Xcel Final Exam Questions With Correct Detailed Answers.
This MANDATORY health policy provision states that the policy, including endorsements and
attached papers, constitutes - ANSWER- the entire insurance contract between the parties
The monthly benefit for an individual disability income policy is usually limited to a percentage
of the insured's income in order to avoid - ANSWER- over insurance
When an insurance licensee changes his or her address under the Michigan Insurance Code,
who MUST be notified? - ANSWER- the commissioner of the Department of Insurance and
financial services (DIFS)
Jonas is a whole life insurance policyowner and would like to add coverage for his two
children. Which of the following products would allow him to accomplish this? - ANSWER-
Child term rider
A child term rider is a level term insurance that can be added to an existing policy.
The typical long-term care insurance policy is designed to provide a minimum of __ year(s) of
coverage. - ANSWER- 1
How many employees must an employer have for a terminated employee to be eligible for
COBRA? - ANSWER- 20
Which of the following policies does NOT build cash value? - ANSWER- Term
CORRECT: straight life, endowment, variable life
Which type of annuity stops all payments upon the death of the annuitant? - ANSWER- Life
annuity
The type of annuity in which all payments cease upon the death of an annuitant is referred to
as a life annuity.
Under the subrogation clause, legal action can be taken by the insurer against the - ANSWER-
responsible third party
Disability Income plans which require that the insurer can NEVER change or alter premium
rates are usually considered - ANSWER- Noncancellable
A noncancellable policy cannot be cancelled nor can its premium rates be increased under
any circumstances.
Coordination of Benefits regulation applies to all of the following plans EXCEPT - ANSWER-
preferred provider organization plan
CORRECT: group vision plan, self-funded group health plan, group health plan
A spouse and child can be added to the primary insured's coverage as what kind of rider? -
ANSWER- Family term
,Amy has a group medical policy through her employer with a $500 deductible and a 90%
coinsurance provision. She incurs $1,500 in covered health care services. How much will her
group insurance carrier pay? - ANSWER- $900
In this situation, the group insurance carrier will pay 90% of the covered loss after the
deductible has been applied.
In order to save on premiums, a Life Insurance policy can legally be backdated up to -
ANSWER- 6 months
Statements made by an insurance applicant on an application are considered to be - ANSWER-
representations
To receive proceeds from a death benefit, a minor - ANSWER- must have an appointed
guardian
In the interest of protecting the assets of a minor, state law requires that a guardian be
appointed to administer the proceeds payable to the minor child.
Which of the following services MUST be provided by HMO plans? - ANSWER- Home health
care
Home health services is an HMO mandatory benefit in Michigan.
The unfair trade practice of replacing an insurance policy from one insurer to another based
on misrepresentation is called - ANSWER- twisting
In determining whether a pre-existing condition applies, the enrollee CANNOT have more than
how many days' gap in health insurance? - ANSWER- 63
A business will typically use which type of life insurance to cover their employees? - ANSWER-
Group policy
Within how many days must a Traditional IRA be rolled over to another IRA in order to avoid
tax consequences? - ANSWER- 60
Ron has a life insurance policy with a face value of $100,000 and a cost of living rider. If the
consumer price index has gone up 4%, how much may Ron increase the face value of the
policy? - ANSWER- $4,000
In this situation, Ron may increase the face value of his policy by $4,000. $100,000 X .04 =
$4,000.
When an accident and health policy requires payment of an additional premium to provide
coverage for a newborn, how many days after the birth is the first payment due? - ANSWER- 31
Peter has a policy where 80% to 90% of the premium is invested in traditional fixed income
securities and the remainder of the premium is invested in contracts tied to a stipulated stock
index. What kind of policy is this? - ANSWER- Equity index whole life
, A life insurance policy that contains a guaranteed interest rate with the chance to earn a rate
that is higher than the guaranteed rate is called - ANSWER- universal life
What is issued to each employee of an employer health plan? - ANSWER- Certificate
Ted has a health insurance plan that requires him to pay a specific sum out of pocket before
any benefits are paid in a calendar year. Which of these does his health plan have? - ANSWER-
Calendar-year deductible
A calendar-year deductible is paid before any benefits are paid in a calendar year.
An insurer would be committing Unfair Discrimination if coverage was denied based upon -
ANSWER- marital status
A licensee who is required to take continuing education MUST include how many ethics
coursework hours? - ANSWER- 3
A licensee is required to take 24 hours of continuing education every two years. Of the 24
hours, 3 must be in ethics
Barbara's policy includes a rider which allows her to purchase additional insurance at specific
dates or events without evidence of insurability. This rider is called a(n) - ANSWER-
Guaranteed insurability rider
When calculating the amount of life insurance needed for an income earner, what has to be
determined when using the Needs Approach? - ANSWER- the family's Financial objectives if
the income earner were to die or become disabled
Dorian exercised a nonforfeiture option by using his life policy's cash value to purchase an
extended term insurance option. When the term insurance expires, - ANSWER- the protection
ends
When the insured gives birth, coverage for eligible newly born children consists of coverage of
injury or sickness including - ANSWER- birth abnormalities
Which of these is NOT considered to be a purpose of an annuity? - ANSWER- Annuities are
intended to create an estate
CORRECT: annuities are indented to liquidate an estate, annuities are intended for the tax-free
growth of principal, and annuities are intended to distribute accumulate principal
What is the purpose for having an accelerated death benefit on a life insurance policy? -
ANSWER- it allows for cash advances to be paid against the death benefit if the insured
becomes terminally ill
Donald is the primary insured of a life insurance policy and adds a children's term rider. What
is the advantage of adding this rider? - ANSWER- can be converted to permanent coverage
without evidence of insurability
Life insurance policies will normally pay for losses arising from - ANSWER- commercial
aviation
This MANDATORY health policy provision states that the policy, including endorsements and
attached papers, constitutes - ANSWER- the entire insurance contract between the parties
The monthly benefit for an individual disability income policy is usually limited to a percentage
of the insured's income in order to avoid - ANSWER- over insurance
When an insurance licensee changes his or her address under the Michigan Insurance Code,
who MUST be notified? - ANSWER- the commissioner of the Department of Insurance and
financial services (DIFS)
Jonas is a whole life insurance policyowner and would like to add coverage for his two
children. Which of the following products would allow him to accomplish this? - ANSWER-
Child term rider
A child term rider is a level term insurance that can be added to an existing policy.
The typical long-term care insurance policy is designed to provide a minimum of __ year(s) of
coverage. - ANSWER- 1
How many employees must an employer have for a terminated employee to be eligible for
COBRA? - ANSWER- 20
Which of the following policies does NOT build cash value? - ANSWER- Term
CORRECT: straight life, endowment, variable life
Which type of annuity stops all payments upon the death of the annuitant? - ANSWER- Life
annuity
The type of annuity in which all payments cease upon the death of an annuitant is referred to
as a life annuity.
Under the subrogation clause, legal action can be taken by the insurer against the - ANSWER-
responsible third party
Disability Income plans which require that the insurer can NEVER change or alter premium
rates are usually considered - ANSWER- Noncancellable
A noncancellable policy cannot be cancelled nor can its premium rates be increased under
any circumstances.
Coordination of Benefits regulation applies to all of the following plans EXCEPT - ANSWER-
preferred provider organization plan
CORRECT: group vision plan, self-funded group health plan, group health plan
A spouse and child can be added to the primary insured's coverage as what kind of rider? -
ANSWER- Family term
,Amy has a group medical policy through her employer with a $500 deductible and a 90%
coinsurance provision. She incurs $1,500 in covered health care services. How much will her
group insurance carrier pay? - ANSWER- $900
In this situation, the group insurance carrier will pay 90% of the covered loss after the
deductible has been applied.
In order to save on premiums, a Life Insurance policy can legally be backdated up to -
ANSWER- 6 months
Statements made by an insurance applicant on an application are considered to be - ANSWER-
representations
To receive proceeds from a death benefit, a minor - ANSWER- must have an appointed
guardian
In the interest of protecting the assets of a minor, state law requires that a guardian be
appointed to administer the proceeds payable to the minor child.
Which of the following services MUST be provided by HMO plans? - ANSWER- Home health
care
Home health services is an HMO mandatory benefit in Michigan.
The unfair trade practice of replacing an insurance policy from one insurer to another based
on misrepresentation is called - ANSWER- twisting
In determining whether a pre-existing condition applies, the enrollee CANNOT have more than
how many days' gap in health insurance? - ANSWER- 63
A business will typically use which type of life insurance to cover their employees? - ANSWER-
Group policy
Within how many days must a Traditional IRA be rolled over to another IRA in order to avoid
tax consequences? - ANSWER- 60
Ron has a life insurance policy with a face value of $100,000 and a cost of living rider. If the
consumer price index has gone up 4%, how much may Ron increase the face value of the
policy? - ANSWER- $4,000
In this situation, Ron may increase the face value of his policy by $4,000. $100,000 X .04 =
$4,000.
When an accident and health policy requires payment of an additional premium to provide
coverage for a newborn, how many days after the birth is the first payment due? - ANSWER- 31
Peter has a policy where 80% to 90% of the premium is invested in traditional fixed income
securities and the remainder of the premium is invested in contracts tied to a stipulated stock
index. What kind of policy is this? - ANSWER- Equity index whole life
, A life insurance policy that contains a guaranteed interest rate with the chance to earn a rate
that is higher than the guaranteed rate is called - ANSWER- universal life
What is issued to each employee of an employer health plan? - ANSWER- Certificate
Ted has a health insurance plan that requires him to pay a specific sum out of pocket before
any benefits are paid in a calendar year. Which of these does his health plan have? - ANSWER-
Calendar-year deductible
A calendar-year deductible is paid before any benefits are paid in a calendar year.
An insurer would be committing Unfair Discrimination if coverage was denied based upon -
ANSWER- marital status
A licensee who is required to take continuing education MUST include how many ethics
coursework hours? - ANSWER- 3
A licensee is required to take 24 hours of continuing education every two years. Of the 24
hours, 3 must be in ethics
Barbara's policy includes a rider which allows her to purchase additional insurance at specific
dates or events without evidence of insurability. This rider is called a(n) - ANSWER-
Guaranteed insurability rider
When calculating the amount of life insurance needed for an income earner, what has to be
determined when using the Needs Approach? - ANSWER- the family's Financial objectives if
the income earner were to die or become disabled
Dorian exercised a nonforfeiture option by using his life policy's cash value to purchase an
extended term insurance option. When the term insurance expires, - ANSWER- the protection
ends
When the insured gives birth, coverage for eligible newly born children consists of coverage of
injury or sickness including - ANSWER- birth abnormalities
Which of these is NOT considered to be a purpose of an annuity? - ANSWER- Annuities are
intended to create an estate
CORRECT: annuities are indented to liquidate an estate, annuities are intended for the tax-free
growth of principal, and annuities are intended to distribute accumulate principal
What is the purpose for having an accelerated death benefit on a life insurance policy? -
ANSWER- it allows for cash advances to be paid against the death benefit if the insured
becomes terminally ill
Donald is the primary insured of a life insurance policy and adds a children's term rider. What
is the advantage of adding this rider? - ANSWER- can be converted to permanent coverage
without evidence of insurability
Life insurance policies will normally pay for losses arising from - ANSWER- commercial
aviation
