Life and Health Insurance Final Exam

Question 1

An insurer is NOT required to provide information on fraudulent claims if requested by

Answer 1

An insured

Question 2

L, aged 50, and L’s spouse, 48 have one natural child and one adopted child. They purchase a Family Policy that covers L’s spouse to age 65. A death benefit will NOT be paid in which of the following circumstances.

Answer 2

L’s spouse dies at age 66

Question 3

An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the

Answer 3

Fair Credit Reporting Act

Question 4

Which statement regarding the Change of Beneficiary provision is True

Answer 4

The policyowner can change the beneficiary

Question 5

Which of the following BEST describes a short-term medical expense policy?

Answer 5

Nonrenewable

Question 6

F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?

Answer 6

Decreasing Term Policy

Question 7

All of the following statements about Major Medical benefits are true, EXCEPT

Answer 7

Benefits have no maximum limit

Question 8

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?

Answer 8

Consideration Clause

Question 9

Life insurance coverage will frequently contain an Accelerated Benefits rider attached to the policy. What would be considered a “qualifying event” under these riders?

Answer 9

A Medical condition resulting in a significantly-shortened lifespan

Question 10

Which of the following requires insurers to disclose when an applicant’s consumer or credit history is being investigated.

Answer 10

1970 - Fair Credit Reporting Act

Question 11

The reason for backdating a policy is

Answer 11

To obtain a premium rate based on an earlier age

Question 12

Under the Patient Protection and Affordable Care Act (PPACA) consumers have access to health coverage that is

Answer 12

Guaranteed available and renewable

Question 13

An example of unfair discrimination would be

Answer 13

Offering different terms of coverage for different policyowners having the same risk classification

Question 14

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

Answer 14

Give written notice to the producer

Question 15

T files a claim on his Accident and Health policy after being treated for an illness. The insurance company believes that T misrepresented his actual health on the initial insurance application and is, therefore, disputing the claim’s validity. The provision that limits the time period during which that company may dispute a claims validity is called

Answer 15

Time Limit on Certain Defenses

Question 16

An example of rebating would be

Answer 16

Offering a client something of value not stated in the contract in exchange for their business

Question 17

An example of an Unfair Claims Settlement Practice is

Answer 17

Turning down a claim without providing the basis of denial

Question 18

J is a subscriber to a plan which contracts with doctors and hospitals to provide medical benefits at a predetermined price. What type of plan does J belong to?

Answer 18

Health Maintenance Organization (HMO)

Question 19

N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take?

Answer 19

Claim will be denied

Question 20

An incomplete life insurance application submitted to an insurer will result in which of these actions?

Answer 20

Application will be returned to the writing agent

Question 21

Which of these statements in INCORRECT regarding the federal income tax treatment of life insurance?

Answer 21

Entire cash surrender value is taxable.

Question 22

Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?

Answer 22

Variable Universal Life

Question 23

D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D’s wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to?

Answer 23

Ex-Wife

Question 24

A policy owner is allowed to pay premiums more than once a year under which provision?

Answer 24

Mode of Premium

Question 25

A policy owner is able to choose the frequency of premium payments through what policy feature?

Answer 25

Premium Mode

Question 26

Life insurance immediately creates an estate upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit?

Answer 26

Variable Life

Question 27

K is the insured and P is the sole beneficiary on a life insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true?

Answer 27

Proceeds will be payable to K’s estate if P dies within a specified time.

Question 28

Which of the following will a Long Term care plan typically provide benefits for

Answer 28

Home health care

Question 29

An individual life insurance policy sold in Indiana can be contested by the insurer only during the first _ years of the contract.

Answer 29

2

Question 30

What action will an insurer take if an interest payment on a policy loan is not made on time?

Answer 30

Automatically add the amount of interest due to the loan balance