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Flashcards in Final Exam Questions Deck (90):

What kind of life insurance beneficiary requires his/her consent when a change of beneficiary is made?

Irrevocable beneficiary


When can a policyowner change a revocable beneficiary?



How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy?

If the primary beneficiary dies before the insured


A level premium indicates

the premium is fixed for the entire duration of the contract


If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act?

Insured's contingent beneficiary


Which premium schedule results in the lowest cost to the policyowner?







An underwriter determines that an applicant's risk should be recategorized due to a health issue. This life insurance policy may be issued with a(n)

extra premium


When does a life insurance contract become effective if the initial premium is not collected during the application process?

When producer delivers policy and collects initial premium


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

Free-Look period has expired


What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability?



N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What type of annuity did N purchase?

Fixed Deferred


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?

Life Annuity with Period Certain


What determines the full amount of Social Security retirement benefits a qualified individual is entitled to receive?

Primary Insurance Amount (PIA)


Which of these provisions require proof of insurability after a policy has lapsed?







What is the Suicide provision designed to do?

safeguard the insurer from an applicant who is contemplating suicide


M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?

Pay face amount minus the past due premium


What benefit does the Payor clause on a Juvenile Life policy provide?

Premiums are waived if payor becomes disabled


How are policyowner dividends treated in regards to income tax?

Interest on accumulations is taxed


B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of

additional Whole Life coverage at specified times


L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatement of Age provision, the insurer will

adjust the death benefit to a reduced amount


S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?

Return of premium rider


What does the ownership clause in a life insurance policy state?

Who the policyowner is and what rights the policyowner is entitled to


The automatic premium loan provision is designed to

avoid a policy lapse


Q is hospitalized for 3 days and receives a bill for $10,100. Q has a Major Medical policy with a $100 deductible and 80/20 coinsurance. How much will Q be responsible for paying on this claim?



Which of these are NOT an example of a Nonforfeiture option?

Extended Term

Reduced Paid-up

Cash Surrender

Life Income

Life Income


P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability?

P cannot borrow against the policy's cash value while disabled

P will have to pay income taxes on the amount of premiums waived

P will still receive declared dividends

P cannot assign ownership of the policy while premiums are being waived

P will still receive declared dividends


Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?

Variable Life


What kind of special need would a policyowner require with an Adjustable Life insurance policy?

Flexible premiums


Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy?

increase face amount

decrease face amount

increase premium-paying period

decrease premium payment

Increase face amounts


When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?

Conversion provision


How long does the coverage normally remain on a limited-pay life policy?

age 100


Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability?

Owner's Rights clause

Incontestable Period

Insuring Agreement

Conversion privilege

Conversion Privilege


What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?

Convertible Term


T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase?

Ten-Year Endowment


A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as

Variable Life


All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for

Variable Life

Modified Whole Life

Universal Variable life

Variable Annuity

Modified Whole Life


The investment gains from a Universal Life Policy usually go toward

The cash value


All of these are characteristics of an Adjustable Life policy EXCEPT

adjustable premiums

adjustable premium payment period

combination of term and whole life insurance

face amount can be adjusted using policy dividends

face amount can be adjusted using policy dividends


When is the face amount paid under a Joint Life and Survivor policy?

Upon death of the last insured


What kind of life insurance product covers children under their parent's policy?

Term rider


A policy of adhesion can only be modified by whom?

The insurance company


Insurance policies offered on a "take it or leave it" basis are considered what?

Contracts of adhesion


Which of these circumstances is a Business Disability Buy-Sell policy designed to help in the sale of a business?

Company becoming insolvent

Death of the business owner

Business owner becoming disabled

Key employee becoming disabled

Business owner becoming disabled


Under which of the following circumstances will the benefits under COBRA continuation coverage end?

Employee has become uninsurable

All group health plans are terminated by the employer

Employer moves headquarters to another state

Employee becomes permanently disabled

All group health plans are terminated by the employer


J has an Accidental Death and Dismemberment policy with a principal sum of $50,000. While trimming the hedges, J cuts off one of his fingers. What is the MAXIMUM J will receive from his policy?



When an employee is required to pay a portion of the premium for an employer/employee group health plan, the employee is covered under which of the following plans?







The provision in a Group Health policy that allows the insurer to postpone coverage for a covered illness 30 days after the policy's effective date is referred to as the

Waiting Period


Which of the following statements BEST defines usual, customary, and reasonable (UCR) charges?

The maximum premium an insurer can charge for their health insurance based on geography

The maximum amount an employer can contribute to a contributory health plan

The maximum deductible an insured can be charged

The maximum amount considered eligible for reimbursement by an insurance company under a health plan

The maximum amount considered eligible for reimbursement by an insurance company under a health plan


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

Carryover provision. The Carryover provision permits expenses incurred during the last three months of the calendar year to be carried over into the new year if needed to satisfy the deductible for the next year.


T was treated for an ailment 2 months prior to applying for a health insurance policy. This condition was noted on the application and the policy was issued shortly afterwards.How will the insurer likely consider this condition?

Insurer will likely treat as a pre-existing condition which may not be covered for one year


Which provision in a Major Medical Policy requires the insurer to pay only part of a loss and the insured to pay the remaining balance?



What expenses does a Basic Hospital policy pay for?

Hospital room and board


Which of the following costs would a Basic Hospital/Surgical policy likely cover?

Surgically removing a facial birthmark

Care given at a nursing home

Treating a wound from a soldier injured at war

Lost income caused by a hospital stay

Surgically removing a facial birthmark


Which of the following statements about Health Reimbursement Arrangements (HRA) is CORRECT?

If the employee had a qualified medical leave from work, lost wages can be reimbursed

If the employee paid for qualified medical expenses, the reimbursements may be tax-free

Any unused amounts are added to employee's gross income

Health insurance premiums can be reimbursed to the employee

If the employee paid for qualified medical expenses, the reimbursements may be tax-free


An insurance company receives E’s application for an individual health policy. E did not complete all of the medical history questions because she could not remember the exact dates. E signed the policy and submitted it to the insurance company anyway. A few weeks later, E suffers a heart attack and is hospitalized without completing the medical history questions and paying the initial premium. E is not insured. Which of the following clauses details the conditions that E did not meet?

Entire Contract clause

MIB clause

Insuring clause

Consideration clause

Consideration Clause


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?

Entire Contract


The policy provision that entitles the insurer to establish conditions the insured must meet while a claim is pending is

Time Limit on Certain Defenses


The provision that defines to whom the insurer will pay benefits to is called

Payment of Claims


Health insurance benefits NOT covered due to an act of war are

excluded by the insurer in the contract provisions


Which Accident and Health policy provision addresses preexisting conditions?

Proof of Loss

Legal Actions

Time Limit on Certain Defenses

Payment of Claims

Time limit and certain defenses


If an individual has an Accidental Death and Dismemberment policy and dies, an autopsy can be performed in all these situations EXCEPT

When the cause of death is unknown

When the state prohibits this by law

When consent for the autopsy is not obtained

When foul play was a contributing factor

When the state prohibits this by law


Which of these is considered a mandatory provision?

Payment of Claims

Insurance with Other Insurers

Misstatement of Age

Change of Occupation

Payment of Claims


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?

The insurer will pay the original benefit stated in the policy

The insurer will adjust the benefit to what the premiums paid would have purchased at the insured's actual age

The insurer will pay the original face amount minus any premium deficiencies owed

The insurer will deny the claim and refund premiums paid

The insurer will adjust the benefit to what the premiums paid would have purchased at the insured's actual age


When does a Probationary Period provision become effective in a health insurance contract?

At the policies inception


G is involved in an automobile accident as a result of driving while intoxicated and suffers numerous injuries. According to the Intoxicants and Narcotics exclusion in G’s policy, who is responsible for paying the medical bills?

The insured


K becomes ill after traveling overseas and is unable to work for 3 months. What kind of policy would cover her loss of income?

Disability Income


Which of the following is the MOST important factor when deciding how much Disability Income coverage an applicant should purchase?

Applicant's occupation

Applicant's monthly income

Applicant's health

Applicant's previous disabilities

Applicant's monthly income


P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase?



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

Policy issued with a rating


N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take?

Claim will be denied


P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase?

Family Maintenance policy


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?



Under what system does a group of doctors and hospitals in a designated area contract with an insurer to provide services at a prearranged cost to the INSURED?



When a person returns to work after a period of total disability but cannot earn as much as he or she did before the disability, this situation is called which of the following?

Residual disability


When L applies for a Health Insurance Policy, L unintentionally fails to list a previous visit to a cardiologist. If the insurance company contests the policy, it MUST do so within 2 years...

from the date of the issue


Which of these Nonforfeiture Options continue a build-up of cash value?

Waiver of Premium

Extended Term

Reduced Paid-Up

Cash Surrender

Reduced Paid Up


All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death EXCEPT

Fixed Period

Interest Only

Fixed Amount

Life Income

Interest Only


Which factors are taken into consideration when an insurance company determines the premium rate for a Whole Life policy on an applicant?

Risk Classification


When is the face amount of a Whole Life policy paid?

When the insured dies or at the policy's maturity date, whichever happens first


Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?

Modified Whole Life

Variable Life

Universal Life

Adjustable Life

Variable Life


In a Disability Income policy, which of these clauses acts as a deductible?

Elimination Period

Waiver Period

Deductible Period

Probationary Period

Elimination Period


Before a Health Policy is issued or delivered, the form, classification or risks, and premium rates MUST be filed with the

Commissioner of Insurance


Which of the following policy provisions prohibits an insurance company from incorporating external documents into an insurance policy?


Exceptions and Reductions


Entire Contract

Entire Contract


The rules and regulations of the Life and Health Insurance Guaranty Association in North Carolina apply to

Life and Health Policies issued by companies authorized in North Carolina


A Health Reimbursement Arrangement MUST be established by

the employer


What is the elimination period of an individual disability policy?

Time period a disabled person must wait before benefits are paid


A disability elimination period is best described as a

ime deductible


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?

36 god damn months


D is an architect receiving Disability Income benefits who is not able to return to work full time, but can work on a part-time basis. Which of these features would allow D to continue receiving benefits?

Residual Benefit clause

Waiver Benefit clause

Concurrent Benefit clause

Guaranteed Benefit clause

Residual Benefit Clause


Which type of renewability best describes a Disability Income policy that covers an individual until the age of 65, but the insurer has the right to change the premium rate?

Guaranteed Renewable. The renewal provision in a guaranteed renewable policy specifies that the policy must be renewed (as long as premiums are paid) until the insured reaches a specified age. These usually have increasing premiums.