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UTAH LIFE INSURANCE TEST QUESTIONS WITH 100% CORRECT ANSWERS
"limited policy - CORRECT ANSWER ecample: Prescription drug policies may be sold as
supplements to individual policies or as stand-alone"
"buy-sell plans - CORRECT ANSWER offers several advantages to the partners while they are
all living. The partners know they will have a legal right to buy a deceased partner's share of the business, and the family and heirs of the partners know that the partnership interest will be disposed of at a fair price. Further, the money needed to purchase the deceased partner's interest will be available when needed."
"unilateral contract. - CORRECT ANSWER since only one party-the insurer-makes any kind of
enforceable promise. The insurer promises to pay benefits if and when certain events, such as death or disability, occur. The insured's act of paying the premium is given in exchange for this promise. However, the insured is not obligated to make these payments and can let the policy lapse."
"18 months - CORRECT ANSWER When an employee's coverage terminates under a group
health policy, the employee must be offered continuation coverage for:"
"Graded premium whole life - CORRECT ANSWER policy in which the premium at the
inception of the policy is lower than the continuous premium whole life rate and then increases each year for the first five years of the policy period. After five years, the premium levels off."
"state guaranty associations - CORRECT ANSWER All states have established one, funds or
associations. If an insurer becomes financially unable to pay its claims, this will cover the consumers' unpaid claims. Insurance companies fund this associations through assessments."
"managed care plans - CORRECT ANSWER HMOs, PPOs, and POS plans, offer comprehensive
medical services to their members. They also apply financial incentives that encourage providers to keep both the quantity and cost of services in check and motivate members to select cost- effective providers."
"needs approach - CORRECT ANSWER is not limited to fulfilling objectives in the event of
death only, such as final expenses and immediate debts that need to be paid. It also considers a family's (or business's) living needs, such as maintenance income for the family, providing for a child's education, and planning for the surviving spouse's retirement income. Replacement of the
breadwinner's projected increasing annual salary is a factor that is taken into account when using the human life value approach to determine how much life insurance is needed."
"flexible spending accounts - CORRECT ANSWER benefit provided by an employer that allows
an employee to deposit a certain amount of his or her paycheck into an account before paying income taxes. During the year, the employee is then directly reimbursed from this account for eligible health care and dependent care expenses. Only qualified medical expenses are reimbursable, not all medical expenses. Eligible expenses include certain medical expenses, health care plan deductibles, and co-payments."
"Joint life - CORRECT ANSWER one policy that covers two people. Using some type of
permanent insurance, it pays the death benefit when the first insured dies. The survivor then has the option of purchasing a single individual policy without evidence of insurability."
"deferred annuities - CORRECT ANSWER Surrender charge-free withdrawals are generally
permitted up to a specified percentage. (A common percentage is 10%.) Although these free withdrawals may escape the contract's surrender charge, they are subject to income taxation. If the contract owner is younger than age 59½, the tax may include a 10% penalty."
"Group medical expense plans. - CORRECT ANSWER Prescription drug coverage can be
offered as an optional benefit under which of the following arrangement"
"Social Security disability benefits - CORRECT ANSWER An eligible applicant for you must be
younger than age 65 (since all benefits paid after age 65 are classified as retirement benefits), enjoy a fully insured status, and be unable to engage in gainful work for at least 5 months before the start of the benefits."
"proofs of loss - CORRECT ANSWER Claimants must give yhis in writing to the insurer within 90
days of the loss. If the claim is for continuing loss, proofs must be filed within 90 days after the end of the period for which the insurer is liable. If it is not reasonably possible to give proof within such time, proof must be given no later than one year from the time it was required, except in the absence of legal capacity."
"A variable annuity is based on - CORRECT ANSWER investments and payments. They vary
with the value of the investments in a separate fund."
amount of the insurance at the insured's death. This includes taking out a policy loan or surrendering the policy."
"buy-sell plans in close corporations - CORRECT ANSWER provides multiple advantages for all
concerned. It usually takes 1 of 2 forms: a cross-purchase plan, in which the stockholders purchase the interest of the deceased stockholder as individuals, and a stock redemption plan, in which the corporation purchases the deceased stockholder's shares. In the case of multiple stockholders, a stock redemption plan requires fewer policies than a cross-purchase plan. A corporation does not cease to exist because an owner dies, and it is necessary to arrange for the disposition of the deceased owner's interests."
"miscellaneous medical expense benefit in a medical expense policy - CORRECT ANSWER
normally will cover drugs and medicine administered in the hospital as well as other incidental hospital expenses."
"stop-loss feature in a major medical policy - CORRECT ANSWER To provide a safeguard for
insureds, many major medical policies contain a this feature that limits the insured's out-of- pocket expenses. This means that once the insured has paid a specified amount toward his or her covered expenses-usually $1,000 to $2,000-the company pays 100% of covered expenses after that point."
"The needs approach - CORRECT ANSWER for determining how much insurance protection is
needed requires an analysis of the family's financials if the breadwinner dies. Then the family's ability to meet these out of current or anticipated assets must be assessed. This involves determining the amount of monthly benefits the family will receive from Social Security, pension plans, personal savings, and any other sources."
"probationary period. - CORRECT ANSWER helps the insurer to avoid paying benefits for
losses due to illness contracted before the policy was issued. The elimination period arises in the context of a disability income policy. It is the period between the beginning of an insured's disability and the commencement of the period for which benefits are payable."
"30 days - CORRECT ANSWER after receiving notice of loss, the insurer must complete its
investigation of the claim and advise the first party claimant about whether the claim has been accepted or denied, unless the investigation cannot reasonably be completed within that time. Any basis for denying a claim must be noted in the insurer's claim file and must be communicated promptly in writing to the claimant."
"Community rating - CORRECT ANSWER based on the average charge for insurance among all
insureds in a community. It does not take into consideration the difference in risk among insureds. With this, the same rate structure is used for all subscribers, regardless of their past or potential loss experience. Premiums for group insurance are typically based on experience rating."
"An executive bonus plan - CORRECT ANSWER a nonqualified employee benefit arrangement
in which an employer pays a bonus to a particular employee. The employee then uses the bonus to pay the premiums on a life insurance policy covering his life. The employee, not the employer, is the policyowner."
"the Commissioner of Insurance, when conducting examinations - CORRECT ANSWER
subpoena witnesses, take depositions, administer oaths, examine people under oath, and require the production of records, books, papers, and any other documents."
"Social Security disability benefits - CORRECT ANSWER be totally and permanently disabled
for at least five months. The other requirements are that the disability must be expected to last for at least 12 months or end in death, and the person must be fully insured and disability insured as defined under Social Security regulations."
"The probationary period in disability income policies usually lasts: - CORRECT ANSWER two
weeks to one month."
"key-person life insurance - CORRECT ANSWER purchased on any person in an organization
whose contributions are essential to its success. With this, the business is the owner, premium payor, and beneficiary of the policy. The purpose of the insurance is to protect the business against the economic loss it would suffer if this were to die."
"respite care provision under a long-term care policy - CORRECT ANSWER pays the cost of
either bringing in a substitute provider to the insured's home or moving the insured to a care facility for a period of time. Its purpose is to give an unpaid caregiver (such as spouse or other family member) relief from her daily duties."
"The change of occupation provision - CORRECT ANSWER describes changes that may be
made to premium rates or benefits if the insured changes jobs"
"The legal action provision - CORRECT ANSWER prevents the insured from taking legal action
against the insurer any sooner than 60 days from the date the claim was filed."
"63 days - CORRECT ANSWER According to HIPAA, a newly hired worker is not subject to a
waiting period if they had less than how many days between jobs with no health insurance coverage?"
"Insurance Department. - CORRECT ANSWER approves or disapproves of continuing
education programs according to the standards of the Utah insurance code. also determines how many continuing education hours each program will receive. All proposed continuing education courses and programs must be submitted and approved by them at least 14 days before they can be offered for continuing education credit."
"Medical Information Bureau (MIB) - CORRECT ANSWER nonprofit central information agency
that provides assistance in the underwriting of life insurance. It is not run or accessed by all physicians, nor is data obtained in connection with claims reported to them. Insurance companies report information obtained through underwriting to them.Information obtained by them may be used by an insurer to decide whether to insure an applicant."
"Social Security provides - CORRECT ANSWER death benefits, old-age (retirement) benefits,
and disability benefits to eligible workers. but not medical expense benefits."
"March 1. - CORRECT ANSWER Authorized insurers must file an annual statement each year
by:"
"In order to sell variable annuities, a producer must have - CORRECT ANSWER valid life
insurance license and be registered with the Financial Industry Regulatory Authority (FINRA). In order to be registered with FINRA the producer must first pass the applicable securities exam(s). To obtain a life insurance license the producer must also first pass the state life insurance exam. Being a member of the National Association of Insurance and Financial Advisors (NAIFA) is not required to sell variable annuities."
"individual disability income policy - CORRECT ANSWER Premiums payable on this contract
are generally not tax deductible. Premium rates are determined per $100 of monthly income benefit; the waiting period selected; the length of the benefit period; the applicant's age, income, and occupation; and whether the applicant has any other current forms of these policies in force. They also have waiting periods to eliminate claims for very short-term disabilities that the insured can manage without financial hardship. They may vary from one week to one year, though most policies specify 30 to 90 days. Benefits are not paid during this time. Riders are available to adjust benefits for cost-of-living increases."
"Group health insurance participants may be classified by - CORRECT ANSWER type of payroll,
duties and length of service, but not by age."
"fully insured. - CORRECT ANSWER Sally, age 66, has accumulated 50 credits from working
during the past 15 years. For Social Security purposes, this means that Sally is:"
"Under a fixed-period life insurance settlement option - CORRECT ANSWER excess interest
will increase the size of payments. Insurers may choose to pay interest over and above the guaranteed rate if they have sufficiently high earnings."
"To be considered a qualified contract, a long-term care insurance policy must - CORRECT
ANSWER follow NAIC's long-term care insurance model regulations, which address the
following: policy replacement, conversion, marketing standards, prohibitions on limits and exclusions, and policy renewability, among other things."
"18 months. - CORRECT ANSWER Under COBRA regulations, group health coverage of
terminated employees must be continued up to:"
"The insured must file proof of loss within - CORRECT ANSWER 90 days of the date of loss."
"Utah, the Insurance Department and the Commissioner of Insurance - CORRECT ANSWER
responsible for administering and enforcing the state's insurance laws. As chief officer of this Utah organization, they have the authority to make rules and regulations to help carry out those laws"
"participating policies. - CORRECT ANSWER Insurance policies that pay dividends"
"Life Insurance Cost Index - CORRECT ANSWER to solicit life insurance, a producer or insurer
must explain that the this is meaningful only when comparing the relative costs of two or more similar policies."
"coverage of a spouse under an employer-sponsored group health insurance plan - CORRECT
ANSWER the they declines coverage after 31 days of becoming eligible, future coverage is
available only during open enrollment periods or when proof of insurability is provided. Otherwise, dependents become eligible at the same time coverage is provided to the employee. Proof of insurability at the time of initial eligibility may or may not be required under the plan."
"applicant's signature is required - CORRECT ANSWER aviation questionnaire and
authorization form; in other words, forms requiring detailed information from the insured. An agent's report is not given to the applicant and does not."
"Individual Practice Model. - CORRECT ANSWER type of HMO contracts with a large number
of individual doctors who work out of their own offices or clinics"
"three to six months. - CORRECT ANSWER Disability income benefits for partial disability
typically are payable to eligible insureds for a MAXIMUM of"
"10-year renewable and convertible level term. - CORRECT ANSWER life insurance policies
with the same face value would have the highest premium if issued to the same person"
"ERISA.Employee Retirement Income Security Act - CORRECT ANSWER established minimum
standards for pension and health care plans offered in private industry. It prohibits highly paid employees from receiving disproportionate benefit levels"
"Individual premium contributions to a group medical expense plan - CORRECT ANSWER
unreimbursed medical expenses exceed 10% of an individual's adjusted gross income. Premium contributions made by an employer and those made by an employee for group disability coverage cannot be considered for purposes of determining a medical tax deduction."
"deferred compensation plan - CORRECT ANSWER a nonqualified plan, which means that it
can pick and choose which employees and owners can participate in the plan without regard to years of service, salary levels, or any other criteria."
"miscellaneous medical expense benefit in a medical expense policy - CORRECT ANSWER
normally will cover drugs and medicine administered in the hospital as well as other incidental hospital expenses."
"24 - CORRECT ANSWER How many hours of continuing education must all licensees complete
to renew their licenses every two years?" Which of the following is NOT true about social insurances? A Partioipation Is mandatory and automatic for all elipible citizens B Social insurance provides equal benefits to all citizens that contribute C The government, as an insurance provider, has a clear and strong monopoly
D Benefits are prescribed by law any changes to the benefit structure and provisions are made by
changes in the law - CORRECT ANSWER B Social insurance provides equal benefits to all
citizens that contribute" "Universal Life provides for an increasing death benefit only if the applicant chooses: A A return of premium rider to the plan B To include an inflation rider at the time of application C Death Benefit Option B
D To add an increasing term rider to the policy - CORRECT ANSWER C Death Benefit Option B
Option B pays the face amount stated in the contract that is level term an increasing death benefit." "All of the following are true about indeterminate premium whole life policies, except: A The policy has adjustable premiums B The company charges a current premium based on current estimates C They are like participating whole life
D There is a maximum guaranteed premium stated in the policy - CORRECT ANSWER C They
are like participating whole life" "All of the following policies end when an insured dies, except: A Joint Life B Variable Universal Life C Juvenile Life
D Joint Survivorship - CORRECT ANSWER D Joint Survivorship"
"What is the 'waiver of premium' called on a Universal Life insurance policy? A Monthly premium waiver B Waiver of flexible premium C Disability premium income
D Waiver of Cost of Insurance - CORRECT ANSWER D Waiver of Cost of Insurance"
"Which of the following provides the basis for the benefit amount paid to an insured under a disability income rider? A The face amount of the policy B The length of time income payments are to be paid out C The amount of monthly benefit selected
D The elimination period - CORRECT ANSWER A The face amount of the policy"
"Joe had $500,000 of life insurance at work. He has an additional $40,000 life insurance policy the company purchased on all employees. His wife is the primary beneficiary and their four children contingent beneficiaries. Upon Joe's death, what are the tax consequences to his beneficiaries? A $460,000 is income taxable to the recipient B The $540,000 lump sum proceeds will be received income tax-free C All premiums paid may be deducted from the face-value-beforetaxation
D The $40.000 will be taxed since the premium was tax-deductible by the employer - CORRECT
ANSWER B The $540,000 lump sum proceeds will be received income tax-free"
"By what means is a transfer for value made? A By requesting a change in the berneficiary designations B By a partial withdrawal C By way of collateral assignment
D Through an absolute assignment - CORRECT ANSWER D Through an absolute assignment"
"When funds are transferred from one qualified plan to the trustee of an IRA or another plan, there is a _____day requirement A 90 B 60 C 30
D 0 - CORRECT ANSWER D 0"
"If a policyowner unintentionally pays premiums in excess of the MEC guidelines, the excess premium can be refunded by the insurer within 60 days after the ______ A End of the contract year B Latest-premium payment was-received C End of the tax year
D End of the calerdar year - CORRECT ANSWER A End of the contract year"
"When the annuitant dies during the accumulation phase of the annuity, the beneficiary receiving the death benefit: A Pays income tax on any gains using the deceased's income tax bracket B Pays no income tax on any portion of the-proceeds C Pays income tax on any gains at his or her own income tax rate
D Pays taxes based on the estate tax rate of the deceased - CORRECT ANSWER C Pays income
tax on any gains at his or her own income tax rate" "All of the following are true regarding IRA transfers, except: A They can only take place once a year B Funds are directly transferred from one financial institution to another
C It is a transaction between the same types of plan, such as two IRA accounts
D Transfers are-not taxable-events - CORRECT ANSWER A They can only take place once a
year" "Nonprofit organizations as qualified by the internal revenue code are also eligible to establish Tax Sheltered Annuities for their employees A 501(c)(3) B 505(d) C 401(a)
D 408a) - CORRECT ANSWER A 501(c3)"
"ERISA sets what type of standards for pension plans in private industry. A Minimum
B Voluntary - CORRECT ANSWER A Minimum"
"Which of the following statements about Section 1035 transactions is TRUE? A Any surrender charges satisfied on the old policy-carry over into the new policy B All surrender charges are waived on any existing policy C A 1035 allows an annuity to be exchanged for life insurance
D A new application is required when moving into a new life insurance policy - CORRECT
ANSWER D A new application is required when moving into a new life insurance policy"
"All of the following will determine whether or not an IRA contribution is deductible, except: A Whether the IRA owner is a participant in an employer sponsored retirement plan B Whether the IRA owner chooses a Roth or a Traditional IRA C Whether the IRA owner is over a specified age
D Whether the IRA owner has gross income that exceeds a certain amount - CORRECT
ANSWER C Whether the IRA owner is over a specified age"
"All of the following acts are considered unfair claim settlement practices in Utah, except: A Not trying, in good faith, to settle a claim for which liability has become reasonably clear B Having a policy or practice of appealing arbitration awards C Responding to a claim or a communication about a claim within 15 days of receipt
D Compelling insureds to sue by offering less than the amounts due - CORRECT ANSWER C
Responding to a claim or a communication about a claim within 15 days of receipt" "To recommend an insurer who compensates a producer or consultant, the producer or consultant must in writing do all of the following, except:
D 5 - CORRECT ANSWER C 2"
"A producer or consultant must keep documentation of completing the continuing education requirements for ______ years after the end of the 2-year licensing period to which the continuing education applies A 3 B 4 C 2
D 5 - CORRECT ANSWER C 2"
"A(n) report is a general report of the applicant's finances, character, morals, work, hobbies, and other habits. A Inspection B Attending physician's C Motor vehicle
D Agent's - CORRECT ANSWER A Inspection"
"T has some heart health issues, but needs some additional life insurance coverage. What options should T consider? A A group life insurance plan B Adjustable Life C A group health insurance plan
D Universal Life Option B - CORRECT ANSWER A) A group life insurance plan"
"The purpose of the Re-Entry Term option is to: A Obtain a permanent plan of insurance that builds cash value B Continue on with thd existing policy but with a larger face amount C Extend the length of time the original policy can be in effect
D Obtain a new term policy at a lower rate - CORRECT ANSWER D Obtain a new term policy at
a lower rate" "An insured has paid premiums annually on her life insurance policy. She would now like change to a monthly premium payment. What must occur to effect this change? A The insurer and beneiciary must agree in writing to the change and amend the onginal contract B The Insured and beneficiary must agree in witing to the change and amend the original contract C The beneficiary and owner must agreein writing to the change and amend the original contract D The insured simply needs contact the insurance company and request a change in premium
mode - CORRECT ANSWER D The insured simply needs contact the insurance company and
request a change in premium mode"
"How long, typically, is the grace period on a $500,000 level term life insurance policy? A One month B One year C One quarter
D One week - CORRECT ANSWER A One month"
"In order to convert a term policy to a permanent policy as of the original issue age, all of the following must occur, except: A Back premiums will have to be paid at the time of conversion B Interest will be charged and have to be paid at the time of conversion C The cash values will have to be paid out first before the conversion can be effected
D The request for conversion must be made on a timely basis - CORRECT ANSWER C The cash
values will have to be paid out first before the conversion can be effected" "What is an annuitant, in regard to an annuity policy? A The issuer of the policy B The party who receives any residual policy benefits C The person who has all of the rights in the contract
D The party whose life the policy's benefits are based on - CORRECT ANSWER D The party
whose life the policy's benefits are based on" "The cost of any required medical exams in the underwriting process is paid by the A Insured B Insurer C Producer
D Applicant - CORRECT ANSWER B Insurer"
"All are correct statements concerning noncontributory group life, EXCEPT A Premiums are calculated by underwriting each individual in the group B The Conversion Period is 31 days C If employer-sponsored, an employee must work a minimum number of hours per week to be eligible
D Only the plan sponsor is responsible for paying premiums - CORRECT ANSWER A Premiums
are calculated by underwriting each individual in the group" "Whole Life is also known as protection. A Periodic B Permanent C Temporary
D Absolute - CORRECT ANSWER B Permanent"
B Reduces the death benefit by the amount withdrawn C Both answers
D Neither answer - CORRECT ANSWER B Reduces the death benefit by the amount
withdrawn" "What rider is designed to help the insured offset the effects of future inflation on the policy's face amount? A Living Needs B Cost of Living C Decreasing Term
D Accelerating Benefits - CORRECT ANSWER B Cost of Living"
"How much of a cash value policy loan will an insurer normally grant with a variable type policy? A 75-90% B 50-75% C 100%
D 80-90% - CORRECT ANSWER A 75-90%"
"Which of the following riders require the insured being totally and permanently disabled before it becomes effective? A Living need rider B Accidental death rider C Waiver of premium rider
D Spouse rider - CORRECT ANSWER C Waiver of premium rider"
"A married couple wants to make sure that i ther of them dies, the survivor has enough funds to maintain their standard of living but want to accomplish this in the most economical way. Which of the following recommendations is best suited to accomplish their goal? A Purchase a Joint life policy B Buy a Joint Survivorship Life Policy C Buy two separate Whole Life policies
D Buy two seperate Limited payment life policies - CORRECT ANSWER A Purchase a Joint life
policy" "Which one of the following regarding the purposes of Utah's State licensing and regulations is false? A To-promote uniform licensing requirements between the-several states B To regulate insurance marketing practices C To preserve and encourage competition at the insurer and producer level
D To promote the professional competence of insurance producers - CORRECT ANSWER C To
preserve and encourage competition at the insurer and producer level" "If an applicant for life insurance misstates his age on the application, what would be the consequence if/when it is discovered A Premiums refunded with interest, no death beneft paid B Real age divided by actual age muitiplied by death benefit C The policy will be voided D Death benefit will be what the premium paid would have purchased at issuance at the correct
age - CORRECT ANSWER D Death benefit will be what the premium paid would have
purchased at issuance at the correct age" "Which of the following is a type of rating that does not involve an extra premium being assessed? A The flat-rate B The lien plan C Sub standard
D Rated up age - CORRECT ANSWER B The lien plan"
"Which of the following is not a way to access the money accumulated in a traditional ordinary permanent life insurance policy? A Partial surrender B Cash Surender C Endowment
D Policy toan - CORRECT ANSWER A Partial surrender"
"Which of the following will receive the smallest monthly income benefit check if an annuity is annuitized? A 65 year old male B 50 year old female C 65 year old fermale
D 50 year old male - CORRECT ANSWER B 50 year old female"
"An insurance policy entered into in violation of state insurance laws is voidable by the ______ who entered into the transaction without knowing it was illegal. A Producer B Insurer C Policyholder
D Agency - CORRECT ANSWER C Policyholder"
