Insurance Concepts and Policies, Exams of Nursing

Download Insurance Concepts and Policies and more Exams Nursing in PDF only on Docsity! 1 / 31 2023-2024 PEARSON VUE TEXAS LIFE AND HEALTH INSURANCE TEST QUESTIONS AND ANSWERS  Who is obligated to make sure all questions are answered and all necessary signatures are collected on the application?: The Agent  An underwriter is reviewing an applicant with an extensive medical history. Which of the following would give the underwriter a better understanding of how the applicant has been treated for various illnesses?: Attending physician's Statement  Which of the following would NOT be eligible for coverage under key person?: The owner of the shop  With Adjustable Life, the owner can change all of the following EXCEPT: The insured  Which of the following is provided by skilled medical personnel to those who need occasional medical assistance or rehabilitative care?: Intermediate care  Partial disability usually pays what percentage of the total disability benefit?: 50% 2 / 31  Which of the following long-term care benefits would provide coverage for care for functionally impaired adults on a less than 24-hour basis? A. Residential care B. Assisted living C. Home health care D. Adult day care: D. Adult day care  An insured's long-tern care policy is scheduled to pay fixed amount of coverage of $120 per day. The long-term care facility only charged $100 per day. How much will the insurance company pay? A. 20% of the total cost B. $120 a day C. $100 a day D. 80% of the total cost: B. $120 a day  In comparison to a policy that uses the accidental means definition, a policy that uses the accidental bodily injury definition would provide coverage that is A. More limited in duration B. Broader in duration C. Broder in general D. More limited in general: C. Broader in general  An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits? A. The entire living benefits is considered taxable income B. A portion of the benefits up to a limit is tax-free; the rest is taxable income C. Principle is tax free, but interest is taxed D. The entire benefits will be received tax free: B. B. A portion of the benefits up to a limit is tax-free; the rest is taxable income 5 / 31 D. Attained age: D. Attained age  Which of the following best describes the "first-dollar coverage" principle in basic medical insurance? A. The insured must first pay a deductible B. The insurer covers the first claim on the policy C. Deductibles and coinsurance are taxed first D. The insured is not required to pay a deductible: D. The insured is not required to pay a deductible  Which of the following determines the cash value of a variable life policy? A. The performance of the policy portfolio B. The company's general account C. The policy's guarantees D. The premium mode: D. The premium mode  An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? A. The date of the application B. The date of the medical exam C. The date of policy delivery D. The date of issue: B. The date of the medical exam  An applicant who receives a preferred risk classification qualifies for A. Higher premiums than a person who receives a sub-standard risk B. Higher premiums than a person who receives a standard risk C. Lower premiums than a person who receives a standard risk D. Dividends payable for lack of claims: C. Lower premiums than a person who receives a standard risk  All of the following statements about Medicare Part B are correct EXCEPT A. It is a compulsory program B. It covers services and supplies not covered by Part A C. It is financed by monthly premium D. It is financed by tax revenues: A. It is a compulsory program 6 / 31  With respect to the consideration clause, which of the following would be considered consideration on the part of the applicant for insurance? A. Providing warranties on the application B. Notice of policy cancellation C. Payment of premium D. Promise to renew the policy at the end of the policy period: C. Payment of premium  The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called A. Waiver of premium B. Guaranteed insurability C. Waiver of cost of insurance D. Payor benefit: A. Waiver of premium  Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? A. It is life contingency option B. The beneficiary receives the remainder of the principal amount upon the annuitant's death C. Payments can be made in installments and as a single cash refund D. It does not guarantee that the entire principal amount will be paid out: D. It does not guarantee that the entire principal amount will be paid out  An insurer advertises a health policy that is covered by the Life and Health Insurance Guaranty Association. The advertisement includes a short list of benefits and approximate rates. The end of the advertisement includes statement that protection is provided by the Guaranty Association. Which of the following is true? A.Mentioning the Guaranty Association in advertisement is considered to be unfair trade practice B. The advertisement must also include the contact information of the associ- ation C.The advertisement must also include the contact information of the Com- missioner of Insurance 7 / 31 D.Mentioning the Guaranty Association is mandatory when advertising in the state of Texas: A. Mentioning the Guaranty Association in advertisement is considered to be unfair trade practice  The commissioner of Insurance issues a Cease and Desist Order and immediately receives a request for the charges to be reviewed in a hearing. Within how many days must the hearing be held? A. 10 B.14 C. 30 D.60: C.30  What is the purpose of the Life Insurance Guaranty Association? A. To help protect policyowners and beneficiaries against financial loss caused by the insolvency of an insurance company B. To encourage life insurance to write substandard business C. To allow agents to continue to solicit insurance, even if the company they represent is financially impaired D. To protect the reputation of the insurance Department if they issue a Certificate of Authority to a company that becomes insolvent: A. To help protect policyowners and beneficiaries against financial loss caused by the insolvency of an insurance company  Which of the following is a feature of a variable annuity? A. Interest rate is guarantee B. Securities license is not required C. Benefit payment amounts are not guaranteed D. Payments into the annuity are kept in the company's general account: C. Benefit payment amounts are not guaranteed  Which provision allows the policyholder a period of time, while coverage is in force, to examine a health insurance policy and determine whether or not to keep it? A. Elimination period B. Probationary period C. Free Look period 10 / A. The plan is funded by permanent insurance only B. There is no limitation on the number of key employee plans in force at any time C. The employer is the owner, payor and beneficiary of the policy D. The key employee is insured: the plan is funded by permanent insurance only  Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned , will be paid to A. Beneficiary of the death benefit B. The spouse of the insured C. The insured D. Creditors: C. The insured  When delivering a policy, which of the following is an agent's responsibility? A. Issue the policy if the applicant is present B. Approve or decline C. Collect medical statement from physician D. Collect payment at time of delivery: Collect payment at time of delivery 46. Ray has an individual major medical policy that requires a coinsurance payment. Ray very rarely visits his physician and would prefer to pay the lowest premium possible. Which coinsurance arrangement would be best for Ray? A. 50/50 B.75/75 C.80/20 D. 90/10: 50/50  On a health insurance application, a signature is required from all of the following individuals EXCEPT A. The spouse of the policyowner B. The proposed insured C. The policyowner D. The agent: The spouse of the policyowner  Which of the following is NOT true regarding a flexible spending account? A. It is cafeteria plan B. It does not have limits on contributions C. It operates on "use-or-use" basis 11 / D. It provides an opportunity to receive benefits on pretax basis: It does not have limits on contributions  A partnership buy-sell agreement in which each partner purchases insurance on the life of each of the other partners is called a A. split-dollar plan B. Stock reduction plan C. Cross-purchase plan D. Key person plan: Cross-purchase plan  An insured purchase a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefits. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receives as a settlement? A. 0 B. $100,000 C. $200,000 D. $100,000 plus the total of paid premiums: $200,000  The premium charged for exercising the guaranteed insurability Rider is based upon the insured's A. Average age B. Issue age C. Attained age D. Assumed age: Attained age  all of the following statements concerning Medicaid are correct EXCEPT A. Individual states design and administer the Medicaid program under broad guidelines established by the federal government B. Individuals claiming benefits must prove they do not have the ability or means to pay for their own medical care C. Persons, at least 65 years of age, who are blind or disabled and financially unable to pay, may qualify for Medicaid Nursing Home benefits D. Medicaid is a state funded program that provides health care to persons over age 65, only: Medicaid is a state funded program that provides health care to persons over age 65, only 12 /  When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? A. consideration B. Legal purpose C. Contract of adhesion D. Acceptance: Consideration  An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? A. Guaranteed insurability option B. Dividend options C. Guaranteed renewable option D. Nonforfeiture options: Guaranteed insurability option  An individual purchased a $100,000 Joint life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy? A. nothing B. $50,000 C. $100,000 D. $200,000: $100,000  Most policies will pay the accidental death benefits as long as the death is caused by the caused by the accident and occurs within A. 30 days B. 60 days C. 90 days D. 120 days: 90 days  Which of the following includes information regarding a person's credit, character, reputation, and habits? A. Consumer history B. Insurability report C. Agent's report D. Consumer report: Consumer report 15 / C. Coverage for dependents D. Military duty: Coverage for dependents  The insurance policy, together with the policy application and any added riders from what is known as a(n) A. Certificate of coverage B. Contract of adhesion C. Blanket policy D. Entire contract: Entire contract  To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested A. At the time of application B. When the applicant's credit is checked C. When the policy is delivered D. At the initial interviewer: At the time of application  The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the A. One-year option B. Paid-up option C. Accelerated endowment D. Paid-up additions: One-year option  If an insurer requires a medical examination of an applicant in connection with the application for life insurance, who is responsible for paying the cost of the examination? A. The examiner B. The applicant C. The insurer D. The cost of the examination will be waived: The insurer  The premium of a survivorship life policy compared with that of a joint life policy would be A. Half the amount B. Lower C. Higher D. As high: Lower  What license or licenses are required to sell variable annuities? 16 / A. No license is required B. Both a life insurance license and a securities license C. Only a life insurance license D. Only a securities license: Both a life insurance license and a securities license 75. If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights? A. Policyowner B. The insured and the policyowner C. Beneficiary D. Insured: policyowner 76.Which of following is a feature of a disability buy out plan? A. A lump-sum benefit payment option B. Tax deductible premiums C. Taxable benefits D. A short elimination period: A lump-sum benefit payment option 77.Children's rider attached to whole life policies are usually issued as what type of insurance? A. Term B. Variable life C. Adjustable life D. Whole life: term 78. L has a major medical policy with a $500 deductible and 80/20 coinsurance. L is hospitalized and sustains a $2,500 loss. What is the maximum amount that L will have to pay? A. $900 (deductible + 20% of the bill after the deductible [ 20% of 2,000] B. $500 (amount of deductible) C. $1,000 (deductible + 20% of the entire bill) D. $2,500 ( the entire bill): $900 (deductible + 20% of the bill after the deductible [ 20% of 2,000] 79.Which of the following entities can legally bind coverage? A. Insurer B. The insured 17 / C. Federal insurance board D. Agent: insurer 80.Which is true regarding obtaining underwriting sources? A. It is illegal to obtain information from outside sources contacted and how the information is being gathered B. The applicant must be informed of the sources contacted and how the information is being gathered C. The insurer does not need to inform the applicant of the information is gathered; informing only of the source is sufficient D. The insurer only needs to inform the applicant of how the information is gathered; it is not necessary to disclose the sources: The applicant must be informed of the sources contacted and how the information is being gathered 81. Which is NOT true about beneficiary designations? A. The beneficiary must have insurable interest in the insured B. The beneficiary may be a natural person C. The policy does not have to have beneficiary named in order to be validD. Trusts can be valid beneficiaries: The beneficiary must have insurable interest in the insured  Group health insurance is characterized by all of the following EXCEPT A. A Master contract B. Lower administrative costs C. Conversion privilege D. Adverse selection: Adverse selection  After a back injury, an insurer is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive? A. Payment for life B. Yearly premium waiver and monthly income C. Monthly premium waiver and monthly income D. Percentage of medical costs paid by the insurer: Monthly premium waiver and monthly income  Which of the following is NOT covered under Plan A in Medicap insurance? A. The first three pints of blood each year B. The Medicare Part A deductible 20 / B. Insurer C. Applicant D. Underwriters: Insurer  Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die? A. Ordinary life B. Joint life C. Decreasing Term D. Whole life: Joint life  Regarding long-term care coverage, as the elimination period gets shorter, the premium A. Remains constant B. Premiums are not based on elimination periods C. Decreases D. Increases: Increases  All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT A. The payments are not guaranteed for life B. The insurer determines the amount for each payment C. It is a life contingency option D. It will pay the benefit only for a designated period of time: It is a life contingency option  Which of the following best describes annually renewable term insurance? A. Neither the premium nor the death benefit is affected by the insured's age B. It provides an annually increasing death benefit C. It is level insurance D. It requires proof of insurability at each renewable: It is level insurance  When a reduced paid -up nonforfeiture option is chosen, what happens to the face amount of the policy? A. It is increased when extra premiums are paid B. It decreases over the term of the policy 21 / C. It remains the same as the original policy, regardless of any differences in value D. It is reduced to the amount of what the cash value would buy as a single premium: It is reduced to the amount of what the cash value would buy as a single premium  When is the earliest a policy may go into effect? A. When the insurer approves the application B. After the underwriter reviews the policy C. When the application is signed and a check is given to the agent D. When the first premium is paid and the policy has been delivered: When the application is signed and a check is given to the agent  Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within A. 60 days of a loss B. 90 days of a loss C. 20 days of a loss D. 3o days of a loss: 90 days of a loss  Social Security disability definition includes all of the following EXCEPT A. A physical impairment expected to result in death B. Disability expected to last for at least 6 months C. The inability to engage in any gainful work D. Disability resulting from a medically determinable mental impairment: Disability expected to last for at least 6 months  An agent makes a mistake on the application and then corrects his mistakes by physically entering the necessary information. Who must then initial that charge? A. Executive officer of the company B. Insured C. Agent D. Applicant: Applicant  The form of life annuity which pays benefits throughout the lifetime of the annuitant and also guarantees payment for a minimum number of years is called A. Life income with period certain 22 / B. Life income with refund C. Joint and survivorship D. Joint life annuity: Life income with period certain  All of the following long-term care coverages would allow an insured to receive care at home EXCEPT A. Skilled care B. Custodial care in insured's house C. Respite care D. Home health care: Skilled care  An applicant is discussing his options for Medicare supplement coverage with his agent. The applicant is 65 years old and has just enrolled in Medicare Part A and Part B. What is the insurance company obligated to do? A. Send the applicant to a doctor for a physical. Nothing can happen until they get the results B. Offer the supplement policy on a guaranteed issue basis C. Exclude pre-existing conditions from coverage under the supplement poli-cies D. Look at the applicant's medical history to decide what premium to charge-: Offer the supplement policy on a guaranteed issue basis  A provision found in insurance which prevents the insured from collecting twice for the same loss is called A. Consent to settle loss B. Right of salvage C. Appraisal D. Subrogation: Subrogation  All of the following statement concerning Accidental Death and Dismemberment coverage are correct EXCEPT A. Accidental death and dismemberment insurance is considered to be limited coverage B. Death benefits are paid only if death occurs within 24 hours of an accidentC. Accidental death benefits are paid only if death results from accidental bodily injury as defined in the policy 25 /  All of the following are examples of third-party ownership of a life insurance policy EXCEPT A. When insured purchased a new home, the insured made an absolute as- signment of a life insurance policy to the mortgage company B. An insured borrows money from the bank and makes a collateral assign- ment of a part of the death benefit to secure the loan C. An insured couple purchases a life insurance policy insuring the life of their grandson D. A company purchases a life insurance policy on their manager, who is important part of the operation: An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan  The mode of premium payment A. Is the method used to compute the cash surrender value of the policy B. Does not affect the amount of premium payment C. Is defined as the frequency and the amount of the premium payment D. Is the factor that determines the amount of dividends in a policy: Is defined as the frequency and the amount of the premium payment  What is the maximum allowed value of a gift that an agent can give to an insured without violating the regulation on rebating? A. $10 B. $15 C. $25 D. $100: $25  Which of the following individuals will be eligible coverage on the Health Insurance Marketplace? A. A permanent resident lawfully present in the U.S. B. Someone who has Medicare coverage C. A U.S. citizen who is incarcerated D. A U.S. citizen living abroad: A permanent resident lawfully present in the U.S.  Which of the following is NOT required on an illustration used in the sale of a life insurance policy? A. Underwriting or rating classification upon which the illustration is based 26 / B. The name of the primary and secondary beneficiaries C. Generic name of policy D. Name of insurer: The name of the primary and secondary beneficiaries 123. If the insured has the right to keep a long-term care insurance policy in force by making timely premium payments, and the insurer may not make any chances to the policy or decline to renew it, the policy is A. Permanent B. Conditonal C. Guaranteed renewable D. Irrevocable: Guaranteed renewable  An agent receives an Emergency Cease and Desist Order for chronically misrepresenting his insurance policies. The agent knows that he did not commit the violation stated in the Emergency Cease and Desist Order. He wants to contest the charges in a court hearing. Which of the following is true? A. The judge will determine when the hearing will be held B. The hearing date can be set for any time within the next year, unless both parties agree to a later date C. The hearing must be set for exactly 30 days after the request is made D. The hearing must be held within 30 days of receiving a request, unless both parties agree to a later date: The hearing must be held within 30 days of receiving a request, unless both parties agree to a later date  The insurers are allowed to disclose the HIV-related test result to all of the following EXCEPT A. Another insurer B. The insured's doctor C. A reinsurer involved in the underwriting process D. The Texas Department of Health: Another insurer  An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? A. Twisting B. Defamation C. False advertising 27 / D. Unfair claims: False advertising  On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of? A. Concealment B. Unfair claim practice C. Rebating D. Misrepresentation: Misrepresentation  What is the major difference between a stock company and a mutual company? A. Types of policies issued B. Ownership C. Amount of benefits D. Number of producers: Ownership  How long most producer maintain records of continuing education course completion? A. 1 year B. 3 years C. 4 years D. 5 years: 4 years  All of the following information must be included in the evidence of coverage for an HMO plan EXCEPT A. HMO's toll-free telephone number B. The insurance agent's name and license number C. A schedule of benefits D. Examples of information to appear in the blanks: The insurance agent's name and license number  The classification "Small Employer" means any person or firm that during the preceding year employed how many employees? A. Between 1 and 25 B. At least 2 and not more than 50 C. At least 10 and not more than 100 D. No more than 10: At least 2 and not more than 50  The insurance Commissioner may examine the affairs of any insurer as 30 /  Conversion to an individual whole life policy is permitted without evidence of insurability within how many days of the termination of employment? A. 14 days B. 28 days C. 30 days D. 31 days: 31 days  If a policyowner surrenders his life insurance policy that has been in force for 5 years within 60 days after the premium due date, what will the insurer be required to pay A. nothing B. The death benefit C. A cash surrender value D. A paid-up nonforfeiture benefit: A cash surrender value  All of the following statements are correct regarding credit life insurance EXCEPT A. Benefits are paid to the borrower's beneficiary B. The amount of insurance permissible is limited per borrower C. Premiums are usually paid by the borrower D. Benefits are paid to the creditor: Benefits are paid to the borrower's beneficiary  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? A. Unfair Discrimination B. Defamation C. Illegal D. A legal advertising strategy: Illegal  How soon from the termination of debt under a credit life insurance policy must a creditor provide notice to the insurer? A. 7 days B. 10 days C. 30 days D. 60 days: 60 days 31 /  How many hours of continuing education can be carried over from one licensing period to the next? A. 2 B.5 C. Any excess hours D. 0: 0  Which of the following is correct about a group health insurance policy? A. It cannot provide coverage for handicapped children B. It cannot exclude coverage from an occupational accident C. It cannot exclude newborn children from coverage D. It cannot exclude coverage for VA hospital treatment: It cannot exclude newborn children from coverage  An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming? A. Alien B. Domestic C.Unauthorized D. Foreign: Foreign  Which of the following is NOT a possible penalty for a violation of the Insurance Code? A. An administrative penalty B. Payment of restitution C. A cease and desist order D. A fine up to $100,000: A fine up to $100,000 E.