Download Indiana Life and Health Insurance EXAM TEST BANK WITH ALL VERSIONS OF THE EXAM and more Exams Finance in PDF only on Docsity!
Indiana Life and Health Insurance EXAM
TEST BANK WITH ALL VERSIONS OF
THE EXAM WITH ALLMODULES
COVERED | ACCURATE AND VERIFIED
QUESTIONS AND ANSWERS FOR
GUARANTEED PASS| LATEST UPDATE
1. Why would the Commissioner examine the records of an insurance company? A. To assess company marketing B. To evaluate competition C. To determine the solvency of the company ✅ D. To recruit more agents Rationale: State law requires insurance departments to examine insurers to ensure they are financially solvent and able to meet obligations. 2. Which of these is considered a true statement regarding Medicaid? A. Funded solely by the federal government B. Funded by local counties C. Funded by both state and federal governments ✅ D. Only for employed individuals Rationale: Medicaid is a joint federal and state program that provides health coverage to eligible low-income individuals. 3. Which of these is NOT a reason for a business to buy key person life insurance? A. Replace lost revenue B. Cover hiring/training expenses C. A pension deficiency if the key employee dies ✅ D. Provide continuity in leadership Rationale: Key person insurance is not intended to fund pension obligations. 4. Under the Common Disaster provision, which of these statements is true? A. Proceeds are paid to the insurer B. Proceeds are forfeited C. Proceeds will be payable to K's estate if P dies within a specified time ✅ D. Proceeds are paid to the state Rationale: If the beneficiary dies shortly after the insured in a common disaster, benefits are paid to the insured's estate.
5. In Indiana, a producer licensed in Indiana but living in Michigan is considered a: A. Resident producer B. Temporary producer C. Guest producer D. Nonresident producer ✅ Rationale: A producer licensed in a state but living in another is a nonresident producer. 6. An insurer that terminates a producer’s appointment must notify the Commissioner within how many days? A. 10 days B. 20 days C. 30 days ✅ D. 60 days Rationale: Indiana law requires notice of termination to be given within 30 days. 7. To maintain their license, Indiana resident producers must: A. File taxes early B. Recruit new agents C. Meet continuing education requirements ✅ D. Relocate every 5 years Rationale: Ongoing education is required to renew insurance licenses. 8. Which is NOT a required provision in a group life policy? A. Grace period B. Misstatement of age C. Accidental death and dismemberment ✅ D. Conversion Rationale: AD&D is optional in group life policies, not mandatory. 9. Which policy may not have the Automatic Premium Loan provision? A. Whole life B. Universal life C. Decreasing term ✅ D. Variable life Rationale: Term policies do not accumulate cash value and cannot have loan features. 10. Which statement about a whole life policy is true? A. Premiums are flexible B. Death benefit can be adjusted C. Beneficiary can’t be changed
D. People with dental plans only Rationale: Exemptions exist for financial and religious reasons.
17. Q's annuity pays no less than $250 quarterly. This is a: A. Immediate annuity B. Flexible installment deferred annuity ✅ C. Straight life annuity D. Single premium annuity Rationale: Flexible installment annuities allow periodic payments like quarterly. 18. When can a producer sell insurance for an insurer? A. After signing the contract B. After being properly appointed by the insurer ✅ C. After submitting the first policy D. Immediately after training Rationale: Official appointment is required before transacting insurance. 19. If P’s life insurance premiums are waived due to disability: A. Coverage lapses B. Death benefit reduces C. P will still receive declared dividends ✅ D. Premiums must be repaid Rationale: Waiver of premium doesn’t affect dividend eligibility. 20. Which factor may NOT be used to reject a life policy? A. Hobbies B. Weight C. Gender ✅ D. Medical history Rationale: Gender discrimination in underwriting is not allowed. 21. What type of renewability guarantees both premium rate and renewability? A. Cancelable B. Conditionally renewable C. Optionally renewable D. Noncancelable ✅ Rationale: Noncancelable policies guarantee rates and renewal. 22. Which is NOT a reason to revoke a producer’s license? A. Producer is insolvent ✅ B. Fraud C. Misrepresentation
D. Theft Rationale: Insolvency alone isn’t grounds for revocation.
23. Which policy supplements Medicare hospital coverage? A. Disability income B. Long-term care C. Medicare Supplement ✅ D. Medicaid Rationale: Medicare Supplements cover costs beyond Medicare. 24. Under the Uniform Simultaneous Death Act, if insured and primary beneficiary die together: A. Proceeds go to the state B. Proceeds go to insurer C. Proceeds go to contingent beneficiary ✅ D. Proceeds are forfeited Rationale: If it’s unclear who died first, proceeds go to the next in line. 25. What type of policy pays the face amount if the insured lives to 70 or dies before? A. Whole life B. Term C. Endowment at age 70 ✅ D. Variable life Rationale: Endowment policies pay at a set age or on death. 26. If proof of loss was filed on Sept 1, when can legal action be taken? A. September 15 B. October 15 C. November 1 ✅ D. Immediately Rationale: Legal action can be taken 60 days after proof of loss is filed. 27. What would be the family’s out-of-pocket medical expenses in 2013 with a $500 deductible and 4 deductibles max? A. $ B. $ C. $1,000 ✅ D. $2, Rationale: Two deductible claims at $500 each = $1,000.
D. Captive agent Rationale: Risk retention groups manage liability insurance for members.
34. Which is an example of false advertising? A. Paying claims quickly B. Exaggerating dividends in an ad ✅ C. Listing company contact info D. Offering a discount legally Rationale: Misleading statements about dividends are illegal. 35. What type of renewability guarantees premium rate and renewability? A. Guaranteed renewable B. Conditionally renewable C. Optionally renewable D. Noncancelable ✅ Rationale: A noncancelable policy guarantees the insurer cannot cancel or raise premiums as long as premiums are paid. 36. Which of the following is NOT a reason for the commissioner to revoke a producer's license? A. Fraudulent conduct B. Misrepresentation on an application C. Producer is insolvent ✅ D. Failure to remit premiums Rationale: A producer being insolvent is not in itself grounds for license revocation; misconduct is. 37. A retiree on Medicare required five hospital stays in one year. Which policy would provide the best insurance for excess hospital stays? A. Medicaid B. Major Medical C. Medicare Supplement ✅ D. HMO Rationale: A Medicare Supplement policy helps cover hospital costs not paid by Medicare, including multiple hospital stays. 38. Under the Uniform Simultaneous Death Act, if the insured and primary beneficiary die together and it can’t be determined who died first, who receives the proceeds? A. The insurer B. The insured’s contingent beneficiary ✅ C. The state D. The beneficiary’s estate
Rationale: If no clear order of death can be determined, benefits go to the contingent beneficiary under this Act.
39. P owns a $25,000 life policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before then. What kind of policy does P own? A. Whole life B. Endowment at age 70 ✅ C. Term life D. Adjustable life Rationale: An endowment policy pays the face value either at a specified age or upon death, whichever comes first. 40. S filed proof of loss for a disability income claim on Sept 1. The insurer has not responded. When can S take legal action? A. October 1 B. November 1 ✅ C. December 1 D. Immediately Rationale: Legal action may be taken after 60 days from the submission of proof of loss. 41. A hospital/surgical expense policy was purchased with a $500 deductible and a 4-deductible cap/year. Two claims in 2013 and two in 2014 exceeded the deductible. What are the out-of-pocket expenses for 2013? A. $ B. $1,000 ✅ C. $1, D. $2, Rationale: Each deductible was $500. Two claims in 2013 equal $1,000 out-of-pocket (2 × $500). 42. Which of the following would be a valid reason to suspend or revoke a producer's license? A. Writing primarily controlled business ✅ B. Earning excessive commissions C. Delayed claim submission D. Working for more than one insurer Rationale: Controlled business refers to writing policies only for oneself, family, or close associates, which is prohibited. 43. How are policyowner dividends treated with respect to income tax? A. Fully taxable
48. An example of false advertising would be: A. Paid celebrity endorsement B. Exaggerating dividends in a magazine ad ✅ C. Using stock images of happy families D. Listing benefits in bold font Rationale: Misleading claims about dividends or benefits are considered false advertising. 49. A 66-year-old is covered under a group health plan with 40 employees. If she injures herself walking in the park, what is the primary coverage? A. Medicare B. Medicaid C. Her group health plan ✅ D. Social Security Rationale: For businesses with 20+ employees, the group plan remains primary coverage for working individuals over 65. 50. Which retirement plan can an employee start even if another retirement plan exists? A. 403(b) B. 401(k) C. SEP D. Individual Retirement Account (IRA) ✅ Rationale: An individual can always contribute to a traditional IRA regardless of other existing plans. Full face amount minus any past due premiums - ANSWER An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this grace period? Investor-originated life insurance - ANSWER a Life insurance arrangement which circumvents insurable interest statutes is called, 180 - ANSWER How many days is a temporary producer's license valid prescription drugs - ANSWER Which of these options can an individual use their medical flexible spending account to pay for
producer - ANSWER an existing life insurance policy is being replaced by a new one. A notice of replacement must be provided by the _________________ to be signed by the applicant applicants signature on the application - ANSWER Before a life insurance policy is issued, which of these components of the contract is required to an individual policy for a stated period of time - ANSWER Group life policies in IN are required to contain a conversion privilege that allows for conversion twisting - ANSWER A producer who makes misleading statements that lead to the termination of an existing policy so that the new policy with another insurer can be taken out has committed the employee - ANSWER Under a trustee group life policy, who would be eligible for a certificate of coverage 10% penalty is applied to withdrawals before age 59 1/2 - ANSWER All of the following statements about traditional individual retirement accounts are false except: *10% penalty is applied to withdrawals after age 59 1/ *withdrawals are normally tax free to the recipient *10% penalty is applied to withdrawals before age 59 1/ *contributions are not tax deductible the beneficiary - ANSWER T is the policyowner for a life insurance policy with an irrevocable beneficiary designation. If T wishes to change the beneficiary, T must obtain permission from P's estate since she survived - ANSWER P and Q are married and have three children. P is the primary beneficiary on Q's accident death and dismemberment policy and q's sister R is the contingent beneficiary. P,Q, and R are involved in a car accident and Q and R are killed instantly. The accidental death benefits will be paid to Promise to pay a death benefit to a named beneficiary - ANSWER What is the consideration given by an insurer in the consideration clause of a life policy is mandated by state requirements - ANSWER The conversion provision in a group heath insurance policy Time limit on certain defenses - ANSWER T files a claim on his Accident and Health policy after being treated for an illness. The insurance company believes that T
*agent *the insured (adult) *beneficiary example of twisting - ANSWER what is this an example of: a producer misrepresents a policy to induce a policyowner to surrender an existing policy insuring - ANSWER Which health policy clause specifies the amount of benefit to be paid misrepresentation - ANSWER Convincing a prospective insured to buy an insurance policy based on exaggerations is considered to be a form of This clause provides the payment of proceeds to the insured's estate - ANSWER The common Disaster clause provides that if both the insured and the sole name beneficiary were to die in a common accident, which of the following is true the insured - ANSWER G is involved in an automobile accident as a result of driving while intoxicated and suffers numerous injuries. According to the intoxicants and narcotics exclusion in G's policy, who is responsible for paying the medical bills 30 days - ANSWER How long is the typical free look period for Long term care insurance policies Proceeds will be paid to P's estate - ANSWER K is the insured and P is the sole beneficiary in an Accidental Death and Dismemberment insurance policy. Both are involved in a fatal accident where K dies before P. Under the common disaster provision, which of these statements are true exclusion - ANSWER In a life insurance policy, which feature states that the policy will not cover certain risks producer - ANSWER The _____________ must provide an insured with proper disclosure concerning the replacement of a life insurance policy revocable - ANSWER J would like to maintain the right to change beneficiaries. Which beneficiary designation should be used warranty - ANSWER The part of life insurance policy guaranteed to be true is called The insurance company - ANSWER A policy of adhesion can only be modified by whom policy owner controls where the investment will go and selects the amount of the premium payment - ANSWER what is true concerning a variable universal life policy
HRA is entirely funded by the employer, reimbursement for eligible medical expenses are allowed, HRA can be offered with other health plans - ANSWER characteristics of a Health Reimbursement Arrangement (HRA) except 25% - ANSWER In IN, what is the maximum percentage of controlled business a producer may write in a 12 month period Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured - ANSWER Which of the following best describes a contingent beneficiary consultant - ANSWER A ___________ sells insurance advice for a fee available to those enrolled in medicare part A & B - ANSWER Medicare part C is fair credit reporting act - ANSWER An insurance applicant must be informed of an investigation regarding his/her reputation and character according to the may cancel the policy for nonpayment only - ANSWER Under a guaranteed renewable health insurance policy, the insurer Variable Universal Life - ANSWER a __________________ ______________ life policy combines investment choices with a form of term coverage 20 days - ANSWER A person insured under a health policy is required to give the insurance company a notice of claim within _______ days of covered loss 10% - ANSWER premature IRA distributions are assessed a penalty tax of Free look period has expired - ANSWER M completes an application for life insurance but does not pay the initial premium. what has to happen before M's policy can go into effect at birth - ANSWER Under a small group plan, babies are covered admitted - ANSWER An insurance company that has qualified and received a certificate of authority from the department of insurance to sell insurance in this state is considered to be a ____________________ insurer 4 monts - ANSWER V is insured under an individual disability income policy with a 30 day elimination period. On july 1, he is involved in an accident and temporarily disabled. He returns to work Dec 1. How many month of benefit are payable
Major Medical with Basic Hospital/Surgical coverage - ANSWER Comprehensive Major Medical policies usually combine *common stock *money market securities *junk bonds - ANSWER variable annuities may invest premiums into what the current contract surrender value - ANSWER A contract owner terminates an annuity before the income payment period begins. the owner will then receive additional life coverage - ANSWER A term life rider offers the insured 1970 Fair Credit Reporting Act - ANSWER which requires insurers to disclose when an applicant's consumer or credit history is being investigated Life income - ANSWER Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary insured must be under a physician's care - ANSWER What is the initial requirement to become eligible for benefits under the waiver of premium provision all employees must be notified of the cancellation either by the insurance company or through J - ANSWER J owns a business and offers a Group Life policy covering her employees. J decides to cancel the policy by letting is lapse on the renewal date. What action must be taken owner's rights - ANSWER In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy credit report, risk classification, and application - ANSWER The underwriting process involves all of these blanket accident policy - ANSWER Accidental death coverage is provided to commercial airline passengers in which of the following types of policies group must be formed for a purpose other than obtaining insurance - ANSWER Which of the following is a requirement to be eligible for a group life policy in indiana Proceeds will go to the contingent beneficiary - ANSWER A primary beneficiary has died before the insured in a life insurance policy. A contingent beneficiary is also named in the policy. Which of the following will occur when the insured dies
6 - ANSWER qualified long-term care policies may take into consideration an applicant's pre-existing conditions for a maximum of not more than ___________ months prior to the effective date of coverage insureds needs for flexible premiums - ANSWER Which of these needs is satisfied by adjustable life insurance sign an enrollment card - ANSWER P is a new employee and will be obtaining noncontributory group major medical insurance from her employer. which of the following actions must she take during the open enrollment conditional - ANSWER insurance contracts are known as ____________ because certain conditions or acts must occur before any claims can be paid 20 - Pay Life accumulates cash value faster than Straight Life - ANSWER a potential client, age 40, would like to purchase whole life policy that will accumulate cash value at a faster rate in early years of the policy. Which of these statements made by the producer would be correct buy additional coverage at a later date - ANSWER the guarantee of insurability option provides a long-term care policy owner the ability to Primary Insurance Amount (PIA) - ANSWER what determines the full amount of SS requirement benefits a qualified individual is entitled to receive contest a claim during the contestable period - ANSWER the incontestable clause allows an insurer to conditions, coverage, limitations and premiums - ANSWER when a life insurance application is completed, a policy summary must be given to the applicant. the policy summary must include policy must be issued to XYZ, and a certificate must be issued to each employee - ANSWER XYZ Corp was issued a group health policy for its employees. Under this planThe insured and Insurance company will share the cost of covered losses under which health policy feature? - ANSWER Payment of Claims provision XYZ Corp was issued a group Health policy for its employees. Under this plan a: - ANSWER Policy must be issued to XYZ, and a certificate must be issued to each employee Bryce purchased a disability income policy with a rider that guarantees him the option of purchasing additional amounts of coverage at predetermined times without requiring to
When a policy pays dividends to its policyholders, it is said to be - ANSWER participating The stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called - ANSWER Reserves Which of the following requires insurers to disclose when an applicant's consumer or credit history is being investigated: - ANSWER 1970- Fair credit reporting act What year was the McCarran-Ferguson Act enacted? - ANSWER 1945 Which of these describe a participating insurance policy? - ANSWER Policyowners are entitled to receive dividends A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of its members is known as: - ANSWER A fraternal benefit society What is the name of the law that requires insurers to disclose information gathering practices and where the information was obtained? - ANSWER Fair Credit Reporting Act The probability of loss becoming more predictable is attributed to: - ANSWER Law of Large Numbers Which of the following is a requirement for a risk to be considered insurable? - ANSWER Predictability of loss The Law of Large Numbers involves a: - ANSWER Large group of homgeneous units The cause of a loss is referred to as a - ANSWER Peril All of the following are examples of pure risk EXCEPT - ANSWER Losing money at a casino Insurance companies determine risk exposure by which of the following? - ANSWER Law of large numbers and risk pooling What is known as the immediate specific event causing loss and giving rise to risk? - ANSWER Peril How do insurers predict the increase of individual risks? - ANSWER Law of large numbers
People with higher loss exposure have the tendency to purchase insurance more often than those at average risk. This is called - ANSWER Adverse selection Insurance addresses what type of risk? - ANSWER Pure In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this? - ANSWER Unilateral Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features? - ANSWER Aleatory Which of these is NOT a type of agent authority? - ANSWER principal When must insurable interest be present in order for a life insurance policy to be valid? - ANSWER When the application is made A life insurance policy would be considered a wagering contract WITHOUT: - ANSWER Insurable interest All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT: - ANSWER Bilateral A policy of adhesion can only be modified by whom? - ANSWER The insurance company Which of these is considered a statement that is assured to be true in every respect? - ANSWER Warranty Which of these require an offer, acceptance, and consideration? - ANSWER Contract Who makes the legally enforceable promises in a unilateral contract? - ANSWER Insurance company When must insurable interest exist for a life insurance contract to be valid? - ANSWER Inception of the contract Which of the following consists of an offer, acceptance, and consideration? - ANSWER Contract Which of the following BEST describes a warranty? - ANSWER Statement guaranteed to be true
