OREGON LIFE INSURANCE EXAM
SIMULATION- DIFFICULT QUESTIONS
& VERIFIED CORRECT ANSWERS
PASSED ALREADY GRADED A+
Under a straight life annuity, if the annuitant dies before the principal amount is paid out,
the beneficiary will receive
a)The remainder of the principal.
b)Nothing; the payments will cease.
c)Guaranteed minimum benefit.
d)The amount paid into the annuity. - CORRECT ANSWER b
Which of the following is usually true of a participating life insurance policy?
a)It pays dividends to policyowners.
b)It may be converted to a term life policy.
c)It pays dividends to stockholders.
d)It assesses premiums against stockholders. - CORRECT ANSWER a
What is the best way to change an application?
a)Erase the previous answer and replace it with the new answer
b)White-out the previous answer
c)Draw a line through the incorrect answer and insert the correct one.
d)Start over with a fresh application - CORRECT ANSWER d
An insured is upset that her new health insurance policy was delivered to her by
certified mail and not through her agent. Which of the following is true?
a)There is nothing wrong with this form of policy delivery.
b)The insured should complain to the insurer.
c)The insured should ask for a new policy to be delivered.
d)The policy will not be legal until it is delivered by an agent. - CORRECT ANSWER a
If an insured surrenders his life insurance policy, which statement is true regarding the
cash value of the policy?
a)It is only taxable if the cash value exceeds the amount paid for premiums
.b)It is not considered to be taxable
,.c)It is taxable only if it exceeds the amounts paid for premiums by 50%.
d)It is automatically taxable. - CORRECT ANSWER a
HIPAA applies to groups of
a)At least 10.
b)At least 100.
c)More than 2, fewer than 50.
d)2 or more. - CORRECT ANSWER d
All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT
a)Employer contributions are tax deductible as ordinary business expense.
b)Funds accumulate on a tax-deferred basis.
c)Employee and employer contributions are not counted as income to the employee for
income tax purposes
.d)At distribution, all amounts received by the employee are tax free. - CORRECT
ANSWER d
Why is it essential for an insurer to document all correspondence with an insured?
a)Federal law
b)Errors and omissions
c)Statistics gathering
d)State law - CORRECT ANSWER b
How many days from the finalization of a divorce or separation does the spouse of a
group health certificate owner have to notify the insurer when requesting continuance of
coverage?
a)14
b)60
c)30
d)45 - CORRECT ANSWER b
Traditional IRA contributions are tax deductible based on which of the following?
a)How long the plan has been in force
b)Owner's age
c)IRA limit
d)Owner's income Traditional IRA contributions are tax deductible, but may be limited if
the owner's income exceeds a certain level. - CORRECT ANSWER d
When the insured selects the extended term nonforfeiture option, the cash value will be
used to purchase term insurance with what face amount?
a)The same as the original policy minus the cash value
,b)Equal to the original policy for as long as the cash values will purchase.
c)In lesser amounts for the remaining policy term of age 100.
d)Equal to the cash value surrendered from the policy - CORRECT ANSWER b
When employees are actively at work on the date coverage can be transferred to
another insurance carrier, what happens to coinsurance and deductibles?
a)They have to be reevaluated.
b)Coinsurance carries over, but deductibles are generally higher.
c)Deductibles carry over, but coinsurance is generally higher.
d)They carry over from the old plan to the new plan. - CORRECT ANSWER d
Chris, who is unlicensed, works part-time in her father's insurance agency. She may
perform all of the following activities EXCEPT
a)Assist her father in completing applications for insurance.
b)Call prospects and collect expiration data of their existing policies for her father.
c)Collect premium for in-force policies and explain coverages to clients that have
existing policies written by her father.
d)Make appointments with clients and prospective clients to meet with her father. -
CORRECT ANSWER c
Concerning Medicare Part B, which statement is INCORRECT?
a)It is fully funded by Social Security taxes (FICA).
b)It is known as medical insurance.
c)It offers limited prescription drug coverage.
d)It provides partial coverage for medical expenses not fully covered by Part A. -
CORRECT ANSWER a
Employers can reduce health plan costs by coupling a Health Reimbursement Account
(HRA) with
a)Nothing; HRAs cannot be coupled with any other health plan.
b)A high deductible health plan.
c)A low deductible health plan.
d)An IRA. - CORRECT ANSWER b
A prospective insured receives a conditional receipt but dies before the policy is issued.
The insurer will
a)Automatically pay the policy proceeds.
b)Pay the policy proceeds only if it would have issued the policy.
c)Pay the policy proceeds up to an established limit.
d)Not pay the policy proceeds under any circumstances. - CORRECT ANSWER b
, All of the following statements are true regarding installments for a fixed amount
EXCEPT
a)Value of the account and future earnings will determine the time period for the
benefits.
b)This option pays a specific amount until the funds are exhausted.
c)The annuitant may select how big the payments will be.
d)The payments will stop when the annuitant dies. - CORRECT ANSWER d
Life insurance death proceeds are
a)Taxable to the extent that they exceed 7.5% of the beneficiary's adjusted gross
income.
b)Taxed as a capital gain.
c)Taxed as ordinary income.
d)Generally not taxed as income. - CORRECT ANSWER d
When a fixed annuity owner pays pays a monthly annuity premium to the insurance
company, where is this money placed?
a)Forwarded to an investor
b)Each contract's separate account
c)The annuity owner's account
d)The insurance company's general account - CORRECT ANSWER d
An individual has been making periodic premium payments on an annuity. The annuity
income payments are scheduled to begin after 1 year since the annuity was purchased.
What type of annuity is it?
a)Deferred
b)Fixed
c)Flexible premium
d)Immediate - CORRECT ANSWER a
Which of the following statements concerning buy-sell agreements is true?
a)Benefits received are considered income taxable.
b)Buy-sell agreements pay in the event of a medical emergency
.c)Buy-sell agreements are normally funded with a life insurance policy.
d)Premiums paid are deductible as a business expense. - CORRECT ANSWER c
Long-term care policies require that in addition to the applicant at least one person must
be designated in the policy. What is the role of that designated person?
a)To receive policy benefits if the insured is deceased
b)To pay the premiums on the policy
SIMULATION- DIFFICULT QUESTIONS
& VERIFIED CORRECT ANSWERS
PASSED ALREADY GRADED A+
Under a straight life annuity, if the annuitant dies before the principal amount is paid out,
the beneficiary will receive
a)The remainder of the principal.
b)Nothing; the payments will cease.
c)Guaranteed minimum benefit.
d)The amount paid into the annuity. - CORRECT ANSWER b
Which of the following is usually true of a participating life insurance policy?
a)It pays dividends to policyowners.
b)It may be converted to a term life policy.
c)It pays dividends to stockholders.
d)It assesses premiums against stockholders. - CORRECT ANSWER a
What is the best way to change an application?
a)Erase the previous answer and replace it with the new answer
b)White-out the previous answer
c)Draw a line through the incorrect answer and insert the correct one.
d)Start over with a fresh application - CORRECT ANSWER d
An insured is upset that her new health insurance policy was delivered to her by
certified mail and not through her agent. Which of the following is true?
a)There is nothing wrong with this form of policy delivery.
b)The insured should complain to the insurer.
c)The insured should ask for a new policy to be delivered.
d)The policy will not be legal until it is delivered by an agent. - CORRECT ANSWER a
If an insured surrenders his life insurance policy, which statement is true regarding the
cash value of the policy?
a)It is only taxable if the cash value exceeds the amount paid for premiums
.b)It is not considered to be taxable
,.c)It is taxable only if it exceeds the amounts paid for premiums by 50%.
d)It is automatically taxable. - CORRECT ANSWER a
HIPAA applies to groups of
a)At least 10.
b)At least 100.
c)More than 2, fewer than 50.
d)2 or more. - CORRECT ANSWER d
All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT
a)Employer contributions are tax deductible as ordinary business expense.
b)Funds accumulate on a tax-deferred basis.
c)Employee and employer contributions are not counted as income to the employee for
income tax purposes
.d)At distribution, all amounts received by the employee are tax free. - CORRECT
ANSWER d
Why is it essential for an insurer to document all correspondence with an insured?
a)Federal law
b)Errors and omissions
c)Statistics gathering
d)State law - CORRECT ANSWER b
How many days from the finalization of a divorce or separation does the spouse of a
group health certificate owner have to notify the insurer when requesting continuance of
coverage?
a)14
b)60
c)30
d)45 - CORRECT ANSWER b
Traditional IRA contributions are tax deductible based on which of the following?
a)How long the plan has been in force
b)Owner's age
c)IRA limit
d)Owner's income Traditional IRA contributions are tax deductible, but may be limited if
the owner's income exceeds a certain level. - CORRECT ANSWER d
When the insured selects the extended term nonforfeiture option, the cash value will be
used to purchase term insurance with what face amount?
a)The same as the original policy minus the cash value
,b)Equal to the original policy for as long as the cash values will purchase.
c)In lesser amounts for the remaining policy term of age 100.
d)Equal to the cash value surrendered from the policy - CORRECT ANSWER b
When employees are actively at work on the date coverage can be transferred to
another insurance carrier, what happens to coinsurance and deductibles?
a)They have to be reevaluated.
b)Coinsurance carries over, but deductibles are generally higher.
c)Deductibles carry over, but coinsurance is generally higher.
d)They carry over from the old plan to the new plan. - CORRECT ANSWER d
Chris, who is unlicensed, works part-time in her father's insurance agency. She may
perform all of the following activities EXCEPT
a)Assist her father in completing applications for insurance.
b)Call prospects and collect expiration data of their existing policies for her father.
c)Collect premium for in-force policies and explain coverages to clients that have
existing policies written by her father.
d)Make appointments with clients and prospective clients to meet with her father. -
CORRECT ANSWER c
Concerning Medicare Part B, which statement is INCORRECT?
a)It is fully funded by Social Security taxes (FICA).
b)It is known as medical insurance.
c)It offers limited prescription drug coverage.
d)It provides partial coverage for medical expenses not fully covered by Part A. -
CORRECT ANSWER a
Employers can reduce health plan costs by coupling a Health Reimbursement Account
(HRA) with
a)Nothing; HRAs cannot be coupled with any other health plan.
b)A high deductible health plan.
c)A low deductible health plan.
d)An IRA. - CORRECT ANSWER b
A prospective insured receives a conditional receipt but dies before the policy is issued.
The insurer will
a)Automatically pay the policy proceeds.
b)Pay the policy proceeds only if it would have issued the policy.
c)Pay the policy proceeds up to an established limit.
d)Not pay the policy proceeds under any circumstances. - CORRECT ANSWER b
, All of the following statements are true regarding installments for a fixed amount
EXCEPT
a)Value of the account and future earnings will determine the time period for the
benefits.
b)This option pays a specific amount until the funds are exhausted.
c)The annuitant may select how big the payments will be.
d)The payments will stop when the annuitant dies. - CORRECT ANSWER d
Life insurance death proceeds are
a)Taxable to the extent that they exceed 7.5% of the beneficiary's adjusted gross
income.
b)Taxed as a capital gain.
c)Taxed as ordinary income.
d)Generally not taxed as income. - CORRECT ANSWER d
When a fixed annuity owner pays pays a monthly annuity premium to the insurance
company, where is this money placed?
a)Forwarded to an investor
b)Each contract's separate account
c)The annuity owner's account
d)The insurance company's general account - CORRECT ANSWER d
An individual has been making periodic premium payments on an annuity. The annuity
income payments are scheduled to begin after 1 year since the annuity was purchased.
What type of annuity is it?
a)Deferred
b)Fixed
c)Flexible premium
d)Immediate - CORRECT ANSWER a
Which of the following statements concerning buy-sell agreements is true?
a)Benefits received are considered income taxable.
b)Buy-sell agreements pay in the event of a medical emergency
.c)Buy-sell agreements are normally funded with a life insurance policy.
d)Premiums paid are deductible as a business expense. - CORRECT ANSWER c
Long-term care policies require that in addition to the applicant at least one person must
be designated in the policy. What is the role of that designated person?
a)To receive policy benefits if the insured is deceased
b)To pay the premiums on the policy
