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Insurance Exam Questions

With a Straight Life policy, what happens if the insured lives to age 100
The policy matures and the cash value is paid to the insured.
Most policies will pay the accident death benefits as long as the death is caused by the accident and occurs within
90 days.
What is the maximum period of coverage under COBRA?
36 months
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?
The surviving beneficiary will continue receiving 2/3 of the benefit paid when the insured was alive.
What percentage of individually-owned disability income is taxable?
0%
How are the variable annuities regulated?
By state and federal agencies
An insured committed suicide 6 months after his life insurance policy was issued. The insurer will
Refund the premiums paid.
Which of the following conditions would a disability income policy most likely NOT require in order to qualify for benefits?
A specified income status prior to the disability
In Pennsylvania, a “pre-existing condition” is defined as a disease or condition for which medical attention was received at least
90 days prior to the effective date of coverage.
An insured was involved in an accident and could not perform her current job for 3 years. If the insured could reasonably perform another job utilizing similar skills after 1 month, for how long would she be receiving benefits under an “own occupation” disability plan?
2 years
After a person’s employment is terminated, it is possible to obtain individual health insurance after losing the group health coverage provided by the employer. Which of the following is NOT true?
By law, the new, individual policy must provide the same benefits as the group insurance policy.
Amanda is scheduled for a root canal. Which type of treatment is this?
Endodontics
Which of the following is deemed to be consideration on the part of the applicant, in respect to the Consideration Clause?
Payment of premium
As it pertains to group health insurance, COBRA stipulates that
Group coverage must be extended for terminated employees up to a certain period of time at the former employee’s expense.
Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income?
Income period
What of the following must an alien insurer obtain in order to transact insurance within a given state?
Certificate of Authority
An applicant is discussing his options for Medicare supplement coverage with his agent. He is eligible for the Medicare supplement plans. What is the insurance company obligated to do?
Offer the supplement policy on a guaranteed issue basis
The paid-up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy.
Which of the following is true regarding a term health policy?
It is nonrenewable.
Which of the following is true regarding benefits paid to disabled employees?
They may be subject to taxation if the premium was paid by the employer.
All of the following are differences between individual and group health insurance EXCEPT
Individual insurance does not require medical examinations, while group insurance does require medical examinations.
Your client owns a Market Value Adjusted Annuity. In order to pay for a series of large, unexpected medical bills, he decides to surrender his policy prematurely. Which of the following will determine the penalty that that annuity owner will have to pay?
Current interest rate at the time of surrender
For an individual who is eligible for Medicare at age 65, and who is still employed and covered under the employer’s plan, which of the following is true?
The employer plan is primary coverage, and Medicare is secondary coverage
Which of the following expenses is NOT covered by a health insurance policy?
Funeral
According to the incontestability provision, which of the following is a reason an insurer can deny a claim on a policy that has been in force for 2 years?
Insured stopped paying premiums
A 12-year-old child applies for a life insurance policy. The applicant excels in school and leads a very healthy lifestyle. What risk classification would this applicant most likely receive?
Declined
All of the following are characteristics of a Major Medical Expense policy EXCEPT
Blanket coverage.
Which of the following is NOT the purpose of HIPAA?
To provide immediate coverage to new employees who had been previously covered for 18 months
Which provision states that the insurance company must pay Medical Expense claims immediately?
Time of Payment of Claims
An insured’s long-term care policy is scheduled to pay a fixed amount of coverage of $120 per day. The long-term care facility only charged a $100 per day. How much will the insurance company pay?
$120 a day
Pete has a major medical policy with a $500 deductible and a co-insurance clause of 80/20. If he incurs medical expenses of $4,000, the insurer would pay
$2,800.
The death protection component of Universal Life Insurance is always
Annually Renewable Term
What would be considered a disadvantage of owning a fixed annuity?
Decrease in purchasing power of the benefit in times of inflation
If the insured under a disability income insurance policy changes to a more hazardous occupation after the policy has been issued, and a claim is filed, the insurance company should do which of the following?
Adjust the benefit in accordance with the increased risk.
Which of the following would qualify as a Section 1035 exchange?
Cash Value Life Insurance Policy to a Cash Value Life Insurance Policy
Children’s riders attached to whole life policies are usually issued as what type of insurance?
Decreasing term
In long term care policies, the term “chronically ill” means an individual who is unable to perform at least 2 activities of daily living – for at least
90 days.
A Universal Life Insurance policy is best described as
An Annually Renewable Term policy with a cash value account.
How many eligible employees must be included in a contributory plan?
75%
A term insurance policy that provides coverage, with level premium and level death benefit, for the number of years equal to the average life expectancy of the insured, is what kind of contract?
Life expectancy contract
Most LTC plans have which of the following features?
Guaranteed renewability
If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered
An unfair trade practice.
An agent had his license suspended, but continued to transact insurance. In this situation, which of the following penalties could he face?
$10,000 fine
The President of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?
Corporations are never legal annuitants.
What option allows the insured to periodically increase benefit levels without providing evidence of insurability?
Guarantee of insurability
What is the maximum period that an insurer would pay benefits in accordance with an Additional Monthly Benefit rider?
1 year
Every insurer marketing Long-Term Care insurance must establish marketing procedures to ensure all of the following EXCEPT
LTC policies are marketed effectively to prospective insureds.
A person is enrolled in Part A of Medicare and not Part B. Three months into coverage, he applies for a Medicare supplement policy. Which of the following is true?
The insurer can deny coverage.
Which is NOT true regarding an insured who is considered to be a standard risk?
The insured may have to pay slightly higher premiums.
If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined?
The surrender charge is a percentage of the cash value and decreases over time.
When is a suicide covered by a life insurance policy?
If the policy has been in force for more than 2 years
What type of annuity can be purchased with a single premium and provides benefit payments immediately?
Immediate
Two equal partners in a business worth $150,000 are using a Cross Purchase plan to protect against the death of each other. Which of the following statements would be correct?
Partner A buys a policy on partner B in the amount of $75,000 naming Partner A as beneficiary.
A couple receives a set amount of income from their annuity. When the wife dies, the husband no longer receives annuity payments. What type of annuity did the couple buy?
Joint life
All of the following are considered to be supplemental benefits under an HMO plan EXCEPT
Preventive services.
Annuity contracts grow tax deferred. That means that
There is no current income taxation upon the growth in the annuity.
Which of the following can surrender a deferred annuity contract?
Only the annuity owner
An agent offers his client free tickets to the Super Bowl game in exchange for the purchase of an insurance policy. The agent is guilty of
Rebating.
Which of the following statements about a suicide clause in a life insurance policy is true?
Suicide is excluded for a specific period of years and covered thereafter.
An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?
Illegal
Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT
The loss may be intentional.
Insurers must notify the Commissioner’s office as to whether or not a life insurance policy will be marketed with illustrations. Certification of that notification must be provided annually within how many days of the anniversary of the original certification?
30 days
Felix has a disability income policy with an annual premium of $300 and a benefit amount of $300 per month. Felix was disabled and because of the policy’s elimination period, had no income at the time it was due. The policy contains the optional Unpaid Premium provision. Now that the elimination period has been satisfied, Felix’s first disability payment will be
Nothing.
If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined?
The surrender charge is a percentage of the cash value and decreases over time.
A policy which covers medical costs related to a specific condition is called a
Dread Disease Policy.
For how many days of skilled nursing facility care will Medicare pay benefits?
100
Garrett is involved in a car accident. In addition to general, less serious injuries, he permanently loses the use of his leg and is rendered completely blind. The blindness improves a month later. To what extent will he receive Presumptive Disability benefits?
No benefits
Violation of unfair discrimination law may result in all of the following penalties EXCEPT
Fines of up to $1,000 for each act.
All of the following are correct about the required provisions of a health insurance policy EXCEPT
A reinstated policy provides immediate coverage for an illness.
Which of the following distinguishes a Group Life Policy from an Individual Life Insurance Policy?
Reduced adverse selection
Which of the following is NOT an enrollment period for Medicare Part A applicants?
Automatic enrollment
All of the following are characteristics of a group life insurance plan EXCEPT
There is a requirement to prove insurability on the part of the participants.
A situation in which a person can only lose or have no change represents
Pure risk.
Anna loses her left arm in an accident that is covered by her Accidental Death and Dismemberment policy. What kind of benefit will Anna most likely receive from this policy?
The capital amount in a lump sum
Which of the following is true regarding health insurance?
It could provide payments for loss of income.
Under HIPAA, which of the following is INCORRECT regarding eligibility requirements for conversion to an individual policy?
An individual who was previously covered by group health insurance for 6 months is eligible.
When is the insurability conditional receipt given?
When the premium is paid at the time of application
Mortality – Interest + Expense =
Gross premium
A long stretch of national economic hardship causes a 7% rate of inflation. Devonne notices that the face value of her life insurance policy has been raised 7% as a result. What is the name of the provision that caused this change?
Cost of Living Rider
When a producer holding a certificate or a brokers license has a change in his/her residence or business address, he/she must notify the Department of Insurance and any company for which the producer holds an appointment within
30 days.
Which provision may be added to a permanent life policy, at no cost, that insures that the policy will not lapse so long as there is cash value?
Automatic Premium Loan option
When is a suicide covered by a life insurance policy?
If the policy has been in force for more than 2 years
If a new individual long-term care policyholder is not satisfied with a new policy, within how many days can the insured return the policy for a full premium refund?
30
An insured owns a term policy with a guaranteed renewable option. When the end of the policy draws near, the insured answers medical questions in order to prove insurability and qualifies for a discounted premium rate. Which option best describes this scenario?
Re-entry
Which of the following is an example of a non-qualified retirement plan?
Executive bonus plan
After a person’s employment is terminated, it is possible to obtain individual health insurance after losing the group health coverage provided by the employer. Which of the following is NOT true?
By law, the new, individual policy must provide the same benefits as the group insurance policy.
In which of the following locations would skilled care most likely be provided?
In an institutional setting
Which authority is NOT stated in an agent’s contract but is required for the agent to conduct business?
Implied
The benefits received by the business in a Disability Buy-Sell policy are
Income tax free
Which of the following statements is true regarding the cash value in a Universal life policy?
The insurer credits the cash value in the policy with a current interest rate.
The policy, in combination with the application, is joined together into one entity called the
Entire Contract
What type of benefit helps to pay for accidental injuries that are not severe enough to qualify as disabilities?
Medical Reimbursement Benefit
In forming an insurance contract, when does an acceptance usually occur?
When an insurer approves a prepaid application
Which of the following is the term for the specific dollar amount that must be paid by an HMO member for a service?
Copayment
What is the penalty for IRA distributions that are below the required minimum for the year?
50%
In order to become licensed to become a viatical settlement provider, an application must be made with
The Insurance Department
Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within
90 days of a loss.
Which of the following is not true of Disability Buy-Sell coverage?
Benefits are considered taxable income to the business.

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