PEARSON VUE LIFE AND HEALTH INSURANCE EXAM LATEST EXAM 2024 | ALL QUESTIONS AND ANSWERS, Exams of Insurance Economics

Download PEARSON VUE LIFE AND HEALTH INSURANCE EXAM LATEST EXAM 2024 | ALL QUESTIONS AND ANSWERS and more Exams Insurance Economics in PDF only on Docsity! PEARSON VUE LIFE AND HEALTH INSURANCE EXAM LATEST EXAM 2024 | ALL QUESTIONS AND CORRECT ANSWERS | LATEST VERSION | ALREADY GRADED A+ When a producer submits an insurance application to the company, the producer must take all of the following actions EXCEPT: A. submit the initial premium, if it was collected B. ensure any changes on the application were initialed by the applicant C. submit a completed medical information report D. complete the producer's report ------CORRECT ANSWER---------------C In life insurance, the Free Look provision begins on the: A. effective date of coverage B. policy delivery date C. date of application D. date that the insurer issues the policy ------CORRECT ANSWER----------- ----B A client needs a substantial amount of protection but has limited financial resources. Which of the following insurance policies would BEST meet the client's needs? A. Term Life B. Adjustable Life C. Whole Life D. Limited-Pay Life ------CORRECT ANSWER---------------A A life policy is usually contestable due to material misrepresentation on the application for a period of: A. 30 days B. 6 months C. 2 years D. 5 years ------CORRECT ANSWER---------------C Which of the following statements is CORRECT about the Paid-Up Additions in a participating Whole Life policy? A. They are subject to underwriting approval. B. They do not generate dividends. C. They are considered Term policies. D. They are purchased on an attained age basis. ------CORRECT ANSWER---------------D In which of the following contracts is the Death benefit called the principal sum? A. Survivorship Annuity B. Accidental Death and Dismemberment (AD&D) C. Decreasing Term D. Joint Life ------CORRECT ANSWER---------------B At which of the following times MUST a life insurance applicant be informed of their rights under the Fair Credit Reporting Act? A. During the initial appointment B. When the insured's application is completed C. When the policy is delivery D. Upon initial premium receipt ------CORRECT ANSWER---------------C R has just graduated from law school. R knows that R's future earnings will be much higher than they are now, but wants to purchase a permanent policy now to cover future needs. Which of the following policies would BEST suit R's needs? A. Return of Premium Life B. Life Paid-Up at 65 C. Modified Whole Life D. Annual Renewable Term ------CORRECT ANSWER---------------C C. Survivorship Life D. Life Annuity ------CORRECT ANSWER---------------D Which of the following group life plans requires at least 75 percent of the eligible members to participate? A. Contributory B. Noncontributory C. Participating D. Nonparticipating ------CORRECT ANSWER---------------A An insured intentionally understates her age on her application for a life policy. At death, the insurer will take which of the following actions? A. Refuse to pay the claim based on material misrepresentation on the application B. Pay the face amount of the policy if the death occurred after the end of the incontestable period C. Pay a reduced Death benefit based on the insured's actual age D. Pay the stated Death benefit less the unpaid premium owed to the company as a result of the understated age. ------CORRECT ANSWER------ ---------C Which of the following annuities would BEST suit the needs of a 35-year- old factory worker who is concerned about inflation and wants to establish a retirement plan? A. A Single Premium Deferred Annuity B. A Single Premium Immediate Annuity C. A Level Premium Fixed Annuity D. A Flexible Premium Variable Annuity ------CORRECT ANSWER------------ ---D Under a Guaranteed Renewable Accident & Health policy, an insurer retains the right to: A. increase the premium rate for one insured without increasing the rate for others in the same class B. increase the premium rate for an entire class of insureds C. increase the benefits for an individual insured D. decrease benefits for one insured without decreasing benefits for others in the same class ------CORRECT ANSWER---------------B An insurer must provide claim forms to an insured within a MAXIMUM of how many days after receiving notice of an Accident & Health claim? A. Five B. Fifteen C. Twenty D. Thirty ------CORRECT ANSWER---------------B Under a group health plan, an employer may offer additional benefits to classes of employees on the basis of all of the following factors EXCEPT: A. length of employment B. gender C. salary grade D. job category ------CORRECT ANSWER---------------B P wants to name her husband as the beneficiary of her life policy. However, she wishes to retain all of the rights of ownership. P should have her husband named as the: a: irrevocable beneficiary b: revocable beneficiary c: secondary beneficiary ------CORRECT ANSWER---------------B A contract that has as its basic function the systematic liquidation of accumulated assets through periodic payments is called an: A. indemnity contract B. investment contract C. endowment D. annuity ------CORRECT ANSWER---------------D An insurance producer takes an application for a life insurance policy but does not collect the initial premium. On delivery of the policy to the proposed insured, the producer must collect the initial premium and which of the following? A. A copy of the MIB report B. The insured's signed statement of continued good health C. A copy of the conditional receipt D. A copy of the temporary insurance agreement that covered the period between the application date and the delivery date. ------CORRECT ANSWER---------------B An employer can deduct premium payments as an ordinary business expense for which of the following life coverages? A. Buy and Sell Agreements B. Group C. Key Employee D. Joint Life, if the business is named as the beneficiary ------CORRECT ANSWER---------------B A producer takes applications from identical twins who want to buy the same type of policy in the same amount. The insurer issues the policies as applied for, but charges a 25 percent higher premium for one of the policies. The difference in premiums is probably due to which of the following factors? A. Incontestability B. Insurable interest C. Consideration D. Risk classification ------CORRECT ANSWER---------------D The PRIMARY reason for selecting a Variable Whole Life policy instead of a traditional Whole Life policy is that the Variable Whole Life policy: A. provides flexible premium payments B. allows the policyowner to borrow a larger percentage of the cash value C. has the potential to earn a higher rate of return on the cash value D. allows the policyowner more flexibility in naming and changing beneficiaries ------CORRECT ANSWER---------------C A policyowner names his wife as the primary beneficiary of his Universal Life policy on a revocable basis. He also names his three children as his secondary beneficiaries and his estate as his tertiary beneficiary. If the policyowner's wife predeceases him, and then he dies, who will receive the policy proceeds? A. The children B. The policyowner's estate C. The primary beneficiary's estate D. The tertiary beneficiary ------CORRECT ANSWER---------------A The Waiver of Premium provision of a life policy allows the insurer to take which of the following actions? A. Waive an insured's premiums if the insured becomes totally disabled before a certain age B. Waive an insured's premiums if the insured becomes partially disabled for a minimum time C. Increase an insured's coverage at an attained age without imposing a premium increase D. Reduce an insured's premiums if the insured pays them annually instead of monthly ------CORRECT ANSWER---------------A Under the Social Security Retirement Benefits, all of the following factors will influence how much a retiring individual will receive as a monthly income benefit EXCEPT the individual's: A. age B. "primary insurance amount" C. "fully insured" or "currently insured" status D. sex ------CORRECT ANSWER---------------D The PRIMARY purpose of an inspection report is to assess an applicant's: A. credit rating B. personal characteristics C. job performance D. health profile ------CORRECT ANSWER---------------B If a policy contains a Guaranteed Insurability rider, the insured has the right to purchase: A. additional coverage when the insured reaches retirement age B. additional coverage whenever the insured changes jobs C. additional coverage at specified ages D. coverage on the insured's children within thirty-one days after they are born ------CORRECT ANSWER---------------C Which of the following statements is NOT correct about representations? A. They can be a part of the contract. B. They are true in every respect. C. They are assumed to be accurate. D. They influence the insurer's acceptance of the risk. ------CORRECT ANSWER---------------B If an Adjustable Life policyowner makes an additional premium payment, the policy may be affected in all of the following ways EXCEPT the: A. premium paying period may decrease B. value of the Nonforfeiture Options may decrease C. face amount may increase D. length of coverage may increase ------CORRECT ANSWER---------------B An insured owns a $10,000 policy with a $4,000 cash value and a 6 percent interest rate. On January 1, the insured borrows $500 and pays one year's interest in advance. During the year, the insured does not repay any part of the loan or interest. If the insured dies on December 31, the beneficiary will be entitled to a MAXIMUM of: A. $3,500 B. $6,000 C. $9,470 D. $9,500 ------CORRECT ANSWER---------------D Which of the following retirement plans is tax-qualified? A. Key-person B. Defined contribution C. Section 457 deferred compensation D. Split dollar life insurance ------CORRECT ANSWER---------------B A life insurance application is incomplete if it is missing the signature of which of the following? A. A revocable beneficiary B. The president of the insurer C. The proposed insured's primary care physician D. The proposed adult insured ------CORRECT ANSWER---------------D The right to change a beneficiary designation is reserved for the: A. beneficiary B. policyowner C. insurer D. insured ------CORRECT ANSWER---------------B A health care plan that reimburses a flat fee for medical care it provides at a clinic it owns and operates is referred to as: A. Health Maintenance Organization B. Medicaid C. Medicare D. Multiple Employer Trust (MET) ------CORRECT ANSWER---------------A Which of the following laws requires an insurer to notify an applicant in writing that an investigative consumer report may be made on the applicant? A. Uniform Provisions Law B. Freedom of Information Act C. Medical Information Bureau Disclosure Act D. Fair Credit Reporting Act (Insurance Information and Privacy Protection Act) ------CORRECT ANSWER---------------D An individual who has had a heart murmur since birth is likely to be issued an individual disability policy that includes: A. Guaranteed Insurability rider B. an Exclusionary/ Impairment rider C. Waiver of Premium rider D. Double Indemnity rider ------CORRECT ANSWER---------------B Which of the following statements is CORRECT about coinsurance? A. It applies to deductibles as well as to claim payments. B. It helps control overutilization of benefits. C. It is effective for the first claim payment and waived for future claims. D. Insurance companies may adjust the coinsurance ratio after issuing a policy. ------CORRECT ANSWER---------------B The insurance policy clause that identifies the contracting parties and defines the scope and limits of coverage is called the: A. Insuring clause B. Benefit clause C. Consideration clause D. Renewal clause ------CORRECT ANSWER---------------A In an Accidental Death and Dismemberment (AD&D) policy, the term "capital sum" refers to: A. the benefit paid for death caused by a dread disease B. the monthly disability income paid if an insured loses a limb or the sight in one or both eyes C. a lump sum payment made when disease causes the amputation of an arm or a leg D. a lump sum payment made for an accidental dismemberment ------ CORRECT ANSWER---------------D A group long-term disability plan is integrated with Social Security when which of the following statements is CORRECT? A. Social Security and group benefits pay a combined maximum limit. B. Full group benefits are paid in addition to Social Security benefits. C. Full Social Security benefits are paid after group benefits are exhausted. D. Half of the allowable Social Security benefits are paid after group benefits are exhausted. ------CORRECT ANSWER---------------A Medicare Part A covers which of the following expenses? A. Hospital room and board B. Surgical expenses C. Medications D. Physicians' services ------CORRECT ANSWER---------------A J has a physical impairment, attends school, and is incapable of self- sustaining employment and/ or self care. Which of the following statements is CORRECT about J's medical coverage under J's father's group plan? A. J's coverage ceases, but J may apply for group student coverage. B. J's coverage automatically discontinues at age twenty-six. C. J's coverage continues only as long as J is a full-time student. D. J's coverage continues as long as J is continually incapacitated and is financially dependent on J's father. ------CORRECT ANSWER---------------D Medicare Supplement policies are primarily designed to: A. offset the high cost of Medicare B. provide additional retirement income to supplement Social Security retirement benefits C. provide additional benefits beyond those provided by Medicare D. provide a reinsurance network that spreads the Medicare risk among private insurance companies ------CORRECT ANSWER---------------C A producer and an applicant complete an application for a health policy and submit it to the insurer for underwriting without any premium. The underwriter issues a policy and mails it to the producer for delivery to the applicant. The producer should take all of the following actions during the delivery of the policy to the applicant EXCEPT: A. collect the initial premium payment B. issue a conditional receipt C. have the applicant complete a statement of continued good health D. explain the Free Look provision which begins on the policy delivery date ------CORRECT ANSWER---------------B M and N own a small interior design studio that employs six people. The owners are concerned about the financial continuation of the business if either of them should become permanently disabled. In this situation, a producer would MOST likely recommend which of the following types of contracts? A. Basic Hospital B. Pay the claim as filed because the policy becomes incontestable after two years C. Pay the claim and cancel the policy D. Adjust the benefits downward according to the benefits that X would have been entitled to based on the premiums ------CORRECT ANSWER---- -----------D When delivering a policy to a client, a producer should take all of the following actions EXCEPT: A. collect any premiums due B. fully explain all exclusions and/or riders C. keep the policy in the producer's office for safe-keeping on behalf of the client D. review all benefits provided by the policy ------CORRECT ANSWER------- --------C A married insured has an Accidental Death and Dismemberment (AD&D) policy that names his brother as the primary beneficiary and his son as the contingent beneficiary. If the insured and his brother are both killed instantly in a train accident, the policy proceeds would be paid to which of the following? A. The insured's estate B. The brother's estate C. The insured's son D. The insured's spouse ------CORRECT ANSWER---------------C Which of the following definitions MOST accurately describes the Probationary Period? A. The period of time from the date of the loss until the benefits begin B. The period of time from the date of the loss until benefits are actually received by the policyowner C. The waiting period a new hire must satisfy prior to becoming eligible for group health coverage D. The period of time once a claim is received by the insurance company before it pays benefits to the policyowner ------CORRECT ANSWER---------- -----C The Elimination Period in most Disability Income policies applies: A. to each separate disability B. to claims for accidents only C. during the first 30 days of the contract D. during short-term disabilities that are easily managed ------CORRECT ANSWER---------------A The PRIMARY purpose of Medicaid is to: A. pay for expenses not covered by Medicare B. provide Disability Income benefits to people on Medicare C. provide Medical Expense coverage to persons meeting certain minimum income requirements D. provide funds for people injured in natural disasters ------CORRECT ANSWER---------------C In which of the following health policies are both the renewability and the premiums guaranteed? A. Noncancellable B. Optionally Renewable C. Guaranteed Renewable D. Conditionally Renewable ------CORRECT ANSWER---------------A An insured whose Disability Income policy contains a Change of Occupation clause takes a new job in a more hazardous occupation and fails to notify the insurer of the change. One year later, the insured becomes disabled. The insurer will most likely take which of the following actions? A. Cancel the policy and refund one year's premiums B. Settle the claim according to what the premiums would have purchased under the more hazardous occupation C. Pay the claim in full and then cancel the policy D. Pay the claim after deducting an extra one-year premium payment ------ CORRECT ANSWER---------------B Which of the following reports may include information obtained by a telephone call to the proposed insured? A. Medical Information Bureau (MIB) report B. Attending physician's report C. Inspection report D. Precertification Review ------CORRECT ANSWER---------------C The purpose of the Medical Information Bureau (MIB) is to: A. recommend the premium rates for health policies issued to substandard risks B. share medical data among member companies C. provide background data for large group health plans D. provide actuarial data on dread diseases ------CORRECT ANSWER------ ---------B An Accident and Health policy Notice of Claim provision requires that an insured give written notice to the insurer within a MAXIMUM of how many days after a loss? A. 15 B. 20 C. 30 D. 45 ------CORRECT ANSWER---------------B The Consideration clause in an accident and health policy states the: A. the applicant pays the initial premium B. conditions under which benefits are paid C. Notice of Claim D. Payment of Claims ------CORRECT ANSWER---------------D A Disability Income policy may provide benefits for which of the following losses? A. Residual Disability B. Catastrophic medical expenses C. Long term care D. Supplemental payments to Medicare ------CORRECT ANSWER------------ ---A When periodic claim payments are required under a long-term disability income policy, an insurer MUST make payments to an insured at least once every: A. month B. three months C. six months D. year ------CORRECT ANSWER---------------A Under an Accidental Death and Dismemberment (AD&D) policy, insurable interest must exist at which of the following times? A. When a change of beneficiary is requested B. At the inception of the policy C. When a beneficiary other than a relative is named D. At the time a claim is submitted ------CORRECT ANSWER---------------B Health insurance policies are offered on a "take it or leave it" basis and referred to as which of the following types of contracts? A. Aleatory Contracts B. Valued Contracts C. Unilateral Contracts D. Contracts of Adhesion ------CORRECT ANSWER---------------D Which of the following health policies requires a beneficiary designation? A. Travel Accident B. Medicare Supplement C. Blanket D. Long Term Care ------CORRECT ANSWER---------------A The PRIMARY reason for selecting a Variable Whole Life policy instead of a traditional Whole Life policy is that the Variable Whole Life policy: ------ CORRECT ANSWER---------------has the potential to earn a higher rate of return on the cash value Which of the following statements is CORRECT about the Paid-Up Additions in a participating Whole Life policy? ------CORRECT ANSWER---- -----------They are purchased on an attained age basis. Which of the following statements is CORRECT about Group Life conversion privileges? ------CORRECT ANSWER---------------Death during the conversion period is covered even if the departing employee chose not to convert the policy. If an insured commits suicide after the Suicide clause in the insured's life insurance policy has expired, the insurer will take which of the following actions? ------CORRECT ANSWER---------------Pay the Death benefit If a policy contains a Guaranteed Insurability rider, the insured has the right to purchase: ------CORRECT ANSWER---------------additional coverage at specified ages If life insurance policy applicant is classified as a substandard risk, the insurance company will MOST likely: ------CORRECT ANSWER--------------- charge an extra premium P wants to name her husband as the beneficiary of her life policy. However, she wishes to retain all of the rights of ownership. P should have her husband named as the: ------CORRECT ANSWER---------------revocable beneficiary Which of the following features allows an insurance policy to remain in force for a specified number of days beyond the premium due date? ------ CORRECT ANSWER---------------Grace Period provision In life insurance, insurable interest must exist at the time the: ------ CORRECT ANSWER---------------producer writes an application on a proposed insured Which of the following terms refers to the transfer of some or all of the ownership rights of a life insurance policy from one individual to another? -- ----CORRECT ANSWER---------------Assignment Which of the following statements about a Renewable Term policy is CORRECT? ------CORRECT ANSWER---------------It is renewable at the option of the insured. Which of the following retirement plans is tax-qualified? ------CORRECT ANSWER---------------Defined contribution Reinstatement of a life insurance policy requires an insured to take all of the following actions EXCEPT: ------CORRECT ANSWER---------------make collateral assignment to the insurer If an applicant for life insurance submits a completed application to a producer without paying the first premium, coverage becomes effective when the: ------CORRECT ANSWER---------------policy is delivered and the premium paid An insurance producer takes an application for a life insurance policy but does not collect the initial premium. On delivery of the policy to the proposed insured, the producer must collect the initial premium and which of the following? ------CORRECT ANSWER---------------The insured's signed statement of continued good health Which of the following statements is NOT correct about representations? --- ---CORRECT ANSWER---------------They are true in every respect. Which of the following group life plans requires at least 75 percent of the eligible members to participate? ------CORRECT ANSWER--------------- Contributory A type of annuity in which the cash values are invested in securities is called: ------CORRECT ANSWER---------------Variable R has just graduated from law school. R knows that R's future earnings will be much higher than they are now, but wants to purchase a permanent policy now to cover future needs. Which of the following policies would BEST suit R's needs? ------CORRECT ANSWER---------------Modified Whole Life In the event of an insured's death, which of the following provides an income for the family during a designated period of time followed by a lump sum death benefit? ------CORRECT ANSWER---------------Family Income rider A producer takes applications from identical twins who want to buy the same type of policy in the same amount. The insurer issues the policies as applied for, but charges a 25 percent higher premium for one of the policies. The difference in premiums is probably due to which of the following factors? ------CORRECT ANSWER---------------Risk classification All of the following policies may be examples of third party ownership EXCEPT: ------CORRECT ANSWER---------------Modified Life The Waiver of Premium provision of a life policy allows the insurer to take which of the following actions? ------CORRECT ANSWER---------------Waive an insured's premiums if the insured becomes totally disabled before a certain age A life policy is usually contestable due to material misrepresentation on the application for a period of: ------CORRECT ANSWER---------------2 years If an Adjustable Life policyowner makes an additional premium payment, the policy may be affected in all of the following ways EXCEPT the: ------ CORRECT ANSWER---------------value of the Nonforfeiture Options may decrease At which of the following times MUST a life insurance applicant be informed of their rights under the Fair Credit Reporting Act? ------CORRECT ANSWER---------------When the policy is delivery The right to change a beneficiary designation is reserved for the: ------ CORRECT ANSWER---------------policyowner A contract that has as its basic function the systematic liquidation of accumulated assets through periodic payments is called an: ------ CORRECT ANSWER---------------annuity A life insurance application is incomplete if it is missing the signature of which of the following? ------CORRECT ANSWER---------------The proposed adult insured A policyowner names his wife as the primary beneficiary of his Universal Life policy on a revocable basis. He also names his three children as his secondary beneficiaries and his estate as his tertiary beneficiary. If the policyowner's wife predeceases him, and then he dies, who will receive the policy proceeds? ------CORRECT ANSWER---------------the children In a life policy, a special benefit that prepays a portion of the death benefit during the lifetime of an insured in the event of a specified illness is called: - -----CORRECT ANSWER---------------an acceleration of life insurance benefit An insurance company doing business in this state must operate under: ---- --CORRECT ANSWER---------------a certificate of authority Which of the following situations is considered rebating? ------CORRECT ANSWER---------------A producer returns a portion of the commission to an insured. Which of the following statements about Credit Life insurance is CORRECT? ------CORRECT ANSWER---------------it may be provided through a group or individual policy. An individual appointed by an insurance company to solicit applications for a policy of insurance on its behalf is known as: ------CORRECT ANSWER-- -------------an insurance producer All of the following provisions must be included in group life insurance policies issued in this state EXCEPT: ------CORRECT ANSWER--------------- Suicide A producer may be guilty of misrepresentation if the producer: ------ CORRECT ANSWER---------------tells an insured the deductible on a policy is less than it actually is An insurance producer who makes false statements that harm the reputation of another insurance company is guilty of: ------CORRECT ANSWER---------------defamation The Life Insurance and Annuity Replacement Rule is designed for which of the following purposes? ------CORRECT ANSWER---------------To ensure that policyowners receive adequate information on which to base a replacement decision Which of the following types of insurance policies is EXEMPT from the Life Insurance and Annuity Replacement Rule? ------CORRECT ANSWER------- --------Group Life Which of the following statements is CORRECT about insurance producers who fail to satisfy the continuing education requirements? ------CORRECT ANSWER---------------Their licenses will be terminated. The major difference between a mutual insurance company and a stock insurance company is the: ------CORRECT ANSWER---------------form of ownership each company is permitted An individual may obtain a temporary insurance producer's license without passing the licensing examination if the individual: ------CORRECT ANSWER---------------is a deceased licensed producer's next of kin A Variable Life contract must contain all of the following provisions EXCEPT: ------CORRECT ANSWER---------------Accidental Death An insurance company formed under the laws of a state other than this state is known as: ------CORRECT ANSWER---------------a foreign company An individual who, for the purpose of collecting premiums, acts for another in negotiating a contract of insurance is considered to be: ------CORRECT ANSWER---------------a producer Controlled business is defined as insurance a producer writes on all of the following individuals EXCEPT the producer's: ------CORRECT ANSWER---- -----------neighbors In order for nonresident applicants to be eligible for an insurance producer license in this state, they MUST: ------CORRECT ANSWER---------------hold a like license in another state