Life and Health Insurance Exam Practice

This JSON array contains 352 practice flashcards in Question and Answer style based on insurance lecture notes, covering life and health insurance concepts, policy provisions, and regulations.

What is an example of an applicant intentionally lying to an insurance company on an application to obtain a cheaper premium?

Fraud

Which hobby would most life insurance policies typically exclude coverage for?

Racing cars once a month

Which of the following is NOT typically a source of underwriting information for life or health insurance?

Disclosure authorization response

What happens if a life insurance applicant receives a conditional receipt and then dies the next day?

The claim will be paid if the application is approved

Which signature is NOT required on an individual insurance application?

Insurer

From which of the following sources must a producer NOT obtain a signature for an insurance application?

The beneficiary

How many months can a life insurance policy normally be backdated from the date of application?

$6$ months

An attending physician's statement (APS) is performed at the request of which party during underwriting?

The insurer

Which document describes the critical segments of a life insurance policy?

Policy summary

True or False: An applicant's medical history may be analyzed and reported during the insurance application process.

True

What is the term for a person who is NOT acceptable by an insurer at standard rates because of health history, occupation, or hobbies?

Substandard risk

Which law must insurers and producers comply with when obtaining personal information from a third party concerning an applicant?

Fair Credit Reporting Act

What type of statement guarantees that the facts supplied by an insurance applicant are true?

Warranty

Which of the following is NOT considered a key factor in underwriting life insurance?

Marital status

In what way does an insurer have a right to screen applicants for HIV?

Blood test for HIV

What is NOT a possible field underwriting role for an insurance producer?

Providing commission information to the applicant

Under a group life plan, what does the conversion privilege allow an employee to do upon employment termination?

Convert to an individual plan

Under a group life policy, what document will the insurer issue to each person insured?

Certificate

What risk selection process helps protect insurance companies from the tendency of less favorable risks seeking insurance?

Adverse selection

An employee under a group insurance policy has the right to name a beneficiary and the right to what else?

Convert to an individual policy in the event of employment termination

What is a group organized for purposes other than obtaining insurance that has a constitution and bylaws called?

Association or labor group

What is the process called when an insured individual changes group coverage to an individual policy with the same insurer due to termination?

Conversion

Which factor would an insurer consider when determining whether to accept a group life plan?

Average age

What does a non-contributory health insurance plan help the insurer avoid by covering all eligible employees?

Adverse selection

Which of the following is NOT a characteristic of a Group Life Insurance Plan?

Individual underwriting

In which document can the coverage, conditions, and limitations of a group contract master policy be found?

Certificate of coverage and benefits

What phase is an annuity in when it is experiencing tax-deferred growth until retirement?

Accumulation period

Which annuity payout option allows the policyowner to choose a pre-determined number of benefit payments?

Period certain

How do interest earnings accumulate in a deferred annuity contract?

On a tax-deferred basis

Which rider on a variable annuity guarantees that the annuitant will not outlive their benefits without having to annuitize the investment?

Guaranteed lifetime withdrawal benefit (GLWB)

What constitutes the nonforfeiture value of an annuity before annuitization?

All premiums paid, plus interest, minus any withdrawals and surrender charges

With a deferred annuity, how soon can benefit payments begin after the date of purchase?

A minimum of $12$ months

Which benefit option ensures income benefits are paid for life without actually annuitizing the contract in exchange for a fee?

Guaranteed lifetime withdrawal benefit

What do fixed annuities NOT provide as a benefit to the policyowner?

Hedge against inflation

What is an annuity called when it is linked to a market-related index?

Equity-indexed annuity

Which type of annuity requires premium payments that vary from year to year?

Flexible premium deferred annuity

What type of annuity provides a guaranteed accumulation or payout?

Annuity certain

During the accumulation period, who is the only individual with the authority to surrender an annuity?

Policyowner

When does an immediate annuity typically begin making payments?

After the first premium has been paid

What primarily determines the amount of annuity payments for a life annuitant?

The annuitant's life expectancy

If an annuitant dies before the annuity start date, what is returned to the beneficiary?

Premiums paid plus interest earned

How does an individual qualify as a fully-insured individual under Social Security disability coverage?

Individual has been credited with the appropriate number of quarters of coverage

What are the two types of insured statuses under Social Security?

Fully insured and currently insured

True or False: Social Security is intended to replace a sound personal insurance plan.

False

What is the period called when there are no Social Security benefits for a surviving spouse once the youngest child turns $16$?

Blackout period

To qualify for Social Security Total Disability, how long must the disability be expected to last?

$12$ months

What condition regarding the duration of a retirement plan would disqualify it from receiving favorable tax treatment?

It is temporary

Withdrawals from a qualified plan for which purpose would still trigger a $10\%$ tax penalty?

Stock purchase

For whom were Keogh plans specifically designed to provide pension benefits?

The self-employed

Under a Traditional IRA, when is the interest earned on the account taxed?

Upon distribution

How is the growth of earnings in a Traditional IRA handled for tax purposes?

Grow tax-deferred and are taxable upon withdrawal

Within how many days must an IRA rollover be completed to avoid being taxed as current income?

$60$ days

Which type of employer is subject to ERISA regulations?

Private sector employers

At what age is a Roth IRA owner eligible for tax-free withdrawals, provided they have held the account for at least $5$ years?

$$59 \frac{1}{2}$$

How are contributions made to a Roth IRA handled for tax purposes?

Not tax deductible

What type of tax will a beneficiary pay on money withdrawn from an inherited traditional IRA?

Ordinary income tax

Which personal asset is NOT typically taken into account when determining an applicant's life insurance needs?

Automobile

Which method measures an individual's future net earnings capability to calculate the financial impact on dependents?

Human life value approach

Which of the following is NOT an example of a Business Continuation Plan?

Deferred Compensation

Which use of life insurance is considered inappropriate for business purposes?

Covering entry level employees with life insurance

Which approach predicts earning potential to determine how much of that amount is devoted to dependents?

Human life value approach

When life insurance is purchased to enable heirs to pay estate taxes, what is this specific strategy called?

Estate conservation

How are premiums paid by an employer for an employee's group life insurance treated for the business?

Tax-deductible to the employer

What is a valid reason for small businesses to insure the lives of major shareholders?

Fund a buy-sell agreement

Who is the policyholder for a group health benefit plan?

Employer

In which type of policy can a master contract and certificate of coverage be found?

Group

Without a Section $125$ Plan, how is an employee's payroll contribution to an HSA treated for tax purposes?

Taxable income to the employee

Which individual is NOT eligible for continued health coverage under COBRA?

An employee terminated for gross misconduct

If an employer pays half the premium for a monthly disability benefit of $1,000, what amount is considered taxable income?

$$500$$

Which of the following is typically NOT eligible for coverage in a group health policy?

Temporary employee

According to HIPAA, when is an individual eligible for coverage upon hire at a new company if they have previous group health insurance?

Immediately upon hire

What are the two primary perils involved in health insurance?

Accident and sickness

How are disability income benefits treated for tax purposes if the group policy premium is paid entirely by the employer?

Taxable income

Under HIPAA, what is health claim information categorized as?

Individually identifiable health information

What provides evidence of ownership in a participating health insurance contract?

Policy ownership

Which peril is typically covered by health insurance?

Injury due to accident

If an employee age $65$ or older continues working and keeps their employer group health plan, which is the secondary payer?

Medicare

On what basis may group health plans deny participation to a member?

Part-time employment status

What percentage of health costs paid by sole proprietors is tax deductible?

$$100\%$$

What is the primary purpose of Credit Accident and Health plans?

Help pay off existing loans during periods of disability

According to HIPAA, when can a group health policy renewal be denied?

When contribution or participation rules have been violated

What is issued to a person covered with an individual health plan?

A policy

When an insured individual changes group coverage to an individual plan with the same insurer upon termination, it is called a(n) ________.

Conversion

What percentage of physician fees does Medicare Part B typically pay?

$$80\%$$

What is Medicare Part B also commonly known as?

Medical insurance

What did the establishment of Medicaid allow states to receive to expand public assistance programs?

Matching funds

Who is the intended population for the Medicaid program?

Poverty stricken people

Which of the following is NOT a qualifying event for Medicare eligibility?

Falling below the federal poverty level

Which type of employee would be covered under Workers' Compensation after an workplace accident if they were an innocent bystander?

An employee performing their job during an accident

What are small employers who join together to provide health benefits for their employees called?

Multiple Employer Welfare Association (MEWA)

What primary service does Medicare Part A cover?

Inpatient hospital stay

Which factor is NOT considered when determining eligibility for Medicare benefits?

Income

What primary service does Medicare Part B cover?

Doctor's charges

In addition to fee-for-service plans, what is the other type of health plan participating in the Federal Employees Benefit Program?

Prepaid (Health Maintenance Organizations)

How is Medicare Part B insurance partially funded besides general tax revenue?

Monthly user premiums

Which payment method involves unbundling services and paying for them separately?

Fee-for-service

What is a legal entity created to allow pools of employers to purchase group health benefits for employees?

Multiple Employer Welfare Association (MEWA)

Compared to an HMO, what provider advantage does a PPO offer?

Greater choice of providers

If a PPO subscriber receives care from an out-of-network provider, how is the care handled?

Care is covered at a lower percentage

In a closed network plan, what percentage of the billed amount does a subscriber pay if they choose an out-of-network physician?

$$100\%$$