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

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Alabama Life & Health Insurance Test

1.Which welfare program provides assistance to the needy? ANS Medicaid

2. Barbara has the right to change the beneficiary designation on her life insurance policy. Barbara's beneficiary is a(n) ANS revocable beneficiary
3. Within how many calendar days must all clean electronic health insurance claims be paid in Alabama? ANS 30
4. Which type of term policy allows the policyowner to switch to permanent insurance? ANS Convertible term 5.What does renewable term guarantee? ANS The insured's insurability
5. If an insured commits suicide, a life insurance policy's face amount will be paid only after the policy has been in force for at least ANS two years

7. Which of the following statements concerning a life insurance policy is TRUE? ANS An issued policy can never be changed by a producer
8. The proceeds of a life insurance policy can be paid in a form other than a lump-sum payment. These forms of payment are called ANS settlement options 9.The withholding of facts in an insurance application is called ANS concealment 10.A licensed Alabama insurance producer would NOT be disciplined by the Commissioner of Insurance for ANS being convicted of a misdemeanor 11.The option to convert term life insurance to a permanent form of coverage can normally be executed ANS without proof of insurability 12.Which type of life insurance rider allows a policyowner to increase the level of coverage to keep up with inflation? ANS

insured's written request) be payable to ANS a hospital, physician, or surgeon 19.Bart is injured and provides notice of a health claim to his insurer. He later receives the required claims forms. Within how many days of the loss must Bart file proof of loss with the insurance company? ANS 90

20.Which of these statements regarding an insurance application is true? ANS A representation is valid as long as it is true 21.An insurance company licensed to solicit insurance in a specific state is called ANS an admitted company 22.John purchases insurance because he expects to experience a loss. This is known as ANS adverse selection 23.Who would most likely own a Medicare Supplement policy? ANS 69-year old female covered by Medicare 24.Amy owns a disability income policy with a noncancellable renewal pro- vision. Which of the following is guaranteed in her policy? ANS The coverage and premium rate are guaranteed 25.According to Required Provision 4, when an insured applies for reinstate- ment of a health policy and receives a conditional receipt, how long does the insurer have to approve or deny? ANS within 45 days of the date of application 26.Policy dividends for life insurance are ANS not guaranteed 27.What is a certificate of insurance? ANS A certificate issued to each individual covered by the group life insurance 28.Which is NOT true regarding Medicare Supplement policies? ANS Must include a minimum 20-day Free-Look provision 29.In Alabama, all Health Maintenance Organizations must ANS have a complaint system to resolve written complaints from enrollees 30.Rick owns a $100,000 life insurance policy with a cash value of $10,000. How much can he borrow up to? ANS The accumulated cash value ($10,000 less interest)

37.A Cross Purchase Buy-Sell Agreement is in place for ABC Company's four founding partners. What would this agreement require if the agreement is funded with individual life insurance? ANS Each partner must own a policy on the other partners 38.The Notice of Claim Provision states that the insured notify the insurance company within days of a claim. ANS 20 39.Which of the following is NOT a factor typically used by insurers to classify risk? ANS Education level 40.The agreement between a producer and the insurance company specifies the authority given to a producer to act on behalf of the insurer. This is called ANS expressed authority 41.Under a Health Maintenance Organization (HMO), service providers are paid a fixed monthly fee for each member. This concept is called ANS capitation

42. The Commissioner of Insurance may NOT do which of the following? ANS - Change insurance laws 43.Within how many days of a written demand must the Commissioner of Insurance hold a hearing? ANS 30 44.The life and health insurance marketing system utilizing non-employee agents that represent just one insurance company and are often paid an allowance to cover office expense and staffing is the ANS general agency system 45.Which provision allows a disability income policy to remain in force with- out further payments when the insured has

become totally and permanently disabled? ANS Waiver of premium 46.Which of the following is considered the "automatic" Nonforfeiture Option that most insurers will use? ANS Extended term 47.An insurance premium can be defined as ANS money paid to an insurance company for benefits provided in the policy 48.Which of these statements accurately portray a whole life policy? ANS Endows at age 100 and paid up at a stated time 49.John is an annuitant who has surrendered his annuity at age

55. What will he pay? ANS Tax on the interest earned 50.A Preferred Provider Organization (PPO) contract typically uses which payment arrangement? ANS Negotiated fee-for- service 51.Which entity is responsible for the majority of regulations imposed on the insurance industry? ANS State government 52.A husband and wife purchases a life insurance policy that covers both of them. The policy paid nothing when the husband died. Two years later, the wife dies and a death benefit is paid to the beneficiary. Which type of policy is this? ANS Survivorship life policy

60.An accidental death rider claim is usually paid if the insured ANS dies within 90 days of the accident 61.Which of the following is an example of a "nonforfeiture value"? ANS After a policyowner cancels his/her permanent policy, the cash value accumulation must be made available to the policyowner 62.The number of an insurance company's health insureds that is expected to become sick or injured is called ANS morbidity experience 63.Wayne is covered under a nonoccupational group health policy. He is hurt while traveling for business and requires a lengthy hospital stay. His group health policy refuses to pay for hospital expenses because ANS this is considered a job-related accident 64.Who does a disability income policy normally cover? ANS Wage earners 65.How are employer-paid premiums for employee group health insurance normally treated for tax purposes? ANS Tax deductible to the employer/Nontaxable to the employee 66.Which of the following life insurance policies will build up cash value the fastest? ANS Single premiums 67.Which of the following provisions may NOT be adjusted in an adjustable life policy? ANS The insured

68.Who does the insurance agent legally represent? ANS The insurance company 69.Pat applies for insurance, pays the initial premium, and receives a doc- ument from the agent. This document indicates that if the policy is issued, coverage begins on the date of the document. This document is called a(n) ANS - conditional receipt 70.A waiver of premium ANS waives the premiums when the policyowner becomes totally disabled 71.When an estate is named beneficiary to a life insurance policy, the policy proceeds are ANS distributed according to state law 72.A husband and wife are receiving annuity payments. When the husband dies, the wife still receives annuity payments for life. What kind of annuity is this? ANS Joint and survivor life annuity 73.Kris is receiving annuity payments that has not yet paid an amount which is equal to the purchase price of the annuity. If she were to die, her benefi- ciary would continue receiving annuity payments until this amount has been reached. What type of annuity is this? ANS Refund life annuity 74.An insurance contract is said to be a(n) because there is a mutual reliance of truthfulness on both parties. ANS contract of utmost good faith 75.All of these statements concerning the coordination of benefits are true, EXCEPT ANS The secondary insurer does NOT

ANS Future income option

84.A Long Term Care (LTC) policy has a minimum renewability level of ANS guar- anteed renewable 85.An insurance company licensed to do business in Alabama, but incorpo- rated in another state, is called ANS a foreign company 86.A policyowner can collect the face amount on what type of policy? ANS endow- ment policy 87.Extended residence in a nursing home is covered by a(n) ANS long-term care policy

88. Nick has a Major Medical insurance policy with a $1, deductible, an 80% coinsurance clause, and a $1,500 stop-loss feature. He is hospitalized and incurs the following covered expenses ANS $10,000 hospital room and board, $2,500 surgeon's fee. What is Nick responsible for paying? ANS $1, 89.A disability policy in Alabama that is paid on a monthly basis is required to have a grace period of ANS 10 90.The monthly benefit of an Annuity Certain is determined by ANS the annuitant's payout period selection 91.What percentage of eligible employees must be covered by noncontribu- tory group insurance plans? ANS 100% 92.Alabama's annuity disclosure regulation ANS requires the delivery of a buyer's guide and a disclosure document to an annuity applicant 93.Kim has purchased a straight life annuity. What will this

101. Which of these is a correct statement? ANS Policy dividends cannot be guaran- teed
102. Which type of life insurance policy combines insurance protection with an accumulation of cash value? ANS permanent insurance
103. XYZ Insurance Company issued a new life policy to an insured that replaced an existing policy. XYZ Insurance Company is considered to be the ANS replacing insurer
104. The objective of insurance is ANS the transfer of risk
105. Insurance policies issued by companies which allow their policyowners to participate in the favorable experience of the company through payment of dividends are known as ANS participating policies
106. In Alabama, an insurer who violates state laws for the payment of insur- ance commissions may be fined up to ANS three times the amount of the commis- sions paid
107. Ed has an insurance policy with an insurance company. Before Ed's pol- icy will pay a claim, certain events must occur. Because of this, an insurance policy is considered to be ANS conditional
108. Which type of assignment transfers a portion of the policyowner's right to another party in order to secure a debt to that party? ANS Collateral assignment
109. Ann is an employee covered by a Group Life plan through her employer. When Ann is terminated, her employer

fails to inform her about the plan's conversion option. Two weeks later, Ann dies in an automobile accident. How will this situation be handled? ANS Full benefits must be paid by the insurer

110. An insurance company may cancel a life insurance policy under which of the following conditions? ANS The outstanding policy loan exceeds the cash value of the policy
111. When does "adverse selection" exist? ANS When the risks accepted for insur- ance has a HIGHER likelihood of experiencing loss than an average group
112. The aviation exclusion ANS excludes coverage when the insured is riding in certain kinds of air travel
113. Which dividend option allows a policyowner to use his/her dividends to buy life insurance on a single premium basis? ANS Paid-up additions option
114. Ron turned over all rights in his policy over to an assignee. This is called ANS an absolute assignment
115. Beginning at what age can an IRA owner start making withdrawals and NOT be subjected to a tax penalty? ANS 59 1/
116. Mary and Paul have individual disability income policies that both pay a $5,000/month benefit. Mary's policy has a 30-day elimination period, and Paul's

Life policy is true, EXCEPT ANS The key employee names the beneficiary

124. An insurance company that cedes a portion of an insured's coverage to another insurer is said to be engaged in ANS reinsurance
125. Don and Marie are married and each have a Major Medical plan provided by their employers. Don was born in August of 1969 and Marie was born in March of 1976. For their two dependent children, ANS Marie's plan is primary and Don's is secondary
126. A retirement plan intended for a sole proprietor and his/her employees would be a(n) ANS Keogh Plan
127. Any individual who has failed two Alabama insurance licensing examina- tions must wait how long before retaking it a third time? ANS three months
128. Risk is best defined as the ANS uncertainty of loss
129. According to Alabama law, agents of a Health Maintenance Organization (HMO) ANS must be licensed as insurance producers
130. The maximum amount of coverage placed on a disability income policy is based on the insured's ANS earned income from the previous year
131. All of these are correct concerning group life insurance, EXCEPT ANS Whole life insurance is the form of insurance typically used in group life insurance

132. Under Alabama's annuity disclosure regulation, the disclosures must be mailed to the applicant within business days if the application is taken over the telephone. ANS 5