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Life, Accident, & Health State Exam
Simulator with Complete Solutions
A Modified Endowment Contract (MEC) is best described as ✔✔A life insurance contract which accumulates cash values higher than the IRS will allow
According to life insurance contract law, insurable interest exists ✔✔At the Time of the application
Under Workers' Compensation, injured employees are covered for all of the following issues EXCEPT ✔✔Pain and suffering
What happens when an insurance policy is backdated? ✔✔The policy's effective date is earlier than the present
Key Person Disability Insurance pays benefits to the ✔✔Employer
What does the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 allow an employee to do? ✔✔In the event of employment termination, group health insurance can be kept if the employee pays the premiums
Making a statement that is false or maliciously critical of the financial condition of an insurer is known as ✔✔Defamation
Which of the following statements is CORRECT regarding an individual applying for life or health insurance? ✔✔The applicants medical history may be analyzed and reported
Index whole life insurance contains a securities component that acts as a(n) ✔✔Hedge against inflation
Premiums paid that exceed 7 1/2% of an insured's Adjusted Gross Income (AGI) are tax- deductible when paid for which of the following plans? ✔✔Qualified long-term care plan
How are premiums paid by the insured for personally owned disability income insurance treated for tax purposes? ✔✔Not tax deductible
Part A Hospital expense coverage provided under Medicare is automatically made available to each of the following EXCEPT
-A 50-year old individual who has qualified for SSDI in the last 24 months
Who is the individual paid on a fee-for-service basis? ✔✔Provider
Which of the following is an annuity that is linked to a market-related index? ✔✔Equity-indexed annuity
Low frequency diseases can be exclusively covered by what kind of health insurance policies? ✔✔Limited policies
What activity does NOT require an insurance producer's license? ✔✔Underwriting
When MUST a newborn child be covered under an existing health insurance policy? ✔✔Immediately
Distributions from a Health Savings Account (HSA) for qualified medical expenses are ✔✔Tax free
Which of these retirement plans do NOT qualify for a federal income tax deduction?
-SIMPLE Plan
-Traditional IRA
-Keogh Plan
-Roth IRA ✔✔Roth IRA
An insurer will accept a premium from the insured and continue the coverage in full force as though it was NOT late during which time period? ✔✔Grace Period
The deeds and actions of a producer indicate what kind of authority?
-Express
-Apparent
-Implied
-Conditional ✔✔Apparent
Coordination of Benefits regulation applies to all of the following plans EXCEPT
-Group vision plan
-Preferred Provider Organization plan
-Self-funded group health plan
-Group health plan ✔✔Preferred Provider Organization Plan (PPO)
-Only the insured is legally bound ✔✔Only the insurer is legally bound
Medicaid is intended for ✔✔Poverty stricken people
An employer is issued a group medical insurance policy. This single contract is known as a(n)
-entire contract
-master policy
-certificate of coverage
-employer contract ✔✔Master Policy
Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value. She would like to borrow $15,000 against the cash value. Which of the following statements is TRUE?
-Net death benefit will be reduced if the loan is not repaid
-No interest will be charged on loan balance
-Term life policies are the only type of insurance that allows policy loans
-A loan can be taken out for up to the face amount of the policy ✔✔Net death benefit will be reduced if the loan is not repaid
A plan in which an employer pays insurance benefits from a fund derived from the employer's current revenues is called
-A self-derived plan
-A multiple-employer plan
-A blanket plan
-A self-funded plan ✔✔A self-funded plan
An annuitant is guaranteed to NOT outlive their benefits with a(n) ✔✔Guaranteed lifetime withdrawal benefit
The least expensive option to pay off a 30-year mortgage balance would be ✔✔Decreasing term- life
In a Long-Term Care policy, activities of daily living (ADL's) can be each of the following EXCEPT
Talking
Dressing
Transferring
Feeding oneself ✔✔Talking
A father has a son who is mentally handicapped but not eligible for Medicare. The son is dependent on his father. Under which of the following circumstances can the son remain on the father's coverage after the age of 26? ✔✔With written proof of ineligibility and dependency
Of the following dividend options, which of these is taxable?
-Reduction of premium
-One year term
-Paid-up additions
-Accumulation at interest ✔✔Accumulation at interest
An immediate annuity has been purchased with a single premium. When does the annuitant typically begin receiving benefit payments? ✔✔1 month
What is the contract called that is issued to an employer for a Group Medical Insurance plan? ✔✔Master Policy
A type of insurer that is owned by its policyowners is called ✔✔Mutual insurer
Select the appropriate response
All of the following are considered appropriate uses of life insurance for business purposes EXCEPT
-Attracting quality employees by offering a group life plan
-Funding an entity buy-sell agreement
-Protecting the business by covering key employees with life insurance
-Protecting the business by covering entry level employees with life insurance ✔✔Protecting the business by covering entry level employees with life insurance
In what part of an insurance policy are policy benefits found? ✔✔Declarations
Which of the following does Medicare Part D cover? ✔✔Prescription drugs
Donna and Mary were racing bicycles in a store parking lot while being cheered on by fellow employees. Mary ran into John, another employee, who happened to be taking out the garbage. Both Mary and John are injured. Who would most likely be covered under Workers' Compensation? ✔✔John
All of these are characteristics of a major medical expense policy EXCEPT
-large benefit maximums
-Adjustable life policy
-Variable universal policy
-Universal policy
-Modified whole life policy ✔✔Variable universal policy
The double indemnity provision in a life insurance policy pertains to an insured's death caused by a(n) ✔✔Accident
Benefits that fall under a major medical plan are considered to be a reimbursement for a loss, and is ✔✔Not taxable as income
According to the Michigan Insurance Code, which of the following MUST a producer do when replacing a Life Insurance policy? ✔✔Submit to the replacing insurer a list of all Life Insurance policies or annuity contracts proposed to be replaced
A licensee who informs an insured of inaccurate terms, benefits, or advantages of any policy is committing which of the following violations? ✔✔Misrepresentation
All of the following are exempt from the 10% tax penalty for early qualified plan withdrawals EXCEPT
-Qualified college expenses
-First time home purchase
-Death of the participant
-Stock purchase ✔✔Stock purchase
An example of a tax-qualified retirement plan would be a(n) ✔✔defined contribution plan
In Michigan, a small employer is comprised of ✔✔2-50 employees
A payment system for health care in which the provider is paid for each service given is called ✔✔fee-for-service
One of the most important considerations when replacing health insurance would be the ✔✔Exclusions of the new policy
Question 64
Sharon is the policyowner of a $50,000 life insurance policy. Her son, Mike, is the beneficiary. If Sharon MUST obtain Mike's signature in order to change the beneficiary, what kind of beneficiary designation is this? ✔✔Irrevocable
Which of the following is Medicare Part B also known as? ✔✔Medical Insurance
Which of the following is a requirement for ANY change in an insurance application? ✔✔Change must be initialed by the applicant
An insured individual and the policy's beneficiary die from the same accident. The common disaster provision states the insurer will continue as if ✔✔The insured outlived the beneficiary
What type of injury would NOT be covered under a health insurance policy? ✔✔Work related
A 10% excise tax is normally applied to an early withdrawal from an IRA. According to HIPAA, this tax will not be applied if the withdrawal is used for medical expenses that exceed ____ of the individual's adjusted gross income. ✔✔7.5%
The open enrollment period for Medicare Part B is ✔✔January 1st-March 31st
A licensee can disclose a consumer's policy account number to all of the following EXCEPT a
-member in an affinity program that was identified to the consumer upon entering the program
-service provider marketing on behalf of the licensee
-consumer reporting agency
-non-affiliated third party ✔✔Non-affiliated 3rd party
Joe has a life insurance policy that has a face amount of $300,000. After a number of years, the policy's cash value accumulates to $50,000 and the face amount becomes $350,000. What kind of policy is this? ✔✔Universal Life Policy
In an employer-sponsored contributory group Disability Income plan, the employer pays 60% of the premium and each employee pays 40% of the premium. Any income benefits paid are taxed to the employee at ✔✔60% (because 60% is paid by the employer)
Donald is the primary insured of a life insurance policy and adds a children's term rider. What is the advantage of adding this rider? ✔✔Can be converted to permanent coverage without evidence of insurability
An individual covered under a Blue Cross Blue Shield plan is called a(n) ✔✔Subscriber
Shirley has a Medigap policy, which is designed to pay costs associated with ✔✔Medicare part A & B
The gatekeeper's role when used by an HMO is ✔✔Obtaining referrals to specialists from primary care physicians
Which of the following is present when an applicant stands to lose value if the insured dies? ✔✔Insurable Interest
A life insurance policy that has premiums fully paid up within a stated time period is called ✔✔Limited payment insurance
What is issued to each employee of an employer health plan? ✔✔Certificate (of insurance)
Tyler purchased a disability policy with a waiver of premium rider on April 1. He is disabled on May 1. On June 1, he receives proof of permanent and total disability, and submits a claim. He
begins receiving benefits on June 15. When are his premiums waived? ✔✔May 1 (Day of disability)
Under a contract of adhesion, ✔✔The terms must be fully accepted or fully rejected
Providing incorrect, misleading, incomplete, or materially untrue information in the license application is ✔✔Misrepresentation
Jennifer is required to pay a specific sum out of pocket before any benefits are paid in a year. Her health policy most likely contains a(n) ✔✔Deductible
What is the purpose of the Medical Information Bureau (MIB)? ✔✔To help underwriters evaluate risk
A doctor who accepts Medicare Assignment agrees to which of the following? ✔✔Doctor can not charge more than the Medicare's scheduled coverage
Which contract element is insurable interest a component of? ✔✔Legal purpose
