Life Insurance Policy and Claims Questions with Answers, Exams of Nursing

Download Life Insurance Policy and Claims Questions with Answers and more Exams Nursing in PDF only on Docsity! Texas General Lines - Life, accident and health insurance PRACTICE EXAM Questions and Answers 2024 LIFE SECTION 1 Correct Answer is LIFE SECTION 1 1) Sandra Timms, age 27, is advised by her producer to purchase Life insurance to cover a 20-year-amortized $50,000 business-improvement loan. Which of the following plans would adequately protect Ms. Timms at the minimum premium outlay? Correct Answer is A- $50,000 Whole Life policy B- $50,000 Level Term policy for 20 years C- $50,000 20 Pay Life policy D- $50,000 Decreasing Term policy for 20 years 2) A 45-year old customer who is seeking to supplement his retirement income at age 65 would not buy a: Correct Answer is A- Deferred Annuity B- Equity Indexed Annuity C- Variable Annuity D- Immediate Annuity 3) John Livingston owns a 30-Pay Life policy that he purchased at the age of 30. The cash value will equal the face amount of the policy when he reaches the age of: Correct Answer is A- 60 B- 70 C- 100 D- 30 4) Which of the following is an example of a Limited-Pay Life policy? Correct Answer is A- Universal life B- Whole Life C- Life Paid-Up at Age 65 D- Renewable Term to Age 70 5) Which of the following policies provides the greatest amount of protection for an insured's premium dollar as well as some cash accumulation? Correct Answer is A- Annuity B- Whole Life C- Term D- Limited-Pay Life 6) Which of the following individual policy conversions is usually permitted without any evidence of insurability? Correct Answer is A- Conversion to a lower-premium plan B- Conversion from a Whole Life policy to a Term policy C- Conversion from a Term policy to a Whole Life policy D- Conversion to a larger amount of insurance 7) Which of the following is NOT correct regarding Ordinary Whole Life policies? Correct Answer is A- The premiums payments are owed annually until you die or reach age 100 B- The cash value grows more quickly in the beginning years of the policy C- Coverage lasts for your own life D- Ordinary Whole Life is a type of permanent insurance 8) Which of the following statements is true about the premium payment schedule for a Whole Life policy? Correct Answer is A- Premiums are payable for a designated period of time only, after which coverage is no longer provided B- Premiums are payable until the insured's retirement only, after which coverage is continued automatically until the insured's death C- One premium, in the amount of the insured's choice, is payable at the time of application, and the balance of the premiums is deducted from the face amount of the policy at the time of the insured's death D- Premiums are payable throughout the insured's lifetime, and coverage continues until the insured's death 9) A life insurance policy that covers two parties, but only pays when the last party dies is known as: Correct Answer is A- Joint Life B- Contingent Life C- Other insured Life D- Survivorship Life 10) Which of the following contracts requires that a series of benefit payments be made at specified intervals? Correct Answer is A- 20-Pay Life B- Modified Whole Life C- Annuity D- Ordinary Whole Life 11) If a client wants cash value life insurance with a flexible premium and an adjustable death benefit that will allow the policy owner a choice of various cash value investment options, he should buy: Correct Answer is A- Variable Life B- Universal Life value at a faster rate in the early years of the policy. Which of the following would be the producer's most appropriate response? Correct Answer is A- "20-Pay Life will accumulate cash value faster." B- "The rate of cash-value accumulation depends on the profitability of the insurance company." C- "Straight Life will accumulate cash value faster." D- "Both plans will accumulate cash value at the same rate." LIFE SECTION 2 Correct Answer is LIFE SECTION 2 1) Which of the following statements about the Reinstatement provision is true? Correct Answer is A- It provides for reinstatement of a policy regardless of the insured's health B- It requires the policy owner to pay, with interest, all premiums that are in arrears in order for the policy to be reinstated C- It permits reinstatement within 10 years after a policy has lapsed D- It guarantees the reinstatement of a policy that has been surrendered for cash 2) The time period covered by the Free Look provision of a Life insurance contract starts: Correct Answer is A- When the insured receives the contract and a "right to look" receipt B- When the contract is received in the agency office and given to the producer C- When the insured receives the contract and makes the first premium payment, if needed D- When the contract is issued and mailed to the agency office from the home office of the insurance company 3) Dividend projections may be included in a proposal for Life insurance when which of the following is true? Correct Answer is A- There is a clear statement that payment of future dividends is not guaranteed B- The applicant has requested that they be included C- The projected amounts do not exceed the dividends previously paid by the same insurance company D- The projected amounts are calculated on the basis of the Commissioners Standard Ordinary Mortality Tables 4) The Life insurance rider that will pay the insured's premium after a period of disability due to accident or sickness is: Correct Answer is A- Guaranteed Insurability B- Accidental Death and Dismemberment C- Waiver of Premium D- Automatic Premium Loan 5) Which of the following is a Non-forfeiture Option that provides continuing cash value buildup? Correct Answer is A- Extended Term B- Deferred Annuity C- Reduced Paid-Up D- Cash Surrender 6) A rider that keeps a policy from lapsing due to non-payment of premium by borrowing from the cash value is: Correct Answer is A- Reduced Paid-Up Option B- Extended Term Option C- Automatic Premium Loan D- Mode of Payment 7) Which of the following Settlement Options might provide payments that exceed the proceeds of the policy and the interest earned? Correct Answer is A- Interest Only B- Fixed Period C- Life Annuity D- Fixed Amount 8) A client buys a $50,000 Whole Life policy on himself and wants to add $25,000 in Term coverage for his spouse. He should add which of the following riders to his policy? Correct Answer is A- Spousal Rider B- Family Rider C- Other Insured Rider D- Additional Insured Rider 9) All of the following are considered to be owner's rights under a Life insurance policy, EXCEPT: Correct Answer is A- Changing an irrevocable beneficiary B- Changing a dividend option C- Taking a policy loan D- Selecting a settlement option prior to death 10) If the insured dies 5 years after he bought a Life insurance policy and the insurer determines that there was material misrepresentation on his application, they will: Correct Answer is A- Pay the claim B- Pay only a portion of the claim C- Deny the claim D- Deny the claim but refund the premium 11) The life insurance policy provision that prevents the insurer from modifying a policy after it has been issued is the: Correct Answer is A- Incontestability Clause B- Entire Contract Clause C- Consideration Clause D- Insuring Clause 12) Which of the following statements is true about exercising a Guaranteed Insurability option: I. The new insurance is available at the original issue age rate II. Evidence of insurability is not required III. The insured can exercise the option at any time after the age of 21 IV. The maximum purchase is specified in the contract Correct Answer is A- III and IV B- I and II C- II and IV D- I, II, and III 13) In a policy insuring the life of a child, which of the following allows the premiums to be waived in the event of the death or disability of the person responsible for premium payments? Correct Answer is A- Reduced Paid-Up option B- Payor Benefit Rider C- Waiver of Premium provision D- Reduction of Premium option 14) Which of the following is true about the Misstatement of Age provision Correct Answer is A- It allows the insurer to adjust benefits B- It allows the insurer to change the premium C- It allows the insurer to void the contract D- It allows the insurer to contest a claim during the first 2 15) Which of the following statements about a typical Suicide clause in a Life insurance policy is true? Correct Answer is A- Suicide is excluded for a specific period of years and covered thereafter B- Suicide is excluded as long as the policy is in force C- Suicide is covered for a specific period of years and excluded thereafter D- Suicide is covered as long as the policy is in force 16) A $10,000 Life insurance policy with a Triple Indemnity clause has been in force for three years. The insured is injured in a train wreck and dies in a hospital five months later. The death proceeds payable under the policy would be: Correct Answer is A- $20,000 B- $ -0- 30) The Life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the: Correct Answer is A- Misstatement of Age clause B- Insuring clause C- Incontestability clause D- Reinstatement clause 31) The provision in a Life insurance policy that provides protection against unintentional policy lapse is known as the: Correct Answer is A- Automatic Premium Loan provision B- Payor clause C- Waiver of Premium benefit D- Reduction of Premium option 32) The purpose of the Grace Period is to: Correct Answer is A- Give the beneficiary time to prove that insurable interest exists B- Protect the policy owner against unintentional lapse C- Protect the insurer against adverse selection D- Give the insurer time to determine the cause of death 33) Jim gets married and wants to add his new spouse to his existing Life insurance policy. Which rider should he add? Correct Answer is A- Guaranteed Insurability Rider B- Other Insured Rider C- Payor Rider D- Term Rider 34) An insured died during the Grace Period of her Life insurance policy and had not paid the required annual premium. The insurance company is obligated to pay which of the following to the beneficiary? Correct Answer is A- The face amount of the policy less any earned premiums B- The full face amount of the policy C- The cash value of the policy, if any D- A refund of any premiums paid 35) A client buys a Life insurance policy on July 1st and dies by suicide 6 months later. The insurance company will: Correct Answer is A- Deny the claim B- Deny the claim, but refund the premium C- Pay the claim in full D- Pay half of the claim 36) To add coverage for a child to your Whole Life policy you would purchase which of these riders? Correct Answer is A- Payor Benefit Rider B- Guaranteed Insurability Rider C- Waiver of Premium Rider D- Child Term Rider 37) Which of the following statements about the Misstatement of Age provision in a Life insurance policy is true? Correct Answer is A- If the insured's age has been overstated, it provides that a premium refund and the face amount of the policy will be payable B-If the insured's age has been understated, it provides that a death benefit smaller than the face amount of the policy will be payable C- It becomes inoperative after the expiration of the policy's Contestable period D- It is an optional provision 38) An insurance company will grant an advance from the cash value of a Life insurance policy when the policy owner requests which of the following? Correct Answer is A- An automatic premium loan B- A low-interest dividend loan C- A policy loan D- A loan from Extended Term Insurance LIFE SECTION 3 Correct Answer is LIFE SECTION 3 1) An insured's premium for Life insurance is based mainly upon their: Correct Answer is A- Risk classification B- Gender C- Occupation D- Age 2) A prospect's statements made in the application for insurance constitute a part of which of the following? Correct Answer is A- Subrogation Clause B- Incontestability Clause C- Co-insurance Clause D- Consideration Clause 3) In the formation of a Life insurance contract, the special significance of a Conditional Receipt is that it: Correct Answer is A- Serves as proof that the producer has determined the applicant to be fully insurable for coverage by the insurance company B- Is intended to provide coverage on a date earlier than the date of the issuance of the policy C- Is given by the producer only to applicants who fully prepay all scheduled premiums in advance of policy issue D- Guarantees the applicant that a policy will be issued in the amount applied for in the application 4) Life insurance becomes effective when: Correct Answer is A- When the insurer receives the application at their home office B- When the conditions in the conditional receipt are satisfied C- The applicant writes the check and receives a conditional receipt D- When the producer signs the application 5) A producer submits a completed and signed application to the underwriter along with the first premium check. After checking the results of the physical exam, the underwriter issues a 'rated' policy. Which of the following will not be required: Correct Answer is A- A statement that the applicant's health has not changed since the physical exam B- Additional premium to be collected at policy delivery C- A new completed and signed application D- An explanation of the rating or premium surcharge to the client 6) Insurable interest must exist: Correct Answer is A- At the time of loss B- In order to be named as beneficiary C- At the time of application D- Continuously 7) All of the following are a part of a Life insurance policy, EXCEPT the: Correct Answer is A- Conditional Receipt B- Incontestability Clause C- Copy of the application D- Insuring Clause 8) Once completed and signed by the applicant, a producer may change an application: Correct Answer is A- With consent of his manager B- If the applicant initials the change C- With the verbal consent of the applicant D- At anytime 9) An applicant has been denied insurance coverage because of information contained in a consumer report. According to the Fair Credit Reporting Act, all of the following statements are true about this situation, EXCEPT: Correct Answer is A- The applicant has the right to obtain a copy of the consumer report directly from an insurance company that used the report 21) Which federal law governs consumer investigative reports: Correct Answer is A- Telephone Communication Protection Act B- Privacy Protection Act C- Fair Credit Reporting Act D- Employee Retirement Income Security Act 22) If an application for Life insurance is not complete: Correct Answer is A- The insurer will reject it B- The insurer will issue the policy and request additional information C- The insurer will return it to the producer D- The insurer will consider it to be void LIFE SECTION 4 Correct Answer is LIFE SECTION 4 1) A plan under which the surviving partners of a partnership agree to buy the interest of a deceased partner is known as a: Correct Answer is A- Surviving Shareholder plan B- Buy and Sell Agreement C- Key Employee Life policy D- Deferred Compensation plan 2) Carl Burk, whose wife is his business partner, buys a Life insurance policy on his wife's life. Because of this third-party ownership, the beneficiary should be the: Correct Answer is A- Policy owner's children B- Policy owner's estate C- Policy owner D- Policy owner's wife 3) When a company requires that their employees pay part of the premium for the Group Life insurance coverage, it is known as a ___________ group: Correct Answer is A- Contributory B- Nonparticipatory C- Participatory D- Noncontributory 4) Albert Metz, who has $2,000 of Group Life insurance, has just terminated his employment. Mr. Metz has how many days in which to convert his group coverage to individual coverage? Correct Answer is A- 28 B- 21 C- 15 D- 31 5) Which of the following is not considered to be a 'qualified' plan? Correct Answer is A- IRA B- 403b Tax Sheltered Annuity C- Split Dollar D- Keogh 6) Traditional IRAs have a premature distribution penalty for distributions taken prior to age: Correct Answer is A- 55 B- 70 1/2 C- 59 1/2 D- 65 7) Tim Watson wants to obtain a Life insurance policy on his employee, Mike Carson, and to name Mike's wife, Deborah Carson, as the beneficiary. Signatures of which of the following would be legally required on the application? I. Tim Watson II. Mike Carson III. Deborah Carson Correct Answer is A- I and II B- II and III C- I, II, and III D- I only 8) An insurable interest must exist when: Correct Answer is A- Cash values are borrowed B- Death proceeds become payable C- A life insurance policy is issued D- A policy is surrendered for cash 9) A client with a participating Life insurance policy receives both interest and dividends. What are the tax implications? Correct Answer is A- Neither are taxable B- The interest is taxable, but the dividends are not C- Both are taxable as ordinary income D- The dividends are taxable, but the interest isn't 10) A Life insurance policy of which the cash value is over-funded according to IRS rules is known as: Correct Answer is A- A Universal Life Contract B- A Variable Life Contract C- A Modified Endowment Contract D- A Variable/Universal Life Contract 11) The owner of a business is insured under a $100,000 Key Employee Life policy that contains a Double Indemnity clause and a Suicide clause. The business has paid the annual premium of $2,000. Six months after the inception date of the policy, the insured commits suicide. The insurance company's liability for payment is: Correct Answer is A- $100,000 B- $200,000 C- $ -0- D- $2,000 12) A parent who wishes to have complete control of their son's life insurance policy until the son reaches age 25 can do so through the use of which of the following? Correct Answer is A- Ownership provision B- Payor provision C- Insuring Clause D- Consideration Clause 13) Premature distributions from a Traditional IRA prior to age 59 1/2 are subject to: Correct Answer is A- A 50% IRS penalty B- Ordinary income tax plus a 10% penalty C- Capital gains tax plus a 6% penalty D- Ordinary income tax 14) When someone other than the insured is the owner of a Life insurance policy, the owner may do all of the following without the insured's consent, EXCEPT: Correct Answer is A- Make a policy loan B- Change the beneficiary C- Increase the amount of insurance D- Surrender the policy for its cash value 15) Albert Metz, who has $2,000 of Group Life insurance, has just terminated his employment.The maximum amount that Mr. Metz will be able to convert is which of the following? Correct Answer is A- $1,500 B- $1,000 C- $2,000 D- $500 16) Which of the following statements is true about a policy assignment? Correct Answer is A- It permits the beneficiary to designate the person or persons to receive the benefits B- It is valid during the insured's lifetime only, because the death benefit is payable to the named beneficiary C- It is the same as a beneficiary designation D- It transfers the owner's rights under the policy to the extent expressed in the assignment form I. Heart surgery II. An emergency appendectomy III. Plastic surgery for burns received in an auto accident Correct Answer is A- I and II B- I only C- III only D- I, II, and III 14) All of the following are true about Long Term Care insurance, EXCEPT: Correct Answer is A- It may be cancelled, if the insured's health changes B- It may be cancelled for non-payment of premium C- Coverage is subject to a daily maximum limit D- It must have a 30-day free look provision 15) HMOs offer all of the following features, EXCEPT: Correct Answer is A- Co-payments B- Closed networks C- Reimbursement D- Preventative care 16) Which of the following statements about Group insurance is true? Correct Answer is A- Group insurance is essentially reduced-cost mass protection B- A small group is rated on the basis of its own experience C- Group insurance is issued after each prospect has had a medical examination D- Each person insured in a group is issued a policy 17) When benefits are paid to a policy owner covered under a Hospital Expense policy, the policy is considered to be which of the following? Correct Answer is A- Reimbursement B- Special Risk C- Limited Accident D- Service 18) Which of the following statements about Accidental Death and Dismemberment coverage are true? I. Death benefits are paid only if death occurs within 24 hours of an accident II. Dismemberment benefits are paid for certain disabilities that are presumed to be total and permanent III. Accidental Death benefits are paid only if death results from an accidental bodily injury as defined in the policy Correct Answer is A- I and III B- II and III C- I, II, and III D- I and II 19) If you purchased a Major Medical policy with a $500 deductible and 80/20 co- insurance, what would be the effect of adding a $500 Supplemental Accident rider to your policy: Correct Answer is A- It would limit coverage to $500 in the event of accidental injury B- It would waive the deductible and co-insurance up to $500 for accidental injury C- You would be required to pay a $500 additional premium if you were injured in an accident D- The deductible and co-insurance would be waived up to $500 for injury or sickness 20) Regarding Long Term Care insurance, which of the following is not considered to be an Activity of Daily Living (ADL): Correct Answer is A- Talking B- Bathing C- Transferring D- Eating 21) Leland Farrell was hospitalized for two weeks and received a bill for $2,100. He has a Major Medical policy with a $100 deductible. His co-insurance is 80/20, figured after reducing the bill by the deductible amount. Mr. Farrell is expected to pay a total of: Correct Answer is A- $520 B- $500 C- $400 D- $1,500 22) Group A&H insurance normally specifies that what percentage of those eligible must be enrolled under a noncontributory plan? Correct Answer is A- 100% B- 25% C- 75% D- 50% 23) Which of the following is not covered by a Basic Medical Expense policy: Correct Answer is A- Hospital room and board B- Long term care expenses C- In-hospital doctor visits D- Surgical expenses 24) Jill has a Major Medical insurance policy with a $1,000 deductible and 80/20 co- insurance. If she has a $10,000 claim, how much will her insurer pay: Correct Answer is A- $2,800 B- $7,200 C- $2,000 D- $1,000 25) Hospital Indemnity policies will pay: Correct Answer is A- Medical bills B- Surgical expenses C- Hospital room and board D- A daily amount if hospitalized 26) In an A&H policy, an Elimination Period provision refers to the period: Correct Answer is A- Between the first day of disability and the actual receipt of payment for the disability incurred B- During which any specific accident or illness is excluded from coverage C- Between the effective date of the policy and the date on which payments under the policy become due D- Between the first day of disability and the day to which the disability must continue before it can result in the insured receiving any benefits 27) Which of the following statements is USUALLY true about the benefits of a Group Short-Term Disability Income policy? Correct Answer is A- They are payable for accidents covered by Workers' Compensation B- They are not payable for accidents covered by Workers' Compensation C- They are not affected by Workers' Compensation D- They are payable when expenses exceed Workers' Compensation benefits 28) Which of the following is INCORRECT regarding a Disability Income policy? Correct Answer is A- On a group policy you have a taxable benefit B- On an individual policy you have a taxable benefit C- On a group policy you insure your gross income D- On an individual policy you insure your net income HEALTH SECTION 2 Correct Answer is HEALTH SECTION 2 1) If the insured is not entirely satisfied with the policy issued, she may return it to the insurance company for voiding and receive a refund of premium at which of the following times? Correct Answer is A- Within a specified period from the date the insurance company issues the policy B- Within a specified period from the date the insured receives the contract C- Within a specified period from the date the producer receives the contract D- Within a specified period after the first renewal premium falls due 2) The owner of a Medical Expense policy has all of the following rights, EXCEPT: Correct Answer is A- Sue the insurer, if there is a disagreement over a claim B- Return the policy to the insurer within the free look period C- Modify the policy without the consent of the insurer D- Assign the benefits to the provider of medical services 15) Under a Guaranteed Renewable Health insurance policy, the insurer may: Correct Answer is A- Cancel the contract for too many claims B- Change rates by class C- Change policy provisions at any time D- Reduce the amount of insurance if the insured's health declines 16) An applicant for an Individual Health policy failed to complete the responses to the Medical History questions because she had forgotten some important past treatment dates. She did, however, sign the application. Before being able to complete the responses and pay the initial premium, she was confined to a hospital for a condition that would ordinarily be covered by the policy. In this situation, she was not insured because she had not met the conditions specified in which of the following? Correct Answer is A- Insuring clause B- Pre-existing Conditions clause C- Eligibility clause D- Consideration clause 17) The language in a Major Medical Expense policy that requires a claim to be shared between the insurer and the insured is called? Correct Answer is A- Coordination of Benefits B- Co-insurance C- Co-payment D- Deductible 18) The purpose of the Illegal Occupation provision is to: Correct Answer is A- Allow an insurance company to collect extra premiums to provide coverage for an insured's illegal acts B- Protect an insured from purchasing policies from an unlicensed producer C- Absolve an insurance company from liability for a loss incurred by an insured during his commission of a felony D- Prevent a producer from rebating on large policies 19) The owner of a Medical Expense policy has all of the following rights, EXCEPT to: Correct Answer is A- Sue the insurance company, if there is a disagreement over a claim B- Assign the benefits to the provider of the medical services C- Return the policy to the insurance company within the Free Look period D- Add coverage for a spouse without providing proof of insurability 20) Which clause or provision contains the insurer's promise to pay claims in accordance with the terms of the policy? Correct Answer is A- Consideration clause B- Payment of Claims provision C- Insuring agreement or clause D- Entire Contract clause 21) On Disability Income insurance, which of the following is true regarding the Change of Occupation provision? Correct Answer is A- It allows the insurer to adjust benefits B- It is a mandatory policy provision C- It is designed to protect the insured D- It allows the insurer to void coverage 22) A client with Disability Income insurance hurts his back and is off work for 3 months and then returns to work. If he hurts his back again, it may be covered as a: Correct Answer is A- Recurrent disability B- Temporary disability C- Residual disability D- Partial disability 23) If the insurer does not send the insured claim forms within the time specified, which of the following is correct? Correct Answer is A- The insurer has waived the requirement and must pay the claim B- The insured does not have to submit claim forms C- The insured may submit the claim on any form D- The insured is relieved of any further responsibility 24) Under the Uniform Provisions Law, which of the following provisions is optional for an A&H policy? Correct Answer is A- Physical Examination and Autopsy B- Time Limit on Certain Defenses C- Change of Occupation D- Entire Contract 25) A producer has just been told by a policy owner that she is 10 years younger than was listed on the application. The producer should: Correct Answer is A- Notify the insurance company for a possible review of the application B- Write a new policy at the correct age immediately so there will be no gap in coverage C- Notify the insurance company to adjust the existing policy to the correct age D- Determine whether there has been any change in health since the application for the policy 26) Marshall bought a disability income policy with a 30 day waiting period on March 1st. He became disabled on June 1st but went back to work on June 15th. He became disabled again on July 1st until October 1st. When do his benefits begin? Correct Answer is A- July 1st B- June 15th C- August 15th D- June 1st 27) if a Health insurance policy is delivered on August 1st and returned by the insured on August 9th, the insurer will: Correct Answer is A- Refund all premiums paid and void the policy B- Pay all claims turned in between August 1st and August 9th C- Require the insured to disclose the reason why D- Return part of the premiums paid 28) In Health insurance, the length of the Grace Period varies according to which of the following? I. The mode of premium payment II. The length of the benefit period Correct Answer is A- II only B- I only C- I and II D- Neither 29) The policy provision that prevents an insurance company from altering its agreement with a policy owner by referring to documents or other items not contained in the policy is called the: Correct Answer is A- Incontestable provision B- Entire Contract provision C- Benefits provision D- Legal Actions provision 30) A 40-year-old woman is insured under a $500-per-month Disability Income policy that contains a Change of Occupation provision. After her policy was issued, she changed her occupation from insurance producer to farmer without notifying the insurance company and she was recently injured. She would most likely receive which of the following from the insurance company? Correct Answer is A- $500 per month B- Less than $500 per month C- No benefits D- More than $500 per month 31) The Time of Payment of Claims provision requires that an insurance company pay Disability Income benefits no less frequently than: Correct Answer is A- Quarterly B- Semi-annually C- Annually D- Monthly 32) When does the Free Look start? Correct Answer is A- Date of application B- At policy delivery C- Policy issue B- Medicaid C- Critical illness plan D- Medicare 5) This program is made up of four parts, and the insured helps to pay for three of these parts. Correct Answer is A- POS plan B- Medicaid C- Medicare D- Critical illness plan 6) Part A of Medicare is generally available at no charge to those who are at least age: Correct Answer is A- 60 B- 62 C- 55 D- 65 HEALTH SECTION 4 Correct Answer is HEALTH SECTION 4 1) Which of the following statements is true about Residual Disability benefits? Correct Answer is A- They are reduced when an insured is not under a doctor's care B- An insured is entitled to a Principal Sum benefit for the partial loss of a limb C- Payment may be based on loss of time, income, or function D- Payment may be based on termination of employment 2) Which of the following benefits, if any, may be taxed like wages and salary by the Internal Revenue Service? Correct Answer is A- Workers' Compensation benefits B- Welfare benefits C- All answer options are incorrect D- Social Security Disability benefits 3) The coverage provided by a Disability Income policy that does NOT pay benefits for losses occurring as the result of the insured's employment is called: Correct Answer is A- Workers' Compensation B- Non-occupational coverage C- Unemployment coverage D- Occupational coverage 4) On Health insurance, all of the following are considered to be Rights of Ownership EXCEPT: Correct Answer is A- Applying to reinstate a lapsed policy B- Changing an irrevocable beneficiary on an AD&D policy C- Paying the premium D- Assigning benefits payable to a health care provider 5) What type of Health insurance requires the policy owner to designate a beneficiary? Correct Answer is A- Specified Disease B- AD&D C- Disability Income D- Medical Expense 6) What type of Disability Income insurance coverage will pay the insured a portion of the difference between what he earned before his disability and what he can earn now? Correct Answer is A- Temporary B- Partial C- Residual D- Total 7) All of the following are true regarding a Group Health insurance policy that includes coverage for dependents EXCEPT: Correct Answer is A- Dependent children may continue coverage as long as they live at home B- Upon termination of employment, dependents may continue their group coverage C- Upon termination of employment, dependents may convert to an individual policy without a physical exam D- Newborn children are covered from the moment of birth 8) If an insured, covered by both Disability Income insurance and Workers' Compensation, is injured at work, the claim will be: Correct Answer is A- Shared by the two policies equally B- Paid by Workers' Compensation C- Paid by the Disability Income policy D- Denied HEALTH SECTION 5 Correct Answer is HEALTH SECTION 5 1) Policy delivery refers to the delivery of the: Correct Answer is A- Insurance policy cost disclosure materials to the applicant B- Premium and receipt for the insurance policy to the agency office C- Completed application for the insurance policy to the agency office D- Completed insurance policy to the applicant 2) If, at the time of application, the applicant does not pay any initial premium, what should the producer do when delivering the policy? Correct Answer is A- Ask the applicant to fill out a new application B- Ask the applicant to take another physical exam C- Require the client to pay the entire first years premium to start coverage D- Collect the initial premium and ask the client to sign a Statement of Continued Good Health 3) The Fair Credit Reporting Act requires that: Correct Answer is A- The insurer or producer to furnish a copy of the consumer report to applicants who have been rejected B- The insurer may not use underwriting information received from producers as the basis for declining coverage C- The insurer furnish the Federal Trade Commission a list of all declined applicants D- The applicant be advised, in advance, that a consumer report may be ordered 4) Coverage becomes effective when the: Correct Answer is A- The producer delivers the policy to the insured B- First premium has been paid and the application is approved C- The medical exam has been completed and the premium has been paid D- First premium has been paid and received in the insurer's home office 5) All of the following must sign the application, EXCEPT: Correct Answer is A- The producer B- The proposed insured C- The beneficiary D- The policy owner, if other than the insured 6) An applicant for an A&H insurance policy has a heart condition of which he is unaware and therefore he answers "no" to the question pertaining to heart problems. His answer is considered to be a: Correct Answer is A- Representation B- Warranty C- Fraudulent answer D- Concealment 7) When completing an application for Medical insurance, a producer should do which of the following? Correct Answer is A- Review the applicant's health statement and bind the coverage B- Complete the Medical Information Bureau report C- Sign the applicant's name, if the applicant lives out-of-state D- Witness the applicant's signature 8) Which party to the insurance contract makes an enforceable promise? Correct Answer is A- The insurer B- The insured C- The producer D- The policy owner 9) On the delivery of an insurance policy that contains an impairment rider for a past health condition, a producer must do which of the following? I. Explain, to the best of their ability, the rider and the specific exclusions D- 20 3) Which of the following is NOT prohibited under the Unfair Practices section of insurance law: Correct Answer is A- Making false oral statements about the financial condition of a person which are calculated to injure that person B- Readjusting group premium rates based on loss or expense experience C- Misleading or false statements about dividends previously paid on an insurance policy D- Discriminating between insurance applicants on the basis of gender 4) An insurance company can have rates based on: Correct Answer is A- Gender B- Ethnic background C- Religion D- Nationality 5) Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as: Correct Answer is A- Defamation B- Rebating C- Misleading advertising D- Coercion 6) Shareholders own a ___________ insurer: Correct Answer is A- Stock B- Fraternal C- Reciprocal D- Mutual 7) An insurance company authorized to sell insurance in Texas, but with their home office in Illinois, is called a/an: Correct Answer is A- Alien company B- Domestic company C- Foreign company D- Surplus company 8) Regarding Claims Methods and Practices, all of the following are true EXCEPT: Correct Answer is A- Insurers cannot deny unsubstantiated claims B- Insurers must conduct a reasonable investigation prior to denial of a claim C- Insurers may settle a claim by attempt to reach a compromise D- Insurers cannot require insureds to pay the costs of a claims investigation 9) All of the following are true regarding the federal Fair Credit Reporting Act EXCEPT: Correct Answer is A- It applies to credit reports ordered in connection with insurance, banking and employment B- Insurers are not required to give customers a copy of the report C- Reports may be sent to anyone who requests one D- The customer must be notified if adverse action is taken as a result of a report 10) No licensee whose license has been denied, refused or revoked can file another licensing application with the Commissioner for at least ____ years: Correct Answer is A- 5 B- 4 C- 2 D- 3 11) All could be considered rebates EXCEPT: Correct Answer is A- Employment B- Dividends C- Securities D- Commissions 12) To become a Texas insurance agent, you must: Correct Answer is A- Pass an exam B- Have resided in Texas for at least one year C- Post a bond D- File your personal financial statement with the Commissioner 13) When the applicant passes the exam and qualifies in all other respects except for the fingerprint check by the FBI, the Department of Insurance will issue a license called: Correct Answer is A- Conditional B- Retroactive C- Temporary D- Reciprocal 14) A Texas resident agent seeking to sell insurance to customers in another state needs: Correct Answer is A- A non-resident license in that state B- A Foreign agents license in that state C- A Certificate of Authority in that state D- A resident license in that state 15) Which of the following statements regarding temporary licenses is FALSE: Correct Answer is A- They may be renewed B- They may be issued without exam C- They are valid up to 90 days D- They require 40 hours of license training 16) When the Commissioner finds, after a hearing, that a person has intentionally violated an insurance regulation, what is the maximum fine that may be levied: Correct Answer is A- $25,000 B- $250 C- $5,000 D- $2,500 17) If an agent is convicted of a felony in this or another state, who do they have to notify: Correct Answer is A- The National Association of Insurance Commissioners (NAIC) B- The Federal Department of Insurance C- The local Agent's Association D- The State Department of Insurance 18) Unfair claims practices will be assumed to be intentional if: Correct Answer is A- They are reported to an insurer by the policyholder B- They occur with such frequency as to indicate a general business practice C- The licensee fails to promptly submit a required report D- The licensee has been reported for a similar practice during the preceding three years 19) Circulating deceptive sales material to the public is what type of Unfair Trade Practice: Correct Answer is A- Defamation B- Misleading advertising C- Misrepresentation D- Coercion 20) Conditions for a corporate agency seeking a Texas insurance agent's license include: Correct Answer is A- It must sell all lines of insurance B- All active corporate officers must have individual agent's licenses C- It must be a domestic corporation D- All salaried employees must be licensed 21) Sharing commissions is legal if: Correct Answer is A- The other party also has an insurance license B- The other party is licensed for the same lines of insurance you are C- The other party has permission of your client D- The other party represents a life company and you represent a P&C company 22) What is the maximum period of time the Commissioner may revoke your agent's license: Correct Answer is A- Two years B- There is no maximum time period C- 12 months D- Six months 23) Your license will expire every ____ years. 37) The type of government primarily concerned with the regulation of insurance and insurance companies is: Correct Answer is A- County government B- Federal government C- City government D- State government 38) Making false or malicious statements about the financial condition of an insurer or agent is what type of Unfair Trade Practice: Correct Answer is A- Defamation B- Intimidation C- Coercion D- Deceptive advertising 39) An insurer must acknowledge receipt of a Notice of Claim within _____ days: Correct Answer is A- 20 B- 10 C- 5 D- 30 40) Who might receive dividends from a mutual insurer: Correct Answer is A- Policyholders B- Stockholders C- Subscribers D- Shareholders 41) Insurers applying for authority to do business in Texas are required to do all of the following, EXCEPT: Correct Answer is A- Show evidence of sufficient legal reserves to handle claims B- File rates C- File forms D- Maintain their home office in Texas 42) A mortgage company may do all of the following EXCEPT: Correct Answer is A- Buy coverage for you if you fail to do so as required by agreement B- Recommend an insurance company C- Require you to buy insurance from an authorized company D- Require you to buy insurance from them 43) An independent auto insurance agent's contract is terminated by the insurer he represents. How are his clients affected: Correct Answer is A- They may stay with the terminated agent and receive customary services B- They must transfer to another agent of the company C- They must apply for coverage through the Assigned Risk Pool D- They must insure elsewhere 44) To obtain a Texas license, you must do all EXCEPT: Correct Answer is A- Be 18 years of age B- Complete pre-license training C- Be fingerprinted D- Pass an exam 45) If an agent's license is suspended or revoked, what happens to their accounts: Correct Answer is A- They are automatically non-renewed B- They continue in force C- They are cancelled immediately D- They are assigned to another insurer SECTION 2 - TEXAS LIFE LAW Correct Answer is SECTION 2 - TEXAS LIFE LAW 1) "Twisting" is a commonly-used term describing: Correct Answer is A- The making of misleading representations as to the financial condition of any insurer B- A misrepresentation made to a policyholder for the purpose of inducing the lapse, forfeiture, surrender, retention or conversion of any policy of insurance C- Unfair avoidance of payment of policy benefits to which a claimant is entitled D- Giving, or promising to give, tangible or intangible items of value or service in order to induce a prospect to buy a policy of insurance 2) In the replacement of existing life insurance policies, regulations mandate disclosure of relevant information to all of the following EXCEPT: Correct Answer is A- The existing insurer B- The beneficiaries of the existing policy C- The applicant D- The replacing insurer 3) Conversion of a Group Life Insurance policy may not be made to: Correct Answer is A- 15 year level term B- 20-pay life C- Life paid up at age 65 D- Whole Life 4) All of the following are true about Credit Life insurance EXCEPT: Correct Answer is A- It must be written as group insurance B- It is usually decreasing term insurance C- It may not be written for more than the amount of the loan D- It may not be written in connection with loans of more than 10 years 5) The Life Insurance Replacement Rule does not apply to which of the following: Correct Answer is A- 10 year Convertible and Renewable Level Term B- Credit Life C- Whole Life Insurance D- Endowment 6) Which of the following is NOT true regarding the replacement of Life insurance: Correct Answer is A- It is unlawful B- It may be detrimental C- It may lead to liability for Errors and Omissions D- Both the agent and the customer must sign the Notice Regarding Replacement 7) Which of the following is true about the Texas Life, Accident, Health and Hospital Service Insurance Guaranty Association: Correct Answer is A- Coverage is unlimited B- Agents may use it's presence as an inducement to the sale C- All insurers must participate D- It protects the customers of insolvent insurance companies 8) Under what circumstances may a partially or totally blind person be offered life insurance at rates different from those applying to persons with unimpaired sight: Correct Answer is A- When the risk is placed under the Guarantee Association B- No such discrimination is permitted C- Upon application by the insurer to the Commissioner D- When such handicap is relevant to the risk of loss 9) All are true about variable products sold in this state EXCEPT: Correct Answer is A- Customers must bear the investment risk B- Agents must have a state Life insurance license and a federal Securities license C- Insurers invest the customer's premiums in their general account D- Rates of return are not guaranteed 10) All of the following are true about Group Life insurance EXCEPT: Correct Answer is A- The employer is the beneficiary B- The employee is the insured C- It is usually written as annual renewable term insurance D- There must be a minimum of 2 employees 11) False advertising includes which of the following: Correct Answer is A- Stating that the policy you are selling has limitations and reductions B- Implying that you are the insurer rather than the agent C- Failing to include the premium in sales material you are disseminating D- Stating to a client that there is a difference in benefits between Whole Life Insurance and Term Life Insurance Correct Answer is A- The grace period B- COBRA continuation requirements C- Participation requirements D- Small group eligibility requirements 10) All of the following are true about large employer Group Medical Expense plans EXCEPT: Correct Answer is A- The limiting age of an unmarried child of an enrollee is age 21 B- Unmarried grandchildren of the insured under age 26 may be covered, if dependent C- They may not limit or exclude initial coverage of a newborn or adopted child in any way D- They must provide coverage for drug and alcohol treatment in the same manner as they cover any other illness 11) Long Term Care Insurance is an Individual or Group Insurance policy designed to provide coverage for at least ______ months for custodial care services provided in a setting other than an acute care unit of a hospital. Correct Answer is A- 6 months B- 18 months C- 24 months D- 12 months 12) A long-term care policy sold in this state must be Guaranteed renewable: Correct Answer is A- For life B- To age 75 C- To age 85 D- To age 65 13) All of the following are true about Skilled Nursing Home Care under Medicare EXCEPT: Correct Answer is A- It is subject to co-insurance B- It is covered under Part B C- It is covered under Part A D- Coverage is limited to 100 days 14) On a Group Medical Expense plan covering 20 or more employees, if an insured needs kidney dialysis, the primary coverage is provided by: Correct Answer is A- Medicare Part A B- Medicare Part B C- Medicaid D- The Group insurance plan 15) If an insured covered by a Disability Income policy is temporarily unemployed at the time he becomes disabled: Correct Answer is A- Coverage is limited to what Unemployment Insurance pays B- Coverage is limited to what Social Security pays C- The coverage will apply in full D- There is no coverage 16) Most mandatory provisions on individual health insurance policies protect: Correct Answer is A- The Commissioner B- The insurer C- The public D- The insured 17) Which of the following coverage may be excluded on a Medicare Supplement policy by the insurer: Correct Answer is A- Dental care and eyeglasses B- Mental or emotional disorders, alcoholism & drug addiction C- All answer options are correct D- Cosmetic surgery 18) The purpose of Medicare Supplement Insurance is: Correct Answer is A- To provide coverage for certain medical expenses before Medicare begins to pay B- To provide coverage to elderly people who are not covered under a corporate plan for retired employees C- To provide coverage for hospital, medical or surgical expenses that are not fully covered by Medicare D- To provide an alternative insurance plan for people who do not want to use Medicare 19) An insured who pays his premium monthly has a minimum grace period of: Correct Answer is A- 30 days B- Seven days C- 31 days D- 10 days 20) A proposed insured under a Medicare Supplement policy should receive a Buyer's Guide and an outline of coverage: Correct Answer is A- Within three days after policy delivery B- Before the policy is issued C- Before the policy is delivered D- Before an application is made for insurance 21) All of the following are true regarding a Disability income policy sold with an 'accidental means' clause EXCEPT: Correct Answer is A- It is also known as the 'accidental bodily' injury or 'results' clause B- There is no coverage unless the injury was sudden and unforeseen C- It is not permitted to be used in this state D- It is very restrictive 22) A Medical Expense policy that includes coverage for dependent children, shall provide coverage for: Correct Answer is A- All answer options are correct B- Congenital defects and birth abnormalities from the instant of a newly born child's birth C- Children up to 26 years of age D- Mentally retarded or physically handicapped children beyond age 26 if proof of such incapacity is furnished to the insurer by the policyholder within 31 days of the child's attainment of the limited age 23) No Medicare Supplement policy shall be delivered or issued for delivery in Texas unless: Correct Answer is A- All answer options are correct B- The agent makes it clear that neither he nor his policy is in any way sponsored or affiliated with the federal government, the Medicare program, or the Social Security Administration C- In a Direct Mail Solicitation, the "Guide" is delivered along with the policy D- The "Guide to Health Insurance of People with Medicare" and a complete printed outline of coverage is completed and delivered to the applicant prior to the time application is made and acknowledgment of delivery is provided to the insurer 24) When determining "creditable coverage" for the purpose of guaranteed insurability, an individual must have had prior coverage for at least 18 months with no gaps of more than _______ days: Correct Answer is A- 90 B- 63 C- 15 D- 36 25) The application for a Medicare Supplement policy must ask the question regarding: Correct Answer is A- Replacement B- Education C- Religious preference D- Nationality 26) On Disability Income insurance, when an insured is unable to perform one or more duties of his occupation, the disability is known as: Correct Answer is A- Partial B- Permanent C- Total D- Temporary 27) On Disability Income insurance, when two or more disabilities are combined to apply to the same waiting or elimination period, the disabilities are known as: Correct Answer is A- Repetitive B- Residual 14) Under the Patient Protection and Affordable Care Act, children may remain on their parent's medical expense policy until they reach what age? Correct Answer is A- 23 B- 26 C- 20 D- 19 15) Which of the following is not an essential health benefit? Correct Answer is A- Acupuncture B- Maternity and newborn care C- Lab services D- Hospitalization 16) To be eligible for cost sharing reductions, the policy must be purchased on the Exchange and be a ___ level plan. Correct Answer is A- Bronze B- Silver C- Catastrophic D- Gold 17) If a medical expense insurer violates the minimum loss ratio requirement and has administrative expenses that are too high, they must: Correct Answer is A- Make refunds to customers and lower their administrative expenses B- Re-underwrite their book of business C- File for a rate increase as soon as possible D- Make refunds to customers 18) Under the PPACA, if an employer offers health insurance to its employees, it must be offered to all eligible employees within ___ days of their start date. Correct Answer is A- 90 B- 10 C- 60 D- 30 19) Advanced premium tax credit (APTC) is available to persons who purchase any metal level of coverage on the Exchange and have an income of not more than ____ % of the Federal Poverty Level. Correct Answer is A- 133 B- 400 C- 300 D- 200 20) In order to avoid owing a penalty for not having insurance on your tax return, a person must have a qualified health benefit plan for a minimum of ____ months during a given year. Correct Answer is A- Ten (10) B- Six (6) C- Twelve (12) D- Nine (9) 21) What is the actuarial value of the platinum tier of benefits on the Exchange? Correct Answer is A- 70% B- 60% C- 80% D- 90% 22) Under the PPACA, insurers who write group medical expense polices must maintain a calendar year minimum loss ratio (MLR) of at least ____ percent. Correct Answer is A- 50 B- 80 C- 85 D- 60 23) An insurer has a minimum loss ratio for its individual medical expense policies of 75% in 2015. What is the insurer required to do? Correct Answer is A- Charge an additional 10% in premiums in 2016 B- Refund 5% of the premiums collected to those insured on individual policies in 2015 C- Refund 10% of the premiums collected to those insured on group policies in 2015 D- Charge an additional 5% in premiums in 2016 24) Under the PPACA, medical expense policies must include coverage for ____ essential health benefits. Correct Answer is A- 10 B- 8 C- 15 D- 25 25) Which of the following statements is incorrect regarding the PPACA? Correct Answer is A- There can be no limit on benefits for essential health coverages B- Premiums may be based upon a person's plan category C- Individual medical expense policies may contain a probationary period of up to six (6) months D- As of 2014, there is an individual mandate that requires every person residing in the U.S., age 18 or older, to have health insurance or pay a penalty on their tax return 26) Which of the following is not an essential health benefit under the PPACA? Correct Answer is A- Emergency services B- Adult dental care C- Hospitalization D- Laboratory services SECTION 5 - TEXAS HMO LAW Correct Answer is SECTION 5 - TEXAS HMO LAW 1) For cancellation of an HMO contract due to fraud or intentional misrepresentation of a material fact, how many days' advance written notice is required? Correct Answer is A- 15 B- 30 C- 20 D- 10 2) Persons covered by an HMO (Health Maintenance Organization) are known as: Correct Answer is A- Participants B- Beneficiaries C- Insureds D- Subscribers 3) Individuals enrolled in a health care plan offered by an HMO, including covered dependents, are commonly referred to as: Correct Answer is A- Insureds B- Enrollees C- Participants D- Insurers 4) All HMOs must include coverage for newborn children from the moment of birth. The HMO may require that the subscriber notify the HMO within ____ days of the birth of the child and pay any additional premium required to continue coverage for the newborn child. Correct Answer is A- 30 B- 31 C- 10 D- 15 5) If a material misstatement was made regarding a subscriber's health on an enrollment application, the HMO may adjust the premium so long as the contract holder is given ____ days' prior written notice. Correct Answer is A- 20 B- 30 C- 31 D- 10 6) A physician is paid a _______ fee for each enrollee, per definite time period, regardless of the services provided. Correct Answer is A- Capitation B- Subscriber C- Referral D- Enrollment