Practice exam

19.	Which of the following statements about group life is correct?
a)	The premiums are higher than in an individual policy because there is no medical exam.
b)	The group sponsor receives a Certificate of Insurance.
c)	The policy can be converted to an individual term insurance policy.
d)	The cost of coverage is based on the ratio of men and women in the group.
	Group life insurance can be converted to an individual whole life, not a term, policy; the group life insurance premiums are usually lower than those of an individual policy; the group sponsor receives a master contract, while the participants receive certificates of insurance. The cost of the coverage is based on the average age of the group and the ratio of men to women.
#22.	A small hardware store owner is involved in a car accident that renders him totally disabled for half a year. Which type of insurance would help him pay for expenses of the company during the time of his disability?
a)	Disability buy-sell agreement
b)	Business disability policy
c)	Business overhead expense policy
d)	Key person insurance
	Business Overhead Expense (BOE) insurance is sold to small business owners for the purpose of reimbursing the policyholder for various business overhead expenses during a period of total disability. Expenses such as rent, utilities, and employee salaries are covered.
#23.	To be acceptable to insurance companies, what percentage of eligible employees must be enrolled under a contributory group health insurance plan?
a)	100%
b)	50%
c)	65%
d)	75%
	State laws establish the minimum number of individuals that constitute a group. Insurers may have a larger number required for certain plans.
#32.	All of the following are factors that an underwriter could use to select and classify risk EXCEPT
a)	Occupation.
b)	Avocation.
c)	National origin.
d)	Morals.
	The company will discriminate in favor of good risks and not of poor risks; however, it cannot discriminate unfairly by using factors such as race or national origin in their underwriting.
#37.	What is the elimination period for Social Security disability benefits?
a)	12 months
b)	3 months
c)	5 months
d)	6 months
	The elimination period for Social Security disability benefits is 5 months.
#45.	What type of benefit plan for group health insurance will provide coverage in the event of a catastrophic illness or injury?
a)	Small Employer Group Plan
b)	Catastrophic Care Benefit Plan
c)	Basic Care Benefit Plan
d)	Catastrophic Access
	This list shows all of the questions that you missed in the session you just completed. The answer you selected is in bold. The correct answer is highlighted in green. #14.  Which of the following terms is used to name the nontaxed return of unused premiums? a) Dividend b) Premium return c) Interest d) Surrender   The return of unused premiums is called a dividend. Dividends are not considered to be income for tax purposes, since they are the return of unused premiums. #15.  Life settlement contracts must be approved by which of the following? a) The NAIC b) The state's attorney general c) The Superintendent of Insurance d) The policyowner   The Superintendent must approve all life settlement contract forms as well as the final contract. #22.  Which of the following factors about the insured determines the amount of disability benefit that the insured will receive? a) Marital status b) Age c) Income d) Gender   Disability benefits are paid to those who are unable to work as they normally would, due to an accident or illness. Benefits are designed to help the insured recover income lost as a result of the disability. The amount of benefits that an insured receives is determined by the insured’s earned income and is usually limited to a certain percentage of that amount. #38.  The law states that an insurer is allowed to pay the entire Death Benefit to the insured if they qualify to use the Accelerated Death Benefit Rider; however, most insurers limit the amount of the Death Benefit paid to a) 60% b) 75% c) 30% d) 50%   While the law technically allows an insurance company to advance the entire death benefit, most carriers impose their own cap, such as 50% of the death benefit. #41.  Which of the following entities has the authority to make changes to an insurance policy? a) Producer b) Insurer's executive officer c) Department of Insurance d) Broker   Only an executive officer of the company, not an agent, has authority to make any changes to the policy. The insurer must have the insured's written agreement to the change. #47.  If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a) 5 days b) 7 days c) 10 days d) 3 days   Consumers must be advised that they have a right to request additional information concerning investigative consumer reports, and the insurer or reporting agency has 5 days to provide the consumer with the additional information.