Texas General Lines - Life, accident and health insurance PRACTICE EXAM, Exams of Insurance Economics

Download Texas General Lines - Life, accident and health insurance PRACTICE EXAM and more Exams Insurance Economics in PDF only on Docsity! Texas General Lines - Life, accident and health insurance PRACTICE EXAMEXAM WITH ACCURATE ANSWERS LATEST VERSION UPDATE 2025-2025 GUARANTEED PASS 10) Which of the following contracts requires that a series of benefit payments be made at specified intervals? A- 20-Pay Life B- Modified Whole Life C- Annuity D- Ordinary Whole Life - Ans - C- Annuity 11) If a client wants cash value life insurance with a flexible premium and an adjustable death benefit that will allow the policy owner a choice of various cash value investment options, he should buy: A- Variable Life B- Universal Life C- Adjustable Life D- Variable/Universal Life - Ans - D- Variable/Universal Life 12) If a person wants to invest a lump sum in an annuity that may appreciate along with market and economic conditions, they should buy a: A- Flexible premium Annuity B- Fixed Annuity C- Deferred Annuity D- Variable Annuity - Ans - 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 - Ans - 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 - Ans - 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 – Ans - 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: - Ans - 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 - Ans - 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 - Ans - 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 - Ans - 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 - Ans - A- Is convertible to permanent Whole Life without a physical exam B- Extended Term Option C- Automatic Premium Loan D- Mode of Payment - Ans - 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 - Ans - 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? - Ans – 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: - Ans – 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: - Ans - 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: - Ans - 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 - Ans - 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? - Ans - A- Reduced Paid-Up option B- Payor Benefit Rider C- Waiver of Premium provision D- Reduction of Premium option 14) Which of the following is true about the Misstatement of Age provision - Ans - A- It allows the insurer to adjust benefits B- It allows the insurer to change the premium C- It allows the insurer to void the contract D- It allows the insurer to contest a claim during the first 2 15) Which of the following statements about a typical Suicide clause in a Life insurance policy is true? - Ans - A- Suicide is excluded for a specific period of years and covered thereafter B- Suicide is excluded as long as the policy is in force C- Suicide is covered for a specific period of years and excluded thereafter D- Suicide is covered as long as the policy is in force 16) A $10,000 Life insurance policy with a Triple Indemnity clause has been in force for three years. The insured is injured in a train wreck and dies in a hospital five months later. The death proceeds payable under the policy would be: - Ans - A- $20,000 B- $ -0- C- $30,000 D- $10,000 17) Grandma owns a policy on her grandchild. Which rider would kick in if Grandma should die tomorrow? - Ans - A- Guaranteed Insurability Rider B- Waiver of Premium Rider C- Payor Benefit Rider D- Child Term Rider 18) Dividend projections may be included in a proposal for Life insurance: - Ans - A- When there is a clear statement that they are not guaranteed B- Only upon the request of the applicant C- When they are required to be applied to future premiums due D- When past results are used as the basis for future projections 19) What Life insurance policy provision applies if a policy lapsed last year and the insured wants it back? - Ans - A- Assignment B- Reinstatement C- Non-forfeiture D- Grace Period 20) A customer buys a $25,000 Life insurance policy with a $25,000 Accidental Death Benefit rider attached. If he dies of cancer, how much will his policy pay? - Ans - A- Nothing B- $25,000 C- $50,000 D- $75,000 21) The contingent beneficiary will receive policy proceeds when: - Ans - 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: - Ans - 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: - Ans - A- Incontestability Clause B- Insuring Clause C- Beneficiary Clause D- Consideration Clause 24) Which of the following is true about the Insuring Clause? - Ans - 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? - Ans - A- October 31st B- October 18th C- October 10th D- October 1st C- Occupation D- Age - Ans - 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 - Ans - 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 - Ans - 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 - Ans - 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 - Ans - 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 - Ans - C- At the time of application 7) All of the following are a part of a Life insurance policy, EXCEPT the: - Ans - 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: - Ans - 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: - Ans - A- The applicant has the right to obtain a copy of the consumer report directly from an insurance company that used the report B- The reporting agency cannot issue any report containing adverse information about the applicant that predates the report by more than seven years, except in the case of a bankruptcy, which may be reported for a 14-year period C- The applicant has the right to obtain disclosure of the substance of the information in the consumer report from the reporting agency D- The applicant has the right to obtain the identity of other inquirers who have obtained consumer reports on him within the past six months from the reporting agency 10) On May 8th a prospect filled out an application for a life insurance policy but paid no premium. The insurance company approved the application on May 14th and issued the policy on May 15th. The producer delivered the policy on May 26th and collected the first premium. The coverage became effective on: - Ans - A- May 26th B- May 8th C- May 15th D- May 14th 11) An insurable interest must exist when: - Ans - 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: - Ans - 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: - Ans - 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: - Ans - 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: - Ans - 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: - Ans - 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? - Ans - 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: - Ans - 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 10) A Life insurance policy of which the cash value is over-funded according to IRS rules is known as: - Ans - 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: - Ans - 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? - Ans - 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: - Ans - 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: - Ans - 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? - Ans - A- $1,500 B- $1,000 C- $2,000 D- $500 16) Which of the following statements is true about a policy assignment? - Ans - 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 - Ans - 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 - Ans - 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 - Ans - 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 - Ans - 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 - Ans - 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 - Ans - 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? - Ans - 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: - Ans - 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: - Ans - 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: - Ans - 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: - Ans - 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: - Ans - 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? - Ans - 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? C- Between the effective date of the policy and the date on which payments under the policy become due D- Between the first day of disability and the day to which the disability must continue before it can result in the insured receiving any benefits 27) Which of the following statements is USUALLY true about the benefits of a Group Short-Term Disability Income policy? - Ans - A- They are payable for accidents covered by Workers' Compensation B- They are not payable for accidents covered by Workers' Compensation C- They are not affected by Workers' Compensation D- They are payable when expenses exceed Workers' Compensation benefits 28) Which of the following is INCORRECT regarding a Disability Income policy? - Ans - 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 - Ans - 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 - Ans - 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 - Ans - 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 - Ans - 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 - Ans - 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 - Ans - 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: - Ans - 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? - Ans - 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: - Ans - 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? - Ans - 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? - Ans - 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? - Ans - 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: - Ans - 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? - Ans - 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? - Ans - 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: - Ans - 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? - Ans - A- Insuring clause B- Pre-existing Conditions clause C- Eligibility clause D- Consideration clause changed her occupation from insurance producer to farmer without notifying the insurance company and she was recently injured. She would most likely receive which of the following from the insurance company? - Ans - A- $500 per month B- Less than $500 per month C- No benefits D- More than $500 per month 31) The Time of Payment of Claims provision requires that an insurance company pay Disability Income benefits no less frequently than: - Ans - A- Quarterly B- Semi-annually C- Annually D- Monthly 32) When does the Free Look start? - Ans - A- Date of application B- At policy delivery C- Policy issue D- Date of the Conditional Receipt 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? - Ans - 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? - Ans - 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: - Ans - 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? - Ans - A- 30 B- 20 C- 60 D- 90 37) To be eligible for benefits under the Waiver of Premium rider, the insured must: - Ans - 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: - Ans - 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: - Ans - 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? - Ans - 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 - Ans - 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 - Ans - 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 - Ans - 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 - Ans - 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 B- Medicaid C- Critical illness plan D- Medicare - Ans - 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 - Ans - 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 - Ans - D- 65 HEALTH SECTION 4 - Ans - 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 - Ans - 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 - Ans - 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: D- Witness the applicant's signature 8) Which party to the insurance contract makes an enforceable promise? - Ans - 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 - Ans - 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? - Ans - 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: - Ans - 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: - Ans - 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? - Ans - 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? - Ans - 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? - Ans - 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? - Ans - 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: - Ans - 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: - Ans - 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 - Ans - 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 - Ans - B- Agent 2) Texas resident agents must complete _____ hours of continuing education every two years. A- 10 B- 40 C- 24 D- 20 - Ans - 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 - Ans - 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 - Ans - 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 - Ans - D- Coercion 6) Shareholders own a ___________ insurer: - Ans - A- Stock B- Fraternal C- Reciprocal D- Mutual 7) An insurance company authorized to sell insurance in Texas, but with their home office in Illinois, is called a/an: - Ans - A- Alien company B- Domestic company C- Foreign company D- Surplus company 8) Regarding Claims Methods and Practices, all of the following are true EXCEPT: - Ans - A- Insurers cannot deny unsubstantiated claims B- Insurers must conduct a reasonable investigation prior to denial of a claim C- Insurers may settle a claim by attempt to reach a compromise D- Insurers cannot require insureds to pay the costs of a claims investigation 24) The maximum monetary penalty for an agent who violates an insurance law, rule or order is: - Ans - 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: - Ans - A- Ever again B- Except by special permission of the governor C- For at least 5 years D- For six months 26) Defamation is: - Ans - A- Concealment B- False advertising C- Misrepresentation D- Misstating financial condition 27) insurable interest must exist on property insurance: - Ans - A- At time of loss B- At time of application C- At time of policy delivery D- It need not exist 28) Which of the following indicates free competition is occurring: - Ans - 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: - Ans - 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: - Ans - 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: - Ans - 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: - Ans - 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: - Ans - A- Fraud B- Controlled business C- Captive business D- Exclusive business 34) Which of the following is NOT considered an unfair practice: - Ans - 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: - Ans - 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: - Ans - 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: - Ans - 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: - Ans - A- Defamation B- Intimidation C- Coercion D- Deceptive advertising 39) An insurer must acknowledge receipt of a Notice of Claim within _____ days: - Ans - A- 20 B- 10 C- 5 D- 30 40) Who might receive dividends from a mutual insurer: - Ans - 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: - Ans - A- Show evidence of sufficient legal reserves to handle claims B- File rates C- File forms D- Maintain their home office in Texas 42) A mortgage company may do all of the following EXCEPT: - Ans - A- Buy coverage for you if you fail to do so as required by agreement B- Recommend an insurance company C- Require you to buy insurance from an authorized company D- Require you to buy insurance from them 43) An independent auto insurance agent's contract is terminated by the insurer he represents. How are his clients affected: - Ans - A- They may stay with the terminated agent and receive customary services B- They must transfer to another agent of the company C- They must apply for coverage through the Assigned Risk Pool D- They must insure elsewhere 44) To obtain a Texas license, you must do all EXCEPT: - Ans - A- Be 18 years of age B- Complete pre-license training C- Be fingerprinted D- Pass an exam 45) If an agent's license is suspended or revoked, what happens to their accounts: - Ans - A- They are automatically non-renewed B- They continue in force C- They are cancelled immediately D- They are assigned to another insurer SECTION 2 - TEXAS LIFE LAW - Ans - SECTION 2 - TEXAS LIFE LAW 1) "Twisting" is a commonly-used term describing: A- The making of misleading representations as to the financial condition of any insurer 15) Credit Life Insurance: - Ans - 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 - Ans - 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: - Ans - A- 10 B- 31 C- 63 D- 20 2) In a Family Health policy, coverage for a newborn child commences: - Ans - 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: - Ans - 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: - Ans - 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: - Ans - 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: - Ans - A- 15 B- 61 C- 31 D- 10 7) The Coordination of Benefits clause in group health insurance indicates: - Ans - 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. - Ans - 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: - Ans - 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: - Ans - 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. - Ans - 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: - Ans - 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: - Ans - 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 14) On a Group Medical Expense plan covering 20 or more employees, if an insured needs kidney dialysis, the primary coverage is provided by: - Ans - A- Medicare Part A B- Medicare Part B C- Medicaid D- The Group insurance plan 15) If an insured covered by a Disability Income policy is temporarily unemployed at the time he becomes disabled: - Ans - A- Coverage is limited to what Unemployment Insurance pays B- Coverage is limited to what Social Security pays C- The coverage will apply in full D- There is no coverage 16) Most mandatory provisions on individual health insurance policies protect: - Ans - A- The Commissioner B- The insurer C- The public D- The insured 17) Which of the following coverage may be excluded on a Medicare Supplement policy by the insurer: - Ans - A- Dental care and eyeglasses B- Mental or emotional disorders, alcoholism & drug addiction C- All answer options are correct D- Cosmetic surgery 18) The purpose of Medicare Supplement Insurance is: - Ans - A- To provide coverage for certain medical expenses before Medicare begins to pay B- To provide coverage to elderly people who are not covered under a corporate plan for retired employees C- To provide coverage for hospital, medical or surgical expenses that are not fully covered by Medicare D- To provide an alternative insurance plan for people who do not want to use Medicare 19) An insured who pays his premium monthly has a minimum grace period of: - Ans - A- 30 days B- Seven days C- 31 days D- 10 days 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: - Ans - 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: - Ans - 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. - Ans - A- 24 B- 35 C- 30 D- 40 9) Which of the following is not a metal level of coverage under the PPACA? - Ans - A- Bronze B- Gold C- Palladium D- Platinum 10) Under the PPACA, all of the following are essential health benefits EXCEPT: - Ans - 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? - Ans - 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. - Ans - 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? - Ans - 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? - Ans - A- 23 B- 26 C- 20 D- 19 15) Which of the following is not an essential health benefit? - Ans - 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. - Ans - 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: - Ans - 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. - Ans - 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. - Ans - 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. - Ans - 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? - Ans - A- 70% B- 60% C- 80% D- 90% 22) Under the PPACA, insurers who write group medical expense polices must maintain a calendar year minimum loss ratio (MLR) of at least ____ percent. - Ans - A- 50 B- 80 C- 85 D- 60 23) An insurer has a minimum loss ratio for its individual medical expense policies of 75% in 2015. What is the insurer required to do? - Ans - A- Charge an additional 10% in premiums in 2016 B- Refund 5% of the premiums collected to those insured on individual policies in 2015 C- Refund 10% of the premiums collected to those insured on group policies in 2015 D- Charge an additional 5% in premiums in 2016 24) Under the PPACA, medical expense policies must include coverage for ____ essential health benefits. - Ans - A- 10 B- 8 C- 15 D- 25 25) Which of the following statements is incorrect regarding the PPACA? - Ans - A- There can be no limit on benefits for essential health coverages B- Premiums may be based upon a person's plan category C- Individual medical expense policies may contain a probationary period of up to six (6) months D- As of 2014, there is an individual mandate that requires every person residing in the U.S., age 18 or older, to have health insurance or pay a penalty on their tax return 26) Which of the following is not an essential health benefit under the PPACA? - Ans - A- Emergency services B- Adult dental care C- Hospitalization D- Laboratory services SECTION 5 - TEXAS HMO LAW - Ans - SECTION 5 - TEXAS HMO LAW