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Alabama State Life & Health Insurance Exam (6 Sets of Exam’s) questions verified with 100% correct answers 1. Which policy accumulates cash value at the fastest rate? ANS A. 10-pay life policy 2. The legal doctrine that prevents one from exercising a right of privilege is called ANS Estoppel 3. 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 ANS contains a grace period. 4. If an insurance carrier decides to cancel a producer's appointment, each of the following is true EXCEPT ANS The Commissioner can immediately cancel the producer's license based upon the Company's allegation of wrong doing by the producer.
Typology: Exams
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1.Which policy accumulates cash value at the fastest rate? ANS A. 10-pay life policy
Commissioner can immediately cancel the producer's license based upon the Company's allegation of wrong doing by the producer.
10.The application has two parts. Part 1 is? ANS General information about the applicant. 11.All Health Insurers must pay claims as prescribed by Alabama law. Which of these statements is FALSE? ANS. Insurers may decide which claim forms they will accept 12.Darlene dies without having paid the $500 premium on her $50,000 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 the premium owed. 13.Legally, who does an insurance agent (producer) represent? ANS only the com- pany
15.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 16.When Jonas died, it was discovered that he was actually six years older than he had claimed when applying for an insurance policy. Upon his death what will the insurance company pay? ANS The company will pay only the amount of insurance that Jonas' premiums would have purchased at his correct age. 17.If you qualify for COBRA, coverage under the group health plan ANS all of the above 18.The duties of the Alabama Insurance Commissioner include all of the following EXCEPT ANS. Represent the State of Alabama in any legal proceedings. 19.If Todd has been named the irrevocable beneficiary of a life insurance policy, he ANS cannot be replaced as beneficiary without his consent 20.Why are insurance contracts said to be contracts of adhesion? ANS One party writes the contract and the other party
must accept or reject the contract as written. 21.How can 'Key Employee' disability income insurance purchased by a business be used by the business? ANS Both of the above. 22.All of the following are examples of insurable interest EXCEPT ANS an airline insuring the lives of its passengers. 23.A beneficiary is always which of the following? ANS The person named to receive the sum specified in a life insurance contract when the insured dies. 24.A straight life annuity provides which of the following? ANS A periodic income to the annuitant for life 25.A defined contribution plan ANS promises a specified payment to the plan by the employer 26.Which of the following is TRUE concerning willful violations of Alabama insurance regulations? ANS All of the above are correct. -Each instance of violation is considered as a separate offense.
-Each violation is punishable as a misdemeanor. -Each violation, upon conviction, may result in both fines and hard labor 27.The factors that determine the amount of each payment to a beneficiary under the fixed period (fixed time) option are the ANS length of the fixed period and the death benefit of the policy, and interest. 28.The settlement option under which the principal never decreases unless the beneficiary makes withdrawals is the ANS interest only option. 29.Which of the following is CORRECT concerning the payment of commis- sions for insurance in Alabama? ANS An insurer who violates the Alabama rules on
commission payments may be fined up to three times the amount of the commis- sions paid. 30.Which of the following riders could decrease the amount of the policy death benefit if utilized? ANS Automatic Premium Loan Rider 31.A company domiciled in another state that has received permission from the insurance commissioner to do business in this state is called a/an ANS foreign admitted company. 32.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. 33.Billy is the owner of a life insurance policy and has chosen a policy set- tlement option under which the company will pay the beneficiary (his widow) an income each month for as long as she lives. Payment stops at her death. Which settlement option has Billy selected? ANS Life income option 34.Medical expense policies generally provide ANS medical service or expense reimbursement benefits.
35.Under the typical Coordination of Benefits Clause in Group Health Insur- ance, how is primary coverage determined? ANS The husband's policy is primary and the other is excess 36.Which policy will have immediate cash? ANS Single premium 37.An Attending Physician's Statement is used to do what? ANS Obtain detailed information regarding a specific medical condition.
44.Which of the following is CORRECT regarding a Health Maintenance Or- ganization (HMO) operating in Alabama? ANS Every HMO must have a complaint system to resolve written complaints from enrollees. 45.Alabama's "replacement" regulation applies to all of the following EX- CEPT ANS credit life insurance. 46.When must the insurable interest exist for life insurance? ANS at the time of application 47.When does the 10-day Free Look begin? ANS Date of policy delivery 48.For life insurance purposes, all persons are considered to be statistically 'dead' at age ANS 100. 49.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 by the carrier. 50.A man applied for a Long Term Care (LTC) 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 51.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? ANS cost of living adjustment 52.A life insurance policy is a unilateral contract because ANS only the insurance company is bound to live up to the terms of the
agreement. 53.Insurance policies issued by companies which are owned by stockholders and do not pay policy dividends are known as ANS non-participating policies. 54.The Grace Period has what effect? ANS An extension of time to pay a late premi- um. 55.If you misstate your age when applying for Disability Income insurance, you may suffer what consequence at claim time? ANS Your benefits will be reduced if your age is higher than stated 56.The income period when a surviving spouse does not qualify for Social Security survivor or retirement benefits is called the ANS Blackout Period. 57.In noncontributory group insurance plans, what percentage of eligible employees must be covered by the plan? ANS 100% 58.The type of health insurance policy most likely used to cover all students attending a large university is ANS a blanket policy. 59.The usual payment arrangement under a Preferred Provider Organization (PPO) contract is ANS a negotiated fee-for-service. 60.For weekly premium disability policies in Alabama, there must be a grace period of ANS 7 days 61.With respect to an insurance application ANS all statements made by the appli- cant are considered to be representations.
62.The "entire contract" law in Alabama says ANS the policy and the application (or a summary of the application) constitute the entire contract. 63.Interest Sensitive Whole Life is also called? ANS Universal Term. 64.Most major medical policies include as eligible expenses coverage of ANS all of the above. -hospital room and board, intensive care, and hospital medical and surgical services. -physicians' medical, diagnostic and surgical services.
Supplement Plans (MSPs) are all of the following EXCEPT ANS MSPs must be more restrictive than Medicare. 70.If an agent tells a proposed insured he has authority to issue a policy, which he is actually disallowed to do by his agency contract, the insured may reasonably assume the agent had this authority. This is an example of ANS implied authority. 71.The Suicide Clause has what effect? ANS It excludes suicide during the first two years.
76."Community Rating" generally means the insurer charges ANS the same rate for everyone in a geographic area. 77.The basic purpose for the coinsurance provision in a major medical policy is to ANS limit over-utilization of the policy benefits. 78.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. 79.To sell a variable life insurance policy, an insurance producer must ANS All of the above. -have a valid life insurance license. -have a variable life and variable annuity products license. -be registered with FINRA (the Financial Regulatory Authority) 80.Mr. and Mrs. Carter receive annuity payments. Mr. Carter dies, but Mrs. Carter continues to receive payments for the rest of her life. The Carters have a ANS joint and survivor life annuity. 81.The kind of life insurance that acquires no cash value is ANS term life.
term option. 84.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. 85.What is the definition of Risk? ANS uncertainty or chance of loss 86.Which of the following characteristics apply to Medicare Supplement Poli- cies (MSPs)? ANS All of the above. -First-time applicants (over age 65) for MSPs cannot be turned down. -The definitions used in MSPs must be the same definitions used in Medicare. -MSPs may not duplicate coverage provided by Medicare. 87.A disability income policy typically covers ANS just the wage earners. 88.A life insurance company may pay a death claim for less than the face amount of a policy under which of the following conditions? ANS All of the above
-When there is an outstanding policy loan. -When the policy is in the grace period because of an unpaid premium. -When the age of the insured was understated on the application 89.This rider can be attached to a permanent life insurance policy to add more coverage for a limited time. ANS term rider 90.A contract requires an Offer and Acceptance. What constitutes a valid offer? ANS An application and premium payment submitted to the company or one of its agents. 91.In Health Maintenance Organizations (HMOs), the use of a primary care physician or PCP is common as part of ANS the gatekeeper system. 92.Renewable Term guarantees ANS the insured's insurability 93.Under a collateral assignment, the policyowner ANS assigns only a portion of the policy proceeds to the assignee. 94.Which of the following is INCORRECT concerning premiums collected by an insurance producer in Alabama? ANS Premium payments become the property of the producer 95.You must notify the Company of a health insurance claim within how many days (or as soon thereafter as reasonable possible)? ANS 20 days 96.Alabama law regulates Life insurance benefits with respect to minors. Which statement is FALSE? ANS Minors can receive benefits without restriction. 97.COBRA and HIPAA both address portability. What is the difference between them? ANS COBRA provides a coverage bridge,
HIPAA addresses coverage under plans for new entrants. 98.An immediate annuity with quarterly payments will begin making pay- ments ANS 3 months after the annuity is purchased. 99.The primary components in premium calculations include each of the following EXCEPT ANS Profit margins.
will receive ANS full benefits.
-The producer must have reasonable grounds to believe the recommended annuity purchase is suitable based on the facts disclosed. -The producer must maintain records of information obtained for at least three years after the transaction.