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General Lines- Life, Accident, and Health
EXAM QUESTIONS ACCURATE AND
VERIFIED ACTUAL EXAM QUESTIONS
WITH DETAILED ANSWERS FOR
GUARANTEED PASS | ALREADY
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1. The first portion of a covered Major Medical insurance expense that the insured is required to pay is called the: A. Coinsurance B. Copayment C. Premium D. Initial Deductible ✅ Rationale: The initial deductible is the amount the insured must pay before the insurance company begins to cover medical costs. 2. Q is hospitalized for 3 days and receives a bill for $10,100. Q has a Major Medical policy with a $100 deductible and 80/20 coinsurance. How much will Q be responsible for paying? A. $ B. $2, C. $2,100 ✅ D. $8, Rationale: Q pays the $100 deductible and 20% of the remaining $10,000: (10,000 x 0.20 = $2,000) + $100 = $2,100. 3. M has a Major Medical policy with a $200 deductible and 80% coinsurance. If M incurs a $2,200 claim, how much will M receive in payment? A. $1, B. $1,600 ✅ C. $2, D. $1, Rationale: Subtract the deductible ($2,200 - $200 = $2,000), then apply 80% coinsurance: $2,000 x 0.80 = $1,600. 4. An insured with a $1,000 deductible and 80/20 coinsurance incurs $11,000 in medical expenses. How much must they pay? A. $1,
B. $2,
C. $3,000 ✅
D. $1,
Rationale: $1,000 deductible + 20% of remaining $10,000 = $1,000 + $2,000 = $3,000.
5. What is the purpose of the coinsurance clause in a major medical policy? A. Limits the insurer’s liability B. Discourages overutilization of coverage ✅ C. Increases premium rates D. Eliminates deductibles Rationale: Coinsurance ensures the insured shares some cost, discouraging unnecessary claims. 6. Which of the following is NOT covered under a hospitalization expense policy? A. Room and board B. Operating room charges C. Surgeon's fees ✅ D. Laboratory services Rationale: Surgeon’s fees are covered under surgical expense policies, not hospitalization expense policies. 7. Which of the following is true about individual disability income policies? A. No elimination period B. Benefits begin immediately C. Normally includes an elimination period ✅ D. Only covers accidental injuries Rationale: Most disability income policies include an elimination (waiting) period before benefits begin. 8. What is the elimination period in a disability income policy? A. Period benefits are paid B. Time the insured is unemployed C. Time before benefits begin ✅ D. Time policy remains in force Rationale: It’s the waiting period after a disability before benefits are payable. 9. Medicare Part B does NOT cover: A. Doctor visits B. Inpatient hospital services ✅ C. Durable medical equipment D. Outpatient services Rationale: Inpatient services are covered under Medicare Part A.
D. Optionally Renewable Rationale: Guaranteed renewable policies ensure continued coverage but allow class- wide premium changes.
16. The 2-year contestability period begins when the insurance company: A. Delivers the policy B. Receives the first claim C. Issues the policy ✅ D. Receives the premium Rationale: The contestability period begins on the issue date of the policy. 17. How long does an insured have to notify the insurer of a medical claim after an accident? A. 10 days B. 30 days C. 15 days D. 20 days ✅ Rationale: Most policies require notice of claim within 20 days after the loss. 18. What is the purpose of the grace period in an Accidental Death and Dismemberment policy? A. Pay lower premiums B. Contest claims C. Provide extra time to pay premiums ✅ D. Delay coverage start Rationale: The grace period ensures coverage continues even if a premium is late. 19. The clause that makes the application part of the insurance contract is called: A. Free Look B. Entire Contract Provision ✅ C. Legal Action Clause D. Consideration Clause Rationale: The entire contract provision includes the application and the policy as the complete agreement. 20. J purchases a Disability Income Policy that only J can terminate, and rates will never increase. This is a: A. Guaranteed Renewable Policy B. Conditionally Renewable Policy C. Noncancellable Policy ✅ D. Group Disability Policy Rationale: A noncancellable policy guarantees both coverage and premium rates.
21. If an applicant with diabetes applies for disability income insurance, which action will the insurer NOT take? A. Add a rider B. Charge a higher premium C. Alter the time of payment of claims provision ✅ D. Exclude the condition Rationale: Time of payment provisions are standardized and not altered based on health. 22. What is the purpose of pre-admission certification? A. Increase hospital coverage B. Prevent nonessential medical costs ✅ C. Ensure claim denial D. Approve physician treatments Rationale: It helps control costs by ensuring hospital admissions are medically necessary. 23. Under the Fair Credit Reporting Act, when must an applicant be informed of their rights? A. After the policy is issued B. After underwriting C. Upon application completion ✅ D. At the time of first claim Rationale: Disclosure of rights must occur at application to ensure transparency. 24. What is included in the consideration clause of an insurance contract? A. Benefit exclusions B. Free look period C. Premium payment schedule and amount ✅ D. Coverage limits Rationale: The consideration clause defines the insured’s obligation to pay premiums. 25. A life insurance policy would be considered a wagering contract without: A. Premium payments B. Insurable interest ✅ C. Beneficiary designation D. A medical exam Rationale: Insurable interest is required to prevent speculative use of life insurance. 26. Whole life policies provide all of the following EXCEPT: A. Level premiums B. Guaranteed cash value C. Death benefit
B. Fixed period C. Life income D. Interest only ✅ Rationale: Interest-only pays interest while leaving the principal untouched.
33. When third-party ownership is involved, the primary beneficiary must have: A. Legal guardianship B. Power of attorney C. Insurable interest in the proposed insured ✅ D. Medical authorization Rationale: To prevent misuse, the primary beneficiary must have a valid insurable interest in the insured's life. 34. A term life insurance policy matures: A. At policy issuance B. When premiums are paid C. Upon the insured’s death during the term ✅ D. When cash value equals death benefit Rationale: Term life pays out only if death occurs during the term. 35. Which statement is true regarding a Variable Whole Life policy? A. No death benefit is guaranteed B. A minimum guaranteed death benefit is provided ✅ C. Cash value is fixed D. Premiums can’t change Rationale: Even with investment variability, Variable Whole Life has a guaranteed minimum death benefit. 36. Which statement about a whole life policy is correct? A. Cash value can't be accessed B. Only covers accidental death C. Cash value may be borrowed against ✅ D. Must be converted to annuity Rationale: Policyowners can borrow from the accumulated cash value. 37. Which product does NOT require FINRA securities registration to sell? A. Variable life B. Variable annuity C. Modified whole life ✅ D. Universal variable life Rationale: Modified whole life is a traditional product, not tied to investments. 38. Which life policy guarantees a minimum death benefit and immediately creates an estate at death?
A. Term Life B. Universal Life C. Variable Life ✅ D. Modified Endowment Rationale: Variable life guarantees a minimum death benefit and builds cash value through investments.
39. Which is a feature of interest-sensitive whole life? A. Premiums never change B. Fixed cash value C. Guaranteed investment returns D. Premium payments can vary ✅ Rationale: Interest-sensitive whole life allows premium flexibility based on interest rate performance. 40. Which is NOT contractually guaranteed in whole life policies? A. Level premiums B. Death benefit C. Cash value D. Partial withdrawals beyond surrender period ✅ Rationale: Withdrawals aren't a feature; loans or full surrender are the only options. 41. What is a feature of a straight life policy? A. One-time premium B. Premiums paid as long as coverage is active ✅ C. Limited payment period D. Annual dividends Rationale: Straight life requires lifetime premium payments unless canceled or surrendered. 42. Which product is NOT interest-sensitive? A. Interest-sensitive whole life B. Universal life C. Modified whole life ✅ D. Variable life Rationale: Modified whole life has fixed structure; premiums increase after initial years but are not interest-based. 43. A life insurance policy that combines cash value with a level face amount is called: A. Term life B. Adjustable life C. Whole life ✅
49. Which annuity pays the highest monthly income to one person? A. Life with refund B. Period certain C. Straight life annuity ✅ D. Joint life Rationale: Because it stops at death, straight life provides the highest payment amount. 50. If an annuity is canceled before the income phase, the owner receives: A. Death benefit B. Income payments C. Contract’s surrender value ✅ D. Premium refund Rationale: If canceled early, the owner gets the cash surrender value minus any penalties. 51. Which statement is INCORRECT about Tax-Sheltered Annuities (TSAs)? A. Designed for nonprofit employees B. Tax-deferred contributions C. Funded through salary reduction D. Income is received tax-free ✅ Rationale: TSA distributions are taxed as income upon withdrawal. 52. If rollover funds are received directly by an individual, what is withheld? A. 10% B. 20% ✅ C. 5% D. Nothing if it’s a direct transfer Rationale: Indirect rollovers require 20% withholding unless done trustee-to-trustee. 53. How are Roth IRA distributions taxed under normal conditions? A. Fully taxed B. Partially taxed C. Tax-free ✅ D. Taxed at capital gains Rationale: Qualified Roth IRA distributions are tax-free. 54. Who is usually the owner of a 403(b) TSA account? A. Employer B. Beneficiary C. Employee ✅ D. IRS Rationale: The employee owns the TSA, though the employer sponsors the plan.
55. HIPAA guarantees a person leaving COBRA coverage can: A. Get Medicaid B. Access individual coverage regardless of health ✅ C. Convert to group coverage D. Avoid preexisting clause Rationale: HIPAA ensures guaranteed-issue access to individual coverage. 56. Ordinary whole life policies include: A. Increasing death benefit B. Level cash value over time ✅ C. Variable premiums D. Flexible death benefits Rationale: Cash value accumulates at a level, guaranteed rate. 57. Which action is NOT an error or omission making a producer liable? A. Misrepresentation B. Failure to explain exclusions C. Using an approved surplus line insurer ✅ D. Recommending an unsuitable policy Rationale: Writing business with an approved surplus line insurer is allowed. 58. Which of the following is FALSE about annuity taxation? A. Earnings grow tax-deferred B. Qualified and nonqualified annuities are taxed the same ✅ C. Qualified annuities are fully taxable upon withdrawal D. Nonqualified annuities are partially taxable Rationale: Qualified and nonqualified annuities are taxed differently based on contribution source. 59. What is correct about utmost good faith in insurance? A. Only the insured must disclose all facts B. Only insurer is bound by it C. Both parties must act in good faith ✅ D. It applies only to claims Rationale: Both insurer and insured are expected to act honestly and disclose material facts. 60. Which annuity option pays for life, but at least a certain number of years? A. Joint life B. Straight life C. Life income with period certain ✅
Jack, an insurance agent, offers free season football tickets to anyone who buys a life insurance policy from him. This sales practice is called - ANSWER rebating After Todd was injured in a car crash, he received occupational theyto help him return to work. His disability income policy paid for this therapy because it had - ANSWER A rehabilitation provision If a small employer insurance decides to terminate all small employer health benefits plans it issues in TEXAS, it must notify the TEXAS commissioner and all affected employer of its intent to do so at least - ANSWER At least 180 days before it ends coverage Contract characteristics is unique to insurance contracts but NOT all contracts - ANSWER Unilateral When first meeting prospective insurance applicants, a producer must give them a document that explains the general features, benefits, and condition of type of insurance being considered. Which is called a - ANSWER Buyer's Guide Abby, who life in New York she is a licensed life insurance agent , wants to apply fo a nonresident license in Texas. To do so, she must submit which of the following to TDI - ANSWER An aplicación, few and letter of certification from her home state Amanda used a basic illustration to help Mark. a potencial cliente, de understand how the cash value of his life insurance policy would grow. Mark then agreed to buy the policy. Which of the following best describes Amanda's duties which respect to delivering a copy of the illustration used - ANSWER Amanda must deliver a signed copy ilustración to both Mark and the insurer With respect to the transfer-for-value rule, which of the following situations would result in the new owner being subject to tax on the policy's gain upon the insured's death - ANSWER Policy is sold by the insured to neighborhood in exchange for cash Which of the following describes the options available with a universal life insurance policy the owner no longer wishes to maintain - ANSWER Surrender the policy for its cash value or let the policy continue without premium until the cash value can no longer cover monthly deductions A section 125 cafeteria plan may cover which of these expenses - ANSWER Health insurance premiums An insurance producer tells a life insurance applicant that he has the authority to waive the medical exam that is normally required by the insurer with every application. The
insurer may be required to accept the application without a medical exam due to the producers: - ANSWER Apparent authority A long-term care rider on a life insurance policy will pay benefits if the insured is diagnosed as chronically ill due to which of the following? - ANSWER Either a medical or cognitive (mental health) reason Which federal law group health plans and protects their enrollees - ANSWER A What type of state regulation gives a person in poor health or with a pre-existing condition the opportunity to buy health insurance - ANSWER Guaranteed issue With certain limitations a policyowner may change all of the following in a life insurance policy, EXCEPT: - ANSWER The incontestability provision With certain limitations, a policyowner may change all of the following in a life insurance policy, EXCEPT: - ANSWER A Where can a person set up a health care savings account (HSA) - ANSWER Financial institution Which statement about converting coverage under a children's term rider is correct - ANSWER Conversion is possible even if the child is uninsurable, and the converted policy coverage amount may be greater than amount provided under the rider Which of the statements regarding the replacement of a life insurance policy is correct - ANSWER Replacing a policy will require the insured to go through a new contestability The commissioner issued a cease and desist order against Nether Insurance Company for committing certain practices when settling claims. Nether ignores the order. The commissioner may refer to which of the following for enforcement. - ANSWER State attorney general Which type of group health insurance plan bases premios and benefits in the claim experience of similar groups in the region - ANSWER Community-rated plan Which of the following explains why the human life values approach to deter main insurance needs is rarely used today - ANSWER It doesn't factor in all that it takes to secure a family's financial futures For tax purposes, a self-employed person includes all the following, EXCEPT: - ANSWER An incorporated business owner
Which of the following is correct about the HMO claims process - ANSWER Members no not need to Sumit claims forms for services provided within the network Life insurance is commonly used for all the following needed EXCEPT - ANSWER To save for a new car in several years Which association protects owners of life and health insurance policies issued by insurance who become financially unable to pay claims and benefits - ANSWER Life, Accidents, Health and Hospital Service Insurance Guaranty Association Which of the following statements regarding the taxation of deaf benefits dead paid from a group life insurance plan is correct - ANSWER The death benefits is income tax free, but interest earned on found left with the insurer under a settlement option is taxable in the year earned Besides select policy anniversary dates, a life insurance guaranteed insurability rider usually permits special alternative option dates that typically include all the following, EXCEPT - ANSWER The policyowner's loss of job Loss of a job is generally not a qualifying special event What is the mathematical concept of probability that helps insurance estimates the statistics likelihood of mortality or morbidity losses at any given age - ANSWER Law of large number Medicare Part B benefits exclude coverage for - ANSWER G All of the following statements about indexed life insurance are correct EXCEPT - ANSWER Vaccinations In What form does the MIB present it's information to insurance - ANSWER Memetic codes, indicating risk identified in previous applications, that are communicated electronically Which of the following types of qualified retirement plan can include life insurance in the plan funding - ANSWER With respect to annuities, the basic purpose for the exclusion ratio is to Which of the following distribution a sum of money regularly, starting very shortly after they are bought - ANSWER Retirement annuity Immediate annuities distribute a sum of money regularly, starting very shortly after they bought
All the following regarding the " spendthrift clause" of life insurance policy are correct EXCEPT - ANSWER The spendthrift clauses keeps benefits from claiming any death benefits until the insurer checks their personal and business credit history Alice Owen a long-term Carr policy, Her return of premium option allows her to have a portion of the premium - ANSWER Paid to her car estate or a named beneficiary when she dies A return of premium option in a LTC policy return a portion of the premium paid for the coverage to the insured dies. The amount of the returned premium depends on whether the insured used the policy's benefits and if so, to what extent. Structured settlement most commonly use - ANSWER Immediate fixed annuities Which of the following must HMO members to receive covered care - ANSWER HMO's network of providers and caregivers HMOs must provide their subscribers (enrollees) with evidence of coverage, which must include all the following EXCEPT - ANSWER H If a Social Security benefits recipients has income from other sources, including wages and investment earnings, what percentage of Social Security benefits exceeding a combined income threshold may be income taxable - ANSWER Anywhere from 50% to 85 percent of Social Security benefits will be subject to income taxation A Medical Expense Policy covers the cost of health care services delivered according to
- ANSWER The plan or policy Care plan combines the features of others plans - ANSWER POS plan Points-of-service (POS) plan combine that the cost controles of an HMOS with the flexibility that a preferred provider organization (PPO) and traditional medical insurance policy have with respect to the selection of health care providers How many Social Security credits must a worker earn to qualify for Social Security disability benefits - ANSWER 40 credits A worker becomes fully insured and eligible for all Social Security benefits (including disability benefits) with 40 credits XYZ insurance has been changed with unfairly discrimination among insurance. Which of the following practices in unfair discrimination - ANSWER XYZ changed two individual insured of the same class and risk different premium for life insurance policies based on where they lived and their ethnicities
Advertisement for indeterminate premium whole life policies sold in Texas must prominently set forth all the following terms EXCEPT - ANSWER The fact the non guaranteed maximum premium can never be changed. Because Advertisements for indeterminate premium life policies must display the fact that maximum premium in not guaranteed and may be changed. JEFF graduated from college two years ago and wants to work in the insurance industry as a life and health insurance counselor. His mentor advises him that he must - ANSWER Pass an exam cornering the basic of life and health insurance, business insurance, and state planning, among other topics. Because To receta life health insurance counselor license, JEFF must pass and examination that covers topics such as the fundamentals of life and health insurance, financial and economics, and business insurance and estate planning. Janet has been continuously licensed as an agent in Texas for the past 25 years. Her friend, Steven, is a nonresident licensee in Texas and every year completes his state's continuing education requirements. When they ask you for advice on meeting the Texas continuing education requirements, you inform them that - ANSWER Neither Steve nor Janet needs to comply with Texas's continuing education requirements. Who would NOT be eligible for Medicare enrollment - ANSWER A person under age 65 who has received Social Security disability benefits for 6 months Frank, and aplican for life insurance who is a substandard risk, can expect to pay a premium that is best described as which of the following - ANSWER Generally higher than for a standard risk. Because An applicants who represents a substandard risk will pay a higher premium to offset the higher risk. Bob bought a universal life insurance policy with a $100.000 stipulated amount and chose an Option 2 (increasing) death benefits. At his death ten years later, the policy's cash value had increased to 50.000 what will his beneficiary receive. - ANSWER $150. Because UL death benefits Option 2 pays an increasing death benefits equal to a level net amount at risk plus the cash value. The beneficiary will get $150,000 (the $100. specified amount plus $50.000 increase in cash value) Bob bought a $100.000 ten-year level term Insurance policy on March 1,2012. What will happen if he does on April,2020 - ANSWER Bob's benefits will not pay any benefits.
Because Bobs's $100.000 ten-year level term policy gives him level $100.000 of coverage during the ten years coverage period, through March 1,2020, IF Bob's dies after the ten-years period, the policy will have expire and no benefits will be payables. What is the only restriction on naming an annuitant - ANSWER The annuity must be a natural person. An insurance incurs $7,000 in cover medical expenses. Her comprehensive major medical policy requires her to pay $500 of those espeses before the poly will pay a benefits based on the remaining $6.500. What kind of deductible does the insured have? - ANSWER Flat deductible Which of the following of health insurance based benefits on the indemnification of the insured - ANSWER basic medical expenses insurance. Because Medical expenses (indemnity) insurance is the traditional form of health care coverage based on indemnification of the insured. What type of life company is owned by the policyholders - ANSWER Mutual company. Because Mutual companies are owed by the policy owners. These companies issue participating life insurance policies that distribute excess premium benefits n the form of dividends. The basic purpose for the re-entry option with a renewable term life insurance policy is to let the policyowner - ANSWER renew the policy at lower current rates rather than guaranteed renew rates. Because to get the lower current (" attained age') rate they is the feature of the re-entry option. The insured must prove insurability at the time of renewal or at periodic intervals throughout the policy's term ÉRISA does NOT regulate group health insurance plans with respect to - ANSWER Promoting the sponsor's best interest. Which of the following best explains why. Sección 1035 of Tax Code does NOT permit a tax-free exchange of an annuity for a life insurance policy - ANSWER Allowing a taxfree exchange against an annuity for life insurance would enable taxable annuity gain to escape taxation vía the life insurance death benefits Under a survivor life insurance policy, when does the insurer pay the dead benefits - ANSWER Up on the death of the insured who dies second
