Louisiana Life and Health Insurance Exam: Multiple Choice Questions and Answers, Exams of Insurance law

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Louisiana Life and Health Insurance Exam

1.All of the following are correct about the required provisions of a health

insurance policy EXCEPT

A. The entire contract clause means the signed application, policy, endorse- ments,

and attachments constitute the entire contract.

B. A reinstated policy provides immediate coverage for an illness.

C. Policies become incontestable after being in force for 3 years.

D. A grace period of 31 days is found in an annual pay policy.: B. A reinstated policy

provides immediate coverage for an illness. Accidental injury is covered immediately, but to protect the insurer against adverse selection, losses resulting from sickness are covered only if the sickness occurs at least 10 days after the reinstatement date.

2.An insured pays a monthly premium of $100 for health insurance. What would be

the duration of the grace period under the policy?

A. 15 days

B. 30 days

C. 60 days

D. 7 days: B. 30 days

The grace period is 30 days for all health insurance policies in Louisiana.

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3.Question 11 of 15

An applicant for an individual health policy failed to complete the application properly. Before being able to complete the application and pay the initial premium, she is confined to a hospital. This will not be covered by insurance because she has not met the conditions specified in the

A. Insuring Clause.

B. Pre-existing Conditions Clause.

C. Eligibility Clause.

D. Consideration Clause.: D. Consideration Clause.

The consideration clause specifies that both parties to the contract must give some valuable consideration. The payment of the premium is the consideration given by the applicant. Because the applicant had not paid an initial premium, she is not covered by insurance.

4.Question 12 of 15

Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under an accident and health policy must contain

A. An estimate of the total amount of medical and hospital expense for the loss.

B. A complete physician's statement.

C. A statement that is sufficiently clear to identify the insured and the nature of the

claim.

D. A statement from the insured's employer showing that the insured was unable to

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D. Legal Actions: A. Time of Payment of Claims

The Time of Payment of Claims provision specifies that claims are to be paid immediately upon written proof of loss.

7.Which renewability provision allows an insurer to terminate a policy for any reason,

and to increase the premiums for any class of insureds?

A. Conditionally renewable

B. Cancellable

C. Guaranteed renewable

D. Optionally renewable: D. Optionally renewable

The renewability provision in an optionally renewable policy gives the insurer the option to terminate the policy for any reason on the date specified in the contract (usually a renewal date). Furthermore, this provision allows the insurer to increase the premium for any class of optionally renewable insureds.

8.When an insurer issues an individual health insurance policy that is guar- anteed

renewable, the insurer agrees

A. To charge a lower premium every year the policy is renewed.

B. Not to change the premium rate for any reason.

C. To renew the policy indefinitely.

D. To renew the policy until the insured has reached age 65.: D. To renew the policy

until the insured has reached age 65.

5 / 95 The guaranteed renewable provision is similar to the noncancellable provision, with the exception that the insurer can increase the policy premium on the policy anniver- sary date. As with the noncancellable policy, coverage is generally not renewable beyond the insured's age 65.

9.Which provision concerns the insured's duty to provide the insurer with

reasonable notice in the event of a loss?

A. Notice of Claim

B. Loss Notification

C. Claims Initiation

D. Consideration: A. Notice of Claim

The Notice of Claim Provision spells out the insured's duty to provide the insurer with reasonable notice in the event of a loss.

10.In an optionally renewable policy, the insurer has which of the following options?

A. Alter the due date so the policy can be cancelled sooner

B. Shorten the notice that the insured receives

C. Increase premiums

D. Increase the grace period: C. Increase premiums

Optionally renewable policies allow the insurer to cancel a policy for any reason whatsoever. Policies can only be cancelled by class on the policy anniversary or premium due date (renewal date). If the insurer elects to renew coverage, it can also increase the policy premium.

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13.While a claim is pending, an insurance company may require

A. The insured to be examined only once annually.

B. An independent examination only once every 45 days.

C. An independent examination as often as reasonably required.

D.The insured to be examined only within the first 30 days.: C. An independent

examination as often as reasonably required.

8 / 95 While a claim is pending, an insurance company may require an independent exam as often as reasonably required.

14.Which of the following statements is true concerning the alteration of optional

policy provisions?

A. An insurer may change the wording of optional policy provisions that would

adversely affect the policyholder but must first receive state permission before the change goes into effect.

B. Once any kind of provision is written, it cannot be changed.

C. An insurer may change the wording of optional provisions, as long as the change

does not adversely affect the policyholder.

D. An insurer may change the wording of optional provisions, regardless of its effect

on the policyholder.: C. An insurer may change the wording of optional provisions, as long as the change does not adversely affect the policyholder. Optional policy provisions can be changed by an insurer, as long as the changes do not adversely affect the policyholder.

15. If the insured under a disability income insurance policy change to a more

hazardous occupation after the policy has been issued, and a claim is filed, the insurance company should do which of the following?

A. Adjust the benefit in accordance with the increased risk

B. Cancel the policy

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D. The elimination period will be extended 6 months for each year of age misstatement.:

B. Amounts payable under the policy will reflect the insured's correct age. f an insured misstates his or her age upon policy application, the optional misstate- ment of age provision will change the payable benefit to that which would have been purchased at the insured's actual age.

18.In a group health policy, a probationary period is intended for people who

A. Have additional coverage through a spouse.

B. Want lower premiums.

C. Join the group after the effective date.

D. Have a pre-existing condition at the time they join the group.: C. Join the group

after the effective date. The probationary period is the waiting period new employees must satisfy before becoming eligible for benefits.

19.The provision that states that both the printed contract and a copy of

the application form the contract between the policyowner and the insurer is called the

A. Certificate of insurance.

B. Aleatory contract.

C. Master policy.

D. Entire contract.: D. Entire contract.

11 / 95 The policy, together with the attached application, constitutes the entire contract. This provision limits the use of evidence other than the contract and the attached application in a test of the contract's validity. This is a mandatory provision in life insurance.

20.An insured submitted a notice of claim to the insurer, but never received claims

forms. He later submits proof of loss, and explains the nature and extent of loss in a hand-written letter to the insurer. Which of the following would be true?

A. The claim most likely will not be paid since the official claims form was not

submitted.

B. The insurer will be fined for not providing the claims forms.

C. The insured must submit proof of loss to the Department of Insurance.

D. The insured was in compliance with the policy requirements regarding claims.: D.

The insured was in compliance with the policy requirements regarding claims. f claims forms are not furnished to the insured, the claimant is deemed to have complied with the requirements of the policy if he or she submits written proof of the occurrence, nature of the loss, and extent of loss to the insurer.

21.In the event of loss, after a notice of claim is submitted to the insurer, who is

responsible for providing claims forms and to which party?

A. Insurer to the insured

B. Insured to the insurer

C. Insurer to the Department of Insurance

13 / 95 f business owners want coverage for the loss of their own income due to total disability, they need to purchase a separate individual disability income policy.

24.In comparison to a policy that uses the accidental means definition, a pol- icy that

uses the accidental bodily injury definition would provide a coverage that is

A. More limited in general.

B. More limited in duration.

C. Broader in duration.

D. Broader in general.: D. Broader in general.

A policy that uses the accidental bodily injury definition will provide broader coverage than a policy

25.An insured wants to buy a disability income policy that pays a maximum monthly

benefit of $1,200. To make sure that the disability benefit keeps up with inflation, the insured would need to add

A. A guaranteed purchase option rider.

B. 5% more to the premium each year.

C. An additional monthly benefit rider.

D. A cost of living rider.: D. A cost of living rider.

The cost of living rider is usually tied to the Consumer Price Index (CPI) or another recognized measure of inflation.

26.While repairing the roof of his house an insured accidentally falls off and breaks

14 / 95 his arm and sustains a head injury that results in total blindness of both eyes. His policy contains an Accidental Death & Dismemberment Rider. What is the extent of benefits that he will receive?

A. Reciprocal Amount

B. Principal Sum

C. Capital Sum

D. 50% of the principal: B. Principal Sum

f the insured dies, the insurer pays the full amount, also known as the "principal sum", which is also paid if the insured loses sight in both eyes or loses two limbs. If the insured lives but loses a hand or foot or the sight in one eye, the insured will be paid a percentage of the principal sum, usually 50%, which is called the "capital sum".

27.Your client has a Social Insurance Supplement (SIS) rider on his disability policy.

After he becomes disabled, he receives payments from the company. Shortly thereafter, he also begins receiving Social Security benefit payments. Which of the following will happen?

A. The SIS rider will discontinue paying benefits.

B. Both plans will continue to pay fully.

C. The SIS payment will be reduced dollar-for-dollar by the Social Security benefit

payment.

D. Social Security will discontinue benefits until the SIS rider expires.: C. The SIS

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D. Partial benefits: C. Full benefits

Presumptive Disability plans offer full benefits for specified conditions. These policies typically require the loss of at least two limbs (Loss of use does not qualify in some policies.), total and permanent blindness, or loss of speech or hearing. Benefits are paid, even if the insured is able to work.

30.An applicant is considered to be high-risk, but not so much that the insurer wants to

deny coverage. Which of the following is NOT true?

A. The insurer can increase the premium.

B. The insurer can add exclusions to the policy.

C. The insurer can rate-up the policy.

D. The insurer will issue a conditional coverage.: D. The insurer will issue a

conditional coverage. f an applicant is considered to be too much of a risk, the application can be denied. If, however, the applicant's risks are not high enough to decline, two measures can be taken to protect the insurer: the policy can be rated-up, which means that the premiums will increase, and exclusions can be added, which means that the insurer will not have to cover conditions that make the applicant a high risk to insure.

31.The period of time immediately following a disability during which benefits are not

payable is

A. The residual period.

B. The elimination period.

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C. The probationary period.

D. The grace period.: B. The elimination period.

The elimination period is a waiting period, expressed in days, not dollars, imposed on the insured from the onset of disability until benefit payments commence.

32.All of the following benefits are available under Social Security EXCEPT

A. Death benefits.

B. Welfare benefits.

C. Old-age and retirement benefits.

D. Disability benefits.: B. Welfare benefits.

Social Security is an entitlement program, not a welfare program.

33.An insured is involved in a car accident. In addition to general, less serious injuries,

he permanently loses the use of his leg and is rendered completely blind. The blindness improves a month later. To what extent will he receive Presumptive Disability benefits?

A. No benefits

B. Full benefits

C. Partial benefits

D. Full benefits until the blindness lifts: A. No benefits

Presumptive Disability plans offer full benefits for specified conditions. These policies

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D. During the elimination period.: B. For the first 2 years of a disability.

The own occupation definition of disability usually applies to the first 24 months after a loss.

36.Which of the following is considered a presumptive disability under a disability

income policy?

A. Loss of hearing in one ear

B. Loss of one hand or one foot

C. Loss of two limbs

D. Loss of one eye: C. Loss of two limbs

Presumptive disability is a provision that is found in most disability income policies that specifies conditions that will automatically qualify the insured for full disability benefits, such as the loss of two limbs.

37.Which statement accurately describes group disability income insurance?

A. Short-term plans provide benefits for up to 1 year.

B. The extent of benefits is determined by the insured's income.

C. In long-term plans, monthly benefits are limited to 75% of the insured's income.

D. There are no participation requirements for employees.: B. The extent of

benefits is determined by the insured's income. Group plans usually specify the benefits based on a percentage of the worker's

20 / 95 income. Group long-term plans provide monthly benefits usually limited to 60% of the individual's income.

38.The amount of Social Security disability benefits is based upon the work- er's

Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over which years? Which years of income may be deleted from calculation?

A. Their highest 20; lowest 2

B. Their highest 35; lowest 5

C. Their highest 40; lowest 5

D. Their highest 15; lowest 4: B. Their highest 35; lowest 5

The amount of Social Security disability benefits is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over their highest 35 years. The lowest 5 years of income may be deleted from calculation.

39.What is the number of credits required for fully insured status for Social Security

disability benefits?

A. 4

B. 10

C. 30

D. 40: D. 40

The term "fully insured" refers to someone who has earned 40 quarters of coverage