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Insurance License Exam > Practice Test: Missed questions > Flashcards

Practice Test: Missed questions Flashcards

1
Q

A person that is disabled under Social Security is eligible for Medicare benefits after:

A

a. 5 months (150 days)
b. 24 months (720 days)
* 29 months (870 days)
d. Determination by a Medicare formula

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2
Q

Which of the following is NOT a requirement for a captive insurance company in SC?

A

a. Maintain its principal place of business in SC
b. Appoint a resident registered agent to act on its behalf in SC
c. The Director must be an agent of the company
* Hold at least one Board of Director’s meeting every 6 months in SC. (every 12 months)

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3
Q

Under MIPPA, low income Medicare beneficiaries receiving help in applying for Medicare must reside in which area?

A

The 50 states, Washington DC or any U.S. territory

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4
Q

The Medicare Part D “doughnut hole” occurs:

A

When the individual pays a percentage of all prescription drug costs

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5
Q

A PPO Plan will usually have all the following features, EXCEPT:

A

a. Higher reimbursement for in network providers
b. Office visit co-pays
* Mandatory referrals to specialists
d. Deductibles and co-insurance for non-network providers

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6
Q

Which of the following is true about Medicare/Medicaid and Medicare supplements?

A

a. They can provide nursing home benefits needed for aging
b. Medicare and Medicaid supplements can provide nursing home benefits from an injury for 6 months
c. They all provide nursing home benefits
* None of the above

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7
Q

Agents issue a conditional receipt to the applicant after the application and premium have been collected. If an insurer accepts the coverage as applied for, when does the coverage begin?

A

The date of the application or medical exam (whichever is later).

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8
Q

What type of health plan would a university provide for its students?

A

A blanket Health Plan

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9
Q

A deferred annuity with a decreasing term life insurance rider is a :

A

Retirement income annuity

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10
Q

A pianist, lost two fingers on her right hand. Though unable to support herself as a pianist, she started teaching piano and now has many students. Her disability would likely be reclassified as:

A

Any occupation

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11
Q

Field underwriting is done by the agent/producer when he/she is face-to-face with the applicant, completing the application. The application contains three main parts:

A

General information, medical information, producer’s report

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12
Q

A qualified retirement plan that blends an IRA with a profit-sharing plan and allows the employer to deduct up to 25% of contributions made to all employees is called a:

A

SEP

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13
Q

Any of the following should be considered in a needs approach calculation, EXCEPT:

A

a. Income needed needed for daily expenses
b. Cash required retiring outstanding debt
c. Funding college tuition for surviving children
* Amount needed to retire comfortably

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14
Q

Which of the following statements concerning a Medicare Supplement plan are true?

A

a. An individual must qualify for Medicaid to be eligible for these policies
b. An insurance company must be affiliated with Medicare to sell supplement policies
c. Medicare supplements are typically available when a person reaches age 59.5 and up
* An insurance company must have a certificate of authority to market Medicare Supplements

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15
Q

Which of the following in not a correct statement about equity-indexed annuities?

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
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16
Q

Any of the following transactions will be subject to federal income tax consequences in a modified endowment contract (MEC), EXCEPT:

A

a. Policy Loans
b. Policy withdrawals
c. Partial withdrawals
* Death proceeds

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17
Q

All of the following types of policies will not be subject to coordination of benefits, EXCEPT:

A

a. Hospital indemnity policies
b. Medicare Supplement policies
* Group policies
d. Individual Health policies

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18
Q

Which of the following statements concerning the payment from a non-qualified annuity is correct?

A

a. Since this is a non-qualified plan, all payments are 100% tax free
* Since this is a non-qualified plan only a portion of the payment will be taxable
c. Since this is a non-qualified plan all the income received will be taxable
d. If the income is below a certain threshold, Jack is not required to report it.

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19
Q

All of the statements are true about universal life policies, EXCEPT:

A

a. The actual cost of the insurance is based on annually renewable term life insurance.
b. The policyowner can increase or decrease the death benefit during the policy term.
* Universal life policies are only subject to the interest rates stated in the contract.
d. The interest earned by the cash accounts has a guaranteed minimum.

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20
Q

The rates of any life insurance policy must be the same for people:

A

a. of the same gender
b. of the same geographic location
* of the same class and equal expectation of life
d. all of the above

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21
Q

What is the maximum fine the Director can levy on an insurer who intentionally violates SC insurance law?

A

$30,000

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22
Q

All of the following are non-routine dental procedures, EXCEPT:

A

a. Crowns and Fillings
b. Dentures
* Fluoride treatments
d. Bridges

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23
Q

A change of occupation provision will allow the insurance company to do any of the following at the time of the claim, EXCEPT:

A

a. pay the benefits stated in the policy
* increase the premiums for that individual
c. pay a reduced benefit for a higher risk occupation
d. require a doctor’s statement confirming disability

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24
Q

All of the following are true regarding comprehensive dental plans, EXCEPT:

A

a. Comprehensive plans have coinsurance
b. Comprehensive plans have deductibles
* Benefits are paid on a first-dollar basis
d. Comprehensive plans are also referred to as nonscheduled

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25
Q

Short-term disability plans may be designed with any of the following features, EXCEPT:

A

a. Benefits may be paid as a percentage of income
b. Benefits may be paid as a flat indemnity amount
* Benefits will coordinate with Workers’ Compensation
d. Both accidents and sicknesses will be covered

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26
Q

All of the following are limited type policies, EXCEPT:

A

a. Accident only
b. Specified disease
* Physician expense
d. Basic hospital expense

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27
Q

The children’s rider is not:

A

a. A rider to cover only the children
b. A form of term insurance
c. Part of the life policy of an insured
* A family rider

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28
Q

What is the only place that a blank insurance policy can be signed?

A

a. At the insured’s home
b. At the insured’s office
c. At a bank
* In a coin-operated machine

29
Q

What prohibited practice manipulates through the threat of a negative result?

A
  • Intimidation
    b. Coercion
    c. Boycott
    d. Fraud
30
Q

A vision plan will usually include benefits for all of the following, EXCEPT:

A

a. Annual eye exam
* Eye surgery
c. Contact lenses
d. Eyeglass frames

31
Q

Which of the following is true regarding buy-sell policies?

A
  • Premiums are not tax-deductible, but benefits are tax-free.
    b. Premiums are tax-deductible, but benefits are taxable.
    c. Premiums are tax-deductible and benefits are tax-free.
    d. Premiums are not tax-deductible and benefits are taxable.
32
Q

Martha turned 65, so she is eligible to enroll in Medicare Part B, but she is continuing to work and has a group plan. What should Martha do?

A

Obtain a certificate of insurance from her employer when she retires and Medicare will waive the penalties for late enrollment.

33
Q

Which of the following statements is true regarding key person disability income insurance?

A

Premiums are not tax-deductible, but benefits are received tax-free.

34
Q

All of the following are elements of insurable risks, EXCEPT:

A

a. Loss must occur by chance or accident
b. Large number of homogenous units
c. Loss must be predictable
* Loss must be catastrophic

35
Q

An insured neglected to mention to the producer that he had similar policies with another insurer. When this was discovered, what must the insurers do?

A

The insurers pay a proportionate share of the claim, deny amounts over actual expenses, and refund a pro rata portion of the premiums for benefits the insured was unable to collect.

36
Q

What are the basic qualifications to qualify for social security disability benefit?

A

Have proper insured status. Be unable to work at any job. Have a disability that is expected to last one year or more or result in death, and be disabled for at least 150 days.

37
Q

Which of the following statements is not true about the guaranteed insurability rider (GIR)?

A

a. This rider provides specific dates on which additional life insurance policies can be bought
b. If the option is not exercised within 90 days of the specific time, the option is foregone.
c. After a certain age, the rider may not be able to be purchased or added.
* The older the insured gets, the more frequent the purchase option dates.

38
Q

Which of the following is true about policy loans?

A

a. There is no consequence if they are not paid back.
b. They are not subject to interest.
* They are subject to interest.
d. All of the above

39
Q

If a producer tries to get an insured to cancel a policy and replace it with another policy with the same company, this is called:

A

Churning

40
Q

If an insurance producer allows their insurance license to lapse, how much time does the producer have to be reinstated?

A

6 months

41
Q

How much time does someone have to transfer funds from one IRA to another without incurring a tax penalty?

A

60 days

42
Q

All of the following are commonly used when investigating the insurability of an applicant, EXCEPT:

A

a. An attending physician’s statement
b. A credit report
c. Contacting the Medical Information Bureau (MIB)
* Talking to the neighborhood watch

43
Q

Randall’s company has taken out a life insurance policy on a key employee- John. John is the insured, but the company is the owner of the policy. What rights does John have as the insured?

A

a. Choice of premium mode
b. Beneficiary designation
c. Take out a policy loan
* None of the above

44
Q

Which of the following is not true about the payor rider?

A
  • There is no added premium for this rider.
    b. The premiums can be waived until the juvenile reaches a specified age.
    c. The premiums can be waived until the maturity date of the contract
    d. The insurance remains in force even if the premiums are not paid.
45
Q

A common life insurance provision is the _________, which states that if there is insufficient proof to show order of death when the insured and beneficiary die in the same accident, it is presumed that the insured died last, and the proceeds are payable to the named contingent beneficiary.

A
  • Uniform simultaneous death act
    b. Per capita and per stirpes
    c. Facility of payment
    d. Spendthrift clause
46
Q

To protect a policyholder from an inadvertent lapsing of a contract, the automatic premium loan (APL) provision may be added to a cash value life policy. Which of the following statements is not true about this provision?

A
  • It can be applied for at any time.
    b. The policy will lapse if there is not enough cash value to cover the premium payment
    c. Reinstatement is not available if the policy lapses for lack of payment
    d. Outstanding loan amounts are deducted from the death benefit.
47
Q

Which of the following statements is true about a waiver of premium rider?

A

a. A waiver of premium rider can only be added to a regular life policy.
b A waiver of premium rider cannot be added to a term policy
* A waiver of premium rider can be added to a term policy
d. A waiver of premium rider cannot be added to a life policy once the policy is approved

48
Q

A clause that protects a beneficiary from creditors coming after the proceeds of a policy is called which of the following?

A

a. Beneficiary protection clause
b. Insuring clause
c. Incontestable clause
* Spendthrift clause

49
Q

Annuities have a variety of payout options. These options provide the annuitant with choices on how the annuity settlement will occur. All of the following are annuity payout options, EXCEPT:

A

a. Cash (lump sum)
b. Annuity certain
* Flexible payment
d. Refund life annuity

50
Q

All periodic premium annuities are:

A

a. Level premium
b. Flexible premium
c. Fixed
* Deferred

51
Q

A qualified retirement plan differs from a non-qualified retirement plan in all of the following ways, EXCEPT:

A
  • Contributions to a non-qualified plan are deductible on a current basis.
    b. Qualified plans have specific rules on participation and non-qualified plans do not.
    c. Highly compensated employees may be limited by qualified plans and non-qualified plans do not have the same limits.
    d. Qualified plans are subject to annual discrimination tests and non-qualified plans are not.
52
Q

What provision of a health policy may cover pre-existing conditions?

A
  • Time limit for certain defenses
    b. Entire contract
    c. Insuring clause
    d. Exclusions
53
Q

All of the following provisions are mandatory in health policies, EXCEPT:

A
  • Coinsurance
    b. Grace period
    c. Payment of claims provision
    d. Reinstatement provision
54
Q

All of the following may be exclusions from coverage in a health policy, EXCEPT:

A

a. Injury while committing a felony
* Sickness while travelling abroad
c. Treatment for drug and alcohol abuse
d. Self-inflicted injury

55
Q

To protect against a disabled person receiving more income by being disabled than they can earn by working, most group disability plans will offset policy benefits with any of the following benefits, EXCEPT:

A

a. Wage continuation plans
* Medicaid
c. Social Security
d. Worker’s Compensation

56
Q

Bernie is disabled and wants to apply for disability under Social Security. In order to qualify, he must meet all of the following requirements, EXCEPT:

A

a. Total and permanent disability and he must not be able to work
b. He must have earned the necessary number of quarters of coverage.
* There is a 6 month waiting period.
d. The disability is expected to last 12 months or more, or result in death.

  • The waiting period for Social Security disability benefits is 5 months or 150 days.
57
Q

What is the maximum length that COBRA benefits may be extended:

A

a. 12 months
b. 18 months
c. 24 months
* 36 months

  • Individuals may continue their group health coverage under COBRA for 18 months. Covered dependents are eligible for coverage up to 36 months if the insured’s coverage is terminated due to death, divorce, the insured becomes eligible for Medicare or the dependent loses dependency status.
58
Q

HIPAA recognizes time served under group plans to determine pre-existing condition restrictions. If a person is not covered, what is the maximum period they are allowed to go without coverage before the HIPAA requirements become void?

A

63 days.

  • If a person is without creditable group coverage, including COBRA options, for 63 days the clock for creditable coverage starts again. With a 63 day lapse, the insurance company may apply pre-existing condition clauses without recognizing prior coverage.
59
Q

Underwriting is the process that insurance companies use to select, classify and rate risks. What is the biggest source of information used in underwriting?

A

Application

60
Q

Susan is buying a life insurance policy. Which of the following disclosures provides specific information about the policy purchased, such as the premium and benefits?

A

Policy Summary

61
Q

Martin is applying for a life insurance policy. When is a statement of good health required:

A

The application does not include the premium.

62
Q

In a business overhead expense policy (BOE), which of the following is TRUE?

A

Benefits are taxed, and premiums are deductible.

63
Q

Surin Global has a group health policy and a group disability policy for its employees. They pay 75% of the premium for the disability policy, and they pay 100% of the premium for the health plan; which of the following statements is correct?

A

The health plan is noncontributory, and twenty-five percent of the benefits are not taxable in the disability plan.

  • The health plan is noncontributory because the employer pays for the full amount of the premiums. In a group health policy, premiums are deductible for the employer, and benefits are tax-free for the employee. Benefits are not taxable because they are covering a loss; note the difference between group disability plans where benefits are taxable to the employee.
64
Q

Surin Global has a group disability policy for its employees. They pay 70% of the premium, and Bobby their employee pays 30%; which of the following statements are correct?

A

Bobby will receive 70% of the benefits not tax-free and 30% of the benefits tax-free.

  • Bobby will receive 30% tax-free, but will have to pay taxes on the 70% that his employer pays. In a group disability policy, premiums are deductible for the employer, and benefits are taxable to the employee. If an employee pays a percentage, the benefits are tax-free for the part the employee pays.
65
Q

Jeb has an individual health policy, which of the following are TRUE?

A

Benefits are tax-free, and premiums are not deductible

  • In an individual health policy the premiums are not deductible, but benefits are tax-free.
66
Q

Piper has an individual disability policy, which of the following is TRUE?

A

Benefits are tax free, and premiums are not deductible.

67
Q

Combination plans are intended to be representative of the needs of the insured. One such plan is called the ___________, which combines ordinary life and level term insurance. It provides monthly income for a stated period of 10, 15, or 20 years, or to an age, as selected by the insured.

A

Family maintenance policy

  • Family maintenance policy combines ordinary life and level term and does provide an income stream for a designated number of years of a designated age.
68
Q

A universal life plan differs from a whole life plan in all of the following ways, EXCEPT:

A

The cost of life insurance may vary from year to year on a universal life contract.

Insurance License Exam (7 decks)

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