Alabama Life & Health Insurance Test Exam with 194questions and answers 100%Correctly veri, Exams of Nursing

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Which of the following would be considered a speculative risk? - CORRECT ANSWERS The possibility the painting you bought might be a long-lost masterpiece A speculative risk is one in which there is a chance for either loss or gain. Example: Gambling, Casino's, Lottery, etc. All of the other choices describe pure risk, where there is no chance of gain, only a chance of loss exists. Which is the proper term for a company owned by its policy owners? - CORRECT ANSWERS A mutual insurance company A producer who is acting as an agent is representing: - CORRECT ANSWERS Always the insurer All of the following are elements of a contract, except: - CORRECT ANSWERS Authority All enforceable contracts must include these characteristics: offer and acceptance (agreement), considerations, competent parties, and legal purpose. Authority is not considered one of the elements of a legal contract. Each of the following would be an element in the definition of fraud, except: - CORRECT ANSWERS An individual warrants a fact stated on the application A warranted fact is one guaranteed to be true. Although no statement on an application is regarded as warranty, no fraud is involved if a statement is guaranteed to be true. Examples of Fraud - CORRECT ANSWERS Intentional material misrepresentation with the intent of causing injury to another party Withholding of known material facts

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A false statement on the application that is material to the acceptance of the risk A company that is licensed to sell insurance in a particular state is: - CORRECT ANSWERS An authorized Company In order to be valid, a contract must be between individuals considered legally able to enter into an agreement. This principle is known as: - CORRECT ANSWERS Competent parties An insurance contract is an aleatory contract. This means: - CORRECT ANSWERS Equal value is not given by both parties to the contract Aleatory: contract of unequal values exchanged The ____________ market is a private source of coverage of last resort for individuals or businesses that have been rejected by voluntary market insurers. - CORRECT ANSWERS Residual To address adverse selection what can an insurer legally do? - CORRECT ANSWERS Establish and enforce sound underwriting practices Underwriting helps to protect the insurer against adverse selection and accepting risks that are more likely than average to suffer losses. A contract that is drafted by an insurer and receives no input or alteration from the insured, is considered a(n): - CORRECT ANSWERS Contract of Adhesion _________ refers to the jurisdiction where an insurer was formed or incorporated. - CORRECT ANSWERS Domicile: Domicile refers to the jurisdiction either state or country where an insurer was formed or incorporated.

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_____________ insurance allows for insurance coverage to be obtained when not available from admitted carriers. - CORRECT ANSWERS Surplus Lines Insurance can be obtained through surplus lines brokers (producers) from non- admitted insurers. To make insurance more affordable and protect the insurance company from paying out too much in claims, insurers will: - CORRECT ANSWERS Reinsure the risk Reinsurance is what makes insurance affordable. Reinsurance companies are insurance companies that accept all or a portion of the financial risk of loss from the insurance company. The field underwriter is the _________ and is not a determiner of insurability. - CORRECT ANSWERS Producer The producer is in the field soliciting applications for insurance and in effect is another pair of eyes and ears for the insurer in helping to issue policies to insurable prospects. Third-party ownership refers to: - CORRECT ANSWERS A situation where the policyowner is someone other than the insured Which statement best describes the term reserve? - CORRECT ANSWERS That amount that, when increased by future premiums on outstanding policies, and interest on those premiums will enable the company to meet future death claims The applicant, if other than the proposed insured, must have: - CORRECT ANSWERS An insurable interest in the life of the insured Controlled business may be defined as insurance sold: - CORRECT ANSWERS To the producer, the producer's family and friends, and the producer's business associates

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With regard to life insurance policies, loading refers to: - CORRECT ANSWERS Assignment of the appropriate share of the company's operating expenses to each policy Which of the following statements about the average number of people who die each year is true? - CORRECT ANSWERS It is called the mortality rate Mortality Rate: which is the statistical probability of death in a large population of insureds. Which of the following is NOT a characteristic of life insurance as property? - CORRECT ANSWERS It requires a fund portfolio manager Characteristics: It creates an immediate estate It requires no physical maintenance It may be paid for in installments The most effective way to ensure that the applicant will accept the policy when it is issued is: - CORRECT ANSWERS To have the applicant pay the initial premium at the time of application Allen purchases an estate builder (jumping juvenile) policy for his 5-year old son, Donald. Suppose that when Donald reaches age 21 his father presents him with the policy as a gift. Which of the following statements is NOT correct? - CORRECT ANSWERS Donald must change the beneficiaries immediately CORRECT:

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The premium will continue to be based on his original age of 5 Donald has enjoyed protection against the problems of premature death The face value of Donald's policy has increased by 5 times Term insurance differs from permanent insurance in that term: - CORRECT ANSWERS Builds no cash value, pays a death benefit only An indeterminate premium policy offers: - CORRECT ANSWERS A low initial premium with succeeding premiums based on the company's investment return, mortality and expenses With regard to the waiver of premium rider, after the disability a policyowner normally: - CORRECT ANSWERS Need not repay the premiums paid by the company during disability In many jurisdictions, permanent policies are required to have some cash value by the end of: - CORRECT ANSWERS The Third Year Loan values and retirement income are: - CORRECT ANSWERS Called the living benefits of life insurance With a modified premium whole life contract, premium payments: - CORRECT ANSWERS Are lower in the early years of the contract A variable life policy: - CORRECT ANSWERS Death benefit varies to reflect the investment results of the underlying separate account, but never falls below a guaranteed minimum

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The type of policy that can be changed from one that does not accumulate cash values to one that does is a: - CORRECT ANSWERS Convertible term policy A limited pay life policy: - CORRECT ANSWERS Requires premium payments for a specified number of years or until a specified age is reached Should an insured become totally and permanently disabled two months before the cut-off date for the waiver of premium rider: - CORRECT ANSWERS The insured remains eligible for all provisions Warren and Wilma have a joint life policy. Warren dies and the policy pays nothing. Later on, Wilma dies and the policy death benefit is paid to the beneficiary. This is called a: - CORRECT ANSWERS Survivorship or second-to-die policy A whole life policy: - CORRECT ANSWERS Requires the insured to pay premiums for life and endows at age 100 If Greg's policy on his own life has a guaranteed insurability rider, it means that he can purchase more insurance: - CORRECT ANSWERS On his own life at certain specified ages without proof of insurability Any extra premium charged for the waiver of premium rider: - CORRECT ANSWERS Does not apply to the policy's cash value If a policyowner has a $100,000 policy with an accumulated cash value of $6,000, the policyowner can borrow up to: - CORRECT ANSWERS The entire accumulated cash value of $6,000, less interest for 1 year An insured allows a permanent policy to lapse. Unless otherwise instructed, the insurance company: - CORRECT ANSWERS Will automatically institute the extended term option Each of the following statements about policy loans is correct, except: - CORRECT ANSWERS Policy loans may be made on any type of policy

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What is a postmortem dividend? - CORRECT ANSWERS A dividend earned, but not yet paid, in the year of the insured's death and paid with the death claim The factors that determine the amount of each payment under the fixed period settlement option are: - CORRECT ANSWERS Length of the fixed period, face amount of the policy and interest Fred purchased a $100,000 policy naming his wife, Wilma, as primary beneficiary, and his only child, Pebbles, to receive any proceeds if Wilma dies before Fred, or if she dies after Fred, but before receiving all the policy proceeds. Fred elected the interest settlement option for Wilma, with the right of withdrawal after 5 years. No settlement option was stipulated for Pebbles. Fred dies on May 6th, 1991. When Fred dies, his insurance company will make settlement by paying: - CORRECT ANSWERS Interest in periodic payments to Wilma Each of the following is a source of life insurance policy dividends, except: - CORRECT ANSWERS Guaranteed cash value accumulations Why should a policyowner be especially careful when deciding to increase the amount of an outstanding policy loan? - CORRECT ANSWERS If the outstanding loan balance, plus interest, equals or exceeds the cash value of the policy, the company could cancel the insurance The main purpose of the spendthrift clause contained in a settlement option is to prevent the beneficiary from doing all of the following, except: - CORRECT ANSWERS Purchasing a new car once the claim has been settled and proceeds have been paid out according to the beneficiary designations Collateral for a policy loan is: - CORRECT ANSWERS The cash value of the policy itself If an insured has an outstanding loan of $5,000 on a policy with a face amount of $25,000, at death the company will: - CORRECT ANSWERS Pay the beneficiary $20,000, after subtracting the amount of the outstanding loan

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The nonforfeiture option that provides the most life insurance protection is the: - CORRECT ANSWERS Extended Term Option The extended term option provides the most life insurance protection of the available nonforfeiture options. Paid up additions are considered dividend options and are not considered a nonforfeiture option. The settlement option that provides for the proceeds plus interest to be paid in installments for a specified period of time is called the: - CORRECT ANSWERS Fixed Period Option All of the following are situations in which the insurer is obligated to pay out a death benefit after the insured has died, except: - CORRECT ANSWERS The premiums have not been paid and have been overdue for 3 years A client purchases an individual disability income policy and receives the policy from the insurer 45 days after application. Upon receipt of the policy, the client typically has ______days to review and return the policy to receive a full refund for any reason. - CORRECT ANSWERS 10 An annuitant has a temporary annuity certain, and dies shortly after the payments start but before the certain period of 10 years has elapsed. Any money remaining is:

• CORRECT ANSWERS Paid to the beneficiary for the rest of the certain period The type of annuity that guarantees to pay total income at least equal to the purchase price of the contract is a: - CORRECT ANSWERS Refund life annuity 'Annuity Period' refers to which of the following? - CORRECT ANSWERS The time during which payments are made to the annuitant The annuity period begins when the annuitant starts to receive payments from the accumulated funds in the annuity policy. This is also referred to as 'the Annuitization period'.

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An annuity owner can change all of the following in an annuity, except: - CORRECT ANSWERS Mortality Table Which of the following will receive the smallest monthly income benefit check if an annuity is annuitized? - CORRECT ANSWERS 50 year old female Which of the following Annuities is generally not backed by the insurer's general account assets? - CORRECT ANSWERS Variable When converting a group life policy to an individual policy, the departing group member's new policy must be a: - CORRECT ANSWERS Permanent or whole life policy When underwriting group life insurance: - CORRECT ANSWERS The underwriter generally focuses on the group as a whole, rather than on individual members Which of the following statements is NOT true about the tax treatment of Social Security? - CORRECT ANSWERS Employee paid payroll deductions for Social Security are tax deductible to the employee Split-dollar plan - CORRECT ANSWERS Divides the cost of additional insurance for an employee between that employee and the company George, who has a group policy, may upon leaving his place of employment: - CORRECT ANSWERS Convert it to permanent insurance without proof of insurability, within a specified period The Lucrative Lozenge Company provides a $5,000 monthly income to retirees who served as senior executives. This benefit is not available to other retirees of the company. This is an example of a: - CORRECT ANSWERS Non-qualified plan

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Incidental limitations refer to which of the following? - CORRECT ANSWERS The amount of life insurance that may be included in a qualified retirement plan If a policyowner paid $18,000 in premiums for a policy that is cashed in for $21,000, how much of the policy's cash surrender value would be subject to federal income tax? - CORRECT ANSWERS $3, Any proceeds from a surrendered or matured life insurance policy that exceed policy costs are subject to federal income tax. This is referred to as the cost recovery rule. Distributions from a qualified retirement plan: - CORRECT ANSWERS Are received tax-free only if they result from previously taxed contributions A group deferred annuity or an individual deferred annuity would be most likely used: - CORRECT ANSWERS To fund a defined benefit plan When a group deferred annuity is used to fund a defined benefit plan, specified amounts of deferred annuity are bought by the employer each year to provide the 'defined benefit' for the employee at retirement, thus providing a guaranteed defined benefit at retirement. Defined Contribution Plan - CORRECT ANSWERS Which of the following would NOT be permitted as a Section 1035 policy exchange?

• CORRECT ANSWERS An annuity contract exchanged for a life contract TSAs are tax-sheltered retirement programs for employees of all the following kinds of organizations, except: - CORRECT ANSWERS Corporations How are employer paid premiums on a group life insurance plan treated for tax purposes? - CORRECT ANSWERS As an ordinary and necessary business expense

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With a Profit Sharing Plan contributions must generally be made in at least ________ consecutive years. - CORRECT ANSWERS 3 out of last 5 A stay at home father wants to open up an IRA. What is required in order for him to do so? - CORRECT ANSWERS Be married to a spouse that has earned income The tendency for poor risks to seek and be covered for insurance more than average risks is known as: - CORRECT ANSWERS Adverse Selection What type of policy pays weekly or monthly benefits for loss of income due to sickness or injury? - CORRECT ANSWERS Disability Income Disability income pays benefits either weekly or monthly when an insured becomes disabled and unable to perform some or all of their job duties, due to a sickness or injury. The specified period that must elapse before new coverage is effective for nonaccidental losses is known as which of the following? - CORRECT ANSWERS Probationary Period All of the following statements regarding an insurance application are correct, except: - CORRECT ANSWERS It is not included as part of the contract Correct: It is a formal written request by an applicant to an insurer requesting a policy It is the primary source of information for underwriting purposes It must be signed by at least the applicant and producer

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If a policy was issued at a higher premium due to a higher risk exposure, all of the following can be used to reflect the higher risk, except: - CORRECT ANSWERS Declined Information about an applicant's work behavior or character gathered from neighbors or co-workers would be included on an? - CORRECT ANSWERS Inspection Report Timothy owns an individual A&H policy, and in the event of an accident, he is required to prove only that the injury itself is unforeseen and unintended. Tim's policy is based on which of the following definitions of accident? - CORRECT ANSWERS Accidental Bodily Injury If the insurer issues a health insurance policy without an initial premium, the producer must obtain a signed: - CORRECT ANSWERS Statement of Good Health Comprehensive dental plans usually provide: - CORRECT ANSWERS Routine dental care services without deductibles or coinsurance Which of the following is NOT a common exclusion for a dental expense policy? - CORRECT ANSWERS The preventative care exclusion Common Exclusions: The 5-year replacement exclusion The missing tooth exclusion The cosmetic exclusion

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Under a credit health policy, what is the maximum amount of any accidental death benefit included? - CORRECT ANSWERS The amount of outstanding indebtedness at any given time Dental policies that limit benefits to specified maximums per procedure, with first dollar coverage are: - CORRECT ANSWERS Scheduled: policies provide first dollar coverage, but limit benefits to specified maximums per procedure. A policy that pays surgical expense benefits does not schedule the approved benefit payable for every type of surgery. Instead, surgeries not listed are paid on the basis of a comparison to one or more types of commonly-performed major surgeries that are scheduled. Under this arrangement, the unscheduled surgeries are paid on the basis of: - CORRECT ANSWERS Their relative value Which of the following statements is FALSE regarding credit health insurance? - CORRECT ANSWERS Credit health insurance operates like an HMO and provides death benefit protection regardless of the cause of death Which provision allows medical expenses from the last 3 months of a calendar year to be used during the next calendar year to meet a deductible? - CORRECT ANSWERS Carryover provision For nonroutine treatments, a comprehensive policy generally pays: - CORRECT ANSWERS A specified percentage of the reasonable and customary charges A certain major medical policy states a maximum number of days for which convalescent care will be paid as well as a maximum number of X-rays that will be paid for under any one claim. These are examples of: - CORRECT ANSWERS Inside Limits The limits sometimes placed on specific coverages in a major medical policy are called inside or internal limits. These limits resemble scheduled benefits, as to the fact that they are stated in the policy as either maximum lifetime limits or limits per policy period. Either way they are stated inside the policy.

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Which of the following is true about a policy that pays for room and board expenses on a indemnity basis? - CORRECT ANSWERS The policy pays a specified, pre- established amount per day for a maximum number of days Before Cranston was disabled, he was a full time engineer earning about $70, annually. Now, two years later, he is able to work part-time, earning about $25, annually. It is likely that Cranston would be classified as: - CORRECT ANSWERS Partially Disabled As compared to individual disability income policies, group disability income policies are generally: - CORRECT ANSWERS Less costly and have more liberal provisions Which of the following is NOT one of the categories of benefits incorporated by State Workers' Compensation Laws? - CORRECT ANSWERS Long-term care coverage All state Workers' Compensation laws incorporate for categories of benefits: disability (loss of income), benefits, medical bills, survivor (death) benefits, and rehabilitation benefits. No long-term care coverage applies. Under Workers' Compensation, a disability that is a permanent physical impairment leaving the individual incapable of performing the previous regular occupation, but capable of performing some other type of work, is a: - CORRECT ANSWERS Permanent partial disability What type of disability income policies are most likely used to cover only nonoccupational disability as opposed to both occupational and nonoccupational? - CORRECT ANSWERS Short-term disability policies Social Security disability benefits become available to eligible workers after a waiting period of: - CORRECT ANSWERS 5 months

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In Individual Disability Income underwriting, the single most important rating factor from an underwriting standpoint is the applicant's: - CORRECT ANSWERS Occupation Under a Key Employee Disability Income Policy, the employer is the: - CORRECT ANSWERS Policy Owner Recipient of proceeds Premium Payor What type of disability income insurance pays a benefit to a business to help in the search, cost, and hiring of a replacement when an employee becomes disabled and is unable to work for the company? - CORRECT ANSWERS Key Employee For hospital stays of over 90 days, patients can draw from a pool of 60 reserve days that may be used: - CORRECT ANSWERS Once in a lifetime Which of the following statements is FALSE regarding Medigap policies? - CORRECT ANSWERS A Medigap policy provides the same coverage as a Medicare policy A Medigap policy supplements and fills the gaps of Medicare, it never duplicates Medicare. Medicare supplement policies must provide a 'free look' period of: - CORRECT ANSWERS 30 days The Medicare home health care benefit will provide for which of the following services? - CORRECT ANSWERS Medical Supplies A Medicare SELECT policy differs from a regular Medicare Supplement (Medigap) policy in that it: - CORRECT ANSWERS Is a managed care version of the traditional Medicare Supplement policy

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Which part of Medicare requires premium payments by most eligible participants? - CORRECT ANSWERS Part B Medical Insurance/ Outpatient All Medicare supplement (or Medigap) policies must: - CORRECT ANSWERS Have the same core benefits The first year commission for the sale of a Medicare supplement policy may be no more than ________ of the commission paid for selling or servicing the policy in the second year. - CORRECT ANSWERS 200% Michelle is 65 and starting to receive Social Security benefits. To receive Medicare Part A, she needs to: - CORRECT ANSWERS Do nothing A Medicare supplement policy may not limit benefits for losses incurred more than ________ from the effective date of coverage because they involve a preexisting condition. - CORRECT ANSWERS 6 months Primary support for Medicare Part A comes from: - CORRECT ANSWERS Social Security payroll taxes Part B of Medicare excludes which of the following medical expenses? - CORRECT ANSWERS A regular dental checkup Which of the following is true of Medicare Part A, in terms of coverage? - CORRECT ANSWERS Helps pay for hospital care and skilled nursing facility care as an inpatient plus home or hospice care Policies are considered incontestable after: - CORRECT ANSWERS 2 years All of the following statements about noncancellable policies are true, except: - CORRECT ANSWERS The insurer may choose not to renew the policy, but only on the policy renewal or anniversary date

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The only right to cancel a noncancellable policy is nonpayment of premium, because it is guaranteed renewable to age 65. The only type of renewal provision that allows an insurer the right not to renew on the policy anniversary is the optionally renewable option. Required/Mandatory Provision 'Proof of Loss' indicates that except in the absence of the insured's legal capacity, if it was not reasonably possible for the insured to provide proof of loss as required in a policy, the latest time the proof of loss may be furnished is: - CORRECT ANSWERS 1 year from the time proof is otherwise required Each of the following would be found in the insuring clause of an insurance policy, except: - CORRECT ANSWERS General information about the named insured Under Optional Provision 'Unpaid Premiums', when premiums are unpaid at the time a claim is submitted, the insurer may: - CORRECT ANSWERS Deduct unpaid premiums from benefits before paying the claim Required Provision 'Reinstatement' addresses reinstatement of a lapsed policy. According to this provision, when an insured applies for reinstatement and receives a conditional receipt, how long does the insurer have to approve or deny reinstatement before the policy will be automatically reinstated? - CORRECT ANSWERS 45 days from the date of the conditional receipt The Time Limit on Certain Defenses (Incontestable) period is _____ years under individual health and disability contracts. - CORRECT ANSWERS 2 Under the Legal Actions Mandatory Uniform Provision, an insured must wait at least _____ days after providing proof of loss before he or she can take legal action against the insurer. - CORRECT ANSWERS 60 days John has had his individual Health and Disability Income policies for many years. While intoxicated, he was injured as the driver in a single car accident. Who covers the medical expenses for John? - CORRECT ANSWERS John is liable for all expenses

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According to the Intoxicants and Narcotics Provision (an Optional Uniform Provision), the insurer may deny coverage for John's injuries, making John liable for all expenses. An insured should receive necessary claim forms within _____ days after notice of claim. - CORRECT ANSWERS 15 Which of the following is not a Mandatory Uniform Provision of an Accident and Health policy? - CORRECT ANSWERS Waiver of Premium Precertification, Mandatory Second Surgical Opinion, and Concurrent Review are provisions in health insurance policies known as: - CORRECT ANSWERS Case Management Provisions Managed Health Care attempts to contain costs by controlling the behavior of participants in all of the following ways, except: - CORRECT ANSWERS Partial Case Management Which statement concerning individual A&H policy renewal provisions is most correct from the perspective of the insured? - CORRECT ANSWERS The more favorable the renewal provision to the insured, the higher the cost The more favorable a renewal provision is to the insured, the higher the premium will be. A Noncancellable policy will cost the most because its premium may not be changed in the future. Which of these is a Mandatory Uniform Provision? - CORRECT ANSWERS Legal Actions The Coordination of Benefits Provision is designed to: - CORRECT ANSWERS Give insureds as much coverage as possible while eliminating overinsurance

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Which of the following statements is NOT true concerning a coordination of benefits situation? - CORRECT ANSWERS Where children are involved, the primary group insurer is the insurer for the parent who is oldest by age at the time of claim When double coverage exists, the coordination of benefits provision simply steps in and stipulates which insurer pays and when. The insured's plan is always primary, the spouses plan is secondary, the parent whose birthday comes first in the calendar year is primary for the children, not who is oldest. The purpose of this provision is to provide the most possible coverage without allowing any overinsurance from occurring. A plan in which employees select health benefits from a variety of coverage options, based on their individual coverage needs is a: - CORRECT ANSWERS Cafeteria Plan The main benefit of 501(c)9 trusts is: - CORRECT ANSWERS Contributions to these trusts may be deducted immediately, instead of when benefits are distributed Contributions to a 501(c)9 trust can be deducted immediately, where as contributions to regular self-funded plans may not be deducted until benefits are distributed. Maintaining these trusts may be high enough to eliminate any tax advantages offered. Distributions may be taxable. Which of the following would NOT be a likely consideration in determining premium rates for group health insurance? - CORRECT ANSWERS Whether the company produced a profit or a loss in the previous year What would? Degree of occupational hazard associated with the group Length of the waiting period Maximum indemnity period

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The federal law that governs employer-sponsored employee retirement and welfare and benefit plans is: - CORRECT ANSWERS ERISA The Employee Retirement Income Security Act (ERISA) of 1974 is the federal law that governs employer-sponsored employee retirement and welfare and benefit plans. Among other things, ERISA provides protections for participants and beneficiaries in employee benefit plans (participant rights), including providing access to plan information. Which of the following policies would allow the business to deduct premiums paid? - CORRECT ANSWERS Business overhead expense insurance Premiums paid for disability policies, whether held on key employees or put in place to fund a buy-sell agreement, are not deductible. A business overhead expense policy is sold and marketed as a business loss income policy and therefore qualifies as a tax deductible business expense. Buy Sell Agreement - CORRECT ANSWERS When an employee pays part of the premiums for group disability insurance: - CORRECT ANSWERS The benefits are received tax free to the extent that the employee paid the premiums Which of the following might be eligible to participate in an MSA? - CORRECT ANSWERS Charles, who works for a small bakery with only 15 employees MSA: are limited to self-employed individuals or individuals employed by a small employer having 50 or fewer employees. On which of the following policies would any proceeds be taxable? - CORRECT ANSWERS Business overhead expense insurance

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Generally, when premiums are deductible, the policy proceeds will be taxed. When premiums are not deductible, proceeds are generally received tax free. When the business is also the beneficiary, typically the premiums are not tax deductible to the business. All of the groups are considered to be exempt from the Affordable Care Act's requirement to purchase coverage, except: - CORRECT ANSWERS Those who must pay less than 9.5% of their income for health insurance Those that must pay more than 9.5%, even after subsidies, are exempt. EXEMPT: Those whose household income does not require the filing of a tax return Undocumented immigrants Members of a religion opposed to acceptance of health care benefits Benefits received from an individual Long-Term Care Policy are not subject to ______, regardless of the deductibility of the premiums paid for the plan. - CORRECT ANSWERS Income Tax A minor aged ______ years or older may contract for insurance on his or her own life.

• CORRECT ANSWERS 15 To receive a license as a resident insurance producer, an applicant must be at least:
• CORRECT ANSWERS 18 years old Which of the following acts established the Federal Government's right to regulate the insurance industry in situations involving fraud and false statements made in

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insurance transactions which might lead to jeopardizing the financial soundness of an insurance company? - CORRECT ANSWERS McCarran-Ferguson Act HIPAA - CORRECT ANSWERS COBRA - CORRECT ANSWERS Which of the following describes why Alabama encourages the purchase of Long- Term Care Insurance through its LTC 'Partnership Program'? - CORRECT ANSWERS Provides you with asset protection Allows Medicaid to disregard some or all of your assets for Medicaid eligibility Requires Medicaid to disregard some or all of your assets during estate recovery In Alabama, the Commissioner of insurance is: - CORRECT ANSWERS Appointed by governor An individual long-term care insurance policy may not be terminated for nonpayment of premium unless the insurer has give notice to the insured and any designated persons at least _____ days before the effective date of the termination. - CORRECT ANSWERS 30 The notice must provide a 30 day grace period from the date of its mailing. Every insured may designate at least 1 additional person to receive notice of a lapse or of termination for nonpayment of premium. An insurer may reserve the right to defer the payment of a cash surrender value for up to _________ months after demand is made and the policy is surrendered. - CORRECT ANSWERS 6 months

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All of the following are true regarding advertising in life insurance, except: - CORRECT ANSWERS Premiums cannot be mentioned in an advertisement at all Premiums MAY be mentioned, but only as premiums. NOT as Deposits, Deposit premiums or Investments. Advertisements MUST indicate clearly what the product is advertising. Dividends MUST state that they are Not Guaranteed. TRUE: Premiums cannot be referred to as 'deposits', 'deposit premiums', or 'investments', they may be referred to as 'premiums' only Advertisements may not omit the words 'life insurance' or 'annuity' from a policy's name Any reference to policy dividends must state that they are not guaranteed An annuity or pure endowment contract may be reinstated within __________ from the default in premium payments, unless the cash surrender value has been paid. - CORRECT ANSWERS 1 year A licensee must inform the Commissioner of a change of legal name or address within ______ days of the change. - CORRECT ANSWERS 30 The head of the state department of insurance has all of the following powers, except: - CORRECT ANSWERS Creating and establishing new premium rates for insurance companies operating in the state Powers:

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Imposing penalties for violations of the insurance code, including but not limited to fines, suspensions or revocations of licenses and Certificates of Authority, and requesting that the Attorney General prosecute a violator Approving rates and rate increases for regulated lines of insurance Subpoenaing witnesses and administering oaths in order to further any examination, investigation, or hearing on insurance matters Which of the following can be listed on an illustration? - CORRECT ANSWERS The insurer's name, producers name, address, and the policy generic name The proposed insured's name, age, gender, and the initial death benefit The dividend option selected or any nonguaranteed elements Non-financial regulatory activities are known as: - CORRECT ANSWERS Market conduct Non-financial regulatory activities of an insurance department fall under the broad heading of market conduct. Proper market conduct means conducting insurance business fairly and responsibly. Which of the following IS true about an HMO under Alabama Law? - CORRECT ANSWERS The Commissioner of insurance can regulate them but cannot impose a fine HMOs are already Government regulated both at the State and Federal levels. However, the Commissioner does have the right to regulate all insurers in their state, but they cannot impose a fine. That would be equivalent to the State government issuing a fine to themselves and the federal government. The Commissioner may certainly accept an examination from the HMO's home states insurance commissioner and may examine any company in its own state as it relates to protecting the general public

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Which of the following IS NOT a type of illustration under the Alabama regulation governing life insurance illustrations? - CORRECT ANSWERS Annualized Illustration TYPES: In force illustration Supplemental illustration Basic illustration Which of the following provided the federal government the right to regulate the insurance industry, regarding fraud and false statements? - CORRECT ANSWERS McCarran/Ferguson Act Jay, who is employed by Carson Company, is assigned to work temporarily in another state. While in the other state, Jay is injured on the job. He is entitled to benefits of the Workers' Compensation law in the state in which he was hired even though his injury occurred in a different state. This indicates that the Workers' Compensation law in the state where Jay was hired: - CORRECT ANSWERS Includes extraterritorial provisions TEFRA is intended to: - CORRECT ANSWERS Prevent group plans from discriminating in favor of key employees The minimum capital required to form and organize a new domestic stock life insurance company in Alabama is: - CORRECT ANSWERS $1,000,000 To be able to start operations, a mutual company must have all of the following, except: - CORRECT ANSWERS Min number of stockholders