NM Life Insurance Final Exam Mock Test

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

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

Which of the following health care plans charges a premium that cannot be increased?

Noncancelable

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

Transfers some of the investment risk to the policyowner

Which type of life insurance policy allows the policyowner the choice of investments along with flexible premium payments?

Variable Universal Life

Which of these is NOT considered to be a cost connected with an individual's death?

Business expenses

A (an) ___________ insurer assumes risk from another insurance company.

Reinsurance

When group insurance under COBRA have expired, a fully insured group policy can be converted to a (an)

Individual health policy

The authority to change the beneficiary in an individual annuity lies with the

Owner

How are monthly life annuity benefit payments treated under a tax sheltered annuity (TSA)?

Taxed as an ordinary income in the year recieved

Which individual would be best suited for Medicare Supplement Insurance?

Medicare enrollee

Which of the following is NOT an example as risk retention?

Not doing a business deal after deciding it would be too risky.

Tim is in need of surgery. Before being hospitalized, he is referred to an outpatient clinic for diagnostic tests. What is this an example of?

Pre-admission testing

Does the Superintendent have the ability to examine the records of authorized insurers?

Yes, because of the powers granted through state statues

Which statement about group life insurance is INCORRECT?

Each participant requires evidence of insurability

Medicare Part A does NOT provide coverage for

The first three pints of blood

Darrell has a group long-term disability income policy paid by his employer. Which of these statements is true?

The specified benefit amount is a percentage of his wages.

Twisting means

Pursuading an insured, to the insured's detriment, to switch policies.

What is the maxium number of employees (earning at least 5,000) that an employer can have in order to start a SIMPLE retirement plan?

100

The following are all elements of a valid contract EXCEPT

written evidence

Which of the following would permit an insurer to delay a covered disability policy claim?

Elimination period

Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted?

If Tom's employment is terminated, 20% of his funds could be forfeited.

When a ten year renewable term life insurance policy issued at age 45 is renewed, the premium rate will be the current rate for

Ten year term insurance for a person aged 55.

What kind of arrangement gives the policyowner the right to change the beneficiary?

Revocable designation

Wyatt is shopping for life insurance and is mainly concerned with the policy's death benefit. Which index should he be looking at when making comparisons?

Net payment cost index

An individual health insurance policy with premiums paid monthly has a minimum grace period of

10 days

The Medical Information Bureau consists of members from which group?

Insurance companies

A single premium deferred annuity sometimes containes a bail out feauture. Which statement regarding this feauture is correct?

If an interest rate falls below a specified level, the surrender charge is waived.

Which of these statements is NOT a characteristic of the law of large numbers?

Rates can be calculated to compensate for losses

Which of the following is NOT a valid contract exchange?

An annuity exchanged for a life insurance policy

All of these are duties that a producer may be required to perform when delivering an insurance policy EXCEPT

Leave a conditional receipt with the client

The owner's cost basis for a non-qualified deferred is typically the same as the

total premiums paid

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

Interst payment made by the policyowner are deductiable

Which group is the Do Not Call Registry designed to protect against?

telemarketers

Which of the following is NOT subject to the promise to pay in an insuring clause?

How the premium is calculated

A policyowner has a life insurance policy where she had listed her age on the application as 5 years younger than her actual age. If she dies and the insurer discovers the misstatement of age, how much will the insurance company pay?

Less than the face amount.

Which term refers to insurance written on the interests of the licensee, the licensee's employer, or the licensee's immediate family?

Controlled Business

With life insurance, the needs approach is used primarily in determining

how much life insurance a client should apply for

When a sum of money undergoes capital liquidation, that sum will

decrease in size

Which of the following is NOT considered to be an expense for surviving family members of a deceased wage earner?

unemployment tax expenses

Which is an accurate discription of the premium in a graded premium life insurance policy?

Annual increases in premium for a stated number of years then remains level

A terminated employee has how many days upon termination to convert group life insurance coverage to an individual policy?

31 days

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

Probationary period

In order to contribute to a Health Savings Account (HSA),

The applicant must be enrolled in a High Deductible Health Plan (HDHP)

Julie is an employee with a group health plan that contains the Mandatory Second Surgical Opinion provision. What is to be expected with this provision in place?

Out-of-pocket expenses are lower when a Second Surgical Opinion is obtained as opposed to having only one.

Which annuity allows contributions to an IRA?

Deferred

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

Where the master contract was issued

Tim had an on-the-job accident and collects benefits from his individual disability income policy. Which factor could possibly reduce these benefits?

Benefits he recieves from worker's compensation

In health insurance, 60 days must pass after written proof of loss has been recieved by an insurer before the insured may

Bring legal action against the insurer

In New Mexico, continuing a Health plan coverage beyond the inital coverage period may require the policyholder to do all of the following EXCEPT

certify the newborn's insurablity

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

defamation

Which of the following statements about the contestability of a life insurance policy is true?

The policy can be contested by the insurer only during the first two years of the contract

Which life insurance clause prohibits an insurance company from questioning the vaildity of the contract after a stated period of time has passed?

Incontestable clause

Which statement regarding the cash value of a whole life insurance policy is correct?

available to the policyowner when policy has been surrendered

Alan is an enrollee of a health maintenance organization (HMO) which uses a gatekeeper system. If there ever comes a time when he needs emergency health services, what should he do?

Proceed to the nearest emergency room

Third-party administration has become fairly common in accident and health insurance due to the growth of

self-funding of benefits

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

reinstated

Field underwriting by a producer

may result in the disclosure of hazardous activities of the applicant

Nonqualified medical expense distributions from a Health Savings Account (HSA) have a tax penalty of

20%

Which of these life insurance policies does NOT contain a cash value provision?

decreasing term life

Which of the following is generally a form of group credit life insurance?

Decreasing Term Insurance

In New Mexico, who would be eligible for a temporary agent's license?

A designated employee who is replacing a deseased agent

Individual and group health insurance typically exclude coverage for which of the following?

Cosmetic Surgery

Terry recieves long-term physical therapy at her residence. What type of insurance would cover this service?

Home health care

At what age do most people become eligible for Medicare?

65

Under Medicare Supplement insurance, what form provides information about services, benefits, copayments, deductiables, exclusions, premiums, and the insurer?

The outline of coverage

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

irrevocable beneficiary

Which of the following is NOT a reason the government provides insurance?

reduce fraudulent claims

Which of the following can be defined as "the potential for loss"?

Risk

Patrick purchased a long-term care policy. He has a health condition for which medical treatment was recommended by a physician within 6 months prior to the policy's effective date. This condition is called a(n)

pre-existing condition

James ownes a business and purchased a policy that covers the business expense of finding a permenant or temporary employee to replace a disabled one. This type of disability coverage is called

key employee coverage

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

Cataract surgey

How are level term policies able to provide level premiums?

Premiums are averaged over the term of the policy

Long-term care insurance policies may exclude coverage for all of the following EXCEPT

Senile demetia

After the extended term life nonforfeiture option is chosen, the available insurance will be

level term for a stated period of time

Tim is covered by an accident and health insurance policy that may not be changed in any way by the insurer up to a stated age, as long as the premiums are paid. What type of policy is this?

Noncancelable

Under HIPPA, medical plan late enrollees may be excluded for pre-existing conditions for a maximum of

18 months

Illistrations used in the sale of life insurance contain a statement that must be signed by

the agent

A single-life annuity only has ONE

Annuitant

An accident and health plan that typically covers ONLY the services of approved providers is called a (an)

HMO plan

A life insurance illistrations showing future premiums being paid out of nonguaranteed values must disclose that

The policyowner may need to resume premium payments depending on actual results

Which statement concerning a decreasing term life policy is accurate?

face amount decreases over the policy period

Jerry has an indemnity plan which covers dental expenses. Typically, these type of plans

cover preventive care once every six months

Accident and health insuance claim handling is made more convenient to the insured by utliizing

Assignment of Benefits

Which of the following does a Medicare Advantage enrollee typically pay for?

Small co-pay per visit or per service

All of these statement correctly describe an aleatory contract EXCEPT

Only one party makes any kind of legally enforceable offer

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

Custodial Care

Who must sign a rider attached to a health insurance policy in order for it to be valid?

Insured and producer

What qualifies as acceptance of an insurance contract offer?

The issued policy

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

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

If an individual would like to enroll in Medicare or seek public information about Medicare, which federal agency handles this?

Social Security Administration

Individuals who participate in in a HMO plan are called

subscribers

What is the minimum number of employee's needed for a small employer medical expense plan in New Mexico?

2

The New Mexico small employer rules must apply to a medical expense plan when the number of eligible employee's is within a specified range. What is the range?

2-50

Which of the following best describes the tax treatment of medical expense policies for the self-employed?

100% of medical expense plan premiums are tax deductable

Part A Medicare includes coverage for all of the following services EXCEPT

120 days of Skilled Nursing Care

Individual health insurance policies must cover mentally and physically handicapped dependent children

until they become self-supportive

An insurance company can be liable for a producer's unauthorized acts

when the agency contract is unclear concerning the authority given

The unwritten authority given to the producer to carry out necessary incidental acts of the agency agreement is called

implied authority

In the event of premium default, which life insurance provision will use cash value to keep the policy in force?

automatic premuim loan

The Superintendent must inspect the financial records of each domestic company every

5 years