1|Page
Life and Health Insurance Test Bank (Chapter 7:
Health) by Kaplan Financial Education, Latest
Edition - Questions and Answers.
J has a life policy with the Guaranteed Insurability rider. J has just
celebrated their 42nd birthday and realizes that she wants to use her rider
and buy more death benefit. Which of the following will apply to J's
request?
A: The insurer will allow J to add more insurance without proving
insurability.
B: The insurer will allow J to add more insurance pending a paramedical
exam.
C: The insurer will deny J's request to add more insurance.
D: The insurer will allow J to add more coverage pending proof of
insurability and extra premium. - ANSWER-C: The insurer will deny J's
request to add more insurance.
An insured has a policy with a Waiver of Premium rider. The insured
has suffered an illness that will prevent them for working for two years.
When will their premiums be waived?
A: Immediately
B: After the first nine months of disability
C: After the first six months of disability
D: Never, premiums cannot be waived because illness is not a disability.
- ANSWER-C: After the first six months of disability
The clause that defines and describes the scope of coverage and the
limits of indemnification is known as the:
A: Insuring Agreement
B: Incontestable Clause
,2|Page
C: Payor Clause
D: Entire Contract Clause - ANSWER-A: Insuring Agreement
D has just paid off his mortgage and has decided that he no longer needs
his life insurance policy which he originally purchased to cover the
house payments should he die. If D explores the possibly of selling his
policy while he is still alive, it is known as:
A: a life settlement
B: an annuity
C: a Viatical settlement
D: STOLI - ANSWER-A: a life settlement
Combination/Variation Plans insure:
A: Groups
B: Two or More lives under one contract
C: Two or more people under separate contracts
D: are a form of variable life insurance - ANSWER-B: Two or More
lives under one contract
What is the tax consideration for taking a cash dividend option?
A: The dividend is fully taxable as income
B: The dividend is paid tax free
C: Depending on income bracket of the insured, the dividend may be
taxable
D: If the company gets to keep half of the dividend it is take free -
ANSWER-B: The dividend is paid tax free
Which of the following is not true regarding a renewable option on a
term policy?
A: The policy must be renewed regardless of insurability.
B: The rates cannot be more than standard rates at renewal.
C: Premiums are based off of attained age rates.
D: A policy can be renewed, however, the insured must convert to a
different policy. - ANSWER-D: A policy can be renewed, however, the
insured must convert to a different policy.
,3|Page
Which of the following is considered to be part of the Entire Contract?
A: Declarations Page
B: Buyers Guide
C: Copy of the Application
D: All of the Above - ANSWER-C: Copy of the Application
Company A has a partnership with Company Z. There is an agreement
in place that if the CEO of either company were to die, the other
company would receive money to buy out the partnership. This is an
example of:
A: Buy/Sell Agreement
B: Crosse Purchase plan
C: Business Entity Plan
D: Key Person - ANSWER-C: Business Entity Plan
All of the following are true regarding the Guaranty Association
EXCEPT:
A: A claimant may receive less benefits than what they had from a
policy.
B: The Association is comprised of All member insurers
C: The Association is comprised of All member insurers and have a
right to end membership while still transacting business in IL
D: There is a $250,000 limit on the present value of annuity benefits. -
ANSWER-C: The Association is comprised of All member insurers and
have a right to end membership while still transacting business in IL
G has a credit life policy and is replacing that with a whole life policy.
The agent must:
A: formally replace coverage and include all forms to the insured
B: notify the existing insurer with a notice regarding replacement form
C: sign the application and forward all signed documents to the
replacing insurer to send to the existing insurer
D: None of the Above - ANSWER-D: None of the Above
, 4|Page
Each of the following is an unfair claims practice by an insurance
company, EXCEPT:
A: Failing to acknowledging important communications regarding
claims filed in a timely manner.
B: Supplying brochures to claimants that indicate a competitor is in a
precarious financial position.
C: Purposefully misrepresenting important policy coverage and
provisions to all claimants.
D: Not supplying claims forms with proper instructions regarding their
completion. - ANSWER-B: Supplying brochures to claimants that
indicate a competitor is in a precarious financial position.
All of the following statements pertaining to a temporary license are
true, EXCEPT:
A: they survive the transfer of ownership of an insurance company who
sponsored the licensee.
B: the fee is $50.
C: the Director may limit them in any manner in order to protect the
public.
D: a licensed sponsor may be required. - ANSWER-A: they survive the
transfer of ownership of an insurance company who sponsored the
licensee.
A Temporary License (180 days) allows the holder to engage in all of
the following activities, EXCEPT:
A: a surviving spouse of a producer can use the authority to help effect
the sale of the insurance business.
B: make certain that insureds are paying renewal premiums in a timely
manner.
C: ask the Director to extend the authority if an anticipated agency sale
is taking longer than 180 days.
D: sell a new policy to an existing client. - ANSWER-D: sell a new
policy to an existing client.
Life and Health Insurance Test Bank (Chapter 7:
Health) by Kaplan Financial Education, Latest
Edition - Questions and Answers.
J has a life policy with the Guaranteed Insurability rider. J has just
celebrated their 42nd birthday and realizes that she wants to use her rider
and buy more death benefit. Which of the following will apply to J's
request?
A: The insurer will allow J to add more insurance without proving
insurability.
B: The insurer will allow J to add more insurance pending a paramedical
exam.
C: The insurer will deny J's request to add more insurance.
D: The insurer will allow J to add more coverage pending proof of
insurability and extra premium. - ANSWER-C: The insurer will deny J's
request to add more insurance.
An insured has a policy with a Waiver of Premium rider. The insured
has suffered an illness that will prevent them for working for two years.
When will their premiums be waived?
A: Immediately
B: After the first nine months of disability
C: After the first six months of disability
D: Never, premiums cannot be waived because illness is not a disability.
- ANSWER-C: After the first six months of disability
The clause that defines and describes the scope of coverage and the
limits of indemnification is known as the:
A: Insuring Agreement
B: Incontestable Clause
,2|Page
C: Payor Clause
D: Entire Contract Clause - ANSWER-A: Insuring Agreement
D has just paid off his mortgage and has decided that he no longer needs
his life insurance policy which he originally purchased to cover the
house payments should he die. If D explores the possibly of selling his
policy while he is still alive, it is known as:
A: a life settlement
B: an annuity
C: a Viatical settlement
D: STOLI - ANSWER-A: a life settlement
Combination/Variation Plans insure:
A: Groups
B: Two or More lives under one contract
C: Two or more people under separate contracts
D: are a form of variable life insurance - ANSWER-B: Two or More
lives under one contract
What is the tax consideration for taking a cash dividend option?
A: The dividend is fully taxable as income
B: The dividend is paid tax free
C: Depending on income bracket of the insured, the dividend may be
taxable
D: If the company gets to keep half of the dividend it is take free -
ANSWER-B: The dividend is paid tax free
Which of the following is not true regarding a renewable option on a
term policy?
A: The policy must be renewed regardless of insurability.
B: The rates cannot be more than standard rates at renewal.
C: Premiums are based off of attained age rates.
D: A policy can be renewed, however, the insured must convert to a
different policy. - ANSWER-D: A policy can be renewed, however, the
insured must convert to a different policy.
,3|Page
Which of the following is considered to be part of the Entire Contract?
A: Declarations Page
B: Buyers Guide
C: Copy of the Application
D: All of the Above - ANSWER-C: Copy of the Application
Company A has a partnership with Company Z. There is an agreement
in place that if the CEO of either company were to die, the other
company would receive money to buy out the partnership. This is an
example of:
A: Buy/Sell Agreement
B: Crosse Purchase plan
C: Business Entity Plan
D: Key Person - ANSWER-C: Business Entity Plan
All of the following are true regarding the Guaranty Association
EXCEPT:
A: A claimant may receive less benefits than what they had from a
policy.
B: The Association is comprised of All member insurers
C: The Association is comprised of All member insurers and have a
right to end membership while still transacting business in IL
D: There is a $250,000 limit on the present value of annuity benefits. -
ANSWER-C: The Association is comprised of All member insurers and
have a right to end membership while still transacting business in IL
G has a credit life policy and is replacing that with a whole life policy.
The agent must:
A: formally replace coverage and include all forms to the insured
B: notify the existing insurer with a notice regarding replacement form
C: sign the application and forward all signed documents to the
replacing insurer to send to the existing insurer
D: None of the Above - ANSWER-D: None of the Above
, 4|Page
Each of the following is an unfair claims practice by an insurance
company, EXCEPT:
A: Failing to acknowledging important communications regarding
claims filed in a timely manner.
B: Supplying brochures to claimants that indicate a competitor is in a
precarious financial position.
C: Purposefully misrepresenting important policy coverage and
provisions to all claimants.
D: Not supplying claims forms with proper instructions regarding their
completion. - ANSWER-B: Supplying brochures to claimants that
indicate a competitor is in a precarious financial position.
All of the following statements pertaining to a temporary license are
true, EXCEPT:
A: they survive the transfer of ownership of an insurance company who
sponsored the licensee.
B: the fee is $50.
C: the Director may limit them in any manner in order to protect the
public.
D: a licensed sponsor may be required. - ANSWER-A: they survive the
transfer of ownership of an insurance company who sponsored the
licensee.
A Temporary License (180 days) allows the holder to engage in all of
the following activities, EXCEPT:
A: a surviving spouse of a producer can use the authority to help effect
the sale of the insurance business.
B: make certain that insureds are paying renewal premiums in a timely
manner.
C: ask the Director to extend the authority if an anticipated agency sale
is taking longer than 180 days.
D: sell a new policy to an existing client. - ANSWER-D: sell a new
policy to an existing client.
