Download Life & Health Insurance Exam: Key Concepts & Applications and more Quizzes Insurance law in PDF only on Docsity!
XCELL TESTING SOLUTIONS (LIFE & HEALTH)
FINAL PRACTICE EXAM 2024/2025 EXAM
ACTUAL EXAM COMPLETE 170 QUESTIONS
WITH DETAILED VERIFIED ANSWERS (100%
CORRECT ANSWERS) /ALREADY GRADED A+
BRAND NEW!!
"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? - CORRECT ANSWER=> Each
partner must own a policy on the other partners"
"Who elects the governing body of a mutual insurance company? - CORRECT ANSWER=>
policyholders"
"When does a Guaranteed Insurability Rider allow the insured to buy additional coverage? - CORRECT
ANSWER=> 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 - CORRECT ANSWER=>
beneficiary's age" "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 - CORRECT ANSWER=> policy proceeds"
"What is the Suicide provision designed to do? - CORRECT ANSWER=> 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? -
CORRECT ANSWER=> Entire Contract provision"
"The incontestable clause allows an insurer to - CORRECT ANSWER=> contest a claim during the
contestable period"
"All of these statements about the Waiver of Premium provision are correct EXCEPT - CORRECT
ANSWER=> Insured must be eligible for Social Security disability for claim to be accepted"
"Which of the following statements is CORRECT about accelerated death benefits? - CORRECT
ANSWER=> 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? - CORRECT ANSWER=> Payor clause"
"What benefit does the Payor clause on a Juvenile Life policy provide? - CORRECT ANSWER=>
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? - CORRECT ANSWER=> Accidental Death and Dismemberment provision"
"L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatement of Age provision, the insurer
will - CORRECT ANSWER=> adjust the death benefit to a reduced amount"
"S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy? -
CORRECT ANSWER=> Return of premium rider"
"D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive? -
CORRECT ANSWER=> The full face amount"
"In a Life insurance contract, an insurance company's promise to pay stated benefits is called the -
CORRECT ANSWER=> Insuring clause"
"What does the ownership clause in a life insurance policy state? - CORRECT ANSWER=> Who the
policyowner is and what rights the policyowner is entitled to" "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? - CORRECT ANSWER=> Full face
amount minus any past due premiums" "When a misrepresentation on a life insurance policy application is discovered, what action may an
insurance company take? - CORRECT ANSWER=> Void the policy only if it is discovered during the
Contestable period and proven to be material" "Which policy requires an agent to register with the National Association of Securities Dealers (NASD)
before selling? - CORRECT ANSWER=> Variable Life"
"What kind of special need would a policyowner require with an Adjustable Life insurance policy? -
CORRECT ANSWER=> flexible premiums"
"A policy of adhesion can only be modified by whom? - CORRECT ANSWER=> The insurance company"
"When third-party ownership is involved, applicants who also happen to be the stated primary
beneficiary are required to have - CORRECT ANSWER=> insurable interest in the proposed insured"
"The part of a life insurance policy guaranteed to be true is called a(n) - CORRECT ANSWER=>
warranty" "A Business Overhead Expense policy would cover which of the following if a business owner becomes
disabled? - CORRECT ANSWER=> Utilities and office rent"
"Which statement is TRUE regarding a group accident & health policy issued to an employer? -
CORRECT ANSWER=> The employer is the policyowner and each employee receives a certificate of
coverage" "T is covered by two health insurance plans: a group plan through his employer and his spouse's plan as a dependent. When T submits a claim, his employer's plan is considered what type of carrier under the
Model Group Coordination of Benefits provision? - CORRECT ANSWER=> Primary carrier"
"J has an Accidental Death and Dismemberment policy with a principal sum of $50,000. While trimming the hedges, J cuts off one of his fingers. What is the MAXIMUM J will receive from his policy? -
CORRECT ANSWER=> $25,000"
"When an employee is required to pay a portion of the premium for an employer/employee group
health plan, the employee is covered under which of the following plans? - CORRECT ANSWER=>
Contributory" "Which contract permits the remaining partners to buy-out the interest of a disabled business partner? -
CORRECT ANSWER=> Disability Buy-Sell"
"Which of the following statements does NOT accurately describe the tax treatment of premiums and
benefits of individual Accident and Health insurance? - CORRECT ANSWER=> Disability income policy
premiums are tax-deductible" "An insurance company would MOST likely pay benefits under an Accidental Death and Dismemberment
policy for which of the following losses? - CORRECT ANSWER=> 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) - CORRECT ANSWER=> closed panel"
"The health insurance program which is administered by each state and funded by both the federal and
state governments is called - CORRECT ANSWER=> 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? - CORRECT ANSWER=> Health Maintenance
Organization"
"Which of these is considered a true statement regarding Medicaid? - CORRECT ANSWER=> 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? - CORRECT ANSWER=> Determined by the terms of the policy"
"Which of the following types of health coverage frequently uses a deductible? - CORRECT ANSWER=>
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 - CORRECT ANSWER=> 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? -
CORRECT ANSWER=> $7,000"
"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? - CORRECT ANSWER=> Carryover provision"
"With a Basic Medical Expense policy, what does the hospitalization expense cover? - CORRECT
ANSWER=> 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 - CORRECT ANSWER=> coinsurance"
"Basic Medical Expense insurance - CORRECT ANSWER=> has lower benefit limits than Major Medical
insurance"
"Which of the following services is NOT covered under a hospitalization expense policy? - CORRECT
ANSWER=> surgeon's fees"
"For which of the following expenses does a Basic Hospital policy pay? - CORRECT ANSWER=> 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? - CORRECT ANSWER=> $1,600"
"Which of the following are NOT managed care organizations? - CORRECT ANSWER=> Medical
Information Bureau (MIB)"
"Which of the following statements about the classification of applicants is INCORRECT? - CORRECT
ANSWER=> 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? - CORRECT ANSWER=> 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? - CORRECT ANSWER=> Recurrent Disability"
"T has Disability Income policy that pays a monthly benefit of $5000. If T becomes partially disabled,
what can he likely expect? - CORRECT ANSWER=> Less than $5,000 per month benefit regardless of the
cause"
"The underwriting process involves all of these EXCEPT for - CORRECT ANSWER=> Policy Loan"
"Which parts of a life insurance policy are guaranteed to be true? - CORRECT ANSWER=> 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? - CORRECT ANSWER=> 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) - CORRECT ANSWER=> Accidental Death and Dismemberment rider (AD&D)"
"All students attending a large university could be covered by - CORRECT ANSWER=> A blanket policy"
"Which of the following statements is true about most Blue Cross/Blue Shield organizations? - CORRECT
ANSWER=> They are nonprofit organizations"
"An individual Disability Income insurance applicant may be required to submit all of the following
information EXCEPT - CORRECT ANSWER=> spouse's occupation"
"A CEO's personal assistant suffered injuries at home and as a result, was unable to work for four
months. Which type of policy will pay a monthly benefit to the personal assistant? - CORRECT
ANSWER=> Disability income"
"P is a Major Medical policyowner who is hospitalized as a result of injuries sustained from participating
in a carjacking. How will the insurer most likely handle this claim? - CORRECT ANSWER=> Claim will be
denied" "An insurance agent who convinces a prospective insured to purchase a policy by exaggerating the
benefits of the policy may be found guilty of - CORRECT ANSWER=> misrepresentation"
"Policyholders elect the governing bodies of which of the following types of insurance companies? -
CORRECT ANSWER=> Mutual"
"A stock insurance company is owned by it's - CORRECT ANSWER=> stockholders"
"A creditor who requires a debtor to obtain insurance from a particular company or agent as a condition
for a loan is guilty of - CORRECT ANSWER=> coercion"
"An alien insurance company is defined as one formed in - CORRECT ANSWER=> Europe"
"All of the following are requirements to become an insurance producer in the state of Arkansas except:
- CORRECT ANSWER=> Graduate High School"
"Replacement is involved in all of the following situations EXCEPT when - CORRECT ANSWER=>
Maintaining an existing policy and applying for a new one"
"In Arkansas, how long is the "free look" period? - CORRECT ANSWER=> 10 days"
"In Arkansas, a producer who moves to a new address must notify the Commissioner of the address
change within how many days? - CORRECT ANSWER=> 30 days"
"Periodic health claim payments MUST be made at least - CORRECT ANSWER=> 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? - CORRECT ANSWER=> 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? - CORRECT
ANSWER=> Sign an enrollment card"
"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 - CORRECT ANSWER=> experimental and investigative services"
"Which type of renewability best describes a Disability Income policy that covers an individual until the
age of 65, but the insurer has the right to change the premium rate? - CORRECT ANSWER=>
Guaranteed renewable" "Insurance contracts are known as ____ because certain future conditions or acts must occur before any
claims can be paid. - CORRECT ANSWER=> conditional"
"The sections of an insurance contract which limit coverage are called - CORRECT ANSWER=>
exclusions"
"Which of the following best describes a contingent beneficiary? - CORRECT ANSWER=> Person
designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured"
"A major medical policy typically - CORRECT ANSWER=> provides benefits for reasonable and
necessary medical expenses, subject to policy limits" "An insurer must provide an insured with claim forms within __ days after receiving notice of a loss. -
CORRECT ANSWER=> 15 days"
"A "reimbursement policy" pays what amount of covered Long-Term Care expenses? - CORRECT
ANSWER=> Actual covered expenses up to the daily maximum"
"Which of the following is NOT included in the policy face? - CORRECT ANSWER=> 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? - CORRECT ANSWER=> 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? - CORRECT ANSWER=> Guaranteed Insurability Option rider"
"A policyowner's rights are limited under which beneficiary designation? - CORRECT ANSWER=>
Irrevcocable"
"Which statement is true regarding a minor beneficiary - CORRECT ANSWER=> Normally, a guardian is
required to be appointed in the Beneficiary clause of the contract"
"A level premium indicates - CORRECT ANSWER=> the premium is fixed for the entire duration of the
contract"
"On a life insurance policy, who is qualified to change the beneficiary designation? - CORRECT
ANSWER=> Policyowner"
"A life insurance application must be signed by all of these EXCEPT - CORRECT ANSWER=> beneficiary"
"At what time must a policyowner have insurable interest on the insured in order for the life policy to be
valid? - CORRECT ANSWER=> 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 - CORRECT ANSWER=> 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? - CORRECT ANSWER=> Conditional"
"P is a producer who notices 5 questions on a life application were not answered. What actions should P
take? - CORRECT ANSWER=> Set up a meeting with the applicant to answer the remaining questions"
"When does a life insurance contract become effective if the initial premium is not collected during the
application process? - CORRECT ANSWER=> 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? - CORRECT ANSWER=> 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? - CORRECT
ANSWER=> Marital Status"
"Which of the following is an important underwriting principle of group life insurance? - CORRECT
ANSWER=> Everyone must be covered in the group"
"Which requirement must be met for an association to be eligible for a group life plan? - CORRECT
ANSWER=> 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? - CORRECT ANSWER=> Conversion"
"What type of annuity has a cash value that is based upon the performance of it's underlying investment
funds? - CORRECT ANSWER=> Variable"
"When an employee is terminated, which statement about a group term life conversion is true? -
CORRECT ANSWER=> Policy proceeds will be paid if the employee dies during the conversion period"
"Under a trustee group life policy, who would be eligible for a certificate of coverage? - CORRECT
ANSWER=> Corporation"
"N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What
type of annuity did N purchase? - CORRECT ANSWER=> Fixed Deferred"
"S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is
best suited for her situation? - CORRECT ANSWER=> Single Premium"
"Which of these is an element of a Single Premium annuity? - CORRECT ANSWER=> Lump-sum
payment"
"Which of these statements concerning an Individual Straight Life annuity is accurate? - CORRECT
ANSWER=> Payments are made to an annuitant for life"
"An individual who purchases a Life annuity is given protection against - CORRECT ANSWER=> the risk
of living longer than expected"
"An immediate annuity consists of a - CORRECT ANSWER=> single premium"
"All of these are considered to be a benefit under Social Security EXCEPT for - CORRECT ANSWER=>
unemployment" "Which product would best serve a retired individual looking to invest a lump-sum of money through an
insurance company? - CORRECT ANSWER=> Annuity"
"Which statement regarding third-party ownership of a life insurance policy is true? - CORRECT
ANSWER=> It is used extensively in estate-planning as well as business circumstances"
