Alabama Health and Life Insurance Exam, Exams of Insurance law

Download Alabama Health and Life Insurance Exam and more Exams Insurance law in PDF only on Docsity!

Alabama Health and Life Ins Exam

According to the Alabama Insurance Regulations, all of the following are included as advertisements except: - verified answer; A birthday card sent to a policyowner by his or her agent According to the Alabama Insurance regulations, when using an illustration in the sale of a life insurance policy, an insurance producer may legally do what? - verified answer; Use an illustration which has "non- guaranteed" elements According to the Optional Provision of a standard Health policy dealing with the issue of "unpaid premium", what will happen if you sustain an insured loss during the grace period? - verified answer; The claim will be paid after deducting the unpaid premium According to the required provision 3, the minimum grace period for all policies, other than monthly or weekly premium policies is: - verified answer; 31 days A company domiciled in another state that has received permission from the insurance commissioner to do business in this state is called: - verified answer; Foreign admitted company A contract requires an offer and acceptance. What constitutes a valid offer? - verified answer; An application and a premium payment submitted to the company or one of its agents Adverse selection will exist when: - verified answer; The group for risk of insurance is more likely than the average group experience loss A family medical expense policy typically covers: - verified answer; Every member of the family A form of welfare that provides assistance to the needy is: - verified answer; Medicaid A health savings account: - verified answer; Works with a high deductible plan

A level term policy is one where: - verified answer; The premium and the protection remain constant for the term of the policy A life insurance company may pay a death claim for less than the face amount of a policy under which of the following conditions? - verified answer; All of the above All of the following are common characteristics of Health Maintenance Organizations EXCEPT: - verified answer; They pioneered Nurse Practitioners All of the following provisions of an adjustable life policy may be adjusted to meet the policyholders changing needs except: - verified answer; The face amount of the policy All other factors being equal, which of the following policies is the least expensive as far as the total amount of premium paid is concerned, assuming the insured lived to be 100? - verified answer; Single Premium An accident policy would normally cover: - verified answer; A bullet wound suffered when an individual is shot by a hunter who mistook the individual for a deer An employee covered by the employers group life plan is terminated. The employer fails to inform the departing employee about the plans conversion option. When the former employee is killed bungee jumping a week later: - verified answer; The insurance company must pay the full benefits of the policy An immediate annuity with quarterly payments will begin making payments: - verified answer; 1 month after the annuity is purchased An insurance producer must keep complete records pertaining to transactions under the producer's license for at least: - verified answer; Three years An insurance producer who violates the Alabama long-term care insurance regulation may be fined up to three times the amount of any commissions paid for each policy involved, or up to _____, whichever is greater. - verified answer; $10,

An insured can increase the monthly benefits paid under a disability income policy by a specified percentage or in relation to an economic index with which of the following riders? - verified answer; Cost of living adjustment nother way insurance companies are classified is on the basis of where they receive their authority to operate, or their original charter. A company chartered in Alabama would be considered what type of insurance company in Alabama? - verified answer; Domestic A parent who purchases a policy on the life of a minor child and wishes to retain complete control of the policy until the child reaches age 18 may do so by means of: - verified answer; The ownership clause A policyholder decides to pay life insurance premiums quarterly instead of annually, what is the correct statement? - verified answer; The total outlay of annual premium dollars will increase A rider to a whole life policy that pays part or all of the death benefit to a terminally ill insured before his or her death is called: - verified answer; An accelerated benefit option A straight life annuity pays a periodic income: - verified answer; To two annuitants until one dies, after which all payments cease A term policy in which protection remains constant for the term of the policy is: - verified answer; level term A term policy that allows the policyowner to switch to permanent insurance is called - verified answer; convertible term A written legal agreement between two or more parties for a consideration is called a(n): - verified answer; contract A 20-pay life policy would indicate what? - verified answer; premiums are paid for 20 years

Because certain events must occur before an insurance company is obligated to pay under an insurance contract, an insurance policy is said to be: - verified answer; conditional Because there is a mutual reliance of truthfulness of both parties; an insurance contract is said to be? - verified answer; contract of upmost good faith Before Cranston was disabled, he was a full-time engineer earning about $70,000 annually. Now, two years later, he is able to work part-time, earning about $25,000 annually. It is likely that Cranston would be classified as: - verified answer; partially disabled Bill's Major Medical policy is reinstated on September 10. If he hit by a truck and hospital on September 15, he will receive: - verified answer; full benefits Brenda names her husband as the beneficiary of the accidental death benefit in her health policy. She has relinquished her right to change the beneficiary designation. Brenda's husband is: - verified answer; an irrevocable beneficiary Contracts must have consideration. Insurance contracts are considered to be aleatory contracts. This means what? - verified answer; The promise to pay claims will most likely not be equal to all premium payments Disability coverage designed to cover a disabled owner's business expenses other than income, the cost of capital goods, and other specified expenses is known as: - verified answer; business overhead expense insurance Dividend options are defined as ways in which the policy owner can? - verified answer; use or collect policy dividends Employer-paid premiums for employee group health insurance are generally: - verified answer; Tax deductible to the employer and nontaxable to the employees Factors commonly used by health insurers to classify risk include all of the following EXCEPT: - verified answer; education

For a company to escape claim payment due to false information on the application, the statements must be what? - verified answer; simply untrue For a disability income insurance, a policy with a benefit period lasting less than two years is generally considered: - verified answer; short term For medical expense policies, assignment refers to? - verified answer; Assigning the policy benefits to a health care provider For weekly premium disability policies in Alabama, there must be a grace period of: - verified answer; 7 days Harvey has a life insurance policy with a guaranteed incontestability rider. Which of the following events would enable Harvey to purchase additional insurance under his rider? - verified answer; he reaches the age specified in the policy If an insurance carrier decided to cancel a producer's appointment, each of the following is true EXCEPT:

• verified answer; The commissioner can immediately cancel the producer's license based upon the company's allegation of wrong doing by the producer If an insured under a Major Medical insurance policy with a $200 deductible and an 80% coinsurance clause incurred the following covered expenses: Hospital room and board $2,000; Surgeon's fee $1,500. How much would the policy pay? - verified answer; $2,640 [2,000 + 1,500 = 3,500 - 200 = 3,300 x .80] If Leo has been named the irrevocable beneficiary on a life insurance policy, he: - verified answer; Cannot be replaced as beneficiary without his consent If the consideration clause states that the premium payment keeps the policy in force until the next premium is due plus 30 days thereafter, the policy: - verified answer; contains a grace period If the insurance company accepts a substandard or special class risk: - verified answer; The premium will be higher than for a normal risk

If the insured is still alive at the end of the whole life policy period, what happens? - verified answer; the policy face is payable If the premium is not paid during the grace period of a Term Policy, what will occur? - verified answer; the policy will lapse If you decide to start withdrawing money at the end of the accumulation period, your choices are each of the following except: - verified answer; tac free stream of payment of 75% If you have not met the continuing education requirement when it is time to renew your license, you may? - verified answer; Request an extension and continue to do business until your request is accepted or denied If you qualify for COBRA, coverage under the group health plan: - verified answer; May be extended for up to 18 months for you and your dependents If you suffer a loss linked directly to your use of intoxicants or non-prescribed narcotics, what is the effect? - verified answer; Your claim may be denied by the carrier In Alabama, all clean electronic claims must be paid within ___ calendar days of receipt by the health insurer. - verified answer; 30 In Alabama, the agents of a Health Maintenance Organization: - verified answer; Are required to be licensed as insurance producers and are subject to all producer licensing requirements In a decreasing term policy, which of the following decreases each year? - verified answer; the face amount In an insurance transaction, an insurance producer may be in charge of other people's money, which is called: - verified answer; a fiduciary responsibility

In the life insurance agency relationship, what party is the principal? - verified answer; the agent In a traditional Whole Life policy, cash value: - verified answer; grows on a tax-deferred basis In non-contributory group insurance plans, what percentage of eligible employees are covered on the plan? - verified answer; 100% In order to keep life insurance from being a speculative investment, what condition must exist between the subject of the policy and the applicant of the policy? - verified answer; insurable interest Insurance policies are said to be conditional contracts. This means what? - verified answer; Failure of the insured to comply with the conditions can allow the company to avoid claim payment Insurance policies issued by companies which allow their policyowner to participate in the favorable experience of the company through the payment of dividends are known as: - verified answer; participating policies Interest sensitive whole life is also called? - verified answer; current assumption whole life Jack was born in August of 1966. His wife Mary was born in March of 1976. They each work and each is covered by a major medical plan provided by their employer. For their 2 dependent children: - verified answer; Mary's plan is primary and Jack's plan is secondary Joe, whose life insurance policy has a waiver of premium rider, becomes disabled for two years, during which time the company pays over $1,500 in premiums. Joe recovers and now must: - verified answer; Begin paying the premiums again as they become due Legally, who does an insurance agent represent? - verified answer; only the company Long Term Care policies are issued __________ renewable. - verified answer; guaranteed

Major Medical policies normally cover: - verified answer; Usual, customary and necessary medical expenses Medicare Advantage (Medicare Part C) is an option which allows what? - verified answer; Utilization of benefits through an HMO, PPO or traditional insurer Mortality figures are usually developed by the analysis of statistics: - verified answer; Relating to the death of millions of individuals over extended periods of time Most life insurance policies: - verified answer; Will pay the face amount if the insured is killed while a passenger of a regularly scheduled commercial airline. Most life insurance policies lapse after a grace period of? - verified answer; 30 days Most Long Term Care policies will exclude coverage caused by all of the following EXCEPT: - verified answer; Alzheimer's Disease Most major medical policies include as eligible expenses coverage of: - verified answer; all of the above Not a requirement to receive an Alabama insurance producer license - verified answer; An applicant must have a diploma from an approved college or university Offering to give a prospect anything of value not specified in the contracted to persuade the prospect to purchase the insurance is known as: - verified answer; rebating Oliver has a life insurance policy with a $50,000 death benefit. At his death there is a $5,000 policy loan outstanding. Which of the following statements is correct? - verified answer; The insurer will subtract the amount of the loan and pay $45,000 to the beneficiary Paid-Up additions act as a default if the policyholder doesn't indicate an option. Paid-up additions are: - verified answer; Single payment premiums which purchase additional amounts of insurance which adds to the face amount

Sherwood has no valid will but has named his estate as the beneficiary of his life insurance policy. As a result, the policy proceeds: - verified answer; Are distributed according to state law Shirley can no longer pay the premiums on her policy which has accumulated $11,100 in cash value. Which of the following would indicate that Shirley has elected the extended term option? - verified answer; She uses the $11,100 to buy term insurance of the same face amount as her original policy Should an insured die while a policy is in its grace period, the amount of a past-due premium is: - verified answer; Deducted from the face amount of the policy before payment is made to the beneficiary Six months ago, Pedro fell down a flight of stairs at home, resulting in complete paralysis from which he is not expected to recover. With a nine-year-old, Pedro will probably be able to collect benefits from? - verified answer; social security Someone who is a preferred risk: - verified answer; Will likely pay a lower premium than someone who is not The amount an Accidental Death & Dismemberment (AD&D) policy pays for accidental death is technically called the: - verified answer; Principal sum The assignment provision permits the policyholder to transfer or assign some or all of his/her rights to another party. A partial assignment is called what? - verified answer; Collateral assignments The authority of an insurance producer included in the agreement between the producer and the company is known as: - verified answer; expressed The company will normally pay the face amount of the policy to the beneficiary of an insured who commits suicide: - verified answer; 2 years The current rate of interest paid to the cash value account of a universal life policy consists of: - verified answer; The guaranteed interest rate or the current interest, whichever is higher

The deductible for a medical expense policy is typically stated as a: - verified answer; set dollar amount The disability income rider of a life insurance policy normally: - verified answer; Pays the premium as long as disability continues The "elimination period" refers to: - verified answer; The time period after a disability starts and before the insured may begin receiving disability income benefits The employees of Ace Trucking company must each pay a portion of a: - verified answer; Contributory group plan The "Entire Contract" law in Alabama says - verified answer; The policy and the application constitute the entire contract The fixed period option provides that the principal amount: - verified answer; Is invested by the company with interest being paid to the policyowner The fundamental insurance concept that an insured should not profit from a loss but should be restored in whole or part to the approximate financial condition occupied before the loss ins known as the principle of: - verified answer; indemnity The group of risk for insurance is more likely than the amount of the premium for their group life insurance. This means they are members of a: - verified answer; Contributory group plan The head of the state department of insurance has all of the following powers EXCEPT: - verified answer; The power to promulgate insurance laws The Health Maintenance Organization (HMO) concept that service providers are paid a fixed annual fee for each member is called: - verified answer; capitation The income period when a surviving spouse does not qualify for social security survivor or retirement benefits is called the: - verified answer; blackout period

The incontestable clause has what effect on coverage? - verified answer; Misstatement on the application will not negate coverage if a loss occurs following the incontestable period The insurance company that issues new life to an insured to replace an existing policy is the? - verified answer; Replacing insurer The insurance policy is a unilateral promise to pay. This means what? - verified answer; The company promises to pay claims. That promise is legally enforceable The kind of life insurance that acquires no cash value is? - verified answer; term life The life and health insurance marketing system utilizing nonemployee agents that represent just one insurance company and are often paid an allowance to cover office expenses and staffing is the: - verified answer; general agency system The major purpose of a Health Maintenance Organization (HMO) is to: - verified answer; Provide full medical services with emphasis on preventive medicine The primary objective of COBRA was? - verified answer; It provides a bridge from the end of old coverage to the beginning of new coverage The process of underwriting primarily involves what two key steps? - verified answer; Risk selection and pricing The provision that protects the rights of the contingent beneficiary if the insured and the primary beneficiary die as the result of one accident is the: - verified answer; Common disaster provision The purpose of Social Security is: - verified answer; To help working Americans with financial problems brought on by retirement

The renewability option offers major advantage to the insurer? - verified answer; Proof of insurability is not required The State's nonforfeiture law is supported by: - verified answer; Nonforfeiture Clause The type pf premium for term life insurance that remains the same throughout the policy period is the: - verified answer; level premium The waiver off premium rider suspends premium payments without penalty for what situations? - verified answer; long term disability This rider can be attached to a permanent life insurance policy to add more coverage for a limited time - verified answer; term rider To sell variable life insurance policies, an insurance producer must: - verified answer; all of the above Under Law of Alabama Life and Disability Insurance Guaranty Association has the power and duty to do which of the following? - verified answer; all of the above Under which of the following circumstances will the payor rider waive premiums and allow a life insurance policy to remain in force? - verified answer; If the insured dies prior to age 21 or 25 Vanessa's policy on her life names her three brothers as beneficiaries to share equally in the proceeds. If any of the brothers predeceases Vanessa, her beneficiary designations known as: - verified answer; per stripes Wendy is insured under a nonoccupational group health policy. She is involved in an auto accident while working and is confined to the hospital for a lengthy stay. Wendy's hospital expenses will not be paid under her group insurance because her hospital considers this: - verified answer; a job related accident What is the applicant offering as consideration? - verified answer; Statements on the application and premium payments

What is the definition of risk? - verified answer; Uncertainty or chance or chance of loss What risk classification would require payment of the most premium? - verified answer; Rated When a Major Medical policy exceeds the stop-loss, the insurance company will pay: - verified answer; 100% of covered expenses When an insurer cedes part of insureds coverage to another insurance company, retaining the insurer is engaging in: - verified answer; reinsurance When a policy claim contains a deductible and coinsurance provision, the policyholder's portion of the claim is calculated by: - verified answer; applying the deductible first When a policy is written so that no one may change the beneficiary, the policy has: - verified answer; Irrevocable beneficiary When Darwin became totally and permanently disabled, his disability income policy continued in force without further payments. This demonstrated the use of which of the following provisions? - verified answer; Waiver of premium When Jonas died, it was discovered that he was actually 6 years older than he had claimed when applying for the insurance policy, upon death insurance policy pays? - verified answer; The company will pay only the amount of insurance that Jonas premiums would have purchased at his current age When the agent collects the first premium at application, the applicant is given a Conditional Receipt. This acts to? - verified answer; answers a and b only When the reduced paid-up policy option is exercised: - verified answer; The amount of coverage will be less than the original

Which is NOT true regarding Medicare supplement policies? - verified answer; They require a 20-day free look Which life insurance nonforfeiture option provides the same amount of death protection as the original policy, but decreases the time coverage will remain in effect? - verified answer; Extended term Which life policy offers permanent protection and a premium that gradually increases during the early years of the contract? - verified answer; Graded premium whole life Which of the following are true regarding Medicare Prescription Drug Coverage (Part D)? - verified answer; All of the above Which of the following could be the beneficiary of a life insurance policy? - verified answer; ALL OF THE ABOVE ARE CORRECT Which of the following describes a multiple employer trust (MET)? - verified answer; An association of employers cooperating to reduce medical cost through prevention Which of the following disabling acts are usually exclusions on a medical expense or disability income policy? - verified answer; all of the above are correct Which of the following factors determines the amount of each payment under the fixed period settlement option? - verified answer; the length of the fixed period Which of the following is a tax advantage of a qualified retirement plan? - verified answer; Tax- deductible contributions by the employer Which of the following is CORRECT concerning the payment of commissions for insurance in Alabama? - verified answer; An insurer who violates the Alabama rules on commission payments may be fined up to three times the amount of the commissions paid

Which of the following is CORRECT regarding a Health Maintenance Organization (HMO) operating in Alabama? - verified answer; Every HMO must have a complaint system to resolve written complaints from enrollees. Which of the following is CORRECT regarding the incontestability of a Long Term Care (LTC) policy in Alabama? - verified answer; all of the above are correct Which of the following is NOT a correct concerning group life insurance? - verified answer; Group Life Insurance is mostly in the form of whole life insurance Which of the following is the settlement option of a life policy that provides periodic payments of a specified amount as long as the proceeds plus interest lasts? - verified answer; Fixed amount option Which of the following most specifically describes a type of policy intended to cover extended residence in a nursing home? - verified answer; Long-term care policies Which of the following premium payment modes will result in the highest total premium? - verified answer; monthly Which of the following riders could decrease the amount of the policy death benefit, if utilized? - verified answer; Automatic premium loan rider Which of the following statements about Key Employee Life Insurance is true? - verified answer; The company owns the insurance on the key employee Which of the following statements is true? - verified answer; Policy dividends cannot be guaranteed Which of the following would generally NOT be grounds for disciplinary action by the Alabama Commissioner of Insurance against a licensed insurance producer? - verified answer; Having been convicted of a misdemeanor offense Which policy will have immediate cash? - verified answer; single premium

Which statement is correct in comparing Medicare Plan A to Medicare Plan F? - verified answer; Plan A contains the Basic benefits Which statement is true? - verified answer; Concealment is the withholding of information that should have been provided to an insurer Which statement is true concerning Renewable Term insurance? - verified answer; The premium will increase at renewal Which statement regarding insurance producer license appointments is TRUE? - verified answer; A licensed insurance producer must be licensed and appointed by the insurer to act as the insurer's agent Who is the Chief Executive Officer of the Alabama Department of Insurance? - verified answer; The insurance commissioner Whole life is a combination of death benefit and what additional feature? - verified answer; Accumulating cash value Who must meet Alabama's requirement to earn 24 hours of continued education hours every two years?

• verified answer; A producer who only sells property and casualty insurance Why might a policyowner want to assign their policy to another party? - verified answer; As collateral support for a loan Withholding of facts that should be included in an application for insurance is called: - verified answer; concealment With the "Single Premium" dividend option, dividends will be used to: - verified answer; Accumulate at interest You can withdraw money from an annuity without penalty beginning at what age? - verified answer; 59. years of age

Your license may be refused, suspended or revoked for any of the following actions EXCEPT: - verified answer; Receiving too many unwarranted consumer complaints Accidental Death and Dismemberment Policies pay for what? - verified answer; DO NOT PICK: Death from accident or disease A coinsurance clause, as used in health insurance, requires insureds to: - verified answer; DO NOT PICK: settle on a percentage basis when they own two or more policies A disability that is presumed to result from the same or a related cause of prior disability is called a: - verified answer; DO NOT PICK: presumptive disability A man with an Accidental Death & Dismemberment (AD&D) policy having a principal sum or $100, and a capital sum of $50,000 loses a leg due to a blood clot which was not due to an accident. The policy will pay: - verified answer; DO NOT PICK: $50, An entity's chance of loss is determined by reviewing loss experience for large numbers of entities with similar risk characteristics. This predictability of loss relies upon what principle? - verified answer; DO NOT PICK: the law of reasonable expectations An individual otherwise qualified except for having taken and passed the examination can be issued a temporary insurance producer license, which is valid for a maximum period of? - verified answer; DO NOT PICK: One year An insured's disability income policy defines total disability as "the insured's inability to perform the duties of his or her own occupation." This definition known as the: - verified answer; DO NOT PICK: "any occupation" definition and is more liberal than the 'your own occupation' definition A woman purchases a disability income policy while working as a librarian. Without notifying the company, she becomes a rodeo clown. If she is injured, the Change of Occupation provision dictates that the insurance company: - verified answer; DO NOT PICK: can deny the claim

Benefits paid under an employer-paid Group Disability Income Insurance policy are: - verified answer; DO NOT PICK: non-taxable to the employee How can 'Key Employee' disability income insurance purchased by a business be used by the business? - verified answer; DO NOT PICK: To temporarily replace the key employees If William has a major medical plan on himself, his wife Harriet, and their son Bill, what happens when daughter Bess is born? - verified answer; DO NOT PICK: She is covered from the moment of birth if the policy provides maternity benefits If you misstate your age when applying for Disability Income Insurance, you may suffer what consequence at claim time? - verified answer; DO NOT PICK: it depends upon when the claim occurs. The incontestable Clause prohibits the company from taking action after two years In some jurisdictions the government acts as an insurer for these lines of business with the exception of which one? - verified answer; DO NOT PICK: Auto and home insurance for entities unable to get insurance elsewhere Laws have been enacted requiring changes to a Medicare supplement policy automatically when changes are made to the Medicare program. This requirement is called: - verified answer; DO NOT PICK: duplicating Medicare Normally, Blue Cross and Blue Shield organizations make payments for medical expenses: - verified answer; DO NOT PICK: only to HMOs or PPOs Once a dependent child is no longer eligible under the parents' health insurance policy, most policies contain what provision? - verified answer; DO NOT PICK: The right for a child to remain on the policy for increased premium charge Regardless of where the insurance company was chartered, in order to operate in Alabama, which statement is accurate? - verified answer; DO NOT PICK: only domestic companies must comply since they are chartered by Alabama

Select the correct statement below: - verified answer; DO NOT PICK: All of the above are correct The life and health insurance marketing system structured to allow potential clients to submit applications directly to the company is the: - verified answer; DO NOT PICK: general agency system The premium for a medical expense policy is typically: - verified answer; DO NOT PICK: guaranteed to change The primary components in premium calculations include each of the following EXCEPT: - verified answer; DO NOT PICK: Mortality or morbidity risk The required provision of a standard health policy indicates that if the insurer wants to have an autopsy performed while a claim is pending, the insurer: - verified answer; DO NOT PICK: may do so only if it presents evidence that substantiates the insurer's opinion that an autopsy is required Under a group disability income policy: - verified answer; DO NOT PICK: occupational losses are typically covered Vision plans typically provide coverage for which of the following? - verified answer; DO NOT PICK: All of the above When are disability income benefits received as nontaxable income to the recipient? - verified answer; DO NOT PICK: When the employer has paid the premium When does the 10-day free look begin? - verified answer; DO NOT PICK: Date of policy issue When may agents change a policy or waive its provisions, according to Required Provision 1 of a standard Health policy? - verified answer; DO NOT PICK: with the approval and signatures of the insured and of an executive officer of the insurance company When must the insurable interest exist for life insurance? - verified answer; DO NOT PICK: At the time of death

Which of the following is CORRECT concerning the marketing of Medicare supplement insurance in Alabama? - verified answer; DO NOT PICK: Medicare supplement policies cannot treat a loss due to injury differently than a loss due to illness Which part of the Medicare requires premium payment by most eligible participants? - verified answer; DO NOT PICK: All of the above Which statement about Health Savings Accounts is NOT true? - verified answer; DO NOT PICK: the account can be funded by both the employer and the employee You must notify the company of a health insurance claim within how many days (or as soon thereafter as reasonable possible)? - verified answer; DO NOT PICK: 30 days