The Ultimate Life & Health Practice Test III
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Jerry is using a new time management technique in his insurance sales presentation. In order to cut the amount of time he spends at each appointment he no longer answers questions when they are first asked. Instead he answers them only if they are asked twice. He feels this will allow him to get to his next meeting quicker. Most insurance professionals would consider this:
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An unethical practice
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A clever and ethical practice
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The Ultimate Life & Health Practice Test III assesses understanding of insurance policies, risk types, and ethical considerations in the insurance industry. It is designed for learners aiming to deepen their knowledge in life and health insurance fundamentals.
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- 2.
The Fair Credit Reporting Act mandates that a credit reporting company responds to a consumer complaint when that company's credit report inaccurately reflects information about the consumer.
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True
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False
Correct Answer
A. TrueExplanation
The Fair Credit Reporting Act is a federal law that requires credit reporting companies to investigate and respond to consumer complaints regarding inaccuracies in their credit reports. This means that if a consumer finds incorrect information on their credit report, the credit reporting company must take action to rectify the error. Therefore, the statement that the Fair Credit Reporting Act mandates a response to consumer complaints when credit reports inaccurately reflect information about the consumer is true.Rate this question:
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- 3.
The master policy owner of a group insurance policy is responsible for paying the premiums, submitting information about the employees, forwarding the applications to the insurer and maintaining the policy.
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True
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False
Correct Answer
A. TrueExplanation
The master policy owner of a group insurance policy holds the responsibility of paying the premiums, providing employee information, submitting applications to the insurer, and managing the policy. This means that the master policy owner has the authority and obligation to handle all administrative tasks related to the group insurance policy. Therefore, the statement is true.Rate this question:
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- 4.
The owner of a non-par whole life policy never misses a payment, never borrows from the policy's cash value, and finally reaches the age of 100. What cash value is this person entitled to in comparison to the face amount ?
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100% of the cash value which is now the same as the face amount.
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None of the cash value, the person has not died.
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About 50% of the cash value as of the date of the birthday.
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None of the above.
Correct Answer
A. 100% of the cash value which is now the same as the face amount.Explanation
The owner of a non-par whole life policy is entitled to 100% of the cash value which is now the same as the face amount because they have never missed a payment, never borrowed from the policy's cash value, and have reached the age of 100.Rate this question:
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- 5.
Neglecting to communicate that which a party knows, and ought to communicate, so that the other party may make a sound decision is known as:
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Concealment
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Material information
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Boycotting
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None of the above
Correct Answer
A. ConcealmentExplanation
Concealment refers to the act of deliberately withholding or not disclosing important information that one party knows and should communicate to the other party. This lack of communication prevents the other party from making an informed decision, potentially leading to negative consequences. It is a form of deception where relevant information is intentionally hidden, which can result in legal and ethical issues.Rate this question:
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- 6.
When the health insurer and the insured participae in the costs of expenses on an agreed percentage basis, it is known as coinsurance.
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True
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False
Correct Answer
A. TrueExplanation
Coinsurance is a term used in the health insurance industry to describe a situation where both the health insurer and the insured share the costs of medical expenses based on a pre-agreed percentage. This means that the insured is responsible for paying a portion of the expenses, while the insurer covers the remaining percentage. This arrangement helps to distribute the financial burden between the two parties and encourages the insured to be more mindful of their healthcare costs. Therefore, the given answer "True" accurately reflects the definition of coinsurance.Rate this question:
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- 7.
Which of the following is required to be included in the writing of an insurance contract ?
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The parties between whom the contract is made
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The risks insured against
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The period in which the insurance is to continue
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All the above
Correct Answer
A. All the aboveExplanation
An insurance contract must include the parties involved in the contract, the risks that are being insured against, and the duration of the insurance coverage. Including all of these elements is necessary to ensure that both parties understand the terms and conditions of the insurance agreement. By including the parties, risks, and period in the contract, it helps to establish clear expectations and obligations for both the insurer and the insured.Rate this question:
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- 8.
An agent makes a misleading comparison of a policy he is selling in order to convince a prospect to lapse an old insurance policy. What is this called ?
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Intimidation
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Rebating
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Boycotting
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Twisting
Correct Answer
A. TwistingExplanation
Twisting is when an insurance agent uses misleading or deceptive tactics to convince a prospect to cancel their existing insurance policy and purchase a new one. In this scenario, the agent is making a misleading comparison of the policies in order to convince the prospect to lapse their old policy. This unethical practice is known as twisting.Rate this question:
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- 9.
Insurance companies have several departments handling various responsibilities in the issuance of polices. Which department is primarily involved with the selection of risks ?
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The sales unit
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The claims unit
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The underwriting unit
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The actuarial unit
Correct Answer
A. The underwriting unitExplanation
The underwriting unit is primarily involved with the selection of risks. This department assesses the potential risks associated with insuring a particular individual or entity and determines the terms and conditions of the insurance policy. They evaluate factors such as the applicant's age, health, occupation, and past claims history to calculate the level of risk involved and set the appropriate premium. Their main responsibility is to ensure that the insurance company takes on acceptable risks that align with their underwriting guidelines.Rate this question:
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- 10.
A type of contract, which is considered a savings instrument used for accumulating investment funds for the purpose of eventually receiving those through a systematic program of withdrawl is a/an:
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An annuity
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Term insurance policy
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Disability insurance policy
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All the above
Correct Answer
A. An annuityExplanation
An annuity is a type of contract that serves as a savings instrument for accumulating investment funds. It allows individuals to systematically withdraw these funds over time. An annuity provides a reliable and structured way to receive the accumulated funds, making it an effective financial tool for long-term savings and retirement planning.Rate this question:
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- 11.
Why would a business use a key person life insurance policy ?
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To provide the key employee's surviving family members with funds to live on after the death of the employee.
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To help the employee's spouse supplement her Social Security benefits.
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To better allow the employee qualify for a bank loan
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To protect the company from the financial consequences of the death of a vice president
Correct Answer
A. To protect the company from the financial consequences of the death of a vice presidentExplanation
A business would use a key person life insurance policy to protect the company from the financial consequences of the death of a vice president. This policy ensures that the company receives a payout in the event of the key employee's death, which can be used to cover any financial losses, such as loss of revenue, recruitment and training costs for a replacement, or paying off debts. It provides financial stability and safeguards the business from potential disruptions caused by the loss of a key individual.Rate this question:
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- 12.
Which of the following is not legal when determining premium rates for life or disability insurance ?
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Gender
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Age
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Nationality
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All the above may not be used
Correct Answer
A. NationalityExplanation
When determining premium rates for life or disability insurance, it is not legal to consider an individual's nationality. Discrimination based on nationality is prohibited in insurance practices. However, factors such as gender and age may be considered in determining premium rates, although there are regulations in place to prevent unfair discrimination based on these factors as well.Rate this question:
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- 13.
Generally, it is unfair to discriminate against any one class of individuals in the business of insurance. However, the code does permit the charging of a higher premium if such such premiums can be supported by mortality tables segregated by sex (gender)
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True
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False
Correct Answer
A. TrueExplanation
The explanation for the given correct answer is that while it is generally unfair to discriminate against any one class of individuals in the business of insurance, the code does allow for the charging of higher premiums based on mortality tables segregated by sex or gender. This means that if there is statistical evidence to support the higher risk associated with a particular gender, insurance companies are allowed to charge higher premiums for that gender. Therefore, the statement that it is generally unfair to discriminate against any one class of individuals is true, but there is an exception when supported by mortality tables.Rate this question:
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- 14.
Bill holds two jobs. If Bill were to apply for an insurance policy and the insurer reviews the risk exposure based on his occupation, which of the following would the insurer most likely use to classify him ? The job:
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Which would constitute the highest premium
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That Bill has worked at the longest.
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That represents the highest hazard.
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That Bill devotes the most time to every week.
Correct Answer
A. That represents the highest hazard.Explanation
The insurer would most likely use the job that represents the highest hazard to classify Bill. This is because the level of risk exposure in a job is an important factor for insurers when determining the premium for an insurance policy. Jobs with higher hazards are typically associated with a greater likelihood of accidents or injuries, which increases the insurer's risk and the potential for claims. Therefore, the job that represents the highest hazard would likely result in a higher premium for the insurance policy.Rate this question:
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- 15.
One of the provisions commonly found in life insurance is the "misstatement of age" clause. If the age of the insured is in error but not discovered until much later, the insurance company will:
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Make an adjustment to the face amount to properly reflect the premiums that have been paid.
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Send back all collected premiums to the insured and cancel the policy.
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Send back all collected premiums to the insured, pay interest on that amount and cancel the policy.
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Try to establish if there was intent to defraud. If not, the insurer will most likely not pursue legal actions.
Correct Answer
A. Make an adjustment to the face amount to properly reflect the premiums that have been paid.Explanation
If the age of the insured is found to be incorrect at a later time, the "misstatement of age" clause in life insurance allows the insurance company to make an adjustment to the face amount of the policy. This adjustment is made in order to properly reflect the premiums that have been paid by the insured. In other words, the insurance company will modify the coverage amount to correspond to the actual premiums paid based on the correct age of the insured.Rate this question:
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- 16.
Which of the following would be considered an alien insurer?
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An unauthorized company that underwrites undocumented workers.
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A company located in England and doing business in California.
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A company that is organized in Nevada but maintains branch offices in this state.
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All the above are alien insurers.
Correct Answer
A. A company located in England and doing business in California.Explanation
An alien insurer refers to a company that is located outside of the jurisdiction where it is doing business. In this case, a company located in England doing business in California would be considered an alien insurer because it is operating in a jurisdiction different from its location. The other options do not meet the criteria of being located outside of the jurisdiction where they are doing business.Rate this question:
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- 17.
Of the items listed below, which are requirements for a life and disability insurance analyst license ?
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The applicant must have a good general reputation and good business reputation
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The applicant must be 18 years of age, minimum.
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The applicant must have a thorough knowledge of life and disability insurances.
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These are all required
Correct Answer
A. These are all requiredExplanation
The requirements for a life and disability insurance analyst license include having a good general reputation and good business reputation, being at least 18 years of age, and having a thorough knowledge of life and disability insurances. All of these requirements must be met in order to obtain the license.Rate this question:
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- 18.
Employees that have group life or health policies covering them are required to be issued a/an ______.
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Estimate of employers premiums
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Certificate of insurance
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Master policy
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Monthly premium notification on a non-participating plan
Correct Answer
A. Certificate of insuranceExplanation
When employees have group life or health policies covering them, they are typically required to be issued a certificate of insurance. This certificate serves as proof that the employee is covered under the policy and outlines the details of their coverage. It may include information such as the policy number, effective dates, and the types of benefits provided. This certificate is important for employees to have as it can be used to verify their coverage with healthcare providers or in the event of a claim.Rate this question:
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- 19.
From the following, identify that which constitutes the "entire contract" in a life insurance policy. The policy:
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And any oral statements along with the application
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And a copy of the application when attached.
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And a brochure on the insurer including code-approved financial information.
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But not the application
Correct Answer
A. And a copy of the application when attached.Explanation
The "entire contract" in a life insurance policy includes a copy of the application when attached. This means that all the terms, conditions, and information stated in the application form, when attached to the policy, form the complete and binding contract between the insured and the insurer. The other elements mentioned, such as oral statements, the application itself, and the brochure on the insurer, may provide additional information but do not constitute the entire contract.Rate this question:
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- 20.
If no other selection is made, which of the following settlement options becomes the default or automatic mode of settlement for the death benefit of a life insurance policy ?
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Life income with period certain
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The purchase of an annuity
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Installment payments
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Lump sum in cash
Correct Answer
A. Lump sum in cashExplanation
The default or automatic mode of settlement for the death benefit of a life insurance policy is a lump sum in cash. This means that if the policyholder does not select any other settlement option, the beneficiary will receive the entire death benefit as a one-time payment. This option provides the beneficiary with immediate access to the funds, allowing them to use the money as needed.Rate this question:
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- 21.
Health Maintenance Organizations (HMOs) provide which of the following ?
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Health care coverage
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Health care services
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Both A and B above
Correct Answer
A. Both A and B aboveExplanation
HMOs provide both health care coverage and health care services. Health care coverage refers to the insurance or financial protection that HMOs offer to individuals, which helps cover the costs of medical treatments and services. On the other hand, health care services refer to the actual medical care and treatments provided by doctors, hospitals, and other healthcare professionals that are part of the HMO network. HMOs aim to provide comprehensive healthcare by offering both coverage and services to their members.Rate this question:
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- 22.
Disability income insurers carefully consider a potential insured's occupation as an underwriting factor because of the:
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Age of all people in that occupation
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Income earned by those in that occupation
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Degree of risk of those in that occupation
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Recovery rate of those disabled in a particular occupation
Correct Answer
A. Degree of risk of those in that occupationExplanation
Disability income insurers consider a potential insured's occupation as an underwriting factor because the degree of risk associated with that occupation can impact the likelihood of the insured becoming disabled and making a claim. Certain occupations may have higher risks of accidents or injuries, which increases the chances of disability. By assessing the degree of risk, insurers can determine the appropriate premium rates and coverage for individuals in different occupations.Rate this question:
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- 23.
All of the following would be considered an accident as it relates to health insurance, except:
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Sarah gets hurt when she is hit by another car. The driver of the other car was running a red light
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Harry trips on a rock while hiking causing him to sprain his ankle.
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Molly intentionally injures herself by falling off her bike
Correct Answer
A. Molly intentionally injures herself by falling off her bikeExplanation
Molly intentionally injuring herself by falling off her bike would not be considered an accident as it relates to health insurance. Accidents are typically defined as unexpected and unintentional events that result in injury or harm. In this case, Molly's actions were deliberate, indicating that the injury was not accidental.Rate this question:
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- 24.
When any change in residence address occurs, every licensee and every applicant for a license must notify the Commissioner _______________. (Select the most correct response)
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Within 6 months after the move has taken place
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Within 6 months before the license is to expire
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30 days before submitting a continuing education certificate.
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Immediately
Correct Answer
A. ImmediatelyExplanation
When any change in residence address occurs, every licensee and every applicant for a license must notify the Commissioner immediately. This means that as soon as the change in address happens, it is the responsibility of the licensee or applicant to inform the Commissioner without delay. This ensures that the Commissioner has up-to-date and accurate information regarding the licensee's or applicant's residence address. This prompt notification allows for effective communication and ensures that any necessary actions or updates can be taken in a timely manner.Rate this question:
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- 25.
When the public purchases annuities, they are attempting to address the risk of:
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Dying before the age reflected on mortality tables.
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Getting too old to qualify for life insurance.
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Having to pay any taxes on their savings.
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Outliving the money they have saved for retirement
Correct Answer
A. Outliving the money they have saved for retirementExplanation
When the public purchases annuities, they are addressing the risk of outliving the money they have saved for retirement. Annuities provide a guaranteed income stream for a specific period or for life, ensuring that individuals have a steady source of income even if they live longer than expected. This helps to mitigate the risk of running out of money during retirement and provides financial security for the future.Rate this question:
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- 26.
Which of the following is a type of single deductible for all family members that, when satisfied, overrides any remaining family member's individual deductibles ?
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A calendar year deductible
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A per cause deductible
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A co-payment
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Family deductible
Correct Answer
A. Family deductibleExplanation
A family deductible is a type of single deductible for all family members that, when satisfied, overrides any remaining family member's individual deductibles. This means that once the total amount of medical expenses for the entire family reaches the family deductible, the insurance coverage kicks in for all family members, regardless of whether their individual deductibles have been met or not. This ensures that the family as a whole is protected and does not have to meet multiple individual deductibles before receiving coverage.Rate this question:
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- 27.
Which of the following is not an example of what insurance policy can provide an insured?
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Help protect from the possibility of a loss.
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Reduce the uncertainty of financial loss
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Eliminate the risk of sickness
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Replace a large possible loss with that of a small certain loss (Premium).
Correct Answer
A. Eliminate the risk of sicknessExplanation
An insurance policy cannot eliminate the risk of sickness. Insurance policies provide financial protection against the risk of sickness by covering medical expenses and providing income replacement in case of disability, but they cannot completely eliminate the possibility of falling sick. Sickness is a natural occurrence and insurance can only mitigate the financial impact, not prevent it entirely.Rate this question:
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- 28.
The best description of a hazard is a/an:
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Condition that may increase the chance that a loss may occur
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Cause of a loss
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Pure risk
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Uncertainty of a financial loss
Correct Answer
A. Condition that may increase the chance that a loss may occurExplanation
A hazard can be defined as a condition that has the potential to increase the likelihood of a loss occurring. It refers to any factor or situation that poses a threat to people, property, or the environment. Hazards can include physical hazards (such as fire or natural disasters), environmental hazards (such as pollution or climate change), or even human hazards (such as negligence or unsafe practices). By identifying and managing hazards, individuals and organizations can take preventive measures to reduce the chances of a loss or mitigate its impact.Rate this question:
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- 29.
Decreasing term insurance is frequently used to pay the unpaid balance of a mortgage upon death of the mortgage holder.
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True
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False
Correct Answer
A. TrueExplanation
Decreasing term insurance is a type of life insurance where the coverage amount decreases over time. It is often used to cover the unpaid balance of a mortgage in the event of the mortgage holder's death. As the mortgage balance decreases over time, so does the coverage amount of the insurance policy. Therefore, it is true that decreasing term insurance is frequently used to pay the unpaid balance of a mortgage upon the death of the mortgage holder.Rate this question:
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- 30.
Charles received a large inheritance from his uncle's estate. Because he can use the income, he buys an annuity with the full amount of his inheritance that will begin paying him monthly payments starting the following month. Charles has purchased a/an _____ annuity.
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Flexible premium deferred
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Single premium immediate
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Annual premium deferred
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None of the above
Correct Answer
A. Single premium immediateExplanation
Charles has purchased a single premium immediate annuity. This type of annuity is funded by a lump sum payment (single premium) and begins paying out immediately (immediate annuity). Since Charles bought the annuity with the full amount of his inheritance and it will start paying him monthly payments starting the following month, it aligns with the characteristics of a single premium immediate annuity.Rate this question:
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- 31.
In an overall comparison of a savings account and a tax-deferred annuity, where the savings account and annuity both pay the same interest, on the same principal amount, and for the same period of time, which will generate the highest return on investment dollars?
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The savings account and annuity will be about the same, even after the taxes
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The savings account will pay more because of commissions paid on the annuity
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The annuity will pay more because of the tax deferral qualities it has
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The savings account will pay more because of the FDIC
Correct Answer
A. The annuity will pay more because of the tax deferral qualities it hasExplanation
The annuity will generate the highest return on investment dollars because of its tax deferral qualities. This means that the earnings on the annuity will not be taxed until they are withdrawn, allowing the investment to grow and compound over time without being reduced by taxes. In contrast, the savings account will be subject to taxes on its earnings, potentially reducing the overall return on investment.Rate this question:
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- 32.
An exclusion of benefits in health and disability insurance that denies coverage for a stated period of time for conditions that were experienced before the policy became effective is the:
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Waiver of premium provision
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Pre-existing conditions exclusion
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Free look period
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Benefit payment clause
Correct Answer
A. Pre-existing conditions exclusionExplanation
The correct answer is "Pre-existing conditions exclusion." This refers to a provision in health and disability insurance policies that denies coverage for conditions that were experienced before the policy became effective. It means that any medical conditions or illnesses that existed prior to the policy's start date will not be covered for a certain period of time. This exclusion is commonly used by insurance companies to limit their liability and prevent individuals from obtaining coverage for pre-existing conditions.Rate this question:
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- 33.
Frequently, juvenile life policies contain a payor rider. This rider states that in the event the payor of premiums is disabled or dies, and the juvenile has yet to reach a specific age:
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The insurance firm will lend (with interest) funds to make the premium payments.
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The premiums will be paid by the insurer until the child reaches the age of 21 or 25.
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The deceased parent's estate will pay the premiums.
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The insurer will completely waive all future premiums
Correct Answer
A. The premiums will be paid by the insurer until the child reaches the age of 21 or 25.Explanation
The correct answer is that the premiums will be paid by the insurer until the child reaches the age of 21 or 25. This means that if the payor of premiums becomes disabled or dies before the child reaches a specific age, the insurance firm will continue to pay the premiums on behalf of the child until they reach either 21 or 25 years old. This ensures that the policy remains in force and the child continues to receive the benefits of the insurance policy.Rate this question:
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- 34.
Which of the following is true about a service provider as it relates to health insurance ?
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Blue Cross and Blue Shield are legally prevented from having service providers in their network
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Service type doctors usually provide better service compared to other health care providers
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Payments are made directly to the insureds.
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Payments are made directly to the provider.
Correct Answer
A. Payments are made directly to the provider.Explanation
In health insurance, payments are typically made directly to the service provider, such as doctors or hospitals. This means that the insurance company pays the provider directly for the services rendered to the insured individual. This is the standard practice in most health insurance plans, where the insured individual does not have to pay out-of-pocket for covered services and the provider is reimbursed by the insurance company.Rate this question:
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- 35.
Every licensee must indicate on which of the following documents his or her license number ?
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Print advertisements
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Business cards
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Written price quotations
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All the above
Correct Answer
A. All the aboveExplanation
All the above options (print advertisements, business cards, and written price quotations) require licensees to indicate their license number. This is important for transparency and to ensure that customers can easily verify the legitimacy and qualifications of the licensee. By including the license number on these documents, licensees are providing a clear and easily accessible way for customers to confirm their credentials.Rate this question:
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- 36.
Which of the following is correct about a third-party Administrator ?
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It is a person who works for a life agent and helps in the solicitation of health insurance.
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It is the department of an insurer that handles the payment of claims.
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It is an independent company that provides administrative services for company's self-funded plans
Correct Answer
A. It is an independent company that provides administrative services for company's self-funded plansExplanation
A third-party administrator is an independent company that provides administrative services for a company's self-funded plans. This means that they handle various tasks such as processing claims, managing benefits, and coordinating with healthcare providers on behalf of the company. They are not directly employed by the company or the insurer, but rather serve as a separate entity that specializes in managing the administrative aspects of self-funded plans.Rate this question:
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- 37.
Select the statement that best describes a Multiple Employer Trust:
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A group of small businesses that band together in order to qualify for group insurance benefits.
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An organization unifying employers to cooperatively cut medical costs through preventative medicine.
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A type of re-insurance company backing insurance issued to businesses.
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None of the above
Correct Answer
A. A group of small businesses that band together in order to qualify for group insurance benefits.Explanation
A Multiple Employer Trust refers to a group of small businesses that join forces in order to qualify for group insurance benefits. By pooling their resources and participating in a collective insurance plan, these businesses can often secure better coverage at more affordable rates. This arrangement allows small businesses to access benefits that may otherwise be financially out of reach if they were to seek insurance individually.Rate this question:
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- 38.
Frank is an eligible employee who wishes to participate in group insurance. To get this coverage without having to provide the insurer with evidence of insurability, Frank must:
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Do nothing at all, he is automatically entitled by being an eligible employee
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Pay the annual premium for the first anniversary year
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Submit the files the doctor has on Frank's past medical history along with certificates of insurance.
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Enroll for insurance during the eligibility period
Correct Answer
A. Enroll for insurance during the eligibility periodExplanation
Frank can get coverage without providing evidence of insurability by enrolling for insurance during the eligibility period. This means that Frank needs to actively sign up for the group insurance during the specified time frame when he is eligible to do so. By enrolling during this period, Frank can secure the coverage without having to provide any additional documentation or medical history.Rate this question:
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- 39.
Choose the provision(s) listed below in the Uniform Policy Provisions law that regulates health insurance sales in California.
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Reinstatement
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Payment of claims
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Grace period
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All the above
Correct Answer
A. All the aboveExplanation
The correct answer is "All the above" because all three provisions - reinstatement, payment of claims, and grace period - are listed in the Uniform Policy Provisions law that regulates health insurance sales in California. Reinstatement refers to the process of restoring a lapsed policy, payment of claims ensures that the insurance company fulfills its obligations to pay for covered expenses, and grace period allows a policyholder to make premium payments after the due date without losing coverage.Rate this question:
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- 40.
A hospital confinement indemnity insurance policy pays:
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A daily dollar benefit for each day the insured is confined to a hospital
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All the medical expenses less coinsurance and deductibles
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The actual amount of hospital expenses
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None of the above
Correct Answer
A. A daily dollar benefit for each day the insured is confined to a hospitalExplanation
The correct answer is "A daily dollar benefit for each day the insured is confined to a hospital." This means that the insurance policy will provide a fixed amount of money for each day the insured person is hospitalized. It does not cover all medical expenses or the actual amount of hospital expenses.Rate this question:
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- 41.
Which of the following is not a feature of a major medical insurance policy ?
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Maximum benefit limits
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Coinsurance
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Deductibles
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Capitation
Correct Answer
A. CapitationExplanation
Capitation is not a feature of a major medical insurance policy. Capitation refers to a payment arrangement where healthcare providers receive a fixed amount per patient, regardless of the services provided. In major medical insurance policies, the focus is on covering a portion or all of the costs of medical services, rather than using a capitation model. Features such as maximum benefit limits, coinsurance, and deductibles are commonly found in major medical insurance policies to determine the coverage and cost-sharing responsibilities of the policyholder.Rate this question:
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- 42.
Select the correct statement about the Social Security system
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If is, for the most part, a voluntary program.
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It is only meant to be a supplement to an individual's major income; it only supplies a minimum floor of income
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The system is completely and fully funded.
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The amount each person gets out is nearly exactly what they put in.
Correct Answer
A. It is only meant to be a supplement to an individual's major income; it only supplies a minimum floor of incomeExplanation
The Social Security system is designed to provide a minimum level of income as a supplement to an individual's main source of income. It is not intended to be the sole source of income for individuals, but rather to provide a safety net and ensure a basic level of financial support. The system is not fully funded, meaning that the amount received by individuals may not be exactly equal to what they have contributed.Rate this question:
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- 43.
Oscar owns a whole life policy that he has been paying into for many years. He would like to continue having life insurance, and can afford to make the premium payments, but needs about 30% of the case value for a couple of years. What would be the best course of action for Oscar to take ?
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Continue making the premium payments to keep the contract in force and borrow from cash value
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Since he must surrender the policy to get any money out he can do so, then buy another policy with the other 70% of the funds he received from the cash value.
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Find another source of funds. He has no access to cash value until the age of 100.
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Find another source of funds. Whole life policies do not build cash value.
Correct Answer
A. Continue making the premium payments to keep the contract in force and borrow from cash valueExplanation
Oscar should continue making the premium payments to keep the contract in force and borrow from the cash value. This is the best course of action because Oscar wants to continue having life insurance and can afford to make the premium payments. By borrowing from the cash value, he can access the funds he needs without surrendering the policy or finding another source of funds. This allows him to maintain his life insurance coverage while also meeting his immediate financial needs.Rate this question:
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- 44.
If the premium on an individual health insurance policy is paid annually, semi-annually, or quarterly what is the minimum grace period required ?
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10 days
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20 days
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30 or 31 days
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None of the above
Correct Answer
A. 30 or 31 daysExplanation
The minimum grace period required for the premium payment on an individual health insurance policy, whether paid annually, semi-annually, or quarterly, is 30 or 31 days. This means that policyholders have a window of 30 or 31 days after the due date to make the payment without facing any penalties or cancellation of their policy.Rate this question:
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- 45.
In the process of applying for insurance an applicant is asked questions that do not relate to underwriting but are clearly meant for attaining marketing information. Under the code this practice is allowable assuming the person aplying for coverage is informed of such practices.
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True
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False
Correct Answer
A. TrueExplanation
The explanation for the given correct answer is that according to the code, it is allowable for insurance companies to ask questions that are not related to underwriting but are intended to gather marketing information from the applicant. However, it is important for the insurance company to inform the person applying for coverage about such practices. This implies that the insurance company must disclose their intention of collecting marketing information and obtain the applicant's consent for doing so.Rate this question:
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- 46.
Fran is comparing life insurance available through her employer and an independent life agent. Her employer provides automatic coverage and requires ______ medical information than the life agent.
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More
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Less
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Neither A nor B, the medical information required would be the same.
Correct Answer
A. LessExplanation
The correct answer is "Less". Fran is comparing the life insurance available through her employer and an independent life agent. The question is asking about the medical information required in these two options. The answer "Less" suggests that the employer requires less medical information compared to the independent life agent.Rate this question:
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- 47.
When an insured becomes totally and permanently disabled, her condition triggers a provision that keeps that policy in force even though the insured stops making premium payments. This is a/an:
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Accelerated living benefit provision.
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Guaranteed insurability provision
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Waiver of premium provision.
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None of the above
Correct Answer
A. Waiver of premium provision.Explanation
When an insured becomes totally and permanently disabled, the waiver of premium provision is triggered. This provision allows the insured to stop making premium payments while keeping the policy in force. This provision is designed to provide financial relief to the insured during a period of disability, ensuring that the policy remains active and providing coverage when it is needed the most.Rate this question:
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- 48.
The dividends and cash value continue, and all features of the policy remain in force, even though the insurance company, not the owner, is making the premiums. This is a description of a _____ rider.
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Cost of living
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Return of cash value
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Waiver of premium
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None of the above
Correct Answer
A. Waiver of premiumExplanation
This description matches the features of a Waiver of Premium rider. With this rider, the insurance company pays the premiums on behalf of the policy owner if they become disabled or unable to work, allowing the policy to remain in force. The dividends and cash value of the policy continue to grow, and all other features of the policy remain intact.Rate this question:
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- 49.
What does the incontestable clause of a life insurance policy do ?
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It keeps the cash value from losing value if the premium is not paid.
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It keeps the insurer from canceling the policy if, after 2 years, there is a discovery of error, concealment, or misstatement by the policy owners
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It insures the insurance company will not be liable for hte acts of fraud by it's agents.
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All the above
Correct Answer
A. It keeps the insurer from canceling the policy if, after 2 years, there is a discovery of error, concealment, or misstatement by the policy ownersExplanation
The incontestable clause of a life insurance policy prevents the insurer from canceling the policy if, after 2 years, there is a discovery of error, concealment, or misstatement by the policy owners. This clause provides protection to the policy owners by ensuring that the insurer cannot use these grounds to terminate the policy after a certain period of time.Rate this question:
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Current Version
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Mar 22, 2023Quiz Edited by
ProProfs Editorial Team -
Jan 26, 2010Quiz Created by
Pchinna
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