FLORIDA HEALTH AND LIFE INSURANCE EXAM 2024 AND PRACTICE EXAM TEST BANK | 450 QUESTIONS, Exams of Community Health

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FLORIDA HEALTH AND LIFE INSURANCE EXAM

2024 AND PRACTICE EXAM TEST BANK | 450

QUESTIONS WITH VERIFIED ANSWERS | | GRADED

A | LATEST UPDATE

K age 45, and his wife, age 43, have three children. They purchase a Family Policy that covers K's wife to age 65. All of these situations will pay a death benefit EXCEPT: - CORRECT ANSWER K's wife dies at age 66 Which statement is correct regarding the premium payment schedule for whole life policies?

• CORRECT ANSWER Premiums are payable throughout the insured's lifetime/coverage lasts until death of the insured. Under a Graded Premium policy, the premiums - CORRECT ANSWER Are lower during the policy's early years Term insurance has which of the following characteristics? - CORRECT ANSWER Expires at the end of the policy period How long does the coverage normally remain on a limited-pay life policy? - CORRECT ANSWER age 100 Which of these is an element of a Variable Life policy - CORRECT ANSWER A fixed, level premium Variable Whole Life insurance can be described as - CORRECT ANSWER both an insurance and securities product Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability? - CORRECT ANSWER Conversion Privilege Life insurance immediately creates an estate upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit? - CORRECT ANSWER Variable life What does a Face Amount Plus Cash Value Policy pay upon the insured's death? - CORRECT ANSWER Face amount plus the policy's cash value

N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take? - CORRECT ANSWER Claim will be denied What provision in a life insurance policy states that the application is considered part of the contract? - CORRECT ANSWER Entire Contract provision B recently died and was insured with a life insurance policy for over five years. During the claims process, the insurer discovered that B had understated his age by 5 years at the time of application. In this situation, the insurer will - CORRECT ANSWER pay the amount that the premium would have purchased at the correct age K's whole life insurance policy lapsed two months ago due to nonpayment. She would now like to reinstate the policy. All of these statements are correct about the policy's reinstatement EXCEPT - CORRECT ANSWER K will forfeit the right to use the automatic loan provision upon reinstatement A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision - CORRECT ANSWER Payor Provision Which of the following actions is NOT possible with Universal Life policy - CORRECT ANSWER Premiums may be applied as a credit against income tax A life policy with death benefit and cash value that can fluctuate according to performance of its underlying investment portfolio is referred to as - CORRECT ANSWER Variable life Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling? - CORRECT ANSWER Variable life P owns a $25,000 Life Policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before age 70. What kind of policy does P own. - CORRECT ANSWER Endowment at Age 70 All of these are characteristics of Adjustable life policy, EXCEPT: - CORRECT ANSWER face amount can be adjusted using policy dividends J is 35 - years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value? - CORRECT ANSWER 20- pay life What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years? - CORRECT ANSWER Family maintenance Policy

Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled? - CORRECT ANSWER Payor clause Which of the following is an example of a nonforfeiture option? - CORRECT ANSWER Reduced paid- up option K owns a Whole Life policy. If K wants an increasing Death Benefit to protect against inflation, which Divided Option should she chose? - CORRECT ANSWER Paid-Up Additional Insurance A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached? - CORRECT ANSWER waiver of premium A cost of living rider gives the insured - CORRECT ANSWER additional death benefits B receives yearly dividends and interest from a participating life insurance policy. Which of these should B include as gross income for federal income tax purposes? - CORRECT ANSWER Interest only All of these statements about the waiver of premium provision are correct, EXCEPT: - CORRECT ANSWER Insured must be eligible for social security disability of claim to be accepted. Whose life is covered on a life insurance policy that contains a payor benefit clause - CORRECT ANSWER Child D owns a whole life policy that was purchased 10 years ago. If the premium payments suddenly stop and D takes no additional action, which Nonforfeiture option will the insurer likely proceed with? - CORRECT ANSWER Extended Term What action can a policyowner take if an application for a bank loan requires collateral? - CORRECT ANSWER Assign policy ownership to bank M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the - CORRECT ANSWER policy proceeds An insured's inability to perform two or more activities of daily living may trigger which type of life policy rider? - CORRECT ANSWER Long term care Variable whole life insurance can be described as - CORRECT ANSWER both an insurance and securities product

The Accidental Death and Dismemberment (AD&D) provisions in a life insurance policy would pay additional benefits in the insured - CORRECT ANSWER is blinded in an accident N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot? - CORRECT ANSWER Exclusion S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary? - CORRECT ANSWER $50, Which of the following best describes a contingent beneficiary - CORRECT ANSWER Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured. J chooses a monthly premium payment mode on his Whole life insurance policy. Which of these statements is correct - CORRECT ANSWER The gross premium is higher on a monthly premium mode as compared to being paid annually Which statement is true regarding minor beneficiary - CORRECT ANSWER Normally a guardian is required to be appointed in the beneficiary clause of the contract. Which premium schedule results in the lowest cost to the policyownwer? - CORRECT ANSWER Annual If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who dies first, where are the death proceeds to be directed under the uniform Simultaneous Death Act? - CORRECT ANSWER Insured's contingent beneficiary Which of the following statements is CORRECT regarding the tax treatment of a lump-sum payment paid to a life insurance policy's primary beneficiary? - CORRECT ANSWER All proceeds are income tax free in the year they are received. Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? - CORRECT ANSWER Life income The common Disaster clause provides that if both the insured and the sole named beneficiary where to die in a common accident, which of the following is true? - CORRECT ANSWER The clause provides the payment of proceeds to the insured's estate A policyowner is allowed to pay premiums more than once a year under which provision? - CORRECT ANSWER Mode of premium

Which of these is NOT an element of Life insurance premiums? - CORRECT ANSWER Morbidity rate J would like to maintain the right to change beneficiaries. Which beneficiary designation should be used? - CORRECT ANSWER revocable Quarterly premium payments increase the annual cost of insurance because - CORRECT ANSWER Interest to the insurer is decreased while the administrative costs are increased Which statement regarding the Change of Beneficiary provision is true? - CORRECT ANSWER The policy owner can change the beneficiary A Whole life insurance policyowner does not wish to continue making premium payments. Which of the following enables the policyowner to sell the policy for more than its cash value?

• CORRECT ANSWER Life settlement contract A policyowner's rights are limited under which beneficiary designation? - CORRECT ANSWER Irrevocable What action should a producer take if the initial premium is NOT submitted with the application? - CORRECT ANSWER Forward the application to the insurer without the initial premium All statements are true regarding the underwriting process EXCEPT - CORRECT ANSWER AIDS and HIV virus exams can be conducted in a discriminatory fashion. Which factors are taken into consideration when an insurance company determines the premium rate for a Whole Life policy on an applicant? - CORRECT ANSWER Risk Classification Who is NOT required to sign a life insurance application? - CORRECT ANSWER Beneficiary The entity whose sole purpose is sharing medical data among its member companies is called the
• CORRECT ANSWER Medical Information Bureau Which of these actions should a producer take when submitting an insurance application to an insurer? - CORRECT ANSWER Inform the insurer the relevant information not included on the application T is given a receipt after completing a life insurance application and paying the initial premium. Under this Situation T's coverage is - CORRECT ANSWER conditional, depending on the insurer's underwriting guidelines

Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation? - CORRECT ANSWER Policy was returned within the free-look period, premium will be fully refunded Life insurance companies are required to establish and maintain a anti-money laundering compliance program according to which federal regulation? - CORRECT ANSWER USA PATRIOT Act A life insurance application must be signed by all these EXCEPT - CORRECT ANSWER Beneficiary T cash surrenders a recently-issued whole life policy. He also requests that the proceeds be payable to an unrelated third party. T would likely be red-flagged for violation of - CORRECT ANSWER anti-money laundering rules on January 8, an applicant filled out an application of a life insurance policy but did not include the initial premium. The insurance company approved the application on January 14 and issued the policy January 15. The producer delivered the policy on January 26 and collected the first premium. When did the coverage become effective - CORRECT ANSWER January 26 Before a life insurance policy is issued, which of these components of the contract is required?

• CORRECT ANSWER Applicant's signature on application Before a life policy is issued, which of these contract elements is necessary? - CORRECT ANSWER A signed application by the prospect P is a producer who notices 5 questions on a life application were not answered. What actions should P take? - CORRECT ANSWER Set up meeting with the applicant to answer the remaining questions. An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be - CORRECT ANSWER converted to an individual permanent policy at an individual rate Which of the following statements about non contributory employee group life insurance is FALSE? - CORRECT ANSWER A minimum number of employees is required to participate Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life plan to all its eligible employees? - CORRECT ANSWER Portion of the premiums paid by the employer may be a tax deduction

If its employees share in the cost of insurance, what type of group life insurance plan would a corporation have? - CORRECT ANSWER Contributory Which provision is NOT a requirement in a group life policy? - CORRECT ANSWER Accidental When an employee is terminated which statement about a group term life is true? - CORRECT ANSWER Policy will be paid if the employee dies during the conversion period. Which of the following is an important underwriting principle of group life insurance? - CORRECT ANSWER Everyone must be covered in the group S, while in the process of converting her group life insurance to an individual policy, dies. What happens to the claim her beneficiary submits? - CORRECT ANSWER full benefits payable under the Master contract What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability? - CORRECT ANSWER Conversion what type of group insurance plan involves employees sharing the cost? - CORRECT ANSWER contributory plan N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What type of annuity did N purchase? - CORRECT ANSWER Fixed Deffered A contract owner terminates an annuity before the income payment period begins. The owner will the receive - CORRECT ANSWER current contact surrender value T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this? - CORRECT ANSWER Life Annuity with Period Certain How does an indexed annuity differ from a fixed annuity? - CORRECT ANSWER Indexed annuity owners may receive credited interest tied to the fluctuations of the linked index P, aged 50, purchased an annuity that P will fund with $500/month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase? - CORRECT ANSWER Deffered K has inherited a large sum of money. K purchases an annuity with this sum on July 1, and starts receiving payments August 1. These payments will continue for as long as she and her spouse

lives. Which type of annuity did K purchase? - CORRECT ANSWER Single premium Immediate Joint with Survivor Annuity S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation? - CORRECT ANSWER Single Premium T purchased a $100,000 single premium, Straight Life annuity 5 years ago. He has received monthly payments since the inception of the annuity. If T dies, the insurance company - CORRECT ANSWER does NOT have to make any further payments An immediate annuity consists of a - CORRECT ANSWER Single Premium Variable annuities may invest premiums in each of the following, EXCEPT: - CORRECT ANSWER Insurer's corporate business account What determines the full amount of Social Security retirement benefits a qualified individual is entitled to receive? - CORRECT ANSWER Primary Insurance amount (PIA) Q is severely injured in an automobile accident and becomes totally disabled. How many months must Q be disabled before being able to file for social security benefits? - CORRECT ANSWER 5 To be eligible for social security disability benefits, an employee must be unable to perform - CORRECT ANSWER Any occupation What is Old Age and Survivors Health Insurance (OASDHI) also known as? - CORRECT ANSWER Social Security Which of the following does Social Security not provide benefits for? - CORRECT ANSWER Dismemberment Which tax would an IRA participant be subject to on distributions received prior to age 59 1/2? - CORRECT ANSWER ordinary income tax and a 10% tax penalty for early withdrawal In a qualified retirement plan, the yearly contributions to an employee's account - CORRECT ANSWER are restricted to maximum levels set by the IRS Tom has qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted? - CORRECT ANSWER If Toms employment is terminated, 20% of the funds would be forfeited

What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan? - CORRECT ANSWER 50% At the age of 45, an individual withdraws $50,000 from his Qualified Profit-Sharing Plan and then deposits this amount into a personal savings account. This action would result in - CORRECT ANSWER Income tax and a 10% penalty assessed upon funds withdrawn from the Qualified plan. When funds are shifted straight from one IRA to another IRA, what percentage of the tax s withheld? - CORRECT ANSWER none What is the maximum number of employees (earning at least $5,000) that an employer can have in order to start a SIMPLE retirement plan - CORRECT ANSWER 100 In an individual retirement account (IRA), rollover contributions are - CORRECT ANSWER Not limited by dollar amount Which of these retirement plans can be started by an employee, even if another plan is in existence? - CORRECT ANSWER Individual Retirement Account (IRA) What type of employee welfare plans are not subject to ERISA regulations - CORRECT ANSWER Church plans Insured - CORRECT ANSWER The person covered by the insurance policy. Rider - CORRECT ANSWER A written modification attached to a policy that increases or decreases coverage and/or premiums. What is a unilateral contract? - CORRECT ANSWER A contract in which only one of the parties is legally bound to fulfill its obligations. What law protects consumers from the circulation of inaccurate or obsolete information? - CORRECT ANSWER The Fair Credit Reporting Act. What are the three types of agent authority? - CORRECT ANSWER Implied, Express, and Apparent. Agent - CORRECT ANSWER An individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of the insurer. What is name of the process that insurance companies use to determine whether or not an applicant is insurable? - CORRECT ANSWER Underwriting

The requirement that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility? - CORRECT ANSWER Fiduciary What is a third-party ownership? - CORRECT ANSWER An insurance arrangement in which the policy owner and the insured are not the same person. Suitability - CORRECT ANSWER Factors that determine if an insurance product is appropriate for a particular customer. Premium - CORRECT ANSWER A payment by the policy owner to the insurance company to keep the policy in force. Disclosure - CORRECT ANSWER Providing sufficient information to help someone make informed decision. An agent offer a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of? - CORRECT ANSWER Rebating If an insurer meets the states financial requirements and is approved to transact business in the state, it is considered what type of insurer? - CORRECT ANSWER Authorized What information are the members of the medical information bureau required to report? - CORRECT ANSWER Adverse medical information about the applicants or insureds. What type of beneficiary can be changed at any point by the policy owner? - CORRECT ANSWER Revocable What document describes the specific information about a policy? - CORRECT ANSWER Policy Summary What is the term for the causes of loss insured against in an insurance policy? - CORRECT ANSWER Peril Whom does an insurance agent represent? - CORRECT ANSWER Insurance Company What is an unfair trade practice? - CORRECT ANSWER Any fraudulent, deceptive, or dishonest business practice that is prohibited by statutes and regulations. Insurer - CORRECT ANSWER The company that issues an insurance policy. Peril - CORRECT ANSWER Cause of loss

Contract of Adhesion - CORRECT ANSWER A contract prepared by one party that must be accepted as written or be rejected by the other party. What are the four elements of an insurance contract? - CORRECT ANSWER Agreement (Offer and Acceptance), consideration, competent parties, and legal purpose. Policy Provision - CORRECT ANSWER A clause that stipulates the rights and obligations under an insurance contract. Fiduciary - CORRECT ANSWER A producer who handles insurer's funds in a trust capacity. Who is considered a nonresident agent? - CORRECT ANSWER An agent who resides and is licensed in another state, but is authorized to transact insurance in Florida. What is underwriting? - CORRECT ANSWER The risk selection and classification process. What is the best way to handle incomplete insurance applications? - CORRECT ANSWER Return the application to the applicant for completion. What are the five characteristics of an ideally insurable risk? - CORRECT ANSWER Loss must be:

1. Due to Change
2. Definite and measurable
3. Statistically predictable
4. Not catastrophic
5. Coverage cannot be mandatory. What type of policy issues certificates of insurance to the insurance? - CORRECT ANSWER Group Policy What is the purpose of a free-look period? - CORRECT ANSWER To allow the insured to return the policy and get a full refund (if done during the free-look period) Whose responsibility is it to determine that all of the questions on an insurance application are answered? - CORRECT ANSWER The Agent's What types of licensee represents the insurance company? - CORRECT ANSWER Agent Who must be notified of the producers change of address? - CORRECT ANSWER The department of Insurance Certificate of Insurance - CORRECT ANSWER A document issued to insureds under a group plan that states the coverage being issued, and indicates the coverage type and amounts.

Nonrenewal - CORRECT ANSWER Termination of a policy by an insurer on the anniversary or renewal date. Representation - CORRECT ANSWER A statement made by the applicant on the insurance application that is believed to be true. What is a warranty? - CORRECT ANSWER An absolutely true statement that, if breached, may viod an insurance contract. In insurance, when is the offer usually made on a contract? - CORRECT ANSWER When the insurance application is submitted. When a change needs to be made on the application for insurance, which is the best method for correcting the information? - CORRECT ANSWER Complete a new application or ask the applicant to initial the correction on the original application. A situation in which a person can only experience a loss and no gain represents what type of risk? - CORRECT ANSWER Pure Risk Who is responsible for the contents of insurance advertisements? - CORRECT ANSWER The Insurance Company What is the entire contract in health insurance underwriting? - CORRECT ANSWER The policy with riders and endorsements, plus a copy of the application. What is the main purpose for requiring a person to be licensed to transact insurance? - CORRECT ANSWER To protect the general public. Who is an insurance agent? - CORRECT ANSWER A person authorized to sell, solicit, and negotiate insurance contracts. What illegal act does a producer commit what representing a policy in a more favorable light than the policy really is? - CORRECT ANSWER Misrepresentation Field Underwriter - CORRECT ANSWER An insurance agent who conducts an initial policy solicitation and application. (The company's front line of underwriting) Policyowner - CORRECT ANSWER The person entitled to exercise the rights and privileges in the policy. What is solvency? - CORRECT ANSWER An insurer's ability to meet its financial obligations of policy owners, insureds, and beneficiaries.

What entities make up the medical information bureau (MIB)? - CORRECT ANSWER Insurers What is the foundation of statistical prediction of loss upon which rate for insurance are calculated? - CORRECT ANSWER Law of Large Numbers Adverse Selection - CORRECT ANSWER The tendency of risk with higher probability of loss to purchase and maintain insurance more often than the risks who represent lower probability of loss. Concealment - CORRECT ANSWER The withholding of known facts that, if material, can void a contract. What is the purpose of a cease and desist order? - CORRECT ANSWER To prevent a producer or insurer from violating laws for transacting insurance. What is the purpose of the Florida Guaranty Association? - CORRECT ANSWER To protect policy owners, insureds, and beneficiaries from financial losses caused by insolvent insurers. Who's responsible for paying the cost of a medical examination required in the process of underwriting? - CORRECT ANSWER The Insurer Which of the two types of policy assignments requires transfer of all ownership rights in the policy to a third-party? - CORRECT ANSWER Absolute Assignment Who may share in the commissions from the sale of a life insurance policy? - CORRECT ANSWER Only producers properly licensed for the type of insurance transaction. (Ex. Life insurance agents may share commissions for life insurance transactions) Who must be a member of a state insurance guaranty association? - CORRECT ANSWER Any authorized insurer within a state. When should an agent obtain a statement of good health from the insured? - CORRECT ANSWER When the premium was paid upon delivery rather that at the time of application. What is the main responsibility of a company's underwriting unit? - CORRECT ANSWER Risk Selection Conditions that increase the chance of a loss are known as what? - CORRECT ANSWER Hazards

What is the purpose of the agent's report during the application process? - CORRECT ANSWER It provides the agent's observation about the proposed insured that may help in the underwriting process. If an underwriter requires extensive information about the applicants medical history, what report will best serve this purpose? - CORRECT ANSWER Attending Physician's statement. What are agents required to do in order to renew their license? - CORRECT ANSWER Complete required continuing education hours. Primary Beneficiary - CORRECT ANSWER A beneficiary who has the first claim to the policy proceeds after the death of the insured. Why are dividends in life insurance polices not taxable? - CORRECT ANSWER Dividends are not considered income for tax purposes; they are a return of unused premium. How soon can income payments begin in an immediate annuity? - CORRECT ANSWER No later that one year from the time of annuity purchase. What type of annuity requires an agent to have a securities license? - CORRECT ANSWER Variable Annuity What are some examples of Life qualified plans? - CORRECT ANSWER IRA, 401(k), HR 10 (keogh), SEP, SIMPLE Under what non-forfeiture option does the company pay the policy's surrender value and have no further obligations to the policy owner? - CORRECT ANSWER Cash Surrender What provision in a life insurance policy extends coverage beyond the premium due date? - CORRECT ANSWER Grace Period. In term policies, what happens to the premium throughout the term of the policy? - CORRECT ANSWER The premium remains level. What type of whole life insurance policy only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and endows at the insured's age 100?

• CORRECT ANSWER Single premium whole life. What are the characteristics of the group that underwriters will consider before issuing a group life policy? - CORRECT ANSWER Groups purpose, size, financial strength, and turnover. What is the main advantage of converting from group life insurance to individual coverage? - CORRECT ANSWER Evidence of insurability is not required

What is included in Part 2 of a life insurance application? - CORRECT ANSWER Medical information about the prospective insured. Term Insurance - CORRECT ANSWER Coverage for a specified period of time without cash values or living benefits. Lump Sum - CORRECT ANSWER A payout method that pays the beneficiary the entire benefit in one payment. What are the consequences of withdrawing funds from a traditional IRA prior to the age of 59 1/2? - CORRECT ANSWER 10% penalty Whose life expectancy is taken into consideration in an annuity contract? - CORRECT ANSWER Annuitant Who bears the investment risk in a fixed annuity? - CORRECT ANSWER The insurer What is the primary purpose of a 401(k) plan? - CORRECT ANSWER Provide retirement income. What does the term "double indemnity" mean? - CORRECT ANSWER The insurer will pay a benefit of twice the face amount. What type of beneficiary is next in line after the primary beneficiary? - CORRECT ANSWER Contingent Beneficiary. Who controls changes in premium payments, face changes, and loans in a life insurance policy? - CORRECT ANSWER Policy owners. When would a 20 - pay whole life policy endow? - CORRECT ANSWER When the insured reaches age 100. Who owns a group life insurance contract? - CORRECT ANSWER The employer. In a joint life policy, when is the death benefit paid? - CORRECT ANSWER Upon the first death (if first-to-die policy), or upon the second death (if survivor ship policy) What is the blackout period for Social Security Benefits? - CORRECT ANSWER A period of time during which the surviving spouse does not receive social security benefits. What are the personal uses of life insurance? - CORRECT ANSWER Survivor protection, estate creation and conservation, cash accumulation and liquidity.

Non-forfeiture Options - CORRECT ANSWER Methods of distribution of guaranteed values in a life insurance policy. With the interest-only settlement option, what happens to the policy's death benefit? - CORRECT ANSWER Policy proceeds are retained by the insurance company; only the interest is paid to the beneficiary. If there is no named beneficiary for the annuity benefits, where do the benefits go? - CORRECT ANSWER Annuitant's estate What is the general taxation rule for death benefits payable to the beneficiary of a life insurance policy? - CORRECT ANSWER Death benefits are generally not subject to income taxes. What is the purpose of the automatic premium loan provision? - CORRECT ANSWER To prevent the unintentional lapse of a policy because of nonpayment of premium. Which non-forfeiture option is automatically selected by the company if not chosen by the policy owner? - CORRECT ANSWER Extended Term. What life insurance policy provision prevents an insurer form disputing or denying a claim due to misstatements on the application after a certain period of time? - CORRECT ANSWER Incontestability In annually renewable term policies, what is the annual premium based upon? - CORRECT ANSWER The insured's attained age. In what type of life insurance policy can the policy owner skip premium payments without the policy lapsing? - CORRECT ANSWER Universal Life What type of life insurance policy offers pure death protection? - CORRECT ANSWER Term At what point does coverage begin when an agent issues a conditional insurability receipt for a life insurance policy? - CORRECT ANSWER Either on the date of the application or the date of the medical exam, whichever occurs last. What are the three main factors that determine the premium for a life insurance policy? - CORRECT ANSWER Mortality, Interest, and Expense. Qualified Plan - CORRECT ANSWER A retirement plan that meets the IRS guidelines for receiving favorable tax treatment. Face Amount - CORRECT ANSWER The amount of benefit stated in the life insurance policy.

What is the penalty for excessive contributions to a traditional IRA? - CORRECT ANSWER 6% What are the two phases of an Annuity? - CORRECT ANSWER Accumulation and Annuitization (Pay-in and Pay-out) What annuity settlement option provides income payments to the annuitant for the duration of his or his life, and also guarantees payment for a specified number of years? - CORRECT ANSWER Life income with period certain. For a retirement plan to be qualified, it must be designed for whose benefit? - CORRECT ANSWER Employees What life policy rider allows the company to forgo collecting the premium if the insured becomes disabled? - CORRECT ANSWER Waiver of Premium What beneficiary designation has the first claim to the death proceeds of a life insurance policy?

• CORRECT ANSWER Primary Beneficiary What happens to the proceeds of a life insurance policy if there is no named beneficiary? - CORRECT ANSWER The proceeds are paid to the insured's state. A whole life policy that requires premium payments only for a specified number of years is known as what kind of policy? - CORRECT ANSWER Limited-Pay Whole Life What are the death benefit options in universal life policies? - CORRECT ANSWER Option A: Level Death Benefit Option B: Increasing Death Benefit Why are policy loans not available on term insurance? - CORRECT ANSWER There is no cash value to borrow against. What document must a producer provide to the insured during policy replacement? - CORRECT ANSWER Notice regarding replacement When must insurable interest exist in a life insurance policy? - CORRECT ANSWER At the time of application. Participating Policy - CORRECT ANSWER Insurance in which policy owners share in profits or losses and receive dividends when available.

If a settlement option is not chosen by the policy owner or the beneficiary, what option will be used by the insurer? - CORRECT ANSWER Lump-Sum payment What type of annuity is purchased with multiple payments, and begins income payments no sooner than one year after the purchase? - CORRECT ANSWER Flexible premium deferred annuity According to the taxation rules of life insurance policies, how are cash value increases taxed? - CORRECT ANSWER Cash value growth is tax-deferred Who does the common disaster clause protect? - CORRECT ANSWER The contingent beneficiary Which non-forfeiture option provides coverage for the longest period of time? - CORRECT ANSWER Reduced paid-up What provision allows the policy owner to reactivate a lapsed life insurance policy within a specified period of time with proof of insurability? - CORRECT ANSWER Reinstatement What does "level" refer to in level term insurance? - CORRECT ANSWER Face Amount What elements of an adjustable life policy can be changed by the policy owner? - CORRECT ANSWER The amount and payment period of the premium, and the period of protection. In variable universal life insurance, to what policy component does the term "variable" refer? - CORRECT ANSWER Cash value and face amount What portion of a partial withdrawal from a universal life policy will be taxed? - CORRECT ANSWER Interest earned on the withdrawn cash value In calculating the amount of life insurance needed, on what is the needs approach based? - CORRECT ANSWER The predicted needs of the family after the premature death of the insured. Settlement Options - CORRECT ANSWER Methods used to pay the death benefits to a beneficiary upon the insured's death. Insurable Interest - CORRECT ANSWER A financial interest in the life of another person with the possibility of losing something of value if that person dies. If someone wants to buy a life insurance policy that will provide lifetime protection against premature death, what type of life insurance policy should it be? - CORRECT ANSWER Permanent

What is policy replacement? - CORRECT ANSWER A new policy is issued while an existing policy is terminated or reissued with reduction in cash value. What type of life insurance is best suited to cover a mortgage? - CORRECT ANSWER Decreasing Term When the amount of insurance is increased in an adjustable life policy, what will the insurer require from the insured? - CORRECT ANSWER Evidence of Insurability. What are the "living benefits" of whole life insurance? - CORRECT ANSWER Cash Value Statements on the application made by an applicant for a life insurance policy are known as what? - CORRECT ANSWER Representations What dividend option can increase the death benefit of the existing life policy> - CORRECT ANSWER Paid-up additions What are the most common exclusions in life insurance policies? - CORRECT ANSWER War and Military service, hazardous occupation, and Aviation. If the beneficiary of a life insurance policy receives death benefit payments that consist of principal and interest, which portion, if any, will be taxed? - CORRECT ANSWER Interest Only What type of annuity is suitable for someone who wants the largest benefit amount only for as long as the annuitant lives? - CORRECT ANSWER Straight Life What is the main reason for purchasing an annuity? - CORRECT ANSWER To provide income that the annuitant cannot outlive. SIMPLE plans are available to groups of how many employees? - CORRECT ANSWER No more than 100 What type of health insurance would pay for hiring a replacement for a valuable employee who becomes disabled? - CORRECT ANSWER Key-person disability insurance What is a presumptive disability provision? - CORRECT ANSWER Provision found in most disability income policies that specifies the conditions that will automatically qualify for full disability benefits. Under an individual disability income policy, the benefits must be paid on at least what schedule? - CORRECT ANSWER Monthly

What is a probationary period in group health insurance? - CORRECT ANSWER The period of time that must lapse before an employee is eligible for group health coverage. Who decides which optional provisions would be included in the health policy? - CORRECT ANSWER The insurance company Which Medicare part helps pay for inpatient hospital care, inpatient care in skilled nursing facility, home health care, and hospice care? - CORRECT ANSWER Part A Can Alzheimer's disease be excluded from coverage under a ling-term care policy? - CORRECT ANSWER NO, organic cognitive disorders, such as Alzheimer's or Parkinson's must be covered. How many consecutive months of coverage must long-term care insurance provide? - CORRECT ANSWER 12 Months Under a fully contributory health plan, how are the benefits received by the employee? - CORRECT ANSWER Income tax free How are the benefits of a group accidental death and dismemberment policy received? - CORRECT ANSWER Income Tax free What is overinsurance? - CORRECT ANSWER An excessive amount of insurance that would result in over payment to the insured in the event of a loss. Most health policies will pay accidental death benefits if the death is caused by an accident and occurs within how many days? - CORRECT ANSWER 90 Days In health insurance, what is considered a sickness? - CORRECT ANSWER An illness that first arises while the policy is in force. What do individual insureds receive as proof of their group health coverage? - CORRECT ANSWER Certificate of Insurance In health insurance contracts, the insured is not legally bound to any particular action; however, the insurer is obligated to pay for losses covered by the policy. What contract characteristic does this describe? - CORRECT ANSWER Unilateral How do insurers determine that cost for a group health policy? - CORRECT ANSWER The main variables are the ration of men and women in the group, and the average age of the group. Who is responsible for making premium payments in an HMO plan? - CORRECT ANSWER Subscribers

What health policy provision describes the insured's right to cancel coverage? - CORRECT ANSWER Renewability Provision When can an irrevocable beneficiary be changed? - CORRECT ANSWER With the written consent of the beneficiary. Under the uniform required provisions for health insurance policies, proof of loss usually needs to be filed within how many days? - CORRECT ANSWER 90 Days What is the required free-look period for Medicare supplement policies? - CORRECT ANSWER 30 Days Who qualifies for Medicaid? - CORRECT ANSWER People with insufficient income and insufficient assets. What type of insurance covers an employee who is hurt on the job? - CORRECT ANSWER Worker's Compensation Under what employer sponsored plan are the benefits taxable to an employee in proportion to the amount of premium paid by the employer? - CORRECT ANSWER Disability income When are LTC benefits received tax-free by an individual? - CORRECT ANSWER LTC benefits are always received tax-free What is the gatekeeper model? - CORRECT ANSWER An HMO model that uses the insured's primary care physician as the initial contact for the insured for medical care and for referrals. What are the common exclusions in most health insurance policies? - CORRECT ANSWER War, self-inflicted injuries, elective cosmetic surgeries, injuries caused by participating in illegal activities, and workers compensation benefits. What is the term for a period of time immediately following a disability during which benefits are not payable? - CORRECT ANSWER Elimination Period How can health insurance policies be delivered to the insured? - CORRECT ANSWER Personally delivered by the agent or mailed. What is the purpose of respite care in long-term care insurance? - CORRECT ANSWER To provide relief for a caregiver. In what type of health insurance plans are providers paid for services in advance, regardless of the services provided? - CORRECT ANSWER Prepaid plans

When an individual is covered under two health plans that have duplicate benefits, the benefit will be prorated to avoid what? - CORRECT ANSWER Overinsurance What is the main difference between coinsurance and co-pay? - CORRECT ANSWER Co-pay is a set dollar amount; coinsurance is a percentage of the expenses Which policy rider in a health insurance policy allows an insured to purchase additional amounts of disability income coverage without evidence of insurability? - CORRECT ANSWER Guaranteed Insurablility Rider What Medicare part provides prescription drug benefit? - CORRECT ANSWER Part D How is Medicaid funded? - CORRECT ANSWER Medicaid is a federal and state funded program How are individually owned disability income benefits taxed once received by that insured? - CORRECT ANSWER Disability benefits are not taxed; they are received income tax free How long do short-term disability group plans pay benefits? - CORRECT ANSWER For a period of less than two years In health insurance, when would an excess plan pay benefits? - CORRECT ANSWER After the primary plan has paid it's full promised benefit, the excess plan will pay the balance. What is Long-Term Care? - CORRECT ANSWER Health and social services provided for individuals with chronic disease or disabilities who requires living assistance at home or in a nursing home facility. What type of health insurance plans cover all accidents and sicknesses that are not specifically excluded in the policy? - CORRECT ANSWER Comprehensive plans What is the purpose of managed care health insurance plans? - CORRECT ANSWER To control health insurance claims expenses. If an agent makes a correction on the application for health insurance, who must initial the correct answer? - CORRECT ANSWER The Applicant What is "own occupation" disability? - CORRECT ANSWER Insured's inability to perform duties of his or her current job or an occupation for which the insured is educated and trained. According to the reinstatement provision, once a lapsed policy is reinstated, how soon will coverage be available for accidents? - CORRECT ANSWER Immediately

If the insured pays a monthly premium for health insurance, how long will the grace period be on the policy? - CORRECT ANSWER 10 Days What is a deductible in a health insurance policy? - CORRECT ANSWER A specified dollar amount that the insured must pay before the insurer pays any policy benefits. In which Medicare supplemental plans are the core benefits found? - CORRECT ANSWER All plans (A-N) When is the initial enrollment period for Medicare part A? - CORRECT ANSWER When an individual first becomes eligib;e for Medicare, starting three months before turning age 65 and ending three months after the 65th birthday. What part of Medicare is known as medical insurance? - CORRECT ANSWER Part B What type of disabilities will be covered by occupational coverage? - CORRECT ANSWER Disabilities that result from accidents or sicknesses on OR off the job How are benefits received by the business from a key person disability insurance? - CORRECT ANSWER Income tax free What is a service plan? - CORRECT ANSWER An insurance plan in which benefits are provided to subscribers in the form of services instead of monetary benefits. What is the elimination period? - CORRECT ANSWER A waiting period imposed on the insured from the onset of disability until benefit payments begin. Who are the parties in a group health contract? - CORRECT ANSWER The employer and the Insurer A waiver of premium provision may be included with what type of health insurance policies? - CORRECT ANSWER Disability income and LTC What type of hospital policy pays a fixed amount each day that the insured is in the hospital?

• CORRECT ANSWER Hospital Indemnity How can AD&D coverage be written? - CORRECT ANSWER As a rider to a health insurance policy, or as a seperate policy. What is a fee-for-service health plan? - CORRECT ANSWER Under a fee-for-service plan, providers receive payments for each service provided.

The insured on a health policy misstated his age on the insurance application. If this misrepresentation is discovered, what will happen to the policy? - CORRECT ANSWER The benefit amount payable under the policy will be adjusted to the insured's correct age. What is the purpose of the coinsurance provision in health insurance policies? - CORRECT ANSWER To prevent overutilization of the policy benefits. How will changing one's occupation to be more hazardous, affect the health insurance policy in force? - CORRECT ANSWER Claim benefits will be reduced to what the premium would have brought for a more hazardous occupation. How is Medicare part B funded? - CORRECT ANSWER By monthly premiums and from the general revenues of the federal government. What are the activities of daily living? - CORRECT ANSWER Bathing, Dressing, Eating, Transferring, Toileting, and Continence. What benefits are provided by Medicare part C? - CORRECT ANSWER Expanded benefits for a fee through private insurance programs such as HMO's or PPO's. What is a tax advantage of the employer paying disability insurance premiums for its employees?

• CORRECT ANSWER Premiums are deductible as a business expense. How are excess funds in an employee's health savings account (HSA) handled? - CORRECT ANSWER The funds can be carried forward to the next year. What is Major medical insurance? - CORRECT ANSWER Health insurance that provides coverage for catastrophic losses, and features deductibles and coinsurance, and high limits of coverage. What are two types of expenses that are covered by health plans? - CORRECT ANSWER Medical expenses and loss of income expenses If the insureds share in the cost of health insurance premiums with the employer, this would be known as what type of group health plan? - CORRECT ANSWER Contributory Who must sign a health insurance application? - CORRECT ANSWER The agent and the insured (and the policy owner if different from the insured) What is the time requirement for terminated employees to covert the group health coverage to an individual plan without evidence of insurability? - CORRECT ANSWER 31 days after termination of the employment