Health and life Insurance practice exam
with complete solutions
In a group health policy, a probationary period is intended for people who..
a) want lower premium
b) join the group after the effective date
c) Have a pre - exising condition at time they join the group D) Have additional coverage
through a spouse - Answer B.
Under HIPAA, which of the following is Incorrect regarding eligibility requirements for
conversion to an individual party?
A) individual who was previously covered by group health insurance for 6 months is
eligible
B) an individual who has used up COBRA continuation coverage is eligible
C) individual who doesn't qualify for Medicare may be eligible
D) gap of coverage for eligibility is a period of 63 days or less - Answer A) HIPAA
requires that theindividual have a previous continuous creditable health coverage
for at least 18 months
An insured owns a life insurance policy. To be able to pay some of her med bills, she
withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the
insurer charges a fee. What type of policy does the insured most likely have?
a) Term Life
B) Limited pay
C) Universal Life
D) Adjustable Life - Answer C) Universal life policies allow for policyholders to
withdraw a limitedportion of the policy's cash value
Insurance is the transfer of
,a) peril
b)risk
c) loss
D) Hazard - Answer B
In an annuity, the accumulated money is converted into a stream of income during
which time period?
a) Payment period
B) amortization period
C) Conversion Period
D) Annuitization Period - Answer D. "annuitization period" (annuity period) = time
during which accumulated money is converted into an income stream
which of the following reports will provide the underwriter with the info about an
insurance applicant's credit?
a) Any federal Report
B) Consumer report
C) Inspection report
D) Agent's report - Answer B
Which agreement specifies how a business will transfer hands when one of the
owners dies or becomes disabled?
A) Absolute Assignment
B) Transfer of Ownership
C)Disability Buy - Sell
D) Proprietary Transfer - Answer C
All of the following are true of the Key Person Disability income policy EXCEPT
,a) Benefits are considered taxable income to the business
B) premiums are not deductible to the business
C) Typically written to protect company in event a key employee becomes disabled and
is unable to work
D) income may be used to find replacement for key employee - Answer A) key person
disability benefits are not considered taxable income to the business
What term best describes the act of withholding material info that would be crucial to
an underwriting decision?
A) Concealment
B) Withholding
C) Leading
D) Breach of warranty - Answer a) Concealment occurs when a person withholds a
material fact that is crucial to making a decision
A married couple's retirement annuity pays them $250 per month. Husband dies and
his wife continues to receive $125.50 per month for as long as she lives. When the wife
dies, payments stop. What settlement option did they select?
A) Joint Annuity
B) Cash refund Annuity
C) Straight life
D) Joint and survivor - Answer d
An employee quits his job and converts his group policy to an individual policy ; the
premium for the individual policy will be based on his
a) experience rating
b) group rating
c) insurer's scheduled rate
d) attained age - Answer D
, If a licensee wants to transact insurance under a different name than that listed on
his/her producer's license, which of the following must occur?
a) change must be reported to Commissioner
b) Change must be reported to the Federal Producer's Directory
c) licensee must obtain a new license
d) illegal to transact insurance under any name other than the one listed on the license
- Answer
A) required to notify commissioner in writing prior to use of fictitious name
Concerning Juvenile Life Insurance, which of the following statements is INCORRECT?
a) can be a limited premium payment policy
b) classified as any life insurance written on the life of a minor
c) classified as any life insurance purchased by a minor
d) usually a parent or guardian is the applicant for insurance on the life of a minor -
Answer C) insures life of a minor; does not need to be purchased by minor
When a reduced - paid up nonforfeiture option is chosen, what happens to the face
amount of the policy?
a) it decreases over the term of the policy
b) remains the same as the original policy, regardless of any differences in value
c) reduced to the amount of what the cash value would buy as a single premium
D) is increased when extra premiums are paid - Answer C) In a reduced paid - up
policy, original policy's cash value is used as a single premium to pay for a
permanent policy with a reduced face amount from the original , hence the name.
new policy accumulates in cash value until its maturity or the insured's death
Ray has an individual major medical policy that requires a coinsurance payment. Ray
very rarely visits his physician and would prefer to pay the lowest premium possible.
Which coinsurance arrangement would be best?
a) 75/25
with complete solutions
In a group health policy, a probationary period is intended for people who..
a) want lower premium
b) join the group after the effective date
c) Have a pre - exising condition at time they join the group D) Have additional coverage
through a spouse - Answer B.
Under HIPAA, which of the following is Incorrect regarding eligibility requirements for
conversion to an individual party?
A) individual who was previously covered by group health insurance for 6 months is
eligible
B) an individual who has used up COBRA continuation coverage is eligible
C) individual who doesn't qualify for Medicare may be eligible
D) gap of coverage for eligibility is a period of 63 days or less - Answer A) HIPAA
requires that theindividual have a previous continuous creditable health coverage
for at least 18 months
An insured owns a life insurance policy. To be able to pay some of her med bills, she
withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the
insurer charges a fee. What type of policy does the insured most likely have?
a) Term Life
B) Limited pay
C) Universal Life
D) Adjustable Life - Answer C) Universal life policies allow for policyholders to
withdraw a limitedportion of the policy's cash value
Insurance is the transfer of
,a) peril
b)risk
c) loss
D) Hazard - Answer B
In an annuity, the accumulated money is converted into a stream of income during
which time period?
a) Payment period
B) amortization period
C) Conversion Period
D) Annuitization Period - Answer D. "annuitization period" (annuity period) = time
during which accumulated money is converted into an income stream
which of the following reports will provide the underwriter with the info about an
insurance applicant's credit?
a) Any federal Report
B) Consumer report
C) Inspection report
D) Agent's report - Answer B
Which agreement specifies how a business will transfer hands when one of the
owners dies or becomes disabled?
A) Absolute Assignment
B) Transfer of Ownership
C)Disability Buy - Sell
D) Proprietary Transfer - Answer C
All of the following are true of the Key Person Disability income policy EXCEPT
,a) Benefits are considered taxable income to the business
B) premiums are not deductible to the business
C) Typically written to protect company in event a key employee becomes disabled and
is unable to work
D) income may be used to find replacement for key employee - Answer A) key person
disability benefits are not considered taxable income to the business
What term best describes the act of withholding material info that would be crucial to
an underwriting decision?
A) Concealment
B) Withholding
C) Leading
D) Breach of warranty - Answer a) Concealment occurs when a person withholds a
material fact that is crucial to making a decision
A married couple's retirement annuity pays them $250 per month. Husband dies and
his wife continues to receive $125.50 per month for as long as she lives. When the wife
dies, payments stop. What settlement option did they select?
A) Joint Annuity
B) Cash refund Annuity
C) Straight life
D) Joint and survivor - Answer d
An employee quits his job and converts his group policy to an individual policy ; the
premium for the individual policy will be based on his
a) experience rating
b) group rating
c) insurer's scheduled rate
d) attained age - Answer D
, If a licensee wants to transact insurance under a different name than that listed on
his/her producer's license, which of the following must occur?
a) change must be reported to Commissioner
b) Change must be reported to the Federal Producer's Directory
c) licensee must obtain a new license
d) illegal to transact insurance under any name other than the one listed on the license
- Answer
A) required to notify commissioner in writing prior to use of fictitious name
Concerning Juvenile Life Insurance, which of the following statements is INCORRECT?
a) can be a limited premium payment policy
b) classified as any life insurance written on the life of a minor
c) classified as any life insurance purchased by a minor
d) usually a parent or guardian is the applicant for insurance on the life of a minor -
Answer C) insures life of a minor; does not need to be purchased by minor
When a reduced - paid up nonforfeiture option is chosen, what happens to the face
amount of the policy?
a) it decreases over the term of the policy
b) remains the same as the original policy, regardless of any differences in value
c) reduced to the amount of what the cash value would buy as a single premium
D) is increased when extra premiums are paid - Answer C) In a reduced paid - up
policy, original policy's cash value is used as a single premium to pay for a
permanent policy with a reduced face amount from the original , hence the name.
new policy accumulates in cash value until its maturity or the insured's death
Ray has an individual major medical policy that requires a coinsurance payment. Ray
very rarely visits his physician and would prefer to pay the lowest premium possible.
Which coinsurance arrangement would be best?
a) 75/25
