Comprehensive Exam

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Which term describes an insurance company that has been organized outside of the United States or its possessions and is admitted to this st

Alien

Assuming the responsibility for loss is considered which of the following ways of managing risk?

Retention

All of the following are parties to a life insurance contract, except:

The beneficiary

The process of analyzing risk exposures and designing programs to handle them is known as:

Risk Management

Those insurers that are incorporated in another state, but doing business in this state, are considered:

Foreign

Insurance ____________ are captive or independent organizations that recruit, contract with, train, and support insurance producers.

Agencies

A generic brochure developed by the NAIC to provide consumers with descriptions of basic types of life insurance as well as the comparative

Buyer's Guide

Which best describes how an indemnity plan works?

Insured pays a fixed dollar amount up front and files a claim for reimbursement

Premium is considered the policyowner's:

Consideration

Implied authority is:

What the public assumes the agent has

The Law of Agency states that a person or entity who acts on behalf of another person, company, or government, is known as the __________.

Agent

The insurable interest on one's own life is generally regarded as:

Unlimited

Statements made on the application by the applicant that are believed to be true to the best of his/her knowledge are:

Representations

If a life insurance applicant's answers on the application indicate that he/she is in good health, when in fact the applicant has a disease

A representation

Which of the following would an agent do when replacing a policy?

Provide all of the above

All of the following are true regarding re-entry term, except:

The new policy's premium will be based on the insured's original age

As the cash value increases in a traditional whole life policy, the net amount at risk ____________, but the face amount of the policy would

Decreases

If Jon dies with an outstanding policy loan of $10,000 on his $100,000 policy that has $15,000 of cash value, what will his beneficiary rece

$90,000

To purchase the greatest amount of coverage, for the least amount of initial premium, a client would purchase which of the following?

A term policy

Which of the following policies requires a producer to have both a life and securities licenseto sell?

Variable Universal

A _________ policy is one that is written on the life of a minor.

A juvenile policy is a policy written on the life of a minor to pay for any funeral costs, protect future insurability, and to build up cash

All of the following must be included in a whole life policy, except:

Guaranteed dividend table

What is the name of a single policy covering two or more lives that pays benefits upon the death of the first insured?

Joint Life

A _______ Option protects the policyowner against total loss of benefits in the event of a lapsed policy.

Nonforfeiture

All of the following are life insurance disability riders, except:

A payor benefit can be added to a jumping juvenile policy.

All of the following are Dividend Options, except:

Reduced paid-up is a nonforfeiture option, not a dividend option.

Angela bought a policy from her friend, an insurance producer. After looking it over thoroughly, Angela only has one question. Will she rece

Participating

All of the following are TRUE of Policy Loan Rate provisions, except:

The policies with fixed interest loan rates usually have a maximum interest rate of 10%.

Which statement is FALSE regarding Nonforfeiture Options?

They are used when the insured lives to the endowment date of the policy or at the insured's death

The insuring clause is found:

The insuring clause is typically found on the front or first page of the policy.

What is the additional premium cost to have the automatic premium loan provision included in a permanent policy?

The Automatic Premium Loan provision is available on cash value policies only and does not require an additional premium.

Albert owned a $100,000 policy that had accumulated a cash value of $20,000, against which he had borrowed $10,000. If he dies with this loa

Any outstanding loans at the insured's death will be deducted from the face amount (death benefit) along with any interest due. (Pay$90,000)

If a life insurance policy lapses due to nonpayment of premium, then reinstatement requires:

The payment of back premiums, plus interest, and proof of insurability

Which of the following is NOT a Dividend Option?

Reduced Paid-Up is a Nonforfeiture Option. The other answer choices are Dividend Options.

Frank has a life insurance policy in which he chooses to have the dividends increase the death benefit. Which Dividend Option did he select?

Paid-Up Additions

Which of the following is responsible for paying the premiums due on a life insurance policy?

It is the policyowner's responsibility to pay the premiums due in full and on time.

A person who negotiates insurance contracts with insurers on behalf of an applicant is known as a(n):

Agents/producers are deemed to be representatives of the insurer, while a broker is deemed to be a representative of the applicant/insured.

The person who submits an application for insurance is always referred to as the _______.

The person who submits an application for insurance is always referred to as the applicant.

The transfer of some or all of the financial risk of loss from one insurer to another insurer or insurers is best described as:

Reinsurance is a device used by insurers to reduce their direct loss exposure for certain risks.

______ are primarily social organizations that engage in charitable and benevolent activities consisting of members of a given faith, lodge,

Fraternal Benefit Society.

Which best describes how an indemnity plan works?

Insured pays a fixed dollar amount up front and files a claim for reimbursement

A generic brochure developed by the NAIC to provide consumers with descriptions of basic types of life insurance as well as the comparative

Buyer's Guide

A type of company that is owned by its policyholders, that traditionally issues participating policies in which policyholders may be eligibl

Mutual Insurance

An Errors & Omissions policy primarily covers the liability of:

A producer or agency

If a life insurance applicant's answers on the application indicate that he/she is in good health, when in fact the applicant has a disease

A representation

A producer's unwritten authority that is assumed by the public in known as:

Implied

Contractual provisions explain all of the following, except:

Where the premium is going to come from

As long as all parties perform certain duties as obligated, coverage will remain in effect. This defines a:

Conditional contract

Which of the following is a requirement in order for a third-party ownership policy to be issued by a life insurance company?

Insurable interest must exist between the policyowner and the insured

All of the following statements regarding advertising are correct, except:

Advertisements do not include radio scripts

Some traditional whole life policies offer a(n) __________ feature to keep the policy in force if there are sufficient cash values to do so.

Automatic premium loan

All of the following are characteristics of Ordinary Whole Life Insurance, except:

If insured lives to age 100, the total amount of premium paid over the lifetime of the insured is returned to the policyowner

A young couple just starting out on a limited budget, but having a large need for life insurance coverage, most likely would be best suited

Term

All of the following are characteristics of Term Insurance, except:

High premium outlay in the early years

Mary decides to convert her Term Policy to permanent protection. Which of the following statements is true regarding the conversion?

She may convert without evidence of insurability

To purchase the greatest amount of coverage, for the least amount of initial premium, a client would purchase which of the following?

A term policy

C has a $100,000 traditional whole life insurance policy with a $30,000 cash surrender value. He applies for and receives a $10,000 policy l

If C were disabled, his beneficiaries would receive $70,000, less any outstanding interest charges

Frieda wants coverage until she has paid back her business loan in 10 years. The ideal life insurance policy with the least expense would be

Decreasing Term Life

If an insured dies during the policy's grace period, the insurer will:

Pay the death benefit, less the amount of premium due

When withdrawing cash from a cash value life insurance policy, the amount of the withdrawal up to the policy's cost basis is tax-free. This

First-In, First-Out (FIFO)

If money is paid when a change of ownership in a life insurance policy takes place, this is generally known as a ____________.

Transfer for value

Which of the following is not a way to access the money accumulated in a traditional ordinary permanent life insurance policy?

Partial surrender

Ted owns a $50,000 Whole Life Policy. At age 47, he decides to stop paying premiums on his policy when it has $15,000 of cash value and exer

$50,000

All of the following are traditional whole life policy nonforfeiture values, except:

Renewable and convertible features

The _________ clause states what each party exchanges in the contract.

The consideration clause states what each party exchanges in the contract.

If overdue premiums are paid during the __________ period, the policy will remain in effect.

There is a grace period for late premiums. Typically it is 30 days (or one month) during which coverage will remain in effect.

Typically, how many days can elapse before an overdue premium will cause a policy to lapse?

There is a grace period for late premiums. Typically it is 30 days (or one month) during which coverage will remain in effect.

The _________ is the time period provided after the premium due date before a policy lapses.

The grace period is the time period provided after the premium due date before a policy lapses.

What happens to the overall annual premium cost once a term rider expires?

It decreases

A _______ Option protects the policyowner against total loss of benefits in the event of a lapsed policy.

Nonforfeiture

All of the following are true about riders, except:

All riders are available free of charge and can be added at anytime without proof of insurability

Which of the following is the proper sequence of beneficiaries?

Primary, contingent, tertiary

If a beneficiary is designated as irrevocable, then all of the following require the irrevocable beneficiary's approval, except:

Changing the mode of premium

John is the insured. His wife Mary is the primary beneficiary. Their three children are the contingent beneficiaries. John and Mary are kill

The children

All of the following regarding revocable beneficiaries is true, except:

They have rights in the policy just like any other party to the contract

What is the main purpose that IRC section 1035 was enacted?

The main purpose of section 1035 is to allow for the continuation of tax-deferral from an old policy into a new policy.

For an individually purchased life insurance policy, the premiums are considered a __________.

Nondeductible personal expense

When would a life insurance policy loan be subject to income taxation?

If the policy lapses when there is a policy loan outstanding which is in excess of the policy's cost basis

All of the following can determine the death benefit settlement option, except:

The insurer

Life insurance benefits are usually paid ____________, unless another mode of settlement has been selected.

In a lump sum

If a medical exam is required as part of the underwriting process, who normally conducts the exam?

A physician or nurse

When producer Pete delivers a policy, he should also do which of the following?

Explain the policy fully

A typical life insurance application contains how many parts?

What is the primary source of underwriting information for an individual health insurance policy?

The application

Normally, when the insurer determines that the insured is an acceptable risk, the insurer will send the policy to the ____________.

Producer

What should the producer do, if the insured is in the hospital with a heart condition pending surgery on the day the newly issued policy was

Return the policy to the insurer with a letter of explanation

A life insurance applicant pays the initial premium at the time of application and receives a Conditional Receipt. If coverage is issued as

The date of the application or upon the completion of any required medical exam (whichever is later)

By what means does the client acknowledge that an insurer may use services and information provided by third parties to gather information d

By signing the application

Lorraine's position has been terminated, and she is interested in converting her group life coverage to an individual policy. In the process

She will be converting her group term benefit to an individual term benefit

All of the following regarding employer group life insurance are true, except:

Employee-paid premiums are tax-deductible to the employee

XYZ Corporation has 59 employees. The company decides to purchase a group life policy and will pay the total premium. What percentage of emp

100%

Group term life insurance policies have a(n) _________ premium at renewal.

Increasing

In which market are Certificates of Insurance issued to insured individuals?

Group

With a Life Income Payment Option, what happens at the annuitant's death?

All payments cease

All of the following are benefits an annuity can provide that other investment or savings products cannot, except:

Tax-free distributions

A retiree elected the Life Income with 10 Year Period Certain. He/she dies the day after receiving 119 monthly payments. The beneficiary wil

If the annuitant, now deceased, was receiving income from a pure life or straight life annuity, how much goes into the annuitant's estate fo

Nothing

If Alan owns a market value adjustment annuity (MVA) and interest rates have fallen since he has taken out the policy, what impact will this

In effect, the policy values would have increased

G is concerned about the future and living a comfortable retirement. Which of the products listed below is ideally suited to help G prepare

An annuity

Upon annuitizing an annuity, all of the following factors help in determining the amount of the income benefit payment, except:

State of residence

The annuity benefit or payment option requiring the greatest amount of capital per $1,000 of benefit is:

Life Income Joint and Survivor 100%

If enrolled in an accredited elementary or secondary school, a covered child can continue receiving Survivor Benefits up to what age?

There are ____ broad categories of qualified retirement plans.

Which of the following plans is commonly known as a pension?

Defined benefit

What type of retirement plan is not required to have a vesting schedule, is not approved by the IRS, can discriminate in favor of highly com

A non-qualified plan

The needs analysis approach in determining the amount of coverage someone needs takes into consideration all of the following, except:

Receiving raises and bonuses by the insured over the years

All of the following are factors that are taken into consideration when using the Human Life Value approach in determining the proper amount

The insured's educational background

Which of the following is truly a Key Person (Key Employee)?

An executive sales manager

A partnership has 3 partners who each have an equal ownership interest in their $3,000,000 business. How many policies would have to be purc

A key person is typically all of the following, except:

Not directly involved in sales, production, or service

ACA Insurance plans must include coverage for preventive health services including all of the following, except:

Well-child care up to the age of 26

Which of the following individuals is not eligible to establish a Health Savings Account?

Anne, who is covered through a traditional HMO

Which statement is FALSE regarding Social Security Disability benefits?

Qualification for benefits is contingent only upon the employee's having 45 work credits and being unable to perform his or her usual job

Examples of preventative care include all of the following, except:

Restricting travel to within 5 miles of home

Ashley wanted to establish her company benefit plan so that it could cover her individual health insurance premiums and out-of-pocket expens

HRAs

Benefit payments made on a ____________ basis are not scheduled, but are based on the average fee charged by all doctors in a given geograph

Usual, customary, and reasonable (UCR)

All of the following plans allow participants to retain benefits amounts remaining at the end of the plan year for future use, except:

FSAs

What is the primary source of underwriting information for an individual health insurance policy?

The application is the primary source of underwriting information. All other sources are supplementary.

A Hospital Indemnity Plan pays for:

A daily hospital benefit on a daily limit as stated in the policy

Which of the following is most likely to pay the highest premium for a disability income policy, all other factors being equal?

Age 40, welder, tobacco user

Under what provision will a disability policy provide benefits if the insured is totally disabled because of donating an organ to another in

Transplant

The two categories of Group Disability Income policies are:

Long-Term and Short-Term

A partial disability is defined as an individual:

Unable to perform one or more duties of his/her occupation

Between the ages of 19 and 65, a worker in America is more likely to be disabled rather than die. This is a comparison of:

Morbidity to Mortality

Own occupation is the:

Inability to perform all duties of one's own occupation

Recurrent disability:

Protects an insured who becomes disabled for the same loss and does not have to meet a new waiting period

Which of the following statements is true regarding group short term disability benefits:

Benefits payable can be up to 100% of loss of income

For an accidental means policy to pay a claim, the injury must be an:

Unintentional in both the cause and the result of the injury

The Initial Enrollment Period for Medicare is 7 months in length. Which of the following are the start and stop dates for this period?

The 1st day of the 3rd month before the individual turns age 65 and the last day of the 3rd month after the month the individual turns age 6

Which of the following is not provided under Part A of Medicare?

Outpatient Hospital Treatment

A long-term care policy can exclude from coverage all of the following, except:

Alzheimer's disease

A Medicare Supplement or LTC policy's free look period is:

30 days

One of your clients just reinstated an Accident and Health policy. When is coverage effective for sickness and accident?

In 10 days for sickness and immediately for accidental injuries

Kirk has just reinstated an individual A policy that had lapsed and wants to know how soon coverage will be in effect for any accident or

Accidents immediately, sickness after 10 days

Until yesterday, J. J. worked for his father's company and was covered by the company's large group health plan. He stopped working to go to

A good option for J.J. is to exercise the COBRA option under his father's group plan

Insurers include provisions in contracts to help reduce unnecessary claims and the overpayment of claims. Which of the following is not one

Consideration Clause

Which provision is an Optional Uniform Provision?

Other Insurance With This Insurer

Consumers must be made aware of all of the following in a replacement sale, except:

The financial ratings from each rating service

Albert owns a printing business in which he, at times, prints counterfeit money. One day while processing counterfeit bills, his arm is seve

Not cover the claim since he was involved in an illegal act at the time of injury

The Legal Actions provision preserves the insured's right to bring suit against his/her own insurer, but the insured must wait at least ____

Under Florida law, coverage may be nonrenewed for all of the following reasons, except:

Frequency of claims

In Life Insurance, a Children's Rider covers a newborn at 14 days of age. In Health Insurance, a newborn is covered:

From the moment of birth

To reduce the risk of insuring a substandard disability applicant, an insurer may take all of the following actions, except:

Remove all of the exclusion riders

Notice of claim is required within _____ days of loss.

Which of the following is a Case Management Provision used by insurers to monitor hospital stays?

Concurrent Review

Sharon, age 64 is getting ready to file her taxes. Which of the following statements regardingthe deductibility of her various, personally-

If her deductible long-term care insurance premiums, her medical expense premiums, and herafter-tax, out-of-pocket expenses total @least 10%

All of the following are underwriting criteria taken into account by the insurer in the underwriting of individual life insurance cases, exc

Education level completed

Victor, age 59, calculated last year's gross income to be $100,000. When he analyzed the cost of his various insurance policies, he found th

0 Zero

All of the following are factors used in the calculation of health insurance premiums, except:

Mortality Table

Which of the following is not a qualifying event?

Termination due to gross misconduct

Under a Franchise Plan, employees would find their cost to be:

Less than the cost of an individual plan of like amount

Harry and Sally were equal partners in a catering business worth $400,000. They entered into a buy-sell agreement that provided funding whet

The premiums are tax deductible

Under which business-related use of Disability Income Insurance would the premiums be tax-deductible?

Business Overhead Expense Coverage

An applicant must complete ______ hours of prelicensing life and health insurance education in order to be licensed.

The Market Investigation division includes 4 sections with unique duties. Which of the following is not one of those 4 sections?

Approval

Which of the following is not considered unethical as described in the Unfair Trade and Marketing Practices?

Representation

A change of address must be reported to the DFS within how many days after moving?

A new agent must complete ______ hours of continuing education every ______ year(s).

24 hours/2 years

Which of the following is not true of a nonadmitted carrier?

The Florida Guaranty Association protects residents who buy from a nonadmitted carrier

When soliciting insurance, producers are governed by state rules and regulations under the title of ___________.

Unfair Trade Practices

A person acting as an insurer without a Certificate of Authority and collects $150,000 in premiums is guilty of which of the following?

1st degree felony

An applicant inaccurately representing information on the application is most likely guilty of:

Misrepresentation

Charging different rates or providing different benefits to insureds of the same actuarial class or hazard category is which of the followin

Unfair discrimination

Which of the following is not true of a nonadmitted carrier?

The Florida Guaranty Association protects residents who buy from a nonadmitted carrier

Which state entity is responsible for approving a Certificate of Authority for an insurance company?

Office of Insurance Regulation

The agent's fiduciary responsibility is to turn that money over to the insurer ___________.

Immediately

An insurance license may not be suspended for which of the following?

Over-insuring a health insurance risk

An agent may have no more than ________ of his total business within a 12-month period be from controlled business.

50%

Which of the following is NOT correct concerning the Buyer's Guide?

The NAIC Model does not meet Florida requirements

An insurance company can charge a fixed rate up to ______ annual interest on a policy loan subject to restrictions.

10%

___________ restrict the insurer's underwriting criteria for group policies.

State and federal laws

Which of the following is incorrect regarding the duties of an agent dealing with the replacement of an existing policy?

The agent must have the applicant sign a statement only if the insurance will replace an existing policy

Regarding suitability, the agent still has an obligation to a senior consumer who does which of the following?

Postpones answering questions about his investments

A policy is considered 'incontestable' after how many years in the state of Florida?

The insured is 67 years old and forgot to pay his/her life insurance premium. What is the grace period?

51 days

In order to sell fixed-rate or indexed-rate annuity contracts, an agent must:

Be licensed for life insurance and complete 3 hours of continuing education training for suitability in life insurance and annuity transacti

Policy replacement is the process of:

Cancelling an existing policy and issuing a new policy

An agent is prohibited from knowingly comparing policy benefits by misrepresenting all of the following, except:

Agent's commission

Which of the following annuities is known for having the highest surrender charge percentages and the longest surrender charge time periods?

Indexed Annuities

Before the replacement of an annuity contract, the agent must provide information to the consumer. Which of the following is not required?

Explanation that the purchase or exchange does not have tax consequences

All of the following annuities can be sold without a securities registration/license, except:

Variable

____________ are allowed as a way to access annuity values without having to elect a settlement option or surrender the contract.

Systematic withdrawals

The Age Discrimination in Employment Act (ADEA) affects both the short- and long-term group disability benefits for people employed after ag

Coverage for the following are optional in a medical expense plan, except:

Mental illness and substance abuse

Which of the following statements regarding TRICARE is correct?

TRICARE Prime is mandatory for active duty members

Which action would not render a small employer's health benefit plan nonrenewable?

Frequent claims

All of the following are correct regarding regulatory jurisdiction over group insurance, except:

The policy only needs to provide benefits as required by the state in which the insurer is incorporated

When it comes to choosing between home health care or home care, what is the most significant difference?

Medical vs. non-medical

Which provision of group health plans is used to determine primary and secondary coverage when an insured is covered by more than one insura

Coordination of Benefits

Under Florida law, coverage may be nonrenewed for all of the following reasons, except:

Frequency of claims

When vision care is added to a Medical Expense Policy as an optional benefit, which of the following would be true regarding that benefit?

It typically does not cover the cost to replace frames or lenses that are lost or broken

Which of the following types of policies would a sports team purchase to obtain coverage for a season?

Blanket

Dominic is a physician associated with a closed panel HMO. This means that Dominic can work with:

Only that HMO's subscribers

An agent is guilty of ______ when he / she makes a false or malicious statement about a competing insurer's financial condition.

Defamation

A firm with 50 employees replaces its existing group health plan. With regard to ongoing existing claims, the replacing insurer will be:

Required to continue paying them under the No Loss-No Gain law

Which statement is incorrect regarding HMOs?

HMOs must provide basic health care services including hospitalization, laboratory services, optical services, physical therapy, dental car

Which of the following is not true of the rating factors used by carriers that issue small employer coverage?

Rates are based on anticipated claim experience