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Life Insurance Exam Questions and Answers PDF
1. What is another word for a mathematician who analyzes the probability of specific events occurring and values health or life insurance policies depending on the probability of those events occurring?
Statistician
Computator
Actuary
Economist
ANSWER: Actuary
An actuary is a mathematician who analyzes the probability of certain events occurring and then prices insurance policies depending on the probability of those events occurring.
2. Mikey, Len’s grandson, is one of his three children. Len’s disability policy names his wife as the primary beneficiary, but she died five years ago. All of Len’s children had died by the time he goes away. They, like Mikey, had benefited from his generosity. Mikey is what kind of beneficiary?
Secondary
Tertiary
Primary
None of the above
All of the above
ANSWER: Tertiary
The policyholder names a beneficiary to receive the benefits or payout from an insurance policy. The following are the three sorts of beneficiaries:
Primary (a spouse) is the primary beneficiary, receiving benefits or cash from the policy before all other beneficiaries.
In the case that the primary beneficiary is deceased when the insured dies, a secondary beneficiary (a child) can get the benefits or proceeds.
In the case that both the primary and secondary beneficiaries are deceased when the insured dies, a tertiary beneficiary (a grandchild) can get the benefits or proceeds.
3. When compared to other types of plans, adjustable life policies are?
Flexible
Illegal
Strict
Risky
Waiver
ANSWER: Flexible
In comparison to other types of plans, adjustable life policies are more flexible.
Adjustable life insurance policies exist primarily because of the flexibility they provide.
Adjustable life insurance policies allow you to adjust the policy’s main aspects, such as the premiums you pay and the face value.
Conventional insurance is utilized as a base, and the features can then be tailored to the insured’s specific needs.
The insured has the option of requesting a certain premium payment schedule and amount.
Changes to the protection time and face amount are also possible.
The insured gains more flexibility with an adjustable policy, while the insurer can charge a larger premium than with a whole or term life policy.
4. Ken wants to get a life insurance policy as soon as possible, but he also wants the flexibility to shop about and switch plans if he discovers one that he likes better. What benefit will Ken receive from this provision?
Free look
Sample period
Review period
First look
Tryout clause
ANSWER: Free look
A “free-look” clause allows a policyholder to buy life insurance with the option of shopping around and switching policies if better coverage is found.
Following the actual delivery of the policy, these policies often give a ten to thirty-day review period.
No. She has to go through COBRA to obtain coverage
The health and life insurance coverage is canceled while Rainer is on leave
Yes but her health insurer has to approve her request
Yes the law requires her cash value and health insurance coverage to continue on her employer’s plan
None of the above
ANSWER: Yes but her health insurer has to approve her request
Rainer can ask to stay on her employer’s group health insurance coverage while she is unable to work because her ailment is covered by workers’ compensation, but her request must be approved by her employer’s health provider.
Coverage may still be available if clearance is not given.
Depending on her situation, she might be eligible to get coverage through COBRA or the Family and Medical Leave Act (FMLA).
7. What kind of income does someone insured have if he or she is unable to work?
Unearned
Earned
Adhesion
Contingency
Flashcards
ANSWER: Unearned
Unearned income, such as interest payments or investment income, is income that persists even if a person is unable to work.
Unearned income may be used to calculate how many disability payments a person is eligible for.
An adhesion contract is one offered by an insurance firm on a “take it or leave it” basis, though the word is not confined to the insurance business.
The insured has the option of accepting or rejecting the contract. However, any ambiguities in the contract are construed against the drafter of the contract (the insurance company) and in favor of the insured, which means that the insured will be given the respect deserved if there is any question about what a policy term is supposed to entail.
As a result of this hypothesis, insurance companies are encouraged to make policy terms as plain as feasible.
8. The following is a way of calculating the amount of disability coverage that an individual requires:
COBRA
Programming
Computing
Actuarial
None of the above
ANSWER: Programming
Programming is a way of calculating the amount of disability insurance that a person needs.
An actuary is a mathematician who analyzes the probability of certain events occurring and then prices insurance policies depending on the probability of those events occurring.
The 1985 Act by Consolidated Omnibus Budget Reconciliation (COBRA) allows employees and their dependents in a group health plan to go on acquiring health insurance coverage up to 18 months or longer after leaving their employer if certain conditions are met.
This means that an employee who has left their employer can choose COBRA continuation benefits and continue receiving the same coverage if they are eligible.
If a “prequalifying event” happens that results in the loss of coverage, COBRA continuation coverage is allowed.
These are the “qualifying events”:
Involuntary or voluntary termination or reduced working hours
The death of an insured
Legal separation or divorce leading to the ex-coverage spouse’s being terminated -when a dependent kid “olds out” (is no longer eligible for coverage)
A second qualifying event must occur or the qualified recipient must be found disabled by Social Security to get an extension of COBRA continuing coverage for an additional 18 months once the initial 18 months have expired.
Aside from the aforementioned qualifying circumstances, if the covered employee becomes Medicare- eligible, an extension is allowed.
Cash surrender value rider
All of the above
ANSWER: Spouse term insurance rider
A spousal term insurance rider allows a whole life policyholder to add term coverage to their spouse.
A minor death benefit is usually paid out by a term policy. It could also contain the opportunity to convert the term policy to a permanent policy without having to prove insurability when the spouse reaches specific ages as defined in the insurance contract.
Another option is that if the insured dies within the premium-paying period, the spouse’s coverage will be converted to term coverage without the need to pay any further payment.
A term life insurance policy flaunts a set premium and is only valid for a set period of time.
In addition to the permanent full coverage in the main policy, term life riders provide term coverage for a set amount of time.
When a life rider is added to a permanent life policy, the insured can convert his or her term life insurance coverage to permanent life insurance at any time.
The insured saves money on premiums at the start of the policy term by having a portion of the coverage as a year term.
A conversion does not, however, necessitate a further underwriting process or medical test.
Whole life insurance and straight life insurance are other terms for ordinary life insurance.
Ordinary life insurance is a policy that is assured to stay in full force for the duration of the insured’s life, or until the policy maturity date, whichever comes first.
A life insurance policy is an understanding between the insured and the insurer that compels the insurer to pay the policy’s death benefit to the policy’s beneficiaries when the insured passes away if the terms of the contract are followed.
Whole life policies have substantially higher premiums than term policies since they are assured to stay in force as long as the required premiums are paid.
Whole life premiums are set at the time of issue and do not normally increase with age.
Apart from limited pay policies, which may be paid up in 9-10 years, 19-20 years, or at age 64-65, the insured party usually pays premiums until death.
Whole life insurance is a sort of life insurance that has a cash value, like variable life, universal life, and endowment policies.
11. COBRA permits:
A terminated employee to continue coverage
An employer to terminate an employee’s coverage
An employer to continue terminated employee’s coverage
An employer to give insurance premiums to employee
None of the above
ANSWER: A terminated employee to continue coverage
The 1985 Act by Consolidated Omnibus Budget Reconciliation (COBRA) allows employees and their dependents in a group health plan to go on acquiring health insurance coverage up to 18 months or longer after leaving their employer if certain conditions are met.
This means that an employee who has left their employer can choose COBRA continuation benefits and continue receiving the same coverage if they are eligible.
It is not a decision made by the employer.
If a “prequalifying incident” happens that results in a loss of coverage, continuation coverage is available.
These are the “qualifying events”:
Involuntary or voluntary termination or reduced working hours
The death of an insured -legal separation or divorce leading to the ex-coverage spouse’s being terminated
When a dependent kid “olds out” (is no longer eligible for coverage)
A second qualifying event must occur or the qualified recipient must be found disabled by Social Security to get an extension of COBRA continuing coverage for an additional 18 months once the initial 18 months have expired.
Aside from the aforementioned qualifying circumstances, if the covered employee becomes Medicare- eligible, an extension is allowed.
To get an extension, the qualifying employee must notify the plan administrator and submit proof of the reason or the social security administration’s disability determination.
12. Fran buys a 5-year annuity with a graded vesting period. Which of the following percentages will be vested at the end of year three?
Unscrupulous individuals who want to take advantage of the elderly may exploit STOLIs.
14. Which of these processes is not a common underwriting position for a health insurance company?
Rating the policy
Sending the policy documents to the applicants
Reviewing medical histories
Setting premium rates
ANSWER: Sending the policy documents to the applicants
Underwriters’ primary responsibility, particularly in the case of accident or disability insurance, is to assess and analyze the risk and exposures of applicants.
To establish an applicant’s risk level, underwriters look at a variety of factors, including the applicant’s medical history.
After that, the underwriter determines the level of coverage to provide the applicant and rates the policy.
After that, the premium rate is calculated.
Finally, the policy is issued, which normally entails submitting all plan documentation to the selling agent, including the certificate of insurance (COI).
The documents are then given to the applicant by the agent.
15. A(n) _____________________ is an add-on to an insurance policy that increases the benefits.
Rider
Supplement
Expansion of provision
B and E
Continuation
ANSWER: Rider
A rider is an add-on to an insurance contract that can increase or decrease the benefits, conditions, or coverage of a policy.
A rider is a legally binding document that is attached to a contract.
16. What document is supplied by an insurance company to offer verification that a medical procedure is covered by the insured?
Proof of coverage
POS
COI
IME
ANSWER: COI
An insurance firm issues a certificate of insurance (COI) to prove that insurance coverage is in place.
The coverage provisions are also included in the paper, which includes the kind of insurance, coverage terms, the effective date of coverage, and any limitations or exclusions.
The COI could be used to demonstrate that a specific medical practice is covered.
An insurer may request an independent medical examination (IME) to verify claims made by an insured’s personal doctor.
Before the IME, the IME doctor had not treated the insured.
It’s a second thought.
The qualities of a health maintenance organization (HMO) and a preferred provider organization (PPO) are combined in a point of service plan (POS) (PPO).
In a Point-of-Service plan, members who receive health services from plan providers are typically reimbursed 90-100 percent of the cost, compared to roughly 70% for non-plan providers.
The insured is responsible for the difference between the cost and the reimbursement amount.
A POS is a sort of managed care that provides lower medical costs in exchange for a limited provider selection.
17. Both of Lechter’s parents died in an aviation crash when he was 12 years old. Lechter is qualified for Social Security benefits if he is at least _____ years old and became disabled before the age of _____
22: 18
18: 16
25: 18
25: 21
When the insured dies, the purchaser of the policy becomes the new policyholder, and as long as the purchaser pays the required premiums, the purchaser will receive the entire death benefit.
20. Which of the following statements concerning Medicaid is correct?
It is a nationwide program
It is a local program
It is both a nationwide and local program
It is a privately managed program
ANSWER: It is both a state and federal program
Medicaid is a federal-state government program that is offered in every state. It offers free or low-cost health care to those who meet certain criteria.
The funding is split between the federal and state governments. Each state determines the degree of benefits, as well as coverage and prices, although Medicaid programs must follow federal rules.
Payments to medical providers might be provided directly to them, or the Medicaid program can be managed by a third-party administrator or insurance company, depending on the program.
