Life and Health Insurance 200 Questions Practice Exam

An annuity promises that, if the annuitant dies before receiving payments equal to the correct value, the payments will be continued to a beneficiary until an amount equal to the contract value has been paid. This type of annuity is called

An installment Refund annuity

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

5 months

A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?

20-Pay Life accumulates cash value faster than Straight Life

Who makes the legally enforceable promises in a unilateral insurance policy?

Insurance company

The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and

the initial premium

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

Warranty

A comprehensive major medical health insurance policy contains an Eligible Expenses provision which identifies the types of health care services that are covered. All of the following health care services are typically covered EXCEPT for

experimental and investigative services

If a retiree on Medicare required five hospital stays in one year, which policy would provide the best insurance for excess hospital expenses?

Medicare Supplement

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

All of the following are limited benefit plans EXCEPT

life insurance policies

A physician opens up a new practice and qualifies for a $7,000/month Disability Income policy. What rider would the physician add if he wants the ability to increase his policy benefit as his practice and income grow?

Guaranteed Insurability Option rider

An agent whose license has been revoked is required to

wait at least five years before applying for a new license

The benefits under a Disability Buy-Out policy are

payable to the company or another shareholder

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

health information

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

Deducted when the policy is discontinued

What MUST an insurance company use in its advertising?

Its true corporate name

An accident policy will most likely pay a benefit for a(n)

off-the-job accident

M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT

free-look period has expired

When a policyowner cash surrenders a Universal Life insurance policy in it's early years, this may be considered a red flag for a(n)

Anti-Money Laundering violation

Which of these do NOT constitute policy delivery?

Policy issued with a rating

What is the MINIMUM number of Activities of Daily Living (ADL) an insured must be unable to perform to qualify for Long Term Care benefits?

2

An agent who tells a client that dividends are guaranteed may be guilty of

misrepresentation

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

The beneficiary is named by the key employee

A policyowner's rights are limited under which beneficiary designation?

Irrevocable

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

Variable Whole Life Insurance can be described as

both an insurance and securities product

A 66 year-old is covered under a group health plan while employed with a business that has 40 employees. If she injures herself while walking in the park, what coverage would be considered primary?

Her group health plan

Medicare

is a hospital and medical expense insurance program

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

All of the following statements about health coverage for newborns are correct EXCEPT

coverage during the first year is limited to congenital defects

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 employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a

$25,000 individual whole life policy

M purchases a $70,000 Life Insurance Policy with premium payments of $550 a year for the first 5 years. At the beginning of the sixth year, the premium will increase to $800 per year but will remain level thereafter. The face amount will remain at $70,000 throughout the life of the policy. The type of policy that M has purchased is

Modified Premium Life

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 the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy?

Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company

Which of the following statements is CORRECT about the period in which a Term Policy can be converted?

It varies according to the contracts

If, at the time of an insured's death, the insurance company discovers that the insured's age was misstated on the application for life insurance, the company will most likely

pay the policy proceeds in the amount the premiums would have purchased at the insured's actual age

K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective?

The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured

An assignment of benefits of a Health Policy

transfers payments to someone other than the policyowner

What type of policy would only provide coverage for specific types of illnesses (cancer, stroke, etc)?

Dread disease insurance

K becomes ill after traveling overseas and is unable to work for 3 months. What kind of policy would cover her loss of income?

Disability Income

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

The Accidental Death and Dismemberment (AD&D) provision in a life insurance policy would pay additional benefits if the insured

is blinded in an accident

Which of the following policy features allows an insured to defer current health charges to the following year's deductible instead of the current year's deducitble?

Carryover provision

T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this?

Life Annuity with Period Certain

On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take?

Collect initial premium along with a signed health statement

Which of the following costs would a Basic Hospital/Surgical policy likely cover?

Surgically removing a facial birthmark

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

Payments are made to an annuitant for life

J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions?

Reinstatement provision

P is an employee who quits her job and wants to convert her group health coverage to an individual policy. After the expiration of COBRA laws, which of the following statements is TRUE?

She does NOT need to provide evidence of insurability

A whole life insurance policyowner does not wish to continue making premium payments. Which of the following enables the policyowner to sell the policy for more than its cash value?

Life settlement contract

Who can purchase a plan through the Marketplace?

Any legal resident except those incarcerated

What is Old Age and Survivors Health Insurance (OASDHI) also known as?

Social Security

Which of these require an offer, acceptance, and consideration?

Contract

How does a typical Variable Life Policy investment account grow?

Through mutual funds, stocks, bonds

An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the

applicant's physician

After the initial enrollment period, an HMO must hold an open enrollment period of how many days at LEAST once in every 12-month period?

31

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

Exclusions

A student pilot can pay regular premium costs for her life insurance policy with the addition of which of the following?

Aviation exclusion

In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy?

Owner's Rights

A Renewable Term Policy is renewable at the option of the

insured

Which of these is considered a true statement regarding Medicaid?

Funded by both state and federal governments

Which is true concerning a Variable Universal Life policy?

Policyowner controls where the investment will go and selects the amount of the premium payment

In life insurance, the needs approach is used mostly to establish

how much life insurance a client should apply for

A life insurance illustration is NOT required to include the

company's mortality table

Which of these characteristics is consistent with a Straight Life policy?

Premiums are payable for as long as there is insurance coverage in force

Under the Texas insurance code, which of the following statements about the Suicide clause is CORRECT?

Suicide may not be a defense against payment after the second year

Which of the following best describes a contingent beneficiary?

Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured

A Business Disability Buyout plan policy is designed

to pay benefits to the Corporation or other shareholders

Term insurance has which of the following characteristics?

Expires at the end of the policy period

An agent MUST do which of the following during a sales presentation for a participating life insurance policy?

Include a statement that dividends are NOT guaranteed

In regards to representations or warranties, which of these statements is TRUE?

If material to the risk, false representations will void a policy

The Commissioner of Insurance may issue a temporary agent's license for a maximum of how many days?

180

A stock insurance company is owned by it's

stockholders

J chooses a monthly premium payment mode on his Whole Life insurance policy. Which of these statements is correct?

The gross premium is higher on a monthly payment mode as compared to being paid annually

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

Family Maintenance Policy

Which of these actions is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan?

Collateral assignment

Under what system do a group of doctors and hospitals in a designated area contract with an insurer to provide services at a prearranged cost to the insured?

PPO

Basic Hospital and Surgical policy benefits are

lower than the actual expenses incurred

An employer that offers a qualified retirement plan to its employees is eligible to

make tax-deductible contributions to the plan

What action can a policyowner take if an application for a bank loan requires collateral?

Assign policy ownership to the bank

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

The Consideration clause in a life insurance contract contains what pertinent information?

Amount of premium payments and when they are due

T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?

$50,000

T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?

$0

The clause identifying which losses resulting from an accident or sickness are insured by the policy is called the

Insuring clause

What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?

Whole Life

What is the purpose of the Time of Payment of Claims provision?

Prevents delayed claim payments made by the insurer

A long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following?

Inability of the insured to perform more than 2 Activities of Daily Living (ADL's)

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 Insurance Commissioner may examine the records of an insurance company in order to

determine the solvency of the company

What does Medicare Parts A and B cover?

Part A covers hospitalization; Part B covers doctor's services

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

Certificate

A 42-year-old executive wants to purchase life insurance that will allow for increases or decreases to coverage as his/her needs change. Which of the following policies will best meet this need?

Universal Life

When a life insurance policy exceeds certain IRS table values, the result would create which of the following?

Modified Endowment Contract (MEC)

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

K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?

$20,000 death benefit

Which of the following are NOT managed care organizations?

Medical Information Bureau (MIB)

K has a health policy that must be renewed by the insurer and the premiums can only be increased if applied to the entire class of insureds. This type of policy is considered

guaranteed renewable

What type of life insurance incorporates flexible premiums and an adjustable death benefit?

Universal Life