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Alabama Life & Health Insurance Exam
1. Insurance is defined as the transfer of risk to the insurance company in consideration for a premium.: Pure 2. The chance of loss without any chance of gain is called : Pure Risk 3. has the possibility for gain or loss and is not insurable.: Speculative Risk 4. is defined as the chance of loss.: Risk 5. A condition that could result in a loss is known as: Exposure 6. is something that increases the chance of loss.: Hazard 7. The presence of a increases the chance of a loss occurring.- : Physical Hazard 8. defined as a cause of loss, such as fire.: Peril
9. To be insurable, losses must be .: Calculable 10. allows insurers to predict claims more accurately.: Law of Large Numbers 11. The law of large numbers applies to .: Groups of people, not individuals 12. The law of large numbers applies to groups of people, not to individuals. The more people in the group .: the more accurate the predic- tions are 13. Most insurers buy to protect themselves in the event ofa .: reinsurance , catastrophic loss 14. are not required to be uniform from one state to another.: Insurance laws 15. dividends to its shareholders (stockholders), but they may not be guaran-teed.: Stock insurer may pay 16. Stock insurers pay the dividends to its shareholders (stockholders), arethey guaranteed.: No
25. An insurance contract is in that only one of the parties to the contract is legally bound to do anything.: unilateral 26. insurer: If forms are not furnished, written proof of the occurrence, nature of the loss, and extent of loss must be submitted to the 27. If a distribution is made for a reason other than to pay for qualified medical expenses, the amount withdrawn will be subject to an income tax and an additional: 20% tax 28. Medicare supplement policies (Medigap) do not cover the cost of: extendednursing home care 29. to fill the gap in coverage attributable to Medicare's deductibles, copay-ment requirements, and benefit periods. These plans are issued by privateinsurance companies.: Medigap plans are designed 30. to either continue group coverage and defer Medicare until retirement, orswitch to Medicare.: If a person is still employed at the age of 65, he or she may choose 31. non-controlled business: The purpose of a license is to primarily write 32. When producer was reviewing a potential customers coverage written byanother company the producer made several remarks that were maliciously critical of that other insurer. The producer count be found guilty of (oral or written remarks): Defamation 33. What policy characteristics of a Major Medical Expense don't EXCEPT: Low maximum limits
34. Characteristics of a Major Medical Expense: High Maximum Limits 35. Characteristics of a Major Medical Expense: Blanket Coverage 36. Characteristics of a Major Medical Expense: Coinsurance 37. Characteristics of a Major Medical Expense: Deductible 38. In franchise insurance, premiums are usually: Lower than individual policies,but higher than group policies 39. Mandatory provision in individual health insurance policies stating that the insurer, at its own expense, has the right and opportunity and is: Physicalexamination and autopsy 40. state programs that benefits are payable when workers suffer work-relatedinjury regardless of fault or negligence: Workers Compensation 41. When does Medicare cover nursing home care?: Only if its part of treatmentfor covered illness or injury 42. Who is the beneficiary in a credit health policy?: The lending institution 43. Each insurer should pay a proportionate share of the claim: An insured has medical insurance coverage through 2 different provider both covering same
on previous insurance applications?: Medical Information Bureau
55. According to OBRA, what is the minimum number of employees required to constitute a large group?: 100 56. One individual licensed insurance producer: In addition to obtaining an insur- ance producer license, a business entity, in order to transact insurance, must haveat least 57. Commissioner: Which of the following authorities is authorized to issue a temporary insurance producer's licenses 58. Each insurer should pay a proportionate share of the claim.: An insured hasmedical insurance coverage through 2 different providers, both covering the sameexpenses on an expense-incurred basis. Neither company knows in advance that the insured has coverage through any other insurers. The insured submits a claim to both insurers. How should the claim be handled
59. Employee benefits are tax deductible the year in which they were received.- : Concerning group Medical and Dental insurance, which of the following statements is INCORRECT? 60. any premium paid by the employer is deductible as a business expense. premiums provided by the employee are only deductible if certain conditionsare met. Group medical and dental expense benefits are received income taxfree by the employee.: For group medical and dental expense insurance 61. To help the insured understand all aspects of the contract: Why should the producer personally deliver the policy when the first premium has already been paid? 62. cost containment: An insured is receiving hospice care. His insurer will pay for painkillers but not for an operation to reduce the size of a tumor. What term best fits this arrangement? 63. All plans (A-N): In which Medicare supplemental policies are the core benefits found? 64. The premium increases: If a policy is rated-up, which of the following is true? 65. comprehensive plan: A health insurance plan that covers all accidents and sicknesses that are not specifically excluded from the policy is referred to as a 66. An employee's group medical benefits are generally exempt from taxation as income.: Under which condition would an employee's group medical benefits be exempt from income taxes? 67. Policyowner: Individuals must have insurable interest in the insured 68. To minimize the insured's level of liability in the event of loss: Which of the following is NOT a goal of risk retention? 69. reduce expenses improve cash flow, to increase control of claim reservingclaims
74. self insurance, deductibles, copayments: All of the following are examples ofrisk retention 75. Reasonable expectations: If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept? 76. for the first 2 years of a disability: In disability income insurance, the own occupation definition of disability applies 77. nothing: If one takes Social Security retirement benefits at age 62, what needsto be done at age 65 to qualify for Medicare? 78. Both group health and Medicare: A man is still employed at age 65 and is now eligible for Medicare. He wants to know what health insurance coverage he is eligible to receive. Which of the following options are available to him? 79. Premiums are deductible and benefits are taxed. The premiums paid for BOE insurance are tax deductible to the business as a business expense. However, the benefits received are taxable to the business as received.: Regarding the taxation of Business Overhead policies, 80. Entire Contract: The provision that states that both the printed contract and a copy of the application form the contract between the policyowner and the insurer is called the 81. The insurer: An insurer hires a representative to advertise its company at a local convention. The representative lies about the details of some of the policies, in an attempt to secure more business for the company. Who is responsible for the representative's claims? 82. Service policies that it has issued.File
annual reports. Pay fees and taxes.: Should an authorized insurance company have their certificate of authority suspended, during the period of the suspension, the insurer must do all of the following
83. Within 90 days or as soon as reasonably possible, but not to exceed 1 year: How soon following the occurrence of a covered loss must an insured submitwritten proof of such loss to the insurance company? 84. If it is intentional and material: When would a misrepresentation on the insur- ance application be considered fraud? 85. They cover Medicare deductibles and copayments.They supplement Medicare benefits. They are issued by private insurers: All of the following statements about Medicare supplement insurance policies are
Another name for a substandard risk classification is
91. As long as the policy is in force: What is the maximum period of time duringwhich an insurer may contest fraudulent misstatements made in a health insurance application? 92. Group health insurance. Annuities. Disability income insurance.: All of the following are lines of insurance that maybe transacted under a life and accident/health producer license 93. Death benefits are paid only if death occurs within 24 hours of an accident Under an Accidental Death and Dismemberment insurance policy, the deathbenefit will be paid if the accidental death occurs within (90 days)of the
accident, not 24 hours.: All of the following statements concerning Accidental Death and Dismemberment coverage are correct EXCEPT
94. NAIC: A long-term care insurance shopper's guide must be provided in the format developed by which of the following? 95. Income benefits Death benefits Medical and rehabilitation benefits: Under workers compensation, which of the following benefits are included? 96. 0 days If an employer provides short-term disability benefits for its employees, the elimination period can be nonexistent, and the benefits can last as long as two years. The benefit typically spans 70 - 80% of the insured's income.: Whatis the shortest possible elimination period for group short-term disability benefits provided by an employer? 97. Its goal is to channel patients to providers that discount services.: Whichof the following is true of a PPO? 98. They only cover specific accidents or diseases.: Which of the following istrue regarding limited health insurance policies? 99. Part B coverage is provided free of charge when an individual turns age 65 Those who desire Part B coverage must enroll and pay a monthly premium.- : Which of the following statements is INCORRECT concerning Medicare Part B coverage? 100. The loss may be intentional
103. Reduction. Steps taken to prevent losses from occurring are called risk reduction.: In- stalling deadbolt locks on the doors of a home is an example of which method of handling risk? 104. Both the applicant and agent: Who must sign the notice regarding replace- ment? 105. illegal: An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice? 106. 500: An insured is covered under 2 group health plans - under his own andhis spouse's. He had suffered a loss of $2,000. After the insured paid the total of $500 in deductibles and coinsurance, the primary insurer covered $1,500 of medical expenses. What amount, if any, would be paid by the secondary insurer? 107. what the first company will not pay, such as deductibles and coinsurance. The insured will, then, be reimbursed for out-of-pocket costs.: Once the primary insurer has paid the full available benefit, the secondary insurer will cover 108. perpetual: In Alabama, an insurance company certificate of authority is issuedfor what period of time? 109. Conformity with State Statutes: Which of the following provisions requires that any policy language that is in conflict with the state statutes of the state in whichthe insured resides is automatically amended to conform with those of the state of residence? 110. workers compensation: An employee is injured in a construction accident, rendering him unable to work for a year. Which of the following plans would provide him with medical expense coverage and income assistance?
111. A method used by insurers to protect against catastrophic losses.: Rein-surance System 112. Independent Agency System General Agency System Direct Response Marketing System: All of the following are marketing arrange- ments used by insurers 113. is issued on those groups that have members that are constantly chang-ing.: Blanket insurance 114. A joining together by employers to provide health benefits for employee MEWA provides benefits for a number of member groups.: Which statementbest defines a Multiple Employer Welfare Arrangement (MEWA)? 115. 100%: For group medical and dental expense insurance, what percentage of premium paid by the employer is deductible as a business expense?
All LTC policies must disclose and explain the renewability provisions.With re-gard to life insurance policies that provide an accelerated benefit for long-termcare, the policy must include a statement to the effect that receipt of the accel-erated benefits may be taxable, and that the insured should seek assistance from a personal tax advisor.: Which of the following does NOT have to be disclosedin a long-term care (LTC) policy?
124. Each violation will be punished as a separate violation of the insurancecode.: With respect to multiple violations of the insurance code, which of the following is correct? 125. Overinsurance: When an individual is covered under two health insurance policies that have duplicate benefits which could make a claim for benefits becauseof an injury or illness profitable, it is called 126. Benefits are considered taxable income to the business.: Which of the following is not true of Disability Buy-Sell coverage?
127. tax free.: The buy-sell coverage benefits are 128. Insurers are barred from requesting HIV testing.: Which of the following statements regarding HIV testing for life insurance purposes is NOT true? 129. Platinum: According to the PPACA metal levels classification, if a health plan is expected to cover 90% of the cost for an average population, and the participants would cover the remaining 10%, what type of plan is that? 130. covers 90% of the benefit costs: Platinum Plan 131. covers 80% of the benefit costs: Gold Plan 132. covers 60% of the benefit costs: Bronze Plan 133. covers 70% of the benefit cost: Silvers plan 134. The pre-existing condition waiting period fulfilled in the old policy will be transferred to the new policy, the new one picking up where the old one left off.: An individual purchased a Medicare supplement policy in March and decided to replace it 2 months later. His history of coronary artery disease is considered a pre-existing condition. Which of the following is true? 135. is a term used to describe the situation that is created when an individual purchases duplicating coverage with the intent to collect from each policy for a single loss.: Overinsurance 136. Pay the claim. Because the accident occurred during the grace period, the insurance com- pany will pay the claim.: An insured pays her Major Medical Insurance premium annually on March 1. Last March she forgot to mail her premium to the company. OnMarch 19, she had an accident and broke her leg. The insurance company would 137. grace period: Because the accident occurred during the , the
