Which policy provision permits the policy owner to take a specified number of days to examine the contract, and allows for cancellation and a full refund if the policy owner rejects the terms or costs?
Free Look
When will a policy pay on a UCR basis?
When particular benefits are not listed on a payment schedule
Which type of rider reimburses health and social service expenses incurred in a convalescent or nursing home facility?
long term care rider
Which of the following is exempted from the incontestability provision in insurance policies?
Fraudulent misstatements
What does first dollar coverage mean?
As soon as covered medical expenses are incurred, the policy begins to pay
What is the waiver of premium provision?
In a long term care contract, the premium is waived after the insured has been confined for a specific period of time
According to the Time Payment of Claims provision, the insurer must make the payment immediately after receiving proof of loss EXCEPT
for claims involving periodic payments
Which is a disadvantage to a flexible premium annuity?
the actual amount of the annuity benefit cannot be determined in advance
When a policy or certificate containing an accelerated benefit provision is applied for or delivered, the producer is responsible for providing that applicant a summary of coverage that includes all of the following EXCEPT
a detailed and comprehensive summary of the accelerated benefit
which one of the following represents an advantage of obtaining a policy loan versus a withdrawal?
the loan is not taxed while a withdrawal is taxed for amounts above the contract cost basis
How does a noncancelable policy differ from a guaranteed renewable policy?
with the non cancelable policy the insurer may increase premiums only based on the terms of the policy
What does it mean if a health policy is conditionally renewable?
Insurer may elect NOT to renew only under the conditions specified in the policy
When the suicide clause is inserted in a life insurance contract, death by suicide is not covered during the policy’s initial:
2 year period
What does coinsurance mean?
The insurer and the insured share expenses over the deductible.
Which of the following must be given to the insurer within 20 days after occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible?
Notice of claim
The right to change the beneficiary or dispose of the policy or its benefits in any manner one chooses is reserved to the policy owner UNLESS which of the following is true?
The policy owner has named an irrevocable beneficiary
Which of the following refers to how often a premium is paid?
Mode
All of the following are common exclusions from loss found in disability income policies EXCEPT for that incurred while
Committing a misdemeanor
At which point are contractual death benefit settlement options determined and by whom are they determined?
At the time the policy is purchased by the owner of the policy
All of the following are ownership rights EXCEPT
Switching the policy from one insured to another
All of the following are TRUE regarding incomplete applications EXCEPT
The incomplete application can be accepted with the missing information added later
A consumer report used to determine eligibility for insurance may include all of the following EXCEPT
Medical underwriting exam
All of the following are required signatures on a life insurance application EXCEPT
The minor in a juvenile policy
Why are insurance policies considered conditional contracts?
Certain conditions need to be met to make the contract legally enforceable.
When does insurable interest come into play in a life insurance policy?
when the applicant for the policy is not the insured
Which of the following occurs immediately after the application is submitted and the initial premium paid?
the underwriting process begins
Obtaining consumer information reports under false pretenses is prosecutable by which of the following?
Fair Credit Reporting Act
What is the purpose of Stranger-originated life insurance (STOLI)?
the policy is originated primarily or solely for the purpose of resale
All of the following are classifications of risk EXCEPT
non-nicotine
What specific new procedures does the USA Patriot Act require of insurance companies?
Establish an anti-money laundering program
What procedure is used by an insurer to protect itself in the event a dispute arises and the applicant and the agent do not recall the changes that were made in a completed application?
The applicant and possibly the agent initial any changes made.
What is a MIB report?
medical information on an applicant for assessing life or health insurance risk
How do warranties differ from representations?
a warranty is guaranteed to be true, a representation is believed to be true to the best of one’s knowledge.
If the insurer wishes to share an applicant’s HIV status, the applicant must be given full notice of all of the following EXCEPT
the treatment procedures that are covered by the policy.
Which of the following was specifically designed to address STOLI and IOLI practices?
NCOIL Act
Why is rehabilitation considered worthy of federal help under workers’ compensation?
it reduces insurance losses and helps regain the worker’s dignity
In a case where an individual’s health is insured by both their own policy and their spouse’s policy, which policy pays in the event of an illness?
The individual’s policy pays first, the spouse’s policy pays the remaining up to coverage amount.
The group conversion option is allowed for all of the following EXCEPT
during the annual benefits enrollment period.
What type of insurance should a company purchase if it wants to insure the life of its CEO?
key person insurance
All of the following are tax qualified retirement plans EXCEPT
Section 529 plan.
Why is relying solely on employer group life insurance generally considered inadequate for most individual’s needs?
It is financially insufficient to cover end of life expenses.
For an individual long-term care policy there is an annual dollar limit for tax deductions that is based on which of the following?
age
When can the premiums of an individually owned health insurance policy be deducted from the individual’s income tax?
when the taxpayer’s medical expenses exceed 7.5% of adjusted gross income during a taxable year
In noncontributory plans, which percentage of eligible members must participate?
100%
Short term disability insurance generally only covers injuries due to which of the following?
Non-occupational injuries
Managed care plans increase efficiency by all of the following means EXCEPT
transferring the management of costs to the insureds.
Under which situation must insurable interest exist between the applicant and insured at the time of application?
When a third-party applicant names themselves beneficiary
Which of the following is characteristic of a nonqualified plan?
plan does not meet federal guidelines for tax benefits
In a home healthcare benefit, all of the following are eligible expenses EXCEPT
blood transfusions
All of the following are requirements to qualify for Social Security disability benefits EXCEPT when
unable to work in occupation in which the worker was trained or educated
How long after being entitled to disability benefits will an individual be eligible to receive Medicare benefits?
2 years
Which of the following amends the Social Security Act to make Medicare secondary to group health plans?
TEFRA
Which of the following is TRUE of a point of service plan?
A patient’s care is coordinated by an in-network primary care physician.
A group conversion option may be used in all the following instances EXCEPT
a life-changing event, such as marriage, divorce, or childbirth
Which problem was universal life insurance designed to address?
low interest rates during periods of high inflation
Compared to basic hospital, medical and surgical policies, which type of insurance provides broader coverage, fewer gaps, higher individual benefits, and higher policy maximums?
major medical insurance
Current assumption whole life policies are sensitive to which of the following?
interest rates
Which is the major reason why long term care insurance is becoming increasingly important?
As life expectancy increases, the chances of needing long term care also increase
Which of the following is defined as the dollar amount beyond which the insured no longer participates in payment of medical expenses?
Stop Loss Limit
Which is the primary purpose of Health Reimbursement Accounts (HRAs)?
To assist covered employees with the payment of medical expenses on a high deductible plan funded through pre-tax contributions.
States generally define a true “group” for insurance as requiring a minimum of how many participants?
10
When should a buy-sell agreement include a provision for the buy-out of an owner’s business interest in the event of a disability?
When there is a buy-sell agreement funded with life insurance to buyout the interest of a deceased owner or partner.
Which type of life policy can be continued year after year without a required medical examination but rates are dependent on the insured’s current age?
renewable term
Which of the following is true about a decreasing term life policy?
The face amount reaches zero at policy expiration.
Which of the following is TRUE of the limited pay whole life policy?
Coverage continues after the policy is paid-up.
Which of the following is a characteristic of Preferred Provider Organizations (PPOs)?
prearranged costs for services rendered
All of the following are characteristics of variable whole life EXCEPT
there is no guaranteed minimum death benefit.
Which of the following policy types is considered double indemnity?
accidental death
Which of the following lists the three common types of permanent individual life insurance?
Variable Life, Whole Life, Universal Life
Which of the following is TRUE for a flexible premium annuity?
The purchaser has the option to vary the amount of each premium payment falling between a minimum and maximum amount.
Which type of annuity covers two or more annuitants and provides monthly income only until the first annuitant dies?
Joint Life Annuity
Which of the following coverage types pays a monthly cash benefit following the elimination period for total disability due to accident or sickness?
Disability income insurance
In which of the following does a covered employee agree to a reduction in compensation so the amount can be used to cover medical expenses?
Flexible Spending Account (FSA)
Which of the following is covered by a dread disease policy?
illnesses that do not occur frequently but incur significant costs when they do occur
Which insurance plans are commonly offered through the worksite (employer sponsored) EXCEPT?
Medicare
What happens when an initial offer is answered with a counteroffer?
Initial offer is void
According to the Affordable Care Act (ACA), dependent children may remain on their parent’s plan until what age?
Age 26
The premiums paid by an employer for his employee’s group life insurance are usually considered to be
tax-deductible to the employer
A family group accident and health insurance policy must continue coverage for each unmarried child at least until age
19
A life insurance beneficiary died after receiving only six payments under the policy’s life income settlement option. What happens with the remaining balance of the death proceeds?
Kept by the insurance company
When an individual is planning to protect his family with life insurance, one method of doing so is called needs analysis. What exactly does needs analysis involve?
Identifies the needs of an individual and the individual’s dependents
A retired couple would like to maximize the income derived from their combined life savings and have it payable until they both die. Which annuity would be their best choice?
Joint and survivor annuity
Major medical plans typically exclude coverage for which of the following benefits?
Custodial care
Which of the following BEST describes a “partial disability”?
Unable to perform one or more job duties
Under an adjustable life insurance policy, which of the following may NOT be changed without further underwriting?
The person insured
An agent’s license in New York must be renewed every
Two years
A policyowner pays the first annual premium for a $50,000 life insurance policy and dies one month after the policy effective date. Which of these statements is normally true?
Beneficiary receives $50,000 income tax-free
According to the Affordable Care Act (ACA), the proportion of premium revenues spent on clinical services and quality improvements is called the
Medical Loss Ratio
A material change in a modified endowment contract (MEC) results in
the seven pay test, adjusted for cash value, applies again
How many days notice does the Affordable Care Act require insurers to give before rescinding coverage?
30
What determines how much an annuitant is paid for a variable annuity?
The market value variations of the securities backing it
Accident and health insurance standard provisions require that
The policy, endorsements, and attached papers constitute the entire contract
Agreements made by terminally ill persons to sell their life insurance policies at a discount in order to pay medical expenses are called
Life Settlements
An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately had the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee?
Distribution is subject to federal income tax withholding
A characteristic of preferred provider organizations (PPO) is
If service is obtained outside the PPO, benefits are reduced and costs increase
Which of the following accurately describes a participating insurance policy?
Policyowners may be entitled to receive dividends
What are reasonable and customary charges for health insurance primarily based on?
Average charges within a geographic region
No existing insurance license will be revoked until
The licensee has been afforded a right to a hearing on the charges
What is considered interstate travel under the Federal Fraud and False Statements Act?
Puerto Rico
Claims settlement practices of insurers are regulated by
State insurance departments
Under the New York Disability Benefits Law, cash payments are provided to workers who are unable to work because of injury or illness that
Occurred on the job
A policyowner suffers a covered accident and health insurance loss on June 30 and submits the proof of loss to the insurer July 10. If the policyowner cancelled the coverage on July 2, how will the insurance company handle the claim?
Claim must be paid after proof of loss is received
Claim must be paid after proof of loss is received
Paid-up policy that offers lifetime protection
All of the following are unfair claims settlement practices EXCEPT
An attempt to settle a claim by arbitration
Ambiguities in insurance contracts are typically interpreted in favor of the insured. This rule is referred to as
Reasonable expectations
According to the Affordable Care Act (ACA), insurers can no longer deny health coverage due to pre-existing conditions unless that plan is a(n)
Grandfathered plan
The Affordable Care Act (ACA) established “exchanges” in order to
assist individuals and small businesses when making their health insurance purchases
The policy provision that permits an employee to change from group life coverage to an individual life policy is called the
conversion provision
In New York, reducing benefits for a newborn child under an accident and health plan is
Prohibited in any form
When determining the suitability of an annuity for a consumer, the insurance provider is obligated to
Make reasonable efforts to fit the annuity with the consumer’s needs
Which of the following statements BEST describes employer contributions for employer provided health insurance?
Employer contributions are deductible
Who typically makes the purchase payments in an individual annuity?
Owner
The law of large numbers enables an insurer to
Predict losses
A disabled business owner who has payroll and business expenses paid for has what kind of insurance policy?
Business Overhead Expense
In what situation could an insurance policy’s coverage be modified?
Applicant is a substandard risk
What type of life insurance policy covers two or more persons and pays the face amount upon the death of the first insured?
Joint life
A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a
risk retention group
Which provision makes the application part of the annuity contract?
Entire Contract clause
Which of the following is NOT guaranteed in a whole life policy?
Dividend scale
Omar is covered by a disability income policy. He is hurt while performing an occupation more hazardous than the occupation listed in his policy. The policy’s change of occupation provision will have what effect?
Reduce the benefit level
Terry receives long-term physical therapy at her residence. What type of insurance would cover this service?
home health care
A life insurance producer licensed in New York is authorized to
Solicit, receive and forward applications to the insurer
An association which maintains a facility that displays offers and counteroffers for purchasers or sellers of life settlement contracts is known as a
Life settlement intermediary
A signed good health statement may be requested by a life producer at the time of
policy delivery
Taxable income may be the result from all of these modified endowment contract (MEC) transactions EXCEPT for
The policy is surrendered for less than what was paid into it
With regard to the use of nonpublic personal information, the phrase opt out means
Customers must be given the chance to stop disclosure
Which of the following is NOT a function of accident and health insurance?
Pays a death benefit as a result of natural causes
Home health care benefits typically do NOT include coverage for
Prescription medication
In a disability income contract, an insured is considered to be totally disabled under the presumptive disability provision if he/she
loses the ability to speak
Which of these pays an income to two or more annuitants until the death of the last annuitant?
Joint and survivor annuity
New York workers compensation laws exclude benefits for disabilities caused by
Intentional, self-inflicted injuries occurring on the job
An individual long-term policy must be renewable
For life
Straight whole life insurance can be accurately described in all of these statements EXCEPT
Policy protection normally expires at age 65
Which of the following does a Medicare Advantage enrollee typically pay for?
Small co-pay per visit or per service
Long Term Care policies will usually pay for eligible benefits using which of the following methods?
Expense incurred
Emily is disabled. In order to become eligible for Social Security disability income benefits, she must be
fully insured, according to Social Security
After an insurance application has been originated, the producer normally
is the major personal contact to the insured
Misrepresenting pertinent policy provisions relating to coverage after a loss is
An unfair claims settlement practice
Which health policy clause specifies the amount of benefits to be paid?
Insuring
Periodic health claim payments MUST be made at least
monthly
The absolute assignment of a life insurance policy results in
all incidents of ownership transferred to the assignee
What kind of arrangement gives the policyowner the right to change the beneficiary?
Revocable designation
Jill has a group health plan with an employer that covers employees in more than one state. Which of the following aspects is NOT affected by the state regulatory jurisdiction established for this plan?
Continuation of coverage under COBRA
Which of the following is NOT subject to the promise to pay in an insuring clause?
How the premium is calculated
The amount received for a life insurance policy in a life settlement is
Less than the death benefit
Pete is covered by a group health insurance plan which covers employees in multiple states. This plan is governed by the laws of which state?
Where the master contract was issued
Which of the following best describes the presumptive disability provision?
Waives the typical total disability requirements
Which of the following is NOT an allowable exclusion for long-term care insurance policies?
Care for incurable conditions
False advertising of an insurance policy is an example of
misrepresentation
Employer-paid qualified long-term care insurance premiums are typically
Excluded from the employee’s gross income.
An accident and health insurer has just received written proof of loss from one of its insureds. The insured must now wait 60 days before
bringing legal action against the insurer
Long-term care policies normally cover expenses associated with
nursing homes
Individual Medicare Supplement policies must allow an insured a MINIMUM of how many days after policy delivery to return the policy and receive a refund of premium?
30 days
A policyowner suffers an injury that renders him incapable of performing one or more important job duties. Any decrease in income resulting from this injury would make him eligible for benefits under which provision?
partial disability
What effect does interest income have upon insurance premiums?
Decreases premium
Which of the following is NOT a valid contract exchange?
“An annuity exchanged for a life insurance policy”. The 1035 exchange does not allow for an annuity to be exchanged for a life insurance policy. This is not considered an equal exchange and will be taxed.
Which of these factors does NOT influence an individual’s need for life insurance?
Self-maintenance expenses
Which benefit supplement added to a life insurance policy insures an entire family?
Family term rider
Dan has a major medical expense policy with a $200 deductible and an 80/20 coinsurance provision. He incurs covered medical expenses of $100 in November and $400 in January. Under the carryover provision, what will the insurer pay?
$240
The Carryover provision permits expenses incurred during the last 3 months of the calendar year to be carried over into the new year if needed to satisfy the deductible for the next year. In this case, the insurer would have to pay $240. ($100 + $400=$500 covered medical expenses; $500 – $200 deductible = $300. $300 X 80% = $240 payable by insurer)
What does a 401(k) plan generally provide its participants?
Salary-deferral option
The interest paid during an annuity’s payout period is considered
Taxable as ordinary income
A “premature” distribution from a modified endowment contract (MEC) incurs a penalty tax of
10%
A prepaid dental plan has an agreement in place with a network of dentists which
accepts an established amount that is considered full payment for services rendered
Laura added a children’s rider to her life insurance policy. What type of coverage was added?
Level term
Which factor determines the maximum disability income benefit that can be purchased by an applicant?
The applicant’s income
Medicare can be described as
a federal health insurance program for individuals over the age of 65 or permanently disabled
Which is an example of an unfair claims settlement practice?
Attempting to negotiate the payment of claims where coverage or liability is in question
Denying claims on the basis of specific policy provisions
Including an arbitration provision in the insurer’s policies
Offering settlements that are less than the fair value to offset insurer expenses
Offering settlements that are less than the fair value to offset insurer expenses
Laura has an employer-based preventative health care plan that focuses on an enrollee’s problems, such as drug abuse or stress. These plans are called
Wellness programs
Which of the following does NOT meet the requirements of “skilled nursing care”?
Must be ordered by a doctor
Must require daily care
Must be provided exclusively in a hospital
Must be provided by skilled medical practitioners
Must be provided exclusively in a hospital
What is the actuarial value of a bronze level health plan?
60
Which of the following is considered a Limited accident and health plan?
HMO
PPO
Cancer plan
Major medical plan
Cancer plan
To be eligible for coverage within a small employer health plan, employees must regularly work at least
20 hours per week
According to the law of large numbers, how would losses be affected if the number of similar insured units increases?
Predictability of losses will be improved
Which of these is NOT considered the responsibility of a producer during the underwriting process?
Collecting additional medical information if needed
Promptly sending the completed application to the insurance company
Forwarding any material personal observations to the insurer
Selecting the final approval date
Selecting the final approval date
Trade association groups that are eligible for group medical benefits normally are
same industry
A whole life policy that provides a choice of dividend options must include the following statement about dividends
they are not guaranteed
Jerome is covered by a disability income policy that does NOT provide benefits for losses occurring as the result of his employment. What kind of coverage is this?
Nonoccupational coverage
If a benefit plan is offered on an Exchange, what must the insurance company offer, with regard to that plan, outside of the Exchange?
The insurance company must offer the same plan
The guarantee of insurability option provides a long-term care policyowner the ability to
buy additional coverage at a later date
A copy of all Medicare Supplement advertisements must be submitted for approval to
The Superintendent of Insurance
When advertising a life insurance policy, an agent is required to disclose the
Name of the actual insurer
An insured must notify an insurer of a medical claim within how many days after an accident?
20
What effect can a long-term care benefit rider have on a life insurance policy?
Reduced death benefit
If used toward the costs associated with assisted living or nursing home confinement, a long-term care benefit will reduce a life insurance policy’s death benefit.
An advantage of owning a flexible premium life insurance policy would be
The policyowner can make policy changes without difficulty
Which type of policy pays benefits to a policyholder covered under a Hospital Expense policy?
reimbursement
In regards to the Affordable Care Act (ACA), which of these is NOT a role of a health insurance exchange?
Contact the employer if an employee stops coverage under a plan offered in the exchange
The term “life settlement broker” may refer to
Someone who is licensed to negotiate a life settlement contract
Which of the following statements about the contestability of a life insurance policy is true?
The policy cannot be contested by the insurer once it is paid for and issued
The policy can be contested by the insurer only during the first two years of the contract
The policy can never be contested by the insurer
The policy can always be contested by the insurer
The policy can be contested by the insurer only during the first two years of the contract
Which of the following would NOT have a restricted ability to enter into a contract?
Small employer
What kind of life policy typically offers mortgage protection?
Decreasing term
Which term refers to insurance written on the interests of the licensee, the licensee’s employer, or the licensee’s immediate family?
controlled business
Where is the difference between a standard risk and a substandard risk reflected?
premium charges
Which life insurance policy would be eligible to include an automatic premium loan provision?
whole life
Which statement regarding the life insurance premium for a children’s rider is true?
Premium remains the same no matter how many children
An applicant submits a life insurance application where an investigative consumer report is used in the underwriting process. Which of these statements is true?
Applicant has a right to receive a copy of the report
Which of the following health insurance provisions requires that the application becomes part of the policy?
Entire contract clause
The grouping of two or more small employers in order to obtain group health insurance at a favorable rate is called a multiple employer
trust
A temporary producer license may be initially issued for a maximum period of
90 DAYS
A Health Reimbursement Arrangement MUST be established
by the employer
According to the Federal Fraud and False Statements Act, which of these is considered to be an intentional violation?
Making false entries in a company’s books
The contractual rights which allow the owner of a deferred annuity to surrender the cash value several years before the annuity date are called
nonforfeiture options
Medicare Supplement insurance requires an individual to be at least how old for open enrollment?
No minimum age
Why does New York law require an insurance agent to examine the existing Medicare Supplement policies of a prospective insured?
To determine the suitability of potential changes
Which tax cost is normally associated with death?
Federal Estate Tax
Under which circumstance can an insurance company offer group Health insurance?
The sponsoring group provides an employer-employee relationship
Replacement rules are designed primarily to protect the interest of the
Policyowner
What is taken into consideration when defining “total disability” in a disability income insurance policy?
The insured’s education, training, and experience
Two agents are licensed in the same line of insurance. One agent provides the other with a referral that results in a sale. How will the commissions on this sale likely be paid?
Agents will likely share the commission
Kate received a group accident and health termination notice. How many days does she have to apply for a converted policy?
31
What happens to the cash value of a market value adjusted annuity if it’s surrendered prior to the end of the stated guarantee period?
Subject to market value adjustment
Mary is the sole proprietor of her business and has a family health plan. She would like to deduct the premiums from her taxes. What percentage of her premiums are tax deductible?
100%
Which of the following is NOT a condition that must be met for an accidental death benefit to be paid?
Cause of death must be from a job-related injury
A life insurance policy in New York becomes incontestable after it has been in force for
2 years
Which one of these is NOT considered to be an element of an insurable risk?
Speculative risk
When a health insurance policy includes a Mandatory Second Surgical Opinion provision, the insured must
seek a second opinion for specified elective surgeries
When a Medicare Supplement insurance policy is being replaced, who must sign the notice of replacement?
The agent and the applicant
When would evidence of insurability be required for a person already covered with a variable universal life policy?
The death benefit is increased
Tim is confined to a nursing home but doesn’t have a terminal illness. Which life insurance rider is designed to help pay for this type of expense?
Long-term care benefit rider
Premature IRA distributions are subject to a penalty tax of
10%
A source of supplemental income for a life insurance policyowner can be derived from the
cash value
Respite Care coverage is typically found in a(n)
Long Term Care policy
What is an insurance contract that identifies individuals by relationship to a specific organization?
Group insurance
Which annuity allows contributions to an IRA?
Deferred
Beginning January 1, 2014, the restricted annual limit for plans under the Affordable Care Act will be
no limit
During an annuity’s liquidation phase, the annuitant normally
receives benefit payments at regular intervals