Final Exam

Question 1

With a Guaranteed Insurability rider on a Disability Income policy, the:

Select one:
a. The insurer will not require a medical examination in order to issue the policy.
b. The insurer is not allowed to cancel the policy.
c. The insured can buy additional disability income coverage without proving evidence of insurability.
d. Insured is allowed to assign the policy to a family member.

Answer 1

C

Question 2

What type of premiums payment can employers deduct as an ordinary business expense?
Select one:
a. Key employee
b. Group
c. Buy/sell agreements
d. Joint life if part of a business partnership

Answer 2

B

Question 3

Phil and Sarah bought a life policy in which both are insured. Sarah dies before Phil. If the policy pays the death benefit after Phil dies, it is a:

Select one:
a. Convertible term
b. Guaranteed renewable
c. Survivorship life
d. Joint life

Answer 3

C

Question 4

What type of insurer is formed under the laws of anyplace outside the United States?

Select one:
a. Foreign
b. Domestic
c. Alien
d. Unincorporated

Answer 4

C

Question 5

In a life policy, a statement of good health is needed when:
Select one:
a. The application includes the premium.
b. The application does not include the premium.
c. The statement of good health is never needed.
d. The statement of good health is always needed.

Answer 5

B

Question 6

An agent who gives a prospective client a flat screen TV as an incentive to purchase an insurance policy is engaging in what unfair trade practice?
Select one:
a. Boycott, coercion and intimidation
b. Rebating
c. False advertising
d. Disparagement

Answer 6

B

Question 7

The life insurance rider that pays the face amount plus the total premiums paid into the policy is known as:
Select one:
a. Payor rider
b. Return of cash value
c. Waiver of premium
d. Return of premium

Answer 7

D

Question 8

How often is the Commissioner required to conduct an examination of every insurance company?
Select one:
a. Every year
b. Every 2 years
c. Every 5 years
d. There is no time frame for examinations.

Answer 8

C

Question 9

What document authorizes an insurer to engage in the insurance business?
Select one:
a. Certificate of insurance
b. Insurance authorization license
c. Certificate of authority
d. Deed of insurance

Answer 9

C

Question 10

An agent’s appointment remains in force:
Select one:
a. For 2 years
b. For 4 years
c. Until canceled by the Commissioner
d. Until terminated or surrendered

Answer 10

D

Question 11

The Acme Brick Company wants to provide additional benefits to certain classes of employees under a group health plan. They can do this as long as the classes are not based on:

Select one:
a. How much money they make.
b. The gender of the employee.
c. How long the employee has been with the company.
d. The category of their job.

Answer 11

B

Question 12

A program that includes prehospitalization authorization is an example of:
Select one:
a. Workers’ Compensation
b. Social Security disability
c. Managed care
d. Major medical

Answer 12

C

Question 13

Who must consent to have an HIV lab test?
Select one:
a. Producers
b. Subject of the test
c. Agents
d. Underwriters

Answer 13

B

Question 14

What type policy would pay the death benefits after the first person dies, if it covers two or more lives?

Select one:
a. Universal life
b. Term life
c. Joint life
d. Survivorship life

Answer 14

C

Question 15

Jeff and Mike own an architect firm with 20 employees and worry about the company if one of them becomes permanently disabled. What type of policy should they buy?
Select one:
a. Individual disability
b. Business overhead expense
c. Key employee
d. Disability buy-out

Answer 15

D

Question 16

An insured has returned to work after a disability, but is unable to perform all of his previous duties. Which of the following definitions would cover his permanent partial disability?
Select one:
a. Own occupation
b. Residual disability
c. Long-term disability
d. Any occupation

Answer 16

B

Question 17

The benefit that encourages the disabled policy owner to try to return to work is:

Select one:
a. Residual disability
b. Waiver of premium
c. Recurrent disability
d. COLA

Answer 17

C

Question 18

What is the maximum amount of time an insurance policy may be backdated?
Select one:
a. 1 month
b. 3 months
c. 6 months
d. 1 year

Answer 18

C

Question 19

To become a licensed insurance agent in Texas , a person must be how many years of age?
Select one:
a. 17
b. 18
c. 19
d. 21

Answer 19

B

Question 20

Jacob, James and Jonathan are triplets, and all applied for the same type of insurance coverage at the same time. For James and Jonathan the rates were the same. Jacob’s rate was quite a bit higher. What is the most likely reason for this difference?
Select one:
a. Consideration
b. Third-party ownership
c. Insurable interest
d. Risk classification

Answer 20

D

Question 21

How many days does an insured have to file a notice of claim?
Select one:
a. 15 days
b. 20 days
c. 45 days
d. 90 days

Answer 21

B

Question 22

Mr. Johnson is looking at Medicare Supplement policies. These policies are designed primarily to:
Select one:
a. Offset Medicare costs.
b. Provide supplement retirement benefits.
c. Provide additional disability coverage.
d. Provide benefits not covered by Medicare.

Answer 22

D

Question 23

Richard is thinking about transferring some of the ownership rights of his policy to his brother Randy. What term is used for this type of transfer?

Select one:
a. Assignment
b. Endorsement
c. Insurable interest
d. Change of beneficiary

Answer 23

A

Question 24

Cindy has a new medical plan that provides both health care services and health care insurance. She is covered by:

Select one:
a. Medicare
b. A Multiple Employer Trust (MET)
c. Medicaid
d. An HMO (Health Maintenance Organization)

Answer 24

D

Question 25

The services are provided on a prepaid per person basis called capitation in:
Select one:
a. HMOs
b. HSAs
c. POSs
d. PPOs

Answer 25

A

Question 26

What guarantees Jason the right to question the source and validity of consumer information used to rate a policy?
Select one:
a. State legislation
b. MIB (Medical Information Bureau)
c. Fair Credit Reporting Act
d. Social Security Act

Answer 26

C

Question 27

According to the Physical Examination and Autopsy provision, who is responsible for paying the cost of examining the insured?
Select one:
a. The insurer
b. The insured
c. The policyowner
d. The medical provider

Answer 27

A

Question 28

How many continuing education credit hours must Texas agents complete during each license period?

Select one:
a. 15
b. 24
c. 30
d. 32

Answer 28

B

Question 29

If Dan pays his health insurance premium quarterly and fails to make payment on April 1, his grace period will expire:
Select one:
a. May 1
b. June 1
c. June 30
d. July 1

Answer 29

A

Question 30

In most Disability Income policies, the Elimination Period applies:
Select one:
a. To each disability separately.
b. To claims for accidents only.
c. Only to the first time an insured becomes disabled.
d. During the first 10 days of the contract.

Answer 30

A

Question 31

What are the two most common adjustments made during a month with a universal life insurance policy?
Select one:
a. Decrease premium and increase death benefit
b. Cost of death protection deducted and current interest rate credited
c. Lengthen premium-paying period and increase death benefit
d. None of the above

Answer 31

B

Question 32

Which of the following factors does not influence the amount that an individual receives as monthly income under Social Security?
Select one:
a. Insured status (fully/currently)
b. Sex
c. PIA
d. Age

Answer 32

B

Question 33

Which of the following must happen before an HIV test is performed on an applicant?

Select one:
a. The Insurer must inform all non-entitled parties to the upcoming test.
b. A consent form must be signed by the applicant prior to the test.
c. The insurer must inquire about the applicant’s sexual orientation.
d. The insurer must inform the state Department of Health of upcoming test.

Answer 33

B

Question 34

The rider that you would pick if you want to be able to add coverage in the future, without having to show proof of insurability:

Select one:
a. Payor
b. Waiver of premium
c. Consideration
d. Guaranteed insurability

Answer 34

D

Question 35

The producer realizes that the prospective client omitted information about a prior illness. What should the producer do?
Select one:
a. Assume the client will not make a claim until the incontestability period is over.
b. Nothing, because the MIB will catch it
c. The producer has no responsibility to report the omitted information.
d. Tell the prospective client that a claim might be rejected later due to the omission.

Answer 35

D

Question 36

Which of the following is an improper form of policy replacement?

Select one:
a. Twisting
b. Discrimination
c. Defamation
d. Rebating

Answer 36

A

Question 37

Which of the following is NOT a nonforfeiture option that will protect the value of a health insurance policy in the event of default in the payment of premiums?
Select one:
a. Lengthened Benefit Period
b. Reduced, Paid Up Coverage
c. Shortened Benefit Period
d. Extended Term Coverage

Answer 37

A

Question 38

If the cash values of an annuity are invested in securities, it is a:
Select one:
a. Immediate annuity
b. Variable annuity
c. Fixed annuity
d. Deferred annuity

Answer 38

B

Question 39

A POS (Point od Service) plan is a combination of:

Select one:
a. PPO and HSA
b. HMO and PPO
c. POS and PPO
d. HSA and HMO

Answer 39

B

Question 40

Kim’s policy remained in force for a certain number of days even though she forgot to pay the premium. The provision that allows this is called:
Select one:
a. The insuring clause
b. The automatic premium loan
c. The consideration clause
d. The grace period provision

Answer 40

D

Question 41

How many days does an insured have to provide proof of loss?
Select one:
a. 15 days
b. 20 days
c. 60 days
d. 90 days

Answer 41

D

Question 42

Which of the following is a prepaid plan focused on preventive care, requiring the insured to be referred to a specialist by the primary care physician?
Select one:
a. HMO
b. PPO
c. POS
d. AD&D

Answer 42

A

Question 43

Errors & Omissions are most likely to occur during:
Select one:
a. Delivery
b. A replacement
c. The application process
d. Underwriting

Answer 43

B

Question 44

Which of the following is NOT a nonforfeiture option that will protect the cash value of a permanent life insurance policy in the event of lapse?
Select one:
a. Reduced, Paid Up Coverage
b. Cash
c. Extended Term Coverage
d. Lengthened Benefit Period

Answer 44

D

Question 45

What is the grace period for life insurance policies in Texas?
Select one:
a. 7 days
b. 10 days
c. 15 days
d. 31 days

Answer 45

D

Question 46

A Waiver of Premium provision in a Disability Income policy allows:
Select one:
a. The insured to maintain a policy in force while unable to pay premiums when disabled.
b. The insurer to subtract the premium payments from the insured’s benefit payments.
c. The insurer to increase the premium because of the disability.
d. The insured to extend the Grace Period.

Answer 46

A

Question 47

Which type of life policy would best suit someone who retires in good health with a large amount of cash, whose investment goals are conservative?
Select one:
a. Limited premium whole life insurance
b. Single premium whole life insurance
c. Continuous premium straight life insurance
d. Level term insurance

Answer 47

B

Question 48

How many days does an insurer have to provide claims forms after a notice of claim?
Select one:
a. 7 days
b. 14 days
c. 15 days
d. 30 days

Answer 48

C

Question 49

On November 5, Zoe fills out an application for a life policy. On November 6, the agent accepts the premium for the policy. The policy is delivered on November 7. Which date does the Free Look period start?

Select one:
a. November 5
b. November 6
c. November 7
d. November 17

Answer 49

C

Question 50

Long-term care plans are written as:
Select one:
a. Optionally renewable
b. Guaranteed renewable
c. Conditional renewable
d. Cancellable

Answer 50

B

Question 51

The fact that the application is part of the policy is stated in:
Select one:
a. The ownership clause
b. The options
c. The entire contract
d. The insuring clause

Answer 51

C

Question 52

Which of the following statements is correct when pertaining to coordination of benefits by a group long-term disability plan with Social Security?

Select one:
a. Group and Social Security benefits pay a combined maximum limit.
b. After group benefits are exhausted, half of the allowable Social Security benefits are paid.
c. Group only pays after Social Security benefits are depleted.
d. Social Security only pays after group benefits have been exhausted.

Answer 52

A

Question 53

What right of renewability does not guarantee insurability if certain circumstances happen and allows the insurer to increase premiums?

Select one:
a. Optionally renewable
b. Conditionally renewable
c. Noncancelable
d. Cancelable

Answer 53

B

Question 54

Samson has a policy that allows the insurer to cancel the policy at any date specified in the contract, and to raise his premiums. Which type of policy is it?
Select one:
a. Noncancelable
b. Conditionally renewable
c. Optionally renewable
d. Cancelable

Answer 54

C

Question 55

What type group plan requires 75% participation?
Select one:
a. Contributing
b. Consideration
c. Noncontributory
d. Contributory

Answer 55

D

Question 56

Paul has a basic medical policy. It will pay for:
Select one:
a. Hospital visits
b. Outpatient care
c. Doctor visits
d. Prescription drugs
B-348
Feedback
Your answer is correct
Doctor visits are covered under basic medical policies.
The correct answer is: Doctor visits

Answer 56

C

Question 57

What kind of contract pays an income to an insured until the insured dies?
Select one:
a. Economatic whole life
b. Endowment
c. Variable whole life
d. Life annuity

Answer 57

D

Question 58

Dylan tells the insurer to keep the dividend and apply it to his next premium. He is using which dividend option?
Select one:
a. Accumulate at interest
b. Reduced paid-up
c. Reduction of premium
d. Paid-up addition

Answer 58

C

Question 59

Which of the following is NOT a feature of the Patient Protection and Affordable Care Act?
Select one:
a. Older Americans will receive larger tax credits for larger premiums.
b. The premium tax credit is fully refundable.
c. The premium tax credit is always paid to the individual as soon as they pay their premium.
d. The premium tax credit is fixed based on a benchmark plan.

Answer 59

C

Question 60

At what age would a qualified retirement plan distribution be premature?

Select one:
a. 60
b. 59
c. 65
d. 70 1/2

Answer 60

B

Question 61

Sam works for large corporation and is eligible for both his company’s health plan and Medicare. Which plan would be primary?

Select one:
a. Medicare
b. They will split the cost.
c. He can pick.
d. Work

Answer 61

D

Question 62

How does the IRS treat disability income benefits when the employer pays the policy premiums?
Select one:
a. They are fully taxable.
b. The are not taxable.
c. The first 3 months are taxable.
d. The first 6 months are taxable.

Answer 62

A

Question 63

The policyowner’s obligation to pay the premium is the:

Select one:
a. Insuring Clause
b. Consideration Clause
c. Entire Contract
d. Assignment Clause

Answer 63

B

Question 64

What contract term means only one party to a contract’s promises are legally enforceable?
Select one:
a. Aleatory
b. Unilateral
c. Conditional
d. Adhesion

Answer 64

B

Question 65

Barbara allows her comprehensive major medical plan to lapse. If her policy is reinstated on March 20th and she contracts mononucleosis on March 29th, what benefits will she receive?
Select one:
a. Full
b. Only hospitalization coverage
c. Partial
d. None

Answer 65

D

Question 66

Which of the following would prevent someone from becoming an insurance agent?
Select one:
a. Being a nonresident
b. Having committed dishonest activity
c. Being only 18 years of age
d. Passing the licensing exam more than 6 months ago

Answer 66

B

Question 67

Shane and Casey both have health plans from work that covers their son Cash. Which plan is primary?

Select one:
a. Shane since he is the father.
b. The parent with the earliest birthday in the year is primary.
c. The plans split the cost.
d. Casey since she works for a bigger company.

Answer 67

B

Question 68

Alex’s life policy lapsed, which Nonforfeiture option would the insurer send him the value of the policy?
Select one:
a. Reduction of premium
b. Cash surrender
c. Cash payment
d. Reduced paid-up

Answer 68

B

Question 69

When an insured completed his health policy application, his producer did not take a premium when he submitted it to the insurer. When the producer delivers the policy to the applicant, he needs to do all of the following EXCEPT:
Select one:
a. Explain the policy and provisions to the applicant.
b. Collect the initial premium from the applicant.
c. Ask the applicant to complete a statement of continued good health.
d. Issue the applicant a conditional receipt.

Answer 69

D

Question 70

Mr. Jones, the insured, committed suicide after the expiration of the suicide clause in his life insurance policy. The insurer is obligated to:
Select one:
a. Refund the premiums paid.
b. Pay the death benefit.
c. Pay 50% of the death benefit
d. Pay nothing.

Answer 70

B

Question 71

All of the following are true for a person to be appointed Commissioner of Insurance in Texas, EXCEPT:
Select one:
a. The Commissioner must have prior experience in insurance.
b. The Commissioner can be an attorney or a CPA.
c. The Commissioner must have no conflict of interest.
d. The Commissioner must have 10 years experience in business or government.

Answer 71

D

Question 72

When Jason filled out his application his statements had to be ______________ to be considered legal.
Select one:
a. Warranties
b. Contributory
c. Representations
d. Guaranteed

Answer 72

C

Question 73

Which of the following statements is not true about the tax liabilities for individual life insurance policies?
Select one:
a. If a policy is surrendered for its cash value some of the cash value may be subject to ordinary income tax.
b. Policy loans are taxable as income.
c. Policy premiums are not deductible for an individual life insurance policy.
d. Accelerated benefits are tax free if they are qualified.

Answer 73

B

Question 74

The cheapest premium payment mode would be on a policy that is paid:

Select one:
a. Monthly
b. Annually
c. Quarterly
d. Semiannually

Answer 74

B

Question 75

Investment risk is completely taken by the policyowner is what type policy?
Select one:
a. Variable universal life
b. Adjustable life
c. Universal life
d. Whole life

Answer 75

A

Question 76

Blake died 20 days after his group life insurance coverage was terminated. He did not apply for individual coverage. Which of the following is true?
Select one:
a. His beneficiary will receive 50% of the death benefit.
b. His beneficiary will receive the full death benefit.
c. His beneficiary will receive the death benefit minus the initial premium for the converted coverage.
d. His beneficiary will not receive the death benefit because his group coverage was terminated.

Answer 76

B

Question 77

Which rider on Diane’s life policy will help her out when she is confined to a nursing home with a terminal illness?
Select one:
a. Accelerated benefit rider
b. Accidental death rider
c. Return of premium rider
d. Consideration

Answer 77

A

Question 78

Dylan is looking at buying an equity-indexed life policy; it will likely be tied to:

Select one:
a. Consumer Price Index
b. Inflation
c. Dow Jones Industrial Average
d. Gross Domestic Product

Answer 78

C

Question 79

Tyler owns a major medical policy with 70/30 coinsurance and a $3,000 deductible. If he submits a claim for $20,000, how much will he pay?
Select one:
a. $3,000
b. $5,100
c. $8,100
d. $20,000

Answer 79

C

Question 80

If James has an increasing term policy, which of the following must increase?
Select one:
a. The return of premium
b. The taxes on the benefit
c. The death benefit
d. The premium

Answer 80

C

Question 81

Comprehensive major medical health policies typically have an Eligible Expenses provision that specifies coverage for all but:
Select one:
a. Services of nurses.
b. Services of doctors.
c. Semi-private room and board.
d. Experimental services.

Answer 81

D

Question 82

An Accident and Health policy contains a Consideration clause which states:

Select one:
a. That the applicant pays the initial premium.
b. That insurable interest must exist between the parties of the contract.
c. That the entire contract includes any attachments made to the policy.
d. Details of certain claims that may be excluded under the policy.

Answer 82

A

Question 83

On January 3, an application is submitted without the initial premium. The insurer requires a medical exam, and it is completed on January 15. On January 20, the insurer issued the policy standard, and the producer delivers it on January 22. When is coverage effective?
Select one:
a. January 3
b. January 20
c. January 22, after the statement of good health is signed, and the initial premium is paid.
d. January 15

Answer 83

C

Question 84

The open enrollment period for a group HMO lasts for how many days?
Select one:
a. 15 days
b. 20 days
c. 30 days
d. 60 days

Answer 84

C

Question 85

On April 9, an application is submitted without the initial premium. The insurer requires a medical exam, and it is completed on April 14. On April 18, the insurer issued the policy, and the producer delivers it on April 21. When is coverage effective?

Select one:
a. April 9
b. April 14
c. April 18
d. April 21, after the statement of good health is signed, and the initial premium is paid.

Answer 85

D

Question 86

What approach calculates the amount of money a family needs immediately upon the death of the insured to pay for their expenses and basic necessities?
Select one:
a. Human life value
b. Needs
c. Salary
d. Social Security blackout

Answer 86

B

Question 87

What type of insurance contract is prepared by the insurer and not negotiated?
Select one:
a. Aleatory
b. Unilateral
c. Adhesion
d. Conditional

Answer 87

C

Question 88

Sally is a self-employed software programmer that works from home. If she becomes unable to work due to a disability, which type of policy would pay her rent?
Select one:
a. Group disability income policy
b. Individual disability income policy
c. Workers’ Compensation
d. Business overhead expense policy

Answer 88

B

Question 89

Which of the following would not be allowed in the advertising of life insurance policies in Texas?
Select one:
a. Comparisons with other insurers
b. Guaranteed interest rates for specific time periods
c. Having testimonials from famous actors
d. Mentioning rumors about competitors

Answer 89

D

Question 90

For which of the following shows a lack of fiduciary trust?
Select one:
a. Churning
b. Twisting
c. Commingling of funds
d. Boycott

Answer 90

C

Question 91

A Texas insurance agent must complete how many continuing education credit hours each license period?

Select one:
a. 16
b. 24
c. 30
d. 36

Answer 91

B

Question 92

Capitation is used in:
Select one:
a. HSAs
b. PPOs
c. HRAs
d. HMOs

Answer 92

D

Question 93

Who has the right to change the beneficiary on a life policy?
Select one:
a. The beneficiary
b. The policyowner
c. The insured
d. The insurer

Answer 93

B

Question 94

The insurer has a maximum of how many days after receiving notice of a claim to provide claims forms?
Select one:
a. 7 days
b. 15 days
c. 45 days
d. 60 days

Answer 94

B

Question 95

Over-funded life insurance policies where the proceeds are subject to taxation are called:
Select one:
a. Section 457 deferred compensation.
b. Section 1035 exchange
c. MECs
d. Roth IRAs

Answer 95

C

Question 96

A life insurance policy in Texas must contain all the following provisions, EXCEPT:
Select one:
a. Incontestability
b. Settlement
c. Legal action
d. Assignment

Answer 96

B

Question 97

Which of the following offers the broadest service area and broadest selection of providers?
Select one:
a. POS
b. HMO
c. PPO
d. FSA

Answer 97

C

Question 98

After receiving notice of a claim, the insurer has a maximum of how many days to provide claims forms?
Select one:
a. 10 days
b. 15 days
c. 30 days
d. 60 days

Answer 98

B

Question 99

Life insurance death benefits that can be accessed tax-free when the insured is still alive are called:
Select one:
a. Accelerated benefits
b. Viatical settlements
c. Chronically ill benefits
d. Life settlements

Answer 99

A

Question 100

In the state of Texas, when must newborn child coverage begin?

Select one:
a. From the moment of birth
b. After the newborn is 48 hours old
c. When the newborn is 1 week old
d. When the newborn is 1 month old

Answer 100

A

Question 101

If Adam’s license is suspended or revoked, how long must he wait to apply for a new license?
Select one:
a. 60 days after the effective date of the revocation
b. 120 days after the effective date of the revocation
c. 1 year after the effective date of the revocation
d. 5 years after the effective date of the revocation

Answer 101

D

Question 102

An insured became disabled in February of 2014. She had bought a disability income policy in October of 2012. Her disability was due to a condition that existed prior to October 2012 but was not excluded from her policy. The insurer will:

Select one:
a. Deny the claim because it is the result of a pre-existing condition.
b. Pay the claim in full.
c. Deny the claim based on fraudulent misrepresentation.
d. Pay 50% of the claim.

Answer 102

B

Question 103

All of the following are typical groups that would be eligible for group life insurance, EXCEPT:
Select one:
a. A group of creditors
b. A family
c. A public employee association
d. A funeral trust

Answer 103

B

Question 104

What type of insurer is formed under the laws of Texas?
Select one:
a. Alien
b. Unincorporated
c. Domestic
d. Foreign

Answer 104

C

Question 105

Nick has a policy that the insurer can cancel when he turns 65. Which type of policy is it?
Select one:
a. Cancelable
b. Noncancelable
c. Conditionally renewable
d. Optionally renewable

Answer 105

C

Question 106

HSAs are frequently used with:
Select one:
a. HDHPs
b. PPOs
c. POSs
d. HMOs

Answer 106

A

Question 107

What should the insured do if the insurer fails to send the correct forms, under the Claims Forms provision of a health policy?
Select one:
a. Ask the Department of Insurance to intervene.
b. Ask their producer for a form.
c. Wait for the claims forms.
d. Create their own form on which to submit the claim.

Answer 107

D

Question 108

Information obtained by a phone call to an applicant, may be included in which of the following reports?

Select one:
a. Physician’s report
b. Producer’s report
c. Inspection report
d. Medical Information Bureau (MIB ) report

Answer 108

C

Question 109

All of the following are true regarding advertising of life insurance policies in Texas, EXCEPT:
Select one:
a. The full licensed name of the insurer must appear on the advertisement.
b. Agents are responsible for the form and content of advertisements.
c. Advertisements must not be misleading.
d. Advertisements must contain the premium rate.

Answer 109

B

Question 110

What part of the policy directs the insurer on the recipients of benefits?
Select one:
a. Insuring agreement
b. Conditions provision
c. Payment of Claims provision
d. Entire contract

Answer 110

C

Question 111

All of the following are duties of a producer when delivering a policy to an applicant EXCEPT:
Select one:
a. Arranging to keep the policy in his office for safe-keeping.
b. Review of the benefits and conditions.
c. Collection of any premiums due.
d. Explanation of all riders and exclusions.

Answer 111

A

Question 112

How are dividends treated for tax purposes?
Select one:
a. Always taxed
b. Depends on persons income
c. Depends on the type policy
d. Never taxed

Answer 112

D

Question 113

Jennifer made an additional premium payment on her Adjustable Life policy. Which of the following is not a way that her policy is affected by this payment?
Select one:
a. The premium paying period may decrease.
b. The value of nonforfeiture options may decrease.
c. The face amount of her policy may increase.
d. The length of her coverage may increase.

Answer 113

B

Question 114

The manner in which the proceeds of a life policy are handled are specified in what provision?
Select one:
a. Dividend options
b. Insuring clause
c. Settlement options
d. Payment options

Answer 114

C

Question 115

The beneficiary designation that allows the policy to be changed without the beneficiary’s consent:
Select one:
a. Primary
b. Irrevocable
c. Contingent
d. Revocable

Answer 115

D

Question 116

A decreasing term life policy would be the most appropriate for:
Select one:
a. A 35 year old doctor with a lawyer wife and a child
b. A 41 year old lawyer who wants a policy to pay his mortgage if he dies
c. A 66 year old retired electrician
d. A 57 year old schoolteacher that doesn’t want any risk

Answer 116

B

Question 117

A health policy will usually exclude losses related to all of the following, EXCEPT:
Select one:
a. Self-inflicted injuries
b. Losses incurred while committing a felony
c. Losses incurred while engaging in an illegal occupation
d. Losses from an auto accident when the insured was at fault

Answer 117

D

Question 118

Tina has a policy that only covers cancer-related medical expenses. What kind of policy does she have?
Select one:
a. Stop-loss
b. Accident only
c. Dread disease
d. AD&D

Answer 118

C

Question 119

The Beauty Shop Cosmetic Company purchases a life insurance policy on Anna, the company’s leading salesperson. Which business continuation plan does this company have?
Select one:
a. Executive bonus plan
b. Key person insurance
c. Section 303 plan
d. Split-dollar

Answer 119

B`

Question 120

If more than one beneficiary is named, who is the first in line?
Select one:
a. Revocable
b. Primary
c. Irrevocable
d. Contingent

Answer 120

B

Question 121

What right of renewability guarantees insurability, but does not guarantee premiums?
Select one:
a. Optionally renewable
b. Guaranteed insurability
c. Noncancelable
d. Guaranteed renewable

Answer 121

D

Question 122

Who of the following might take out a credit life policy?
Select one:
a. A man who has paid cash for an expensive piece of electronics
b. A husband whose wife has cancer
c. A father who is hoping his son will be a professional ballplayer
d. A car dealer who is financing someone’s car

Answer 122

D

Question 123

If an applicant states their age is 30 on an application for life insurance, when they were actually 37, what is the insurer likely to do?
Select one:
a. Void the policy for misrepresentation and fraud.
b. Pay the full death benefit based on the stated age.
c. Refund the premiums paid without interest.
d. Pay the death benefit based on the applicant’s actual age.

Answer 123

D

Question 124

How does Texas define chemical dependency?

Select one:
a. The abuse of or an addiction to alcohol or a controlled substance
b. A psychological or physical dependence on or an addiction to a controlled substance or illegal drug.
c. The abuse of, a psychological or physical dependence on, or an addiction to alcohol or a controlled substance
d. The abuse of, a psychological or physical dependence on, or an addiction to an illegal drug or a controlled substance

Answer 124

C

Question 125

The most common plan used with an HSA is:
Select one:
a. POS
b. PPO
c. HDHP
d. HMO

Answer 125

C

Question 126

When an HMO’s license is suspended, who are the only people that can be enrolled?

Select one:
a. All of the above
b. Newborns
c. Seniors over 65
d. New spouses

Answer 126

B

Question 127

Jamie has a renewable term policy. Which of the following is not an incorrect statement about this type of policy.
Select one:
a. Renewability is the insurer’s option.
b. Renewable term policies never have an age limit.
c. Renewability is at the insured’s option.
d. The insured must provide proof of insurability.

Answer 127

A

Question 128

Becky is a 31 years old and knows she needs to start a retirement plan. She currently works in a bakery and is worried about how inflation would affect her retirement plan. Which annuity would be a good fit for her needs?
Select one:
a. Deferred annuity - single premium
b. Immediate annuity - single premium
c. Flexible premium deferred annuity
d. Level premium fixed annuity

Answer 128

C

Question 129

An insurance applicant submits an application with a premium. After underwriting, the insurer sends back the policy, rated, with an impairment rider. What should the producer tell the applicant at delivery?

Select one:
a. Explain that the policy is rated.
b. Explain the issue and collect an additional premium.
c. Nothing
d. Tell the applicant that they were declined.

Answer 129

B

Question 130

Which of the following could be used to prevent a lapse in the payment of life insurance premiums?
Select one:
a. Automatic premium loan
b. Cash loan
c. Partial Surrender
d. Waiver of premium

Answer 130

A

Question 131

Which of the following policies would pay for a company’s rent, utilities, and other operating expenses if the owner becomes disabled?
Select one:
a. Workers’ Compensation
b. Key employee
c. Business overhead expense
d. Business buy-out

Answer 131

C

Question 132

An insurance application is not complete unless it has:
Select one:
a. The signature of the insured (unless not an adult), and the agent.
b. The signature of the physician who conducted the medical exam, and the medical records.
c. A signature of an officer of the company.
d. Signature of the beneficiary or beneficiaries.

Answer 132

A

Question 133

If an applicant misstates their age on an insurance application, what does the insurer do when it is discovered at claim time?
Select one:
a. Pay the claim in full because it is no longer contestable.
b. Cancel the policy.
c. Deny the claim because he fraudulently misrepresented his age on the application.
d. Adjust the claim benefits to reflect what he would have been entitled to if his real age had been given.

Answer 133

D

Question 134

What is the main purpose of the MIB?
Select one:
a. The sharing of medical information and data among its member companies.
b. To provide data for the purpose of rating large group health plans using experience rating.
c. Make recommendations on premiums rates for substandard risks.
d. To accumulate and provide data on dread diseases to members.

Answer 134

A

Question 135

Does a loan on the cash value of a life insurance policy accrue interest, and if so, how is the interest handled?
Select one:
a. No, the loan does not accrue interest, he is borrowing his own money.
b. Yes, the interest can be paid annually, or added to the loan.
c. Yes, the interest is added to the premium payment.
d. None of the above

Answer 135

B

Question 136

All of the following are considered to be acts of the agent, EXCEPT:
Select one:
a. Waives terms of the contract when necessary
b. Solicitation of business on behalf of the insurer
c. Receives and transmit the application and the insurance policy to and from the insurer
d. Examines or inspects a risk

Answer 136

A

Question 137

If an individual has a chronic medical condition, how is the insurer likely to handle this situation when issuing an individual health policy?
Select one:
a. The insurer will exclude the condition with an Impairment rider.
b. The insurer will include a Double Indemnity rider.
c. The insurer will issue a Waiver of Premium rider.
d. The insurer will include a Disability Income rider.

Answer 137

A

Question 138

What is the biggest source of information used in underwriting?
Select one:
a. Application
b. MIB
c. HIPAA
d. Representations

Answer 138

A

Question 139

In life insurance, insurable interest must be present at the time of:
Select one:
a. Application
b. Never
c. Death
d. Delivery

Answer 139

A

Question 140

To determine the coverage and benefits to pay for a surgery based on what is considered fair and common for an area is:
Select one:
a. Relative value scale
b. Usual, reasonable, and customary
c. Subrogation
d. Concurrent review

Answer 140

B

Question 141

What is the advantage of a payor benefit rider?
Select one:
a. It cancels the policy without penalty and returns premiums paid.
b. It provides a temporary waiver of premium if the person paying the premium dies.
c. It provides disability income.
d. It provides additional insurance if the death is a result of an accident.

Answer 141

B

Question 142

Life insurance applications require a signature from:

Select one:
a. The agent
b. The insured
c. The policyowner
d. All of the above

Answer 142

D

Question 143

Sue’s hospital bill is $4,500. Her major medical policy has a $500 deductible and then it pays 80% of the remaining bill. The policy also has a maximum out-of-pocket of $2,000. How much of the total bill will the insurance company pay?

Select one:
a. $3,200
b. $3,600
c. $3,800
d. $4,000

Answer 143

A

Question 144

Which of the following is not one of the elements required to make a contract legal?
Select one:
a. Competent parties
b. Ambiguities
c. Offer and acceptance
d. Legal purpose

Answer 144

B

Question 145

What is the advantage of a Waiver of Premium provision in a life policy?

Select one:
a. Reduce an insured’s premiums.
b. Increase an insured’s coverage.
c. Waive an insured’s premiums if he/she becomes disabled.
d. All of the above.

Answer 145

C

Question 146

Jeff has limited financial resources, but finds himself in a position where he needs a good deal of protection. A __________would probably best suit his needs at this time.
Select one:
a. Term policy
b. Adjustable life
c. Universal life
d. AD&D

Answer 146

A

Question 147

An individual has a disability income policy with a Change of Occupation clause when he changes to a new more hazardous job. He neglects to inform the insurer. What happens if one year later he files a claim when he becomes disabled?
Select one:
a. Cancel his policy and refund one year’s premium payments.
b. The insurer will pay the claim based on what the premiums would have purchased had the hazardous occupation been known.
c. The insurer will pay one-half of the claim.
d. The insurer will write a new policy

Answer 147

B

Question 148

Gregory recently purchased a one-year term insurance policy. At the end of the year, he can purchase an identical policy without having to show proof of insurability. Why type of policy did he purchase?
Select one:
a. Decreasing term
b. Increasing term
c. Renewable term
d. Level premium term

Answer 148

C

Question 149

Riders covering additional insureds can be added to life policies and cover all but which of the following?
Select one:
a. Legally adopted children
b. Step children
c. Younger siblings of the policyholder
d. Biological children

Answer 149

C

Question 150

What type of policy allows an insurer to cancel a policy if certain circumstances stated in the contract happen?
Select one:
a. Conditionally renewable
b. Cancelable
c. Optionally renewable
d. Noncancelable

Answer 150

A

Question 151

Nick’s life policy lapsed, which Nonforfeiture option would allow the insurer to use the cash value to buy a whole life policy?

Select one:
a. Reduction of premium
b. Cash surrender
c. Reduced paid-up
d. Extended term

Answer 151

C

Question 152

For tax purposes, how are premiums from a group life policy treated for an employer?
Select one:
a. Tax deductible over a certain dollar amount
b. Tax deductible
c. Not tax deductible
d. Tax deductible under certain conditions

Answer 152

B

Question 153

The ____________ requires an applicant be notified in writing that the insurer could request an investigative consumer report may be made on them.
Select one:
a. McCarran Ferguson Act
b. Unfair Trade Practices Act
c. Fair Credit Reporting Act
d. Privacy Act of 1974

Answer 153

C

Question 154

Credit life policies are taken out to cover:
Select one:
a. The life of a creditor
b. The life of a debtor
c. The solvency of an insurer
d. The obligations of Texas

Answer 154

B

Question 155

Josh wants to provide income for his family for a designated period if he should die, and a lump sum benefit as well. He should purchase:
Select one:
a. A survivorship policy
b. A family income rider
c. A payor rider
d. A joint life policy

Answer 155

B

Question 156

Claims forms must be given to a claimant within:
Select one:
a. 7 days
b. 15 days
c. 45 days
d. 60 days

Answer 156

B

Question 157

The only person that has the right to change the beneficiary on a life policy is:
Select one:
a. The insured.
b. The policyowner.
c. The insurer.
d. The beneficiary.

Answer 157

B

Question 158

Although Karl attends school, he has a physical impairment and is not capable of self-care or self-sustaining employment. Under his mother’s group health plan, which of the following is true?
Select one:
a. Karl’s coverage will continue as long as he is physically and financially dependent on his mom.
b. Karl’s coverage will cease on his twenty-fifth birthday.
c. Karl’s will have coverage on his mom’s policy until he qualifies for his own coverage.
d. As soon as Karl completes school, his coverage will terminate.

Answer 158

A

Question 159

Cindy has always paid her health insurance premium quarterly. She recently changed the payment period to weekly. What will the grace period be on the new cycle?
Select one:
a. 7 days
b. 15 days
c. 30 days
d. 31 days

Answer 159

A

Question 160

What would be best for someone who received a large lump sum from their company retirement and wants to be sure their basic living needs are always covered?

Select one:
a. A deferred annuity
b. An immediate annuity purchased with a lump sum
c. A deferred annuity funded with periodic deposits
d. An immediate annuity that is payable for 10 years only

Answer 160

B

Question 161

Lanna notices that she forgot to ask a few questions on the application after leaving the clients home. She is in a hurry to submit the application, what should she do?

Select one:
a. Ask his boss to sign off on the changes
b. Call and ask the question over the phone
c. Make up an answer he thinks best fits based on his previous information
d. Go back and ask the questions, then have the client initial the changes

Answer 161

D

Question 162

Which contract pay an additional sum if the insured dies due to an accident?
Select one:
a. AD&D
b. Joint life policy
c. Graded premium whole life
d. Survivorship policy

Answer 162

A

Question 163

Insurable interest must exist at which of the following times for an Accidental Death and Dismemberment (AD&D) policy?

Select one:
a. When the policy becomes effective.
b. When a claim is submitted.
c. When the application is requested.
d. If a change of beneficiary is requested.

Answer 163

C

Question 164

Which of the following terms can be used in the advertising of life insurance policies in Texas?
Select one:
a. Endow
b. Savings
c. Investment
d. Death

Answer 164

D

Question 165

The provision on Robert’s insurance policy that allowed the policy to remain in force, even though he forgot to pay his premium, is:
Select one:
a. The consideration clause.
b. The automatic premium loan.
c. The grace period provision.
d. The insuring clause.

Answer 165

C

Question 166

If a person has both Medicare and a work plan, which payer is secondary?
Select one:
a. He can pick.
b. Group
c. They will split the cost.
d. Medicare

Answer 166

D

Question 167

In which clause would the insurance company’s promise to pay be included?
Select one:
a. Insuring clause
b. Entire contract
c. Assignment clause
d. Consideration

Answer 167

A

Question 168

What type of insurer is formed under the laws of anyplace outside the United States?

Select one:
a. Unincorporated
b. Foreign
c. Alien
d. Domestic

Answer 168

C

Question 169

James’ Carpet Cleaning is considering a noncontributary health plan. Noncontributory plans require:

Select one:
a. 75% of eligible employees enroll.
b. 100% of eligible employees enroll.
c. 75% of all employees enroll.
d. 100% of premiums paid by employees.

Answer 169

B

Question 170

A policy on two or more lives that pays the death benefit after the first person dies is called:
Select one:
a. Adjustable life
b. Joint life
c. Universal life
d. Survivorship life

Answer 170

B

Question 171

A producer cannot change or waive any provisions in an insurance contract. This is stipulated in the:
Select one:
a. Legal action provision.
b. Entire contract provision.
c. Consideration clause.
d. Insuring clause.

Answer 171

B

Question 172

During the replacement of a policy with another one from the same company, the producer needs to make sure it is not considered?
Select one:
a. Twisting
b. Discrimination
c. Churning
d. Rebating

Answer 172

C

Question 173

What is the maximum amount of time an insurance policy may be backdated?
Select one:
a. 1 month
b. 3 months
c. 6 months
d. 1 year

Answer 173

C

Question 174

HDHPs ( High deductible health plans) are most often used with:

Select one:
a. PPOs (Preferred Provider Organization)
b. POSs (Point of Service plan)
c. HSAs (Health Savings Account)
d. HMOs (Health Maintenance Organization)

Answer 174

C

Question 175

Maggie and Melinda are partners in the Bizzy Bakery. What type of insurance did they purchase to allow one partner to buy all of the business if the other partner dies?
Select one:
a. Survivor Life policy
b. Buy and Sell Agreement
c. Key employee life policy
d. Joint policy

Answer 175

B

Question 176

Question text
The Commissioner can revoke a producer’s license for all the following, EXCEPT:
Select one:
a. Writing only controlled business
b. Obtaining a license through fraud
c. Committing a misdemeanor
d. Misappropriation of money

Answer 176

C

Question 177

What should someone buy who is concerned about being able to function independently without help when they become older?
Select one:
a. A Medicare supplement plan
b. A long-term care rider attached to a life insurance policy
c. A pre-paid funeral plan
d. A Medicaid plan

Answer 177

B

Question 178

If Dylan wants a set minimum rate of return, what type annuity should he buy?
Select one:
a. Immediate
b. Variable
c. Fixed
d. Deferred

Answer 178

C

Question 179

A limited dread disease policy most likely would cover:
Select one:
a. Cancer
b. Dental
c. Vision
d. Hospital indemnity

Answer 179

A

Question 180

Baxter tells the insurer to keep the dividend and apply it to the face value of his life policy. He is using which dividend option?
Select one:
a. Reduction of premium
b. Paid-up addition
c. Reduced paid-up
d. Accumulate at interest

Answer 180

B

Question 181

A Business Continuation Agreement is used to assure business ownership is transferred upon the death of an owner or partner. Another name for this is:
Select one:
a. Buy and Sell Agreement.
b. Joint policy.
c. Survivor Life policy.
d. Key employee life policy.

Answer 181

A

Question 182

A one-sided agreement whereby a promise to do (or refrain from doing) something in return for a performance (not a promise) is what type of contract?
Select one:
a. A conditional contract
b. A contract of adhesion
c. A unilateral contract
d. An aleatory contract

Answer 182

C

Question 183

What type of policy does not allow the insurer to change the coverage, but allows the insurer to change the premiums by class?
Select one:
a. Noncancelable
b. Guaranteed insurability
c. Optionally renewable
d. Guaranteed renewable

Answer 183

D

Question 184

When a person buys insurance, the insurer is obligated to pay uncertain benefits in the future which are called:
Select one:
a. Conditional
b. Adhesion
c. Aleatory
d. Unilateral

Answer 184

A

Question 185

What is a key difference between a stock insurer and a mutual insurer?
Select one:
a. Stock insurers are regulated by the SEC; mutual insurers are regulated by the Texas Insurance Department.
b. Stock insurers can only issue life insurance; mutual insurers can issue both life and health insurance.
c. Stock insurers are owned by investors; mutual insurers are owned by policyholders.
d. Stock insurers can operate in more than one state; mutual insurers can only operate in one state.

Answer 185

C

Question 186

An agent has a fiduciary trust to all the following, EXCEPT:
Select one:
a. Interviewees who didn’t purchase
b. Applicants
c. Insurer
d. Insureds

Answer 186

A

Question 187

Physicians and medical facilities provide services on a contracted price in:
Select one:
a. POSs
b. HSAs
c. HMOs
d. PPOs

Answer 187

D

Question 188

Which clause in an insurance policy identifies the scope and limits of coverage as well as the contracting parties?
Select one:
a. The insuring clause
b. The consideration clause
c. The cancellation clause.
d. The renewal clause.

Answer 188

A

Question 189

Melissa climbs mountains on the weekends. Her boss is afraid is afraid that the company will lose a major client if she is in an accident. What type of policy would be most appropriate?
Select one:
a. Business overhead expense
b. Business buy-out
c. Workers’ Compensation
d. Key employee

Answer 189

D

Question 190

What document contains long-term care insurance policy benefits, exclusions and limitations?
Select one:
a. Notice regarding replacement
b. Outline of coverage
c. Illustration
d. Policy summary

Answer 190

B

Question 191

This type annuity benefit payments start at a later date, greater than 12 months from of purchase:
Select one:
a. Deferred
b. Immediate
c. Single
d. Flexible

Answer 191

A

Question 192

What provision must automatically update with changes to Medicare?
Select one:
a. Cost-sharing
b. Guaranteed issue
c. Renewability
d. Free look

Answer 192

A

Question 193

When must the outline of coverage for a long-term care insurance policy be given to an applicant?
Select one:
a. Prior to the time of initial solicitation
b. At the time of initial solicitation
c. Within 3 days of initial solicitation
d. Within 5 days of initial solicitation

Answer 193

B

Question 194

Bob bought a policy that covers cancer only. It is considered a:
Select one:
a. Major medical plan
b. Basic medical plan
c. Limited plan
d. Basic hospital plan

Answer 194

C

Question 195

Jeff was injured in a car wreck. How many day does he have to provide a notice of claim to his insurer?
Select one:
a. 15 days
b. 20 days
c. 45 days
d. 90 days

Answer 195

B

Question 196

Medicare Supplement policies are primarily designed to:
Select one:
a. Offset the cost of Medicare
b. Provide additional retirement income to supplement Social Security retirement benefits
c. Provide a reinsurance network that spreads the Medicare risk among private insurance companies
d. Provide additional benefits beyond those provided by Medicare

Answer 196

D

Question 197

A Lump Sum payment for life insurance is:

Select one:
a. Taxable
b. Taxable over the premium payment amounts
c. Not taxable
d. Taxable if the employer paid the premiums

Answer 197

C

Question 198

On December 6, an application for life insurance is submitted with the initial premium. On December 23 the insurer issues the policy. Due to it being Christmas, the agent doesn’t deliver the policy until December 28. A conditional receipt was issued without a required medical exam. When is coverage effective?

Select one:
a. December 28, after the statement of good health is signed
b. December 6
c. December 23
d. December 28

Answer 198

B

Question 199

The agent notices that he or she forgot to ask a few questions on the application after leaving the clients home. Before submitting it he or she should:
Select one:
a. Ask his boss to sign off on the changes
b. Make up an answer he thinks best fits based on his previous information
c. Call and ask the question over the phone
d. Go back and ask the questions, then have the client initial the changes

Answer 199

D

Question 200

Brenda’s has given her insurer permission to go after a third party to collect damages owed. This is known as:

Select one:
a. Liberalization
b. Indemnification
c. Subrogation
d. All of the above

Answer 200

C

Question 201

What type of policy allows the insurer to cancel the policy on any specified date and to increase the premiums for any class?
Select one:
a. Conditionally renewable
b. Optionally renewable
c. Noncancelable
d. Cancelable

Answer 201

B

Question 202

The amount that an individual receives as monthly income under Social Security is not affected by:

Select one:
a. Insured status (fully/currently).
b. Age.
c. Marital status.
d. PIA.

Answer 202

C

Question 203

Bob has a $30,000 life policy with a double indemnity AD&D rider. If he dies of cancer after 6 months, what would his beneficiaries receive?
Select one:
a. $0.00
b. $30,000
c. $60,000
d. $90,000

Answer 203

$30,000. An accidental death and dismemberment (AD&D) policy will only pay the benefit if the cause of death is accidental.
The correct answer is: $30,000

Question 204

Preston needs a life policy. He is just starting out as a doctor. In two years he will be making more money, and would like the option for a more permanent policy. What type policy should he buy?
Select one:
a. Increasing term
b. Renewable term
c. Convertible term
d. Level term

Answer 204

A convertible term policy can be exchanged for a whole life policy after the set period without the insured having to show proof of insurability.
The correct answer is: Convertible term

Question 205

Vision plans are considered:
Select one:
a. Limited plans
b. Major medical plans
c. Basic hospital plans
d. Basic medical plans

Answer 205

A

Question 206

What kind of contract uses periodic payments as a way to systematically liquidate assets?
Select one:
a. Investment
b. Viatical
c. Endowment
d. Annuity

Answer 206

D

Question 207

When an HMO’s license is suspended, who are the only people that can be enrolled?

Select one:
a. All of the above
b. Seniors over 65
c. Newborns
d. New spouses

Answer 207

C

Question 208

Skylar has a major medical policy that has a $1,000 deductible, a maximum out of pocket of $2,000 after the deductible, and an 80/20 coinsurance. If his medical bill was $7,000, what will he have to pay?
Select one:
a. $2,200
b. $3,200
c. $4,800
d. $5,000

Answer 208

A

Question 209

While investigating a claim, the insurer discovers the claimant had not included her full medical history on the application. The claims results from a condition that existed 4 years ago. The insurer will:
Select one:
a. Pay the current claim, but void the policy, based on misrepresentation
b. Pay the claim
c. Deny payment of the claim and cancel the policy, based on misrepresentation
d. Reduce the percentage of payment for the current claim

Answer 209

The company may not refuse to pay the claim because of the time limit that is placed on pre-existing conditions and misstatements. In most states, after the policy has been in force for 3 years, the insurer may not refuse to pay claims using the misrepresentation or pre-existing conditions defense.
The correct answer is: Pay the claim

Question 210

In a life insurance policy, statements by the insured are considered:
Select one:
a. Representations
b. Testimonials
c. Misrepresentations
d. Warranties

Answer 210

A

Question 211

Tim was injured in an accident, how many days does he have to provide proof of loss?
Select one:
a. 7 days
b. 15 days
c. 45 days
d. 90 days

Answer 211

D

Question 212

Tim loves to ski, but his boss worries that business will suffer if he has a major accident. What type of policy should his boss think about purchasing?
Select one:
a. Business overhead expense
b. Key employee
c. Business buy-out
d. Workers’ Compensation

Answer 212

B

Question 213

Which of the following is not normally granted an exemption from the continuing education requirement?
Select one:
a. A licensee that is on active military service
b. A licensee needing a waiver due to illness or disability
c. A licensee that had continuously held a license for at least 10 years
d. A non-resident agent that completed continuing education requirements in their home state

Answer 213

A licensee that had continuously held a license for at least 20 years can be granted an exemption from the continuing education requirement.
The correct answer is: A licensee that had continuously held a license for at least 10 years

Question 214

Under workers compensation, which of the following injury qualifies?
Select one:
a. An employee breaks an arm while lifting a box at work
b. An employee is hurt at a gas station while buying gas
c. An employee is hurt in a car crash driving home from work
d. An employee is hurt on a break while walking around the block on a smoke break

Answer 214

A

Question 215

If an applicants statements on an application are guaranteed to be true, they are:
Select one:
a. Contributory.
b. Certified.
c. Representations.
d. Warranties.

Answer 215

D

Question 216

The Probationary Period of a group health policy can be defined as:
Select one:
a. The waiting period for claim investigation.
b. Waiting period before benefits begin.
c. Period of time between date of loss and when benefits begin.
d. New hire waiting period prior to eligibility for group health policy.

Answer 216

A probationary period is the waiting period for a new employee before he/she is eligible for group coverage.
The correct answer is: New hire waiting period prior to eligibility for group health policy.

Question 217

Which of the following types of policy cannot be third-party ownership?

Select one:
a. Group life
b. Key employee life
c. Modified life
d. STOLI and IOLI

Answer 217

C

Question 218

A guaranteed insurability rider allows the insured to protect against insurability risk. What is NOT protected?
Select one:
a. Waiver of premiums
b. Proof of insurability
c. Premiums
d. Coverage

Answer 218

C

Question 219

What kind of term policy would a man with limited resources most likely purchase to make sure that his wife and children are secure in their home if he dies while the children are young and in school?
Select one:
a. Convertible term
b. Renewable term
c. Decreasing term
d. Increasing term

Answer 219

Tyrone will most like purchase a decreasing term policy (face amount is what decreases) because it can be accommodated with his limited resources, and would provide the mortgage protection he needs while his children are young.
The correct answer is: Decreasing term

Question 220

In managed care, the primary care doctor is:
Select one:
a. A gatekeeper
b. An advisor
c. A staff model
d. A concurrent reviewer

Answer 220

A

Question 221

At what time during the application and approval process for life insurance must insurable interest exist?
Select one:
a. When a claim is filed.
b. When the underwriter gives approval for the policy.
c. When the application on a proposed insured is written.
d. When the policy is delivered.

Answer 221

C

Question 222

Who enforces the insurance laws of Texas?
Select one:
a. The governor
b. The Commissioner
c. The county district attorneys
d. The attorney general of Texas

Answer 222

B

Question 223

An insured has how many days from the date of loss to provide proof of loss?
Select one:
a. 15 days
b. 30 days
c. 60 days
d. 90 days

Answer 223

D

Question 224

Which of the following is required in order for an insurance application to be considered complete?
Select one:
a. The signature of the physician who conducted the medical exam.
b. A revocable beneficiary
c. A signature of an executive with the insurer.
d. The signature of the insured (unless not an adult).

Answer 224

D

Question 225

Which of the following policies requires a beneficiary designation?
Select one:
a. AD&D
b. Medicare
c. Blanket policy
d. Long-term care policy

Answer 225

The AD&D is the only health policy listed that requires a beneficiary be named.
The correct answer is: AD&D

Question 226

In Texas, what is the renewability provision required for long-term care policies?
Select one:
a. Optionally renewable
b. Conditionally renewable
c. Noncancellable
d. Guaranteed renewable

Answer 226

D
LTC policies must be at least guaranteed renewable.
The correct answer is: Guaranteed renewable

Question 227

If an employee dies during the Group Life Conversion Period without completing the conversion, the insurer will:
Select one:
a. Negotiate a settlement.
b. Deny the coverage.
c. Pay the full death benefit.
d. Pay one-half of the coverage amount.

Answer 227

C

Question 228

Which of the following is not true about variable universal life policies?
Select one:
a. The cash value is based on investment in a separate account.
b. They have flexible premiums.
c. They have no provision for policy loans and withdrawals.
d. The death protection is deducted from the cash value.

Answer 228

Variable universal life DOES provide with the policyowner with access to cash values via policy loans and withdrawals.
The correct answer is: They have no provision for policy loans and withdrawals.

Question 229

Which of the following is true about the powers of the Commissioner?
Select one:
a. The Commissioner can regulate the business of insurance in the state.
b. The Commissioner can administer Texas Workers’ Compensation system.
c. The Commissioner can deny, suspend or revoke insurance licenses.
d. All of the above

Answer 229

D

Question 230

An insured’s policy has a maximum of $2,000 in out-of-pocket expenses, then the insurer will cover 100%. This is called:
Select one:
a. Coinsurance
b. Stop-loss
c. Corridor deductible
d. Deductible

Answer 230

B

Question 231

All of the following are true regarding nonresident producer licensing, EXCEPT:
Select one:
a. Nonresident licensees’ home state must not have a reciprocal relationship with Texas.
b. Nonresident licensees are not required to pass the Texas licensing exam.
c. Nonresident licensees must hold a valid producer license in their home state.
d. Nonresident licensees’ home state is not Texas.

Answer 231

A

Question 232

A person licensed to give advice regarding insurance policies in exchange for a fee includes all the following, EXCEPT:
Select one:
a. Insurance counselor
b. Insurance advisor
c. Insurance analyst
d. Insurance broker

Answer 232

D
An insurance counselor is a licensee who provides advice regarding the benefits and coverages of an insurance policy or contract in exchange for a fee. An insurance counselor may also be called an insurance adviser or insurance analyst. An insurance broker receives a commission.
The correct answer is: Insurance broker

Question 233

Rick drives a forklift and sometimes moves boxes by hand. He sustained an injury to his back and can no longer life the boxes, but can still drive the forklift. This disability is classified as:
Select one:
a. Non-confining disability
b. Recurring disability
c. Temporary disability
d. Partial disability

Answer 233

Rick’s disability would be classified as a partial disability because although he cannot perform all of his previous duties, he can perform some of them.
The correct answer is: Partial disability

Question 234

Which of the following statements is true about the return of premium rider?
Select one:
a. The death benefit is the face amount of the policy minus the premiums paid.
b. It is an increasing term rider that matches the total premium input.
c. Is in effect until the insured dies, regardless of age.
d. The rider is less expensive than other riders.

Answer 234

B
The return of premium rider is an increasing term rider that matches total premium input. Usually policies drop the rider when the insured reaches age 60.
The correct answer is: It is an increasing term rider that matches the total premium input.

Question 235

A credit life policy must contain all of the following, EXCEPT:
Select one:
a. Name and address of the debtor
b. Name and address of the insurer
c. Termination date
d. Effective date

Answer 235

A
All individual or group credit life insurance must include: name and address of the insurer, name and age of the debtor, and effective and termination of insurance.
The correct answer is: Name and address of the debtor

Question 236

Which rider allows an insured to purchase additional disability income coverage, at a future date, regardless of insurability?
Select one:
a. Guaranteed insurability rider.
b. Multiple indemnity rider.
c. Impairment rider.
d. Guaranteed renewable rider.

Answer 236

A
The guaranteed insurability rider allows the insured to purchase additional disability income coverage at future dates regardless of insurability.
The correct answer is: Guaranteed insurability rider.

Question 237

Noncontributory plans:
Select one:
a. Must have 50% participation
b. Must have 75% participation
c. Must have 70% participation
d. Must have 100% participation

Answer 237

D

Question 238

What method does an insurer use to determine the coverage and benefits to pay for a surgery based on what is considered fair and common for an area?
Select one:
a. Concurrent review
b. Usual, reasonable, and customary
c. Subrogation
d. Relative value scale

Answer 238

B

Question 239

If an insurer is to protect themselves from suicide, pre-existing conditions and injuries that are self-inflicted, they primarily do it by:
Select one:
a. Consumer investigative reports.
b. Riders.
c. Exclusions.
d. Medical reports.

Answer 239

C

Question 240

The provision that determines who becomes the beneficiary if the insured and primary beneficiary both die in the same accident:
Select one:
a. Common disaster
b. Contingent
c. Primary
d. Incontestable

Answer 240

The common disaster clause protects the contingent beneficiaries’ rights by stipulating a certain number of days the primary beneficiary must outlive the insured after a common accident causing near-simultaneous death.
The correct answer is: Common disaster

Question 241

A variable whole life policy would be the most appropriate for:
Select one:
a. A 34 year old executive with a lawyer wife and a child
b. A 57 year old schoolteacher that doesn’t want any risk
c. A 66 year old retired electrician
d. A 42 year old professional who wants a policy to pay his mortgage if he dies

Answer 241

A

Question 242

Which of the following plans was most likely purchased for the leading sales representative?
Select one:
a. Executive bonus plan
b. Deferred compensation plan
c. Key person insurance
d. Split-dollar plan

Answer 242

C

Question 243

What must an insurer have before engaging in the insurance business?
Select one:
a. Certificate of authority
b. Certificate of insurance
c. Insurance authorization license
d. License of insurance

Answer 243

A

Question 244

Sally was injured in a car wreck. How many day does she have to provide proof of loss to her insurer?
Select one:
a. 15 days
b. 30 days
c. 60 days
d. 90 days

Answer 244

D

Question 245

Premium payment mode is:

Select one:
a. Location of premium payments made
b. Duration of premium payments
c. Type of policy for premium payment
d. Frequency of premium payments

Answer 245

D

Question 246

The beneficiary designation that does not allow the policy to be changed without the beneficiary’s consent:
Select one:
a. Revocable
b. Irrevocable
c. Contingent
d. Primary

Answer 246

B

Question 247

The provision that will prevent a whole life policy from lapsing is:
Select one:
a. Waiver of premium
b. Accelerated death benefit
c. Automatic conversion option
d. Automatic premium loan

Answer 247

D
The automatic premium loan provision authorizes the insurance company to make a policy loan automatically when a premium that is due is not paid.
The correct answer is: Automatic premium loan

Question 248

Which of the following is true about the Waiver of Premium provision in a life policy?
Select one:
a. There is no additional charge for the provision.
b. The waiver of premium can be added to any policy.
c. The disability must be total and permanent.
d. The insurer cannot deny the provision.

Answer 248

C
The insurer can deny the provision, there is an additional charge, and it can only be added to a term policy. Only the total/permanent item is true.
The correct answer is: The disability must be total and permanent.

Question 249

The purpose of the Medical Information Bureau (MIB) is to:
Select one:
a. Collect and share medical information with member insurance companies.
b. Rate policies.
c. Publish the CSO Tables every two decades.
d. Evaluate risks.

Answer 249

A

Question 250

Which of the following is not true about an increasing term policy?
Select one:
a. The increases occur randomly.
b. It provides an increasing face amount.
c. It is not a common type of term.
d. It has level premiums.

Answer 250

A

Question 251

What type of policy would offer a 40-year old the fastest accumulation of cash value?

Select one:
a. 30 - pay life
b. Straight whole life
c. 20 - pay life
d. Paid - up at 65

Answer 251

C

Question 252

Greg, a teacher, has a disability income policy with the change of occupation provision. Greg quits his and becomes an oilfield worker. What would happen to Greg’s policy if he becomes disabled after the job change?
Select one:
a. The insurance company would pay the amount of disability income benefits that the premium purchased would have covered for Greg’s more hazardous occupation.
b. The insurance company would pay the full amount of disability income benefits.
c. The insurance company would void the policy.
d. The insurance company would refund the premiums paid and void the policy.

Answer 252

A
If Greg becomes disabled after having changed occupations to one classified as more hazardous , the insurer will pay only the portion of the indemnities provided in the policy as the premium paid would have purchased-at the rates and within the limits fixed by the insurer-for the more hazardous occupation.
The correct answer is: The insurance company would pay the amount of disability income benefits that the premium purchased would have covered for Greg’s more hazardous occupation.

Question 253

Which of the following is NOT a nonforfeiture option that will protect the cash value of a permanent life insurance policy in the event of lapse?
Select one:
a. Extended Term Coverage
b. Cash
c. Reduced, Paid Up Coverage
d. Lengthened Benefit Period

Answer 253

D
If the policyowner fails to make premium payments, the policy will lapse. Nonforfeiture options protect the cash value of permanent life insurance policies (whole life, universal life, etc.) Insurers must provide at least one of the following nonforfeiture options: Reduced, Paid-up Coverage, Extended Term Coverage, Shortened Benefit Period, or cash.
The correct answer is: Lengthened Benefit Period

Question 254

Jonathan was 45 when he applied for a disability income policy, but stated his age as 35. He is now 57 and has submitted a claim. The insurer discovers the error and will:
Select one:
a. Pay the claim, but a decreased amount of benefits based on the premiums Jonathan should have paid, had his correct age been stated in the application
b. Pay the full claim
c. Deny the claim and void the policy for misrepresentation and fraud
d. Pay the full claim and void the policy for concealment and misrepresentation

Answer 254

A

Question 255

On October 13, an application is submitted with the initial premium, and on October 21 the insurer issues the policy standard. Due to a family emergency, the agent doesnt deliver the policy until October 27. A conditional receipt was issued without a required medical exam. When is coverage effective?
Select one:
a. October 13
b. October 21
c. October 27
d. October 27, after the statement of good health is signed.

Answer 255

A

Question 256

At what point must insurable interest be present for a life insurance policy to be valid?

Select one:
a. During the incontestability period
b. During the free look period
c. When the application is made
d. When the policy is delivered

Answer 256

C

Question 257

Rick sold a Major Medical policy and collected the initial premium on May 5th. He received the approved policy back from the insurer on May 9th and tried to deliver it on May 15, but the client was not at home. He did deliver the policy on May 30th. If the client does not wish to keep the policy, she must return it by what date to receive a refund?

Select one:
a. June 11
b. June 9
c. June 1
d. June 10

Answer 257

B
The client must return it within 10 days after it was delivered to her, by June 9.

The correct answer is: June 9

Question 258

Typical health policies do not provide benefits for which of the following?
Select one:
a. A condition covered by Workers’ Compensation
b. An injury covered under a government plan
c. An injury sustained in the commission of a felony
d. All of the above

Answer 258

D

Question 259

What right of renewability does not guarantee insurability, allowing the insurer to cancel on certain dates?
Select one:
a. Conditionally renewable
b. Cancelable
c. Noncancelable
d. Optionally renewable

Answer 259

D

Question 260

If an applicant is found guilty of material misrepresentation on an application, how long does the insurer have to contest the policy?
Select one:
a. 2 years from the effective date of the policy
b. 3 months from the delivery of the policy
c. 60 days from the date of the application
d. 5 years from the discovery of the misrepresentation

Answer 260

A

Question 261

Generally, how are health insurance policies taxed?
Select one:
a. If premiums are tax-deductible, benefits are also tax-deductible.
b. If premiums are tax-deductible, benefits are taxed as income.
c. Premiums and benefits are not taxed.
d. None of the above

Answer 261

B

Question 262

With what receipt is coverage assured, even if the person is later proved to be uninsurable, until the insurer formally rejects the application?
Select one:
a. Insurability
b. Binding
c. Conditional
d. Approval

Answer 262

B
With a binding receipt, coverage is assured, even if the person is later proved to be uninsurable, until the insurer formally rejects the application.
The correct answer is: Binding

Question 263

If a physical exam or autopsy is required, who pays for it?
Select one:
a. The insurer and insured split it.
b. Insurer
c. It is taken out of the benefits.
d. Insured

Answer 263

B

Question 264

An insured filed a claim with her insurance company and submitted all the proof of loss requested. The insurer is non-responsive. How many days must the insured wait before beginning legal action to recover her money?
Select one:
a. 15 days
b. 20 days
c. 30 days
d. 60 days

Answer 264

D
If a claim has not been paid after all proof of loss has been submitted, the insured must wait 60 days before instituting legal action.
The correct answer is: 60 days

Question 265

Marshall wants to reinstate his life policy and to do so he need not do which of the following?
Select one:
a. Provide evidence of insurability.
b. Pay past due premiums
c. Pay back interest on his outstanding policy loan.
d. Make a collateral assignment to the insurance company.

Answer 265

D

Question 266

Jeremy, a producer, is proposing a life policy to a new client. When must he inform the client of their rights under the FCRA?
Select one:
a. When he completes the application.
b. When he receives the initial premium payment.
c. When he first set up an appointment to meet with the client.
d. When he submits the application to the insurer.

Answer 266

A

Question 267

Which of the following is not a change that a policyowner can make to an adjustable life policy?
Select one:
a. Change the coverage period
b. Raise or lower the premium
c. Change the named insured
d. Raise or lower the face amount

Answer 267

C

Question 268

What is HIPAA’s most important aspect?
Select one:
a. Portability
b. Maternity
c. Coordination of benefits
d. COBRA

Answer 268

A

Question 269

Amelia has a nonqualified annuity that is paid out of her paycheck. It will be paid:
Select one:
a. Deferred tax
b. Post tax
c. Immediate tax
d. Before tax

Answer 269

B
A nonqualified plan is not eligible for tax benefits. Therefore a nonqualified annuity would be paid with after tax income. The test makers try to trick you with different names of annuities or policies, but the question is asking about pretax or after tax on a nonqualified plan.
The correct answer is: Post tax

Question 270

What are the advantages of purchasing a straight life policy?

Select one:
a. The face amount and the premiums are level, and payable over the life of the insured, up to 100 years of age.
b. The cash value and death benefits are guaranteed by the insurer.
c. The premium can be lower than limited payment and single premium polices.
d. All of the above.

Answer 270

D

Question 271

Most medical expense plans have coinsurance. All of the following are false about coinsurance EXCEPT:
Select one:
a. Coinsurance is useful in controlling overutilization of benefits.
b. Coinsurance applies to both the deductible and the claim payments.
c. Coinsurance percentages can be changed.
d. Coinsurance allows the insurer to charge more for a policy.

Answer 271

A

Question 272

A life insurance policy in Texas must contain all the following provisions, EXCEPT:
Select one:
a. Reinstatement
b. Legal action
c. Viatical
d. Payment of claim

Answer 272

C
A life insurance policy in Texas must contain the following provisions: entire contract, payment of premiums, grace period, reinstatement, incontestability, statements of insured, misstatement of age, payment of claim, legal action, assignment, and accelerated life benefits.
The correct answer is: Viatical

Question 273

Which provision encourages a disabled policy owner to try to return to work?
Select one:
a. Waiver of premium
b. Presumptive disability
c. Recurrent disability
d. Residual disability

Answer 273

C
The recurrent disability provision encourages a person with a disability to try and go back to work. It specifies a certain number of days that a recurrence of the disability is considered a continuation, not a new disability. Therefore it does not have a new elimination period.
The correct answer is: Recurrent disability

Question 274

When an insured dies, the settlement option provision:
Select one:
a. Confirms the insurable interest of the beneficiary.
b. Determines the amount of the proceeds.
c. All of the above.
d. Specifies how the proceeds are handled.

Answer 274

D

Question 275

For how much time prior to open enrollment can a pre-existing condition be used to reject an applicant for a group HMO?

Select one:
a. 6 months
b. 12 months
c. 18 months
d. Applicants cannot be rejected.

Answer 275

D
During the open enrollment period the HMO may not reject any applicant for health reasons. Pre-existing conditions cannot be excluded.

The correct answer is: Applicants cannot be rejected.

Question 276

Jeff owns a small business. If he becomes disabled, which type of policy would pay his operating expenses?
Select one:
a. Key employee
b. Disability buy-out
c. Business overhead expense
d. Individual disability

Answer 276

C

Question 277

An entire life insurance policy in Texas consists of:
Select one:
a. Policy and application
b. Policy only
c. Application only
d. Policy, application and any attachments or riders

Answer 277

D

Question 278

Sandra needs more protection than she can afford right now due to her limited financial resources. Her needs can be met by a:
Select one:
a. Term policy.
b. Adjustable life.
c. AD&D.
d. Universal life.

Answer 278

A

Question 279

What is the primary purpose of Medicaid?
Select one:
a. Provide insurance to everyone.
b. Provide coverage for medical expenses not covered by Medicare.
c. It provides medical expense coverage for low income people.
d. Provide people on Medicare with disability income benefits.

Answer 279

C

Question 280

Mark, a producer, took an application for a life policy from Barbara, but neglected to collect the initial premium. When he delivers the policy to Barbara he must collect the initial premium and also
Select one:
a. A copy of the Medical Information Bureau report.
b. The conditional receipt.
c. a copy of the binder that he issued.
d. A signed statement of good health.

Answer 280

D

Question 281

What is the insurer’s obligation if an insured commits suicide 4 years after the policy inception date?
Select one:
a. Pay the death benefit.
b. Refund the premiums paid.
c. Pay nothing - suicide is an exclusion.
d. Pay 50% of the death benefit.

Answer 281

A

Question 282

When does coverage becomes effective in a health policy?
Select one:
a. The initial premium is paid, and the application is finished.
b. Delivery of the policy
c. The initial premium is paid, and the policy is delivered.
d. Completion of the application

Answer 282

C
Coverage becomes effective in a health policy when the initial premium is paid, and the policy is delivered.
The correct answer is: The initial premium is paid, and the policy is delivered.

Question 283

The type policy agents buy to protect themselves if they give incorrect advice or didnt advise a client about an important issue is a:
Select one:
a. E&O
b. Annuity
c. Liability
d. E&P

Answer 283

A
Agents buy an E&O (Errors & Omissions) policy to protect against giving incorrect advice (errors), and not advising a client about an important issue (omissions). Errors & Omissions are most likely to occur during a policy replacement.
The correct answer is: E&O

Question 284

A long-term care insurance policy must contain which of the following provisions?
Select one:
a. Coverage for conditions that result from war
b. Coverage for drug and alcohol dependency
c. Guaranteed renewability
d. Probationary period of no longer than 180 days

Answer 284

C
As a result of the 1996 Health Insurance Portability and Accountability Act (HIPAA), all long-term care policies sold today must be guaranteed renewable. The insurer cannot cancel the policy and must renew coverage each year, as long as the insured pays the premiums.
The correct answer is: Guaranteed renewability

Question 285

Which of the following is not a benefit of the Social Security program?

Select one:
a. Disability benefit
b. Retirement benefit
c. Group health insurance benefit
d. Survivor benefit

Answer 285

C

Question 286

Which of the following best describes an assignment?

Select one:
a. Endorsement
b. Change of beneficiary
c. Transfer of some of the ownership rights
d. Insurable interest

Answer 286

C

Question 287

What type policy would pay the death benefits after the second person dies if it covers two or more lives?
Select one:
a. Universal life
b. Term life
c. Survivorship life
d. Joint life

Answer 287

C

Question 288

Controlled business is usually written on all the following, EXCEPT:
Select one:
a. Relatives
b. Friends
c. Employees
d. The licensee

Answer 288

B

Question 289

Insurers use risk classification to rate policies. Risk classification can impact all of the following EXCEPT:
Select one:
a. Premium payment dates.
b. Whether or not the insurer will write the policy.
c. The amount of coverage.
d. Amount of the premium.

Answer 289

A

Question 290

Amanda provided information to the best of her recollection on her insurance application. This is referred to as a:
Select one:
a. Consideration
b. Warranty
c. Representation
d. Assignment

Answer 290

C

Question 291

What type of insurer is formed under the laws of a U.S. state other than Texas?
Select one:
a. Unincorporated
b. Domestic
c. Foreign
d. Alien

Answer 291

C

Question 292

Tim buys a life policy on December 6, and the agent delivers it on December 10. When will the free look period begin?

Select one:
a. December 6
b. December 10
c. December 16
d. December 20

Answer 292

B

Question 293

What happens to a death benefit if it is determined that an applicant stated their age was younger than their actual age?
Select one:
a. The premium would be increased.
b. The premium would be lowered.
c. The death benefit would be lowered.
d. The death benefit would be increased.

Answer 293

C

Question 294

The Commissioner can suspend a producer’s license for all the following, EXCEPT:
Select one:
a. Fraud
b. Willful violation of insurance laws
c. Indictment for a felony
d. Misrepresentation of the terms of a policy

Answer 294

C
The Commissioner can suspend a producer’s license for: CONVICTION of a felony, willful violation of insurance laws of Texas, fraud, misrepresentation of the terms of a policy, as well as other acts.
The correct answer is: Indictment for a felony

Question 295

Which of the following is a prepaid plan focused on preventive care, requiring the insured to be referred to a specialist by the primary care physician?
Select one:
a. HMO
b. PPO
c. POS
d. AD&D

Answer 295

A

Question 296

If an additional premium is required by the insurer for newborn child coverage, when must the insured be notified by the insurer?
Select one:
a. Within 24 hours of the date of birth
b. Within 15 days of the date of birth
c. Within 31 days of the date of birth
d. Within 41 days of the date of birth

Answer 296

C

Question 297

What may an insurer not require to reinstate a health policy?
Select one:
a. A reinstatement application fee
b. Up to 60 days of back due premiums
c. A reinstatement application
d. Proof of insurability

Answer 297

A

Question 298

What does a producer do at delivery if, he submits an application with a premium. After underwriting, the insurer sends back the policy, rated, with an impairment rider.
Select one:
a. Tell the applicant that they were declined.
b. Nothing
c. Explain that the policy is rated.
d. Explain the issue and collect an additional premium.

Answer 298

D

Question 299

For tax purposes, how are individual life premiums treated?
Select one:
a. Not tax deductible
b. Tax deductible over a certain dollar amount
c. Tax deductible
d. Tax deductible under certain conditions

Answer 299

A

Question 300

Who must consent to have an HIV lab test?
Select one:
a. Underwriters
b. Producers
c. Subject of the test
d. Agents

Answer 300

C

Question 301

What right of renewability guarantees both the premium and insurability?
Select one:
a. Optionally renewable
b. Guaranteed insurability
c. Guaranteed renewable
d. Noncancelable

Answer 301

d

Question 302

Which of the following is required for a contributory plan?
Select one:
a. The employer pays all fees and premiums.
b. 50% participation of eligible employees
c. 75% participation of eligible employees
d. 100% participation of eligible employees

Answer 302

C

Question 303

All of the following statements are correct about representations EXCEPT:
Select one:
a. They are considered to be correct to the best of the applicant’s knowledge.
b. They are part of the contract.
c. They are not part of the contract.
d. They are not likely to result in a policy cancellation if they are not totally accurate.

Answer 303

C

Question 304

If an owner of a small company has a car crash and becomes disabled, which type of policy would pay the company’s rent?
Select one:
a. Business overhead expense
b. Disability buy-out
c. Individual disability
d. Key employee

Answer 304

A

Question 305

An entire life insurance policy in Texas consists of:
Select one:
a. Policy and application
b. Policy, application and any attachments or riders
c. Application only
d. Policy only

Answer 305

B

Question 306

Which of the following is not required for John to sell small employer health benefit plans?
Select one:
a. He must have a life and accident and health license.
b. He must complete 5 hours of continuing education for small employer health benefits every 2 years.
c. He must have completed an initial 8-hour certification course.
d. He must be a member of the small business insurance association.

Answer 306

D

Question 307

The stipulated amount of time that an insured has to make an overdue premium payment after the due date is called the:
Select one:
a. Grace period
b. Guaranteed insurability period
c. Give back period
d. Free look period

Answer 307

A

Question 308

If an insurer uses what is considered fair and common for a geographic area to determine the coverage and benefits to pay for a surgery, it is called:
Select one:
a. Concurrent review
b. Relative value scale
c. Usual, reasonable, and customary
d. Subrogation

Answer 308

C

Question 309

Insurance contracts are one-sided. Which of the following terms best describes this?
Select one:
a. Aleatory contract
b. Unilateral contract
c. Personal contract
d. Conditional contract

Answer 309

B

Question 310

Which of the following is not true about the family income policy?
Select one:
a. It is a combination of whole life and decreasing term.
b. It provides income payments if the breadwinner dies within the income period.
c. It may be issued as term - added to a permanent life policy.
d. It is issued on the entire family.

Answer 310

D

Question 311

HIPAA’s main benefit is:
Select one:
a. Coordination of benefits
b. COBRA
c. Portability
d. Maternity

Answer 311

C

Question 312

Which of the following is NOT an Essential Health Benefit of the PPACA?
Select one:
a. Substance use disorder services care
b. Prescription drugs
c. Laboratory services
d. Dental care

Answer 312

D

Question 313

On his application for a life insurance policy, James writes that he is a smoker, age 34, and is in generally good health. One year after the policy is issued James is diagnosed with lung cancer. James did not indicate on his life insurance application that he had lung cancer. Which of the following best explains James’ situation, and how the insurer will handle the situation?

Select one:
a. James has made a material misrepresentation and the insurer will void and cancel his policy, returning any premiums pro rata with interest.
b. James has made a material representation and the insurer will void and cancel his policy.
c. None of the above
d. James’ statements on the application were made to the best of his knowledge. The insurer will not void or cancel the policy.

Answer 313

D

Question 314

At what age does a qualified retirement plan require distributions?
Select one:
a. 70 1/2
b. 59 1/2
c. 65
d. 60

Answer 314

A

Question 315

Which of the following statements is true about level term?

Select one:
a. Level term has a cash value component
b. Level term can be issued for a specified number of years of until the insured reaches a certain age.
c. Premiums can increase annually.
d. All of the above

Answer 315

B

Question 316

Shane and Casey bought a life policy in which both are insured. If it pays the death benefits after both die, it is a:

Select one:
a. Guaranteed renewable
b. Survivorship life
c. Joint life
d. Convertible term

Answer 316

B

Question 317

Blake bought a life policy with a $500,000 face value and an AD&D rider that is triple indemnity. After 4 months, he is killed in an avalanche, what would the policy pay?
Select one:
a. $0.00
b. $500,000
c. $1,000,000
d. $1,500,000

Answer 317

D

Question 318

If a potential insured does not attach his initial premium payment to the insurance application, he is making a legal:
Select one:
a. Contract
b. Offer
c. Counteroffer
d. Inquiry for an offer

Answer 318

D

Question 319

The clause that prevents the insurance company from acting unilaterally to change a policy is:
Select one:
a. Time limit for certain defenses
b. The insuring clause
c. The entire contract clause
d. Incontestable clause

Answer 319

C

Question 320

What part of the insurance contract contains the insurer’s promise to pay benefits?
Select one:
a. Consideration clause
b. Insuring clause
c. Payment of claims
d. Execution clause

Answer 320

B

Question 321

Adam was found to have used his license to procure insurance for relatives and it was also discovered that he was issuing rebates to insureds. What will probably happen to him?
Select one:
a. His license(s) will be suspended or revoked.
b. He will go to prison.
c. He will pay fines of up to $250,000.
d. All of the above

Answer 321

A

Question 322

Which of the following is an advantage of a renewable term policy?
Select one:
a. Insured does not have to provide proof of insurability.
b. Renewable term policies never have an age limit.
c. Renewable term policies usually have an age limit.
d. Renewal is based on insured’s attained age, so premium is higher.

Answer 322

A

Question 323

What licenses must insurance agents have to sell variable policies?
Select one:
a. Life insurance producer only
b. Securities license only
c. Life insurance producer and securities license
d. Life insurance producer, securities license and liability license

Answer 323

C

Question 324

Which of the following is not a way a Health Maintenance Organization (HMO) can be organized in Texas?
Select one:
a. Staff model
b. Network
c. Dependent model
d. Group model

Answer 324

C

Question 325

A life insurance policyowner may assign what amount of the policy?
Select one:
a. None
b. Half
c. All
d. An amount determined by the insurer

Answer 325

C

Question 326

Which of the following is intended to be covered by health insurance?
Select one:
a. Accidental injury
b. Illness
c. Medical costs
d. All of the above

Answer 326

D

Question 327

Managed care (Medicare Advantage) expenses are provided by which part of Medicare?
Select one:
a. Part A
b. Part B
c. Part C
d. Part D

Answer 327

C

Question 328

Becky allowed her insurance policy to lapse. In order to reinstate the policy she must:
Select one:
a. Pay past due premiums.
b. Provide evidence of insurability.
c. Pay back interest on her outstanding policy loan.
d. All of the above.

Answer 328

D

Question 329

Diane has recently been confined to a nursing home with a terminal illness. Which rider on a life policy will help her out in this situation?
Select one:
a. Return of premium rider
b. Accidental death rider
c. Consideration
d. Accelerated benefit rider

Answer 329

D

Question 330

All of the following are true regarding advertising of life insurance policies in Texas, EXCEPT:
Select one:
a. Advertisements must not be misleading.
b. The full licensed name of the insurer must appear on the advertisement.
c. Advertisements must contain the premium rate.
d. Agents are responsible for the form and content of advertisements.

Answer 330

D

Question 331

What happens if there is a misstatement of age on a life insurance policy?
Select one:
a. If the policy is less than 2 years in force, it is cancelled and all premiums are returned.
b. If the policy is more than 2 years in force, the policy pays according to what is stated on the policy.
c. The policy pays according to what the premiums paid would have bought for the correct age.
d. The policy is always cancelled..

Answer 331

C

Question 332

Pat’s life insurance policy misstated that she was male, when she is in fact female. This fact was discovered after Pat’s death, what is likely to happen as a result?
Select one:
a. The death benefit will be lowered.
b. The death benefit will be increased.
c. The premiums are refunded.
d. None of the above

Answer 332

B

Question 333

In a POS plan, going to a doctor that is not approved will result in:
Select one:
a. Denied coverage
b. Higher deductible
c. Higher coinsurance
d. A review

Answer 333

C

Question 334

If more than one beneficiary is named, who is the second in line?
Select one:
a. Irrevocable
b. Primary
c. Contingent
d. Revocable

Answer 334

C

Question 335

The highest total premium is a result of which premium payment mode?
Select one:
a. Annual
b. Semi annual
c. Quarterly
d. Monthly

Answer 335

D

Question 336

Tim has a special savings medical plan whereby the funds do not rollover from year to year. This plan is a:
Select one:
a. FSA
b. HRA
c. HSA
d. Group health insurance

Answer 336

A

Question 336

Tim has a special savings medical plan whereby the funds do not rollover from year to year. This plan is a:
Select one:
a. FSA
b. HRA
c. HSA
d. Group health insurance

Answer 336

A
FSA funds are available on a use-it or lose-it basis, and must be used in the plan year they are contributed to the FSA, or they will be forfeited.
The correct answer is: FSA

Question 337

Both parents have health plans from work that covers their daughter. Which plan is primary?
Select one:
a. The plans split the cost.
b. Father
c. Mother
d. The parent with the earliest birthday in the year is primary.

Answer 337

D

Question 338

Which of the following best describes the Free Look period?

Select one:
a. The period of time between application and policy delivery where the policy owner can add beneficiaries.
b. The period of time after policy delivery where the policyowner can examine the policy.
c. The period of time after policy delivery where the policyowner does not pay premiums.
d. The period of time between application and policy delivery where policy changes may be made.

Answer 338

B

Question 339

Samson has a major medical policy that has a $1,000 deductible, a maximum out of pocket of $2,000 after the deductible, and an 80/20 coinsurance. If his medical bill was $20,000, what will he have to pay?
Select one:
a. $2,000
b. $3,000
c. $3,800
d. $4,800

Answer 339

B

Question 340

Dr. Jones and Dr. Smith own a veterinary clinic together and worry that if one of them becomes disabled the clinic will have financial problems. What type of policy should they consider buying?
Select one:
a. Disability buy-out
b. Individual disability
c. Business overhead expense
d. Key employee

Answer 340

A

Question 341

Harold was injured falling off a scaffold at work. Why was his claim denied under his employer’s group disability plan?
Select one:
a. Workers’ Compensation is the primary benefit provider in this case.
b. A group disability plan coordinates with Workers’ Compensation.
c. Benefits are higher on Workers’ Compensation.
d. The employer’s experience is better for Workers’ Compensation that it is for the group disability plan.

Answer 341

A

Question 342

A health insurance policy that will not pay benefits unless confined to a hospital is known as a:
Select one:
a. Noncancellable contract
b. Unilateral contract
c. Contract of adhesion
d. Conditional contract

Answer 342

D

Question 343

Health insurance exclusions/restrictions exclude coverage for losses resulting from:
Select one:
a. Participation in a felony
b. Self-inflicted injuries
c. Act of war
d. All of the above

Answer 343

D

Question 344

A primary care physician in managed care acts as:
Select one:
a. An advisor
b. A gatekeeper
c. A concurrent reviewer
d. A staff model

Answer 344

B

Question 345

Benjamin is the beneficiary of his uncle’s life insurance policy. How much tax will he owe on the proceeds?
Select one:
a. They are tax-deferred.
b. Nothing - they are not taxable.
c. They are taxed at half his normal rate.
d. They are taxed at a higher rate because it pushed him into a higher tax bracket.

Answer 345

B

Question 346

Miranda has stopped paying her premiums, but a provision in her policy provides for continuation of coverage. What is that provision called?
Select one:
a. Waiver of premium option
b. Consideration clause
c. Insuring clause
d. Nonforfeiture option

Answer 346

D

Question 347

What type of policy allows the insured to pay the entire premium in one lump-sum?
Select one:
a. Single premium whole life
b. Graded premium whole life
c. Variable universal life
d. Economatic whole life

Answer 347

A

Question 348

Angela is now 65 years old. The cash value of her 20-pay endowment at age 65 policy is equal to:
Select one:
a. None of the above
b. The sum of premiums paid plus interest and dividends.
c. The guaranteed cash value plus interest.
d. The face amount of the policy.

Answer 348

D

Question 349

How long is the grace period for health insurance policies with other than weekly or monthly-due premiums?
Select one:
a. 7 days
b. 10 days
c. 31 days
d. 60 days

Answer 349

C
A grace period of at least seven days for weekly premium policies, 10 days for monthly premium policies and 31 days for all other policies is granted.
The correct answer is: 31 days

Question 350

Raymond purchased a major medical policy and paid the initial premium to Malcolm, a producer, on November 5th. Malcolm received the policy from the insurer on November 8th and tried unsuccessfully to deliver it to Raymond. He was able to deliver the policy on November 10th. Raymond decided he did not want the policy and has 10 days from which of the following dates to return the policy to the company and obtain a full premium refund?
Select one:
a. November 8th
b. November 20th
c. November 5th
d. November 10th

Answer 350

D

Question 351

What part of the policy states the elements that comprise the contract?
Select one:
a. The entire contract
b. The insuring clause
c. The options
d. The ownership clause

Answer 351

A
The insurance policy itself (including any riders and endorsements/amendments) and the application, if attached to the policy, comprise the entire contract between all parties.
The correct answer is: The entire contract

Question 352

If the word, variable, is in the name of an insurance plan or annuity, it means that:
Select one:
a. It includes various types of plans.
b. It has multiple beneficiaries.
c. Investment in securities is involved.
d. It has variable payouts.

Answer 352

C

Question 353

What type of policy does not allow the insurer to change the premium or the coverage?
Select one:
a. Noncancelable
b. Guaranteed renewable
c. Guaranteed insurability
d. Optionally renewable

Answer 353

A

Question 354

Trusting agents to apply money received from clients in a responsible way is called:
Select one:
a. Nondiscrimination
b. Monetary trust
c. Fiduciary trust
d. Commingling

Answer 354

C

Question 355

Which of the following statements regarding annual renewal term (ART) policies is false?
Select one:
a. ART premiums increase each time the policy is renewed.
b. ART usually has a maximum age after which policies are not renewable.
c. ART is guaranteed renewable on an annual basis with proof of insurability.
d. ART policies have a level face amount.

Answer 355

C
ART policies are guaranteed renewable (until a certain age) without proof of insurability.
The correct answer is: ART is guaranteed renewable on an annual basis with proof of insurability.

Question 356

What type of insurer is formed under the laws of a U.S. state other than Texas?
Select one:
a. Foreign
b. Domestic
c. Alien
d. Unincorporated

Answer 356

A

Question 357

Which of the following is true about Key Person insurance?
Select one:
a. The key person purchases the policy.
b. The company pays the premiums.
c. The key person is the beneficiary.
d. The company is the insured.

Answer 357

B

Question 358

Which of the following is NOT a nonforfeiture option that will protect the cash value of a permanent life insurance policy in the event of lapse?
Select one:
a. Cash
b. Reduced, Paid Up Coverage
c. Shortened Benefit Period
d. Waiver of Premium

Answer 358

D
If the policyowner fails to make premium payments, the policy will lapse. Nonforfeiture options protect the cash value of permanent life insurance policies (whole life, universal life, etc.) Insurers must provide at least one of the following nonforfeiture options: Reduced, Paid-up Coverage, Extended Term Coverage, Shortened Benefit Period, or cash.
The correct answer is: Waiver of Premium

Question 359

Jason is naming his wife Patti as the beneficiary on his policy but he is retaining all rights of ownership. What type of beneficiary is Patti?
Select one:
a. Tertiary beneficiary
b. Secondary beneficiary
c. Revocable beneficiary
d. Irrevocable beneficiary

Answer 359

C

Question 360

Which of the following is a common index that an equity-indexed life policy is linked?

Select one:
a. Consumer Price Index
b. S&P 500
c. Inflation
d. Gross Domestic Product

Answer 360

B

Question 361

Which of the following statements regarding the waiver of premium rider for a life insurance policy is false?
Select one:
a. The rider is void after the policyowner reaches a certain age, such as 65.
b. Premium payments are waived when the policyowner is disabled.
c. The policy is kept in force while premium payments are waived.
d. All waived premiums must be repaid if the policyowner recovers from the disability.

Answer 361

D

Question 362

This type annuity benefit payments start within a year of purchase:
Select one:
a. Deferred
b. Immediate
c. Flexible
d. Single

Answer 362

B
An Immediate annuity’s benefit payments start within a year of purchase. A Deferred annuity’s benefit payments start at a later date, greater than 12 months from of purchase.
The correct answer is: Immediate

Question 363

If an agent’s appointment is terminated for cause, how much time does the agent have to inform the Commissioner?
Select one:
a. Immediately
b. 7 days
c. 14 days
d. 30 days

Answer 363

A
If an appointment of an agent is terminated for cause, the insurer or agent must immediately inform the Department of the termination with a statement of facts including the date(s) and cause(s) for the termination.
The correct answer is: Immediately

Question 364

Caroline is a self-employed interior decorator that works from home. If she becomes unable to work, which policy would cover her?
Select one:
a. Business overhead expense policy
b. Individual disability income policy
c. Group disability income policy
d. Workers’ Compensation

Answer 364

B

Question 365

When Sally was given a substandard rating for her insurance as the result of a consumer report, the ___________ gives her the right to questions the source and validity of the information.
Select one:
a. MIB (Medical Information Bureau)
b. Fair Credit Reporting Act
c. State legislation
d. Social Security Act

Answer 365

B

Question 366

Which of the following must happen before an HIV test is performed on an applicant?

Select one:
a. A consent form must be signed by the applicant prior to the test.
b. The Insurer must inform all non-entitled parties to the upcoming test.
c. The insurer must inquire about the applicant’s sexual orientation.
d. The insurer must inform the state Department of Health of upcoming test.

Answer 366

A

Question 367

A policy on two or more lives that pays the death benefit after the second person dies is called:
Select one:
a. Universal life
b. Term life
c. Joint life
d. Survivorship life

Answer 367

D

Question 368

Health insurance applications require a signature from:

Select one:
a. The agent
b. The insured
c. The policyowner
d. All of the above

Answer 368

D

Question 369

Which of the following statements regarding a straight life annuity is correct?

Select one:
a. Life expectancy does not factor into the underwriting process
b. The payments are never taxed
c. Only available to a select few employees in a retirement plan
d. Provides payments for life to the annuitant

Answer 369

D

Question 370

Larrys mother is diagnosed with cancer, and she has less than a year to live. What rider or provision allows her to use her life insurance?
Select one:
a. Waiver of premium
b. Accelerated benefits
c. Cost of Living
d. Early benefits

Answer 370

B

Question 371

Physicians and outpatient coverage is provided by which part of Medicare?
Select one:
a. Part A
b. Part B
c. Part C
d. Part D

Answer 371

B

Question 372

After a loss, the insured must give a notice of claim within:
Select one:
a. 15 days
b. 20 days
c. 45 days
d. 90 days

Answer 372

B

Question 373

In an insurance contract the insured pays premiums and the ______________ is the promise of the insurer to pay benefits.
Select one:
a. Assignment clause
b. Insuring clause
c. Incontestability clause
d. Consideration clause

Answer 373

B

Question 374

What type of contract is written by one party?
Select one:
a. Conditional
b. Unilateral
c. Adhesion
d. Aleatory

Answer 374

C
Insurance contracts are contracts of adhesion. In a contract of adhesion there is only one author, the insurance company.
The correct answer is: Adhesion

Question 375

Tim was injured in an accident, how many days does he have to provide proof of loss?
Select one:
a. 7 days
b. 15 days
c. 45 days
d. 90 days

Answer 375

D

Question 376

All of the following are changes that a policyowner can make to an adjustable life policy, EXCEPT:
Select one:
a. Change the face amount of the policy
b. Change the insurer
c. Change the premium-paying period
d. Raise or lower the premium, as income allows

Answer 376

B

Question 377

How often is the Commissioner allowed to conduct an examination of an insurance company?
Select one:
a. As often as he deems necessary
b. No more than once a month
c. No more than once every 6 months
d. No more than once a year

Answer 377

A

Question 378

After breaking his leg, Oliver purchased a major medical policy and filed a claim for the treatment on his broken leg. The claim is denied due to:
Select one:
a. The insuring clause
b. The consideration clause
c. The entire contract clause
d. The pre-existing clause

Answer 378

D

Question 379

An insurance application is not complete unless it has:
Select one:
a. A signature of an officer of the company.
b. The signature of the insured (unless not an adult), and the agent.
c. The signature of the physician who conducted the medical exam, and the medical records.
d. Signature of the beneficiary or beneficiaries.

Answer 379

B

Question 380

A producer must give a client during a replacement a
Select one:
a. Notice of Insurance Regarding Rights
b. Notice to Applicant Regarding Replacement of Life Insurance
c. Disclosure forms
d. Notice of Duties

Answer 380

B

Question 381

Dylan is worried about his health in the future. Which rider should he pick if you want to be able to add coverage in the future, without having to show proof of insurability:
Select one:
a. Payor
b. Waiver of premium
c. Consideration
d. Guaranteed insurability

Answer 381

D

Question 382

In the state of Texas, when must newborn child coverage begin?

Select one:
a. From the moment of birth
b. After the newborn is 48 hours old
c. When the newborn is 1 week old
d. When the newborn is 1 month old

Answer 382

A

Question 383

Which of the following is Title 19, a public welfare program?
Select one:
a. Medicare
b. Medicaid
c. Long-term care insurance
d. Medigap

Answer 383

B

Question 384

A bookkeeper with a disability policy changed jobs to work on an offshore oil platform and became disabled. His policy states that he has a $1,000 monthly benefit for a qualifying disability, but he receives $750.00 per month. His policy most likely has a:
Select one:
a. Residual disability clause
b. Presumptive disability clause
c. Own occupation definition
d. Change of occupation provision

Answer 384

D

Question 385

Diane, an applicant for a life insurance policy, is found to be a substandard risk. The insurer will most likely:
Select one:
a. Lower its standards
b. Demand a medical examination.
c. Charge a higher premium.
d. Deny the policy

Answer 385

C

Question 386

What method to determine the proper amount of life insurance uses age, net annual salary, number of working years remaining prior to retirement, expenses and the rate at which the value of the dollar is depreciating?
Select one:
a. Needs approach
b. Estate conservation approach
c. Human life value approach
d. Lump-sum approach

Answer 386

C

Question 387

The buyer’s guide is usually given to the purchaser at the time of:
Select one:
a. Application
b. Underwriting
c. Delivery
d. Point of sale

Answer 387

A

Question 388

In order for insurable interest to be valid in an insurance contract it must exist:
Select one:
a. When the policy is approved.
b. When the underwriter gets the application for the policy.
c. At the time that the application on a proposed insured is written.
d. When the insured dies.
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Your answer is correct
Insurable interest must be present when the application is written.
The correct answer is: At the time that the application on a proposed insured is written.

Answer 388

C

Question 389

Who of the following might take out a credit life policy?
Select one:
a. A father who is hoping his son will be a professional ballplayer
b. A car dealer who is financing someone’s car
c. A husband whose wife has cancer
d. A man who has paid cash for an expensive piece of electronics

Answer 389

B

Question 390

Which of the following is true about the payment of commissions in Texas?
Select one:
a. Renewal or other deferred commissions may be paid to unlicensed persons, so long as the person was licensed at the time of the sale, solicitation or negotiation.
b. Licensed agents without an appointment from a particular insurance company may refer an application to another licensed agent with an appointment and share the commission.
c. A temporary licensee may not obtain a commission on a sale made to a person who has a family, employment, or business relationship with the temporary licensee.
d. All of the above

Answer 390

D

Question 391

A group long-term disability plan may contain all of the following features, EXCEPT:
Select one:
a. The benefits will coordinate with Workers’ Compensation benefits.
b. Benefits will not be paid for on-the-job losses.
c. Benefits will be coordinated with Social Security disability benefits.
d. The benefit is not usually stated as a percent of income.

Answer 391

D

Question 392

The cash loan provision of a life insurance policy states that:
Select one:
a. Withdrawals or partial surrenders of policy cash value can be made; the policy specifies how much can be withdrawn and at what frequency.
b. The insurer will automatically use the policy cash value to pay an overdue premium.
c. Modifications to the policy must be made by an authorized officer of the insurer and attached to the policy.
d. A policy loan in an amount up to the current cash value, less any existing indebtedness, may be made.

Answer 392

D

Question 393

A program that includes prehospitalization authorization is an example of:
Select one:
a. Workers’ Compensation
b. Major medical
c. Social Security disability
d. Managed care

Answer 393

D

Question 394

Transacting insurance includes which of the following?
Select one:
a. Sale
b. Solicitation
c. Negotiation
d. All of the above

Answer 394

D

Question 395

On June 25, an application is submitted with the initial premium, and on June 30 the insurer issues the policy standard. Due to it being close to a holiday, the agent doesn’t deliver the policy until July 6. A conditional receipt was issued without a required medical exam. When is coverage effective?

Select one:
a. June 25
b. July 6
c. July 6, after the statement of good health is signed.
d. June 30

Answer 395

A

Question 396

If upon completion of a life insurance application the producer does not collect the initial premium, upon delivery he/she must:
Select one:
a. Collect the premium for a couple of months and a statement of good health.
b. Retrieve the conditional receipt, collect the premium and a statement of good health.
c. Provide a copy of the investigative report.
d. Collect a statement of good health and the initial premium.

Answer 396

D

Question 397

If a person has both Medicare and a work plan, which payor is secondary?
Select one:
a. They will split the cost.
b. Medicare
c. He can pick.
d. Work

Answer 397

B

Question 398

The producer is replacing a policy with another one from a different company; the producer needs to make sure it is not considered?
Select one:
a. Churning
b. Twisting
c. Discrimination
d. Rebating

Answer 398

B

Question 399

Which of the following is not considered an unfair trade practice?
Select one:
a. False advertising
b. Joint advertising
c. Defamation
d. Intimidation

Answer 399

B

Question 400

If health insurance premiums are not tax-deductible, the benefits are:
Select one:
a. Always tax-free.
b. Only tax-free for disability income insurance.
c. Tax-free, as long as they do not exceed the actual cost of medical expenses.
d. Taxable as ordinary income.

Answer 400

C

Question 401

Peyton has a basic hospital policy. It will pay for:
Select one:
a. Prescription drugs
b. Outpatient care
c. Doctor visits
d. Hospital visits

Answer 401

D

Question 402

Which of the following is not a correct statement about equity-indexed annuities?
Select one:
a. A securities license is required to sell EIAs.
b. The principal and interest are guaranteed.
c. Earnings above the guaranteed rate are linked to the stock market.
d. Earnings are also tied to the insurer’s overall investment performance.

Answer 402

A
A securities license is not currently required to sell equity-indexed annuities.
The correct answer is: A securities license is required to sell EIAs.

Question 403

An annuity is a kind of contract uses periodic payments as a way to systematically liquidate assets. Which of the following is not true about annuities?
Select one:
a. The accumulation phase is the pay-in period.
b. The purchaser of the annuity pays the premiums.
c. The annuitant has the right to name the beneficiary.
d. The contract owner is not necessarily the annuitant.

Answer 403

C

Question 404

Spencer owns a major medical policy with 80/20 coinsurance and a $1,000 deductible. If he submits a claim for $15,000, how much will the insurer pay?
Select one:
a. $1,000
b. $3,800
c. $11,200
d. $15,000

Answer 404

C

Question 405

If Jack let his insurance license expire, which of the following are his options to renew the expired license?
Select one:
a. If the license expired less than 90 days ago, he can submit the renewal application, fee and pay a late fee.
b. If the license expired more than 90 days but less than a year ago, he can apply for a new license, pay any fees (including late fees), without taking the exam.
c. If his license expired more than a year ago, he must retake the license exam, and submit an application for a new license.
d. All of the above

Answer 405

D

Question 406

Which of the following terms means inducing the purchase of insurance through force, threat, or undue pressure?
Select one:
a. Twisting
b. Misrepresentation
c. Cold lead advertising
d. High pressure tactics

Answer 406

D

Question 407

All of the following statements are correct about Group Life conversion privileges EXCEPT:
Select one:
a. An extension of 15 days may be added to the conversion period, if the employee was not made aware of their conversion rights.
b. All group life policies must include a conversion option.
c. If a death occurs during the conversion period, there is no coverage.
d. If a member’s coverage is terminated, the member (and dependents) may convert to individual whole life.

Answer 407

C

Question 408

Bob signed an application for a $100,000 life insurance policy and paid the first premium on January 1. The agent issued an insurability receipt. A week later, the required medical examination proves Bob insurable. If Bob dies before the insurer approves the application:
Select one:
a. The coverage will be retroactively effective, but the policy will only pay $50,000.
b. No coverage will be provided.
c. No coverage will be provided, but the premium will be refunded.
d. The coverage will be retroactively effective, the beneficiary will receive the full death benefit

Answer 408

D

Question 409

When Barbara’s brother died, his policy paid an amount over the face value of the policy. He probably had:
Select one:
a. A Graded premium whole life policy.
b. A Joint life policy.
c. A Survivorship policy.
d. An AD&D policy.

Answer 409

D

Question 410

Which of the following is true about the powers of the Commissioner?
Select one:
a. The Commissioner can regulate the business of insurance in the state.
b. The Commissioner can administer Texas Workers’ Compensation system.
c. The Commissioner can deny, suspend or revoke insurance licenses.
d. All of the above

Answer 410

D

Question 411

A Lump Sum payment for life insurance is:

Select one:
a. Not taxable
b. Taxable
c. Taxable over the premium payment amounts
d. Taxable if the employer paid the premiums

Answer 411

A

Question 412

Which managed care program has a larger service area, wider range of provider choices, no gatekeeper and coverage for emergency treatment outside of the provider list?
Select one:
a. HMO
b. HSA
c. POS
d. PPO

Answer 412

D

Question 413

What permits the insurance company to contest misrepresentation in the application during the first 2 policy years?
Select one:
a. Grace period provision
b. Time of payment of claims provision
c. Incontestability provision
d. Legal action provision

Answer 413

C

Question 414

What gives the insurance company the right to assume rights of the insured in order to sue a responsible third party when damages are inflicted on the insured?
Select one:
a. Concealment
b. Warranties
c. Subrogation
d. Utmost good faith

Answer 414

C

Question 415

Ron is a 30 years old who has a steady job and wants to set up a retirement plan. If he is concerned about inflation, he should consider a:
Select one:
a. Immediate annuity - single premium.
b. Deferred annuity - single premium.
c. Flexible premium deferred annuity.
d. Level premium fixed annuity.

Answer 415

C

Question 416

How does an insurer verify the personal characteristics of an applicant?
Select one:
a. The insurer gets a credit report.
b. The insurer gets an inspection report.
c. The insurer does a health profile.
d. The insurer checks with his employer about job performance.

Answer 416

B

Question 417

Davis is not sure if he should try to return to work due to his disability. His insurer tells him that if he the disability happens again within 90 days it will be treated as a continuation. Which provision does he have?
Select one:
a. Recurrent disability
b. Residual disability
c. Presumptive disability
d. Waiver of premium

Answer 417

A

Question 418

All of the following statements are incorrect regarding the reinstatement provision, EXCEPT:
Select one:
a. Accidents are covered immediately upon reinstatement, and sicknesses are covered after a 10-day waiting period.
b. Only accidents are covered under a reinstated policy.
c. Sickness and accident are covered immediately upon reinstatement.
d. There is a 45-day waiting period for a policy to become effective once reinstated.

Answer 418

A

Question 419

All of the following statements are true about Universal Life EXCEPT:
Select one:
a. It provides both death protection and cash value.
b. Policyholders cannot change the face amount of the policy.
c. Also known as flexible premium adjustable life.
d. Policyholders can skip premium payments.

Answer 419

B

Question 420

The insurer discovers that Erica misstated her age on the health insurance policy application. What will the insurer do?
Select one:
a. Decrease her premiums
b. Adjust the policy benefits
c. Void her policy
d. Increase her premiums

Answer 420

B

Question 421

You may be able to keep your old group coverage for a specified amount of time after leaving an employer with:
Select one:
a. HIPAA
b. Medicaid
c. Medicare
d. COBRA

Answer 421

D

Question 422

Select one:
a. Part A
b. Part B
c. Part C
d. Part D

Answer 422

A

Question 423

How often must a group HMO have an open enrollment period?
Select one:
a. Once per month
b. Once per year
c. Twice per year
d. Three times per year

Answer 423

B

Question 424

In a long-term care policy, pre-existing conditions must be covered after:
Select one:
a. 18 months from the effective date of coverage
b. 6 months from the effective date of coverage
c. 24 months from the effective date of coverage
d. 12 months from the effective date of coverage

Answer 424

B

Question 425

Preston tells the insurer to keep the dividend and use it to invest. He is using which dividend option?
Select one:
a. Reduction of premium
b. Accumulate at interest
c. Cash payment
d. Paid-up addition

Answer 425

B

Question 426

Variable whole life differs from ordinary whole life in that:
Select one:
a. Variable whole life offers higher interest rates.
b. The cash value is guaranteed.
c. If the premium is not paid after the grace period, the policy uses the cash value to pay the premium.
d. Variable products are only regulated by the state insurance departments.

Answer 426

A

Question 427

For how much time prior to open enrollment can a pre-existing condition be used to reject an applicant for a group HMO?

Select one:
a. 6 months
b. 12 months
c. 18 months
d. Applicants cannot be rejected.

Answer 427

D

Question 428

Physical exams or autopsies are paid by the:
Select one:
a. Insurer
b. It is taken out of the benefits.
c. The insurer and insured split it.
d. Insured
K-402
Feedback
Your answer is correct
The insurer pays for a physical exam or autopsy. They have the right to request them.
The correct answer is: Insurer

Answer 428

A

Question 429

All of the following are types of third-party ownership EXCEPT:
Select one:
a. IOLI
b. STOLI
c. APL
d. Viatical settlement

Answer 429

C

Question 430

Which of the following are commercial companies owned by policyholders?
Select one:
a. Stock insurers
b. Mutual insurers
c. Surplus insurers
d. Government insurers

Answer 430

B

Question 431

An insured must wait how many days after providing proof of loss to an insurance company before filing a legal suit against the company?
Select one:
a. 60 days
b. 30 days
c. 45 days
d. 90 days

Answer 431

A

Question 432

What rider allows someone to purchase additional disability income insurance at a later date, regardless of insurability?
Select one:
a. A guaranteed insurability rider
b. An impairment rider
c. A waiver of premium rider
d. A double indemnity rider

Answer 432

A

Question 433

A life insurance policy in Texas must contain all the following provisions, EXCEPT:
Select one:
a. Legal action
b. Assignment
c. Incontestability
d. Settlement

Answer 433

D

Question 434

Shane realizes that the client left off information about a prior illness. What should the he do?
Select one:
a. Tell the prospective client that a claim might be rejected later due to the omission.
b. Assume the client will not make a claim until the incontestability period is over.
c. The producer has no responsibility to report the incomplete information.
d. Nothing, because the MIB will catch it

Answer 434

A

Question 435

Businesses can deduct certain items as ordinary business expense, such as:
Select one:
a. Employees portion of the group premium.
b. Buy/sell agreements.
c. Key employee.
d. Group insurance premiums.

Answer 435

D

Question 436

What is likely to occur if the insured dies before the loan is repaid, according to the automatic premium loan provision?
Select one:
a. The outstanding balance of the loan and any interest on the loan are deducted from the benefit.
b. The beneficiary pays the loan off.
c. The insurance company writes the loan amount off.
d. None of the above

Answer 436

A

Question 437

Monica has life insurance on her 10-year-old son. What rider will make sure that in the event she dies or becomes disabled that the policy will remain in force?
Select one:
a. Payor Rider
b. Accelerated benefit rider
c. Riders covering additional insureds
d. Substitute insured rider

Answer 437

A

Question 438

What type group plan requires 75% participation?
Select one:
a. Consideration
b. Noncontributory
c. Contributing
d. Contributory

Answer 438

D

Question 439

Dylan and Bob own a small business and worry about their company if their star salesman becomes disabled. Which type of policy should they buy?
Select one:
a. Business overhead expense
b. Key employee
c. Workers’ Compensation
d. Business buy-out

Answer 439

B

Question 440

Mr. Johnson committed suicide after the suicide clause expired on his life insurance policy. What is his insurer likely to do as a result?
Select one:
a. Return all premiums to the beneficiary
b. Pay the full death benefit
c. Return all premiums plus interest to the beneficiary
d. Pay half the death benefit

Answer 440

B

Question 441

How does Texas define chemical dependency?

Select one:
a. The abuse of, a psychological or physical dependence on, or an addiction to alcohol or a controlled substance
b. The abuse of, a psychological or physical dependence on, or an addiction to an illegal drug or a controlled substance
c. A psychological or physical dependence on or an addiction to a controlled substance or illegal drug.
d. The abuse of or an addiction to alcohol or a controlled

Answer 441

A

Question 442

Zoe Hart has a $45,000 life policy with a double indemnity AD&D rider. If she dies in a car crash after 7 months, what would her beneficiaries receive?
Select one:
a. $0.00
b. $45,000
c. $90,000
d. $135,000

Answer 442

C

Question 443

Nursing home care is provided by which part of Medicare?
Select one:
a. Part A
b. Part B
c. Part C
d. Part D

Answer 443

A

Question 444

Nonforfeiture life insurance benefits are calculated using the nonforfeiture interest rate and:
Select one:
a. Morbidity table
b. Mortality table
c. Benefits table
d. Exclusions table

Answer 444

B

Question 445

The agent notices he made a mistake in completing the application. He or she should:
Select one:
a. He or she should start a new application, and fill it out on a phone call.
b. For a small change, he or she should fix the mistake, and then have the client initial the changes in his or her presence.
c. Ignore the mistake and submit the application
d. Make the changes, and then initial them.

Answer 445

B

Question 446

Dylan can’t utilize his health insurance unless he has a loss because his contract is:
Select one:
a. Aleatory
b. Conditional
c. Unilateral
d. Adhesion

Answer 446

B

Question 447

Dylan is looking at buying a disability income policy, which would be the cheapest?

Select one:
a. Own occupation with a 30-day elimination period
b. Any occupation with 60-day elimination period
c. Any occupation with 30-day elimination period
d. Own occupation with a 60-day elimination period

Answer 447

The Any Occupation would be the cheapest with a 60-day elimination period. Any Occupation means you cant do any job, which you are reasonably suited by training or education. The longer the elimination period, the cheaper the premiums will cost.

The correct answer is: Any occupation with 60-day elimination period

Double check this answer - I THINK IT MIGHT BE WRONG

Question 448

Nick has a policy that the insurer can cancel when he turns 65. Which type of policy is it?
Select one:
a. Optionally renewable
b. Cancelable
c. Noncancelable
d. Conditionally renewable

Answer 448

A conditionally renewable policy allows the insurer to cancel the policy if certain stated conditions happen. Examples of conditions are losing a job or reaching a specified age, such as 65.
The correct answer is: Conditionally renewable

Question 449

What right of renewability guarantees insurability, but does not guarantee premiums?
Select one:
a. Guaranteed renewable
b. Optionally renewable
c. Noncancelable
d. Guaranteed insurability

Answer 449

A guaranteed renewable policy does not allow the insurer to cancel the policy, but it allows the insurer to increase the premiums.
The correct answer is: Guaranteed renewable

(guaranteed insurability only refers to whether or not proof of insurability is needed to renew)

Question 450

What contract term means only one party to a contract’s promises are legally enforceable?
Select one:
a. Aleatory
b. Conditional
c. Adhesion
d. Unilateral

Answer 450

D

Question 451

What type of insurance contract is prepared by the insurer and not negotiated?
Select one:
a. Unilateral
b. Adhesion
c. Aleatory
d. Conditional

Answer 451

B
Insurance contracts are contracts of adhesion. In a contract of adhesion there is only one author, the insurance company.
The correct answer is: Adhesion