ALABAMA INSURANCE TEST EXAM WITH 100% CORRECT ANSWERS 2024, Exams of Advanced Education

Download ALABAMA INSURANCE TEST EXAM WITH 100% CORRECT ANSWERS 2024 and more Exams Advanced Education in PDF only on Docsity! ALABAMA INSURANCE TEST EXAM WITH 100% CORRECT ANSWERS 2024 Which welfare program provides assistance to the needy? - Correct Answer-Medicaid Barbara has the right to change the beneficiary designation on her life insurance policy. Barbara's beneficiary is a(n): - Correct Answer-revocable beneficiary Within how many calendar days must all clean electronic health insurance claims be paid in Alabama? - Correct Answer- 30 Which type of term policy allows the policyowner to switch to permanent insurance? - Correct Answer-Convertible term What does renewable term guarantee? - Correct Answer-The insured's insurability If an insured commits suicide, a life insurance policy's face amount will be paid only after the policy has been in force for at least: - Correct Answer-two years Which of the following statements concerning a life insurance policy is TRUE? - Correct Answer-An issued policy can never be changed by a producer The proceeds of a life insurance policy can be paid in a form other than a lump-sum payment. These forms of payment are called: - Correct Answer-settlement options The withholding of facts in an insurance application is called: - Correct Answer-concealment A licensed Alabama insurance producer would NOT be disciplined by the Commissioner of Insurance for: - Correct Answer-being convicted of a misdemeanor The option to convert term life insurance to a permanent form of coverage can normally be executed: - Correct Answer- without proof of insurability Which type of life insurance rider allows a policyowner to increase the level of coverage to keep up with inflation? - Correct Answer-cost of living rider Amy owns a disability income policy with a noncancellable renewal provision. Which of the following is guaranteed in her policy? - Correct Answer-The coverage and premium rate are guaranteed According to Required Provision 4, when an insured applies for reinstatement of a health policy and receives a conditional receipt, how long does the insurer have to approve or deny? - Correct Answer-within 45 days of the date of application Policy dividends for life insurance are: - Correct Answer-not guaranteed What is a certificate of insurance? - Correct Answer-A certificate issued to each individual covered by the group life insurance Which is NOT true regarding Medicare Supplement policies? - Correct Answer-Must include a minimum 20-day Free-Look provision In Alabama, all Health Maintenance Organizations must: - Correct Answer-have a complaint system to resolve written complaints from enrollees Rick owns a $100,000 life insurance policy with a cash value of $10,000. How much can he borrow up to? - Correct Answer- The accumulated cash value ($10,000 less interest) Susan owns a life insurance policy that has accumulated $10,000 in cash value in which she can no longer pay its premiums. If she elects to take the extended term option, which of these actions would she take? - Correct Answer-Uses the $10,000 to buy term insurance of the same face amount as her original policy Jackie took out a Medicare supplement insurance policy and also has a preexisting condition. In this situation, a preexisting condition is defined as a condition for which medical advice was given or received within _____ of the effective date of coverage. - Correct Answer-6 months Rodney applies for an insurance policy and pays the first premium. The receipt given for the first premium is called a(n): - Correct Answer-conditional receipt A policy owner with an automatic premium loan provision must: - Correct Answer-pay back the loan amount to keep the policy's cash value at its maximum Which of the following is NOT an example of insurable interest? - Correct Answer-An airline insuring the lives of its passengers With key employee life insurance, - Correct Answer-the company is the owner of the policy A Cross Purchase Buy-Sell Agreement is in place for ABC Company's four founding partners. What would this agreement require if the agreement is funded with individual life insurance? - Correct Answer-Each partner must own a policy on the other partners The Notice of Claim Provision states that the insured notify the insurance company within __ days of a claim. - Correct Answer-20 A Preferred Provider Organization (PPO) contract typically uses which payment arrangement? - Correct Answer- Negotiated fee-for-service Which entity is responsible for the majority of regulations imposed on the insurance industry? - Correct Answer-State government A husband and wife purchases a life insurance policy that covers both of them. The policy paid nothing when the husband died. Two years later, the wife dies and a death benefit is paid to the beneficiary. Which type of policy is this? - Correct Answer-Survivorship life policy An insurance producer must have which of the following in order to sell variable life insurance policies? - Correct Answer- All of these Total disability can be defined as "the insured's inability to perform the occupation for which he/she is reasonably qualified by education, training, or experience." For disability income insurance purposes, this definition is known as: - Correct Answer-the "own occupation" definition Which of the following limits an insurance company's total exposure under a major medical policy? - Correct Answer- Maximum lifetime benefit and a coinsurance provision In regards to insurance applications, which of the following statements is true? - Correct Answer-Changes on the application must be consented to in writing Shawn has a waiver of premium rider on his life insurance policy. He becomes disabled for 3 years, during which the insurance company waives $3,000 in premiums. When Shawn recovers, he must: - Correct Answer-resume paying premiums again Which of these is NOT considered a form of advertisement in Alabama? - Correct Answer-A producer sending a Christmas card to a client The exclusions and conditions in an insurance contract are required to be conspicuous, plain, and clearly stated. There should be no surprise when an insurance company denies a claim for a hidden clause. This is called the: - Correct Answer- doctrine of reasonable expectations An accidental death rider claim is usually paid if the insured: - Correct Answer-dies within 90 days of the accident Which of the following is an example of a "nonforfeiture value"? - Correct Answer-After a policyowner cancels his/her permanent policy, the cash value accumulation must be made available to the policyowner The number of an insurance company's health insureds that is expected to become sick or injured is called: - Correct Answer- morbidity experience Wayne is covered under a nonoccupational group health policy. He is hurt while traveling for business and requires a lengthy hospital stay. His group health policy refuses to pay for hospital expenses because - Correct Answer-this is considered a job-related accident Who does a disability income policy normally cover? - Correct Answer-Wage earners How are employer-paid premiums for employee group health insurance normally treated for tax purposes? - Correct What describes a level term policy? - Correct Answer-The premium and the protection remain constant for the term of the policy An example of a life insurance beneficiary is a(n): - Correct Answer-all of these Jan is named irrevocable beneficiary of Jim's life insurance policy. Which of the following statements is correct? - Correct Answer-Jim needs Jan's permission to borrow the policy's loan value Which of these will NOT result in an increase in life insurance policy dividends? - Correct Answer-Higher reserves Which of these statements concerning COBRA is correct? - Correct Answer-Under COBRA, dependents of employees covered by group plans have the same extension and conversion privileges available to them as the employee A life insurance beneficiary has chosen a settlement option in which the principal never decreases unless the beneficiary makes a withdrawal. This settlement option is called the: - Correct Answer-interest only option Which of these is NOT a reason the insurance application is important? - Correct Answer-When attached to the policy, the application becomes part of the insurance clause At certain ages or dates, an insured can increase the stated benefit (within limits) under their disability income policy, regardless of health. Which policy rider BEST describes this? - Correct Answer-Future income option A Long Term Care (LTC) policy has a minimum renewability level of: - Correct Answer-guaranteed renewable An insurance company licensed to do business in Alabama, but incorporated in another state, is called: - Correct Answer-a foreign company A policyowner can collect the face amount on what type of policy? - Correct Answer-endowment policy Extended residence in a nursing home is covered by a(n): - Correct Answer-long-term care policy Nick has a Major Medical insurance policy with a $1,000 deductible, an 80% coinsurance clause, and a $1,500 stop-loss feature. He is hospitalized and incurs the following covered expenses: $10,000 hospital room and board, $2,500 surgeon's fee. What is Nick responsible for paying? - Correct Answer- $1,500 What is a certificate of insurance? - Correct Answer-A certificate issued to each individual covered by the group life insurance A disability policy in Alabama that is paid on a monthly basis is required to have a grace period of: - Correct Answer-10 The monthly benefit of an Annuity Certain is determined by: - Correct Answer-the annuitant's payout period selection What percentage of eligible employees must be covered by noncontributory group insurance plans? - Correct Answer- 100% Which type of life insurance policy combines insurance protection with an accumulation of cash value? - Correct Answer-permanent insurance XYZ Insurance Company issued a new life policy to an insured that replaced an existing policy. XYZ Insurance Company is considered to be the: - Correct Answer-replacing insurer The objective of insurance is: - Correct Answer-the transfer of risk Insurance policies issued by companies which allow their policyowners to participate in the favorable experience of the company through payment of dividends are known as: - Correct Answer-participating policies In Alabama, an insurer who violates state laws for the payment of insurance commissions may be fined up to: - Correct Answer-three times the amount of the commissions paid Ed has an insurance policy with an insurance company. Before Ed's policy will pay a claim, certain events must occur. Because of this, an insurance policy is considered to be: - Correct Answer-conditional Which type of assignment transfers a portion of the policyowner's right to another party in order to secure a debt to that party? - Correct Answer-Collateral assignment Ann is an employee covered by a Group Life plan through her employer. When Ann is terminated, her employer fails to inform her about the plan's conversion option. Two weeks later, Ann dies in an automobile accident. How will this situation be handled? - Correct Answer-Full benefits must be paid by the insurer An insurance company may cancel a life insurance policy under which of the following conditions? - Correct Answer- The outstanding policy loan exceeds the cash value of the policy When does "adverse selection" exist? - Correct Answer-When the risks accepted for insurance has a HIGHER likelihood of experiencing loss than an average group The aviation exclusion: - Correct Answer-excludes coverage when the insured is riding in certain kinds of air travel Which dividend option allows a policyowner to use his/her dividends to buy life insurance on a single premium basis? - Correct Answer-Paid-up additions option Ron turned over all rights in his policy over to an assignee. This is called: - Correct Answer-an absolute assignment Beginning at what age can an IRA owner start making withdrawals and NOT be subjected to a tax penalty? - Correct Answer-59 1/2 Mary and Paul have individual disability income policies that both pay a $5,000/month benefit. Mary's policy has a 30-day elimination period, and Paul's policy has a five month elimination period. Which of the following statements is true? - Correct Answer-Paul's premium is probably less than Mary's A Long Term Care insured must be unable to perform a minimum of __ Activities of Daily Living (ADLs) to receive benefits. - Correct Answer-2 According to Alabama law, agents of a Health Maintenance Organization (HMO): - Correct Answer-must be licensed as insurance producers The maximum amount of coverage placed on a disability income policy is based on the insured's: - Correct Answer- earned income from the previous year All of these are correct concerning group life insurance, EXCEPT: - Correct Answer-Whole life insurance is the form of insurance typically used in group life insurance Under Alabama's annuity disclosure regulation, the disclosures must be mailed to the applicant within __ business days if the application is taken over the telephone. - Correct Answer-5 An individual unable to perform two or more Activities of Daily Living (ADLs) will trigger coverage from a _____ policy. - Correct Answer-Long Term Care (LTC) An insurance producer represents the: - Correct Answer-the insurance company Julio, the insurance producer, has allowed his license to lapse. He would like to reinstate his license without retaking a prelicense course or passing a written examination. To do this, Julio must reinstate the license within ___ months from the renewal date. - Correct Answer-12 An insurance producer who offers a potential client something of value as an incentive to purchase insurance is engaging in: - Correct Answer-rebating Carol is a life insurance policyowner who has transferred her ownership to a third party in exchange for a percentage of the death benefit. What is this called? - Correct Answer-Viatical settlement agreement In Alabama, when are newborns covered under a health policy? - Correct Answer-The moment of birth Which of the following is a TRUE statement regarding dental insurance? - Correct Answer-Comprehensive dental care policies usually cover a percentage of reasonable and customary charges for non-routine treatment What use does a business have for a key employee disability insurance policy? - Correct Answer-Temporarily replace a disabled key employee The period of time during which a surviving spouse does not qualify for Social Security survivor or retirement benefits is called: - Correct Answer-The Blackout Period Required Provision 3 states that the minimum grace period for all policies (except those with monthly or weekly premium modes) is: - Correct Answer-31 days Which statement concerning Alabama's life insurance solicitation regulations is true? - Correct Answer-All of these Which of the following dividend options allows the continuation of cash value accumulation? - Correct Answer- Reduced paid-up insurance Medicare eligibility is typically based on: - Correct Answer-age