Life and Health

Which of the following statements regarding a conditionally renewable policy is NOT correct?A) The insurer may refuse to renew the contract as the result of the insured's deteriorating health.B) The insurer may refuse to renew the contract as the result of the insured's retirement.C) The insured has the conditional right to renew the policy up to a given age.D) The insured has the conditional right to renew the policy up to a given date.

All individual health insurance policies must include a notice of claim provision requiring that a written notice of claim must be given to the insurer within how long after the occurrence of the loss?
A) 10 days.
B) 24 hours.
C) 20 days.
D) 5 days.

Which of the following statements is CORRECT?
A) Individual disability plans are only available on a short-term basis.
B) Disability income insurance benefits are paid out immediately following the disability.
C) Disability income insurance does not provide a death benefit.
D) Group disability plans are only available on a long-term basis.

Sidney makes $3,000 a month as a machine shop supervisor. His disability income policy provides for a monthly payment of $2,500 in the event of total disability. If Sidney were to become partially disabled, but continued to work at 60% of his pay, what would the policy pay, assuming it had a residual disability provision?A) $1,200 a month.B) $0, since Sidney was not fully disabled.C) $1,000 a month.D) $2,500 a month.

A business disability buy-out insurance plan may include an "elective indemnity." This feature can be used to:
A) pay a lump-sum death benefit to the insured's family.
B) enable the business owners to add other owners to the policy.
C) reimburse other business owners or partners for the insured's loss of services to the business.
D) postpone payment of the benefit to the insured.

Which kind of deductible is entirely or partially absorbed by a basic medical expense policy?
A) Corridor.
B) Decreasing.
C) First dollar.
D) Integrated.

All of the following approaches are used by insurers to determine benefits payable under basic surgical expense insurance EXCEPT:
A) relative value scale approach.
B) reasonable and customary approach.
C) traditional net cost method.
D) surgical schedule method.

When separate deductibles are required for each illness or accident, what kind of deductible is in effect?
A) Per benefit.
B) Per cause.
C) Flat.
D) Revolving.

Which of the following dental plans covers dental services on a traditional fee-for-service basis?
A) Comprehensive plan.
B) Preferred Provider Organization.
C) Capitation plan.
D) Direct reimbursement plan.

With respect to dental insurance, another name for a capitation plan is a(n):
A) dental health maintenance organization.
B) preferred provider organization.
C) indemnity plan.
D) exclusive provider organization.

All of the following group health coverages include a conversion privilege EXCEPT:
A) Basic medical expense.
B) Comprehensive medical expense.
C) Accidental death and dismemberment.
D) Disability income.

Suppose an employee recently has been divorced. His 56-year-old spouse wants to know if she can maintain coverage under the employee's group medical insurance plan. Which of the following statements best describes how this situation might be treated?
A) She would be able to continue coverage, for up to 3 years, by paying up to 102% of the premium required for the group coverage.
B) She would no longer qualify for coverage under the employee's group medical plan because she no longer is a dependent.
C) She would be able to continue coverage until age 65 by paying up to 102% of the premium required for the group coverage.
D) She would be able to qualify for coverage under an individual policy, provided she submits to individual underwriting and pays a premium commensurate with her risk.

Which one of the following statements about the Consolidated Omnibus Budget Reconciliation Act of 1985 is NOT correct?
A) The terminated employee must pay the group premium to the insurer within a 60-day grace period.
B) The employer must provide the terminated employee with a 60-day period in which to exercise any option under COBRA.
C) COBRA legislation does not apply if the employer has fewer than 20 employees.
D) The maximum duration of coverage for a deceased employee's dependents is 36 months.

Under COBRA regulations, which of the following statements regarding coverage of a spouse after divorce from an insured employee is CORRECT?
A) The divorced spouse's coverage can be continued with an increase in coinsurance and deductible.
B) The divorced spouse's coverage can be continued with identical benefits for a specified period.
C) All coverage ends at the time of the divorce.
D) The divorced spouse's coverage can be converted to an individual policy.

Individual health insurance policies are typically written on which basis?
A) Experience rated.
B) Nonparticipating.
C) Claims rated.
D) Participating.

Lynn is insured under Medicare Part A and enters the hospital for surgery. Assuming that Lynn has not yet tapped into her lifetime reserve, what is the maximum number of days that Medicare will pay for her hospital bills?
A) 120 days.
B) 60 days.
C) 150 days.
D) 90 days.

Which of the following statements regarding the lifetime reserve of hospital coverage for Medicare patients is CORRECT?
A) Tapping into the reserve results in a lower daily copayment.
B) If a patient exhausts the reserve, he or she must pay a higher copayment.
C) The reserve may be replenished if the patient reenters a hospital after a benefit period ends and pays a new deductible.
D) The reserve does not renew with a new benefit period.

Tom is covered under Medicare Part A. He spends 1 week in the hospital for some minor surgery and returns home on July 10. It was his first hospital stay in years. Which of the following statements is CORRECT regarding his Medicare coverage?
A) Medicare will pay benefits, but Tom must make a daily copayment.
B) Medicare will not cover Tom's hospital expenses because he was not hospitalized for 10 consecutive days.
C) After Tom pays the deductible, Medicare will pay 80% of all covered charges.
D) After Tom pays the deductible, Medicare will pay 100% of all covered charges.

Tom is covered under Medicare Part A. He spends 1 week in the hospital for some minor surgery and returns home on July 10. It was his first hospital stay in years. He pays his deductible and Medicare pays the balance. He is then admitted to the hospital again on November 1 of that same year, when he returns for more surgery. Which of the following statements is CORRECT?
A) Tom will have to pay the Part A deductible again only if the second surgery is unrelated to the first surgery.
B) He will not have to pay the Part A deductible again.
C) It will be considered the start of a new benefit period.
D) He need not pay the Part A deductible, but must make a daily copayment.

Many insurance policies contain a preexisting limitation that excludes coverage for unspecified conditions for how long?
A) One year.
B) Three months.
C) Six months.
D) Nine months.

The Medicare Secondary Rule (which requires the private insurer to first pay benefits) does not apply to groups of fewer than ________persons. Therefore, it is likely that Medicare will pay benefits up to maximum eligibility. Thereafter, if the employee is covered under the group plan, that plan will then pay additional benefits.

To be eligible for Social Security disability benefits, one of the requirements is that the person
A) be totally disabled for at least five months.
B) be totally and permanently disabled for at least three months.
C) be totally and permanently disabled for at least five months.
D) be totally disabled for at least three months.

Becky has the following unreimbursed medical expenses: $2,000 in premiums for group accidental death and dismemberment (AD&D) coverage, $500 in dental expenses, and $4,000 for other medical expenses and prescription drugs. If her adjusted gross income last year was $40,000, how much of the medical expenses can she take an income tax deduction for, if any?
A) $6,500.00
B) $3,500.00
C) $500.00
D) $1,500.00

Accurate Data Inc. pays $5,000 a year in premiums for a disability insurance policy covering its senior vice president, David Mills. If David later becomes disabled and receives the monthly benefits under the policy:
A) Accurate Data cannot take a tax deduction for the premiums paid.
B) David will not have to pay income and FICA tax on the benefits received.
C) David must pay income and FICA tax on the benefits received.
D) Accurate Data must pay the income and FICA tax on the benefits received.

If the Commissioner believes a producer has engaged in an unfair trade practice, she will issue a notice of hearing to investigate the charges. The hearing must occur no sooner than how many days following the notice?
A) 10 days.
B) 21 days.
C) 14 days.
D) 30 days.

How long does an insurance producer license remain valid after it is issued?
A) Four years from date of issue.
B) Two years from date of issue.
C) One year from date of issue.
D) Three years from date of issue.

A producer who has been found guilty of reporting with malice in a court of law may be fined up to how much?
A) $7,500.00
B) $1,000.00
C) $5,000.00
D) $10,000.00

If a producer is convicted of not paying premiums held for an insurer who is entitled to them and who has requested their transmission, that producer is guilty of:A) larceny.B) fraud.C) misrepresentation.D) defamation.

An insurer who is terminating a business relationship with a producer must notify the Commissioner within how many days of the termination?A) 60 days.B) 30 days.C) 10 days.D) 45 days.

How many hours of continuing education must a licensed producer complete during the first three-year renewal period?
A) 30 hours.
B) 60 hours.
C) 45 hours.
D) None.

What is the MAXIMUM fine imposed on a producer who commits an unfair trade practice?
A) $5,000.00
B) $500.00
C) $1,000.00
D) $100.00

A producer who knowingly obtains payment of a policy premium through fraudulent representations may be punished in all of the following ways EXCEPT:
A) a fine of at least $100.
B) imprisonment for up to 6 months.
C) 30 hours of community service.
D) a fine of not more than $1,000.

A producer must report to the commissioner any administrative action taken against him within how many days of the final disposition of the matter?
A) 15 days.
B) 60 days.
C) 30 days.
D) 90 days.

A producer who willfully makes a false statement of any material fact or matter in a sworn statement concerning the death or disability of a policyowner in order to obtain a benefit is guilty of:
A) perjury.
B) larceny.
C) defamation.
D) coercion.

The term of a temporary producer license is how long?
A) 30 days.
B) 90 days.
C) 180 days.
D) 60 days.

How many hours of continuing education must licensees complete during the second and every subsequent 36-month period after licensure?
A) 60 hours.
B) 15 hours.
C) 30 hours.
D) 45 hours.

An insurance company that is authorized to transact insurance in Massachusetts is most commonly referred to as a(n):
A) endorsed company.
B) licensed company.
C) admitted company.
D) certified company.

The policy loan provision for variable live insurance policies delivered in Massachusetts must:
A) provide for credit on loaned amounts at a rate at least equal to the loan interest rate less 1%.
B) provide for credit on loaned amounts at a rate equal to the loan interest rate less 3%.
C) provide for credit on loaned amounts at a rate equal to the loan interest rate.
D) provide for credit on loaned amounts at a rate at least equal to the loan interest rate less 2%.

If an employee, covered through a group plan, loses employment because of a plant closing, for how long will he remain covered under that plan?
A) 30 days.
B) 10 days.
C) 90 days.
D) 60 days.

Which of the following statements regarding the issue of accident and health insurance policies in Massachusetts is CORRECT?
A) An appropriate disclosure form is required.
B) An agent must identify herself as an agent of the insurance company at the time of delivery.
C) The insurer must explain that the purchaser has 90 days during which to mail in the first premium.
D) A premium is required with the application.

A health plan that provides coverage for the treatment of alcoholism must cover how many days of inpatient care?
A) 15 days.
B) 7 days.
C) 60 days.
D) 30 days.

Medicare supplement insurance policies must give the insured the right to examine the policy for at least:
A) 60 days.
B) 45 days.
C) 7 days.
D) 30 days.

The minimum loss ratio for Medicare supplement policies is ____%.

To qualify for the MassHealth exemptions, long-term care policies may include an elimination period not to exceed:
A) 180 days.
B) 100 days.
C) 200 days.
D) 365 days.

Which of the following organizations reimburses its insureds for covered medical expenses? A)Blue Cross/Blue Shield. B)Preferred provider organizations. C)Commercial insurers. D)Health maintenance organizations.

Claire's employer is self-insured and establishes an exclusive provider organization (EPO) in town. When Claire goes to the doctor, which of the following is most likely to happen? A)She will have a deductible and will need to pay coinsurance. B)Her care will be provided through a nationwide network of HMOs. C)All of her expenses will be covered if she uses a physician who is approved under the plan. D)All her outpatient expenses will be covered, but hospital costs will be covered on a per diem basis.

With respect to dental insurance, another name for a capitation plan is a(n): A)exclusive provider organization. B)dental health maintenance organization. C)preferred provider organization. D)indemnity plan.

A master policy is issued with each of the following forms of insurance EXCEPT: A)blanket health insurance. B)group major medical insurance. C)franchise insurance. D)group disability income insurance.

When refusing to renew a plan, the insurer must provide at least ___ days' advance notice of its intent not to renew.

In reinsurance, the insurance company that transfers part of a risk it underwrites to another insurer is called the:
A) retroceding company.
B) ceding insurer.
C) assuming insurer.
D) reinsurer.

Except for direct response insurers, companies must deliver a Buyer's Guide to all prospective buyers:
A) at the time of policy delivery.
B) before the agent commences a sales presentation.
C) before accepting an initial premium or premium deposit.
D) before the signing of the application.

All of the following descriptions of buy-sell plans in close corporations are correct EXCEPT:
A) A close corporation that has four stockholder-employees plans to set up an insured buy-sell agreement. A stock redemption plan will require fewer policies than a cross-purchase plan.
B) A corporation has an insured cross-purchase buy-sell plan agreed to by the corporate president and vice president, the two owners. The president and vice president own and pay the premiums for the life insurance policies in the plan.
C) A corporation has a stock redemption plan for its officers, all stockholder-employees. The total stock is valued at $600,000 and held equally by the three officers. A $200,000 policy will be purchased by the corporation on each of its three officers.
D) Like a partnership, a corporation ceases to exist after the death of one of its owners. It is not necessary to make an agreement to dispose of a deceased stockholder's interests.

Three equal partners in a business worth $600,000 decide to set up an insured cross-purchase buy-sell agreement. How large a policy would each partner buy to insure the lives of the other partners?
A) $200,000.00
B) $50,000.00
C) $150,000.00
D) $100,000.00

Sam applied for a term life insurance policy, paid the initial premium, and received a conditional receipt on December 1. If the insurer issued the policy on January 1 and the agent delivered the policy on January 3, the policy effective date will be:
A) December 1.
B) January 3.
C) January 1.
D) when the policy is delivered and a statement of continued good health is obtained.

The best reason for designating a trust as a life insurance policy beneficiary is to:
A) remove the policy proceeds from the insured's taxable estate.
B) make it possible to manage the policy proceeds for the long-term benefit of an individual or organization.
C) make it possible to benefit an individual or organization that might have otherwise been ineligible to be a designated beneficiary.
D) make it possible to accumulate income tax-free interest on the policy proceeds once paid into the trust.

Hazel, Philip, and Anita are equal partners in a partnership worth $150,000. They decide to arrange an insured cross-purchase buy-sell agreement. Which of the following statements pertaining to this arrangement is CORRECT?
A) The partnership will purchase and maintain a $50,000 policy on each of the partner's lives.
B) Each individual partner must purchase and maintain a $50,000 policy on each of the other partner's lives.
C) If Hazel dies, Philip and Anita will each have a partnership interest of $50,000.
D) Hazel will purchase and maintain a $25,000 life insurance policy each on the lives of Philip and Anita.

Which of the following statements pertaining to deferred compensation plans is CORRECT?
A) A deferred compensation arrangement is a qualified plan funded by the employee.
B) A deferred compensation arrangement is a qualified plan funded by the employer.
C) A deferred compensation arrangement is a non-qualified plan funded by the employer.
D) A deferred compensation arrangement is a non-qualified plan funded by the employee.

All of the following statements regarding nonqualified deferred compensation plans are correct EXCEPT:
A) the employer receives no tax deduction for the amount of the compensation deferred until the compensation is actually distributed.
B) a deferred compensation plan is an unsecured promise made by an employer to pay an employee part of the employee's compensation in the future.
C) under a nonqualified deferred compensation plan, an employee can rely on guaranteed future benefits.
D) most deferred compensation plans are unfunded.

Regarding the Life Insurance Surrender Cost Index, a low index figure represents a relatively:
A) low cash surrender value at the end of the designated period.
B) high policy cost in the event of policy surrender value at the end of the designated period.
C) low policy cost in the event of policy surrender at the end of a designated period.
D) high cash surrender value at the end of the designated period.

Since only the insurer prepares the insurance contract, it is called a contract of:
A) unilateral terms.
B) condition.
C) estoppel.
D) adhesion.

A company with three partners is considering a buy-sell plan. All of the following statements pertaining to buy-sell plans and this partnership are correct EXCEPT:
A) no benefits will accrue to the partnership from the buy-sell agreement until one of the partners dies.
B) if they choose a cross-purchase plan, each partner would have to purchase two policies for a total of six plans.
C) an insured entity buy-sell agreement designates the partnership as the beneficiary.
D) if they choose an entity buy-sell agreement, the business would be party to the agreement.

All of the following statements about a modified whole life policy are correct EXCEPT:
A) premiums are uniformly lower during the early years of the contract.
B) it is basically an endowment policy.
C) cash value builds until the insured reaches age 100 so long as the policy is in force.
D) the premium-paying period continues to age 100.

Which of the following statements regarding experience versus community rating by group health insurance plans is CORRECT?
A) Community rating takes the group's previous claims experience into account.
B) Premiums for group insurance are typically not based on experience rating.
C) Experience rating is based on past and projected medical costs of the group.
D) Community rating is more cost effective and competitive.

Persons who are otherwise considered unacceptable health insurance risks can obtain coverage if an insurer issues a policy with a(n)
A) Multiple indemnity rider.
B) Optional exclusion rider.
C) Nondisabling injury rider.
D) Waiver of impairments rider.

Which of the following statements pertaining to limited pay life policies is CORRECT?
A) The total premium cost for a single-premium life policy is more than the total premium cost for a policy with premiums spread over a period of years.
B) A limited pay life policyowner pays premium of variable amounts during the life of the policy.
C) Insurance protection exists only during the time premiums are actually paid.
D) Both limited pay life and whole life policies endow at age 100.

An impaired insurer is a company that:
A) is not authorized to do business in the state.
B) has products which are not competitive in the state.
C) has only interim agents and apprentice brokers in its marketing force.
D) is potentially unable to fulfill its contractual obligations.

What is the initial period of time specified in a disability income policy that must pass, after a policy is in force, before a loss due to sickness can be covered?
A) Probationary period.
B) Temporary interval.
C) Elimination period.
D) Preexisting term.

Which of the following terms relates to disability income insurance?
A) First dollar.
B) Service basis.
C) Coinsurance.
D) Residual basis.

Mary has lost both legs as the result of complications caused by diabetes. Previously a horse trainer, she has taken a position as a computer programmer. Nonetheless, her insurance company pays her benefits under her disability income insurance policy under which of the following provisions?
A) The flat amount benefit provision.
B) The presumptive disability provision.
C) The partial disability provision.
D) The own occupation provision.

The probationary period in disability income policies usually lasts:

Benefit periods for short-term disability income policies typically vary from:
A) three months to three years.
B) one to five years.
C) six months to two years.
D) one to 12 months.

What disability policy can be used to fund buy-sell agreements between partners or stockholders in a closely held corporation?
A) Disability buy-out policy.
B) Key-person disability policy.
C) Business overhead expense policy.
D) Long-term care disability policy.

Which kind of insurance company is owned by individuals who buy shares but are not entitled to receive policy dividends?
A) Fraternal insurance company.
B) Reciprocal insurance company.
C) Stock insurance company.
D) Mutual insurance company.

Which of the following statements regarding representations is CORRECT?
A) If a representation is false on a material point, the insurer may alter the contract but may not rescind it.
B) A representation is guaranteed to be true.
C) A representation may not be altered after the insurance is in effect.
D) Only written statements are considered representations.

If an insurance producer violates any section of the insurance code, what can the Commissioner issue to stop the producer from committing the violation?
A) Cease and desist order.
B) Notice of a hearing.
C) Suspension order.
D) Notice of violation.

A group of individuals who agree to share each others' losses is known as:
A) a mixed group.
B) a service organization.
C) a reciprocal exchange.
D) a reinsurer.

Which of the following would not be required of a producer who wants to sell variable annuities?
A) Successfully passing the required exams.
B) Having a valid producer life insurance license.
C) Registration with the National Association of Insurance and Financial Advisors.
D) Registration with the Financial Industry Regulatory Authority.

Which of the following period certain income options would call for the highest payment rate per $1,000 of life policy proceeds?
A) 5-year period certain.
B) 20-year period certain.
C) 10-year period certain.
D) 15-year period certain.

The risk that involves the chance of both loss and gain is:
A) impure risk.
B) whole risk.
C) pure risk.
D) speculative risk.

Concerning Mutual Insurers, which of the following is a CORRECT statement?
A) Policyholders participate in dividends.
B) In a mutual company, there are stockholders.
C) In a mutual company, there are shareholders.
D) Mutual companies are sometimes referred to as non-participating companies.

Regular notices sent to policyowners for payment of their life insurance policy premiums reflect:
A) net level premium.
B) gross single premium.
C) gross premium.
D) net single premium.

All of the following statements about mutual insurance companies are correct EXCEPT:
A) they must maintain the same reserves as a stock company.
B) they charge a fixed premium.
C) they do not have capital stock.
D) they are unincorporated.

Doreen is appointed by an insurance company to transact insurance on its behalf. She collects her clients premiums and has them sign paperwork. By what authority can she do so?
A) Implied.
B) Express.
C) Fiduciary.
D) Apparent.

A person authorized by an agent or broker to solicit insurance applications and collect premiums is called a(n):
A) solicitor.
B) auxiliary broker.
C) adjuster.
D) adjutant agent.

Under HIPAA regulations, a health insurer can refuse to renew coverage for all of the following reasons EXCEPT:
A) the employer required new group members to wait 6 months before entry to the plan based on pre-existing conditions.
B) the employer excluded certain group members in a contributory plan.
C) the employer denied an employee's entry into the plan based on evidence of uninsurability.
D) the employer failed to pay premiums in a timely manner.

Medicare supplement (Medigap) policies are designed to pay:
A) benefits to those who cannot afford Medicare Part B coverage.
B) most or all of Medicare's deductibles.
C) benefits provided under Medicare Part A.
D) medical costs associated with extended custodial (nursing home) care.

For how many days of care in a skilled nursing facility will Medicare pay benefits?
A) 75 days.
B) 60 days.
C) 20 days.
D) 100 days.

None of the following can be considered qualifying expenses for purposes of determining an individual's medical tax deduction EXCEPT:
A) premium contributions paid by an employer to a group medical expense plan.
B) premium contributions paid by an individual to a group medical expense plan
C) premium contributions paid by an employer to a group disability plan.
D) premium contributions paid by an individual to a group disability plan.

A health insurance plan would require the naming of a beneficiary in order to:
A) identify the recipient of the Social Security death benefit.
B) identify supplemental assets upon the termination of benefits.
C) reallocate unused funds in a medical savings account (MSA) or health savings account (HSA).
D) indicate who is to receive benefits if the insured becomes disabled.

Lisa is in the hospital awaiting surgery. The doctors meet in the morning to discuss the best way to proceed as a routine procedure in their PPO. This is an example of:
A) retrospective review.
B) gatekeeping.
C) provider credentialing.
D) concurrent review.

Which of the following accurately describes the service approach used by Blue Cross and Blue Shield?
A) Blue Cross and Blue Shield are for-profit organizations run by insurance companies.
B) Both Blue Cross and Blue Shield plans do not reimburse for covered expenses, but pay health care providers directly.
C) Blue Shield plans provide prepayment coverage for hospital expenses; Blue Cross plans provide prepayment coverage for medical and surgical services.
D) Both Blue Cross and Blue Shield reimburse their subscribers for covered medical and hospital expenses.

Credit health insurance:
A) provides payments on loans if the debtor dies.
B) covers both debtors and creditors.
C) provides payments on loans that become due while the debtor is disabled.
D) covers creditors only.