ALABAMA INSURANCE TEST
A disability policy that must be renewed, cannot be cancelled until age 65, and may not have an increase
in premium for any reason is called a(n): - noncancellable policy
According to Required Provision 4, when an insured applies for reinstatement of a health policy and
receives a conditional receipt, how long does the insurer have to approve or deny? - within 45
days of the date of application
A husband and wife purchases a life insurance policy that covers both of them. The policy paid nothing
when the husband died. Two years later, the wife dies and a death benefit is paid to the beneficiary.
Which type of policy is this? - Survivorship life policy
A disability policy in Alabama that is paid on a monthly basis is required to have a grace period of: -
10
A husband and wife are receiving annuity payments. When the husband dies, the wife still receives
annuity payments for life. What kind of annuity is this? - Joint and survivor life annuity
A licensed Alabama insurance producer would NOT be disciplined by the Commissioner of Insurance for:
- being convicted of a misdemeanor
A life insurance beneficiary has chosen a settlement option in which the principal never decreases unless
the beneficiary makes a withdrawal. This settlement option is called the: - interest only option
A life insurance policy owned by a third party: - is used largely in estate-planning as well as
business situations
A Long Term Care (LTC) policy has a minimum renewability level of: - guaranteed renewable
,A Long Term Care insured must be unable to perform a minimum of __ Activities of Daily Living (ADLs) to
receive benefits. - 2
A policy owner with an automatic premium loan provision must: - pay back the loan amount to
keep the policy's cash value at its maximum
A policyowner can collect the face amount on what type of policy? - endowment policy
A Preferred Provider Organization (PPO) contract typically uses which payment arrangement? -
Negotiated fee-for-service
A retirement plan intended for a sole proprietor and his/her employees would be a(n): - Keogh
Plan
A retirement plan that can be started by an employee, even if another plan is in existence, is called a(n): -
Individual Retirement Account (IRA)
A substandard or special class risk typically results in: - a premium that is higher than for a normal
risk
A waiver of premium: - waives the premiums when the policyowner becomes totally disabled
A written agreement that involves two or more parties and consideration is: - a contract
According to Alabama law, a minor: - age 18 can begin receiving life insurance death benefits of
up to $3,000 per year
According to Alabama law, agents of a Health Maintenance Organization (HMO): - must be
licensed as insurance producers
, A Cross Purchase Buy-Sell Agreement is in place for ABC Company's four founding partners. What would
this agreement require if the agreement is funded with individual life insurance? - Each partner
must own a policy on the other partners
Alabama's annuity disclosure regulation: - requires the delivery of a buyer's guide and a disclosure
document to an annuity applicant
All of these are correct concerning group life insurance, EXCEPT: - Whole life insurance is the form
of insurance typically used in group life insurance
All of these statements concerning a Key Employee Life policy is true, EXCEPT: - The key employee
names the beneficiary
All of these statements concerning the coordination of benefits are true, EXCEPT: - The secondary
insurer does NOT pay benefits
Amy owns a disability income policy with a noncancellable renewal provision. Which of the following is
guaranteed in her policy? - The coverage and premium rate are guaranteed
An accidental death rider claim is usually paid if the insured: - dies within 90 days of the accident
An example of a life insurance beneficiary is a(n): - all of these
An individual unable to perform two or more Activities of Daily Living (ADLs) will trigger coverage from a
_____ policy. - Long Term Care (LTC)
An insurance company licensed to do business in Alabama, but incorporated in another state, is called: -
a foreign company
An insurance company licensed to solicit insurance in a specific state is called: - an admitted
company
A disability policy that must be renewed, cannot be cancelled until age 65, and may not have an increase
in premium for any reason is called a(n): - noncancellable policy
According to Required Provision 4, when an insured applies for reinstatement of a health policy and
receives a conditional receipt, how long does the insurer have to approve or deny? - within 45
days of the date of application
A husband and wife purchases a life insurance policy that covers both of them. The policy paid nothing
when the husband died. Two years later, the wife dies and a death benefit is paid to the beneficiary.
Which type of policy is this? - Survivorship life policy
A disability policy in Alabama that is paid on a monthly basis is required to have a grace period of: -
10
A husband and wife are receiving annuity payments. When the husband dies, the wife still receives
annuity payments for life. What kind of annuity is this? - Joint and survivor life annuity
A licensed Alabama insurance producer would NOT be disciplined by the Commissioner of Insurance for:
- being convicted of a misdemeanor
A life insurance beneficiary has chosen a settlement option in which the principal never decreases unless
the beneficiary makes a withdrawal. This settlement option is called the: - interest only option
A life insurance policy owned by a third party: - is used largely in estate-planning as well as
business situations
A Long Term Care (LTC) policy has a minimum renewability level of: - guaranteed renewable
,A Long Term Care insured must be unable to perform a minimum of __ Activities of Daily Living (ADLs) to
receive benefits. - 2
A policy owner with an automatic premium loan provision must: - pay back the loan amount to
keep the policy's cash value at its maximum
A policyowner can collect the face amount on what type of policy? - endowment policy
A Preferred Provider Organization (PPO) contract typically uses which payment arrangement? -
Negotiated fee-for-service
A retirement plan intended for a sole proprietor and his/her employees would be a(n): - Keogh
Plan
A retirement plan that can be started by an employee, even if another plan is in existence, is called a(n): -
Individual Retirement Account (IRA)
A substandard or special class risk typically results in: - a premium that is higher than for a normal
risk
A waiver of premium: - waives the premiums when the policyowner becomes totally disabled
A written agreement that involves two or more parties and consideration is: - a contract
According to Alabama law, a minor: - age 18 can begin receiving life insurance death benefits of
up to $3,000 per year
According to Alabama law, agents of a Health Maintenance Organization (HMO): - must be
licensed as insurance producers
, A Cross Purchase Buy-Sell Agreement is in place for ABC Company's four founding partners. What would
this agreement require if the agreement is funded with individual life insurance? - Each partner
must own a policy on the other partners
Alabama's annuity disclosure regulation: - requires the delivery of a buyer's guide and a disclosure
document to an annuity applicant
All of these are correct concerning group life insurance, EXCEPT: - Whole life insurance is the form
of insurance typically used in group life insurance
All of these statements concerning a Key Employee Life policy is true, EXCEPT: - The key employee
names the beneficiary
All of these statements concerning the coordination of benefits are true, EXCEPT: - The secondary
insurer does NOT pay benefits
Amy owns a disability income policy with a noncancellable renewal provision. Which of the following is
guaranteed in her policy? - The coverage and premium rate are guaranteed
An accidental death rider claim is usually paid if the insured: - dies within 90 days of the accident
An example of a life insurance beneficiary is a(n): - all of these
An individual unable to perform two or more Activities of Daily Living (ADLs) will trigger coverage from a
_____ policy. - Long Term Care (LTC)
An insurance company licensed to do business in Alabama, but incorporated in another state, is called: -
a foreign company
An insurance company licensed to solicit insurance in a specific state is called: - an admitted
company
