Life Insurance Fundamentals: Premiums, Ownership, Loading, and Nonforfeiture Options, Exams of Nursing

Download Life Insurance Fundamentals: Premiums, Ownership, Loading, and Nonforfeiture Options and more Exams Nursing in PDF only on Docsity! AD Banker Comprehensive Exam 294 Questions And Answers 2024. A producer who is acting as an agent is representing: A The insured, the applicant and the beneficiary B Always the insured C The insured and the insurer D Always the insurer - Correct answer D In order to be valid, a contract must be between individuals considered legally able to enter into an agreement. This principle is known as: A Restricted persons B Considerations C Competent parties D Agreement - Correct answer C A company that is licensed to sell insurance in a particular state is: A A domiciled company B A nonadmitted company C An authorized company D A foreign companyA company that is licensed to sell insurance in a particular state is: - Correct answer C An insurance contract is an aleatory contract. This means: A Equal value is not given by both parties to the contract B The contract must be for a legal purpose C Parties to the contract must have the legal capacity to enter into the contract D Statements made in the application are guaranteed to be true in all respects - Correct answer A Which of the following would be considered a speculative risk? A The possibility your car is totaled in an auto accident B The possibility the painting you bought might be a long-lost masterpiece C The possibility you will die on the job at a young age D The possibility you will become disabled - Correct answer B Which is the proper term for a company owned by its policyowners? A A charitable insurance company B A reciprocal insurance company C A domestic insurance company D A mutual insurance company - Correct answer D All of the following are elements of a contract, except: A Offer and acceptance B Legal purpose B County C Federal D Insurers - Correct answer A Which of the following is NOT considered one of the essential elements of a contract? A Competent Parties B Legal Purpose C Offer and Acceptance D Conditions - Correct answer D The most effective way to ensure that the applicant will accept the policy when it is issued is: A To collect the initial premium upon policy delivery, not at the time of application B To deliver the policy with a gift certificate to a local restaurant C Offer to pay the first premium for them D To have the applicant pay the initial premium at the time of application - Correct answer D Which of the following is NOT a characteristic of life insurance as property? A It may be paid for in installments B It requires a fund portfolio manager C It creates an immediate estate D It requires no physical maintenance - Correct answer B Which of the following statements about the average number of people who die each year is true? A It is called the mortality rate B It is called the principle of indemnity C It is called the predictability rate D It is called the principle of life insurance - Correct answer A Insurers generally calculate premiums on: A A weekly basis B An annual basis C A monthly basis D A daily basis - Correct answer B Third-party ownership refers to: A A situation where the beneficiary has no insurable interest in the insured B A situation where the beneficiary is irrevocable C A situation where the policyowner is someone other than the insured D A situation where the applicant is someone other than the payor - Correct answer C With regard to life insurance policies, loading refers to: A The amount of money the insurance company reserves for expected mortality costs B The amount the company anticipates for dividend payout C Assignment of the appropriate share of the company's operating expenses to each policy D Surrender charges applied to the cash surrender of the policy - Correct answer C Which statement best describes the term reserve? A That amount that enables the insurer to provide sales bonuses and incentives for their commissioned sales staff B That amount that, when increased by future premiums on outstanding policies, and interest on those premiums will enable the company to meet future death claims C That amount, required by law, that the company must hold in reserve to pay only cash value accumulations on permanent insurance policies D That amount insurer's maintain in reserve to guarantee that they can profit from future death claims - Correct answer B Controlled business may be defined as insurance sold: A To individuals needing an increased amount of term insurance B To existing clients only C To anyone willing to buy D To the producer, the producer's family and friends, and the producer's business associates - Correct answer D Which of the following policies could be expected to have the lowest premium? A Whole life A Requires premium payments for a specified number of years or until a specified age is reached B Start off with small premium payments and then they increase, but only up to a specified limit C Is offered in limited face amounts only D Can only be purchased by individuals on a specified limited income - Correct answer A Which of the following provides the basis for the benefit amount paid to an insured under a disability income rider? A The length of time income payments are to be paid out B The face amount of the policy C The elimination period D The amount of monthly benefit selected - Correct answer B Allen purchases an estate builder (jumping juvenile) policy for his 5-year old son, Donald. Suppose that when Donald reaches age 21 his father presents him with the policy as a gift. Which of the following statements is NOT correct? A Donald has enjoyed protection against the problems of premature death B The premium will continue to be based on his original age of 5 C The face value of Donald's policy has increased by 5 times D Donald must change the beneficiaries immediately - Correct answer D The type of policy that can be changed from one that does not accumulate cash values to one that does is a: A Universal life policy B Variable life policy C Permanent policy D Convertible term policy - Correct answer D With a modified premium whole life contract, premium payments: A Are lower in the early years of the contract B Are invested in the stock market C Never change for the life of the policy D Are modified throughout the life of the plan and may fluctuate at the insurer's discretion - Correct answer A With regard to the waiver of premium rider, after the disability a policyowner normally: A Must prove insurability to continue the policy on an annual basis B Must reapply for the insurance C Need not repay the premiums paid by the company during disability D Must repay the premiums paid by the company during disability - Correct answer C In a whole life insurance policy: A The insurance protection remains level throughout the policy period, and the cash value does not impact the amount of insurance protection at all B The cash value is equal to the face amount of insurance throughout the life of the policy C The cash value provides no living benefits until the policy endows D The cash value is greatest at the end of the policy period, and the insurance protection is greatest at the start of the policy - Correct answer D Warren and Wilma have a joint life policy. Warren dies and the policy pays nothing. Later on, Wilma dies and the policy death benefit is paid to the beneficiary. This is called a: A Variable life policy B Level term policy C Survivorship or second-to-die policy D Reduced paid up policy - Correct answer C Each of the following is a source of life insurance policy dividends, except: A Guaranteed cash value accumulations B Reductions in operating expenses C Savings in mortality D Additional interest earnings - Correct answer A Each of the following statements about policy loans is correct, except: A A policy loan cannot be made on a policy until it has been in force long enough to accumulate some cash value B If a policy has cash value, the insurance company cannot refuse to lend the policyowner money C The loan value of a policy cannot exceed the current cash value Collateral for a policy loan is: A The cash value of the policy itself B The premiums applied to the cash value account minus the load C Not required at all D Provided by the policy's death benefit - Correct answer A An insured allows a permanent policy to lapse. Unless otherwise instructed, the insurance company: A May apply the cash values to purchase additional paid up insurance B May exercise any nonforfeiture option it deems appropriate C Applies the remaining cash values into a deferred annuity D Will automatically institute the extended term option - Correct answer D If an insured has an outstanding loan of $5,000 on a policy with a face amount of $25,000, at death the company will: A Pay the beneficiary $20,000, after subtracting the amount of the outstanding loan B Cancel the policy C Pay the beneficiary the full $25,000 face amount D Institute a required loan repayment schedule before allowing the death claim to be processed - Correct answer A What is a postmortem dividend? A A second dividend declared after the initial dividend had been paid out B A dividend declared but held for future payout C A dividend declared and paid out at least one year after an insured's death D A dividend earned, but not yet paid, in the year of the insured's death and paid with the death claim - Correct answer D The nonforfeiture option that provides the most life insurance protection is the: A Extended term option B Reduced paid-up option C Paid up additions option D Cash surrender option - Correct answer A An insured forgets to pay his insurance premium. Instead of the policy lapsing, the premium is paid by the company. This would suggest that a __________ policy was purchased. A Whole Life B Decreasing term C Level term D Renewable term - Correct answer A What is the easiest and best way to assure that the life insurance policy's death proceeds don't end up in probate court process? A List a primary and contingent beneficiary by their full name and relationship to the insured B Name the estate as beneficiary C Make sure the client has a will that is current and in an easily accessible location D Ascertain that the client has a trust that is filed with the County court - Correct answer A The type of annuity that guarantees to pay total income at least equal to the purchase price of the contract is a: A Refund life annuity B Pure life annuity C Joint life annuity D Joint life and survivorship annuity - Correct answer A An annuitant has a temporary annuity certain, and dies shortly after the payments start but before the certain period of 10 years has elapsed. Any money remaining is: A Subject to probate and will be disbursed according to state law B Paid out for the beneficiary's entire life C Paid to the beneficiary for the rest of the certain period D Placed into an insurance trust account - Correct answer C 'Annuity Period' refers to which of the following? A The process in determining the cost basis of an annuity B The time in which the annuity is accumulating and earning interest C The period of time in which an annuity is subject to a 10% premature withdrawal penalty D B Self-employed people must pay both the employer and the employee share of Social Security taxes C Employee paid payroll deductions for Social Security are tax deductible to the employee D Employers may take a tax deduction for contributing on behalf of their employees - Correct answer C A split-dollar plan: A Is part of an entity buy-sell agreement B Insures key employees and is for the sole benefit of the employer in the event of the employees death C Divides the cost of additional insurance for an employee between that employee and the company D Is a qualified retirement plan for the employee with which premiums are split between both the employer and employee - Correct answer C The Lucrative Lozenge Company provides a $5,000 monthly income to retirees who served as senior executives. This benefit is not available to other retirees of the company. This is an example of a: A Qualified plan B Nonqualified plan C 401(k) D Keogh Plan - Correct answer B Distributions from a qualified retirement plan: A Are always fully taxable B May only be received in interest only payments C Are always received tax-free D Are received tax-free only if they result from previously taxed contributions - Correct answer D TSAs are tax-sheltered retirement programs for employees of all the following kinds of organizations, except: A Corporations B Religious C Educational D Charitable - Correct answer A If a policyowner paid $18,000 in premiums for a policy that is cashed in for $21,000, how much of the policy's cash surrender value would be subject to federal income tax? A $18,000 B $3,000 C Zero D $21,000 - Correct answer B Incidental limitations refer to which of the following? A Annuity payout options B Taxation of Roth IRAs C Roth IRAs D The amount of life insurance that may be included in a qualified retirement plan - Correct answer D Which of the following would NOT be permitted as a Section 1035 policy exchange? A A life contract exchanged for an annuity contract B An annuity contract exchanged for a life contract C An endowment contract exchanged for an annuity contract D A life contract exchanged for an endowment contract - Correct answer B A group deferred annuity or an individual deferred annuity would be most likely used: A Both answers B To fund a defined benefit plan C Neither answer D To fund a defined contribution plan - Correct answer B If an annuitant withdraws funds from their annuity prior to age 59 1/2 what is the tax consequence? A Tax on the tax deferred portion of the withdrawal along with a 15% tax penalty B Tax on the entire withdrawal plus a 10% tax penalty C Tax and 10% penalty tax on the withdrawal that represents earnings D Tax on cost basis and 10% tax penalty on the tax deferred portion of the withdrawal - Correct answer C Additional payment reflecting lost interest C A statement of good health D An affidavit from the applicant - Correct answer C Statements made on the application are considered true to the best of the applicant's knowledge and belief are considered to be: A Waivers B Representations C Concealments D Warranties - Correct answer B Which of the following are included in Part I of a Health Insurance Application? A The gender of the applicant B Medical background C Family health history D Present health - Correct answer A Which of the following is true about a policy that pays for room and board expenses on a indemnity basis? A The policy pays a stated amount per day in the hospital with no limit regardless of the number of days B The policy pays a specified, pre-established amount per day for a maximum number of days C The policy pays a percentage of the total cost per day in the hospital up to 30 days D The policy pays only a percentage of what is considered to be usual, customary, and reasonable - Correct answer B A policy that pays surgical expense benefits does not schedule the approved benefit payable for every type of surgery. Instead, surgeries not listed are paid on the basis of a comparison to one or more types of commonly-performed major surgeries that are scheduled. Under this arrangement, the unscheduled surgeries are paid on the basis of: A Their stated value B Their limited value C Their relative value D Their common value - Correct answer C For nonroutine treatments, a comprehensive policy generally pays: A A specified percentage of the reasonable and customary charges B For catastrophic health losses only C 100% of the medical expenses D For inpatient hospital treatment only - Correct answer A Under what circumstances do major medical policies usually provide for restoration of benefits? A Restoration usually occurs after a specified dollar amount of benefits has been exhausted and after the insured has proven insurability B Restoration of benefits must occur every policy anniversary regardless of the amount of benefits exhausted C Anytime benefit limits have been exhausted D Under no circumstances do major medical policies provide restoration of benefits - Correct answer A Under a credit health policy, what is the maximum amount of any accidental death benefit included? A $50,000 B None of the answers listed C The amount of outstanding indebtedness at any given time D Double the amount of the original indebtedness - Correct answer C Which of the following statements is FALSE regarding credit health insurance? A Even if the creditor pays the full cost of the insurance, the debtor must be made aware of the coverage B The accidental death benefit may not exceed the total amount of indebtedness, nor may the monthly disability benefit exceed the monthly loan payment amount C Credit health insurance operates like an HMO and provides death benefit protection regardless of the cause of death D Credit health insurance may be sold as either group or individual insurance - Correct answer C Comprehensive dental plans usually provide: A Non-routine dental care without any regard to deductibles or coinsurances B Routine dental care services without deductibles or coinsurance C Routine care without deductibles, but subject to coinsurance A Totally disabled B Permanently disabled C Partially disabled D Completely disabled - Correct answer C Social Security disability benefits become available to eligible workers after a waiting period of: A 30 days B 5 months C 1 year D 90 days - Correct answer B What type of disability income policies are most likely used to cover only nonoccupational disability as opposed to both occupational and nonoccupational? A Short-term disability policies B Workers' Compensation C Disability income rider to an individual life policy D Long-term disability policies - Correct answer A The waiting period from the start of a disability to be eligible to apply for Social Security disability is: A 3 months B 12 months C 6 months D 5 months - Correct answer D To reduce its exposure to claims from a substandard disability risk, an insurer may take all of the following actions, except: A Charge additional premium B Reduce the amount of benefit C Remove all of the exclusion riders D Increase the elimination period - Correct answer C With a Business Overhead Expense Policy, all of the following are claims that are covered, except: A Employee labor B The salary or profit of the business owner C Utilities D Office rent - Correct answer B The Medicare home health care benefit will provide for which of the following services? A Hospitalization care B Prescription drugs C Groceries D Medical supplies - Correct answer D All Medicare supplement (or Medigap) policies must: A Provide the same benefits as Medicare Part A B Provide the same benefits as Medicare Part B C Offer a 10 day free look provision D Have the same core benefits - Correct answer D A Medicare supplement policy may not limit benefits for losses incurred more than ________ from the effective date of coverage because they involve a preexisting condition. A 30 days B 1 year C 6 months D 90 days - Correct answer C A Medicare SELECT policy differs from a regular Medicare Supplement (Medigap) policy in that it: A Is provided through Medicaid B Provides more coverages C Is a managed care version of the traditional Medicare Supplement policy D Costs more - Correct answer C Medicaid D Social Security payroll taxes - Correct answer D Which of the following will cover the cost of inpatient blood transfusions after the first 3 pints? A Long-Term Care B Medicare Part D C Medicare Part B D Medicare Part A - Correct answer A Which of the following Medicare Supplement policies have Core Benefits? A Plan A only B Plans A through N C Plans C through J only D Plan A through C only - Correct answer B Policies are considered incontestable after: A 2 years B 3 months C 6 months D 9 months - Correct answer A All of the following statements about noncancellable policies are true, except: A A noncancellable policy is also called a noncancellable and guaranteed renewable policy B The insurer may regain the right to cancel or not to renew when the insured reaches an age specified in the policy C The only right to cancel the noncancellable policy is for nonpayment of premium D The insurer may choose not to renew the policy, but only on the policy renewal or anniversary date - Correct answer D Each of the following would be found in the insuring clause of an insurance policy, except: A Definitions B General information about the named insured C General scope of coverage D Conditions under which benefits are payable - Correct answer B Required Provision 'Reinstatement' addresses reinstatement of a lapsed policy. According to this provision, when an insured applies for reinstatement and receives a conditional receipt, how long does the insurer have to approve or deny reinstatement before the policy will be automatically reinstated? A 90 days from the date of the conditional receipt B 120 days from the date of the conditional receipt C 45 days from the date of the conditional receipt D 20 days from the date of the conditional receipt - Correct answer C Required/Mandatory Provision 'Proof of Loss' indicates that except in the absence of the insured's legal capacity, if it was not reasonably possible for the insured to provide proof of loss as required in a policy, the latest time the proof of loss may be furnished is: A 1 year from the time proof is otherwise required B 6 months from the time proof is otherwise required C 5 years from the time proof is otherwise required D Within 60 days of the time proof is otherwise required - Correct answer A Under Optional Provision 'Unpaid Premiums', when premiums are unpaid at the time a claim is submitted, the insurer may: A Deny the claim because the policy has actually lapsed due to unpaid premiums B Require the unpaid premium be paid before allowing any claim to be processed C Deduct unpaid premiums from benefits before paying the claim D Charge interest on any overdue premiums due at the time of the claim - Correct answer C Managed Health Care attempts to contain costs by controlling the behavior of participants in all of the following ways, except: A Controlled Provider Access B Copayments and/or coinsurance C Partial Case Management D Preventive Care - Correct answer C Which statement concerning individual A&H policy renewal provisions is most correct from the perspective of the insured? A The more favorable the renewal provision to the insured, the lower the cost 2 - Correct answer D Which of the following is not a Mandatory Uniform Provision of an Accident and Health policy? A Waiver of Premium B Time limit on Certain Defenses C Proof of Loss D Payment of Claims - Correct answer A Which of the following statements is NOT true concerning a coordination of benefits situation? A The group insurer for the person with the claim is primary B Where children are involved, the primary group insurer is the insurer for the parent who is oldest by age at the time of claim C The group insurer for the spouse of the person with the claim is secondary D Where children are involved, the primary group insurer is the insurer for the parent whose birthday comes first in the year - Correct answer B Which of the following would NOT be a likely consideration in determining premium rates for group health insurance? A Degree of occupational hazard associated with the group B Length of the waiting period C Maximum indemnity period D Whether the company produced a profit or a loss in the previous year - Correct answer D The main benefit of 501(c)9 trusts is: A Costs of setting up these trusts are always lower than other types of plans B That distributions from the trust are always received tax-free C Contributions to these trusts may be deducted immediately, instead of when benefits are distributed D Contributions to these trusts are not tax deductible at all - Correct answer C A plan in which employees select health benefits from a variety of coverage options, based on their individual coverage needs is a: A COBRA continuation plan B HIPAA plan C Cafeteria plan D Staff model plan - Correct answer C The Coordination of Benefits Provision is designed to: A Give insureds as much coverage as possible while eliminating overinsurance B Encourage insureds to purchase and maintain as much additional coverage as possible C Permit insurers the right to pay or not pay a claim at their discretion D Prevent overinsurance - Correct answer A Payment of the first premium and an application must be submitted to an insurer for individual coverage within how many days to convert group coverage to an individual policy not requiring proof of insurability? A 45 days B 7 days C 10 days D 31 days - Correct answer D When an employee pays part of the premiums for group disability insurance: A The benefits are received tax free to the extent that the employee paid the premiums B All of the disability income benefits received by the employee are fully taxable C All of the disability income benefits are received totally income tax free to the employee D All of the employee paid premiums are tax deductible to the employee - Correct answer A On which of the following policies would any proceeds be taxable? A Business overhead expense insurance B The death benefit proceeds of an individually purchased life insurance policy paid to a beneficiary C A key employee disability income policy paid for and owned by the business and the business is the beneficiary D A disability policy that is used to fund a buy-sell agreement - Correct answer A Which of the following policies would allow the business to deduct premiums paid? A An individually purchased disability income policy paid for through employee payroll deduction B A disability income policy used to fund a Buy-Sell Agreement 30 days after receipt of the demand B 20 days after receipt of the demand C 10 days after receipt of the demand D 14 days after receipt of the demand - Correct answer A Non-financial regulatory activities are known as: A Market conduct B Risky conduct C Hazardous conduct D Financial conduct - Correct answer A An applicant who fails two examinations for the same line of authority must wait ______ to take another examination for that line of authority. A 1 year B 2 years C 6 months D 3 months - Correct answer D A licensee must inform the Commissioner of a change of legal name or address within ______ days of the change. A 180 B 90 C 10 D 30 - Correct answer D The head of the state department of insurance has all of the following powers, except: A Approving rates and rate increases for regulated lines of insurance B Imposing penalties for violations of the insurance code, including but not limited to fines, suspensions or revocations of licenses and Certificates of Authority, and requesting that the Attorney General prosecute a violator C Subpoenaing witnesses and administering oaths in order to further any examination, investigation, or hearing on insurance matters D Creating and establishing new premium rates for insurance companies operating in the state - Correct answer D An insurer may reserve the right to defer the payment of a cash surrender value for up to _________ months after demand is made and the policy is surrendered. A 6 months B 2 months C 1 month D 3 months - Correct answer A A health benefit plan that provides coverage for surgical services for a mastectomy must provide screening mammography for women age 50 or older at least every: A 2 years B Year C 5 years D 3 years - Correct answer B TEFRA is intended to: A Require labor unions to establish a trust for employee pension accounts B Regulate and standardize Medicare supplement plans C Prevent group plans from discriminating in favor of key employees D Regulate social insurance programs - Correct answer C A minor aged ______ years or older may contract for insurance on his or her own life. A 15 B 10 C 14 D 12 - Correct answer A A licensee must inform the Commissioner of a change of legal name or address within ______ days of the change. A 10 B 30 C 90 D 180 - Correct answer B Which of the following can be listed on a life insurance illustration? Are $1,000 and must be requested within 90 days from the date of death C Are not provided D Include both a one-time burial allowance and a weekly benefit for a surviving spouse and /or children - Correct answer D An individual long-term care insurance policy may not be terminated for nonpayment of premium unless the insurer has give notice to the insured and any designated persons at least _____ days before the effective date of the termination. A 30 B 60 C 45 D 20 - Correct answer A Who is Alabama's current Commissioner of Insurance? A Jim Ridling B Walter Bell C Bob Riley D Fob James - Correct answer A In the context of replacement, the term 'conservation' means any attempt by the: A Insured to negotiate a lower premium with the agent B All the answers listed C Insured to cancel the policy in an attempt to conserve premium dollars D Existing insurer or its agent to continue existing life insurance in force - Correct answer D All of the following are common complaints filed by clients against Errors and Omissions policies, except: A Failure of the agent to share the commission with the client B Failure to obtain proper coverage C Quoting inflated information D Misrepresenting the plan of coverage - Correct answer A To receive a license as a resident insurance producer, an applicant must be at least: A 21 years old B 18 years old C 19 years old D 20 years old - Correct answer B The reinsurance agreement that allows the reinsurer an opportunity to reject coverage for individual risks or price them higher due to their higher risk is known as a(n) ___________ agreement. A Treaty B Facultative C Reciprocal D Residual - Correct answer B It is the _________ who issues a Certificate of Authority enabling an insurer to conduct insurance business within a particular state. A Secretary of State B State Senate C State Insurance Commissioner D State Congress - Correct answer C With health and life insurance a/an _________ is required at the time of the application. A Insurable interest B Beneficiary status C Indemnity interest D Ownership right - Correct answer A To make insurance more affordable and protect the insurance company from paying out too much in claims, insurers will: A Reserve the risk B Retain the risk C Deny the risk D Reinsure the risk - Correct answer D A contract that is drafted by an insurer and receives no input or alteration from the insured, is considered a(n): A Unilateral Contract A Requires the insured to pay premiums for life and endows at age 100 B Requires the insured to pay premiums to age 65 and endows at age 120 C Requires the insured to pay premiums to age 90 and endows at age 100 D Is a single premium policy that endows at a specific age specified in the contract - Correct answer A The situation below that most likely calls for the purchase of term insurance is: A Roger is age 62 and is approaching retirement after working for a corporation for 30 years B Mary is 44 years old, is a career school teacher and has no children C George has two years of medical school to complete; he and his wife have one child D Kathy, age 60 and married, has two adult children, both of which are married - Correct answer C In a universal life policy, the two adjustments usually made to the cash value account are: A Cost of insurance protection is charged and current interest is credited B Cost of insurance protection is credited and current interest is charged C Guaranteed interest is credited as long as the insurer has had a favorable investment return D Premiums and guaranteed interest are charged - Correct answer A In which of the following circumstances would the accidental death benefit not apply? A Death caused by an automobile accident B Death caused as the result of being a passenger on a regularly scheduled airline C Death caused as a direct result of an occupational accident D Death caused by an intentional act - Correct answer D Dividends if declared are paid __________. A Annually B Monthly C Quarterly D Semi-annually - Correct answer A The ___________ decides which dividend option is in effect and can change their election at any time. A Board of Directors B Beneficiary C Insurer D Policyowner - Correct answer D Under what conditions would there be a limit as to how much premium can be deposited into an annuity? A If the annuity is funding a qualified retirement plan and the IRS imposes a limit on that type of plan B If the stock market falls by more than 25% C If the producer has sold more annuity premiums than their quota D If interest rates rise more than 10% - Correct answer A Which of the following Annuities can it be said that it has 'upside potential, but no downside risk' when it comes to the stock market overall? A Market Value Adjustment B Variable C Fixed D Indexed - Correct answer D Which of the following death benefits is paid out to the beneficiary income tax free? A An annuity whose annuitant dies during the accumulation phase B An annuity whose annuitant dies during the distribution phase C An annuity whose annuitant dies when used for retirement income planning D Life insurance when the insured dies while the policy is in force - Correct answer D A Taft-Hartley Trust is established by one or more: A Labor unions or associations B Employers in a Multiple Employer Trust C Employees working for more than one employer D Credit unions in the same area - Correct answer A In group insurance, the evidence of a contract between the insurer and the employer or association is: D Automobile and home health care - Correct answer C If an insured pays a premium that is lower than others that are in the same class, this insured is considered to be rated as? A Substandard B Preferred C Reduced D Standard - Correct answer B All of the following statements regarding an insurance application are correct, except: A It is not included as part of the contract B It is a formal written request by an applicant to an insurer requesting a policy C It is the primary source of information for underwriting purposes D It must be signed by at least the applicant and producer - Correct answer A A product designed to provide coverage for necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital is called: A Long-Term Care B Outpatient Care C Retirement Benefits D Medicare Supplement - Correct answer A A certain major medical policy states a maximum number of days for which convalescent care will be paid as well as a maximum number of X-rays that will be paid for under any one claim. These are examples of: A Inside limits B Designated benefits C Common policy limits D Stand alone limits - Correct answer A When medical expense policies do not state specific benefit dollar benefit amounts, but instead base payments upon the charges for like services in the same geographical area, benefits are designated as which of the following? A Blanket charges B Scheduled charges C Specified charges D Usual, customary, and reasonable charges - Correct answer D What type of disability income insurance pays a benefit to a business to help in the search, cost, and hiring of a replacement when an employee becomes disabled and is unable to work for the company? A Buy-sell B Reducing term C Business overhead expense D Key employee - Correct answer D Under a Key Employee Disability Income Policy, the employer is the: A All of the answers listed B Recipient of the proceeds C Premium Payor D Policyowner - Correct answer A An insured may find it more difficult to qualify for benefits, but will enjoy a lower premium, when a more restrictive definition of _________ is found in a Disability Income policy. A Disability B Transplant C Rehabilitation D Benefit - Correct answer A With _______, the patient must pay 20% of covered charges plus the deductible. A None of the answers listed B Medicaid C Medicare Part B D A Medicare Supplement - Correct answer C In order for a claimant to be eligible for _______ benefits, they must qualify based upon need. A Medicaid B A Group insurance cannot be based upon community experience B The average age of the group is not taken into consideration C Premiums are generally re-evaluated annually and may be based upon prior claims D All participants are always eligible immediately - Correct answer C Which of the following is considered not to be an Essential Health Benefit? A Mental health services B Behavioral health treatment C Personal care D Ambulatory patient services - Correct answer C The following statement is true concerning the income received from an individually owned disability income policy: A Premiums paid with after tax dollars, Income benefit taxable B Premiums are tax sheltered, Income benefit taxable C Premiums are tax sheltered, Income benefit not taxable D Premiums paid with after tax dollars, Income benefit not taxable - Correct answer D The maximum liability of the Life and Disability Insurance Guaranty Association for all benefits, including cash values, for any one life is: A $100,000 B $250,000 C $300,000 D There is no limit - Correct answer C The minimum capital required to form and organize a new domestic stock life insurance company in Alabama is: A $500,000 B $1,000,000 C $50,000 D $2,000,000 - Correct answer B Unless revoked or suspended, an insurance producer license will remain in effect for: A 2 years B To age 65 C As long as the license renewal fee is paid and the continuing education requirements are met D 3 years - Correct answer C Which of the following IS NOT a type of illustration under the Alabama regulation governing life insurance illustrations? A Supplemental illustration B Basic illustration C Annualized Illustration D In force illustration - Correct answer C If a company wishes to share information about a customer's health with a third party: A The customer must opt-out of allowing disclosure immediately B The company must pay a fee to the customer before the information may be shared C The customer must pay a fee for this privilege D The customer must actively opt-in to allowing the disclosure - Correct answer D Assets in a separate account are valued at: A Their market value first quoted to the applicant B Their guaranteed rate of interest C Their market value on the date of valuation D Their market value at any given time - Correct answer C The Life and Disability Insurance Guaranty Association provides a maximum liability benefit in the event an insurer becomes insolvent. The benefit amount is limited to: A $100,000 for cash value on one life and $300,000 for all benefits B $100,000 for cash value on one life and $250,000 for all benefits C $50,000 for cash value on one life and $150,000 for all benefits D $100,000 for cash value on one life and $500,000 for all benefits - Correct answer A If the Commissioner denies a request for an extension to comply with the continuing education requirements, the licensee must complete the continuing education requirements within _______ days after being notified of the denial. Lapsing D Surrendering - Correct answer C Jeanne has a $100,000 whole life insurance policy that has $1,000 of dividend additions, a $6,000 outstanding loan that includes unpaid interest, and a monthly premium of $500. If she dies during the grace period, which of the following insurance settlements would be permitted? A $93,000 B $92,500 C $94,500 D $100,000 - Correct answer C An individual purchased a fixed annuity with flexible premiums. When she annuitized the policy, she chose the Life Income 10-Year Certain option. What would the beneficiary receive if the annuitant dies 4 years after the annuity payout began? A 6 more years of payments B Nothing C The undistributed balance D 10 more years of payments - Correct answer A One of the benefits of an annuity in regards to taxes is: A Premiums are tax deferred B Premiums are tax deductible C Death benefits are income tax free D Earnings are tax deferred during the accumulation phase - Correct answer D Which of the following will receive the smallest monthly income benefit check if an annuity is annuitized? A 65 year old female B 62 year old male C 55 year old male D 50 year old female - Correct answer D How are employer paid premiums on a group life insurance plan treated for tax purposes? A As compensation in lieu of cash B As an ordinary and necessary business expense C As a personal expense paid on behalf of the employee D A barter transaction - Correct answer B A SEP uses employer funded _______ accounts. A Defined Benefit B Profit Sharing C IRA D 401(k) - Correct answer C A non-school employer can set up a TSA plan for their employees under which of the following IRC section? A 501(c)(3) B 401(k) C 408(a) D 403(b) - Correct answer A If the insurer issues a health insurance policy without an initial premium, the producer must obtain a signed: A Statement of Good Health B Standard provisions endorsement C Rider that the policy is acceptable D Statement of increased health risks - Correct answer A Which of the following has primary responsibility for ensuring that the application is filled out completely? A Producer B Home office underwriter C Insurer D Actuary - Correct answer A The mathematical probability table used by insurance companies to determine loss due to sickness or injury is the: A Rate Table B An insured should receive necessary claim forms within _____ days after notice of claim. A 15 B 5 C 10 D 20 - Correct answer A Which of these is a Mandatory Uniform Provision? A Illegal Occupation B Conformity with State Statutes C Misstatement of Age D Legal Actions - Correct answer D Coordination of Benefits is a provision designed to reduce ________ when an insured is covered under multiple health plans. A Continuation of coverage B Overinsurance C Extension of benefits D Excess coverage - Correct answer B Benefits received from an individual Long-Term Care Policy are not subject to ______, regardless of the deductibility of the premiums paid for the plan. A Income tax B Sales tax C Deductibles D Premiums - Correct answer A All of the groups are considered to be exempt from the Affordable Care Act's requirement to purchase coverage, except: A Members of a religion opposed to acceptance of health care benefits B Undocumented immigrants C Those who must pay less than 9.5% of their income for health insurance D Those whose household income does not require the filing of a tax return - Correct answer C Which of the following may an insurer purchase for its separate account? A More than 10% of the total issued and outstanding voting securities of any single issuer B Both answers are correct C Securities of a subsidiary of the insurer D Neither answer is correct - Correct answer D Which of the following provided the federal government the right to regulate the insurance industry, regarding fraud and false statements? A McCarran/Ferguson Act B COBRA Act C HIPAA Act D Gramm-Leach-Bliley Act - Correct answer A Which of the following acts established the Federal Government's right to regulate the insurance industry in situations involving fraud and false statements made in insurance transactions which might lead to jeopardizing the financial soundness of an insurance company? A TAMRA Act B McCarran-Ferguson Act C HIPAA Act D COBRA Act - Correct answer B All of the following are true regarding the States Second Injury Fund, except: A It limits the employers liability for a previously disabled employees second injury B It is funded by assessments against insurers and those who self insure C It is used to relieve the state of any burden for Workers' Compensation benefits D It promotes the employment of previously injured or handicapped workers - Correct answer C An annuity or pure endowment contract may be reinstated within __________ from the default in premium payments, unless the cash surrender value has been paid. A 1 year B 3 months C 6 months B Appointed by the president of the United States C Voted into office by primary elections D Appointed by the governor - Correct answer D The maximum liability of the Life and Disability Insurance Guaranty Association for cash values, for any one life is: A $200,000 B There is no limit C $100,000 D $300,000 - Correct answer C All of the following are true regarding advertising in life insurance, except: A Premiums cannot be referred to as 'deposits', 'deposit premiums', or 'investments', they may be referred to as 'premiums' only B Advertisements may not omit the words 'life insurance' or 'annuity' from a policy's name C Premiums cannot be mentioned in an advertisement at all D Any reference to policy dividends must state that they are not guaranteed - Correct answer C The field underwriter is the _________ and is not a determiner of insurability. A Paramedical examiner B Producer C Medical doctor D Actuary - Correct answer B The ____________ market is a private source of coverage of last resort for individuals or businesses that have been rejected by voluntary market insurers. A Reciprocal B Reinsurance C Residual D Self-insured - Correct answer C _____________ insurance allows for insurance coverage to be obtained when not available from admitted carriers. A Surplus lines B Foreign C Brokerage D Fraternal - Correct answer A Which of the following beneficiary designations prevents a policyowner from assigning the policy, taking a policy loan, or surrendering the policy without the beneficiaries consent? A Named B Irrevocable C Incontestable D Class - Correct answer B Concerning the Paid-Up Additions Dividend Option, all of the following are true, except: A Paid-up additions increase the amount of future dividends credited B Eventually, no more premiums will be due on the policy C Paid-up additions have their own increasing cash values D These single premium additions do not change the face value of the original policy - Correct answer B Under an annuity with a Joint Life Payment Option, what will the survivor receive upon the death of the first annuitant? A The remaining period certain B The undistributed balance C The same amount they were receiving together D Nothing - Correct answer D Which of the following Annuities would potentially be the most negatively impacted by the overall stock market falling in value? A Fixed B Variable C Indexed D Market adjusted annuity - Correct answer B 15% C 25% D 20% - Correct answer D Part B of Medicare excludes which of the following medical expenses? A A regular dental checkup B Clinical laboratory services C Outpatient hospital treatment D Home health care - Correct answer A Regarding COBRA, which of the following is not true? A It provides continuation of coverage for 36 months for a surviving spouse B It covers participants who have resigned for 36 months following the date of their resignation C It provides continuation of coverage for 36 months for an individual losing dependent status D It provides continuation of coverage for 29 months for the disabled - Correct answer B _______ income benefits received by an employee are subject to taxation in proportion to the amount of premium that the employer paid. That income attributable to the employee's premium is not taxable. A Medical B Long-Term Care C Disability D Dental - Correct answer C