CONNECTICUT LIFE AND HEALTH INSURANCE EXAM ((150 QUESTIONS WITH VERIFIED ANSWERS))

Finance Risk Management CONNECTICUT LIFE AND HEALTH INSURANCE EXAM ((150 QUESTIONS WITH VERIFIED ANSWERS)) 1)A producer has indicated to a potential client that the proposed life insurance is covered by the Connecticut Life and Health Insurance Guaranty Association. This action taken by the producer is Answer - "Prohibited by law". Pointing out to a prospective client that the life insurance policy you are presenting is covered by the Connecticut Life and Health Guaranty Association is prohibited by law. 2)Which of the following does NOT involve a life settlement transaction? Answer - Converting term life coverage to whole life insurance. the business of life settlements includes all of these except "Converting term life coverage to whole life insurance. 3)Life settlement brokers are NOT allowed to Answer - Complete transactions prior to being approved for a license. Life settlement brokers need to be licensed before conducting any life settlement transactions. the exception to this would be certain eligible financial professionals. 4)A producer must complete credit hours of continuing education for each licensing period. Answer - 24 hours. All insurance agents must successfully complete 24 credit hours of continuing education every 2 years, prior to license renewal. Three of those hours must be in ethics. A life insurance policy provision that has the ability to reduce the death benefit is called the Answer - Accelerated (living) benefit. Whatever amount is withdrawn from an accelerated benefit will be deducted from the face amount when death occurs. An officer for a corporation takes out numerous unsecured loans from the company's qualified retirement plan. Which of these rules is the plan in violation of? Answer - Exclusive benefit rule. The assets held in a company's qualified retirement plan must be maintained for the exclusive benefit of the employees and their beneficiaries. A source of supplemental income for a life insurance policy owner can be derived from the Answer - Cash value. Cash value may be used as a source to supplement a policy owner’s income. Purchasing insurance is an example of risk Answer - Transference. Purchasing insurance is an example of risk transference. Which statement best describes a single premium whole life policy? Answer - Paid- up policy that offers lifetime protection. A single premium whole life policy provides protection for life as a paid-up policy. Which of the following situations would allow funds to be deposited into a rollover IRA? Answer - An employee quits her job and receives $50,000 from her qualified plan. Medical costs in birthing centers are lowered by using Answer - Certified nurse midwives. Birthing centers reduce medical costs through the use of certified nurse midwives. What is a a "functional assessment" for long-term care benefits? Answer - A review of the insured's ability to perform the activities of daily living. A "functional assessment" determines the insured's ability to perform the activities of daily living (ADLs) John bought a deferred annuity on Mary. John amends the contract years later to name Tom as the recipient of the proceeds if Mary dies. Who is the annuitant for this contract? Answer - Mary. In this situation, Mary is the annuitant because that is where the proceeds of the annuity will be directed. When does the producer give a premium receipt for a life insurance application? Answer - "When the initial premium has been paid with the application". A premium receipt is given to an applicant when the initial premium is paid with the application . Which statement is true regarding hospital preadmission certification for emergency situations? Answer - Notification is required to be given after insured is admitted to the hospital. Hospital preadmission certification typically requires notification to be given after the patient is admitted to the hospital for an emergency situation. For nonemergency situations, notification is to be given BEFORE admission. When using the approach for life insurance planning, a lump sum may be created to provide for all of the following EXCEPT Answer - "Employee benefits". The needs approach to personal life insurance planning may involve creating a lump sum to provide for all of these EXCEPT employee benefits. How are the premiums for an individually-owned disability income policy treated for tax purposes? Answer - Not tax-deductible at all. Premiums for individually-owned disability income policy are not tax-deductible at all. Which of the following must clearly be illustrated in ALL sales material for market value adjusted annuities ? Answer - The market value adjustment can be either upward or downward. Sales material used in the marketing of market value adjusted annuities in Connecticut must clearly illustrate that the market value can be either upward or downward. Why do insurers require a minimum number of employees participate in a group insurance plan? Answer - Minimize adverse selection. The larger the group to be insured, the more predictable will be the expected losses from the group. A reciprocal insurer typically has an administrator who manages the premiums collected from the group's members. This administrator is called a(n) Answer - Attorney-in-fact. The administrator of a reciprocal insurer who manages the premiums collected from the group's members is called an attorney-in-fact. How are qualified Roth IRA distributions normally treated for tax purposes? Answer - Received income tax-free. Qualified distributions are received income tax-free in a Roth IRA. Which of the following is generally a form of group credit life insurance? Answer - Decreasing term insurance Ricks owns a variable universal life policy and chooses a variable death benefit option. What will typically happen to the death benefit as a result of this selection? Answer - Fluctuate with changes in the cash account. When a variable universal life policyowner selects a variable death benefit option, the death benefit generally will fluctuate with changes in the cash account. After conducting a hearing, the Commissioner is empowered to issue a cease and desist order. A violation of such an order is punishable by a monetary fine not to exceed Answer - $50,000. Anyone who violates a final cease and desist order will be subject to license suspension or revocation, and a fine up to $50,000 for each violation. An annuity contract may be returned for a full refund during the Answer - Free look period. The period during which a buyer may return an annuity contract for a full refund is called the "free look period". Kelly purchases a health insurance policy issued on a conditionally renewable basis. The insurance company has a right to refuse renewal of the policy for Answer - Specific reasons stated in the contract. If an individual health contract is issued on a conditionally renewable basis, the insurer has a right to refuse renewal for specific reasons stated in the contract only. Which of these is NOT considered a Federal punishment for unfair and deceptive insurance practices? Answer - Community service. Under federal law, punishment for unfair and deceptive insurance practices may include a fine, , imprisonment and license revocation but not community service. A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a Answer - Risk retention group. A group-owned insurer whose primary activity consists of assuming and spreading the liability risks of its members is called a risk retention group. Which of the following is considered to be an unfair claims settlement practice? Answer - Misrepresenting pertinent policy provisions relating to coverage after a loss. This is an unfair claims settlement practice. How long do most states allow an insurance company to delay the payment of a cash surrender under the Delayed Payment provision? Answer - 6 months. Most states allow insurers to delay payment of cash surrender values for up to 6 months after policyowners request payment. This provision is a proactive measure for companies should an economic crisis arise, but such delays are rarely invoked. Joe is a life insurance policyowner who has failed to pay interest on his policy loan. What will result from this nonpayment? Answer - Loan amount is increased to reflect the amount of interest due. When an interest payment is not made, the policy loan is increased to reflect the amount of interest due. A description of a qualified plan's insurance contract may be found in which ERISA reporting form? Answer - Annual return/report (Form 5500). Form 5500 is a disclosure document that employee benefit plans use to satisfy annual reporting requirements under ERISA. When does a family health policy's coverage for a newborn child begin? Answer - At the moment of birth. If additional children are born to the family, the health insurance policy must cover the children at the moment of birth. XYZ Corp gives money to an employee to purchase a life insurance policy and allows the employee to select the beneficiary. What kind of plan is this? Answer - Split-dollar. A split-dollar plan is an arrangement where an employee and an employee share in the cost of purchasing a life insurance policy on the employee. The employee is also allowed to name the beneficiary. In long-term care insurance, what is an "ADL"? Answer - Activities of daily living Medicare Supplement insurance requires an individual to be at least how old for open enrollment? Answer - No minimum age. An accident and health insurance policy's premium requirements are set forth in which of the following provisions? Answer - Consideration clause. A producer MUST notify the Commissioner for Answer - conducting business under an assumed name. What determines how much an annuitant is paid for a variable annuity? Answer - The market value variations of the securities backing it. The amount of each variable annuity benefit paid to an annuitant varies according to the market value of the securities backing it. A producer sold a life insurance policy but did NOT provide the applicant with a basic illustration. In this situation, the insurer is REQUIRED to provide the applicant with a policy summary no later than the Answer - Policy delivery date. Which of the following statements accurately describes the "time limit on certain defenses"? Answer - After a stated period of time, claims cannot be denied due to material misrepresentation on the application. Time limit on certain defense provision limits the time an insurer can void a contract or deny a claim for material misrepresentation on the application. During the application process, a statement made by an applicant that becomes part of the contract is considered to be a(n) Answer - Warranty. a statement made by the applicant that is guaranteed to be true in every respect and becomes part of the contract. A policyowner pays the first annual premium for a $50,000 life insurance policy and dies one month after the policy effective date. Which of these statements is normally true? Answer - Beneficiary receives $50,000 income tax-free. A(n) insurer is incorporated and formed in Connecticut Answer - domestic. In CT, a domestic insurance company is defined as a company that is incorporated and formed in CT. The health insurance premiums paid for by each partner in a partnership is considered to be Answer - 100% tax deductible. In a business partnership. The inability to perform SOME of the duties of one's own occupation is known as a Answer - Residual disability. Which of the following would most likely purchase an immediate annuity? Answer - Retiree having a lump sum to invest. Who is required to notify the producer in the event of appointment termination? Answer - Insurer. The insurer is responsible for reporting an producer's termination of appointment. All of these are considered features of whole life insurance EXCEPT Answer - initial premium is lower than for an equivalent amount of term insurance. The initial cost of whole life insurance is actually HIGHER than the equivalent amount of term insurance. Which of these statements is NOT a characteristic of the law of large numbers? Answer - Rates can be calculated to compensate for losses. The law of large numbers states that larger groups provide better loss predictions. The higher the exposure, the more likely the event can be predicted. When must a producer provide disclosure about information practices to an applicant? Answer - Prior to or at the time of signing the application Which of the following describes the act of insuring a risk against possible loss? Answer - Risk transfer In regards to technology and the ACA, which of the following statements is correct? Answer - States which operate with an Exchange must offer an internet-based-portal Which of the following is NOT a valid reason for an insurer to contest a life insurance policy during the policy's first two years of existence? Answer - Misstatement of age. During the first two years a life insurance policy is in force, the insurer may contest a policy for all of these reasons EXCEPT misstatement of age in the application. A group health certificate for coverage issued in Connecticut MUST contain a(n) Answer - Summary of policy features and benefits. Which parties are directly involved in a group accident and health insurance contract? Answer - Employer and insurer. The contract for coverage in a group health plan is between the insurance company and the employer. Which of the following incidents would NOT be covered by an Accidental Death and Dismemberment policy? Answer - Suicide. Suicide is not covered by AD&D policies. How long is individual medical expense insurance normally written for? Answer - 1 year. An accident and health insurance policy defines an injury as "bodily injury by accidental means". For an injury to be covered on this policy, what is required? Answer - Both the cause and resultant injury must be accidental. Accidental means is a requirement of an accident based policy that the cause of the mishap must be accidental for any claim to be payable. Which of these is NOT considered to be a cost connected with an individual's death? Answer - Business expenses. All of these are considered to be costs associated with an individuals death EXCEPT business expenses. The free look period provided in a life insurance policy is usually Answer - 10 days. Life insurance policies must provide a minimum free look period of 10 days upon policy delivery. This allows the policyowner time to decide whether or not to keep it. If the policyowner decides not to keep the policy within the 10 days allowed, a full refund will be given. A life insurance beneficiary died after receiving only six payments under the policy's life income settlement option. What happens with the remaining balance of the death proceeds? Answer - Kept by the insurance company. Under the life income settlement option, the beneficiary is able to have the benefits converted into an annuity which is based upon the individual's life expectancy and payable as long as the beneficiary is still alive. What type of employee welfare plans are not subject to ERISA regulations? Answer - Church plans. Exempt from ERISA regulations An insurer may NOT refuse the renewal of a small employer health insurance plan because of Answer - Overuse of medical services. Not a valid reason for denying the renewal of a small employer health insurance plan.