producer practice exam 1

Trent has a permanent, partial disability where he is paid 50% of his previous income. Trent is covered by a:

residual disability benefit

According to Required Provision 4, when an insured applies for reinstatement of a health policy and receives a conditional receipt, how long does the insurer have to approve or deny?

45 days

An insurance premium can be defined as:

money paid to an insurance company for benefits provided in the policy

A Long Term Care insured must be unable to perform a minimum of __ Activities of Daily Living (ADLs) to receive benefits.

2

Barbara has the right to change the beneficiary designation on her life insurance policy. Barbara's beneficiary is a(n):

revocable beneficiary

Typically, a disability income rider will pay:

a monthly income for as long as the insured remains totally and completely disabled

After the insurance company receives a written request, an insured may have health insurance benefits paid to:

anyone designated by the insured

What is a disability income policy designed to do?

Pay benefits to maintain the insured's current standard of living

Anita is an office clerk at the time she purchases a Disability Income policy. She later changes her career to a king crab fisherman. If she ever becomes injured on the boat, the Change of Occupation provision states that the insurer can:

adjust the benefits

Extended residence in a nursing home is covered by a(n):

long term care policy

Which provision allows a disability income policy to remain in force without further payments when the insured has become totally and permanently disabled?

Waiver of premium

Bart is injured and provides notice of a health claim to his insurer. He later receives the required claims forms. Within how many days of the loss must Bart file proof of loss with the insurance company?

90

If insurance premiums are paid more frequently than annually, the policyowner can expect to:

have a higher total outlay of dollars for the coverage for that year

Periodic benefit payments must be made no less frequently than:

monthly

Required Provision 3 states that the minimum grace period for all policies (except those with monthly or weekly premium modes) is:

31 days

A ___ ___ company is one that is domiciled in another state and has NOT received a license to do business in Alabama.

foreign nonadmitted

Katherine is a retiree and was recently hospitalized for 10 days. Which type of insurance policy would best cover her for excess hospital expenses?

medicare supplement

The premium payment mode which results in the highest total premium is:

monthly

The Notice of Claim Provision states that the insured notify the insurance company within __ days of a claim.

20

Long Term Care policies normally provide benefits for:

home health care

When an estate is named beneficiary to a life insurance policy, the policy proceeds are:

distributed according to state law

Medicare Advantage (Medicare Part C) allows the utilization of benefits through a(n):

HMO, PPO, or traditional insurer

The Long Term Care Partnership program is designed to allow seniors to:

shelter assets from the spend-down requirements of Medicaid

Alabama's head of the Department of Insurance does NOT have the power to:

promulgate insurance laws

Which is NOT true regarding Medicare Supplement policies?

Must include a minimum 20-day Free-Look provision

A Preferred Provider Organization (PPO) contract typically uses which payment arrangement?

Negotiated fee-for-service

An insurance company licensed to do business in Alabama, but incorporated in another state, is called:

a foreign company

Who would most likely own a Medicare Supplement policy?

69-year old female covered by Medicare

Ed has an insurance policy with an insurance company. Before Ed's policy will pay a claim, certain events must occur. Because of this, an insurance policy is considered to be:

conditional

A retirement plan intended for a sole proprietor and his/her employees would be a(n):

keogh plan

In regards to a life insurance policy or an annuity contract, all statements made on the application are considered to be:

representations

Which of these will NOT result in an increase in life insurance policy dividends?

higher reserves

Pat the producer just sold an insurance policy to a client, explaining that he has authority to issue the policy. Pat was not specifically granted this power from the insurance company. Pat is exercising:

implied authority

Beginning at what age can an IRA owner start making withdrawals and NOT be subjected to a tax penalty?

59 1/2

An insurance producer represents the:

insurance company

The exclusions and conditions in an insurance contract are required to be conspicuous, plain, and clearly stated. There should be no surprise when an insurance company denies a claim for a hidden clause. This is called the:

doctrine of reasonable expectations

Medicare eligibility is typically based on:

age

Pat applies for insurance, pays the initial premium, and receives a document from the agent. This document indicates that if the policy is issued, coverage begins on the date of the document. This document is called a(n):

conditional receipt

Medicare is NOT available to a(n):

61-year old Medicaid recipient

The withholding of facts in an insurance application is called:

concealment

Under a Health Maintenance Organization (HMO), service providers are paid a fixed monthly fee for each member. This concept is called:

capitation

What is a defined benefit plan?

A retirement plan that promises a specified benefit to the employee at retirement

How is the Alabama Life and Disability Insurance Guaranty Association able to pay claims for insolvent insurers?

Assessments against other admitted insurers in Alabama

What kind of risk are amateur pilots normally classified as?

special class risk

Which of the following best describes a Health Maintenance Organization (HMO)?

Provides full medical services that stress preventative medicine

What is the applicant's consideration in an insurance contract?

premiums

Which of the following is NOT a factor typically used by insurers to classify risk?

education level

Which of the following statements concerning a life insurance policy is TRUE?

An issued policy can never be changed by a producer

Which of these is NOT a reason the insurance application is important?

When attached to the policy, the application becomes part of the insurance clause

The period of time during which a surviving spouse does not qualify for Social Security survivor or retirement benefits is called:

the blackout period

According to Alabama law, agents of a Health Maintenance Organization (HMO):

must be licensed as an insurance producer

A husband and wife purchases a life insurance policy that covers both of them. The policy paid nothing when the husband died. Two years later, the wife dies and a death benefit is paid to the beneficiary. Which type of policy is this?

Survivorship life policy

According to Alabama law, a minor:

age 18 can begin receiving life insurance death benefits of up to $3,000 per year

If a Long Term Care (LTC) policy in Alabama has been in effect for more than ___, the insurer CANNOT contest any material representation on the application.

2 years

A policyowner can collect the face amount on what type of policy?

endowment policy

In regards to insurance applications, which of the following statements is true?

Changes on the application must be consented to in writing

Which of the following is NOT an example of insurable interest?

An airline insuring the lives of its passengers

In Alabama, all Health Maintenance Organizations must:

have a complaint system to resolve written complaints from enrollees

Julio, the insurance producer, has allowed his license to lapse. He would like to reinstate his license without retaking a prelicense course or passing a written examination. To do this, Julio must reinstate the license within ___ months from the renewal date.

12

If an insured commits suicide, a life insurance policy's face amount will be paid only after the policy has been in force for at least:

2 years

Which of these statements regarding an insurance application is true?

A representation is valid as long as it is true

Albert surrenders his Whole Life policy ten years after it was purchased. What can he expect?

To pay taxes on the cash value in excess of premium paid

Jackie took out a Medicare supplement insurance policy and also has a preexisting condition. In this situation, a preexisting condition is defined as a condition for which medical advice was given or received within _____ of the effective date of coverage.

6 months

An insurance producer must have which of the following in order to sell variable life insurance policies?

1. License for variable life and annuities contracts

2. A valid insurance license

3. Registered with FINRA

The Alabama Life and Disability Insurance Guaranty has the power to:

1. loan money to an insolvent insurance company

2. guarantee the obligations of an insurance company

3. provide money to satisfy the obligations of an insurance company

Who does the insurance agent legally represent?

insurance company

Replacement regulation in Alabama does NOT apply to:

credit life insurance

Medicare supplement policies marketed in Alabama:

1. cannot be more restrictive than Medicare

2. cannot treat a loss due to injury differently than a loss due to illness

3. cannot offer benefits that simply duplicate Medicare benefits

The minimum grace period for a life insurance policy sold in Alabama is:

30 days

The Commissioner of Insurance may NOT do which of the following?

change insurance laws