Life and Health Insurance

Which of the following reduces the opportunity for overinsurance?

a. Reduction in coverage provision 

b. Coordination of benefits provision 

c. Insuring clause 

d. Conformity with state statutes

The principal source of information concerning an applicant's identity, age, and marital status is found in the

a. MIB 

b. credit report 

c. policy summary 

d. completed application

Which of the following statements about the installments for a fixed period settlement option in life insurance policies is NOT true?

a. The periodic payment amount is determined by the beneficiary's age

b. The shorter the period of time, the larger each installment

c. The longer the period of time, the smaller each installment

d. The installment payments are composed of both principal and interest

XYZ Corp gives money to an employee to purchase a life insurance policy and allows the employee to select the beneficiary. What kind of plan is this?

a. Split-dollar 

b. Cross purchase 

c. Key employee 

d. Deferred compensation

A client applies for an individual accident and health policy in Arizona. If the insurer collects personal information from any source other than public records or the applicant, a notice of application practices MUST be given to the applicant no later than the

a. application date 

b. policy issue date 

c. policy delivery date 

d. presentation date

Which of these statements about traditional individual retirement accounts is accurate?

a. 10% penalty is applied to withdrawals after age 59 1/2

b. Withdrawals are normally tax-free to the recipient

c. 10% penalty is applied to withdrawals prior to age 59 1/2

d. Contributions are not tax deductible

Which element of a contract constitutes a definite and unqualified proposal by one party to another?

a. Adhesion

b. Consideration

c. Acceptance

d. Offer

A life annuity feature which provides benefit payments for a minimum number of years, no matter when the annuitant dies, is called

a. fixed period

b. period certain

c. installment refund

d. straight life

Part A Medicare includes coverage for all of the following services EXCEPT

a. First 60 days of hospitalization

b. 120 days of Skilled Nursing Facility care

c. Hospice care

d. Inpatient mental health care limited to 190 days in a lifetime

Which of the following is NOT included as a hospice benefit under a major medical plan?

a. Home-based services

b. Counseling

c. Rehabilitation

d. Pain management

Medicare can be described as

a. a supplemental income source for individuals over the age of 65 or permanently disabled

b. a state health program for individuals over the age of 65 or permanently disabled

c. a federal health program for individuals with financial need

d. a federal health insurance program for individuals over the age of 65 or permanently disabled

A signed good health statement may be requested by a life producer at the time of

a. policy issue

b. application

c. policy delivery

d. physical examination

Al surrenders his life insurance policy for its cash value. The total of premiums paid into the policy minus total dividends received in cash or used to offset premiums is referred to as the

a. premium basis

b. net proceeds

c. cash basis

d. cost basis

The Change of Occupation provision in a Disability Income policy states that, in the event the insured changes to a less hazardous occupation, which of the following may apply?

a. Benefits will remain the same in the event of a covered claim

b. Premiums cannot be adjusted

c. Benefits can be increased in the event of a covered claim

d. Benefits can be reduced in the event of a covered claim

How long must a producer maintain customer records for an insurance transaction?

a. One year 

b. Two years 

c. Three years 

d. Four years

Which of the following disability buy-sell agreements is best suited for businesses with a limited number of partners?

a. Split dollar plan 

b. Entity agreement 

c. Cross-purchase agreement 

d. Key person plan

The interest paid during an annuity's payout period is considered

a. nontaxable 

b. taxable as ordinary income 

c. taxable as capital gains 

d. tax-deductible

A(n) _______ insurer operates in the U.S but is headquartered outside the U.S.

a. unauthorized 

b. alien 

c. foreign 

d. reciprocal

Which of the following is associated with an immediate annuity?

a. Tax-free benefit payments

b. Installment premium payments

c. Lack of an accumulation period

d. Lump-sum benefit

The Genetic Information Nondiscrimination Act of 2008 bars all of the following, EXCEPT:

a. prohibits group health plans and health insurers from denying coverage to a healthy individual

b. charging that person higher premiums based solely on a genetic predisposition to developing a disease in the future

c. bars the use of genetic information in health insurance

d. prohibits the use of genetic information in health insurance, unless the applicant signs a waiver

Every producer licensed in Arizona must notify the Director within how many days of any change of residential, business or e-mail address?

a. 10 days 

b. 30 days 

c. 60 days 

d. 90 days

A handicapped child is covered under an individual health policy. If continuation of coverage is needed beyond the policy's age limit, which of the following is required?

a. Proof of incapacity upon reaching the age limit

b. Proof of dependency upon reaching the age limit

c. Proof of incapacity and dependency upon reaching the age limit

d. Proof of insurability

Which of the following is a TRUE statement regarding universal life insurance?

a. Death benefits are normally taxable

b. Policy loans are not permitted

c. Premiums or face amount cannot be changed

d. Policy indicates how much of each premium is used toward company expenses

Which of the following could be a future use of the cash value that builds in a recently-purchased whole life insurance policy?

a. Convert the cash value to a paid-up term policy

b. Gives policyowner ability to borrow against funds within two years

c. Increases the policy's face amount

d. Provide supplemental income in 35 years

What is payable to the policyowner if a whole life policy is surrendered prior to its maturity date?

a. The loan value

b. The cash value

c. The face amount minus any past due premiums and outstanding loans

d. Nothing

A life annuity with period certain is characterized as

a. guaranteeing benefit payments for a stated period of time after reaching age 65

b. guaranteeing a minimum interest rate

c. guaranteeing lifetime benefit payments for two or more people

d. guaranteeing benefit payments for a stated minimum number of years

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

a. The reduction in sales as a direct result from death of the key employee

b. A void in leadership if the key person were to die

c. The loss of company revenues while a replacement is being sought

d. An increased pension liability if the key employee dies

In Arizona, at least ___ employee(s) are needed for a small employer medical expense plan.

a. 1 

b. 2 

c. 3 

d. 4

Which factor determines the maximum disability income benefit that can be purchased by an applicant?

a. The applicant's income 

b. The applicant's age 

c. The applicant's health 

d. The applicant's credit score

An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?

a. When the policy is issued

b. The date of policy delivery

c. When the conditions of the receipt are met

d. The date the sales appointment was set

Which of the following is true regarding a person receiving a waiver of premium benefit?

a. The insured must expect a total recovery within 2 years

b. The insured will not qualify for short-term disability

c. The insured will not qualify for workers compensation

d. The insured must be disabled for a period of time

All of these statements concerning group credit life insurance are false EXCEPT

a. Cash value loans are allowable

b. Dividends can reduce the premium payments

c. The face amount and premiums are flexible

d. The face amount is based on the outstanding loan balance

What are premiums for group credit life insurance based on?

a. The age of the borrower at the time debt is incurred

b. The age of the borrower when debt is paid off

c. The average age of the borrower over the life of the debt

d. Flat rate unrelated to the borrower's age

Which of the following does NOT help determine group health insurance premiums?

a. Average age of group

b. Claims experience of the group

c. Income level of group members

d. The group's size

Which of these would NOT be a valid reason to add the waiver of premium rider to a life insurance policy?

a. Prevents a policy from lapsing in the event of total disability

b. Premiums waived by the insurer do not have to be repaid by the policyowner

c. Policy's cash value would still increase as policy premiums are being waived

d. It allows a policy loan to cover premium payments if the policyowner becomes totally disabled

Karen is a health maintenance organization (HMO) subscriber. Who provides all of her preventative and routine care?

a. Primary care physician 

b. Provider specialist 

c. Preventative coordinator 

d. HMO director

A life policy that has premiums that are lower than normal during the early years is called

a. Decreasing term 

b. Modified life 

c. Variable life 

d. Limited-pay life

What is the guaranteed cash value of a whole life insurance policy when the insured turns 65 years old?

a. Greater than the policy's face amount

b. Less than the policy's face amount

c. Depends on the performance of the separate underlying investment account

d. Equal to the policy's face amount

Participants of a small group medical plan MUST be given advance notice of at least ___ days prior to the plan's discontinuation.

a. 30 

b. 60 

c. 120 

d. 180

A health plan offered by private insurance companies is

a. Social Security 

b. Medicaid 

c. Medicare 

d. a Medicare Supplement

According to the Affordable Care Act (ACA), the proportion of premium revenues spent on clinical services and quality improvements is called the

a. Medical loss ratio

b. Market essential coverage

c. Medical rebate

d. Minimum issue reform

The insured's consideration given for a health insurance policy is

a. the first premium payment and the application

b. the initial premium payment only

c. the application

d. the initial premium and an investigative report