Which of the following is not a situation that involves life insurance policy replacement Quizlet

Victor, age 59, calculated last year's gross income to be $100,000. When reviewing the cost of his various personal insurance policies, he found that his disability income policy annual premium was $3,500, his long-term care insurance annual premium was $4,000, and the total annual cost of his individual Medical insurance premiums and out-of-pocket medical expenses came to $5,500. Based on this information, he could deduct ______ from his taxable income for that year.

All of the following are required to sign an application for insurance except:
beneficiary
A transaction in which a life policy is purchased when an existing policy is surrendered is called:
replacement
Statements made by the applicant on a life or health insurance application are true to the best of one's knowledge are considered to be:
representations
Which of the following statements regarding insurable interest is not correct?
insurable interest only applies to individuals related by blood
A substandard risk may be issued based on any of the following except:
longer than expected life expectancy
Evidence of group life insurance coverage provided to an employee is the:
certificate of insurance
The insured cannot borrow against the loan value of the policy without the permission and consent of which of the following, if named?
irrevocable beneficiary
The Waiver of Premium rider will waive the premium after a specified waiting period if the:
insured becomes disabled
The insuring clause found in a life insurance contract states the:
insurer's promise to pay death benefits as long as all conditions are met
A lump sum of money is placed into an account from which the annuitant will draw periodic benefits the following month. This describes a:
single premium deferred annuity
All of the following are correct regarding taxation of individual life insurance except:
policy loans are considered an investment and are always taxable
Which of the following policies will provide for a flexible premium, adjustable death benefit, and a guaranteed minimum interest to be credited to the general account if the current rate falls to the minimum rate?
variable universal life
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If a change or correction must be made on the application for insurance, which of the following applies?
the producer can make the change and the applicant must initial the change
Variable whole life includes all of the following features except:
annual renewable term insurance
All of the following are correct regarding Annual Renewable Term except:
it matures at age 100
Which of the following is not one of the 4 elements of valid legal contract?
incompetent parties
The owner's rights include all of the following except:
choose the mortality rate
A receipt issued at the time of application upon the payment of premium that provides coverage effective as of the date of the application or medical exam, as long as the policy is issued as applied, is referred to as a:
conditional receipt
If the primary beneficiary predecreases the insured, the death benefit is payable to the
the contingent (or secondary) beneficiary
The settlement option under which payments totaling the death benefit are guaranteed for a specific number of years is referred to as:
fixed period
Which provision will assure that the life insurance policy premiums are deducted from the cash value if the premiums are not paid directly by the owner at the end of the grace period?
automatic premium loan
An Ordinary Straight Whole Life policy provides for:
a level premium, level face amount, and cash accumulation until the policy matures
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A business is concerned that if its top sales producer dies suddenly, the company will suffer a loss due to this loss in expertise, productivity, revenue, and the costs associated with finding a replacement. Which of the following will meet this business use of life insurance?
key person life insurance
If an insured commits suicide while the suicide clause is in effect, the insurance company will:
refund the amount of premiums paid
The permanent transfer of ownership in a policy is called:
absolute assignment

Which of the following is an example of risk reduction?
Taking action to minimize the severity of a potential loss
What is the purpose of the Fair Credit Reporting Act?
To give the consumer recourse if the insurance is denied on the basis of a credit report
Insurance is designed to provide protection against which of the following?
pure risk
Insurance is an example of which type of risk management technique?
Transfer of risk
If you have a map to find the exact location of a treasure, what type of risk would this be?
Speculative risk
Paul is an agent for ABC Insurance Company, which has just issued a life insurance policy to Maria. Who is the "principal" in this transaction?
ABC Insurance Company
what are the three hazards when it comes to insurance underwriting?
physical, moral, and morale.
A company that has not received permission from an Insurance Commissioner to do business in his or her state is called a/an:
non-admitted
All of the following are responsibilities the producer owes to the applicant, EXCEPT:
Only offering policies with the lowest possible premium
In a reinsurance transaction, the company that wishes to transfer all or a portion of the financial risk of loss is known as the _______ company.
ceding
When an insurance company uses another company to cover part of the risk it is called:
Reinsurance
All of the following are characteristics of a Mutual Insurance Company, except:
Stockholders have ownershipis owned by its policyholders, and does not have stockholders
1.00
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A policyowner has the right to cancel the policy at any time, and for any reason, because insurance contracts are ____________.
Unilateral
The_______ department of an insurance company is responsible for providing service to policyholders at the time of a loss.
claims
An applicant inaccurately representing information on the application is guilty of:
misrepresentation
What is the term for the idea that some risks are less desirable than average risks, and that these risks tend to seek coverage to a greater extent than more favorable risks?
adverse selection
A hazard is best defined as:
Something that increases the chance of a loss
Under the Fair Credit Reporting Act, which of the following statements is correct?
If an individual is denied coverage, they can request a copy of the report
what is the definition of fraud?
Intentional deceit with the intent to gain
The State's __________ branch enforces the existing statutes that have been put in place.
executive
________ is generally an option only for large corporations who may want to limit their risk up to a certain dollar amount, then buy insurance above and beyond that amount.
Self-insurance
A mutual insurance company is owned by its:
policyholders
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What is the correct insurance term for a statement that is guaranteed to be true?
warranty
Which of the following would be considered a speculative risk?
The possibility the painting you bought might be a long-lost masterpiece
The ___________ branch writes and passes state insurance laws, or statutes, to protect the insuring public.
Legislative
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Insurers that are incorporated in another state, but doing business in this state, are considered:
foreign
What gives an insurer the authority to operate within this state?
A Certificate of Authority
domicile
_________ refers to the jurisdiction where an insurer was formed or incorporated.
All of the following statements regarding financial rating services are correct, except:
Agents and producers must place business through an insurer with the lowest rates
J and his insurance company disagree over some ambiguous language in J's life insurance policy. If the parties end up in court, which principle would direct the court to rule in favor of J?
Adhesion
If an insurer is incorporated in Rhode Island, but primarily does business in New York, what type of insurer would it be considered in New York?
foreign
What is the name for an insurer organized in the same state in which it is authorized to do business?
domestic
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Apparent authority is:
The demonstrated general appearance that authority exist
Which kind of agent enters into agreements with more than one insurer?
independent
If a producer is acting as an agent, whom do they represent?
always the insurer
All of the following are Anti-Money Laundering 'red flags', except:
Paying annual policy premiums
When two parties rely upon the statements and promises of the other and assume no attempt to conceal or deceive was made, this means the contract was entered into on the basis of:
Utmost good faith
A ____________ agreement is a reinsurance agreement that allows the reinsurance company an opportunity to reject coverage for individual risks, or price them higher due to their substandard (higher risk) nature.
Facultative
Dividends issued by stock insurers are paid to:
Stockholders
The relationship of a person who acts on behalf of a company whereby the person's actions can bind the company is known as:
The law of agency
An insurer with capital that is divided into shares, and is owned by shareholders, is considered a:
stock company
All of the following are elements of an insurable risk, except:
The loss may be catastrophic
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Which statement defines a peril?
It is the specific cause of loss
Where can an insured find insurance coverage after being rejected by Insurer A due to claims history?
residual market
When both parties must perform certain duties and follow certain rules of conduct to make a contract enforceable, this is known as a(n) __________ contract.
conditional
Which of the following terms refers to the risk management technique of assuming the responsibility for a loss?
Retention
Which term refers to a contract in which only one party is legally bound to contractual obligations after the premium is paid?
unilateral contract
The principle that states that an insured should be restored to approximately the same financial position after a loss as before is known as:
Indemnity
Which of the following is NOT true about social insurances?
Social insurance provides equal benefits to all citizens that contribute
An insurer that is authorized to do business in this state MUST be _____.
admitted insurer
The ___________ branch is responsible for interpreting and determining the constitutionality of the statutes.
judicial
If incorrect or unverifiable information is found on an applicant's Credit Report, the Fair Credit Reporting Act requires the reporting agency to:
Send the correct information to all parties who received a report within the prior 24 months

Which of the following IS NOT part of the definition of "insurable risk"?
The loss must be preventable
The Principle of Indemnity helps avoid which of the following?
Overpayment of a claim
A life insurance applicant's answers on the application indicate that they in good health. In fact, the applicant actually has a disease that they are not aware of. The statement on the application is considered:
A representation
A life insurance policy is a unilateral contract, because:
Only one party can be charged with breach of contract
A(n) ____________ is responsible for paying the policy's premium and has various rights as specified in the contract.
owner
The Fair Credit Reporting Act guarantees which of the following?
Applicants' right to information held about them by any reporting agency

J took out a life policy when he was 35. It had a conversion feature that he exercised at age 45. Age 45 is referred to as his ____ age.
Attained
If a client is unsure about whether or not he/she can obtain coverage or how much it would cost, what can the producer suggest to see what the insurer can do without tying up any of the client's funds?
Submit a trial application
A producer must include their name and address on which of the following?
A policy summary
What should an agent tell the insured when the insured asks when will his health plan take effect?
The effective date indicated on the policy
In order to receive a policy dividend, the policyowner must own a/an __________ policy.
Participating
Generally speaking, straight whole life is classified as which of the following?
Ordinary
The term 'mode' refers to the:
Frequency of premium payments
All of the following are reasons an application is important, except:
Statements made on the application are considered to be warranteed statements, guaranteed to be true in all respects
Which of the following policies offers the least guarantees?
Variable Universal Life
If a client chooses to pay premiums other than annually, what can he or she expect?
Additional charges to offset lost interest, earnings, and increased administrative costs
Debit life insurance is classified as which of the following?
industrial
A personalized computer-generated illustration detailing premiums, cash values, interest rates, and surrender values is called __________.
A policy summary
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A producer submits a completed application to the insurer along with the premium check after giving the applicant a conditional receipt. If the applicant completes the required medical exam, but dies prior to the insurer issuing a policy as applied for, what is the insurer's responsibility?
To pay the claim in full as long as the conditions of the receipt were fully satisfied by the insurer
When an insured decides to change her mode of premium payment from annually to monthly, the total premium due would:
Increase
The date on which insurance coverage is no longer in effect is referred to as the _________ date.
expiration
A (an)_________ is used when the insured's age, medical history, or amount of coverage does not require a medical exam for underwriting purposes.
nonmedical application
If the producer discovers that the applicant is not in good health at time of policy delivery, what should the next step be?
The policy should be returned to the insurer, or the deliver the policy only after the insurer grants permission
Industrial Life Insurance is also referred to as a:
Debit Policyare also known as home service and debit policies where premiums are collected by a Debit Agent.
What is the primary reason why States have 'outlawed' Stranger/Investor Originated Life Insurance (STOLI) transactions?
At policy inception there is a lack of insurable interest
_______________ is the process of selection, classification and rating, and determining if someone is insurable.
home office underwriting
If it is known or should be known by the agent that an existing policy is going to be lapsed, forfeited, surrendered or terminated in favor of a new policy, the agent must submit a:
Notice Regarding Replacement
When an applicant does not smoke, exercises regularly, seldom drinks, and eats moderately and is considered to be a better-than-average risk, they would likely qualify for:
Preferred status and pay a lower premium
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The factor in premium computation that has to do with the recordkeeping and statistical analysis insurance companies perform is:
Experience
If after a policy has been issued and delivered, the insurer discovers unanswered questions on the application, what can the insurer legally do at this point?
Nothing, the insurer has waived its right to that information
When an applicant completes the insurance application in its entirety and provides the producer with a premium check, what in effect has taken place?
The applicant is making an offer to the insurer
In determining the proper amount of life insurance coverage for an insured, the ________ approach measures the projected future earnings and the value of the insured's services in the event of his or her premature death.
Human Life Value
The mortality rate is based on mortality tables which show life expectancy and the death rate per _______ people living in the U.S.
1,000
Insurance covering the liability of a producer or agency is called _______.
Errors and Omissions
In a replacement transaction, the insurer that is having its policy replaced is known as the _______ insurer.
Existing
All of the following signatures would be required on a life insurance application for an adult, except that of the:
beneficiary
Industrial insurance is also known as:
home service
When are Errors and Omissions claims filed?
When clients file a report or a complaint
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Medical exams are requested in all of the following situations, except:
low amount of premium
Which of the following would be considered a good result from an underwriter's action when an individual Life Insurance Policy is issued as applied for?
issued standard
The premium that reflects mortality rates, assumed interest, and the policy's share of the company's operating expenses is called the:
Gross premium
Which of the following types of policies is eligible for policy dividends?
participatingare issued by mutual companies and are eligible for policy dividends if and when declared by the company's board of directors.
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Which statement best describes the term reserve?
That amount that, when increased by future premiums on outstanding policies, and interest on those premiums will enable the company to meet future death claims
A Consumer Investigative Report is not completed by ___________.
producer
The HIV Consent Form specifies which types of individuals may receive __________.
test results
The person who submits an application for insurance is always referred to as the _______.
Applicant
A participating policy is likely to have which of the following?
A higher premium than a nonparticipating policy
All of the following are living benefits of life insurance, except:
Burial expenses
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There are ______ methods available to determine the income objective after the death of the client for planning purposes.
2
Under the Do Not Call Registry, telephone solicitation calls before _____ or after _____ are prohibited.
8am, 9pm
The applicant, if other than the proposed insured, must have:
An insurable interest in the life of the insured
In a STOLI/IOLI transaction, what are the insureds basically doing?
Selling their mortality to another for up-front cash
The Medical Information Bureau is a nonprofit organization supported by:
the insurance companies
J buys a life insurance policy specifically intending for the death benefit to be used to cover estate taxes. What is the correct term for using life insurance in this way?
Estate conservation
The most effective way to ensure that the applicant will accept the policy when it is issued is:
To have the applicant pay the initial premium at the time of application
Loading includes all of the following, except:
Mortality
Policy __________ are the net premiums paid plus interest earned and reflect potential insurance contract obligations.
Reserves
__________ life insurance is when an insured is induced into purchasing life insurance with the sole intent of selling that policy once issued to third party investors for an amount less than the death benefit, but greater than its cash values.
stranger oriented

A participating policy is likely to have which of the following?
A higher premium than a nonparticipating policy
All of the following are true of a substandard risk, except:
The premium would be discounted
__________ life insurance is when an insured is induced into purchasing life insurance with the sole intent of selling that policy once issued to third party investors for an amount less than the death benefit, but greater than its cash values.
stranger originated
The _________ settlement industry has increased awareness of STOLI/IOLI.
Life
The portion of the premium that is based only on mortality rates and assumed interest is called the:
Net premium
Which of the following receipts states that coverage will begin immediately for a specific length of time, regardless of whether the applicant is ultimately approved for coverage by the insurer?
temporary insurance agreement
which of the following offers the least guarentees?
Variable Universal Life
Assignment of the appropriate share of the company's operating expenses to each policy
Assignment of the appropriate share of the company's operating expenses to each policy
A group plan is designed to insure all of the following, except:
creditors
All of the following are reasons an application is important, except:
Statements made on the application are considered to be warranteed statements, guaranteed to be true in all respects
Which of the following most accurately and completely describes an application when submitted with an initial premium?
A written request from an applicant to an insurer requesting the insurer to issue a policy on the basis of the information in the application
In a replacement sale all of the following are producer responsibilities, except:
Reimburse the applicant for any surrender charges that may be incurred as a result of the transaction
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A group plan is normally owned by any one of the following, except:
Debtors
In a STOLI/IOLI transaction, what are the insureds basically doing?
Selling their mortality to another for up-front cash
A ___________ settlement is when a terminally ill insured sells his or her life insurance policy to a third party other than an insurance company, for an amount less than the policy's death benefit, but greater than its cash values.
viatical
In which of the following circumstances would the accidental death benefit not apply?
Death caused by an intentional act
Joe has a whole life policy with a guaranteed insurability rider. He was 21 at the time the policy was issued. If he exercises all of the options at the ages specified under the typical rider, how many policies will he end up with?
7
Who receives the endowment value of a whole life policy?
The policyowner
A viatical settlement is contract between a life insurance policyowner and a _______________.
Viatical settlement provider
The purpose of the Re-Entry Term option is to:
Obtain a new term policy at a lower rate
With a Current Assumption Whole life policy, what can happen if the cash values increase too quickly?
The policy could mature sooner than expected
If a policyowner wants to increase the death benefit of an Adjustable Life Insurance policy, what is required?
Prove insurability for the increase
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An insured owning an Adjustable Life Policy enjoys a policy that has characteristics of both ______ and _______.
Permanent and Term
Variable Universal Life should only be sold to those clients who are:
More investment savvy
Which of the following Whole Life insurance policies has the highest annual premium payment per $1,000 of coverage for a 35-year-old, all other factors being equal?
20-Pay Ordinary Whole Life
All of the following provisions of an adjustable life policy may be changed to meet the policyholder's needs, except:
The person named as the insured on the policy
An existing term life insurance policy may be exchanged for a new term life insurance policy on the ______ date.
Re-Entry
A $100,000 policy with a waiver of premium rider and $30,000 of cash value is in force. The base policy costs $750 and the rider is $50. What is the total premium annually the policyowner must pay to keep the policy in force if the policyowner decides to cancel the rider?
750
How does an Option A death benefit feature of a Universal Life policy work?
It pays out the policy's face amount
Premium payments made into a variable universal life policy:
Are invested in one or more investment portfolios at the policyowners option
C has a $100,000 traditional whole life insurance policy with a $30,000 cash surrender value. He applies for and receives a $10,000 policy loan from the insurer. All of the following about this transaction are true, except:
If C were disabled, his beneficiaries would receive $70,000, less any outstanding interest charges
In a universal life policy, the two adjustments usually made to the cash value account are:
Cost of insurance protection is charged and current interest is credited
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If an insured's policy includes the waiver of premium rider, what happens when the age is reached where the rider no longer applies?
the premium for the policy is reduced
Which of the following riders require the insured being totally and permanently disabled before it becomes effective?
Waiver of premium rider
What is the net amount at risk in a Whole Life Insurance policy?
The face amount less the cash values
What is the name of the life insurance policy that is written on the life of a minor, is owned and paid for initially by a parent, and whose face amount increases to 5 times its original amount at age 21?
Jumping Juvenile
This rider allows for the insured to obtain additional insurance in between the specified ages including marriage and the birth or adoption of a child, when the need for insurance coverage may increase without having to prove insurability. It is called the ________ rider:
Guaranteed Insurability
Most group life insurance has a(n) ______ term death benefit.
level
A client wants coverage for himself as well as coverage for his wife and children all under one policy at an affordable price. Which of the following would best meet the need?
family rider
What happens to a spouse or child rider just prior to it expiring?
The spouse or child has a conversion option
Jason has a Whole Life insurance policy with a face amount of $100,000, an annual premium of $1,000, and a cash value of $10,000. If he wants to borrow money from the insurer, what is the maximum he can obtain?
10,000
Variable Whole Life has all of the following features, except:
partial surrender are allowed
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At what age does the cash value equal the face amount of a traditional whole life policy issued 25 years ago?
100
Which of the following term life insurance policies cannot be renewed?
decreasing
Q has an ordinary straight whole life insurance policy for $100,000. Due to a change in circumstances, Q finds that there is now a need for more coverage, but the budget is not sufficient for another similar policy. What can Q do to satisfy the need for additional coverage at a low price?
Add a term rider
When the death of an insured occurs within a specified period, causing the policy to pay double or triple benefits, this policy must have which of the following riders?
Accidental Death Rider
Which of the following is TRUE regarding a Living Need (Accelerated Benefit) Rider?
Reduces the death benefit by the amount withdrawn
The ________ is the amount payable to the beneficiary upon death of the insured named in a life insurance policy.
face amount
If the insured becomes totally disabled, the company waives premiums for the duration of the disability if a _____________ is in force.
Waiver of premium rider
Which Term Life insurance policy would have the highest initial premium, all else being equal?
20 year term
Whole Life is also known as ________ protection.
permanent
If Alvin purchases a Variable Universal Life Policy with a face amount of $250,000, and chooses death benefit Option B, upon his death the amount of the benefit payable to the beneficiary would be _________ if the policy had $25,000 in cash values.
275,000

If Alvin purchases a Variable Universal Life Policy with a face amount of $250,000, and chooses death benefit Option B, upon his death the amount of the benefit payable to the beneficiary would be _________ if the policy had $25,000 in cash values.
275,000
Which of the following best describes an Annual Renewable Term Policy?
A policy with a level death benefit, but with increased premium at each renewal
All of the following are true regarding Current Assumption Whole Life, except:
If current rates decrease, the policyowner pays reduced premiums, or the cash values will grow faster
Should an insured become totally and permanently disabled two months before the cut-off date for the waiver of premium rider:
The insured remains eligible for all provisions
In the event a parent becomes disabled or dies while paying premiums on a life insurance policy for a minor child, which provision would allow the policy to continue in force until the child reaches a predetermined age?
Payor Benefit (Waiver of Payor Premium)waives the policy premium in the event of the death or total disability of the premium payor. Usually found in policies covering children to the child's age 21 or 25.
Universal Life is similar to Whole Life in all of the following ways, except:
The timing and amount of premium is flexible
exclusions
______________ are conditions stipulated in the contract for which the insurer will not provide coverage.
All of the following are situations in which the insurer is obligated to pay out a death benefit after the insured has died, except:
The premiums have not been paid and have been overdue for 3 years
Under what conditions can a producer alter, change, modify or waive any policy provisions?
never
The ___________ clause allows the insurer to pay a relative or anyone deemed entitled to the death proceeds when there are no living beneficiaries, often to reimburse them for the funeral costs.
facility of payment
The ____________ provision prevents a Whole Life Policy from lapsing, as long as there is adequate cash value, if the insured/policyowner forgets to pay the premium by the end of the grace period.
Automatic Premium Loan
If no money is involved when the ownership of a policy changes, this is referred to specifically as a(n) __________.
Absolute assignment
00:0201:461.00
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An insured purchased an ordinary life policy 15 years ago, and at that time listed her husband as the only beneficiary. Her husband died 2 years ago but she never changed the beneficiary. She dies, leaving one surviving adult child. Who receives the death benefit?
the insured's estate
Which of the following nonforfeiture options would you use to cancel the entire policy and receive all values in the policy?
cash surrender option
Sylvia was the insured and owner of a policy that named her husband as the beneficiary. Upon her husband's death, she decided to change the beneficiary designation to her best friend since she has no close living relatives. The insurance company will:
Accept the beneficiary change
A policyowner allows a policy to lapse and the insurance company converts the policy to the extended term option. Which of the following from the original policy will automatically carry over into the new policy?
face value
Which of the following terms means that the policyowner can change the beneficiary designation at any time and for any reason?
Revocable
Which of the following two documents always constitutes part of the entire contract?
The application and policy
George has named each of his three sons as per capita primary beneficiaries of a $30,000 life insurance policy. If all three sons are living at the time of George's death, which statement best describes the amount each will receive?
all sons get 10,000
Mona let her permanent policy lapse. She discovered there was $2,498 in cash value remaining in the policy and decided to pay off some of her credit card debt. She exercised which Nonforfeiture Option?
cash surrender
The Mode of Premium provision addresses:
frequency of premium payment
Which statement best describes the provisions of the Uniform Simultaneous Death Act?
If the insured and the primary beneficiary should die immediately in the same accident, the proceeds are paid as if the primary beneficiary had died first
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What is a material misstatement?
One which would have caused the insurer to not issue the policy had it been known
Jeanne has a $100,000 whole life insurance policy that has $1,000 of dividend additions, a $6,000 outstanding loan that includes unpaid interest, and a monthly premium of $500. If she dies during the grace period, which of the following insurance settlements would be permitted?
$94,500It is prohibited for any settlement to be less than the amount of the death benefit, PLUS dividends, less policy loans and loan interest outstanding, less any unpaid premium.
When there is enough cash value within a life policy to pay the premium, the Automatic Premium Loan provision prevents the policy from:
Lapsing
If a beneficiary has the choice and is interested in capital conservation, then which of the following settlement options should be chosen?
Interest Only
Turning over all rights in a life policy to an assignee is referred to as:
An absolute assignment
Each of the following statements about policy loans is correct, except:
policy loans may be made on any type of policy
The provision which denies the beneficiary the right to commute, alienate, or assign his/her interest in the policy proceeds is:
The Spendthrift Clause
As a general rule, most insurance companies will allow the insured to change to another type of insurance policy without a medical examination if the:
New premium is higher than the original
Which provision allows an insurer to borrow from the cash value of a policy in order to pay premiums due and prevent a lapse in coverage?
Automatic Premium Loanenables the insurer to borrow automatically from the policy's cash value, at the end of the grace period, to cover a premium payment to prevent the policy from lapsing.
If the premiums are not paid on a Traditional Whole Life policy that has been in force for decades with no loan outstanding, what happens?
Unless specified otherwise, the cash values buy extended term
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Which provision requires the application, the contract itself and any riders to be attached to establish a complete contract?
The Entire Contract Provision
When a producer is made aware of an insured's death, the first task is to:
notify the insurance company
The policy loan amount cannot exceed the ____________.
Available cash surrender value
A partial withdrawal is considered ______________.
A partial surrender of the policy
The company will normally pay the face amount of the policy to the beneficiary of an insured who commits suicide after the policy has been in effect for:A
2 years
How long, typically, is the reinstatement period from policy lapse?
3 years
Using the policy dividends as a single premium to buy additional life insurance is called the:
Paid-up additions option
Cranston wants a Settlement Option for his beneficiary that will guarantee the beneficiary an income as long as the beneficiary lives. Cranston should choose:
Life Income Only
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The nonforfeiture option that, if exercised, terminates all coverage is:
Cash Surrender
Which of the following two documents always constitutes part of the entire contract?
The application and policy
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All of the following are Settlement Options, except:
Reduced Paid-Up
A settlement option that guarantees a payment for a specified period of time and that liquidates both principle and interest is which of the following?
Fixed Period
The nonforfeiture option that provides coverage for the longest period of time is:
Reduced Paid-Up
The owner's rights include all of the following, except:
Selection of mortality table to use
Once a policy has lapsed, the insured usually can reinstate the policy, provided proof of insurability is shown, if:
All back premiums due plus interest have been repaid and less than 3 years have elapsed
The collateral used in a Collateral Assignment of a policy is the policy's:
Cash value
If the policyowner specifies the time over which all settlement option installments are to be paid, he/she has chosen which Settlement Option?
Fixed Period
State law may vary, but life insurance policies GENERALLY cannot be backdated more than ______ months.
6
Each of the following is a source of life insurance policy dividends, except:
Guaranteed cash value accumulations
Once issued, if the application is attached to the policy itself, it then becomes part of the ___________.
entire contract
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______________ are conditions stipulated in the contract for which the insurer will not provide coverage.
exclusions
All of the following are common exclusions, except:
driving
When can a policyowner make a change in the policy's coverage or other benefits if an irrevocable beneficiary has been named?
after irrevocable beneficiary dies
Which of the following provisions is NOT a standard provision?
backdating
Which nonforfeiture option would you use to keep your policy in force, but with a smaller face amount of the same type, and would eliminate any further premium payments?
Reduced paid-up option
The payment of the proceeds of a policy in other than a lump-sum cash payment is called a:
Settlement option
B's policy had a $1,000 annual premium. B has not paid it for 2 years and wants to put the policy back in force. The insurer charges 10% interest on overdue premiums. What does B have to pay in order to reinstate their policy?
2 years of premiums, plus interest due on overdue premiums amounts
How are settlement options paid?
A lump sum or a mode of equivalent value
Which of the following is FALSE about the Automatic Premium Loan Provision (APL)?
For it to be included in the policy, there is an additional premium charge
A life Insurance policyowner receives an annual dividend. One option for this dividend is to use it to offset the annual obligation to the insurer. What is this option called?
Premium Reduction
The interest earned on dividends is:
taxable
Why should a policyowner be especially careful when deciding to increase the amount of an outstanding policy loan?
If the outstanding loan balance, plus interest, equals or exceeds the cash value of the policy, the company could cancel the insurance

K has a loan of $5,000 outstanding against her $25,000 traditional whole life policy. If K dies, how much will her beneficiaries receive?
20,000
When can a policyowner make a change in the policy's coverage or other benefits if an irrevocable beneficiary has been named?
after irrevocable beneficiary dies
The annuity __________ option selected can provide a temporary or lifetime payment.
Settlement
All of the following are ways in which an annuity can be classified based on its premium funding method, except:
reinvestment
If an annuity uses units instead of dollars to determine the value of the policy, then it is a(n) _________ annuity.
Variable
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A(n) __________ annuity has its interest credit linked to the positive performance of a stock market index.
equity-indexed
An insurer considers all of the following when determining the fixed annuity payments, except:
Stock market value
Annuities and life insurance are similar in all of the following ways, except:
Both use the same term to identify the person whose life is the subject of the contract
If interest rates have fallen since a market value adjustment annuity (MVA) was purchased, what impact will this have on the annuity?
In effect, the account values would have increased
A(n) ________ has all of the contractual rights in an annuity contract.
Owner
Which product, offered by insurers is specifically designed to allow an individual's savings to be distributed to him/her periodically over his/her entire life, regardless of how long he/she lives?
Annuities
Which of the following annuities does not have a traditional accumulation phase?
Single premium immediate
If the policyowner can withdraw funds from an annuity without surrender charges in the event interest crediting rates fall by more than a specific amount, this is referred to as a(n) ____________ provision.
Bailout
Harry, the annuitant of a non-qualified tax deferred annuity with $40,000 cash value chooses the Life Income with Refund Payment Option when he annuitizes to policy. After receiving $1,000 each month for 80 months, Harry suddenly dies. How much will his beneficiary, his wife Lucille, receive?
zeroreturns the remaining unpaid principal, since Harry lived well beyond the refund (principal amount) there would be no residual values remaining on the payment option selected.
The insurer generally assumes the investment risk in all of the following annuities, except:
Variable
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In which of the following circumstances is an annuity's tax-deferral benefit lost?
The annuity is owned by a corporation
Under an annuity with a Joint Life Payment Option, what will the survivor receive upon the death of the first annuitant?
nothingceases all distributions at the first death of any of the annuitants. This would not be the case if a Life Income Joint and Survivor Option were chosen.
The pay-out period of an annuity is also referred to as the ______ period.
Annuity
...
...
With a Life Income Payment Option, what happens at the annuitant's death?
All payments cease
Which of the following Annuities can it be said that it has 'upside potential, but no downside risk' when it comes to the stock market overall?
...
An individual owns a variable annuity. Upon annuitization, the number of Annuity Units on which the benefit amount is based will __________ from month to month.
Remain the same
What type of annuity is designed to start benefit payments many years from now and subjects the owner to investment risk?
Deferred variable
G is concerned about the future and living a comfortable retirement. Which of the products listed below is ideally suited to help G prepare for his retirement goal?
an annuity
Which of the following annuities uses unit values rather than dollars to account for its value?
Variable
The annuity pay-in period is also referred to as the ________ period.
Accumulation
Before taking an application for an annuity, it is important to:
Determine the suitability of the product to the intended purchaser
What do both life insurance and annuities have in common?
Both are products based on a mortality tableannuities are sold primarily to supplement income at retirement. Life insurance is primarily used to create funds upon the death of the insured for surviving family members.
Sam wants to know at what age he should annuitize in order to receive the highest monthly income benefit payment:
Age 70
A deferred annuity pays a death benefit to a beneficiary:
When the annuitant dies before receiving any annuity payments
F has an annuity with $50,000 of cash value. F needs life insurance but does not currently have it in his budget to pay for it. What is another option for F to consider to obtain the much needed life insurance F needs?
Use some of the annuity funds either through systematic withdrawal or a settlement option to pay the life insurance premiums
Which of the following is TRUE regarding Indexed Annuities?
Values and benefits may increase, but not decrease
_____________ are allowed as a way to access annuity values without having to elect a settlement option or surrender the contract.
Systematic withdrawals
All of the following are true regarding annuities, except:
They are similar to life insurance
One of the benefits of an annuity in regards to taxes is:
Earnings are tax deferred during the accumulation phase
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All of the following are traits of a Fixed Annuity, except
The actual rate of interest credited will be based on the state-published interest rate index
All of the following are benefits an annuity can provide that other investment or savings products cannot, except:
Tax-free distributions
Mr. Zamboni is the owner and the annuitant of an annuity. Mrs. Zamboni, the designated beneficiary, will be able to assume all ownership rights and tax-deferral if Mr. Zamboni should die ___________.
During the Accumulation Period
K owns a variable annuity with an assumed interest rate of 4%. If the actual performance of the separate account(s) is 5%, the effect on this month's income benefit check will be such that it:
it will go higher.if the actual return is greater than the assumed interest rate, then it will increase the next month
Harry, the annuitant of a non-qualified tax deferred annuity with $40,000 cash value chooses the Life Income with Refund Payment Option when he annuitizes to policy. After receiving $1,000 each month for 80 months, Harry suddenly dies. How much will his beneficiary, his wife Lucille, receive?
zero
James is nearing retirement and has accumulated $175,000 in an annuity. He wants the largest possible monthly benefit for as long as he lives. Which option should he choose?
Life Income
All of the following terms are the same regardless if the policy is life insurance or an annuity, except:
Annuitant

What will cause the time period of the fixed amount settlement option to be extended?
An increase in interest credited
Primarily, the _________ is the person who will receive any residual contract benefits after the annuitant has died.
beneficiary
A lump sum of money is placed into an account from which the annuitant will draw periodic benefits beginning more than a year from the date of purchase. This describes a:
Single Premium Deferred Annuity
Jasmine has deposited $100,000 into a single premium immediate annuity. If Jasmine were to die before receiving $100,000 in payments, the balance of the $100,000 would be paid to her sister. Jasmine has selected the:
Life Income with Refund Option
Annuities may be funded with either a lump sum or a ______ premium basis.
Flexible
Mastered (12)
You've been getting these terms right!
Select these 12
Concerning the Paid-Up Additions Dividend Option, all of the following are true, except:
Eventually, no more premiums will be due on the policy
A trust is established where the grantor can change the trustees whenever they want. Which of the following would best describe the type of trust that was set up?
revocable trust
The period of time over which a single sum or periodic deposits grow within an annuity is referred to as the:
Accumulation Period
Which annuity is the only one regulated by the SEC, FINRA, and State insurance departments?
variable
Annuities are classified in all of the following ways, except:
Issuer of the annuitybased on (single, flexible, and periodic), funding (fixed vs. variable), when income benefits are payable (immediate vs. deferred), and the payout option selected (life only vs. annuity certain).
Generally, which of the following Annuities is not designed to guarantee the principal value of the policy in stable interest rate environments?
Variable
If an annuity is purchased in December and monthly benefits begin in January of the following year, what type of annuity is it?
Single Premium Immediate Annuity
1.00

If a lump sum from a lawsuit, a lottery winning, or inheritance, is used to purchase a guaranteed lifetime income. It is referred to as a ___________.
Structured settlement
The type of annuity in which the values grow according to the performance of the investment medium, and in which benefits may fluctuate according to market performance, is called:
A variable annuity
Annuity income benefit payments are based on all of the following, except:
education level
All else being equal, which of the following will receive the largest income benefit payment from an annuity?
MALE AGE 80 (older male)
The _________ gives the owner of a variable annuity the ability to withdraw a maximum percentage of the annuity value until the initial investment amount has been recouped.
Guaranteed minimum withdrawal benefit

All of the following regarding credit life are true, except:
Usually the creditor pays the premium(debtor pays)
An application for group coverage is signed by the:
Employer, who then receives and retains a master policy
Which of the following is the least important when it comes to determining the cost of the group life insurance plan?
The health of each member of the group
An individual has secured a $12,000 loan from the bank to purchase a boat, which is scheduled for repayment in monthly installments over 48 months. Which life insurance would be most efficient at protecting the lender should the borrower die prior to retiring the debt?
Decreasing Term
Steve begins work on March 18 at the Riviera Electric Company. Riviera offers noncontributory group life insurance to its employees after a probationary period and provided the other usual requirements are met. If the probationary period is the usual length, Steve will be eligible for group life insurance on:
June 18(group life insurance is usually 90 days)
Which of the following is a major risk to an employee covered under an employer's group life insurance plan?
The sponsor can elect to discontinue the plan
A split-dollar plan:
Divides the cost of additional insurance for an employee between that employee and the company
Each of the following pertaining to group life insurance is true, except:
Group members are required to prove insurability
Mastered (13)
You've been getting these terms right!
Select these 13
With a Contributory Group Life Plan, what percentage of the employees must participate?
At least 75%
If an employee does not enroll during open enrollment and they still want coverage, what happens?
They must provide proof of insurability
Social Security pays an eligible surviving spouse (or minor child) a one-time benefit upon the death of a covered worker. Which of the following is the amount of that benefit?
$255
T has some heart health issues, but needs some additional life insurance coverage. What options should T consider?
A group life insurance plan
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The __________ allows an insurer to pay death benefits anyone it deems to be entitled in the absence of a designated beneficiary.
Facility of Payment Clause
ABC Enterprises is worth $300,000. There are 3 shareholders and each shareholder is an equal owner of the company. If they establish an entity buy-sell agreement, the entity would have to buy policies in the amount of $____________ on each of the owners.
$100,000
The primary purpose of a Section 303 redemption is:
To provide liquidity to pay estate taxes and administration and funeral costs
A Taft-Hartley Trust is established by one or more:
Labor unions or associations
Which of the following concerning Noncontributory Group Life insurance is FALSE?
An employer pays 75% of the premium
The Social Security Survivor Benefit is based on which of the following?
PIA
When an insurer wishes to implement changes to a group life policy, whom must it notify?
The group sponsor
All of the following are examples of third-party ownership, except:
A mother buys a policy for herself and names her son as beneficiary
____________ individuals pay a FICA tax amount equal to the total of an employer and employee payment.
self employed
Not studied (32)
You haven't studied these terms yet!
Select these 32
To help protect against experiencing immediate claims, group plans have a(n) _______ period set up by the group sponsor.
Probationary
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All of the following are advantages of having a Buy-Sell Agreement in place, except:
Premiums are tax-deductible
The Allied Stove company applies for life insurance on its key vice president, Harold. Allied Stove company is the premium payer and beneficiary, and controls all rights to the policy. Which of the following is true?
Harold is the proposed insured; his company is the applicant, policyowner, and beneficiary
After the blackout period has ended, the widow or widower may receive a Social Security income benefit based on the ___________.
PIA of the deceased spouse
A certificate of insurance:
Is issued to each individual covered by the group life insurance
When a group plan is contributory, what percentage of employees must want and be willing to pay for coverage?
75%
Which of the following is a major risk to an employee covered under an employer's group life insurance plan?
The sponsor can elect to discontinue the plan
L is no longer eligible for the employer's $50,000 group life insurance plan. L dies 28 days later without sending in the required conversion paperwork. What will their beneficiaries receive?
$50,000, less any premiums due
Why were industrial policies written?
To offset funeral expenses
Which of the following is true in regard to an Entity Purchase Plan?
The business enters into an agreement to purchase the deceased's interest in the business
Under an Entity Purchase Plan form of a Buy-Sell Agreement, the business is all of the following, except:
Insured
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The 31 days in which the employee may change his/her group policy to an individual policy upon termination and without evidence of insurability, is known as:
The Conversion Period
In those instances in which the death of a valued employee could cause financial hardship for a company, the company might acquire additional funds through which type of coverage?
Key Person
An agreement that establishes a price with the intent to purchase the assets of a business should one of the parties to the agreement predeceases the other is called a ___________.
Buy-Sell Agreement
Regarding Social Security survivor benefits, when the youngest child reaches age 16, the _________ period begins and continues until the surviving spouse reaches age 60.
blackout
How are employee FICA taxes collected?
The employer withholds the employee's tax and pays it along with the employer's portion
The Social Security System is funded through:
Federal Insurance Contribution Act (FICA) taxes
When converting a group life policy to an individual policy, the departing group member's new policy must be a:
Permanent or whole life policy
How is the funding for Social Security provided?
Through FICA taxes that are paid by both employers and employees
The principal difference between an entity purchase and a cross purchase buy-sell agreement is:
The identity of the policyowner
Which of the following IS true regarding key person insurance?
The employer is the policyowner, premium payor, and usually the beneficiaryProvides for the cost of replacing or training a new employee in the event of the death of the key employeeIt is written for the benefit of the employer, not the employee's family
________ Insured under Social Security means that a worker has at least 6 work credits during the 13-quarter period ending with the quarter in which the worker dies, becomes disabled, or reaches retirement age.
Currently
Which of the following meets the criterion for being a natural group for group life insurance purposes?
The group was formed for a purpose other than for procuring or reducing the cost of insurance
If a buy-sell agreement were not in place, all of the following could happen, except:
The estate transfer may be sped up due to emergency business liquidation
Open enrollment periods are offered on a(n) ______ basis that allows individuals to enroll without evidence of insurability or to make changes.
Annual
The 31 days in which the employee may change his/her group policy to an individual policy upon termination and without evidence of insurability, is known as:
The Conversion Period
Buy-sell agreement life insurance premiums are:
Not deductible and proceeds are income tax free
The Kalamazoo Stove and Screen Door Company applies for life insurance on its key vice president, Harold. Kalamazoo Stove and Screen Door Company is the premium payer and beneficiary, and controls all rights to the policy. Which of the following is true?
Harold is the proposed insured; his company is the applicant
An employee who is covered under an employer group life insurance plan may assume all of the following are TRUE of the opportunity of conversion, except:
The employee chooses which type of insurance to convert to
All of the following are characteristics of Franchise Insurance, except:
Certificates of Insurance are issued
All of the following are true regarding credit life, except:
The amount of coverage can exceed the debt
Which of the following policies is issued without medical exams required?
industrial

ERISA requires which of the following?
Qualified plans must meet certain minimum standards
If an accelerated death benefit is in effect, how often must the insurer provide a report showing the amount paid and the amount of the remaining benefit?
Monthly
What is the key difference between a qualified plan and a nonqualified plan?
Qualified plans are eligible for favorable tax treatmentNonqualified plans are not required to meet ERISA requirements and are not eligible for the same favorable tax treatment as qualified plans.
A person may contribute to a Traditional IRA if they ________.
Have taxable income
In the event that an insured receives a periodic benefit as the result of exercising the Accelerated Death Benefit Rider, what information must the insurer provide to the insured?
The amount of the accelerated payment, the remaining death benefit and cash values
Which is true regarding the taxation of the cash value in a Universal Life Policy prior to withdrawal?
Tax deferred
____________ do not meet requirements of federal law to be eligible for favorable tax treatment.
Nonqualified retirement plans
Which of the following would NOT be permitted as a Section 1035 policy exchange?
An annuity contract exchanged for a life contract
Paul surrenders a life policy and receives a lump sum of $30,000. Premiums totaled $25,000 on the policy. How is the surrender treated for tax purposes?
$25,000 is received tax-free, and $5,000 is taxed at ordinary income rates
With a Profit Sharing Plan contributions must generally be made in at least ________ consecutive years.
3 out of the last 5
If a policyowner paid $18,000 in premiums for a policy that is cashed in for $21,000, how much of the policy's cash surrender value would be subject to federal income tax?
$3,000
All of the following are the benefits of having an employer sponsored retirement plan be ERISA qualified, except:
Plan withdrawals are tax free
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SIMPLE plans are only available to companies that have ______ employees or less, and must be the only type of plan the company has available for the employees.
100
Keogh Plans are NOT available to:
Employees of large companies presently participating in a qualified retirement plan which are not self employed
What happens if the owner of a Traditional IRA fails to take an RMD for the required amount?
There is a 50% tax penalty
The exception to the rule concerning the non-deductibility of life insurance premiums is:
All employer paid group life insurance premiums
All of the following are true regarding IRA transfers, except:
They can only take place once a year
What is the main purpose that IRC section 1035 was enacted?
To allow for continued tax-deferral on any gains in an existing policy when a policyowner moves into a new one
There are ____ broad categories of qualified retirement plans.
2
All of the following are TRUE regarding non-qualified retirement plans, except:
Contributions are immediately tax deductible
Why are dividends not taxable as income when paid out to a participating policyholder?
They represent a return of a portion of the premium paid
Generally, the ________ is the amount of premiums paid into the policy less any dividends or withdrawals previously taken.
Cost basis
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A Section 1035 Exchange is permitted in each of the following transactions, except:
An annuity is exchanged for a Whole Life Policy
If a policyowner of a life insurance policy accidentally pays in premiums in excess of the MEC guidelines, the insurer can refund the excess within ______ days of the end of the contract year.
60
Death benefits paid from an employee group life insurance plan to an employee's named beneficiary are received __________.
Income tax-free
An insured has paid $1,000 in annual premiums for her permanent life insurance policy for 12 years. Now upon surrendering the policy she is due to receive $15,000 of cash value. How much of this cash value is taxable?
$3,000
If money is paid when a change of ownership in a life insurance policy takes place, this is generally known as a ____________.
Transfer for value
Which of the following plans provides employees with a fixed and known benefit at retirement, the amount of which generally depends upon length of service and highest attained salary?
Defined benefit
Nancy has an IRA and wants to move her funds directly from one financial institution to another while still maintaining the assets within an IRA account. How many times can she do this?
As often as she likes
Unless an exception applies, life insurance proceeds are income taxable in which of the following circumstances?
When a transfer of ownership takes place while the insured was alive
Life insurance policy premiums establish a _________ in the policy for tax purposes.
cost basis
When a life insurance policy does not pass the ______-pay test, it becomes classified as a MEC.
7
The cost recovery rule states:
That the excess cash value over premiums paid is considered taxable income when withdrawn
All employer-paid premiums for amounts of group life insurance over $__________ are reported as taxable income to the employee.
$50,000
___________ are not taxable because they are considered a return of excess premium.
Dividends
H owns a nonqualified variable annuity that has a separate account invested in the stock market. If H withdraws funds from the annuity, the earnings on the withdrawal will be taxed as:
Ordinary income
In a SIMPLE plan, employer contributions vest:
Immediately at 100%
If a non-qualified variable annuity owned for 15 years is surrendered, what is the income tax consequence?
Any amount received in excess of its cost basis is taxable as ordinary income
An insured has paid $1,000 in annual premiums for her permanent life insurance policy for 12 years. Now upon surrendering the policy she is due to receive $15,000 of cash value. How much of this cash value is taxable?
$3,000
A public school teacher may contribute part of his or her paycheck income into a ____ plan and defer income taxes on not only the contribution but also the growth in the plan.
403(b)
Which of the following Is the reason why premiums paid on personal life insurance are not deductible?
They are considered a personal expense
What is "defined" in a defined contribution plan?
The percentage or amount of an employee's deposits to the plan
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SIMPLE plans are only available to companies that have ______ employees or less, and must be the only type of plan the company has available for the employees.
100
A $500,000 policy is sold for $50,000. After the sale, the new owner pays $10,000 in life insurance premiums while the insured is alive. Upon death of the insured, how much of the death benefit is taxable?
$440,000
All of the following are transactions that qualify as a 1035 exchange, except:
A fixed annuity into an adjustable life insurance policy
What type of retirement plan is not required to have a vesting schedule, is not approved by the IRS, can discriminate in favor of highly compensated employees, and can benefit the employer?
A non-qualified plan
Incidental limitations refer to which of the following?
The amount of life insurance that may be included in a qualified retirement plan
A Section 1035 Exchange is permitted in each of the following transactions, except:
An annuity is exchanged for a Whole Life Policy
What is the name of the plan that is very popular with self-employed individuals and uses employer funded IRA's for their employees?
SEP
Cash values within an ordinary straight whole life insurance policy _______ over time.
Increase
A person who wishes to open an IRA must:
Have taxable income
erisa is a ------ law
Federal
Once a policy is classified as a MEC, it will maintain that classification for ____________.
The life of the policy
All of the following are TRUE regarding non-qualified retirement plans, except:
Contributions are immediately tax deductible
Failure to take a required minimum distribution (RMD) can result in a ________ tax penalty.
50%
The exception to the rule concerning the non-deductibility of life insurance premiums is:
All employer paid group life insurance premiums

____________ is the initial step of the total process of insuring a health risk.
Field underwriting
Accidental Injury is a:
Sudden, unexpected and unforeseen event
Accident and Health Insurance provides coverage for two major categories of perils. They are:
Accidental injury and sickness
All of the following statements regarding advertising are correct, except:
Advertisements do not include radio scripts
Angela's health policy was considered a limited insurance policy because it:
Only covered specific losses named in the policy for limited dollar amounts
If the insurer issues a health insurance policy without an initial premium, the producer must obtain a signed:
Statement of Good Health
Upon receipt of an application, the insurer's underwriter may issue the contract with exclusions or limitations. This means that:
Coverage is issued, but there are limits on the insurer's obligation to pay
Health insurance is purchased to deal with all of the following risks, except:
Third party liability claims
This type of policy covers various expenses that an insured may incur due to a routine accident or sickness.
Medical expense
Accident and Health policies provide coverages for all, except:
Workers' Compensation claims
Howard talks to his agent Jane about buying a critical illness policy from the XYZ insurance company to cover his wife Deborah, and naming his daughter Mary as the beneficiary in case of death. Jane told him that she would need signatures from all of the following, except:
mary
The agent's primary underwriting role is:
To make sure the application provides the proper information
00:0201:461.00
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Timothy owns an individual A&H policy, and in the event of an accident, he is required to prove only that the injury itself is unforeseen and unintended. Tim's policy is based on which of the following definitions of accident?
accidental bodily injury
All of the following are classifications of substandard risks, EXCEPT:
Declined
The __________ is the person applying for insurance coverage and is responsible for completing an application.
Policyowner
Edward applies for a disability insurance policy. He pays the initial premium at the time of application and receives a conditional receipt. Three days after the insurance company conducts a medical examination, but before it issues a policy, Edward suffers a stroke. Upon reviewing the results of his medical exam, the company discovers that Edward has been diagnosed with high blood pressure and atherosclerosis. Under the terms of the conditional receipt, the insurance company:
Denies the claim because the insurer would not have issued the policy as applied for as standard or better
This type of policy covers the treatment and care of the insured's teeth.
Dental expense
An applicant determined to have below average risk of loss would be:
Issued a preferred policy
Which of the following terms and definitions do not match?
Long-Term Care - Contract that pays weekly or monthly benefits if an insured is unable to perform the duties of their job
If the insurer issues a policy after receiving an application for health insurance in which preexisting conditions were inadvertently omitted, what would be the consequence to the insured's coverage if a preexisting condition caused a claim shortly after being issued?
Coverage would be as stipulated in the policy because the company issued the policy even though the question was left blank
Which of the following types of care is excluded in a Long-Term Care policy?
Hospitalization in the Intensive Care Unit
Which of the following products replaces lost income when one is unable to work due to a condition for which therapeutic and rehabilitative care services is often necessary?
Disability Insurance
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Accident and Health insurers would use which of the following formulas in determining premium rates?
Morbidity - Interest + Expenses
If a change or correction must be made on the application for insurance, which of the following applies?
The Producer can make the change and have the insured initial the change
The chart that shows the chance of a disability at any given age is called a:
Morbidity Table
What health insurance product is designed to provide coverage for necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital?
Long-Term Care
Select the correct statement about converting from a family policy to an individual policy.
Usually, conversion may be made without evidence of insurability if the individual does so within 31 days after the family coverage ends
A specified period that must elapse before new coverage goes into effect for a given condition is known as which of the following?
probationary period
Home health care provides benefits for all of the following, except:
Vocational or job rehabilitation
W has a health insurance policy with an 80/20 coinsurance provision and a $1,000 deductible. If W has an outpatient procedure that cost $900, how much will W have to pay?
$900
Which of the following describes the possibility of someone becoming disabled at any given age?
Morbidity
All of the following are classifications of substandard risks, EXCEPT:
Declined
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All of the following are sources that insurers may look at for information regarding the insurability of a prospective insured, except:
College Degree
Which of the following terms and definitions do not match?
Long-Term Care - Contract that pays weekly or monthly benefits if an insured is unable to perform the duties of their job
The tendency for poor risks to seek and be covered for insurance more than average risks is known as:
Adverse selection
Consumers must be made aware of all of the following in a replacement sale, except:
The financial ratings from each rating service
If an application is submitted with a question left unanswered, which of the following should occur?
The insurer would require an answer before issuing a policy
If the insurance company accepts a special class risk:
The premium will be higher than for a normal risk
Policy replacement is the process of:
Cancelling an existing policy and issuing a new policy
The _________ was created in order to alert insurer home office underwriters of errors, omissions, or misrepresentations made on insurance applications.
MIB
All of the following practices may never be used when advertising health insurance, except:
Advertising a group's product endorsement, if the insurer has any control over the group
Which of the following has primary responsibility for ensuring that the application is filled out completely?
producer

All of the following are factors used in the calculation of health insurance premiums, except:
morality table
Between the ages of 19 and 65, an America worker is more likely to be disabled than to die. This is a comparison of:
Morbidity to Mortality

Concerning PPOs, which is a true statement?
The insured has a financial incentive to use providers who have agreed to predetermined reimbursements for medical services rendered
Which of the following are NOT typically covered under HMOs:
Private hospital rooms
Bill is a retired military officer suffering from complications caused by Agent Orange exposure during his military service. He incurs $54, 510 in medical expenses during hospitalization at the local Veterans Administration Hospital. The private health insurance he now owns will likely pay:
Nothingmilitary is covered by TRICARE
All of the following are typical accident and health insurance policy exclusions, except:
Nonoccupational injuries
Joe purchased a policy that includes a Common Accident, Recurrent Hospitalization, Restoration of Benefits, and Accumulation Provision, as well as a Family Deductible. He purchased a _________ Policy.
Major Medical
Blue Cross and Blue Shield have traditionally offered benefits under the form of:
Service contracts
Hank was in the hospital last month for 2 days for which he received a check for $200. This month Hank was in the hospital for 5 days for which he received a check for $500. These checks are most likely:
Benefit payments from a Hospital Income or Indemnity Policy
Under what circumstances do major medical policies usually provide for restoration of benefits?
Restoration usually occurs after a specified dollar amount of benefits has been exhausted and after the insured has proven insurability
When a surgery schedule includes a specific dollar amount that will be provided for a major type of surgery, this is called:
Absolute value
If Jane has a new baby born under a Medical Expense policy, the baby is covered:
From the moment of birth
Which of the following is the best definition of a Limited Accident Policy?
Provides specific benefits for specific injuries from specific causes
A type of provider that consists of employers who pay claims out of their own funds instead of funding claims as an insurer is known as what type of provider?
Self-Insured
1.00
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All of the following are considered specialty physicians, except:
Hospital administrator
Which major medical plan deductible will result in the lowest premium?
$2,500 (highest option)
Which type of Accident and Health policy would provide reimbursement for expenses involved with a broken hip?
Medical Expense Policy
When a Health Maintenance Organization chooses a limited number of health care providers to provide services to its subscribers, this is known as:
A closed panel
The usual payment arrangement under a Preferred Provider Organization (PPO) contract is:
A fee for each service
Which statement is incorrect regarding Blue Cross and Blue Shield?
Blue Cross and Blue Shield have traditionally offered benefits in the form of indemnity
Which of the following types of limited policies would a common carrier purchase to provide medical and surgical benefits in excess of any primary coverage?
Blanket Plan
All of the following are true of Blue Cross and Blue Shield Associations, except:
They specialize only in sponsoring group plans
When payment under a Medical Expense policy is based on the average fee charged by all doctors in a given geographical area, and the balance of any overcharges or costs of any disallowed services are the insured's responsibility, the payment is known as:
Usual, customary, reasonable (UCR) payment
If an insured has a policy with 80/20 coinsurance, how is payment split?
The insurer pays 80% and the insured pays 20%
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Which of the following is NOT a common exclusion for a dental expense policy?
The preventative care exclusionits usually encouraged
All of the following are common exclusions typically found in a medical expense policy, except:
Dependent child coverage
HMOs are established as either ________, which means the doctor can work with anyone, including HMO members, or ________, which means the doctor can only work with HMO members.
Open panel, closed panel
Which of the following is true concerning a Medical Expense Policy for a family?
It will continue to cover their unemployed 25-year-old child who is habitually unemployed
When a Medical Expense plan pays eligible expenses directly to the hospital, physician, or surgeon, it is paying on a:
Service basis
Which of the following is true of traditional commercial insurers?
They traditionally market reimbursement-type contracts that pay directly to the insured
Raymond owns an Accidental Death and Dismemberment Policy with a principal sum of $50,000, and a capital sum of $25,000. After owning the policy for several months, Raymond dies as the result of coronary artery disease. Lynn, his beneficiary, can expect to receive what amount of benefit from the policy?
None
___________ is a cost sharing feature and is stated as a percentage of sharing between the insurer and the insured, such as 80/20.
Coinsurance
Dread disease, travel accident, vision care, and hospital indemnity policies are all examples of:
Limited policies
Which of the following insurance policies may be written in conjunction with a Basic Medical Expense Coverage and utilizes a Corridor Deductible after the basic plan benefits have been exhausted?
Supplementary Major Medical
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Vision Care covers which of the following?
Eye exams, eye glasses, contacts
Under a credit health policy, what is the maximum amount of any accidental death benefit included?
The amount of outstanding indebtedness at any given time
The type of health care provider that provides both the health care services and the health care coverage is a/an:
health maintenance organization
The main purpose of requiring a Gatekeeper is to:
Reduce costs within the plan
Benefit payments made on a ____________ basis are not scheduled, but are based on the average fee charged by all doctors in a given geographical area.
Usual, customary, and reasonable (UCR)
Many insurers pay benefits based on the average fee charged in a geographical area. This is referred to as:
Usual, Customary, and Reasonable
A Medical Expense Policy's list of the amounts the insurer will pay for each medical service is known as a(n) __________.
Schedule of Benefits
Comprehensive dental plans usually provide:
Routine dental care services without deductibles or coinsurance
Sylvia is a participant in a Preferred Provider Organization and finds that if she opts to use a provider outside the network:
Her PPO will pay a reduced amount with Sylvia paying the balance
All of the following are types of dental care, except:
Podiatry
Which is correct concerning Blue Cross and Blue Shield Plans?
They are service plans with benefits paid directly to the hospital or physician

Attaching a(n) ___________ rider excludes coverage for a condition that would otherwise be covered.
Impairment
What type of disability income insurance provides funds to cover business expenses when the business owner becomes disabled?
Business overhead expense
Which of the following will be covered under a business owner expense (business overhead) policy?
Business property rental
Which optional disability income insurance rider waives the elimination period if the insured is hospitalized and pays only when the insured is being treated as an inpatient.
hospital confinement
Which of the following is NOT classified as an occupational disease under Workers' Compensation?
Michael, an insurance salesperson who gets the flu from one of his clients while visiting the client's home during a service call
How are disability income benefit claims paid?
Weekly or monthly
_______________ is insurance provided by an employer to cover injuries that occur on the job only.
Workers' Compensation
A court reporter develops arthritis making it impossible to continue this employment. The reporter now has other employment at a reduced salary and receives a monthly benefit from an insurance contract due to which of the following policy provisions?
Residual Disability
With a Business Overhead Expense Policy, all of the following are claims that are covered, except:
The salary or profit of the business owner
Loss of the use of two limbs is one condition that generally will automatically qualify the victim for what type of total disability?
Presumptive disabilitytotally disabled
Which of the following is needed to qualify for a Social Security Disability Benefit?
Be either currently or fully insured
If a disability insurance applicant is insurable, but not at a standard rate, all of the following are actions an underwriter can take, except:
Reduce the dividends the policy is eligible for
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In the event total disability continues beyond a specified period of time, future premiums will not be required to be sent in to the insurer for the duration of the disability. This optional rider is called the _________ rider.
Waiver of premium
All of the following are correct concerning partial disability, except:
Partial disability payments are usually 75% of the total disability benefit
Which statement is false concerning Social Security disability benefits?
The employee must only be unable to engage in his/her own occupation to be considered disabled
Luis and Margarita Rodriguez have a family health policy that includes two riders. One rider excludes coverage for Margarita's existing diabetes. The other rider indicates that the couple may purchase additional disability income coverage at specified dates in the future without proving insurability. What two riders are attached to this policy?
Impairment and guaranteed insurability riders
Under Workers' Compensation, a disability that is a permanent physical impairment leaving the individual incapable of performing the previous regular occupation, but capable of performing some other type of work, is a:
Permanent partial disability
In Individual Disability Income underwriting, the single most important rating factor from an underwriting standpoint is the applicant's:
Occupation
Which measure could an underwriter use to reduce the risk when underwriting a Disability Income Policy?
Shorten the benefit period and increase the elimination periodtotal claims exposure is reduced
If a disabled worker is eligible for a Social Security disability benefits, his or her spouse and children may each also be eligible for a benefit in the amount of ____% of the disabled worker's benefit.
50
What type of disability income insurance pays a benefit to a business to help in the search, cost, and hiring of a replacement when an employee becomes disabled and is unable to work for the company?
key employee
Which of the following is NOT a reason that insurers limit disability income benefits to a percentage of the insured's past earnings?
To keep their expenses down
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Joan was told she could only expect about 70% of her weekly salary on a disability check if she was ever disabled. The reason for this is to reduce _________.
Malingering(lying about one's disability) or a morale hazard (a person chooses not to work because they have some income available).
Which of the following is NOT one of the categories of benefits incorporated by State Workers' Compensation Laws?
Long-term care coverage
Social Security disability benefits become available to eligible workers after a waiting period of:
5 months
Group Disability Income is usually offered only on a nonoccupational basis, which will not cover work-related disabilities, because:
Work related injuries are normally covered under Workers' Compensation
Under the Coordination of Benefits provision, if an insured is disabled due to a work-related loss, the primary payer is
Workers' Compensation
Own occupation is the:
Inability to perform all duties of one's own occupation
To reduce the risk of insuring a substandard disability applicant, an insurer may take all of the following actions, except:
Remove all of the exclusion riders
Josh is a concert pianist and earns a very good living with his talent. He was in a car accident and broke his arm. His disability is considered:
Total, temporary
Regarding disability income policies, which of the following benefit periods would have the lowest premium?
6 weeks
Which statement is false concerning Social Security disability benefits?
The employee must only be unable to engage in his/her own occupation to be considered disabled
The Age Discrimination in Employment Act (ADEA) affects both the short- and long-term group disability benefits for people employed after age _______.
65
Ole Olson owns a Business Overhead Expense Policy whereby if he should become disabled, the policy will continue to cover most business expenses in his absence. The policy would cover all of the following, except:
Ole's personal lost income
Own occupation is the:
Inability to perform all duties of one's own occupation
In disability insurance, if a person is unable to perform their current job duties due to a disability, this definition is known as the:
Own occupation, less restrictive definition
Which provision provides a loss of earnings benefit to an employee who returns to work after sustaining a total disability, if the insured's earnings are less than they were before the disability.
Residual Disability
Which of the following waives the elimination period in a disability policy?
hospital confinement rider
What is the function of disability income insurance?
To replace income when disability prevents a person from working to earn a living
If a disability insurance applicant is insurable, but not at a standard rate, all of the following are actions an underwriter can take, except:
Reduce the dividends the policy is eligible for
Under the Coordination of Benefits provision, if an insured is disabled due to a work-related loss, the primary payer is
workers compensation
An insured's disability income policy defines total disability as 'the insureds inability to perform the duties of any occupation for which he or she is reasonably qualified by education training or experience.' This definition is known as the:
'Any occupation' definition and is more restrictive than other definitions

Which of the following is correct concerning an LTC policy?
It may define a preexisting condition as a condition for which advice or treatment was recommended or received within 6 months of the effective date of coverage
All the following qualify for Medicare Part A, except:
Healthy individuals who are under age 65 and not covered by Social Security, but are willing to pay the Part A premium
Which of the following provides coverage for low income families?
Medicaid
For which of the following reasons may an insurer cancel or non-renew a Medicare supplement policy?
Nonpayment of premium
A Medicare supplement policy that provides only the basic 'core' benefits is known as:
Plan A
Part B of Medicare excludes which of the following medical expenses?
A regular dental checkup
Which of the following exclusions applies to Long-Term Care coverage?
Rest Cures
Medicare Part D provides prescription drug coverage that requires the insured to pay all of the following, except:
Medicare Part A premium
As long as the premium is paid, a Medigap policy is __________ renewable.
Guaranteed
No insurer or agent may unnecessarily replace a policyholder's Long-Term Care insurance policy or replace it with a policy that offers:
Fewer benefits and a greater premium
An insured is hospitalized for at least 3 days. How long will Medicare pay for confinement in a skilled nursing facility?
Up to 100 days
Overseas foreign travel emergency coverage is a Medicare supplement:
Additional benefit
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How long is the free look period for a Medicare Supplement policy?
30 days
Which of the following is not true of Medicare Part B?
All retirees are automatically covered
A Medicare supplement policy may not limit benefits for losses incurred more than ________ from the effective date of coverage because they involve a preexisting condition.
6 months
Which of the following statements is FALSE regarding Medigap policies?
A Medigap policy provides the same coverage as a Medicare policy
All of the following are exclusions under an LTC policy, except:
Chemical dependency on one's own prescription drugs
Select the correct statement about long-term care policies.
Present policies are more likely to pay benefits regardless of the level of care required by the insured
Which of the following is NOT one of the core benefits included in any Medicare supplement policy?
Part A deductible for each benefit period
In order to purchase a Medicare Supplement, an eligible individual usually must have Medicare Parts __________.
A and B
An institution that is organized primarily for the purpose of providing support services to terminally ill patients and their families is a:
Hospice
The annual general enrollment period for Medicare Part B ends on:
March 31
Which of the following types of care is covered by Medicare Part A?
Skilled nursing care
Originally, Medicare was for U.S. citizens age _______ and over.
65
With _______, the patient must pay 20% of covered charges plus the deductible.
Medicare Part B
What do ADLs trigger?(acts of daily living)
Long-Term Care Insurance
Medicare supplement policies must provide a 'free look' period of:
30 days
Which of the following will cover the cost of inpatient blood transfusions after the first 3 pints?
Medicare Part A
Medicaid is a federal program that is administered by the _______ government.
State
A long-term care policy typically provides daily benefits?
For 2 years, 5 years, to age 65 or lifetime
A qualified Long-Term Care Policy may exclude losses incurred from preexisting conditions for no longer than ______ months from the effective date of coverage.
6
Core Benefits of Medicare Supplement policies cover ____ pints of blood.
3
Which type of LTC coverage is designed to provide relief for the primary caregiver of a long-term care patient?
Respite Care
...
...
A Medicare Supplement or LTC policy's free look period is:
30 days
Which of the following are NOT eligible for Medicare coverage?
People suffering from liver cancer
Part A of Medicare is known as:
hospital insurance
Which of the following requires an annual deductible and coinsurance?
Medicare Part B medical
After the deductible has been satisfied, Medicare pays the full cost of up to:
60 days of inpatient hospital care
The most important rating factor in a LTC policy is:
Whether or not an individual can perform activities of daily living
A Medicare SELECT policy differs from a regular Medicare Supplement (Medigap) policy in that it:
Is a managed care version of the traditional Medicare Supplement policy

All of the following are examples of cost containment and managed health care, except:
Experimental drug treatment
Which of the following allows reimbursement benefits to be paid directly to medical providers?
Assignment of benefits
Required Provision 'Reinstatement' addresses reinstatement of a lapsed policy. According to this provision, when an insured applies for reinstatement and receives a conditional receipt, how long does the insurer have to approve or deny reinstatement before the policy will be automatically reinstated?
45 days from the date of the conditional receipt
An insured's accident policy uses the phrase 'accidental bodily injury' to define what constitutes accidental injury and/or resulting death. This phrase:
Is less restrictive than the phrase 'accidental means'
An insurer has the right to request a physical exam or an autopsy to determine its liability to pay benefits. This request may be made under which provision?
Physical Exam & Autopsy
Managed Health Care attempts to contain costs by controlling the behavior of participants in all of the following ways, except:
Partial Case Management
When an insurance company cancels a policy, the unearned premium is:
Returned in full to the insured in a pro rata return
Precertification, Mandatory Second Surgical Opinion, and Concurrent Review are provisions in health insurance policies known as:
Case Management Provisions
Albert owns a printing business in which he, at times, prints counterfeit money. One day while processing counterfeit bills, his arm is severely damaged. His insurance will:
Not cover the claim since he was involved in an illegal act at the time of injury
The Insuring Clause under an individual A&H policy would contain all the following, except:
Premium or rate calculations
What is an impairment rider?
It excludes specific conditions that normally would cause the entire policy to be declined
A certain health insurance policy states that the insurer will not refuse to renew the policy and furthermore, the insurer may not cancel the policy. However, the insurer may change the premium by classes of insureds. This policy is:
A guaranteed renewable policy
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Three years ago, Charles purchased a health policy from the QRS Company; he has purchased two additional contracts from the same insurer since. Each contract contains the Other Insurance With This Insurer Provision. What happens if Charles has a claim?
Only one policy will pay, the premiums for the other contracts will be returned
Optional Uniform Provisions are included in the contract at the _______ option.
Insurer's
Which of these is a Mandatory Uniform Provision?
Legal Actions
The Time Limit on Certain Defenses (Incontestability) period is _____ years under individual health and disability contracts.
2
Required Provision 10 'Physical Exam and Autopsy', indicates that if the insurer wants to have an autopsy performed while a claim is pending, the insurer:
May do so if it is not forbidden by law and if the insurer pays for it
Policies are considered incontestable after:
2 years
One of your clients just reinstated his health insurance plan. When is coverage effective for sickness and accident?
10 days for sickness, and immediately for accidental injuries
Optional Provisions 'Changes of Occupation' and 'Misstatement of Age', permit the insurer to do which of the following?
Pay indemnities equal to benefits that would have been purchased at the premium paid had the insurer known the facts when the premium was established
All of the following statements about noncancellable policies are true, except:
The insurer may choose not to renew the policy, but only on the policy renewal or anniversary date
Which of the following best describes the consideration on the part of an insurer?
The promise to pay in the event of a covered claim
Kirk has just reinstated an individual A&H policy that had lapsed and wants to know how soon coverage will be in effect for any accident or sickness. You, the agent, would say:
Accidents immediately, sickness after 10 days
Beth has a contract stating she must be disabled for 3 months before benefits will begin to be paid. This 3-month period is known as the:
Elimination Period
Which clause in a contract would state that Jim is covered by XYZ insurer for a monthly benefit of $2,000 in the event of disability?
Insuring Clause
Examples of preventative care include all of the following, except:
Restricting travel to within 5 miles of home`
An insurer has the right to request a physical exam or an autopsy to determine its liability to pay benefits. This request may be made under which provision?
Physical Exam & Autopsy
Kirk has just reinstated an individual A&H policy that had lapsed and wants to know how soon coverage will be in effect for any accident or sickness. You, the agent, would say:
Accidents immediately, sickness after 10 days
Three years ago, Charles purchased a health policy from the QRS Company; he has purchased two additional contracts from the same insurer since. Each contract contains the Other Insurance With This Insurer Provision. What happens if Charles has a claim?
Only one policy will pay, the premiums for the other contracts will be returned
Under the unpaid premium provision, if an insured owes a past due premium payment at the same time a claim is filed:
The insurer may deduct the amount of the premium from the claim paid
The 'Other Insurance with this Insurer' Provision allows an insurer to control:
Overinsurance
Notice of claim is required within _____ days of loss.
20
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Precertification, Mandatory Second Surgical Opinion, and Concurrent Review are provisions in health insurance policies known as:
Case Management Provisions
Under the Entire Contract provision, all of the following may be part of the agreement between the insured and the insurer, except:
Statements made to the applicant by the producer during the application process
All of the following are Optional Uniform Provisions, except:
Legal Actions
...
...
Which of the following is not a Mandatory Uniform Provision?
Conformity with State Statutes
Which of the following is not a Mandatory Uniform Provision of an Accident and Health policy?
Waiver of Premium
Second surgical opinions, precertification, concurrent reviews, and outpatient/ambulatory services are elements of a cost containment system commonly known as:
Case management

When an agent misleads the public in an advertisement, who is held accountable?
Both the insurer and agent
Which is not a qualifying event for the continuation of dependent coverage under the Consolidated Omnibus Budget Reconciliation Act?
Termination of the employee for theft
All of the following are requirements that insurers may place on a group plan to avoid adverse selection, except:
Proof of insurability from each employee
COBRA is a federal law requiring employers with _____ or more employees to provide the option of continuing the employee's existing health coverage for dependents for up to _____ months following qualifying events.
20, 36
Select the correct statement. cobra
COBRA protects dependents of employees by mandating for them the same extension and conversion privileges available to employees covered by group plans
Which of the following is correct pertaining to underwriting a group health policy?
Premiums are generally re-evaluated annually and may be based upon prior claims
Which of the following types of policies would a sports team purchase to obtain coverage for a season?
Blanket
COBRA applies to employers with:
20 or more employees
All of the following are ways in which an employee will lose their employer sponsored group health insurance, except:
Becoming too old while still on the job
Which is true regarding the advertising of Accident and Sickness Insurance?
When insurers advertise that a group endorses a certain health product, the public must be made aware of any control the insurer may have regarding the group
Which provision of group health plans is used to determine primary and secondary coverage when an insured is covered by more than one insurance plan?
Coordination of Benefits
When a group is covered by a MET, who is issued the Master Policy?
The trust
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A carrier replacing employer group coverage is not required to cover all employees and dependents covered by, or eligible for, coverage under the previous policy if the replacement takes place more than _____ days after of the previous policy's termination.
60
A firm with 50 employees replaces its existing group health plan. With regard to ongoing existing claims, the replacing insurer will be:
Required to continue paying them under the No Loss-No Gain law
HIPAA defines a pre-existing condition as one for which the insured received medical advice, diagnosis, care, or treatment within the past _____ months.
6
Which of the following individuals would probably NOT be a qualified beneficiary under COBRA?
Any dependent not covered under the employee's health coverage prior to a qualifying event
Oswald changes jobs in June. He had been covered by group health for two years at his previous job. His new job offers group health coverage with a six month exclusion for pre-existing conditions. Assuming that Oswald enrolls at the earliest opportunity in the group health program at his new job, when will any pre-existing conditions Oswald may have be covered in his new group health plan?
Immediately
Under COBRA, coverage for dependents of an employee may continue up to 36 months for any of the following events, except:
Termination of the employee
Which action would not render a small employer's health benefit plan nonrenewable?
Frequent claims
Coordination of Benefits is a provision designed to reduce ________ when an insured is covered under multiple health plans.
Overinsurance
Which statement is incorrect regarding COBRA?
The employee or beneficiary must respond to the notification of his/her right to continue coverage within 90 days, if he/she wants to continue the coverage
When an individual converts from a group health policy to an individual policy:
The new plan will not provide the same benefits as the group plan
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Hicks Corp. wants to install a contributory group plan. It employs 200 people. How many employees must participate in order to install the plan?
150
What percentage of employee participation is required for a contributory employer group plan?
75%
Which of the following is NOT a method of reducing adverse selection in group health insurance?
Establishing a maximum number of participants for coverage under the plan
All of the following are a prohibited form of advertising, except:
When an insurer excludes coverage for preexisting conditions, an advertisement of the policy that implies that the applicant's medical condition or history will not affect eligibility or payment
When Harold became no longer eligible for coverage under his employer's group benefit program, which of the following statements accurately reflects the conversion privilege defined by his group contract?
Harold had 31 days to convert his policy to an individual plan
When an individual carries more accident and health insurance than he/she would need for a loss, it is called:
Overinsurance
The main benefit of a 501(c)9 trust is that:
Contributions to these trusts may be deducted immediately, instead of when benefits are distributed
Which is true regarding the advertising of Accident and Sickness Insurance?
When insurers advertise that a group endorses a certain health product, the public must be made aware of any control the insurer may have regarding the group
When employers who self-fund their employee benefits form a larger group in order to offer health insurance benefits to each employer's workers, it is called a (an):
Multiple Employer Welfare Association (MEWA)
Under COBRA, coverage for dependents of an employee may continue up to 36 months for any of the following events, except:
Termination of the employee
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Regarding group health insurance, which is true?
The plan sponsor is issued the Master Policy
Until yesterday, J. J. worked for his father's company and was covered by the company's large group health plan. He stopped working to go to college. He is 26 years of age and wants to keep the same coverage until he earns his degree in approximately 24 months. Which of the following statements is true?
A good option for J.J. is to exercise the COBRA option under his father's group plan
A carrier replacing employer group coverage is not required to cover all employees and dependents covered by, or eligible for, coverage under the previous policy if the replacement takes place more than _____ days after of the previous policy's termination.
60
Small employer plan preexisting conditions may not be excluded for any longer than _____ months.
12
Which of the following statements is NOT true concerning a coordination of benefits situation?
Where children are involved, the primary group insurer is the insurer for the parent who is oldest by age at the time of claim
Which of the following IS true regarding COBRA coverage?
If an employee carried dependent coverage on the group plan, dependent coverage must be made available on the COBRA continuation policyEmployees must be notified of their right to continue coverage immediately upon terminationAn insured must be notified under COBRA when a qualifying event occurs
Which of the following is consistent with group health underwriting?
Each member of the group is covered regardless of his or her health history
Experience rating utilizes _______ in determining the rate the insurer will charge for group coverage in each year of coverage.
Actual loss experience of the group
The pregnancy discrimination act applies to groups with ______ or more employees.
15

Premiums paid by employees for group health insurance are only deductible to the extent that ______________________.
They exceed 7.5% of adjusted gross income
When an individual pays the full cost of disability income insurance, a disabled employee's benefit will be ____________________.
Nontaxable in full, regardless of the employee's wage
Which of the following might be covered by an FSA, but not an HRA?
Eyeglasses
Gary participates in a group long-term care insurance program through his employer. The employer pays for a standard level of coverage for all employees, and Gary pays for an additional voluntary amount of coverage. In all, Gary's employer pays two thirds of the cost and Gary pays the remaining one third of the cost. If Gary makes a claim under this policy, what percentage of his benefits would be taxable based on the premium structure?
0%
Under which of the following business-related plans are benefits taxable as income to the owner?
Business Overhead Expense
Karen, age 50, withdraws $1,000 from her Health Savings Account (HSA) for a purpose other than a qualified medical expense. As a result of this action:
The $1,000 is taxed as ordinary income, with an additional $200 penalty tax applied
Which of the following might be eligible to participate in an MSA?
Charles, who works for a small bakery with only 15 employees
Which of the following statements is false regarding the Affordable Care Act?
It requires all employers to provide health insurance to their employees
Which of the following covers the greatest percentage of the benefit cost of the plan under the Affordable Care Act?
Platinum
Harry and Sally were equal partners in a catering business worth $400,000. They entered into a buy-sell agreement that provided funding whether one of them died or was disabled. The annual premium for each of the disability insurance policies was $2,000. All of the following statements are correct, except:
The premiums are tax deductible
What taxes apply to the benefits under an individual Disability Income Policy on which the insured has paid the premiums?
No tax
What is the difference between a Health Reimbursement Account (HRAs) and a Health Savings Account (HSA)?
HRAs are owned by the employer, and are not portable when an employee leaves
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When are disability income benefits received as nontaxable income to the recipient?
When the employee has paid the premium
There are ____ different 'Metal Plans' offered through the health insurance exchanges.
4
In which of the following circumstances was the small business owner able to deduct the premiums they paid for insurance?
The sole proprietor of a small firm buys an overhead expense policy
When an individual is covered by a three-tiered, consumer driven health plan, the second source or tier of payment usually comes from a/an:
Out-of-pocket funds
Which of the following programs provides health insurance that supplements Medicare for military retirees?
TRICARE for Life
On which of the following policies would any proceeds be taxable?
Business overhead expense insurance
The cost-sharing provisions of TRICARE Standard include:
A $12 co-pay for office visits and 25% co-pay for procedures
Under the ACA, group health insurance plans apply which of the following restrictions to dependent coverage on children of the primary insured?
They must be under age 26
Ashley wanted to establish her company benefit plan so that it could cover her individual health insurance premiums and out-of-pocket expenses without group insurance or loss of unused benefits. After some research, she established a:
HRAs
Which of the following disability income benefits would be received free of federal income tax?
A personal disability income insurance policy benefit
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Andrew discovered that the consumer directed health plan he had established was subject to new contribution limits when he switched the Tier 1 payment mechanism from a/n:
HRAs to an HSA
Victoria, age 62, calculated last year's gross income to be $60,000. When she totaled up the cost of individual Medical and Long-term Care insurance, as well as her various out-of-pocket medical costs, she discovered the total was $7,500, which meant she could deduct _______ from her taxable income.
$3,000
Which of the following statements IS true regarding the taxation of individual long-term care insurance policies?
Individual long-term care policies are treated the same for tax purposes as accident and health policies only if the policy is qualified according to federal law
Jay receives an annual disability benefit of $10,000. His employer contributed 75% of the premium. How much of Jay's benefit is subject to income tax?
$7,500
Which of the following best describes the general tax rules regarding individual disability health insurance plans?
Premiums are not deductible, the benefits are not taxable
Employer-paid premiums for employee group health insurance are generally:
Nontaxable to the employeesTax-deductible to the employer
All of the following are primary plans, EXCEPT:
TRICARE for Life
What is the Health Insurance Marketplace?
It is a resource where consumers can learn about their health insurance coverage options and compare plans
Which of the following statements is false regarding the Affordable Care Act?
It requires all employers to provide health insurance to their employees
Which of the following statements regarding coverage for emergency care under the Affordable Care Act is correct?
Plans must do so regardless of network affiliation without requiring prior approval
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The cost-sharing provisions of TRICARE Standard include:
A $12 co-pay for office visits and 25% co-pay for procedures
Karen, age 50, withdraws $1,000 from her Health Savings Account (HSA) for a purpose other than a qualified medical expense. As a result of this action:
The $1,000 is taxed as ordinary income, with an additional $200 penalty tax applied(20%)
Which of the following is considered not to be an Essential Health Benefit?
Personal care
What is the maximum annual contribution to an FSA, which is allowed by law?
$2,550
Health Savings Accounts (HSAs) must be accompanied by a:
High Deductible Health Plan (HDHP)
Which of the following statements regarding TRICARE is correct?
TRICARE Prime is mandatory for active duty members
The benefits of an individual disability income policy:
Are received tax-free and generally limited to a percentage of monthly income
Which of the following is not a Metal plan category?
copper
All of the following are primary plans, EXCEPT:
TRICARE for Life
The Bronze plan covers _______ of medical expenses.
60%

All of the following are ways consumers can insure themselves with 'minimum essential coverage' without having to pay a penalty under the Affordable Care Act, except:
Be self-insured
Which of the following might be covered by an FSA, but not an HRA?
Eyeglasses

If an insurance company accepts business from a person that is not currently appointed and who is not licensed for that line of business, which of the following applies?
Insurer may be fined up to 3 times the premium received
An individual long-term care insurance policy may not be terminated for nonpayment of premium unless the insurer has give notice to the insured and any designated persons at least _____ days before the effective date of the termination.
30
Which of the following may an insurer purchase for its separate account?
More than 10% of the total issued and outstanding voting securities of any single issuerSecurities of a subsidiary of the insurerneither answer is correct
A life insurance policy is incontestable, except for nonpayment of premiums, after it has been in force during the lifetime of the insured for ______ from its date of issue.
2
TEFRA is intended to:
Prevent group plans from discriminating in favor of key employees
Which of the following acts established the Federal Government's right to regulate the insurance industry in situations involving fraud and false statements made in insurance transactions which might lead to jeopardizing the financial soundness of an insurance company?
McCarran-Ferguson Act
All of the following would be considered replacement in life insurance and subject to replacement guidelines, except:
A term policy converted to whole life insurance
In the context of replacement, the term 'conservation' means any attempt by the:
Existing insurer or its agent to continue existing life insurance in force
When advertising you may NOT imply that:
Illustrated dividends will be enough to fully pay for the policyDividends are anything other than a refund or a return of part of the paid premiumDividend payments are guaranteed
An annuity or pure endowment contract may be reinstated within __________ from the default in premium payments, unless the cash surrender value has been paid.
1 year
Industrial life insurance is a form of life insurance written under policies with face amounts of:
$2,500 or less
A producer is subject to maintain continuing education requirements and must complete _________ classroom hours of continuing education or its equivalent on a biennial basis, 3 of which must be on ethics or business practices.
24
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When replacement is involved, an agent must present the applicant with a Notice Regarding Replacement of Life Insurance no later than:
The time of taking the application
The Commissioner can extend the time you have to complete your continuing education requirements for up to how long?
90 days
The Alabama Life and Disability Insurance Guaranty Association provides protection for all of the following, except:
Pay the insurer's creditors when facing insolvency
Medicare supplement policies and Long-Term care policies must provide a 'free look' period of:
30 days
Twisting involves which of the following?
Policy replacement
Assets in a separate account are valued at:
Their market value on the date of valuation
What is the primary purpose or function of a Long-Term Care Partnership policy?
It helps with the spending down of assets for Medicaid eligibility
If a company wishes to share information about a customer's health with a third party:
The customer must actively opt-in to allowing the disclosure
A health benefit plan that provides coverage for surgical services for a mastectomy must provide screening mammography for women age 50 or older at least every:
Year
What is the underlying purpose of a second injury fund?
To promote the employment of previously injured or physically handicapped workers
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All of the following are true regarding advertising in life insurance, except:
Premiums cannot be mentioned in an advertisement at all
Which of the following can be listed on an illustration?
The dividend option selected or any nonguaranteed elementsThe insurer's name, producers name, address, and the policy generic nameThe proposed insured's name, age, gender, and the initial death benefit
Which of the following is needed to receive a producer's license after passing the state licensing exam?
The producer must submit a uniform application for licensure with the Commissioner
All of the following are reasons that the Commissioner may suspend a producers license, except:
Conviction of a misdemeanor
When using an illustration to sell a life policy, an agent may NOT:
Falsely represent that premium payments are not requiredImply that nonguaranteed elements are guaranteed or misleadingly use nonguaranteed elementsRepresent the policy as anything other than a life policy
Which of the following describes why Alabama encourages the purchase of Long-Term Care Insurance through its LTC 'Partnership Program'?
Provides you with asset protectionAllows Medicaid to disregard some or all of your assets for Medicaid eligibilityRequires Medicaid to disregard some or all of your assets during estate recovery
Death benefits paid under Workers' Compensation:
Include both a one-time burial allowance and a weekly benefit for a surviving spouse and /or children
A minor domiciled in Alabama who is 18 years old is competent to receive payments of up to _________ in any one year from a life insurance company, provided the insurer has not been notified of a guardian.
$3,000
Which of the following is/are required when reinstating a life insurance policy after a default in premiums?
Evidence of insurabilityA reinstatement applicationPayment of overdue premiums
An insurance company, upon receiving proof of death, may not delay a death claim settlement beyond a period of:
2 months
Under Alabama law, you cannot pay any valuable consideration to a person if they are not licensed as a producer. If a producer violates this provision, they are subject to a fine of up to:
3 times the commission paid
What is the youngest age a minor may contract for insurance on his or her own life?
15
An insurer that issues a health insurance policy must pay for services rendered by Alabama health care providers within ______ calendar days upon receiving a clean electronic claim.
30
A producer can reinstate their license once it has lapsed without retaking a prelicensing course and without taking a new license exam within:
12 months
If an insurance company accepts business from a person that is not currently appointed and who is not licensed for that line of business, which of the following applies?
Insurer may be fined up to 3 times the premium received

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