question

In discussing a potentially lucrative group policy with a business owner who had purchased a business and just moved into the community, an established producer jokingly remarked, "Well, would it sweeten the pot if I could assure you membership in the country club?" He added, "I'm on the membership committee and while we're not accepting new application right now, I'm sure something could be worked out." These remarks constituted:

answer

rebating

question

Which plan is nonprofit, provides medical services to subscribers on a service basis and is called a "producer cooperative?"

answer

Blue Cross and Blue Shield

question

Joe recently purchased a new vehicle through his local dealer. His loan was $21,500. The finance and insurance representative suggested that Joe purchase credit life to pay off the car in the event of his death. If Joe dies before his note is paid, what is the benefit?

answer

The lender will receive the amount of the outstanding balance and there will be no residual.

question

Medicare Part A provides a benefit for skilled nursing care after a hospital stay. In order to qualify for the skilled nursing benefit, the patient must do all of the following EXCEPT:

answer

Be limited to 20 days of custodial care

question

The principal function of an annuity is the liquidation of an estate. Purchased on an individual or group basis, they can fund personal retirement, or in the case of group, employer-sponsored retirement plans. All of the following are characteristics of annuities EXCEPT:

answer

An annuity always guarantees a lifetime income for the annuitant.

question

Replacement is defined as any life insurance transaction in which existing life insurance undergoes any of the following situations EXCEPT:

answer

Is renewed with a new amount on the policy

question

Although it is not normally recommended that a minor be named as a beneficiary on a life policy, sometimes it is the only logical option. When the only logical beneficiary is a minor, all of the following options are available EXCEPT:

answer

The benefits can go directly to the estate of the insured

question

Beneficiaries on a life insurance policy can be designated in several different categories. Which of the following statements is not true about a revocable beneficiary on a life insurance policy?

answer

The policyowner cannot change the beneficiary without their knowledge.

question

Nancy wishes to transfer some of her legal rights as the policyowner of a life contract. The transfer of some or all of a policyowner's legal rights to another party is called an assignment. Which of the following is not an assignment whereby she would transfer her rights?

answer

Total, complete, unconditional assignment

question

Gloria did not opt out of Medicare Part B so she automatically pays a premium and has the coverage. Which of the following is not part of the Medicare Part B coverage?

answer

Nursing home

question

Rick's grandmother has a long-term care policy (LTC). If she becomes disabled, or has a chronic disease, she can expect that it will provide benefits for nursing home, home-based care and respite care:

answer

If services are provided under medical supervision

question

As long as education requirements for resident individual producers are met by the due date, an insurance producer license must remain in effect unless which of the following takes place?

answer

The license is suspended

question

Individuals engaged in the business of insurance found to have committed fraud or knowingly made materially false statements may be subject to all of the following penalties EXCEPT?

answer

A fine of up to $75,000

question

Licensees must inform the Commissioner by any means acceptable to the Commissioner of a change of legal name or address within how many days of the change?

answer

30 days

question

The agent must provide an outline of coverage to the applicant:

answer

Upon application or policy delivery

question

Daniel was purchasing a life policy from his friend Marcus, an agent for MMC Agency. Even though Daniel had not yet paid a premium, Marcus told him that the policy was in force as of the date that they wrote the contract. Marcus did not have the authority to bind coverage immediately, but the MMC Agency could still be liable. This is an example of:

answer

Apparent authority

question

Which of the following classification of employees is not used for the purpose of determining group insurance eligibility?

answer

Age or gender

question

Lawrence is trying to understand the difference between a Flexible spending account and a Health Savings Account. The primary differences are:

answer

Health Savings accounts can be carried over from year to year

question

A reduction in force at Charlie's company has resulted in Charlie being laid off from his current position. His group life insurance plan (an annually renewable term policy) contains a provision allowing him to convert to an individual policy. Which of the following is not a consideration in converting from a group to an individual plan?

answer

He can use the cash value of his group policy to purchase paid-up insurance

question

Isaac is enrolled in his employer's group plan on a non-contributory basis. He contract pneumonia and is hospitalized. Isaac is reimbursed for the medical expense he incurred less a $500 deductible. How much of his benefits will be taxed?

answer

Isaac will have no tax liability, as medical benefits are not taxable.

question

All of the following are true concerning taxation of medical benefits EXCEPT:

answer

Medical expenses deducted from income tax become taxable in the next year if they are reimbursed after the deduction is taken.

question

Marta sees that her new health policy has a guaranteed premium and the company may not terminate her coverage for any reason. This type of policy is know as:

answer

Non-cancellable

question

Each of the following will pay medical benefits EXCEPT:

answer

Endowment policy

question

The government is one of three primary types of insurers. Government insurance provides protections against fundamental risks. Which of the following is an example of a government insurance program?

answer

Social Security

question

An individual health insurance policy must be renewed each year by the insurance company under what circumstances:

answer

All policies must be renewed without change, but rates for an entire class of insureds may be changed as a pooling group.

question

The disability income rider on Jack's policy promises to pay him a monthly income in the event he becomes disabled. The amount of the income is based on:

answer

The face amount of the policy

question

Steven currently earns $50,000 annually. At age 35, Steven feels he will earn increasing amounts as he gains more experience and he will most likely earn as much as $2,250,000 during his working years. Steven and his agent have calculated that he should have approximately $1,500,000 in life insurance to be sure his family is guaranteed the lifestyle he would provide if he dies. This approach is called:

answer

Human Life Value

question

The insuring clause in a health policy will deal with all of the following EXCEPT:

answer

A definition of losses not covered by the policy

question

Variable whole life has fixed level premiums and a guaranteed minimum death benefit like ordinary whole life. Variable whole life differs from ordinary whole life in that ____________________________.

answer

Variable whole life offers higher interest rates.

question

An underwriter has reviewed the information submitted on a prospective customer. He has determined that this person will not qualify for a standard issue policy. The underwriter may choose any of the following actions EXCEPT:

answer

Issue the policy with a probationary period allowing the company to cancel the policy at a later date at their option.

question

Which of the following is not an element of insurable risks?

answer

Large number of heterogeneous units.

question

In any life insurance policy transaction, the agent must ask the applicant if the policy is replacing another policy. The applicant must sign a written statement indicating if a replacement is involved - or not. If a replacement is involved, the agent must do all of the following EXCEPT:

answer

Notify the insurer of the policy being replaced - of any policies to be replaced.

question

Insurance companies use which of the following to limit claims from pre-existing disabilities or to control adverse selection?

answer

Probationary periods

question

A basic total disability plan has several components. Which of these if also known as the 'time deductible'?

answer

Elimination period

question

A health insurance contract may be any of the following types of contracts EXCEPT:

answer

A valued contract

question

An employee's eligibility for group enrollment may be determined by all of the following EXCEPT:

answer

Gender

question

A participating life policy pays dividends to the policyholder. The insurer offers the policyholder options on how to receive the dividends. All of the following are dividend options EXCEPT:

answer

Fixed period option

question

Which of the following will trigger a taxable event in regard to a 1035 transfer?

answer

Changing the ownership of a plan

question

When Mr. Baker reached age 65, he started to receive Social Security benefits. He continued to work at his regular job. Did he have tax liability on his Social Security benefit payments?

answer

Yes if his income it greater than $25,000

question

An annuity that has different rates depending on how the annuity is surrendered and when, is a:

answer

Two-tiered annuity

question

The policy may not define a preexisting condition more restrictively than a condition for which medical advice was given or treatment was recommended by a physician within ________ before the effective date of coverage.

answer

6 months

question

No action at law or in equity may be brought to recover on this policy prior to the expiration of 60 days after what has taken place?

answer

The insurer has received written proof of loss

question

Along with supplying a prospective buyer of a policy providing disability coverage to a person eligible for Medicare by reason of age with a buyer's guide, what other requirement must the insurer fulfill?

answer

Obtain acknowledgment that the buyer has received the buyer's guide

question

The principal losses related to accident & health insurance are:

answer

Loss of income from disability and medical expenses from the cost of medical treatments, physician's fees, hospitalization and prescriptions.

question

Adjustable is a type of life insurance combines features of term and whole life coverage. Combining the features gives policyholders options to change their policies as their needs change over time. Which of the following is not a true statement about adjustable life insurance?

answer

The length of time that premiums are paid cannot be changed.

question

Ashley wants to purchase term insurance that will allow her to renew at the end of the period and have a lower premium than is offered with conventional renewals. This type of policy is called:

answer

Reentry term

question

A policy is not considered in effect until it has been delivered to the insured. Which of the following is an effective and legal way to deliver a policy?

answer

-Personal delivery by an agent -Mailing the policy to the policyowner -Giving the policy to an agent of the policyowner

question

A comprehensive major medical policy will cover all of the following losses EXCEPT:

answer

Liposuction to reduce weight

question

Short-term disability riders called ____________are available and provide benefits during the first 6-12 months of a claim.

answer

Additional monthly benefit rider

question

Federal law subjects all permanent life policies to a test to determine if they are in face modified endowment contracts (MECs) as opposed to regular life insurance. All of the following serve to discourage MECs as an investment vehicle EXCEPT:

answer

Subsequent policies can be exchanged without the MEC classification.

question

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

answer

Policy loans are taxable as income.

question

Standard dividend options for a participating policy may be any of the following EXCEPT:

answer

Provide guaranteed insurability

question

What type of group health insurance plan is self-funded up to a specific amount, then the insurer covers the remaining costs?

answer

Shared-funding

question

Wendy was a beneficiary on her great-grandfather's life policy. After her great-grandfather died, it was discovered that on his original life policy, his age had been misstated on the application. He was actually 8 years younger than what was stated on the policy. Her grandfather was 96 years old, and the policy had been in force for over 50 years. Did the misstatement of age have any affect on the policy benefits?

answer

The misstatement of age would result in an increase in the death benefit.

question

A contractual stipulation defining the amount and timing of payments due for a specified level of coverage under an insurance policy is called the ____________. This clause states that the insurance coverage is in place on application and the payment of the first premium.

answer

Consideration clause

question

Jack pays his premiums weekly to an agent who comes to his home to collect. Jack is covered by:

answer

An industrial policy

question

Joint life insurance insures two people with one policy, often spouses or business partners. Marty and Joyce are looking at the characteristics of a joint life policy, and discovered:

answer

The payout can help with estate taxes.

question

Medicaid is a needs tested program. It provides medical benefits for the poor and indigent. It is funded as follows:

answer

Jointly funded by individual states and the federal government

question

Ken has a medical plan through his employer that provides a schedule of benefits and payment allowances for those benefits in his employee group certificate booklet. Ken most likely in enrolled in a:

answer

Basic Surgical Expense Plan

question

Which of the following is a characteristic of an annuity certain, that is different from a life annuity?

answer

The annuity certain provides payments for a specified period.

question

An annuity period certain is another type of annuity. All of the following statements are true about an annuity certain EXCEPT:

answer

If the annuitant dies, the payments cease.

question

When recommending the purchase of a Medicare supplement policy, the insurer must ___________________________.

answer

make reasonable efforts to determined whether or not it is appropriate for the consumer

question

If a provision of an individual health insurance policy conflicts with the laws of Michigan what then is the status of the provision?

answer

It is amended to conform with the minimum statutory requirements of Michigan law

question

If a group disability coverage is replaced by a policy which contains a preexisting condition limitation and covers 10 or more employees, then the new policy coverage ______________________

answer

may not be less than the coverage of the replacement policy without the preexisting condition limitation

question

One type of annuity is a variable annuity. How is the benefit payment option with a variable annuity different from a fixed annuity?

answer

The insurer cannot guarantee a specific dollar amount periodic annuity benefit.

question

Which of the following best describes spreading uncertainty of loss over a group of many individuals, and the law of large numbers?

answer

Insurance

question

Ellen has submitted an application to reinstate her health insurance plan with all requirements to her insurance company. The insurance company has been non-responsive. If the company fails to respond, the policy will automatically reinstate. How many days are required for this action?

answer

45

question

A life insurance plan has an incontestable clause. What is this clause called in an accident and health contract?

answer

Time limit for certain defenses

question

One approach to determining how much life insurance a person will require is the "Needs approach". Any of the following should be considered in a needs calculation EXCEPT:

answer

Amount needed to retire comfortably

question

After obtaining a written agreement from his or her client a licensed insurance counselor is able to perform which of the following acts?

answer

-Provide advice with respect to promised benefits, afforded coverage, terms, or advantages of a policy -Advertise himself as an insurance counselor -Audit policies of insurance

question

Sidney has received his insurance policy from his agent. After examining the policy carefully, he decides to return the policy under the "Free Look" provision. The insurance company is obligated to do which of the following?

answer

Refund all premiums in full

question

If ABC insurer is incorporated in Texas, it is considered to be:

answer

Alien in Great Britain

question

Because annuities are commonly sold by life insurance companies, the annuity company is most often a private company. Which of the following is usually the owner of the annuity?

answer

The annuitant

question

Some policies are guaranteed renewable. All of the following are characteristics of a guaranteed renewable policy EXCEPT:

answer

The insurer is allowed to increase individual premiums

question

The time of payment of claims provision requires that:

answer

claims must be paid after the insurer is notified and receives proof of loss.

question

A trigger for becoming eligible for COBRA benefits can be any of the following EXCEPT:

answer

An employee reaches age 65

question

In discussing a long term care program with a prospect, the agent should review which of the following carefully?

answer

The prospect's assets and financial situation

question

Micah was injured in an accident on the job and was off work for one month. Seven months after he returned to work - the injury he suffered in the initial accident reappeared. Under these circumstances, how will the insurance company treat the claim?

answer

-As a new claim -With a new elimination period

question

James is gathering his tax information for his tax preparer. James is aware that certain medical expenses may qualify for a tax deduction, depending on his individual situation. James can use all of the following out of pocket expenses to see if he qualifies for a medical deduction EXCEPT

answer

Disability insurance premium

question

An association may wish to offer health insurance benefits to its members. For an association to be allowed to offer a group health plan, it must do all of the following EXCEPT:

answer

Insure only healthy members

question

Smaller employer groups rates usually determined by a preset table that deals with the demographic make up of that group of individuals. This process is known as:

answer

Community rating

question

All of the following are considered moral hazards EXCEPT:

answer

Poor credit history

question

There are several types of whole life insurance including - participating, non- participating, economatic, limited pay, and single premium. Not all companies offer all types of policies. All of the following statements pertain to limited-pay and single premium EXCEPT:

answer

The premiums are generally less because the insurance company receives their money up front.

question

Michigan rules covering replacement do not apply to transactions in which the application for new life insurance meets which of the following descriptions?

answer

Policies covering employees and debtors

question

If the insured opts to carry the return of premium rider, the insurer refunds the total amount of premiums paid - into the policy - If an insured dies within a time period specified in the policy. Which of the following statements is true about the return of premium rider?

answer

It is an increasing term rider that matches the total premium input.

question

Mr. Baker is considering adding to his life insurance. Mr. Samuel, his agent, has recommended the Guaranteed Insurability rider. Which of the following statements is true about the Guaranteed Insurability rider?

answer

Mr. Baker's policy will provide specific dates on which additional life insurance policies can be bought

question

Eligibility for Social Security disability benefits is determined by all of the following EXCEPT:

answer

Individuals under age 30 must earn 10 quarters of credit within the past 5 years

question

Section 1035 of the Internal Revenue code provides for limiting tax liability on certain exchanges. All of the following exchanges would qualify under Section 1035 EXCEPT:

answer

Vacant land for another piece of vacant land

question

The IRS uses a test to determine if a policy should be defined as life insurance of as a MEC (Modified Endowment Contract). This test is called:

answer

A seven-pay test

question

Any of the following transactions will be subject to federal income tax consequences in a Modified Endowment Contract (MEC) EXCEPT:

answer

Death proceeds

question

When an insured purchases a life policy, he/she can decide how the proceeds of the policy will be paid. The policyowner can select all of the following settlement options EXCEPT:

answer

Dividend option

question

Insurers can set different premium rates for different individuals based on:

answer

classifications that result from cost experience.

question

Various riders and provisions affect how, when and how much the insured received in benefits. The _____________ limits income benefits based on the insured's income for the past two years.

answer

Relation of earnings

question

Many things come into consideration in the calculation of premiums. Which of the following is a common element when it occurs, allows an insurer to charge lower premiums?

answer

Higher interest earnings

question

A hazard is best defined as:

answer

something that increases the chance of loss.

question

The outline of coverage, which must be given to the applicant at the time of application, consists of which of the following components?

answer

Premium information

question

Along with supplying a prospective buyer of a policy providing disability coverage to a person eligible for Medicare by reason of age with a buyer's guide, what other requirement must the insurer fulfill?

answer

Obtain acknowledgment that the buyer has received the buyer's guide

question

A fixed indivisible premium life insurance policy that funds long-term care benefits entirely by accelerating the death benefit is considered to provide reasonable benefits. The policy must contain which of the following provisions?

answer

Nonpayment of premiums is the only way benefits can be terminated

question

The StarGaze Software Company has __________________ Mr. Cooper, because loss of Mr. Cooper would cause StarGaze to suffer a financial loss.

answer

An insurable interest in

question

Life insurance can fulfill a variety of personal and family needs in addition to the traditional death benefits. Which of the following is another use for whole life insurance?

answer

Cash for emergencies

question

David sees the wording "non-participating" on his health policy. This means:

answer

No dividends are payable.

question

Your disability policy states that you will qualify for benefits in the event you are not able to perform the essential duties of your occupation as a result of a sickness or an accident for 5 years and any occupation for which you have had prior experience, education or training thereafter. You are a surgeon who has a neurological problem in his arm. You are not able to perform surgery, but you can practice internal medicine. What benefits might your expect when your disability is approved?

answer

Full benefits for five years and no benefits thereafter

question

Seth has purchased a new life insurance policy from his agent. His agent has explained that his premiums are guaranteed not to change. His coverage will never decrease. He will build cash account that is available for loans or surrender, and he will be required to make premium payments as long as he lives. Seth has purchased:

answer

A whole life policy

question

Medicare Part B offers benefits for all of the following EXCEPT:

answer

Skilled nursing facilities

question

With an Accidental Death & Dismemberment (AD&D) policy, the payment of a specified amount, usually a percentage of the principal sum, which varies according to the severity of the injury, is called:

answer

Capital sum

question

Life insurance policies that pay dividends to policyholders are called 'participating policies'. All of the following are true statements about dividends EXCEPT?

answer

Dividends are taxable

question

A person becomes eligible for Medicare when:

answer

Part A is automatic for all persons reaching Age 65

question

A 1035 exchange is allowed on any of the following transactions EXCEPT:

answer

An annuity to a life insurance policy

question

Deferring of taxes is a prime advantage of annuities. All of the following are true about annuities and taxes EXCEPT:

answer

Taxes are imposed during the accumulation phase.

question

Assets deposited into a fixed annuity are invested in:

answer

The insurance company's general account

question

Henry has a group plan with his employer. He reads his benefit booklet and it says, "The first $10,000 of medical expenses is covered in full. After the first $10,000 is exhausted, the plan will apply a $500 deductible and additional expenses will be covered at 80%. Henry has what kind of plan?

answer

A basic medical plan with a corridor deductible

question

A large group of 2,000 employees has renewed for another year. The premiums have increased by 12% over the previous year. The new rates were most likely a result of:

answer

Higher than expected claims for that particular group of people

question

Kenneth sees that he has the right to assign his benefits on his health contract. This means that Kenneth may:

answer

Assign his benefits directly to a provider and allow his insurance plan to pay the provider directly

question

Zanubia has a medical plan that reimburses based on general costs in her geographical area. This schedule is known as:

answer

URC (Usual, reasonable and customary)

question

In order to complete the sale of a life insurance policy, the policy must be delivered to the insured. All of the following are good reasons to deliver the policy in person EXCEPT:

answer

The agent can change the date of the coverage if necessary

question

An underwriter will consider which of the following conditions in making his/her decision to approve an application for health insurance?

answer

A condition that occurs prior to making an application for health insurance

question

Herman reads on the face of his policy that his policy is cancellable. He should be aware that:

answer

The insurance company may cancel the policy with notice as specified in the policy to conform with regulations governing that transaction.

question

Which of the following is true when a policy is written as cancellable?

answer

The insurance company may cancel at any time by returning the unearned premiums.

question

Mr. Johnson has applied for Medicaid. Which of the following is required in order for him to be eligible for Medicaid?

answer

-He must sell his home -He must not have any income -He must not have any personal property *(None of the above)*

question

Martha is working to design a new group plan for her employer. She knows that her supervisor wants to provide different levels of benefits for various levels of employees. Martha may consider any of the following classifications EXCEPT:

answer

Age brackets of employees

question

If Joseph wants to purchase a policy that provides him with a blend of the benefits of traditional whole life and universal life, he should choose _________________.

answer

Interest-sensitive whole life

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