Simulation

#3.	The form used to establish the terms for both parties when a person sells his life insurance policy to a 3rd unrelated person is called a
a)	Living Benefits Form.
b)	Life Settlement Contract.
c)	Unilateral Contract.
d)	Certificate of Authority.
	When a policyowner decides he no longer needs his insurance coverage and decides to sell his policy to a 3rd party who has no insurable interest, he may establish a Life Settlement Contract with a life settlement provider. The contract establishes all the terms, and must have been approved by the Superintendent.
#6.	An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it?
a)	Flexible premium
b)	Immediate
c)	Deferred
d)	Fixed
	Deferred annuities may be purchased with either a single lump sum or periodic payments, but they do not begin the income payments until sometime after 1 year from the date of purchase.
#7.	Which of the following provisions must be included on the first page of a Medicare supplement policy, which states the insurer’s right to change premium amounts?
a)	Insurer's rights
b)	Coverage limitations
c)	Continuation provision
d)	Premium provision
	The renewal provision, also known as a continuation provision, must be included on the first page of Medicare supplement policies. This provision explains the right of the insurer to alter premium amounts.
#14.	Insurers and agents are required to report cybersecurity events to the Department of Financial Services within what time period of discovery?
a)	24 hours
b)	72 hours
c)	5 days
d)	10 days
	After a cybersecurity event has been discovered, an insurer or its agents must report the event to the Department of Financial Services within 72 hours.
#15.	In forming an insurance contract, when does acceptance usually occur?
a)	When an insured submits an application
b)	When an insurer's underwriter approves coverage
c)	When an insurer delivers the policy
d)	When an insurer receives an application
	In insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer’s underwriter approves the application and issues a policy.
#16.	Which of the following characteristics applies to defined benefit plans but not defined contribution plans?
a)	They are subject to the rules of ERISA.
b)	The amount of contributions made by the employer is determined by an actuarial formula.
c)	They are qualified plans.
d)	Employers can choose not to make contributions for a particular year.
	Defined benefit plans offer benefits that are based on a definite contribution formula. Defined contribution plans may specify that contributions are made based on corporate profits, so contributions may not be made when that corporation is not profitable. Both are qualified plans subject to the rules of ERISA.
#19.	Which of the following is NOT a feature of a noncancellable policy?
a)	The insurer may terminate the contract only at renewal for certain conditions.
b)	The premiums cannot be increased beyond the amount stated in the policy.
c)	The guarantee to renew coverage usually applies until the insured reaches certain age.
d)	The insured has the right to renew the policy for the life of the contract.
	The insurance company cannot cancel a noncancellable policy, nor can the premium be increased beyond what is stated in the policy. The insured has the right to renew the policy for the life of the contract; however, the guarantee to renew coverage usually only applies until the insured reaches age 65.
#25.	Which of the following is NOT true about a joint and survivor annuity benefit option?
a)	Payments stop after the first death among the annuitants.
b)	A period certain option may be included.
c)	This option guarantees income for two or more recipients.
d)	The surviving annuitant may receive reduced payments.
	A joint and survivor annuity will pay until the last annuitant has died; however, the surviving annuitant may receive reduced payments.
#28.	Which of the following would provide an underwriter with information concerning an applicant's health history?
a)	A medical examination
b)	The agent's report
c)	The inspection report
d)	The Medical Information Bureau
	An agent's report and inspection report provide personal information. Medical exams provide information on current health. Only the MIB will provide information about an applicant's medical history.
#29.	Which of the following is NOT provided by an HMO?
a)	Services
b)	Financing
c)	Patient care
d)	Reimbursement
	Traditionally the insurance companies have provided the financing while the doctors and hospitals have provided the care. The HMO concept is unique in that the HMO provides both the financing and the patient care for its members. The HMO provides benefits in the form of services rather than in the form of reimbursement for the services of the physician or hospital.
#36.	A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the
a)	Primary beneficiary.
b)	Irrevocable beneficiary.
c)	Revocable beneficiary.
d)	Secondary beneficiary.
	The policyowner may change a revocable designation at any time and without the consent of the beneficiary. Irrevocable beneficiaries, on the other hand, have a vested interest in the policy, so the policyowner may not be able to exercise certain rights without their consent.
#41.	At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called
a)	Supplemental add on.
b)	Cost of living.
c)	Guaranteed insurability.
d)	Waiver of cost of insurance.
	Guaranteed insurability is a rider that is included at the time of application (or can be added at a later date) which allows the insured to increase the amount of insurance without proving evidence of insurability.
#42.	What type of benefit plan is a managed plan that is developed in conjunction with the Health Benefit plan committee?
a)	Open Care Plan
b)	Basic Coverage Benefit Plan
c)	Catastrophic Coverage Benefit Plan
d)	Small Employee Carrier Plan
	Basic Coverage Benefit Plan is a managed plan developed in conjunction with the Health Benefit plan committee. The Basic Coverage Benefit Plan is lower in cost than the Standard Benefit Plan.
#46.	All of the following entities regulate variable life policies EXCEPT
a)	The Guaranty Association.
b)	Federal government.
c)	The SEC.
d)	The Insurance Department.
	Variable life insurance is regulated by both the state and federal government, as well as the Insurance Department, and the SEC.
#47.	Which of the following best describes annually renewable term insurance?
a)	Neither the premium nor the death benefit is affected by the insured’s age.
b)	It provides an annually increasing death benefit.
c)	It is level term insurance.
d)	It requires proof of insurability at each renewal.
	Annually renewable term is a form of level term insurance that offers the most insurance at the lowest cost.
#54.	Which of the following factors would be an underwriting consideration for a small employer carrier?
a)	Percentage of participation
b)	Claims experience
c)	Health status
d)	Medical history of the employees
	Coverage under a small employer health benefit plan is generally available only if at least 75% of eligible employees elect to be covered.
#56.	Regarding cost containment in medical plans, what type of review process do employers and insurers use to evaluate the utilization review process and the effectiveness of the professionals involved in large insurance claims?
a)	Preventive review
b)	Retrospective review
c)	Concurrent review
d)	Prospective review
	Under the retrospective review process, employers and insurers can evaluate the utilization review process and the effectiveness of the professionals involved in large claims. These reviews include hospital bill audits.
#59.	In which Medicare supplemental policies are the core benefits found?
a)	All plans
b)	Plans A and B only
c)	Plan A only
d)	Plans A–D only
	The benefits in Plan A are considered to be core benefits and must be included in the other types. Therefore, all types contain the core benefits offered by Plan A.
#62.	What are the continuing education requirements for licensed insurance agents in the state of New York?
a)	30 hours of any insurance-related courses every 4 years
b)	20 hours for life and heath agents and 25 hours for property and casualty brokers every 2 years
c)	15 hours of approved instruction every 2 years
d)	25 hours of instruction annually
	To renew a license, any resident or nonresident agent must complete 15 hours of instruction by an approved provider of continuing education biennially (every 2 years).
#65.	One of the differences between group underwriting and individual underwriting is that there is little or no medical information required regarding plan participants in groups of
a)	Fewer than 50.
b)	50 or more.
c)	100 or more.
d)	25 or more.
	In groups of 50 or more, medical information cannot be required of plan participants.
#68.	Which of the following statements regarding Business Overhead Expense policies is NOT true?
a)	Any benefits received are taxable to the business.
b)	Leased equipment expenses are covered by the plan.
c)	Benefits are usually limited to six months.
d)	Premiums paid for BOE are tax-deductible.
	Business Overhead Expense (BOE) insurance is sold to small business owners for the purpose of reimbursing the policyholder for business overhead expenses during a period of total disability. Premiums are tax-deductible for a business, but any benefits received are taxable as income. Overhead expenses, including equipment and employee salaries, are covered by the plan. Salaries and profits of the employer are not protected.
#69.	A Universal Life Insurance policy is best described as a/an
a)	Flexible Premium Variable Life policy.
b)	Annually Renewable Term policy with a cash value account.
c)	Variable Life with a cash value account.
d)	Whole Life policy with two premiums: target and minimum.
	A universal policy has two components: an insurance component and a cash account. The insurance component (or the death protection) of a universal life policy is always annual renewable term insurance.
#76.	All of the following are TRUE statements regarding the accumulation at interest option EXCEPT
a)	The policyholder has the right to withdraw the accumulations at any time.
b)	The interest is not taxable since it remains inside the insurance policy.
c)	The annual dividend is retained by the company.
d)	The interest is credited at a rate specified by the policy.
	The interest credited under this option is TAXABLE, whether or not the policyowner receives it.
#81.	Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?
a)	Stop-loss
b)	Consideration
c)	Reasonable expectations
d)	Indemnity
	The principle of indemnity stipulates that the insured can only collect for the amount of the loss even if the policy is written with greater benefit limits.
#82.	Which document helps ensure that full and fair disclosure is provided to the recipient of a policy?
a)	Statute of Limitations
b)	Outline of Coverage
c)	Benefit Limitations
d)	Policy Summary
	The Outline of Coverage is created to ensure full and fair disclosure to the recipient of a new policy. This document can be released at the time of application or upon delivery of the policy.
#83.	Which of the following dental insurance categories would cover the filling of cavities?
a)	This type of work is not covered.
b)	Routine and preventative maintenance
c)	Routine and major restorative care
d)	Orthodontic care
	Routine and major restorative care covers the costs of dental work, such as oral surgery, bridges, dentures, and cavity treatment. Routine and preventative maintenance covers routine dental check-ups only.
#92.	If compensation is authorized, it must be made in writing, including the amount of compensation and signed by the person to be charged. How long must a copy of this record be kept?
a)	At least 2 years
b)	At least 3 years
c)	At least 5 years
d)	At least 1 year
	No licensed person may charge directly or indirectly any additional fees or compensation not authorized for examining, appraising, reviewing or evaluating any insurance policy, annuity or retirement plan. This also includes other services in connection with a life insurance contract. A copy of this record must be kept for at least 3 years.
#99.	When a person applies for Medicare supplement insurance, whose responsibility is it to confirm that the applicant does not already have accident or sickness insurance in force?
a)	Agent
b)	Insurer
c)	State government
d)	Active physician
	Although it is illegal for an applicant to intentionally misrepresent himself in an insurance application, it is the insurer’s ultimate responsibility to make sure that the applicant does not already have another accident or sickness policy in force.
#100.	All of the following violations may result in an agent’s imprisonment EXCEPT
a)	Engaging in the business of insurance after being convicted of breach of trust.
b)	Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction.
c)	Embezzling funds from the insurer.
d)	Knowingly obtaining information about a consumer under false pretenses.
	While the agents are required to notify the department about any administrative action or criminal prosecution taken against them, that act alone will not result in imprisonment. All the others are violations that may be punished by imprisonment.
#113.	Which of the following is NOT true regarding Workers Compensation?
a)	Benefits are offered by the insurer.
b)	Benefits are not regulated by the federal government.
c)	Benefits vary from state to state.
d)	Benefits are regulated by the state government.
	The state government regulates Workers Compensation benefits, which vary slightly from state to state.
#114.	If an employee terminates her employment, which of the following provisions would allow her to continue health coverage under an individual policy, if requested within 60 days?
a)	Conversion
b)	Reinstatement
c)	Grace period
d)	Renewability
	Conversion provisions are required by law, and allows the insured to convert to an individual policy within 60 days without evidence of insurability.
#120.	The minimum number of credits required for partially insured status for Social Security disability benefits is
a)	4 credits.
b)	6 credits.
c)	10 credits.
d)	40 credits.
	To be considered partially insured, an individual must have earned 6 credits during the last 13-quarter period.
#138.	What method do insurers use to protect themselves against catastrophic losses?
a)	Pro rata liability
b)	Risk management
c)	Reinsurance
d)	Indemnity
	Insurers use reinsurance to protect themselves from catastrophic losses. This is a method where the reinsurer indemnifies the ceding insurer for part or all of the losses it sustains related to a policy issued previously.
#139.	While repairing the roof of his house an insured accidentally falls off and breaks his arm and sustains a head injury that results in total blindness of both eyes. His policy contains an Accidental Death & Dismemberment Rider. What is the extent of benefits that he will receive?
a)	Reciprocal Amount
b)	Principal Sum
c)	Capital Sum
d)	50% of the Principal
	If the insured dies, the insurer pays the full amount, also known as the "principal sum", which is also paid if the insured loses sight in both eyes or loses two limbs. If the insured lives but loses a hand or foot or the sight in one eye, the insured will be paid a percentage of the principal sum, usually 50%, which is called the "capital sum".
#142.	When must an IRA be completely distributed when a beneficiary is not named?
a)	Due date of the deceased owner's final tax return including extensions.
b)	December 31 of the year that contains the fifth anniversary of the owner's death.
c)	Due date of beneficiary's tax return including extensions.
d)	December 31 of the year following the year of the owner's death.
	If the owner dies before distributions have begun, the entire interest must be distributed in full on or before December 31 of the calendar year that contains the fifth anniversary of the owner’s death, unless the owner named a beneficiary.
#144.	If an individual is covered by a policy that includes an Accidental Death & Dismemberment rider, what term describes the maximum benefits he will receive if he loses sight in both eyes as a result of a fire?
a)	Reciprocal amount
b)	Capital sum
c)	Percentage of full amount
d)	Principal sum
	If the insured dies, the insurer pays the full amount, also known as the "principal sum". Principal sum will most likely be paid out if the insured loses sight in both eyes or loses two limbs. If the insured lives but loses a hand or foot or the sight in one eye, the insured will be paid a percentage of the principal sum, called the "capital sum."