job utilizing similar skills after 1 month, for how long would she be receiving benefits under an "own occupation" disability plan? a) 1 month b) She would not receive any benefits c) 3 years d) 2 years
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Answer: D Under an Own Occupation plan, if the insured cannot perform his/her current job for a period of up to 2 years, disability benefits will be issued, even if the insured would be capable of performing a similar job during that 2 year period. After that if the insured is capable of performing another job utilizing similar skills, benefits will not be paid.
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For an individual who is NOT covered by an employee-sponsored plan. IRA contributions: a) Are never tax deductible b) Are partially tax deductible depending on the income level c) Will be tax deductible d) Will be deducted based on the income level
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Answer: C Individuals who are not covered by an employer-sponsored plan may deduct the full amount of their IRA contributions regardless of their income level.
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An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin 2 years after the annuity was purchased. What type of annuity is it? a) Fixed b) Flexible premium c) Immediate d) Deferred
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Answer: d) Deferred
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Which is the correct comparison between survivorship life and a traditional joint life policy? a) Joint life pays a death benefit on the first death, while Survivorship Life pays on the last death b) A traditional joint life policy has a lower premium than a Survivorship Life policy c) Joint Life policies can cover more than two individuals, while Survivorship Life is limited to two. d) The premiums for both are determined by a combined general health rating.
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Answer: A
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The renewal commissions paid in the 3rd year must be as high as the commission of which year? a) 3rd b) 4th c) 1st d) 2nd
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Answer: D
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What is the benefit of experience rating? a) Experience rating helps employees with low claims experience become exempt from group premiums b) Experience rating helps employers with high claims experience because they get lower premiums c) Experience rating helps employers with low claims experience because they get lower premiums d) Experience rating helps employers with high claims experience get group coverage.
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Answer: C
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All other factors being equal, which of the following premium payment modes will incur the lowest overall payment? a) Annual b) Semi-annual c) Quarterly d) Monthly
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Answer: A
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What is the purpose of COBRA? a) To protect the insured against insolvent insured b) To provide continuation of coverage for terminated employees c) To provide coverage for the dependents d) To provide health coverage for people with low income
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Answer: B
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An applicant who receives a preferred risk classification qualifies for: a) Lower premiums than a person who receives standard risk. b) Dividends payable for lack of claims c) Higher premiums than a person who receives sub-standard risk. d) Higher premiums than a person who receives a standard risk
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Answer: A
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What is reinsurance? a) An agreement between originating insurer and ceding insurer b) An agreement between a domestic insurer and a foreign insurer c) An agreement between an insurer and an insured d) An agreement between a ceding insurer and assuming insurer
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Answer: D
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Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die? a) Whole life policies b) Ordinary life policies c) Joint life policies d) Individual endowment policies
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Answer: C
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In order to qualify for conversion from a group life policy to an individual life policy of the same coverage, a person must have been insured under the group plan for how many years? a) 5 b) 10 c) 1 d) 3
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Answer: A
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An insured purchased a life insurance policy on his Life naming his wife as primary beneficiary, and his daughter is contingent beneficiary. Under what circumstances could the daughter collect the death benefit? a) If the primary beneficiary predeceases the insured b) The primary and contingent beneficiaries share death benefits c) With the primary beneficiary's written consent d) If the insured died from accidental means
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Answer: A
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All of the following would it would be different between qualified and nonqualified retirement plans EXCEPT: a) IRS approval requirements b) Taxation on accumulation c) Taxation of withdrawals d) Taxation of contributions
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Answer: B
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Unlike the dividend itself, the interest earned on dividends is: a) Nontaxable b) Tax deductible c) 40% taxable, similar to a capital gain d) Taxable
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Answer: D
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What provision may allow a small employer health benefit plan to exclude coverage for a pregnancy existing on the effective date of the coverage? a) Adverse selection b) Open enrollment c) Pre-existing condition d) Specified disease coverage
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Answer: C
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Which of the following best describes fixed-period settlement option? a) Both the principal and interest will be liquidated over a selected period of time b) Only the principal amount will be paid out within a specified period of time c) The death benefit must be paid out in a lump sum within a certain time period d) Income is guaranteed for the life of the beneficiary
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Answer: A
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In cases where a covered employee is eligible for Medicare benefits to treat end stage renal disease with dialysis for kidney transplant, which of the following is correct? a) Medicare is primary for the first 12 months of treatment and then employer group insurance is secondary b) Medicare is the secondary payer during the first 30 months of treatment c) Medicare in the employer group insurance plan will share the cost equally d) Because Medicare does not cover treatment of ESRD the group plan will pay 100%
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Answer: B
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Which of the following is not correct regarding false statements by person engaged in the business insurance? a) Omissions of material fact on insurance application are fraud b) Full statement about financial condition of an insurer are unlawful c) Statements made with the intent to deceive or unlawful d) Only written statements can be considered fraud
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Answer: D
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All of the following statements are true regarding installments for a fixed period Annuity settlement option EXCEPT: a) The payments are not guaranteed for life b) The insurance determines the amount for each payment c) It is a life contingency option d) It will pay the benefit only for a designated period of time
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Answer: C
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An insurance company receives an application with some information missing and issues the policy anyway. What is this called? a) Estoppel b) Subrogation c) Aleatory d) Waiver
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Answer: D
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Before a business entity may legally transact insurance, and must perform all the following except a) Obtain an insurance producer license b) Designate license producer c) Procure a staff of at least one natural person d) File an application with the insurance commissioner
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Answer: C
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When an individual is covered under 2 health insurance policies that have duplicate benefits which could make a claim for benefits because of an injury or illness profitable, it is called: a) Overinsurance b) Double indemnity coverage c) Fraternal coverage d) Pro-rata coverage
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Answer: A
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Occasional visits by which of the following medical professionals will NOT be covered under LTC's home health care? a) Attending physician b) Registered nurses c) Licensed practical nurses d) Community-based organization professionals
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Answer: A
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Which of the following is NOT included on Part 1 of the application for insurance? a) Applicant's gender b) Applicant's occupation c) Applicants' marital status d) Applicant's medical background
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Answer: D
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If the owner prematurely surrenders his deferred annuity before the annuitization period begins, which of the following is most likely to occur? a) The owner will receive the premium payments that have been paid into the annuity, plus any interest, minus the surrender charge b) A surrender charge will be imposed that is equal to 3 of the owner's monthly annuity payments c) A surrender charge will not be imposed because the account has been open for at least 1 year d) The owner will forfeit any premiums he has paid into the account, but will receive any interest earned on the account.
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Answer: A
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All of the following benefits are available under Social Security EXCEPT: a) Old-age and retirement benefits b) Disability benefits c) Death benefits d) Welfare benefits
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Answer: D
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An absolute assignment is a: a) Change of beneficiary b) Change of insurer c) Transfer of all ownership rights in a policy d) Transfer of some ownership rights in a policy
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Answer: C
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Which of the following is a similarity between equity indexed annuities and fixed annuities? a) The insurance company keeps 2% of the returns b) Both are considered to be more risky than variable annuities c) They invest on a conservative basis d) They have a guaranteed minimum interest rate
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Answer: D
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What makes up the Medical Information Bureau? a) Former insured b) Physicians and paramedics c) Insurers d) Hospitals
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Answer: C
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In forming an insurance contract, when does acceptance usually occur? a) When an insurer accepts an application b) When an insurer approves a prepaid application c) When an insured receives the policy d) When an insurer receives an application
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Answer: B
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If one takes Social Security retirement benefits at age 62, what needs to be done at age 65 to qualify for medicare? a) Appear for a physical at the social security office b) Apply at a local Social Security office c) Nothing d) Apply for coverage through the state
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Answer: C
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Following an injury, Jill, age 66 and covered under Medicare parts A&B was treated by her physician on an out-patient basis. How much of her doctors bill will Jill be required to pay out-of-pocket? a) 20% of covered charges above the deductible b) 80% of covered charges above the deductible c) All reasonable charges above the deductible according to Medicare standards d) A per office call deductible
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Answer: A
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All of the following factors, which are identified on the application, play a vital role in determining the insured's insurability EXCEPT: a) Education b) Age c) Gender d) Occupation
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Answer: A
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Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive: a) Guaranteed minimum benefit b) The amount paid into the annuity c) The remainder of the principal d) Nothing; the payments will cease
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Answer: D
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Which of the following is NOT true regarding Equity Indexed Annuities a) The insurance company keeps a percentage of the returns b) They have guaranteed minimum interest rates c) They are less risky than variable annuities d) They earn lower interest rates than fixed annuities
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Answer: D
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All of the following cases show when a Small Employer Medical plan cannot be renewable EXCEPT a) When the small employer carrier elects to nonrenew all of its health benefit plans delivered or issued for delivery to small employers b) When the employer chooses to renew the plan c) For nonpayment of required premiums d) When the Commissioner/Director finds that the continuation of the coverage would not be in the best interests of the policyholders or certificate holders or may impair the carrier's ability to meet its contractual obligations
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Answer: B
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The requirement that agents must account for all insurance funds collected, and without the express consent of the insurance companies are not permitted to co-mingle those funds with their own funds is known as a) Fiscal responsibility b) Accepted accounting principal c) Fiduciary responsibility d) Premium accountability
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Answer: C
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Which of the following is NOT a characteristic of an insurable risk? a) The loss must be measurable b) The loss exposure must be large c) The loss must be catastrophic d) The loss must be due to chance
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Answer: C
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Who must a business entity designate as being responsible for its compliance with insurance laws? a) Anyone b) An employee that has been approved by the Commissioner c) A licensed producer d) A lawyer
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Answer: C
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What is the term used when a person sells his assets as a way to gain more money? a) Liquidation b) Buy-Sell c) Commerce d) Transfer
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Answer: A
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What is the name of a clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military? a) Limited b) Aviation c) Hazardous occupation d) Military service or war
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Answer: D
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Concerning Medicare Part B, which statement is INCORRECT? a) Medicare Part B is fully funded by Social Security taxes (FICA) b) If a person initially declines Part B, he or she must wait until the next general enrollment period to enroll c) An individual must reject Medicare Part B or he will be enrolled in it automatically d) Medicare part B provides partial coverage and benefits for medical expenses not covered completely by Part A
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Answer: A
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A typical Accidental Death and Dismemberment policy covers all of the following losses EXCEPT: a) Life b) Income c) Eyesight d) Limb
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Answer: B
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In a group policy, who is issued a certificate of insurance? a) The insurance company b) The employer c) The individual insured d) The healthcare provider
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Answer: C
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Which of the following could be considered an employee's dependant under employer group health insurance? a) A 21 year old child who is a part time student b) A 35 year old disabled child incapable of self support c) A 24 year old step child d) A 20 year old married child
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Answer: B
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Molly is the owner of a $225,000 life policy with a triple indemnity rider for accidental death. When Molly is killed in a car accident, It is determined that the accident was his fault and that he was intoxicated at the time of the accident. The triple indemnity rider in Molly's policy specifies that the death must not be contributed to by the insured in any manner. In this case, the beneficiary will receive: a) $675,000 (triple the amount of policy value) b) $0 c) $112,500 (50% of the policy value) d) $225,000
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Answer: D
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Which of the following statements pertaining to Medicare Part A is correct? a) Medicare Part A is automatically provided when an individual qualifies for Social Security benefits at age 65 b) For the first 90 days of hospitalization, Medicare Part A pays 100% of all covered services, except for the initial deductible c) Individuals with ESRD do not qualify for Part A d) Each individual covered by Medicare Part A is allowed one 90 day benefit period per year
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Answer: A
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Albert and Brian are partners in the business. They produce a buy- sell agreement, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement? a) Permanent insurance b) Universal life insurance c) Any form of life insurance d) Term insurance
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Answer: C
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All of the following qualify for Medicare Part A EXCEPT: a) Anyone who is over 65, not covered by Social Security, and is willing to pay premium b) Anyone who is willing to pay a premium c) Anyone that qualifies through social security d) Anyone who is at the end stage renal disease
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Answer: B
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A policy with a 31-day grace period implies a) The policy continues for 31 days if premiums are not paid b) The policy holder has a 31 day free look c) The policy lapses if premium is not paid 31 days before it is due d) If something happens within 31 days of the policy issue, the insurer will not pay
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Answer: A
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An insured has medical insurance coverage through two different providers, both covering the same expenses on an expense incurred basis. Neither company knows in advance that the insured has coverage through any other insurers. The insured submits a claim to both insurers. How should the claim be handled? a) Each insurer should pay a proportionate share of the claim b) One of the insurers will pay fully, while the other will not pay any benefits c) Once the insurers discover the duplicate coverage, the policies would most likely be cancelled, and no claim paid. d) The insured should receive full benefits from each insurer
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Answer: A
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If an individual is covered under a disability income policy that includes an Accidental Death and Dismemberment rider, what are the maximum benefits that he will receive from the policy, if he loses sight in both eyes as a result of a fire? a) Reciprocal amount b) Capital sum c) Percentage of full amount d) Principal sum
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Answer: D
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Which of the following is true regarding a single life settlement option? a) It provides income the beneficiary cannot outlive b) Payments continue until the entire principal is exhausted c) Proceeds are paid out in lump sum d) It provides income for a specified period of time
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Answer: A
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What is the amount a physician or supplier bills for a particular service or supply? a) Assignment b) Coinsurance c) Approved amount d) Actual charge
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Answer: D
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Which of the following is an example of a limited-pay life policy? a) Life paid up at Age 65 b) Renewable Term to Age 70 c) Level term life d) Straight life
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Answer: A
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Which of the following may NOT be included in an insurance company's advertisement? a) That its policies are covered by a state Guaranty Association b) Their policies' limitations or exclusions c) The name of a specific agent d) An identification of a limited policy as a limited policy
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Answer: A
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What qualifications must an agent hold in order to sell variable life insurance policies? a) National Association of Insurance Commissioners (NAIC) registration b) State licensing to sell life insurance and variable products c) Both state and federal licensing d) Same certification as fixed life policies
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Answer: C
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If a policy has an automatic premium loan provision, what happens if the policyowner dies before the loan is paid back? a) The balance of the loan is forgiven; the policy beneficiary receives the full death benefit b) The policy beneficiary takes over the loan payment c) The policy is rendered null and void d) The balance of the loan will be taken out of the death benefit
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Answer: D
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Pete is hospitalized with a back injury. Upon checking his disability income policy, he learns that he will not be eligible for benefits for at least 30 days. This would indicate that his policy was probably written with a 30 day: a) Probationary period b) Deductible c) Elimination period d) Black-out period
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Answer: C
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A health insurance policy lapses but is reinstated within an acceptable timeframe. How soon from the reinstatement date will coverage for accidents become effective? a) After 21 days b) After 31 days c) Immediately d) After 14 days
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Answer: C
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Which type of authority is based on the actions and words of the agent? a) Fiduciary b) Implied c) Apparent d) Express
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Answer: C
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What is the goal of the HMO? a) Limiting the deductibles and coinsurance to reduce costs b) Providing health services close to home c) Early detection through regular checkups d) Providing free health services
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Answer: C
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An individual has just been diagnosed with a quickly spreading, fatal form of cancer; his oncologist predicts that he will live for five months. He applies for individual life insurance. What risk classification will he most likely receive? a) Poor b) Provisional c) Declined d) Substandard
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Answer: C
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Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be? a) Cash refund b) Installments for a fixed period c) Installments for a fixed amount d) Installment refund
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Answer: B
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An insured has a Modified Endowment Contract. He wants to withdraw some money in order to pay medical bills. Which of the following is true? a) He cannot withdraw money from his MEC before age 59 ½ b) He will have to pay a penalty if he's younger than 59 ½ c) He will have to pay a penalty regardless of his age d) He will not have to pay a penalty regardless of his age
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Answer: B
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A Medicare supplement policy must provide coverage for pre-existing conditions after the policy has been in force for: a) 2 years b) 90 days c) 6 months d) 1 year
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Answer: C
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Who is involved in completing the agent's report? a) Attending physician and the agent b) Only the agent c) The agent and the applicant d) Only the underwriter, if not agent
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Answer: B
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Regarding a PPO, which of the following is correct when selecting a primary care physician? a) The insured may choose medical providers not found on the preferred list and still retain coverage b) The insured is allowed to receive care from any provider, but if the insured select a PPO provider, the insured will realize lower out of pocket costs c) If a non-network provider is used, the insured's out-of-pocket costs will be higher d) All of the above are true
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Answer: D
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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: a) Experience rating b) Group rate c) Insurer's scheduled rate d) Attained age
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Answer: D
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Which of the following is used to determine the annuity amounts that are not taxable? a) Pro rata ratio b) Exclusion index c) Market-adjusted annuities index d) Exclusion ratio
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Answer: D
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The provision which states that both the printed contract and a copy of the application for the contract between the policy owner and the insurer is called the: a) Entire contract b) Total contract c) Aleatory contract d) Complete contract
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Answer: A
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An insured is the recipient of an accidental death and dismemberment policy purchased by his employer. The policy pays triple indemnity in case of accidental death. If the insured died as a result of an accident stipulated in the policy, how will the benefits paid be taxed? a) Benefits received are considered income tax free b) Benefits received will be taxed as capital losses c) No taxes will be taken because no benefits will be paid d) Benefits will be taxed as ordinary income
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Answer: A
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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? a) As of the application date b) As of the policy delivery date c) As of the first of the month after the policy issue d) As of the policy issue date
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Answer: A
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An insured decides to surrender his whole life insurance policy which you purchased 30 years ago. He had paid annual premiums of $500 while the policy was in force (which added up to $15,000.) When he surrendered the policy, the cash surrender value was $18,000. What part of the surrender value would be income taxable? a) $1,000 b) $18,000 c) $15,000 d) $3,000
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Answer: D
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What is the minimum number of continuing education credit hours that producers must complete on the subject of ethics each licensing period? a) 3 b) 5 c) 10 d) 12
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Answer: A
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All of the following individuals may qualify for Medicare health insurance benefits EXCEPT: a) A person age 50 b) A person 65 or older c) A person age 53 who suffers from chronic kidney disease d) A person under age 65 who is receiving social security disability benefits
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Answer: A
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What type of group rating uses the actual experience of the group as a factor in developing the rates to be charged? a) Experience rating b) District rating c) Community rating d) Individual rating
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Answer: A
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What part of the Internal Revenue Code allows an owner of a life insurance policy or annuity to exchange or replace their current contract with another contract without creating adverse tax consequences? a) Section 1035 Policy Exchange b) Modified Endowment Exchange c) 401(k) Plan d) Section 457 Deferred Compensation Plan
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Answer: A
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Your client is planning to retire. She has accumulated $100,000 in retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent you should recommend: a) Joint and survivor b) Straight life c) Life income with period certain d) Installment refund
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Answer: B
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To meet the Entire Contract provision, a policy must contain: a) A declarations page with a summary of insureds b) Buyer's guide to life insurance c) Listing of the insured's former insurer(s) for incontestability provisions d) A copy of the original application for insurance
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Answer: D
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Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a benficiery, the premiums must be paid: a) Until the policyowner's age is 65 b) For 20 years c) Until the policyowner's age is 100, when the policy matures d) For 20 years or until death whichever occurs first
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Answer: D
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Which of the following is true regarding underwriting for a person with HIV? a) A person may be declined for HIV but not AIDS. b) The person may be declined c) The person may only be declined if he/she has symptoms d) The person may not be declined
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Answer: B
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Which of the following is NOT a duty of the Commissioner? a) License insurance companies and producers b) Enforce violations of the insurance code c) Regulate insurance rates d) Develop insurance rates
answer
Answer: D
question
An insured has a Social Insurance Supplement rider in her disability income plan. Following a disability, she begins receiving benefit payment from the insurer. She then begins receiving Social Security benefits that are smaller than the SIS benefit payments. At that point, her insurer ends the SIS benefit payments. Which of the following best describes the situation? a) Miscommunication. The proper authorities should be notified in order to end Social Security payment so that the SIS rider will continue to pay b) Although a mistake may have occurred, the insured has no recourse c) This is typical of an SIS rider d) The insured should contact the insurer to confirm her actual Social Security benefit amount. The SIS rider should pay the difference between the rider amount and the actual benefit.
answer
Answer: D
question
Which of the following health care plans would most likely provide the insured/subscriber with comprehensive health care coverage? a) Basic medical expense plan b) Health maintenance organization plan c) Group dental plan d) Medical-surgical expense plan
answer
Answer: B
question
If $100,000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for 10 years which of the following would be taxable annually? a) $3,000 b) $13,000 c) $10,000 d) $7,000
answer
Answer: A
question
All of the following statement concerning the use of life insurance as an Executive Bonus are correct EXCEPT a) The policy is owned by the company b) Any type of insurance policy may be used c) The employer pays a bonus to a selected employee to fund the policy d) It is considered a nonqualified employee benefit
answer
Answer: A
question
Lyle has $10,000 term life policy. He paid his annual premium on Feb 1. Lyle fails to renew the policy and dies on Feb 28 of the following year. Accounting for the $200 of earned premium, how much will the beneficiary receive from Lyle's insurance company? a) $10,000 b) $9,800 c) $200 d) $0
answer
Answer: B
question
Which of the following can surrender a deferred annuity contract? a) The beneficiary after the owner's death b) Deferred annuity cannot be surrendered c) Only the annuity owner d) Only the insurance company for nonpayment of premiums
answer
Answer: C
question
The 3 main differences between fixes and variable annuities include all of the following EXCEPT: a) License requirements b) Mortality c) Interest Rate d) Underlying Investment
answer
Answer: B
question
Which of the following is NOT a feature of a noncancellable policy? a) The insurer may terminate the contract only at renewal for certain conditions b) The premiums cannot be increased beyond the amount stated in the policy c) The gurantee to renew coverage usually applies until the insured reaches certain age d) The insured has the right to renew the policy for the life of the contract
answer
Answer: A
question
All of the following are differences between individual and group health insurance EXCEPT a) Individual insurance does not require medical examinations, while group insurance does require medical examinations b) In individual policies, the individual selects coverage options, while in a group plan all employees are covered for the same coverage which is chosen by the employer c) Individual coverage can be written on an occupational or nonoccupational basis while group plans cover only nonoccupational d) Individual policies are renewable at the option of the insured, while group usually terminates when the individual leaves the group
answer
Answer: A
question
When the policyowner specified a dollar amount in which installments are to be paid; he/she has chosen a settlement upon a) Extended term b) Fixed amount c) Fixed period d) Life income period certain
answer
Answer: B
question
Which of the following statements is correct concerning taxation of long-term care insurance? a) Excessive benefits may be taxable b) Benefits may be taxable as ordinary income c) Premiums may be taxable as income d) Premiums are not deductible in any case
answer
Answer: A
question
Combination plans are comprised of 2 types of plan features: basic and a) Expanded b) Limited c) Comprehensive d) Scheduled
answer
Answer: C
question
Which of the following is true regarding dividend-related taxation? a) Dividends are taxable in some life insurance policies and nontaxable in others b) Dividends are considered income for tax purposes c) Dividends are not taxable d) Dividends are taxable only after a certain amount is accumulated annually
answer
Answer: C
question
For an individual who is NOT covered by an employer-sponsored plan, IRA contributions a) Are partially tax deductible depending on the income level b) Will be tax deductible c) Will be deducted based on the income level d) Are never tax deductible
answer
Answer: B
question
A life insurance policyowner has an outstanding policy loan. What will the insurer most likely do? a) Charge interest on the loan b) Require payment of additional premium c) Assess a fine d) Cancel the policy
answer
Answer: A
question
Which of the following describes the tax advantage of a qualified retirement plan? a) The earnings in the plan accumulate tax deferred b) Distributions prior to age 59 ½ are tax-deductible c) Employer contributions are deductible as a business expense when the employee receives benefits d) Employer contributions are not taxed when paid out to the employee
answer
Answer: A
question
Social security benefits are available for a surviving spouse until the youngest child reaches age 16. Benefits are later resumed when the surviving spouse reaches retirement age. What is the time period called during which the surviving spouse does not receive benefits? a) Waiver of premium b) Retention of capital c) No-benefit d) Blackout period
answer
Answer: D
question
An employee becomes insured under a PPO plan provided by his employer. If the insured decides to go to a physician who is not a PPO provider, which of the following will happen? a) The PPO will pay reduced benefits b) The PPO will not pay any benefits at all c) The insured will be required to pay a higher deductible d) The PPO will pay the same benefits as if the insured had seen a PPO physician
answer
Answer: A
question
All other factors being equal, which of the following premium modes would result in the lowest overall premium a) Monthly b) Annual c) Quarterly d) Semi-Annual
answer
Answer: B
question
An insured committed suicide one year after his life insurance policy was issued. The insurer a) Refund the premiums paid b) Pay the policy's cash value c) Pay the full death benefit to the beneficiary d) Pay nothing
answer
Answer: A
question
In respect to the consideration clause, which of the following is consideration on the part of the insurer? a) Offering a secondary policy to the applicant b) Offering an unconditional contract c) Explaining policy revisions to the applicant d) Promising to pay in accordance with the contract terms
answer
Answer: D
question
If an insurer meets the State's financial requirements and is approved to transact business in the state, it is considered to be a) Certified b) Qualified c) Approved d) Authorized
answer
Answer: D
question
Adverse selection is a concept best described as a) Only offering coverage to good risks b) Risks with higher probability of loss seeking insurance more often than other risks c) Underwriters slanting the odds in favor of the company d) Poor choices of applicants to be covered
answer
Answer: B
question
Which of the following factors does an insurer use the most to determine the extent of disability benefits that it will promise in a contract? a) The insured's hobbies b) The insured's income c) The insured's marital status d) The insured's moral history
answer
Answer: B
question
When may an insured deduct unreimbursed medical expenses paid under a long term care policy? a) When the expenses exceed a certain percentage of the insured's adjusted gross income b) Only if the insured is age 65 or older c) All LTC expenses are tax deductible d) Only if the insured does not itemize expenses
answer
Answer: A
question
What process will the insurance company use to monitor the insured's hospital stay to make sure the everything is proceeding according to schedule? a) Precertification review b) Concurrent review c) Prospective review d) Corridor review
answer
Answer: B
question
In an individual long-term care insurance plan, the insured is able to deduct the premiums from taxes. What income taxation will be imposed on the benefits received? a) No tax b) Policy tax c) Federal income tax d) State income tax
answer
Answer: A
question
Which of the following is NOT a feature of a guaranteed renewable provision? a) Coverage is not renewable beyond the insured's age 65 b) The insured's benefits cannot be reduced c) The insurer can increase the policy premium on an individual basis d) The insured has a unilateral right to renew the policy for the life of the contract
answer
Answer: C
question
How many hours of continuing education are required of insurance producers? a) 180 hours b) 15 hours c) 30 hours d) 24 hours
answer
Answer: D
question
What does "leve" refer to in level term insurance? a) Cash value b) Interest rate c) Face amount d) Premium
answer
Answer: C
question
What benefits are paid directly to the insured under a health insurance policy, the policy provides benefits on what type of basis? a) Reimbursement b) Service c) Limited d) Scheduled
answer
Answer: A
question
Which clause allows both the insured and dentist to know in advance which benefits will be paid? a) Advanced Benefit Notification b) Fixed Rate c) Precertification d) Preadmission
answer
Answer: C
question
Which document helps to insure full and fair disclosure to the recipient of a policy? a) Statute of limitations b) Outline of coverage c) Benefit limitations d) Policy summary
answer
Answer: B
question
Which of the following groups would most likely be covered under a blanket accident policy? a) Independent contractors who work for a general contractor b) Students at a public school c) Office workers for a retail business d) Factory workers at the automobile assembly plant
answer
Answer: B
question
Which of the following terms describes making false statement about the financial condition of any insurer that are intended to injure any person engage in the business of insurance? a) Defamation b) Undercutting c) Twisting d) Slandering
answer
Answer: A
question
Which of the below statements is FALSE concerning a Modified Endowment Contract (MEC)? a) Policy loans are taxable distributions b) MECs lose some of the favorable tax treatment of distributions c) The policyholder can receive distributions at any time without being penalized d) Distributions before age 59 ½ have a penalty tax of 10% on the gain in the policy
answer
Answer: C
question
All of the following are true regarding insurance policy loans EXCEPT a) Policy loan can be made on policies that do not accumulate cash value b) The amount of unrepaid loan and interest will be deducted from the policy proceeds when the insured dies c) The policy will terminate if the loan plus interest equals or exceeds the cash value of the policy d) Policyowners can borrow up to the full amount of their whole life policy's cash value
answer
Answer: A
question
All of the following are regulated areas of the insurance industry EXCEPT a) Investments b) Commissions c) Producers d) Trade practices
answer
Answer: B
question
How are funds contributed to a tax-sheltered annuity treated for taxation? a) The contributions are taxed as income for the employee b) The contributions are taxed as income for the employee, but are tax free upon withdrawal c) The contributions are not included as income for the employee. But are taxable upon distribution d) The contributions are never taxed
answer
Answer: C
question
Under a pure life annuity, an income is payable by the company a) For as long as either the annuitant or a name beneficiary is alive b) Only for the life of the annuitant c) Until the principal and interest are exhausted d) For a guaranteed period of time whether or not the annuitant survives to the end of that period
answer
Answer: B
question
After 3 years of making payments into a flexible premium deferred annuity, the owner decides to surrender the annuity. The insurer returns all the premium payments to the owner, except for a predetermined percentage. What is this percentage called? a) Inflation adjustment b) Surrender charge c) Termination penalty d) Bail out charge
answer
Answer: B
question
In long term care (LTC) policies, as the benefit period lengthens, the premium a) Remains unchanged b) LTC premium are not based on benefit periods c) Decreased d) Increases
answer
Answer: D
question
Which of the following would NOT be an underwriting consideration for a health insurance applicant? a) Applicant's sexual orientation b) Applicant's personal habits c) Applicant's medical history d) Applicant's credit rating
answer
Answer: A
question
All else being equal which of the following will NOT be considered unfair discrimination by insurers? a) Discriminating in benefits and coverages based on insured's habits and lifestyle b) Charging applicants with similar health histories different premium rates based on their ethnicity c) Cancelling individual coverage based on the insured's marital status d) Assigning different risk classifications to applicants based on ethnicity
answer
Answer: A
question
Alden is involved in a small plan accident that renders him permanently deaf, although he does not sustain any other major injuries. Alden is still able to perform his current job. To what extent will he receive Presumptive Disability benefits? a) Full benefits b) Partial benefits c) Full benefits for 2 years d) No benefits
answer
Answer: A
question
If a beneficiary wanted a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what option would a beneficiary select? a) Fixed income b) Fixed period c) Fixed Time d) Fixed amount
answer
Answer: B
question
Which of the following would NOT be used in preventative care? a) Pap smear b) Annual physical exam c) Mammogram d) Chemotherapy
answer
Answer: D
question
According to the Future Increase Option Rider (FIO) which of the following is NOT an acceptable time to increase an insured's benefit level? a) Death of spouse b) Age 34 c) Marriage d) Birth of a child
answer
Answer: A
question
The benefits received by the business in a Disability Buy-Sell policy are a) Partially taxable b) Fully taxable c) Income tax free d) Tax deductible
answer
Answer: C
question
You bought an individual health insurance policy for yourself. Which of the following roles do you have? a) Insured b) Both subscriber and insured c) Subscriber d) Producer
answer
Answer: B
question
The following are legitimate uses of insurance in a business setting EXCEPT a) compensating executive b) funding against financial loss caused by the death of a key employee c) funding business continuation agreements d) funding against general company financial loss
answer
Answer: D
question
Which of the following would NOT be true regarding a $100,000 20-year level term policy? a) the policy will expire at the end of the 20 year period b) at the end of 20 years the policy's cash value will equal $100,000 c) the policy premiums will remain level for 20 years d) if the insured dies before the policy expired the beneficiary will receive $100,000
answer
Answer: B
question
Joe did not remember to renew his insurance license before the due date. What must he do now to reinstate the license without having to take a written exam? a) Pay 3 times the renewal fee within 24 days of the due date b) Pay double the amount of the unpaid renewal fee within 24 months of the due date c) Pay the usual renewal fee within 24 months of the due date d) Joe cannot reinstate his license now without passing a written exam
answer
Answer: B
question
Which of the following riders would NOT cause the Death Benefit to increase? a) Accidental Death Rider b) Payor Benefit Rider c) Guaranteed Insurability Rider d) Cost of Living Rider
answer
Answer: B
question
Attempting to determine how much insurance an individual would require based upon their financial objectives is know as: a) Viatical Approach b) Needs approach c) Human life approach d) Estate planning
answer
Answer: B
question
An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase? a) Payments for 15 years b) Payments for 20 years c) Payment for life d) Nothing
answer
Answer: A
question
Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? a) Payments can be made in installments and as a single cash refund b) It provides a higher monthly payment than a pure life annuity c) It is a life contingency option d) The beneficiary receives the remainder of the principal amount upon the annuitant's death
answer
Answer: B
question
Another name for a substandard risk classification is: a) Elevated b) Rated c) Controlled d) Declined
answer
Answer: B
question
What is a primary difference between an IRA and an SEP? a) Only $40,000 maximum per year can be contributed to an IRA b) Much more money can be contributed to an IRA c) Much more money can be contributed to an SEP d) Only $3000 maximum per year can be contributed to a SEP
answer
Answer: C
question
The term 'fixed' in a fixed annuity refers to all of the following except a) Death benefit b) Guaranteed rate of interest c) Equal annuity payments d) Amount and length of payments
answer
Answer: A
question
At times it is possible for a life insurance agent to affect a savings of premium rates by back-dating an application for life insurance. What is the maximum amount of time that an application may be back dated? a) 1 year b) Not allowed c) Varies from insurer to insurer d) 6 months
answer
Answer: D
question
Which of the following is NOT the purpose of HIPAA? a) To limit exclusions for preexisting conditions b) To provide immediate coverage to new employees who had been previously covered for 18 months c) To guarantee the right to buy individual policies to eligible individuals d) To prohibit discrimination against employees based on their health status
answer
Answer: B
question
Which of the following is true regarding health insurance? a) It provides death benefit coverage b) It only covers expenses related to health care c) It could provide payments for loss of income d) Disability coverage is excluded
answer
Answer: C
question
The 2 types of assignments are a) Complete and partial b) Complete and proportionate c) Absolute and collateral d) Absolute and partial
answer
Answer: C
question
Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost? a) Reasonable coverage expectations b) Indemnity c) Stop-loss d) Limited benfits
answer
Answer: B
question
An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible? a) The insured can transfer the policy to his friend and then notify the insurer of the change b) The insured will need a written consent of the insurer c) It is impossible to transfer a policy d) The insured would have to surrender his policy to the insurer, and his friend could then ask to buy it
answer
Answer: B
