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UTAH LIFE AND HEALTH INSURANCE EXAM QUESTIONS AND
CORRECT ANSWERS ALREADY PASSED
"An example of an unfair claims practice would be - CORRECT ANSWER Failing to adopt
reasonable standards for prompt claim investigation"
"The cause of a loss is referred to as a(n) - CORRECT ANSWER Peril"
"A ______________ insurance company is organized in a country outside of the United States -
CORRECT ANSWER Alien"
"An insurance company needs to obtain personal infracting from a third party concerning an
applicant. Which law do all insurers and their producers need to comply with? - CORRECT
ANSWER Fair Credit Reporting Act"
"What is created after policy proceeds are obtained in a lump sum and then immediately
invested? - CORRECT ANSWER Estate"
"Insurance premium is determined by each of the following factors EXCEPT - CORRECT
ANSWER Liquidity"
"A Modified Endowment Contract (MEC) is best described as - CORRECT ANSWER A life
insurance contract which accumulates cash values higher than the IRS will allow" "Administrative actions taken against a producer must be reported to the commissioner within
_____ days - CORRECT ANSWER 30 days"
"The purpose of the Coordination of Benefits provision in group accident and health plans is to -
CORRECT ANSWER Avoid overpayment of claims"
"Kristi purchases an annuity that will pay her husband an income for 15 years. If he dies, this income will become payable to their children for the remainder of the period. Kristi has what kind
of annuity? - CORRECT ANSWER Temporary annuity certain"
"An endorsement found in an insurance plan which modifies the provision of the policy is called
a(n) - CORRECT ANSWER Rider"
"Which type of policy combines the flexibility of a universal life policy with investment choices? -
CORRECT ANSWER Variable universal life policy"
"Kathy pays a monthly premium on her health insurance policy. How long is her grace period? -
CORRECT ANSWER 10 days"
"What happens when an insurance policy is backdated - CORRECT ANSWER The policy's
effective date is earlier than the present" "A life insurance policy normally contains a provision that restricts coverage in the event of death
under all of the following except - CORRECT ANSWER Fare-paying passengers"
"Which of these would be the best example of a limited pay life insurance policy? - CORRECT
ANSWER Whole life premiums paid up after 20 years"
"Which of these describes the result of a modified endowment contract that failed to meet the
seven-pay test? - CORRECT ANSWER Pre-death distributions are typically taxable"
"Which of the following is NOT included under a health benefit plan? - CORRECT ANSWER
Hospital indemnity plan"
"Which of the following is NOT considered rebating - CORRECT ANSWER Sharing commissions
with a producer licensed in the same line of business"
"Which of the following BEST describes a conditional insurance contract? - CORRECT ANSWER
A contract that requires certain conditions or acts by the insured individual"
"Which of the following would a Health Saving Account (HSA) owner not be able to make? -
CORRECT ANSWER The amount contributed by the employer"
"Which of these statements about Medicare is CORRECT? - CORRECT ANSWER Funded by
federal, state, and local taxes" "________ occurs when a producer willfully makes an untrue or incomplete statement during the
course of an insurance transaction. - CORRECT ANSWER Misrepresentation"
"Which of the following would be an act of Unfair Discrimination by an insurer? - CORRECT
ANSWER Deny coverage based on marital status"
"The two major actions required for a policyholder to comply with the Reinstatement Clause are
CORRECT ANSWER Provide evidence of insurability, pay past due premiums"
"A non-contributory health insurance plan helps the insurer avoid - CORRECT ANSWER
Adverse selection" "At what age will a person normally enroll with an insurance carrier under a Part C Medicare
Advantage Plan? - CORRECT ANSWER Age 65"
"The Do Not Call Registry offers exemptions for calls place from all of the following EXCEPT -
CORRECT ANSWER Insurance sales calls"
"Craig submits a $500 claim for medical expenses. With a past due premium of $100, the insurer
pays $400. Which of the Uniform Optional Provisions covers this situation? - CORRECT
ANSWER Unpaid premium"
"All of the following are elements of an insurance policy EXCEPT - CORRECT ANSWER Claims
forms"
"What is the primary reason for buying annuity? - CORRECT ANSWER Provide future
economic security"
"Which of the following is a requirement for a producer's license renewal? - CORRECT
ANSWER Completing the require continuing education"
"What does the Group Life underwriting risk selection process help protect insurance companies
from? - CORRECT ANSWER Adverse selection"
"Variable life Insurance and Universal life insurance are very similar. Which of these features are
held exclusively by variable universal life insurance? - CORRECT ANSWER Policyowner has the
right to select the investment which will provide the greatest return"
"Medical Expenses Insurance would cover - CORRECT ANSWER An injury occurring at the
insured's residence" "The double indemnity provision in a life insurance policy pertains to an insured's death caused
by a(n) - CORRECT ANSWER Accident"
"In group health care, what is the purpose of the coordination of benefits provision? - CORRECT
ANSWER Determines what is paid by the primary and secondary insurers in the event of a claim"
"Bill requires some nursing care and supervision but NOT full-time care. Which of these nursing
home options would best serve him? - CORRECT ANSWER Assisted living"
"In regards to a life insurance contract, which of the following statements is NOT true regarding
the concept of insurable interest? - CORRECT ANSWER Insurable interest can be established
sufficiently by sentimental attachment alone"
"A dread disease policy is considered to be a type of - CORRECT ANSWER Limited health
insurance policy" "A life insurance rider that allows and individual to purchase insurance as they grow older,
regardless of insurability, is call a(n) - CORRECT ANSWER Guaranteed insurability rider"
"Which type of annuity guarantees a stated number of income payments, whether or not the
annuitant is still alive to receive them? - CORRECT ANSWER Life annuity certain"
"If threats or force is used to affect an insurance transaction, the unfair trade practice of ______
has been committed - CORRECT ANSWER Coercion"
"All of the following are considered appropriate use of life insurance of business purposes EXCEPT
- CORRECT ANSWER Protecting the business by covering entry level employees with life insurance" "A(n) ____ investigates, negotiates, and settles claims for a fee on behalf of an insurance
company. - CORRECT ANSWER Adjuster"
"The gatekeeper's role when used by an HMO is - CORRECT ANSWER Obtaining referrals to
specialist from primary care physicians" "A type of person that has a constitution and bylaws and has ben organized for purposes other
than obtaining insurance is called a(n) - CORRECT ANSWER Association of labor group"
"Term insurance is appropriate for someone who - CORRECT ANSWER Seeks temporary
protection and lower premiums" "Claims payable to a Disability Income insured, even when the insured can continue to work, are
the result of a - CORRECT ANSWER Presumptive disability"
"Which of the following nursing home options would BEST suit an individual who needs some
nursing and supervision but NOT full-time care? - CORRECT ANSWER Assisted living facilities"
"All of the following plans allow for employee contributions to be taken on a pre-tax basis EXCEPT
- CORRECT ANSWER Health Reimbursement Arrangement Plan"
"With of these is NOT considered to be a common life insurance nonforfeiture options? -
CORRECT ANSWER Life income annuity"
"____ is informing an insured of inaccurate terms, benefits, or advantages of any policy. -
CORRECT ANSWER Misrepresentation"
"Which of these factors help determine an insured's life insurance premium? - CORRECT
ANSWER Avocation (hobby)"
"Jennifer is required to pay a specific sum out of pocket before any benefits are paid in a year. Her
health policy most likely contains a(n) - CORRECT ANSWER Deductible"
"An employer is issued a group medical insurance policy. This single contract is known as a(n) -
CORRECT ANSWER Master policy"
"An HMO that involves a partnership of physicians and other providers who practice out of a
central facility is called a(n) - CORRECT ANSWER Group HMO"
"Under group health insurance, a certificate of coverage is issued to the - CORRECT ANSWER
Employee"
"How often must an insurance producer's license in Utah be renewed? - CORRECT ANSWER
Every two years"
"An example of unfair discrimination would be - CORRECT ANSWER When an insurer charges
a higher rate for insurance based on an insured's race, religion, or national origin"
"At what point may a producer sell insurance for an insurer? - CORRECT ANSWER After being
properly appointed by the insurer"
"An example of an unfair claims settlement practice is - CORRECT ANSWER Turning down a
claim without providing the basis of denial"
"Which of the following typically does NOT provide a form of managed care? - CORRECT
ANSWER Major medical indemnity plan"
"An applicant'c character and personal habits can be obtained for underwriting purposed form
which source? - CORRECT ANSWER Investigative consumer report"
"Before using an assumed name in Utah, a producer MUST - CORRECT ANSWER Notify the
Commissioner"
"What is the primary purpose of a rating service company such as A.M Best? - CORRECT
ANSWER Determine financial strength of an insurance company"
"An insured has a health plan that pays established amounts in accordance with a list of injuries,
surgical procedures, or other losses. This list is called a - CORRECT ANSWER Benefits schedule"
"Which of the following does Coordination of Benefits allow? - CORRECT ANSWER Allows the
secondary payor to reduce their benefit payment so no more than 100% of the claim is paid" "A halter insurance policy that allows an insurer to china the policy owners premiums, but NOT
cancel the policy is called a(n) - CORRECT ANSWER Guaranteed renewable policy"
"AD&D accidental death and dismemberment insurance - CORRECT ANSWER A limited form
of health insurance that covers accident only. It is the only type of health insurance that covers death. AD&D policies do not follow the principle of indemnity, in that they pay in addition to any other coverage the insured has."
"Adverse selection - CORRECT ANSWER Selection not in favor of the company. The tendency
of poorer risks to want insurance more often than standard risks. For example, a person who is already sick would like to buy health insurance."
"Adverse underwriting decisions, consumer rights - CORRECT ANSWER Under the fair credit
reporting act, when an adverse underwriting decision is made, the insurer must provide the applicant or policyholder with specific written reasons for the decision, or advise the individual that specific reasons are available upon written request. Upon receipt of the written request, the insurer must furnish specific regions for the adverse decision and the names and addresses of the sources the provided the information."
"Agent/producer - CORRECT ANSWER The individual appointed by insurance company to
solicit and negotiate insurance contracts on its behalf. Agents or producers represent the company, not the client."
"Alien company - CORRECT ANSWER And insurer organized and domiciled in a country other
than the United States."
"Assignee - CORRECT ANSWER The person to whom policy rights are assigned in whole or in
part by the policyholder, who is known as the assignor. On life insurance there are two types of assignment: absolute and collateral."
"Assignment - CORRECT ANSWER Transfer of rights in a policy to another party by the
policyholder. For example, if you bought a life insurance policy on a minor child, you are the owner and the child is the insured. When the child reaches age 21, you can assign all rights of ownership in the policy to the child. This is an absolute assignment."
"Attained age - CORRECT ANSWER The present or current age of the insured. Upon
conversion, premiums are based on the current age of the insured."
"Authorized company - CORRECT ANSWER And insurer permitted to sell insurance within a
state. Must obtain a certificate of authority from the commissioner or director of insurance in every state they sell in."
"Automatic premium loan - CORRECT ANSWER A rider in a life policy authorizing the
insurance company to use the cash value to pay premiums not paid by the end of the grace period. May be present in whole life or endowment policies only, never term. This rider is free, but must be selected by the policy owner."
"Aviation clause - CORRECT ANSWER Limits or excludes coverage when the insured is
participating in specified types of air travel. Coverage is usually confined to regularly scheduled flights or commercial airlines. Often applies to student pilots."
"Beneficiary - CORRECT ANSWER A person who may become eligible to receive, or is
receiving, benefits under an insurance plan. This person is selected by the policy owner and may be changed at any time, unless itrevocable."
"Blanket insurance contract - CORRECT ANSWER A contract of health insurance that covers all
of the class of persons not individually identified. Often written to cover school children or sports teams, such as Little League. No certificates are issued, since coverage applies to everyone that attends or participates."
"Blue plan - CORRECT ANSWER Generic term for those insurers (usually on a service rather
than a reimbursement basis) who are authorized to use the designation Blue Cross or Blue Shield."
"Brokerage - CORRECT ANSWER A producer who represents an insured in the solicitation,
negotiation, or procurement of contracts of insurance. For example, you might represent only one insurer as a producer. If that insurer declines to write coverage for your client, you might try to broker the business elsewhere in an effort to better serve your customers."
"Business insurance - CORRECT ANSWER Life or health insurance written to cover business
situations such as key person, so proprietor, partnership, corporations, etc."
"Cancelable - CORRECT ANSWER A contract of insurance that may be terminated by the
insurance company or insured at any time. Virtually every form of insurance is cancelable (unless state law prohibits such action) except life insurance and those health policies designated as guaranteed renewable or noncancelable and guaranteed renewable."
"Cancellation - CORRECT ANSWER Termination of the contract of insurance midterm (rather
than at the renewal date) by voluntary act of the insurance company or insured, effected in accordance with the provisions in the contract or by mutual agreement."
is designed to protect the rights of the contingent beneficiary in the event of simultaneous (or nearly simultaneous) death of the insured and the primary beneficiary. This time limit is usually 10, 15, or 30 days, depending on state law. Also known as the uniform simultaneous death law."
"Comprehensive health insurance - CORRECT ANSWER A form of health insurance that
combines the coverage of major medical and basic medical expense contracts into one broad contract provides coverage for almost all types of medical expense, usually subject to a Corridor deductible and to a percentage participation clause (sometimes called coinsurance) applicable to all or some of the cover expenses."
"Concealment - CORRECT ANSWER The deliberate withholding the facts by an applicant for
insurance that materially affects an insurance risk or loss."
"Conditional receipt - CORRECT ANSWER In life and health insurance, this provides that if
premium accompanies the application, coverage shall be in force from the date of application (whether the policy has yet been issued or not) provided the insurance company would have issued the coverage on the basis of facts as revealed by the application and other usual sources of underwriting information. Remember, there is never any coverage unless the premium has been paid!"
"Conditionally renewable - CORRECT ANSWER A contract of health insurance that provides
that the insured may renew the contract to state a date or age, subject to the right of the insured to decline renewal only under conditions defined in the contract."
"Conditions - CORRECT ANSWER The part of an insurance contract setting up the
responsibilities of both the insured and the insurer, such as the requirements regarding notice of claim and proof of loss."
"Consideration - CORRECT ANSWER The exchange of value in which a contract is based. In life
and health insurance, the '' is the premium and the statements in the application. Remember this need not be equal. You might pay $1000 in premium, but your policy will pay $100,000 if you die."
"Consideration clause - CORRECT ANSWER A clause a life policy specifying the premium due
for the insurance protection and the frequency of payment (also called mode). The more frequent the mode of payment, the higher the cost, since most insurers charge service fees for budget payments. The cheapest mode is annual."
"Contingent beneficiary - CORRECT ANSWER Person or persons named to receive benefits if
the primary beneficiary is not alive when the insured dies. For example, the primary beneficiary might be your spouse and the '' beneficiary might be your children."
"Contract - CORRECT ANSWER A legal agreement between two parties for consideration, such
as insurance policy. To hold up in court, these must contain four required elements: consideration, offer, acceptance and legal purpose (COAL). Parties to the contract must also have legal capacity."
"Contributory group - CORRECT ANSWER Group insurance for which the employees pay part
of the premium. If the group is contributory, at least 75% of those eligible must enroll in order to prevent adverse selection. In noncontributory groups 100% must enroll."
"Controlled business - CORRECT ANSWER Life insurance coverage written on the producers
own life and on the lives of such persons as the producers relatives and business associates. The amount of controlled business a producer may right is restricted in most states, often to a maximum of 50% in a 12 month period."
"Convertible term insurance - CORRECT ANSWER A term life policy that can be converted
anytime to a permanent type of coverage without proof of insurability. Conversion premiums are based on current age and coverage cannot be increased. Most term is convertible, but not all. Most group insurance (which is usually annual renewal term) is convertible by law during its 31 day grace period."
"Corridor deductible - CORRECT ANSWER A major medical deductible that applies between
benefits paid by the basic plan and the start of the major medical benefits."
"Credit insurance - CORRECT ANSWER Insurance on a debtor in favor of a lender, intended to
pay off a loan or the balance due theron if the insured dies or is disabled. Credit life is a type of decreasing term insurance and the face amount of the policy is limited to the amount of the loan. Generally not used as mortgage protection insurance."
"Death benefit - CORRECT ANSWER The policy proceeds to pay upon the death of the insured.
On life insurance, proceeds are not taxable, but may be included in the value of the insured's estate for estate tax purposes."
"Deductible - CORRECT ANSWER Dollars or percentage of expense that will not be reimbursed
by the insurer. The purpose of the deductible is to hold down the cost of insurance. The higher the deductible, the lower the premium."
"A hospital or medical expense policy will typically cover dental treatment expenses under which
circumstance? - CORRECT ANSWER Dental treatment is needed to repair and injury"
"Which disability policy provision would address any concerns of the value of the benefits
decreasing over time? - CORRECT ANSWER Cost of living benefit"
"The typical long-term care insurance policy is designed to provide a minimum of __ year(s) of
coverage. - CORRECT ANSWER 1 year"
"An insured has a stop-loss limit of $5,000, a deductible of $500, and an 80/20 coinsurance. The
insured incurs $25,000 of covered losses. How much will the insured have to pay? - CORRECT
ANSWER $5,000"
"Signatures for an insurance application MUST be obtained by the producer from all of the
following sources EXCEPT - CORRECT ANSWER The beneficiary"
"A health care provider claim may be settled using which of the following payment methods? -
CORRECT ANSWER Fee-for-service"
"Rob purchased a standard whole life policy with a $500,000 death benefit when he was age 30. His insurance agent told him the policy would be paid up if he reached age 100. The present cash
value of the policy equals $250,000. Rob recently died at age 60. The death benefit would be -
CORRECT ANSWER $500,000"
"How does one become eligible for Part D: Prescription Drug coverage? - CORRECT ANSWER
Must have Medicare coverage" "What does a life insurance policy guarantee to the stated beneficiary upon the death of the
insured? - CORRECT ANSWER Specified amount of money"
"Insurance producer Jerry offers insureds a $350 shopping card if they purchase insurance
products through him. What is this an example of? - CORRECT ANSWER Rebating"
"A life insurance policyowner does NOT have the right to - CORRECT ANSWER Revoke an
absolute assignment" "A life insurance policy that contains a guaranteed interest rate with the chance to earn a rate
that is higher then the guaranteed rate is called? - CORRECT ANSWER Universal life"
"How many months can a life insurance policy normally be backdated form the date of the
application? - CORRECT ANSWER 6 months"
"Barry offers Chris his mountain cabin for the weekend to secure his order for his insurance
business. This is an example of - CORRECT ANSWER Rebating"
"A life insurance claim which involves a per capita distribution of policy proceeds would be
payable to the - CORRECT ANSWER Named living primary beneficiaries"
"Which of these is considered to be a document that describes the critical segment of a life
insurance policy - CORRECT ANSWER Policy summary"
"Under a group life policy, the insurer will issue and individual _______ to the policyowner for
delivery to each person insured. - CORRECT ANSWER Certificate"
"A securities license is required for a life insurance producer to sell - CORRECT ANSWER
Variable life insurance"
"What is the elimination period of an individual disability policy? - CORRECT ANSWER Time
period a disabled person must wait before benefits are paid"
"Level premium term life insurance policies - CORRECT ANSWER Have premiums that are
averaged over the policy period" "A life insurance company has transferred some of its risk to another insurer. The insurer
assuming the risk is called the - CORRECT ANSWER Reinsurer"
"Utah requires that an insurance producers must complete ______ hour(s) of continuing
education on the subject of law and ethics every reporting period. - CORRECT ANSWER 3
hours" "Which is these legislation Acts is designed to protects consumers with guidelines regarding
credit reporting and distribution? - CORRECT ANSWER Fair Credit and Reporting Act"
"A limited payment whole life policy provides - CORRECT ANSWER Lifetime protection"
"A policyholder has a major medical plan with a 80%/20% coinsurance and a deductible of $75. If the insured has previously met her deductible and receives a bill for $175, how much will the
insurer pay? - CORRECT ANSWER $140"
"Ken is a producer who has obtained Consumer Information Reports under false pretenses. Under the Fair Credit Reporting Act, what is the maximum penalty that may be imposed on Ken?
CORRECT ANSWER $5,000"
"What kind of life insurance policy issued by a mutual insurer provides a return of divisible
surplus? - CORRECT ANSWER Participating life insurance policy"
"What type of injury would NOT be covered under a health insurance policy? - CORRECT
ANSWER Work-related"
"What would be an expense factor in an insurance program? - CORRECT ANSWER Mortality
costs" "Elizabeth is the beneficiary of a life insurance policy. She is receiving the death benefit in payments of $10,000 per month until the principal and interest has been paid out. Which option
was chosen? - CORRECT ANSWER Fixed amount"
"According to HIPPA, when an insured individual leaves an employer and immediately begins
working for a new company that offers group health insurance, the individual - CORRECT
ANSWER Is eligible for coverage upon hire"
"Premiums paid that exceed 7 1/2% of an insured's Adjusted Gross Income (AGI) are tax-
deductible when paid for which of the following plans? - CORRECT ANSWER Qualified Long-
Term Care plan" "Susan is insured through her Group Health Insurance plan and changed her coverage to an individual plan with the same insurer after her employment was terminated. This change is called
a(n) - CORRECT ANSWER Conversion"
"A closed network plan offers a a primary physician copay of $25. If a subscriber chooses a
primary care physician outside of the network, the subscriber will likely pay - CORRECT
ANSWER 100% of the billed amount"
"P the producer intentionally submits a false statement in support of a claim. P is committing -
CORRECT ANSWER Fraud"
"In contrast to a guaranteed renewable policy, a noncancellable policy - CORRECT ANSWER
May never raise premiums"
"Who is the individual paid on a fee-for-service basis? - CORRECT ANSWER Provider"
"During the accumulation period, who can surrender an annuity? - CORRECT ANSWER
Policyowner" "A lincensee who must complete ______ hours of continuing equation credit hours for each
licensing period. - CORRECT ANSWER 24 hours"
"The suicide clause of a life insurance policy states that if an insured commits suicide within a stated period from the policy's inception, the insurer will only be liable for a return of premiums
paid - CORRECT ANSWER Minus indebtedness and without interest"
"Reggie purchased a life insurance policy with a face amount of $500,000. After 15 years, the cash value has accumulated to $100,000 and the policy's face amount has become $600,000. Which
type of life insurance policy is this? - CORRECT ANSWER Universal life"
"Which of these is NOT a characteristic of the Accelerated Death Benefit option? - CORRECT
ANSWER The benefit can be offered as a rider at a specific extra cost or may be at no cost"
"A waiver of premium rider allows an inured to waive premium payments if the insured is -
CORRECT ANSWER Completely and permanently disabled"
"Under a life insurance policy, what does the insuring clause state? - CORRECT ANSWER The
insurer's obligation to pay a death benefit upon an approved death claim"
"Accident and Sickness - CORRECT ANSWER Insurance against bodily injury, disability or death
by accident, or against disability or expense resulting from sickness, and the insurance relating thereto"
"Accidental Means - CORRECT ANSWER The unexpected cause of an accidental bodily injury.
Under this definition, which is very restrictive, if you meant to do whatever caused your injury, there is no coverage. Most health insurance policies cover accidental bodily injury, which is much broader, in that it covers accidents regardless of the cause"
"Accumulation at interest option - CORRECT ANSWER A dividend or settlement option under
which the policyholder allows his dividends or policy proceeds to accumulate interest with the company. Although the dividends or proceeds are not generally"
"Actuary - CORRECT ANSWER One concern with the application of probability and statistical
theory to insurance, utilizing the law of large numbers."
