Alabama Life & Health Insurance Exam questions verified with 100% correct answers, Exams of Life Sciences

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Alabama Life & Health Insurance Exam

1. Insurance is defined as the transfer of risk to the insurance company in consideration for a premium.: Pure
2. The chance of loss without any chance of gain is called : Pure Risk
3. has the possibility for gain or loss and is not insurable.: Speculative Risk
4. is defined as the chance of loss.: Risk
5. A condition that could result in a loss is known as: Exposure
6. is something that increases the chance of loss.: Hazard 7. The presence of a increases the chance of a loss occurring.- : Physical Hazard

8. defined as a cause of loss, such as fire.: Peril
9. To be insurable, losses must be .: Calculable
10. allows insurers to predict claims more accurately.: Law of Large Numbers
11. The law of large numbers applies to .: Groups of people, not individuals
12. The law of large numbers applies to groups of people, not to individuals. The more people in the group .: the more accurate the predic- tions are
13. Most insurers buy to protect themselves in the event of a .: reinsurance , catastrophic loss
14. are not required to be uniform from one state to another.: Insurance laws
15. dividends to its shareholders (stockholders), but they may not be guaran- teed.: Stock insurer may pay

insured's estate

25. An insurance contract is in that only one of the parties to the contract is legally bound to do anything.: unilateral
26. insurer: If forms are not furnished, written proof of the occurrence, nature of the loss, and extent of loss must be submitted to the
27. If a distribution is made for a reason other than to pay for qualified medical expenses, the amount withdrawn will be subject to an income tax and an additional: 20% tax
28. Medicare supplement policies (Medigap) do not cover the cost of: extended nursing home care
29. to fill the gap in coverage attributable to Medicare's deductibles, copay- ment requirements, and benefit periods. These plans are issued by private insurance companies.: Medigap plans are designed
30. to either continue group coverage and defer Medicare until retirement, or switch to Medicare.: If a person is still employed at the age of 65, he or she may choose
31. non-controlled business: The purpose of a license is to primarily write
32. When producer was reviewing a potential customers coverage written by another company the producer made

expense. Neither company know in advance that the insured has coverage through any other Insurers. How claim is handled?

44. Offers Full Benefits. Total or permanent disability due to loss of sight, hearing, speech or 2 + limbs; benefits paid even while continuing to work.- : Presumptive Disability

45. Under Social Security disability requirements, a worker is fully insured on a permanent basis after having worked in a covered occupation for:: 40 Quarters
46. Exchange of unequal values: Aleatory in nature refers to:
47. Insurer cannot cancel or raise premiums beyond amount stated in the policy: Noncancellable Policies
48. The company can cancel your policy at a premium due date for reasons given in the policy.: optional renewability
49. Made up of 4 parts where the first part is paid by FICA and second part is financed by premiums and payroll taxes.: Medicare
50. licensees must report of any action taken against them in another jurisdic- tion or by another governmental agency in Alabama: 30 days
51. When a domestic insurance company examined by the Commissioner disagrees with the findings of the examination what recourse is available: - Request a hearing within 2o days of receiving the report
52. Employee benefit plan under which the employer bears the

full cost of the employees' benefits; must insure 100% of eligible employees.: noncontributory plan

53. Evaluates insurers financial status often used by state departments of insurance: AM BEST
54. An insurance company wants to obtain the insurance history of an appli- cant. Which source releases coded information to insurers regarding informa- tion included on previous insurance applications?: Medical Information Bureau
55. According to OBRA, what is the minimum number of employees required to constitute a large group?: 100
56. One individual licensed insurance producer: In addition to obtaining an insur- ance producer license, a business entity, in order to transact insurance, must have at least
57. Commissioner: Which of the following authorities is authorized to issue a temporary insurance producer's licenses
58. Each insurer should pay a proportionate share of the claim.: An insured has medical insurance coverage through 2 different providers, both covering the same expenses on an expense-incurred basis. Neither company knows in advance that the insured has coverage through any other insurers. The insured submits a claim to both insurers. How should the claim be handled

67. Policyowner: Individuals must have insurable interest in the insured
68. To minimize the insured's level of liability in the event of loss: Which of the following is NOT a goal of risk retention? 69. reduce expenses improve cash flow, to increase control of claim reserving claims settlements to fund losses that cannot be insured.: Retention usually results from three basic desires of the insured:
69. Automatically covered and exempt from any probationary period.: Employ- ees actively at work on the date coverage is transferred to another insurance carrier are
70. HMOs may pay for services not covered by Medicare.: Which of the follow- ing statements is CORRECT concerning the relationship between Medicare and HMOs?
71. not taxable: Qualified medical expenses paid for participants in a Medical Savings Account (MSA) are
72. It is a liability insurance company owned by its members: Which of the following is true regarding a risk retention group?

74. self insurance, deductibles, copayments: All of the following are examples of risk retention
75. Reasonable expectations: If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept?
76. for the first 2 years of a disability: In disability income insurance, the own occupation definition of disability applies
77. nothing: If one takes Social Security retirement benefits at age 62, what needs to be done at age 65 to qualify for Medicare?
78. Both group health and Medicare: A man is still employed at age 65 and is now eligible for Medicare. He wants to know what health insurance coverage he is eligible to receive. Which of the following options are available to him? 79. Premiums are deductible and benefits are taxed. The premiums paid for BOE insurance are tax deductible to the business as a business expense. However, the benefits received are taxable to the business as received.: Regarding the taxation of Business Overhead policies,
79. Entire Contract: The provision that states that both the printed contract and a copy of the application form the contract between the policyowner and the insurer is called the
80. The insurer: An insurer hires a representative to advertise its company at a local convention. The representative lies about the details of some of the policies, in an attempt to secure more business

86. Credit History Habits Prior Insurance: If an insurance company wishes to order an inspection report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report could contain all of the following information 87. False financial statement False financial statements are made when insurance companies attempt to hide their financial troubles from the public and government officials.: When an insurance agency published an advertising brochure, it emphasized the compa- ny's financial stability and sound business practices. In reality, its financial health is terrible, and the company will soon have to file for bankruptcy. Which of the following terms best describes the advertisement? 88. Educati on Training Experience: Any occupation disability typically means that an individual is unable to perform the duties of the occupation for which he/she is suited by all of these

89. A reinstated policy provides immediate coverage for an illness.: All of the following are correct about the required provisions of a health insurance policy EXCEPT 90. Rated

Substandard risk classification is also referred to as "rated" since these policies could be issued with the premium rated- up, resulting in a higher premium.: Another name for a substandard risk classification is

91. As long as the policy is in force: What is the maximum period of time during which an insurer may contest fraudulent misstatements made in a health insurance application? 92. Group health insurance. Annuities. Disability income insurance.: All of the following are lines of insurance that may be transacted under a life and accident/health producer license 93. Death benefits are paid only if death occurs within 24 hours of an accident Under an Accidental Death and Dismemberment insurance policy, the death benefit will be paid if the accidental death occurs within (90 days)of the

Those who desire Part B coverage must enroll and pay a monthly premium.- : Which of the following statements is INCORRECT concerning Medicare Part B coverage?

100. The loss may be intentional To insure intentional losses would be against public policy.: Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT

101. Optionally renewable: Which renewability provision allows an insurer to termi- nate a policy for any reason, and to increase the premiums for any class of insureds? 102. 50 or more. In groups of 50 or more, medical information cannot be required of plan participants.: One of the differences between group underwriting and individual underwriting is that there is little or no medical information required regarding plan participants in groups of

103. Reduction. Steps taken to prevent losses from occurring are called risk reduction.: In- stalling deadbolt locks on the doors of a home is an example of which method of handling risk?

104. Both the applicant and agent: Who must sign the notice regarding replace- ment?
105. illegal: An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?
106. 500: An insured is covered under 2 group health plans - under his own and his spouse's. He had suffered a loss of $2,000. After the insured paid the total of $500 in deductibles and coinsurance, the primary insurer covered $1,500 of medical expenses. What amount, if any, would be paid by the secondary insurer?
107. what the first company will not pay, such as deductibles and coinsurance. The insured will, then, be reimbursed for out- of-pocket costs.: Once the primary insurer has paid the full available benefit, the secondary insurer will cover
108. perpetual: In Alabama, an insurance company certificate of authority is issued for what period of time?
109. Conformity with State Statutes: Which of the following provisions requires that any policy language that is in conflict with the state statutes of the state in which the insured resides is automatically

116. blanket policy: A group policy used to provide accident and health coverage on a group of persons being transported by a common carrier, without naming the insured persons individually is called
117. An independent examination as often as reasonably required: While a claim is pending, an insurance company may require 118. Return the policy to the insurer. The policy is to be delivered to the applicant who is in continued good health. If the health of the insured has deteriorated since the application was completed and no money was taken, the agent should not accept money or deliver the policy unless directed to do so by the insurer.: Agent D submitted an application for life insurance on client A. No money was sent with the application. When Agent D attempted to deliver the policy, he discovered that A had suffered a heart attack since the application was taken. The agent should
118. excluded: Under a typical health insurance policy, claims that result from in- juries while the insured was intoxicated or under the influence of drugs are generally
119. 100: According to OBRA, what is the minimum number of employees required to constitute a large group?
120. 6 credits: To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters?

122. debtor, creditor: Which of the following is NOT an example of insurable inter- est? 123. The aggregate amount of premiums due All LTC policies must disclose and explain the renewability provisions. With re- gard to life insurance policies that provide an accelerated benefit for long-term care, the policy must include a statement to the effect that receipt of the accel- erated benefits may be taxable, and that the insured should seek assistance from a personal tax advisor.: Which of the following does NOT have to be disclosed in a long-term care (LTC) policy?
123. Each violation will be punished as a separate violation of the insurance code.: With respect to multiple violations of the insurance code, which of the following is correct?
124. Overinsurance: When an individual is covered under two health insurance policies that have duplicate benefits which could make a claim for benefits because of an injury or illness profitable, it is called
125. Benefits are considered taxable income to the business.: Which of the following is not true of Disability Buy-Sell coverage?