question

An arrangement where an individual is authorized to act on behalf of another person or company is established through

answer

the law of agency

question

The powers directly given to a producer in an agency contract are called

answer

express

question

An insurance application requires an applicant to make a full, accurate disclosure of the risk factor involved. Using this criteria, an insurance policy is considered what type of contract?

answer

Contract of utmost good faith

question

What qualifies as acceptance of an insurance contract offer?

answer

An issued policy

question

How long does one premium payment cover in a single premium whole life policy?

answer

Entire life of the policy

question

Which action will trigger a penalty tax on premature distributions from a modified endowment contract (MEC)?

answer

policy loans

question

What type of premiums are associated with individual mortgage protection life insurance policies?

answer

Level premiums

question

Which statement regarding whole life insurance is accurate?

answer

Insurance coverage can continue for life

question

How long does protection normally extend to under a limited pay whole life policy?

answer

Until age 100

question

When does the insured stop making payments under a thirty-payment whole life policy?

answer

At the time of death or 30 years after the policy's inception, whichever comes first

question

What type of life insurance policy covers two or more persons and pays the face amount upon the death of the first insured?

answer

Joint life

question

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

answer

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

question

A policyowner is permitted to take out a policy loan on a whole life policy at what point?

answer

When the policy has a cash value

question

A source of additional income for a life insurance policyowner can be derived from the

answer

cash value

question

A life insurance policy's waiver of premium rider has the ability to

answer

relieve the insured of premium payments following an initial waiting period after the insured becomes totally disabled

question

What could be the potential result of taking out a cash value loan on a life insurance policy?

answer

Cash surrender value will be reduced if policy is forfeited

question

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

answer

Reduced

question

How is the insured protected if a payor benefit rider is attached to the life insurance policy?

answer

Premium payments are waived in the event the premium payor dies or becomes disabled

question

In what way is a life insurance policy affected by an accelerated benefit payment?

answer

Decreases the death benefit

question

Which of these factors does NOT affect life insurance premium rates?

answer

Producer Certification

question

A contingent beneficiary is described as the

answer

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

question

How much is normally paid to a policyowner in a life (viatical) settlement?

answer

Less than the death benefit

question

Life insurance premiums are based on what three factors?

answer

Mortality, interest, expenses

question

Where will a life insurance policy's proceeds be directed to if all the beneficiaries die before the insured?

answer

Insured's estate

question

A signed good health statement may be collected by a life producer at the time of

answer

policy delivery

question

What happens to the cash value of a market value adjusted annuity if it's surrendered prior to the end of the stated guarantee period?

answer

Subject to market value adjustment

question

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

answer

Transfers some of the investment risk to the policyowner

question

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

answer

makes only one premium payment

question

The interest credited to the cash values of personally-owned non-qualified annuities is considered

answer

tax-deferred

question

Which benefit can be found in an equity indexed annuity, but not in a fixed annuity?

answer

Protection against long-term inflation

question

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

answer

Investment risk is assumed by the purchaser

question

When a deferred annuity is surrendered, who must sign the authorization to do so?

answer

Owner

question

An annuity's accumulation period can usually

answer

continue after the purchase payments stop

question

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

answer

When the contract is annuitized

question

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

answer

When the contract has been held for a stated time period

question

What happens to the purchasing power of benefit payments from a fixed life annuity when the cost of living goes up?

answer

Decreases

question

Sarah, age 88, is a life annuitant who has lived beyond her life expectancy. The funds for additional benefit payments will be derived primarily from funds that were

answer

not distributed to life annuitants who died before life expectancy

question

A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a

answer

profit-sharing plan

question

An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately had the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee?

answer

Distribution is subject to federal income tax withholding

question

Rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The transfer of Rick's IRA account balance to his surviving spouse qualifies for

answer

the marital deduction

question

Who is normally considered to be the owner of a 403(b) tax-sheltered annuity?

answer

The participating employee

question

The health insurance premiums paid for by each partner in a partnership is considered to be

answer

100% tax deductible

question

A disabled business owner who has payroll and business expenses paid for has what kind of insurance policy?

answer

Business overhead expense

question

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

answer

Where the master contract was issued

question

Which of the following statements BEST describes a double indemnity provision in travel accident insurance?

answer

Benefits are doubled under certain circumstances stated in the policy

question

Which of these are NOT factors that influence group health insurance underwriting?

answer

Physical exams of group members

question

Nonqualified distributions from a health savings account (HSA) have a tax penalty of

answer

20%

question

Which of the following is another name for individuals who participate in an HMO plan?

answer

Subscribers

question

Which of the following statements is INCORRECT about why the government provides insurance?

answer

Reduce fraudulent claims

question

Medicaid will pay for nursing home expenses under what condition?

answer

Must have financial need

question

Rick is a disabled worker receiving Social Security benefits. What are his wife and dependent children eligible for?

answer

An income benefit which is a percentage of his primary insurance amount

question

Which of these would NOT likely qualify as a presumptive disability?

answer

Loss of sight in one eye

question

The amount of a covered loss to be paid by the insured before a major medical expense policy begins to pay is called the

answer

deductible amount

question

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

answer

Benefits are paid on a capitation basis

question

A pre-existing condition exclusion in an accident and health insurance policy pertains to

answer

prior health matters

question

A policyowner suffers a covered accident and health insurance loss on June 30 and submits the proof of loss to the insurer July 10. If the policyowner cancelled the coverage on July 2, how will the insurance company handle the claim?

answer

Claim must be paid after proof of loss is received

question

A health plan offered by private insurance companies is

answer

a Medicare Supplement

question

What type of doctor-ordered care assists an individual with performing basic daily activities such as bathing, dressing, and eating?

answer

Custodial care

question

Medicare Supplement insurance requires an individual to be at least how old for open enrollment?

answer

No minimum age

question

When a health insurance policy includes a Mandatory Second Surgical Opinion provision, the insured must

answer

seek a second opinion for specified elective surgeries

question

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

answer

Non-cancelable with a health condition exclusion rider

question

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

answer

Removing uniform policy provisions

question

What is the name of the period of time during which a new employee is ineligible for group Health insurance coverage?

answer

Probationary period

question

Which type of deductible must be satisfied again for each illness or accident in a major medical plan?

answer

Per-cause

question

Which statement is NOT true regarding health insurance policies that provide limited benefits?

answer

Only persons under the age of 65 are eligible

question

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

answer

Benefit period

question

Third-party administration has become popular in accident and health insurance due to the expansion of

answer

self-funding of benefits

question

ERISA requires that a Summary Plan Description must be provided to a new plan member within how many days following the new member's eligibility date?

answer

90

question

What is another name for a Keogh plan?

answer

HR 10 plan

question

Who does TRI-CARE provide accident and health coverage to?

answer

Military families

question

Misrepresenting pertinent policy provisions relating to coverage after a loss is

answer

An unfair claims settlement practice

question

Making a statement that is false or maliciously critical of the financial condition of an insurer is known as

answer

defamation

question

A producer who attempts to intimidate is engaging in

answer

coercion

question

In accordance with federal fraud and false statements regulation, a prohibited person cannot transact insurance business in Nebraska without

answer

The written consent of the Commissioner

question

Who reports a producer's termination of appointment to the Director?

answer

The insurer

question

Which event must a producer report to the Director?

answer

Conducting business under an assumed name

question

To receive an insurance license, an applicant must

answer

Apply for the license after passing the appropriate examination

question

A licensee whose name or address changes must notify the Director within

answer

30 days

question

Which of the following activities would NOT subject a licensed producer to a penalty under Nebraska law?

answer

Selling a life insurance policy to an individual who already owns a current life policy

question

Basic coverage for the treatment of alcoholism includes how many days of hospital inpatient coverage in any 365-day benefit period?

answer

30

question

Employer-paid qualified long-term care insurance premiums are typically

answer

excluded from the employee's gross income

question

Scott has a life insurance policy in which the dividends are left with the insurance company. This particular policy may be paid up when the cash value plus accumulated dividends

answer

equal the net single premium for the same face amount at the insured's attained age

question

A certificate of coverage for a group health policy is best described as

answer

proof of coverage for the employee

question

Which of the following is true regarding inpatient psychiatric care under Medicare Part A?

answer

Benefits are limited to 190 days lifetime

question

Dividends from a stock insurance company are normally sent to

answer

shareholders

question

The main role of accident and health and disability insurance is to

answer

protect against medical care costs and the loss of earning power

question

The coinsurance for skilled nursing facility services covered by Medicare after the 100% Medicare coverage ends is

answer

a flat dollar amount per day

question

Ken is age 65 and has 2 years until he receives Social Security retirement income benefits. At his current age, which is true about Medicare Part A Hospital Insurance coverage?

answer

It is available through application to Social Security

question

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

answer

Both pay on a fee-for-service basis

question

Larry is about to file an accident and health insurance claim. Which of the following would make claim handling more convenient for him?

answer

Assignment of benefits

question

Which factor determines the maximum disability income benefit that can be purchased by an applicant?

answer

The applicant's income

question

What is the insurer responsible for when a producer is acting within the scope of authority granted in the agency contract?

answer

Responsible for acts by the producer that are authority only

question

Which of these must be disclosed in a universal life policy?

answer

The surrender charges

question

Which statement regarding an adjustable life insurance policy is NOT true?

answer

Policy loans are not permitted

question

Which of these life insurance policies do NOT contain cash value provisions?

answer

Decreasing term life

question

Straight whole life insurance can be accurately described in all of these statements EXCEPT

answer

Policy protection normally expires at age 65

question

How are level term policies able to provide level premiums?

answer

Premiums are averaged over the term of the policy

question

Laura added a children's rider to her life insurance policy. What type of coverage was added?

answer

Level term

question

Which of these is NOT an advantage of term life insurance?

answer

A cash benefit will be provided if the insured is alive at the end of the policy period

question

Peter, age 50, surrenders his modified endowment contract (MEC). How is the gain treated in terms of federal income taxes?

answer

The gain is treated as taxable income and a penalty tax is imposed on the gain

question

Which statement regarding a single premium life insurance policy is NOT correct?

answer

Additional premiums may be required under certain conditions

question

When a lapsed policy's premium has been paid current, it has the potential of being

answer

reinstated

question

Which situation is an accelerated (living) benefit rider suited for?

answer

Insured expected to be confined to a nursing home for life

question

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

answer

accelerated (living) benefit

question

Which statement regarding the waiver of premium rider is accurate?

answer

Cash payment is not directly provided to the policyowner

question

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

answer

Total premiums paid plus the policy face amount

question

Which benefit is normally payable to a life insurance policyowner when the insured's life expectancy has been severely limited?

answer

Accelerated (living) benefit

question

How may an insurance company classify an accidental death benefit on a life policy?

answer

As an optional policy rider

question

An insured that has a guaranteed insurability rider attached to his life insurance policy has the right, without proving insurability, to

answer

periodically purchase additional insurance

question

What is considered the collateral on a life insurance policy loan?

answer

The policy's cash value

question

Which of these statements is NOT true regarding a cash value loan against a life insurance policy?

answer

Interest payments made by policyowner are deductible

question

When a policy loan is requested by a policyowner and it requires the consent of the beneficiary, what kind of beneficiary designation is this?

answer

Irrevocable beneficiary

question

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

answer

Fixed-Period

question

Which life insurance policy provision prohibits a beneficiary from "commuting, encumbering, withdrawing, or assigning" any portion of the proceeds prior to actual receipt from the company?

answer

Spendthrift clause

question

Death proceeds from a life insurance policy are typically included in a deceased insured's gross estate

answer

for federal income tax reasons

question

Which report contains information regarding an individual's general reputation and credit standing?

answer

Consumer report

question

The reason for backdating a policy is

answer

to obtain a premium rate based on an earlier age

question

When the disclosure of an insured's nonpublic information is involved, what is the insurer obligated to do?

answer

Give notice, explain, and allow opting out

question

Which of the following is NOT a reason for a business to buy key person life insurance?

answer

An increased pension liability if the key employee dies

question

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

answer

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

question

When does interest income for a flexible premium deferred annuity get reported for federal income taxes?

answer

When the distributions are received from the contract

question

Who typically makes the purchase payments in an individual annuity?

answer

Owner

question

The interest credited to the cash values of personally-owned non-qualified annuities is considered

answer

tax-deferred

question

A life annuity feature which provides benefit payments for a minimum number of years, no matter when the annuitant dies, is called

answer

period certain

question

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

answer

Time of purchase

question

When a large sum of money is used to structure monthly payments, which product is typically used?

answer

An immediate annuity

question

Which of the following normally pertains to an immediate annuity?

answer

Lack of an accumulation period

question

An annuity which starts paying monthly benefits within a month after issuance is called a(n)

answer

immediate annuity

question

When funds are transferred directly from one IRA to another IRA, what percentage of the tax is withheld?

answer

None

question

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

answer

60 days

question

First-time homebuyers are able to withdraw up to how much from their qualified IRAs without incurring the 10% early withdrawal penalty?

answer

$10,000

question

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

answer

Pays a death benefit as a result of natural causes

question

Typically, states will permit the grouping of two or more small employers in the same industry for obtaining group health insurance at a favorable rate. This grouping of employers is known as a multiple employer

answer

trust

question

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

answer

Disability income

question

Individuals seeking Social Security disability income benefits must have a disability that will eventually lead to death, or be expected to last at least

answer

12 months

question

Specialty care is provided by which of these health maintenance organization (HMO) providers?

answer

Neurologist

question

Which of the following is NOT an allowable exclusion for long-term care insurance policies?

answer

Care for incurable conditions

question

Which of the following does NOT meet the requirements of "skilled nursing care"?

answer

Must be provided exclusively in a hospital

question

Who is protected with the "other insurance with this insurer" provision?

answer

Insurance company

question

What does a Mandatory Second Surgical Opinion provision provide to an employer-paid health insurance plan?

answer

Containment of the employer's premium cost

question

To which of the following group plans do HIPAA rules NOT apply?

answer

Disability income

question

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

answer

Disability income

question

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

answer

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

question

A medical fee schedule shows the amount an insurer will pay for a given procedure. This amount is considered to be the

answer

highest amount payable

question

Reductions in coverage are one feature of _______ in Health insurance policies.

answer

cost containment

question

What is a "functional assessment" for long-term care benefits?

answer

A review of the insured's ability to perform the activities of daily living

question

Some standard Medicare Supplement policies include which benefit?

answer

Hospice care

question

Which of the following describes coverage for the Medicare Part B coinsurance?

answer

A Medicare Supplement core benefit

question

In long-term care insurance, what is an "ADL"?

answer

Activities of daily living

question

The payment of the first premium, the promise to pay a covered loss, and the agreement to abide by policy conditions are all examples of

answer

consideration

question

Emergency health care coverage for Medicare enrollees traveling abroad is

answer

a core benefit under a Medicare Supplement

question

An attempt to defraud an insurance company is considered

answer

A felony

question

A producer's authority to bind an insurer to an insurance contract may be granted in the:

answer

Producer's appointment with the insurance company

question

A producer's license in Nebraska must be renewed every

answer

Two years

question

An individual appointed by an insurance company that represents the company and presents policies on its behalf is

answer

A producer

question

No existing producer's license will be revoked until

answer

The producer has been afforded a right to a hearing on the charges

question

Disclosure requirements in the life insurance solicitation regulation mandate that prospective purchasers be given

answer

a Buyer's Guide and Policy Summary

question

A nonparticipating whole life insurance policy was surrendered for its $20,000 cash value. The total premiums paid had totaled $16,000. What were the federal income tax consequences to the policyowner on receipt of the cash value?

answer

$16,000 was received tax-free and $4,000 as ordinary income

question

A comprehensive group policy also covers expenses related to vision care. Which of the following is not typically covered under a vision plan?

answer

Cataract surgery

question

A producer delivers an accident and health policy and must also collect the initial premium. The applicant informs the producer of a recent material change in health. Aside from collecting the initial premium, the producer must also

answer

obtain a signed good health statement from the applicant

question

Errors and omissions insurance would be used in which of the following situations?

answer

A producer's improper replacement of an insurance policy

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