USAA Test Questions with 100% Correct Answers | Verified | Updated 2024, Exams of Advanced Education

Download USAA Test Questions with 100% Correct Answers | Verified | Updated 2024 and more Exams Advanced Education in PDF only on Docsity! USAA Test Questions with 100% Correct Answers | Verified | Updated 2024 What type of reinsurance contract involves two companies automatically sharing their risk exposure? - Correct Answer-treaty A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a - Correct Answer-risk retention group What is the name of the law that requires insurers to disclose information gathering practices and where the information was obtained? - Correct Answer-Fair Credit Reporting Act The stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called: - Correct Answer-reserves A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of its members is known as: - Correct Answer-fraternal benefit society If a contract of adhesion contains questionable language, to whom would the interpretation be in favor of? - Correct Answer-insured What is a warranty? - Correct Answer-is a statement guaranteed to be true A policy of adhesion can only be modified by whom? - Correct Answer-insurance company Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements? - Correct Answer-Legal Purpose (Insurable Interest) Which of these is considered a statement that is assured to be true in every respect? - Correct Answer-warranty Which of these is NOT a type of agent authority? - Correct Answer-principal The Consideration clause of an insurance contract includes: - Correct Answer-the schedule and amount of premium payments What is the consideration given by an insurer in the Consideration clause of the life policy? - Correct Answer-Promise to pay a death benefit to a named beneficiary Who makes the legally enforceable promises in a unilateral insurance policy? - Correct Answer-insurance company All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT: - Correct Answer-bilateral At what point does an informal contact become binding? - Correct Answer-When one party makes an offer and the other party accepts that offer. Which of these arrangements allows one to bypass insurable interest laws? - Correct Answer-Investor-Originated Life Insurance Taking receipt of premiums and holding them for the insurance company is an example of - Correct Answer-fiduciary responsibility Life and health insurance policies are: - Correct Answer-unilateral contracts What type of life insurance gives the greatest amount of coverage for a limited period of time? - Correct Answer-Term life Which type of life policy contains a monthly mortality charge as well as self-directed investment choices? - Correct Answer-Variable Universal Life T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this? - Correct Answer-renewable Which of the following policies is characterized by a flexible premium and death benefit and allows the policyowner control of the investment aspect of the plan? - Correct Answer-Variable universal life D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed? - Correct Answer-Level term A policy that becomes a Modified Endowment Contract (MEC) - Correct Answer-will lose many of its tax advantages Term insurance has which of the following characteristics? - Correct Answer-Expires at the end of the policy period What type of life policy covers two people and pays upon death of the last insured? - Correct Answer-survivorship A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision? - Correct Answer-Payor provision P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability? - Correct Answer-P will still receive declared dividends N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot? - Correct Answer-exclusion A primary beneficiary has died before the insured in a life insurance policy. A contingent beneficiary is also named in the policy. Which of the following will occur when the inured dies? - Correct Answer-Proceeds will go to the contingent beneficiary Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? - Correct Answer-Life Income A policyowner is able to choose the frequency of premium payments through what policy feature? - Correct Answer-Premium Mode How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy? - Correct Answer-If the primary beneficiary dies before the insured If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act? - Correct Answer-Insured's contingent beneficiary Which statement is INCORRECT regarding the federal income tax treatment of life insurance? - Correct Answer-Entire cash surrender value is taxable Which premium schedule results in the lowest cost to the policyowner? - Correct Answer-annual On a life insurance policy, who is qualified to change the beneficiary designation? - Correct Answer-Policyowner J chooses a monthly premium payment mode on his Whole Life insurance policy. Which of these statements is correct? - Correct Answer-The gross premium is higher on a monthly payment mode as compared to being paid annually A policyowner's rights are limited under which beneficiary designation? - Correct Answer-irrevocable P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to - Correct Answer-P only Quarterly premium payments increase the annual cost of insurance because - Correct Answer-interest to the insurer is decreased while the administrative costs are increased Which of the following statements is CORRECT regarding the tax treatment of a lump- sum payment paid to a life insurance policy's primary beneficiary? - Correct Answer- Which of the following statements is CORRECT regarding the tax treatment of a lump- sum payment paid to a life insurance policy's primary beneficiary? - Correct Answer-All proceeds are income tax free in the year they are received A whole life insurance policyowner does not wish to continue making premium payments. Which of the following enables the policyowner to sell the policy for more than its cash value? - Correct Answer-Life settlement contract Which type of life insurance beneficiary requires his/her consent when a change of beneficiary is attempted by the policyowner? - Correct Answer-Irrevocable beneficiary In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and - Correct Answer-the initial premium Why is an applicant's signature required on a life insurance application? - Correct Answer-To attest that the statements on the application are accurate to the best of the applicant's knowledge An incomplete life insurance application submitted to an insurer will result in which of these actions? - Correct Answer-Application will be returned to the writing agent All of these are considered sources of underwriting information about an applicant EXCEPT - Correct Answer-Rating services K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used? - Correct Answer-Conditional Before a life insurance policy is issued, which of these components of the contract is required? - Correct Answer-Applicant's signature on application Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation? - Correct Answer-The policy was returned within the free-look period, premium will be fully refunded. At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid? - Correct Answer-At the time of application When an insurance application is taken by a producer, which of these statements is true? - Correct Answer-Any changes made on the application require the applicant's initials. What action should a producer take if the initial premium is NOT submitted with the application? - Correct Answer-Forward the application to the insurer without the initial premium Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take? - Correct Answer-Return to customer, collect a new check made out to the insurance company, and send the new check out to the insurance company. P is a producer who notices 5 questions on a life application were not answered. What actions should P take? - Correct Answer-Set up a meeting with the applicant to answer the remaining questions Which Federal law allows an insurer to obtain an inspection report on a potential insured? - Correct Answer-Fair Credit Reporting Act What is the purpose of the USA Patriot Act? - Correct Answer-detect and deter terrorism Which of the following statements is CORRECT about an agent who is taking an insurance application? - Correct Answer-The agent should have the applicant initial any changes made on the application. S, while in the process of converting her group life insurance to an individual policy, dies. What happens to the claim her beneficiary submits? - Correct Answer-Full benefits are payable under the Master contract Which requirement must be met for an association to be eligible for a group life plan? - Correct Answer-Group was formed for a purpose other than acquiring insurance. Under a trustee group life policy, who would be eligible for a certificate of coverage? - Correct Answer-Employee What type of group insurance plan involves employees sharing the cost? - Correct Answer-contributory plan Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company? - Correct Answer-Annuity A 55-year-old recently received a $30,000 distribution from a previous employer's 401k plan, minus $6,000 withholding. Which federal taxes apply if none of the funds were rolled over? - Correct Answer-Income taxes plus a 10% penalty tax on $30,000 Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted? - Correct Answer-If Tom's employment is terminated, 20% of the funds will be forfeited A qualified profit sharing plan is designed to: - Correct Answer-allow employees to participate in the profits of the company What is considered a valid reason for small businesses to insure the lives of its major shareholders? - Correct Answer-Fund a buy-sell agreement. In a key employee life insurance policy, the third party owner can be all of the following EXCEPT: - Correct Answer-insured A Key Employee policy is taken out by Company X on its vice president. Ten years later, this employee leaves Company X and begins working for Company Y. If this individual were to die and the policy is still in force and unchanged, where would the death proceeds be directed? - Correct Answer-Company X Which of these is NOT a reason for a business to buy key person life insurance? - Correct Answer-A pension deficiency if the key employee dies In life insurance, the needs approach is mostly established: - Correct Answer-How much life insurance a client should apply for The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers (and their families) whose employment has been terminated the right to: - Correct Answer- Continue group health benefits Which of the following statements does NOT accurately describe the tax treatment of premiums and benefits of individual Accidental and Health insurance? - Correct Answer- Disability income policy premiums are tax-deductible T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary? - Correct Answer-Request of the change will be refused XYZ Company pays the entire premium for its group health plan. The MINIMUM percentage of eligible employees that must be covered is - Correct Answer-100% The provision in a Group Health policy that allows the insurer to postpone coverage for a covered illness 30 days after the policy's effective date is referred to as the: - Correct Answer-Waiting period When an employee is required to pay a portion of the premium for an employer/employee group health plan, the employee is covered under which of the following plans? - Correct Answer-Contributory A policyowner would like to change the beneficiary on an Accidental Death and Dismemberment (AD&D) insurance policy and make the change to permanent. Which type is designation would fulfill this need? - Correct Answer-Irrevocable The reason for a business having a Business Overhead Expense Disability Plan is to cover - Correct Answer-Fixed business expenses All students attending a large university could be covered by - Correct Answer-A blanket policy Group/voluntary long-term care policy premiums are typically deducted from the employee's income and - Correct Answer-are less costly as compared to individual long term care coverage G is an accountant who has ten employees and is concerned about how the business would survive financially if G became disabled. The type of policy which BEST addresses this concern is - Correct Answer-Business overhead expense P is a new employee and will be obtaining non-contributory group Major Medical insurance from her employer. Which of the following actions must she take during the open enrollment period? - Correct Answer-Sign an enrollment card Business Overhead Expense policy would cover which of the following if a business owner becomes disabled? - Correct Answer-Utilities and office rent The benefits under a Disability Buy-out policy are: - Correct Answer-Payable to the company or another shareholder A medical care provider which typically delivers health services at its own local medical facility is known as a - Correct Answer-Health Maintenance Organization A situation where a group of physicians are salaried employees and conduct business in an HMO facility is called a(an): - Correct Answer-closed panel A 66 year old is covered under a group health plan while employed with a business that has 40 employees. If she injurers herself while walking in the park, what coverage would be considered primary? - Correct Answer-Her group health plan J is a subscriber to a plan which contracts with doctors and hospitals to provide medical benefits at a preset price. What type of plan does J belong to? - Correct Answer-Health Maintenance Organization Which of these is considered a true statement regarding Medicaid? - Correct Answer- Funded by both state and federal governments What does Medicare parts A and B both cover? - Correct Answer-Part A covers hospitalizations, part B covers Doctor's services What type of provider is known for stressing preventive medical care? - Correct Answer- HMO Medicaid was designed to assist individuals who are - Correct Answer-Below a specific income limit Which of the following statements is true about most Blue Cross/Blue Shield organizations? - Correct Answer-They are nonprofit Which of the following BEST describes how a Preferred Provider Organization (PPO) is less restrictive than a Health Maintenance Organization (HMO)? - Correct Answer-More physicians to choose from Which of these is NOT a characteristic of Health Reimbursement Arrangement - Correct Answer-Employee funds the HRA entirely Comprehensive Major Medical policies usually combine: - Correct Answer-Major Medical with Basic Hospital/Surgical coverage Which of the following types of health coverage frequently use deductibles? - Correct Answer-Major Medical Policy A comprehensive major medical health insurance policy contains and Eligible Expenses provision which identifies the types of health care services that are covered. All of the following health care services are typically covered, EXCEPT for: - Correct Answer- Experimental and investigative services Which of the following BEST describes a Hospital Indemnity policy? - Correct Answer- Coverage that pays a stated amount per day of a covered hospitalization. This type of deductible provision waives the deductible for all family members after some of them has satisfied individual deductibles within the same year: - Correct Answer-Family maximum deductible Which of the following medical expenses does Cancer insurance NOT cover? - Correct Answer-Arthritis The individual most likely to buy Medicare Supplement policy would be a(n): - Correct Answer-68-year old male covered by Medicare T owns an Accident & Health policy and notifies her insurance company that she has chosen a less hazardous occupation. Under the Change of Occupation provision, which of the following actions may her insurance company take? - Correct Answer-Increase her policy's coverage amount A disability income policyowner recently submitted a claim for a chronic neck problem that has now resulted in total disability. The original neck injury occurred before the application was taken 5 years prior. The neck injury was never disclosed to the insurer at the time of application. How will the insurer handle this claim? - Correct Answer- Claim will be paid and coverage will remain in force Which type of renewability best describes a Disability Income policy that covers an individual until the age of 65, but the insurer has the right to change the premium rate? - Correct Answer-Guaranteed renewable An insurer must provide an insured with claim forms within __ days after receiving notice of a loss. - Correct Answer-15 Which type of rider would be added to an Accident and Health policy if the policyowner wants to ensure the policy will continue if he/she ever becomes totally disability? - Correct Answer-Waiver of Premium rider S filed a written Proof of Loss for a Disability Income claim on September 1. The insurance company did not respond to the claim. S can take legal action against the insurer beginning - Correct Answer-November 1 Insurers may request a hearing within ___ if their policy is rejected - Correct Answer-20 days Which of the following provisions specifies how long a policyowners health coverage will remain in effect if the policyowner does not pay the premium when it is due? - Correct Answer-grace period When an insurance company sends a policy to the insured with an attached application, the element that makes the application part of the contract between the insured and the insurer is called the - Correct Answer-Entire Contract provision After an insured gives notice of loss, what must he/she do if the insurer does not furnish forms? - Correct Answer-File written proof of loss If an individual has an Accidental Death and Dismemberment policy and dies, an autopsy can be performed in all these situations, EXCEPT: - Correct Answer-When the state prohibits this by law According to the Mandatory Uniform Policy Provisions, what is the maximum amount of time after the premium due date during which the policy remains in force even though the premium has not been paid? - Correct Answer-31 days What should an insured do if the insurer does not send claims forms within the time period set forth in a health policy's Claims Forms provision? - Correct Answer-Submit the claim in any form The sections of an insurance contract which limit coverage are called: - Correct Answer- Exclusions If an insurance company issues a Disability Income policy that it cannot cancel or for which it cannot increase premiums, the type of renewability that best desribes this policy is called - Correct Answer-noncancellable Which of the following health policy provisions states that the producer does NOT have the authority to change the policy or waive any of its provisions? - Correct Answer- Entire Contract The Notice of Claims provision requires a policyowner to - Correct Answer-notify an insurer of a claim within a specified time With Accidental Death and Dismemberment policies, what is the purpose of the Grace Period? - Correct Answer-Gives the policyowner additional time to pay past due premiums What must the policyowner provide to the insurer for validation that a loss has occurred? - Correct Answer-Proof of Loss The policy provision that entitles the insurer to establish conditions the insured must meet while a claim is pending is - Correct Answer-Time Limit on Certain Defenses P is self-employed and owns an Individual Disability Income policy. He becomes totally disabled on June 1 and receives $2,000 a month for the next 10 months. How much of this income is subject to federal income tax? - Correct Answer-$0 T is receiving $3,000/month from a Disability Income policy in which T's employer had paid the premiums. How are the $3,000 benefit payments taxable? - Correct Answer- Benefits are taxable to T An agent takes an individual Disability Income application, collects the appropriate premium, and issues the prospective insured a conditional receipt. The next step the insurance company will take is to - Correct Answer-determine if the applicant is an acceptable risk by completing standard underwriting procedures Information obtained from a phone conversation to the proposed insured can be found in which of these reports? - Correct Answer-inspection report A prepaid application for individual Disability Income insurance was recently submitted to an insurer. When the insurer received the Medical Information Bureau (MIB) report, the report showed that the applicant had suffered a stroke 18 months ago, something that was not disclosed on the application. Which of the following actions would the insurance company NOT take? - Correct Answer-Send a notice to the MIB that the applicant was declined Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy? - Correct Answer-Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take? - Correct Answer-Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company Which of the following statements about the classification of applicants is INCORRECT: - Correct Answer-Substandard applicants are never declined by underwriters Which of the following are NOT managed care organizations? - Correct Answer-Medical Information Bureau (MIB) Which of the following BEST describes how pre-admission certificates are used? - Correct Answer-Used to prevent nonessential medical costs How often must an insurance agent license normally be renewed? - Correct Answer- Every 2 years Credit Life insurance is - Correct Answer-Insurance that is issued on the life of the person who has the debt (debtor) and the creditor owns and is the beneficiary of the policy. During a sales presentation for a participating life insurance policy, an agent MUST - Correct Answer-Make a prospect understand that dividends are NOT guaranteed A new agent must complete at LEAST___ hours of continuing education within 24 months of initial licensure. - Correct Answer-24 What is the minimum benefit period that must be offered by a Long-Term Care policy? - Correct Answer-12 months