exam practice

If an insured's age was misstated on a life insurance contract, the Misstatement of Age provision requires that any death benefit payable would be

an amount that the premiums paid would have purchased at the current age

In Texas, how long must a policy be in force before an insurance company must pay death benefits for suicide?

2 years

A certificate of ________ permits an insurance company to transact business in Texas.

authority

In Texas, which of these statements regarding the Suicide clause is TRUE?

An insurer may not use suicide as a defense against payment after the second year

A license may be denied, suspended, or revoked if the licensee?

is found guilty of misrepresentation in obtaining the license

Which action will a life insurance company most likely take if an insured dies and it is discovered that the insured's age was misstated on the application?

Pay an amount the premiums would have purchased at the insured's actual age

A promotional advertising item is not considered a rebate unless it has a value equal to or less than what amount?

$25

Which of the following is NOT a required provision in group life policies?

Right to Loan

A temporary agent's license issued by the Commissioner of Insurance is valid for up to ___ days.

90

Which of these provisions is NOT required in life insurance policies?

Extended Term

An example of false advertising would be

An insurer exaggerating its dividends in a magazine advertisemenT

An example of rebating would be

returning a portion of a premium as inducement to purchase insurance

An insurance company organized under New York laws and licensed to do business in Texas is considered a(n)

foreign company

As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of?

Coercion

B, an insurance agent, tells his clients that their rights may be impaired if they fail to complete a release form within a given period of time. B may be found guilty of

coercion

How often must an insurance agent license normally be renewed?

Every two years

The phrase "transacting business" includes

1. collecting premiums

To terminate an agent's appointment, an insurance company must

send termination notice to the Texas Department of Insurance

When will a hearing be held after a notice of hearing, alleging participation in an unfair or deceptive act, is served to a licensee or insurer by the Commissioner?

No sooner than 6 days

Which of the following actions does the Commissioner of Insurance NOT have the power to conduct?

Activate insurance companies' financial reserves

Which Unfair Trade Practice involves an agent telling a prospective client that a policy's dividends are guaranteed?

Misrepresentation

Who is liable when an insured suffers a loss on a policy sold by an agent through an insurer not authorized to conduct business in Texas?

The agent

A plan through the Marketplace may be purchased by

any legal resident (except those imprisoned)

An applicant MUST receive an Outline of Coverage when an application is taken for a(n)

Medicare Supplement policy

An Evidence of Coverage form may be issued by a Health Maintenance Organization (HMO) after being approved by the

Commissioner

Every 12-months after the initial enrollment period, an HMO must hold an open enrollment period of

31 days

Which of the following benefits is NOT required under a group health plan for drug and alcohol treatment?

Transportation to and from a treatment facility

Which of the following statements about health coverage for newborns is NOT true?

Coverage is limited to only congenital defects

Which of these is NOT a reason for a business to buy key person life insurance?

A pension deficiency if the key employee dies

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

Primary Insurance Amount (PIA)

When does a life insurance contract become effective if the initial premium is not collected during the application process?

When producer delivers policy and collects initial premium

An insured covered by a group Major Medical plan is hospitalized after sustaining injuries that resulted from an automobile accident. Assuming the plan had a $1,000 deductible and an 80/20 Coinsurance clause, how much will the INSURED be responsible to pay with $11,000 in covered medical expenses?

$3,000

Which of these factors do NOT play a role in the underwriting of a life insurance policy?

Marital status

J was reviewing her Health Insurance policy and noticed the phrase "This policy will only pay for a semi-private room". This phrase is considered to be a(n)

internal limit

Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability?

Conversion privilege

The first portion of a covered Major Medical insurance expense that the insured is required to pay is called the:

initial deductible

How are Roth IRA distributions normally taxed?

Distributions are received tax-free

Which of the following statements is CORRECT about an agent who is taking an insurance application?

The agent should have the applicant initial any changes made on the application

Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself?

Entire Contract Provision

An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period?

Full face amount minus any past due premiums

T was treated for an ailment 2 months prior to applying for a health insurance policy. This condition was noted on the application and the policy was issued shortly afterwards. How will the insurer likely consider this condition?

Insurer will likely treat as a pre-existing condition which may not be covered for one year

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

Application containing statements from the insured

Which of the following statements BEST defines usual, customary, and reasonable (UCR) charges?

The maximum amount considered eligible for reimbursement by an insurance company under a health plan

Information obtained from a phone conversation to the proposed insured can be found in which of these reports?

Inspection report

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

A Return of Premium life insurance policy is:

Whole life and Increasing term

What is the purpose of a Policy Summary?

It highlights the critical parts of the policy issued

All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death, EXCEPT:

Interest Only

Which of the following consists of an offer, acceptance, and consideration?

Contract

S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT

beneficiary's age

Which of these actions should a producer take when submitting an insurance application to an insurer?

Inform insurer of relevant information not included on the application

Under a Graded Premium Whole Life policy,

the premium increases each year during the early years of the contract and remains the same after that time

A life policy with a death benefit and cash value that can fluctuate according to the performance of its underlying investment portfolio is referred to as:

Variable Life

Before a life insurance policy is issued, which of these components of the contract is required?

Applicant's signature on application

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

What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?

1. Family Maintenance Policy

The USA Patriot Act was enacted in:

2001

Which statement is true regarding a minor beneficiary?

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

How are surrender charges deducted in a life policy with a rear-end loaded provision?

Deducted when the policy is discontinuedM

Under a Graded Premium policy, the premiums

are lower during the policy's early years

Which statement regarding the Change of Beneficiary provision is true?

The policyowner can change the beneficiary

Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation?

Policy was returned within the free-look period, premium will be fully refunded

How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period?

Claims are denied under the Suicide clause of the policy

In a Life insurance contract, an insurance company's promise to pay stated benefits is called the:

Insuring clause

Which of the following statements is CORRECT about accelerated death benefits?

Must have a terminal illness to qualify

A policyowner would like to change the beneficiary on a Life insurance policy and make the change permanent. Which type of designation would fulfill this need?

Irrevocable

Why must an insurance applicant answer all questions on the application?

Statements and representations on the application are part of the consideration for issuing a policy

A producer does not have the authority to change a policy or waive any of its provisions. The health provision that best describes this statement is called the

Entire contract

Medicare Part B does NOT cover:

inpatient hospital services

Deductibles are used in health policies to lower:

overuse of medical services

ursing home benefits must be provided for at least 12 consecutive months in which of the following types of policies?

Long-Term Care

A policy of adhesion can only be modified by whom?

The insurance company

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

On a life insurance policy, who is qualified to change the beneficiary designation?

Policyowner

Which of these are NOT an example of a Nonforfeiture option?

Life Income

Which of the following is NOT included in the policy face?

Exclusions

Which of these do NOT constitute policy delivery?

Policy issued with a rating

If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of?

Insured

K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?

Level

Which of the following policy provisions prohibits an insurance company from incorporating external documents into an insurance policy?

Entire Contract

An insurance company normally has 2 years to contest information provided on an accident and health application. This 2 year period begins on the date that the:

insurer dates the policy

An insurer must provide an insured with claim forms within __ days after receiving notice of a loss.

15

Variable Life products require a producer to

hold a Life Insurance license and a Securities license

When is the face amount of a Whole Life policy paid?

When the insured dies or at the policy's maturity date, whichever happens first

When does a Probationary Period provision become effective in a health insurance contract?

At the policy's inception

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

Insurance policies are offered on a "take it or leave it" basis, which make them:

Contracts of Adhesion

Which of the following provisions specifies how long a policyowner's health coverage will remain in effect if the policyowner does not pay the premium when it is due?

Grace Period

Who is NOT required to sign a health insurance application?

Beneficiary

T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?

Request of the change will be refused

A Disability Income policy that only the policyowner can terminate and which the rates will never go up is considered to be

Noncancellable

Which of these needs is satisfied by Adjustable Life insurance?

Insured's need for flexible premiums

A Business Overhead Expense policy would cover which of the following if a business owner becomes disabled?

Utilities and office rent

A Business Overhead Expense policy:

covers business expenses such as rent and utilities

A life insurance policy would be considered a wagering contract WITHOUT:

insurable interest

If an individual is covered under an Accidental Death Policy and dies, an autopsy can be performed in all these situations, EXCEPT:

When the state prohibits this by law

K failed to pay a renewal premium within the time granted by the insurer. K then sends in a payment which the insurer subsequently accepts. Which policy provision specifies that coverage may be restored in this situation?

Reinstatement

P loses an arm in a farm accident and is paid $10,000 from his Accidental Death and Dismemberment policy. This benefit is known as the

Capital Sum

T owns an Accident & Health policy and notifies her insurance company that she has chosen a less hazardous occupation. Under the Change of Occupation provision, which of the following actions may her insurance company take?

Increase her policy's coverage amount

Which type of renewability best describes a Disability Income policy that covers an individual until the age of 65, but the insurer has the right to change the premium rate for the overall risk class?

Guaranteed Renewable