Oregon Life and Health Insurance Practice Exam Answers

Oregon Life and Health Insurance Practice Exam Answers

 

All of the following are reasons for group insurance termination for dependents EXCEPT

a) The end of the last period for which the employee has made the required premium for dependent coverage passes.

b) The overall maximum benefit for major medical benefits is received

c) The dependent reaches age 21

d) The dependent fails to meet the definition of a dependent

 

 

Which of the following statements is INCORRECT concerning Modified Endowment Contracts (MECs)?

a) An MEC must always pass the 7-pay test

b) A life insurance policy failing the 7-pay test is classified as an MEC

c) A primary purpose of the regulations governing MECs was to reduce incentives for the use of life insurance as a short-term investment vehicle.

d) A distribution from an MEC may be subject to a 10% penalty if withdrawn prior to 59 1/2

 

An individual purchases a life insurance policy and lists his parents as the beneficiaries. He is able to change beneficiaries at any time. What type of beneficiary designation does the policy have?

a) Irrevocable
b) contingent
c) primary
d) revocable

Revocable

 

In which of the following scenarios would a producer be allowed to obtain insurance through an unauthorized insurer?

1. a) if there are no authorized insurers for a specific type of coverage in this state
   b) if the insurer needs to investigate insurance claims
   c) under no circumstances
   d) if the producer had no knowledge that the company is unauthorized

 

If an insured purchases an insurance policy with a large deductible, what risk management techniques is the insured exercising?

1. a) Avoidance
   b) Sharing
   c) Retention
   d) Transfer only

 

Which of the following is NOT a common exclusion found in most health policies?

a) Self- inflicted injuries
b) Dental procedure due to birth defect
c) Workers compensation claims
d) War or act of war

 

Which of the following is NOT a typical type of Long-Term Care coverage?

a) Residential care
b) Home health care
c) Child day care
d) Skilled nursing care

 

Which of the following is true regarding examination of company’s records?

a) Examination of records must be requested be each insurance company

b) Examination of records are held every 3 years

c) The director has the authority to examine every authorized insurer in this state.

d) Only resident insurers are subject to the examination of records

 

With Adjustable Life, the owner can change all of the following EXCEPT

1. a) The premium
   b) The length of time the coverage will last
   c) The insured
   d) The death benefit

 

What type of insurer uses a formal sharing arrangement?

1. a) Stock insurers
   b) Mutual Insurers
   c) Fraternal Benefit Societies
   d) Reciprocal Insurers

 

Which of the following meets the insured’s personal needs, and is provided by nonmedical personnel?

1. a) Intermediate care
   b) Custodial Care
   c) Skilled care
   d) Assisted living

 

What advantage does the “recurrent disability” provision provide to the insured under a disability income policy?

a) It eliminates the imposition of an elimination period for a separate disability
b) It imposes an elimination period for the disability
c) It eliminates the imposition of a second elimination period for the same disability
d) it provides the insured with lifetime disability benefits

 

Which of the following terms is used to define the period of time during which an annuitant makes payments into an annuity?

a) Loading period
b) Accumulation period
c) Premium building period
d) Annuity period

 

Regarding major medical plans

a) Higher stop-loss means lower premiums
b) Higher stop-loss means higher premiums
c) Lower stop-loss means level premium
d) Lower stop-loss means lower premium

 

Which of the following is NOT a crucial factor in health insurance underwriting?

1. a) Physical condition
   b) Morale hazards
   c) Occupation
   d) Income

 

The benefits in Medical Expense Insurance are

1. a) Taxable
   b) Nonexistent
   c) taxed when they reach $25,000 per year.
   d) Received income tax free by the individual

 

Which of the following is true regarding pure life annuity settlement option?

1. a) The beneficiary will receive a refund of the principal
   b) It guarantees income for a specified period of time
   c) It provides the highest monthly benefit
   d) It guarantees that all proceeds will be paid out

 

What is the advantage of an open enrollment period to the insured?

1. a) Coverage will be provided regardless of the insured’s health status.
   b) The insured may change providers as frequently as deemed necessary
   c) It occurs several times a year for the benefit of the insured
   d) The premiums for coverage are lower during this period

 

To be acceptable to insurance companies, what percentage of eligible employees must be enrolled under a contributory group health insurance plan?

1. a) 65%
   b) 75%
   c) 100%
   d) 50%

 

All of the following statements are goals of TRICARE except

1. a) provide faster, more convenient access to civilian care
   b) Create a more limited system of health care
   c) Control escalating costs
   d) Improve overall access to health care for members

 

If an insured decides to reduce the coinsurance amount on her major medical insurance, what can the insured expect?

1. a) A lower lifetime benefit payout
   b) Stop-loss increase
   c) A higher monthly premium
   d) A higher deductible

 

All of the following are true of credit life EXCEPT

1. a) The creditor is the policyowner
   b) The insured names the beneficiary
   c) The death benefit cannot exceed the amount of the loan
   d) The premium payment is included in the loan payment

 

Which of the following individuals would be a likely candidate to purchase a deferred annuity?

a) Someone who needs to start receiving benefit payments within 6 months of the annuity
b) Someone who wants to leave the death benefit to the beneficiaries
c) Someone who cannot afford life insurance
d) Someone who wants to grow retirement funds tax deferred

 

Medicare Part A services do NOT include which of the following?

1. a) Private Duty Nursing
   b) Post hospital Skilled Nursing Facility Care
   c) Hosptalization
   d) Hospice Care

 

Dennis has a cavity. His insurer covers his claim up to a predetermined amount, which is indicated by a fee schedule. Which type of plan does he have?

1. a) Nonscheduled
   b) Limited
   c) Procedure-based
   d) Scheduled

 

If a business wants to make sure it will be able to cover losses due to the disability of its top employee, the business should get which type of insurance?

a) Key person disability income
b) Group health insurance policy
c) Health Savings Account (HSA)
d) Business overhead expense

 

In some cases, in order for an insurer to legally disclose privileged information to appropriate sources, the insured must sign an authorization form. What is the maximum amount of time that can legally pass between the completion of the form and the disclosure of information?

1. a) 1 month
   b) 6 months
   c) 1 year
   d) 2 year

 

A married couple purchase a life insurance policy on their newborn baby. They are concerned about what would happen to the policy if either one of them were unable to continue making the premium payments due to death or disability. Which policy rider should their agent recommend?

1. a) Payor benefit
   b) Guaranteed insurability
   c) Automatic premium loan
   d) Waiver of premium

 

Which of the following is required in order for a plan to be qualified?

1. a) The plan’s contribution formula is allowed to discriminate in favor of officers of the company
   b) The plan must be formally written and communicated to the employees
   c) The plan must not be permanent
   d) The plan must be for exclusive benefit of the employer

 

Which risk classification is representative of the majority of people in a certain group and with similar lifestyles?

1. a) Standard
   b) Substandard
   c) Declined
   d) Preferred

 

An insured needs ongoing treatment for a diabetic condition. Under the PPACA, which of the following is correct?

1. a) The condition is covered if the insured’s plan specifies the condition
   b) Treatment is subject to pre-existing conditions exclusion
   c) Treatment is subject to an annual dollar maximum
   d) The condition must be covered under the insured’s plan

 

If an insured decided to reduce the coinsurance amount on her major medical insurance, what can the insured expect?

1. a) Stop-loss increase
   b) A higher monthly premium
   c) A higher deductible
   d) A lower lifetime benefit payout

 

Which of the following time periods is the general enrollment period for Medicare Part B?

a) March 1 through March 31 each year
b) January 1 through March 31 each year
c) March 1 through May 31 each year
d) January 1 through January 31 each year

 

An employee is on an extended leave of absence when the employer group health plan changes from one carrier to another. before the employee returns to work, what might the employee most likely notice?

a) Suspended coverage
b) Limited coverage
c) Increased benefits
d) No change in coverage

 

What is another term for health insurance policy subscriber?

1. a) Participant
   b) Underwriter
   c) Dependent
   d) Insured

 

If the insurance premiums were not tax deductible, what other taxation will this affect?

1. a) Taxation of interest
   b) Taxation of the policy’s cash value
   c) Federal tax income
   d) Taxation of benefits

 

If an agent follows the rules and terms of his agent contract, he is exercising his

1. a) Apparent authority
   b) Contractual authority
   c) Implied authority
   d) Express authority

 

Which of the following is provided by skilled medical personnel to those who need occasional medical assistance or rehabilitative care?

1. a) Home health care
   b) Skilled care
   c) Intermediate care
   d) Custodial care

 

In order to reinstate a life insurance policy the insured must do all of the following EXCEPT

1. a) Pay any interest due on back premiums
   b) Repay any outstanding loans and interest
   c) Pay next year’s premiums in advance
   d) Pay back premiums

 

An insured purchases a non-participating whole life policy. This policy includes all of the following EXCEPT

1. a) Permanent protection
   b) Cash and loan values
   c) Dividends
   d) A premium calculated closely to the cost of the insurance

 

Under which of the following conditions would life insurance proceeds be taxable by the federal government?

1. a) If paid to the policyowner
   b) If there is a transfer for value
   b) If collaterally assigned to a lender
   c) If taken as a lump sum

 

An insured recently received his major medical insurance policy. Only 20 days after the policy issue, while recreational rock climbing, the insured suffered a fall that required hospitalization, surgery and physical therapy to repair his broken leg. Which of the following is true?

1. a) The plan will not cover the expenses because the elimination period is not satisfied
   b) Only surgery is covered under the plan
   c) Both the deductible and coinsurance payments will be required
   d) The plan will not cover the expenses due to hazardous avocation

 

An employer is no longer able to afford the group health insurance plan and the plan terminates. However, one of the employees continues to receive coverage under the plan. Which of the following explains the reason for the continued coverage?

1. a) A nonforfeiture option is in place
   b) The employee is totally disabled
   c) The employee is an executive covered under the plan
   d) The employee’s health savings account pays for the coverage

 

When an insured terminates membership in the insured group, the insured can convert to

1. a) Term with proof of insurability
   b) Whole life without proof of insurability
   c) Whole life with proof of insurability
   d) Term without proof of insurability

 

Decreasing term insurance is often used to

1. a) Cover a mortgage
   b) Liquidate an estate
   c) Build up cash value for retirement
   d) pay estate taxes

 

Variable insurance and variable annuities are regulated by

1. a) SEC and FINRA only
   b) SEC, FINRA, and Department of Insurance
   c) Department of Insurance only
   d) NAIC

 

A core Medicare supplement policy (Plan A) will cover all of the following expenses EXCEPT

1. a) Part A deductible
   b) The first 3 pints of blood
   c) 20% if Part B coinsurance amounts for Medicare-approved services
   d) Part A coinsurance

 

All of the following are true of a Multiple Employer Trust (MET) EXCEPT

1. a) METs allow small employers an opportunity to band together and purchase insurance at a lower group rate

   b) The trusts are formed by insurers, agents, brokers, or third party administrators, who are call sponsors

   c) The sponsor develops the plan, sets the underwriting rules, and administers it

   d) The employee has a right of conversion upon leaving the group insurance

 

Contributions to Roth IRAs are

1. a) Tax deductible
   b) Always subject to a 6% tax penalty
   c) Paid with pre-tax dollars
   d) Not tax deductible

 

How many hours of continuing education must a producer complete for each license renewal period?

1. a) 12, plus 3 in ethics and 3 in state laws
   b) 45 for the first 5 years
   c) 10 per year
   d) 24, including 3 in ethics and 3 in state laws

 

Human Life Value approach to determining Life Insurance needs is based upon which of the following ideas?

1. a) replacement of assets
   b) Specific needs for college education
   c) Retirement needs
   d) Loss of the breadwinner’s income

 

Which of the following terms refers to the nontaxable portion of each annuity benefit payment?

1. a) Interest
   b) Principal
   c) Cost base
   d) Tax base

 

Which of the following is TRUE of level term insurance?

a) The premium increases or decreases based on current interest rates
b) The policy endows at age 100
c) The policy offer nonforfeiture values
d) It is temporary protection

 

Insureds have the right to do which of the following if they have NOT received the proper claim forms within 15 days of their notice to the insurer of a covered loss under a major medical policy?

1. a) Demand full payment immediately for the claim
   b) Speak with a claims adjuster or another representative from the insurance company
   c) Submit the description in their own words on a plain sheet of paper

 

What is is called when a doctor accepts the Medicare approved amount?

1. a) Assignment
   b) Consent
   c) Verification
   d) Acceptance

 

All of the following could qualify as a group for the purpose of purchasing group health insurance EXCEPT

1. a) Multiple employer trust
   b) Single employer with 14 employees
   c) An association of 35 people
   d) Labor union

 

All of the following are general requirements of a qualified plan EXCEPT

1. a) The plan’s benefit cannot discriminate in favor of the “prohibited group”
   b) The plan must be temporary
   c) The plan must be approved by the IRS
   d) The plan must have a vesting requirement

 

The regulation of the insurance industry primarily rests with

1. a) The state
   b) The NAIC
   c) Private insurers
   d) The federal government

 

What is the difference between a straight life policy and a 20-pay whole life policy?

1. a) Premium payment period
   b) The benefit settlement option
   c) The face amount
   d) Policy maturity date

 

Life insurance creates an immediate estate. Which of the following best explains this statement?

a) The face value of the policy is payable to the beneficiary upon the death of the insured
b) The policy has cash values and nonforfeiture values
c) The policy generates immediate cash value
d) The death benefit will always be paid to the estate of the insured

 

What happens to the face amount of a whole life policy if the insured reaches the age of 100?

1. a) The cash value and the face amount are paid to the insured
   b) The face amount is paid to the insured
   c) It is paid to the insured’s estate and the policy is terminated
   d) It is paid to the beneficiary in full

 

HMOs are known as what type of plans?

1. a) Service
   b) Health savings
   c) Consumer driven
   d) Reimbursement

 

Which dividend option will increase the death benefit?

1. a) Extended term
   b) Reduced paid up
   c) Paid-up additions
   d) Accumulation

 

In order for an alumni association to be eligible to purchase group health insurance for its members, all of these statements must be true EXCEPT when the association

1. a) Has been active for five years minimum
   b) Has a constitution, by-laws, and must hold at least annual meetings
   c) Is organized for reasons other than buying insurance
   d) Has at least 100 members

 

If both the primary and contingent beneficiaries of a life insurance policy have died before the insured’s death, who will receive the death benefit?

1. a) The tertiary beneficiary
   b) The insured’s heir
   c) The primary beneficiary
   d) The government

 

In group health insurance, what is experience rating?

a) When a larger groups gets lower rates because its median age is fairly low
b) When an insurer uses the experience of the group as a whole to determine the premiums
c) The larger the group, the more experienced the agent assigned to the policy
d) When a larger group gets higher premiums due to its relatively higher health costs