Exam Simulator

What are two components of a universal policy?
Insurance and Cash Account
What are 3 details in the underwriting process for life insurance?
Selection, classification, and rating of risks
What are two types of reserves?
Premium and loss
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When an insurer neglects to pay a legitimate claim that is covered under the terms of the policy, what has the insurer violated?
Consideration
What is the binding force in a contract?
Consideration
What is consideration on the part of the insured?
The payment of premiums
What is a difference in the comparison between private and government insurers?
Private insurers may be authorized to transact insurance by state insurance departments.
The following is an example of what type of authority: The agent accepts a premium payment after the end of the grace period.
Apparent Authority
A Universal Life insurance policy has two types of interest rates that are called:
Guaranteed and Current
What type of policy covers unusual risks that are NOT normally included under Accidental Death and Dismemberment coverage?
Special Risk Policy
What is the term used to describe a person, other than a viator, that enters into or effectuates a viatical settlement contract?
Viatical settlement Provider
True/False: Fixed annuities provide a minimum guaranteed rate of interest
False
True/False: Fixed annuities provide a hedge against inflation
True
True/False: Income Dependencey Period is considered and income period.
False
The document that describes an insured’s medical history, including diagnoses and treatments?
Attending Physician’s Statement
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
5 Days
When an insured, upon the end of a term policy with guaranteed renewable option, may answer medical questions to prove insurability and qualify for a discounted premium rate is called:
Re-Entry
To sign up for a medicare prescription drug plan, individuals must first be enrolled in which parts of medicare
Medicare Part A or Parts A and B
An insured pays a small $100 premium every month, yet the insurer promises to pay a high percentage of all medical costs. What element of an insurance contract does this describe?
Aleatory
What is NOT able to be changed in an adjustable life policy
Type of investment
True/False: Regarding a deferred annuity, income payments begin within 1 year from the date of purchase.
False
True/False: Presumptive disability plans offer full benefits for specified conditions
True
True/False: An individual is terminated from his full-time job at the age of 67 is eligible for COBRA benefits.
False
If withdrawn before age 65, non qualified distributions from an MSA are included in the employee’s gross income and subject to a penalty tax of how much?
15%
What is true regarding a term health policy?
It is nonrenewable
Without creating a formal corporate insurance structure,what could a group of individuals form to help share their losses?
Risk-sharing pool
Events or conditions that increase the chances of an insured loss occuring are referred to as:
Hazards
Most HMO’s operate through what type of system?
A group enrollment system either at their place of employment or as a member of an association
If a life insurance policy is deemed to be a modified endowment contract, the policy loans:
Will be taxed on a last-in-first out basis.
A great reason to purchase life insurance rather than an annuity is:
to create an estate
Contracts that are prepared by one party ans submitted to the other party on the “Take it or Leave it” basis are classified as:
Contracts of Adhesion
True/False: In regards to the 1035 exchange, A whole life insurance policy can be exchanged for a term insurance policy.
False
What type of policy would be an example of a limited accident and health insurance policy?
A Dread disease policy
The primary requirement in order to receive Medicaid benefits is based upon:
Need
How often must domestic insurance companies be examined by the Chief Financial Officer in Florida?
At least every 5 years
True/False: Medicare Part A services include outpatient Hospital Treatment.
False
True/False: A deferred annuitiy has a payout within 1 year.
False
Which component must increase in the increasing term insurance?
Death Benefit
What is the purpose of establishing the target premium for a universal life policy?
To keep the policy in force
True/False: A Payor Benefit Rider would cause the Death Benefit to increase.
False
How does a payor Benefit rider pay?
It only pays the premium if the payor is disabled or dies.
A peril is most easily defined as:
The cause of loss insured against.
What is the name of the person who refers subscribers to specialists for necessary treatment, disapproves requests for procedures from subscribers that he/she feels is not medically necessary or advantageous?
Gatekeeper
Susan owns an individual long-term care insurance plan and is able to deduct the premiums from her taxes. What income taxation will be imposed on the benefits she receives?
None
The terms and conditions of a life insurance policy is found in the
Policy clauses and provisions
True/False: If life insurance benefits for minors is placed in the hands of either a guardian or a trustee, the guardian may or may not be acountable for assets.
True
True/False: Someone who works 400 hours per year would qualify for a Keogh Plan.
False. A person must have worked at least 1000 per year.
True/False: A person is enrolled in Part A of Medicare and not Part B. Three months into coverage, he applies for a Medicare supplement policy. Can the insurer deny coverage?
True
Under the OBRA of 1990 Medicare supplement insurance may not be denied on the basis of an applicant’s health status, claims experience, or medical condition during the first six months after a medicare beneficiary age 65 or older first enrolls in Part B of Medicare.
True/False: During a replacement of life insurance, a replacing insurer must obtain a list of all insurance policies that will be replaced.
True
True/False: Concerning the taxation of a traditional IRA early distributions are always subject to penalty.
False
True/False: Regarding Blue Cross and Blue Shield, they are considered insurance companies.
False
A participant contributes mor than the maximum amount to her Roth IRA. What kind of tax penalty will he or she have to pay?
6%
Which renewability provision allows an insurer to terminate a policy for any reason, and to increase the premiums for any class of insureds?
Optionally Renewable
Under which condition would an employee’s group medical benefits be exempt from income taxes?
An employee’s group medical benefits are generally exempt from taxation as income.
Bob owns an adjustable life policy. Sometime in the future he wants to increase the death benefit. Which statement would be correct regarding this change?
The death benefit can be increased by providing evidence of insurability.
Who can make changes to the policy once its in effect?
An executive officer of the insurer.
Social Security Supplement or Social Security Riders are used to supplement or replace benefits that might be payable under social security disability. In which of the following situations would these NOT provide for the payment of income benefits?
When the amount payable under social seurity is more than the amount payable under the rider.
Which report will provide the underwriter with the information about a consumer’s credit?
Consumer Report
What are the three main differences between fixed and variable annuities?
License Requirements
Interest Rate
Underlying Investment
If a person holds licenses to sell both life and property insurance, how many hours of life insurance continuing education will ther person need to complete every 2 years?
12 hours.
If a parent would like to enroll a child over the ane of 5 into the Florida Healthy Kids Program, their family income must be under what percentage of the federal proverty level?
200%
What type of insurance provider woule be considered a risk sharing arrangement?
Recriprocal
True/False: Flying on a commercial airline required by your job is a factor in the underwriting process?
False
What rider provides for a waiver of premium when the policy owner and the insured are NOT the same person?
Payor benefit
A business wants to make sure that if a key employee becomes disabled, the business will be protected from any resulting loss. What kind of insurance will protect the business?
Business Disability
What would NOT be a way to determine the interest rate in a Universal Life Policy?
Some insurers base their interest rate on the estimated market conditions for the life of the policy.
What is the advantage of reinstating a policy instead of applying for a new one?
The original age is used for premium determination.
What clause is said to be the “Heart of the Policy,” containing the company’s promise to pay?
Insuring Clause
What is true regarding the agent’s appointments?
A person may hold several appointments at one time.
The rider that may be added to a disability income policy that allows for an increase in the benefit amount under certain conditions is called:
Cost of Living (COLA)
An HSA holder who is 65 years old decides to use the money in the account for non-health expense. WHich of the following is true?
he will have to pay tax.
A family’s income need is greatest during which period?
Family Income Dependency
What is the Family Dependency Period?
The period when, should the insured die prematurely, the surviving spouse will have dependent children to support.
What is the unpaid premium provision?
If a premium is past due and the insurer owes claim payment, the amount of the premium will be deducted from the amount of the claim.
What is the maximum penalty for habitual willful noncompliance with the fair credit reporting act?
$2,500
Agents are required by law to maintain records of insurance transactions pertaining to premium payments for at least:
3 years
An agent’s appointment has been declined. Which of the following is true?
State taxes may be refunded upon a written request.
True/False: HMO coverage is divided into geographic territories.
True
True/False: Regarding insurable risks, insureds cannot be randomly selected.
False. Selecting insureds randomly will help the insurer to have a fair proportion of good risks to poor risks.
True/False: Persons disabled before the age of 24 can qualify for social security benefits with only 6 work credits earned in the 3 years prior to the start of the disability.
True
What is the most common time for error and omissions to occur in the part of an insurer?
Policy Delivery & Sales interview
True/False: Replacing insurance policies for the purpose of making commissions is legal
False. This is called Churning which is illegal.
What option allows the insured to periodically increase benefit levels without providing evidence of insurability?
Guarantee of Insurability
True/False: Protection from the policyowner’s creditions would be a benefit of a suvivorship life policy.
False
True/False: Federal Deposit Insurance Corporation (FDIC) is is a government insurance program.
False
An insured has medicare Part D Coverage. He has reached his initial benefit limit and must now pay 100% of his prescription drug costs. What is the term for this gap in coverage?
Doughnut hole
What would be an example of a limited accident and healt insurance policy?
A dread disease policy
True/False: Concerning the COBRA Act of 1985, It requires all employers, regardless of the number or age of employees to provide extended group health coverage.
False
True/False: COBRA Act applies to only employers with 20 or more employees
True
In a deferred annuity, how do the current and guaranteed interest rates work together?
The owner will receive the guaranteed rate or the current rate, whichever is higher.
The insurer may suspect that a moral hazard exists if the policy holder:
Was not honest about all aspects regarding his health on an application for insurance
When a replacement is involved, a replacing insurance company is responsible for all of the following EXCEPT:
Provide a copy of the important notice regarding replacement of Life insurance to the applicant.
In comparison to consumer reports, what would describe a unique charasteristic of investigative consumer reports?
The customer’s associates, friends, and neighbors provide the report’s data.
True/False: Regarding the characteristics of a group life insurance plan, there is a requirement to prove insurability on the part of the participants.
False
When an insurer appoints an agent,
The insurer is bound by the agent’s acts.
When a homeowner purchases insurance on their home, what risk management technique are they practicing?
Transfer
What is the initial period of time specified in a disability income policy that must pass, after the policy is in force, before a loss can be covered?
Probationary Period
What is a Family Income policy?
Provides monthly income upon the death of the insured while maintaining permanent coverage until the end of the income payments by combining decreasing term insurance and whole life insurance.

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