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When can a life insurance policy be issued WITHOUT the insured's consent?
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What benefit is payable to a life insurance policyowner who has contracted a terminal illness?
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State Simulator
Insurance Exam
| Question | Answer |
|---|---|
| When can a life insurance policy be issued WITHOUT the insured's consent? | When a parent purchases a policy on the life of a minor child |
| What benefit is payable to a life insurance policyowner who has contracted a terminal illness? | Accelerated (living) benefit |
| When a life annuitant outlives life expectancy, the funds for additional benefit payments will be derived primarily from funds that were | Not distributed to life annuitants who died before life expectancy |
| Specialty care is provided by which of these health maintenance organization (HMO) providers? | Neurologist |
| Long-term care policies normally cover expenses associated with | Nursing homes |
| An accident and health insurance policy covers the insured, the insured's spouse, and their child. If additional children are born to the family, the accident and health insurance policy must cover the children | From the date of birth |
| A contingent beneficiary is described as the | person who receives the death benefits if the primary beneficiary dies before the insured |
| Which of the following would permit an insurer to delay a covered disability policy claim? | Elimination period |
| When an individual is covered under a small employer's accident and health plan, the pre-existing conditions exlcusion period may be partially or wholly satisfied by | having creditable coverage with a previous employer |
| Which statement is correct regarding accident and health insurance provided by a partnership for its partners? | Benefits are received income tax-free by the partners |
| A disability buy-sell agreement best suited for businesses with a limited number of partners is called | A cross purchase agreement |
| Medicare can be described as | a federal health program for individuals over the age of 65 or permanently disabled |
| Which dental specialty deals with the replacement of missing teeth? | Prosthodontics |
| Who would be the most likely party for legally entering into a contract? | Small employer |
| Which action will trigger a tax penalty on premature distributions from a modified endowment contract (MEC)? | policy loans |
| Generally, an indemnity plan which covers dental expenses | Covers preventative care for adults and children once every six months |
| The process of analyzing exposures that create risk and designing programs to handle them is called risk | management |
| What is a condition for which medical advice or treatment was recommended by or received from a provider of health care service within six months preceding the effective date of an individual long-term care policy? | Pre-existing condition |
| In Arizona, continuation of accident and health insurance plan coverage for a handicapped child beyond the age limit stated in the policy may require proof of the child's | Incapacity and dependency upon reaching the age limit |
| Which of these is typically regarded as a major treatment in an indemnity dental plan? | Dentures |
| Tonya has been diagnosed with kidney failure and has group accident and health insurance through her large employer. Which of these accident and health plans will be primary during the months following her diagnosis? | Her employer's group accident and health plan |
| An insurer may refuse to renew individual accident and health insurance coverage in all of the following circumstances EXCEPT | The insured developed a critical health condition |
| Premiums for an individually-owned disability income policy are | Not tax-deductible at all |
| An individual currently owns a long-term care policy. At the time of application for similar coverage, which item must be signed by the applicant and retained by the insurer? | A replacement notice |
| Disability income insurance normally excludes coverage for disabilities that arise from | active military duty |
| The back-end charge typically associated with an annuity that has been cancelled too early is called a | surrender charge |
| Prepaid dental plans differ from most other types of dental plans in what way? | Closed panel of dentists can only be used |
| Which of these would be the likely course of action taken by an insurer when handling a substandard-risk applicant for disability income insurance? | Reduce the benefit period |
| What action does an insurance company take under the rehabilitation benefit in a disability income policy? | covers the cost of the rehabilitation necessary to help a disabled insured return to work |
| Claims settlement practices of insurers are regulated by: | State insurance departments |
| Arizona law requires the Human Immunodeficiency Virus (HIV) consent form to | Disclose the types of individuals or organizations that may receive a copy of the test results |
| In what way is an insured preferred provider plan similar to an indemnity plan? | Both pay providers on a fee-for-service basis |
| Which would NOT be a location where skilled nursing care is provided? | Personal residence |
| All of the following are unfair claims settlement practices EXCEPT | An attempt to settle a claim by arbitration |
| Ambiguities in insurance contracts are typically interpreted in favor of the insured. This rule is referred to as | Reasonable expectations |
| When dealing with long-term care coverage, which of the following are classified as ADLs? | Eating, bathing, dressing |
| Kim has a life insurance policy which insures all the members of her family. The benefit supplement attached to a life insurance policy which insures all members of a family is called a | Family term rider |
| Which of these is true regarding the exchange of consideration among parties involved in an insurance contract? | Can be unequal |
| An accident and health insurance policy's premium requirements are set forth in which of the following provisions? | Consideration clause |
| A prepaid dental plan has an agreement in place with a network of dentists which | accepts an established amount as payment in full for the dental services rendered |
| An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction? | 20% is withheld for income taxes |
| Under Arizona workers' compensation laws, which of the following situations would be excluded from disability benefits? | Intentional self-inflicted injuries at the workplace |
| What can be expected when a preferred provider organization (PPO) patient decides to use a non-PPO? | Higher out-of-pocket expenses |
| When does the producer give a premium receipt for a life insurance application? | When the initial premium has been collected with the application |
| An accident and health plan that typically covers only the services of approved providers is called a(n) | HMO plan |
| An annuity owner has a life annuity which provides benefit payments for a minimum number of years, regardless of when the annuitant dies. The contract feature of this annuity is called | period certain |
| All of these are common limiting factors with dental insurance EXCEPT for | Limit placed number of teeth that may be treated annually |
| How long may an insurer legally defer paying the cash value of a surrendered life insurance policy? | 6 months |
| Which statement concerning a decreasing term life policy is accurate? | Face amount decreases over the policy period |
| A policyowner suffers a covered accident and health insurance loss on June 30 and submits the proof of loss to the insurer July 10. If the policyowner cancelled the coverage on July 2, how will the insurance company handle the claim? | Claim must be paid after proof of loss is received |
| The Do Not Call Registry was designed to prevent calls from | Telemarketers |
| Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted? | If Tom's employment is terminated, 20% of the funds would be forfeited |
| In Arizona, when personal information is collected from a source other than the accident and health insurance applicant or public records, a notice of information practices must be given to the applicant no later than the date of | Application |
| Under the Affordable Care Act, all plans that offer coverage to children under the child's parents plan, will continue to provide coverage until those children reach what age? | 26 |
| When the employer pays the premium, covered individuals normally receive tax-free benefits under all of the following group health plans EXCEPT | Disability income |
| In Arizona, an attempt to defraud an insurance company is considered | A felony |
| All of these are duties that a producer may be required to perform when delivering an insurance policy EXCEPT | Leave a conditional receipt with client |
| How long is a person covered for under a limited pay whole life policy? | Until age 100 |
| The difference between a doctor's actual charges and the amount approved by Medicare is called a(n) | excess charge |
| In Arizona, an insurer providing small employer group medical plans may discontinue an employer's coverage if | The insurer no longer offers the plan to any employer |
| What is the name of the rider that provides an additional purchase option in a life insurance policy? | Guaranteed insurability rider |
| A transaction in which a new life insurance policy is purchased and an existing life insurance policy is surrendered is called | Replacement |
| The insurance coverage in a variable life insurance policy may fluctuate according to | its underlying investments |
| Medicare supplement insurance that provides a preventative medical care benefit will often cover | yearly physical examinations |
| An insurer has a contractual agreement which transfers a portion of its risk exposure to another insurer. What kind of contract is this? | Reinsurance |
| In accident and health insurance, 60 days must pass after written proof of loss has been received by an insurer before the insured may | Bring legal action against the insurer |
| Misrepresenting pertinent policy provisions relating to coverage after a loss is | An unfair claims settlement practice |
| Which statement regarding the waiver of premium rider is accurate? | Cash payments are not directly provided to the policyowner |
| Group dental insurers can discourage adverse selection by | Limiting benefits for late enrollees |
| A person can receive Medicare Part A Hospital benefits, regardless of age, as long as the person has received which of the following benefits for at least 24 months? | Social Security Disability |
| Death benefits from a life insurance policy are normally considered to be | exempt from federal income tax |
| A producer must maintain customer records for how many years following the completion date of the insurance transaction? | Three |
| When a Medicare Supplement insurance policy is being replaced, who must sign the notice of replacement? | The producer and the applicant |
| Bert’s spouse passed away recently. Bert was covered under his spouse’s group family health insurance plan but now is covered under COBRA. How much of the active-employee cost may be passed on to Bert for continued coverage? | Maximum of 102% |
| The administrator of a reciprocal insurer who manages the premiums collected from the group's members is called | An attorney in fact |
| All of the following may obtain a temporary's producer's license EXCEPT | An employee of a licensed producer who is retired |
| When using the needs approach to life insurance planning, lump sums may be created for all of the following reasons EXCEPT | Employee benefits |
| Which of these is NOT a factor in the underwriting process of a life insurance application? | National origin |
| Under which plan does an employer give money to an employee to purchase a life insurance policy and allow the employee to choose the beneficiary? | Split-dollar |
| According to the needs approach, an emergency reserve fund's primary purpose is to | Pay for unexpected expenses |
| The death of an annuity contract owner will generally trigger a payout to the beneficiary. How may the spouse as beneficiary of the annuity owner avoid the income tax burden? | The spouse as beneficiary may continue the contract with deferred taxation as contingent owner |
| When a $50,000 life insurance policy is issued as a substandard risk on a graded death benefit basis, the amount of the policy's death benefit is | initially less than $50,000 and increases over time |
| What is considered the collateral on a policy loan? | The policy's cash value |
| All of these statements concerning group credit life insurance are false EXCEPT | The face amount is determined by the outstanding loan balance |
| EXCEPT for fraud, the time after issuance of a policy during which an insurance company may contest a health insurance claim due to the statements on an application is | 2 years |
| Which statement is true of trade association groups eligible for group medical benefits? | Members of the associations are usually in the industry |
| Which of these life insurance policies do NOT contain cash value provisions? | Decreasing term life |
| An arrangement where an individual is authorized to act on behalf of another person or company is sanctioned through | the law of agency |
| She pays for the portion of the premium attributable to the cost of residual disability benefits, while her employer pays for the remainder. What are the tax implications of this policy? | Residual benefits will be received income tax-free |
| What is Arizona's REQUIRED grace period for a life insurance policy? | 30 days |
| An annuity becomes incontestable after it has been in force for | 2 years |
| A rating on a disability income insurance policy means that | An additional premium will be charged |
| Fee-for-service is an accident and health insurance benefit payment model in which | the cost of each service is scheduled as outlined in the policy |
| Under the uniform mandatory provisions, an accident and health insurer has the right to request an autopsy | Only where not prohibited by law |
| When determining the premiums for a large group, most insurance companies use | Experience rating |
| A disability income insurance policy was recently issued with a rating. What does this mean? | Policyowner will be charged an additional premium |
| During an annuity's liquidation phase, the annuitant normally | receives benefit payments at regular intervals |
| Based on age criteria only, which of the co-annuitants listed below would receive the largest monthly benefit payments in a joint and survivor annuity? | Age 71 and 73 |
| John has a criminal record in which he was convicted of a felony that involved dishonesty. Under Federal law, how would John be able to engage in insurance transactions? | Given written consent by the state insurance regulatory agency |
| How long does one premium payment cover in a single premium whole life policy? | Entire length of the policy |
| Which statement concerning a deferred annuity is correct? | The owner can be the beneficiary, annuitant, or neither |
| An insurance company's voluntary refusal to enforce a contract's provision is called a(n) | waiver |
| Which of these is NOT considered a preventative service in a dental plan? | Fillings |
| Which of these is NOT considered to be a cost connected with an individual's death? | Business expenses |
| What type of reinsurance contract involves two companies automatically sharing their risk exposure? | Treaty |
| Employers will frequently purchase life insurance on a key employee in order to | help offset the cost of finding and training a replacement |
| Insurable interest involves what assumption? | One person benefits from the continuation of another's life |
| Under which circumstance is the interest rate guaranteed within a market value adjusted annuity? | When the contract has been in force for the period specified in the policy |
| The stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called | reserves |
| An insured is entitled to coverage under a policy that a prudent person would expect it to provide. This principle is called | Reasonable expectations |
| An employer has a group life insurance plan in place for his employees. How would an employee with health problems be treated in this situation? | Eligible for standard coverage on this plan |
| False advertising of an insurance policy is considered | Misrepresentation |
| Who would be most qualified for Medicare Supplement insurance? | Medicare enrollee |
| Which of the following statements is true regarding accident and health insurance claims that reimburse on an indemnity basis? | Claims can be sent directly to the insured |
| When there is a named beneficiary on a life insurance policy, the death benefits | are paid directly to the beneficiary without interference from the insured's creditors |
| All of these are used to prevent adverse selection in a group dental plan EXCEPT | Decreased employee participation |
| Which of the following statements regarding hospital pre-admission authorization is NOT true? | It encourages weekend admission |
| An insurance contract may be voided if a misrepresentation found on the application is determined to be | material |
| Which one of the following encourages preventative care in dental insurance? | The absence of deductibles on routine examinations |
| Which of these situations would NOT potentially involve a prison sentence under Federal law? | Transacting insurance with a nonresident license |
| Which type of Medicare Supplement information can be used without prior state approval? | Government publications |
| When must interest income in a flexible premium deferred annuity be reported for federal income taxes? | When distributions are received from the contract |
| What would be a valid reason for naming a trust as the beneficiary of a life insurance policy as opposed to naming an individual? | Management of proceeds would be provided |
| Pete is covered by an employer-provided group health insurance plan, which covers employees in multiple states. This plan is governed by the laws of which state? | Where the master contract was issued |
| Health providers are compensated by a preferred provider organization (PPO) for normal dental procedures by what means? | Decreased fee schedules |
| All of the following are covered under most dental plans EXCEPT for | Oral cancer |
| What is the minimum number of employees needed for a small employer medical expense plan in Arizona? | 2 |
| In Arizona, an insurer discontinues offering a particular type of small group medical coverage. Participants must receive advance notice of at least | 180 days |
| Under which circumstance can an insurer cancel a Medicare Supplement insurance policy without prior approval by the Arizona Department of Insurance? | Nonpayment of premium |
| Which of the following health insurance provisions requires that the application becomes part of the policy? | Entire Contract clause |
| In Arizona, a group accident and health certificate of insurance must contain | A summary of policy features and benefits |
| Which of the following is NOT a dividend option for a life insurance policy? | Surrender the policy's cash value |
| In Arizona, a long-term care policy may offer coverage | In which benefits are based on an individual's ability to perform the activities of daily living |
| Andy is in need of health care performed by skilled medical practitioners, but only on an intermittent basis. What level of care will his doctor likely prescribe? | Intermediate care |
| When an individual purchases insurance as a result of threats made by the producer, there has been a violation of | Unfair trade practice laws |
| A policyowner is permitted to take out a policy loan on a whole life policy at what point? | When the policy has accrued cash value |
| How does an underwriter take into account an applicant's marital status? | When determining who is eligible for dependent coverage |
| Under the IRS "minimum coverage" rules, a qualified retirement plan must | Benefit a broad cross-section of employees |
| What happens to the cash value of a market value adjusted annuity if it's surrendered early? | Market value adjustment is applied |
| When would evidence of insurability be required for a person insured with a variable universal life policy? | The face amount is increased |
| Which statement is true regarding hospital preadmission certification for emergency situations? | Notification is required to be given after insured is admitted to the hospital |
| A life insurance illustration showing future premiums being paid out of nonguaranteed values must disclose that | The policyowner may need to resume premium payments depending on actual results |
| An insurer that confines or largely limits the exposures it writes to those of its owners is called | Captive |
| When an annuity contract has been surrendered, how will the surrender charges affect the final contract settlement? | Final contract settlement will be reduced |
| A producer's license may be suspended | For misappropriation of premiums |
| Which statement regarding whole life insurance is accurate? | Insurance coverage can continue for life |
| Mary is the sole proprietor of her business and has a family health plan. She would like to deduct the premiums from her taxes. What percentage of her premiums are tax deductible? | 100% |
| Which of these are NOT factors that influence group health insurance underwriting? | Individual physical examinations |
| Group credit life insurance is typically a form of | Decreasing term insurance |
| James has individual health insurance with two different insurers. The "insurance with other insurers" provision states that an insurer can pay benefits on a pro-rata basis if | no notification was given to the insurer concerning the existence of other health coverage |
| When an insured under a group life insurance plan in Arizona elects the conversion option, the new policy is issued | without requiring evidence of insurability |
| When a company is licensed by the Department of Insurance to do business in this state, it becomes | An authorized company |
| Which settlement option makes minimum guaranteed dollar payments over a stated number of years? | Fixed-Period |
| Individuals seeking Social Security disability income benefits must have a disability that will eventually lead to death or be expected to last at least | 12 months |
| Which of the following features a guaranteed interest rate, flexible deposits, deferred taxation, and death benefits equal to the cash value? | Flexible premium fixed annuity |
| A producer working for an insurance company may be personally liable for | acts performed which are prohibited in the agency contract |
| Which of these pharmacy options is typically available to enrollees in a staff model HMO? | An in-house pharmacy |
| During the early years of a whole life insurance policy, the cash value will normally be | less than the total premiums paid |
| Beginning January 1, 2014, the restricted annual limit for plans under the Affordable Care Act will be | No Limit |
| Proceeds of the viatical settlement contract could be subject to the claims of | Creditors |
| A life insurance producer licensed in Arizona is authorized to | Solicit, receive and forward applications to the insurer |
| An insurance company can be liable for a producer's unauthorized acts | when the agency contract is vague concerning the authority given |
| Taking a sum of money and decreasing it in size would fit the description of | capital liquidation |
| Kate received a group accident and health termination notice. How many days does she have to apply for a converted policy? | 31 |
| Under HIPAA, medical plan late enrollees may be excluded for pre-existing conditions for a maximum of | 18 months |
| If a producer chooses to conduct business under an assumed name, when must notification be given to the Director? | Prior to using the assumed name |
| In the event of premium default, which life insurance provision will utilize the cash value to keep the policy in force? | Automatic premium loan |
| A whole life policy that provides a choice of dividend options must include the following statement about dividends | They are not guaranteed |
| Who regulates an insurer's claim settlement practices? | State insurance departments |
| At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit Reporting Act? | Upon completion of the application |
| Most prepaid dental plans cover | Oral exams |
| What situation requires all eligible employees be covered under a group life insurance plan? | Entire premium paid by the employer |
| Which of the following is another name for individuals who participate in an HMO plan? | Subscribers |
| What happens when an initial offer is answered with a counteroffer? | Initial offer is void |
| The "Notice to buyer" on the first page of each long term care policy delivered in Arizona | explains that some long term care costs may not be covered |
| What must the insurer provide to certificate holders when a group Medicare Supplement insurance policy is terminated and not replaced? | An offer of conversion to individual coverage |
| What is the minimum number of employees needed for a small employer medical expense plan in Arizona? | 2 |
| How many employees must an employer have for the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to apply? | At least 20 |
| The reason for backdating a policy is | to obtain a premium rate based on an earlier age |
| He receives benefits from a qualified retirement plan through his former employer. The plan's trustee has decided to split these benefit payments between Tim and his estranged wife. This decision is likely in violation of which IRS rule? | Alienation of benefits |
| In what form can an insurance company provide an accidental death benefit on a life policy? | As an optional policy rider |
| How does a continuous premium whole life policy differ from a limited pay whole life policy? | The time period in which premiums will be paid |
| The Medical Information Bureau consists of members from which group? | Insurance companies |
| Which of the following statements BEST describes employer contributions for a health insurance policy offered by an employer? | Employer contributions are deductible |
| If a group endorses an accident and health insurance product in an advertisement, the public must be made aware of | Any control by the insurer over the group |
| In regards to health insurance, employees age 65 or older are typically required to | be offered the same group medical coverage offered to the younger employees |
| Who normally pays the premiums for group credit life insurance? | Borrower |
| All of the following claims settlement practices could initiate a cease and desist order EXCEPT | Refusing to pay a claim without conducting a reasonable investigation of all available information where material facts are in dispute |
| What does a Mandatory Second Surgical Opinion provision provide to an employer-paid health insurance plan? | Control of the employer's premium cost |
| The health insurance premiums paid for by each partner in a partnership is considered to be | 100% tax deductible |
| The main role of accident and health and disability insurance is to | protect against medical care costs and the loss of earning power |
| How are the premiums for an individual disability income policy treated for tax purposes? | No tax deduction |
| Splitting the commission with the buyer on a sale of insurance is known as | Rebating |
| Which of these is NOT a reason to buy a term life policy? | To accumulate savings |
| What is the guaranteed cash value of a whole life insurance policy when the insured turns 65 years old? | Less than the policy's face amount |
| A large corporation purchased an accumulation annuity contract for its corporate pension. If all the employees participate and receive certificates of participation, what is this contract called? | Group deferred annuity |
| The Affordable Care Act requires insurance companies to give how many days of notice before rescinding coverage? | 30 |
| How would preventative care be encouraged in a dental plan? | No deductible or coinsurance on oral examinations |
| When dealing with single-life annuities, there is only one | annuitant |
| Trade association groups that are eligible for group medical benefits normally are | in the same industry |
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