Download Nevada Life Insurance Exam Questions and Answers and more Exams Insurance law in PDF only on Docsity!
NEVADA LIFE INSURANCE EXAM QUESTIONS &
ANSWERS 100% CORRECT (SCORED A+)
“What are the four required elements of an insurance contract? - CORRECT ANSWER
Agreement, consideration, competent parties, and legal purpose." "Occasional visits by what medical professionals will not be covered under Long-Term Care's
home health care? - CORRECT ANSWER Attending physicians"
"Can an individual who belongs to a POS plan use an out-of-network physician? - CORRECT
ANSWER Yes, they can use any physician even if not part of the HMO"
"What is the advantage of reinstating a policy instead of applying for a new one? - CORRECT
ANSWER The original age is used for premium determination"
"What would basic medical expense coverage not cover? - CORRECT ANSWER Surgeon's
services"
"What is not provided by an HMO? - CORRECT ANSWER Reimbursement"
"What entity determines if an advertisement is deceptive of confusing? - CORRECT ANSWER
The Commissioner" "How many days does a nonresident procedure have to file a change of address when the agent
moves to Nevada from another state? - CORRECT ANSWER 30 days"
"What is not considered a misrepresentation? - CORRECT ANSWER Making comparisons
between different policies" "A producer who has allowed their license to lapse may reinstate the license without retaking the
examination within what maximum time period? - CORRECT ANSWER 12 months or 1 year"
"Who is a person, other than a viator, that enters into a viatical settlement? - CORRECT
ANSWER Viatical Settlement Provider"
"How many days after cancellation of a license in another state does a new resident agent have to apply for Nevada producer license without having to fulfill licensing examination and education
requirements? - CORRECT ANSWER 90 days"
"When would a misrepresentation on an insurance application be considered fraud? -
CORRECT ANSWER When it is intentional and material"
"What entities make up the Medical Information Bureau? - CORRECT ANSWER Insurers"
"What risk classification would typically qualify for lower premiums? - CORRECT ANSWER
Preferred Risk"
"What is policy replacement? - CORRECT ANSWER A new policy is issued while an existing
policy is terminated or reissued with a reduction in cash value" "What best describes the concept that the insured pays a small amount of premium for a large
amount of risk on the part of the insurance company? - CORRECT ANSWER Aleatory
Contract"
"When does an adjustable life policy accumulate cash value? - CORRECT ANSWER When the
premiums paid are more than the cost of the policy" "What type of whole life insurance policies only requires a payment of premium at its inception, and in addition to providing insurance protection for the life of the insured, endows at the
insured's age 100? - CORRECT ANSWER Single premium whole life"
"What type of insurance would perform the function of cash accumulation? - CORRECT
ANSWER Whole Life Insurance"
"What are the two components of a universal policy? - CORRECT ANSWER Insurance and
cash account"
"Which Universal Life option has a gradually increasing cash value and a level death benefit? -
CORRECT ANSWER Option A"
"What life insurance policy provision prevents an insurer from disputing or denying a claim due
to misstatements on the application after a certain period of time? - CORRECT ANSWER
Incontestability"
"What is the purpose of the Automatic Premium Loan provision? - CORRECT ANSWER To
prevent the unintentional lapse of a policy because of nonpayment of the premium"
"What are the characteristics of the group that underwriters will consider before issuing a group
life policy? - CORRECT ANSWER Group's purpose, size, financial strength, and turnover"
"What is the main purpose of the 7-Pay Test? - CORRECT ANSWER To determine if a life
insurance policy a Modified Endowment Contract (MEC)" "If the beneficiary of a life insurance policy receives death benefit payments that consist of
principal and interest, which portion, if any, will be taxed? - CORRECT ANSWER The interest
payment will be taxed."
"What does it mean when a retirement plan is qualified? - CORRECT ANSWER The plan has
favorable tax treatment"
"Who may contribute to an HR-10 plan? - CORRECT ANSWER A self-employed individual"
"Who would be considered a third - CORRECT ANSWER An individual or an entity who is not
the insured"
"What does liquidity mean in a life insurance policy? - CORRECT ANSWER Availability of
cash value"
"What is required to qualify an individual to contribute to a traditional IRA? - CORRECT
ANSWER Earned income"
"When would life insurance policy proceeds be included in the insured's taxable estate? -
CORRECT ANSWER When there is an incident of ownership at the time of death"
"What type of policy is typically issued without proof of insurability from the insured? -
CORRECT ANSWER Group policy"
"SIMPLE plans are available to groups of how many employees? - CORRECT ANSWER No
more than 100"
"Why are dividends in life insurance policies not taxable? - CORRECT ANSWER They are a
return of unused premiums and are not considered income for tax purposes"
"What type of worker would not qualify for Keogh Plan? - CORRECT ANSWER A worker who
works less than 1,000 hours per year"
"The premiums paid by the employer in a business life insurance policy are - CORRECT
ANSWER Tax deductible by the employer"
"When an employee terminates coverage under a group insurance policy, how long does the
coverage stay in force? - CORRECT ANSWER 31 days"
"How are contributions to a tax-sheltered annuity treated with regards to taxation? - CORRECT
ANSWER They are not included as income for the employee, but are taxable upon distribution"
"What type of insurance policies would perform the function of cash accumulation? - CORRECT
ANSWER Whole Life Insurance"
"In a life settlement contract, whom does the life settlement broker represent? - CORRECT
ANSWER The owner of the policy"
"Who is responsible for paying the cost of a medical examination required in the process of
underwriting? - CORRECT ANSWER The insurer"
"If an insurer decides to obtain medical information from different sources in order to determine
the insurability of an applicant, who must be notified of the investigation? - CORRECT
ANSWER The applicant"
"What is the entire contract in health insurance underwriting? - CORRECT ANSWER The
application and the policy issued" "If an agent makes a correction on the application for health insurance, who must initial the
correct answer? - CORRECT ANSWER The applicant"
"What is a penalty tax for nonqualified distributions from a health savings account? - CORRECT
ANSWER 20%"
"An insured makes regular contributions to his Health Savings Account. How are those
contributions treated in regards to taxation? - CORRECT ANSWER They are tax deductible"
"How long will benefit periods for individual short-term disability policies continue for? -
CORRECT ANSWER 6 months to 2 years"
"How soon following the occurrence of a covered loss must an insured submit written proof of
such loss to the insurance company? - CORRECT ANSWER Within 90 days to 1 year"
"What provision states that the insurance company must pay Medical Expense claims
immediately? - CORRECT ANSWER Time of Payment of Claims"
"What is does the Insuring Clause do? - CORRECT ANSWER It identifies the agreement
between the insured and the insurance company and the loss covered."
"What does the Insuring Clause of a disability policy not include? - CORRECT ANSWER The
method of premium payment" "In respect to the Consideration Clause, which of the following is consideration on the part of the
insurer? - CORRECT ANSWER The insurer promises to pay in accordance with the contract
terms."
"A Waiver of Premium Provision may be included with which kind of health insurance policy? -
CORRECT ANSWER A Disability Income policy."
"What must Medicare Supplement policies and Long-Term Care policies be written as? -
CORRECT ANSWER A guaranteed renewable contract."
"According to the Rights of Renewability Rider for cancellable policies what is untrue about the
cancellation of an individual insurance policy? - CORRECT ANSWER Any unearned
premiums are retained by the insurance company."
"What is not a feature of a guaranteed renewable provision? - CORRECT ANSWER The
insurer can increase the policy premium on a individual basis."
"What health insurance provision describes the insured's right to cancel coverage? - CORRECT
ANSWER The Renewal Provision."
"The premium charge for exercising the guaranteed insurability rider is based upon the insured's
what? - CORRECT ANSWER The attained age."
"What feature is not a part of a noncancellable policy? - CORRECT ANSWER The insurer can
terminate the contract at the renewal for certain conditions."
"The insurer can change what on a Guaranteed Renewable Health Insurance policy? -
CORRECT ANSWER The rates by class."
"According to the Reinstatement Provision, once a lapsed policy is reinstated, how soon will
coverage be available for accidents? - CORRECT ANSWER It is available immediately."
"How will changing one's occupation to be more hazardous affect the health insurance policy in
force? - CORRECT ANSWER The claim benefits will be reduced to what the premium would
have bought."
"What does it mean if a Health Insurance policy has a 31-day grace period - CORRECT
ANSWER The policy remains in effect until the period ends if the premium has still not been
paid." "If the insured pays a monthly premium for a Health Insurance policy, how long would the grace
period be on the policy? - CORRECT ANSWER It would last for 10 days."
"What is a deductible in a Health Insurance policy? - CORRECT ANSWER The specified dollar
amount that the insured must pay before the insurer pays the policy benefits."
"What are usual, reasonable, and customary charges based on? - CORRECT ANSWER The
average charge for a procedure in a specific geographic region." "What health insurance provision prevents the insured from bringing a lawsuit against the
insurance company for at least 60 days after proof of loss is provided? - CORRECT ANSWER
The Legal Actions Provision."
"A Waiver of Premium Provision may be included with what type of Health Insurance policies? -
CORRECT ANSWER The Disability Income policy."
"Who decides which optional provisions would be included in a Health Insurance policy? -
CORRECT ANSWER The insurance company."
"What section of a Health Insurance policy lists the services for which the insurer will not
provide coverage? - CORRECT ANSWER The Exclusions Section."
"What does the free-look period allow the insured to do? - CORRECT ANSWER To return the
policy for a full refund."
"When can an irrevocable beneficiary be changed? - CORRECT ANSWER Only with the
written consent of the beneficiary."
"What does the Social Security Disability definition not include? - CORRECT ANSWER Any
disability expected to last for at least 6 months"
"What benefit is based on a Primary Insurance Amount or PIA? - CORRECT ANSWER The
Social Security Disability benefit."
"What is another name for Medicare Advantage plans? - CORRECT ANSWER Part C"
"What part of Medicare is known as hospital insurance? - CORRECT ANSWER Part A"
"At what age do individuals qualify for Medicare? - CORRECT ANSWER At age 65."
"When is the initial enrollment period for Medicare Part A? - CORRECT ANSWER 3 months
before turning 65 and 3 months after"
"What is the purpose of Medicare Supplement plans? - CORRECT ANSWER To fill in the gaps
in Medicare coverage."
"How many parts does Medicare have? - CORRECT ANSWER It has 4 parts, A through D."
"If an individual is covered by Medicare and is also covered by their employer's health plan,
which plan would be considered primary? - CORRECT ANSWER The employer plan."
"What benefits are provided by Medicare Part C? - CORRECT ANSWER It has expanded
benefits through private insurance programs such as HMOs or PPOs."
"How many pints of blood will be paid for by Medicare Supplement core benefits? - CORRECT
ANSWER It will only pay for the first 3 pints."
"Who issues Medigap policies? - CORRECT ANSWER Private insurers"
"What is another name for Medicare Supplement plans? - CORRECT ANSWER Medigap"
"How does someone qualify for Social Security Disability Income benefits? - CORRECT
ANSWER They must have fully insured status, meet the definition of disability, and satisfy the
waiting period."
"What is the required free-look period for Medicare Supplement policies? - CORRECT
ANSWER It is 30 days."
"Who is eligible for Medicare Part B? - CORRECT ANSWER Anyone who has enrolled in
Medicare Part A."
"How is Medicare Part B funded? - CORRECT ANSWER By monthly premiums and from the
general revenue of the federal governement."
"What type of services will Medicare Part A pay for? - CORRECT ANSWER Any hospital care,
skilled nursing facility care, home health care, and hospice care." "What part of Medicare pays for inpatient hospital care, skilled nursing facility, home health
care, and hospice care? - CORRECT ANSWER Medicare Part A"
"What Part of Medicare is known as medical insurance? - CORRECT ANSWER Medicare Part
B"
"Who can qualify for Medicaid? - CORRECT ANSWER Any person with insufficient income."
"What part of Medicare will cover lab services and diagnostic tests? - CORRECT ANSWER
Medicare Part B"
"How long is an open enrollment period for Medicare Supplement policies? - CORRECT
ANSWER It is a 6-month period."
"Who is able to qualify for Medicare Part A? - CORRECT ANSWER Anyone who is over 65."
"What program expands individual public assistance programs for people with insufficient
income and resources? - CORRECT ANSWER Medicaid"
"What can a Medicare SELECT policy not do? - CORRECT ANSWER Prohibit payment for
regularly covered services if provided by non-network providers."
"What part of Medicare covers physician's and surgeon's services? - CORRECT ANSWER
Medicare Part B" "Once a person meets the stringent requirements for disability benefits, how long is the waiting
period under Social Security before any benefits will be paid? - CORRECT ANSWER Benefits
will be paid in 5 months."
"What is not covered under Plan A in Medigap Health Insurance? - CORRECT ANSWER The
deductible."
"When a business receives benefits from its key person disability insurance, how are those
benefits taxed? - CORRECT ANSWER The key person disability insurance benefits are tax-
free."
"What is the birthday rule in a Coordination of Benefits Provision? - CORRECT ANSWER The
coverage of the parent whose birthday is earliest in the year is considered primary."
"How long do Short-Term Disability Group Health Insurance plans pay benefits? - CORRECT
ANSWER For any period less than 2 years."
"What are the five basic characteristics of managed care plans? - CORRECT ANSWER
Controlled access to providers, comprehensive case management, preventive care, risk sharing, and high quality care."
"What is the purpose of Managed Care Health Insurance plans? - CORRECT ANSWER To
control health insurance claims expenses"
"What is subrogation in health insurance? - CORRECT ANSWER gives the insurer the right to
seek recovery from a third party that was responsible with the loss after the insurer has paid for the loss"
"In health insurance, when would excess plans pay benefits? - CORRECT ANSWER After the
primary plans has paid its full promised benefits, the excess plan will pay the remaining balance."
"What type of disabilities will be covered by occupational coverage? - CORRECT ANSWER
Disabilities that result from accident or sickness that occur on or off the job."
"What are the four types of workers compensation benefits? - CORRECT ANSWER Medical,
income, rehabilitation, and death benefits" "Under what employer-provided plan are the benefits taxable to an employee in proportion to the
amount of premium paid by the employer? - CORRECT ANSWER Disability Income"
"Under a fully contributory health plan, how are benefits received by the employee? -
CORRECT ANSWER As tax-free income."
"What is true regarding Business Overhead Expense Insurance? - CORRECT ANSWER
Premiums are tax deductible."
"Workers Compensation benefits are regulated by which entity? - CORRECT ANSWER The
state government."
"What is the taxation of Group Medical Expense premiums and benefits? - CORRECT
ANSWER Premiums are tax deductible and benefits are not taxable."
"What is the provision that prevents the insured from collecting twice for the same loss? -
CORRECT ANSWER Subrogation"
"The Commissioner must give reasonable notice to all interested parties as to the time, place, and
purpose of a hearing within the minimum of how many days of the hearing? - CORRECT
ANSWER 20 days"
"What is not a duty of the Commissioner? - CORRECT ANSWER Developing insurance rates."
"What actions by an insurance company will cause an examination by the Commissioner? -
CORRECT ANSWER An application for an initial Certificate of Authority"
"Who is responsible for the cost of examinations conducted by the Commissioner? - CORRECT
ANSWER The insurer being examined"
"Producers must complete how many hours of continuing education on the subject of ethics
every licensing period? - CORRECT ANSWER 3 hours"
"What definition does not fit the definition of an administrator? - CORRECT ANSWER A life
and health producer who only sells insurance" "A producer who has allowed their license to lapse may reinstate the examination within what
maximum time period? - CORRECT ANSWER 12 months"
"Agents who persuade insureds to cancel a policy in favor of another one when it might not be in
the insured's best interest are guilty of... - CORRECT ANSWER Twisting"
"How often are producers required to complete continuing education requirements to keep the
license in force? - CORRECT ANSWER Every 3 years"
"The Nevada Insurance Guaranty Association has a legal right to seek damages from third parties
after having reimbursed the insured for the loss. What is this known as? - CORRECT
ANSWER Subrogation"
"An agent offers a client free tickets to a sporting event in exchange for the purchase of an
insurance policy. What is the agent guilty of? - CORRECT ANSWER Rebating"
"In general, who can be excluded from producer licensing and examination requirements? -
CORRECT ANSWER Insurance company officers, directors, or others who do not transact
insurance and who do not receive commissions for their services."
"To whom may a certificate of authority be issued? - CORRECT ANSWER To an insurer
authorized to transact business in this state." "In the Commissioner finds a licensee engaging in an unfair method of competition, what order
will be issued? - CORRECT ANSWER A Cease and Desist order."
"What is controlled business? - CORRECT ANSWER Insurance on the producer's own life or
property, or the lives, or or property of the producer's family or business associates." "On its advertisement, a company claims that it has funds in its possession that are, in fact, not
available for the payment of losses or claims. What is the company guilty of? - CORRECT
ANSWER Misrepresentation."
"Who must be notified of a producer's change of address? - CORRECT ANSWER The
Department of Insurance." "If a producer makes maliciously critical statements about another insurer, what is this illegal
practice called? - CORRECT ANSWER Defamation."
"When a producer's appointment with the insurer is terminated, who must notify the
Commissioner? - CORRECT ANSWER The appointing insurer."
"Each domestic insurer of Nevada must be examined by the Commissioner every... - CORRECT
ANSWER 5 years."
"What is the required grace period in group life policies in Nevada? - CORRECT ANSWER 31
days"
"What is not a required provision in group life insurance policies issued in Nevada? - CORRECT
ANSWER Nonforfeiture benefits"
"During replacement of life insurance, a replacing insurer must do which of the following? -
CORRECT ANSWER Obtain a list of all life insurance policies that will be replaced"
"What statement would best describe the difference between viatical settlement and accelerated
death benefits? - CORRECT ANSWER Viaticals are funded by a third party; accelerated death
benefits are provided by the insurer that issued the original policy." "Which rule would apply is an agent knows an applicant is going to cash in an old policy and use
the funds to purchase new insurance? - CORRECT ANSWER Replacement rule"
"What two parts make up a life insurance application? - CORRECT ANSWER General
Information and the Medical Information. An agent's report can go in a life insurance application but is not included in the life insurance policy."
"When must insurable interest exist in life insurance? - CORRECT ANSWER At the time of
application." "When does coverage begin, if the premium was submitted with the application, and the policy
was issued two weeks later? - CORRECT ANSWER At the time of the application."
"If an agent makes a mistake on the application and then corrects it, who must initial that
change? - CORRECT ANSWER The applicant."
"Insurers may change what on a guaranteed renewable health insurance polity? - CORRECT
ANSWER The rates by class."
"At what age may an individual make withdrawals from an HSA for nonhealth purposes without
being penalized? - CORRECT ANSWER At age 65."
"Which provision states how much time must pass between two like illnesses in order for the
second one to be covered under a new set of benefits? - CORRECT ANSWER Recurrent
Disability Provision"
"In forming an insurance contract, when does acceptance occur? - CORRECT ANSWER When
an insurer's underwriter approves coverage" "What is an important feature of a dental expense insurance plan that is not found in a medical
expense insurance plan? - CORRECT ANSWER Diagnostic and preventive care"
"What best describes the "first-dollar coverage" principle in basic medical insurance? -
CORRECT ANSWER The insured is not required to pay a deductible"
"What insurance arrangements will be appropriate for a parent buying a life insurance policy on
a child where the parent is the policyowner? - CORRECT ANSWER Third-party ownership"
"What are the three basic types of term life insurance? - CORRECT ANSWER The three basic
types of term life insurance are level, increasing, and decreasing."
"When would a whole life insurance policy mature? - CORRECT ANSWER The whole life
insurance policy matures when the insured dies or turns 100."
"Who is an annuitant? - CORRECT ANSWER The annuitant is the person on whose life
expectancy the annuity is written and who receives benefits from the annuity."
"What constitutes the entire contract? - CORRECT ANSWER The entire contract constitutes
the policy, a copy of application, and any riders or amendments." "Which rider allows an insured to purchase additional coverage without evidence of insurability?
- CORRECT ANSWER The Guaranteed Insurability Rider allows an insured to purchase additional coverage without evidence of insurability."
"What are the three nonforfeiture options? - CORRECT ANSWER The three nonforfeiture
options are reduced paid-up, extended term, and cash surrender value."
"In group life insurance, who receives the master contract? - CORRECT ANSWER The
employer receives the master contract in group life insurance."
"What are some examples of qualified retirement plans? - CORRECT ANSWER Traditional
IRA, Roth IRA, SIMPLE, SEP, and 401(k)"
"When would life insurance death benefits be tax free? - CORRECT ANSWER If paid as a
lump sum to the beneficiary"
"What do individuals use to transfer their risk of loss to a larger group? - CORRECT ANSWER
Insurance"
"What is insurance the transfer of? - CORRECT ANSWER Risk"
"Insurance is a contract by which one seeks to protect another from - CORRECT ANSWER
Loss" "What type of report provides information about the applicant's hobbies, habits, and financial
status? - CORRECT ANSWER Inspection Report"
"What law protects consumers from the circulation of inaccurate or obsolete information -
CORRECT ANSWER The Fair Credit Reporting Act"
"What term describes the fee a person pays an insurance company to receive coverage? -
CORRECT ANSWER Premium"
"What is the purpose of the agent's report during the application process? - CORRECT
ANSWER The agent's report discusses the agent's personal observations about the proposed
insured that may help in the underwriting process."
"What two elements are necessary for a life insurance contract to have a legal purpose? -
CORRECT ANSWER Insurable interest and consent"
"What does it mean when health insurance contracts are unilateral? - CORRECT ANSWER
Only one party makes a legally enforceable promise"
"How is the information obtained for an investigative consumer report? - CORRECT
ANSWER Through interviews with the applicant's associates, friends, and neighbors"
"What is the name of the process that insurance companies use to determine whether or not an
applicant is insurable? - CORRECT ANSWER Underwriting"
"What are the three types of risk rating classifications in life insurance? - CORRECT ANSWER
Standard, substandard, and preferred"
"What best describes gross annual premium? - CORRECT ANSWER Net premium plus
expenses" "What is the appropriate action by the insurer if a prospective insured submitted an incomplete
application? - CORRECT ANSWER Return the application to the applicant for completion"
"What is a statement that is guaranteed to be true, and if untrue, may breach an insurance
contract? - CORRECT ANSWER Warranty"
"What is the minimum interest rate on an equity indexed annuity often based? - CORRECT
ANSWER An index like Standard & Poor's 500"
"What annuity settlement option provides income payments to the annuitant for the duration of
their life and also guarantees payment for a specified number of years? - CORRECT ANSWER
Life income with period certain"
