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150 Cards in this Set
- Front
- Back
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1. Which is the proper term for a company owned |
B |
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2. A certi"cate of insurance
A. is issued to the employer to list which employees are covered by the group plan B. is issued to each individual covered by the group life insurance C. contains all policy information except the amount of protection and the bene"ciary D. is not considered valid proof of coverage |
B
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3. Al purchases an estate builder (jumping
juvenile) policy for his 5-year-old son, Donald. When Donald reaches age 21, his father presents him with the policy as a gift. Which of the following statements is NOT correct? A. Donald does not have to continue to make the premium payments to keep the policy in force. B. The premium will continue to be based on Donald’s original age of 5. C. Donald has enjoyed protection against the problems of premature death. D. The face value of Donald’s policy has increased by 5 times. |
A
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4. Mortality "gures are normally developed by
studying and interpreting statistics A. from small groups of people over 10-year periods B. developed from the deaths of millions of persons over long periods C. gathered by interviewing many persons in selected cities across the nation D. obtained by surveys of insured persons |
B
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5. The money paid by the insured to the insurance
company for insurance protection is called the A. consideration B. dividend C. bene"t D. assignment |
A
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6. The difference between a customer and a
consumer under the Gramm-Leach-Bliley Act is that A. a customer is a policyholder, whereas a consumer is an applicant B. a consumer is a policyholder, whereas a customer is an applicant C. a customer has an ongoing relationship with the insurer, whereas a consumer does not D. a consumer has an ongoing relationship with the insurer, whereas a customer does not |
c
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7. An insured allows a permanent policy to lapse.
Unless otherwise instructed, the insurance company A. is entitled to keep any accumulated cash values B. may use the cash value to purchase a reduced amount of permanent insurance C. will automatically send the cash values of the policy to the policyowner D. will automatically institute the extended term option |
D
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8. Which of the following statements about the
average number of people who die each year is TRUE? A. It is called the mortality rate. B. It cannot be predicted with any accuracy. C. It cannot be used to determine insurance rates. D. It is the principal factor in risk selection. |
A
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9. Money taken out of a modi"ed endowment
contract (MEC) will result in the A. policy being voided B. is always received income-tax free C. is considered to be a return of premium D. may be subject to unfavorable tax rules |
D
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10. Ed has a $50,000 policy with cash values of
$10,000. A $2,000 loan is outstanding, as is a past-due premium of $1,000. Ed "nds he can no longer make premium payments on this policy. If Ed chooses the cash surrender value option, he will receive A. $7,000 B. $8,000 C. $9,000 D. $10,000 |
B
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11. George, who has a group policy, may, upon
leaving his place of employment A. convert it to permanent insurance, provided he’s insurable, within a speci"ed period B. convert it to permanent insurance without proof of insurability, within a speci"ed period C. convert it to permanent insurance at his original age, without proof of insurability, within a speci"ed period D. not convert it to permanent insurance but may convert it to term insurance on an individual basis |
B
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12. A life insurance policy is a unilateral contract
because A. only the insured is bound to live up to his side of the agreement B. only the insurance company is bound to live up to its side of the agreement C. either party may default on the agreement D. neither party may default on the agreement |
B
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13. To what does the statement “spreading the
result of "nancial loss created by an individual’s death among many persons so the cost for each individual is small” refer? A. The principle of mortality B. The principle of life insurance C. The principle of indemnity D. The principle of risk |
B
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14. The Lucrative Lozenge Company provides a
$5,000 monthly income to retirees who served as senior executives. This bene"t is not available to other retirees of the company. This is an example of a A. pro"t-sharing plan B. quali"ed retirement plan C. nonquali"ed plan D. de"ned contribution plan |
C
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15. In a universal life policy, the two adjustments
usually made to the cash value account are A. guaranteed interest and current interest are credited B. premium and excess interest are charged C. guaranteed interest is charged and premium is credited D. cost of insurance protection is charged and current interest is credited |
D
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16. Loan values and retirement income are
A. called the living bene"ts of life insurance B. available from all life insurance policies C. available only from term policies D. available only as part of the business uses of life insurance |
A
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17. Which of the following policies could be
expected to have the lowest premium? A. 15-pay endowment at age 65 B. 20-pay life C. 30-pay life D. Whole life |
D
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18. To be valid, a contract must be between
individuals considered legally able to enter into an agreement. This principle is known as A. legal purpose B. offer and acceptance C. competent parties D. a contract of utmost good faith |
C
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19. When a group plan is contributory, what
percentage of employees must want and be willing to pay for coverage? A. 50% B. 75% C. 100% D. The percentage depends on the size of the group. |
B
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20. A rollover refers to which of the following?
A. A transfer of funds from one IRA to another B. Change from a standard to a substandard risk C. Contributions made by employees to a group life policy D. Taxation of withdrawals from a modi"ed endowment contract |
A
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21. Which of the following possibilities would be
considered a speculative risk? A. The painting you bought might be a longlost masterpiece. B. Your house will burn down. C. You will die young. D. You will contract cancer. |
A
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22. Non"nancial regulatory activities are known as
A. insurance conduct B. insurance competition C. market conduct D. market competition |
C
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23. A Taft-Hartley Trust is established by one or
more A. employers in the same or related "eld B. employers in unrelated "elds C. employees working for the same employer D. labor unions or associations |
D
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24. The cash value accumulation in a life insurance
policy A. cannot be used until the policy matures B. can be used for loans or later as retirement income C. is always so small that the policyowner can do very little with it D. is taxed as income to the policyowner as it accumulates |
B
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25. The type of policy that can be changed from one
that does not accumulate cash values to one that does is a A. renewable term policy B. convertible term policy C. whole life policy D. level term policy |
B
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26. Warren and Wilma have a joint life policy.
Warren dies, and the policy pays nothing. Later on, Wilma dies and the policy death bene"t is paid to the bene"ciary. This is called a A. limited pay life policy B. convertible term policy C. variable life policy D. survivorship, or second-to-die, policy |
D
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27. The number of years excluded from the
conversion privilege on a convertible term policy A. is 3 years B. is 5 years C. varies among insurance companies D. there is no exclusion |
C
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28. Which of the following situations most likely
calls for the purchase of term insurance? A. Tanya plans to retire at age 59 with enough income to travel abroad. B. George has 2 years of medical school to complete. He and his wife have 1 child. C. Leonard is 42 years old and owns a thriving business. He is married, with 2 teenaged children. D. Marge, widowed, has 1 married son, age 30. |
B
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29. When a producer is made aware of an insured’s
death, the "rst task is to A. comfort the family B. provide "nancial counseling C. contact the bene"ciary D. notify the insurance company |
D
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30. The primary purpose of a Section 303
redemption is A. liquidation of an estate’s assets to provide income for survivors B. to provide income for a businessowner at retirement C. to provide liquidity to pay estate taxes and administration and funeral costs D. to enable a businessowner to redeem shares in payment of debts on a tax-advantaged basis |
C
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31. Life insurance that does not require a medical
exam is known as simpli"ed A. issue B. underwriting C. selection D. accounting |
A
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32. Which of the following statements about social
insurance is NOT true? A. Participation is mandatory and automatic for all eligible citizens. B. Bene"ts are prescribed by law. Any changes to the bene"t structure and provisions are made by changes in the law. C. Social insurance seeks to be equitable rather than adequate. D. The government, as an insurance provider, has a clear and strong monopoly. |
C
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33. All of the following are elements of a contract
EXCEPT A. legal purpose B. offer and acceptance C. consideration D. assignment |
D
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34. A whole life policy
A. requires a single payment after which coverage is afforded for the whole life of the insured B. requires the insured to pay the premium for life and endows at age 100 C. is paid up at some speci"c time and endows at 65 D. is paid up at some speci"c time and endows at 100 |
B
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35. A limited pay life policy
A. requires level premium payments for the entire lifetime of the insured B. is available only for small face amounts C. requires premium payments for a speci"ed number of years or until a speci"ed age is reached D. cannot be purchased any longer because of tax law restrictions against it |
C
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36. A variable life policy
A. always offers a variable premium B. has a death bene"t that varies to re#ect the investment results of the underlying separate account but never falls below a guaranteed minimum C. has a "xed death bene"t; what varies are the cash values D. has "xed cash values; what varies is the death bene"t |
B
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37. The term annuity period refers to which of the
following? A. The time during which payments are made to the annuitant B. The time during which premiums are paid to fund the annuity C. The process of determining the amount of the annuity payment D. The principal factor in determining the annuity premium |
A
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38. One of the greatest advantages of convertible
and renewable term policies is that A. they are considerably less expensive than other term policies B. these features are automatically included in all term policies C. the insured isn’t required to show proof of insurability in order to renew or convert D. they accumulate cash values |
C
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39. The punishment for fraud or making false
statements may include A. "nes only B. imprisonment only C. either "nes or imprisonment D. "nes, imprisonment, or both |
D
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40. When the cash value account of a universal life
policy reaches zero, the policyowner must make a premium payment or A. the policy is lapsed B. the policy goes into the grace period C. the policy is inde"nitely suspended D. nothing happens because the cash value account can never reach zero |
B
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41. The head of the state department of insurance
has all of the following powers EXCEPT A. approving rates and rate increases for regulated lines of insurance B. subpoenaing witnesses and administering oaths in order to further any examination, investigation, or hearing on insurance matters C. imposing penalties for violations of the insurance code, including but not limited to "nes, suspensions, or revocations of licenses and Certi"cates of Authority, and requesting that the Attorney General prosecute a violator D. writing and approving state laws related to insurance |
D
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42. To be able to start operations, a mutual company
must have all of the following EXCEPT A. a minimum number of applications for insurance B. a minimum number of producers with agency contracts signed C. the advanced premium payment for each application D. a surplus as speci"ed by the state |
B
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43. Term insurance differs from permanent insurance
in that term A. builds cash value but pays no death bene"t B. repays money to a living insured C. builds no cash value and pays a death bene"t only D. has a higher premium per $1,000 of insurance |
C
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44. A producer who is acting as an agent is
representing A. either the insured or the insurer B. the insured only C. the insurer only D. neither the insured nor the insurer |
C
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45. Third-party ownership refers to a situation in
which A. the policyowner is someone other than the insured B. the applicant is someone other than the insured C. the bene"ciary is someone other than the insured D. the bene"ciary is someone different than the policyowner |
A
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46. When underwriting group life insurance, the
underwriter generally A. requires extensive medical information from each individual B. requires extensive medical information from the group C. focuses on individual members of the group rather than the group as a whole D. focuses on the group as a whole rather than on individual members |
D
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47. The tendency for poor risks to seek and be
covered for insurance more than average risks is known as A. adverse insurance B. adverse selection C. adverse underwriting D. adverse choice |
B
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48. An annuitant has a temporary annuity certain
and dies shortly after the payments start but before the certain period of 10 years has elapsed. Any money remaining is A. kept by the company B. paid to the bene"ciary for the rest of the certain period C. paid to the bene"ciary in one lump sum D. paid to the annuitant’s estate |
B
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49. If a group insurance plan is noncontributory
individuals become A. immediately covered after completing the eligibility period B. individuals must complete the probationary period and then enroll during the eligibility period to avoid medical underwriting C. individuals must complete the eligibility period and then enroll during the probationary period to avoid medical underwriting D. all individuals become immediately covered after completing the probationary period |
D
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50. A straight life annuity pays a periodic income
A. during the annuitant’s lifetime with no refund upon his death B. with a guaranteed total amount to be paid either to the annuitant or the bene"ciary C. guaranteed to be equal to the purchase price of the annuity D. to two annuitants until one dies, after which all payments cease |
A
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51. A deferred annuity pays a death bene"t to a
bene"ciary A. under no circumstances B. only when the annuitant dies after having received 12 monthly income payments C. when the annuitant dies before receiving any annuity payments D. only to a contingent bene"ciary when both the annuitant and the primary bene"ciary have died |
C
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52. An annuity is a contract that
A. creates an estate by means of the annuitant making monthly payments until a speci"ed age, usually 65 B. liquidates an estate in one lump sum cash payment to the annuitant C. creates an immediate estate to provide monthly income for the annuitant’s bene"ciary D. provides a lifetime income through periodic payments to the annuitant |
D
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53. Taxes are deferred on cash accumulations in all
of the following EXCEPT A. a deferred annuity B. a bank certi"cate of deposit C. a Keogh plan D. a universal life policy |
B
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54. Mr. and Mrs. Burden receive annuity payments.
Mr. Burden dies, but Mrs. Burden continues to receive payments. The Burdens have a A. straight life annuity B. joint life annuity C. joint life and survivorship annuity D. life annuity with period certain |
C
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55. A life annuity with period certain pays the
annuitant A. during the certain period after which all payments cease B. an amount equal to the purchase price in a speci"ed number of installments C. for a speci"ed minimum number of years, or the rest of his life, whichever is longer D. until death, at which time the bene"ciary begins receiving payments for the rest of his life |
C
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56. A level premium annuity is one that
A. is purchased with one lump-sum payment B. pays the annuitant a yearly income C. is purchased over the years before the date on which the annuity begins D. must have the entire premium paid by 1 year before the date on which the annuity begins |
C
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57. The type of annuity that guarantees to pay total
income at least equal to the purchase price of the contract is a A. straight life annuity B. life annuity with period certain C. refund life annuity D. temporary annuity certain |
C
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58. With an immediate annuity, payments to the
annuitant begin when a period has elapsed that is A. any period agreed upon by the company and the annuitant B. equal to the period between payments C. usually a speci"ed date in the distant future D. any period after 1 year |
B
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59. The type of annuity in which the values grow
according to the performance of the investment medium, and in which bene"ts may #uctuate according to market performance, is called a A. variable annuity B. #exible premium annuity C. TSA D. deferred annuity |
A
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60. TSAs are tax-sheltered retirement programs
for employees of all the following kinds of organizations EXCEPT A. charitable B. educational C. religious D. labor |
D
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61. A #exible premium annuity provides for a
#exible A. premium payment schedule B. premium payment amount C. annuity payout amount D. interest rate |
B
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62. An insurance contract is an aleatory contract.
This means A. equal value is not given by both parties to the contract B. the contract is one sided C. the insurance company is relying on the truthfulness of the applicant D. the contract is personal in nature |
A
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63. An expense loading is added to the net premium
to do all of the following EXCEPT A. cover all expenses and contingencies B. have funds for expenses when needed C. concentrate costs among certain small groups of insured D. spread cost equitably among insureds |
C
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64. Income payments made from an annuity are
A. always received entirely tax free B. always taxed for their entire amount C. only partly subject to federal taxation D. taxed only by states |
C
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65. All of the following are living bene"ts of life
insurance EXCEPT A. loan values B. last expenses C. retirement income D. cash withdrawals |
B
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66. In a whole life insurance policy
A. the cash value and insurance protection are greatest at the start of the policy B. the cash value and insurance protection are greatest at the end of the policy period C. the cash value is greatest at the start of the policy, and the insurance protection is greatest at the end of the policy period D. the cash value is greatest at the end of the policy period, and the insurance protection is greatest at the start of the policy |
D
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67. Premiums for which of the following policies
are deductible by an individual for income tax purposes? A. Universal life policy B. Whole life policy C. Term policy D. None of the above |
D
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68. In group insurance, the evidence of a contract
between the insurer and the employer or association is the A. policy B. certi"cate of insurance C. certi"cate of policy D. policy of certi"cation |
A
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69. A child may be a dependent beyond the ages of
19 or 21 A. under no circumstances B. only if the child is permanently mentally or physically disabled at any age C. only if the child is permanently mentally or physically disabled before that age D. only if the child is permanently mentally and physically disabled at any age |
C
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70. The type of insurance that provides group life
insurance automatically for federal employees unless they choose not to be included in the plan is A. SGLI B. FEGLI C. TRICARE D. CHAMPUS |
B
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71. All of the following provisions of an adjustable
life policy may be changed to meet the policyholder’s needs EXCEPT A. the face amount of the policy B. the amount and/or frequency of premium payments C. the individual insured D. the period of insurance protection |
C
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72. The current rate of interest paid to the cash
value account of a universal life policy consists of A. guaranteed interest plus excess interest B. excess interest only C. guaranteed interest only D. the interest index |
A
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73. In a universal life policy, the amount of the
death bene"t can equal the policy’s cash value A. at any time B. at no time C. at the beginning of the corridor period D. when the insured reaches age 95 |
D
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74. If a universal life policy with the increasing
death bene"t option has an initial face amount of $75,000 and a cash value of $10,000, the actual death bene"t will be A. $10,000 B. $65,000 C. $75,000 D. $85,000 |
D
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75. A universal life policy may be surrendered for its
cash value A. only when the cash value equals the death bene"t B. at any time C. within 30 days of an interest payment only D. only if there are no outstanding loans |
B
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76. Which of the following is taxable as income?
A. Insurance policy proceeds paid in a lump sum B. Interest paid on policy dividends C. Policy dividends D. Policy loans |
B
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77. Producers selling variable life insurance
A. must have a valid life license only B. must have a valid life license and must be registered with NASD C. must be registered with NASD only D. need not be licensed |
B
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78. The death bene"t of a variable life policy
A. may go up but never down B. may go down but never up C. remains the same D. may go up or down but will never fall below the face amount of the policy |
D
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79. The cash value of a variable life policy
A. is determined by the investment experience of the separate account B. cannot be withdrawn C. is guaranteed by the company D. receives speci"ed interest payments |
A
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80. Premiums for a variable universal life policy
A. can vary in amount but must be paid at speci"ed intervals B. can vary in amount and payment schedule C. may not vary in amount but can vary as to payment schedule D. cannot vary in amount and must always be paid at speci"ed intervals |
B
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81. Premium payments made into a variable
universal life policy A. are invested according to company policy B. are invested in a conservative account of long-term bonds and mortgages C. must be divided equally into separate investment accounts D. are invested in one or more investment portfolios at the policyowner’s option |
D
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82. Which of the following factors is NOT
considered when using the needs approach to determine the kind and amount of insurance appropriate for an individual? A. Needs for last illness and burial expenses B. Maintenance income for the family for a period after the death of the principal wage earner C. The individual’s net annual salary D. Continuing income for the surviving spouse |
C
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83. Carol’s husband dies, leaving her with a 5-yearold
daughter to support. Which of the 3 income periods is Carol in currently? A. Family dependency period B. Preretirement period C. Blackout period D. Retirement period |
A
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84. The most effective way to ensure that the
applicant will accept the policy when it is issued is to A. promise the applicant a part of your commission if the policy is issued B. avoid telling the applicant about the 10-day free-look period, so they will not know they have an option C. send the policy through the mail D. have the applicant pay the initial premium at the time of application |
D
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85. A policyowner allows a policy to lapse, and the
insurance company converts the policy to the extended term option. Which of the following from the original policy will automatically carry over into the new policy? A. Waiver of premium B. Face value C. Accidental death bene"t D. Disability income |
B
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86. When Jonas died, it was discovered that he was
actually 6 years older than he had claimed when applying for an insurance policy. As a result of this discovery, the insurance company A. will not pay the policy proceeds B. will pay the proceeds less the amount of extra premium that Jonas should have paid for the insurance C. will pay only the amount of insurance that Jonas’ premiums would have purchased at his correct age D. must pay all the proceeds regardless of Jonas having given an incorrect age |
C
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87. Which of the following would NOT be
permitted as a Section 1035 policy exchange? A. A life contract exchanged for another life contract B. An annuity contract exchanged for a life contract C. An annuity contract exchanged for another annuity contract D. An endowment contract exchanged for an annuity contract |
B
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88. All of the following factors are used to determine
annuity premiums EXCEPT A. assumed interest rate B. annuitant’s age C. annuitant’s place of residence D. income amount and payment guarantee |
C
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89. Jack has a variable annuity in a separate account
that has a portfolio valued at $5 million. There are 500,000 outstanding accumulation units for the account. What’s the value of 1 unit? A. $5 B. $10 C. $20 D. $50 |
B
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90. Paul dies before his annuity has paid out an
amount at least equal to the purchase price of the annuity, so Paul’s bene"ciary continues to receive annuity payments until that amount has been reached. This type of annuity is a A. refund life annuity B. straight life annuity C. joint and survivorship annuity D. life annuity with no refund |
A
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91. Which of the following is NOT a characteristic
of life insurance as property? A. It requires reasonable managerial ability. B. It creates an immediate estate. C. It may be paid for in installments. D. It requires no physical maintenance. |
A
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92. Alicia, age 35, has an annuity that has a
guaranteed growth rate of 6% and that will pay her a speci"ed monthly income beginning at age 65. What kind of annuity does Alicia have? A. An immediate variable annuity B. A deferred "xed annuity C. A deferred variable annuity D. An immediate "xed annuity |
B
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93. A universal life policy with a back-end load
A. has no grace period B. makes a service charge when the policy is surrendered C. deducts a portion of each premium payment for operating expenses D. accumulates cash value more slowly than does a policy with a front-end load |
B
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94. An indeterminate premium policy offers
A. term insurance with a #uctuating death bene"t B. whole life insurance with premium payments for a limited number of years C. high initial premium that gradually decreases over the years D. a low initial premium with succeeding premiums based on the company’s investment return, mortality, and expenses |
D
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95. With a 401(k) plan, employee contributions to
the plan A. must be matched dollar for dollar by the employer B. are made on an after-tax basis C. are made on a pretax basis D. are received income-tax free at the time of distribution |
C
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96. Alma, age 35, earns $50,000 a year and expects
to retire when she is 65. What is Alma’s human life value? A. $50,000 B. $150,000 C. $1.5 million D. $5 million |
C
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97. Permanent insurance differs from term insurance
with regard to A. cash value accumulation B. frequency of premium payments C. amount of insurance protection D. taxation of policy proceeds |
A
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98. An accounting measure used to determine a
contract owner’s interest in the separate account of a variable annuity before payments begin is called A. an annuity unit B. an accumulation unit C. a premium D. an installment certain |
B
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99. In many jurisdictions, permanent policies are
required to have some cash value by the end of A. 30 days after the policy is issued B. the policy’s 1st year C. the policy’s 3rd year D. the policy’s 5th year |
C
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100. Once a policy has lapsed, the insured usually
can reinstate the policy, provided proof of insurability is shown, if all back premiums due A. plus interest have been repaid and fewer than 3 years have elapsed B. have been repaid and fewer than 4 years have elapsed C. plus interest have been repaid and less than 1 year has elapsed D. have been repaid regardless of how much time has elapsed |
A
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101. The type of health care provider that provides
both health care services and health care coverage is a A. preferred provider organization B. health maintenance organization C. Blue Cross/Blue Shield organization D. traditional health insurance company |
B
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102. Dread disease, travel accident, vision care, and
hospital indemnity policies are all examples of A. LTC policies B. limited policies C. group policies D. blanket policies |
B
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103. Which of the following groups is NOT eligible
for Medicare coverage? A. People age 65 and older who are eligible for Social Security B. People age 65 and older who are not eligible for Social Security but who are willing to pay a monthly premium C. People of any age who have been entitled to disability bene"ts for 24 months D. People with any life-threatening condition |
D
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104. Which of the following terms describes the
concept that the insurer and the insured share in the cost of medical expenses, with the insurer bearing the greater share? A. Deductible B. Stop-loss limit C. Coinsurance D. Bene"t restoration |
C
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105. The coordination of bene"ts provision is
designed to A. give insureds as much coverage as possible B. save insurers as much money as possible C. prevent overinsurance D. give insureds as much coverage as possible while eliminating overinsurance |
D
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106. The health care system operated by the
Department of Defense to cover active and retired military personnel and their families is known as A. CHAMPUS B. TRICARE C. FEGLI D. SGLI |
B
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107. The type of health insurance policy most likely
used to cover all students attending a large university is known as A. a blanket policy B. a franchise policy C. an ASO D. a self-insured plan |
A
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108. Under workers’ compensation, a disability that
is a permanent physical impairment leaving the individual incapable of performing the previous regular occupation, but capable of performing some other type of work, is A. a permanent total disability B. a permanent partial disability C. a temporary total disability D. a temporary partial disability |
B
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109. A health insurance policy includes an
endorsement indicating that the insurer will allow the policy to continue in force without further premiums if the insured is totally and permanently disabled. Which endorsement is attached to this policy? A. Guaranteed insurability B. Impairment C. Multiple indemnity D. Waiver of premium |
D
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110. Which part of Medicare requires premium
payment by most eligible participants? Part A, basic A. hospital insurance B. Part B, supplementary medical insurance C. Respite care D. All of the above |
B
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111. Which of the following statements about longterm
care policies is CORRECT? A. ADLs are not generally a consideration under these policies. B. Most LTC policies are guaranteed renewable up to age 70, after which they revert to optionally renewable policies. C. Present policies are more likely to pay bene"ts regardless of the level of care required by the insured. D. Virtually all LTC policies require prior hospitalization before bene"ts will be paid. |
C
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112. The bene"ts of an individual disability income
policy are A. received tax free and generally limited to a percentage of monthly income B. received tax free and generally unlimited C. taxed upon receipt and generally limited to a percentage of monthly income D. taxed upon receipt and generally unlimited |
A
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113. Under a credit health policy, what is the
maximum amount of any accidental death bene"t included? A. $20,000 B. The amount of the original indebtedness C. The amount of outstanding indebtedness at any given time D. A speci"ed multiple of the monthly loan payment |
C
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114. Before Cranston was disabled, he was a full-time
engineer earning about $70,000 annually. Now, 2 years later, he is able to work part-time, earning about $25,000 annually. It is likely that Cranston would be classi"ed as A. totally and permanently disabled B. recurrently disabled C. partially disabled D. not disabled at all |
C
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115. Primary support for Medicare Part A comes from
A. general tax revenues B. Social Security payroll taxes C. private funding D. a combination of the above |
B
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116. When medical expense policies do not state
speci"c dollar bene"t amounts but instead base payments on the charges for like services in the same geographic area, bene"ts are designated as which of the following? A. Usual, customary, and reasonable charges B. Stated charges C. Percentage of stated charges D. Designated charges |
A
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117. Compared with individual disability income
policies, group disability income policies are generally A. more costly and have less liberal provisions B. more restrictive in terms of covered medical expense C. less costly and have more liberal provisions D. tied more closely to Social Security disability bene"ts |
C
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118. Many major medical policies include a provision
whereby when expenses reach a certain dollar amount, the insured no longer shares in the cost of expenses; the insurer pays 100% of remaining covered charges. This is referred to as the A. maximum bene"t B. bene"t restoration C. coinsurance percentage D. stop-loss limit |
D
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119. An insured’s disability income policy de"nes
total disability as the insured’s inability to perform the duties of any occupation for which he is reasonably quali"ed by education, training, or experience. This de"nition is known as the A. own occupation de"nition and is more restrictive than other de"nitions B. any occupation de"nition and is more restrictive than other de"nitions C. own occupation de"nition and is less restrictive than other de"nitions D. any occupation de"nition and is less restrictive than other de"nitions |
B
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120. A certain major medical policy states
a maximum number of days for which convalescent care will be paid and a maximum number of x-rays that will be paid for under any one claim. These are examples of A. "rst-dollar coverage B. inside limits C. carryover provisions D. stop-loss limits |
B
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121. Medigap policies were standardized to
A. regulate the cost of plans B. help consumers make informed decisions C. help insurers decide which plans to offer D. help health care professionals provide care ef"ciently |
B
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122. A health maintenance organization in a certain
city contracts with an independent medical group to provide services to HMO subscribers. The HMO pays the group organization rather than paying the individual medical practitioners. Which type of HMO structure is this? A. Group model B. Network model C. Staff model D. IPA model |
A
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123. Which of the following statements regarding
COBRA is CORRECT? A. COBRA permits companies who have terminated employees to stop their group coverage as of the date of termination. B. When employers discontinue group coverage, employees must prove they are insurable in order to convert to individual coverage. C. COBRA protects dependents of employees by mandating for them the same extension and conversion privileges available to employees covered by group plans. D. All of the above are correct. |
C
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124. In a disability income policy, there is a period
during which no bene"ts will be paid for illness of any kind. This period usually does not apply to accidents, only to illness. This interim is called the A. elimination period B. bene"t period C. waiver period D. probationary period |
D
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125. The usual payment arrangement under a
preferred provider organization contract is A. a fee for each service B. a #at monthly amount for each subscriber C. reimbursement to the individual subscriber D. any of the above |
A
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126. Jay, who is employed by Carson Company, is
assigned to work temporarily in another state. While in the other state, Jay is injured on the job. He is entitled to bene"ts of the workers’ compensation law in the state in which he was hired even though his injury occurred in a different state. This indicates that the workers’ compensation law in the state where Jay was hired A. is compulsory B. is elective C. includes extraterritorial provisions D. has a second injury fund |
C
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127. A health insurance policy that the insurer may
choose not to renew only on the premium due date is called A. a conditionally renewable policy B. an optionally renewable policy C. a cancelable policy D. a guaranteed renewable policy |
B
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128. Second surgical opinions, precerti"cation,
concurrent reviews, and outpatient/ambulatory services are all elements of a cost-containment system commonly known as A. COBRA B. case management C. prior authorization D. LTC |
B
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129. Luis and Margarita have a family health policy
that includes two riders. One rider excludes coverage for Margarita’s existing diabetes. The other rider indicates that the couple may purchase additional disability income coverage at speci"ed dates in the future without proving insurability. Which two riders are attached to this policy? Impairment and guaranteed A. insurability riders B. Impairment and COLA riders C. Waiver of premium and guaranteed insurability riders D. Waiver of premium and multiple indemnity riders |
A
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130. Normally, Blue Cross/Blue Shield makes
payments for medical expenses A. directly to the providers B. to subscribers who are responsible for paying the providers C. directly to the providers under group plans and to the subscribers under individual policies D. only to HMOs or PPOs |
A
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131. Under what circumstances do major medical
policies usually provide for restoration of bene"ts? A. Usually, major medical policies do not have such provisions. B. Usually, restoration is permitted only after the insured is certi"ed as being totally and permanently disabled. C. Restoration usually occurs after a speci"ed dollar amount of bene"ts has been exhausted and after the insured has proved insurability. D. Normally, restoration of bene"ts is provided only if the major medical policy is written in conjunction with a disability income policy, and restoration occurs upon the insured’s application for it after recovering from a temporary disability. |
C
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132. Which of the following waives the elimination
period in a disability policy? A. Impairment rider B. Hospital con"nement rider C. Cost-of-living adjustment rider D. Guaranteed insurability rider |
B
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133. The Medical Information Bureau is a nonpro"t
organization supported by A. insurance companies B. the federal government C. state governments D. all of the above |
A
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134. A disability that is presumed to result from the
same or a related cause of prior disability is called a A. recurrent disability B. residual disability C. presumptive disability D. delayed disability |
A
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135. Some major medical policies begin with basic
"rst-dollar coverage that pays up to its limits, then the insured must pay a certain dollar amount of expenses before the major medical portion steps in. Which of the following terms applies to the dollar amount the insured must pay between the basic policy and the major medical coverage? A. Coinsurance percentage B. Stop-loss limit C. Corridor deductible D. Internal limit |
C
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136. A Medicare SELECT policy differs from a
regular Medigap policy in that it A. provides more coverages B. costs more C. both A and B D. neither A nor B |
D
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137. Employer-paid premiums for employee group
health insurance are generally A. tax deductible to the employer B. nontaxable to the employees C. both A and B D. neither A nor B |
C
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138. In health maintenance organizations, the use of
a primary care physician, or PCP, is common as part of A. the group model B. a capitation arrangement C. open enrollment D. the gatekeeper system |
D
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139. Which of the following statements concerning a
coordination of bene"ts situation is NOT true? A. The group insurer for the person with the claim is primary. B. The group insurer for the spouse of the person with the claim is secondary. C. To prevent overinsurance, the secondary insurer does not pay bene"ts. D. If children are involved, the primary group insurer is the insurer for the parent whose birthday comes "rst in the year. |
C
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140. Oswald changes jobs in June. He was covered
by group health for 2 years at his previous job. His new job offers group health coverage with a 6-month exclusion for preexisting conditions. Assuming that Oswald enrolls at the earliest opportunity in the group health program at his new job, when will any preexisting conditions Oswald may have be covered in his new group health plan? A. Immediately B. After 3 months C. After 6 months D. After 12 months |
A
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141. Which of the following statements concerning
dental care policies is CORRECT? A. Comprehensive dental care policies usually pay a percentage of reasonable and customary charges for nonroutine treatment. B. Scheduled dental policies are likely to include orthodontic care. C. When orthodontic care is included in a dental policy, it is usually subject to the same maximums and deductibles as other covered services. D. Most dental policies are included as part of a health bene"ts package covering all medical needs. |
A
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142. Which of the following is a factor in the
evolution and increasing availability of LTC policies? A. Consumers are increasingly aware that Medicare does not cover long-term care. B. A very small percentage of the population is likely to spend any time in a nursing home as they age. C. Long-term care policies are not regulated by the government and are therefore less expensive than regulated types of insurance. D. The average cost for nursing home care is relatively low. |
A
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143. A contract that backs up a self-funded health
care plan to limit the employer’s liability for claims is called A. an administrative services only contract B. a multiple option plan C. a stop-loss contract D. an emergency contract |
C
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144. Group credit health insurance requires all of the
following EXCEPT A. a medical exam B. a master policyowner C. a minimum number of debtors D. premium payment by each debtor |
A
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145. All of the following bene"ts are provided under
Part A of Medicare EXCEPT A. inpatient hospital care B. skilled nursing facility care C. hospice care D. physicians’ services for inpatient care |
D
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146. The health maintenance organization concept
that service providers are paid a "xed monthly fee for each member is called A. designated service B. capitation C. closed panel D. the gatekeeper system |
B
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147. Which of the following phrases correctly
describes Medicaid? Supplements Medicare A. before age 65 B. Provides medical bene"ts for certain lowincome people, for the disabled, and for families with dependent children C. Is usually totally funded by the states with little or no federal reimbursement D. All of the above |
B
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148. Major medical policies may include a type of
deductible wherein the insured pays a new deductible amount for each separate event that causes medical expenses to be incurred. This is known as the A. per-cause deductible B. all-cause deductible C. common accident or illness provision D. carryover provision |
A
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149. Which of the following is a requirement for
payment of Social Security disability bene"ts? A. Total and permanent disability for at least 5 months B. Being fully insured and disability insured C. Expected disability of 12 months or longer or ending in death D. All of the above |
D
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150. Health maintenance organizations are required
to provide for all of the following EXCEPT A. emergency services B. preventive services C. prescription drugs D. physicians’ services |
C
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