Life Practice Exam 3 Part II

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1) All of the following are true of Disability Income policies, except:

a) benefits are determined by the insured’s past earnings and are limited to a percentage of those earnings

b) from a policyholder’s perspective, an "any occupation" Disability Income policy is more advantageous than an "own occupation" policy

c) an "own occupation" policy is more expensive and difficult to qualify for than an "any occupation" policy.

d) a Disability Income policy is a valued contract designed to provide periodic payments following an elimination period, to an insured when he/she is unable to work as a result of sickness or injury


2) Which of the following best describes the phrase"Presumptive Disability?"

a) loss of a leg below the knee

b) loss of sight in an eye

c) loss of the ability to speak

d) loss of hearing in an ear


3) All of the following are true of disability policies (occupational design) except:

a) occupational coverage provides payment for a disability occurring on the job

b) occupational coverage usually costs less than nonoccupational coverage

c) occupational coverage provides payment for a disability occurring off the job

d) occupational coverage usually costs more than occupational policies


4) Which of the following is designed to provide benefits for lossof earnings after a return to work from a total disability, if the insured cannot earn as much as he/she did before the disability began?

a) recurrent disability

b) presumptive disability

c) residual disability

d) restorative disability


5) All of the following are true of group Disability Income plans, except:

a) it is usually offered on an occupational basis

b) the underwriter’s job in underwriting group cases is guarding against adverse selection to the insurer and overinsurance

c) no medical underwriting is involved as compared to individual cases

d) most insurers require a minimum number of employees to participate in order to issue a plan without evidence of insurability


6) Under a Key Employee Disability Income policy, the employer is the:

a) policyowner

b) premium payor

c) recipient of the proceeds

d) all of the above


7) Disability Income policies are designed to replace all of one’s lost earnings due to a disability by illness or accident?

a) True

b) False


8) Which best describes a Renewable Term policy?

a) one in which the cash value increases at each renewal

b) one in which the premium decreases at each renewal

c) one in which the face value increases at each renewal

d) one in which the premium increases at each renewal


9) The face amount of a whole life policy is:

a) amount available for policy loans

b) amount payable to beneficiary upon insured’s death

c) amount of premiums and cash value

d) total of premiums and cash value


10) All of the following are characteristics of Ordinary Whole Life insurance, except:

a) premiums are ususally paid throughout the lifetime of the insured

b) premiums remain uniform

c) pays face value if insured dies before attaining age 100

d) if insured lives to age 100, premiums are returned


11) Which is true of Single Premium Whole Life?

a) is the same as Modified Whole Life

b) premiums necessary to pay up policy are all paid at inception of policy

c) policy loans are not available on single premium policies

d) requires special filings with the insurance department


12) If the insured under a Limited Pay Life at 70 policy were to die at age 65, what would be paid to the beneficiary?

a) face value

b) cash value

c) face amount less cash

d) there would be no death benefits payable


13) What is the amount the owner would receive upon policy surrender of a Single Premium Whole Life policy?

a) face value

b) cash value

c) face amount less cash

d) nothing, since the insured must die before benefits are paid


14) If Allan purchases a Variable Life policy with a face amount of $250,000 and later dies, the amount of death benefit payable to the beneficiary must be at least:

a) $250,000

b) more than $250,000

c) less than $250,000


15) A Universal Life policy contains all of the following characteristics, except:

a) cash value

b) death benefit

c) nonforfeiture options

d) flexible premiums


16) A Variable Life policy guarantees which of the following?

a) minimum death benefit

b) minimum cash value

c) interest

d) insurability


17) Your client has indicated that whether he predeceases his wife or she predeceases him, the federal estate taxes due will be deferred until the surviving spouse dies. At that time, the executor of the second spouse’s estate would use life insurance proceeds to help pay the estate tax. Your client would also prefer that he and his wife be insured under a single policy. Which of the following policies would best accomplish that objective?

a) family maintainance policy

b) survivorship life

c) joint life

d) Universal life


18) The premium charged for exercising the Guaranteed Insurability rider is based upon:

a) issue age

b) attained age

c) assumed age

d) age is not a factor in determining premium


19) Under which of the following types of riders is it that the insured and owner must be two different individuals?

a) waiver of premium

b) waiver of payors premium

c) waiver of premium/disability income

d) accelerated death benefit


20) Under the Double Indemnity rider the insured must die within how many days for the rider to pay benefits?

a) 30

b) 60

c) 90

d) 180


21) A Return of Premium rider:

a) provides increasing term insurance attached to a permanent policy that will pay the equivalent of the face value plus the cash value if death occurs within the term.

b) is not allowed in this state

c) provides decreasing term with whole life, so, upon the insured’s death within the term, the beneficiary receives the equivalent of the face value of the whole life policy and all premiums paid

d) funds the return of premiums through increasing term insurance attached to a permanent policy


22) In the case of a joint life policy, the premiums are based on the:

a) age of the yougest insured

b) age of the oldest

c) age of whichever insured will be the owner of the policy

d) average age of both insureds


23) All of the following are underwriting criteria taken into account by the insurer in the underwriting of individual cases, except:

a) physical condition

b) medical history

c) nationality

d) sex


24) The type of professional liability insurance that a Health Insurance agent would purchase is:

a) comprehensive general liability

b) directors and officers liability

c) E & O liability

d) business pursuits liability


25) In a disability underwriting, the single most important rating factor from an underwriting standpoint is the applicant’s:

a) occupation

b) health

c) gender

d) fiances


26) Most group disability income insurance is offered on a/an:

a) nonoccupational basis

b) occupational basis

c) contributory basis

d) noncontributory basis


27) An application for disability insurance may be altered by:

a) the insurer

b) the Commissioner

c) the agent


28) Fred works on a road construction crew during the day and is a salesman at a hardware store during the evenings and weekends. Upon applying for a disability insurance, the insurer will use of the following for rating purposes?

a) the sales career at the store

b) road construction job

c) both careers

d) none of the above


29) If an insurer were to exclude coverage for a condition that was resolved after the policy had already been issued, this would constitute:

a) an issue with an exclusion

b) preexisting conditions exclusion

c) postclaims underwriting

d) an exclusion endorsement


30) All of the following are true of group health insurance, except:

a) community rating is whereby the cost of medical care within a particular geographical area or setting determines the premium the insured will pay

b) the insureds under the plan are given Certificates of Insurance as evidence of their coverage

c) the utilization of the claim history of the group seeking to purchase the insurance to determine the premium the plan will cost is known as experience rating

d) the Certificate of Insurance that is given the policyowner is a legal contract


31) In this state, every policy providing coverage for a dependent child until a specific age shall not terminate that coverage if the child is dependent upon the insured and is incapable of self-support because of a physical or mental handicap, if proof of this dependency is given the insurer within how many days of the child’s attaining the maximum age?

a) 31 days

b) 45 days

c) 60 days

d) 90 days


32) A contributory group disability plan requires a participation percentage of:

a) 25%

b) 50%

c) 75%

d) 100%


33) The cost of a group disability policy is determined by:

a) claims experience

b) average age of the group

c) overall health of the group

d) average age of the group, type of group, and ratio of males to females


34) For what amount of time must an employer and his/her dependents, respectively, be allowed to continue group coverage under COBRA?

a) employee-18 months/dependents-36 months

b) employee-36 months/dependents-18months

c) employee-18 months/dependents-24 months

d) employee-12 months/dependents-18 months


35) The ABC Co. employs 50 full-time employees. Last week the company decided to replace its existing group disability policy through the Acme Insurance Company with a policy through the XYZ Insurance Company. What is required of XYZ Insurance Company with regard to any ongoing claims that existed under the Acme policy and what is the name of the legislation that establishes this requirement?

a) XYZ must continue to pay claims under the Dual Choice Law

b) XYZ must extend claims payments under COBRA

c) XYZ must deny claims that were submitted

d) XYZ must continue to pay claims under the rules of the NO LOSS- NO GAIN legislation


36) Which of the following provisions is a Mandatory provision?

a) legal actions

b) misstatement of age

c) conformity with State Statute

d) illegal occupation


37) Upon reinstatement of an individual accident and health policy sickness is covered:

a) immediately

b) after three days

c) after five days

d) after 10 days


38) Which of the following is true?

a) notice to an insurer’s agent of a claim under a health insurance policy is the same as notice to the company

b) only the agent can alter satements on the application

c) "preexisting conditions" is one of the Mandatory Provisions

d) the Mandatory Provisions benefit the insurer more than the insured


39) A health insurance contract that is being paid monthly must contain a grace period of at least:

a) 7 days

b) 10 days

c) 30 days

d) 31 days


40) Which provision states that the insurance company must pay claims immediately?

a) Payment of Claims

b) Legal Actions

c) Relation of Earnings to Insurance

d) Time Payment of Claims


41) The Reinstatement provision is"

a) a provision which states the policyowner’s rights, if any, to continue coverage under the policy beyond the current policy year

b) a provision which permits the insurer to terminate coverage at any time

c) a provision which states the period of time following the premium due date for the policyowner to pay the premium

d) a provision that states the process for reactivating coverage once a policy has lapsed


42) An insured must present notice of claim within how many days?

a) 5

b) 10

c) 15

d) 20


43) Which of the following combinations includes only Mandatory provisions?

a) entire contract, unpaid premiums, claims forms

b) Proof of loss, reinstatement, misstatement of age

c) illegal occupation, entire contract, time limit on certain defenses

d) legal actions, time of payment of claims, notice of claim


44) All of the following are Optional provisions, except:

a) illegal occupation

b) legal actions

c) change of occupation

d) misstatement of age


45) Which of the following provisions is an Optional provision?

a) claims forms

b) other insurance in this insurer

c) physical examination

d) payment of claims


46) Mr. Smith is injured while attempting to escape from the police following a bank robbery. His A&H coverage will probably pay:

a) nothing

b) face value

c) amount scheduled

d) one half normal benefit


47) The Optional provisions, in general, allow the insurance company to protect itself against potential abuses of the coverage by the:

a) insured

b) beneficiary

c) agent

d) they do not really protect the company


48) Tom has purchased a medical expense policy which provides him with the unilateral right to renew coverage to age 65. In addition, the premium is guaranteed to be increased over the life of the policy. Which of the follwoing renewal provisions is contained in Tom’s policy?

a) guaranteed renewable

b) noncancellable

c) optionally renewable

d) unconditionally renewable


49) The Guaranteed Renewable provision states:

a) guaranteed renewable with adjustable premium determined for each insured based on claims

b) guaranteed renewable with guaranteed premium

c) guaranteed renewable with adjustable premium allowed by classification only

d) renewable only at the option of the insurer


50) Which type of policy would be most advantageous to a client?

a) guaranteed renewable

b) noncancellable

c) optionally renewable

d) conditionally renewable


Answers to Part 2

1-b 2-c 3-b 4-c 5-a 6-d 7-b 8-d 9-b..10-d 11-b 12-a 13-b 14-a 15-c 16-a

17-b 18-b 19-b 20-c 21-d 22-d 23-c 24-c 25-a 26-a 27-d 28-b 29-c 30-d

31-a 32-c 33-d 34-a 35-d 36-a 37-d 38-a 39-b 40-d 41-d 42-d 43-d 44-b

45-b 46-a 47-a 48-b 49-c 50-b


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