An annuity promises that, if the annuitant dies before receiving payments equal to the correct value, the payments will be continued to a beneficiary
... [Show More] until an amount equal to the contract value has been paid. This type of annuity is called
An installment Refund annuity
A Straight Life annuity
A Cash Refund annuity
A Joint Life annuity - ANSWER-An installment Refund annuity
One becomes eligible for Social Security disability benefits after having been disabled for
3 months
5 months
6 months
12 months - ANSWER-5 months
A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?
Straight life accumulates faster than Limited-pay Life
20-Pay Life accumulates cash value faster than Straight Life
Cash value accumulation of both 20-Pay Life and Straight Life depend on the insurer's financial rating
20-Pay Life and Straight Life accumulate cash value at the same rate - ANSWER-20-Pay Life accumulates cash value faster than Straight Life
Who makes the legally enforceable promises in a unilateral insurance policy?
Beneficiary
Insurance company
Insured
Applicant - ANSWER-Insurance company
The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and
the initial premium
agreeing to a physical examination
delivery of policy
disclosure of any medical conditions - ANSWER-the initial premium
Which parts of a life insurance policy are guaranteed to be true?
Rating
Representation
Statement
Warranty - ANSWER-Warranty
A comprehensive major medical health insurance policy contains an Eligible Expenses provision which identifies the types of health care services that are covered. All of the following health care services are typically covered EXCEPT for
hospital charges
physician fees
experimental and investigative services
nursing services - ANSWER-experimental and investigative services
If a retiree on Medicare required five hospital stays in one year, which policy would provide the best insurance for excess hospital expenses?
Long-term care
Indemnity
Medicare Supplement
Medicaid - ANSWER-Medicare Supplement
S, while in the process of converting her group life insurance to an individual policy, dies. What happens to the claim her beneficiary submits?
No benefits are payable under the Master contract
Full benefits are payable under the Master contract
Full benefits are payable under the converted policy
Benefits less required premium are payable under the converted policy - ANSWER-Full benefits are payable under the Master contract
All of the following are limited benefit plans EXCEPT
cancer policies
life insurance policies
dental policies
critical illness policies - ANSWER-life insurance policies
A physician opens up a new practice and qualifies for a $7,000/month Disability Income policy. What rider would the physician add if he wants the ability to increase his policy benefit as his practice and income grow?
Extended Term rider
Cost of Living Adjustment rider
Guaranteed Insurability Option rider
Waiver of Premium rider - ANSWER-Guaranteed Insurability Option rider
An agent whose license has been revoked is required to
wait at least five years before applying for a new license
submit all previously written policies to the Commissioner of Insurance's office for servicing of the accounts
cancel all policies currently in effect and advise the insureds to place them elsewhere
continue to service the existing accounts but not solicit new business - ANSWER-wait at least five years before applying for a new license
The benefits under a Disability Buy-Out policy are
normally paid in installments
taxable to the beneficiary
payable to the company or another shareholder
normally paid after a short elimination period - ANSWER-payable to the company or another shareholder
he Health Insurance Portability and Accountability Act (HIPAA) gives privacy protection for
insolvency
health information
financial information
overinsurance - ANSWER-health information
How are surrender charges deducted in a life policy with a rear-end loaded provision?
Deducted from the death benefit
Deducted when the policy is discontinued
Deducted from policy's cash value
Deducted when assigned to another policyowner - ANSWER-Deducted when the policy is discontinued
What MUST an insurance company use in its advertising?
Its trade name
Its true corporate name
Its service mark
Its corporate logo - ANSWER-Its true corporate name
An accident policy will most likely pay a benefit for a(n)
self-inflicted injury
critical illness
on-the-job accident
off-the-job accident - ANSWER-off-the-job accident
M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT
policy is delivered
free-look period has expired
insurance company issues policy
initial premium is collected - ANSWER-free-look period has expired
When a policyowner cash surrenders a Universal Life insurance policy in it's early years, this may be considered a red flag for a(n)
Federal Fair Credit Act Violation
Title 18 Fraud violation
Anti-Money Laundering violation
Unfair Trade Practice violation - ANSWER-Anti-Money Laundering violation
Which of these do NOT constitute policy delivery?
Policy mailed to applicant
Policy mailed to agent
Policy delivered to the applicant by the agent
Policy issued with a rating - ANSWER-Policy issued with a rating
What is the MINIMUM number of Activities of Daily Living (ADL) an insured must be unable to perform to qualify for Long Term Care benefits?
1
2
3
4 - ANSWER-2
An agent who tells a client that dividends are guaranteed may be guilty of
fraud
rebating
misrepresentation
slander - ANSWER-misrepresentation
Which statement regarding a Key Employee Life policy is NOT true?
The application must be signed by the key employee
Its purpose is to prevent the financial loss that may ensue if a key employee dies
The beneficiary is named by the key employee
The company purchases, owns, pays the premiums and is the beneficiary - ANSWER-The beneficiary is named by the key employee
A policyowner's rights are limited under which beneficiary designation?
Revocable
Tertiary
Contingent
Irrevocable - ANSWER-Irrevocable
Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take?
Deposit the applicant's check into his account and make a personal check out to the insurance company from his personal account
Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company
Cross off his name on the "pay to" portion of the check, write the name of the insurance company, and send the check back to the insurance company
Deposit the check in to his personal account, use the funds to purchase a cashiers check, and send the new cashiers check back to the insurance company - ANSWER-Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company
Variable Whole Life Insurance can be described as
both an insurance and securities product
an insurance product only
a securities product only
the insurance company assumes the investment risk - ANSWER-both an insurance and securities product
A 66 year-old is covered under a group health plan while employed with a business that has 40 employees. If she injures herself while walking in the park, what coverage would be considered primary?
Medicaid
Long-term care
Medicare
Her group health plan - ANSWER-Her group health plan
Medicare
is a disability program
is a hospital and medical expense insurance program
offers assistance in making health insurance premiums
Part D provides payment for surgeon expenses - ANSWER-is a hospital and medical expense insurance program
T owns an Accident & Health policy and notifies her insurance company that she has chosen a less hazardous occupation. Under the Change of Occupation provision, which of the following actions may her insurance company take?
Allow her to take a tax deduction on unearned premiums
Increase her policy's coverage amount
Decrease her policy's coverage amount
Nothing - ANSWER-Increase her policy's coverage amount
All of the following statements about health coverage for newborns are correct EXCEPT
coverage begins and benefits are payable from the moment of birth
coverage includes necessary care and treatment of congenital defects
coverage during the first year is limited to congenital defects
continued coverage after the first 31 days is dependent on notification - ANSWER-coverage during the first year is limited to congenital defects
Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself?
Policy Exclusion
Incontestable
Entire Contract Provision
Assignment - ANSWER-Entire Contract Provision
An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a
$125,000 individual whole life policy
$25,000 modified whole life policy
$25,000 individual term life policy
$25,000 individual whole life policy - ANSWER-$25,000 individual whole life policy
M purchases a $70,000 Life Insurance Policy with premium payments of $550 a year for the first 5 years. At the beginning of the sixth year, the premium will increase to $800 per year but will remain level thereafter. The face amount will remain at $70,000 throughout the life of the policy. The type of policy that M has purchased is
Adjustable Life
Indeterminate Premium Life
Grader Premium Life
Modified Premium Life - ANSWER-Modified Premium Life
S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT
type of life insurance
S's attained age
dividend amount used toward purchase
beneficiary's age - ANSWER-beneficiary's age
Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy?
Have the customer sign a blank application, then take the application back to his office to complete prior to sending it off to the insurance company
Complete the application over the phone with the customer, sign the application for the customer, then send the application off to the insurance company
Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company
Have the customer fill out the application and send it to his office for him to sign, then send it off to the insurance company - ANSWER-Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company
Which of the following statements is CORRECT about the period in which a Term Policy can be converted?
It is the same in all contracts
It is set by state regulation
It can be changed by the insured
It varies according to the contracts - ANSWER-It varies according to the contracts
If, at the time of an insured's death, the insurance company discovers that the insured's age was misstated on the application for life insurance, the company will most likely
deny the claim for policy proceeds on the basis of fraud
collect the correct premiums and pay the claim
pay the policy proceeds in the amount the premiums would have purchased at the insured's actual age
pay the policy proceeds less a penalty not to exceed 12% of those proceeds - ANSWER-pay the policy proceeds in the amount the premiums would have purchased at the insured's actual age
K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective?
The date the sales appointment was made
The date the application was submitted to the insurance company
The date of application
The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured - ANSWER-The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured
An assignment of benefits of a Health Policy
transfers payments to someone other than the policyowner
is prohibited by state law
is allowed only on policies dates after 1992
transfers rights from the company to the policyholder - ANSWER-transfers payments to someone other than the policyowner
What type of policy would only provide coverage for specific types of illnesses (cancer, stroke, etc)?
MEWA
Blanket insurance
Dread disease insurance
Disability insurance - ANSWER-Dread disease insurance
K becomes ill after traveling overseas and is unable to work for 3 months. What kind of policy would cover her loss of income?
Indemnity
Major Medical
Travel
Disability Income - ANSWER-Disability Income
M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son?
Tertiary
Irrevocable
Revocable
Contingent - ANSWER-Revocable
The Accidental Death and Dismemberment (AD&D) provision in a life insurance policy would pay additional benefits if the insured
dies of natural causes
becomes critically ill
becomes chronically ill
is blinded in an accident - ANSWER-is blinded in an accident
Which of the following policy features allows an insured to defer current health charges to the following year's deductible instead of the current year's deducitble?
Deferral provision
Carryover provision
Stop Loss provision
Corridor provision - ANSWER-Carryover provision
T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this?
Fixed Certain
Joint and Full Survivor
Life Annuity with Period Certain
Installment Refund - ANSWER-Life Annuity with Period Certain
On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take?
Collect initial premium
Collect initial premium along with a signed health statement
Explain to the applicant the policy is no longer in effect due to change in health condition
Collect initial premium and leave a binding receipt - ANSWER-Collect initial premium along with a signed health statement
Which of the following costs would a Basic Hospital/Surgical policy likely cover?
Surgically removing a facial birthmark
Care given at a nursing home
Treating a wound from a soldier injured at war
Lost income caused by a hospital stay - ANSWER-Surgically removing a facial birthmark
Which of these statements concerning an Individual Straight Life annuity is accurate?
Life expectancy of the annuitant is not a factor
The payments are received tax-free
Only available to employees of nonprofit charitable, educational, and religious organizations
Payments are made to an annuitant for life - ANSWER-Payments are made to an annuitant for life
J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions?
Payor clause
Automatic Premium Loan provision
Reinstatement provision
Waiver of Premium - ANSWER-Reinstatement provision
P is an employee who quits her job and wants to convert her group health coverage to an individual policy. After the expiration of COBRA laws, which of the following statements is TRUE?
She DOES need to provide evidence of insurability
She does NOT need to provide evidence of insurability
She will have up to 6 months to convert to an individual policy
She will be paying exactly the same premium for the individual plan as she did the group plan - ANSWER-She does NOT need to provide evidence of insurability
A whole life insurance policyowner does not wish to continue making premium payments. Which of the following enables the policyowner to sell the policy for more than its cash value?
Cash surrender
Life settlement contract
Buy-sell arrangement
1031 Exchange - ANSWER-Life settlement contract
Who can purchase a plan through the Marketplace?
Anyone
Any legal resident except those incarcerated
Only those who do not have access to employer-sponsored coverage
Only those who might be eligible for tax credits - ANSWER-Any legal resident except those incarcerated
What is Old Age and Survivors Health Insurance (OASDHI) also known as?
Medicare
Social Security
Medicaid
FICA - ANSWER-Social Security
Which of these require an offer, acceptance, and consideration?
Warranty
Estoppel
Contract
Representation - ANSWER-Contract
How does a typical Variable Life Policy investment account grow?
Tied to price of gold
Through mutual funds, stocks, bonds
Based on returns from insurer's general account
Tied to Treasury Bills - ANSWER-Through mutual funds, stocks, bonds
An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the
agent
applicant's spouse
National Association of Insurance Commissioners (NAIC)
applicant's physician - ANSWER-applicant's physician
After the initial enrollment period, an HMO must hold an open enrollment period of how many days at LEAST once in every 12-month period?
15
31
45
90 - ANSWER-31
Which of the following is NOT included in the policy face?
Free Look provision
Name of the insured
Name of the insurer
Exclusions - ANSWER-Exclusions
A student pilot can pay regular premium costs for her life insurance policy with the addition of which of the following?
Guaranteed Insurability rider
Aviation exclusion
Impairment rider
Accidental Death Benefit rider - ANSWER-Aviation exclusion
In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy?
Nonforfeiture
Entire Contract
Insuring Clause
Owner's Rights - ANSWER-Owner's Rights
A Renewable Term Policy is renewable at the option of the
Owner
Company
Insured
Assignee - ANSWER-insured
Which of these is considered a true statement regarding Medicaid?
Funded by both state and federal governments
Intended to be used by individuals age 65 and older
Provides disability income benefits
Automatically covers those receiving Social Security disability benefits - ANSWER-Funded by both state and federal governments
Which is true concerning a Variable Universal Life policy?
Policyowner controls where the investment will go and selects the amount of the premium payment
Policyowner has no say where the investment will go but can choose the premium mode
The investment vehicle for this type of policy is held in the insurer's general portfolio
The death benefit can vary but the policyowner has no say in the premium amount paid - ANSWER-Policyowner controls where the investment will go and selects the amount of the premium payment
In life insurance, the needs approach is used mostly to establish
which type of life insurance a client should apply for
how much life insurance a client should apply for
which company a client should use when applying for life insurance
what the maximum amount the client can spend on life insurance - ANSWER-how much life insurance a client should apply for
A life insurance illustration is NOT required to include the
name of the insurer
underwriting or rating classification upon which the illustration is based
initial death benefit
company's mortality table - ANSWER-company's mortality table
Which of these characteristics is consistent with a Straight Life policy?
Owner can adjust both premium and death benefit
Premiums are lower for the first five years, increase the sixth year, then levels off for the remaining length of the contract
Owner has the option of converting to term insurance
Premiums are payable for as long as there is insurance coverage in force - ANSWER-Premiums are payable for as long as there is insurance coverage in force
Under the Texas insurance code, which of the following statements about the Suicide clause is CORRECT?
The Commissioner of Insurance must review insurance companies' Suicide clauses every five years for discrimination
A Suicide clause must apply equally to Life and Accidental Death and Dismemberment (AD&D) policies
An insurance company must actuarially justify any suicide limitation
Suicide may not be a defense against payment after the second year - ANSWER-Suicide may not be a defense against payment after the second year
Which of the following best describes a contingent beneficiary?
Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured
Person designated by the primary beneficiary's executor to receive policy proceeds
Person designated by the state to receive policy proceeds in the event that the primary beneficiary dies
Person designated by the insurance comapany to receive policy proceeds in the event that the primary beneficiary dies - ANSWER-Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured
A Business Disability Buyout plan policy is designed
as an incurred expense plan
with a very short Elimination period
to pay benefits to the Corporation or other shareholders
to pay benefits to the insured's spouse - ANSWER-to pay benefits to the Corporation or other shareholders
Term insurance has which of the following characteristics?
Expires at the end of the policy period
Builds cash value
Has nonforfeiture options
Endows at the end of the policy period - ANSWER-Expires at the end of the policy period
An agent MUST do which of the following during a sales presentation for a participating life insurance policy?
Include a statement that dividends are NOT guaranteed
Include a statement that dividends ARE guaranteed
Explain the applicable Nonforfeiture values
Explain the surrender cost indexes for 5 and 10 years - ANSWER-Include a statement that dividends are NOT guaranteed
In regards to representations or warranties, which of these statements is TRUE?
Warranties are statements considered to be true to the best of the applicant's belief
If material to the risk, false representations will void a policy
Representations are statements guaranteed to be true in every respect
If material to the risk, false representations will NOT void a policy - ANSWER-If material to the risk, false representations will void a policy
The Commissioner of Insurance may issue a temporary agent's license for a maximum of how many days?
180
90
60
30 - ANSWER-90
A stock insurance company is owned by it's
directors
stockholders
agents
insureds - ANSWER-stockholders
J chooses a monthly premium payment mode on his Whole Life insurance policy. Which of these statements is correct?
The gross premium is higher on a monthly payment mode as compared to being paid annually
The gross premium is lower on a monthly payment mode as compared to being paid annually
The cash value from a life policy paid on a monthly basis builds quicker than one paid on an annual basis
The face amount of a life policy paid on a monthly basis is higher than one paid on an annual basis - ANSWER-The gross premium is higher on a monthly payment mode as compared to being paid annually
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
Family Maintenance Policy
Family Income Policy
Survivor Policy
Family Survivor Policy - ANSWER-Family Maintenance Policy
Which of these actions is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan?
Revocable assignment
Beneficiary change
Irrevocable assignment
Collateral assignment - ANSWER-Collateral assignment
Under what system do a group of doctors and hospitals in a designated area contract with an insurer to provide services at a prearranged cost to the insured?
HMO
PPO
EPO
PLHSO - ANSWER-PPO
Basic Hospital and Surgical policy benefits are
lower than the actual expenses incurred
higher than the actual expenses incurred
normally subject to deductibles
normally subject to coinsurance - ANSWER-lower than the actual expenses incurred
An employer that offers a qualified retirement plan to its employees is eligible to
avoid ERISA regulations
make tax-deductible contributions to the plan
make tax deductible contributions to key employees only
make partial tax-deductible contributions to the plan - ANSWER-make tax-deductible contributions to the plan
What action can a policyowner take if an application for a bank loan requires collateral?
Utilize accelerated benefits provision
Borrow against policy cash value and use as a down payment
Assign policy ownership to the bank
Name bank as beneficiary - ANSWER-Assign policy ownership to the bank
Which of the following provisions specifies how long a policyowner's health coverage will remain in effect if the policyowner does not pay the premium when it is due?
Grace Period
Consideration
Waiver of Premium
Reinstatement - ANSWER-Grace Period
The Consideration clause in a life insurance contract contains what pertinent information?
Summary of benefits
Offer and acceptance
Entire Contract
Amount of premium payments and when they are due - ANSWER-Amount of premium payments and when they are due
T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?
The total premiums paid minus any policy loans
Nothing
$50,000
$100,000 - ANSWER-$50,000
T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?
$1,000,000
$500,000
$250,000
$0 - ANSWER-$0
The clause identifying which losses resulting from an accident or sickness are insured by the policy is called the
Entire Contract provision
Consideration clause
Benefit clause
Insuring clause - ANSWER-Insuring clause
What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?
Term Life
Whole Life
Credit Life
Universal Life - ANSWER-Whole Life
What is the purpose of the Time of Payment of Claims provision?
Requires the insured to wait 60 days after submitting Proof of Loss before filing a lawsuit
Prevents delayed claim payments made by the insurer
Requires a probation period for each claim filed by the insured
Protects the insurer from frivolous lawsuits - ANSWER-Prevents delayed claim payments made by the insurer
A long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following?
Critical illness
Terminal illness
Inability of the insured to perform more than 2 Activities of Daily Living (ADL's)
Inability of the insured to maintain insurance premiums due to unemployment - ANSWER-Inability of the insured to perform more than 2 Activities of Daily Living (ADL's)
Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability?
Owner's Rights clause
Incontestable Period
Insuring Agreement
Conversion privilege - ANSWER-Conversion privilege
The Insurance Commissioner may examine the records of an insurance company in order to
determine the solvency of the company
determine the trust deposits of the company
approve the claims records of the company for tax purposes
assess the company's value on behalf of a prospective client - ANSWER-determine the solvency of the company
What does Medicare Parts A and B cover?
Part A covers hospitalization; Part B covers long-term care
Part A covers doctor's services; Part B covers hospitalization
Part A covers hospitalization; Part B covers doctor's services
Part A covers prescription drugs; Part B covers disability - ANSWER-Part A covers hospitalization; Part B covers doctor's services
What is issued to each employee of an employer health plan?
Provision
Receipt
Policy
Certificate - ANSWER-Certificate
A 42-year-old executive wants to purchase life insurance that will allow for increases or decreases to coverage as his/her needs change. Which of the following policies will best meet this need?
Endowment at Age 75
Universal Life
Graded Benefit Whole Life
Modified Whole Life - ANSWER-Universal Life
When a life insurance policy exceeds certain IRS table values, the result would create which of the following?
1035 Exchange
An investment
Modified Endowment Contract (MEC)
Endowment - ANSWER-Modified Endowment Contract (MEC)
Which of the following statements BEST defines usual, customary, and reasonable (UCR) charges?
The maximum premium an insurer can charge for their health insurance based on geography [Show Less]