Life & Health Insurance License Exam Practice Test New Latest Version with All Questions,, Exams of Nursing

Download Life & Health Insurance License Exam Practice Test New Latest Version with All Questions, and more Exams Nursing in PDF only on Docsity! Life & Health Insurance License Exam Practice Test New Latest Version with All Questions, 100% Correct Answers and Rationale Updated 2023-2024 • 1. A disability income policy social insurance supplement (SIS) benefit rider: o A. Pays benefits only if it turns out the insured is eligible for benefits from social insurance o B. Pays a benefit if the insured is injured on the job and qualifies for workers compensation benefits o C. Provides a payment only when the insured is totally disabled, but not receiving any social insurance benefit plans o D. Provides for a bonus payment that will match social security disability income benefits, if they are paid Correct Answer C. Provides a payment only when the insured is totally disabled, but not receiving any social insurance benefit plans Explanation The disability income policy social insurance supplement (SIS) benefit rider provides a payment only when the insured is totally disabled, but not receiving any social insurance benefit plans. This means that the rider will only pay benefits if the insured is unable to work due to a disability and does not qualify for any other social insurance benefits. It is designed to provide additional financial support to individuals who are disabled and do not have any other sources of income from social insurance programs. Rate this question: • 2. A health maintenance organization (HMO) plan contains costs by promoting o A. After-hours care o B. Generic care o C. Preventative care o D. Fee for service care Correct Answer C. Preventative care Explanation An HMO plan contains costs by promoting preventative care. Preventative care refers to measures taken to prevent illness or detect it early, such as regular check-ups, vaccinations, and screenings. By encouraging members to engage in preventative care, HMOs can help identify health issues before they become more serious and costly to treat. This approach can lead to better overall health outcomes and lower healthcare expenses in the long run. Rate this question: • 3. Renewable term insurance can be best described as : o A. A level death benefit with an increase in premium Explanation The rights of an irrevocable beneficiary differ from those of a revocable beneficiary because an irrevocable beneficiary has a vested right that cannot be impaired by the policy owner or their creditors without the beneficiary's consent. This means that once designated as an irrevocable beneficiary, their right to receive the benefits cannot be taken away without their permission. In contrast, a revocable beneficiary can have their designation changed by the policy owner without their consent. Rate this question: • 6. What recourse does an insurer have if a violation of a material warranty on the part of the insured is discovered: o A. A hearing by the insurance commissioner to determine the severity of the the misrepresentation and to determine an appropriate course of action o B. None, if the policy has been in force for over 12 months o C. Rescission of the policy o D. A hearing by a court of law to determine an appropriate course of action an insurer may take Correct Answer C. Rescission of the policy Explanation If a violation of a material warranty on the part of the insured is discovered, the insurer has the option to rescind the policy. Rescission means that the insurer can cancel the policy from its inception and treat it as if it never existed. This allows the insurer to avoid any obligations or liabilities under the policy. Rescission is a common recourse for insurers when there has been a misrepresentation or breach of warranty by the insured. Rate this question: • 7. Which of the following describes an insurer who has enough financial resources only to provide for all its liabilities and for all reinsurance of all outstanding risks? o A. Guaranteed o B. Insolvent o C. Solvent o D. Non-participating Correct Answer B. Insolvent Explanation An insurer who is insolvent does not have enough financial resources to provide for all its liabilities and reinsurance of outstanding risks. This means that the insurer is unable to meet its financial obligations and may be at risk of bankruptcy or liquidation. Rate this question: • 8. All of the following statements about the election of a life insurance policy's settlement options are true, except: o A. The election is made by the policy owner at the time the application is submitted. o B. When no settlement option is chosen, the proceeds are automatically paid to the policy owner's state. o C. The policy owner may change the settlement option after it has been chosen. o D. The election may be made by the beneficiary if no settlement option is in force at the time of death of the insured. Correct Answer B. When no settlement option is chosen, the proceeds are automatically paid to the policy owner's state. Explanation The correct answer is "When no settlement option is chosen, the proceeds are automatically paid to the policy owner's state." This statement is not true because when no settlement option is chosen, the proceeds are typically paid to the policy owner's beneficiaries or estate, not to the policy owner's state. Rate this question: • 9. What is the purpose of "key person" insurance? o A. To provide health insurance benefits to key employees o B. To give a key employee the ability to purchase the business o C. To give retirement benefits to key employees o D. has never borrowed from the policy's cash value, the cash value remains the same as the initial amount of the policy, which is $150,000. Rate this question: • 12. Intentional concealment entitles the injured party to which course of action? o A. None, due to the fact that the concealment was unintentional o B. $250 fine to be paid to the injured party o C. Possible imprisonment to the party who concealed the information o D. Rescission of the contract Correct Answer D. Rescission of the contract Explanation Intentional concealment refers to the act of deliberately hiding or withholding information. In such cases, the injured party has the right to choose the course of action known as rescission of the contract. Rescission allows the injured party to cancel the contract and be relieved of any obligations or consequences that may have arisen from it. This course of action is justified as intentional concealment undermines the trust and fairness essential for a contractual relationship. Rate this question: • 13. Loss retention is an effective risk management technique when all of the following conditions exist except: o A. The probability of loss is unknown o B. The losses are highly predictable o C. The insured chooses to assume the losses involved o D. The worst possible loss is not serious Correct Answer A. The probability of loss is unknown Explanation Loss retention is an effective risk management technique when the losses are highly predictable, the insured chooses to assume the losses involved, and the worst possible loss is not serious. However, if the probability of loss is unknown, it becomes difficult to assess the potential risks and make informed decisions regarding loss retention. Therefore, the absence of knowledge about the probability of loss would make loss retention less effective as a risk management technique. Rate this question: • 14. A disability policy, described as "guaranteed renewable" is one where the insurance company o A. Surrenders the right to change the premiums o B. Reserves the right to change any of its terms o C. Reserves the right to change the premiums, but may not change any of its terms o D. May not renew the policy if the insured ceases to comply with certain conditions such as continued employment Correct Answer C. Reserves the right to change the premiums, but may not change any of its terms Explanation In a disability policy described as "guaranteed renewable," the insurance company reserves the right to change the premiums, which means they can increase the cost of the policy over time. However, they are not allowed to change any of the other terms of the policy, such as coverage limits or benefits. This ensures that the policyholder can rely on the same level of coverage and benefits throughout the policy's term, even if the premiums increase. Rate this question: • 15. When are parties to a contract required to communicate information solely based on personal judgment for a matter in question: o A. Only when asked o B. Only when the policy terms require it o C. Only when relevant o D. Never Which type of insurance guarantees the right to renew the policy each year, regardless of health but at an increased premium: o A. Convertible term o B. Level term o C. Decreasing term o D. Renewable term Correct Answer D. Renewable term Explanation Renewable term insurance guarantees the right to renew the policy each year, regardless of health, but at an increased premium. This means that the policyholder can continue the coverage without having to go through the underwriting process again, even if their health condition deteriorates. However, the premium for renewable term insurance increases with each renewal, reflecting the increased risk associated with the policyholder's age. Rate this question: • 19. The passage of worker's compensation legislation meant o A. Employees no longer had any legal means of obtaining reimbursement for work injuries o B. Employees would have to sue their employers to obtain reimbursement for work injuries o C. Employers would be held responsible for the cost of their employee's work injuries regardless of fault o D. Employers were no longer responsible for work injuries to employees Correct Answer C. Employers would be held responsible for the cost of their employee's work injuries regardless of fault Explanation The correct answer is "Employers would be held responsible for the cost of their employee's work injuries regardless of fault". This means that the passage of worker's compensation legislation made employers accountable for covering the expenses related to their employees' work injuries, regardless of who was at fault for the injury. This implies that employees no longer had to sue their employers to obtain reimbursement for work injuries, and employers were no longer able to escape responsibility for such injuries. Rate this question: • 20. RW and Associates is an agency which represents BLG Insurance Corporation. RW and Associates may leave the name BLG Insurance Corporation in its advertisements by clearly stating the relationship between the two businesses in any of the following ways, except: o A. RW and Associates who represent BLG Insurance Corporation o B. RW and Associates underwriting for BLG Insurance Corporation o C. RW and Associates placing business through BLG Insurance Corporation o D. RW and Associates using the services of BLG Insurance Corporation Correct Answer B. RW and Associates underwriting for BLG Insurance Corporation Explanation The correct answer is "RW and Associates underwriting for BLG Insurance Corporation." This statement implies that RW and Associates is directly involved in the underwriting process for BLG Insurance Corporation, which may not be accurate. The other options correctly state the relationship between RW and Associates and BLG Insurance Corporation, such as representing, placing business through, or using the services of BLG Insurance Corporation. Rate this question: • 21. The probationary period in a group health policy is intended for people o A. Who joined the group after the policy effective date o B. Without health coverage after a qualifying event who declined to join the group at the time of eligibility o C. With a pre-existing condition when they joined the group Correct Answer A. Who joined the group after the policy effective date Explanation The probationary period in a group health policy is intended for people who joined the group after the policy effective date. During this period, these individuals may have limited or no coverage for certain pre- An employee who handles self-insurance claims o C. An employee who is responsible for evaluating for relative quality of competing group health and welfare benefits offered to his employer by insurers o D. An outside organization that processes claims for an employers self-funded plans Correct Answer D. An outside organization that processes claims for an employers self- funded plans Explanation The correct answer is an outside organization that processes claims for an employer's self-funded plans. This explanation is supported by the definition of a third-party administrator (TPA), which is an organization that provides administrative services for employee benefit plans. In this case, the TPA processes claims for self-funded plans, meaning that the employer assumes the financial risk for providing healthcare benefits to its employees. This arrangement allows the employer to have more control over the plan and potentially save costs, while the TPA handles the claims processing and other administrative tasks. Rate this question: • 25. A form of rest or relief offered to family members who are caring for a person who requires continual care is o A. Hospice care o B. Hospital care o C. Respite care o D. Intermediate care Correct Answer C. Respite care Explanation Respite care refers to a type of rest or relief provided to family members who are responsible for the ongoing care of an individual. This form of care allows family caregivers to take a break from their caregiving responsibilities, enabling them to recharge and attend to their own needs. Respite care can be provided in various settings, such as in- home care or at a specialized facility, and it offers temporary relief to family caregivers while ensuring that the person receiving care is still looked after. Rate this question: • 26. All of the following statement about contingent beneficiaries are true, except o A. They receive remaining payments to be made under a settlement agreement upon the primary beneficiary's death o B. The contingent beneficiary shares death proceeds equally with the primary beneficiary o C. They receive the death proceeds if the primary beneficiary is deceased at the time of the insured's death o D. More than one contingent beneficiary may be named Correct Answer B. The contingent beneficiary shares death proceeds equally with the primary beneficiary Explanation The correct answer is that the contingent beneficiary shares death proceeds equally with the primary beneficiary. This statement is false because contingent beneficiaries only receive the death proceeds if the primary beneficiary is deceased at the time of the insured's death. They do not share the proceeds equally with the primary beneficiary. Rate this question: • 27. The payor rider on a juvenile life policy provides that if the payor dies or becomes disabled before the insured juvenile reaches the age specified on the policy o A. The insurer will make the payments until the insured juvenile reaches the specified age o B. The insurer will lend money to keep the policy in force o C. The insured's estate will make the premium payments o D. The insurer will make all the of the policy payments Correct Answer A. The insurer will make the payments until the insured juvenile reaches the specified age Explanation The payor rider on a juvenile life policy provides that if the payor dies or becomes disabled before the insured juvenile reaches the age specified on the policy, the insurer will make the payments until the insured juvenile reaches the specified age. This means that if the person responsible for paying the premiums on the policy (the payor) passes Insolvent o B. Unauthorized o C. Impaired o D. Non-admitted Correct Answer A. Insolvent Explanation If an insurer is not able to meet their financial obligations when they are due, it means that they do not have enough funds or assets to pay their debts. This situation is called insolvency. Insolvency is a serious financial condition and indicates that the insurer is at risk of being unable to fulfill their contractual obligations to policyholders and other stakeholders. Rate this question: • 31. What does the Insurance Commissioner have the right to do if an agent lacks authority from an insurer named on a binder for coverage o A. Fine the insurance company for non-compliance o B. Suspend or revoke the license of the agent o C. Authorize the agent with a certificate of convenience o D. Request a certificate of authority be issued immediately Correct Answer B. Suspend or revoke the license of the agent Explanation The Insurance Commissioner has the right to suspend or revoke the license of an agent if they lack authority from an insurer named on a binder for coverage. This means that if the agent does not have the proper authorization from the insurer to provide coverage, their license can be temporarily suspended or permanently revoked. This action is taken to ensure that agents are operating within the legal boundaries and have the necessary authority to sell insurance policies. Rate this question: • 32. Which definition of disability is the most difficult for an injured worker to satisfy? o A. The own-occupation definition used by the Social Security Administration o B. The typical definition of partial disability used by disability income policies o C. The total disability definition used by the Social Security Administration o D. The typical definition of temporary disability used by disability income polices Correct Answer C. The total disability definition used by the Social Security Administration Explanation The total disability definition used by the Social Security Administration is the most difficult for an injured worker to satisfy because it requires the worker to be completely unable to perform any type of work, not just their own occupation. This means that even if the worker is unable to perform their previous job, they may still be considered able to work in a different capacity, which may make it harder for them to qualify for disability benefits. Rate this question: • 33. People commonly purchase an annuity to protect against the risk of: o A. Dying before their home mortgage is paid off o B. Becoming uninsurable o C. Outliving their financial resources o D. Dying too soon Correct Answer C. Outliving their financial resources Explanation An annuity is a financial product that provides a steady stream of income for a specified period or for the rest of one's life. People commonly purchase annuities to protect against the risk of outliving their financial resources. By investing in an annuity, individuals can ensure a stable income in their retirement years, even if they live longer than expected. This helps to mitigate the fear of running out of money and provides financial security for the future. Rate this question: • 34. because it allows them to more accurately predict losses and set appropriate premiums. When there is a larger pool of insured individuals, insurers can gather more data and statistics on potential risks and losses. This enables them to better understand the likelihood and severity of potential claims, which in turn allows them to set premiums that align with the level of risk. With a larger number insured, insurers have a more reliable basis for calculating premiums and can ensure that they are charging an appropriate amount to cover potential losses. Rate this question: • 37. The insured, aged 65, owns a $100,000 non-participating whole life policy. The policy is paid-up as of today. When would the cash value reach $100,000? o A. Today o B. Age 85 o C. Never o D. Age 100 Correct Answer D. Age 100 Explanation The cash value of a whole life policy typically increases over time as the policyholder pays premiums and accumulates interest. In this case, the insured's policy is already paid-up, meaning they have finished making premium payments. Therefore, the cash value will continue to grow based on the interest rate specified in the policy until the insured reaches age 100, at which point it will reach $100,000. Rate this question: • 38. A measure for rating an individual's need for LTC benefits is called: o A. Case management o B. Activities of daily living o C. The gatekeeper mechanism o D. Co-insurance Correct Answer B. Activities of daily living Explanation Activities of daily living (ADLs) refers to the basic self-care tasks that individuals typically perform on a daily basis, such as bathing, dressing, eating, toileting, transferring, and continence. ADLs are used as a measure to assess an individual's functional ability and determine their need for long-term care (LTC) benefits. The ability or inability to perform ADLs independently can indicate the level of assistance and support required for an individual to maintain their daily activities and quality of life. Therefore, ADLs serve as a rating measure for an individual's need for LTC benefits. Rate this question: • 39. In order to receive the principal sum benefit for death from a disability policy, the death must occur o A. Within a specified number of days after injury o B. Any time during a rehabilitation period o C. Any time during a total dismemberment period o D. Within the policy period from any cause Correct Answer A. Within a specified number of days after injury Explanation The correct answer is "Within a specified number of days after injury." This means that in order for the beneficiary to receive the principal sum benefit for death from a disability policy, the death must occur within a certain timeframe after the injury. This indicates that there is a specific window of time during which the death must occur in order for the benefit to be paid out. Rate this question: • 40. Which of the following are commonly covered by medical expense policies ? o A. Elective cosmetic surgeries o B. Pre-existing conditions o C. Expenses covered by a workers compensation policy o D. Accidental injuries Home health care o B. Adult day care o C. Hospital acute care unit o D. Alzheimer's disease Correct Answer C. Hospital acute care unit Explanation LTC insurance policies typically cover expenses related to long-term care, such as home health care and adult day care. However, a hospital acute care unit is not considered long-term care and is therefore not covered by LTC insurance. This type of care is usually provided for a short duration in a hospital setting and is typically covered by health insurance or Medicare. Therefore, the correct answer is Hospital acute care unit. Rate this question: • 44. Which of the following is a hazard ? o A. A large number of similar exposure units o B. A peril o C. A condition that might increase the likelihoold of a loss occurring o D. A speculative risk Correct Answer C. A condition that might increase the likelihoold of a loss occurring Explanation A hazard is defined as a condition that increases the likelihood of a loss occurring. This means that it poses a potential danger or risk that could lead to a loss or harm. The other options listed in the question do not fit this definition. A large number of similar exposure units refers to a situation where there are many similar entities or individuals being exposed to a risk, but it does not necessarily indicate a hazard. A peril refers to a specific cause of loss, such as a fire or flood, rather than a condition that increases the likelihood of a loss. Lastly, a speculative risk involves the possibility of gain or loss, rather than a specific condition that increases the likelihood of a loss occurring. Rate this question: • 45. A hospital confinement indemnity insurance policy pays o A. An indemnity to the insured for all expenses incurrred when the insured is confined to a hospital o B. The daily benefit coverage amount stated in the policy for each day the insured is confined in the hospital o C. 100% of the covered medical expenses less the deductible and co-insurance percentage o D. The amount of the actual hospital expenses Correct Answer B. The daily benefit coverage amount stated in the policy for each day the insured is confined in the hospital Explanation The correct answer is "the daily benefit coverage amount stated in the policy for each day the insured is confined in the hospital." This means that the insurance policy will provide a fixed daily amount to the insured for each day they are confined in the hospital. This amount is predetermined and specified in the policy. It does not cover all the expenses incurred or the actual hospital expenses, but rather provides a set daily benefit. Rate this question: • 46. When a licensed agent submits a renewal applications with applicable fee on or before the expiration date o A. The agent will be able to operate if a receipt for payment is returned prior to the license expiration date o B. The agent will be able to operate for up to 60 days after the specified expiration date o C. The agent will be able to operate if the agent goes in person to the insurance department to receive a temporary extension of the license o D. The agent will be able to continue to operate after a 30 day extension to operate without receipt if requested and approved Correct Answer B. The agent will be able to operate for up to 60 days after the specified expiration date Explanation When a licensed agent submits a renewal application with the applicable fee on or before the expiration date, they will be able to operate for up to 60 days after the specified expiration date. This means High premiums and high cash value o D. Low premiums and no cash value Correct Answer D. Low premiums and no cash value Explanation Term insurance is a type of life insurance that provides coverage for a specific term or period of time. It is typically characterized by low premiums because it only provides coverage for a specific period and does not accumulate cash value over time. This means that if the insured person survives the term, there is no payout or cash value associated with the policy. The low premiums make term insurance an affordable option for individuals who want temporary coverage without the need for cash value accumulation. Rate this question: • 50. A $50,000 whole life policy with a cash value of $10,000 has been in force for 11 years. The policy owner is unable to continue the premium payments. Which of the following describes the reduced paid-up non-forfeiture option o A. The policy owner begins to receive $200 monthly payments from the insurer that will continue for life o B. The policy is surrendered and the policy owner is paid $10,000 by the insurer o C. The cash value is used to purchase a $50,000 term policy that is paid-up for 10 years o D. The cash value is used to purchase a $20,000 paid-up policy Correct Answer D. The cash value is used to purchase a $20,000 paid-up policy Explanation When the policy owner is unable to continue premium payments, the reduced paid-up non-forfeiture option allows them to use the cash value of the policy to purchase a new paid-up policy. In this case, the cash value of $10,000 is used to purchase a new policy with a face value of $20,000. This means that the policy owner will no longer have to make premium payments and the new policy is fully paid-up.