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Insurance Licensing Exam Questions and Answers: A Comprehensive Review, Exams of Business Administration

Middle Georgia State University (MGA)Business Administration

A valuable resource for those studying for insurance licensing exams. it presents a series of multiple-choice questions covering various aspects of insurance, including risk assessment, claims handling, and ethical sales practices. the questions test knowledge of insurance regulations, policy types, and common industry practices, making it ideal for exam preparation and knowledge reinforcement. The detailed answers offer explanations and insights into the correct responses, enhancing understanding of key concepts.

Typology: Exams

2024/2025

Available from 05/13/2025

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Webce Test Questions | 100% Correct |

Verified | 2024 Version

which of the following situations presents a situation of pure risk?

-knowing that his family is depending on him, Frank wants to insure his life

-wanting to increase his retirement savings, Saul invests his life savings in the stock market

-Ralph takes a second mortgage on his house and uses the proceeds to gamble

-wanting better job security, Ron cashes in his life insurance to start his own business - ✔✔knowing that

his family is depending on him, Frank wants to insure his own life

only pure risk is insurable. Pure risk may only result in a loss, unlike speculative risk which may result in a

gain.

Agent Jill received a letter from the Department of insurance asking her to submit verification of having

completed the continued education requirements for the previous licensing period. Three weeks later,

the department sent another letter. Which penalty may the Department impose if Jill has still not

responded to their request a month later? - ✔✔a fine up to $100 per day per violation

A producer has 30 days to respond to a written inquiry from the Department

Jim's policy expired due to nonpayment of premium. His agent sends him a statement the following

month without notice of the lapse. If Jim pays the premium and later suffers a loss for which he files a

claim, what will prevent the insurer from denying the claim?

-estoppel

-utmost good faith

-reasonable expectations

-waiver - ✔✔estoppel

Partial preview of the text

Download Insurance Licensing Exam Questions and Answers: A Comprehensive Review and more Exams Business Administration in PDF only on Docsity!

Webce Test Questions | 100% Correct |

Verified | 2024 Version

which of the following situations presents a situation of pure risk?

knowing that his family is depending on him, Frank wants to insure his life
wanting to increase his retirement savings, Saul invests his life savings in the stock market
Ralph takes a second mortgage on his house and uses the proceeds to gamble
wanting better job security, Ron cashes in his life insurance to start his own business - ✔✔knowing that his family is depending on him, Frank wants to insure his own life only pure risk is insurable. Pure risk may only result in a loss, unlike speculative risk which may result in a gain. Agent Jill received a letter from the Department of insurance asking her to submit verification of having completed the continued education requirements for the previous licensing period. Three weeks later, the department sent another letter. Which penalty may the Department impose if Jill has still not responded to their request a month later? - ✔✔a fine up to $100 per day per violation A producer has 30 days to respond to a written inquiry from the Department Jim's policy expired due to nonpayment of premium. His agent sends him a statement the following month without notice of the lapse. If Jim pays the premium and later suffers a loss for which he files a claim, what will prevent the insurer from denying the claim?
estoppel
utmost good faith
reasonable expectations
waiver - ✔✔estoppel

BBC insurers filed premium rates for its new line of variable products on January 15. Within how many days must the commissioner approve or disapprove the rates? - ✔✔30 days all rate filings are subject to a 30-day waiting period before they become effective. The commissioner of insurance can examine the business accounts, transactions, and records of insurers and producers as often as necessary, but must do so at least once in how many years? - ✔✔5 years Acme Insurance and Apogee insurance agree to offer different premium rates for persons of equal risk within a particular class. They also agree to limit benefits paid to insureds within this class if the insureds live within certain counties of PA. What are Acme and Apogee engaging in?

acceptable marketing and underwriting practices
unfair and prohibited business practices
insurance fraud
false advertising - ✔✔they are engaging in unfair and prohibited business practices they are agreeing to unreasonable restraint of trade in insurance business, and they are engaging in unfair discrimination which of the following is NOT a remedy available to the PA commissioner of insurance for committing an unfair method of competition?
imprisonment
cease and desist order
suspension of license
revocation of license - ✔✔imprisonment is not a punishment for committing an unfair method of competition you cannot be arrested for committing an unfair method of competition

twisting
churning
rebating
false information - ✔✔rebating its illegal to offer gifts in exchange for the purchase of an insurance policy which of the following is not a power granted to the PA commissioner of insurance?
licensing producers and companies
enforcing insurance laws
issuing regulations to administer insurance laws
prosecuting individuals for violating insurance laws - ✔✔the PA commissioner of insurance CANNOT prosecute individuals for violating insurance laws which is not necessary to create a legal contract?
consideration
offer
warranty
acceptance - ✔✔warranty is not necessary to create a legal contract the federal risk retention act of 1986 applies to which business?
self-insuring business
re-insurers
credit life insurance companies
high-risk business insurers - ✔✔the federal risk retention act of 1986 applies to self-insuring businesses

Jeremy has had an individual health insurance policy for many years because of his family's history of cancer. the tendency of someone like jeremy to buy and retain insurance is known as:

implied selection
adverse selection
exposure reduction
risk avoidance - ✔✔his tendency to buy and retain insurance is known as adverse selection with respect to social security benefits, what is a worker's primary insurance amount (PIA)?
the amount of retirement benefit the worker will receive at their full retirement age
the total amount of money a person earned during their lifetime
the amount payable to the surviving spouse after the worker's death
the amount of retirement and disability benefit payable to the worker and their spouse - ✔✔a worker's primary insurance amount is the amount of retirement benefit the worker will receive at their full retirement age a type of life insurance that covers two people and only pays the death benefit upon the second insured's death is called:
survivorship life
family life
spousal life
joint life - ✔✔survivorship life tom bought a $100,000 adjustable life insurance policy. with respect to that policy, all the following statements are correct EXCEPT:
tom can increase the death benefits under his policy if he can prove insurability
if tom wants to change the premium, both he and the insurer must agree to the change

Len decided to surrender his policy for its cash value. All the following statements concerning his decision are correct EXCEPT:

the insurer will send len a check for the policy's cash surrender value
the insurer may decide to pay the cash value either in a lump sum or monthly installments
the policy is cancelled and the insurer's responsibility under the contract ends
the policy cannot be reinstated - ✔✔It's not true that the insurer may decided to pay the cash value either in a lump sum or in monthly installments. The insurer is required to pay it in a lump sum a provision found in some deferred annuities, which allows surrender charge-free withdrawals if the interest rate credited to the accumulated value drops below a specified level, is called:
surrender provision
bailout provision
release provision
non-forfeiture provision - ✔✔this is called the bailout provision which of the following statements regarding third-party ownership is correct?
the insured has no rights in the policy
the insured can access the policy's cash value but cannot designate beneficiaries
the insured can designate a beneficiary and access the cash value, but cannot assign the policy to another third-party owner - ✔✔it is correct that the insured has no rights in the policy all the following statements regarding life insurance term riders are correct EXCEPT:
if the insured is alive at the end of the term, then the coverage ends without value
term life insurance riders has no cash value or any other living benefits associated with them
a term rider provides additional coverage for as long as the insured maintains the base whole life policy

like term life insurance policies, term riders continue only for a specified amount of time - ✔✔it is not true that a term rider provides additional coverage for as long as the insured maintains the base whole life policy. james bought a life insurance policy 18 months ago. If he commits suicide today, what, if anything, would the insurer be obligated to pay the beneficiary?
the full death benefit
the death benefit minus premiums paid
refund of the premiums paid
nothing - ✔✔If you commit suicide within 2 years after purchasing a life insurance policy, the insurer is obligated to only refund the premiums paid to your beneficiary. in some states, employers can buy group life insurance for their employees through a multiple employer trust (MET). All the following statements about METs are correct EXCEPT:
each individual employer is issued a separate policy
a MET must have at least 2 employers and 100 employees
for contributory plans, 75% of the group must enroll
for noncontributory plans, 100% of the group must enroll - ✔✔it is not true that each individual employer is issued a separate policy which of the following statements is true with all types of life insurance?
premiums are invested in the insurer's general account, allowing policy values to be contractually guaranteed
insurers return excess premiums in the form of policy dividends
life insurance policies are noncancellable by the insurer except for non-payment of premium
life insurance policies feature a cash value that can be accessed while the insured is alive - ✔✔it is true that all life insurance policies are noncancellable by the insurer except for nonpayment of premiums

4 to 5%
6 to 10%
depends on the participation rate and cap - ✔✔typically 1-3% is guaranteed what type of life insurance policy distributes its surplus after the company accounts for reserves, liabilities, capital, and expenses?
participating policy
non participating policy
industrial insurance policy
commercial insurance - ✔✔a participating policy because this policy participates in the divisible surplus of the insurer which statement about increasing term insurance is correct?
premiums are generally lower than level term or decreasing term insurance
it is normally sold as a rider on a permanent life policy
the premium increases during the policy term as the death benefit increases
the cash value increases during the term - ✔✔term insurance is normally sold as a rider on a permanent life policy with respect to roth IRA conversions, all the following statements are correct EXCEPT:
income taxes must be paid on the tradiaitonal IRA when the account is converted
to convert to a roth IRA, a person must have earned income
amounts converted to a roth IRA will grow tax free
the convert to a roth IRA, the owner may have any amount of modified adjusted gross income in the year of the conversion - ✔✔it is not true that you must have earned income to convert to a roth IRA

under a disability waiver of premium rider, an insured most commonly must be totally disabled for how long before the waiver begins? - ✔✔most waiver of premium riders require that the insured be totally disabled for SIX MONTHS before the waiver begins julia signed a viatical settlement agreement on May 1. 2 weeks later she decides she no longer wants to sell the policy, what are her options?

julia may cancel the contract only if the viatical settlement provider consents
julia may cancel the contract because the cancellation period has not ended
julia may cancel and contract and keep any proceeds
julia cannot cancel the contract because the cancellation period has ended - ✔✔julia can cancel the contract because the cancellation period is 30 days after signing the contract and 15 days after getting proceeds chester established a 529 plan for his daughter and contributed $5,000 to the account this year. 6 months later, he withdrew $20k to pay for his daughter's college tuition. Which statement is true?
they can take a tax deductible for the contribution
chester does not have to pay tax on the distribution
chester must pay tax on the earnings portion of the withdrawal
chester can take an income tax deduction for their withdrawal - ✔✔chester does not have to pay tax on the distribution because the interest earned and the funds are not taxable what is the maximum amount of time most states allow insurers to delay paying cash surrender values when a life insurance policy is canceled?
1 month
6 months
9 months
1 year - ✔✔they can delay for up to 6 months

if a retired worker's total income including one-half of his or her social security benefits exceeds a threshold amount, then up to what benefits exceeding the threshold are taxable? - ✔✔85% of the following, what organization(s) do life and health insurance companies regulate themselves through:

FINRA
american society of chartered life underwritiers
international society of health underwriters
national association of life underwriters - ✔✔national association of life underwriters american society of chartered life underwriters international society of health underwriters FINRA only regulates agents selling variable life products alex sold an insurance policy before his license lapsed and earned a commission on the sale. is he entitled to a commission if the policy is renewed? - ✔✔yes, because he was licensed when the policy was sold adam is an independent agent and solicits policies for several different insurers. what kind of relationship does he have with each insurer?
consultant
dependent
foduciary
presumptive - ✔✔he has a fiduciary relationship with each insurer an insurer must notify its current customers of its privacy policy and practices at least once every how often?
6 months

36 months
12 months
24 months - ✔✔every 12 months as a general rule, life insurance policy loans become available after a policy has been in force for:
6 months
1 year
3 years
5 years - ✔✔policy loans normally become available after the policy has been in force for THREE years of the following, what statement(s) regarding a life insurance policy's cost-of-living (COL) rider is correct?
the policy's death benefit amount can increase without requiring proof of insurability
the max death benefit increase is usually limited to 5% annually
COL riders are best suited for UL insurance policies
COL riders are commonly tied to the consumer price index - ✔✔the policy's death benefit amount can increase without requiring proof of insurability COL are commonly tied to the consumer price index the max death benefit increase is usually limited to 5% annually
since COL are tied to the CPI, when the CPI goes up so does the benefits an annuity's basic purpose is to - ✔✔liquidate a sum of money and protect against outliving one's income which of the following statements regarding the extended term nonforfeiture option is correct?

the formal name for what is commonly called a "double indemnity ride" is: - ✔✔accidental death benefit rider is aka double indemnity rider in applying for a whole life insuranc epolicy, andrea disclosed that she is a rock climber. of the following, what may the insurer do?

issue a policy but charge a premium
issue a term rider rather than whole life insurance
issue a policy that does not pay death benefit if the death is a direct result of climbing
decline the application - ✔✔issue a policy but charge an additional premium decline the application issue a policy that does not pay a death benefit if the death is a direct result from rock climbing which of the following are required provisions in a market-value adjusted annuity?
incontestability period
nonforfeiture agreement
60 day grace period
misstatement of age provision - ✔✔incontestability period nonforfeiture agreement misstatement of age 60 day grace periods ARE NOT REQUIRED when calculating a family's ongoing needs at the death of the insured, agent must consider all of the following expenses EXCEPT
utilities
transportation expenses
funeral expenses

family medical expenses - ✔✔DOES NOT consider the cost of the funeral only considers ongoing needs of the various life contingency income options, which option offers the largest monthly payment for a given amount of annuity funds? - ✔✔straight life income (aka pure life income) offers the largest monthly income payment if a labor union sponsors a group life insurance plan for its members, which of the following statements is correct?
The union members are the policyowners.
- The union must pay all of the premiums.
premiums must be paid either entirely from union funds or from a combination of union funds and member funds
all of the union members must enroll. - ✔✔premiums must be paid either entirely from union funds or from a combination of union funds and member funds at what point does a deferred annuity beneficiary receive any benefits under the contract? - ✔✔at the death of the owner/annuitant BEFORE annuitization how long can a life insurance policy be backdated - ✔✔6 months under social security, what is the primary insurance amount (PIA) - ✔✔the monthly benefit amount a person will get if they elect to take benefits at full retirement age which provision allows part of a life insurance policy's death benefit to be paid while the owner is still living if he or she suffers a terminal illness? - ✔✔accelerated benefits provision if the insured under a whole life policy is diagnosed with cancer and wishes to use his life insurance to take a final vacation with his family, which of the following statements is most correct?

She cannot take the MSA funds if she changes employers.
Contributions are not deducted from taxable income.
Funds in the account must be depleted by Dec. 31.
she must maintain a high deductible insurance plan - ✔✔she must maintain a high-deductible health insurance plan edwina was injured in a car accident that resulted in both her legs being amputated. what is the minimum amount of benefit she will receive under her specified accident policy? - ✔✔$1, a specified accident policy provides $1000 for double dismemberment, $500 for single, and at least $1000 for accidental death to be considered totally disabled under a disability income policy, the insured must be unable to preform all the substantial and material duties of their regular occupation for how many months? - ✔✔ 24 months which finances health care costs without being tied to a high deductible insurance plan?
HSA
MSA
IRA
FSA flexible spending account - ✔✔flexible spending accounts (FSA) which of the following options must be offered to all long-term care policyowners?
waiver of pre-existing conditions clause
inflation protection
guaranteed benefits clause
replacement protection - ✔✔inflation protection must be offered to all LTC policyowners

alpha co pays the premiums for its group medical, dental, disability, and LTC insurance plans. which statement is correct about the income tax consequences?

The premiums for all of the policies are taxable income to the employees.
The premiums are deductible income to the employees
alpha can take income tax deductions for all the premiums it pays on its policies
Alpha can take an income tax deduction only for the premiums it pays for its medical plans. - ✔✔alpha can take an income tax deduction for all of the premiums it pays on its policies which is not an optional health policy provision issued in PA? - ✔✔change of beneficiary insured retains the right to change the beneficiary core benefits that must be covered in all 10 standard medicare supplment policies include which of the following:
part A coinsurance
Medicare Part B deductible
part B coinsurance after the deductible is met
parts A and B blood coverage for the first 3 pints a year - ✔✔part A coinsurance part B coinsurance after the deductible is met parts A and B blood coverage for the first 3 pints a year a group health policy in PA can exclude coverage for preexisting conditions for no longer than - ✔✔ 12 months after the enrollment date Jons disability income policy provides that benefits will be reduced once he reaches age 62. at this point, his benefits must be equal to what amount that was payable before age 62? - ✔✔50%

Insurance Licensing Exam Questions and Answers: A Comprehensive Review, Exams of Business Administration

Related documents

Partial preview of the text

Download Insurance Licensing Exam Questions and Answers: A Comprehensive Review and more Exams Business Administration in PDF only on Docsity!

Webce Test Questions | 100% Correct |

Verified | 2024 Version