Kansas Insurance Practice Exam
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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?

    <p>Has the potential to earn a higher rate of return on the cash value.</p> 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?

    <p>Sex</p> Signup and view all the answers

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

    <p>Entire contract</p> 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?

    <p>Charge an extra premium</p> Signup and view all the answers

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

    <p>Policy owner</p> 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?

    <p>Policy is delivered and the premium paid.</p> Signup and view all the answers

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

    <p>Purchase additional coverage whenever the insured changes jobs.</p> Signup and view all the answers

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

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

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

    <p>Group</p> 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?

    <p>Term life insurance</p> 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?

    <p>Assignment</p> Signup and view all the answers

    What benefit does a payor benefit rider provide?

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

    What type of retirement plan is tax-qualified?

    <p>Defined contribution</p> Signup and view all the answers

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

    <p>Applicant pays the initial premium</p> Signup and view all the answers

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

    <p>Inspection report</p> Signup and view all the answers

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

    <p>Contracts of Adhesion</p> 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?

    <p>Insuring clause</p> Signup and view all the answers

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

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

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

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

    Which provision designates to whom claim payments are made?

    <p>Payment of Claims</p> Signup and view all the answers

    Medicare supplement policies are primarily designed to?

    <p>Provide additional benefits beyond those provided by Medicare</p> 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?

    <p>The insured's son</p> Signup and view all the answers

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

    <p>100</p> Signup and view all the answers

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

    <p>Yes, for an entire class of insureds</p> Signup and view all the answers

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

    <p>Social Security and group benefits pay a combined maximum limit</p> Signup and view all the answers

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

    <p>July 5</p> Signup and view all the answers

    What is the primary purpose of the MIB?

    <p>Share medical data among member companies</p> 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?

    <p>Fair Credit Reporting Act</p> Signup and view all the answers

    What is the Probationary Period?

    <p>The waiting period a new hire must satisfy prior to becoming eligible for group health coverage</p> 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?

    <p>Fifteen</p> Signup and view all the answers

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

    <p>All factors except Gender</p> Signup and view all the answers

    What type of disability does Residual Disability cover?

    <p>Permanent partial disability</p> Signup and view all the answers

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

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

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

    <p>Fully taxable</p> Signup and view all the answers

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

    <p>Disability Buy-Out</p> Signup and view all the answers

    What is the purpose of coinsurance?

    <p>It helps control over-utilization of benefits</p> 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?

    <p>Adjust the benefits downward according to the benefits that X would have been entitled to based on the premiums</p> 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?

    <p>Pay the full claim</p> Signup and view all the answers

    What is an element required on a contract?

    <p>Assignment</p> Signup and view all the answers

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

    <p>Exclusionary/ Impairment rider</p> Signup and view all the answers

    Which expenses does Medicare Part A cover?

    <p>Hospital room and board</p> Signup and view all the answers

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

    <p>At least once every month</p> Signup and view all the answers

    What is the PRIMARY purpose of Medicaid?

    <p>Provide medical expense coverage to persons meeting certain minimum income requirements</p> 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?

    <p>Health Maintenance Organization</p> Signup and view all the answers

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

    <p>At the inception of the policy</p> Signup and view all the answers

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

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

    What type of provision guarantees renewability unless certain events occur?

    <p>Conditionally Renewable</p> Signup and view all the answers

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

    <p>Managed care</p> 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?

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

    Which health policy has both renewability and premiums guaranteed?

    <p>Noncancellable</p> Signup and view all the answers

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

    <p>Residual Disability</p> 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?

    <p>20</p> Signup and view all the answers

    Which health policy requires a beneficiary designation?

    <p>Travel Accident</p> Signup and view all the answers

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

    <p>A lump sum payment made for an accidental dismemberment</p> Signup and view all the answers

    Which benefits does the Social Security program NOT provide?

    <p>Workers compensation</p> 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?

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

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

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

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

    <p>Each separate disability</p> Signup and view all the answers

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

    <p>An inquiry for an offer</p> Signup and view all the answers

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

    <p>Exclusions</p> 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?

    <p>Issue a conditional receipt</p> Signup and view all the answers

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

    <p>Experimental and investigative services</p> 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?

    <p>Entire contract</p> Signup and view all the answers

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

    <p>The form of ownership each company is permitted</p> Signup and view all the answers

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

    <p>A producer</p> Signup and view all the answers

    What is CORRECT about Medicare supplement coverage?

    <p>Duplication of Medicare benefits is specifically prohibited</p> Signup and view all the answers

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

    <p>Blanket A&amp;H</p> Signup and view all the answers

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

    <p>31 days of coverage</p> Signup and view all the answers

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

    <p>2 years</p> Signup and view all the answers

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

    <p>The deceased licensed producer's next of kin</p> Signup and view all the answers

    What must Credit A&H insurance provide coverage for?

    <p>A loss caused by disability</p> Signup and view all the answers

    Who is authorized to enforce state insurance laws?

    <p>The insurance commissioner</p> Signup and view all the answers

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

    <p>A certificate of authority</p> Signup and view all the answers

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

    <p>A Health Maintenance Organization</p> Signup and view all the answers

    What is an example of rebating in the insurance industry?

    <p>A producer returns a portion of a commission to the insured</p> Signup and view all the answers

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

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

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

    <p>An insurance producer</p> Signup and view all the answers

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

    <p>An outline of coverage</p> Signup and view all the answers

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

    <p>Defamation</p> Signup and view all the answers

    What statement is prohibited in A&H insurance advertisements?

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

    What could make a producer guilty of misrepresentation?

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

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

    <p>A like license in another state</p> Signup and view all the answers

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

    <p>Their license will be terminated</p> Signup and view all the answers

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

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

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

    <p>At any time the insurance commissioner sees fit</p> 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?

    <p>Continue the group coverage by paying the required premium</p> Signup and view all the answers

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

    <p>A foreign company</p> Signup and view all the answers

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

    <p>Neighbors</p> Signup and view all the answers

    When does the Free Look provision in life insurance begin?

    <p>On the policy delivery date</p> 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?

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

    What is the primary purpose of an inspection report?

    <p>To assess an applicant's personal characteristics</p> Signup and view all the answers

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

    <p>2 years</p> Signup and view all the answers

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

    <p>Annuity</p> Signup and view all the answers

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

    <p>Pay the death benefit</p> Signup and view all the answers

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

    <p>Risk Classification</p> Signup and view all the answers

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

    <p>Contributory</p> Signup and view all the answers

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

    <p>A combination of period income followed by a lump sum death benefit</p> 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!

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