Chapter 1

Question 1

In order for a contract to be valid, it must:

Answer 1

✔️✔️-Contain an offer &
acceptance

Question 2

When does a nondisabled person first qualify for a Medicare Supplement Policy?

Answer 2

✔️✔️-Age 65

Question 3

A life insurance company has transferred some of its risk to another insurer. The insurer
assuming the risk is called the:

Answer 3

✔️✔️-Reinsurer

Question 4

A common exclusion with vision plans is:

Answer 4

✔️✔️-Lasik Surgery

Question 5

What are applicants statements concerning occupation, hobbies and personal health
history?

Answer 5

✔️✔️-Representation

Question 6

States that have “no loss, no gain” laws require a replacing policy to:

Answer 6

✔️✔️-Pay for ongoing claims under the policy it replaces

Question 7

A rehabilitation benefit is intended to:

Answer 7

✔️✔️-Prepare the insured to
return to employment

Question 8

Which of the following does coordination of benefits allow?

Answer 8

✔️✔️-The
secondary payor to reduce their benefit payments so no more than 100% of the claim is
paid

Question 9

An insurer may pay a commission in which of the following scenarios:

Answer 9

✔️✔️-To a licensed producer who is appointed with the insurer

Question 10

In which of the following situations would the insurer be liable for a loss?

Answer 10

Answer ✔️✔️-The insured suffered an injury during a bank robbery

Question 11

The Fair Credit and Reporting Act’s main purpose is to:

Answer 11

✔️✔️-Protect
consumers with guidelines regarding credit reporting and distribution

Question 12

J is a producer who has induced an insured through misrepresentation to surrender an
existing insurance policy. What is J guilty of?

Answer 12

✔️✔️-Twisting

Question 13

What is implied authority defined as?

Answer 13

✔️✔️-Authority that is not
specifically given to an agent contract, but that an agent can reasonably assume to
carry out his/her duties

Question 14

A person who is a nonsmoker, average weight, excellent health would fall into what risk
classification:

Answer 14

✔️✔️-Preferred

Question 15

Which of the following is considered to be the period when the accumulated value in an
annuity is paid out?

Answer 15

✔️✔️-Annuitization phase

Question 16

An insurers claim settlement practices are regulated by the:

Answer 16

✔️✔️-State
insurance departments

Question 17

The two major actions required for a policyholder to comply with the Reinstatement
Clause are:

Answer 17

✔️✔️-provide evidence of insurability, pay past due
premiums

Question 18

An insurers ability to make unpredictable payouts to policy owners is called:

Answer 18

✔️✔️-Liquidity

Question 19

Which of the following pertains to the analysis of an applicants personal information and
determining whether insurance should be issued or declined?

Answer 19

✔️✔️-
Underwriting

Question 20

What does the Group Life underwriting risk selection process help protect insurance
companies from? -

Answer 20

✔️✔️-Adverse Selection

Question 21

The Arkansas Life & Disability Insurance Guaranty Association assures payment of
benefits from insurance policies for insolvent insurers, and covers all of the following
insured policies, EXCEPT:

Answer 21

✔️✔️-Liability Insurance

Question 22

Pat owns a 20-pay life policy with a paid-up dividend option. Which is true?

Answer 22

✔️✔️-The policy may be paid up early by using policy dividends?

Question 23

What would happen if a life insurance applicant is given a conditional receipt from an
insurance agent and then dies the next day?

Answer 23

✔️✔️-Claim will be paid if
application is approved

Question 24

A policy owner can receive a percentage payment of the death benefits prior to death by
using what kind of contract?

Answer 24

Answer ✔️✔️-Viatical Settlement agreement

Question 25

A life insurance policy owner does NOT have the right to:

Answer 25

✔️✔️-Revoke an absolute assignment

Question 26

An employee under a group insurance policy has the right to name a beneficiary and
the right to:

Answer 26

✔️✔️-Convert to an individual policy in the event of
employment termination

Question 27

Ron has a life insurance policy with a face value of $100,000 and a cost of living rider. If
the consumer price index has gone up 4%, how much may Ron increase the face value
of the policy?

Answer 27

✔️✔️-$4,000

Question 28

Krissa purchases a 10-year level term life insurance policy that has a death benefit of
$200,000. Which of these statements is true?

Answer 28

✔️✔️-The face amount
and premium will remain constant over the 10-year period

Question 29

What is Arkansas required grace period for a life insurance contract?

Answer 29

✔️✔️-31 days

Question 30

A domestic insurance company in Arkansas MUST:

Answer 30

✔️✔️-Be organized
under Arkansas insurance laws

Question 31

Which would be considered a possible applicant & contract policyholder for group health
benefits? -

Answer 31

✔️✔️-Employer

Question 32

Amy has a group medical policy through her employer with a $500 deductible and a
90% coinsurance provision. She incurs a $1,500 in covered healthcare services. How
much will her group insurance carrier pay?

Answer 32

✔️✔️-$1,000

Question 34

“Maximum benefits” refers to the:

Answer 34

✔️✔️-Upper limit of the total lifetime
benefits the insurance company will pay

Question 35

What does Medicare part D cover?

Answer 35

✔️✔️-Prescription drugs

Question 36

Which best describes a conditional insurance contract?

Answer 36

✔️✔️-A contract
that requires certain conditions or acts by the insured individual

Question 37

A professional liability for which producers can be sued for mistakes of putting a policy
into effect is called:

Answer 37

✔️✔️-Errors and omissions

Question 38

A long-term care policy typically provides all of the following levels of care EXCEPT:

Answer 38

✔️✔️-Acute care

Question 39

Convincing a prospective insured to buy an insurance policy based on exaggerations is
called:

Answer 39

✔️✔️-Misrepresentation

Question 40

Maria the producer completes a sale by collecting the required signatures on the
application by obtaining the initial premium. After, she deposits the check into her
personal checking account. She has committed what crime? -

Answer 40

✔️✔️-
Fraud

Question 41

Medicare Part B covers:

Answer 41

✔️✔️-Hospital room/board

Question 42

Medicare provides coverage for all EXCEPT:

Answer 42

✔️✔️-Custodial care

Question 43

In Arkansas, which of the following is considered an unfair trade practice?

Answer 43

Answer ✔️✔️-Coercion

Question 44

What kind of life insurance policy issued by a mutual insurer provides a return of
divisible surplus?

Answer 44

✔️✔️-Participating life insurance policy

Question 45

Medicare Supplement Insurance is guaranteed issue if the policy effective date is within
______ months of the insured’s Medicare Part B:

Answer 45

✔️✔️-6 months

Question 46

Ted has a health insurance plan that requires him to pay a specific sum out of pocket
before any benefits are paid in a calendar year. Which of these does his health plan
have?

Answer 46

✔️✔️-Calendar year deductible

Question 47

A Medicare Supplement policy must NOT contain benefits which:

Answer 47

✔️✔️-
Duplicate Medicare benefits

Question 48

A healthcare provider claim may be settled using which of the following payment
methods?

Answer 48

✔️✔️-Fee-for-service

Question 49

Who is responsible for assembling the policy forms for insureds?

Answer 49

✔️✔️-
Insurance carriers

Question 50

A hearing must be held before a producer’s license can be suspended or revoked. Prior
to the hearing, the commissioner is required to:

Answer 50

✔️✔️-Give written
notice to the producer

Question 51

When can a group health policy renewal be denied according to the Health Insurance
Portability and Accountability Act (HIPAA)?

Answer 51

✔️✔️-When the contribution
or participation rules have been violated