Alabama Life & Health Insurance State Exam Practice Questions, Exams of Insurance Economics

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Alabama Life & Health Insurance State

Exam Practice Questions

1. if lousie allows her whole life policy to lapse which nonforfeiture option shoild she elect to obtain the most life insurance protection? ANS Extended term option
2. If administrative action is taken against you, or you are criminally prosecut- ed in another jurisdiction, you have how long to submit a notice to the Alabama commissioner? ANS 30 days
3. How can 'key employee' disability income insurance purchased by business be used by the business ANS Both ANS temporary replace the key employee and as a salary continuation for the disabled key employee
4. In health maintenance organizations (HMO's) the use of a primary care physician is common as part of ANS An out of network provider
5. Under the typical coordination of benefits clause in group health

insurance how is the primary coverage determined ANS The employee plan is primary and the other may be excess

6. The entire contract provision stipulates ANS The entire contract includes the ap- plication
7. A man applied for long term care policy. Three months earlier he was diagnosed with diabetes, can the LTC policy exclude future health problems linked with diabetes? ANS Yes, for 6 months
8. The 'elimination period' refers to ANS The time period after a disability starts and before the insured may begin receiving disability income benefits
9. The basic purpose for the coinsurance provision in a major medical policy is to ANS Limit over utilization of the policy benefits
10. Which rider can decrease the amount of the policy death benefit if utilized- ANS Automatic premium loan rider
11. The settlement option under which the principal never decreases unless the beneficiary makes withdrawals is the ANS The interest only option

12. If you surrender your policy early or simply stop paying premiums you still own the equity you have built. You can choose to ANS Get a check for the remaining cash value
13. What describes the aviation exclusion? ANS It limits or excludes coverage for when the insured is participating in only certain kinds of air travel
14. Under which circumstances will the payor rider waive the premiums and allow a life insurance policy to remain in force? ANS If the policyowner dies or becomes disabled prior to the insured reaching either age 21 or 25
15. If you mistake your age when applying for disability income insurance, you may suffer what consequences at claim time? ANS Your benefits will be reduced if your age is higher than stated

16. According to the Alabama regulations concerning Long term care insur- ance, what practice is allowed ANS Use of large amounts of direct mail to market specific LTC policy
17. You must notify the company of a health insurance claim within how many days? ANS 20 days
18. If an agent tells a proposed insured he has the authority to Issue a policy, which he is actually disallowed to do by his agency contract, the insured may reasonably assume the agent had his authority. This is a example of ANS - Expressed authority
19. To receive some social security benefits and be considered "currently insured" an individual must have ANS At least 6 quarters of coverage
20. Dividend options are defined as ways in which the policyowner can ANS Use or collect policy dividends
21. If you suffer a loss linked directly to your use of intoxicants or non-pre- scribed narcotics, what is the effect? ANS Your claim may be denied
22. Laws have been enacted to prohibit cancellation of a Medicare

supplement policy on the sole basic of age or deterioration of health. The requirement is called ANS Guaranteed renewability

23. Which policy accumulates cash value at the fastest rate? ANS 10 - day life policy
24. The factors that determine the amount of each payment to a beneficiary under the fixed period option are? ANS The length of the fixed period and the death benefit of the policy, and interest.
25. A man with a accidental death & dismemberment policy having a principal sum of $100,000 and a capital sum of $50,000 loses a leg due to blood clot which was not due to an accident. The policy will pay? ANS $
26. When does the 10 day free look start? ANS Date of policy delivery
27. The optional provisions of a standard health policy address the issue of claims arising from "illegal occupations", " commission of felonies" and "use of narcotics" according to these provisions ANS The insurer is not liable for claims arising under the conditions described in these provisions
28. Paid-up additions act as a default if the policyholder doesn't Indicate an option. Paid up additions are ANS Single payment premiums which purchase additional amounts of insurance which add to the face amount
29. What is incorrect concerning premiums collected by an insurance produc- er in Alabama? ANS Premium payments become the property of

the producer

30. Normally, Blue Cross/Blue Shield makes payments for medical expenses- ANS directly to the providers
31. What is correct regarding a health maintenance organization operating in Alabama? ANS
32. The convertibility option offers what major advantage to the insured? ANS In- surability is not a factor
33. According to required health policy provisions, the insured is prevented from filling suit against the insurer for at least ANS 60 days and not longer than three years from the date of proof of loss
34. An attending physician's statement is used to do what? ANS Obtain detailed information regarding a specific medical condition
35. The Alabama life and disability insurance guaranty association covers the contractual obligations of an insolvent life and disability insurer, but it's aggregate liability for cash values shall not exceed? ANS
36. How can interest rates or investments affect premiums? ANS Companies pass the cost of borrowing money along to customers.
37. The "entire contract" law in Alabama says ANS The policy and the application (or a summary of the application) constitute the entire contract
38. When a dependent child covered under the parents major medical policy reaches the limiting age, what is the provision that allows the child to purchase his or her own policy without establishing insurability? ANS Conversion privilege
39. If an insurance carrier decides to cancel a producers appointment.

What is true? ANS The commissioner can immediately cancel the producers license based upon the company's allegation of wrong doing by the producer

40. A life insurance policy is a unilateral contract because ANS only the insurance company is bound to live up to its side of the agreement
41. For weekly premium disability policies in Alabama, there must be a grace period of ANS
42. What is not a workers compensation benefit? ANS Extra income benefits
43. Darlene dies without having paid the $500 premium on her $50, policy that was due a week before her death. With no outstanding policy loans, Darlene's Beneficiary can expect to receive? ANS $49,500 which is the face amount less than the premium owed
44. The life and health insurance marketing system utilizing producers that represent multiple insurance companies at the same time, are compensated on a commission basis, and own their own "book of business" is the ANS Indepen- dent agency system

45. Contracts must have consideration. Insurance contracts are considered to be aleatory contracts. This means what? ANS The promise to pay claims will most likely not be equal to all premium payments
46. 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 the following riders? ANS Cost of living adjustment