Northwestern Mutual Life Insurance License Exam Questions and Answers, Exams of Insurance law

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Northwestern Mutual Final Exam Life

Insurance License

Which of the following outlines the authority given to the Producer on behalf of the insurer? - Correct Answer ✔️ ✔️ Producer contract

A health plan offered by private insurance companies is - Correct Answer ✔️ ✔️ a medicare supplement

In Arizona, continuation of accident and health insurance plan coverage for a handicapped child beyond the age limit stated in the policy may require proof of the child's - Correct Answer ✔️ ✔️ Incapacity and dependency upon reaching the age limit

During the first two years a life insurance policy is in force, the insurer may contest a policy for all of the following reasons EXCEPT - Correct Answer ✔️ ✔️ Misstatement of age in the application

A life insurance policy that contains an accelerated (living) benefit rider will provide funds if the - Correct Answer ✔️ ✔️ insured is expected to be confined to a nursing home for life

Andy is in need of health care performed by skilled medical practitioners, but only on an intermittent basis. What level of care will his doctor likely prescribe?

- Correct Answer ✔️ ✔ ️ Intermediate care

When funds are transferred directly from one IRA to another IRA, what percentage of the tax is withheld? - Correct Answer ✔️ ✔️ none

ABC Partnership is a business with a limited number of partners. Which disability buy-sell agreement is best suited for this business? - Correct Answer

✔️ ✔️ Cross purchase agreement

What happens to the purchasing power of benefit payments from a fixed life annuity when the cost of living goes up? - Correct Answer ✔️ ✔️ Decreases

Which type of life insurance policy allows a policyowner the choice of investments along with flexible premium payments? - Correct Answer ✔️ ✔ ️ Variable universal life

Patrick purchased a long-term care policy. He has a health condition for which medical treatment was recommended by a physician within 6 months prior to the policy's effective date. This condition is called a(n) - Correct Answer ✔️ ✔️ pre-existing condition

The following are all elements of a valid contract EXCEPT - Correct Answer ✔ ️ ✔️ written evidence

After the initial enrollment period for Medicare Part B has expired, when may an individual purchase again? - Correct Answer ✔️ ✔️ January through March of each year

Under the Law of Agency, the principal is considered to be - Correct Answer

✔️ ✔️ the insurer

Who does TRI-CARE provide accident and health coverage to? - Correct Answer ✔️ ✔️ Military families

Regulations for variable insurance contracts are set by all of the following EXCEPT - Correct Answer ✔️ ✔️ State attorney general's office

Disability income insurance normally excludes coverage for disabilities that arise from - Correct Answer ✔️ ✔️ active military duty

Which life insurance policy provision prohibits a beneficiary from "commuting, encumbering, withdrawing, or assigning" any portion of the proceeds prior to actual receipt from the company? - Correct Answer ✔️ ✔️ Spendthrift clause

Which life insurance settlement option pays a stated monthly benefit until both principal and interest are exhausted? - Correct Answer ✔️ ✔️ Fixed amount installment option

When an individual is planning to protect his family with life insurance, one method of doing so is called need analysis. What exactly does needs analysis involve? - Correct Answer ✔️ ✔️ Identifies the needs of an individual and the individuals dependents

Steve has a group disability income policy where the premiums are paid by his employer. He elected to pay for additional residual disability coverage. Which of the following statements is true? - Correct Answer ✔️ ✔️ Steve will pay taxes on the disability benefit received from his employer, but will receive any residual disability benefits tax-free

Death proceeds from a life insurance policy are typically included in a deceased insured's gross estate - Correct Answer ✔️ ✔️ for federal income tax reasons

Any employee insured under a group life insurance plan is normally - Correct

Answer ✔️ ✔️ covered with term life insurance

What is this contract called? - Correct Answer ✔️ ✔️ Group deferred annuity

When determining the accumulation value of a deferred annuity, the total is calculated by taking the premiums paid plus interest earned minus - Correct Answer ✔️ ✔️ expenses and withdrawals

Individual health insurance policies must cover mentally and physically handicapped dependent children - Correct Answer ✔️ ✔️ Until they become self-supportive

Which benefit is normally payable to a life insurance policyowner when the insured's life expectancy has been severely limited? - Correct Answer ✔️ ✔

️ Accelerated (living) benefit

An insurer will typically assess a back-end load on a deferred annuity that is cancelled during the early contract years. What is this back-end load referred to as? - Correct Answer ✔️ ✔️ Surrender charge

Mike applied for life insurance and was issued a conditional receipt. He is later found to be insurable and is issued a policy. When does his coverage become

effective? - Correct Answer ✔️ ✔️ Date of issuance of the conditional receipt

The health insurance premiums paid for by each partner in a partnership is considered to be - Correct Answer ✔️ ✔️ 100% tax deductible

Which action will trigger a penalty tax on premature distributions from a modified endowment contract (MEC)? - ✔ ✔ policy loans

Which type of life insurance policy is best suited for paying off the outstanding balance of a 30-year mortgage in the event of the insured's death? - Correct Answer ✔️ ✔️ 30-year decreasing term

How does the cost for a survivorship life policy compare to the cost of combining two separate individual life insurance policies? - Correct Answer ✔ ️ ✔️ Survivorship life policy is lower

Mary is the sole proprietor of her business and has a family health plan. She would like to deduct the premiums from her taxes. What percentage of her premiums are tax deductible? - Correct Answer ✔️ ✔️ 100%

The owner of a single premium deferred annuity is entitled to do all of these EXCEPT - Correct Answer ✔️ ✔️ make additional payments into the annuity

Which of the following is NOT a reason for a business to buy key person life insurance? - Correct Answer ✔️ ✔️ An increased pension liability if the key employee dies

The Arizona Life and Disability Insurance Guaranty Fund protects an insured in the event of - Correct Answer ✔️ ✔️ the insurer's insolvency

Life insurance premiums are computed on what three factors? - Correct

Answer ✔️ ✔️ Mortality, interest, expenses

Major Medical policies are typically characterized by which of the following? - Correct Answer ✔️ ✔️ Flat deductible

Illustrations used in the sale of life insurance contain a statement that must be signed by - Correct Answer ✔️ ✔️ The producer

How long is individual medical expense insurance normally written for? - Correct Answer ✔️ ✔️ 1 year

What type of group plan is excluded from HIPAA statutes? - Correct Answer

✔️ ✔️ Disability income

Field underwriting by a producer - Correct Answer ✔️ ✔️ may result in the disclosure of hazardous activities of the applicant

James has individual health insurance with two different insurers. The "insurance with other insurers" provision states that an insurer can pay benefits on a pro-rata basis if - Correct Answer ✔️ ✔️ no notification was given to the insurer prior to the claim that the insured has other health coverage

How is a claim handled by a health insurer if it occurs during the policy's grace period? - Correct Answer ✔️ ✔️ The unpaid premium may be deducted from the reimbursement

Jonas has disability insurance through his employer. The employer pays 75% of the premium, and Jonas pays the other 25%. What is Jonas's tax liability for any benefits paid from the disability plan? - Correct Answer ✔️ ✔️ Taxes must be paid on 75% of the benefits received

Which of the following statements about universal life insurance is NOT true? - Correct Answer ✔️ ✔️ Universal life insurance normally has a minimum guaranteed cash value for duration of the policy

Pete is covered by a group health insurance plan which covers employees in multiple states. This plan is governed by the laws of which state? - Correct Answer ✔️ ✔️ Where the master contract was issued

Which of these life insurance policies does NOT contain a cash value provision? - Correct Answer ✔️ ✔️ Decreasing term life

Tina is insured under a business overhead expense insurance policy. Which of the following would be covered if she were to become disabled? - Correct Answer ✔️ ✔️ Business property rental expense

Medicare Part A does NOT provide coverage for - Correct Answer ✔️ ✔

️ first 3 pints of blood

The law of large numbers enables an insurer to - Correct Answer ✔️ ✔ ️ predict losses

All of these are common limiting factors with dental insurance EXCEPT for - Correct Answer ✔️ ✔️ Limit placed on number of teeth that may be treated annually

All of the following are unfair claims settlement practices EXCEPT - Correct Answer ✔️ ✔️ attempt to settle a claim by arbitration

James owns a business and has a policy that covers the business expense of finding a permanent or temporary employee to replace a disabled one. This type of disability coverage is called - Correct Answer ✔️ ✔️ Key employee coverage

Which of the following is a true statement regarding a Medicare Supplement policy purchased during the open enrollment period? - Correct Answer ✔️ ✔️ The policy will be issued regardless of health

Which statement regarding a single premium life insurance policy is NOT correct? - Correct Answer ✔️ ✔️ Additional premiums may be required under certain conditions

A policyowner fell behind on the premium payments of a whole life policy and is now in the grace period. How much will the beneficiary receive if the insured dies during this grace period and the policy also contains an outstanding policy loan? - Correct Answer ✔ ️ ✔️ Face amount minus the loan balance and past-due premium

Which statement is NOT true regarding health insurance policies that provide limited benefits? - Correct Answer ✔️ ✔️ Only persons under the age of 65 are eligible

Which of these statements is NOT true regarding a cash value loan against a life insurance policy? - Correct Answer ✔️ ✔️ Interest payments made by policyowner are deductible

Who normally pays the premiums for group credit life insurance? - Correct

Answer ✔️ ✔️ Borrower

An insurance company may delay the payment of the cash value of a surrendered whole life insurance policy for up to - Correct Answer ✔️ ✔️ 6 months

What does a fixed life annuity offer protection against? - Correct Answer ✔️ ✔️ Savings depletion due to longevity

After an insurance application has been originated, the producer normally - Correct Answer ✔️ ✔️ is the major personal contact to the insured

In Arizona, maternity coverage for the birth of an adopted child is covered if the insured legally adopts the baby - Correct Answer ✔️ ✔ ️ within one year of birth

Larry wants to purchase an individual disability income policy to ensure that he will not experience a lapse in income should he become disabled. He has a two- month wage continuation benefit from his employer. What should the policy elimination period be for his individual policy? - Correct Answer ✔️ ✔️ 60 days

Arizona law requires the Human Immunodeficiency Virus (HIV) consent form to - Correct Answer ✔️ ✔️ Disclose the types of individuals or organizations that may receive a copy of the test results

Which of these statements regarding Major Medical Expense insurance is NOT true? - Correct Answer ✔ ️ ✔️ Benefits are paid on a capitation basis

How is a collateral assignment used in a life insurance contract? - Correct Answer ✔️ ✔️ Transfers specific ownership rights to a creditor

Under the Telemarketing Sales Rule, telemarketing calls may NOT be received until - Correct Answer ✔️ ✔ ️ 8:00 AM

Which of the following accurately describes the "time limit on certain defenses"? - Correct Answer ✔️ ✔️ After a stated period of time, claims cannot be denied due to material misrepresentation on the application

A licensee whose name or address changes must notify the Department of Insurance within - Correct Answer ✔ ️ ✔️ 30 days

When the disclosure of an insured's nonpublic information is involved, what is the insurer obligated to do? - Correct Answer ✔️ ✔️ Give notice, explain, and allow opting out

Which statement concerning a decreasing term life policy is accurate? - Correct

Answer ✔️ ✔️ Face amount decreases over the policy period

A whole life policy that provides a choice of dividend options must include the following statement about dividends - Correct Answer ✔️ ✔️ They are not guaranteed

In Arizona, a group accident and health certificate of insurance must contain - Correct Answer ✔️ ✔️ A summary of policy features and benefits

What is the elimination period of an individual disability policy? - Correct Answer ✔️ ✔️ Time period a disabled person must wait before benefits are paid

A life insurance company just paid a $100,000 death benefit to a beneficiary. When the insured died, the cash value was $15,000 and the total premiums- paid equaled $10,000. How much of the proceeds will be added to the beneficiary's gross income for federal income tax purposes? - Correct Answer

✔️ ✔️ Nothing

A life insurance illustration showing future premiums being paid out of nonguaranteed values must disclose that - Correct Answer ✔️ ✔️ The policyowner may need to resume premium payments depending on actual results

When an individual purchases insurance as a result of threats made by the producer, there has been a violation of - Correct Answer ✔️ ✔️ Unfair trade practice laws

An accident and health insurance policy defines an injury as "bodily injury by accidental means". For an injury to be covered on this policy, what is required? -