Texas General Lines - Life, accident and health insurance PRACTICE EXAM-with 100% verified, Exams of Nursing

Download Texas General Lines - Life, accident and health insurance PRACTICE EXAM-with 100% verified and more Exams Nursing in PDF only on Docsity! Texas General Lines - Life, accident and health insurance PRACTICE EXAM-with 100% verified solutions 2024-2025-tutor verified 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) 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 period. Annuities have no cash D- Variable Annuity D- Variable Annuity 13) You have a client that is a real estate agent. Which of the following types of permanent protection is best for this type of client? A- Variable life B- Universal life C- Survivorship life D- Adjustable life D- Adjustable life 14) In order to sell variable life insurance you must be registered with which of the following? A- The SEC B- The State C- The NYSE D- The NASD D- The NASD 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 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: 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 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 C- Universal Life 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? A- Spousal Rider B- Family Rider C- Other Insured Rider D- Additional Insured Rider 9) All of the following are considered to be owner's rights under a Life insurance policy, EXCEPT: A- Changing an irrevocable beneficiary B- Changing a dividend option C- Taking a policy loan D- Selecting a settlement option prior to death 10) If the insured dies 5 years after he bought a Life insurance policy and the insurer determines that there was material misrepresentation on his application, they will: A- Pay the claim B- Pay only a portion of the claim C- Deny the claim D- Deny the claim but refund the premium 11) The life insurance policy provision that prevents the insurer from modifying a policy after it has been issued is the: A- Incontestability Clause B- Entire Contract Clause C- Consideration Clause D- Insuring Clause 12) Which of the following statements is true about exercising a Guaranteed Insurability option: I. The new insurance is available at the original issue age rate II. Evidence of insurability is not required III. The insured can exercise the option at any time after the age of 21 IV. The maximum purchase is specified in the contract A- III and IV B- I and II C- II and IV D- I, II, and III 13) In a policy insuring the life of a child, which of the following allows the premiums to be waived in the event of the death or disability of the person responsible for premium payments? 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 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 We have an expert-written solution to this problem! 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 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: A- Risk classification B- Gender C- Occupation D- Age A- Risk classification 2) A prospect's statements made in the application for insurance constitute a part of which of the following? A- Subrogation Clause B- Incontestability Clause C- Co-insurance Clause D- Consideration Clause D- Consideration Clause 3) In the formation of a Life insurance contract, the special significance of a Conditional Receipt is that it: A- Serves as proof that the producer has determined the applicant to be fully insurable for coverage by the insurance company B- Is intended to provide coverage on a date earlier than the date of the issuance of the policy C- Is given by the producer only to applicants who fully prepay all scheduled premiums in advance of policy issue D- Guarantees the applicant that a policy will be issued in the amount applied for in the application B- Is intended to provide coverage on a date earlier than the date of the issuance of the policy 4) Life insurance becomes effective when: A- When the insurer receives the application at their home office B- When the conditions in the conditional receipt are satisfied C- The applicant writes the check and receives a conditional receipt D- When the producer signs the application B- When the conditions in the conditional receipt are satisfied 5) A producer submits a completed and signed application to the underwriter along with the first premium check. After checking the results of the physical exam, the underwriter issues a 'rated' policy. Which of the following will not be required: A- A statement that the applicant's health has not changed since the physical exam B- Additional premium to be collected at policy delivery C- A new completed and signed application D- An explanation of the rating or premium surcharge to the client C- A new completed and signed application 6) Insurable interest must exist: A- At the time of loss B- In order to be named as beneficiary C- At the time of application D- Continuously C- At the time of application 7) All of the following are a part of a Life insurance policy, EXCEPT the: A- Conditional Receipt B- Incontestability Clause C- Copy of the application D- Insuring Clause 8) Once completed and signed by the applicant, a producer may change an application: A- With consent of his manager B- If the applicant initials the change C- With the verbal consent of the applicant D- At anytime 9) An applicant has been denied insurance coverage because of information contained in a consumer report. According to the Fair Credit Reporting Act, all of the following statements are true about this situation, EXCEPT: A- The applicant has the right to obtain a copy of the consumer report directly from an insurance company that used the report 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: 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 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- A Universal Life Contract B- A Variable Life Contract C- A Modified Endowment Contract D- A Variable/Universal Life Contract 11) The owner of a business is insured under a $100,000 Key Employee Life policy that contains a Double Indemnity clause and a Suicide clause. The business has paid the annual premium of $2,000. Six months after the inception date of the policy, the insured commits suicide. The insurance company's liability for payment is: A- $100,000 B- $200,000 C- $ -0- D- $2,000 12) A parent who wishes to have complete control of their son's life insurance policy until the son reaches age 25 can do so through the use of which of the following? A- Ownership provision B- Payor provision C- Insuring Clause D- Consideration Clause 13) Premature distributions from a Traditional IRA prior to age 59 1/2 are subject to: A- A 50% IRS penalty B- Ordinary income tax plus a 10% penalty C- Capital gains tax plus a 6% penalty D- Ordinary income tax 14) When someone other than the insured is the owner of a Life insurance policy, the owner may do all of the following without the insured's consent, EXCEPT: A- Make a policy loan B- Change the beneficiary C- Increase the amount of insurance D- Surrender the policy for its cash value 15) Albert Metz, who has $2,000 of Group Life insurance, has just terminated his employment.The maximum amount that Mr. Metz will be able to convert is which of the following? A- $1,500 B- $1,000 C- $2,000 D- $500 16) Which of the following statements is true about a policy assignment? A- It permits the beneficiary to designate the person or persons to receive the benefits B- It is valid during the insured's lifetime only, because the death benefit is payable to the named beneficiary C- It is the same as a beneficiary designation D- It transfers the owner's rights under the policy to the extent expressed in the assignment form HEALTH SECTION 1 HEALTH SECTION 1 1) If a dentist was off work for 4 months due to disability, his dental assistant's salary would be covered by: A- Partnership Disability insurance B- Key Employee Disability C- Business Overhead insurance D- Disability Income insurance 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- 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 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 D- They are payable when expenses exceed Workers' Compensation benefits 28) Which of the following is INCORRECT regarding a Disability Income policy? A- On a group policy you have a taxable benefit B- On an individual policy you have a taxable benefit C- On a group policy you insure your gross income D- On an individual policy you insure your net income HEALTH SECTION 2 HEALTH SECTION 2 1) If the insured is not entirely satisfied with the policy issued, she may return it to the insurance company for voiding and receive a refund of premium at which of the following times? A- Within a specified period from the date the insurance company issues the policy B- Within a specified period from the date the insured receives the contract C- Within a specified period from the date the producer receives the contract D- Within a specified period after the first renewal premium falls due B- Within a specified period from the date the insured receives the contract 2) The owner of a Medical Expense policy has all of the following rights, EXCEPT: A- Sue the insurer, if there is a disagreement over a claim B- Return the policy to the insurer within the free look period C- Modify the policy without the consent of the insurer D- Assign the benefits to the provider of medical services C- Modify the policy without the consent of the insurer 3) Which of the following describes a policy, where benefits cannot be reduced, premiums cannot be raised, and coverage cannot be canceled? 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 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 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 25) A producer has just been told by a policy owner that she is 10 years younger than was listed on the application. The producer should: A- Notify the insurance company for a possible review of the application B- Write a new policy at the correct age immediately so there will be no gap in coverage C- Notify the insurance company to adjust the existing policy to the correct age D- Determine whether there has been any change in health since the application for the policy 26) Marshall bought a disability income policy with a 30 day waiting period on March 1st. He became disabled on June 1st but went back to 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: 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) 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 B- Non-occupational coverage 4) On Health insurance, all of the following are considered to be Rights of Ownership EXCEPT: A- Applying to reinstate a lapsed policy B- Changing an irrevocable beneficiary on an AD&D policy C- Paying the premium D- Assigning benefits payable to a health care provider B- Changing an irrevocable beneficiary on an AD&D policy 5) What type of Health insurance requires the policy owner to designate a beneficiary? B- AD&D 6) What type of Disability Income insurance coverage will pay the insured a portion of the difference between what he earned before his disability and what he can earn now? A- Temporary B- Partial C- Residual D- Total C- Residual 7) All of the following are true regarding a Group Health insurance policy that includes coverage for dependents EXCEPT: A- Dependent children may continue coverage as long as they live at home B- Upon termination of employment, dependents may continue their group coverage C- Upon termination of employment, dependents may convert to an individual policy without a physical exam D- Newborn children are covered from the moment of birth A- Dependent children may continue coverage as long as they live at home 8) If an insured, covered by both Disability Income insurance and Workers' Compensation, is injured at work, the claim will be: A- Shared by the two policies equally B- Paid by Workers' Compensation C- Paid by the Disability Income policy D- Denied B- Paid by Workers' Compensation HEALTH SECTION 5 HEALTH SECTION 5 1) Policy delivery refers to the delivery of the: A- Insurance policy cost disclosure materials to the applicant B- Premium and receipt for the insurance policy to the agency office C- Completed application for the insurance policy to the agency office D- Completed insurance policy to the applicant D- Completed insurance policy to the applicant 2) If, at the time of application, the applicant does not pay any initial premium, what should the producer do when delivering the policy? A- Ask the applicant to fill out a new application B- Ask the applicant to take another physical exam C- Require the client to pay the entire first years premium to start coverage D- Collect the initial premium and ask the client to sign a Statement of Continued Good Health D- Collect the initial premium and ask the client to sign a Statement of Continued Good Health 3) The Fair Credit Reporting Act requires that: A- The insurer or producer to furnish a copy of the consumer report to applicants who have been rejected B- The insurer may not use underwriting information received from producers as the basis for declining coverage C- The insurer furnish the Federal Trade Commission a list of all declined applicants D- The applicant be advised, in advance, that a consumer report may be ordered D- The applicant be advised, in advance, that a consumer report may be ordered 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 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 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 A- It applies to credit reports ordered in connection with insurance, banking and employment B- Insurers are not required to give customers a copy of the report C- Reports may be sent to anyone who requests one D- The customer must be notified if adverse action is taken as a result of a report 10) No licensee whose license has been denied, refused or revoked can file another licensing application with the Commissioner for at least ____ years: A- 5 B- 4 C- 2 D- 3 11) All could be considered rebates EXCEPT: A- Employment B- Dividends C- Securities D- Commissions 12) To become a Texas insurance agent, you must: A- Pass an exam B- Have resided in Texas for at least one year C- Post a bond D- File your personal financial statement with the Commissioner 13) When the applicant passes the exam and qualifies in all other respects except for the fingerprint check by the FBI, the Department of Insurance will issue a license called: A- Conditional B- Retroactive C- Temporary D- Reciprocal 14) A Texas resident agent seeking to sell insurance to customers in another state needs: A- A non-resident license in that state B- A Foreign agents license in that state C- A Certificate of Authority in that state D- A resident license in that state 15) Which of the following statements regarding temporary licenses is FALSE: A- They may be renewed B- They may be issued without exam C- They are valid up to 90 days D- They require 40 hours of license training 16) When the Commissioner finds, after a hearing, that a person has intentionally violated an insurance regulation, what is the maximum fine that may be levied: A- $25,000 B- $250 C- $5,000 D- $2,500 17) If an agent is convicted of a felony in this or another state, who do they have to notify: A- The National Association of Insurance Commissioners (NAIC) B- The Federal Department of Insurance C- The local Agent's Association D- The State Department of Insurance 18) Unfair claims practices will be assumed to be intentional if: A- They are reported to an insurer by the policyholder B- They occur with such frequency as to indicate a general business practice C- The licensee fails to promptly submit a required report D- The licensee has been reported for a similar practice during the preceding three years 19) Circulating deceptive sales material to the public is what type of Unfair Trade Practice: A- Defamation B- Misleading advertising C- Misrepresentation D- Coercion 20) Conditions for a corporate agency seeking a Texas insurance agent's license include: 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 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: B- A misrepresentation made to a policyholder for the purpose of inducing the lapse, forfeiture, surrender, retention or conversion of any policy of insurance C- Unfair avoidance of payment of policy benefits to which a claimant is entitled D- Giving, or promising to give, tangible or intangible items of value or service in order to induce a prospect to buy a policy of insurance B- A misrepresentation made to a policyholder for the purpose of inducing the lapse, forfeiture, surrender, retention or conversion of any policy of insurance 2) In the replacement of existing life insurance policies, regulations mandate disclosure of relevant information to all of the following EXCEPT: A- The existing insurer B- The beneficiaries of the existing policy C- The applicant D- The replacing insurer B- The beneficiaries of the existing policy 3) Conversion of a Group Life Insurance policy may not be made to: A- 15 year level term B- 20-pay life C- Life paid up at age 65 D- Whole Life A- 15 year level term 4) All of the following are true about Credit Life insurance EXCEPT: A- It must be written as group insurance B- It is usually decreasing term insurance C- It may not be written for more than the amount of the loan D- It may not be written in connection with loans of more than 10 years A- It must be written as group insurance 5) The Life Insurance Replacement Rule does not apply to which of the following: A- 10 year Convertible and Renewable Level Term B- Credit Life C- Whole Life Insurance D- Endowment B- Credit Life 6) Which of the following is NOT true regarding the replacement of Life insurance: A- It is unlawful B- It may be detrimental C- It may lead to liability for Errors and Omissions D- Both the agent and the customer must sign the Notice Regarding Replacement 7) Which of the following is true about the Texas Life, Accident, Health and Hospital Service Insurance Guaranty Association: A- Coverage is unlimited B- Agents may use it's presence as an inducement to the sale C- All insurers must participate D- It protects the customers of insolvent insurance companies 8) Under what circumstances may a partially or totally blind person be offered life insurance at rates different from those applying to persons with unimpaired sight: 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 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 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 12) A long-term care policy sold in this state must be Guaranteed renewable: A- For life B- To age 75 C- To age 85 D- To age 65 13) All of the following are true about Skilled Nursing Home Care under Medicare EXCEPT: A- It is subject to co-insurance B- It is covered under Part B C- It is covered under Part A D- Coverage is limited to 100 days 21) All of the following are true regarding a Disability income policy sold with an 'accidental means' clause EXCEPT: A- It is also known as the 'accidental bodily' injury or 'results' clause B- There is no coverage unless the injury was sudden and unforeseen C- It is not permitted to be used in this state D- It is very restrictive 22) A Medical Expense policy that includes coverage for dependent children, shall provide coverage for: A- All answer options are correct B- Congenital defects and birth abnormalities from the instant of a newly born child's birth C- Children up to 26 years of age D- Mentally retarded or physically handicapped children beyond age 26 if proof of such incapacity is furnished to the insurer by the policyholder within 31 days of the child's attainment of the limited age 23) No Medicare Supplement policy shall be delivered or issued for delivery in Texas unless: A- All answer options are correct B- The agent makes it clear that neither he nor his policy is in any way sponsored or affiliated with the federal government, the Medicare program, or the Social Security Administration C- In a Direct Mail Solicitation, the "Guide" is delivered along with the policy D- The "Guide to Health Insurance of People with Medicare" and a complete printed outline of coverage is completed and delivered to the applicant prior to the time application is made and acknowledgment of delivery is provided to the insurer 24) When determining "creditable coverage" for the purpose of guaranteed insurability, an individual must have had prior coverage for at least 18 months with no gaps of more than _______ days: A- 90 B- 63 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 C- All states must participate in the federally facilitated Marketplace D- States must have their own state-run Marketplace 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 17) If a medical expense insurer violates the minimum loss ratio requirement and has administrative expenses that are too high, they must: A- Make refunds to customers and lower their administrative expenses B- Re-underwrite their book of business C- File for a rate increase as soon as possible D- Make refunds to customers 18) Under the PPACA, if an employer offers health insurance to its employees, it must be offered to all eligible employees within ___ days of their start date. A- 90 B- 10 C- 60 D- 30 19) Advanced premium tax credit (APTC) is available to persons who purchase any metal level of coverage on the Exchange and have an income of not more than ____ % of the Federal Poverty Level. A- 133 B- 400 C- 300 D- 200 20) In order to avoid owing a penalty for not having insurance on your tax return, a person must have a qualified health benefit plan for a minimum of ____ months during a given year. A- Ten (10) B- Six (6) C- Twelve (12) D- Nine (9) 21) What is the actuarial value of the platinum tier of benefits on the Exchange? A- 70% B- 60% C- 80% D- 90% B- Beneficiaries C- Insureds D- Subscribers D- Subscribers 3) Individuals enrolled in a health care plan offered by an HMO, including covered dependents, are commonly referred to as: 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 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