Texas State Exam Simulator - Life and Health Insurance (200 Questions Practice Exam)

Document Content and Description Below

An annuity promises that, if the annuitant dies before receiving payments equal to the correct value, the payments will be continued to a beneficiary until an amount equal to the contract value has be... en paid. This type of annuity is called An installment Refund annuity A Straight Life annuity A Cash Refund annuity A Joint Life annuity - ANSWER An installment Refund annuity One becomes eligible for Social Security disability benefits after having been disabled for 3 months 5 months 6 months 12 months - ANSWER 5 months A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct? Straight life accumulates faster than Limited-pay Life 20-Pay Life accumulates cash value faster than Straight Life Cash value accumulation of both 20-Pay Life and Straight Life depend on the insurer's financial rating 20-Pay Life and Straight Life accumulate cash value at the same rate - ANSWER 20-Pay Life accumulates cash value faster than Straight Life Who makes the legally enforceable promises in a unilateral insurance policy? Beneficiary Insurance company Insured Applicant - ANSWER Insurance company The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and the initial premium agreeing to a physical examination delivery of policy disclosure of any medical conditions - ANSWER the initial premium Which parts of a life insurance policy are guaranteed to be true? Rating Representation Statement Warranty - ANSWER Warranty A comprehensive major medical health insurance policy contains an Eligible Expenses provision which identifies the types of health care services that are covered. All of the following health care services are typically covered EXCEPT for hospital charges physician fees experimental and investigative services nursing services - ANSWER experimental and investigative services If a retiree on Medicare required five hospital stays in one year, which policy would provide the best insurance for excess hospital expenses? Long-term care Indemnity Medicare Supplement Medicaid - ANSWER Medicare Supplement S, while in the process of converting her group life insurance to an individual policy, dies. What happens to the claim her beneficiary submits? No benefits are payable under the Master contract Full benefits are payable under the Master contract Full benefits are payable under the converted policy Benefits less required premium are payable under the converted policy - ANSWER Full benefits are payable under the Master contract All of the following are limited benefit plans EXCEPT cancer policies life insurance policies dental policies critical illness policies - ANSWER life insurance policies A physician opens up a new practice and qualifies for a $7,000/month Disability Income policy. What rider would the physician add if he wants the ability to increase his policy benefit as his practice and income grow? Extended Term rider Cost of Living Adjustment rider Guaranteed Insurability Option rider Waiver of Premium rider - ANSWER Guaranteed Insurability Option rider An agent whose license has been revoked is required to wait at least five years before applying for a new license submit all previously written policies to the Commissioner of Insurance's office for servicing of the accounts cancel all policies currently in effect and advise the insureds to place them elsewhere continue to service the existing accounts but not solicit new business - ANSWER wait at least five years before applying for a new license The benefits under a Disability Buy-Out policy are normally paid in installments taxable to the beneficiary payable to the company or another shareholder normally paid after a short elimination period - ANSWER payable to the company or another shareholder he Health Insurance Portability and Accountability Act (HIPAA) gives privacy protection for insolvency health information financial information overinsurance - ANSWER health information How are surrender charges deducted in a life policy with a rear-end loaded provision? Deducted from the death benefit Deducted when the policy is discontinued Deducted from policy's cash value Deducted when assigned to another policyowner - ANSWER Deducted when the policy is discontinued What MUST an insurance company use in its advertising? Its trade name Its true corporate name Its service mark Its corporate logo - ANSWER Its true corporate name An accident policy will most likely pay a benefit for a(n) self-inflicted injury critical illness on-the-job accident off-the-job accident - ANSWER off-the-job accident M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT policy is delivered free-look period has expired insurance company issues policy initial premium is collected - ANSWER free-look period has expired When a policyowner cash surrenders a Universal Life insurance policy in it's early years, this may be considered a red flag for a(n) Federal Fair Credit Act Violation Title 18 Fraud violation Anti-Money Laundering violation Unfair Trade Practice violation - ANSWER Anti-Money Laundering violation Which of these do NOT constitute policy delivery? Policy mailed to applicant Policy mailed to agent Policy delivered to the applicant by the agent Policy issued with a rating - ANSWER Policy issued with a rating What is the MINIMUM number of Activities of Daily Living (ADL) an insured must be unable to perform to qualify for Long Term Care benefits? 1 2 3 4 - ANSWER 2 An agent who tells a client that dividends are guaranteed may be guilty of fraud rebating misrepresentation slander - ANSWER misrepresentation Which statement regarding a Key Employee Life policy is NOT true? The application must be signed by the key employee Its purpose is to prevent the financial loss that may ensue if a key employee dies The beneficiary is named by the key employee The company purchases, owns, pays the premiums and is the beneficiary - ANSWER The beneficiary is named by the key employee A policyowner's rights are limited under which beneficiary designation? Revocable Tertiary Contingent Irrevocable - ANSWER Irrevocable Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take? Deposit the applicant's check into his account and make a personal check out to the insurance company from his personal account Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company Cross off his name on the "pay to" portion of the check, write the name of the insurance company, and send the check back to the insurance company Deposit the check in to his personal account, use the funds to purchase a cashiers check, and send the new cashiers check back to the insurance company - ANSWER Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company Variable Whole Life Insurance can be described as both an insurance and securities product an insurance product only a securities product only the insurance company assumes the investment risk - ANSWER both an insurance and securities product A 66 year-old is covered under a group health plan while employed with a business that has 40 employees. If she injures herself while walking in the park, what coverage would be considered primary? Medicaid Long-term care Medicare Her group health plan - ANSWER Her group health plan Medicare is a disability program is a hospital and medical expense insurance program offers assistance in making health insurance premiums Part D provides payment for surgeon expenses - ANSWER is a hospital and medical expense insurance program 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? Allow her to take a tax deduction on unearned premiums Increase her policy's coverage amount Decrease her policy's coverage amount Nothing - ANSWER Increase her policy's coverage amount All of the following statements about health coverage for newborns are correct EXCEPT coverage begins and benefits are payable from the moment of birth coverage includes necessary care and treatment of congenital defects coverage during the first year is limited to congenital defects continued coverage after the first 31 days is dependent on notification - ANSWER coverage during the first year is limited to congenital defects Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself? Policy Exclusion Incontestable Entire Contract Provision Assignment - ANSWER Entire Contract Provision An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a $125,000 individual whole life policy $25,000 modified whole life policy $25,000 individual term life policy $25,000 individual whole life policy - ANSWER $25,000 individual whole life policy M purchases a $70,000 Life Insurance Policy with premium payments of $550 a year for the first 5 years. At the beginning of the sixth year, the premium will increase to $800 per year but will remain level thereafter. The face amount will remain at $70,000 throughout the life of the policy. The type of policy that M has purchased is Adjustable Life Indeterminate Premium Life Grader Premium Life Modified Premium Life - ANSWER Modified Premium Life S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT type of life insurance S's attained age dividend amount used toward purchase beneficiary's age - ANSWER beneficiary's age Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy? Have the customer sign a blank application, then take the application back to his office to complete prior to sending it off to the insurance company Complete the application over the phone with the customer, sign the application for the customer, then send the application off to the insurance company 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 Have the customer fill out the application and send it to his office for him to sign, then send it off to the insurance company - 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 the following statements is CORRECT about the period in which a Term Policy can be converted? It is the same in all contracts It is set by state regulation It can be changed by the insured It varies according to the contracts - ANSWER It varies according to the contracts 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 deny the claim for policy proceeds on the basis of fraud collect the correct premiums and pay the claim pay the policy proceeds in the amount the premiums would have purchased at the insured's actual age pay the policy proceeds less a penalty not to exceed 12% of those proceeds - ANSWER pay the policy proceeds in the amount the premiums would have purchased at the insured's actual age K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective? The date the sales appointment was made The date the application was submitted to the insurance company The date of application The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured - ANSWER The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured An assignment of benefits of a Health Policy transfers payments to someone other than the policyowner is prohibited by state law is allowed only on policies dates after 1992 transfers rights from the company to the policyholder - ANSWER transfers payments to someone other than the policyowner What type of policy would only provide coverage for specific types of illnesses (cancer, stroke, etc)? MEWA Blanket insurance Dread disease insurance Disability insurance - ANSWER Dread disease insurance K becomes ill after traveling overseas and is unable to work for 3 months. What kind of policy would cover her loss of income? Indemnity Major Medical Travel Disability Income - ANSWER Disability Income 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? Tertiary Irrevocable Revocable Contingent - ANSWER Revocable The Accidental Death and Dismemberment (AD&D) provision in a life insurance policy would pay additional benefits if the insured dies of natural causes becomes critically ill becomes chronically ill is blinded in an accident - ANSWER is blinded in an accident 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 deducitble? Deferral provision Carryover provision Stop Loss provision Corridor provision - ANSWER Carryover provision T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this? Fixed Certain Joint and Full Survivor Life Annuity with Period Certain Installment Refund - ANSWER Life Annuity with Period Certain 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? [Show More]

Last updated: 1 year ago

Preview 1 out of 48 pages