For My Downline (Study This) Flashcards
During the course of an insurance business transaction, who does the producer legally represent? A. Producer B. Insured C. Insurance Company D. Beneficiary
Answer: C The Insurance Company
Which type of provider is known for stressing preventative medical care?
A. Multiple Employer Welfare Arrangements (MEWA)
B. Major Medical Provider
C. Health Maintenance Organizations (HMO’S)
D. Preferred Provider Organizations (PPO’s)
Answer: C Health Maintenance Organizations (HMO’s)
The Life and Health Insurance Guaranty Association is:
A. An entity that assists in underwriting large insurance policies
B. Funded by admitted insurance companies through assessments
C. Funded by the state government
D. Administered by the Federal Government
Answer: B Funded by admitted insurance companies through assessments
T is an insurance license applicant who intends to primarily engage in insurance transactions on himself and his family. If the Insurance Department is made aware of this, T will most likely
A. Not be issued a license
B. Be deemed untrustworthy
C. Issued a license
D. Be directed to apply for a surplus lines license
Answer: A Not be issued a license
What type of insurance company is domiciled in England, but conducts business in Indiana A. Foreign B. Domestic C. Alien D. Transatlantic
Answer: C Alien
S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary?
A. $100,000
B. $50,000
C. Refund of premiums paid plus interest
D. No claim will be paid because cause of death was from natural causes
Answer: B $50,000
Who is responsible for determining if Long-Term Care coverage is appropriate to meeting an applicant’s needs? A. Commissioner B. Applicant C. Producer D. Insurance Company
Answer: C Producer (In Indiana, the Producer is responsible for determining if Long Term Care coverage is appropriate to meeting an applicant’s needs.)
An annuity promises that, if the annuitant dies before receiving payments equal to the correct value, the payments will be continued to a beneficiary until an amount equal to the contract value has been paid. This type of annuity is called: A. An Installment Refund Annuity B. A Straight Life Annuity C. A Cash Refund Annuity D. A Joint Life Annuity
Answer: A An Installment Refund Annuity
Why would the Commissioner examine the records of an insurance company?
A. To determine the solvency of the company
B. To set insurance rates for the company
C. To assist in underwriting
D. To assess the company’s value
Answer: A To determine the solvency of the company
Which of the following plans is NOT required to meet Minimum Essential Coverage (MEC) standards under the Affordable Care Act (ACA)?
A. Medicare
B. Medicaid
C. Workers’ Compensation
D. Children’s Health Insurance Program (CHIP)
Answer: C Workers’ Compensation
M’s insurance company denied a reinstatement application for her lapsed health insurance policy. The company did not notify M of this denial. How many days from the reinstatement application date does the insurance company have to notify M of the denial before the policy will be automatically placed back in force? A. 10 days B. 30 days C. 45 days D. 60 days
Answer: C 45 days
A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of its members is known as:
A. A Fraternal Benefit Society
B. A Stock Insurer
C. A Mutual Insurer
D. The Life and Health Insurance Guaranty Association
Answer: A Fraternal Benefit Society
The investment gains from a Universal Life Policy usually go toward: A. The Death Benefit B. The Dividends C. The Cash Value D. Paying Off A Policy Loan
Answer: C The Cash Value
Traditional Individual Retirement annuity (IRA) distributions must start by:
A. Age 59 ½
B. Age 65
C. April 1st of the year following the year the participant attains age 59 ½
D. April 1st of the year following the year the participant attains age 70 ½
Answer: D April 1st of the year following the year the participant attains age 70 ½
The part of a life insurance policy guaranteed to be true is called a(n): A. Representation B. Exclusion C. Warranty D. Waiver
Answer: C Warranty
Which of the following factors affects the amount of monthly disability benefits payable under Social Security?
A. The cause of the disability
B. The amount of the benefits available from other sources
C. The number of children dependent on the recipient
D. The state in which the recipient lives
Answer: B The amount of the benefits available from other sources
If an individual has an Accidental Death and Dismemberment policy and dies, an autopsy can be performed in all these situations, EXCEPT:
A. When the cause of death is unknown
B. When the state prohibits this by law
C. When consent for the autopsy is not obtained
D. When foul play was a contributing factor
Answer: B When the state prohibits this by law
What year was the McCarran-Ferguson Act enacted? A. 1944 B. 1945 C. 1946 D. 1947
Answer: B 1945
All of these statements are true regarding a child qualifying for coverage under the Indiana Children’s Health Insurance Program, EXCEPT:
A. Must be a resident of Indiana to qualify
B. Must be under 19 years of age to qualify
C. Family’s income level must be greater than 150% of Federal poverty level, but less than 200%
D. Must have been born in the United States to qualify
Answer: D Must have been born in the United States to qualify
An individual who in any manner sells, solicits, or negotiates insurance on behalf of insurance companies for compensation is an insurance: A. Solicitor B. Adjuster C. Producer D. Representative
Answer: C Producer
All are true statements regarding the underwriting process, EXCEPT:
A. Signed consent from the applicant must be provided in order to test for AIDS and HIV virus
B. AIDS and HIV virus exams can be conducted in a discriminatory fashion
C. The cost of any examination is paid for by the insurer
D. The original application is the primary source of information used in the underwriting process
Answer: B AIDS and HIV virus exams can be conducted in a discriminatory fashion
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies? A. Family Maintenance Policy B. Family Income Policy C. Survivor Policy D. Family Survivor Policy
Answer: A Family Maintenance Policy
Qualified Long-Term Care policies may take into consideration an applicant’s pre-existing conditions for a maximum of not more than _ month(s) prior to the effective date of coverage. 1 6 12 24
Answer: B 6
On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer take?
A. Collect initial premium
B. Collect initial premium along with a signed health statement
C. Explain to the applicant the policy is no longer in effect due to change in health condition
D. Collect initial premium and leave a binding receipt
Answer: B Collect initial premium along with a signed health statement
A “reimbursement policy” pays what amount of covered Long-Term Care expenses?
A. All expenses regardless on the policy limits
B. Actual covered expenses up to the daily maximum
C. A daily dollar amount regardless of the actual incurred expenses
D. The usual, customary, and reasonable expenses regardless of the policy limits
Answer: B Actual covered expenses up to the daily maximum
T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?
A. Request will be accepted only if in writing by the insured
B. Change will be made only if premiums are paid current
C. Change will be made immediately
D. Request of the change will be refused
Answer: D Request of the change will be refused
A policy that becomes a Modified Endowment Contract (MEC)
A. Will no longer allow for policy loans
B. Must be placed in an irrevocable trust
C. Can never be reinstated after a lapse
D. Will lose many of its tax advantages
Answer: D Will lose many of its tax advantages
A policy of adhesion can only be modified by whom? A. The agent B. The applicant C.The primary beneficiary D. The Insurance company
Answer: D The Insurance company
Additional coverage can be added to a Whole Life policy by adding a(n): A. Payor rider B. Accelerated benefit rider C. Decreasing term rider D. Automatic premium loan rider
Answer: C Decreasing Term Rider
A policy of adhesion can only be modified by whom? A. The agent B. The applicant C. The primary beneficiary D. The insurance company
Answer: D The insurance company
Which of these statements accurately describes the Waiver of Premium provision in an Accident and Health policy
A. Past due premiums on a lapsed policy are waived and coverage is restored
B. The insured is paid a monthly benefit to keep insurance premiums current in the event of total disability
C. Premiums are waived after the insured has been unemployed for a specified time period
D. Premiums are waived after the insured has been totally disabled for a specified time period
Answer: D Premiums are waived after the insured has been totally disabled for a specified time period
In the event of employment termination, a person covered by a group policy also has the right to convert such coverage to an individual policy within _ days without proving insurability. A. 15 B. 30 C. 31 D.45
Answer: C 31
Which of the following permits an insurance company to transact business in Indiana? A. Certificate of admission B. Certificate of domestication C. Certificate of authenticity D. Certificate of authority
Answer: D Certificate of authority
Medicare Part B does NOT cover: A. Occupational therapy B. Inpatient hospital services C. Physician and surgeon services D. Medical equipment rental
Answer: B Inpatient hospital services
What would the Medical Information Bureau (MIB) identify?
A. Testing positive for marijuana use from a previous screening
B. Existing life insurance coverage with other carriers
C. Credit scores
D. Primary physician
Answers: A Testing positive for marijuana use from a previous screening
If an insurer offers health coverage to an employee, the insurer MUST inform the employer of all of the following information EXCEPT:
A. The provisions relating to renewability of coverage
B. The provisions relating to exclusions
C. The benefits and premiums available under all health insurance coverage for which the employer is qualified
D. The terms of the insurer’s provider agreements
Answer: D The terms of the insurer’s provider agreements
What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time? A. Modified whole life B. 20-year paid up policy C. Endowment D. Decreasing term
Answer: D Decreasing term
All of these statements about Equity Indexed Life Insurance are correct, EXCEPT:
A. Cash value has a minimum rate of accumulation
B. If the gain on the index goes beyond the policy’s minimum rate of return, the cash value will mirror that of the index
C. The premiums can be lowered or raised, based on investment performance
D. Tied to an equity index such as the S&P 500
Answer: C The premiums can be lowered or raised, based on investment performance
A whole life policyowner does not wish to continue making premium payments. Which of the following enables the policyowner to sell the policy more than it’s cash value? A. Cash surrender B. Life settlement contract C. Buy-sell arrangement D. 1031 Exchange
Answer: B Life settlement contract
To be eligible for Social Security disability benefits, an employee must be unable to perform:
A. Any occupation
B. His/her current occupation
C. Any occupation that reflects the employee’s education level
D. Any occupation that the employee is qualified and willing to do
Answer: A any occupation
An insurance company that has qualified and received a Certificate of Authority from the Department of Insurance to sell insurance in this state is considered to be a(n) _ insurer. A. Reciprocal B. Accepted C. Domestic D. Admitted
Answer: D Admitted
The annuity that represents the largest possible monthly payment to an individual annuitant is a(n): A. Cash Refund B. Installment refund C. Straight Life annuity D. Life annuity with period certain
Answer: C Straight life annuity
Which of the following statements about accumulated interest earned on dividends from an insurance policy is TRUE? A. It is not taxable B. It is tax deductible C. It is taxed as capital gains D. It is taxed as ordinary income
Answer: D It is taxed as ordinary income
How does a typical Variable Life Policy investment account grow?
A. Tied to price of gold
B. Through mutual funds, stocks, bonds
C. Based on returns from insurer’s general account
D. Tied to Treasury Bills
Answer: B Through mutual funds, stock, bonds
Which of the following best describes a contingent beneficiary
A. Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured
B. Person designated by the primary beneficiary’s executor to receive policy proceeds
C. Person designated by the state to receive policy proceeds in the event that the primary beneficiary dies
D. Person designated by the insurance company to receive policy proceeds in the event that the primary beneficiary dies
A Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured.
N has a Major Medical policy that only pays a portion of N’s medical expenses. N is responsible for paying the remaining balance. This provision is known as: A. Assignment of Benefits B. Coinsurance C. Indemnity D. Co-deductible
Answer: B Coinsurance
What type of life insurance incorporates flexible premiums and an adjustable death benefit? A. Endowment Policy B. Modified Whole Life C. Decreasing Term D. Universal Life
Answer: D Universal Life
A variable insurance policy:
A. Guarantees a minimum rate of return
B. Does not allow the policyowner to assume the investment risk
C. Does not guarantee a return on its investment accounts
D. Does not guarantee an assignment provision
Answer: C Does not guarantee a return on its investment accounts
A physician opens up a new practice and qualifies for a $7,000/month Disability Income policy. What rider would the physician add if he wants the ability to increase his policy benefit as his practice and income grow? A. Extended Term rider B. Cost of Living Adjustment rider C. Guaranteed insurability option rider D. Waiver of Premium rider
Answer: C Guaranteed Insurability Option rider
Which of the following provisions specifies how long a policyowner’s health coverage will remain in effect if the policyowner does not pay the premium when it is due? A. Grace Period B. Consideration C. Waiver of Premium D. Reinstatement
Answer: A Grace Period
What is the purpose of the Indiana Life and Health Insurance Guaranty Association?
A. Ensures that claims filed against insolvent insurance companies will be paid
B. Enforces Indiana’s insurance regulations
C. Approves policy forms
D. Underwrites high-risk insurance applicants
Answer: A Ensures that claims against insolvent insurance companies will be paid
All of these statements concerning Settlement Options are true, EXCEPT:
A. Increased proceeds can be provided through accumulation of interest
B. Rapid depletion of proceeds can be avoided
C. Proceeds can be administered by the insurance company
D. Only the beneficiary may select
Answer: D Only the beneficiary may select
The incontestable clause allows an insurer to:
A. Disallow a change of ownership throughout the Contestable period
B. Disallow a change of beneficiary during the Contestable period
C. Contest a claim at anytime if the cause of death was accidental
D. Contest a claim during the contestable period
Answer: D contest a claim during the contestable period
Under which of the following circumstances will the benefits under COBRA continuation coverage end?
A. Employee has become uninsurable
B. All group health plans are terminated by the employer
C. Employer moves headquarters to another state
D. Employee becomes permanently disabled
Answer: B All group health plans are terminated by the employer
