TEXAS GENERAL LINES - LIFE, ACCIDENT AND HEALTH INSURANCE EXAM, Exams of Health sciences

Download TEXAS GENERAL LINES - LIFE, ACCIDENT AND HEALTH INSURANCE EXAM and more Exams Health sciences in PDF only on Docsity! 1 | P a g e TEXAS GENERAL LINES - LIFE, ACCIDENT AND HEALTH INSURANCE EXAM 2024-2025 WITH ACTUAL CORRECT QUESTIONS AND VERIFIED DETAILED RATIONALES ANSWERS |FREQUENTLY TESTED QUESTIONS AND SOLUTIONS |ALREADY GRADED A+|BRAND NEW!!|GUARANTEED PASS |LATEST UPDATE (2 LATEST VERSIONS ) VERSION A 1) Sandra Timms, age 27, is advised by her producer to purchase Life insurance to cover a 20-year- amortized $50,000 business-improvement loan. Which of the following plans would adequately protect Ms. Timms at the minimum premium outlay? A- $50,000 Whole Life policy B- $50,000 Level Term policy for 20 years C- $50,000 20 Pay Life policy D- $50,000 Decreasing Term policy for 20 years D—A $50,000 Decreasing Term policy for 20 years Explanation: The key here is "minimum premium". Term is the most inexpensive type of coverage. Since Sandra's $50,000 loan will be paid off over 20 years and the loan balance will decrease each year, Decreasing Term makes sense. Decreasing Term is not renewable. 2 | P a g e 2) A 45-year old customer who is seeking to supplement his retirement income at age 65 would not buy a: A- Deferred Annuity B- Equity Indexed Annuity C- Variable Annuity D- Immediate Annuity B- Equity Indexed Annuity 3) John Livingston owns a 30-Pay Life policy that he purchased at the age of 30. The cash value will equal the face amount of the policy when he reaches the age of: A- 60 B- 70 C- 100 D- 30 C- 100 Explanation: Limited Pay Life insurance policies such as Life Paid Up at 65 or 20-Pay Life are simply variations of Whole Life policies. The cash value will equal face amount of the policy (at least) at the maturity of the policy, which is always age 100 on Whole Life policies. These limited-pay policies are designed so that the insured may pay his or her premiums faster and be "paid up" at a certain age. However, just because the premiums are paid up doesn't mean the policy has matured. 4) Which of the following is an example of a Limited-Pay Life policy? A- Universal life B- Whole Life C- Life Paid-Up at Age 65 D- Renewable Term to Age 70 C- Life Paid-Up at Age 65 5) Which of the following policies provides the greatest amount of protection for an insured's premium dollar as well as some cash accumulation? A- Annuity B- Whole Life C- Term D- Limited-Pay Life B- Whole Life If we had not mentioned cash accumulation, the answer would have been Term. However, Term has no cash value, so the answer is Whole Life, which is the most inexpensive type of permanent insurance and is required to have a cash value after the third policy year. Although Limited Pay Life is a type of Whole Life, it is incorrect since it is usually quite expensive due to the shortened pay-in 5 | P a g e 17) A business owner with a fluctuating income who wants a life insurance policy that can be changed to suit economic conditions should buy: A- Variable Life B- Modified Whole Life C- Adjustable Life D- Interest-sensitive Whole Life C- Adjustable Life 18) An Annuity is designed to provide which of the following financial features? I. The liquidation of principal and interest II. Favorable tax treatment III. The creation of an estate B- I and II 19) Which of the following statements about a Renewable Term policy is true? A- It is renewable at the option of the insurance company B- It is renewable at the option of the insured C- It is renewable at the option of the insurance company, with proof of insurability D- It is renewable at the option of the insured, with proof of insurability B- It is renewable at the option of the insured 20) Most Term Life insurance: A- Is convertible to permanent Whole Life without a physical exam B- Has a guaranteed cash value C- Is renewable with evidence of insurability D- Is renewable to age 100 A- Is convertible to permanent Whole Life without a physical exam 21) A life insurance policy whose cash value will fluctuate depending upon the performance of a separate account is: A- Limited-pay Life B- Universal Life C- Ordinary Life D- Variable Life D- Variable Life 22) A life insurance policy that combines term insurance protection, a flexible premium, and cash value accumulation is: A- Increasing Term Life B- Variable/Universal Life C- Universal Life D- Variable Life 6 | P a g e C- Universal Life 23) Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources? A- Term B- Limited Pay policy C- Whole Life D- Annuity A- Term 24) At age 30, Tom Morris wishes to purchase a Whole Life policy. His producer explains that he can pay for the policy in several ways. One method is called 20-Pay Life, and another, Straight Life. Tom wishes to know which plan will accumulate cash value at a faster rate in the early years of the policy. Which of the following would be the producer's most appropriate response? A- "20-Pay Life will accumulate cash value faster." B- "The rate of cash-value accumulation depends on the profitability of the insurance company." C- "Straight Life will accumulate cash value faster." D- "Both plans will accumulate cash value at the same rate." A- "20-Pay Life will accumulate cash value faster." LIFE SECTION 2 LIFE SECTION 2 1) Which of the following statements about the Reinstatement provision is true? A- It provides for reinstatement of a policy regardless of the insured's health B- It requires the policy owner to pay, with interest, all premiums that are in arrears in order for the policy to be reinstated C- It permits reinstatement within 10 years after a policy has lapsed D- It guarantees the reinstatement of a policy that has been surrendered for cash B- It requires the policy owner to pay, with interest, all premiums that are in arrears in order for the policy to be reinstated 2) The time period covered by the Free Look provision of a Life insurance contract starts: A- When the insured receives the contract and a "right to look" receipt B- When the contract is received in the agency office and given to the producer C- When the insured receives the contract and makes the first premium payment, if needed D- When the contract is issued and mailed to the agency office from the home office of the insurance company C- When the insured receives the contract and makes the first premium payment, if needed 7 | P a g e 3) Dividend projections may be included in a proposal for Life insurance when which of the following is true? A- There is a clear statement that payment of future dividends is not guaranteed B- The applicant has requested that they be included C- The projected amounts do not exceed the dividends previously paid by the same insurance company D- The projected amounts are calculated on the basis of the Commissioners Standard Ordinary Mortality Tables A- There is a clear statement that payment of future dividends is not guaranteed 4) The Life insurance rider that will pay the insured's premium after a period of disability due to accident or sickness is: A- Guaranteed Insurability B- Accidental Death and Dismemberment C- Waiver of Premium D- Automatic Premium Loan C- Waiver of Premium 5) Which of the following is a Non-forfeiture Option that provides continuing cash value buildup? A- Extended Term B- Deferred Annuity C- Reduced Paid-Up D- Cash Surrender C- Reduced Paid-Up 6) A rider that keeps a policy from lapsing due to non-payment of premium by borrowing from the cash value is: A- Reduced Paid-Up Option B- Extended Term Option C- Automatic Premium Loan D- Mode of Payment C- Automatic Premium Loan 7) Which of the following Settlement Options might provide payments that exceed the proceeds of the policy and the interest earned? A- Interest Only B- Fixed Period C- Life Annuity D- Fixed Amount C- Life Annuity 8) A client buys a $50,000 Whole Life policy on himself and wants to add $25,000 in Term coverage for his spouse. He should add which of the following riders to his policy? 10 | P a g e C- $50,000 D- $75,000 21) The contingent beneficiary will receive policy proceeds when: A- No beneficiary has been designated B- The insured pre-deceases all designated beneficiaries C- The primary beneficiary pre-deceases the insured D- The insured pre-deceases the primary beneficiary 22) If the insured understated his age and the error is discovered after the insured's death, the insurance company will: A- Deny the claim under the Incontestability clause B- Refund all premiums paid plus accumulated interest C- Pay the claim, less a deduction for the amount of the underpaid premium D- Pay the amount that the premium paid would have purchased at the correct age 23) The clause that states the insurer's promise to pay the policy benefits in accordance with the contract's provisions is the: A- Incontestability Clause B- Insuring Clause C- Beneficiary Clause D- Consideration Clause 24) Which of the following is true about the Insuring Clause? A- It contains the insurer's enforceable promise to pay covered claims B- It states the policy owner's rights C- It states that the insurer may contest a claim for material misrepresentation D- It requires that the application be attached to the policy 25) A client applied for Life insurance on October 1st. The application was approved and the policy was issued on October 10th. It was delivered to the customer on October 18th. When did the Free Look start? A- October 31st B- October 18th C- October 10th D- October 1st 26) Which of these is a rider that would ensure you can purchase additional insurance coverage, at specified ages, regardless of health? A- Payor Benefit Rider B- Guaranteed Insurability Rider C- Waiver of Premium Rider D- Child Term Rider 11 | P a g e 27) A beneficiary designation that prevents the policy owner from making certain changes in the policy is: A- Primary B- Irrevocable C- Revocable D- Contingent 28) Margaret May wants to name her husband as the beneficiary of her Life policy; however, she wishes to retain all of the rights of ownership. Mrs. May should name her husband as: A- Revocable beneficiary B- Irrevocable beneficiary C- Tertiary beneficiary D- Secondary beneficiary 29) On Life insurance, the purpose of the Entire Contract Clause is to: A- Limit the policy to the contract plus the application, if attached B- Spell out the rights of the policy owner C- Require that the insurer attach the application to the policy at issue D- Spell out the rights of the beneficiary 30) The Life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the: A- Misstatement of Age clause B- Insuring clause C- Incontestability clause D- Reinstatement clause 31) The provision in a Life insurance policy that provides protection against unintentional policy lapse is known as the: A- Automatic Premium Loan provision B- Payor clause C- Waiver of Premium benefit D- Reduction of Premium option 32) The purpose of the Grace Period is to: A- Give the beneficiary time to prove that insurable interest exists B- Protect the policy owner against unintentional lapse C- Protect the insurer against adverse selection D- Give the insurer time to determine the cause of death 33) Jim gets married and wants to add his new spouse to his existing Life insurance policy. Which rider should he add? 12 | P a g e A- Guaranteed Insurability Rider B- Other Insured Rider C- Payor Rider D- Term Rider 34) An insured died during the Grace Period of her Life insurance policy and had not paid the required annual premium. The insurance company is obligated to pay which of the following to the beneficiary? A- The face amount of the policy less any earned premiums B- The full face amount of the policy C- The cash value of the policy, if any D- A refund of any premiums paid 35) A client buys a Life insurance policy on July 1st and dies by suicide 6 months later. The insurance company will: A- Deny the claim B- Deny the claim, but refund the premium C- Pay the claim in full D- Pay half of the claim 36) To add coverage for a child to your Whole Life policy you would purchase which of these riders? A- Payor Benefit Rider B- Guaranteed Insurability Rider C- Waiver of Premium Rider D- Child Term Rider 37) Which of the following statements about the Misstatement of Age provision in a Life insurance policy is true? A- If the insured's age has been overstated, it provides that a premium refund and the face amount of the policy will be payable B-If the insured's age has been understated, it provides that a death benefit smaller than the face amount of the policy will be payable C- It becomes inoperative after the expiration of the policy's Contestable period D- It is an optional provision 38) An insurance company will grant an advance from the cash value of a Life insurance policy when the policy owner requests which of the following? A- An automatic premium loan B- A low-interest dividend loan C- A policy loan D- A loan from Extended Term Insurance LIFE SECTION 3 15 | P a g e C- May 15th D- May 14th 11) An insurable interest must exist when: A- A Life insurance policy is cancelled B- Death benefits become payable C- Policy ownership is transferred D- At all times 12) A producer takes an application from a proposed insured without receiving payment of the first premium. The insurance company issues the policy and, when the producer visits the proposed insured to deliver it, she realizes that the health of the applicant has deteriorated significantly since the application was taken. The producer should: A- Rate the policy and obtain any additional premium required B- Refuse to deliver the policy or to accept any premium offered C- Obtain the premium from the prospect and send it to the company immediately D- Deliver the policy as it was issued 13) With proper notice and authorization, insurers may report underwriting information that an applicant lists on their application for Life insurance to the: A- State insurance department B- Fair Credit Reporting Association C- Anyone who requests it D- Medical Information Bureau (MIB) 14) Statements made by an applicant for a Life insurance policy that are supposed to be true are referred to as: A- Information B- Representations C- Facts D- Warranties 15) A producer completes an application for Life insurance and sends it to the underwriter who approves it and issues the policy. When is coverage effective: A- Immediately B- When the producer delivers the policy and picks up the premium C- On the date the client signed the application D- On the date the underwriter approved the application 16) If an applicant for a Life insurance policy is found to be a substandard risk, the insurance company is most likely to: A- Refuse to issue the policy B- Require a yearly medical exam 16 | P a g e C- Charge an extra premium D- Lower its insurability standards 17) When giving a client a conditional receipt, which of the following is true? A- You never collect a premium until you deliver the policy B- The coverage will begin at earliest as of the date of application or when the client passes a physical, whichever is later C- Coverage begins as of date of application D- In order for coverage to begin the applicant must pay all premiums 18) If an existing client of a producer wants to buy another Life insurance policy, the producer should: A- Submit an unsigned application to the insurer referring to existing underwriting information B- Have the customer come in and complete and sign a new application C- Complete and sign the application on behalf of the customer D- Advise the customer that no physical exam is required since he is an existing client 19) Which of the following is true when the insurer issues a 'rated' policy: A- Coverage is effective immediately B- It is considered to be acceptance of the risk C- No additional premiums will be due D- It is considered to be a counteroffer 20) A producer sends a completed and signed application along with the check for the initial premium to the underwriter, who notices that the applicant forgot to sign the check. When would coverage start? A- The date of the conditional receipt B- On the date the application was signed C- When the producer delivers the policy and picks up a signed check along with a Statement of Continued Good Health D- When the underwriter received the application and unsigned check 21) Which federal law governs consumer investigative reports: A- Telephone Communication Protection Act B- Privacy Protection Act C- Fair Credit Reporting Act D- Employee Retirement Income Security Act 22) If an application for Life insurance is not complete: A- The insurer will reject it B- The insurer will issue the policy and request additional information C- The insurer will return it to the producer D- The insurer will consider it to be void LIFE SECTION 4 LIFE SECTION 4 17 | P a g e 1) A plan under which the surviving partners of a partnership agree to buy the interest of a deceased partner is known as a: A- Surviving Shareholder plan B- Buy and Sell Agreement C- Key Employee Life policy D- Deferred Compensation plan B- Buy and Sell Agreement 2) Carl Burk, whose wife is his business partner, buys a Life insurance policy on his wife's life. Because of this third-party ownership, the beneficiary should be the: A- Policy owner's children B- Policy owner's estate C- Policy owner D- Policy owner's wife C- Policy owner 3) When a company requires that their employees pay part of the premium for the Group Life insurance coverage, it is known as a ___________ group: A- Contributory B- Nonparticipatory C- Participatory D- Noncontributory A- Contributory 4) Albert Metz, who has $2,000 of Group Life insurance, has just terminated his employment. Mr. Metz has how many days in which to convert his group coverage to individual coverage? A- 28 B- 21 C- 15 D- 31 D- 31 5) Which of the following is not considered to be a 'qualified' plan? A- IRA B- 403b Tax Sheltered Annuity C- Split Dollar D- Keogh C- Split Dollar 6) Traditional IRAs have a premature distribution penalty for distributions taken prior to age: A- 55 B- 70 1/2 C- 59 1/2 D- 65 20 | P a g e C- Business Overhead insurance 2) Jesse Vega is involved in a two-car accident in which he is disabled and Mr. Vega's passenger and the other driver are injured. Which of the following would most likely be covered by his Disability Income policy? A- His lost income B- The disability of the other driver C- His medical expenses D- The dismemberment of an arm of the passenger A- His lost income 3) The right of an employee to exchange his Group insurance for an Individual policy within 31 days from termination of employment is provided by the: A- Reinstatement provision B- Conversion provision C- Insurability provision D- Renewability provision B- Conversion provision 4) Which of the following is true about the Health Insurance Portability and Accountability Act (HIPAA): A- Probationary periods relating to preexisting conditions are prohibited B- It applies to all types of Health insurance C- Pregnancy may not be considered to be a pre-existing condition D- It enables terminated employees to continue their group coverage C- Pregnancy may not be considered to be a pre-existing condition 5) When comparing PPOs (Preferred Provider Organizations) to HMOs (Health Maintenance Organizations), the main difference between them is: A- HMOs stress preventative care B- HMOs provide broader choice of doctors C- PPOs have federal subsidies D- HMOs have higher deductibles A- HMOs stress preventative care 6) Which of the following does not follow the principle of indemnity and, if you were diagnosed with cancer, would pay in addition to any other medical expense coverage you have? A- Medicaid B- Critical illness plan C- Medicare D- POS plan 7) Which of the following would be covered by Accidental Death and Dismemberment (AD&D) insurance: 21 | P a g e A- Accidental loss of hearing B- Paralysis due to accident C- Accidental loss of eyesight D- Death due to heart attack 8) The most an insured can collect on a Disability Income policy is most closely tied to: A- The average income in their state B- 200% of his income C- Their income D- A percentage of the federal poverty guidelines 9) A 69-year old Medicare beneficiary, who has been hospitalized twice in the past year, should consider buying which of the following to cover future excess medical bills: A- Major Medical B- Medicare Supplement C- Medicaid D- Long Term Care 10) When selling a Medicare Supplement policy, a producer must disclose all of the following, EXCEPT: A- What Medicare covers and what the Supplement covers B- Limitations and exclusions C- The 10 day free look provision D- Premium 11) Jim has a Major Medical policy with a $500 deductible and 80/20 co-insurance. If he has a $5,000 claim, how much of the claim will Jim have to pay: A- $500 B- $3,600 C- $1,400 D- $900 12) Which of the following A&H policies would provide reimbursement for expenses incurred as the result of a broken leg? A- Dental insurance policy B- Accidental Death and Dismemberment policy C- Disability Income policy D- Medical Expense policy 13) Under a Major Medical policy, the cost of which of the following would usually be considered a covered medical expense? I. Heart surgery II. An emergency appendectomy III. Plastic surgery for burns received in an auto accident 22 | P a g e A- I and II B- I only C- III only D- I, II, and III 14) All of the following are true about Long Term Care insurance, EXCEPT: A- It may be cancelled, if the insured's health changes B- It may be cancelled for non-payment of premium C- Coverage is subject to a daily maximum limit D- It must have a 30-day free look provision 15) HMOs offer all of the following features, EXCEPT: A- Co-payments B- Closed networks C- Reimbursement D- Preventative care 16) Which of the following statements about Group insurance is true? A- Group insurance is essentially reduced-cost mass protection B- A small group is rated on the basis of its own experience C- Group insurance is issued after each prospect has had a medical examination D- Each person insured in a group is issued a policy 17) When benefits are paid to a policy owner covered under a Hospital Expense policy, the policy is considered to be which of the following? A- Reimbursement B- Special Risk C- Limited Accident D- Service 18) Which of the following statements about Accidental Death and Dismemberment coverage are true? I. Death benefits are paid only if death occurs within 24 hours of an accident II. Dismemberment benefits are paid for certain disabilities that are presumed to be total and permanent III. Accidental Death benefits are paid only if death results from an accidental bodily injury as defined in the policy A- I and III B- II and III C- I, II, and III D- I and II 19) If you purchased a Major Medical policy with a $500 deductible and 80/20 co-insurance, what would be the effect of adding a $500 Supplemental Accident rider to your policy: 25 | P a g e A- Conditionally Renewable B- Guaranteed Renewable C- Non-cancelable D- Optionally Renewable C- Non-cancelable 4) Which of the following is true about the Health insurance policy provision regarding reinstatement of a lapsed policy? A- Upon reinstatement, no new probationary period may apply B- The insurer must reinstate the policy if the overdue premium is paid C- The insurer must offer it D- It is an optional provision C- The insurer must offer it 5) Which of the following is NOT an optional provision on a Health insurance policy? A- Illegal Occupation B- Change of Occupation C- Misstatement of Age D- Entire Contract D- Entire Contract 6) All of the following statements about the Cancellation provision in an A&H policy are true, EXCEPT that the insurance company: A- Must refund the unearned premium on a pro rata basis if it cancels the policy B- Is obligated to refund the unearned premium on a short-rate table basis if the policy owner requests the cancellation C- Is not obligated to refund the unearned premium upon cancellation D- Must notify the insured of cancellation in writing within a specified period before the cancellation 7) A policy is applied for on September 14th, approved on September 30th, issued on October 12th and delivered to the insured on October 18th. When does the Free Look start? A- October 18th B- September 30th C- September 14th D- October 12th 8) The section of a Health policy that states the insurance company's promise to provide benefits in accordance with the terms of the policy is called the: A- Incontestability clause B- Consideration clause C- Insuring clause D- Probationary Period provision 26 | P a g e 9) A Disability Income policy is written with a 1 year benefit period for sickness and accident, a 30-day probationary period and a 30-day elimination period. If an insured becomes disabled due to sickness for 9 days, how much coverage is immediately available? A- None B- 21 days C- 30 days D- 1 year 10) Which mandatory Health insurance policy provision keeps the producer and/or the insurer from modifying the policy after it has been issued? A- Entire Contract clause B- Insuring agreement C- Incontestability D- Legal actions 11) Which of the following properly describes a policy, where the policyowner has no guarantee of renewal and the insurance company may refuse to renew the policy at the next premium due date? A- Guaranteed Renewable B- Conditionally Renewable C- Optionally Renewable D- Non-cancelable 12) The Health insurance policy provision that prevents an insurer from altering its agreement with a policy owner by referring to documents not contained in the policy is the: A- Entire Contract clause B- Legal Actions provision C- Incontestability clause D- Insuring clause 13) Pre-existing Conditions are referred to in which of the following required A&H policy provisions? A- Claims Forms B- Time Limit on Certain Defenses C- Payment of Claims D- Legal Actions 14) Which of the following is true regarding coverage for war on an accident and health policy? A- It is excluded via a rider B- It is never covered C- It is always covered D- It is excluded per the contract 15) Under a Guaranteed Renewable Health insurance policy, the insurer may: 27 | P a g e A- Cancel the contract for too many claims B- Change rates by class C- Change policy provisions at any time D- Reduce the amount of insurance if the insured's health declines 16) An applicant for an Individual Health policy failed to complete the responses to the Medical History questions because she had forgotten some important past treatment dates. She did, however, sign the application. Before being able to complete the responses and pay the initial premium, she was confined to a hospital for a condition that would ordinarily be covered by the policy. In this situation, she was not insured because she had not met the conditions specified in which of the following? A- Insuring clause B- Pre-existing Conditions clause C- Eligibility clause D- Consideration clause 17) The language in a Major Medical Expense policy that requires a claim to be shared between the insurer and the insured is called? A- Coordination of Benefits B- Co-insurance C- Co-payment D- Deductible 18) The purpose of the Illegal Occupation provision is to: A- Allow an insurance company to collect extra premiums to provide coverage for an insured's illegal acts B- Protect an insured from purchasing policies from an unlicensed producer C- Absolve an insurance company from liability for a loss incurred by an insured during his commission of a felony D- Prevent a producer from rebating on large policies 19) The owner of a Medical Expense policy has all of the following rights, EXCEPT to: A- Sue the insurance company, if there is a disagreement over a claim B- Assign the benefits to the provider of the medical services C- Return the policy to the insurance company within the Free Look period D- Add coverage for a spouse without providing proof of insurability 20) Which clause or provision contains the insurer's promise to pay claims in accordance with the terms of the policy? A- Consideration clause B- Payment of Claims provision C- Insuring agreement or clause D- Entire Contract clause 30 | P a g e 33) An insured's Individual Health Insurance policy was reinstated effective June 1st. On June 8th the insured became ill, was hospitalized, and returned to work on June 15th. The insured's policy would provide which of the following? A- No benefits B- Benefits from June 11th through June 15th C- Partial benefits from June 8th through June 15th D- Full benefits 34) A policy owner has which of the following rights under an A&H policy? A- Refusal of cancellation B- Selection of beneficiaries C- Return of earned premiums D- Extension of renewal period 35) The Legal Actions provision of an A&H policy requires that: A- An arbitrator be used to settle disputes between the insurance company and the insured B- The insurance company must settle a claim within 60 days after receipt of Proof of Loss C- Claims be settled promptly D- An insured must wait at least 60 days after submission of Proof of Loss before initiating a law suit 36) An insured is required to submit Notice of Claim to the insurer within how many days after a loss? A- 30 B- 20 C- 60 D- 90 37) To be eligible for benefits under the Waiver of Premium rider, the insured must: A- Pay all premiums due B- Be under a physician's care C- Be confined to house/home D- Take a physical examination every three months 38) The right of an employee to exchange his Group Health insurance for an Individual policy within 31 days after termination of employment is provided by: A- The grace period B- COBRA C- HIPAA D- The conversion provision 39) A 40-year-old insurance producer is insured under a $4,000-a-month Disability Income policy that contains a Change of Occupation provision. If he changes his occupation to construction worker without notifying the insurer and has a claim, the insurer will most likely: 31 | P a g e A- Pay more than $4,000 a month B- Deny the claim C- Pay less than $4,000 a month D- Pay $4,000 a month 40) Which of the following statements about the Time Limit on Certain Defenses provision is true? A- It is applicable to Group Health contracts only B- It limits the duration of an exclusion rider to a maximum of two years C- It usually expires after the first year of the policy D- It may prohibit an insurance company from denying a claim on the basis of misstatements in an application HEALTH SECTION 3 HEALTH SECTION 3 1) All of the following are true about eligibility for Disability Income benefits under Social Security EXCEPT: A- There is a 5 month waiting period B- They are available only to those who have attained fully insured status C- They are available only to those who are at least age 65 D- Claimants must prove that their disability prevents them from performing any gainful work and will last at least 1 year C- They are available only to those who are at least age 65 2) To be eligible for Social Security Disability Income benefits, the claimant must satisfy a waiting period of: A- 6 months B- 1 year C- 30 days D- 5 months D- 5 months 3) To be eligible for Social Security Disability Income benefits, the claimant must prove that their disability prevents them from performing any gainful work and be expected to last at least ______ or result in death. A- 1 month B- 5 months C- 6 months D- 12 months D- 12 months 4) Which of the following is a program established to help states expand their public assistance programs for individuals whose income and resources are insufficient? A- POS plan 32 | P a g e B- Medicaid C- Critical illness plan D- Medicare B- Medicaid 5) This program is made up of four parts, and the insured helps to pay for three of these parts. A- POS plan B- Medicaid C- Medicare D- Critical illness plan C- Medicare 6) Part A of Medicare is generally available at no charge to those who are at least age: A- 60 B- 62 C- 55 D- 65 D- 65 HEALTH SECTION 4 HEALTH SECTION 4 1) Which of the following statements is true about Residual Disability benefits? A- They are reduced when an insured is not under a doctor's care B- An insured is entitled to a Principal Sum benefit for the partial loss of a limb C- Payment may be based on loss of time, income, or function D- Payment may be based on termination of employment C- Payment may be based on loss of time, income, or function 2) Which of the following benefits, if any, may be taxed like wages and salary by the Internal Revenue Service? A- Workers' Compensation benefits B- Welfare benefits C- All answer options are incorrect D- Social Security Disability benefits C- All answer options are incorrect 3) The coverage provided by a Disability Income policy that does NOT pay benefits for losses occurring as the result of the insured's employment is called: A- Workers' Compensation B- Non-occupational coverage C- Unemployment coverage D- Occupational coverage 35 | P a g e A- Review the applicant's health statement and bind the coverage B- Complete the Medical Information Bureau report C- Sign the applicant's name, if the applicant lives out-of-state D- Witness the applicant's signature 8) Which party to the insurance contract makes an enforceable promise? A- The insurer B- The insured C- The producer D- The policy owner 9) On the delivery of an insurance policy that contains an impairment rider for a past health condition, a producer must do which of the following? I. Explain, to the best of their ability, the rider and the specific exclusions II. Obtain the insured's signature on the amendment form III. Change any statement on the application that they think may be incorrect A- I and II B- II only C- I, II, and III D- I only 10) When a policy is issued with a premium surcharge or an impairment rider, what should the producer do? A- Deliver the policy in person, explain the changes and advise the client that they can either accept the new policy or reject it B- Refund the client's premium, since their offer to buy has been rejected C- Deliver the policy as issued, advising the client to read it and call if they have any questions D- Mail the policy out with a note asking the client to call 11) If an applicant completes an application for insurance and gives the producer a check for the first premium, the producer should give the applicant a: A- Copy of the Entire Contract B- Binder of coverage C- Copy of the policy D- Conditional Receipt 12) Dennis Wiggins makes application for an A&H policy and pays his producer the initial premium. The producer gives Mr. Wiggins a conditional receipt. His coverage will become effective when: A- The producer delivers the policy B- Mr. Wiggins countersigns the conditional receipt C- The insurance company requests a medical examination D- The insurance company accepts the risk 36 | P a g e 13) in order to comply with Fair Credit Reporting Act, at which of the following times must a producer notify an applicant that a credit report may be requested? A- When the policy is delivered B- When the applicant's credit is actually checked C- At the initial interview D- At the time of application 14) Which of the following statements about a Conditional Receipt is true? A- It guarantees that the applicant is acceptable to the insurance company B- It is used to purchase temporary insurance that terminates in six months C- It becomes part of the policy D- It is an interim Insuring Agreement 15) Which law requires that the applicant be notified before a consumer report is ordered? A- Health Insurance Portability and Accountability Act (HIPAA) B- Employees Retirement Income Security Act (ERISA) C- Fair Credit Reporting Act (FCRA) D- Consolidated Budget Reconciliation Act (COBRA) 16) Andrew Reed advised his insurance company of a loss covered by his Major Medical policy. If the insurance company does not provide Mr. Reed with the proper claim forms within 15 days, he has which of the following rights? A- To submit a description of the loss, in his own words, as Proof of Loss B- To receive immediate payment of his claim C- To refuse to submit the required Proof of Loss D- To file a suit against the insurance company immediately 17) A client purchased a Major Medical policy from you last month and would now like to add AD&D coverage. As a producer, you should: A- Mail out a new application, making coverage effective upon return B- Use information in your existing file to complete the new application C- Complete a new application by phone and sign the client's name D- Meet with the client in person and have them complete and sign the application 18) All of the following statements about sources of underwriting information are true, EXCEPT: A- The contents of an inspection report cannot be disclosed to the applicant B- An attending physician's statement is a good source of information C- The application is typically the principal source of information D- A medical examination is typically used when benefits are large SECTION 1 - TEXAS COMMON LAW SECTION 1 - TEXAS COMMON LAW 37 | P a g e 1) A person appointed by an insurer to solicit or sell insurance on their behalf in this state is known as a(n): A- Adjuster B- Agent C- Broker D- Solicitor B- Agent 2) Texas resident agents must complete _____ hours of continuing education every two years. A- 10 B- 40 C- 24 D- 20 C- 24 3) Which of the following is NOT prohibited under the Unfair Practices section of insurance law: A- Making false oral statements about the financial condition of a person which are calculated to injure that person B- Readjusting group premium rates based on loss or expense experience C- Misleading or false statements about dividends previously paid on an insurance policy D- Discriminating between insurance applicants on the basis of gender B- Readjusting group premium rates based on loss or expense experience 4) An insurance company can have rates based on: A- Gender B- Ethnic background C- Religion D- Nationality A- Gender 5) Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as: A- Defamation B- Rebating C- Misleading advertising D- Coercion D- Coercion 6) Shareholders own a ___________ insurer: A- Stock B- Fraternal C- Reciprocal D- Mutual 40 | P a g e C- It must be a domestic corporation D- All salaried employees must be licensed 21) Sharing commissions is legal if: A- The other party also has an insurance license B- The other party is licensed for the same lines of insurance you are C- The other party has permission of your client D- The other party represents a life company and you represent a P&C company 22) What is the maximum period of time the Commissioner may revoke your agent's license: A- Two years B- There is no maximum time period C- 12 months D- Six months 23) Your license will expire every ____ years. A- 3 B- 4 C- 2 D- 5 24) The maximum monetary penalty for an agent who violates an insurance law, rule or order is: A- $5,000 B- $15,000 C- $25,000 D- $10,000 25) If a license is revoked, the licensee shall NOT be eligible for a new license: A- Ever again B- Except by special permission of the governor C- For at least 5 years D- For six months 26) Defamation is: A- Concealment B- False advertising C- Misrepresentation D- Misstating financial condition 27) insurable interest must exist on property insurance: A- At time of loss B- At time of application C- At time of policy delivery D- It need not exist 41 | P a g e 28) Which of the following indicates free competition is occurring: A- All insurers are charging the same rates B- All policy forms contain exactly the same coverage C- There are substantial differences between rate levels of various insurers D- Commissions are fixed at the same level by all insurers 29) All are true about insurance licensing EXCEPT: A- All accounts of a terminated agent must be non-renewed by the insurer B- You must be at least l8 in order get a license C- A temporary license is available up to three months in certain circumstances D- Agents represent the insurance company 30) The Insurance Commissioner shall examine each established, authorized insurer in Texas no less than: A- Once every five years B- Every year C- Once every two years D- Once every three years 31) How long does an agent whose license has been revoked have to wait before they can reapply for a new license: A- 2 years B- 3 years C- 1 year D- 5 years 32) What is the maximum time a Texas insurance agent's license may be issued for: A- Six months B- One year C- Two years D- Four years 33) An agent who procures a license for the principal purpose of obtaining insurance for themselves, for family members or employees, violates the regulations prohibiting: A- Fraud B- Controlled business C- Captive business D- Exclusive business 34) Which of the following is NOT considered an unfair practice: A- Requiring any person to buy insurance through a specific insurer as a condition to lending money for the purchase of property B- Paying dividends to policyholders out of a surplus accumulated from participating policies 42 | P a g e C- Charging a higher premium than the one filed D- Using misleading advertising 35) Temporary licenses issued in Texas generally: A- Are renewable for a like period B- Expire in 90 days C- None of the above is true D- Expire in one year 36) Under the Unfair Claims Settlement Practices Act, which of the following is NOT unfair: A- Attempting to settle based upon an application that has been altered B- The denial of an unsubstantiated claim C- Failure to respond promptly on claims communications D- Refusing to pay claims without conducting a reasonable investigation 37) The type of government primarily concerned with the regulation of insurance and insurance companies is: A- County government B- Federal government C- City government D- State government 38) Making false or malicious statements about the financial condition of an insurer or agent is what type of Unfair Trade Practice: A- Defamation B- Intimidation C- Coercion D- Deceptive advertising 39) An insurer must acknowledge receipt of a Notice of Claim within _____ days: A- 20 B- 10 C- 5 D- 30 40) Who might receive dividends from a mutual insurer: A- Policyholders B- Stockholders C- Subscribers D- Shareholders 41) Insurers applying for authority to do business in Texas are required to do all of the following, EXCEPT: 45 | P a g e A- When the risk is placed under the Guarantee Association B- No such discrimination is permitted C- Upon application by the insurer to the Commissioner D- When such handicap is relevant to the risk of loss 9) All are true about variable products sold in this state EXCEPT: A- Customers must bear the investment risk B- Agents must have a state Life insurance license and a federal Securities license C- Insurers invest the customer's premiums in their general account D- Rates of return are not guaranteed 10) All of the following are true about Group Life insurance EXCEPT: A- The employer is the beneficiary B- The employee is the insured C- It is usually written as annual renewable term insurance D- There must be a minimum of 2 employees 11) False advertising includes which of the following: A- Stating that the policy you are selling has limitations and reductions B- Implying that you are the insurer rather than the agent C- Failing to include the premium in sales material you are disseminating D- Stating to a client that there is a difference in benefits between Whole Life Insurance and Term Life Insurance 12) Conversion to an Individual Whole Life Insurance policy written by the same company is permitted without a physical exam for ______days after termination of your employment: A- Group Life is not convertible B- 28 C- 31 D- 30 13) Where there is no unconditional refund provision of at least 10 days, a Buyer's Guide and a policy summary must be delivered to the prospective life insurance purchaser: A- Prior to filling out an application for insurance B- With the policy C- Prior to accepting an initial premium D- Upon issuance of the policy 14) Which of the following is an unfair or deceptive act in connection with the sale of a life insurance policy: A- Referring to the guarantees available in the event of insurer insolvency B- Making a misleading statement concerning the financial condition of the insurer C- All answer options are correct D- Using a name or title that misrepresents the true nature of the policy 46 | P a g e 15) Credit Life Insurance: A- Shall not exceed the total amount of the indebtedness B- Shall not exceed the total amount of the unpaid installments C- Has a maximum suicide clause of six months D- All answer options are correct SECTION 3 - TEXAS ACCIDENT AND HEALTH LAW SECTION 3 - TEXAS ACCIDENT AND HEALTH LAW 1) Under the Health Insurance Portability and Accountability Act (HIPAA), group medical expense coverage is 'portable' from one group to another group without any new probationary period as long as there is no gap in coverage more than ____ days: A- 10 B- 31 C- 63 D- 20 2) In a Family Health policy, coverage for a newborn child commences: A- When the insurer receives written or oral notice of the birth B- 24 hours after birth C- Three days from the date of birth D- At the instant of birth 3) When two Group Medical Expense insurance polices provide coverage for the same claim, one policy is considered to be primary and the other policy is considered to be excess under the ___________________________________ clause: A- Relation of earnings to insurance B- Pro-rata liability C- Other insurance D- Coordination of Benefits 4) On a Medicare Supplement policy, what is the maximum probationary period before the insurer must cover pre-existing conditions: A- Three months B- 24 months C- Six months D- 12 months 5) Historically, the definition of a Small Employer under Texas's Small Group Health law is one who has at least _____ employee(s) but not more than _____ employees on a typical business day during the course of any one calendar year: A- Three / 75 B- Two / 50 47 | P a g e C- One / 49 D- Five / 99 6) Group Medical Expense Health insurance policies must cover newly born and newly adopted children for at least ____ days: A- 15 B- 61 C- 31 D- 10 7) The Coordination of Benefits clause in group health insurance indicates: A- How the insurer will coordinate with the hospital B- That when two policies are in force, one will be primary and one will be excess C- How the insurer will coordinate with the doctor D- That when two policies are in force, they will share the claim equally 8) Prior to implemenation of the PPACA, to avoid a new probationary period when replacing health insurance coverage, an individual should have prior "creditable coverage" for at least _______ months. A- 24 months B- 6 months C- 18 months D- 12 months 9) On Group Health insurance, state law may regulate all of the following EXCEPT: A- The grace period B- COBRA continuation requirements C- Participation requirements D- Small group eligibility requirements 10) All of the following are true about large employer Group Medical Expense plans EXCEPT: A- The limiting age of an unmarried child of an enrollee is age 21 B- Unmarried grandchildren of the insured under age 26 may be covered, if dependent C- They may not limit or exclude initial coverage of a newborn or adopted child in any way D- They must provide coverage for drug and alcohol treatment in the same manner as they cover any other illness 11) Long Term Care Insurance is an Individual or Group Insurance policy designed to provide coverage for at least ______ months for custodial care services provided in a setting other than an acute care unit of a hospital. A- 6 months B- 18 months C- 24 months D- 12 months 50 | P a g e C- 15 D- 36 25) The application for a Medicare Supplement policy must ask the question regarding: A- Replacement B- Education C- Religious preference D- Nationality 26) On Disability Income insurance, when an insured is unable to perform one or more duties of his occupation, the disability is known as: A- Partial B- Permanent C- Total D- Temporary 27) On Disability Income insurance, when two or more disabilities are combined to apply to the same waiting or elimination period, the disabilities are known as: A- Repetitive B- Residual C- Recurrent D- Repeating SECTION 4 - PPACA SECTION 4 - PPACA 1) In order to qualify for the advanced premium tax credit, a person must have an income below a pre- determined level and: A- Purchase a grandfathered health benefit plan B- Purchase an individual policy C- Purchase a qualified health plan through the Exchange D- Purchase a group policy 2) A business with fewer than ___ full-time equivalent employees will never owe the Employer Shared Responsibility Payment. A- 75 B- 100 C- 50 D- 20 3) Which of the following is true regarding the health insurance Marketplace? A- More states participate in the federally facilitated Marketplace B- More states have their own state-run Marketplace 51 | P a g e C- All states must participate in the federally facilitated Marketplace D- States must have their own state-run Marketplace 4) What is the actuarial value of the bronze tier of benefits on the Exchange? A- 70% B- 90% C- 60% D- 80% 5) Under the PPACA, a medical expense policy whose benefits are based upon 70% of actuarial value are considered to be which metal tier? A- Bronze B- Platinum C- Gold D- Silver 6) If a large employer does not offer a health benefit plan to enough of its full-time equivalent employees and their dependents, or it does not offer a plan that provides affordable coverage at a minimum value, the large employer will owe: A- Money to state insurance department B- A premium payment to the employee C- $1,000 D- An Employer Shared Responsibility Payment 7) A health benefit plan premium may be based upon all of the following EXCEPT: A- Geographic location B- Health history C- Age D- Tobacco use 8) Under the PPACA, a full-time employee is one who works ____ hours or more on average, per week. A- 24 B- 35 C- 30 D- 40 9) Which of the following is not a metal level of coverage under the PPACA? A- Bronze B- Gold C- Palladium D- Platinum 10) Under the PPACA, all of the following are essential health benefits EXCEPT: 52 | P a g e A- Mental health and substance abuse disorder services B- Prescription drugs C- Chiropractic care D- Preventive and wellness services 11) What is the actuarial value of the silver tier of benefits on the Exchange? A- 90% B- 80% C- 60% D- 70% 12) Under the PPACA, insurers who write individual medical expense polices must maintain a calendar year minimum loss ratio (MLR) of at least ____ percent. A- 50 B- 85 C- 60 D- 80 13) The actuarial value of the gold tier of benefits on the Exchange is which of the following? A- 60% B- 90% C- 80% D- 70% 14) Under the Patient Protection and Affordable Care Act, children may remain on their parent's medical expense policy until they reach what age? A- 23 B- 26 C- 20 D- 19 15) Which of the following is not an essential health benefit? A- Acupuncture B- Maternity and newborn care C- Lab services D- Hospitalization 16) To be eligible for cost sharing reductions, the policy must be purchased on the Exchange and be a ___ level plan. A- Bronze B- Silver C- Catastrophic D- Gold 55 | P a g e A- Insureds B- Enrollees C- Participants D- Insurers B- Enrollees 4) All HMOs must include coverage for newborn children from the moment of birth. The HMO may require that the subscriber notify the HMO within ____ days of the birth of the child and pay any additional premium required to continue coverage for the newborn child. A- 30 B- 31 C- 10 D- 15 A- 30 B- 31 C- 10 D- 15 5) If a material misstatement was made regarding a subscriber's health on an enrollment application, the HMO may adjust the premium so long as the contract holder is given ____ days' prior written notice. A- 20 B- 30 C- 31 D- 10 A- 20 B- 30 C- 31 D- 10 6) A physician is paid a _______ fee for each enrollee, per definite time period, regardless of the services provided. A- Capitation B- Subscriber C- Referral D- Enrollment 7) As an enrollee in an HMO, you are entitled to a(n) _______________, which is the agreement between the issuer and the enrollee. A- Notice B- Plan description C- Copy of the policy D- Evidence of coverage 56 | P a g e 8) The form that an HMO must provide to any prospective enrollee that allows for comparisons and informed decisions before selecting among health care plans is called a(n): A- Notice B- Copy of the policy C- Plan description D- Evidence of coverage 9) The area in which the HMO provides coverage, with certain exceptions, is referred to as the: A- Out of network B- Boundary C- Service area D- Coverage matrix 10) As an enrollee in an HMO, you must choose a ________, which is the person you must go to for your initial and primary care. A- Specialist B- Primary Care Physician C- D.O. D- Orthodontist 11) All statements made by the subscriber on an HMO enrollment application are considered to be: A- Warranties B- Literal truths C- Promises D- Representations 12) When you are an enrollee in an HMO, in order to see a specialist you must have: A- A key B- A referral C- A note D- First seen your primary care physician at least twice regarding the issue 13) Prior to canceling an individual HMO contract for nonpayment of premium, the policy must include a ____ -day grace period. A- 10 B- 15 C- 30 D- 20 14) An HMO enrollment form must include a space in which the enrollee may select an obstetrician or gynecologist. The enrollee must be allowed to request a change in this selection up to ____ times a year. A- Four (4) B- Three (3) 57 | P a g e C- Two (2) D- Five (5) 15) All of the following are true regarding HMOs EXCEPT: A- They must provide coverage for all prescription drugs B- The geographic area they are permitted to operate in is called their service area C- They are not considered to be "reimbursement" plans D- They provide managed care benefits Health insurance coverage under COBRA, HIPAA guarantees that the person will Have Acces to a guaranteed-issue individual health policy, regardless of health All the following statements about ordinary (or straight) whole life insurance are correct The cash value remains level throughout the life of the policy Which activity in NOT an error or omission that makes an agent or producer legally to both the insurance and the insure Placing insurance with an approved surplus line insurer All the following statements about the taxation of annuities are correct EXEPT: Qualified annuities are taxes no different than no qualified annuities Which of the following statements about utmost good faith in insurance is correct Both the insurance and the insurer must act in utmost good faith Which annuity settlement option pays income for the annuitant's life, but no less than for a specified number of year Life income with period certain Tim has paid only four premium totally $1000 on his health insurance policy when he was diagnosed with cancer. The insurance company paid more than $100.000 to cover the medical bills for his treatments which of the following characteristics of insurance contracts They are aleatory Jack, an insurance agent, offers free season football tickets to anyone who buys a life insurance policy from him. This sales practice is called rebating After Todd was injured in a car crash, he received occupational theyto help him return to work. His disability income policy paid for this therapy because it had A rehabilitation provision If a small employer insurance decides to terminate all small employer health benefits plans it issues in TEXAS, it must notify the TEXAS commissioner and all affected employer of its intent to do so at least 60 | P a g e When Matthew met with a potential client, he used a life insurance illustration to show how the policy's cash value would grow over the clients lifetime. Matthew could include all of the following in the illustration without violating Texas regulations EXCEPT: As statement that the policy is type of investment and saving plan Annuity contracts include a provision to pay a death benefit if the owner or annuitant doesn't before the contract annuitizes. What does this death benefit typically equal Either the contract's accumulated valued or the amount of premium the owner invested whichever is greater The purpose of policy exclusions is to specify: Condiciones that the policy does not cover An insured medical expense plan requires the insured to pay the medical car provider for each service rendered. The insurer then reimburses the insured. On what basis are benefits paid Free-for-service Which of the following correctly describes the disability income benefit rider availability with life insurance policies It pays a monthly income de terminated by a formula specified in the policy if the insured becomes disabled, without impacting the policy's cash value or face amount Te Generic Informetion Nondiscrimimation Act(GINA) essentially does which of the following It prohibits insurance companies from discrimination on the basis of information delivered through a genetic test JOHN a Tex resident, is covered under a credit life insurance policy while he pays off a car loan. Coverage is paid through December, when his loan is scheduled to be paid. If JOHN pays off the car loan is September (3 months early) which of the following descuwhat the very life insurance company must do with reap to a premium refund It must refund the premium for the thee-month period following the date JOHN paid off the loan Provider operated by an organization That has a representative form of leadership, operates on lodge system, and exist solely for the benefit of its member and their beneficiaries is called a Risk retention group Which of the following is correct about the HMO claims process Members no not need to Sumit claims forms for services provided within the network Life insurance is commonly used for all the following needed EXCEPT To save for a new car in several years 61 | P a g e Which association protects owners of life and health insurance policies issued by insurance who become financially unable to pay claims and benefits Life, Accidents, Health and Hospital Service Insurance Guaranty Association Which of the following statements regarding the taxation of deaf benefits dead paid from a group life insurance plan is correct The death benefits is income tax free, but interest earned on found left with the insurer under a settlement option is taxable in the year earned Besides select policy anniversary dates, a life insurance guaranteed insurability rider usually permits special alternative option dates that typically include all the following, EXCEPT The policyowner's loss of job Loss of a job is generally not a qualifying special event What is the mathematical concept of probability that helps insurance estimates the statistics likelihood of mortality or morbidity losses at any given age Law of large number Medicare Part B benefits exclude coverage for G All of the following statements about indexed life insurance are correct EXCEPT Vaccinations In What form does the MIB present it's information to insurance Memetic codes, indicating risk identified in previous applications, that are communicated electronically Which of the following types of qualified retirement plan can include life insurance in the plan funding With respect to annuities, the basic purpose for the exclusion ratio is to Which of the following distribution a sum of money regularly, starting very shortly after they are bought Retirement annuity Immediate annuities distribute a sum of money regularly, starting very shortly after they bought All the following regarding the " spendthrift clause" of life insurance policy are correct EXCEPT The spendthrift clauses keeps benefits from claiming any death benefits until the insurer checks their personal and business credit history Alice Owen a long-term Carr policy, Her return of premium option allows her to have a portion of the premium 62 | P a g e Paid to her car estate or a named beneficiary when she dies A return of premium option in a LTC policy return a portion of the premium paid for the coverage to the insured dies. The amount of the returned premium depends on whether the insured used the policy's benefits and if so, to what extent. Structured settlement most commonly use Immediate fixed annuities Which of the following must HMO members to receive covered care HMO's network of providers and caregivers HMOs must provide their subscribers (enrollees) with evidence of coverage, which must include all the following EXCEPT H If a Social Security benefits recipients has income from other sources, including wages and investment earnings, what percentage of Social Security benefits exceeding a combined income threshold may be income taxable Anywhere from 50% to 85 percent of Social Security benefits will be subject to income taxation A Medical Expense Policy covers the cost of health care services delivered according to The plan or policy Care plan combines the features of others plans POS plan Points-of-service (POS) plan combine that the cost controles of an HMOS with the flexibility that a preferred provider organization (PPO) and traditional medical insurance policy have with respect to the selection of health care providers How many Social Security credits must a worker earn to qualify for Social Security disability benefits 40 credits A worker becomes fully insured and eligible for all Social Security benefits (including disability benefits) with 40 credits XYZ insurance has been changed with unfairly discrimination among insurance. Which of the following practices in unfair discrimination XYZ changed two individual insured of the same class and risk different premium for life insurance policies based on where they lived and their ethnicities When an applicant applies for insurance, a producer is Not required to 65 | P a g e years coverage period, through March 1,2020, IF Bob's dies after the ten-years period, the policy will have expire and no benefits will be payables. What is the only restriction on naming an annuitant The annuity must be a natural person. An insurance incurs $7,000 in cover medical expenses. Her comprehensive major medical policy requires her to pay $500 of those espeses before the poly will pay a benefits based on the remaining $6.500. What kind of deductible does the insured have? Flat deductible Which of the following of health insurance based benefits on the indemnification of the insured basic medical expenses insurance. Because Medical expenses (indemnity) insurance is the traditional form of health care coverage based on indemnification of the insured. What type of life company is owned by the policyholders Mutual company. Because Mutual companies are owed by the policy owners. These companies issue participating life insurance policies that distribute excess premium benefits n the form of dividends. The basic purpose for the re-entry option with a renewable term life insurance policy is to let the policyowner renew the policy at lower current rates rather than guaranteed renew rates. Because to get the lower current (" attained age') rate they is the feature of the re-entry option. The insured must prove insurability at the time of renewal or at periodic intervals throughout the policy's term ÉRISA does NOT regulate group health insurance plans with respect to Promoting the sponsor's best interest. Which of the following best explains why. Sección 1035 of Tax Code does NOT permit a tax-free exchange of an annuity for a life insurance policy Allowing a tax-free exchange against an annuity for life insurance would enable taxable annuity gain to escape taxation vía the life insurance death benefits Under a survivor life insurance policy, when does the insurer pay the dead benefits Up on the death of the insured who dies second In setting premiums for a new policy, when do actuaries assume those premiums will be paid 66 | P a g e They will Be paid in full at the beginning of the policy year Which of the following will happen if a traditional IRA owner dies before all of the funds in his or her account have been paid out H Jessica, age 25, buys a $100,000 life insurance policy. The initial premium is lower than straight whole life rates and increases each year for the first ten years of the policy period. After that, the premium levels off and stays at that amount for the life of the policy. What type of policy does Jessica own? graded premium whole life All the following are types of riders that are available with most types of life insurance policies EXCEPT Guaranteed dividend rider Which is NOT a standard renew abilities provision Optionally cancelable Because the noncancellable, guaranteed renewable, conditionally renewable, optionally renewable, and cancelable provisions define the right to renew a health insurance policy. Ginny's medical plan provides coverage for the newborn children from their date of birth. She adopts a 5-year-old child on July 1. What benefits is she entitled to Automatic coverage for the first 31 years following adoption, after which Jenny must pay a premium. Under Texas law, an individual life insurance policy may, but is Not required to, contain a(n) Accelerated benefits provision What may an insurance cancel either whole life or term iLife insurance The insurer may cancel both types of policies if the policyowner does not pay the premiums Because the insurer may cancel either type of life insurance policy if the policyowner does not pay premiums Which of the following will happen if the outstanding balance of whole life insurance policy loan, including accrued interest, ever exceeds the policy's cash value The insurer will cancel the policy The time limit on certain defenses provision in a health insurance policy is like which provision in a life insurance policy Incontestable clause Because the time limit on certain defenses provision is like the incontestable clause in life insurance 67 | P a g e A producer who detect inconsistent that lead her to suspect the claimant is making a false claim for benefits is required to Report the suspicions to TDI within 30 days From an insurance perspective, underwriting is best defined as The process of determining if an applicant is an insurable risk As a contract, health insurance policy requires all of the following elements EXCEPT A deadline Which of the following is NOT an allowance basis for excluding coverage under a long-term care policy Alzheimer's disease Which statement describes the "pool of money" approach to benefits under a Long-term care insurance policy Benefits are defined as a total sum of money from which money can be drawn in any amount for as long as the money lasts Which is the amount that is paid for dismemberment under an accident death and dismemberment (AD&D) insurance policy Capital sum In a third- party life insurance contract , the parties to contract are the The owner, the insured, and the insurance company Because two parties in a standard two-party insurance contract are the owner and the insurance company. In a third-party contract, the owner and the insured are different people. Which statement describes the tax treatment of premium for business disability buy-out insurance Premium are not deductible, and benefits are not taxed Which statement correctly describes the income tax treatment of employer- funded group life insurance coverage on a covered employee The value of coverage exceeding $50.000 is taxable to the employee; below that, it is tax free In a participating life insurance pays, the insurance company pays the policyowner a dividend out of which of the following The insurer's divisible surplus A notice of claims tell the insurer that the insured Will make a claim and needs the necessary claims forms 70 | P a g e Joe's primary plan In cases where an existing life insurance policy is going to be replaced by new life insurance policy, the producer must do all the following EXCEPT Sign a form assuming full responsibility for any consequences hay may result from the replacement When a person applies for Medicaid, the limits and the types of income and assets counted vary depending on: where the applicant has a spouse who needs support l What happens to a group health insurance plan when members leave the group Nothing will happen Which statement best describes the purpose for a business owning a key person disability income policy provide the businesses with funds to use for any purpose upon a key employee's disability When must insurable interest exist for a life insurance contract to be valid? It is only necessary for insurable interest to exist at the time applicant applies for a life insurance contract Under standard exclusion, must insurers would deny coverage of which of the following Someone serving as an aircraft member A policyowner can access the cash value of many life insurance policies trough withdrawals, loans, or policy surrender. Which of the following describes the ability to easy convert life insurance into cash liquidity All of the following statements regarding a variable annuity's assumes interest rate(AIR) are correct EXCEPT if the actual return is greater than the AIR, payments will decrease All the Following uses for life insurance in a business represent a valid insurance interest, EXCEPT Life insurance purchased on an important customer to make up for the financial losses that might occur when that customer dies! In the purchase of a life insurance contract, the applicant's considerations consist of the signed application and the first premium Because the consideration policyowner give insurers includes the application with the representations it contains and the first premium Which insurance company functions calculates company mortality and morbidity rates as well as the dividends on participating life insurance policies 71 | P a g e actuarial division If a permanent life insurance policy lapses and the owner does NOT select a non forfeitures option insurance will automatically apply the extended term insurance option An insurance's record of complaints must include all of the following information EXCEPT The commissions paid on policies for which companies were received Tax law considers any limited payment life insurance policy that is paid-up in seven years or less to be which of the following a modified endowed contract Because Life insurance policies that are paid-up in seven years or less are modified endowment contracts (MECs), which means that they lose some of the tax advantages usually enjoyed by life insurance policies Which health insurance policy provides income when disability keeps the insured from working disability income policy An agent commissions on Medicare supplement policies in ten first year CANNOT exceed what percent of commissions in the second year 200 percent Under a policy's of payment provision, what is the first thing an insurer tries to do with the death benefits if there is no valid beneficiary available The insurer looks for a blood relative or someone with a valid claims as the new beneficiary Because in these cases, the insurer name blood relative or someone with a valid claim as the new beneficiary A deferred annuities rider that lets the annuity owner commit only part of the annuity's funds providing guaranteed lifetime income, leaving the remainder available for withdrawal at the owner's discretion, is called a: Guaranteed income rider When does a waiver of premium rider excuse the insured from paying the policy's premium? When the insured is totally disable Because, a waiver of premium rider excuses the insured form paying the policy's premium during periods of total disability. The insured must pay the premium during the elimination period. If, after the period, the insured remains disabled, the waver will be effective back to the first day of disability. All the following statements regarding withdrawals from q universal life policy are correct EXCEPT 72 | P a g e Policy loans are not permitted with universal life insurance policies Because. Policy loans are permitted with universal life policies as well as traditional permanent life policies. Universal life insurance policies almost permit partial surrenders. The death benefits of a fixed deferred annuity equals The contract's accumulated value when dead occurs From an insurance perspective, all the following statements regarding risk and loss are correct EXCEPT Only speculative risk is insurable All the following statements regarding perils are hazards are correct EXCEPT Smoking cigarettes is an example of peril Because a peril is the event that insurance protects against. Smoking is a moral hazard that increases the chance of encountering the peril of death and illness Lucy is applying for an individual health insurance policy and disclosed that she is diabetic, which is considered which of the following A physical hazard Because a phisical hazard is a physical characteristic, such as diabetic, that increases the chance of loss From an insurance perspective, the term "loss exposure" means The extent to which an insurer is subject possible to loss Because all called loss exposure, exposure is the state of being subject to a posible loss. The extent of loss exposure on the premium it changes 1) Sandra Timms, age 27, is advised by her producer to purchase Life insurance to cover a 20-year- amortized $50,000 business-improvement loan. Which of the following plans would adequately protect Ms. Timms at the minimum premium outlay? A- $50,000 Whole Life policy B- $50,000 Level Term policy for 20 years C- $50,000 20 Pay Life policy D- $50,000 Decreasing Term policy for 20 years 2) A 45-year old customer who is seeking to supplement his retirement income at age 65 would not buy a: A- Deferred Annuity B- Equity Indexed Annuity C- Variable Annuity D- Immediate Annuity 75 | P a g e 15) Which of the following is an example of a Limited-Pay Life policy: A- Traditional Whole Life B- Endowment at 65 C- 10 year Renewable Term Life D- 20-Pay Life 16) An insurance producer selling a Variable Annuity whose cash value depends on the performance of an underlying investment account must be registered with: A- The National Association of Insurance Commissioners B- The National Association of Life Underwriters C- The Chartered Life Underwriters D- The Financial Industry Regulatory Authority (FINRA, formerly the NASD) 17) A business owner with a fluctuating income who wants a life insurance policy that can be changed to suit economic conditions should buy: A- Variable Life B- Modified Whole Life C- Adjustable Life D- Interest-sensitive Whole Life 18) An Annuity is designed to provide which of the following financial features? I. The liquidation of principal and interest II. Favorable tax treatment III. The creation of an estate A- I, II, and III B- I and II C- I and III D- II and III 19) Which of the following statements about a Renewable Term policy is true? A- It is renewable at the option of the insurance company B- It is renewable at the option of the insured C- It is renewable at the option of the insurance company, with proof of insurability D- It is renewable at the option of the insured, with proof of insurability 20) Most Term Life insurance: A- Is convertible to permanent Whole Life without a physical exam B- Has a guaranteed cash value C- Is renewable with evidence of insurability D- Is renewable to age 100 21) A life insurance policy whose cash value will fluctuate depending upon the performance of a separate account is: 76 | P a g e A- Limited-pay Life B- Universal Life C- Ordinary Life D- Variable Life 22) A life insurance policy that combines term insurance protection, a flexible premium, and cash value accumulation is: A- Increasing Term Life B- Variable/Universal Life C- Universal Life D- Variable Life 23) Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources? A- Term B- Limited Pay policy C- Whole Life D- Annuity 24) At age 30, Tom Morris wishes to purchase a Whole Life policy. His producer explains that he can pay for the policy in several ways. One method is called 20-Pay Life, and another, Straight Life. Tom wishes to know which plan will accumulate cash value at a faster rate in the early years of the policy. Which of the following would be the producer's most appropriate response? A- "20-Pay Life will accumulate cash value faster." B- "The rate of cash-value accumulation depends on the profitability of the insurance company." C- "Straight Life will accumulate cash value faster." D- "Both plans will accumulate cash value at the same rate." LIFE SECTION 2 LIFE SECTION 2 1) Which of the following statements about the Reinstatement provision is true? A- It provides for reinstatement of a policy regardless of the insured's health B- It requires the policy owner to pay, with interest, all premiums that are in arrears in order for the policy to be reinstated C- It permits reinstatement within 10 years after a policy has lapsed D- It guarantees the reinstatement of a policy that has been surrendered for cash 2) The time period covered by the Free Look provision of a Life insurance contract starts: A- When the insured receives the contract and a "right to look" receipt B- When the contract is received in the agency office and given to the producer 77 | P a g e C- When the insured receives the contract and makes the first premium payment, if needed D- When the contract is issued and mailed to the agency office from the home office of the insurance company 3) Dividend projections may be included in a proposal for Life insurance when which of the following is true? A- There is a clear statement that payment of future dividends is not guaranteed B- The applicant has requested that they be included C- The projected amounts do not exceed the dividends previously paid by the same insurance company D- The projected amounts are calculated on the basis of the Commissioners Standard Ordinary Mortality Tables 4) The Life insurance rider that will pay the insured's premium after a period of disability due to accident or sickness is: A- Guaranteed Insurability B- Accidental Death and Dismemberment C- Waiver of Premium D- Automatic Premium Loan 5) Which of the following is a Non-forfeiture Option that provides continuing cash value buildup? A- Extended Term B- Deferred Annuity C- Reduced Paid-Up D- Cash Surrender 6) A rider that keeps a policy from lapsing due to non-payment of premium by borrowing from the cash value is: A- Reduced Paid-Up Option B- Extended Term Option C- Automatic Premium Loan D- Mode of Payment 7) Which of the following Settlement Options might provide payments that exceed the proceeds of the policy and the interest earned? A- Interest Only B- Fixed Period C- Life Annuity D- Fixed Amount 8) A client buys a $50,000 Whole Life policy on himself and wants to add $25,000 in Term coverage for his spouse. He should add which of the following riders to his policy? A- Spousal Rider B- Family Rider 80 | P a g e 21) The contingent beneficiary will receive policy proceeds when: A- No beneficiary has been designated B- The insured pre-deceases all designated beneficiaries C- The primary beneficiary pre-deceases the insured D- The insured pre-deceases the primary beneficiary 22) If the insured understated his age and the error is discovered after the insured's death, the insurance company will: A- Deny the claim under the Incontestability clause B- Refund all premiums paid plus accumulated interest C- Pay the claim, less a deduction for the amount of the underpaid premium D- Pay the amount that the premium paid would have purchased at the correct age 23) The clause that states the insurer's promise to pay the policy benefits in accordance with the contract's provisions is the: A- Incontestability Clause B- Insuring Clause C- Beneficiary Clause D- Consideration Clause 24) Which of the following is true about the Insuring Clause? A- It contains the insurer's enforceable promise to pay covered claims B- It states the policy owner's rights C- It states that the insurer may contest a claim for material misrepresentation D- It requires that the application be attached to the policy 25) A client applied for Life insurance on October 1st. The application was approved and the policy was issued on October 10th. It was delivered to the customer on October 18th. When did the Free Look start? A- October 31st B- October 18th C- October 10th D- October 1st 26) Which of these is a rider that would ensure you can purchase additional insurance coverage, at specified ages, regardless of health? A- Payor Benefit Rider B- Guaranteed Insurability Rider C- Waiver of Premium Rider D- Child Term Rider 27) A beneficiary designation that prevents the policy owner from making certain changes in the policy is: 81 | P a g e A- Primary B- Irrevocable C- Revocable D- Contingent 28) Margaret May wants to name her husband as the beneficiary of her Life policy; however, she wishes to retain all of the rights of ownership. Mrs. May should name her husband as: A- Revocable beneficiary B- Irrevocable beneficiary C- Tertiary beneficiary D- Secondary beneficiary 29) On Life insurance, the purpose of the Entire Contract Clause is to: A- Limit the policy to the contract plus the application, if attached B- Spell out the rights of the policy owner C- Require that the insurer attach the application to the policy at issue D- Spell out the rights of the beneficiary 30) The Life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the: A- Misstatement of Age clause B- Insuring clause C- Incontestability clause D- Reinstatement clause 31) The provision in a Life insurance policy that provides protection against unintentional policy lapse is known as the: A- Automatic Premium Loan provision B- Payor clause C- Waiver of Premium benefit D- Reduction of Premium option 32) The purpose of the Grace Period is to: A- Give the beneficiary time to prove that insurable interest exists B- Protect the policy owner against unintentional lapse C- Protect the insurer against adverse selection D- Give the insurer time to determine the cause of death 33) Jim gets married and wants to add his new spouse to his existing Life insurance policy. Which rider should he add? A- Guaranteed Insurability Rider B- Other Insured Rider C- Payor Rider D- Term Rider 82 | P a g e 34) An insured died during the Grace Period of her Life insurance policy and had not paid the required annual premium. The insurance company is obligated to pay which of the following to the beneficiary? A- The face amount of the policy less any earned premiums B- The full face amount of the policy C- The cash value of the policy, if any D- A refund of any premiums paid 35) A client buys a Life insurance policy on July 1st and dies by suicide 6 months later. The insurance company will: A- Deny the claim B- Deny the claim, but refund the premium C- Pay the claim in full D- Pay half of the claim 36) To add coverage for a child to your Whole Life policy you would purchase which of these riders? A- Payor Benefit Rider B- Guaranteed Insurability Rider C- Waiver of Premium Rider D- Child Term Rider 37) Which of the following statements about the Misstatement of Age provision in a Life insurance policy is true? A- If the insured's age has been overstated, it provides that a premium refund and the face amount of the policy will be payable B-If the insured's age has been understated, it provides that a death benefit smaller than the face amount of the policy will be payable C- It becomes inoperative after the expiration of the policy's Contestable period D- It is an optional provision 38) An insurance company will grant an advance from the cash value of a Life insurance policy when the policy owner requests which of the following? A- An automatic premium loan B- A low-interest dividend loan C- A policy loan D- A loan from Extended Term Insurance LIFE SECTION 3 LIFE SECTION 3 1) An insured's premium for Life insurance is based mainly upon their: 85 | P a g e to deliver it, she realizes that the health of the applicant has deteriorated significantly since the application was taken. The producer should: A- Rate the policy and obtain any additional premium required B- Refuse to deliver the policy or to accept any premium offered C- Obtain the premium from the prospect and send it to the company immediately D- Deliver the policy as it was issued 13) With proper notice and authorization, insurers may report underwriting information that an applicant lists on their application for Life insurance to the: A- State insurance department B- Fair Credit Reporting Association C- Anyone who requests it D- Medical Information Bureau (MIB) 14) Statements made by an applicant for a Life insurance policy that are supposed to be true are referred to as: A- Information B- Representations C- Facts D- Warranties 15) A producer completes an application for Life insurance and sends it to the underwriter who approves it and issues the policy. When is coverage effective: A- Immediately B- When the producer delivers the policy and picks up the premium C- On the date the client signed the application D- On the date the underwriter approved the application 16) If an applicant for a Life insurance policy is found to be a substandard risk, the insurance company is most likely to: A- Refuse to issue the policy B- Require a yearly medical exam C- Charge an extra premium D- Lower its insurability standards 17) When giving a client a conditional receipt, which of the following is true? A- You never collect a premium until you deliver the policy B- The coverage will begin at earliest as of the date of application or when the client passes a physical, whichever is later C- Coverage begins as of date of application D- In order for coverage to begin the applicant must pay all premiums 18) If an existing client of a producer wants to buy another Life insurance policy, the producer should: 86 | P a g e A- Submit an unsigned application to the insurer referring to existing underwriting information B- Have the customer come in and complete and sign a new application C- Complete and sign the application on behalf of the customer D- Advise the customer that no physical exam is required since he is an existing client 19) Which of the following is true when the insurer issues a 'rated' policy: A- Coverage is effective immediately B- It is considered to be acceptance of the risk C- No additional premiums will be due D- It is considered to be a counteroffer 20) A producer sends a completed and signed application along with the check for the initial premium to the underwriter, who notices that the applicant forgot to sign the check. When would coverage start? A- The date of the conditional receipt B- On the date the application was signed C- When the producer delivers the policy and picks up a signed check along with a Statement of Continued Good Health D- When the underwriter received the application and unsigned check 21) Which federal law governs consumer investigative reports: A- Telephone Communication Protection Act B- Privacy Protection Act C- Fair Credit Reporting Act D- Employee Retirement Income Security Act 22) If an application for Life insurance is not complete: A- The insurer will reject it B- The insurer will issue the policy and request additional information C- The insurer will return it to the producer D- The insurer will consider it to be void LIFE SECTION 4 LIFE SECTION 4 1) A plan under which the surviving partners of a partnership agree to buy the interest of a deceased partner is known as a: A- Surviving Shareholder plan B- Buy and Sell Agreement C- Key Employee Life policy D- Deferred Compensation plan 2) Carl Burk, whose wife is his business partner, buys a Life insurance policy on his wife's life. Because of this third-party ownership, the beneficiary should be the: 87 | P a g e A- Policy owner's children B- Policy owner's estate C- Policy owner D- Policy owner's wife 3) When a company requires that their employees pay part of the premium for the Group Life insurance coverage, it is known as a ___________ group: A- Contributory B- Nonparticipatory C- Participatory D- Noncontributory 4) Albert Metz, who has $2,000 of Group Life insurance, has just terminated his employment. Mr. Metz has how many days in which to convert his group coverage to individual coverage? A- 28 B- 21 C- 15 D- 31 5) Which of the following is not considered to be a 'qualified' plan? A- IRA B- 403b Tax Sheltered Annuity C- Split Dollar D- Keogh 6) Traditional IRAs have a premature distribution penalty for distributions taken prior to age: A- 55 B- 70 1/2 C- 59 1/2 D- 65 7) Tim Watson wants to obtain a Life insurance policy on his employee, Mike Carson, and to name Mike's wife, Deborah Carson, as the beneficiary. Signatures of which of the following would be legally required on the application? I. Tim Watson II. Mike Carson III. Deborah Carson A- I and II B- II and III C- I, II, and III D- I only 8) An insurable interest must exist when: 90 | P a g e 4) Which of the following is true about the Health Insurance Portability and Accountability Act (HIPAA): A- Probationary periods relating to preexisting conditions are prohibited B- It applies to all types of Health insurance C- Pregnancy may not be considered to be a pre-existing condition D- It enables terminated employees to continue their group coverage 5) When comparing PPOs (Preferred Provider Organizations) to HMOs (Health Maintenance Organizations), the main difference between them is: A- HMOs stress preventative care B- HMOs provide broader choice of doctors C- PPOs have federal subsidies D- HMOs have higher deductibles 6) Which of the following does not follow the principle of indemnity and, if you were diagnosed with cancer, would pay in addition to any other medical expense coverage you have? A- Medicaid B- Critical illness plan C- Medicare D- POS plan 7) Which of the following would be covered by Accidental Death and Dismemberment (AD&D) insurance: A- Accidental loss of hearing B- Paralysis due to accident C- Accidental loss of eyesight D- Death due to heart attack 8) The most an insured can collect on a Disability Income policy is most closely tied to: A- The average income in their state B- 200% of his income C- Their income D- A percentage of the federal poverty guidelines 9) A 69-year old Medicare beneficiary, who has been hospitalized twice in the past year, should consider buying which of the following to cover future excess medical bills: A- Major Medical B- Medicare Supplement C- Medicaid D- Long Term Care 10) When selling a Medicare Supplement policy, a producer must disclose all of the following, EXCEPT: A- What Medicare covers and what the Supplement covers B- Limitations and exclusions 91 | P a g e C- The 10 day free look provision D- Premium 11) Jim has a Major Medical policy with a $500 deductible and 80/20 co-insurance. If he has a $5,000 claim, how much of the claim will Jim have to pay: A- $500 B- $3,600 C- $1,400 D- $900 12) Which of the following A&H policies would provide reimbursement for expenses incurred as the result of a broken leg? A- Dental insurance policy B- Accidental Death and Dismemberment policy C- Disability Income policy D- Medical Expense policy 13) Under a Major Medical policy, the cost of which of the following would usually be considered a covered medical expense? I. Heart surgery II. An emergency appendectomy III. Plastic surgery for burns received in an auto accident A- I and II B- I only C- III only D- I, II, and III 14) All of the following are true about Long Term Care insurance, EXCEPT: A- It may be cancelled, if the insured's health changes B- It may be cancelled for non-payment of premium C- Coverage is subject to a daily maximum limit D- It must have a 30-day free look provision 15) HMOs offer all of the following features, EXCEPT: A- Co-payments B- Closed networks C- Reimbursement D- Preventative care 16) Which of the following statements about Group insurance is true? A- Group insurance is essentially reduced-cost mass protection B- A small group is rated on the basis of its own experience 92 | P a g e C- Group insurance is issued after each prospect has had a medical examination D- Each person insured in a group is issued a policy 17) When benefits are paid to a policy owner covered under a Hospital Expense policy, the policy is considered to be which of the following? A- Reimbursement B- Special Risk C- Limited Accident D- Service 18) Which of the following statements about Accidental Death and Dismemberment coverage are true? I. Death benefits are paid only if death occurs within 24 hours of an accident II. Dismemberment benefits are paid for certain disabilities that are presumed to be total and permanent III. Accidental Death benefits are paid only if death results from an accidental bodily injury as defined in the policy A- I and III B- II and III C- I, II, and III D- I and II 19) If you purchased a Major Medical policy with a $500 deductible and 80/20 co-insurance, what would be the effect of adding a $500 Supplemental Accident rider to your policy: A- It would limit coverage to $500 in the event of accidental injury B- It would waive the deductible and co-insurance up to $500 for accidental injury C- You would be required to pay a $500 additional premium if you were injured in an accident D- The deductible and co-insurance would be waived up to $500 for injury or sickness 20) Regarding Long Term Care insurance, which of the following is not considered to be an Activity of Daily Living (ADL): A- Talking B- Bathing C- Transferring D- Eating 21) Leland Farrell was hospitalized for two weeks and received a bill for $2,100. He has a Major Medical policy with a $100 deductible. His co-insurance is 80/20, figured after reducing the bill by the deductible amount. Mr. Farrell is expected to pay a total of: A- $520 B- $500 C- $400 D- $1,500 95 | P a g e A- Must refund the unearned premium on a pro rata basis if it cancels the policy B- Is obligated to refund the unearned premium on a short-rate table basis if the policy owner requests the cancellation C- Is not obligated to refund the unearned premium upon cancellation D- Must notify the insured of cancellation in writing within a specified period before the cancellation 7) A policy is applied for on September 14th, approved on September 30th, issued on October 12th and delivered to the insured on October 18th. When does the Free Look start? A- October 18th B- September 30th C- September 14th D- October 12th 8) The section of a Health policy that states the insurance company's promise to provide benefits in accordance with the terms of the policy is called the: A- Incontestability clause B- Consideration clause C- Insuring clause D- Probationary Period provision 9) A Disability Income policy is written with a 1 year benefit period for sickness and accident, a 30-day probationary period and a 30-day elimination period. If an insured becomes disabled due to sickness for 9 days, how much coverage is immediately available? A- None B- 21 days C- 30 days D- 1 year 10) Which mandatory Health insurance policy provision keeps the producer and/or the insurer from modifying the policy after it has been issued? A- Entire Contract clause B- Insuring agreement C- Incontestability D- Legal actions 11) Which of the following properly describes a policy, where the policyowner has no guarantee of renewal and the insurance company may refuse to renew the policy at the next premium due date? A- Guaranteed Renewable B- Conditionally Renewable C- Optionally Renewable D- Non-cancelable 12) The Health insurance policy provision that prevents an insurer from altering its agreement with a policy owner by referring to documents not contained in the policy is the: 96 | P a g e A- Entire Contract clause B- Legal Actions provision C- Incontestability clause D- Insuring clause 13) Pre-existing Conditions are referred to in which of the following required A&H policy provisions? A- Claims Forms B- Time Limit on Certain Defenses C- Payment of Claims D- Legal Actions 14) Which of the following is true regarding coverage for war on an accident and health policy? A- It is excluded via a rider B- It is never covered C- It is always covered D- It is excluded per the contract 15) Under a Guaranteed Renewable Health insurance policy, the insurer may: A- Cancel the contract for too many claims B- Change rates by class C- Change policy provisions at any time D- Reduce the amount of insurance if the insured's health declines 16) An applicant for an Individual Health policy failed to complete the responses to the Medical History questions because she had forgotten some important past treatment dates. She did, however, sign the application. Before being able to complete the responses and pay the initial premium, she was confined to a hospital for a condition that would ordinarily be covered by the policy. In this situation, she was not insured because she had not met the conditions specified in which of the following? A- Insuring clause B- Pre-existing Conditions clause C- Eligibility clause D- Consideration clause 17) The language in a Major Medical Expense policy that requires a claim to be shared between the insurer and the insured is called? A- Coordination of Benefits B- Co-insurance C- Co-payment D- Deductible 18) The purpose of the Illegal Occupation provision is to: A- Allow an insurance company to collect extra premiums to provide coverage for an insured's illegal acts B- Protect an insured from purchasing policies from an unlicensed producer 97 | P a g e C- Absolve an insurance company from liability for a loss incurred by an insured during his commission of a felony D- Prevent a producer from rebating on large policies 19) The owner of a Medical Expense policy has all of the following rights, EXCEPT to: A- Sue the insurance company, if there is a disagreement over a claim B- Assign the benefits to the provider of the medical services C- Return the policy to the insurance company within the Free Look period D- Add coverage for a spouse without providing proof of insurability 20) Which clause or provision contains the insurer's promise to pay claims in accordance with the terms of the policy? A- Consideration clause B- Payment of Claims provision C- Insuring agreement or clause D- Entire Contract clause 21) On Disability Income insurance, which of the following is true regarding the Change of Occupation provision? A- It allows the insurer to adjust benefits B- It is a mandatory policy provision C- It is designed to protect the insured D- It allows the insurer to void coverage 22) A client with Disability Income insurance hurts his back and is off work for 3 months and then returns to work. If he hurts his back again, it may be covered as a: A- Recurrent disability B- Temporary disability C- Residual disability D- Partial disability 23) If the insurer does not send the insured claim forms within the time specified, which of the following is correct? A- The insurer has waived the requirement and must pay the claim B- The insured does not have to submit claim forms C- The insured may submit the claim on any form D- The insured is relieved of any further responsibility 24) Under the Uniform Provisions Law, which of the following provisions is optional for an A&H policy? A- Physical Examination and Autopsy B- Time Limit on Certain Defenses C- Change of Occupation D- Entire Contract