NEVADA LIFE INSURANCE EXAM QUESTIONS & ANSWERS 100% CORRECT (SCORED A+)

NEVADA LIFE INSURANCE EXAM QUESTIONS & ANSWERS 100% CORRECT (SCORED A+) “What are the four required elements of an insurance contract? - CORRECT ANSWER Agreement, consideration, competent parties, and legal purpose." "Occasional visits by what medical professionals will not be covered under Long-Term Care's home health care? - CORRECT ANSWER Attending physicians" "Can an individual who belongs to a POS plan use an out-of-network physician? - CORRECT ANSWER Yes, they can use any physician even if not part of the HMO" "What is the advantage of reinstating a policy instead of applying for a new one? - CORRECT ANSWER The original age is used for premium determination" "What would basic medical expense coverage not cover? - CORRECT ANSWER Surgeon's services" "What is not provided by an HMO? - CORRECT ANSWER Reimbursement" "What entity determines if an advertisement is deceptive of confusing? - CORRECT ANSWER The Commissioner" "How many days does a nonresident procedure have to file a change of address when the agent moves to Nevada from another state? - CORRECT ANSWER 30 days" "What is not considered a misrepresentation? - CORRECT ANSWER Making comparisons between different policies" "A producer who has allowed their license to lapse may reinstate the license without retaking the examination within what maximum time period? - CORRECT ANSWER 12 months or 1 year" "Who is a person, other than a viator, that enters into a viatical settlement? - CORRECT ANSWER Viatical Settlement Provider" "How many days after cancellation of a license in another state does a new resident agent have to apply for Nevada producer license without having to fulfill licensing examination and education requirements? - CORRECT ANSWER 90 days" "When would a misrepresentation on an insurance application be considered fraud? - CORRECT ANSWER When it is intentional and material" "What entities make up the Medical Information Bureau? - CORRECT ANSWER Insurers" "What risk classification would typically qualify for lower premiums? - CORRECT ANSWER Preferred Risk" "What is policy replacement? - CORRECT ANSWER A new policy is issued while an existing policy is terminated or reissued with a reduction in cash value" "What best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company? - CORRECT ANSWER Aleatory Contract" "When does an adjustable life policy accumulate cash value? - CORRECT ANSWER When the premiums paid are more than the cost of the policy" "What type of whole life insurance policies only requires a payment of premium at its inception, and in addition to providing insurance protection for the life of the insured, endows at the insured's age 100? - CORRECT ANSWER Single premium whole life" "What type of insurance would perform the function of cash accumulation? - CORRECT ANSWER Whole Life Insurance" "What are the two components of a universal policy? - CORRECT ANSWER Insurance and cash account" "Which Universal Life option has a gradually increasing cash value and a level death benefit? - CORRECT ANSWER Option A" "What life insurance policy provision prevents an insurer from disputing or denying a claim due to misstatements on the application after a certain period of time? - CORRECT ANSWER Incontestability" "What is the purpose of the Automatic Premium Loan provision? - CORRECT ANSWER To prevent the unintentional lapse of a policy because of nonpayment of the premium" "What happens to the proceeds of a life insurance policy if there is no named beneficiary? - CORRECT ANSWER The proceeds are paid to the insured's estate" "With the reduction of premium dividend option, how is the dividend used? - CORRECT ANSWER The dividend is applied to the next year's premium; it reduces the next year's premium" "A policyowner borrowed a portion of cash value from his whole life policy. If the loan is not repaid, how will that affect the death benefit to the beneficiary? - CORRECT ANSWER The amount of the loan will be subtracted from the death benefit" "What type of beneficiary is next in line after the primary beneficiary? - CORRECT ANSWER Contingent beneficiary" "If a settlement option is not chosen by the policy owner or the beneficiary, what option will be used by the insurer? - CORRECT ANSWER Lump-sum payment" "What provision allows the policyowner to reactivate a lapsed life insurance policy within a specified period of time with proof of insurability? - CORRECT ANSWER Reinstatement" "Which of the two types of policy assignments requires transfer of all ownership rights in the policy to a third party> - CORRECT ANSWER Absolute Assignment" "What are the dividend options in life insurance policy - CORRECT ANSWER Cash, reduced premium, accumulation at interest, paid-up additions, paid-up option, one-year term, and acceleration of endowment" "When will a contingent beneficiary receive death benefit from a life insurance policy? - CORRECT ANSWER When the primary beneficiary dies before the insured" "What provision in a life insurance policy extends coverage beyond the premium due date? - CORRECT ANSWER Grace period" "What is the primary purpose of a 401(k) plan? - CORRECT ANSWER Provide retirement income" "Is the death benefit of a life insurance policy taxed to the beneficiary if it's received as a lump sum? - CORRECT ANSWER No, lump-sum benefits are received tax free" "What are the characteristics of the group that underwriters will consider before issuing a group life policy? - CORRECT ANSWER Group's purpose, size, financial strength, and turnover" "What is the main purpose of the 7-Pay Test? - CORRECT ANSWER To determine if a life insurance policy a Modified Endowment Contract (MEC)" "If the beneficiary of a life insurance policy receives death benefit payments that consist of principal and interest, which portion, if any, will be taxed? - CORRECT ANSWER The interest payment will be taxed." "What does it mean when a retirement plan is qualified? - CORRECT ANSWER The plan has favorable tax treatment" "Who may contribute to an HR-10 plan? - CORRECT ANSWER A self-employed individual" "Who would be considered a third - CORRECT ANSWER An individual or an entity who is not the insured" "What does liquidity mean in a life insurance policy? - CORRECT ANSWER Availability of cash value" "What is required to qualify an individual to contribute to a traditional IRA? - CORRECT ANSWER Earned income" "When would life insurance policy proceeds be included in the insured's taxable estate? - CORRECT ANSWER When there is an incident of ownership at the time of death" "What type of policy is typically issued without proof of insurability from the insured? - CORRECT ANSWER Group policy" "SIMPLE plans are available to groups of how many employees? - CORRECT ANSWER No more than 100" "Why are dividends in life insurance policies not taxable? - CORRECT ANSWER They are a return of unused premiums and are not considered income for tax purposes" "What type of worker would not qualify for Keogh Plan? - CORRECT ANSWER A worker who works less than 1,000 hours per year" "The premiums paid by the employer in a business life insurance policy are - CORRECT ANSWER Tax deductible by the employer" "When an employee terminates coverage under a group insurance policy, how long does the coverage stay in force? - CORRECT ANSWER 31 days" "How are contributions to a tax-sheltered annuity treated with regards to taxation? - CORRECT ANSWER They are not included as income for the employee, but are taxable upon distribution" "What type of insurance policies would perform the function of cash accumulation? - CORRECT ANSWER Whole Life Insurance" "In a life settlement contract, whom does the life settlement broker represent? - CORRECT ANSWER The owner of the policy" "Who is responsible for paying the cost of a medical examination required in the process of underwriting? - CORRECT ANSWER The insurer" "If an insurer decides to obtain medical information from different sources in order to determine the insurability of an applicant, who must be notified of the investigation? - CORRECT ANSWER The applicant" "What is the entire contract in health insurance underwriting? - CORRECT ANSWER The application and the policy issued" "If an agent makes a correction on the application for health insurance, who must initial the correct answer? - CORRECT ANSWER The applicant" "What is a penalty tax for nonqualified distributions from a health savings account? - CORRECT ANSWER 20%" "An insured makes regular contributions to his Health Savings Account. How are those contributions treated in regards to taxation? - CORRECT ANSWER They are tax deductible" "How long will benefit periods for individual short-term disability policies continue for? - CORRECT ANSWER 6 months to 2 years" "When does coverage apply for a group disability income insurance? - CORRECT ANSWER Both on and off the job" "What must Long-Term care policies include? - CORRECT ANSWER Alzheimer's disease" "What type of care is Respite care? - CORRECT ANSWER Relief for a major care giver" "Most Long-Term Care plans have... - CORRECT ANSWER Guaranteed renewability" "In Long-Term Care insurance, what type of care is provided with intermediate care? - CORRECT ANSWER Occasional nursing or rehabilitative care" "In Long-Term Care coverage, if the elimination period get shorter what does the premium do? - CORRECT ANSWER The premium gets higher" "What type of dental plan is incorporated into a major medical expense plan? - CORRECT ANSWER Integrated dental plan" "How does an employee qualify for COBRA? - CORRECT ANSWER Any termination of employment for reasons other than misconduct" "What type of hospital policy pays a fixed amount each day that the insured is in the hospital? - CORRECT ANSWER Indemnity" "How long is the grace period for weekly premium policies or industrial policies? - CORRECT ANSWER 7 days for weekly premium policies" "How long is the grace period for monthly premium policies? - CORRECT ANSWER 10 days for monthly premium policies" "How long is the grace period for annual or other modes of premium policies? - CORRECT ANSWER 31 days for any other premium policies" "Does a reinstated policy provide immediate coverage for an illness? - CORRECT ANSWER No" "What provision would prevent an insurance company from paying a reimbursement claim to someone other than the policyowner? - CORRECT ANSWER Payment of Claims" "How soon following the occurrence of a covered loss must an insured submit written proof of such loss to the insurance company? - CORRECT ANSWER Within 90 days to 1 year" "What provision states that the insurance company must pay Medical Expense claims immediately? - CORRECT ANSWER Time of Payment of Claims" "What is does the Insuring Clause do? - CORRECT ANSWER It identifies the agreement between the insured and the insurance company and the loss covered." "What does the Insuring Clause of a disability policy not include? - CORRECT ANSWER The method of premium payment" "In respect to the Consideration Clause, which of the following is consideration on the part of the insurer? - CORRECT ANSWER The insurer promises to pay in accordance with the contract terms." "A Waiver of Premium Provision may be included with which kind of health insurance policy? - CORRECT ANSWER A Disability Income policy." "What must Medicare Supplement policies and Long-Term Care policies be written as? - CORRECT ANSWER A guaranteed renewable contract." "According to the Rights of Renewability Rider for cancellable policies what is untrue about the cancellation of an individual insurance policy? - CORRECT ANSWER Any unearned premiums are retained by the insurance company." "What is not a feature of a guaranteed renewable provision? - CORRECT ANSWER The insurer can increase the policy premium on a individual basis." "What health insurance provision describes the insured's right to cancel coverage? - CORRECT ANSWER The Renewal Provision." "The premium charge for exercising the guaranteed insurability rider is based upon the insured's what? - CORRECT ANSWER The attained age." "What feature is not a part of a noncancellable policy? - CORRECT ANSWER The insurer can terminate the contract at the renewal for certain conditions." "The insurer can change what on a Guaranteed Renewable Health Insurance policy? - CORRECT ANSWER The rates by class." "According to the Reinstatement Provision, once a lapsed policy is reinstated, how soon will coverage be available for accidents? - CORRECT ANSWER It is available immediately." "How will changing one's occupation to be more hazardous affect the health insurance policy in force? - CORRECT ANSWER The claim benefits will be reduced to what the premium would have bought." "What does it mean if a Health Insurance policy has a 31-day grace period - CORRECT ANSWER The policy remains in effect until the period ends if the premium has still not been paid." "If the insured pays a monthly premium for a Health Insurance policy, how long would the grace period be on the policy? - CORRECT ANSWER It would last for 10 days." "What is a deductible in a Health Insurance policy? - CORRECT ANSWER The specified dollar amount that the insured must pay before the insurer pays the policy benefits." "What are usual, reasonable, and customary charges based on? - CORRECT ANSWER The average charge for a procedure in a specific geographic region." "What health insurance provision prevents the insured from bringing a lawsuit against the insurance company for at least 60 days after proof of loss is provided? - CORRECT ANSWER The Legal Actions Provision." "A Waiver of Premium Provision may be included with what type of Health Insurance policies? - CORRECT ANSWER The Disability Income policy." "Who decides which optional provisions would be included in a Health Insurance policy? - CORRECT ANSWER The insurance company." "What section of a Health Insurance policy lists the services for which the insurer will not provide coverage? - CORRECT ANSWER The Exclusions Section." "What does the free-look period allow the insured to do? - CORRECT ANSWER To return the policy for a full refund." "When can an irrevocable beneficiary be changed? - CORRECT ANSWER Only with the written consent of the beneficiary." "According to the Physical Examination and Autopsy Provision, who pays for the expense of an autopsy? - CORRECT ANSWER The insurer." "What is the purpose of the Coinsurance Provision in Health Insurance policies? - CORRECT ANSWER It prevents overutilization of the policy benefits." "What Health Insurance policy provision allows the insured the right to cancel coverage? - CORRECT ANSWER The Renewability Provision." "According to the Time Limit on Certain Defenses Provision in a Health Insurance policy, when can an insurer contest fraudulent misstatements on an application? - CORRECT ANSWER It can be any time while the policy is in force." "Under an Individual Disability Income policy, the benefits must be paid on at least what schedule? - CORRECT ANSWER On a monthly basis." "What Health Insurance policy provision states to whom the claim benefits must be paid? - CORRECT ANSWER The Payment of Claims Provision." "What is the name of the act by the insured to voluntarily give up insurance? - CORRECT ANSWER Cancellation." "What Health Insurance policy provision allows the insured a period of time to examine the policy and determine whether to keep it? - CORRECT ANSWER The Free-Look Provision." "What type of policy allows the insurance company to cancel a policy at any time? - CORRECT ANSWER Cancellable" "Under the Physical Exam and Autopsy Provision, how many times can an insurer have the insured examined, at its own expense, while a claim is pending? - CORRECT ANSWER An unlimited amount of times." "What is the maximum period of time during which an insurer may contest fraudulent misstatements made in a health insurance application? - CORRECT ANSWER At any time while the policy is in force." "What is another name for Social Security benefits? - CORRECT ANSWER The Old Age, Survivors, and Disability Insurance." "What does the Social Security Disability definition not include? - CORRECT ANSWER Any disability expected to last for at least 6 months" "What benefit is based on a Primary Insurance Amount or PIA? - CORRECT ANSWER The Social Security Disability benefit." "What is another name for Medicare Advantage plans? - CORRECT ANSWER Part C" "What part of Medicare is known as hospital insurance? - CORRECT ANSWER Part A" "At what age do individuals qualify for Medicare? - CORRECT ANSWER At age 65." "When is the initial enrollment period for Medicare Part A? - CORRECT ANSWER 3 months before turning 65 and 3 months after" "What is the purpose of Medicare Supplement plans? - CORRECT ANSWER To fill in the gaps in Medicare coverage." "How many parts does Medicare have? - CORRECT ANSWER It has 4 parts, A through D." "If an individual is covered by Medicare and is also covered by their employer's health plan, which plan would be considered primary? - CORRECT ANSWER The employer plan." "What benefits are provided by Medicare Part C? - CORRECT ANSWER It has expanded benefits through private insurance programs such as HMOs or PPOs." "How many pints of blood will be paid for by Medicare Supplement core benefits? - CORRECT ANSWER It will only pay for the first 3 pints." "Who issues Medigap policies? - CORRECT ANSWER Private insurers" "What is another name for Medicare Supplement plans? - CORRECT ANSWER Medigap" "How does someone qualify for Social Security Disability Income benefits? - CORRECT ANSWER They must have fully insured status, meet the definition of disability, and satisfy the waiting period." "What is the required free-look period for Medicare Supplement policies? - CORRECT ANSWER It is 30 days." "Who is eligible for Medicare Part B? - CORRECT ANSWER Anyone who has enrolled in Medicare Part A." "How is Medicare Part B funded? - CORRECT ANSWER By monthly premiums and from the general revenue of the federal governement." "What type of services will Medicare Part A pay for? - CORRECT ANSWER Any hospital care, skilled nursing facility care, home health care, and hospice care." "What part of Medicare pays for inpatient hospital care, skilled nursing facility, home health care, and hospice care? - CORRECT ANSWER Medicare Part A" "What Part of Medicare is known as medical insurance? - CORRECT ANSWER Medicare Part B" "Who can qualify for Medicaid? - CORRECT ANSWER Any person with insufficient income." "What part of Medicare will cover lab services and diagnostic tests? - CORRECT ANSWER Medicare Part B" "How long is an open enrollment period for Medicare Supplement policies? - CORRECT ANSWER It is a 6-month period." "Who is able to qualify for Medicare Part A? - CORRECT ANSWER Anyone who is over 65." "What program expands individual public assistance programs for people with insufficient income and resources? - CORRECT ANSWER Medicaid" "What can a Medicare SELECT policy not do? - CORRECT ANSWER Prohibit payment for regularly covered services if provided by non-network providers." "What part of Medicare covers physician's and surgeon's services? - CORRECT ANSWER Medicare Part B" "Once a person meets the stringent requirements for disability benefits, how long is the waiting period under Social Security before any benefits will be paid? - CORRECT ANSWER Benefits will be paid in 5 months." "What is not covered under Plan A in Medigap Health Insurance? - CORRECT ANSWER The deductible." "In which Medicare Supplement policies are the core benefits found? - CORRECT ANSWER In all Medicare plans." "What premium mode would result in the highest annual cost for an insurance policy> - CORRECT ANSWER A monthly premium." "Does the policyowner have the right to change beneficiaries in any case? - CORRECT ANSWER No, a policyowner can only change the beneficiary if it is a revocable beneficiary." "In Group Medical and Dental Expense Insurance, what percentage of premium paid by the employer is deductible as a business expense? - CORRECT ANSWER 100% is deductible." "According to the Coordination of Benefits Provision, if both parents have coverage for a child from their employer's policies, which policy will pay first? - CORRECT ANSWER The order of payment will be determine by the birthday rule." "How are benefits received by the business from a Key Person Disability Income? - CORRECT ANSWER As Tax-free Income" "If the insured's share in the cost of health insurance premiums with the employer, this would be known as what type of Group Health Insurance plan? - CORRECT ANSWER A Contributory Plan." "What type of health insurance covers partners or corporate officers of a closely held business? - CORRECT ANSWER Disability Buy-Sell" "How are individually owned disability income benefits taxed once received by the insured? - CORRECT ANSWER Disability benefits are not taxed" "What type of health insurance is sold to small business owners to reimburse them for the overhead expenses? - CORRECT ANSWER Business Overhead Expense Insurance (BOE)" "What is the tax advantage of the employer paying premiums for its employees for disability income insurance? - CORRECT ANSWER Premiums are deductible as a business expense." "What type of insurance covers an employee who is hurt on the job? - CORRECT ANSWER Workers Compensation" "When a business receives benefits from its key person disability insurance, how are those benefits taxed? - CORRECT ANSWER The key person disability insurance benefits are tax-free." "What is the birthday rule in a Coordination of Benefits Provision? - CORRECT ANSWER The coverage of the parent whose birthday is earliest in the year is considered primary." "How long do Short-Term Disability Group Health Insurance plans pay benefits? - CORRECT ANSWER For any period less than 2 years." "What are the five basic characteristics of managed care plans? - CORRECT ANSWER Controlled access to providers, comprehensive case management, preventive care, risk sharing, and high quality care." "What is the purpose of Managed Care Health Insurance plans? - CORRECT ANSWER To control health insurance claims expenses" "What is subrogation in health insurance? - CORRECT ANSWER gives the insurer the right to seek recovery from a third party that was responsible with the loss after the insurer has paid for the loss" "In health insurance, when would excess plans pay benefits? - CORRECT ANSWER After the primary plans has paid its full promised benefits, the excess plan will pay the remaining balance." "What type of disabilities will be covered by occupational coverage? - CORRECT ANSWER Disabilities that result from accident or sickness that occur on or off the job." "What are the four types of workers compensation benefits? - CORRECT ANSWER Medical, income, rehabilitation, and death benefits" "Under what employer-provided plan are the benefits taxable to an employee in proportion to the amount of premium paid by the employer? - CORRECT ANSWER Disability Income" "Under a fully contributory health plan, how are benefits received by the employee? - CORRECT ANSWER As tax-free income." "What is true regarding Business Overhead Expense Insurance? - CORRECT ANSWER Premiums are tax deductible." "Workers Compensation benefits are regulated by which entity? - CORRECT ANSWER The state government." "What is the taxation of Group Medical Expense premiums and benefits? - CORRECT ANSWER Premiums are tax deductible and benefits are not taxable." "What is the provision that prevents the insured from collecting twice for the same loss? - CORRECT ANSWER Subrogation" "The Commissioner must give reasonable notice to all interested parties as to the time, place, and purpose of a hearing within the minimum of how many days of the hearing? - CORRECT ANSWER 20 days" "What is not a duty of the Commissioner? - CORRECT ANSWER Developing insurance rates." "What actions by an insurance company will cause an examination by the Commissioner? - CORRECT ANSWER An application for an initial Certificate of Authority" "Who is responsible for the cost of examinations conducted by the Commissioner? - CORRECT ANSWER The insurer being examined" "Producers must complete how many hours of continuing education on the subject of ethics every licensing period? - CORRECT ANSWER 3 hours" "What definition does not fit the definition of an administrator? - CORRECT ANSWER A life and health producer who only sells insurance" "A producer who has allowed their license to lapse may reinstate the examination within what maximum time period? - CORRECT ANSWER 12 months" "Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of... - CORRECT ANSWER Twisting" "How often are producers required to complete continuing education requirements to keep the license in force? - CORRECT ANSWER Every 3 years" "The Nevada Insurance Guaranty Association has a legal right to seek damages from third parties after having reimbursed the insured for the loss. What is this known as? - CORRECT ANSWER Subrogation" "An agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of? - CORRECT ANSWER Rebating" "Who is an insurance agent? - CORRECT ANSWER A person authorized to sell, solicit, and negotiate insurance contracts." "When is controlled business legal? - CORRECT ANSWER When the commissions from controlled business do not exceed the aggregate commissions on all the other business" "What type of licensee represents the insured? - CORRECT ANSWER Broker" "Who is considered a nonresident agent? - CORRECT ANSWER An agent who resides and is licensed in another state, but who is authorized to transact insurance in this state." "For what reason can a temporary license be issued? - CORRECT ANSWER For continuation of business in case the licensed producer dies or becomes disabled." "What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is? - CORRECT ANSWER Misrepresentation" "What document is required for an insurance company to transact insurance? - CORRECT ANSWER Certificate of Authority" "Who must be a member of insurance guaranty associations? - CORRECT ANSWER All insurers authorized to write insurance in Nevada." "If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer? - CORRECT ANSWER Authorized or admitted insurer" "Insurers are classified according to their domicile. What are the three types of insurers? - CORRECT ANSWER Domestic, foreign, and alien." "When can the Commissioner or Director examine insurers? - CORRECT ANSWER Whenever deemed necessary but at least once every few years." "Who may share in the commission from the sale of a life insurance policy? - CORRECT ANSWER Only producers properly licensed for the type of insurance transaction" "What are the most common penalties for violations of insurance statutes? - CORRECT ANSWER A Cease and Desist order, a fine, and license suspension or revocation." "In general, who can be excluded from producer licensing and examination requirements? - CORRECT ANSWER Insurance company officers, directors, or others who do not transact insurance and who do not receive commissions for their services." "To whom may a certificate of authority be issued? - CORRECT ANSWER To an insurer authorized to transact business in this state." "In the Commissioner finds a licensee engaging in an unfair method of competition, what order will be issued? - CORRECT ANSWER A Cease and Desist order." "What is controlled business? - CORRECT ANSWER Insurance on the producer's own life or property, or the lives, or or property of the producer's family or business associates." "On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of? - CORRECT ANSWER Misrepresentation." "Who must be notified of a producer's change of address? - CORRECT ANSWER The Department of Insurance." "If a producer makes maliciously critical statements about another insurer, what is this illegal practice called? - CORRECT ANSWER Defamation." "When a producer's appointment with the insurer is terminated, who must notify the Commissioner? - CORRECT ANSWER The appointing insurer." "Each domestic insurer of Nevada must be examined by the Commissioner every... - CORRECT ANSWER 5 years." "What is the required grace period in group life policies in Nevada? - CORRECT ANSWER 31 days" "What is not a required provision in group life insurance policies issued in Nevada? - CORRECT ANSWER Nonforfeiture benefits" "During replacement of life insurance, a replacing insurer must do which of the following? - CORRECT ANSWER Obtain a list of all life insurance policies that will be replaced" "What statement would best describe the difference between viatical settlement and accelerated death benefits? - CORRECT ANSWER Viaticals are funded by a third party; accelerated death benefits are provided by the insurer that issued the original policy." "Which rule would apply is an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance? - CORRECT ANSWER Replacement rule" "What two parts make up a life insurance application? - CORRECT ANSWER General Information and the Medical Information. An agent's report can go in a life insurance application but is not included in the life insurance policy." "When must insurable interest exist in life insurance? - CORRECT ANSWER At the time of application." "When does coverage begin, if the premium was submitted with the application, and the policy was issued two weeks later? - CORRECT ANSWER At the time of the application." "If an agent makes a mistake on the application and then corrects it, who must initial that change? - CORRECT ANSWER The applicant." "Insurers may change what on a guaranteed renewable health insurance polity? - CORRECT ANSWER The rates by class." "At what age may an individual make withdrawals from an HSA for nonhealth purposes without being penalized? - CORRECT ANSWER At age 65." "Which provision states how much time must pass between two like illnesses in order for the second one to be covered under a new set of benefits? - CORRECT ANSWER Recurrent Disability Provision" "In forming an insurance contract, when does acceptance occur? - CORRECT ANSWER When an insurer's underwriter approves coverage" "What is an important feature of a dental expense insurance plan that is not found in a medical expense insurance plan? - CORRECT ANSWER Diagnostic and preventive care" "What best describes the "first-dollar coverage" principle in basic medical insurance? - CORRECT ANSWER The insured is not required to pay a deductible" "What insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner? - CORRECT ANSWER Third-party ownership" "What is not true about dividends? - CORRECT ANSWER Dividend amounts are guaranteed in the policy" "What is not true about Accidental Death and Dismemberment? - CORRECT ANSWER Death benefits are paid only if death occurs within 24 hours of an accident" "When would a 20-pay whole life policy endow? - CORRECT ANSWER When the insured reaches age 100" "What section of a health policy that states the causes of eligible loss under which an insurance is assumed to be disabled? - CORRECT ANSWER Insuring Clause" "The insurance clause of a disability policy usually states what except? - CORRECT ANSWER The method of premium payment" "What best describes annually renewable term insurance? - CORRECT ANSWER It is level term insurance" "What best describes an annuity period? - CORRECT ANSWER Period of time during which accumulated money is converted into income payments" "What is an eligibility requirement for all Social Security Disability Income benefits? - CORRECT ANSWER Have attained fully insured status" "What protects the insured from unintentional policy lapse due to a nonpayment of premium? - CORRECT ANSWER Automatic premium loan" "What is the maximum amount that the Nevada Life & Health Insurance Guaranty Association be obligated to pay with respect to life insurance death benefits for one life? - CORRECT ANSWER $300,000" "What is the penalty for transacting insurance without a proper license? - CORRECT ANSWER $1,000 for each violation" "What type of misrepresentation persuades an insured to cancel, lapse, or switch policies from one to another? - CORRECT ANSWER Twisting" "The patient protection and affordable care act includes what except? - CORRECT ANSWER Individual tax deduction for premiums paid" "What are the three basic types of term life insurance? - CORRECT ANSWER The three basic types of term life insurance are level, increasing, and decreasing." "When would a whole life insurance policy mature? - CORRECT ANSWER The whole life insurance policy matures when the insured dies or turns 100." "Who is an annuitant? - CORRECT ANSWER The annuitant is the person on whose life expectancy the annuity is written and who receives benefits from the annuity." "What constitutes the entire contract? - CORRECT ANSWER The entire contract constitutes the policy, a copy of application, and any riders or amendments." "Which rider allows an insured to purchase additional coverage without evidence of insurability? - CORRECT ANSWER The Guaranteed Insurability Rider allows an insured to purchase additional coverage without evidence of insurability." "What are the three nonforfeiture options? - CORRECT ANSWER The three nonforfeiture options are reduced paid-up, extended term, and cash surrender value." "In group life insurance, who receives the master contract? - CORRECT ANSWER The employer receives the master contract in group life insurance." "What are some examples of qualified retirement plans? - CORRECT ANSWER Traditional IRA, Roth IRA, SIMPLE, SEP, and 401(k)" "When would life insurance death benefits be tax free? - CORRECT ANSWER If paid as a lump sum to the beneficiary" "What do individuals use to transfer their risk of loss to a larger group? - CORRECT ANSWER Insurance" "What is insurance the transfer of? - CORRECT ANSWER Risk" "Insurance is a contract by which one seeks to protect another from - CORRECT ANSWER Loss" "What type of report provides information about the applicant's hobbies, habits, and financial status? - CORRECT ANSWER Inspection Report" "What law protects consumers from the circulation of inaccurate or obsolete information - CORRECT ANSWER The Fair Credit Reporting Act" "What term describes the fee a person pays an insurance company to receive coverage? - CORRECT ANSWER Premium" "What is the purpose of the agent's report during the application process? - CORRECT ANSWER The agent's report discusses the agent's personal observations about the proposed insured that may help in the underwriting process." "What two elements are necessary for a life insurance contract to have a legal purpose? - CORRECT ANSWER Insurable interest and consent" "What does it mean when health insurance contracts are unilateral? - CORRECT ANSWER Only one party makes a legally enforceable promise" "How is the information obtained for an investigative consumer report? - CORRECT ANSWER Through interviews with the applicant's associates, friends, and neighbors" "What is the name of the process that insurance companies use to determine whether or not an applicant is insurable? - CORRECT ANSWER Underwriting" "What are the three types of risk rating classifications in life insurance? - CORRECT ANSWER Standard, substandard, and preferred" "What best describes gross annual premium? - CORRECT ANSWER Net premium plus expenses" "What is the appropriate action by the insurer if a prospective insured submitted an incomplete application? - CORRECT ANSWER Return the application to the applicant for completion" "What is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? - CORRECT ANSWER Warranty" "What is the minimum interest rate on an equity indexed annuity often based? - CORRECT ANSWER An index like Standard & Poor's 500" "What annuity settlement option provides income payments to the annuitant for the duration of their life and also guarantees payment for a specified number of years? - CORRECT ANSWER Life income with period certain" "If the annuitant dies before the annuitization period starts, what will beneficiary receive? - CORRECT ANSWER Either the amount paid into the annuity or cash value, whichever is greater" "In annually renewable term policies, what is the annual premium based upon? - CORRECT ANSWER The insured's attained age" "If the annuitant dies during the accumulation period, who will receive the annuity benefits? - CORRECT ANSWER The beneficiary" "What does the term "level" refer to in level term insurance? - CORRECT ANSWER Face amount" "What type of life insurance is best suited to cover a mortgage? - CORRECT ANSWER Decreasing term" "Who receives income payments from an annuity? - CORRECT ANSWER Annuitant" "What type of premium is charged on a straight life policy? - CORRECT ANSWER A level premium for the life of the insured" "In variable universal life insurance, to what policy component does the term "variable" refer? - CORRECT ANSWER Cash value and death benefit" "A whole policy that requires that the policyowner only pays premiums for a specified number of years is known as what kind of policy? - CORRECT ANSWER Limited-Pay Whole Life" "In an annuity, the accumulated money is converted into a stream of income during which phase? - CORRECT ANSWER Annuitization period" "Whose life expectancy is taken into consideration in an annuity contract? - CORRECT ANSWER The annuitant" "What type of life insurance offers an applicant a cash value element? - CORRECT ANSWER Permanent Insurance" "Mortality tables are used by insurance companies to predict what? - CORRECT ANSWER Life expectancy and the death rates for specific groups of individuals" "If there is no named beneficiary for the annuity benefits, to which entity will the benefits be paid? - CORRECT ANSWER The annuitant's estate" "How soon can income payments begin in an immediate annuity? - CORRECT ANSWER No later than 1 year from the time of annuity purchase" "What type of annuity requires an agent to have a securities license? - CORRECT ANSWER Variable annuity" "What policy loans are not available on term insurance? - CORRECT ANSWER There is no cash value to borrow against" "An individual has a contract that will provide them with a certain amount of income for the rest of their life, however, this is not a life insurance policy. What type of contract does this person have? - CORRECT ANSWER Annuity" "How long will a life annuity with a 15-year period certain pay? - CORRECT ANSWER For the life of the annuitant unless they die within the first 15 years of the annuitization period; then the payments will last 15 years" "What policies would have an IRS required corridor or gap between the cash value and the death benefit? - CORRECT ANSWER Universal Life, Option A" "What is the main difference between immediate and deferred annuities? - CORRECT ANSWER When the income payments begin" "In a survivorship life policy, when does the insurer pay the death benefit? - CORRECT ANSWER Upon the last death" "Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean? - CORRECT ANSWER The beneficiary will only receive payments of the interest earned on the death benefit" "What happens to a policy's cash value under an extended term nonforfeiture option? - CORRECT ANSWER The cash value is converted to the same face amount as in the whole life policy" "What nonforfeiture option is automatically selected by the company if not chosen by the policyowner? - CORRECT ANSWER Extended Term" "What is the purpose of settlement options in life insurance policies? - CORRECT ANSWER to determine how the death benefit will be paid to the beneficiary" "What is the life insurance policy rider that provides coverage on the insured's family members? - CORRECT ANSWER Other-Insured Rider" "What is the advantage of reinstating a life insurance policy as opposed to applying for a new one? - CORRECT ANSWER Policy premium in a reinstated policy will be set according to the insured's original age" "What life insurance policy rider allows the company to forgo collecting the premium if the insured becomes disabled? - CORRECT ANSWER Waiver of Premium" "What beneficiary designation has first claim to the death proceeds of a life insurance policy? - CORRECT ANSWER Primary beneficiary" "In the fixed-period settlement option, how will the number of installments for the death benefit proceeds determine the amount of the installments? - CORRECT ANSWER The longer the period selected, the smaller each installment will be" "What nonforfeiture option has the highest amount of insurance protection? - CORRECT ANSWER Extended Term" "If a life insurance policy has an irrevocable beneficiary designation - CORRECT ANSWER The beneficiary can old be changed with written permission of the beneficiary" "What is the purpose of a free-look period in insurance policies? - CORRECT ANSWER It allows the insured to reject the policy with a full refund" "What is the clause that is included in a life policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military? - CORRECT ANSWER Military Service or War" "An insured receives an annual life insurance dividend check. What term best described this arrangement? - CORRECT ANSWER Cash option" "Nonforfeiture values guarantee what for the policyowner? - CORRECT ANSWER That the cash value will not be lost" "What required provision protects against unintentional lapse of the policy? - CORRECT ANSWER Grace period" "What are the benefits available under Social Security? - CORRECT ANSWER Disability benefits, death benefits, survivor's benefits, and old-age and retirement benefits" "Group life insurance policies are written as what type of life insurance? - CORRECT ANSWER Annually Renewable Term" "What are the personal uses of life insurance? - CORRECT ANSWER Survivor protection, estate creation and conservation, cash accumulation and liquidity" "Who qualifies for tax-sheltered annuities, or 403(b) plans? - CORRECT ANSWER Employees of nonprofit organizations under Section 501(c)(3) and employees of public school systems" "What is the general taxation rule for death benefits payable to the beneficiary of a life insurance policy? - CORRECT ANSWER Death benefits are generally not subject to income taxes" "Upon surrender of a life insurance policy, what portion of the cash value will be taxed? - CORRECT ANSWER Only the portion in excess of the premium paid" "What is the main advantage of converting from group life insurance to individual coverage? - CORRECT ANSWER Evidence of insurability is not required" "What is true regarding a nonqualified retirement plan? - CORRECT ANSWER Contributions are not tax deductible, It can discriminate in benefits and selecting participants, earnings grow tax deferred and it does not need IRS approval" "What document describes an insured's medical history, including diagnosis and treatments? - CORRECT ANSWER Attending Physician's Statement" "What must the insurer do before giving the applicant an HIV exams? - CORRECT ANSWER Get the applicants informed written consent prior to the exam. Results will be disclosed to underwriters but not agents" "In health insurance, the policy itself and the insurance application form what? - CORRECT ANSWER Entire Contract" "Who must sign a health insurance application? - CORRECT ANSWER The policyowner, the insured (if different), and the agent" "What is the term used for a written request to issue an insurance contract based on the provided information? - CORRECT ANSWER Application" "What information are the members of the Medical Information Bureau required to report? - CORRECT ANSWER Medical information about the applicants or insured" "What is the best way to make a change on an application for insurance? - CORRECT ANSWER Start over with a fresh application" "When should an agent obtain a Statement of Good Health from the insured? - CORRECT ANSWER When the premium was paid upon policy delivery and not at the time application" "Whose responsibility is it to inform an applicant for health insurance about the insurer's information gathering practices? - CORRECT ANSWER The agent" "If an underwriter requires extensive information about the applicant's medical history, what report will best serve this purpose? - CORRECT ANSWER Attending Physician's Statement" "An agent is in the process of replacing the insured's current health insurance policy with a new one. What would be the proper action? - CORRECT ANSWER The old policy should stay in force until the new policy is issued" "An agent is ready to deliver a policy to an applicant but has not yet received payment. Upon delivery, the agent collects the applicant's premium check, answers any questions the applicant may have, and then leaves. What did he forget to do? - CORRECT ANSWER Ask them to sign a statement of good health" "To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested? - CORRECT ANSWER At the time of application" "Under the Privacy Rule for HIPAA, protected information includes all individually identifiable health information... - CORRECT ANSWER Held in or transmitted in any form" "In a replacement situation, what is not considered? - CORRECT ANSWER Assets" "If an insured is not required to pay a deductible, what kind of coverage do they have? - CORRECT ANSWER First-dollar Coverage" "What are the three basic coverages for medical expense insurance? - CORRECT ANSWER Hospital, Surgical, Medical" "What is the typical deductible for basic surgical expense insurance? - CORRECT ANSWER $0. There is no deductible but coverage is limited" "What is not covered under Basic Hospital Expense Coverage? - CORRECT ANSWER Surgeon's fees" "How does a member of an HMO see a specialist? - CORRECT ANSWER The primary care physician refers the member" "Where can HMO members receive inpatient hospital care? - CORRECT ANSWER Anywhere, even if outside the service area" "If a health care plan has characteristics of an HMO and PPO, what type of plan is it? - CORRECT ANSWER POS or Point-of Service" "When health care insurers negotiate contracts with health care providers or physicians to provide health care services for subscribers at a favorable cost, it is referred to as... - CORRECT ANSWER Preferred Provider Organization" "How can a new physician be added to the PPO's approved list? - CORRECT ANSWER Agree to follow the PPO standards and charge the appropriate fees" "How do employer contributions to a Health Savings Account affect the insured's taxes? - CORRECT ANSWER The employer contributions are not included in the individual insured's taxable income." "What are Health Savings Accounts designed to do? - CORRECT ANSWER Help individuals save for qualified health expenses" "To be eligible for a Health Savings Account, an individual must be covered by what plan? - CORRECT ANSWER High-Deductible Health Plan"