Texas life and health- Final Exam Review 2022/2023

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If, at the time of an insured's death, the insurance company discovers that the insured's age was misstated on the application for life insurance, the company will most likely - ANSWER pay the policy ... proceeds in the amount the premiums would have purchased at the insured's actual age The provision in a health insurance policy that suspends premiums being paid to the insurer while the insured is disabled is called the: - ANSWER Waiver of Premium P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to: - ANSWER P only Which of these statements accurately describes the Waiver of Premium provision in an Accident and Health policy? - ANSWER *Premiums are waived after the insured has been totally disabled for a specified time period (The Waiver of Premium provision waives the payment of premiums after the insured has been totally disabled for a specified period of time.) All of the following provisions must be included in life insurance policies EXCEPT - ANSWER All of the following provisions must be included in life insurance policies EXCEPT Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation? - ANSWER olicy was returned within the free-look period, premium will be fully refunded Who can purchase a plan through the Marketplace? - ANSWER Any legal resident except those incarcerated A major medical policy typically: - ANSWER provides benefits for reasonable and necessary medical expenses, subject to policy limits Which of the following BEST describes a short-term medical expense policy? - ANSWER Nonrenewable A Whole Life Insurance Policy endows when the - ANSWER Cash value equals the death benefit The insuring clause - ANSWER States the scope and limits of the coverage An insurer must provide an insured with claim forms within __ days after receiving notice of a loss. - ANSWER 15 A Family Income Policy is a combination of Whole Life and - ANSWER Decreasing term insurance T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive? - ANSWER $0 Which of these statements describe a Modified Endowment Contract (MEC)? - ANSWER Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability? - ANSWER conversion An insurance company may be judged guilty of false advertising if it - ANSWER exaggerates its dividends in a newspaper advertisement A policy of adhesion can only be modified by whom? - ANSWER the insurance company Variable Whole Life Insurance can be described as: - ANSWER both an insurance and securities product Which type of contract liquidates an estate through recurrent payments? - ANSWER annuity Many small business owners worry how their business would survive financially if the owner becomes disabled. The policy which BEST addresses this concern is: - ANSWER business overhead expense What is the elimination period of an individual disability policy? - ANSWER time period a disabled person must wait before benefits are paid In Texas, a domestic insurance company is defined as a company that - ANSWER is incorporated and formed in Texas Under a Renewable Term policy, - ANSWER the renewal premium is calculated on the basis of the insured's attained age. Group life policies MUST include all of the following provisions EXCEPT - ANSWER right to loan proceeds The Commissioner of Insurance may issue a temporary agent's license for a maximum of how many days? - ANSWER 90 All of the following statements about health coverage for newborns are correct EXCEPT - ANSWER coverage during the first year is limited to congenital defects An insured must notify an insurer of a medical claim within how many days after an accident? - ANSWER 20 On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take? - ANSWER collect initial premium along with a signed health statement Which of these terms accurately defines an underwriter's assessment of information on a life insurance application? - ANSWER risk classification What is the purpose of a Policy Summary? - ANSWER Highlights the critical parts of the policy issued Under the Texas code, the MAXIMUM for which a spouse may be insured in a company group life program with a $50,000 death benefit is: - ANSWER $25,000 Which of the following types of health coverage frequently uses a deductible? - ANSWER major medical policy Which of the following policy features allows an insured to defer current health charges to the following year's deductible instead of the current year's deductible? - ANSWER carryover provision A policyowner's rights are limited under which beneficiary designation? - ANSWER irrevocable Quarterly premium payments increase the annual cost of insurance because - ANSWER Interest to the insurer is decreased while the administrative costs are increased An agent whose license has been revoked is required to - ANSWER wait at least five years before applying for a new license The individual who provides general medical care for a patient as well as the referral for specialized care is known as a: - ANSWER primary care physician The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death is called a(n): - ANSWER insuring agreement A Business Disability Buyout plan policy is designed - ANSWER To pay benefits to the corporation or other shareholders Information obtained from a phone conversation to the proposed insured can be found in which of these reports? - ANSWER inspection report A creditor who requires a debtor to obtain insurance from a particular company or agent as a condition for a loan is guilty of - ANSWER coercion Group life insurance policies are generally written as: - ANSWER annually renewable term An enrollee of a Health Maintenance Organization (HMO) may be cancelled or nonrenewed for which of the following reasons? - ANSWER failure to pay for coverage Which of the following does Social Security NOT provide benefits for? - ANSWER dismemberment Which of these types of coverage is best described as a short term medical policy? - ANSWER interim coverage Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy? - ANSWER Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE? - ANSWER Evidence of insurability is required when the option is exercised The clause in an Accident and Health policy which defines the benefit amounts the insurer will pay is called the: - ANSWER insuring clause An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period? - ANSWER Full face amount minus any past due premiums The first portion of a covered Major Medical insurance expense that the insured is required to pay is called the: - ANSWER initial deductible According to the Mandatory Uniform Policy Provisions, what is the maximum amount of time after the premium due date during which the policy remains in force even though the premium has not been paid? - ANSWER 31 days Which of the following BEST describes a Hospital Indemnity policy? - ANSWER coverage that pays a stated amount per day of a covered hospitalization Which of these is NOT relevant when determining the amount of personal life insurance needed? - ANSWER local unemployment rate Under which of the following circumstances will the benefits under COBRA continuation coverage end? - ANSWER all group health plans are terminated by the employer What is the consideration given by an insurer in the Consideration clause of a life policy? - ANSWER promise to pay a death benefit to a named beneficiary Nursing home benefits must be provided for at least 12 consecutive months in which of the following types of policies? - ANSWER long term care Which of the following services is NOT covered under a hospitalization expense policy? - ANSWER surgeons fees Which of these life insurance riders allows the applicant to have excess coverage? - ANSWER term rider A CEO's personal assistant suffered injuries at home and as a result, was unable to work for four months. Which type of policy will pay a monthly benefit to the personal assistant? - ANSWER disability income The percentage of an individual's Primary Insurance Amount (PIA) determines the benefits paid in which of the following programs? - ANSWER social security disability income What benefit does the Payor clause on a Juvenile Life policy provide? - ANSWER premiums are waived if the payor becomes diabled Z owns a Disability Income policy with a 30-day Elimination period. Z contracts pneumonia that leaves him unable to work from January 1 until January 15. Z then becomes disabled from an accident on February 1 and the disability lasts until July 1 the same year. Z will become eligible to receive benefits starting on: - ANSWER march 1 A Long-Term Care policy must offer a MINIMUM benefit period of how many months? - ANSWER 12 A Limited-Pay Life policy has: - ANSWER premium payments limited to a specific number of years. Group/voluntary long-term care policy premiums are typically deducted from the employee's income and, - ANSWER are less costly as compared to individual long term care coverage Which premium schedule results in the lowest cost to the policyowner? - ANSWER Annual Additional coverage can be added to a Whole Life policy by adding a(n): - ANSWER decreasing term rider Who is normally considered to be the owner of a 403(b) tax-sheltered annuity? - ANSWER the employee L, aged 50, and L's spouse, 48, have one natural child and one adopted child. They purchase a Family Policy that covers L's spouse to age 65. A death benefit will NOT be paid in which of the following circumstances? - ANSWER L's spouse dies at 66 An underwriter determines that an applicant's risk should be recategorized due to a health issue. This policy may be issued with a(n): - ANSWER exclusion for the medial condition P is a Major Medical policyowner who is hospitalized as a result of injuries sustained from participating in a carjacking. How will the insurer most likely handle this claim? - ANSWER claim will be denied What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability? - ANSWER convertible term Which of these do NOT constitute policy delivery? - ANSWER policy issued with a rating Taking receipt of premiums and holding them for the insurance company is an example of: - ANSWER fiduciary responsibility Under what system do a group of doctors and hospitals in a designated area contract with an insurer to provide services at a prearranged cost to the insured? - ANSWER PPO When does a Probationary Period provision become effective in a health insurance contract? - ANSWER at the policies inception An individual life insurance policy issued in Texas MUST have a grace period for premium payment of how many days? - ANSWER 31 T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay? - ANSWER $50,000 Why is an applicant's signature required on a life insurance application? - ANSWER to attest that the statements on the application are accurate to the best of the applicants knowledge Which of the following types of care is typically not covered in a Long-Term Care policy? - ANSWER acupuncture A student pilot can pay regular premium costs for her life insurance policy with the addition of which of the following? - ANSWER aviation exclusion With Optionally Renewable Health policies, the insurer may: - ANSWER review the policy annually and determine whether or not to renew it After the initial enrollment period, an HMO must hold an open enrollment period of how many days at LEAST once in every 12-month period? - ANSWER 31 To be eligible for Social Security disability benefits, an employee must be unable to perform: - ANSWER any occupation Insurance company agent appointments remain in force for which of the following maximum periods of time, if any? - ANSWER until terminated or withdrawn In a qualified retirement plan, the yearly contributions to an employee's account: - ANSWER as restricted to maximum levels set by the IRS J, an Accidental Death and Dismemberment (AD&D) policy holder, dies after injuries sustained in an accident. J's age as stated on the application five years ago was found to be understated by ten years. Which of the following actions will the insurance company take? - ANSWER the insurer will adjust the benefit to what the premiums paid would have purchased at the insured's actual age Which of these circumstances is a Business Disability Buy-Sell policy designed to help in the sale of a business? - ANSWER business owner becoming disabled Which health policy clause stipulates that an insurance company must attach a copy of the application to the policy to ensure that it is part of the contract? - ANSWER entire contract A certificate of authority does which of the following? - ANSWER permits an insurance company to transact business in Texas What is being delivered during a policy delivery? - ANSWER insurance contract to the proposed insured S is employed by a large corporation that provides group health coverage for its employees and their dependents. If S dies, the company must allow his surviving spouse and dependents to continue their group health coverage for a maximum of how many months under COBRA regulations? - ANSWER 36 Under Texas insurance law, the term "transacting business" includes - ANSWER collecting premiums Which of these provisions require proof of insurability after a policy has lapsed? - ANSWER Reinstatement J has a Disability Income policy that does NOT provide benefits for losses occurring as the result of his employment. What kind of coverage is this? - ANSWER nonoccupational coverage What percentage of continuing education instruction MUST be completed in the classroom or classroom equivalent? - ANSWER 50% Which of the following actions by an insurance company is considered an unfair claims settlement practice? - ANSWER Denying an insured's claim without indicating the basis of denial under the policy Which of the following statements about accumulated interest earned on dividends from an insurance policy is TRUE? - ANSWER It is taxed as ordinary income N purchases an annuity by making payments in an amount no less than $100 quarterly. This describes which of the following annuities? - ANSWER Flexible installment Deferred In regards to representations or warranties, which of these statements is TRUE? - ANSWER If material to the risk, false representations will void a policy The Commissioner of Insurance has the power and duty to take all of the following actions EXCEPT - ANSWER active insurance companies financial reserves A life insurance application must be signed by all of these, EXCEPT: - ANSWER beneficiary A life insurance illustration is NOT required to include the - ANSWER Companies mortality table Health insurance benefits NOT covered due to an act of war are: - ANSWER excluded by the insurer in the contract provisions F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed? - ANSWER Decreasing term policy Which of the following best describes a contingent beneficiary? - ANSWER Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured Which of the following statements BEST describes what the Legal Actions provision of an Accident and Health policy requires? - ANSWER An insured must wait at least 60 days after proof of loss has been submitted before a lawsuit can be filed An agent who tells claimants that their rights may be impaired if they fail to complete a release form within a given period of time could be guilty of - ANSWER coercion In health insurance policies, a waiver of premium provision keeps the coverage in force without premium payments: - ANSWER after an insured has become totally disabled as defined in the policy A newly licensed General Lines agent must complete a MINIMUM of how many hours of continuing education within 24 months after initial license? - ANSWER 24 Information obtained from a phone conversation to the proposed insured can be found in which of these reports? - ANSWER inspection report A stock insurance company is owned by it's - ANSWER stockholders Insurance contracts are known as ____ because certain future conditions or acts must occur before any claims can be paid. - ANSWER conditional An agent may legally share commissions only with - ANSWER another agent who is licensed in the same line of insurance From what authority derives the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained on an applicant? - ANSWER Fair credit reporting act Which of the following health insurance policy provisions specifies the health care services a policy will provide? - ANSWER Insuring clause Which of the following circumstances would cause a Medicare Supplement policy to be cancelled? - ANSWER the insured fails to pay the premium T owns an Accident & Health policy and notifies her insurance company that she has chosen a less hazardous occupation. Under the Change of Occupation provision, which of the following actions may her insurance company take? - ANSWER increase her policy's coverage amount When an insurance company sends a policy to the insured with an attached application, the element that makes the application part of the contract between the insured and the insurer is called the: - ANSWER Entire contract provision An agent MUST give a prospective insured an Outline of Coverage when taking an application for a - ANSWER Medicare supplement policy M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son? - ANSWER Revocable Insurance agent licenses normally must be renewed every - ANSWER two years A Return of Premium life insurance policy is - ANSWER whole life and increasing term Which of the following statements about Health Reimbursement Arrangements (HRA) is CORRECT? - ANSWER If the employee paid for qualified medical expenses, the reimbursements may be tax-free M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son? - ANSWER Revocable Which of these is NOT a type of agent authority? - ANSWER Principal Life insurance that covers an insured's whole life with level premiums paid over a limited time is called: - ANSWER Limited pay life An insurance company may NOT reject a prospective insured's life application on the basis of which of the following factors? - ANSWER Gender The type of annuity that can be purchased with one monetary deposit is called a(n): - ANSWER immediate annuity Benefits for drug and alcohol treatment under a group health policy must include all of the following services EXCEPT - ANSWER transportation to and from an outpatient facility Boycott, coercion, and intimidation that result in the unreasonable restraint of trade are prohibited under the Texas Insurance Code covering - ANSWER unfair methods of competition Which type of policy is considered to be overfunded, as stated by IRS guidelines? - ANSWER modified endowment contract What is the underlying concept regarding level premiums? - ANSWER the early years are charged more than what is needed An agent MUST do which of the following during a sales presentation for a participating life insurance policy? - ANSWER includes a statement that dividends are not guaranteed Which factors are taken into consideration when an insurance company determines the premium rate for a Whole Life policy on an applicant? - ANSWER risk classification C is trying to determine whether to convert her convertible term life policy to whole life insurance using her original age or attained age. What factor would affect her decision the most? - ANSWER the cost Which health policy clause specifies the amount of benefits to be paid? - ANSWER insuring A prepaid application for individual Disability Income insurance was recently submitted to an insurer. When the insurer received the Medical Information Bureau (MIB) report, the report showed that the applicant had suffered a stroke 18 months ago, something that was not disclosed on the application. Which of the following actions would the insurance company NOT take? - ANSWER send a notice to the MIB that the application was declined E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be directed to? - ANSWER F Which of the following reimburses its insureds for covered medical expenses? - ANSWER commercial insurers An insurance company must do which of the following to terminate an agent's appointment? - send notice of the termination to the Texas Department of insurance - ANSWER send notice of the termination to the Texas Department of insurance In Major Medical Expense policies, what is the intent of a Stop Loss provision? - ANSWER limits an insured out-of-pocket medical expenses Which of the following BEST describes Credit Life insurance? - ANSWER Insurance issued on a debtor to cover outstanding balances on installment loans What does the ownership clause in a life insurance policy state? - ANSWER Who the policyowner is and what rights the policyowner is entitled to returning a portion of a premium as inducement to purchase insurance - ANSWER Which of the following is an example of rebating? All of these Settlement options involve the systematic liquidatio [Show More]

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