Life and Health Insurance

How may an insurance company classify an accidental death benefit on a life policy?

a. As an optional policy rider 

b. As a provision of the policy 

c. As a nonforfeiture option 

d. As a mandatory policy rider

A single premium deferred annuity sometimes contains a bailout feature. Which statement regarding this feature is correct?

a. If the interest rate falls below a specified level, the surrender charge is waived

b. If the interest rate rises above a certain level, the surrender charge is waived

c. It allows the Life and Health Guaranty Association to bailout the insolvent insurer

d. A reinsurer will make the remainder of the annuity payments if the original insurance company becomes insolvent

Which type of policy can group term life insurance normally be converted to?

a. An individual renewable policy 

b. An individual level term policy 

c. An individual permanent life insurance policy 

d. A group permanent life insurance policy

Which of the following is NOT a basic underwriting action for accident and health insurance?

a. Excluding a particular health condition from coverage 

b. Removing uniform policy provisions 

c. Declining applications 

d. Issuing a policy at standard issue

A material change in a modified endowment contract (MEC) results in

a. the contract becoming void

b. a new contestable period

c. the seven pay test, adjusted for cash value, applies again

d. a tax penalty

How is the insured protected if a payor benefit rider is attached to the life insurance policy?

a. Premiums are waived if the payor becomes financially insolvent

b. Policy loan will automatically cover the premiums if payor becomes disabled or dies

c. Premium payments are waived in the event the premium payor dies or becomes disabled

d. Policy loan will automatically cover the premiums if payor becomes financially insolvent

A terminally ill policyowner decides to sell his life insurance policy at a discount to help support his family. This sale is called a(n)

a. accelerated death benefit

b. assignment

c. viatical settlement

d. nonforfeiture option

When disability buy-sell insurance benefits exceed a partner's cost basis, which of the following is correct?

a. The excess is taxed as a capital gain to the partner

b. The excess is taxed as ordinary income to the partner

c. The excess is partially taxable to the partner

d. The full amount is non-taxable to the partner

Which of the following statements is NOT true concerning the relationship between group health insurance plans and Medicare? (assuming the business has more than 20 employees)

a. Group health coverage is NOT available for workers over the age of 65

b. Group health coverage is available to workers over the age of 65

c. An active employee's group health plan is primary and Medicare is secondary, unless the employee chooses otherwise

d. Group health coverage is available to an employee's spouse that also happens to be Medicare-eligible

Medicare Part A typically covers

a. inpatient drugs

b. custodial care

c. disability income

d. respite care

If a Medicare Supplement policy is cancelled by the insurer, which of these circumstances does NOT require prior approval by the Arizona Department of Insurance?

a. Multiple Medicare Supplement policies on the same person

b. Nonpayment of premium

c.  Unsuitable coverage

d. Cancelling a class of insureds

After an insurance application has been originated, the producer normally

a. can change the policy provisions

b. determines whether a claim will be paid

c. is the major personal contact to the insured

d. conducts a physical examination

How does the cost for a survivorship life policy compare to the cost of combining two separate individual life insurance policies?

a. Survivorship life policy is lower

b. Survivorship life policy is higher

c. Depends on the investment performance of the underlying accounts

d. Both have the same actuarial costs

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

Skilled nursing facility expenses are sometimes covered by _____, but ONLY if the insured was hospitalized prior to entering the facility.

a. HMOs 

b. Medicare 

c. Medicaid 

d. Medicare Supplements

What determines how much an annuitant is paid for a variable annuity?

a. Varies according to how many outstanding annuity units

b. Payments fluctuate as annuitant gets older

c. The market value variations of the securities backing it

d. Varies according to the insurer's investments in its general account

Which of these is NOT a common life insurance nonforfeiture option?

a. Reduced paid-up insurance

b. Extended term option

c. Cash surrender option

d. Life income annuity

Which of the following is NOT considered to be an expense for surviving family members of a deceased wage earner?

a. Estate taxes

b. Unemployment tax expenses

c. Funeral expense

d. Living expenses

In regards to technology and the ACA, which of the following statements is correct?

a. States which operate with an Exchange must offer an internet-based portal

b. States which operate with an Exchange must increase the costs of their plans to accomodate an internet-based portal

c. States which operate with an Exchange can only offer an internet-based portal in public buildings

d. States which operate with an Exchange qualify for Federal aid to initiate an internet-based portal

Which of the following is NOT covered by a comprehensive long-term care policy?

a. Custodial care

b. Acute care

c. Physical therapy

d. Skilled nursing care

Long Term Care policies will usually pay for eligible benefits using which of the following methods?

a. Delayed

b. Fee for service

c. Expense incurred

d. Respite

Which of the following statements BEST describes a double indemnity provision in travel accident insurance?

a. Benefits are doubled under certain circumstances stated in the policy

b. If the claim is disputed in court and the insurer loses, the face amount will be doubled

c. Benefits cover two people when travelling

d. Accidents and illnesses are covered while the insured is travelling

Which of these is NOT considered to be a cost connected with an individual's death?

a. Funeral expense 

b. Tax liability 

c. Business expenses 

d. Probate costs

Elimination periods typically apply to

a. hospital policies

b. short-term policies

c. disability policies

d. blanket policies

Which health policy clause specifies the amount of benefits to be paid?

a. Insuring 

b. Consideration 

c. Free-look 

d. Payment mode

Life insurance premiums are computed on what three factors?

a. Mortality, interest, dividends

b. Morbidity, interest, expenses

c. Mortality, interest, expenses

d. Morbidity, interest, dividends

A policyowner fell behind on the premium payments of a whole life policy and is now in the grace period. How much will the beneficiary receive if the insured dies during this grace period and the policy also contains an outstanding policy loan?

a. Full face amount

b. Face amount minus the past-due premium

c. Face amount minus the loan balance

d. Face amount minus the loan balance and past-due premium

All of these statements correctly describe an aleatory contract EXCEPT

a. A legal wager is considered an aleatory contract

b. Potential unequal exchange of value for both parties

c. Only one party makes any kind of legally enforceable offer

d. Element of chance is involved

Which of these annuity contract features is meant to discourage withdrawals and exchanges?

a. Annuitization

b. Annual fees

c. Withdrawal penalty

d. Surrender charges

Health providers are compensated by a preferred provider organization (PPO) for normal dental procedures by what means?

a. Usual and customary fee schedules

b. Increased fee schedules

c. Decreased fee schedules

d. Indemnity fee schedules

What is another term used for a "pure" life annuity?

a. Annuity certain 

b. Immediate annuity 

c. Life income 

d. Joint annuity

Who regulates an insurer's claim settlement practices?

a. National Association of Claim Adjusters

b. State attorney general

c. National Association of Insurance Commissioners

d. State insurance departments

Which of these statements is NOT true regarding a cash value loan against a life insurance policy?

a. Interest normally accrues on unpaid balances

b. Loan cannot exceed the policy's cash value

c. Policy contract terms dictate the interest rate

d. Interest payments made by policyowner are deductible

How are monthly life annuity benefit payments treated under a tax sheltered annuity (TSA)?

a. Taxed as a capital gain during the accumulation period

b. Taxed as ordinary income during the accumulation period

c. Taxed as ordinary income in the year received

d. Received tax-free to all recipients

Notice of information practices must be given to a policyholder at least

a. every year

b. every two years

c. every three years

d. every four years

Which life insurance policy option allows the policyowner to have coverage equal to the net death benefit of the lapsed policy?

a. Reduced paid-up nonforfeiture option

b. Accelerated benefits option

c. Extended term nonforfeiture option

d. Cash surrender option

A major medical expense plan typically includes coverage for hospital room and board. Which of the following is normally covered under the category "room and board"?

a. Surgeon's fee

b. Diagnostic services

c. Prescription medication

d. General nursing care

How is a collateral assignment used in a life insurance contract?

a. Transfers permanent ownership rights to a creditor

b. Assigns complete ownership rights to a creditor

c. Transfers specific ownership rights to a creditor

d. Assigns ownership rights to the primary beneficiary

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

a. One year 

b. Two years 

c. Three years 

b. Four years

When premiums are determined, one factor would be the expenses of the

a. beneficiary 

b. insurer 

c. policyowner 

d. producer

To protect information systems, producers, brokers, and insurance companies must implement and maintain a(n):

a. cloud-based storage policy

b. cybersecurity policy

c. information superhighway policy

d. biometrics recognition security policy

Which of these statements is NOT a characteristic of the law of large numbers?

a. Individual losses can be predicted based on past experience

b. Group losses can be predicted based on past experience

c. Losses can be predicted in large groups with a higher degree of accuracy

d. Rates can be calculated to compensate for losses