Health and Life Practice Questions MCQs

All of the following are reasons to buy term insurance except

survivor protection
estate creation
retirement income
estate conservation

When an insured person receives a health insurance policy he has how many days to review and ask for a return of his/her premiums?

5
10
20
30

Short term policies have a benefit period of how long?

13 weeks to 104 weeks
24 weeks to 120 weeks
12 weeks to 52 weeks
15 weeks to 130 weeks

If an employee who has a group policy leaves his job, what type of health insurance is guaranteed to him?

portability
COBRA
The company continues to pay insurance
The employee buys an individual plan

Which of the following is part of the application?

attending physician report
consumer investigation
medical information bureau
agent report

Which of these applies to a standard risk classification?

uses mortality table
fixes additional charge to premium
a lien is placed against the policy to reduce amount of insurance
rates person on age, health, habit and occupation

What is a characteristic of term life insurance?

it is written for a specified period of time
permanent protection
builds cash value
provides lifetime protection

What is a characteristic of adjustable life?

renewable term
adjusts the face amount of the policy
flexible premium
has death benefit options

What is a per capita beneficiary?

a group beneficiary
when a person is too young to be a beneficiary
when the money is divided equally among the beneficiaries
when the beneficiary dies the proceed goes to heirs

A type of short term insurance is

accident policy
catastrophic policy
credit disability
travel insurance

Which of the following is not an exclusion under a health policy?

pre-existing conditions
accident injury
elective surgery
intentional self inflicted injury

What is the type of insurance which pays for workers hurt in the course and scope of duty?

medicare
Medicaid
Workers compensation
Disability social security

Jack and his wife Lyn just purchased a home with a 15-year mortgage. Wanting to make sure that Lyn would be able to pay off the mortgage balance in th...

whole life insurance
term life insurance
variable life insurance
a viatical statement

Which type of life insurance is considered to be more risky based on its investment component?

lever term life insurance
whole life insurance
decreasing term life insurance
variable life insurance

Life insurance underwriters look at a variety of factors when determining the acceptance of an applicant. These factors can include:

health history
occupation
hobbies
all of the above

Which of the following deals with a set of relationships where one person is authorized to act on behalf of another in order to create a legal relatio...

law of principles
law of agency
law of third parties
none of the above

All of the following can be considered life-changing events that could result in a change in the amount of life insurance coverage EXCEPT: I. birth o...

I, II, and III
II and III only
I only
IV only

Term life insurance should always be used in buy/sell agreements

true
false

Corporate owned life insurance proceeds may be used for the following purposes: I. to find, replace, and train a new employee or executive II. to fu...

III only
I and III only
All of the above
None of the above

What is the most common component in all life insurance policies?

living benefits
waiver of premium
death benefit
cost of living rider

Permanent life insurance policies always have two components. What are they? I. death benefit II. cash value III. living benefit IV. conversion be...

I, II, III and IV
I, II and III
II and IV
I and II

A beneficiary on a life insurance policy will receive what value upon the death of the insured?

cash value
surrender value
investment value
death benefit

John, who had a life insurance policy with a death benefit, died on August 31st, after a long bought with cancer. He had been hospitalized for a month...

No, the agent filed the paperwork within 30 days of the claim
Yes, the claim was not settled within 30 days of the claim
No, there are suspicions around the death of John
Yes, the claim was not settled within 15 days of the claim

Which of the following is a rider that allows a terminally ill person to access at least a portion of the death benefit proceeds prior to death?

waiver
living benefit
supplement
addendum

Living benefits on a life insurance policy can be typically be accessed via:

lump sum
regular installments
loan
both A and B

The insured party has no part in determining the wording of an insurance contract. In this respect, insurance contracts are considered to be _________...

contracts of adhesion
contracts of forbearance
contracts by regulation
contracts by law

A(n) in an insurance contract is a statement by the issuing insurance company that sets out the essential elements of insurance- to pay for losses cov...

beneficiary designation
premium amount
insuring clause
rider

Which of the following is not a form of health insurance? I. dental insurance II. vision insurance III. disability insurance IV. long-term care in...

I only
II only
All of the above
None of the above

A business client is looking for ways to decrease its monthly premiums. To get down to the premium level sought after by the company, the agent realiz...

HMO
PPO
POS
HSA

The components of a long-term care insurance policy include all of the following EXCEPT:

elimination period
benefit amount
own occupation
benefit duration

When constructing a major medical insurance policy, several criteria must be established, including:

policy deductible
maximum out-of-pocket amount
elimination period
both A and B only

As a marketing tool, Ted, a health insurance agent, offered to send an applicant and his wife on a weekend vacation to a local resort to induce the ap...

no; misrepresentation
no; twisting
yes; it is perfectly acceptable
no; rebating

An agent is in need of generating business. He gets an idea of asking his client to let his policy lapse so that the agent can sell him a new similar ...

no; rebating
no; bait and switch
no; twisting
yes; it is perfectly acceptable

A _______ is the amount that an insured person is expected to pay for a medical expense at the time of the visit.

deductible
reimbursement
corridor
copayment

The "deductible" in a long-term care insurance policy is referred to as the ___________.

deductible
coinsurance
elimination period
copayment

On a health insurance claim form, the exact procedures that were performed for the insured are represented by standard codes that are referred to as _...

RVU codes
AMA codes
HCPCS codes
CPT codes

What type of notice is used to show all of the services or supplies that were billed to Medicare during a 3-month period, what Medicare paid, and what...

MSN
CPT
OPPS
HCPCS

As a professional surgeon, which type of disability coverage would offer the most liberal definition of benefits triggers for the policy holder in ter...

own occupation
employer provided
social security
business overhead

Social security should be considered one's primary source of disability income coverage.

true
false

Which of the below statements is FALSE concerning a Modified Endowment Contract (MEC)?

MECs lose some of the favorable tax treatment of distributions
The Policyholder can receive distributions at any time without being penalized
Distributions before age 59.5 have a penalty tax of 10% on the gain in the policy
Policy loans are taxable distributions

How is Social Security funded?

taxes imposed on a worker’s earned income
state payroll taxes
sales tax
federal grant money

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it is

an accelerated policy
an endowment
a multiplicative policy
a modified endowment contract

All of the following benefits are available under Social Security EXCEPT

disability benefits
death benefit
welfare benefits
old-age and retirement benefits

What is the main purpose of the seven-pay test?

it determines if the insurance policy is an MEC
it requires level premium payments for 7 years
it ensures that the policy benefits are paid out in 7 years
it guarantees interest minimum

Social Security is funded by a payroll tax imposed on a percentage of an employee's income. This percentage is called:

the taxable wage base
the income tax quotient
the federal tax basis
the earned income dividend

Jane is eligible for full death, retirement, and disability benefits under Social Security. Her worker status with Social Security is

partially insured
correctly insured
completely insured
fully insured

The minimum number of credits required for partially insured status is

4
6
10
20

An employee quits his job on May 15 and doesn't covert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on ...

the insurer will pay a reduced death benefit to the beneficiary
the insurer will pay the death benefit minus one month' premium
the insurer will pay nothing because the employee has terminated his group insurance and hasn't started an individual one
the insurer will pay the full death benefit from the group policy to the beneficiary

Which of the following is INCORRECT concerning a noncontributory group plan?

the employer pays 100% of the premiums
the employees receive individual policies
they help to reduce adverse selection against the insurer
they require 100% employee participation

If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy?

it is only taxable if the cash value exceeds the amount paid for premiums
it is not considered taxable
it is taxable only if it exceeds the amounts paid for premiums by 50%
it is automatically taxable

Which of the following is an IRS qualified retirement program for self-employed?

buy and sell agreement
401(k)
Keogh
Split dollar

Death benefits payable to a beneficiary under a life insurance policy are generally

subject to income taxation by the federal government
exempt from income taxation if under $7000
exempt from taxation if over $7000
not subject to income taxation by the federal government

When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy this is called

key person
a fraternal association
aleatory contract
executive bonus

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then

the benefit received is tax free
the benefit is subject to the exclusionary rule
CIRS has no jurisdiction
The benefit is received as taxable income

Who is a third-party owner?

an irrevocable beneficiary
a policyowner who is not the insured
an insurer who issues a policy for two people
an employee in a group policy

Carol is insured under her employer's group life insurance plan at her place of employment. All of the following statements about her coverage ar...

should carol convert her coverage, the premium will be based upon her attained age
carol could choose what type of insurance her conversion policy provided (term or permanent)
carol would not need to prove insurability for a conversion policy
if carol quits, she may, within 31 days, request that her coverage be converted to an individual policy

Which of the following is NOT true regarding a nonqualified retirement plan?

earnings grow tax deferred
It needs IRS approval
Contributions are not currently tax deductible
It can discriminate in benefits and selecting participants

Employer contributions made to a qualified plan

are subject to vesting requirements
are taxable
have no vesting requirement
are taxable as salary

All of the following are examples of third-party ownership of a life insurance policy EXCEPT

an insured couple purchases a life insurance policy insuring the life of their grandson
a company purchases a life insurance policy on their manager who is an important part of the operation
when an insured purchased a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company
an insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan

What is the official name for the Social Security program?

old age survivors disability insurance
social insurance program
defined benefit retirement insurance
qualified pension plan

The maximum the Insurance guaranty association will pay to an individual for life insurance death benefit is

100,000
250,000
500,000
1,000,000

How is the insurance guaranty association funded?

by the government
by it’s members- authorized insurers
by the department of insurance
by NAIC

Which of the following was created to protect policyowners, insureds and beneficiaries under insurance contracts when insurers fail to perform contrac...

new jersey life and health guaranty association
new jersey insurance consumer protectorate
new jersey insurance solvency association
new jersey consumer protection organization

The requirement that agents must account for all insurance funds collected, and are not permitted to comingle those funds with their own is known as

fiduciary responsibility
premium accountability
insurance-related conduct
fiscal responsibility

How many days does a producer have to remit the collected premiums to the insurer?

3
5
10
30

What are the penalties for the first, second and any subsequent violation for the New Jersey fraud prevention act, respectively?

5k, 10k, 15k
1k, 5k, 10k
10k, 15k, 20k
25k, 50k, 100k

How long must producers and insurers maintain records of management of funds for insurance policies?

1 year after the examination by the commissioner
3 years after opening an account
5 years after termination of coverage
7 years

Presenting any written or oral statement in support of or in opposition to a claim payment, while knowing that the statement contains false or mislead...

a violation of the unsatisfied claim and judgment fund law
a violation of the new jersey insurance fraud prevention act
a permissible act
grounds foe license revocation

An insurer goes bankrupt and is unable to pay on any of its insureds' claims. Which of the following will happen?

the claims will be paid by the state life and health guaranty association
the claims will be paid by the state dep of insurance
the insureds will not be paid
the claims will be paid by a nationally-based program

Which of the following insurers are owned by stockholders who have the usual rights ownership, including the right of voting?

reciprocal
fraternal
stock
mutual

Which of the following would most likely NOT be required to complete continuing education hours in this state?

insurance brokers
resident producers
insurance consultants
nonresident producers

In choosing an insurance business name, which of the following would be allowed?

a name which implies eligibility for individuals to whom coverage is not actually offered
a proper name which does not belong to any officers, stockholders, or executives
a name with the same pronunciation as a competing company, but a different spelling
a name with the same spelling as a competing company but a different pronunciation

A licensed insurance producer may request a waiver of license renewal procedures under any of the following circumstances EXCEPT

he has recently been confined to a wheelchair due to MS
he was injured in a car accident
he has been called into active duty
his renewal forms were lost in the mail

A licensee violates an insurance regulation. A hearing is held, and the person is found guilty. If this is the person's first offense, the penalt...

1500
3000
5000
1000

A participating insurance policy may do which of the following?

pay dividends to the policyowner
provide group coverage
pay dividends to the stockholder
require 8-% participation

All else being equal, which of the following will NOT be considered unfair discrimination by insurers?

assigning different risk classification to applicants based on ethnicity
discriminating in benefits and coverages based in the insured’s habits and lifestyle
charging applicants with similar health histories different premium rates based on their ethnicity
cancelling individual coverage based on insured's martial status

What significance did Paul vs. Virginia have on the insurance industry?

it was decided that insurance was interstate commerce and should be therefore regulated by the fed government
it was decided that insurance required separate federal regulatory agency from securities products
it was decided that insurance licenses should not be issued by the def gov and should instead be issued by individual states
it was decided that insurance was not interstate commerce and could not be regulated by the fed gov

If an applicant's license has lapsed within the past year, the applicant may apply for late renewal of the license within

6 months of exp
9 months of exp
12 months of exp
3 months of exp

If a violation of the new jersey insurance code were to occur, a cease and desist order and/or penalty may be issued. Who may issue a cease and desist...

governor
commissioner
department of banking and insurance
insurance company

What significance did US vs. South-Eastern Underwriters have on the insurance industry?

it determined that insurance licenses should no longer be issued by individual states and should instead be issued by the federal gov
it reversed the decision of paul vs. Virginia determining that insurance is interstate commerce and should be regulated federally
it reversed the decision of paul vs Virginia determining that insurance is not interstate commerce and should not be regulated federally
it determined that insurance licenses should no longer be issued by the federal gov and should instead be issued by individual states

When doing business in this state an insurance company that is formed under the laws of another state is known as which type of insurer?

alien
nonadmitted
foreign
domestic

Which of the following is NOT considered a misrepresentation as it pertains to unfair trace practices?

exaggerating the benefits provided in the policy
stating that the competitors will arbitrarily increase their premiums each year
making comparisons between different policies
stating that the insurance policy is a share of stock

All the following professional designations are recognized by the department as acceptable substitutes for education and examination requirements EXCE...

professional insurance agent
chartered property/casualty underwriter
chartered financial consultant
chartered life underwriter

Which of the following types of insurance policies is most commonly used in credit life insurance?

decreasing term
increasing term
whole life
equity indexed life

If a credit life policy lapses for non-payment before the debt is satisfied, within how many days must the creditor either refund the premium paid or ...

10
30
60
20

Which of the following is true about credit life insurance?

creditor is the insured
debtor is policy beneficiary
creditor is the policyowner
debtor is the annuitant

The type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called

credit life
credit health
decreasing whole life
multiple protection insurance

Which of the following is true regarding the insurance amount in a credit life policy?

creditor can only insure debtor fir the amount owed
creditor may insure the debtor for an unlimited amount of coverage
allowable amount of coverage is determined by the state insurance commissioner
the amount of coverage can be greater than the amount owed

By how many days does the discontinuance of a group insurance policy reduce the time limit for providing notice of claim or proof of loss?

0
5
15
30

An insurer must keep all sales materials for at least how long?

5 years
6 years
8 years
as long as the insurer remains in business

Which type of misrepresentation persuades an insured, to his detriment, to cancel, lapse or switch policies from one to another?

false advertising
rebating
twisting
switching

Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?

replacement rule
reinstatement rule
conversion rule
disclosure rule

It is the responsibility of which of the following to make sure that an applicant/policyholder has a policy summary and buyer's guide?

commissioner
department of banking and insurance
insurer
applicant

An insurance company and insured are settling a lawsuit involving a life insurance policy. The insurer believes that the application would help establ...

if less than 2 years have passed since the policy issue date, it is acceptable for the application to be considered as evidence
state law prohibits applications form being used in litigation
applications can only be used in court cases if they are attached to or endorsed upon the issued policy
once the policy is issued, it is permissible to use the application in litigation, provided that the insured is notified

A person takes out a loan in order to pay off his house. He dies several years later, having paid off only a small portion of the debt. Which of the f...

the lender will not recover this money
the federal government will pay the balance to the lender
if the lender has credit insurance, this amount will be paid to the lender
the state government will pay the balance to the lender

Proceeds form life insurance policies are protected from the beneficiary's debts under all of the following circumstances EXCEPT

the amount of debt exceeds 50% of the policy's face value
there are no circumstances under which proceeds are protected from the beneficiary's debts
some of the premiums were paid in attempt to defraud creditors
the amount of debt exceeds the policy’s face value

During replacement of life insurance, a replacing insurer must do which of the following?

send a copy of the notice regarding replacement to the department of insurance
obtain a list of all life insurance policies that will be replaced
guarantee a replacement for each existing policy
designate a new producer for the replaced policy

Which of the following scenarios would not be covered by insurance?

client M purchases life insurance on herself prior to committing suicide
client P purchases an annuity as a savings vehicle for retirement
client F buys a life insurance policy on her husband who is the sole provider for her family so that she is taken care of if he dies
client E purchases an annuity to provide for her retirement needs as she reaches her mid 50s so that she can travel and take care of her grandchildren

In New Jersey, the public is protected by a notice of discontinuance when a policy is discontinued for nonpayment of premiums. When a policy is discon...

ceasing to collect premium payments from group participants unless the group policyholder remains fully responsible for the benefits
refund of premiums
written notice to the policyholder
a reminder of the date of discontinuance

During policy replacement, the replacing insurer must notify existing insurers within what time period?

90 days
5 business days
10 calendar days
30 days

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Health and Life Practice Questions MCQs