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Xcell Testing Solutions (Life & Health)
Final 167 Question Practice Exam
When does a life insurance contract become effective if the initial premium is not collected during the application process? - ✔ ✔ When producer delivers policy and collects initial premium
Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation? - ✔ ✔ Policy was returned within the free-look period, premium will be fully refunded
Which of these factors do NOT play a role in the underwriting of a life insurance policy? - ✔ ✔ Marital Status
Which of the following is an important underwriting principle of group life insurance? - ✔ ✔ Everyone must be covered in the group
Which requirement must be met for an association to be eligible for a group life plan? - ✔ ✔ Group was formed for a purpose other than acquiring insurance
What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability? - ✔ ✔ Conversion
What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? - ✔ ✔ Variable
One becomes eligible for Social Security disability benefits after having been disabled for - ✔ ✔ 5 months
M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the - ✔ ✔ policy proceeds
What is the Suicide provision designed to do? - ✔ ✔ safeguard the insurer from an applicant who is contemplating suicide
What provision in a life insurance policy states that the application is considered part of the contract? - ✔ ✔ Entire Contract provision
The incontestable clause allows an insurer to - ✔ ✔ contest a claim during the contestable period
All of these statements about the Waiver of Premium provision are correct EXCEPT - ✔ ✔ Insured must be eligible for Social Security disability for claim to be accepted
Which of the following statements is CORRECT about accelerated death benefits? - ✔ ✔ Must have a terminal illness to qualify
Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled? - ✔ ✔ Payor clause
What benefit does the Payor clause on a Juvenile Life policy provide? - ✔ ✔ Premiums are waived if payor becomes disabled
P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount? - ✔ ✔ Accidental Death and Dismemberment provision
Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling? - ✔ ✔ Variable Life
What kind of special need would a policyowner require with an Adjustable Life insurance policy? - ✔ ✔ flexible premiums
Credit Life insurance is - ✔ ✔ issued in an amount not to exceed the amount of the loan
Which of these would be considered a Limited-Pay Life policy? - ✔ ✔ Life Paid-Up at Age 70
Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability? - ✔ ✔ Conversion privilege
What type of life insurance incorporates flexible premiums and an adjustable death benefit? - ✔ ✔ Universal Life
A Limited-Pay Life policy has - ✔ ✔ premium payments limited to a specified number of years
Which statement about a whole life policy is correct? - ✔ ✔ Cash value may be borrowed against
Cash value may be borrowed against - ✔ ✔ Face amount plus the policy's cash value
What type of life policy covers 2 lives and pays the face amount after the first one dies? - ✔ ✔ Joint Life Policy
A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as - ✔ ✔ Variable Life
How does a typical Variable Life Policy investment account grow? - ✔ ✔ Through mutual funds, stocks, bonds
All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for - ✔ ✔ Modified Whole Life
K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this? - ✔ ✔ Modified Whole Life
What kind of premium does a Whole Life policy have? - ✔ ✔ level
What type of life policy covers two people and pays upon the death of the last insured? - ✔ ✔ survivorship
A policy of adhesion can only be modified by whom? - ✔ ✔ The insurance company
When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have - ✔ ✔ insurable interest in the proposed insured
The part of a life insurance policy guaranteed to be true is called a(n) - ✔ ✔ warranty
An insurance company would MOST likely pay benefits under an Accidental Death and Dismemberment policy for which of the following losses? - ✔ ✔ Loss of eyesight due to an accidental injury
The situation in which a group of physicians are salaried employees and conduct business in an HMO facility is called a(n) - ✔ ✔ closed panel
The health insurance program which is administered by each state and funded by both the federal and state governments is called - ✔ ✔ Medicaid
J is a subscriber to a plan which contracts with doctors and hospitals to provide medical benefits at a preset price. What type of plan does J belong to? - ✔ ✔ Health Maintenance Organization
Which of these is considered a true statement regarding Medicaid? - ✔ ✔ Funded by both state and federal governments
M is insured under a basic Hospital/Surgical Expense policy. A physician performs surgery on M. What determines the claim M is eligible for? - ✔ ✔ Determined by the terms of the policy
Which of the following types of health coverage frequently uses a deductible? - ✔ ✔ Major Medical Policy
S wants to open a tax-exempt Health Savings Account. To qualify for this type of account, Federal law dictates that S must be enrolled in a - ✔ ✔ High-deductible health plan
An individual has a Major Medical policy with a $5,000 deductible and an 80/20 Coinsurance clause. How much will the INSURED have to pay
if a total of $15,000 in covered medical expenses are incurred? - ✔ ✔ $7,
Which of the following policy features allows an insured to defer current health charges to the following year's deductible instead of the current year's deducitble? - ✔ ✔ Carryover provision
With a Basic Medical Expense policy, what does the hospitalization expense cover? - ✔ ✔ hospital room and board
N has a Major Medical policy that only pays a portion of N's medical expenses. N is responsible for paying the remaining balance. This provision is known as - ✔ ✔ coinsurance
Basic Medical Expense insurance - ✔ ✔ has lower benefit limits than Major Medical insurance
Which of the following services is NOT covered under a hospitalization expense policy? - ✔ ✔ surgeon's fees
For which of the following expenses does a Basic Hospital policy pay? - ✔ ✔ hospital room and board
M has a Major Medical insurance policy with a $200 flat deductible and an 80% Coinsurance clause. If M incurs a $2,200 claim for an eligible medical expense, how much will M receive in payment for this claim? - ✔ ✔ $1,
Which of the following will a Long Term Care plan typically provide benefits for? - ✔ ✔ home health care
Which of the following health insurance policy provisions specifies the health care services a policy will cover? - ✔ ✔ Insuring clause
If an insurance company issues a Disability Income policy that it cannot cancel or for which it cannot increase premiums, the type of renewability that best desribes this policy is called - ✔ ✔ noncancellable
Which of these statements accurately describes the Waiver of Premium provision in an Accident and Health policy? - ✔ ✔ Premiums are waived after the insured has been totally disabled for a specified time period
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? - ✔ ✔ The insured
Which of the following are NOT managed care organizations? - ✔ ✔ Medical Information Bureau (MIB)
Which of the following statements about the classification of applicants is INCORRECT? - ✔ ✔ Substandard applicants are never declined by underwriters
P received Disability income benefits for 3 months then returns to work. She is able to work one month before her condition returns, leaving her disabled once again. What would the insurance company most likely regard this second period of disability as? - ✔ ✔ A recurrent disability
When an insured has the same disability within a specified time period and the insurance company provides the same benefits without a new
waiting period, the second disability is covered under which of the following benefits? - ✔ ✔ Recurrent Disability
T has Disability Income policy that pays a monthly benefit of $5000. If T becomes partially disabled, what can he likely expect? - ✔ ✔ Less than $5,000 per month benefit regardless of the cause
The underwriting process involves all of these EXCEPT for - ✔ ✔ Policy Loan
Which parts of a life insurance policy are guaranteed to be true? - ✔ ✔ warranty
An insured covered by life insurance has just died. What will happen if the primary beneficiary had already died before the insured and contingent beneficiary? - ✔ ✔ Proceeds will go to the contingent beneficiary
The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n) - ✔ ✔ Accidental Death and Dismemberment rider (AD&D)
All students attending a large university could be covered by - ✔ ✔ A blanket policy
Which of the following statements is true about most Blue Cross/Blue Shield organizations? - ✔ ✔ They are nonprofit organizations
An individual Disability Income insurance applicant may be required to submit all of the following information EXCEPT - ✔ ✔ spouse's occupation
In Arkansas, a producer who moves to a new address must notify the Commissioner of the address change within how many days? - ✔ ✔ 30 days
Periodic health claim payments MUST be made at least - ✔ ✔ monthly
An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective? - ✔ ✔ When the conditions of the receipt are met
P is a new employee and will be obtaining non-contributory group Major Medical insurance from her employer. Which of the following actions must she take during the open enrollment period? - ✔ ✔ Sign an enrollment card
When can a policy owner change a revocable beneficiary? - ✔ ✔ Anytime
M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son?
How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy? - ✔ ✔ If the primary beneficiary dies before the insured
What is the underlying concept regarding level premiums? - ✔ ✔ The early years are charged less than what is needed
A policy owner is able to choose the frequency of premium payments through what policy feature? - ✔ ✔ Premium Mode
Any changes made on an insurance application requires the initials of whom? - ✔ ✔ Applicant
All of these are considered sources of underwriting information about an applicant EXCEPT - ✔ ✔ Rating Services
Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation? - ✔ ✔ Policy was returned within the free-look period, premium will be fully refunded
M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT - ✔ ✔ free-look period has expired
What action should a producer take if the initial premium is NOT submitted with the application? - ✔ ✔ Forward the application to the insurer without the initial premium
Which of the following is an important underwriting principle of group life insurance? - ✔ ✔ Everyone must be covered in the group
Which requirement must be met for an association to be eligible for a group life plan? - ✔ ✔ Group was formed for a purpose other than acquiring insurance
Which statement regarding third-party ownership of a life insurance policy is true? - ✔ ✔ It is used extensively in estate-planning as well as business circumstances
Company Z has a Cross Purchase Buy-Sell Agreement in place among its three founding partners. If the agreement is funded with individual life insurance, what would it require? - ✔ ✔ Each partner must own a policy on the other partners
Who elects the governing body of a mutual insurance company? - ✔ ✔ policyholders
When does a Guaranteed Insurability Rider allow the insured to buy additional coverage? - ✔ ✔ at future dates specified in the contract with no evidence of insurability required
S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT - ✔ ✔ beneficiary's age
A comprehensive major medical health insurance policy contains an Eligible Expenses provision which identifies the types of health care services that are covered. All of the following health care services are typically covered EXCEPT for - ✔ ✔ experimental and investigative services
All of these are considered sources of underwriting information about an applicant EXCEPT - ✔ ✔ rating services
An underwriter determines that an applicant's risk should be recategorized due to a health issue. This policy may be issued with a(n)
- ✔ ✔ exclusion for the medical condition
Why is an applicant's signature required on a health insurance application? - ✔ ✔ To attest that the statements on the application are accurate to the best of the applicant's knowledge
Which of these actions should a producer take when submitting an insurance application to an insurer? - ✔ ✔ Inform insurer of relevant information not included on the application
Which of these do NOT constitute policy delivery? - ✔ ✔ policy issued with a rating
An insurance company may NOT reject a prospective insured's insurance application on the basis of which of the following factors? - ✔ ✔ Gender
Which type of life policy contains a monthly mortality charge as well as self-directed investment choices? - ✔ ✔ variable university life
A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct? - ✔ ✔ 20-Pay Life accumulates cash value faster than Straight Life
A policy loan is made possible by which of these life insurance policy features? - ✔ ✔ cash value provision
Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life plan to all its eligible employees? - ✔ ✔ Portion of the premiums paid for by the employer may be a tax deduction
A "reimbursement policy" pays what amount of covered Long-Term Care expenses? - ✔ ✔ Actual covered expenses up to the daily maximum
Which of the following is NOT included in the policy face? - ✔ ✔ Exclusions
T is receiving $3,000/month from a Disability Income policy in which T's employer had paid the premiums. How are the $3,000 benefit payments taxable? - ✔ ✔ Benefits are taxable to T
A physician opens up a new practice and qualifies for a $7,000/month Disability Income policy. What rider would the physician add if he wants the ability to increase his policy benefit as his practice and income grow? - ✔ ✔ Guaranteed Insurability Option rider
A policyowner's rights are limited under which beneficiary designation?
Which statement is true regarding a minor beneficiary - ✔ ✔ Normally, a guardian is required to be appointed in the Beneficiary clause of the contract
A level premium indicates - ✔ ✔ the premium is fixed for the entire duration of the contract
On a life insurance policy, who is qualified to change the beneficiary designation? - ✔ ✔ Policyowner
A life insurance application must be signed by all of these EXCEPT - ✔ ✔ beneficiary
At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid? - ✔ ✔ At the time of theApplicatioin
Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine - ✔ ✔ probability of making timely premium payments
K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used? - ✔ ✔ Conditional
P is a producer who notices 5 questions on a life application were not answered. What actions should P take? - ✔ ✔ Set up a meeting with the applicant to answer the remaining questions
