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Alabama Life & Health Insurance Test Questions and Answers, Exams of Health psychology

Henderson State University (HSU)Health psychology

Alabama Life & Health Insurance Test Questions and Answers 1. Which welfare program provides assistance to the needy? ANS Medicaid 2. Barbara has the right to change the beneficiary designation on her lifeinsurance policy. Barbara's beneficiary is a(n) ANS revocable beneficiary 3. Within how many calendar days must all clean electronic health insuranceclaims be paid in Alabama? ANS 30 4. Which type of term policy allows the policyowner to switch to permanentinsurance? ANS Convertible term 5. What does renewable term guarantee? ANS The insured's insurability 6. If an insured commits suicide, a life insurance policy's face amount will bepaid only after the policy has been in force for at least ANS two years

Typology: Exams

2023/2024

Available from 09/10/2024

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Alabama Life & Health Insurance Test
Questions and Answers
1. Which welfare program provides assistance to the needy? ANS Medicaid
2. Barbara has the right to change the beneficiary designation on her lifeinsurance
policy. Barbara's beneficiary is a(n) ANS revocable beneficiary
3. Within how many calendar days must all clean electronic health insuranceclaims be paid
in Alabama? ANS 30
4. Which type of term policy allows the policyowner to switch to permanentinsurance?
ANS Convertible term
5. What does renewable term guarantee? ANS The insured's insurability
6. If an insured commits suicide, a life insurance policy's face amount will bepaid only after
the policy has been in force for at least ANS two years
ALABAMA INSURANCE TEST.pdf file:///C:/Users/Admin/Downloads/ALABAMA%20INSURANCE%2...
1 of 20 9/10/2024, 9:37 AM
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Alabama Life & Health Insurance Test

Questions and Answers

  1. Which welfare program provides assistance to the needy? ANS Medicaid
  2. Barbara has the right to change the beneficiary designation on her lifeinsurance policy. Barbara's beneficiary is a(n) ANS revocable beneficiary
  3. Within how many calendar days must all clean electronic health insuranceclaims be paid in Alabama? ANS 30
  4. Which type of term policy allows the policyowner to switch to permanentinsurance? ANS Convertible term
  5. What does renewable term guarantee? ANS The insured's insurability
  6. If an insured commits suicide, a life insurance policy's face amount will bepaid only after the policy has been in force for at least ANS two years

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  1. Which of the following statements concerning a life insurance policy isTRUE? ANS An issued policy can never be changed by a producer
  2. The proceeds of a life insurance policy can be paid in a form other than alump-sum payment. These forms of payment are called ANS settlement options
  3. The withholding of facts in an insurance application is called ANS concealment
  4. A licensed Alabama insurance producer would NOT be disciplined by theCommissioner of Insurance for ANS being convicted of a misdemeanor
  5. The option to convert term life insurance to a permanent form of coveragecan normally be executed ANS without proof of insurability
  6. Which type of life insurance rider allows a policyowner to increase the levelof coverage to keep up with inflation? ANS cost of living rider
  7. What is the minimum age requirement for a minor in Alabama to purchasea life insurance policy? ANS 15
  8. Which of the following best describes a Health Maintenance Organization(HMO)? ANS Provides full medical services that stress preventative medicine

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  1. Which of these statements regarding an insurance application is true? ANS A representation is valid as long as it is true
  2. An insurance company licensed to solicit insurance in a specific state iscalled ANS an admitted company
  3. John purchases insurance because he expects to experience a loss. Thisis known as ANS adverse selection
  4. Who would most likely own a Medicare Supplement policy? ANS 69-year oldfemale covered by Medicare
  5. Amy owns a disability income policy with a noncancellable renewal pro-vision. Which of the following is guaranteed in her policy? ANS The coverage andpremium rate are guaranteed
  6. According to Required Provision 4, when an insured applies for reinstate- ment of a health policy and receives a conditional receipt, how long does theinsurer have to approve or deny? ANS within 45 days of the date of application
  7. Policy dividends for life insurance are ANS not guaranteed
  8. What is a certificate of insurance? ANS A certificate issued to each individual covered by the group life insurance
  9. Which is NOT true regarding Medicare Supplement policies? ANS Must include a minimum 20-day Free-Look provision
  10. In Alabama, all Health Maintenance Organizations must ANS have a complaintsystem to resolve written complaints from enrollees
  11. Rick owns a $100,000 life insurance policy with a cash value of $10,000.How much can he borrow up to? ANS The accumulated cash value ($10,000 less interest)
  12. Susan owns a life insurance policy that has accumulated $10,000 in cashvalue in which she can no longer pay its premiums. If she elects to take the extended term option, which of these actions would she take? ANS Uses the

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$10,000 to buy term insurance of the same face amount as her original policy

  1. Jackie took out a Medicare supplement insurance policy and also has a preexisting condition. In this situation, a preexisting condition is defined as acondition for which medical advice was given or received within of the effective date of coverage. ANS 6 months
  2. Rodney applies for an insurance policy and pays the first premium. Thereceipt given for the first premium is called a(n) ANS conditional receipt
  3. A policy owner with an automatic premium loan provision must ANS pay backthe loan amount to keep the policy's cash value at its maximum
  4. Which of the following is NOT an example of insurable interest? ANS An airlineinsuring the lives of its passengers
  5. With key employee life insurance, ANS the company is the owner of the policy

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100 and paid up at a stated time

  1. John is an annuitant who has surrendered his annuity at age 55. What willhe pay? ANS Tax on the interest earned
  2. A Preferred Provider Organization (PPO) contract typically uses whichpayment arrangement? ANS Negotiated fee-for-service
  3. Which entity is responsible for the majority of regulations imposed on theinsurance industry? ANS State government
  4. A husband and wife purchases a life insurance policy that covers both ofthem. The policy paid nothing when the husband died. Two years later, the wife dies and a death benefit is paid to the beneficiary. Which type of policy isthis? ANS Survivorship life policy

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  1. An insurance producer must have which of the following in order to sellvariable life insurance policies? ANS All of these
  2. Total disability can be defined as "the insured's inability to perform the occupation for which he/she is reasonably qualified by education, training, or experience." For disability income insurance purposes, this definition isknown as ANS the "own occupation" definition
  3. Which of the following limits an insurance company's total exposure undera major medical policy? ANS Maximum lifetime benefit and a coinsurance provision
  4. In regards to insurance applications, which of the following statements istrue? ANS Changes on the application must be consented to in writing
  5. Shawn has a waiver of premium rider on his life insurance policy. He becomes disabled for 3 years, during which the insurance company waives $3,000 in premiums. When Shawn recovers, he must ANS resume paying premiumsagain
  6. Which of these is NOT considered a form of advertisement in Alabama? ANS Aproducer sending a Christmas card to a client
  7. The exclusions and conditions in an insurance contract are required to be conspicuous, plain, and clearly stated. There should be no surprise whenan insurance company denies a claim for a hidden clause. This is called the ANS doctrine of reasonable expectations
  8. An accidental death rider claim is usually paid if the insured ANS dies within 90days of the accident
  9. Which of the following is an example of a "nonforfeiture value"? ANS After a policyowner cancels his/her permanent policy, the cash value accumulation mustbe made available to the policyowner
  10. The number of an insurance company's health insureds that is expectedto become sick or injured is called ANS morbidity experience
  11. Wayne is covered under a nonoccupational group health policy. He is hurtwhile

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  1. Who does the insurance agent legally represent? ANS The insurance company
  2. Pat applies for insurance, pays the initial premium, and receives a doc- ument from the agent. This document indicates that if the policy is issued, coverage begins on the date of the document. This document is called a(n) ANS - conditional receipt
  3. A waiver of premium ANS waives the premiums when the policyowner becomestotally disabled
  4. When an estate is named beneficiary to a life insurance policy, the policyproceeds are ANS distributed according to state law
  5. A husband and wife are receiving annuity payments. When the husbanddies, the wife still receives annuity payments for life. What kind of annuity isthis? ANS Joint and survivor life annuity
  6. Kris is receiving annuity payments that has not yet paid an amount whichis equal to the purchase price of the annuity. If she were to die, her benefi- ciary would continue receiving annuity payments until this amount has beenreached. What type of annuity is this? ANS Refund life annuity
  7. An insurance contract is said to be a(n) because there is a mutual reliance of truthfulness on both parties. ANS contract of utmost good faith
  8. All of these statements concerning the coordination of benefits are true,EXCEPT ANS The secondary insurer does NOT pay benefits
  9. What describes a level term policy? ANS The premium and the protection remain constant for the term of the policy
  10. An example of a life insurance beneficiary is a(n) ANS all of these
  11. Jan is named irrevocable beneficiary of Jim's life insurance policy. Whichof the following statements is correct? ANS Jim needs Jan's permission to borrow the policy's loan value
  12. Which of these will NOT result in an increase in life insurance policydividends?

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ANS Higher reserves

  1. Which of these statements concerning COBRA is correct? ANS Under COBRA,dependents of employees covered by group plans have the same extension and conversion privileges available to them as the employee
  2. A life insurance beneficiary has chosen a settlement option in which theprincipal never decreases unless the beneficiary makes a withdrawal. This settlement option is called the ANS interest only option
  3. Which of these is NOT a reason the insurance application is important? ANS - When attached to the policy, the application becomes part of the insurance clause
  4. At certain ages or dates, an insured can increase the stated benefit (withinlimits) under their disability income policy, regardless of health. Which policy rider BEST describes this? ANS Future income option

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  1. An insured should be restored to the approximate financial condition occupied before the loss occurred. This is called the ANS principle of indemnity
  2. Which of the following statements about a noncancellable policy isFALSE? ANS The premium rate CAN be increased over time
  3. A life insurance policy owned by a third party ANS is used largely in estate-plan-ning as well as business situations
  4. Which of the following does NOT describe a life income settlement option?- ANS Income is paid until the principal amount decreases to zero
  5. Bert purchased an immediate annuity with quarterly payments. When willthis annuity start making payments? ANS 3 months after the annuity is bought

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  1. Which of these is a correct statement? ANS Policy dividends cannot be guaran-teed
  2. Which type of life insurance policy combines insurance protection withan accumulation of cash value? ANS permanent insurance
  3. XYZ Insurance Company issued a new life policy to an insured that replaced an existing policy. XYZ Insurance Company is considered to bethe ANS replacing insurer
  4. The objective of insurance is ANS the transfer of risk
  5. Insurance policies issued by companies which allow their policyownersto participate in the favorable experience of the company through payment ofdividends are known as ANS participating policies
  6. In Alabama, an insurer who violates state laws for the payment of insur- ance commissions may be fined up to ANS three times the amount of the commis-sions paid
  7. Ed has an insurance policy with an insurance company. Before Ed's pol-icy will pay a claim, certain events must occur. Because of this, an insurancepolicy is considered to be ANS conditional
  8. Which type of assignment transfers a portion of the policyowner's right to another party in order to secure a debt to that party? ANS Collateral assignment
  9. Ann is an employee covered by a Group Life plan through her employer.When Ann is terminated, her employer fails to inform her about the plan's conversion option. Two weeks later, Ann dies in an automobile accident. Howwill this situation be handled? ANS Full benefits must be paid by the insurer
  10. An insurance company may cancel a life insurance policy under which ofthe following conditions? ANS The outstanding policy loan exceeds the cash value ofthe policy
  11. When does "adverse selection" exist? ANS When the risks accepted for insur-ance has a HIGHER likelihood of experiencing loss than an average group
  12. The aviation exclusion ANS excludes coverage when the insured is riding incertain kinds of air travel

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policy has a five month elimination period. Which of the following statementsis true? ANS Paul's premium is probably less than Mary's

  1. A Long Term Care insured must be unable to perform a minimum of Activities of Daily Living (ADLs) to receive benefits. ANS 2
  2. If an insured under a Major Medical insurance policy with a $200 de- ductible and an 80% coinsurance clause incurred the following covered ex-penses ANS Hospital room and board $2,000; Surgeon's fee $1,500. How much would the policy pay? ANS $2, (2,000 + 1,500 = 3,500 - 200 = 3,300 x .8)
  3. In which of the following ways does term life insurance and whole lifeinsurance differ? ANS Term insurance does not build cash value
  4. A retirement plan that can be started by an employee, even if another planis in existence, is called a(n) ANS Individual Retirement Account (IRA)
  5. How frequently does a disability income policy typically pay benefits? ANS - monthly
  6. Which of the following is a true statement? ANS The withholding of informationthat should have been provided to an insurer is called concealment
  7. All of these statements concerning a Key Employee Life policy is true,EXCEPT ANS The key employee names the beneficiary
  8. An insurance company that cedes a portion of an insured's coverage toanother insurer is said to be engaged in ANS reinsurance
  9. Don and Marie are married and each have a Major Medical plan providedby their employers. Don was born in August of 1969 and Marie was born in March of 1976. For their two dependent children, ANS Marie's plan is primary and Don's is secondary
  10. A retirement plan intended for a sole proprietor and his/her employeeswould be a(n) ANS Keogh Plan
  11. Any individual who has failed two Alabama insurance licensing examina-tions must

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wait how long before retaking it a third time? ANS three months

  1. Risk is best defined as the ANS uncertainty of loss
  2. According to Alabama law, agents of a Health Maintenance Organization(HMO) ANS must be licensed as insurance producers
  3. The maximum amount of coverage placed on a disability income policyis based on the insured's ANS earned income from the previous year
  4. All of these are correct concerning group life insurance, EXCEPT ANS Wholelife insurance is the form of insurance typically used in group life insurance
  5. Under Alabama's annuity disclosure regulation, the disclosures must be mailed to the applicant within business days if the application is taken overthe telephone. ANS 5

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accumulation? ANS Reduced paid-up insurance

  1. Medicare eligibility is typically based on ANS age
  2. What is vesting? ANS The employee's right to the employer's contributions in a retirement plan if employment terminates prior to retirement
  3. Katherine is a retiree and was recently hospitalized for 10 days. Which type of insurance policy would best cover her for excess hospital expenses? ANS
  4. What kind of risk are amateur pilots normally classified as? ANS Special classrisks
  5. What does Disability Buy-Sell insurance provide? ANS lump-sum benefits
  6. When medical expenses reach a certain dollar amount, the insured is no longer responsible for sharing the cost of expenses. The insurance companythen pays 100% of the covered expenses. This major medical policy provisionis called a(n) ANS stop-loss limit

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  1. Which of the following statements is NOT correct? ANS Agents are allowed towaive certain policy provisions
  2. Individual disability income policies normally have a premium that ANS ad-justs annually
  3. If a Long Term Care (LTC) policy in Alabama has been in effect for morethan , the insurer CANNOT contest any material representation on the application. ANS 2 years
  4. What is a disability income policy designed to do? ANS Pay benefits to maintainthe insured's current standard of living
  5. A substandard or special class risk typically results in ANS a premium that ishigher than for a normal risk
  6. What do Major Medical policies typically cover? ANS Usual, customary, and necessary expenses
  7. Paula has an insurance policy that has a guaranteed minimum cash value,a guaranteed death benefit, fixed premiums, and grows at a rate reflected bya selected fund index. Which type of life policy fits this description? ANS Equity indexed life
  8. Tim has a Universal Life policy. The cash value growth in his policyis ANS interest sensitive
  9. A written agreement that involves two or more parties and considerationis ANS a contract
  10. According to Alabama law, a minor ANS age 18 can begin receiving life insur-ance death benefits of up to $3,000 per year
  11. In regards to a life insurance policy or an annuity contract, all statementsmade on the application are considered to be ANS representations