NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55| 200
QUESTIONS| GRADED A
Institution
Accident And Health Insurance Agent
Course
Accident and Health Insurance Agent
1) In life insurance, insurable interest must exist at which point?
A. At application only
B. At policy delivery only
C. At the time of loss only
D. At application/delivery, but not required at death
Answer: D
Rationale: For life insurance, insurable interest must exist at inception
(application/delivery). It is not required at the insured’s death.
2) Which life policy provision states the policy and attached papers constitute the whole
agreement?
A. Consideration clause
B. Entire contract provision
C. Incontestability clause
D. Insuring clause
Answer: B
Rationale: The entire contract provision prevents outside documents from altering the
agreement after issue unless attached.
3) A life policyowner stops paying premiums and chooses a nonforfeiture option that keeps
some level of coverage with no further premiums. Which option is this?
A. Extended term
B. Reduced paid-up
C. Automatic premium loan
D. Accumulation at interest
,Answer: B
Rationale: Reduced paid-up provides a smaller, fully paid policy for life with no more
premiums.
4) In an individual disability income policy, the purpose of the elimination period is to:
A. Increase the monthly benefit
B. Reduce benefit taxation
C. Exclude preexisting conditions
D. Serve as a time deductible before benefits begin
Answer: D
Rationale: The elimination period is a waiting (time-deductible) period, trading lower
premiums for delayed benefits.
5) Under NY Regulation 60 (life/annuity replacements), which action is required of the
producer before submitting a replacement application?
A. Mail a buyer’s guide after policy delivery
B. Obtain a signed statement from applicant and producer regarding replacement and
provide required disclosures/comparisons
C. Notify the state within 10 days of delivery
D. Waive the free-look period
Answer: B
Rationale: Reg 60 requires signed replacement statements and disclosure/comparison
documents to protect consumers before the application is submitted.
6) A producer recommends moving a client’s existing fixed annuity to a new variable
annuity primarily to earn a higher commission. The client’s risk tolerance and time horizon
are unchanged. This violates:
A. Coordination of benefits
B. Pro-rata cancellation
C. Suitability/Best-interest standards
D. Entire contract rule
Answer: C
Rationale: Annuity transactions must be suitable and in the client’s best interest;
recommending for compensation alone is an unethical churning practice.
,7) In a noncancelable health policy, the insurer may:
A. Cancel anytime with 30 days’ notice
B. Change rates by class at renewal
C. Change provisions but not rates
D. Neither cancel nor change rates/policy terms until the end of the guaranteed period
Answer: D
Rationale: Noncancelable = insurer cannot cancel or raise premiums during the guaranteed
term if premiums are paid.
8) Which group health coordination of benefits rule is correct?
A. Dependent child: the plan of the parent whose birthday is later in the year pays first
B. Employee covered as both employee and dependent: the employee plan is primary
C. COBRA plan is always primary
D. Medicare is always primary for active employees over 65
Answer: B
Rationale: When an individual is covered as an employee and a dependent, the employee
plan is primary.
9) A life policy is in force for 18 months when a material misrepresentation is discovered.
What provision limits the insurer’s ability to rescind?
A. Free-look
B. Incontestability
C. Grace period
D. Reinstatement
Answer: B
Rationale: After the incontestability period (typically 2 years), the insurer generally cannot
void the policy for misstatements (except fraud in some cases).
10) A business wants to cover the loss of revenue if a top salesperson becomes disabled. The
most appropriate policy is:
A. Key person disability income
B. Business overhead expense
, C. Disability buy-sell (cross-purchase)
D. Credit disability
Answer: A
Rationale: Key person DI indemnifies the business for the loss of a key employee’s services
due to disability.
11) NY Regulation 194 requires producers to disclose that:
A. All commissions must be rebated to the client
B. The producer may receive compensation from the insurer and that more information is
available upon request
C. The insurer’s loss ratio for the prior year
D. The client must accept the lowest-premium policy available
Answer: B
Rationale: Reg 194 mandates a compensation disclosure—a general description that the
producer may be paid by the insurer and that additional details are available on request.
12) For annuities, a 1035 exchange can be used to:
A. Exchange an annuity into a life policy tax-free
B. Exchange a life policy into an annuity without current taxation
C. Exchange an annuity into a life policy with tax-free basis only
D. Move qualified plan assets into a Roth IRA tax-free
Answer: B
Rationale: IRC §1035 allows tax-free exchanges from a life policy to an annuity (but not
annuity → life).
13) In an Accident & Health policy, a claim is filed. The insurer must provide claim forms
within:
A. A reasonable period after notice of claim
B. 5 calendar days
C. 60 calendar days
D. Only after proof of loss is submitted
Answer: A
Rationale: Uniform policy provision: insurer must supply claim forms within a reasonable
time after receiving notice of claim; otherwise, the claimant may submit proof in any form.
QUESTIONS| GRADED A
Institution
Accident And Health Insurance Agent
Course
Accident and Health Insurance Agent
1) In life insurance, insurable interest must exist at which point?
A. At application only
B. At policy delivery only
C. At the time of loss only
D. At application/delivery, but not required at death
Answer: D
Rationale: For life insurance, insurable interest must exist at inception
(application/delivery). It is not required at the insured’s death.
2) Which life policy provision states the policy and attached papers constitute the whole
agreement?
A. Consideration clause
B. Entire contract provision
C. Incontestability clause
D. Insuring clause
Answer: B
Rationale: The entire contract provision prevents outside documents from altering the
agreement after issue unless attached.
3) A life policyowner stops paying premiums and chooses a nonforfeiture option that keeps
some level of coverage with no further premiums. Which option is this?
A. Extended term
B. Reduced paid-up
C. Automatic premium loan
D. Accumulation at interest
,Answer: B
Rationale: Reduced paid-up provides a smaller, fully paid policy for life with no more
premiums.
4) In an individual disability income policy, the purpose of the elimination period is to:
A. Increase the monthly benefit
B. Reduce benefit taxation
C. Exclude preexisting conditions
D. Serve as a time deductible before benefits begin
Answer: D
Rationale: The elimination period is a waiting (time-deductible) period, trading lower
premiums for delayed benefits.
5) Under NY Regulation 60 (life/annuity replacements), which action is required of the
producer before submitting a replacement application?
A. Mail a buyer’s guide after policy delivery
B. Obtain a signed statement from applicant and producer regarding replacement and
provide required disclosures/comparisons
C. Notify the state within 10 days of delivery
D. Waive the free-look period
Answer: B
Rationale: Reg 60 requires signed replacement statements and disclosure/comparison
documents to protect consumers before the application is submitted.
6) A producer recommends moving a client’s existing fixed annuity to a new variable
annuity primarily to earn a higher commission. The client’s risk tolerance and time horizon
are unchanged. This violates:
A. Coordination of benefits
B. Pro-rata cancellation
C. Suitability/Best-interest standards
D. Entire contract rule
Answer: C
Rationale: Annuity transactions must be suitable and in the client’s best interest;
recommending for compensation alone is an unethical churning practice.
,7) In a noncancelable health policy, the insurer may:
A. Cancel anytime with 30 days’ notice
B. Change rates by class at renewal
C. Change provisions but not rates
D. Neither cancel nor change rates/policy terms until the end of the guaranteed period
Answer: D
Rationale: Noncancelable = insurer cannot cancel or raise premiums during the guaranteed
term if premiums are paid.
8) Which group health coordination of benefits rule is correct?
A. Dependent child: the plan of the parent whose birthday is later in the year pays first
B. Employee covered as both employee and dependent: the employee plan is primary
C. COBRA plan is always primary
D. Medicare is always primary for active employees over 65
Answer: B
Rationale: When an individual is covered as an employee and a dependent, the employee
plan is primary.
9) A life policy is in force for 18 months when a material misrepresentation is discovered.
What provision limits the insurer’s ability to rescind?
A. Free-look
B. Incontestability
C. Grace period
D. Reinstatement
Answer: B
Rationale: After the incontestability period (typically 2 years), the insurer generally cannot
void the policy for misstatements (except fraud in some cases).
10) A business wants to cover the loss of revenue if a top salesperson becomes disabled. The
most appropriate policy is:
A. Key person disability income
B. Business overhead expense
, C. Disability buy-sell (cross-purchase)
D. Credit disability
Answer: A
Rationale: Key person DI indemnifies the business for the loss of a key employee’s services
due to disability.
11) NY Regulation 194 requires producers to disclose that:
A. All commissions must be rebated to the client
B. The producer may receive compensation from the insurer and that more information is
available upon request
C. The insurer’s loss ratio for the prior year
D. The client must accept the lowest-premium policy available
Answer: B
Rationale: Reg 194 mandates a compensation disclosure—a general description that the
producer may be paid by the insurer and that additional details are available on request.
12) For annuities, a 1035 exchange can be used to:
A. Exchange an annuity into a life policy tax-free
B. Exchange a life policy into an annuity without current taxation
C. Exchange an annuity into a life policy with tax-free basis only
D. Move qualified plan assets into a Roth IRA tax-free
Answer: B
Rationale: IRC §1035 allows tax-free exchanges from a life policy to an annuity (but not
annuity → life).
13) In an Accident & Health policy, a claim is filed. The insurer must provide claim forms
within:
A. A reasonable period after notice of claim
B. 5 calendar days
C. 60 calendar days
D. Only after proof of loss is submitted
Answer: A
Rationale: Uniform policy provision: insurer must supply claim forms within a reasonable
time after receiving notice of claim; otherwise, the claimant may submit proof in any form.
