producer test

Which premium schedule results in the lowest cost to the policyowner?

Annual

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?

life income

Who has the right to change a revocable beneficiary?

policyowner

Which statement is true regarding a minor beneficiary?

Normally, a guardian is required to be appointed in the Beneficiary clause of the contract

M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son?

Revocable

A policyowner is able to choose the frequency of premium payments through what policy feature?

premium mode

K is the insured and P is the sole beneficiary on a life insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true?

Proceeds will be payable to insured’s estate if beneficiary dies within a specified time

T is the policyowner for a Life Insurance policy with an Irrevocable beneficiary designation. If T wishes to change the beneficiary, T must obtain permission from the

beneficiary

If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act?

Insured's contingent beneficiary

A level premium indicates:

the premium is fixed for the entire duration of the contract

A policyowner is allowed to pay premiums more than once a year under which provision?

Mode of Premium

J would like to maintain the right to change beneficiaries. Which beneficiary designation should be used?

Revocable

P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to:

P only

Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take?

Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company

Which factors are taken into consideration when an insurance company determines the premium rate for a Whole Life policy on an applicant?

Risk classification

Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine:

probability of making timely premium payments

D the agent met with a prospect and ended up selling an insurance policy. While filling out the insurance application, D makes a mistake. In this situation, D MUST

correct the information and have the prospect initial the change

A life insurance application must be signed by all of these, EXCEPT:

beneficiary

T applies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or medical examination, whichever is later. Assuming that T is an acceptable risk, what item is given to T?

conditional receipt

What is the initial source of underwriting for an insurance policy?

Application containing statements from the insured

An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?

When the conditions of the receipt are met

ABC Insurance Company has accepted a life insurance application which contains unanswered questions. The company then makes the application part of the life contract. In this situation, the insurer has:

waived one of its legal rights

Which Federal law allows an insurer to obtain an inspection report on a potential insured?

FCRA

Which parts of a life insurance policy are guaranteed to be true

warranty

At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid?

At the time of application

The USA Patriot Act was enacted in:

2001

The entity whose sole purpose is sharing medical data among its member companies is called the

MIB

The reason for backdating a policy is

to obtain a premium rate based on an earlier age

Which of the following is an important underwriting principle of group life insurance?

Everyone must be covered in the group

When an employee is terminated, which statement about a group term life conversion is true?

Policy proceeds will be paid if the employee dies during the conversion period

Company XYZ offers a group Term Life insurance plan to its employees. What does each employee covered under this plan receive?

Certificate of insurance

If its employees share in the cost of insurance, what type of group life insurance plan would a corporation have?

contributory

An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be:

converted to an individual permanent policy at an individual rate

Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life plan to all its eligible employees?

Portion of the premiums paid for by the employer may be a tax deduction

What type of group insurance plan involves employees sharing the cost?

contributory plan

Which of the following statements about noncontributory employee group life insurance is FALSE?

A minimum number of employees is required to participate

Group life insurance policies are generally written as:

annually renewable term

S, while in the process of converting her group life insurance to an individual policy, dies. What happens to the claim her beneficiary submits?

Full benefits are payable under the Master contract

N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What type of annuity did N purchase?

fixed deferred

T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide?

Income that cannot be outlived by the owner

An individual who purchases a Life annuity is given protection against:

the risk of living longer than expected

The payments on Q's annuity are no less than $250 quarterly. Which of the following annuities does Q own?

Flexible Installment Deferred

Variable annuities may invest premiums in each of the following, EXCEPT:

Insurer's corporate business account

W is a 39-year old female who just purchased an annuity to provide income for life starting at age 60. All of these would be acceptable annuity choices, EXCEPT a(n):

immediate annuity

What type of annuity has a cash value that is based upon the performance of it's underlying investment funds?

variable

K has inherited a large sum of money. K purchases an annuity with this sum on July 1, and starts receiving payments August 1. These payments will continue for as long as she and her spouse lives. Which type of annuity did K purchase?

Single Premium Immediate Joint with Survivor Annuity

Which of the following are Equity Indexed annuities typically invested in?

s & p 500

Which of these statements concerning an Individual Straight Life annuity is accurate?

Payments are made to an annuitant for life

Which statement regarding a Key Employee Life policy is NOT true?

The beneficiary is named by the key employee

Two partners own equal shares in a business worth a total of $1,000,000. If they both commit to the purchase of a life insurance policy that will fund a Buy-Sell Agreement, which of the following is TRUE?

Each partner owns a $500,000 policy on their partner's life

Which type of plan allows an employer to give money to an employee for buying a life insurance policy and also permits the employee to select the beneficiary?

Split-dollar plan

An architecture firm would stand to lose a lot of money in the event of the death of its project manager. Which type of policy should the firm purchase on its project manager?

Key Person Life Policy

Company Z has a Cross Purchase Buy-Sell Agreement in place among its three founding partners. If the agreement is funded with individual life insurance, what would it require?

Each partner must own a policy on the other partners

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

59 1/2

What type of employee welfare plans are not subject to ERISA regulations?

church plans

A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid:

mandatory income tax withholding on the transfer amount

How long does an individual have to "rollover" funds from an IRA or qualified plan?

60 days

Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?

annuity

A sole proprietor may use this plan ONLY if the employees of this business are included.

Keogh Pension Plan

An individual working part-time has an annual income of $25,000. If this individual has an IRA, what is the maximum deductible IRA contribution allowable?

7500

Premature IRA distributions are assessed a penalty tax of:

10%

Which of the following is TRUE if the owner of an IRA names their spouse as beneficiary, but then dies before any distributions are made?

The account can be rolled into the surviving spouse's IRA

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 the funds would be forfeited

What determines the full amount of Social Security retirement benefits a qualified individual is entitled to receive?

primary insurance amount

What is Old Age and Survivors Disability Insurance (OASDI) also known as?

social security

One becomes eligible for Social Security disability benefits after having been disabled for:

5 months

The amount of monthly disability benefits payable under Social Security is affected by which of the following factors?

Amount of the benefits available from other sources

Which of these is NOT a source of funding for Social Security benefits?

federal government

What is required for limited benefit policies?

A Notice to Insured stating it is a Limited Benefit Policy

Why do people choose to purchase critical illness insurance coverage?

To provide a lump sum upon diagnosis of a critical illness

What is morbidity?

The probability or risk of getting ill or becoming disabled

What type of contract is medical expense insurance?

A reimbursement contract

How does a Point of Service plan combine features of different insurance models?

To combine features of HMO and PPO plans

What is the basic principle behind how HMO plans manage healthcare delivery?

To provide coordinated care through a network of providers

How do PPO plans organize their provider networks and what is their main goal?

To provide flexibility in choosing healthcare providers

What is experience rating used for in group insurance?

To price large group contracts based on prior claims experience

What is required for limited benefit policies?

A Notice to Insured stating it is a Limited Benefit Polic

What is required for individual health insurance contracts?

Evidence of insurability and an application

What is the fundamental goal of Medicare Advantage coverage?

To provide an alternative to Original Medicare with additional benefits

What is a key feature of a short-term medical insurance policy?

It offers limited coverage for a short duration

What is the key characteristic of the 'accidental result' definition?

Only the resulting injury must be unintentional

What is the purpose of a blanket insurance policy?

To cover a group exposed to the same risks

What is the primary purpose of credit disability insurance?

To pay off a loan if the insured becomes disabled

What is the primary purpose of accident insurance?

To provide benefits for accidental injuries or death

What is required for coverage under the accidental means definition?

Both the cause and result must be accidental

What financial purpose does a Flexible Spending Account serve for healthcare expenses?

To allow employees to set aside pre-tax dollars for medical expenses

What is the primary purpose of a dental insurance policy?

To focus on diagnostic and preventive dental care

What protection does vision care insurance primarily offer to subscribers?

To provide coverage for eye exams and corrective lenses

Which type of plan normally includes hospice benefits?

managed care plans

Which of these statements concerning COBRA is correct?

Under COBRA, dependents of employees covered by group plans have the same extension and conversion privileges available to them as the employee

Which of the following statements is true about most Blue Cross/Blue Shield organizations?

non-profits

What is issued to each employee of an employer health plan?

certificate

Under which of the following circumstances will the benefits under COBRA continuation coverage end?

All group health plans are terminated by the employer

The Health Insurance Portability and Accountability Act (HIPAA) gives privacy protection for

health information

The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers (and their families) whose employment has been terminated the right to:

continue group health benefits

Pre-hospitalization authorization is considered an example of:

managed care

J is covered by an employer-provided 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

A departing employee has decided to continue his group coverage through COBRA. Who pays the premium in this situation?

employee