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Insurance > Final Exam > Flashcards

Final Exam Flashcards

1
Q

The deeds and actions of a producer indicate what kind of authority?
A. Express
B. Apparent
C. Implied
D. Conditional

A

Apparent

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2
Q

Jonas has disability insurance through his employer. The employer pay 75% of the premium, and Jonas pays the other 25%. What is Jonas’s tax liability for any benefits paid from the disability plan?
A. Taxes must be paid an all benefits received.
B. No taxes are payable on any benefits received
C. Taxes must be paid on 25% of the benefits received
D. Taxes must be paid on 75% of the benefits received

A

Texas must be paid on 75% of the benefits received

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3
Q

Which of the following protects a policyowner from a misrepresentation caused by an innocent mistake?
A. Reinstatement clause
B. Entire Contract clause
C. Incontestable clause
D. Nonforfeiture clause

A

Incontestable clause

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4
Q

A spouse and child can be added to the primary insured’s coverage as what kind of rider?
A. Dependent term
B. Guaranteed insurability
C. Primary term
D. Family term

A

Family term

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5
Q

An insured dies from what appears to be accidental causes. When confirming the cause of death, which of these actions by the insurer takes precedence?
A. Autopsy
B. Eyewitness account
C. Police report
D. Physician notes

A

Autopsy

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6
Q

A policyowner can receive an immediate payment before the insured dies by using a(n)
A. Viatical settlement contract
B. Buy-sell arrangement
C. Adhesion agreement
D. Spendthrift plan

A

Viatical settlement contract

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7
Q

Phil is shopping for an annuity that guarantees he CANNOT outlive the benefits. Which of these benefit options would he choose?
A. Accelerated lifetime benefit
B. Guaranteed lifetime withdrawal benefit
C. Right of income rider
D. Guaranteed minimum accumulation benefit

A

Guaranteed lifetime withdrawal benefit

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8
Q

A 70 year old insured individual has suffered from kidney failure for the past 24 months. She is covered by her spouse’s large-group employer plan. How will Medicare be utilized in this situation?
A. Will be the primary insurer and pay for 100% of covered expenses
B. Will be the secondary insurer and pay for claims not fully covered by the group plan
C. Will not pay for any of the covered expenses
D. Will be the primary insurer and the group plan will be secondary

A

Will be the secondary insurer and pay for claims not fully covered by the group plan

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9
Q

When does a life insurance policy typically become effective?
A. When the policy is issued
B. When initial premium is collected and policy is issued
C. When the application is completed and signed
D. When the completed application to sign and initial premium is collected

A

When initial premium is collected and policy is issued

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10
Q

HIPAA considers which of the following as “individually identifiable health information”?
A. A person’s employment history
B. A person’s net income
C. A person’s hire date
D. A person’s health claim information

A

A persons health claim information

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11
Q

Any change of address by a licensee requires notice within 30 days to which of the following?
A. Governor
B. Attorney General
C. Insurer
D. Commissioner

A

Commissioner

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12
Q

For individual health insurance, coverage for pre-existing conditions may be excluded for up to _____ months after issuance of the policy
A. 18
B. 12
C. 6
D. 3

A

12

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13
Q

An insured was injured as an innocent bystander when someone committed a felony. The insurer is
A. Likely to void the policy
B. Partially liable for the loss
C. Not liable for the loss
D. Liable for the loss

A

Liable for the loss

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14
Q

Which dividend option would an insurer invest the policyowner’s money and add any interest earnings as the dividends accrue?
A. Accumulation at Interest Option
B. Cash dividend option
C. Paid-up Additions Option
D. One-year Term Dividend Option

A

Accumulation at Interest Option

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15
Q

In which of the following situations would the insurer be liable for a loss?
A. The insured skipped a payment beyond the 31 day grace period
B. The insured was injured while participating in an illegal occupation
C. The insured was given a notice of cancellation from the insurer
D. The insured suffered an injury as an innocent bystander during a bank robbery

A

The insured suffered an injury as an innocent bystander during a bank robbery

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16
Q

A common exclusion with Vision plans is
A. Eyeglass frames
B. The examination
C. Contact lenses
D. Lasik surgery

A

Lasik surgery

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17
Q

Bill requires some nursing care and supervision but NOT full-time care. Which of these nursing home options would best serve him?
A. Nursing home
B. Assisted living
C. Congregate housing
D. Custodial residence

A

Assisted living

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18
Q

A provision in a whole life policy that allows the policyowner to terminate the policy in return for a reduced paid-up policy of the same type is called a(n)
A. Insuring clause
B. Payor provision
C. Reinstatement provision
D. Nonforfeiture provision

A

Nonforfeiture provision

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19
Q

What will the beneficiary receive if an annuitant dies during the accumulation period?
A. The greater of the accumulated cash value or the total premium paid
B. The lesser of the accumulated cash value or the total premium paid
C. The interest earned on the accumulated cash value
D. Nothing

A

The greater of the accumulated cash value or the total premium paid

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20
Q

An example of risk sharing would be
A. Adding more security to
a high-risk building
B. Choosing not to invest in the stock market
C. Doctors pooling their money to cover malpractice exposures
D. Buying an insurance policy to cover potential liabilities

A

Doctors pooling their money to cover malpractice exposures

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21
Q

What is the tax liability for employer contributions in Health Savings Accounts (HSA’s)?
A. Taxable as regular income to the employee
B. Tax-deductible expense to the employee
C. No tax payment needed
D. Taxable to the employee when they exceed 7 1/2% AGI

A

No tax payment needed

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22
Q

A Medicare Supplement policy must NOT contain benefits which
A. Charge additional premiums
B. Duplicate Medicare benefits
C. Cover more than Medicare coverage
D. Are covered by Worker’s Compensation

A

Duplicate Medicare benefits

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23
Q

Jonas is a whole life insurance policyowner and would like to add coverage for his two children. Which of the following products would allow him to accomplish this?
A. Child term rider
B. Payor rider
C. Family maintenance rider
D. Family income rider

A

Child term rider

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24
Q

Paul is an employee who caught a disease unique to the trade in which he was exposed to. Paul has a(n)
A. Genetic predisposition
B. Worksite Malady
C. Contagious disease
D. Occupational disease

A

Occupational disease

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25
Q

Which of the following describes a person who is NOT acceptable by an insurer at standard rates because of health history, occupation, or hobbies?
A. Standard risk
B. Preferred risk
C. Unacceptable risk
D. Substandard risk

A

Substandard risk

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26
Q

How do insurers predict the increase of individual risks?
A. Law of large numbers
B. U.S. Census
C. Average mortality incidence
D. Experience of morbidity

A

Law of large numbers

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27
Q

What is an insurance policy’s grace period?
A. Period of time after the initial premium is paid in before the policy is issued
B. Period of time it takes for a policy’s underwriting to complete
C. Period of time after a policy is issued, and before it is delivered to policyowner
D. Period of time after the premium is due, but the policy remains in force

A

Period of time after the premium is due but the policy remains in force

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28
Q

An example of a presumptive disability would be
A. A stroke
B. Deafness
C. Diabetes
D. Cancer

A

Deafness

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29
Q

The difference between pre-certification and concurrent review is that pre-certification
A. Costs more to the patient
B. Cost less to the patient
C. Is considered a cost containment measure
D. Occurs before the treatment is provided

A

Occurs before the treatment is provided

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30
Q

An individual covered under a Blue Cross Blue Shield plan is called a(n)
A. Participant
B. Subscriber
C. Policyowner
D. Insured

A

Subscriber

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31
Q

To be classified as a small employer in Michigan, an employer must employ
A. 1-10 employees
B. 2-50 employees
C. 1-25 employees
D. 2-100 employees

A

2-50 employees

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32
Q

Which clause defines total disability as being unable to perform the major duties of the insured’s regular occupation?
A. Own occupation clause
B. Any occupation clause
C. Residual clause
D. Presumptive clause

A

Own occupation clause

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33
Q

In the state of Michigan, a licensed producer
A. Represents the insurer
B. May modify insurance contracts
C. Approves insurance contracts
D Represents the insured

A

Represents the insurer

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34
Q

Which of the following does Coordination of Benefits allow?
A. Allows the secondary payor to reduce their benefit payments so no more than 100% of the claim is paid
B. Allows both a group health plan and individual health plan to coordinate their benefit payments
C. Allows the deductible to be spread out between all the health providers
D. Allows each health provider to pay 100% of the claim

A

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

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35
Q

Newborn coverage under health insurance policies MUST include coverage for
A. Private hospital room from mother
B. Delivery costs
C. Birth abnormalities
D. Mother’s lost income

A

Birth abnormalities

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36
Q

Continued coverage under COBRA would be provided to all of the following EXCEPT:
A. Former dependent of employee no longer of dependent status
B. Terminated employee
C. Divorced spouse of employee
D. A covered employee is terminated for gross misconduct

A

A covered employee is terminated for gross misconduct

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37
Q

A person who is a non-smoker, of average weight, and excellent health would most likely be in which risk classification?
A. Standard
B. Substandard
C. Acceptable
D. Preferred

A

Preferred

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38
Q

Which of these is NOT subject to false advertising regulations?
A. Gifts
B. Brochures
C. Billboards
D. Letters

A

GIFTS

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39
Q

Which of the following is an example of a producer’s fiduciary duty?
A. Recording receipt and remittance of premiums due to the insurance company
B. Determine the rate classification of the insured
C. Reviewing policy summary of benefits
D. Witnessing applicant’s signature

A

Recording receipt and remittance of premium is due to the insurance company

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40
Q

What is the purpose for having an accelerated death benefit on a life insurance policy?
A. It allows for a spouse to be added as a rider to a life insurance policy
B. It allows for policy loans to be advanced to the insured in the event of unemployment
C. It allows for cash advances to be paid against the death benefit if the insured becomes terminally ill
D. At allows for a third party to purchase a life insurance policy at a discounted rate and immediately advance a portion of the death benefit

A

It allows for cash advances to be paid against the death benefit if the insured becomes terminally ill

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41
Q

A long-term care policy typically provides all the following levels of care EXCEPT
A. Skilled care
B. Intermediate care
C. Acute care
D. Custodial care

A

Acute care

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42
Q

Which type of clause describes the following statement: “We have issued the policy in consideration of the representations and your application and payment of the first-term premium”.
A. Premium clause
B. Consideration clause
C. Adhesion clause
D. Contestability clause

A

Consideration clause

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43
Q

Intentional withholding of material facts that would affect an insurance policy’s validity is called a(n)
A. Estoppel
B. Concealment
C. Adhesion
D. Misrepresentation

A

Concealment

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44
Q

Medicare Part A covers
A. Outpatient services
B. Doctor’s fees
C. Inpatient hospital stay
D. Prescription drugs

A

Inpatient hospital stay

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45
Q

Which of the following statements is TRUE about Medicaid
A. It is health insurance for the elderly
B. It is administered by the Federal government
C. It is funded by federal, state, and local taxes
D. Coverage includes compulsory hospital voluntary supplementary medical insurance

A

It is funded by federal, state, and local taxes

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46
Q

An insurer is REQUIRED to offer which of the following to each long-term care applicant at the time of purchase?
A. Lifetime level premiums
B. Conditional renewability
C. Deflation protection
D. Inflation protection

A

Inflation protection

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47
Q

The Do Not Call Registry offers exemptions for calls placed from all of the following EXCEPT
A. Charities
B. Political organizations
C. Insurance sales calls
D. Surveys

A

Insurance sales calls

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48
Q

What is implied authority defined as?
A. Authority given in writing to an agent in the agency agreement
B. Authority that is not specifically given to an agent in the agency contract, but that an agent can reasonably assume to carry out his/her duties
C. Authority given to handle claims and process payments
D. Authority given to an agent to act outside the scope of the agency agreement

A

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

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49
Q

A whole life insurance policy accumulate cash value that becomes
A. The policy loan value which the insured may borrow against
B. The death benefit
C. The source of funding for administration fees
D. A source of funding a term rider to the policy

A

The policy loan value which the insured me borrow against

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50
Q

What makes an insurance policy a unilateral contract?
A. Only the insured pays the premium
B. Only the insured can change the provisions
C. Only the insurer is legally bound
D. Only the insured is legally bound

A

Only the insurer is legally bound

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51
Q

Sonia applied for a health insurance policy on April 1. Her Agent submitted the information to the insurance company on April 6. She paid the premium on May 15 with the policy indicating the effective date being May 30. On which date with Sonya have coverage?
A. April 1
B. April 6
C. May 15
D. May 30

A

May 30

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52
Q

Nate’s dependent son is physically handicapped, but not eligible for Medicare. How long may the son remain on Nate’s health coverage after the age of 26?
A. Extension may be granted to age 30 with Medicare exemption form
B. Coverage remains with written proof of disability independency
C. Only while the son is in rolled in school
D. Coverage ends at age 26

A

Coverage remains with written proof of disability and dependency

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53
Q

Which type of coverage pays an amount per day for hospitalization directly to the insured regardless of the insured‘s other health insurance?
A. MEWA
B. Mutual
C. Group
D. Hospital indemnity

A

Hospital indemnity

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54
Q

A Modified Endowment Contract (MEC) is best described as
A. A life insurance contract which accumulates cash values higher than the IRS will allow
B. An annuity contract which was converted from a life insurance contract
C. A modified life contract which enjoys all the tax advantages of whole life, insurance
D. A life insurance contract where all withdrawals prior to age 65 are subject to a 10% penalty

A

A life insurance contract which accumulates cash values higher than the IRS will allow

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55
Q

Which requirement must be met by associations that seek group health coverage for its members?
A. Must have a board of directors
B. Members must be individually underwritten
C. Must have been formed for a legitimate purpose other than obtaining insurance
D. Must have been formed over the last 10 years

A

Must have been formed for a legitimate purpose other than obtaining insurance

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56
Q

What guarantees that the statements supplied by insurance applicant are true?
A. Assurance
B. Promise
C. Representation
D. Warranty

A

Warranty

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57
Q

When a preferred provider organization (PPO) insured goes out-of-network, which of the following actions occur?
A. The insured will pay a reduced amount
B. The benefits are taxable
C. The insured has lower out-of-pocket expenses
D. The insurer will pay a reduced amount

A

The insurer will pay a reduced amount

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58
Q

Pat is insured with a life insurance policy and Karen is his primary beneficiary. They are both involved in an automobile accident where Pat dies instantly and Karen dies 5 days later. Which policy provision will protect the rights of the contingent beneficiary to receive the policy benefits?
A. Nonforfeiture clause
B. Common disaster clause
C. Spendthrift clause
D. Accident indemnity clause

A

Common disaster clause

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59
Q

Which of the following BEST describes a conditional insurance contract?
A. A contract that requires certain conditions or acts by the insured individual
B. A contract that has the potential for the unequal exchange of consideration for both parties
C. A contract where one party “adheres” to the terms of the contract
D. A contract where only one party makes any kind of enforceable contract

A

A contract that requires certain conditions or ask by the insured individual

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60
Q

Which of the following is NOT included under a health benefit plan?
A. Major medical policy
B. Basic hospital policy
C. Hospital indemnity plan
D. Surgical expense policy

A

Hospital indemnity plan

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61
Q

An example of an unfair claims settlement practice is
A. Making it mandatory that proof of loss be provided for each claim
B. Failing to promptly provide a reasonable explanation for the denial of claims
C. Paying a claim in a timely matter
D. Requiring a time limit for submitting a claim

A

Failing to promptly provide a reasonable explanation for the denial of claims

62
Q

How is a health provider reimbursed if they do NOT have an agreement in place with the insurance company?
A. With a contingent fee
B. With a scheduled fee
C. With a usual, customary, and reasonable fee
D. With a reasonably appropriate fee

A

With a usual, customary, and reasonable fee

63
Q

During the accumulation period, who can surrender an annuity?
A. Pair
B. Annuitant
C. Beneficiary
D. Policy owner

A

Policyowner

64
Q

The premium for a Modified whole life policy is
A. Higher than the typical whole life policy during the first few years and then lower than typical for the remainder
B. Lower than the typical whole life policy during the first few years and then higher than typical for the remainder
C. Normally graded over a period of 20 years
D. Level for the first 5 years then decreases for the remainder of the policy

A

Lower than the typical whole life policy during the first few years and then higher than typical for the remainder

65
Q

Preferred risk policies with reduced premiums are issued by insurance companies because the insured has
A. A higher face amount an average
B. A better ability to pay premiums over a long period of time
C. Worse than average mortality or morbidity experience
D. Better than average mortality or morbidity experience

A

Better than average mortality or morbidity experience

66
Q

Which of the following is an example of the illegal act of defamation?
A. Offering a premium rebate, gift, or a special advantage of any kind to consumers as an inducement to purchase a contract of insurance
B. Making a statement that is false or maliciously critical of the financial condition of an insurer
C. Replacing an insurance policy from one insurer to another based on misrepresentation
D. Using threat of force to restrict fair trade in the transaction of insurance

A

Making a statement that is false or maliciously critical of the financial condition of an insurer

67
Q

Which of these is considered a major tax advantage of life insurance?
A. Tax credits are available for life insurance premiums paid
B. Annual earnings are tax free
C. Premiums are tax deductible by an employee if paid for by an employer
D. Income taxes typically not owed on proceeds paid directly to a beneficiary

A

Income taxes typically not owed on proceeds paid directly to a beneficiary

68
Q

Which of the following is NOT a common exclusion for a medical expense policy?
A. Physical therapy
B. Act of war
C. On-the-job injury
D. Self inflicted injury

A

Physical therapy

69
Q

Guaranteed issue insurance policy has no
A. Initial premium requirement
B. Incontestable period
C. Waiting
D. Medical underwriting

A

Medical underwriting

70
Q

The acceptance of a credit life application requires the submission of a certificate of insurance to the insured within _____ days
A. 10
B. 20
C. 30
D. 40

A

30

71
Q

Newborn must be covered under an existing health policy,
A. At the moment of birth
B. Within 7 days of birth
C. Within 10 days of birth
D. When initial premium is paid for newborn

A

At the moment of birth

72
Q

Which of these will have the highest monthly payout upon annuitization?
A. Life with period certain
B. Joint with survivor life
C. Straight life
D. Joint life

A

Straight life

73
Q

Craig submits a $500 claim for medical expenses. With a past due premium of $100, the insurer pays $400. Which of the Uniform Optional Provisions covers this situation?
A. Payment of claims
B. Legal actions
C. Unpaid premium
D. Time of payment of claims

A

Unpaid premium

74
Q

In Michigan, legal action may be taken against an insurer for up to ____ years for failing to pay a life insurance claim after proof of loss was submitted.
A. 4
B. 5
C. 6
D. 7

A

6

75
Q

A life insurance rider that allows an individual to purchase insurance as they grow older, regardless of insurability, is called a(n)
A. Guaranteed term rider
B. Guaranteed insurability rider
C. Accelerated benefit rider
D. Cost of living writer

A

Guaranteed insurability rider

76
Q

An example of intimidation is
A. Offering a gift as an inducement to purchase a contract of insurance
B. Replacing an insurance policy from one insured to another based on misrepresentation
C. Using threat or force to restrict fair trade in the transaction of insurance
D. Publishing any false financial statement regarding an entity

A

Using threat or forced to restrict fair trade in the transaction of insurance

77
Q

An employee under a group insurance policy has the right to name a beneficiary and the right to
A. Remain on the group plan in the event of employment termination
B. Cash surrender the existing policy
C. Change the policy provisions
D. Convert to an individual policy in the event of employment termination

A

Convert to an individual policy in the event of employment termination

78
Q

The type of policy which pays on the death of the last person is called
A. Joint life
B. Survivorship life
C. Dual life
D. Shared life

A

Survivorship life

79
Q

All of the following are examples of a Business Continuation Plan EXCEPT
A. Key person insurance
B. Cross-purchase agreement
C. Stock Redemption Plan
D. Deferred Compensation

A

Deferred Compensation

80
Q

Insurance represents the process of risk
A. Selection
B. Avoidance
C. Transference
D. Assumption

A

Transference

81
Q

Shirley has a Medigap policy, which is designed to pay costs associated with
A. Medicare Parts A and B
B. Medicare Advantage
C. Medicare Part C
D. Medicare Part D

A

Medicare Parts A and B

82
Q

All of these are standard exclusions found in a life insurance policy EXCEPT
A. Hazardous occupations
B. Aviation
C. Disability
D. War

A

Disability

83
Q

An insurer must furnish to a claimant forms of filing proof of loss within ____ days upon receiving a notice of claim.
A. 10
B. 15
C. 20
D. 25

A

15

84
Q

Upon finding a producer guilty of forgery, the Commissioner may take all of the following actions EXCEPT
A. Impose a civil fine
B. Revoke producer’s license
C. Plays producer on probation
D. Require the producer to notify his/her clients

A

Require the producer to notify his/her clients

85
Q

In determining whether a pre-existing condition applies, the enrollee CANNOT have more than how many days’ gap and health insurance?
A. 60
B. 63
C. 65
D. 70

A

63

86
Q

A producer’s insurance license may ONLY be revoked by the
A. Appointing insurance Company
B. Governor
C. Department of Insurance and Financial Services (DIFS)
D. National Association of Insurance Commissioners (NAIC)

A

Department of Insurance and Financial Services (DIFS)

87
Q

A person covered with an individual health plan.
A. Is issued the policy
B. Is issued a certificate of medical costs
C. Does not contract directly with the insurance company
D. Is not subject to medical underwriting

A

Is issued a policy

88
Q

Field underwriting performed by the producer involves
A. Assigning a risk classification to the insured
B. Providing commission information to the applicant
C. Approving or declining an applicant
D. Completing the application and collecting initial premium

A

Completing the application and collecting initial premium

89
Q

A foreign insurance company doing business in Michigan
A. Is a Company domiciled under the laws of another state
B. Is not subject to Michigan insurance laws
C. Is a company that was formed under the laws of another country
D. Is only authorized to write business outside the United States

A

Is a Company domiciled under the laws of another state

90
Q

A disability elimination period is best described as a
A. Time deductible
B. Dollar deductible
C. Eligibility period
D. Probation period

A

Time deductible

91
Q

Bryce purchased a disability income policy with a rider that guarantees him the option of purchasing additional amount of coverage at predetermine times without requiring to provide evidence of insurability. What kind of rider is this?
A. Guaranteed insurability rider
B. Additional coverage writer
C. Paid-up option rider
D. Extended insurability rider

A

Guaranteed insurability rider

92
Q

ABC insurance company transfers part of the risk to XYZ insurance company. The situation is called
A. Reciprocity
B. Reinsurance
C. Conservation
D. Risk transfer

A

Reinsurance

93
Q

The branch of dentistry which deals with the replacement of missing parts is called
A. Endodontics
B. Periodontics
C. Orthodontics
D. Prosthodontics

A

Prosthodontics

94
Q

Which of the following is an annuity that is linked to a market-related index?
A. Market-related annuity
B. Equity-indexed annuity
C. Deferred-risk annuity
D. Fixed-amount annuity

A

Equity-indexed annuity

95
Q

Paul the producer has provided a false statement in relation to an insurance claim. Which illegal act has been committed?
A. Intimidation
B. Rebating
C. Subrogation
D. Fraud

A

Fraud

96
Q

Andy the insured has made a deliberate lie to the insured in order to obtain a lower premium. This action is considered an act of
A. Subrogation
B. Misrepresentation
C. Malfeasance
D. Fraud

A

Fraud

97
Q

Small employers who are sponsored by an insurer to provide group benefits to employees are called
A. Fraternal Benefit Society
B. Surplus lines brokers
C. Lloyds of London
D. MEWA

A

MEWA

98
Q

A disability income policy can prevent an insured from earning a higher income then if he/she were working by utilizing
A. Elimination periods
B. Probationary periods
C. Benefit limits
D. Deductibles

A

Benefit limits

99
Q

All of these are settlement options for life, insurance policies EXCEPT
A. Life income
B. Lump sum
C. Extended term
D. Fixed period

A

Extended term

100
Q

An example of elective cosmetic surgery would be
A. Reconstructive breast surgery after a mastectomy
B. Removing excess fat from an insured’s waist line
C. Surgery to correct a birth defect
D. Reconstructive surgery after suffering injuries from an automobile accident

A

Removing excess fat from an insured’s waist line

101
Q

Which of these is considered to be a Living Benefit option in a life insurance policy?
A. Reinstatement
B. Waiver of premium
C. Accelerated death benefit
D. Payer benefit

A

Accelerated death benefit

102
Q

The type of policy where the insurer can send a notice to the insured that the policy has been canceled in the middle of the term is called
A. Noncancelable
B. Conditionally renewable
C. Optionally renewable
D. Cancelable

A

Cancelable

103
Q

HMO plans are REQUIRED to provide
A. Long-term disability
B. Vision care
C. Dental care
D. Home health care

A

Home health care

104
Q

Gina, the producer caused financial harm to an insured. Which of these actions may the Commissioner take?
A. Incarcerate Gina after a hearing
B. Revoke Gina’s license immediately without hearing
C. Revoke Gina’s license after hearing concludes a violation has occurred
D. Increase the band requirement for Gina’s license

A

Revoked Gina’s license after hearing concludes a violation has occured.

105
Q

How does one become eligible for part D: Prescription Drug coverage?
A. Must meet certain underwriting guidelines
B. Must have a valid prescription
C. Must have Medicare coverage
D. Must have Medicaid coverage

A

Must have Medicare coverage

106
Q

Which of the following actions is REQUIRED by a producer who is replacing an existing life insurance policy?
A. Keep replacement records on file for at least 10 years
B. Notify the existing insurer of the proposed replacement
C. Submit to the replacing insurer a list of the policies to be replaced
D. Offer the insured a 60-day free-look period

A

Submit to the replacing insurer a list of the policies to be replaced

107
Q

Which of these is NOT a characteristic of the Accelerated Death Benefit option?
A. The face amount and policy premium are not affected by the payment
B. Before payment of the benefit is made, specific conditions must exist, such as suffering from a terminal illness
C. There may be a dollar limit on the maximum benefit
D. The benefit can be offered as a rider at a specific extra cost or maybe at no cost

A

The benefit can be offered as a rider at a specific extra cost or maybe at no cost

108
Q

In most dental plans, a deductible typically is NOT applied to
A. Preventative and diagnostic services
B. Restorative dentistry
C. Orthodontics
D. Oral surgery

A

Preventative and diagnostic services

109
Q

Which of these describes the result of a modified endowment contract that failed to meet the seven-pay test?
A. Policy loans or disallowed
B. The premium payments will be taxed deductible
C. Pre-death distributions are typically taxable
D. Withdrawals will be prohibited

A

Pre-death distributions are typically taxable

110
Q

Which type of business insurance is meant to cover the cost of continuing to do business while the owner is disabled?
A. Disability overhead policy
B. Business continuation policy
C. Disability buy-sell policy
D. Business overhead expense policy

A

Business overhead expense policy

111
Q

Which of these is NOT a qualifying event for Medicare?
A. On Social Security disability for over 2 years
B. Kidney failure
C. Age 65 or older
D. Following below the federal poverty level

A

Falling below the federal poverty level

112
Q

A 10% excise taxes normally applied to an early withdrawal from an IRA. According to HIPAA, this tax will not be applied if the withdrawal is used for medical expenses that exceed _____ of the individual’s adjusted gross income.
A. 5%
B. 6.5%
C. 7.5%
D. 8%

A

7.5%

113
Q

A Universal life policy owner must receive a notice of cash surrender value at LEAST every
A. 6 months
B. Year
C. 2 years
D. 5 years

A

Year

114
Q

Tom has a rider on his disability income policy that guarantees the right to increase his benefits without a medical exam. What kind of writer is this?
A. Waiver of premium rider
B. Guaranteed benefit rider
C. Payer benefit rider
D. Guaranteed insurability rider

A

Guaranteed insurability rider

115
Q

In an insurance contract, the element that shows each party is giving something of value is called
A. Offer
B. Acceptance
C. Consideration
D. Purpose

A

Consideration

116
Q

Distributions from a Health Savings Account (HSA) for qualified medical expenses are
A. Fully taxable
B. Tax-free
C. Partially taxable
D. Tax credits

A

Tax-free

117
Q

In an insurance contract, the applicants “consideration” is the
A. Offer and acceptance
B. Premium only
C. Statements made in the application and the premium
D. Statements made in the application only

A

Statements made in the application and the premium

118
Q

Under Michigan Law, which of the following would NOT be considered an illegal inducement?
A. Sharing commissions with insured
B. Paying premiums for the insured
C. A promotional item with the producer’s name and address valued at $5.00
D. A $100 gift to the insured

A

A promotional item with the producer’s name and address valued at $5.00

119
Q

The election of COBRA for continuation of health coverage will
A. Increase the coverage in lower premium
B. Maintain the same coverage and increase premium
C. Increase out-of-pocket costs and lower premium
D. Decrease out-of-pocket cost and maintain same premium

A

Maintain the same coverage and increase premium

120
Q

And attending physician’s statement would be appropriate for which life insurance purpose?
A. Attending physician’s statements are mandatory during the application process
B. At the request of the applicant to assist in the underwriting decision
C. At the request of the producer to assist in the underwriting decision
D. At the request of the insurer to assist in the underwriting decision

A

At the request of the insurer to assist in the underwriting decision

121
Q

A Medicare Supplement policy issued in the state of Michigan is required to provide each of the following EXCEPT
A. It must cover intermediate and outpatient care for substance abuse
B. It must be guaranteed renewable
C. It must include outpatient prescription drug coverage
D. It must have a free look period of 30 days

A

It must include outpatient prescription drug coverage

122
Q

According to the Health Insurance Portability and Accountability Act (HIPAA), when can a group health policy renewal be denied?
A. There have been too many claims in the previous year
B. The size of the group has increased by more than 10%
C. The participation or contribution rules have been violated
D. Participation or contribution rules have been changed

A

Participation or contribution rules have been violated

123
Q

Benefits provided by a Medicare Supplement Policy must NOT
A. Be payable to the insured
B. Duplicate Medicare benefits
C. Be sold to individuals under 70
D. Charge additional premium

A

Duplicate Medicare benefits

124
Q

A professional liability for which producers can be sued for mistakes of putting a policy into effect is called
A. Fiduciary bond
B. Errors and omissions
C. Fiduciary trust
D. Errors and oversights

A

Errors and omissions

125
Q

The factor used most often when underwriting a disability income policy is
A. Annual earnings
B. Sex of the insured
C. Marital status
D. Occupation

A

Annual earnings

126
Q

Decreasing term life insurance is often used to
A. Provide retirement funds
B. Provide coverage for a home mortgage
C. Accumulate cash value
D. Provide coverage for estate taxes

A

Provide coverage for a home mortgage

127
Q

What is an insurer required to do when faced with an error made under the Misstatement of Age provision?
A. Cancel the policy
B. Pay age-corrected benefits
C. Pay full benefits as stated in the policy
D. Bill the policyowner for back premiums

A

Pay age-corrected benefits

128
Q

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?
A. Fixed
B. Interest only
C. Installment refund
D. Life income

A

Life income

129
Q

In regards to a life insurance contract, which of the statements is NOT true regarding the concept of insurable interest?
A. Individuals are assumed to have insurable interest in themselves
B. Insurable interest is established by a court of law
C. Insurable interest can be established sufficiently by sentimental attachment alone
D. Insurable interest must exist at the time of the application

A

Insurable interest can be established sufficiently by sentimental attachment alone

130
Q

A Medicare Supplement Policy is
A. Government insurance designed to provide healthcare to the elderly
B. Designed to provide prescription drug coverage to the elderly
C. Designed to fill in the gaps of Part A and Part B Medicare
D. A supplement to Medicare advantage part C

A

Design to fill in the gaps of Part A and Part B Medicare

131
Q

In a Long-Term Care policy, activities of daily living (ADL’s) can be each of the following EXCEPT
A. Talking
B. Dressing
C. Transferring
D. Feeding oneself

A

Talking

132
Q

Which of the following is NOT a valid reason for an insurer to refuse renewal of a small employer group plan?
A. Coverage has been discontinued by the insurer
B. Number of participants does not meet minimum requirements.
C. Willful misrepresentation
D. Claims were higher than expected

A

Claims were higher than expected

133
Q

A producer may give an insurance applicant an article of merchandise having an invoice value of ____ or less
A. $5
B. $15
C. $25
D. $50

A

$5

134
Q

XYZ Corp pays the tax-deductible insurance premiums for a key employee disability policy. Which of the following would be the appropriate tax consequence?
A. Premiums are paid with tax credits
B. Benefits are partially taxable
C. Benefits are fully taxable
D. Premiums are paid with after-tax dollars

A

Benefits are fully taxable

135
Q

Which of these is NOT the responsibility of a producer?
A. Represent the insurer
B. Forward applications to the insurer
C. Represent the insured
D. Collect initial premium

A

Represent the insured

136
Q

An individual applying for a Michigan resident producer license must have completed the required prelicensing education within ____ many months of license application
A. 6
B. 12
C. 18
D. 24

A

12

137
Q

Upon receiving a producer complaint, the Commissioner may immediately
A. Issue a cease and desist order
B. Revoke the license
C. Impose a fine
D. Issue a warrant for arrest

A

Issue a cease and desist order

138
Q

Respite care is able to provide
A. Permanent relief to the patient’s primary caregiver
B. Health care to the patient’s primary caregiver
C. Weekly benefit payments to supplement the primary caregiver’s income
D.Temporary relief to the patient’s primary caregiver

A

Temporary relief to the patient’s primary caregiver

139
Q

Ken is a producer who has obtained Consumer Information Reports under false pretenses. Under the Fair Credit Reporting Act, what is the maximum penalty that will be imposed on Ken?
A $1000
B $3000
C $5000
D $7000

A

$5000

140
Q

Producer commissions may NOT be paid to
A. Licensed and appointed producers
B. Licensed and appointed producers who are sharing commissions
C. Non-resident producers
D. Licensed producers not appointed by an insurer

A

License producer not appointed by an insurer

141
Q

Which of these statements regarding the annuitant is CORRECT?
A. The contract can only be signed by the annuitant
B. The annuitant is the only individual who can surrender the contract
C. The annuitant must also be the beneficiary
D. The annuitant’s life expectancy determines the annuity payments

A

The annuitant life expectancy determines the annuity payments

142
Q

Major medical insurance will typically cover medical expenses that result from
A. Crime committed by the insured
B. A self-inflicted injury
C. Intoxication
D. A negative reaction to prescribed medication

A

A negative reaction to prescribed medication

143
Q

Coordination of Benefits regulation applies to all of the following plans EXCEPT
A. Group vision plan
B. Preferred Provider Organization plan
C. Self-funded group health plan
D. Group health plan

A

Preferred Provider Organization plan

144
Q

To be eligible for small employer group coverage, an employee must work a MINIMUM of _____ hours in a typical week
A. 17.5
B. 18
C. 18.5
D. 19

A

17.5

145
Q

Which of the following pertains to the analysis of an applicant’s personal information and determining whether insurance should be issued or declined?
A. Adverse calculation
B. Underwriting
C. Risk classification
D. Actuarial determination

A

Underwriting

146
Q

A life insurance application may be backdated to
A Save on premiums
B. Increase the producer’s commission
C. Ease the underwriting requirements
D. Reduce the policy’s death benefit

A

Save on premiums

147
Q

Low frequency diseases can be exclusively covered by what kind of health insurance policies?
A. Limited policies
B. Blanket policies
C. Employer policies
D. Restricted policies

A

Limited policies

148
Q

Tim purchases an insurance policy from a producer. The producer must present to Tim a notice detailing privacy policies and practices. After this initial notice, Tim must be provided another notice
A. Every six months
B. Annually
C. Every two years
D. Every three years

A

Annually

149
Q

The IRS states that a taxpayer’s medical expenses that exceed 7.5% of their adjusted gross income is tax deductible. Which of the following may be considered a medical expense under this rule?
A. Long Term Care Insurance premiums
B. Dread Disease Insurance premiums
C. Travel Accidental Insurance premiums
D. Individual Disability Income Insurance premiums

A

Long Term Care Insurance premiums

150
Q

Which of these statements concerning Traditional IRAs is CORRECT?
A. Earnings are not taxable when withdrawn
B. Earnings are taxable when withdrawn
C. Contributions are never tax-deductible
D. Contributions are always made by the employer

A

Earnings are taxable when withdrawn

Insurance (23 decks)

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