Insurance Exam

Front 1

What type of annuity guarantees to pay an income to the annuitant each year as long as he lives, and upon death, the annuity will refund the remaining payments to a beneficiary?

Back 1

Installment refund annuity

Installment refund annuity guarantees payments to the annuitant each year as long as the annuitant lives. Upon death, the annuity will refund the remaining payments to a beneficiary in installments.

Front 2

In insurance, an offer is usually made when

Back 2

The application is submitted.

In insurance the offer is usually made by the applicant in the form of the application. Acceptance occurs when the underwriter approves the application, provided it's accompanied by the initial premium. Otherwise, acceptance occurs when the insurer receives payment, after the application has been approved.

Front 3

Premium payments for personally-owned disability income policies are

Back 3

Not tax deductible.

Premiums for personally-owned individual disability income policies are not deductible.

Front 4

Which of the following is NOT covered under a "core" policy, Plan A in Medigap insurance?

Back 4

The Medicare Part A deductible.

Medicare Supplement Plan A provides the core, or basic, benefits established by law. All of the above are part of the basic benefits, except for the Medicare Part A deductible, which is a benefit offered through nine other plans.

Front 5

#11. All of the following are characteristics of a Major Medical Expense policy EXCEPT

a) Blanket coverage.
b) Coinsurance.
c) Low maximum limits.
d) Deductibles

Back 5

c) Low maximum limits.

Major medical expense contracts are characterized by high maximum limits, blanket coverage, coinsurance, and a deductible

Front 6

Felix has a disability income policy with an annual premium of $300 and a benefit amount of $300 per month. Felix was disabled and because of the policy's elimination period, had no income at the time it was due. The policy contains the optional Unpaid Premium provision. Now that the elimination period has been satisfied, Felix's first disability payment will be

Back 6

Nothing.

The insurer would retain the first month's benefit to satisfy the past due premium.

Front 7

What is a primary difference between an IRA and an SEP?

Back 7

Much more money can be contributed to a SEP.

The primary difference between a SEP and an IRA is the much larger amount that can be contributed each year to a SEP (currently $49,000 or 25% of the employee’s compensation, whichever is less).

Front 8

Existing and replacing life insurers are required to keep copies of all summaries, notices, and statements used in sales transactions until the conclusion of their next examination by the Insurance Department, or for a period of at least

Back 8

5 years

Louisiana insurance laws require insurers to keep such records for a minimum of 5 years

Front 9

Which of the following statements is an accurate comparison between private and government insurers?



a) Private insurers provide insurance in areas where the government will not.
b) Private insurers may be authorized to transact insurance by state insurance departments.
c) Insurance provided by the government is called "federal insurance."
d) Private insurers offer fewer lines of insurance than government insurers.

Back 9

b) Private insurers may be authorized to transact insurance by state insurance departments.

Private insurers offer many lines of insurance. Government insurance programs, also known as "social insurance", cover areas that private companies cannot or will not, providing programs like Medicare, Social Security, and National Flood Insurance. Government programs are funded with tax dollars and serve national causes, in contrast with private insurers.

Front 10

Which nonforfeiture option provides coverage for the longest period of time?

a) Extended term
b) Paid-up option
c) Accumulated at interest
d) Reduced paid-up

Back 10

Reduced paid-up

The reduced paid-up nonforfeiture option would provide protection until the insured reaches 100, but the face amount is reduced to what the cash would buy.

Front 11

Which of the following best describes annually renewable term insurance?

Back 11

It is a level term insurance.

Annually renewable term is a form of level term insurance that offers the most insurance at the lowest cost.

Front 12

What is the maximum amount than can be contributed to an MSA of the high-deductible plan for individuals

Back 12

65%

The maximum amount than can be contributed to an MSA is 65% of the high-deductible plan for individuals or 75% of the family deductible for those with family coverage. Non-qualified distributions have a 15% penalty tax.

Front 13

A medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographic area is known as

Back 13

Usual, customary and reasonable.

The usual, customary and reasonable approach for determining insurance benefits is based upon the fees normally charged for specific procedures in the geographic location where the services are provided.

Front 14

All other factors being equal, the least expensive first-year premium payment is found in

Back 14

Annually Renewable Term

Annually renewable term is the purest form of term insurance. The death benefit remains level, but the premium increases each year with the insured's attained age. In decreasing policies, while the face amount decreases, the premium remains constant throughout the life of the contracts. In level term and increasing term policies, the premium also remains level for the term of the policy. Therefore, in the other types of level policies, the first-year premium would not be different from any other year.

Front 15

If a consumer requests additional information concerning an Investigative Consumer Report, how long does the insurer or reporting agency have to comply?

Back 15

5 days

Consumers must be advised that they have a right to request additional information concerning Investigative Consumer Reports, and the insurer or reporting agency has 5 days to provide the consumer with the additional information.

Front 16

A Universal Life insurance policy has two types of interest rate that are called

Back 16

Guaranteed and Current

The insurer credits the cash value in the policy with a current (nonguaranteed) interest rate and backs the cash value with a contract (lower guaranteed) rate of interest.

Front 17

All of the following are TRUE statements regarding the accumulation at interest option EXCEPT

The annual dividend is retained by the company.
The interest is credited at a rate specified by the policy.
The policyholder has the right to withdraw the accumulations at any time.
The interest credited under this option is not taxable since it remains inside the insurance policy.

Back 17

The interest credited under this option is not taxable since it remains inside the insurance policy.

The interest credited under this option is TAXABLE, whether or not the policyowner receives it.

Front 18

Even though "sickness" is a peril covered by a health insurance policy, coverage may be limited or excluded because of all of the following EXCEPT

a) Occupational exclusions.
b) Probationary periods.
c) Exemption periods.
d) Pre-existing conditions.

Back 18

c) Exemption periods.

Health insurance policy conditions require that certain eligibility requirements be met in order for coverage to apply. At the start of a policy, there may be a probationary period and conditions for which an insured received treatment or should have received treatment may be excluded as pre-existing. Injury or disease resulting from an occupation and covered under a workers compensation policy will be excluded from coverage under health insurance.

Front 19

Once a claim for loss is received, how many days does the insurer have to pay it before the interest on benefits begins to accrue?

Back 19

20 days

Interest on benefits of a life insurance policy begins to accrue 20 days after receipt of acceptable proof of loss due to death by the insurer.

Front 20

The policyowner of an Adjustable Life policy can increase premium payments and

Back 20

Have a limited pay policy.

Typically, the owner of an adjustable life policy has the following privileges: increasing or decreasing the premium; changing the premium-paying period; increasing or decreasing the face amount of coverage; or changing the period of protection.

Front 21

#128. All of the following are characteristics of a Universal Life policy EXCEPT

a) The cash account accumulates on a tax-deferred basis.
b) Universal Life is a combination of term insurance and a separate savings account joined in a single contract.
c) The planned premium pays for mortality charges and expenses and any excess is returned to the policyowner.
d) The insurance company reserves the right to adjust the mortality charges and/or interest rate.

Back 21

c) The planned premium pays for mortality charges and expenses and any excess is returned to the policyowner.

Any premium amounts not required to pay for mortality and expenses, create the cash account.

Front 22

The most the Insurance Guaranty Association will pay for net cash surrender values is

Back 22

$100,000.

The Insurance Guaranty Association will not pay more than $100,000 for net cash surrender and net cash withdrawal values.

Front 23

Which of the following statements is true regarding LTC insurance?

a) Every policy must offer reduced paid-up insurance to the applicant.
b) LTC policies may not include any riders.
c) LTC policies must allow a 60-day free-look period.
d) Every policy must offer nonforfeiture benefits to the applicant.

Back 23

d) Every policy must offer nonforfeiture benefits to the applicant.

Long-term care policies or certificates issued or delivered in this state must offer to the applicant nonforfeiture benefits. Reduced paid-up insurance is one of the possible nonforfeiture options, but it is not necessarily required. LTC policies may contain riders, and must offer a 30-day free-look period.

Front 24

A health insurance plan which involves financing, managing, and delivery of health care services and involves a group of providers who share in the financial risk of the plan or who have an incentive to deliver cost effective service, is called

Back 24

Managed care plan.

Managed care plans strive to deliver quality health care services on a cost effective basis.

Front 25

A policyowner cancels his life policy but instructs the insurance company to transfer the cash value of his policy to an annuity. This non taxable transaction is called

Back 25

1035 exchange.

In accordance with Section 1035 of the Internal Revenue Code, certain exchanges of life insurance policies and annuities may occur as non-taxable exchanges.

Front 26

In comparison with the other primary types of term insurance sold, what kind of premium does level term have?

Back 26

Highest

All other things being equal, of the three primary types of term insurance sold, level term has the highest premiums.

Front 27

Within how many days of requesting an Investigative Consumer Report must an insurer notify the consumer in writing that the report will take place?

a) 5
b) 7
c) 14
d) 3

Back 27

d) 3

Investigative Consumer Reports cannot be made unless the consumer is advised in writing about the report within 3 days of the date the report was requested.

Front 28

A person buys an individual long-term care policy and is not satisfied with the provisions. Within how many days will the insured be able to return the policy for a full premium refund?

a) 10 days
b) 15 days
c) 20 days
d) 30 days

Back 28

d) 30 days

Individual long-term care insurance policyholders and group certificate holders who contribute to the cost of their long-term care coverage have the right to return the policy within 30 days of its delivery and have the premium refunded if, after examining the policy or certificate, they are not satisfied for any reason.

Front 29

Insurers are classified according to the legal form of their ownership. The type of insurer organized to return a profit to the stockholders is

Back 29

d) Stock.

Stockholders invest in Stock Companies with the hope the company will make a profit in which they will share.

Front 30

What is the benefit of choosing extended term as a nonforfeiture option?

Back 30

It has the highest amount of insurance protection

Under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy. The duration of the new term coverage lasts for as long a period as the amount of cash value will purchase.

Front 31

Following hospitalization because of an accident, Bill was confined in a skilled nursing facility. Medicare will pay full benefits in this facility for how many days?

Back 31

100

Following hospitalization for at least three days, if medically necessary, Medicare pays for all covered services during the first 20 days in a skilled nursing facility. Days 21 through 100 require a daily copayment.