Nebraska Life and Health License Exam

Before delivering a health insurance policy to a client, the producer alters the insuring clause in a way that he believes will benefit the insurance company. Which of the following statements is true about this alteration?

It is prohibited by the entire contract provision

Which organization offers health insurance to Nebraska residents who are denied health insurance and unable to obtain coverage from private companies due to pre-existing medical conditions?

Nebraska Comprehensive Health Insurance Pool

Newborn children are automatically covered under an insured's individual health insurance policy for how long?

from birth to 31 days

As beneficiary of her husband's life insurance, Beth chooses to receive payments for life. However, she is guaranteed that the payments will be made for ten years. Beth has chosen which of the following?

life income with period certain

Which method of determining the benefit amount is most common in individual disability income policies?

flat amount

Which statement describes the "pool of money" approach to benefits under a long-term care insurance policy?

Benefits are defined as a total sum of money from which money can be drawn in any amount for as long as the money lasts.

Which statement best describes the restrictions an insurer must operate under when using information from the MIB?

Insurers cannot rate or decline a life insurance applicant based solely on MIB information.

Which of the following must HMO members use to receive covered care?

HMO's network of providers and caregivers

Which statement is correct about a buy-up option in a disability income insurance policy for professionals?

It lets the insured buy more coverage in the future without evidence of insurability.

Bill believes he has a cause of action against his health insurer for its refusal to pay benefits on a claim. He filed written proof of loss on April 1. Not having received a response by May 1, he decides to take legal action. What will his attorney probably do?

advise him to wait

For tax purposes, a self-employed person includes all of the following, EXCEPT:

an incorporated business owner

The Director of Insurance can examine the business transactions, accounts, and records of insurers as often as necessary, but must do so at least once in how many years?

five

An insured has a comprehensive major medical insurance policy with a $1,000 deductible and 80/20 coinsurance. She incurs a bill of $11,000. What will she pay in total?

$3,000

Adam owns an individual long-term care policy that was issued in Nebraska. Which of the following conditions must the policy cover?

Alzheimer's disease

Tax law considers any limited payment life insurance policy that is paid-up in seven years or less to be which of the following?

a modified endowment contract

Eric fails to pay the annual premium on his major medical insurance policy. The grace period provision allows him to pay the premium within how many days after the due date?

31

When can the owner of a deferred annuity select a settlement option?

any time prior to annuitization

When completing an application for life insurance, Andrew states that he is 39 years old, though he is actually 45. When the insurer discovers this, what will it probably do?

adjusted the benefits

When underwriting a group life insurance policy, which of the following does the underwriter look at?

the group as a whole

Alana let her life insurance policy lapse two years ago and now wants to reinstate the policy. Which action is she NOT required to take to reinstate the policy?

pay the next year's premium in advance

A long-term care insurance policy issued in Nebraska cannot exclude coverage or limit benefits for which of the following?

Alzheimer's disease

What happens if the provisions of an insurer's health insurance policies contradict state law?

The provisions are changed automatically to comply with the law.

Whether a variable annuity's monthly income rises, falls, or stays level depends largely on which of the following?

the assumed interest rate (AIR) selected by the contract owner

Producers and insurers selling Medicare supplement insurance policies are prohibited from engaging in all of the following acts EXCEPT:

replacement

Jessica, age 48, owns a traditional IRA that she funded with tax-deducted contributions and which is now worth $300,000. Which of the following correctly describes the tax consequences of converting her IRA to a Roth IRA?

She would have to pay income taxes on the entire $300,000.

What kind of insurance policy pays benefits to the business owner if an essential manager were to become disabled?

key person disability income insurance

If Jack takes a new job that is less hazardous than the job he had when he obtained health coverage, what may the insurer do?

reduce the premium

Dan owns a fixed whole life insurance policy. What type of death benefit is Dan guaranteed?

the policy guarantees a fixed death benefit amount.

Ralph, Jerry, and Paula are primary and equal beneficiaries of the $600,000 insurance policy on the life of their mother, Judy. Ralph dies before his mother. He leaves two children, Tim and Hal. Judy's life insurance policy designates the death benefit per capita. How will the insurer distribute the policy benefits?

Jerry and Paula will each receive $300,000

For Social Security purposes, Brian is considered currently insured while Samantha is fully insured. Which of the following statements is correct?

Samantha is eligible for more Social Security benefits than Brian

When she applied for an individual health insurance policy, Betty neglected to disclose that her parents had undergone open-heart surgery many years ago. Her insurer discovers this misstatement four years after the effective date of coverage. What can it do?

nothing

Why does an insurer require that a certain percentage of eligible members participate in a group health insurance plan?

to protect the insurer from adverse selection

Which of the following statements about a Medicare supplement policy is NOT correct?

It can indemnify against loss from illness on a different basis than loss from accident.

Which statement is true under a split-dollar life insurance plan?

The employer and employee split the premiums.

Laura was injured in an accident. She incurred $1,000 in medical bills. Even though she was not disabled or lost any income, her disability income policy paid for these expenses because it has:

a nondisabling injury provision

What do covered employees receive to show they have coverage under a group life insurance policy?

certificate of insurance

Under the payor benefit rider of a juvenile life insurance policy, which of the following happens if the payor becomes disabled before the maximum age specified in the rider?

Premiums are waived until the payor recovers or the insured child reaches a certain age (e.g., 21 or 25), whichever occurs first.

What does the employer own under a group insurance plan?

the master policy

In which of the following areas may a life insurance underwriter discriminate in determining policy eligibility and coverage limits?

personal health history

Which of the following statements regarding the life insurance needs analysis is correct?

Determining the ongoing income needs of surviving dependents is a critical part of the needs approach to life insurance needs analysis.

All of the following statements regarding the career agency distribution system are correct EXCEPT:

Personal producing general agents (PPGAs) are commonly hired to manage career agencies

Which of the following is NOT an unfair claims settlement practice if committed by an insurance company in Nebraska?

failing to promptly settle a claim for which liability is uncertain

An insurer can nonrenew an individual health insurance policy for all of the following reasons EXCEPT:

deterioration of the insured's health

The purpose of the insuring clause is to:

describe the type and scope of coverage

The primary reason for using third-party ownership in personal life insurance for estate planning purposes is to:

remove the life insurance proceeds from the insured's estate and thus reduce the value of the taxable estate

Which statement is correct about health savings accounts (HSAs)?

instead of paying higher premiums for health insurance, the HSA can pay for qualified health care expenses.

Which of the following does NOT fall within the definition of a life insurance advertisement?

a memo from an insurer's president to employees

Variable life insurance policies offer all of the following EXCEPT:

flexible premium payments

To reinstate a lapsed life insurance policy under the typical reinstatement provision, the policyowner must provide all of the following, EXCEPT:

a valid reason for the unpaid premiums

An insurer would use which of the following to limit or exclude coverage for an applicant's health condition?

impairment rider

A group disability income plan with a maximum benefit period of less than two years is what type of plan?

Short-term disability plan

Dave receives Social Security retirement benefits. His wife Cathy is still working. Which statement about Cathy's Social Security spousal benefit is CORRECT?

Cathy can choose either the spousal benefit or the worker's benefit.

What type of life insurance policy distributes its divisible surplus to policyowners in the form of policy dividends?

participating policy

A claimant on a health insurance policy must give written notice of the claim to the insurer within how many days following a loss?

20

Cal bought a $100,000 universal life policy ten years ago. He has paid $8,000 in premiums into the policy. He now decides to surrender the policy for its full $15,000 cash value. What amount is taxable?

$7,000

Jennifer purchases an individual health insurance policy on June 1. One week later, she loses her job and decides she can no longer afford the policy. What are her options?

return the policy for a full refund of premiums

Under the proof of loss provision of a health insurance policy, how long does the insured have to give written proof of loss to the insurer?

90 days

Producers and insurers must maintain records of their insurance transactions for at least how long?

five years

Which insurance company function calculates company mortality and morbidity rates as well as the dividends on participating life insurance policies?

actuarial division

Which one of the following would a state NOT permit as a life insurance policy exclusion?

death resulting from a plane crash in which the insured was a fare-paying passenger

Which rider is NOT commonly found in a disability income policy?

long-term care rider

Which statement about profit-sharing plans is correct?

Contribution limits for profit-sharing plans are the same as those that apply to all defined contribution plans.

Which of the following correctly describes the basic tax treatment of deferred annuity death proceeds paid out before the contract is annuitized?

A portion of the death benefit, essentially representing the sum of premiums paid into the annuity, is taxable.

When Tom, an agent for ABC Insurance, receives an approved policy, he MUST do all of the following, EXCEPT:

A. mail the policy to the applicant by certified mail and set up a time for the policyowner to meet with Tom to review it

Agent Jones and Trudy are meeting to discuss Medicare supplement policies. At what point must Agent Jones give Trudy an outline of coverage?

when Trudy applies for a policy

Which of the following doubles or triples the benefits if the insured dies as the direct result of an accident?

accidental death benefit (ADB) riders

Which of the following is a benefit trigger under a long-term care insurance policy?

cognitive impairment

A worker's eligibility for Social Security disability benefits and benefit amount does NOT depend on:

the worker's family status

What is the only restriction on naming an annuitant?

The annuitant must be a natural person.

Ethel is at full retirement age with Part B coverage. She incurs $1,000 in Medicare-approved health care charges. What must she pay?

the deductible plus 20 percent of the expenses

Which of the following statements about the renewability of small group plans is NOT true?

Plans can be canceled only after the insurer provides 180 days' prior notice.

Which of the following will happen if the outstanding balance of a whole life insurance policy loan, including accrued interest, ever exceeds the policy's cash value?

The insurer will cancel the policy.

Frank intends to use his life insurance to make the down payment on a vacation home. In so doing, Frank is using which of the following?

the policy's cash value

Sandy and Cindy are healthy, are both 45 years old, and have similar life expectancies. Though they are insured by the same company, Sandy's life insurance premiums are considerably lower than Cindy's. What may this indicate a case of?

unfair discrimination

When Terry applied for his life insurance policy four years ago, he omitted any information in the application related to treatment he had received several years earlier for a serious chronic illness. Which of the following actions can the insurance company take when it learns of the omission?

nothing

Which disability would most likely qualify for a full benefit under the presumption of disability provision?

loss of eyesight

How does a family income policy differ from a family maintenance policy?

A family income policy combines whole life insurance with decreasing term insurance, while a family maintenance policy combines whole life and level term insurance.

Brent fails to pay his premium when due, and his life insurance policy lapses. Two years later, he pays the premium. The insurer accepts the payment, and the policy continues in force. Which provision allows this to happen?

reinstatement

Emily, age 48, withdrew $8,000 from her SIMPLE plan to buy a car. How much penalty tax will she owe?

$800

The guaranteed renewability provision in a health insurance policy guarantees that the policy can be renewed until the insured:

reaches age 65

An insurable interest will typically be presumed in all of the following types of relationships EXCEPT:

neighbor and friend

Which statement is correct about the taxation of health insurance expenses?

Premiums paid for individual disability income insurance are not deductible.

Three times a week, Ernest pays for a licensed nurse to come to his house and help with his diabetes management. The nurse also helps with everyday tasks such as bathing and eating. Which type of care is Ernest receiving?

home health care

When acting in the best interests of applicants and insureds, producers must:

give all important information about a proposed policy

Sasha, Kendall, Adam, and Julio are licensed producers in Nebraska. The Director would NOT be able to suspend or revoke which producer's license for engaging in the following acts?

Sasha, who sold insurance policies to family members and friends this year

Which of the following statements about health insurance advertisements is NOT correct?

Advertisements must disclose that policyholders are protected by the Nebraska Life and Health Insurance Guaranty Association.

Dental plans commonly group covered treatment and benefits into how many classes?

three

Which of the following best describes insurable interest?

It refers to the financial relationship between the policyowner and the insured person or property.

When meeting with a prospect to discuss life insurance, Agent Tyler makes disparaging comments about the financial stability and reputation of a competitor to dissuade the prospect from purchasing its policies. Which unfair trade practice has Agent Tyler committed?

A. defamation

Tom is employed by Acme Industries and covered by its group long-term disability income policy. Acme pays 80 percent of the premium. Tom pays 20 percent of the premium. He becomes disabled and receives a monthly benefit payment. How much of this benefit is subject to federal income tax?

80%

Which type of long-term care is provided outside a person's home for groups of adults who are physically or mentally disabled, on less than a 24-hour basis?

adult day care

All the following statements regarding split-dollar life insurance plans are correct EXCEPT:

The employer pays the entire premium and the employee receives the policy benefits.

Darlene failed to pay the premium on her individual health insurance policy, which was due on October 1. She can avoid lapsing the policy if she pays the premium before what date?

October 31

All of the following statements about life insurance policy long-term care riders are correct, EXCEPT:

An insured must first be hospitalized before qualifying for LTC benefit payments

Which of the following best typifies the use of a structured settlement annuity?

Shirley was paralyzed in a car accident, and a jury awarded her $2 million, which must be paid to her over a 20-year period

What is the purpose of disability income insurance?

to replace income lost during disability

The basic purpose for the insuring clause of a life insurance policy is to:

state the insurer's promise to pay the death benefit to the named beneficiary if the insured dies

Holly just turned 65 and purchased a Medicare Select policy. Which statement correctly describes the features of her policy?

It contains restricted network provisions.

Which plan reimburses the insured for the cost of covered medical care received?

indemnity plan

For purposes of group health insurance, a small employer is defined in Nebraska as any person or entity that employs no more than how many employees?

50