Kansas Insurance Practice Exam

Questions and Answers

Which of the following annuities would best suit the needs of a 35 year old factory worker who is concerned about inflation and wants to establish a retirement plan?

Immediate annuity

Fixed annuity

Deferred annuity

Flexible premium variable annuity (correct)

When a producer submits an insurance application to the company, the producer must take all of the following actions EXCEPT?

Collect the premium

Obtain signatures

Submit a completed medical information report (correct)

Explain the policy details

The statement is CORRECT about group life conversion privileges: death during the conversion period is covered even if the departing employee chose not to convert the policy.

True

What is the primary reason for selecting a variable whole life policy instead of a traditional whole life policy?

Has the potential to earn a higher rate of return on the cash value. Signup and view all the answers

Under the Social Security Retirement benefits, all of the following factors influence the monthly income benefit except the individual's?

Sex Signup and view all the answers

Which policy provision states that the application is part of the policy?

Entire contract Signup and view all the answers

If a life insurance policy applicant is classified as a substandard risk, what is the MOST likely action of the insurance company?

Charge an extra premium Signup and view all the answers

The right to change a beneficiary designation is reserved for the?

Policy owner Signup and view all the answers

When does coverage become effective if an applicant for life insurance submits a completed application without paying the first premium?

Policy is delivered and the premium paid. Signup and view all the answers

If a policy contains a Guaranteed Insurability rider, what right does the insured have?

Purchase additional coverage whenever the insured changes jobs. Signup and view all the answers

What does the Waiver of Premium provision of a life policy allow the insurer to do?

Waive an insured's premiums if the insured becomes totally disabled before a certain age. Signup and view all the answers

An employer can deduct premium payments as an ordinary business expense for which of the following life coverages?

Group Signup and view all the answers

Which insurance policy would BEST meet the needs of a client who needs substantial protection but has limited financial resources?

Term life insurance Signup and view all the answers

What refers to the transfer of some or all of the ownership rights of a life insurance policy from one individual to another?

Assignment Signup and view all the answers

What benefit does a payor benefit rider provide?

A temporary waiver of premium should the payor die, until the insured reaches a predetermined age. Signup and view all the answers

What type of retirement plan is tax-qualified?

Defined contribution Signup and view all the answers

What does the consideration clause in an accident and health policy state?

Applicant pays the initial premium Signup and view all the answers

Which of the following reports may include information obtained by a telephone call to the proposed insured?

Inspection report Signup and view all the answers

Health insurance policies are offered on a 'take it or leave it' basis and referred to as?

Contracts of Adhesion Signup and view all the answers

What is the insurance policy clause that identifies the contracting parties and defines the scope and limits of coverage?

Insuring clause Signup and view all the answers

Which of the following statements is CORRECT about a Waiver of Premium provision in a Disability Income Policy?

It allows the insured to maintain a policy in force while disabled and unable to pay premiums. Signup and view all the answers

What is the purpose of the coordination of benefits clause found in group health master contracts?

Avoid double payment of benefits to an insured who has duplicate group coverages Signup and view all the answers

Which provision designates to whom claim payments are made?

Payment of Claims Signup and view all the answers

Medicare supplement policies are primarily designed to?

Provide additional benefits beyond those provided by Medicare Signup and view all the answers

In the event both the insured and the primary beneficiary die at the same time, to whom will the policy proceeds generally be paid?

The insured's son Signup and view all the answers

What percentage of eligible individuals MUST be offered coverage under a noncontributory group health plan?

100 Signup and view all the answers

Under a Guaranteed Renewable Accident and Health policy, can an insurer increase the premium rate?

Yes, for an entire class of insureds Signup and view all the answers

What is provided by a group long-term disability plan integrated with Social Security?

Social Security and group benefits pay a combined maximum limit Signup and view all the answers

When does the Ten-Day Free Look provision start for a newly delivered policy?

July 5 Signup and view all the answers

What is the primary purpose of the MIB?

Share medical data among member companies Signup and view all the answers

What law requires an insurer to notify an applicant in writing that an investigative consumer report may be made on them?

Fair Credit Reporting Act Signup and view all the answers

What is the Probationary Period?

The waiting period a new hire must satisfy prior to becoming eligible for group health coverage Signup and view all the answers

How many days does an insurer have to provide claim forms to an insured after notice of an Accident & Health Claim?

Fifteen Signup and view all the answers

Under a group health plan, on what basis can an employer offer additional benefits to employees?

All factors except Gender Signup and view all the answers

What type of disability does Residual Disability cover?

Permanent partial disability Signup and view all the answers

Which statement is CORRECT about a disability income policy with a Guaranteed Insurability rider?

The insured may periodically increase the amount of benefits payable under the policy Signup and view all the answers

According to the IRS, how are disability income benefits paid under an employer-paid group disability income treated?

Fully taxable Signup and view all the answers

What contract would a producer MOST likely recommend to financially protect a small business from disability?

Disability Buy-Out Signup and view all the answers

What is the purpose of coinsurance?

It helps control over-utilization of benefits Signup and view all the answers

What action is the insurer likely to take if it discovers a policyholder misrepresented their age on a disability application?

Adjust the benefits downward according to the benefits that X would have been entitled to based on the premiums Signup and view all the answers

If an insured becomes disabled three years after a Disability Income Policy is issued, what will likely happen if the disability was pre-existing but not excluded?

Pay the full claim Signup and view all the answers

What is an element required on a contract?

Assignment Signup and view all the answers

What type of rider might an individual with a heart murmur expect on their individual disability policy?

Exclusionary/ Impairment rider Signup and view all the answers

Which expenses does Medicare Part A cover?

Hospital room and board Signup and view all the answers

How often must an insurer make periodic claim payments under a long-term disability income policy?

At least once every month Signup and view all the answers

What is the PRIMARY purpose of Medicaid?

Provide medical expense coverage to persons meeting certain minimum income requirements Signup and view all the answers

What describes a health care plan that reimburses a flat fee for medical care at a clinic it owns?

Health Maintenance Organization Signup and view all the answers

When must insurable interest exist under an AD&D policy?

At the inception of the policy Signup and view all the answers

What statement is CORRECT about a child who is disabled under their father's group plan?

Coverage continues as long as J is continually incapacitated and is financially dependent on J's father Signup and view all the answers

What type of provision guarantees renewability unless certain events occur?

Conditionally Renewable Signup and view all the answers

What is a precertification review prior to a nonemergency hospitalization an example of?

Managed care Signup and view all the answers

Under the Claims Forms provision, if the insurer fails to send claim forms in a timely manner, what should the insured do?

Submit the claim in any form, which must be accepted by the company as adequate proof of loss Signup and view all the answers

Which health policy has both renewability and premiums guaranteed?

Noncancellable Signup and view all the answers

What type of disability can a disability income policy provide benefits for?

Residual Disability Signup and view all the answers

An A&H policy Notice of Claim provision requires how many days to give written notice after a loss?

20 Signup and view all the answers

Which health policy requires a beneficiary designation?

Travel Accident Signup and view all the answers

In an AD&D policy, what does the term 'capital sum' refer to?

A lump sum payment made for an accidental dismemberment Signup and view all the answers

Which benefits does the Social Security program NOT provide?

Workers compensation Signup and view all the answers

What happens if an insured fails to notify the insurer after taking a new job in a more hazardous occupation?

Settle the claim according to what the premiums would have purchased under the more hazardous occupation Signup and view all the answers

What should a producer NOT do when delivering a policy to a client?

Keep the policy in the producers office for safe-keeping on behalf of the client Signup and view all the answers

What does the Elimination Period in most Disability Income policies apply to?

Each separate disability Signup and view all the answers

What is legally defined as making an inquiry for an offer in insurance applications?

An inquiry for an offer Signup and view all the answers

What policy feature addresses suicide, pre-existing conditions, and self-inflicted injuries?

Exclusions Signup and view all the answers

What action should NOT be taken by a producer who completes an application for a health policy without a premium?

Issue a conditional receipt Signup and view all the answers

Which types of healthcare services might be excluded under a comprehensive major medical policy?

Experimental and investigative services Signup and view all the answers

Which provision explains that a producer does not have the authority to waive the provisions of an insurance contract?

Entire contract Signup and view all the answers

What is the major difference between a mutual insurer and a stock insurer?

The form of ownership each company is permitted Signup and view all the answers

Who acts for another in negotiating a contract of insurance for the purpose of collecting premiums?

A producer Signup and view all the answers

What is CORRECT about Medicare supplement coverage?

Duplication of Medicare benefits is specifically prohibited Signup and view all the answers

What type of group policy covers carriers for a newspaper or publisher?

Blanket A&H Signup and view all the answers

What is provided for an insured's newborn child after birth, without notice or additional payment?

31 days of coverage Signup and view all the answers

A major medical policy generally cannot deny coverage for a pre-existing condition after how many years?

2 years Signup and view all the answers

Who can obtain a temporary insurance producer license without passing the examination?

The deceased licensed producer's next of kin Signup and view all the answers

What must Credit A&H insurance provide coverage for?

A loss caused by disability Signup and view all the answers

Who is authorized to enforce state insurance laws?

The insurance commissioner Signup and view all the answers

What must an insurer operate under to conduct business in a state?

A certificate of authority Signup and view all the answers

What organization provides health care services in return for a fixed prepaid premium?

A Health Maintenance Organization Signup and view all the answers

What is an example of rebating in the insurance industry?

A producer returns a portion of a commission to the insured Signup and view all the answers

What right does an applicant have regarding a long-term care policy if not satisfied?

Return the policy and have the premium refunded within 10 days of delivery Signup and view all the answers

Who is considered an individual appointed by an insurer to solicit insurance applications?

An insurance producer Signup and view all the answers

What must a producer provide to an applicant when taking an application for a Medicare supplement policy?

An outline of coverage Signup and view all the answers

What legal term is guilty by making false statements that harm another insurer's reputation?

Defamation Signup and view all the answers

What statement is prohibited in A&H insurance advertisements?

'This plan is accredited by an agency of the federal government' Signup and view all the answers

What could make a producer guilty of misrepresentation?

Telling an insured the deductible on a policy is less than it actually is Signup and view all the answers

What must nonresident applicants hold to be eligible for an insurance producer license?

A like license in another state Signup and view all the answers

What happens to producers who do not satisfy continuing education requirements?

Their license will be terminated Signup and view all the answers

What can cause the insurance commissioner to revoke or suspend a producer's license?

Forging another person's name on an insurance application Signup and view all the answers

When can the Insurance Commissioner examine the records of an insurer?

At any time the insurance commissioner sees fit Signup and view all the answers

What option does an employee who has been covered under a group's health plan for six months have when terminated for cause?

Continue the group coverage by paying the required premium Signup and view all the answers

What is an insurer formed under the law of a state other than where licensed called?

A foreign company Signup and view all the answers

Which individual is exempt from the definition of controlled business for a producer?

Neighbors Signup and view all the answers

When does the Free Look provision in life insurance begin?

On the policy delivery date Signup and view all the answers

What must a producer collect on the delivery of a life insurance policy if the initial premium was not collected with the application?

The insured's signed statement of continued good health Signup and view all the answers

What is the primary purpose of an inspection report?

To assess an applicant's personal characteristics Signup and view all the answers

How long is a life policy usually contestable due to material misrepresentation?

2 years Signup and view all the answers

What is a contract that systematically liquidates accumulated assets through periodic payments called?

Annuity Signup and view all the answers

What will an insurer do if an insured commits suicide after the suicide clause has expired?

Pay the death benefit Signup and view all the answers

What likely causes a 25% increase in premium for one of two identical policies for twins?

Risk Classification Signup and view all the answers

Which group life plan requires at least 75% of eligible members to participate?

Contributory Signup and view all the answers

What provides income for the family during a designated time following an insured's death?

A combination of period income followed by a lump sum death benefit Signup and view all the answers

Study Notes

Insurance Policy Clauses and Provisions

The consideration clause in accident and health policies requires the applicant to pay the initial premium.
An insuring clause delineates the contracting parties and the extent of coverage.
The payment of claims provision designates who receives claim payments.
Waiver of Premium provision allows insured to keep the policy active during disability without paying premiums.

Health Insurance Policies

Health insurance is generally offered on a "take it or leave it" basis, known as contracts of adhesion.
Medicare supplement policies aim to provide extra benefits not covered by Medicare.
Group health insurance under a noncontributory plan must offer coverage to 100% of eligible individuals.

Claims and Benefits

The coordination of benefits clause helps prevent double payments when an insured has multiple group coverages.
Under group plans, an insurer must provide claim forms within a maximum of 15 days after notice of a claim.
A claim for pre-existing conditions cannot be denied after a major medical policy has been active for 2 years.

Disability and Coverage Details

Permanent partial disability is covered under the term "residual disability."
Disability income policies can contain guaranteed insurability riders allowing for periodic benefit increases.
The elimination period typically applies to each separate disability.

Policy Delivery and Consumer Rights

The Ten-Day Free Look provision allows applicants to return the policy for a full refund within 10 days of delivery.
A group long-term disability plan typically works in conjunction with Social Security benefits to establish combined maximum limits.

Medicare and Medicaid

Medicare Part A covers hospital room and board.
Medicaid provides medical coverage for individuals meeting specific income requirements.

Insurance Regulations and Licensing

The Fair Credit Reporting Act mandates insurers inform applicants of potential investigative consumer reports.
The Insurance Commissioner is authorized to enforce state insurance laws and conduct records examinations.

Roles and Responsibilities

A producer, acting on behalf of an insurer, can solicit insurance applications and must provide applicants with an outline of coverage.
An insurance producer may be guilty of defamation if making false statements affecting others' reputations.

Beneficiary Designations and Claims Handling

Under an AD&D policy, insurable interest must exist at inception.
Beneficiaries' rights in claim payments can vary, especially under AD&D policies where capital sums apply for dismemberment.

Special Circumstances

An insured experiencing disability due to a pre-existing condition may not be penalized if not specifically excluded from coverage.
Claims-related issues must be settled according to the premiums paid based on risky occupations when undisclosed to the insurer.

General Policy Provisions

Both renewability and premiums being guaranteed occur in noncancellable policies.
The entire contract provision establishes that the application becomes part of the policy itself.

Important Definitions

Assignment refers to the transfer of ownership rights of a life insurance policy from one individual to another.
The payor benefit rider provides payment benefits in case a policyholder becomes disabled and cannot pay premiums.

Group Policies and Business Considerations

Contributory group life plans necessitate participation from at least 75% of eligible members.
Provide necessary coverage deductions on group life policies as standard business expenses to employers.

Conclusion

Life insurance policies are contestable for two years based on misrepresentation.
An annuity facilitates systematic liquidation of assets through periodic payments, serving a critical function for retirees.

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Prepare for your insurance licensing exam with our Kansas Insurance Practice Exam flashcards. This quiz covers key concepts and terms related to accident and health policies, providing a valuable tool for test-takers. Master the essentials to ensure your success in the insurance field!