Final Practice Test - TX Life & Health Xcel 2024 Flashcards
In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and
a Medical Information Report
the initial premium
forward it immediately to the insurer
attending Physician Statement
the initial premium
Coverage begins on the day in which the producer collects the initial premium and has the applicant sign the life insurance contract.
A Disability Income policyowner recently submitted a claim for a chronic neck problem that has now resulted in total disability. The original neck injury occurred before the application was taken 5 years prior. The neck injury was never disclosed to the insurer at the time of application. How will the insurer handle this claim?
Claim will be paid and coverage will remain in force
Claim will be denied and coverage will remain in force
Claim will be denied and coverage will be cancelled
Claim will be denied, the coverage cancelled, and all premiums paid will be refunded
Claim will be paid and coverage will remain in force
After a policy has been in force for 2 (sometimes 3) years, it enters the incontestable period, in which the insurer may not deny a claim based on information not disclosed at the time of application.
A Medicare Supplement policy may be cancelled for which of the following reasons?
An insurer’s claims were higher than expected for the fiscal year
The premium has not been paid by the insured
The insurer’s AM Best rating has dropped
The insured’s credit rating has dropped significantly
The premium has not been paid by the insured
Failing to pay the premium would cause a Medicare Supplement policy to be cancelled.
Which of the following actions may NOT be taken by an insurance company to insure a substandard applicant for disability income coverage?
Increase the premium
Do not cover the substandard condition
Limit the type of coverage
Lengthen the contestability period
Lengthen the contestability period
An insurer may legally take all of these actions to provide disability income coverage to a substandard applicant EXCEPT “Lengthen the contestability period”.
J was reviewing her Health Insurance policy and noticed the phrase “This policy will only pay for a semi-private room”. This phrase is considered to be a(n)
hidden deductible
internal limit
restricted provision
stop loss
Internal limit
Certain types of expenses may have limits placed on the dollar amount of certain services or on the type of service provided.
An insurance company receives E’s application for an individual health policy. E did not complete all of the medical history questions because she could not remember the exact dates. E signed the policy and submitted it to the insurance company anyway. A few weeks later, E suffers a heart attack and is hospitalized without completing the medical history questions and paying the initial premium. E is not insured. Which of the following clauses details the conditions that E did not meet?
Entire Contract clause
MIB clause
Insuring clause
Consideration clause
Consideration clause
A health insurance contract is valid only if the insured provides consideration in the form of the full minimum premium and the statements made in the application
A domestic insurance company in Texas is considered a company that?
own real estate in Texas
write insurance on risks located only in Texas
is incorporated and formed in Texas
honors the charter of the National Association of Insurance Commissioners (NAIC)
incorporated and formed in Texas
In Texas, a domestic insurance company is defined as a company that is incorporated and formed in Texas.
In Texas, an individual life insurance policy is REQUIRED to have a grace period of
15 days
20 days
30 days
31 days
31 days
An individual life insurance policy issued in Texas MUST have a grace period for premium payment of 31 days.
Which of the following statements about health coverage for newborns is NOT true?
Coverage includes treatment of congenital defects
Coverage continues after the first 31 days upon payment of first premium
Coverage is limited to only congenital defects
Coverage begins at moment of birth
coverage is limited to congenital defects
All of these statements about health coverage for newborns are correct EXCEPT “coverage is limited to congenital defects”.
Which of the following statements describes what an Accident and Health policyowner may NOT do?
File a covered claim
Assign ownership
Cancel the coverage
Adjust the premium payments
Adjust the premium payments
The owner of an Accident and Health policy may not change the premium amount.
Which of the following policy features allows an insured to defer current health charges to the following year’s deductible instead of the current year’s deductible?
Deferral provision
Carryover provision
Stop Loss provision
Corridor provision
Carryover provision
The Carryover provision permits expenses incurred during the last three months of the calendar year to be carried over into the new year if needed to satisfy the deductible for the next year.
Medicare Part B does NOT cover:
occupational therapy
inpatient hospital services
physician and surgeon services
medical equipment rental
inpatient hospital services
Medicare Part B is a voluntary program designed to provide supplementary medical insurance to cover physician services, medical services, and supplies not covered under Part A.
An applicant’s medical information received from the Medical Information Bureau (MIB) may be furnished to the:
agent
applicant’s spouse
National Association of Insurance Commissioners (NAIC)
applicant’s physician
applicant’s physician
Information received from the Medical Information Bureau about a proposed insured may be released to the proposed insured’s physician.
The USA Patriot Act was enacted in:
2001
2002
2003
2004
2001
The USA Patriot Act was enacted in 2001 to detect and deter terrorism.
A policy that becomes a Modified Endowment Contract (MEC):
will no longer allow for policy loans
must be placed in an irrevocable trust
can never be reinstated after a lapse
will lose many of its tax advantages
will lose many of its tax advantages
When a policy becomes a Modified Endowment Contract (MEC), many of the tax advantages are lost.
An immediate annuity consists of a:
variable premium
flexible premium
single premium
deferred premium
Single premium
An immediate annuity has a single premium.
Which of these provisions is NOT required in life insurance policies?
Free look
Grace period
Extended Term
Entire contract
Extended term
All of these provisions must be included in life insurance policies EXCEPT “Extended Term”.
Which of these is NOT considered to be an element of an insurance contract?
the offer
acceptance
negotiating
consideration
Negotiating
The elements of an insurance contract do not include negotiating.
A Business Overhead Expense policy would cover which of the following if a business owner becomes disabled?
Contributions to employee retirement plans
Utilities and office rent
Owner’s salary
Meals and entertainment
Utilities and office rent
A Business Overhead Expense policy is designed to cover certain overhead expenses (rent, taxes, utility bills, employee’s salaries etc) that continue when the business owner is disabled.
XYZ Company pays the entire premium for its group health plan. The MINIMUM percentage of eligible employees that must be covered is:
25%
50%
75%
100%
100%
Most noncontributory group health plans require 100% participation by eligible employees.
Which of the following actions does the Commissioner of Insurance NOT have the power to conduct?
Activate insurance companies’ financial reserves
Issue a cease-and-desist order
Issue insurance licenses
Regulate the business of insurance in this state.
activate insurance companies’ financial reserves.
The Commissioner of Insurance has the power and duty to take all of these actions EXCEPT activate insurance companies’ financial reserves.
A policyowner would like to change the beneficiary on an Accidental Death and Dismemberment (AD&D) insurance policy and make the change permanent. Which type of designation would fulfill this need?
Revocable
Contingent
Irrevocable
Primary
Irrevocable
An irrevocable designation may not be changed without the written consent of the beneficiary.
T sends proof of loss to her insurer for an acceptable medical expense claim under her individual Health Insurance policy. Upon receipt, the insurer must pay the benefits
immediately
within 6 months
at the insurer’s discretion
within 3 months
Under the Time of Payment of Claims provision, the insurer must pay the benefits immediately after receiving proof of loss.
Which of the following organizations would make reimbursement payments directly to the insured individual for covered medical expenditures?
Administrative-services-only plan
Commercial insurer
Preferred provider organization
Health maintenance organization
Commercial insurer
Commercial health insurance companies use the reimbursement approach, which allows policy owners to seek medical treatment then submit the charges to the insurer for reimbursement.
Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine:
driving history
probability of making timely premium payments
if applicant is a tobacco user
overall health of the applicant
probability of making timely premium payments
The purpose of these reports is to provide a picture of an applicant’s general character and reputation, mode of living, finances, and any exposure to abnormal hazards.
Which of these is considered a statement that is assured to be true in every respect?
Estoppel
Warranty
Guarantee
Representation
Warranty
A warranty is a statement that is considered guaranteed to be true.
A(n)
Life policy combines investment choices with a form of Term coverage
Straight Whole
Variable Universal
Variable Term
Adjustable Universal
Variable Universal
Variable Universal Life combines investment choices with a form of Term coverage.
Information obtained from a phone conversation to the proposed insured can be found in which of these reports?
Agent’s report
MIB report
Inspection report
Attending physician’s report
Inspection report
An inspection report may include information obtained by a telephone call to the proposed insured.
Credit Life insurance is
illegal in this state
insurance issued on a debtor to cover outstanding loan balances
not regulated in this state
insurance issued to a creditor to cover outstanding loan balances
insurance issued on a debtor to cover outstanding loan balances
Credit Life insurance can be best described as insurance issued on a debtor to cover outstanding loan balances.
B, an insurance agent, tells his clients that their rights may be impaired if they fail to complete a release form within a given period of time. B may be found guilty of
boycotting
rebating
coercion
discrimination
Coercion
In this situation, the agent is guilty of coercion.
An applicant MUST receive an Outline of Coverage when an application is taken for a(n)
Endowment
Annuity
Medicare Supplement policy
Universal life policy
Medicare Supplement policy
An agent MUST give a prospective insured an Outline of Coverage when taking an application for a Medicare Supplement policy.
A plan through the Marketplace may be purchased by
everyone over 18 years old
any legal resident (except those imprisoned)
any legal resident (including those imprisoned)
only those who might be eligible for Medicare
Any legal resident, except those incarcerated, can purchase a plan through the Marketplace.
Health insurance benefits NOT covered due to an act of war are:
excluded by the insurer in the contract provisions
assigned to a reinsurer
given a longer probationary period
charged a higher premium
excluded by the insurer in the contract provisions
An exclusion is a provision that entirely eliminates coverage for a specified risk, such as an act of war or aviation.
The investment gains from a Universal Life Policy usually go toward:
the death benefit
the dividends
the cash value
paying off a policy loan
the cash value
In a Universal Life Policy, income is usually directed toward the cash value.
In the event of an illness, a(n) earnings. policy would reimburse an insured for loss of
Earnings Indemnity
Family Income
Medicare Supplement
Disability Income
Disability Income
A Disability Income policy would reimburse an insured for loss of earnings due to sickness.
When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have:
all statements be warranties
insurable interest in the proposed insured
the agent complete a third-party application
all those involved be family-related
insurable interest in the proposed insured
An applicant who is also the designated primary beneficiary must have an insurable interest in the proposed insured.
All of these statements concerning Settlement Options are true, EXCEPT:
Increased proceeds can be provided through accumulation of interest
Rapid depletion of proceeds can be avoided
Proceeds can be administered by the insurance company
Only the beneficiary may select
Only the beneficiary may select
This is inaccurate. Settlement options may be selected by the policyowner.
M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M’s policy goes into effect, EXCEPT:
policy is delivered
free-look period has expired
insurance company issues policy
initial premium is collected
free-look period has expired
In this situation, the policy will go into effect after all these actions occur EXCEPT the expiration of the free-look period.
The amount of monthly disability benefits payable under Social Security is affected by which of the following factors?
Insured’s tax bracket
Amount of the benefits available from other sources
Nature of the disability
Insured’s education level
Amount of the benefits available from other sources
The amount of the benefits available from other sources affects the amount of monthly disability benefits payable under Social Security.
A CEO’s personal assistant suffered injuries at home and as a result, was unable to work for four months. Which type of policy will pay a monthly benefit to the personal assistant?
Disability Income
Major Medical
Key Employee
Business Overhead Expense
Disability Income
In this situation, a Disability Income policy would pay monthly benefits.
A Hospital/Surgical Expense policy was purchased for a family of four in March of 2013. The policy was issued with a $500 deductible and a limit of four deductibles per calendar year. Two claims were paid in September 2013, each incurring medical expenses in excess of the deductible. Two additional claims were filed in 2014, each in excess of the deductible amount as well. What would be this family’s out-of- pocket medical expenses for 2013?
$500
$1,000
$1,500
$2,000
$1,000
In this situation, the insured’s maximum out-of-pocket expenses for 2013 would be $1,000.
A non-contributory plan requires participation of all eligible employees.
25%
50%
75%
100%
100%
The percentage of eligible employees participating in a non-contributory plan is required to be at 100%.
The Common Disaster clause provides that if both the insured and the sole named beneficiary were to die in a common accident, which of the following is true?
This clause provides the payment of proceeds to the insured’s estate
This clause provides the payment of proceeds to the beneficiary’s estate
The estate taxes in the insured’s estate may be reduced
The estate taxes in the beneficiary’s estate may be reduced
This clause provides the payment of proceeds to the insured’s estate
The Common Disaster clause provides that in the event of simultaneous death, the beneficiary is presumed to die first and therefore the contingent beneficiary would be next in line for proceeds. If no contingent beneficiary, then the proceeds would be paid to the
To terminate an agent’s appointment, an insurance company must
send termination notice to the Texas Department of Insurance
send termination notice to Governor
pay a termination fee
request a hearing before the Commissioner of Insurance
send termination notice to the Texas Department of Insurance
An insurance company that terminates an agent’s appointment must send notice of the termination to the Texas Department of Insurance.
L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatement of Age provision, the insurer will:
pay the death benefit in full
adjust the death benefit to an increased amount
adjust the death benefit to a reduced amount
deny the claim
adjust the death benefit to a reduced amount
In this situation, the Misstatement of Age provision in the policy specifies that the insurance proceeds will be adjusted to a reduced amount.
Which of the following Life insurance policies combine term insurance with an investment element?
Increasing Term Life
Decreasing Term Life
Universal Life
Graded Life
Universal Life
A Universal Life policy combines term insurance and an investment element.
How often must an insurance agent license normally be renewed?
Every six months
Each year
Every two years
Every three years
Every two years
Insurance agent licenses normally must be renewed every 2 years.
Which of the following situations does a Critical Illness plan cover?
Asthma
Leukemia
Alcohol rehabilitation
Severe car accident
Leukemia
Leukemia is a type of cancer and would be covered under a Critical Illness plan.
What is the MINIMUM benefit period that must be offered by a Long-Term Care policy?
12 months
18 months
36 months
48 months
12 months
A Long-Term Care policy must offer a MINIMUM benefit period of 12 months.
What is required for an agent whose license has been revoked?
Wait at least five years before applying for a new license
Wait at least ten years before applying for a new license
Submit a letter of apology to the Insurance Commissioner along with a $500 fine
Obtain a personal $500,000 E&O policy
Wait at least five years before applying for a new license
An individual whose license has been denied or revoked cannot apply again for an agent’s license for at least 5 years.
Which contract permits the remaining partners to buy-out the interest of a disabled business partner?
Group Disability
Business Continuation
Disability Buy-Sell
Key Person Disability
Disability Buy-Sell
A disability buy-sell plan allows the remaining partners to buy out the interest of the disabled business partner.
Which of the following policy provisions prohibits an insurance company from incorporating external documents into an insurance policy?
Waiver
Exceptions and Reductions
Incontestable
Entire Contract
Entire Contract
An Entire Contract policy provision prohibits an insurance company from incorporating external documents into an insurance policy.
A promotional advertising item is not considered a rebate unless it has a value equal to or less than what amount?
$50
$25
$100
$10
$25
An item that is a promotional advertising item, educational item, or traditional courtesy commonly extended to consumers and that is valued at $25 or less
An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age?
70 1/2
65
55
59 1/2
Traditional Individual Retirement Account (IRA) withdrawals are normally subject to a tax penalty if they are made before the owner reaches age 59 1/2.
During a sales presentation for a participating life insurance policy, an agent MUST
make a prospect understand that dividends are NOT guaranteed
make a prospect understand that dividends ARE guaranteed
offer to the prospect a minimum return of investment
offer to the prospect a portion of the commissions
make a prospect understand that dividends ARE guaranteed
During a sales presentation for a participating life insurance policy, an agent MUST include a statement that dividends are not guaranteed.
Which of the following is a valid reason for an enrollee to be cancelled by a Health Maintenance Organization (HMO) plan?
Nonpayment of coverage
Exceeding a specified number of claims
Starting a cigarette habit
Drinking alcohol
Nonpayment of coverage
An enrollee of a Health Maintenance Organization (HMO) may be cancelled or nonrenewed for failure to pay for coverage.
Information obtained from a phone conversation to the proposed insured can be found in which of these reports?
Agent’s report
MIB report
Inspection report
Attending physician’s report
Inspection report
An inspection report may include information obtained by a telephone call to the proposed insured.
An Evidence of Coverage form may be issued by a Health Maintenance Organization (HMO) after being approved by the
Attorney General
NAIC
Commissioner
National HMO Association
Commissioner of Insurance
A Health Maintenance Organization (HMO) may issue an Evidence of Coverage form after it has been approved by the Commissioner of Insurance.
Which of the following is a requirement for obtaining a Texas insurance agent’s license?
Be honest, trustworthy, and reliable
Be at least 21 years old
Be a college graduate
Be a high school graduate
Be honest, trustworthy, and reliable
An applicant for an agent’s license must be honest, trustworthy, and reliable.
K, age 45, and his wife, age 43, have three children. They purchase a Family Policy that covers K’s wife to age 65. All of these situations will pay a death benefit EXCEPT
K’s wife dies at age 60
K’s wife dies at age 66
A child dies at age 15
A child dies at age 18
K’s wife dies at age 66
K’s wife has coverage only until age 65.
