Texas Life and Health Insurance Exam 2022/2023

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What is the underlying concept regarding level premiums? - ANSWER The early years are charged more than what is needed A level premium indicates - ANSWER the premium is fixed for the entire duratio... n of the contract On a life insurance policy, who is qualified to change the beneficiary designation? - ANSWER Policyowner J chooses a monthly premium payment mode on his Whole Life insurance policy. Which of these statements is correct? The gross premium is higher on a monthly payment mode as compared to being paid annually The gross premium is lower on a monthly payment mode as compared to being paid annually The cash value from a life policy paid on a monthly basis builds quicker than one paid on an annual basis The face amount of a life policy paid on a monthly basis is higher than one paid on an annual basis - ANSWER The gross premium is higher on a monthly payment mode as compared to being paid annually An incomplete life insurance application submitted to an insurer will result in which of these actions? - ANSWER Application will be returned to the writing agent At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid? - ANSWER At the time of application Any changes made on an insurance application requires the initials of whom? - ANSWER Applicant An underwriter determines that an applicant's risk should be recategorized due to a health issue. This policy may be issued with a(n) - ANSWER exclusion for the medical condition In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and - ANSWER the initial premium Why is an applicant's signature required on a life insurance application? - ANSWER To attest that the statements on the application are accurate to the best of the applicant's knowledge Which of these factors do NOT play a role in the underwriting of a life insurance policy? Avocations Credit status Marital status Occupation - ANSWER marital status Before a life insurance policy is issued, which of these components of the contract is required? - ANSWER Applicant's signature on application An insurance company may NOT reject a prospective insured's life application on the basis of which of the following factors? Height Weight Gender Medical history - ANSWER gender P completes an application for a $10,000 life policy, but does not give the producer the initial premium. P's coverage becomes effective when - ANSWER P receives the policy and pays the premium What type of group plan involves employees sharing the cost? - ANSWER contributory plan A noncontributory group term life plan is characterized by - ANSWER the entire cost of the plan is paid for by the employer Under a trustee group life policy, who would be eligible for a certificate of coverage? - ANSWER Employee Which provision is NOT a requirement in a group life policy? - ANSWER Accidental If its employees share in the cost of insurance, what type of group life insurance plan would a corporation have? - ANSWER Contributory W is a 39-year old female who just purchased an annuity to provide income for life starting at age 60. All of these would be acceptable annuity choices EXCEPT a(n) Flexible Premium Deferred annuity Variable annuity Immediate annuity Straight Life annuity - ANSWER Immediate annuity T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this? - ANSWER Life Annuity with Period Certain Which of these is an element of a Single Premium annuity? - ANSWER Lump-sum payment The annuity that represents the largest possible monthly payment to an individual annuitant is a(n) - ANSWER Straight Life annuity Which of these statements concerning an Individual Straight Life annuity is accurate? - ANSWER Payments are made to an annuitant for life What is considered to be a characteristic of an immediate annuity? - ANSWER Benefit payments start within one payment period of purchase Which type of contract liquidates an estate through recurrent payments? - ANSWER Annuity P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase? - ANSWER Deferred Which of the following annuities pays benefits based on units rather than specific dollar amounts? - ANSWER A Variable annuity P is a forty year old woman and would like to purchase an annuity that will provide a lifetime income stream beginning at age sixty. Which of the following did she NOT buy? - ANSWER An immediate annuity One becomes eligible for Social Security disability benefits after having been disabled for - ANSWER 5 months What is Old Age and Survivors Health Insurance (OASDHI) also known as? - ANSWER Social Security All of these are considered to be a benefit under Social Security EXCEPT for - ANSWER unemployment Q is severely injured in an automobile accident and becomes totally disabled. How many months must Q be disabled before being able to apply for Social Security disability benefits? - ANSWER 5 What determines the full amount of Social Security retirement benefits a qualified individual is entitled to receive? - ANSWER Primary Insurance Amount (PIA) Which of these retirement plans can be started by an employee, even if another plan is in existence? - ANSWER Individual Retirement Account (IRA) Which plan is intended to be used by a sole proprietor and the employees of that business? - ANSWER Keogh Plan Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company? - ANSWER Annuity An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age? - ANSWER 59 1/2 Which of the following is TRUE about a qualified retirement that is "top heavy"? - ANSWER More than 60% of plan assets are in key employee accounts What type of employee welfare plans are not subject to ERISA regulations? - ANSWER church plans A Key Employee policy is taken out by Company X on its vice president. Ten years later, this employee leaves Company X and begins working for Company Y. If this individual were to die and the policy is still in force and unchanged, where would the death proceeds be directed? - ANSWER Company X Which statement regarding third-party ownership of a life insurance policy is true? - ANSWER 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? - ANSWER Each partner must own a policy on the other partners Which statement regarding a Key Employee Life policy is NOT true? - ANSWER The beneficiary is named by the key employee The premiums paid by an employer for his employee's group life insurance are usually considered to be - ANSWER tax-deductible to the employer The difference between group insurance and blanket health policies is - ANSWER Blanket health policies do not issue certificates Which of the following statements BEST describes how a policy that uses the "accidental bodily injury" definition of an accident differs from one that uses the "accidental means" definition? - ANSWER Less restrictive Which contract permits the remaining partners to buy-out the interest of a disabled business partner? - ANSWER Disability Buy-Sell A Business Overhead Expense policy - ANSWER reimburses the company for any reduction in sales due to the owner's disability All students attending a large university could be covered by - ANSWER a blanket policy To obtain group Major Medical insurance from an employer, a new employee MUST perform which of the following actions during the open enrollment period? - ANSWER Sign an enrollment card The benefits under a Disability Buy-Out policy are - ANSWER payable to the company or another shareholder The Health Insurance Portability and Accountability Act (HIPAA) gives privacy protection for - ANSWER health information The Coordination of Benefits provision - ANSWER prevents an insured covered by two health plans from making a profit on a covered loss Which type of provider is known for stressing preventative medical care? - ANSWER Health Maintenance Organizations (HMO's) The individual who provides general medical care for a patient as well as the referral for specialized care is known as a - ANSWER Primary Care Physician A 66 year-old is covered under a group health plan while employed with a business that has 40 employees. If she injures herself while walking in the park, what coverage would be considered primary? - ANSWER Her group health plan The health insurance program which is administered by each state and funded by both the federal and state governments is called - ANSWER Medicaid Which of the following organizations would make reimbursement payments directly to the insured individual for covered medical expenditures? - ANSWER Commercial insurer What does Medicare Parts A and B cover? - ANSWER Part A covers hospitalization; Part B covers doctor's services Medicare - ANSWER is a hospital and medical expense insurance program Medicaid was designed to assist individuals who are - ANSWER below a specific income limit Which of the following does Social Security NOT provide benefits for? Survivorship Dismemberment Disability Retirement - ANSWER Dismemberment J's Major Medical policy has a $2,000 deductible and an 80/20 Coinsurance clause. If J is hospitalized and receives a bill for $10,000, J would pay - ANSWER In this situation, ($2,000) + 20% of $8,000 the remaining bill ($1,600) = $3,600. Which of the following statements BEST defines usual, customary, and reasonable (UCR) charges? - ANSWER The maximum amount considered eligible for reimbursement by an insurance company under a 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? - ANSWER $7,000". In this situation, $5,000 + 20% of the remaining bill = $7,000 T was treated for an ailment 2 months prior to applying for a health insurance policy. This condition was noted on the application and the policy was issued shortly afterwards.How will the insurer likely consider this condition? - ANSWER Insurer will likely treat as a pre-existing condition which may not be covered for one year Which of the following BEST describes a Hospital Indemnity policy? - ANSWER Coverage that pays a stated amount per day of a covered hospitalization Which of the following costs would a Basic Hospital/Surgical policy likely cover? - ANSWER Surgically removing a facial birthmark cosmetic surgery A Hospital/Surgical Expense policy was purchased for a family of four in March of 2013. The policy was issued with a $500 deductible and a limit of four deductibles per calendar year. Two claims were paid in September 2013, each incurring medical expenses in excess of the deductible. Two additional claims were filed in 2014, each in excess of the deductible amount as well. What would be this family's out-of-pocket medical expenses for 2013? - ANSWER 1,000 All of the following statements about Major Medical benefits are true EXCEPT - ANSWER Benefits have no maximum limit In order to establish a Health Reimbursement Arrangement (HRA), it MUST - ANSWER be established by the employer All of the following are limited benefit plans EXCEPT cancer policies life insurance policies dental policies critical illness policies - ANSWER life insurance policies M becomes disabled and is unable to work for six months. M dies soon after from complications arising from this disability. M has a Disability Income policy that pays $2,000 a month. Which of the following statements BEST describes what is owed to her estate? - ANSWER Earned, but unpaid benefits K becomes ill after traveling overseas and is unable to work for 3 months. What kind of policy would cover her loss of income? - ANSWER Disability Income What does a Guaranteed Insurability rider provide a Disability Income policyowner? - ANSWER The ability to periodically increase the amount of coverage without evidence of insurability An insured owns an individual Disability Income policy with a 30-day Elimination Period for sickness and accidents and a monthly indemnity benefit of $500. If the insured is disabled for 3 1/2 months, what is the MAXIMUM amount he would receive for an approved claim? - ANSWER $1,250 3.5 months - 1 month elimination period = 2.5 months. 2.5 months X $500 monthly indemnity = $1,250. D is an architect receiving Disability Income benefits who is not able to return to work full time, but can work on a part-time basis. Which of these features would allow D to continue receiving benefits? - ANSWER Residual Benefit clause If a retiree on Medicare required five hospital stays in one year, which policy would provide the best insurance for excess hospital expenses? - ANSWER Medicare Supplement What is the MINIMUM number of Activities of Daily Living (ADL) an insured must be unable to perform to qualify for Long Term Care benefits? - ANSWER 2 Which of the following will a Long Term Care plan typically provide benefits for? - ANSWER home health care The individual most likely to buy a Medicare Supplement policy would be a(n) - ANSWER 68-year old male covered by Medicare How long is the typical free look period for Long Term care insurance policies? - ANSWER 30 days Health insurance benefits NOT covered due to an act of war are - ANSWER excluded by the insurer in the contract provisions Which Accident and Health policy provision addresses preexisting conditions? - ANSWER Time Limit on Certain Defenses When an insurance company sends a policy to the insured with an attached application, the element that makes the application part of the contract between the insured and the insurer is called the - ANSWER Entire Contract provision A Disability Income policyowner recently submitted a claim for a chronic neck problem that has now resulted in total disability. The original neck injury occurred before the application was taken 5 years prior. The neck injury was never disclosed to the insurer at the time of application. How will the insurer handle this claim? - ANSWER Claim will be paid and coverage will remain in force Which of the following health policy provisions states that the producer does NOT have the authority to change the policy or waive any of its provisions? - ANSWER Entire Contract In health insurance policies, a waiver of premium provision keeps the coverage in force without premium payments - ANSWER After an insured has become totally disabled as defined in the policy An insurer must provide an insured with claim forms within __ days after receiving notice of a loss. - ANSWER 15 An insurance company normally has 2 years to contest information provided on an accident and health application. This 2 year period begins on the date that the - ANSWER insurer dates the policy What type of rider would be added to an Accident and Health policy if the policyowner wants to ensure the policy will continue if he/she ever becomes totally disabled? - ANSWER Waiver of Premium rider According to the Mandatory Uniform Policy Provisions, what is the maximum amount of time after the premium due date during which the policy remains in force even though the premium has not been paid? - ANSWER 31 days Pre-hospitalization authorization is considered an example of - ANSWER managed care Which of the following are NOT managed care organizations? - ANSWER Medical Information Bureau (MIB) In general, what percent of personal health insurance premiums is deductible for federal income tax purposes? - ANSWER 100% Which mode of payment is NOT used by health insurance policies? - ANSWER Single premium [Show More]

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