Which of the following entities has the authority to make changes to an insurance policy?
A. Producer
B. Insurer's executive officer
C. Department of Insurance
D. Broker
Answer: B
Only an executive officer of the company, not an agent, has authority to make any changes to the policy. The insurer must have the insured's written agreement to the change
Todd has been informed that he has a hernia which requires repair. When Todd researches the cost, he learns that his insurance plan will cover 200 points worth of surgical expenses. Each point represents $10, which means that $2000 of his surgery will be
Answer: Relative value
Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option?
A. Amount of interest
B. Size of each installment
C. Predetermined length of time stated in the contract
D. Length of income peri
Answer: B
The size of each installment determines the length of time that benefits are received under the Fixed Amount settlement option. It logically follows that larger installments translate into shorter benefit periods
Which of the following policy components contains the company's promise to pay?
A. Insuring clause
B. Premium mode
C. Consideration clause
D. Entire contract provision
Answer: A
An insured 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
Elimination period
A life insurance policy does not have a war clause. If the insured is killed during a time of war, what will the beneficiary receive from the policy?
The full death benefit
Social Security disability definition includes all of the following EXCEPT
A. Disability resulting from a medically determinable mental impairment
B. A physical impairment expected to result in death
C. Disability expected to last for at least 6 months
D.
Answer: C
Which of the following policies would be classified as a traditional level premium contract?
A. Adjustable life
B. Universal Life
C. Variable Universal Life
D. Straight Life
Answer: D
Straight whole life policies have a level guaranteed face amount and a level premium for the life of the insured
An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called?
Profit sharing plan;
A profit sharing plan is one where the employer will contribute monies into an employee's retirement plan when the company shows a profit. The others are all qualified plans, but company profit isn't an issue with them
An insurance agent proposed an individual health insurance policy that is guaranteed renewable. If the applicant accepts this policy, the insurer agrees that
The company will continue to renew the policy until the insured has reached age 65
An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies, and habits. What type of a report is that?
Inspection Report;
Inspection reports cover moral and financial information regarding a potential insured, usually supplied by private investigators and credit agencies. Companies that use inspection reports are subject to the rules outlined in the Fair C
Which statement is NOT true regarding underwriting group health insurance?
A. The group is assessed individually for insurability
B. The premium can be made retroactive for the year
C. The cost of the policy is partially determined by the ratio of males t
Answer: A
Group health insurance policies must cover everyone in the group, regardless of age, health history, and occupation. Because of this blanket coverage, the group as a whole is assessed for insurability. The size, average age, gender ratio, persis
Other than for a qualified life event, when can a change be made in benefits for a Flexible Spending Account (FSA)
During the open enrollment period
(unless the circumstances are deemed a qualified life event)
The responsibility of making certain that an application for insurance is filled out completely, correctly, and to the best of his/her knowledge is the responsibility of whom?
The producer (agent)
In comparison to a policy that uses the accidental means definition, a policy that uses the accidental bodily injury definition would provide a coverage that is
Broader in general
In a relative value system of determining coverage for a given procedure, what term describes the total amount payable per point?
Conversion factor
Don has both a basic expense and a major medical policy. He is injured in an accident, which requires several major surgeries. This quickly exhausts Don's basic expense policy. What must Don do before his major medical policy can pick up where the basic e
Pay a special (corridor) deductible on his major medical policy
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary
Life income with period certain;
The life income with period certain option guarantees payments for the life of the recipient and also specifies a guaranteed period of continued payments. If the recipient should die during this period, the payments would
What is a material misrepresentation?
A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company
Which of the following is NOT a characteristic or a service of an HMO plan?
A. Encouraging early treatment
B. Providing care on an outpatient basis
C. Contracting with Insurance companies
D Providing free annual checkups
Answer: C
Contracts are between the insured and the HMO, not the insurance company
All other factors being equal, what would the premium be like in a survivor survivorship life policy as compared to the premium in a joint life policy?
Lower;
Since the death benefit is not paid until the last death, the joint life expectancy in a sense is extended, resulting in a lower premium than that which is typically charged for joint life
Which nonforfeiture option provides coverage for the longest period of time?
Reduced paid up;
provides protection until the insured reaches 100, but the face amount is reduced to what the cash would buy
What is the benefit of choosing extended term as a nonforfeiture option?
It has the highest amount of insurance protection
An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called
Paid-up additions;
the annual dividend acts as a single premium each year to buy additional amounts of insurance, based on the insured's currently attained age
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 amounts of insurance without pr
Answer: C
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 p
What license or licenses are required to sell variable annuities?
Both a life insurance license and a securities license
Which settlement option allows the insurer to retain the face amount but pay some income based on gain on the proceeds to the beneficiary at regular intervals?
Interest only;
insurer retains policy proceeds and pays interest on the proceeds to the beneficiary at regular intervals. The insurer will usually guarantee an interest rate and even pay in excess of the rate quoted
Which of the following statements is NOT correct concerning the COBRA Act of 1985?
A. It covers terminated employees and/or their dependents for up to 36 months after a qualifying event
B. It applies only to employers with 20 or more employees that mainta
Answer: D
COBRA Act applies to only employers with 20+ employees
Which of the following is TRUE of a qualified plan?
A. It may allow unlimited contributions
B. It has a tax benefit for both employer and employee
C. It does not need to have a vesting schedule
D. It may discriminate in favor of highly paid employees
Answer: B;
A qualified plan is approved by the IRS, which then gives both the employer and employee benefits in deductibility of contributions and tax deferral of growth
What is the advantage of reinstating a policy instead of applying for a new one?
The original age is used for premium determination
Which of the following is NOT true of life settlements?
A. They could be sold for an amount greater than the current cash value
B. They involve insurance policies with large face amounts
C. The seller must be terminally ill
D. They could be used for a key
Answer: C
Which of the following best describes what the annuity period is?
A. The period of time from the effective date of the contract to the date of its termination
B. The period of time during which accumulated money is converted into income payments
C. The pe
Answer: B
How does a member of an HMO see a specialist?
The primary care physician refers the member
If an HMO policy is cancelled for nonpayment of the amounts due under the contract, how long of a notice must the insurer give the insured?
30 days
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be
Authorized
An agent holds an insurance license in the state of Kansas and would like to transact insurance in Texas. The agent became licensed before written examinations were required. Therefore, the agent has not actually passed any kind of examination. Which of t
The written examination requirement will be waived
Which of the following is the closest term to an authorized insurer?
Admitted
If a claimant is to bring a recovery action against an insurance company for a loss claimed under a policy, the action must be brought
Within 2 years
Which of the following is TRUE about credit life insurance?
A. Creditor is the policy owner
B. Debtor is the annuitant
C. Creditor is the insured
D. Debtor is the policy beneficiary
Answer: A
The creditor is the policy owner and the beneficiary, the debtor is the insured
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the
Mutual
Which of the following statements is TRUE about a policy assignment?
A. It is the same as a beneficiary designation
B. It permits the beneficiary to designate the person to receive the benefits
C. It authorizes an agent to modify the policy
D. It transfer
Answer: D
All of the following statements concerning dividends are true EXCEPT:
A. Lower insurance company costs generate higher dividends
B. They stem from favorable underwriting experience
C. Favorable investment results generate higher dividends
D. Dividend amou
Answer: D
Which of the following best describes annually renewable term insurance?
A. It requires proof of insurability at each renewal
B. Neither the premium nor the death benefit is affected by the insured's age
C. It provides an annually increasing death benefit
Answer: D
form of level term insurance that offers the most insurance at the lowest cost
All of the following are true regarding key person disability income insurance EXCEPT:
A. the employer pays the premiums
B. The employee is the insured
C. Premiums are tax deductible as a business expense
D. The employer receives the benefits if the key p
Answer: C;
in key person insurance, the contract is owned by the business, the premium is paid by the business, and the business is the beneficiary. the key person is the insured, and the business must have the key person's consent to be insured in writin
Under what condition are group disability income benefits received by an employee NOT taxable as income?
When the benefits received are equal or less than the employee's percentage of the contribution
Which of the following statements regarding HIV testing for insurance purposes is NOT true?
A. The testing practices must meet the criteria of the U.S. Department of Health and Human Services
B. HIV testing is regulated at the state level
C. Insurers are
Insurers are barred from requesting HIV testing
Occasional visits by which of the following medical professionals will NOT be covered under LTC's home health care?
A. Licensed practical nurses
B. Community-based organization professionals
C. Attending physician
D. Registered nurses
Answer: C
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
3 days
This arrangement specifies who will purchase a disabled partner's interest in the event he or she becomes disabled.
Disability buyout
Specifies who will purchase a disabled partner's interest and legally obligates that person or party to purchase such interest upon disability
An employee insured under a group health plan has been paying $25 monthly premium for his group health coverage. The employer has been contributing $75, for the total monthly cost of $100. If the employee leaves the company, what would be his maximum mont
$102
The employer is permitted to collect a premium from the terminated employee at a rate of no more than 102% of the individual's group premium rate (in this scenario, 102% of $100 total premium is $102). The 2% charge is to cover the employer's adminis
Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to
the insured
Which of the following is NOT a feature of a non-cancellable policy?
A. The insured has the right to renew the policy for the life of the contract
B. The insurer may terminate the contract only at renewal for certain conditions
C. The premiums cannot be i
Answer: B
Under the Accidental Death and Dismemberment (AD&D) coverage, what type of benefit will be paid to the beneficiary in the event of the insured's accidental death?
Principal sum
What type of policy allows the policy owner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?
Universal Life
Under which of the following organizations are the practicing providers compensated on a fee-for-service basis?
PPO
The Federal Fair Credit Reporting Act
Regulates consumer reports
Under SIMPLE plans, participating employees may defer up to a specified amount each year, and the employer then makes a matching contribution up to an amount equal to what percent of the employee's annual wages?
3
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: A
All of the following are true of an annuity owner EXCEPT:
A. The owner is the party who may surrender the annuity
B. The owner must be the party to receive benefits
C. The owner pays the premiums on the annuity
D. The owner has the right to name the benef
Answer: B
An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an
Interest-sensitive Whole Life
All of the following are characteristics of a Universal Life policy EXCEPT:
A. The planned premium pays for mortality charges and expenses and any excess is returned to the policy owner
B. The insurance company reserves the right to adjust the mortality c
Answer: A
A partnership buy-sell agreement in which each partner purchases insurance on the life of each of the other partners is called a
Cross-purchase plan
A life insurance policy has a legal purpose if both of which of the following elements exist
insurable interest and consent
An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a Traditional IRA, how much will be transferred from one plan administrator to another and what is the tax conseque
$10,000, no tax consequence
Which of the following answers does NOT describe the principal goal of a Preferred Provider Organization?
A. Provide medical services only from physicians in the network
B. Provide the subscriber a choice of physicians
C. Provide the subscriber a choice o
Answer: A
If an applicant does not receive a new insurance policy, who would be held responsible?
The agent
Which of the following is NOT true regarding the accumulation period of an annuity?
A. It is also known as the pay-in period
B. It would not occur in a deferred annuity
C. It is the period which the annuity payments earn interest
D. It is the period over
Answer: B
The provision in a health insurance policy that ensures that the insurer cannot refer to any document that is not contained in the contract is the
Entire contract clause
A hospital indemnity policy will pay
A benefit for each day the insured is in a hospital
Who is the owner and who is the beneficiary on a Key Person Life Insurance Policy
The employer is the owner and the Key Person is the beneficiary
In a disability policy, the probationary period refers to the time
During which illness-related disabilities are excluded from coverage
In forming an insurance contract, when does acceptance usually occur?
When an insurer's underwriter approves coverage
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?
The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries are alive
What type of care is Respite care?
Relief for a major care giver
The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into acc
Answer: C
Methods used to pay the death benefits to a beneficiary upon the insured's death are called
Settlement options
An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes the practice?
Illegal
Which of the following best describes a misrepresentation?
Issuing sales material with exaggerated statements about policy benefits
All of the following are to be included in the application for a certificate of authority to act as an HMO EXCEPT:
A. Records of previous insurers
B. A map of the geographic area to be served
C. A schedule of charges for the first 12 months
D. Financial r
Answer: A
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be
Authorized
A temporary license holder can receive a commission from a sale made to all of the following EXCEPT:
The license holder's sister-in-law
Upon the submission of a death claim under a life insurance policy, when should the insurer pay the policy benefit?
Within 2 months
All of the following are considered unfair or deceptive acts in connection with the sale of insurance EXCEPT:
A. Lacking standards for the investigation of an insured's claims
B. Attempting to settle a claim in which liability is clear
C. Stating facts or
Answer: B
Circulating deceptive sales material to the public is what type of Unfair Trade Practice?
False advertising
Which of the following is NOT required to be stated in the outline of coverage provided with a long-term care policy?
Basic information about supplementary policies
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as
Coercion
Which of the following would be considered false advertising?
A. Implying that the agent is the insurer
B. Stating the differences in benefits between Whole Life Insurance and Term Life Insurance
C. Stating that a policy has limitations and exclusions
D.
Answer: A
Which of the following is true regarding the insurance amount in a credit life policy?
A. Allowable amount of coverage is determined by the State Insurance Commissioner
B. The amount of coverage can be greater than the amount owed
C. Creditor can only ins
Answer: C
What percentage of continuing education hours must be in a classroom setting?
50%