Xcell Testing Solutions (Life & Health) Final 150 Question Practice Exam 2023

When can a policy owner change a revocable beneficiary? - Correct answer-Anytime 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? - Correct answer-Revocable How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy? - Correct answer-If the primary beneficiary dies before the insured What is the underlying concept regarding level premiums? - Correct answer-The early years are charged less than what is needed A policy owner is able to choose the frequency of premium payments through what policy feature? - Correct answer-Premium Mode Any changes made on an insurance application requires the initials of whom? - Correct answer-Applicant All of these are considered sources of underwriting information about an applicant EXCEPT - Correct answer-Rating Services Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation? - Correct answer-Policy was returned within the free-look period, premium will be fully refunded 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 - Correct answerfree-look period has expired What action should a producer take if the initial premium is NOT submitted with the application? - Correct answer-Forward the application to the insurer without the initial premium Which of the following is an important underwriting principle of group life insurance? - Correct answer-Everyone must be covered in the group Which requirement must be met for an association to be eligible for a group life plan? - Correct answer-Group was formed for a purpose other than acquiring insurance When an employee is terminated, which statement about a group term life conversion is true? - Correct answer-Policy proceeds will be paid if the employee dies during the conversion period Under a trustee group life policy, who would be eligible for a certificate of coverage? - Correct answer-Corporation 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? - Correct answer-Fixed Deferred S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation? - Correct answer-Single Premium Which of these is an element of a Single Premium annuity? - Correct answer-Lump-sum payment Which of these statements concerning an Individual Straight Life annuity is accurate? - Correct answer-Payments are made to an annuitant for life An individual who purchases a Life annuity is given protection against - Correct answerthe risk of living longer than expected An immediate annuity consists of a - Correct answer-single premium All of these are considered to be a benefit under Social Security EXCEPT for - Correct answer-unemployment Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company? - Correct answer-Annuity Which statement regarding third-party ownership of a life insurance policy is true? - Correct answer-It is used extensively in estate-planning as well as business circumstances Company Z has a Cross Purchase Buy-Sell Agreement in place among its three founding partners. If the agreement is funded with individual life insurance, what would it require? - Correct answer-Each partner must own a policy on the other partners Who elects the governing body of a mutual insurance company? - Correct answerpolicyholders When does a Guaranteed Insurability Rider allow the insured to buy additional coverage? - Correct answer-at future dates specified in the contract with no evidence of insurability required 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 - Correct answer-beneficiary's age M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the - Correct answerpolicy proceeds What is the Suicide provision designed to do? - Correct answer-safeguard the insurer from an applicant who is contemplating suicide What provision in a life insurance policy states that the application is considered part of the contract? - Correct answer-Entire Contract provision The incontestable clause allows an insurer to - Correct answer-contest a claim during the contestable period All of these statements about the Waiver of Premium provision are correct EXCEPT - Correct answer-Insured must be eligible for Social Security disability for claim to be accepted Which of the following statements is CORRECT about accelerated death benefits? - Correct answer-Must have a terminal illness to qualify Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled? - Correct answer-Payor clause What benefit does the Payor clause on a Juvenile Life policy provide? - Correct answerPremiums are waived if payor becomes disabled P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount? - Correct answer-Accidental Death and Dismemberment provision 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 - Correct answer-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? - Correct answer-Return of premium rider D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive? - Correct answer-The full face amount In a Life insurance contract, an insurance company's promise to pay stated benefits is called the - Correct answer-Insuring clause What does the ownership clause in a life insurance policy state? - Correct answer-Who the policyowner is and what rights the policyowner is entitled to An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period? - Correct answer-Full face amount minus any past due premiums When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take? - Correct answer-Void the policy only if it is discovered during the Contestable period and proven to be material Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling? - Correct answer-Variable Life What kind of special need would a policyowner require with an Adjustable Life insurance policy? - Correct answer-flexible premiums Credit Life insurance is - Correct answer-issued in an amount not to exceed the amount of the loan Which of these would be considered a Limited-Pay Life policy? - Correct answer-Life Paid-Up at Age 70 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? - Correct answer-Conversion privilege What type of life insurance incorporates flexible premiums and an adjustable death benefit? - Correct answer-Universal Life A Limited-Pay Life policy has - Correct answer-premium payments limited to a specified number of years Which statement about a whole life policy is correct? - Correct answer-Cash value may be borrowed against Cash value may be borrowed against - Correct answer-Face amount plus the policy's cash value What type of life policy covers 2 lives and pays the face amount after the first one dies? - Correct answer-Joint Life Policy A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as - Correct answer-Variable Life How does a typical Variable Life Policy investment account grow? - Correct answerThrough mutual funds, stocks, bonds All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for - Correct answer-Modified Whole Life K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this? - Correct answer-Modified Whole Life What kind of premium does a Whole Life policy have? - Correct answer-level What type of life policy covers two people and pays upon the death of the last insured? - Correct answer-survivorship A policy of adhesion can only be modified by whom? - Correct answer-The insurance company When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have - Correct answer-insurable interest in the proposed insured The part of a life insurance policy guaranteed to be true is called a(n) - Correct answerwarranty A Business Overhead Expense policy would cover which of the following if a business owner becomes disabled? - Correct answer-Utilities and office rent Which statement is TRUE regarding a group accident & health policy issued to an employer? - Correct answer-The employer is the policyowner and each employee receives a certificate of coverage T is covered by two health insurance plans: a group plan through his employer and his spouse's plan as a dependent. When T submits a claim, his employer's plan is considered what type of carrier under the Model Group Coordination of Benefits provision? - Correct answer-Primary carrier 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? - Correct answer-$25,000 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? - Correct answer-Contributory Which contract permits the remaining partners to buy-out the interest of a disabled business partner? - Correct answer-Disability Buy-Sell Which of the following statements does NOT accurately describe the tax treatment of premiums and benefits of individual Accident and Health insurance? - Correct answerDisability income policy premiums are tax-deductible An insurance company would MOST likely pay benefits under an Accidental Death and Dismemberment policy for which of the following losses? - Correct answer-Loss of eyesight due to an accidental injury The situation in which a group of physicians are salaried employees and conduct business in an HMO facility is called a(n) - Correct answer-closed panel The health insurance program which is administered by each state and funded by both the federal and state governments is called - Correct answer-Medicaid J is a subscriber to a plan which contracts with doctors and hospitals to provide medical benefits at a preset price. What type of plan does J belong to? - Correct answer-Health Maintenance Organization Which of these is considered a true statement regarding Medicaid? - Correct answerFunded by both state and federal governments M is insured under a basic Hospital/Surgical Expense policy. A physician performs surgery on M. What determines the claim M is eligible for? - Correct answer-Determined by the terms of the policy Which of the following types of health coverage frequently uses a deductible? - Correct answer-Major Medical Policy S wants to open a tax-exempt Health Savings Account. To qualify for this type of account, Federal law dictates that S must be enrolled in a - Correct answer-Highdeductible health plan An individual has a Major Medical policy with a $5,000 deductible and an 80/20 Coinsurance clause. How much will the INSURED have to pay if a total of $15,000 in covered medical expenses are incurred? - Correct answer-$7,000 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? - Correct answer-Carryover provision With a Basic Medical Expense policy, what does the hospitalization expense cover? - Correct answer-hospital room and board N has a Major Medical policy that only pays a portion of N's medical expenses. N is responsible for paying the remaining balance. This provision is known as - Correct answer-coinsurance Basic Medical Expense insurance - Correct answer-has lower benefit limits than Major Medical insurance Which of the following services is NOT covered under a hospitalization expense policy? - Correct answer-surgeon's fees For which of the following expenses does a Basic Hospital policy pay? - Correct answer-hospital room and board M has a Major Medical insurance policy with a $200 flat deductible and an 80% Coinsurance clause. If M incurs a $2,200 claim for an eligible medical expense, how much will M receive in payment for this claim? - Correct answer-$1,600 Which of the following will a Long Term Care plan typically provide benefits for? - Correct answer-home health care Which of the following health insurance policy provisions specifies the health care services a policy will cover? - Correct answer-Insuring clause An insured pays premiums on an annual basis for an individual health insurance policy. What is the MINIMUM number of days for the Grace Period provision? - Correct answer-31 According to the Time Payment of Claims provision, the insurer must pay Disability Income benefits no less frequently than which of the following options? - Correct answer-monthly The policy provision that entitles the insurer to establish conditions the insured must meet while a claim is pending is - Correct answer-Time Limit on Certain Defenses With Accidental Death and Dismemberment policies, what is the purpose of the Grace Period? - Correct answer-Gives the policyowner additional time to pay past due premiums Health insurance benefits NOT covered due to an act of war are - Correct answerexcluded by the insurer in the contract provisions Which Accident and Health policy provision addresses preexisting conditions? - Correct answer-Time Limit on Certain Defenses If an individual has an Accidental Death and Dismemberment policy and dies, an autopsy can be performed in all these situations EXCEPT - Correct answer-When the state prohibits this by law Which of these is considered a mandatory provision? - Correct answer-Payment of claims The clause in an Accident and Health policy which defines the benefit amounts the insurer will pay is called the - Correct answer-Insuring clause If an insurance company issues a Disability Income policy that it cannot cancel or for which it cannot increase premiums, the type of renewability that best desribes this policy is called - Correct answer-noncancellable Which of these statements accurately describes the Waiver of Premium provision in an Accident and Health policy? - Correct answer-Premiums are waived after the insured has been totally disabled for a specified time period 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? - Correct answer-The insured Which of the following are NOT managed care organizations? - Correct answer-Medical Information Bureau (MIB) Which of the following statements about the classification of applicants is INCORRECT? - Correct answer-Substandard applicants are never declined by underwriters P received Disability income benefits for 3 months then returns to work. She is able to work one month before her condition returns, leaving her disabled once again. What would the insurance company most likely regard this second period of disability as? - Correct answer-A recurrent disability When an insured has the same disability within a specified time period and the insurance company provides the same benefits without a new waiting period, the second disability is covered under which of the following benefits? - Correct answerRecurrent Disability T has Disability Income policy that pays a monthly benefit of $5000. If T becomes partially disabled, what can he likely expect? - Correct answer-Less than $5,000 per month benefit regardless of the cause The underwriting process involves all of these EXCEPT for - Correct answer-Policy Loan Which parts of a life insurance policy are guaranteed to be true? - Correct answerwarranty An insured covered by life insurance has just died. What will happen if the primary beneficiary had already died before the insured and contingent beneficiary? - Correct answer-Proceeds will go to the contingent beneficiary The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n) - Correct answer-Accidental Death and Dismemberment rider (AD&D) All students attending a large university could be covered by - Correct answer-A blanket policy Which of the following statements is true about most Blue Cross/Blue Shield organizations? - Correct answer-They are nonprofit organizations An individual Disability Income insurance applicant may be required to submit all of the following information EXCEPT - Correct answer-spouse's occupation A CEO's personal assistant suffered injuries at home and as a result, was unable to work for four months. Which type of policy will pay a monthly benefit to the personal assistant? - Correct answer-Disability income P is a Major Medical policyowner who is hospitalized as a result of injuries sustained from participating in a carjacking. How will the insurer most likely handle this claim? - Correct answer-Claim will be denied An insurance agent who convinces a prospective insured to purchase a policy by exaggerating the benefits of the policy may be found guilty of - Correct answermisrepresentation Policyholders elect the governing bodies of which of the following types of insurance companies? - Correct answer-Mutual A stock insurance company is owned by it's - Correct answer-stockholders A creditor who requires a debtor to obtain insurance from a particular company or agent as a condition for a loan is guilty of - Correct answer-coercion