Life and Health Insurance MCQs

An insured, whose policy is in force, intentionally kills herself 7 months after purchasing the policy. The policy includes an accidental death and di...

Nothing
Refund of premiums paid only
The capital amount
The principal amount

An insured owns a $50,000 permanent life policy that she purchased 4 years ago. She wanted to be assured of the opportunity to increase the face amoun...

Guaranteed Insurability Rider
Guaranteed Renewability Rider
Death Benefit Escalation Rider
Accelerated Benefit Rider

With a Contributory Group Life Plan, what percentage of the employees must participate?

A full 100%
At least 60%
At least 75%
Between 75% and 100%

Which of the following is true regarding the licensing of an individual in this state?

The applicant must be 32 year of age
The applicant must have an insurance degree
The applicant must pass a state licensing exam
The applicant must have a law degree

Which policy could provide a substantial immediate cash value?

Enhanced Whole Life Policy
Endowment Policy
Modified Whole Life Policy
Single Premium Whole Life Policy

Which of the following are untrue with regard to insurable interest of a life insurance policy?

A lender has an insurable interest in a borrower.
A possibility of economic loss must exist.
A loss of love and affection can constitute an insurable interest.
A borrower has an insurable interest in a lender.

Which of the following is a prohibited form of advertising?

Advertisements for Medicare Supplements containing information that create undo anxiety in the minds of the insureds.
An advertisement that uses the words 'only', 'just', 'merely', 'minimum', or similar words to imply a minimal imposition of restrictions and reductions.
When an insurer excludes coverage for preexisting conditions, an advertisement of the policy that implies that the applicant's medical condition or history will not affect eligibility or payment.
All are prohibited.

A policyowner has decided upon the Fixed Amount Settlement Option. Which of the following best describes this option?

The death benefit is paid in lump sum fashion.
The insurer determines the number of periods that payments are made.
Only the death benefit with no interest is paid.
The owner specifies the amount of each periodic payment and the insurer pays that amount until the funds (i.e. death benefit) are exhausted.

An insured selecting the annuity benefit option that provides the highest amount of period benefit for life assuming the balance at annuitization and ...

Life Income, Period Certain
Straight Life Option (Life Income)
Life Income with Refund
Temporary Annuity

Initially an insured paid premiums annually on her life insurance policy. She would now like to change to a monthly premium payment. What must occur t...

Insured and beneficiary must agree in writing to the change and amend the original contract
Insurer and beneficiary must agree in writing to the change and amend the original contract
Insurer and owner must agree in writing to the change and amend the original contract
Beneficiary and owner must agree in writing to the change and amend the original contract

Of the following statements, which is true of the One-Year Term Dividend Option?

Doubles the death benefit for one year.
The dividend is used to purchase a one-year term policy equal to the cash value.
Pays a death benefit of the face amount plus total premiums paid.
Pays a death benefit of the face amount plus total dividends paid.

A trustee-to-trustee transfer between tax qualified retirement plans does not expose itself to:

Federal income tax on future distributions
The 10% penalty on premature distribution
The 20% withholding tax
Federal estate taxes should the plan participant die

The rates charged by Independent Practice Association, HMO physicians are negotiated in advance and are on a ________ basis. Choose one answer.

Reimbursement
Fee for service
Indemnity
Out-of-pocket

An insured is nearing retirement and has accumulated $175,000 in an annuity. He needs the option that will pay the largest monthly benefit for as long...

Fixed Amount
Life Income with Refund
Joint Life
Life Income

The Director, Commissioner, or Superintendent may suspend or revoke a license if the licensee has:

Been convicted of an armed criminal action.
Had license suspended in another state.
Been found to be twisting, rebating, and/or illegal inducing.
All of the answers listed.

All of the following are authorities and powers held by the Commissioner or Directory of Insurance, except?

To inquire into all violations of insurance laws in this state.
To set and determine insurance rates so that they are not excessive or unfairly discriminatory.
To subpoena witnesses and documents for testimony on any insurance related matter or hearing.
To issue, refuse, revoke or suspend licenses or Certificates of Authority.

A Whole Life policyowner elects to use his dividends to pay off the policy sooner than originally planned. Which option allows this to occur?

Premiums Reduction Option
Paid-Up Additions Option
Paid-Up Option
Cash Surrender Option

Under the Modified Endowment Contract rules the 7-Pay Test is defined as:

The first 7 years of total premiums paid into a life policy exceed the net premiums of a 7-Pay Policy (i.e. the policy would be paid-up in less than 7 years).
The cash value at the end of year 7 exceeds the total premiums paid.
The policy endows in 7 years.
The cash values are 75% of death benefit at the end of 7 years.

If there is enough cash value within a life policy to pay the premium, exercising the Automatic Premium Provision prevents the policy from:

Lapsing
Renewing
Terminating
Reinstating

LTC coverage for such things as occasional visits and care by registered, practical or vocational nurses or a hospice organization in the home would b...

Home Health Care
Adult Day Care
Custodial Care
Intermediate Care

Which of the following is not true of Medicare Part B?

All retirees are automatically covered.
Provides coverage for outpatient services.
All recipients pay a monthly premium.
It is optional coverage for those eligible for Part A.

When does the Status Clause exclude coverage?

When the insured dies while on active duty in the military.
When the insured dies in basic training.
When the insured dies of a non-war related disease.
Anytime the insured dies, whether active duty or not.

When the Guaranteed Insurability Rider to a life insurance policy, the insured would pay increased premiums based upon:

Calendar age
Issue age
Actual age
Attained age

Which of the following is correct pertaining to underwriting a group health policy?

The average age of the group is not taken into consideration.
All participants are always eligible immediately.
Group insurance cannot be based upon community experience.
Premiums are generally re-evaluated annually and may be based upon prior claims.

A procedure used by dental insurance carriers to determine the benefit to be paid is known as?

Preliminary Evaluation.
Pretreatment Examination.
Least Coverage Provision.
Precertification.

Insurance policies that may pay annual dividends to policyowners are:

Reciprocal policies
Premium Refund policies
Shareholder Benefit plans
Participating policies

Insurable interest in life insurance is necessary only at the time of:

Delivery
Loss
Application
Death

An organization that is formed as a lodge or for charitable reasons, but also sells insurance to its members, is considered a:

Fraternal Association
Lloyd's Association
Retention Group
Reciprocal Company

All of the following options must be provided or offered in a group health insurance plan, except:

Cosmetic surgery
Mammography coverage
Speech and Hearing Disorder Coverage
Genetic testing

John has had his individual Health and Disability Income policies for many years, he has been drinking lately, and he was injured in a single car acci...

John is liable for all expenses.
His health policy pays all expenses.
Health covers medical; disability covers income.
Medicaid pays the medical expenses.

If an insured is hospitalized and incurs a daily room charge of $492 and his Medical Expense Policy stipulated coverage for a hospital room up to $550...

$450
$550
$492
$246

The Unpaid Premiums Optional Uniform Provision allows an insurer to:

Charge the insured a credit charge if premiums are not paid.
Reduce the amount of a claim payment by the premium due.
Cancel the policy during the grace period.
Charge interest on past due premiums.

The purpose of the Unfair Trade Practices Act is to:

Regulate practices in business by defining what practices are fair and descriptive.
Eliminate business by defining what practices are unfair and deceptive.
Regulate practices in the business of insurance by defining what practices are unfair and deceptive.
All of the above.

An insurer authorized to do business within this state is considered what type of insurer?

Foreign
Domestic
Admitted
Certified

Allowing individuals of the same class and hazard to be charged different rates for the same insurance coverage is:

A way to make a higher commission
Unfair Discrimination
Risk Management
None of these

An underwriter usually discovers information pertaining to an applicant's prior health from the:

Medical Information Bureau
Federal Information Bureau
Medical Doctors Association
Inspection Report

Which is not an unfair trade practice?

Selling better coverage that costs more.
Selling by omitting material facts.
Selling by refunding monies not stipulated in the contract.
Selling by charging persons in the same class a different rate.

Part B of Medicare would exclude which of the following medical expenses?

A regular dental checkup
Home health care
Outpatient hospital treatment
Clinical laboratory services

Which of the following would not provide dental services for an insured?

Periodontist
Podiatrist
Prosthodontist
Endodontist

With _______, the patient must pay 20% of covered charges plus the deductible.

Medicaid
A Medicare Supplement
Medicare Part B
None of the answers listed

All of the following are Optional Uniform Provisions, except:

Illegal Occupation
Legal Actions
Change of Occupation
Misstatement of Age

All of the following are correct concerning partial disability, except:

Partial disability payments are usually 75% of the total disability amount.
Partial disability is an inability to perform one or more of the regular duties of an occupation.
It pays a benefit for three to six months.
Partial disability payments are usually up to 50% of the total disability amount.

One characteristic of life insurance is that the insurer is obligated to pay a claim in the event of the death of the insured, however the insured is ...

Contract of Adhesion
Unilateral Contract
Aleatory Contract
Conditional Contract

Concerning eligibility for a 403(b) retirement plan, which of the following would not qualify?

School board member
County librarian
School janitor
School teacher

An heir inherits a substantial sum of money and wants to have the money distributed to her over the rest of her life. Which product offered by the lif...

Single Premium Immediate Annuity
Systematic Installment
Flexible Payout Arrangement
Deferred Distribution Arrangement

The exception to the rule concerning the non-deductibility of life insurance premiums is: Choose one answer.

Key Employee Insurance.
Employer paid group life insurance premium up to $50,000 of coverage.
Life insurance to fund a Buy-Sell Agreement.
Third Party Ownership Policies.

Which of the following is true concerning the Benefit Period of a LTC Policy?

None of the answers listed.
It is the time between the beginning of a policyholder's disability and the beginning of the policy's benefits.
It is always for the life of the insured.
Once the elimination period has been satisfied, it is how long benefits will be payable.

If an insured/owner is receiving accelerated benefits from his life insurance, policy the insurer must provide a report listing total:

Payments and value of remaining death benefit
Cost Comparison
Policy Summary
Buyer's Guide

An individual has secured a $12,000 loan from the bank to purchase a boat, which is scheduled for repayment in monthly installments over 48 months. Wh...

Decreasing Term
Modified Premium Life
Enhanced Whole Life
Level Term

Which of the following is not considered one of the essential elements of a contract?

Competent Parties
Offer and Acceptance
Conditions
Legal Purpose

An insured with an individual LTC policy is deducting the premiums he is paying for the plan on his income taxes. Once he begins to receive an income ...

Not taxable
Fully taxed
7.5% is taxable
Tax-deferred

Which of the following is consistent with group health underwriting?

Individual health histories are required.
Participants must submit to individual physical exams.
Each member of the group is covered regardless of his or her health history.
Smokers pay a higher rate.

Of the following listed choices, which is true as it pertains to Medicare Part A?

It covers all prescription drugs.
It is prepaid through FICA taxes and is automatic when that worker qualifies for social security benefits.
All recipients pay a monthly premium.
Provides coverage for outpatient services.

The Unfair Trade or Unfair Methods of Competition Acts apply to all of the following, except?

All licensed persons.
All admitted insurers.
All insurers including motor clubs and nonprofit hospital associations.
All insureds.

Making, issuing, or circulating any written or oral statement that misrepresents the benefits, conditions, or terms of any insurance policy, or transa...

Twisting
Unfair
Misrepresentation
Concealment

Many insurers pay benefits based on the average fee charged in a geographical area. This is referred to as which of the following?

Reimbursement
Cash
Scheduled
Usual Customary and Reasonable.

A Child Rider that is added to an insured's permanent policy includes which of the following features?

Coverage is for the same amount as the primary insured.
All children (beyond 14 or 15 days of age) are covered, and the rider may be converted to permanent coverage at a specified age without evidence of insurability.
The covered child becomes the premium payor.
If the child rider death benefit is paid, it reduces the face amount of coverage.

Any transaction in which new life insurance or an annuity is to be purchased, and it is known, or should be known to the agent, that existing life ins...

Replacement
Conservation
Buyer's Guide
Advertising Guides

With a Business Overhead Expense Policy, all of the following are covered, except?

Utilities
Office rent
Employee labor
The salaries and profits of the employer

When an insured decides to change her mode of premium payment from annually to monthly, what impact does this have on the total premium due?

It would fluctuate
It would decrease
It would remain the same
It would increase

Traditional individual retirement accounts require distributions to start upon reaching the age of 70 1/2. Which one does not?

A Roth IRA
Keogh IRA
403(b)
501(c)(3)

Which type of the following policies do not require renewability and, through the development of cash values, allows the policy to stay in force to or...

Perpetual Insurance
Life Expectancy Insurance
Annually Renewable Insurance
Permanent Life Insurance

Accident and Health Insurance, insures for two major perils, they are:

Driving under the influence and driving while intoxicated.
On the job and off the job.
Accidental injury and sickness.
Automobile and home health care.

Which of these choices is untrue with regard to a Disability Buy-Sell Policy?

It provides money for the business to buy the interest of the deceased officer or partner.
It pays a lump sum for the business to buy out the totally disabled party's interest in the business.
Policy proceeds are tax-free.
All of the answers listed.

The following statement is true concerning the income received from an individually owned disability income policy:

Premiums are tax sheltered=Income benefit taxable
Premiums paid with after tax dollars = Income benefit not taxable
Premiums paid with after tax dollars=Income benefit taxable
Premiums are tax sheltered=Income benefit not taxable

When an underwriter evaluates the risks presented with a particular group life application, which of the following are most important?

The plan sponsor's credit rating.
Group size, turnover, average age and purpose of the group.
The sales volume of the employer.
The religion of the majority of the participants.

Accident and Health policies provide coverages for all, except:

Medical expenses
Accidental death and dismemberment
Workersâ€™ Compensation
Loss of income

Which of the following types of coverage provides custodial care outside the home for individuals not requiring confinement?

Hospice Care
Adult Day Care
Respite Care
Home Health Care

The arrangement under which an insurer agrees to receive, monitor and pay claims, print benefit books, negotiate provider networks where necessary and...

Reserve-Reduction Arrangement
Administrative Services Only Arrangement
Point of Service Arrangement
Tri-Care Provider Arrangement

With regard to a Whole Life Policy with a graded premium, which is correct?

Premiums vary at the discretion of the owner/insured.
Premiums are lower initially, increase annually, and then level off at some point for the remainder of the policy.
Premiums are based on a term rate for 2 years, then increase.
Death benefit is lower initially than regular whole life.

Managed Health Care attempts to contain costs by controlling the behavior of participants in all of the following ways, except:

Controlled Provider Access
Preventive Care
Risk Sharing
Partial Case Management

Which of the following regarding assignment of a life policy is not true?

The assignee assumes the rights of the policyowner.
The policyowner must first obtain the insurerâ€™s permission.
Assignment of all rights constitutes an absolute assignment.
The death benefit received by the beneficiary is reduced by the amount of the assignment.

If the insurer cancels an individual health plan, what happens to the unearned premium?

It is refunded on a pro rata basis.
The total is refunded.
It is refunded on a short rate basis.
It is used to offset underwriting costs.

Right to Examine is the same as:

Elimination Period
Probationary Period
Waiting Period
Free Look Period

An insured is hospitalized for at least 3 days. How long will Medicare pay for confinement in a skilled nursing facility?

Up to 90 days
Up to 30 days
Up to 365 days
Up to 100 days

When an individual is covered by more than one health plan and is injured, how is it resolved as to which plan pays and how much?

Coordination of Benefits
Conversion Privilege
Continuation of Coverage
Extension of Benefits

With a Variable Life Policy, which of the following is guaranteed?

Cash value
Death benefit
Dividends
Interest rate

Which of the following are responsible for ensuring that the application is filled out completely?

Producer
Underwriter
Actuary
Insurer

Charging a different premium for two separate individuals who are in the same insuring classification, just because one of the individuals has a highe...

Coercion
Defamation
Boycott
Discrimination

If a policy requires the payment of an additional premium for the continuation of coverage for a newborn, the insurer must be notified within 31 days ...

First day of the month of birth
Policy date
Date of birth
Hospitalization date

Of the following, which best describes being an admitted insurer in this state?

Registered
Certified
Authorized
Filed

All of the following describe the responsibilities of an agent or producer, except?

Accepts premiums
Represents the insurer
Solicits applications for contracts
Sets the premiums

All of the following are true purposes of the replacement regulations, except?

Regulate the activities of insurers and agents.
Protect the interests of insurers.
Assure that the purchaser receives enough information to make an informed decision.
Establish penalties for failure to comply with the rules of replacement.

Part A of Medicare pays for:

None of the answers listed
Outpatient expenses
Dental expenses
Hospital expenses

Which issue relating to AIDS is false? Choose one answer.

Insurers may refuse to issue a policy to individuals based on positive HIV test results.
Applicants may or may not be informed that testing for HIV helps determine insurability.
The HIV Consent Form specifies which types of individuals may receive the test results.
Insurers are to avoid making or permitting unfair distinctions between individuals of the same class in the underwriting for the risk of AIDS.

When the death of an insured occurs within a specified period, causing the policy to pay double or triple benefits, this policy must have which of the...

Increased Death Benefit Rider
Enhanced Settlement Rider
Accidental Death Rider
Accelerated Benefit Rider

In the event there is a policy issued and there are questions on the insurance application that went unanswered:

The agent will fill in the answers after the fact.
It will be assumed that the insurer waived their right to have answers to those questions.
The insurer will cancel the policy.
A new application must be filed.

Which requirement is needed to act as an insurance producer or agent?

Obtain a bonding license.
Obtain an insurance professional designation.
Pass a state insurance examination.
Take a fiduciary oath of office.

How is the funding for Social Security provided?

Through FICA taxes that are paid by employees.
Through FICA taxes that are paid by employers.
Through FICA taxes that are paid by both employers and employees.
Through special fundraising programs.

An insured has a $175,000 permanent life insurance policy and is having difficulty keeping up with the premium payments. Which Nonforfeiture Option wo...

Cash Surrender
Extended Term
Premium Reduction
Paid-Up Additions

Which of the following products are offered by insurers to protect families from the financial setback of a family member's premature death?

Endowment Contracts
Mutual Funds
Non qualified Tax Deferred Annuities
Life Insurance

Which is not a characteristic of a Variable Annuity?

Minimum guaranteed rate of interest
Multiple investment options
Regulation by the SEC
Balance held in a separate account

At the time of her retirement at age 62, Jolene chose a Life Income Payment Option to have her annuity distributed. Five years later, when her health ...

She cannot change the distribution once commenced.
By adding a Cost of Living Rider.
By adding a Waiver of Premium Rider.
By adding a Medical Expense Rider.

An agent who promises or gives to any applicant anything of value that isn't specified in the contract is guilty of:

Rebating
Twisting
Fraud
Misrepresentation

The period of time over which a single sum or periodic deposits grow within an annuity is referred to as the:

Savings Period
Growth Period
Accumulation Period
Benefit Period

An insured owned two life policies, one from which she was already receiving a monthly benefit under the Life Income Option. The other was a term poli...

Her monthly benefit for the rest of this life.
The unpaid balance of the first policy and face of the second.
Twice the face amount of the term policy.
The face amount of the term policy.

Which of the following best depicts statements made to an insurer by an insured that affect the validity of the contract?

Warranties
Waivers
Guarantees
Estoppels

Experience rating utilizes ___________ in determining the rate the insurer will charge for group coverage in the following period of coverage.

Credit rating of all participants
Actual loss experience of the group
The plan sponsor's credit rating
Actual loss experience of everyone in that zip code

Which product, offered by insurers, allows an individual's savings to be distributed to him periodically over his entire life, regardless of how ...

Limited Payment Policies
Mutual Funds
Endowment Contracts
Annuities

Which of the following is an example of a rebate?

Premium reductions, promises and personal services not specified in the policy.
Selling insurance only to one's own family.
Charging a fee for researching an insurance quote.
None of the answers listed.

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Life and Health Insurance MCQs