Pearson Vue Texas Life and Health Insurance Test/ 151 Q&A., Exams of Nursing

Download Pearson Vue Texas Life and Health Insurance Test/ 151 Q&A. and more Exams Nursing in PDF only on Docsity! Pearson Vue Texas Life and Health Insurance Test/ 151 Q&A Who is obligated to make sure all questions are answered and all necessary signatures are collected on the application? - Answer: The Agent An underwriter is reviewing an applicant with an extensive medical history. Which of the following would give the underwriter a better understanding of how the applicant has been treated for various illnesses? - Answer: Attending physician's statement Which of the following would NOT be eligible for coverage under key person? - Answer: The owner of the shop With Adjustable Life, the owner can change all of the following EXCEPT - Answer: The insured Which of the following is provided by skilled medical personnel to those who need occasional medical assistance or rehabilitative care? - Answer: Intermediate care Page 1 of 38 Partial disability usually pays what percentage of the total disability benefit? - Answer: 50% Which of the following long-term care benefits would provide coverage for care for functionally impaired adults on a less than 24-hour basis? A. Residential care B. Assisted living C. Home health care D. Adult day care - Answer: D. Adult day care An insured's long-tern care policy is scheduled to pay fixed amount of coverage of $120 per day. The long-term care facility only charged $100 per day. How much will the insurance company pay? A. 20% of the total cost B. $120 a day C. $100 a day D. 80% of the total cost - Answer: B. $120 a day In comparison to a policy that uses the accidental means definition, a policy that uses the accidental bodily injury definition would provide coverage that is A. More limited in duration B. Broader in duration C. Broder in general D. More limited in general - Answer: C. Broader in general An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits? A. The entire living benefits is considered taxable income B. A portion of the benefits up to a limit is tax-free; the rest is taxable income Page 2 of 38 B. They guarantee a return of excess premiums C. they provide the beneficiary the income he/she cannot outlive D. Determines how the death benefit will be paid to the beneficiary - Answer: D. Determines how the death benefit will be paid to the beneficiary The premium charged for exercising the guaranteed insurability Rider is based upon the insured's A. Assumed age B. Average age C. Issue age D. Attained age - Answer: D. Attained age Which of the following best describes the "first-dollar coverage" principle in basic medical insurance? A. The insured must first pay a deductible B. The insurer covers the first claim on the policy C. Deductibles and coinsurance are taxed first D. The insured is not required to pay a deductible - Answer: D. The insured is not required to pay a deductible Which of the following determines the cash value of a variable life policy? A. The performance of the policy portfolio B. The company's general account C. The policy's guarantees D. The premium mode - Answer: D. The premium mode An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? Page 5 of 38 A. The date of the application B. The date of the medical exam C. The date of policy delivery D. The date of issue - Answer: B. The date of the medical exam An applicant who receives a preferred risk classification qualifies for A. Higher premiums than a person who receives a sub-standard risk B. Higher premiums than a person who receives a standard risk C. Lower premiums than a person who receives a standard risk D. Dividends payable for lack of claims - Answer: C. Lower premiums than a person who receives a standard risk All of the following statements about Medicare Part B are correct EXCEPT A. It is a compulsory program B. It covers services and supplies not covered by Part A C. It is financed by monthly premium D. It is financed by tax revenues - Answer: A. It is a compulsory program With respect to the consideration clause, which of the following would be considered consideration on the part of the applicant for insurance? A. Providing warranties on the application B. Notice of policy cancellation C. Payment of premium D. Promise to renew the policy at the end of the policy period - Answer: C. Payment of premium The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called A. Waiver of premium B. Guaranteed insurability Page 6 of 38 C. Waiver of cost of insurance D. Payor benefit - Answer: A. Waiver of premium Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? A. It is life contingency option B. The beneficiary receives the remainder of the principal amount upon the annuitant's death C. Payments can be made in installments and as a single cash refund D. It does not guarantee that the entire principal amount will be paid out - Answer: D. It does not guarantee that the entire principal amount will be paid out An insurer advertises a health policy that is covered by the Life and Health Insurance Guaranty Association. The advertisement includes a short list of benefits and approximate rates. The end of the advertisement includes statement that protection is provided by the Guaranty Association. Which of the following is true? A. Mentioning the Guaranty Association in advertisement is considered to be unfair trade practice B. The advertisement must also include the contact information of the association C. The advertisement must also include the contact information of the Commissioner of Insurance D. Mentioning the Guaranty Association is mandatory when advertising in the state of Texas - Answer: A. Mentioning the Guaranty Association in advertisement is considered to be unfair trade practice The commissioner of Insurance issues a Cease and Desist Order and immediately receives a request for the charges to be reviewed in a hearing. Within how many days must the hearing be held? A. 10 B.14 Page 7 of 38 B. If the daughter is disabled for more than 3 months C. If the daughter is disabled for any length of time D. If the father is disabled for more than 6 months - Answer: D. If the father is disabled for more than 6 months Which of the following is a risk classification used by underwriters for life insurance? A. Normal B. Excellent C. Standard D. Poor - Answer: C. Standard Which of the following explains the policyowner's right to change beneficiaries, choose options, and receives proceeds of a policy? A. The entire contract provision B. The consideration clause C. Assignment rights D. owner's right - Answer: D. owner's right A key person insurance policy can pay for which of the following? A. Cost of training a replacement B. Loss of personal income C. Workers compensation D. Hospital bills of the key person - Answer: Cost of training a replacement An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? A. Adhesion B. Consideration C. Good faith Page 10 of 38 D. Representation - Answer: Consideration A guaranteed renewable disability insurance policy A. Is renewable at the insured's option to a specified age B. Is renewable at the option of the insurer to a specified age of the insured C. Is guaranteed to have a level premium for the life of the policy D. Cannot be cancelled by the insured before age 65 - Answer: Is renewable at the insured's option to a specified age All of the following are true of key person insurance EXCEPT A. The plan is funded by permanent insurance only B. There is no limitation on the number of key employee plans in force at any time C. The employer is the owner, payor and beneficiary of the policy D. The key employee is insured - Answer: the plan is funded by permanent insurance only Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned , will be paid to A. Beneficiary of the death benefit B. The spouse of the insured C. The insured D. Creditors - Answer: C. The insured When delivering a policy, which of the following is an agent's responsibility? A. Issue the policy if the applicant is present B. Approve or decline C. Collect medical statement from physician D. Collect payment at time of delivery - Answer: Collect payment at time of delivery Page 11 of 38 Ray has an individual major medical policy that requires a coinsurance payment. Ray very rarely visits his physician and would prefer to pay the lowest premium possible. Which coinsurance arrangement would be best for Ray? A. 50/50 B.75/75 C.80/20 D. 90/10 - Answer: 50/50 On a health insurance application, a signature is required from all of the following individuals EXCEPT A. The spouse of the policyowner B. The proposed insured C. The policyowner D. The agent - Answer: The spouse of the policyowner Which of the following is NOT true regarding a flexible spending account? A. It is cafeteria plan B. It does not have limits on contributions C. It operates on "use-or-use" basis D. It provides an opportunity to receive benefits on pretax basis - Answer: It does not have limits on contributions A partnership buy-sell agreement in which each partner purchases insurance on the life of each of the other partners is called a A. split-dollar plan B. Stock reduction plan C. Cross-purchase plan D. Key person plan - Answer: Cross-purchase plan Page 12 of 38 Which of the following includes information regarding a person's credit, character, reputation, and habits? A. Consumer history B. Insurability report C. Agent's report D. Consumer report - Answer: Consumer report When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy, as well as a refund of all of the premiums paid A. Return of premium B. cost of living C. decreasing term D. Accidental death - Answer: return of premium Which of the following is true regarding elimination periods and the cost of coverage? A. The longer the elimination period, the higher the cost of coverage B. Elimination periods have no effect on the cost of coverage C. The longer the elimination period, the lower the cost of coverage D. The shorter the elimination period, the lower the cost of coverage - Answer: The longer the elimination period, the lower the cost of coverage Most LTC plans have which of the following features? A. Open enrollment B. Guarantee renewability C. NO elimination period D. Variable premiums - Answer: guarantee renewability A straight life policy has what type of premium? A. A decreasing annual premium for the life of the insured Page 15 of 38 B. A variable annual premium for the life of the insured C. A level annual premium for the life of the insured D. An increasing annual premium for the life of the insured - Answer: A level annual premium for the life of the insured Who is the owner and who is the beneficiary on a key person life insurance policy? A. The key employee is the owner and beneficiary B. The key employee is the owner and the employer is the beneficiary C. The employer is the owner and beneficiary D. The employer is the owner and the key employee is the beneficiary - Answer: The employer is the owner and beneficiary What is the purpose of coinsurance provisions? A. To share liability among different insurance companies B. To help the insurance company to prevent overutilization of the policy C. To have the insured pay premiums to more than one company D. To guarantee payment to the doctors and hospitals - Answer: To help the insurance company to prevent overutilization of the policy Which of the following special policies covers unusual risks that are NOT normally included under Accidental Death and dismemberment coverage? A. Specified disease policy B. Credit disability C. Special risk policy D. Limited risk policy - Answer: special risk policy Which of the following best defines the "owner" as it pertains to life settlement contracts? A. A financial entity that sponsors the transaction B. A fiduciary for the contract Page 16 of 38 C. The insurance provider D. The policyowner of the life insurance policy - Answer: The policyowner of the life insurance policy This arrangement specifies who will purchase a disabled partner's interest in the event he or she becomes disabled A. Business overhead expense B. Key-person insurance C. Employee benefit plan D. Disability buyout - Answer: Disability buyout Why is an equity indexed annuity considered to be fixed annuity? A. It has modest investment potential B. It has a fixed rate of return C. It is not tied to an index like the S&P 500 D. It has a guaranteed minimum interest rate - Answer: It has a guaranteed minimum interest rate In the event of a divorce, which of the following would allow a divorce to continue receiving group health coverage under a insured spouse's plan for an additional 36 months? A. Social security B. Routine dental care C. Coverage for dependents D. Military duty - Answer: Coverage for dependents The insurance policy, together with the policy application and any added riders from what is known as a(n) A. Certificate of coverage B. Contract of adhesion Page 17 of 38 B. $500 (amount of deductible) C.$1,000 (deductible + 20% of the entire bill) D. $2,500 ( the entire bill) - Answer: $900 (deductible + 20% of the bill after the deductible [ 20% of 2,000] Which of the following entities can legally bind coverage? A. Insurer B. The insured C. Federal insurance board D. Agent - Answer: insurer Which is true regarding obtaining underwriting sources? A. It is illegal to obtain information from outside sources contacted and how the information is being gathered B. The applicant must be informed of the sources contacted and how the information is being gathered C. The insurer does not need to inform the applicant of the information is gathered; informing only of the source is sufficient D. The insurer only needs to inform the applicant of how the information is gathered; it is not necessary to disclose the sources - Answer: The applicant must be informed of the sources contacted and how the information is being gathered Which is NOT true about beneficiary designations? A. The beneficiary must have insurable interest in the insured B. The beneficiary may be a natural person C. The policy does not have to have beneficiary named in order to be valid D. Trusts can be valid beneficiaries - Answer: The beneficiary must have insurable interest in the insured Page 20 of 38 Group health insurance is characterized by all of the following EXCEPT A. A Master contract B. Lower administrative costs C. Conversion privilege D. Adverse selection - Answer: Adverse selection After a back injury, an insurer is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive? A. Payment for life B. Yearly premium waiver and monthly income C. Monthly premium waiver and monthly income D. Percentage of medical costs paid by the insurer - Answer: Monthly premium waiver and monthly income Which of the following is NOT covered under Plan A in Medicap insurance? A. The first three pints of blood each year B. The Medicare Part A deductible C. Approved hospital costs for 365 additional days after Medicare benefits end D. The 20% Part B coinsurance amounts for Medicare approved services - Answer: The Medicare Part A deductible All of the following are true regarding a decreasing term policy EXCEPT A. The death benefits $0 at the end of the policy term B. The contract pays only in the event of death during the term and there is no cash value C. The face amount steadily declines throughout the duration of the contract D. The payable premium amount steadily declines throughout the duration of the contract - Answer: The payable premium amount steadily declines throughout the duration of the contract Page 21 of 38 A guaranteed renewable health insurance policy allows the A. Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class B. Policyholder to renew the policy to a stated age and guarantees the premiums for the same period C. Policy to renewed at time of expiration, but the policy can canceled for cause during the policy term' D. Insurer to renew the policy to specified age - Answer: Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class What is the maximum period of time during which an insurer may contest fraudulent misstatements made in a health insurance application? A. 90 days after the effective policy date B. 6 months after the effective policy date C. 1 year after the effective policy date D. As long as the policy is in force - Answer: As long as the policy is in force The gatekeeper of an HMO helps A. Determine who will be allowed to enroll in HMO program B. Prevent double coverage C. Determine which doctors can participate in an HMO plan D. Control specialist costs - Answer: Control specialist costs Workers Compensation benefits are regulated by which entity? A. Insurer B. Federal Government C. State government D. Employer - Answer: State government Page 22 of 38 B. It provides an annually increasing death benefit C. It is level insurance D. It requires proof of insurability at each renewable - Answer: It is level insurance When a reduced paid -up nonforfeiture option is chosen, what happens to the face amount of the policy? A. It is increased when extra premiums are paid B. It decreases over the term of the policy C. It remains the same as the original policy, regardless of any differences in value D. It is reduced to the amount of what the cash value would buy as a single premium - Answer: It is reduced to the amount of what the cash value would buy as a single premium When is the earliest a policy may go into effect? A. When the insurer approves the application B. After the underwriter reviews the policy C. When the application is signed and a check is given to the agent D. When the first premium is paid and the policy has been delivered - Answer: When the application is signed and a check is given to the agent Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within A. 60 days of a loss B. 90 days of a loss C. 20 days of a loss D. 3o days of a loss - Answer: 90 days of a loss Social Security disability definition includes all of the following EXCEPT A. A physical impairment expected to result in death B. Disability expected to last for at least 6 months Page 25 of 38 C. The inability to engage in any gainful work D. Disability resulting from a medically determinable mental impairment - Answer: Disability expected to last for at least 6 months An agent makes a mistake on the application and then corrects his mistakes by physically entering the necessary information. Who must then initial that charge? A. Executive officer of the company B. Insured C. Agent D. Applicant - Answer: Applicant The form of life annuity which pays benefits throughout the lifetime of the annuitant and also guarantees payment for a minimum number of years is called A. Life income with period certain B. Life income with refund C. Joint and survivorship D. Joint life annuity - Answer: Life income with period certain All of the following long-term care coverages would allow an insured to receive care at home EXCEPT A. Skilled care B. Custodial care in insured's house C. Respite care D. Home health care - Answer: Skilled care An applicant is discussing his options for Medicare supplement coverage with his agent. The applicant is 65 years old and has just enrolled in Medicare Part A and Part B. What is the insurance company obligated to do? A. Send the applicant to a doctor for a physical. Nothing can happen until they get the results Page 26 of 38 B. Offer the supplement policy on a guaranteed issue basis C. Exclude pre-existing conditions from coverage under the supplement policies D. Look at the applicant's medical history to decide what premium to charge - Answer: Offer the supplement policy on a guaranteed issue basis A provision found in insurance which prevents the insured from collecting twice for the same loss is called A. Consent to settle loss B. Right of salvage C. Appraisal D. Subrogation - Answer: Subrogation All of the following statement concerning Accidental Death and Dismemberment coverage are correct EXCEPT A. Accidental death and dismemberment insurance is considered to be limited coverage B. Death benefits are paid only if death occurs within 24 hours of an accident C. Accidental death benefits are paid only if death results from accidental bodily injury as defined in the policy D. Dismemberment benefits are paid for certain disabilities that are presumed to be total and permanent - Answer: Death benefits are paid only if death occurs within 24 hours of an accident Which of the following is an example of liquidity in a life insurance contract? A. The flexible premium B. The money in a saving account B. The cash value available to the policyowner C. The death benefit paid to the beneficiary - Answer: The cash value available to the policyowner Page 27 of 38 B. Life income with period certain C. Joint and survivor D. Fixed amount option - Answer: Interest only option All of the following are examples of third-party ownership of a life insurance policy EXCEPT A. When insured purchased a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company B. An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan C. An insured couple purchases a life insurance policy insuring the life of their grandson D. A company purchases a life insurance policy on their manager, who is important part of the operation - Answer: An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan The mode of premium payment A. Is the method used to compute the cash surrender value of the policy B. Does not affect the amount of premium payment C. Is defined as the frequency and the amount of the premium payment D. Is the factor that determines the amount of dividends in a policy - Answer: Is defined as the frequency and the amount of the premium payment What is the maximum allowed value of a gift that an agent can give to an insured without violating the regulation on rebating? A. $10 B. $15 C. $25 D. $100 - Answer: $25 Page 30 of 38 Which of the following individuals will be eligible coverage on the Health Insurance Marketplace? A. A permanent resident lawfully present in the U.S. B. Someone who has Medicare coverage C. A U.S. citizen who is incarcerated D. A U.S. citizen living abroad - Answer: A permanent resident lawfully present in the U.S. Which of the following is NOT required on an illustration used in the sale of a life insurance policy? A. Underwriting or rating classification upon which the illustration is based B. The name of the primary and secondary beneficiaries C. Generic name of policy D. Name of insurer - Answer: The name of the primary and secondary beneficiaries If the insured has the right to keep a long-term care insurance policy in force by making timely premium payments, and the insurer may not make any chances to the policy or decline to renew it, the policy is A. Permanent B. Conditonal C. Guaranteed renewable D. Irrevocable - Answer: Guaranteed renewable An agent receives an Emergency Cease and Desist Order for chronically misrepresenting his insurance policies. The agent knows that he did not commit the violation stated in the Emergency Cease and Desist Order. He wants to contest the charges in a court hearing. Which of the following is true? A. The judge will determine when the hearing will be held B. The hearing date can be set for any time within the next year, unless both parties agree to a later date Page 31 of 38 C. The hearing must be set for exactly 30 days after the request is made D. The hearing must be held within 30 days of receiving a request, unless both parties agree to a later date - Answer: The hearing must be held within 30 days of receiving a request, unless both parties agree to a later date The insurers are allowed to disclose the HIV-related test result to all of the following EXCEPT A. Another insurer B. The insured's doctor C. A reinsurer involved in the underwriting process D. The Texas Department of Health - Answer: Another insurer An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? A. Twisting B. Defamation C. False advertising D. Unfair claims - Answer: False advertising On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of? A. Concealment B. Unfair claim practice C. Rebating D. Misrepresentation - Answer: Misrepresentation What is the major difference between a stock company and a mutual company? A. Types of policies issued B. Ownership C. Amount of benefits Page 32 of 38 If a person is compensated for a testimonial in an advertisement, which of the following statements should be included in the advertisement? A. Commissioned advertisement B. Paid endorsement C. Insurer is not responsible for the contents of the testimonial D. The author is the employee of the insurer - Answer: Paid endorsement The patient protection and affordable care act mandates that insurers provide coverage for dependent children up to age of A. 18 B. 19 C. 21 D. 26 - Answer: 26 What is the minimum renewability standard for long-term care policies issued in this state? A. Cancellable B. Permanent C. Conditionally renewable D. Guaranteed renewable - Answer: Guaranteed renewable What rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance? A. Reinstatement rule B. Conversion rule C. Disclosure rule D. Replacement rule - Answer: Replacement rule Page 35 of 38 The commissioner of Insurance issues a Cease and Desist Order and immediately receives a request for the charges to be reviewed in a hearing. Within how many days must the hearing be held? A. 10 B. 14 C. 30 D. 60 - Answer: 30 When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer? A. Alien B. Nonadmitted C. Foreign D. Domestic - Answer: Foreign Conversion to an individual whole life policy is permitted without evidence of insurability within how many days of the termination of employment? A. 14 days B. 28 days C. 30 days D. 31 days - Answer: 31 days If a policyowner surrenders his life insurance policy that has been in force for 5 years within 60 days after the premium due date, what will the insurer be required to pay A. nothing B. The death benefit C. A cash surrender value D. A paid-up nonforfeiture benefit - Answer: A cash surrender value Page 36 of 38 All of the following statements are correct regarding credit life insurance EXCEPT A. Benefits are paid to the borrower's beneficiary B. The amount of insurance permissible is limited per borrower C. Premiums are usually paid by the borrower D. Benefits are paid to the creditor - Answer: Benefits are paid to the borrower's beneficiary An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice? A. Unfair Discrimination B. Defamation C. Illegal D. A legal advertising strategy - Answer: Illegal How soon from the termination of debt under a credit life insurance policy must a creditor provide notice to the insurer? A. 7 days B. 10 days C. 30 days D. 60 days - Answer: 60 days How many hours of continuing education can be carried over from one licensing period to the next? A. 2 B.5 C. Any excess hours D. 0 - Answer: 0 Which of the following is correct about a group health insurance policy? A. It cannot provide coverage for handicapped children Page 37 of 38