Quiz One

Question 1

1. Which of these life insurance riders allows the applicant to have excess coverage?

a) Automatic Premium Loan Rider
b) Waiver of Premium Rider
c) Guaranteed Insurability Rider
d) Term rider

Answer 1

d) Term rider

Question 2

2. Insurance benefits NOT covered due to an Act of War are?

a) Excluded by the Insurer
b) Assigned to a reinsurer
c) Given a longer probationary period
d) Charged a higher premium

Answer 2

d) Charged a higher premium

Question 3

3. What is required after a life agent sells an insurance policy to an applicant without being appointed by the insurer?

a) Notice of appointment must be submitted to the Commissioner
b) Notice of appointment must be submitted to the insurer
c) Penalty is assessed to the insurer and life agent
d) Application is automatically turned away

Answer 3

a) Notice of appointment must be submitted to the Commissioner

Question 4

4. John is a student pilot with a large life insurance policy. Which of these features would limit the insurer’s obligation in the event John was killed, while flying as a student pilot?

a) Misrepresentation
b) Exclusion
c) Collateral Assignment
d) Concealment

Answer 4

b) Exclusion

Question 5

5. A father who dies within 3 years after purchasing a Life Insurance Policy on his infant daughter can have the policy premiums waived under which provision?

a) Payor Provision
b) Accelerated Benefits Provision
c) Assignment Provision
d) Waiver of Premium Provision

Answer 5

a) Payor Provision

Question 6

6. With any insurance policy, what is the purpose of the Grace Period?

a) Gives the Policy Owner, additional time to Pay Past Due Premiums
b) Gives the Policy Owner, additional time to file a Lawsuit
c) Gives the Policy Owner, additional time to file a Claim of LOSS
d) Gives the Policy Owner, additional time to provide Proof of LOSS

Answer 6

a) Gives the Policy Owner, additional time to Pay Past Due Premiums

Question 7

7. An individual who transacts life, disability, or life and accident and health insurance on behalf of an insurer is called a(n):
   a) adjuster
   b) analyst
   c) life agent
   d) insurance solicitor

Answer 7

c) life agent

Question 8

8. Henry had an annual Life Insurance Premium Payment due Jan. 1. He died Jan 10 without making the premium payment. What action will the Insurer take?

a) Collect Premium from M’s estate
b) Deny the claim
c) Pay the Face Amount, minus the Past due premium
d) Subtract past due premium from cash value

Answer 8

c) Pay the Face Amount, minus the Past due premium

Question 9

9. What does the ownership clause in a life insurance policy state?

a) Who the policy owner is and what rights the policy owner is entitled to
b) Who the beneficiary is and what rights the beneficiary is entitled to
c) Ownership cannot be assigned after the incontestable period
d) Allows policy owner to adjust the death benefit and premium amount at any time

Answer 9

a) Who the policy owner is and what rights the policy owner is entitled to

Question 10

10. An insured is past due, on his Life Insurance Premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this grace period?

a) Refund of all premiums paid, plus interest
b) Refund of all premiums paid
c) Full Face Amount, minus any past due premiums
d) Full Face Amount

Answer 10

c) Full Face Amount, minus any past due premiums

Question 11

11. Which of the following statements is CORRECT about accumulated interest earned on dividends from an insurance policy?
    a) It is not taxable
    b) It is tax deductible
    c) It is taxed as capital gains
    d) It is taxed as ordinary income

Answer 11

d) It is taxed as ordinary income

Question 12

12. An insured pays a premium on an annual basis for an individual health insurance policy. What is the MINIMUM number of days for the Grace-Period provision?
    a) 7 days
    b) 10 days
    c) 20 days
    d) 31 days

Answer 12

d) 31 days

Question 13

13. Joan’s insurance company denied a reinstatement application for her lapsed health insurance policy. The company did not notify her of this denial. How many days from the reinstatement application date does the insurance company have to notify her of the denial before the policy will be automatically placed back in force?

a) 10 days
b) 30 days
c) 45 days
d) 60 days

Answer 13

c) 45 days

Question 14

14. Which of the following statements describes the “Purpose of the insuring clause” in an insurance policy?

a) Specifies the additional time given to pay past due premiums
b) States the scope, and limits of the coverage
c) Specifies a claim will be paid immediately upon receipt of proof of loss
d) Prohibits the insured from suing the insurer for at least 60 days after filling a written proof of loss.

Answer 14

b) States the scope, and limits of the coverage

Question 15

15. If an insurance company issues a Disability income policy that it can not cancel or for which it cannot increase premiums, the type of renewability that best describes this policy is called?

a) Non Cancellable
b) Conditionally Renewable
c) Cancellable
d) Guaranteed Renewable

Answer 15

a) Non Cancellable

Question 16

16. The Agreement in an insurance contract that states a specific sum of money will be paid to a designated person upon an insured’s death is called a(n)?

a) Entire Contract Provision
b) Consideration Clause
c) Insuring Agreement
d) Assignment Agreement

Answer 16

c) Insuring Agreement

Question 17

17. How long must life agents keep their transaction records?
    a) 3 years
    b) 4 years
    c) 5 years
    d) 6 years

Answer 17

c) 5 years

Question 18

18. The Consideration Clause in an Insurance Contract contains what pertinent information?

a) Summary of Benefits
b) Offer and acceptance
c) Entire contract
d) Amount of premium payments and when they are due

Answer 18

d) Amount of premium payments and when they are due

Question 19

19. After the annual deductible is met, a Medicare Part B patient will pay _ of the remaining covered expenses.
    a) 0%
    b) 20%
    c) 50%
    d) 100%

Answer 19

c) 50%

Question 20

20. Which health policy clause stipulates that an insurance company must attach a copy of the application to the policy to ensure that it is part of the contract?
    a) Consideration
    b) Entire contract
    c) Free Look
    d) Insuring

Answer 20

b) Entire contract

Question 21

21. Which statement is TRUE regarding Workers’ Compensation coverage
    a) Negligence is a factor in determining the employer’s liability
    b) Workers’ Compensation benefits are usually received in a lump sum
    c) Employer pays the entire premium for Workers’ Compensation coverage d) The amount received from workers’ compensation is usually greater than the employee might receive if he or she sued a negligent employer

Answer 21

c) Employer pays the entire premium for Workers’ compensation coverage

Question 22

22. Which of the following policy provisions states that the producer does not have the authority to change the policy or waive any of its provisions?
    a) Time Limit on certain defenses
    b) Reinstatement
    c) Entire contract
    d) Change of beneficiary

Answer 22

c) Entire contract

Question 23

23. Which statement about Health Maintenance Organizations is NOT true?
    a) Members minimize out-of-pocket expenses by using HMO network providers
    b) Subscribers pay a fixed periodic fee to the HMO
    c) HMOs are known for stressing preventive care
    d) When a member uses out-of-network providers, a higher monthly fee is charged

Answer 23

d) When a member uses out-of-network providers, a higher monthly fee is charged

Question 24

24. A life Insurance Policy that provides a policy owner with cash value along with a level face amount is called?
    a) Whole Life
    b) Level Term
    c) Credit Life
    d) Ordinary Life

Answer 24

a) Whole Life

Question 25

25. Medicare Part A covers what type of care? a) Skilled nursing facility care b) Major Medical facility care c) Custodial facility care d) Respite facility care

Answer 25

a) Skilled nursing facility care

Question 26

26. What kind of Premium does a Whole-Life policy have? a) Decreasing b) Adjustable c) Level d) Deferred

Answer 26

c) Level

Question 27

27. Individuals age 65 or older are exclusively eligible for which optional program? a) Medicare Part A b) Medicare Part B c) MET's d) Long-term care

Answer 27

b) Medicare Part B

Question 28

28. Which statement about a whole life policy is correct? a) Beneficiary may be changed only with the consent of the premium payor b) Death benefit can usually be adjusted c) Cash value may be borrowed against d) Premiums are Flexible

Answer 28

c) Cash value may be borrowed against

Question 29

29. John was recently terminated from his employment and opted to change his existing group term life insurance to individual permanent life insurance. What is this process called? a) Replacement b) Conversion c) Transformation d) Reinstatement

Answer 29

b) Conversion

Question 30

30. A potential client, age 40, would like to purchase a whole life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct? a) Straight Life accumulates faster than Limited pay life b) 20-Pay Life accumulates cash value faster than Straight life c) Cash value accumulation of both 20-Pay Life and straight Life depend on the Insurer’s financial rating d) 20-Pay Life and Straight Life accumulate cash value at the same rate

Answer 30

b) 20-Pay Life accumulates cash value faster than Straight life

Question 31

31. A terminated employee that has exercised the conversion privilege is able to convert a) only after providing evidence of insurability b) without paying for the premiums c) permanent insurance into term insurance d) term insurance into permanent insurance

Answer 31

d) term insurance into permanent insurance

Question 32

32. Life Insurance that covers an insured’s Whole Life with Level Premiums Paid over a Limited Time is called? a) Adjustable Life c) Limited Pay Life b) Renewable Term d) Joint Life

Answer 32

c) Limited Pay Life

Question 33

33. Which of the following describes a contributory group insurance plan? a) All of the premium is paid by the employer b) Part of the premium is paid by the employee c) Employees are eligible for policy dividends d) Federal government contributes a portion of the employee's premium

Answer 33

b) Part of the premium is paid by the employee

Question 34

34. Henry is a 40-year-old applicant, who would like to retire at age 70. He is looking to buy a Life Insurance Policy with Level Premiums Permanent Protection, and be Paid-Up at Retirement. Which of these should Henry purchase? a) 30 Pay Life b) Term to Age 70 c) Universal Life d) Adjustable Life

Answer 34

a) 30 Pay Life

Question 35

35. If an individual has an Accidental Death & Dismemberment Policy, and dies an autopsy can be performed in all these situations EXCEPT? a) When the cause of death is unknown b) When the state prohibits this by law c) When consent for the autopsy is not obtained d) When foul play was a contributing factor

Answer 35

b) When the state prohibits this by law

Question 36

36. John pays on a $20,000 20-Year Endowment Policy for 10 years, and dies from an Automobile Accident. How much will the Insurance company pay the beneficiary? a) Return of Premium Paid b) Cash Value Plus Interest c) $20,000 Death Benefit d) Face Amount Plus Interest

Answer 36

c) $20,000 Death Benefit

Question 37

37. Life insurance surplus must be distributed to policyowners at what frequency? a) Monthly b) Quarterly c) Semi-annually d) Annually

Answer 37

d) Annually

Question 38

38. Which type of policy is considered to be overfunded, as stated by IRS guidelines? a) Modified Whole-Life b) Modified Endowment Contract c) Variable Universal Life d) Interest Sensitive Whole Life

Answer 38

b) Modified Endowment Contract

Question 39

39. Henry has an existing annuity and is sold a new one, in which the new policy holds no greater financial benefit to him than the existing contract. This is considered a(n) a) illegal transaction b) immediate annuity c) deferred annuity d) unnecessary replacement

Answer 39

d) unnecessary replacement

Question 40

40. Term Insurance has which of the following characteristics? a) Expires at the end of the Policy Period b) Build Cash Value c) Has non-forfeiture Options d) Endows at the end of the Policy Period

Answer 40

a) Expires at the end of the Policy Period

Question 41

41. An agent's attempt to stop the replacement of an existing life insurance policy is known as a) preservation b) prevention c) conservation d) concealment

Answer 41

c) conservation

Question 42

42. John needs life insurance that provides coverage for only a limited amount of time, while also paying the lowest possible premium. What kind of policy is needed? a) Limited-Pay Life b) Graded Premium c) Level Term d) Endowment

Answer 42

c) Level Term

Question 43

43. According to the PPACA, the medical enrollment tier that has 80% actuarial value is called a) platinum b) gold c) silver d) bronze

Answer 43

b) gold

Question 44

44. Which of the following features of a Group Term Life Policy, enables an individual to leave the Group and continue his or her insurance without providing evidence of insurability? a) Owner’s Right Clause b) Incontestable Period c) Insuring Agreement d) Conversion Privilege

Answer 44

d) Conversion Privilege

Question 45

45. When an insured changes to a more hazardous occupation, Which disability policy provision allows an insurer to adjust policy benefit and rates? a) Relation of earnings to insurance provision b) Change of Occupation provision c) Conformity of state statutes provision d) Modified occupation provision

Answer 45

b) Change of Occupation provision

Question 46

46. What type of Life Insurance are Credit Policies issued as? a) Whole b) Variable c) Term d) Universal

Answer 46

c) Term

Question 47

47. Which of the following is NOT a valid reason to replace an existing long term care policy? a) New policy has better benefits b) New policy has higher premiums with fewer benefits c) New policy has lower premium d) lnsured's condition has materially improved

Answer 47

b) New policy has higher premiums with fewer benefits

Question 48

48. T has a Term Policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this? a) Renewable b) Increasing c) Level d) Decreasing

Answer 48

a) Renewable

Question 49

49. The cost of services charged by the Health Insurance Counseling Advocacy Program (HiCap) is a) $25 per appointment b) $50 per appointment c) $75 per appointment d) no cost

Answer 49

d) no cost

Question 50

50. A 15-Year mortgage is best protected by what kind of life policy? a) Modified Whole Life b) 15- Year Level Term c) 15-Year Decreasing Term d) Adjustable

Answer 50

c) 15-Year Decreasing Term