AZ Life and Health Insurance Exam (Latest 2024/ 2025 Update) Questions and Verified Answers| 100% Correct| Grade A

AZ Life and Health Insurance Exam (Latest
2024/ 2025 Update) Questions and Verified
Answers| 100% Correct| Grade A
Q: Which of these is an accurate statement regarding the fixed period settlement option on a life
insurance policy?
Answer:
A portion of the payments paid to the beneficiary comes from interest calculated on the proceeds
of the policy
Q: Under what circumstance does an accident and health insurer have the right to request an
autopsy?
Answer:
When not prohibited by state law
Q: A material change in a modified endowment contract (MEC) results in
Answer:
the seven pay test, adjusted for cash value, being applied again
Q: Under an adjustable life insurance policy, which of the following may NOT be changed
without further underwriting?
Answer:
The person insured

Q: Linda is covered with long-term care insurance and has early-stage Alzheimer’s. She is still
able to reside in her home while receiving primary care, as opposed to moving into a nursing
home. All of the following long-term benefits encourage this EXCEPT for
Answer:
custodial care
Q: Employer-paid qualified long-term care insurance premiums are typically
Answer:
Excluded from the employee’s gross income.
Q: Which statement regarding the certificate of insurance is accurate?
Answer:
Indicates evidence of an employee’s insurance coverage
Q: Purchasing insurance is an example of risk
Answer:
transference
Q: When an applicant applies for a large amount of life insurance coverage, which of the
following would likely NOT be an underwriting requirement?
Answer:
eye examination

Q: A comprehensive major medical health insurance policy contains an eligible expenses
provision which identifies the type of health care services that are covered. All of the following
health care services are typical covered EXCEPT for
Answer:
Experimental and investigative services
Q: All of these statements concerning group credit life insurance are false EXCEPT
Answer:
The face amount is determined by the outstanding loan balance
Q: Who may terminate coverage under and cancelable health insurance policy?
Answer:
insurer or insured
Q: The interest credited to the cash values of personally-owned non-qualified annuities is
considered
Answer:
tax deferred
Q: An insurer that confines or largely limits the exposures it writes to those of its owners is
called
Answer:
captive

Q: Dividends from a mutual insurance company are paid to whom?
Answer:
Policyholders
Q: A business may purchase an annuity for all of the following reasons EXCEPT
Answer:
Informally finding a non-qualified deferred compensation plan
Q: An organization that requires healthcare services to be provided by a network of physicians
and hospitals is known as an
Answer:
HMO
Q: In Arizona, and insurer providing small employer group medical plans may discontinue an
employers coverage if
Answer:
The insurer no longer offers the plan to any employer
Q: Which of the following statements is NOT true concerning the relationship between group
health insurance plans and Medicare? (Assuming the business has more than 20 employees)
Answer:
Group health coverage is NOT available for workers over the age of 65
Q: hold harmless clause is an example of risk
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Where does the primary funding for Medicare part A come from?

Private funding
Insurance company funding
State funding
Federal payroll and self employment taxes
Federal payroll and self employment taxes

Ron recently purchased an immediate, straight life fixed annuity. his benefit payments will?

Discontinue after a stated number of years
Remain a constant dollar amount for the duration of the annuity period.
Pay a lump sum if the annuitant dies
Vary according to the underlying investment performance
Remain a constant dollar amount for the duration of the annuity period.

The grouping of two or more small Employers in order to obtain group health insurance at a favorable rate is called a multiple employer:

Grouping
Trust
Alliance
Corporation
Trust

Which of the following is NOT a valid reason for an insurer to contest a life insurance policy during the policies first two years of existence?

Misstatement of age
Fraud
Material misrepresentation
Material concealment
Misstatement of age

Terry receives long-term physical therapy at her residence. what type of insurance would cover this service?

Home Health Care
Long-term disability income
Nursing home
Respite care
Home Health Care

A handicapped child is covered under an individual health policy. if continuation of coverage is needed beyond the policies age limit, which of the following is required?

Proof of incapacity upon reaching the age limit
Proof of dependency upon reaching the age limit
Proof of incapacity and dependency upon reaching the age limit
Proof of insurability
Proof of incapacity and dependency upon reaching the age limit

Medicare part A does NOT provide coverage for?

Inpatient room and board
Prescriptions Administered while an inpatient
The first 3 pints of blood
Skilled Nursing Facility care
The first 3 pints of blood

Which of the following is an unincorporated association whose members provide coverage for one another?

Self-insurer
Lloyd’s
Reciprocal
Surplus lines
Reciprocal

What is covered under a limited accident and health insurance policy?

Losses that occur only in limited occupations
Limited pre-existing conditions
Losses that occur only in limited age groups
Limited perils and amounts
Limited perils and amounts

The benefit period of Medicare part A begins on the first day the insured?

Notices symptoms
Enters a hospital
Becomes eligible for Medicare
Is diagnosed of an illness
Enters a hospital

Which of the following is TRUE about a qualified retirement plan that is “top heavy”?

More than 30% of plan assets are in Key employee accounts
More than 40% of annual additions are for key employee accounts
More than 50% of plan assets are in Key employee accounts
More than 60% of plan assets are in Key employee accounts
More than 60% of plan assets are in Key employee accounts

Which of the following waiting periods would result in the lowest premium for a disability income policy?

30 days
60 days
90 days
180 days
180 days

Which type of policy pays benefits to a policyholder covered under a hospital expense policy?

Limited
Special risk
Reimbursement policy
Blanket
Reimbursement policy

Insurance crimes which affect interstate commerce are prosecuted by the?

US Attorney General
Governor
FBI
Department of Homeland Security
US Attorney General

Which of the following entities does not establish regulations for variable insurance products?

State Securities authorities
Securities and Exchange Commission (SEC)
Department of Insurance
State Attorney General
State Attorney General

Tim is covered under two medical expense plans. plan A pays up to $5,000. Plan B pays up to $4,000. if she incurs $7,000 in expenses, the coordination of benefits provision dictates that?

Plan a pays up to $7,000
Plan a pays up to $3,500 and plan B pays up to $3,500
Plan a pays 80% and plan B pays 20%
Plan A pays up to $5,000 and plan B pays up to $2,000
Plan A pays up to $5,000 and plan B pays up to $2,000

What is the maximum number of employees (earning at least $5,000) that an employer can have in order to start a SIMPLE retirement plan?

25
50
100
250
100 Employees

Interest is credited to a fixed annuity no lower than the?

Variable contract rate
Contract Guaranteed Rate
Current rate of inflation
Prime rate
Contract Guaranteed Rate

Which of the following health insurance plans charges a premium that cannot be increased?

Guaranteed renewable
Cancelable
Non-cancelable plan
Conditionally renewable
Non-cancelable plan

A life insurance policy can usually be contested by the insurer only during the first __ years of the contract?

2
3
4
5
2 years

Beth is a surgeon who has an own occupation disability income policy. she was injured 6 months ago and has been unable to return to her practice. her monthly benefit from the policy is $15,000. during this time, Beth has been working part-time at a local Boutique and receives $2,000 monthly. what is her ongoing monthly benefit while she is unable to perform her Surgical duties?

$13,000
$17,000
$15,000
Nothing
$15,000

Which of the following is not true of participants in multiple-employer trusts?

Participants are normally small employers
Participants must purchase all coverages the trust offers
Participants are typically all in the same Industry Group
Joinder her agreement is issued to participants
Participants must purchase all coverages the trust offers

An insured is covered under a group long-term disability policy. under this type of policy, the definition of disability based on any occupation typically applies:

Only to part-time employees
Only to White Collar employees
During the probation period
After 2 years of disability
After 2 years of disability

A policy owner fell behind on the premium payments of a whole life policy and is now in the grace period. How much will the beneficiary receive if the insured dies during this grace period and the policy also contains an outstanding policy loan?

Full face amount
Face amount minus the past due premium
Face amount minus the loan balance
Face amount minus the loan balance and past due premium
Face amount minus the loan balance and past due premium

Which of the following statements BEST describes disability buy-sell insurance policies?

Benefits are taxable to the business entity
Premiums are typically tax-deductible
Policy proceeds are typically received income tax-free
Benefits are paid to the disabled insured
Policy proceeds are typically received income tax-free

ABC Partnership is a business with a limited number of partners. Which disability buy-sell agreement is best suited for this business?

Optional buyback agreement
Entity purchase agreement
Cross purchase agreement
Organizational group agreement
Cross purchase agreement

According to the Affordable Care Act (ACA), insurers can no longer deny health coverage due to pre-existing conditions unless that plan is a?

Grandfathered plan
Accident plan
Individual plan
Group plan
Grandfathered plan

Which of the following actions may result in a producer’s license being suspended?

Soliciting Insurance under a temporary license
Misappropriation of premiums
Soliciting Insurance on behalf of a foreign insurer
Splitting the commission with another licensed producer
Misappropriation of premiums

Which life insurance policy provision prohibits a beneficiary from “commuting, encumbering, withdrawing, or assigning” any portion of the proceeds prior to actual receipt from the company?

Insuring clause
SpendThrift clause
Nonforfeiture provision
Collateral provision
SpendThrift clause

A licensee whose name or address changes must notify the Department of Insurance within how many days?

10
15
30
45
30 days

When a deferred annuity is surrendered, who must sign the authorization to do so?

Owner
Annuitant and beneficiary
Annuitant
All parties involved
Owner

Which statement is true regarding Hospital pre-admission certification for emergency situations?

-Notification is required for emergency situations
-Insured cannot be admitted without pre-admission certification
-Notification is required to be given before insured is admitted to the hospital
-Notification is required to be given after insured is admitted to the hospital
Notification is required to be given after insured is admitted to the hospital

What is considered the collateral on a life insurance policy loan?

No collateral is needed
The policies cash value
The policies face value
The equity in a policy owners home
The policies cash value

A Life Insurance Producers underwriting duties may include:

Proving or declining a life insurance application
Seeking additional information requested by the insurance company
Ordering an MIB report determining the rate classification of the applicant
Determinate the rate classification of the applicant
Seeking additional information requested by the insurance company

What happens to the purchasing power of benefit payments from a fixed life annuity when the cost of living goes up?

Increases
Decreases
Not affected by inflation
Tied to stock index
Decreases

Which statement is incorrect concerning a tax- sheltered annuity (TSA):

-Participants make payments from salary reductions
-Normally used by charitable, educational, and religious organizations
-Also known as 403b plans
-Annual investment gains are included in participants gross income
Annual investment gains are included in participants gross income

COBRA extends coverage for a surviving spouse but at a rate not more than __ of the group premium?

25%
50%
75%
102%
102%

The __ is responsible for determining the appropriateness of a Medicare supplement policy for an applicant:

Producer
Underwriter
Applicant
Insurer
Producer

A long-term care policy owner is replacing existing coverage with a new policy. replacement regulations require a _ notice be signed by the applicant and retained by the replacing insurer:

Exchange
Cancellation
Replacement
Replication
Replacement

The disability income policy most likely to have been issued on a substandard basis is:

Non-cancelable with a 60-day elimination period
Conditionally renewable
Non-cancelable with a health condition exclusion Rider
Guaranteed renewable with an inflation Rider
Non-cancelable with a health condition exclusion Rider

Autopsies may be requested by an accident and health insurer:

Only within 5 days of death
Only with the beneficiaries consent
Only if not prohibited by state law
For any reason
Only if not prohibited by state law

Under what circumstance does an accident and health insurer have the right to request an autopsy?

When the claim exceeds an amount specified in the policy
When two days have passed after death
When not prohibited by state law
When consent is given by the beneficiary
When not prohibited by state law

How may an insurance company classify an accidental death benefit on a life policy?

As an optional policy rider
As a provision of the policy
As a nonforfeiture option
As a mandatory Policy rider
As an optional policy rider

Which statement regarding a single premium life insurance policy is NOT correct?

No further premiums are necessary
Policy loans are permitted
Cash value is immediately created
Additional premiums may be required under certain conditions
Additional premiums may be required under certain conditions

Which of the following would most likely purchase an immediate annuity?

Individual wishing to contribute to a tax sheltered annuity
individual wanting to accumulate an investment over time
retiree having a lump sum to invest
business needing and immediate tax write off
retiree having a lump sum to invest

What happens when an initial offer is answered with a counter offer?

an arbitrator decides on a compromise
the counter offer is legally enforceable
initial offer is void
initial offer is automatically accepted
initial offer is void

According to ERISA regulations, a summary plan description must be provided to a new plan member Within how many days of the members eligibility date?

30
60
90
120
90

When premiums are determined, one factor would be the expenses of the?

beneficiary
Insurer
policy owner
producer
Insurer

Which of the following does NOT help determine Group Health Insurance premiums?

Average age of group
claims experience of the group
income level of group members
the group size
income level of group members

Sylvia purchased an annuity for $100,000 from the proceeds of an inheritance. No further payments are permitted and the income stream begins in 15 years. This contract is a?

Equity indexed annuity
single premium immediate annuity
single premium deferred annuity
fixed period immediate annuity
single premium deferred annuity

which health policy Clause specifies the amount of benefits to be paid?

Insuring
Consideration
free look
payment mode
Insuring

Long-term care policies will usually pay for eligible benefits using which of the following methods?

Delayed
fee for service
expense incurred
respite
expense incurred

Which of the following is NOT a valid contract exchange?

O An annuity exchanged for a life insurance policy
O An annuity exchanged for another annuity
O A life insurance policy exchanged for another life insurance policy
O A life insurance policy exchanged for another annuity
O An annuity exchanged for a life insurance policy

Rick provides a notice of claim to his health insurer. If he does not receive a claim form within 15 days, he may comply with the proof of loss provision by?

providing a letter from his personal physician
waiting 90 days and filing a complaint with the Governor
submitting verbal proof of loss
submitting written proof of loss
submitting written proof of loss

The time limit an individual has to “rollover” funds from an IRA or qualified plan is?

60 days
90 days
120 days
No Limit
60 days

Home health care benefits typically do NOT include coverage for?

Nursing care
Wheelchairs
Physical therapy
Prescription medication
Prescription medication

Nonqualified medical expense distributions from a Health Savings Account (HSA) have a tax penalty of?

7.5%
10%
20%
30%
20%

Which of the following types of health insurers is characterized by a limited choice of providers?

Authorized insurance company
Blue Cross / Blue Shield
Commercial insurance company
Health maintenance organization
Health maintenance organization

A _ agent may represent several insurers.

O captive
O free
O independent
O career
O independent

A condition that increases the possibility of financial loss is called a(n):

Risk
Peril
Hazard
Exposure
Hazard

Which statement concerning a deferred annuity contract is correct?

The contract cannot be assignable by the owner
Requires a single premium payment
The owner can be the beneficiary, annuitant, or neither
Benefits start immediately after contract formation
The owner can be the beneficiary, annuitant, or neither

If a producer surrenders their license, how long must they wait to re-apply for the same license?

90 day
6 months
One year
Two years
One year

How is a community rating used for underwriting purposes?

O Each member of a large group is individually underwritten
O Each individual and group plan in the same geographical area is individually underwritten
O The same rates are charged for individual and group plans in the same risk category
O The same rates are charged for individual and group plans in the same geographical area
O The same rates are charged for individual and group plans in the same geographical area

Typically, working individuals age 65 or over must be:

O offered the same Health benefits as the younger employees
O covered by Medicare exclusively
O paying a higher premium than younger employees
O covered by a Medicare Supplement policy
O offered the same Health benefits as the younger employees

Rick is a disabled worker receiving Social Security benefits. What benefits are his wife and dependent children eligible for?

-No benefits
-Spouse is eligible for an income benefit but the children are not
-An income benefit which is a percentage of his primary insurance amount
-An income benefit which equals his entire primary insurance amount
An income benefit which is a percentage of his primary insurance amount

What is taken into consideration when defining “total disability” in a disability income insurance policy?

Number of days spent in the hospital
The amount of additional coverage the insured has
The insured’s education, training, and experience
The elimination period
The insured’s education, training, and experience

Skilled nursing facility expenses are sometimes covered by __ but ONLY if the insured was hospitalized prior to entering the facility.

HMOS
Medicare
Medicaid
Medicare Supplements
Medicare

Employers often purchase life insurance on a key employee in order to:

-provide an income to the deceased key employee’s family
-pay for funeral costs
-provide the employer with a tax credit
-pay for finding and training a replacement if the employee dies prematurely
-pay for finding and training a replacement if the employee dies prematurely

Where will a life insurance policy’s proceeds be directed to if all the beneficiaries die before the insured?

O Insured’s creditors
O Beneficiary’s estate
O Insured’s estate
O Court-ordered beneficiary
O Insured’s estate

A life insurance policy’s waiver of premium rider has the ability to:

-waive the premium payments in the event the insured becomes financially insolvent
-relieve the insured of premium payments following an initial waiting period after the insured becomes totally disabled
-provide a policy loan to cover the premium payments in the event the insured becomes totally disabled
-waive the premiums on this policy as well as any other insurance policies belonging to the insured in the event of total disability
-relieve the insured of premium payments following an initial waiting period after the insured becomes totally disabled

The Medical Information Bureau consists of members from which group?

O Doctors
O Hospitals
O Insurance companies
O Underwriters
O Insurance companies

What does a 401(k) plan generally provide its participants?

O Tax-free distributions
O Salary-deferral distributions
O Salary-deferral option
O A defined retirement benefit
O Salary-deferral option

A group health certificate for coverage issued in Arizona MUST contain a(n)

AM Best rating
NAIC guideline
insurer’s balance sheet
summary of policy features and benefits
summary of policy features and benefits

Straight whole life insurance can be accurately described in all of these statements EXCEPT?

Policy protection normally expires at age 65
Nonforfeiture values are available to the policyowner
Provides level protection with level premiums
Cash value loans are permitted
Policy protection normally expires at age 65

An insured has a $25,000 whole life insurance policy with $6,000 cash value available. Under the extended term nonforfeiture option, what is the amount of insurance available to the insured?

$6,000
$19,000
$25,000
$31,000
$25,000

If a life insurance applicant is shown future premiums are to be paid out of non-guaranteed values, the illustration used in the sales presentation MUST

-be signed and notarized by the Director
-disclose that premium payments are guaranteed to be permanently forfeited by the insurer
-be given to the insured within 10 days after policy delivery
-disclose that premium payments may need to be resumed depending on actual results
-disclose that premium payments may need to be resumed depending on actual results

What does a fixed life annuity offer protection against?

Inflation
Premature death
Inadequate retirement planning
Savings depletion due to longevity
Savings depletion due to longevity

The Genetic Information Nondiscrimination Act of 2008 bars all of the following, EXCEPT:

-prohibits group health plans and health insurers from denying coverage to a healthy individual
-charging that person higher premiums based solely on a genetic predisposition to developing a disease in the future
-bars the use of genetic information in health insurance
-prohibits the use of genetic information in health insurance, unless the applicant signs a waiver
-prohibits the use of genetic information in health insurance, unless the applicant signs a waiver

An insurance policy that can also be classified as a securities product is called

variable life
modified life
universal life
a Modified Endowment Contract
variable life

The coinsurance for skilled nursing facility services covered by Medicare after the 100% Medicare coverage ends is:

15% of the approved amount
30% of the approved amount
a percentage of the approved amount
a flat dollar amount per day
a flat dollar amount per day

A retirement plan that sets aside part of the company’s net income for distributions to qualified employees is called a:

rollover plan
403(b) plan
profit-sharing plan
salary reduction plan
profit-sharing plan

A terminally ill policyowner decides to sell his life insurance policy at a discount to help support his family. This sale is called a(n)

accelerated death benefit
assignment
viatical settlement
nonforfeiture option
viatical settlement

An applicant submits a life insurance application where an investigative consumer report is used in the underwriting process. Which of these statements is true?

-Applicant can determine which items in the report to leave out
-Insurer can obtain a copy of this report without the applicant’s knowledge
-Fee for the report is typically paid by the applicant
-Applicant has a right to receive a copy of the report
Applicant has a right to receive a copy of the report

An accident and health insurance policy’s premium requirements are set forth in which of the following provisions?

Insurance clause
Entire Contract clause
Consideration clause
Premium mode
Consideration clause

Tim is covered by Policy A with a $4,000 limit and by Policy B with a $2,000 limit. Policy A is primary. If a $6,000 loss is incurred, what will each policy pay?

Each policy will pay $3,000
Policy A will pay $4,000 and Policy B will pay $2,000
Policy A will pay $2,000 and Policy B will pay $4,000
Policy A will pay $4,000 and Policy pays nothing
Policy A will pay $4,000 and Policy B will pay $2,000

Which of the following distinguishes field underwriting from home office underwriting?

An agent has no contact with an applicant
An agent has personal contact with an applicant
An agent issues the policy for which the applicant applied
There is no difference between field and home office underwriting
An agent has personal contact with an applicant

Which of the following is NOT true of a preferred provider plan?

-If service is obtained outside the preferred provider plan, benefits are reduced and costs increase
-Members of the preferred provider plan select from among the preferred providers for needed services
-Hospitals can only initiate preferred provider plans
-Preferred provider plans can include dental care
-Hospitals can only initiate preferred provider plans

Under HIPAA, medical plan late enrollees may be excluded for pre-existing conditions for a maximum of?

6 months
12 months
18 months
24 months
18 months

In long-term care insurance, what is an “ADL”?

Advocates of daily living
Approved dollar limits
Activities of daily living
Accepted doctor lists
Activities of daily living

The inability to perform SOME of the duties of one’s own occupation is known as a?

Recurrent disability
Total and permanent disability
Residual disability
Presumptive disability
Residual disability

If a Medicare Supplement policy is cancelled by the insurer, which of these circumstances does NOT require prior approval by the Arizona Department of Insurance?

Multiple Medicare Supplement policies on the same person
Nonpayment of premium
Unsuitable coverage
Cancelling a class of insureds
Nonpayment of premium

The __ may change a revocable beneficiary as part of an accident and health policy.

agent
beneficiary
policyowner
insurer
policyowner

An annuity’s accumulation period may?

continue after the purchase payments stop
continue after the benefit payments start
continue after the annuitant dies
continue after the annuity has been surrendered
continue after the purchase payments stop

Which of the following statements is TRUE if the owner of an IRA names their spouse as beneficiary, but then dies before any distributions are made?

Surrender charge is applied
The account can be rolled into the surviving spouse’s IRA
Distributions will be received tax-free if surviving spouse is over age 59 1/2
Future distributions are payable to the owner’s estate
The account can be rolled into the surviving spouse’s IRA

After the initial enrollment period for Medicare Part B has expired, when may an individual purchase again?

January through March of each year
October through December of each year
Six months after the individual’s birthday month of each year
Three months after the individual’s birthday month of each year
January through March of each year

Andy is in need of health care performed by skilled medical practitioners, but only on an intermittent basis. What level of care will his doctor likely prescribe?

Respite care
Intermediate care
Custodial care
Skilled nursing care
Intermediate care

Which of these statements is NOT true regarding a cash value loan against a life insurance policy?

Interest normally accrues on unpaid balances
Loan cannot exceed the policy’s cash value
Policy contract terms dictate the interest rate
Interest payments made by policyowner are deductible
Interest payments made by policyowner are deductible

In regards to health insurance, employees age 65 or older are typically required to:

-be offered the same group health benefits offered to the younger employees
-provide evidence of insurability for medical insurance offered by the employer
-choose Medicaid as their primary provider
-choose Medicare as their primary provider
be offered the same group health benefits offered to the younger employees

A loss of minimum essential coverage usually counts as a qualifying event that triggers what?

a revision of an existing insurance contract
a reinstatement of coverage
a special enrollment period
an open enrollment period
a special enrollment period

What is a Pap test designed to detect?

Cervical cancer
Prostate cancer
Oral cancer
Breast cancer
Cervical cancer

A health insurance underwriter will most likely view alcohol abuse as a(n)

decreased exposure to risk
increased exposure to risk
condition which cannot be taken into account
condition which results in an automatic rejection for coverage
increased exposure to risk

A MET third-party administrator may NOT perform which of the following functions?

Claims processing
Marketing the plan
Underwriting the plan
Insuring the plan
Marketing the plan

Which of these is a type of private insurance that covers the cost-sharing amounts under Medicare?

Major medical insurance
Medicaid
Disability income
Medicare Supplement
Medicare Supplement

The powers directly given to a producer in an agency contract are called

express
apparent
implied
assumed
express

What is considered a valid reason for an insurer’s refusal to pay policy proceeds directly to a minor?

Minors are not capable of having insurable interest
Minors are normally not capable of handling money in a reasonable manner
Minors are usually not capable of paying for the insurance premium
Minors cannot legally enter into a contract
Minors are normally not capable of handling money in a reasonable manner

A comprehensive major medical health insurance policy contains an Eligible Expenses provision which identifies the types of health care services that are covered. All of the following healthcare services are typically covered EXCEPT for:

hospital charges
physician fees
experimental and investigative services
nursing services
experimental and investigative services

Which of these statements is NOT a characteristic of the law of large numbers?

Individual losses can be predicted based on past experience
Group losses can be predicted based on past experience
Losses can be predicted in large groups with a higher degree of accuracy
Rates can be calculated to compensate for losses
Rates can be calculated to compensate for losses

Under Federal Law, which of the following actions may result in a producer becoming imprisoned?

Producer writing controlled business
Producer embezzling funds from an insurer
Producer selling insurance with a nonresident license
Producer replacing an existing insurance policy with a new one
Producer embezzling funds from an insurer

The principal source of information concerning an applicant’s identity, age, and marital status is found in the:

OMIB
credit report
policy summary
completed application
completed application

Which of the following is NOT an example of risk retention?

Becoming aware of a risk and taking no action
Self-insuring a given risk
Deciding a business deal is risky but going through with it anyways
Not doing a business deal after deciding it would be too risky
Not doing a business deal after deciding it would be too risky

What will Medicare charge if someone doesn’t enroll in certain Medicare programs or plans when they’re first eligible?

10% late charge
reduced costs
withdrawal of eligibility
late enrollment penalty
late enrollment penalty

The difference between a doctor’s actual charges and the amount approved by Medicare is referred to as a(n)

usual, reasonable, and customary amount
excess charge
deductible
surplus fee
excess charge

Which of the following guidelines does NOT apply under the pregnancy provision of the Civil Rights Act?

-A pregnant woman is entitled to sick-leave under the same guidelines as any other type of disability
-Pregnancy must be covered under medical benefits the same as any other illness
-Post-termination extensions of medical benefits must apply equally to pregnancy
-Abortion complications are covered if the woman’s life is in danger
Post-termination extensions of medical benefits must apply equally to pregnancy

What is the insurer responsible for when a producer is acting within the scope of authority granted in the agency contract?

All actions by the producer
Not responsible for any acts by the producer
Responsible for acts that involve misrepresentation only
Responsible for acts by the producer that are authority only
Responsible for acts by the producer that are authority only

In Arizona, the Human Immunodeficiency Virus (HIV) consent form

must direct all positive test results to the Director
must be signed by the beneficiary
must disclose who will be receiving a copy of the test results
must describe the types of tests to be implemented
must disclose who will be receiving a copy of the test results

Under an adjustable life insurance policy, which of the following may NOT be changed without further underwriting?

The person insured
The period of coverage
The payment period
The plan of coverage
The person insured

A policyowner pays the first annual premium for a $50,000 life insurance policy and dies one month after the policy effective date. Which of these statements is normally true?

Premium will be refunded with interest and no death benefit paid
Premium received by insurer is considered to be unearned
Proceeds are prorated to 1/12th of the full amount
Beneficiary receives $50,000 income tax-free
Beneficiary receives $50,000 income tax-free

Karen is a health maintenance organization (HMO) subscriber. Who provides all of her preventative and routine care?

Primary care physician
Provider specialist
Preventative coordinator
HMO director
Primary care physician

When an annuity contract has been fully surrendered, how will the surrender charges affect the final contract settlement?

-Final contract settlement will be reduced
-Final contract settlement will be increased
-Final contract settlement will not be affected
-Final contract settlement will be held in escrow until surrender charges are paid
-Final contract settlement will be reduced

Christopher is issued an insurance policy that contains an attached agreement which alters the terms of the policy. This attached agreement is called a(n)

extension
endorsement
sanction
restriction
endorsement

Telemarketing calls may ONLY be received between the hours of:

O 7:00 AM and 8:00 PM
O 8:00 AM and 9:00 PM
O 9:00 AM and 10:00 PM
O 10:00 AM and 8 PM
O 8:00 AM and 9:00 PM

Which of these do NOT indicate the presence of insurable interest in a life insurance contract?

Lifelong friendship
Marriage
Blood-related
Co-owning a business
Lifelong friendship

What is the federal income tax liability of a death benefit paid from a health insurance policy to a named beneficiary?

Benefits are not taxable
Benefits are partially taxable
Benefits are tax-deferred
Benefits are fully taxable
Benefits are not taxable

What is the MAXIMUM number of employees an employer may have for qualified medical savings accounts?

20 employees
30 employees
40 employees
50 employees
50 employees

Which of these policies is considered to be a comprehensive health policy?

Major medical policy
Surgical policy
Limited benefit policy
Health Savings Account
Major medical policy

Which of the following actions would be considered a felony in the State of Arizona?

Converting group coverage to an individual policy
Attempting to defraud an insurer
Selling insurance for a foreign insurer
Residing in one state while selling insurance in another state
Attempting to defraud an insurer

A statement MUST be signed by the _ for any illustrations used in the sale of a life insurance policy.

Producer
Director
Beneficiary
Governor
Producer

Life insurance premiums are computed on what three factors?

Mortality, interest, dividends
Morbidity, interest, expenses
Mortality, interest, expenses
Morbidity, interest, dividends
Mortality, interest, expenses

A 55 year old recently received a $30,000 distribution from a previous employer’s 401k plan, minus $6,000 for income tax withholding. Which federal taxes apply if none of the funds were rolled over?

Only income taxes on $30,000
Only income taxes on $24,000
Income taxes plus a 10% penalty tax on $30,000
Income taxes plus a 10% penalty tax on $24,000
Income taxes plus a 10% penalty tax on $30,000

How are benefit payments from individually-owned medical expense policies treated for tax purposes?

Exempt from income taxes
Taxed as ordinary income
Taxed as a dividend
Tax credit given for amount of benefit payment
Exempt from income taxes

An agent’s authority to bind an insurer to an insurance contract may be granted in the:

-agent’s contract and the insurance company’s appointment
-agent’s license and insurance company’s certificate of authority
-buyer’s guide and policy summary
-state guaranty association
-agent’s contract and the insurance company’s appointment

Tonya has been diagnosed with kidney failure and is covered by group accident and health insurance through her large employer. Which of these accident and health plans will be primary during the months immediately following her diagnosis?

Medicare
Medicaid
Medicare Supplement
Her employer’s group accident and health plan
Her employer’s group accident and health plan

When must a producer provide disclosure about information practices to an applicant?

During the medical examination
Upon policy delivery
Prior to or at the time of signing the application
Immediately after signing the application
Prior to or at the time of signing the application

The payment of the first premium, the promise to pay a covered loss, and the agreement to abide by policy conditions are all examples of:

consideration
legal purpose
representation
acceptance
consideration

Which life insurance policy provision allows a policyowner to cancel the policy and receive a full refund within a limited time period after policy delivery?

Grace period
Incontestable period
Elimination period
Free-look period
Free-look period

An advantage of owning a flexible premium life insurance policy would be?

Premiums are fixed for the first 5 years
The insurer can make policy changes without difficulty
The policyowner can make policy changes without difficulty
Evidence of insurability is required with any change in premium
The policyowner can make policy changes without difficulty

What is the tax treatment of benefit payments for a non-qualified annuity?

Benefit payments are always taxable
Benefit payments are subject to taxes only prior to age 70 1/2
Benefit payments must begin at age 59 1/2 to avoid a penalty
Benefit payments received after 70 1/2 are always tax-exempt
Benefit payments are always taxable

What would be a valid reason for naming a trust as the beneficiary of a life insurance policy as opposed to naming an individual?

Avoiding probate
Management of proceeds would be provided
Trustee can pay off any existing policy loans
More settlement options available with a trustee
Management of proceeds would be provided

Which of these is typically regarded as a major treatment in an indemnity dental plan?

Fluoride treatment
OX-rays
Restorative fillings
Dentures
Dentures

Omar is covered by a disability income policy. He is hurt while performing an occupation more hazardous than the occupation listed in his policy. The policy’s change of occupation provision will have what effect?

Increase the benefit level
Reduce the benefit level
Increase the premiums
Decrease the premiums
Reduce the benefit level

How long is individual medical expense insurance normally written for?

1 year
2 years
3 years
4 years
1 year

James owns a business and purchased a policy that covers the business expense of finding a permanent or temporary employee to replace a disabled one. This type of disability coverage is called?

Key business coverage
Key maintenance coverage
Key employee coverage
Key employer coverage
Key employee coverage

When disability buy-sell insurance benefits exceed a partner’s cost basis, which of the following is correct?

The excess is taxed as a capital gain to the partner
The excess is taxed as ordinary income to the partner
The excess is partially taxable to the partner
The full amount is non-taxable to the partner
The full amount is non-taxable to the partner

Which of the following situations would an insurance agent need to guard against liability for professional errors and omissions?

Remitting premiums to an insurer
Conducting a sales meeting with other agents
Making a recommendation to a potential insured to replace existing coverage
Setting a sales appointment with a potential client
Making a recommendation to a potential insured to replace existing coverage

Qualified long-term care premiums are treated for tax purposes as?

Qualified Retirement plans
always non-deductible
100% tax-deductible
tax-deductible to the extent they exceed 7 1/2% AGI
tax-deductible to the extent they exceed 7 1/2% AGI

A life annuity with period certain is characterized as?

O guaranteeing benefit payments for a stated period of time after reaching age 65
O guaranteeing a minimum interest rate
O guaranteeing lifetime benefit payments for two or more people
O guaranteeing benefit payments for a stated minimum number of years
guaranteeing benefit payments for a stated minimum number of years

Which of these individuals may NOT obtain a temporary producer license?

O An appointed employee who is replacing a deceased producer
O A personal representative of a licensed producer who has been called to active duty in the military
O The executor of the estate of a deceased licensed producer
O An employee of a retired licensed producer
An employee of a retired licensed producer

Which individual would be best suited for Medicare Supplement insurance?

Medicare enrollee
Medicaid enrollee
Social Security recipient
HMO subscriber
Medicare enrollee

All of the following are covered under most dental plans EXCEPT for:

X-rays
Tooth extraction
Cleanings
Mouth cancer
Mouth cancer

Which of the following actions is considered to be an unfair trade practice?

-A producer who converts group coverage to an individual policy
-A producer who sells insurance to an individual by means of threat
-A producer who sells an insurance policy to a family member
-A producer who sells insurance in a state where he/she is considered a nonresident
-A producer who sells insurance to an individual by means of threat

According to the Affordable Care Act, new Health Insurance Marketplaces are established by the?

ICIICO
CCIIOO
Occoll
CCIIO
CCIIO

An individual working part-time has a gross income of $5,000 for the year. If this individual has an IRA, what is the maximum deductible IRA contribution allowable?

No deduction allowed
$5,000
$2,000
$1,000
$5,000

Which of these is a typical result of a concurrent review?

The deductible amount is increased
The length of time spent in the hospital is monitored
The insured’s premiums usually increase
The coinsurance is waived
The length of time spent in the hospital is monitored

If an individual would like to enroll in Medicare or seek public information about Medicare, which federal agency handles this?

Department of Health and Aging
Social Security Administration
Centers for Medicare and Medicaid Services
Department of Homeland Security
Social Security Administration

During the liquidation phase of an annuity contract, to whom are the income benefits normally payable to?

Trustee
Beneficiary
Policyowner
Annuitant
Annuitant

Tom has a qualified retirement plan with his employer that is currently considered to be 80% “vested”. How can this be interpreted?

-20% of the funds are subject to taxes
-80% of the funds are invested in a separate account
-If Tom’s employment is terminated, 20% of the funds could be forfeited
-If Tom’s employment is terminated, 80% of the funds could be forfeited
If Tom’s employment is terminated, 20% of the funds could be forfeited

Which of the following is a true statement regarding a Medicare Supplement policy purchased during the open enrollment period?

There will be a reduction in benefits
The elimination period will be longer than normal
The cost of premiums will be higher than normal
The policy will be issued regardless of health
The policy will be issued regardless of health

When is it acceptable to charge or receive a fee or service charge in addition to the premium in connection with the transaction of insurance?

-When the amount fee or service charge is great than 10% of the premium
-If the amount of the fee or service charge is reasonably related to the cost of the service
-When amount the fee or service charge is sent in a separate invoice
-If the amount of the fee or service charge is tax deductible
If the amount of the fee or service charge is reasonably related to the cost of the service

A policyowner decides to surrender the cash value of a whole life insurance policy. The insurer has up to __ month(s) to delay this payment.

1
4
6
8
6 Months

The major medical deductible carryover period normally applies to expenses incurred during the last __ months of the plan year.

O five
O four
O three
O two
O three

Which of the following disability buy-sell agreements is best suited for businesses with a limited number of partners?

Split dollar plan
Entity agreement
Cross-purchase agreement
Key person plan
Cross-purchase agreement

Which benefit can be found in an equity indexed annuity, but not in a fixed annuity?

Protection against living too long
Equity loans
A fixed rate of return
Protection against long-term inflation
Protection against long-term inflation

A life annuity feature which provides benefit payments for a minimum number of years, no matter when the annuitant dies, is called:

fixed period
period certain
installment refund
straight life
period certain

Arizona allows a maximum of how many attempts in a 12-month period, before having to wait one year before attempting the exam again?

1 attempts
2 attempts
3 attempts
4 attempts
4 attempts

What determines how much an annuitant is paid for a variable annuity?

Varies according to how many outstanding annuity units
Payments fluctuate as annuitant gets older
The market value variations of the securities backing it
Varies according to the insurer’s investments in its general account
The market value variations of the securities backing it

Which of these is an accurate statement regarding the fixed period settlement option on a life insurance policy?

-A portion of the payments paid to the beneficiary comes from interest calculated on the proceeds of the policy
-Payment can be adjusted monthly by the beneficiary
-A portion of the payments paid to the beneficiary comes from interest generated from policy loans
-Payments are normally guaranteed for 10 years or more
A portion of the payments paid to the beneficiary comes from interest calculated on the proceeds of the policy

Dividends from a mutual insurance company are paid to whom?

Policyholders
Beneficiaries
Preferred stockholders
Stockholders
Policyholders

Which of these is NOT an Unfair Claims Settlement Practice?

-Refusing to pay claims without conducting a reasonable investigation
-Compelling insureds to initiate a lawsuit by offering less on insurance claims
-Offering to settle a claim by arbitration
-Failing to acknowledge and act promptly with respect to insurance claims
-Offering to settle a claim by arbitration

The application is part of the annuity contract according to the

Conversion provision
Free-look provision
Entire Contract clause
Incontestable clause
Entire Contract clause

Which statement concerning a decreasing term life policy is accurate?

Cash value decreases over the policy period
Premium decreases over the policy period
Face amount decreases over the policy period
Face amount stays the same over the policy period
Face amount decreases over the policy period

The unwritten authority given to a producer to carry out necessary incidental acts of the agency agreement is called?

implied authority
express authority
apparent authority
acknowledged authority
implied authority

A Health Reimbursement Arrangement MUST be established?

-with employee funding
-with other employer-sponsored benefit plans
-by the employer
-only during specific open enrollment periods
-by the employer

Which of the following can be defined as “the potential for loss”?

Hazard
Risk
Transference
Peril
Risk

Ambiguities in insurance contracts are typically interpreted in favor of the insured. This rule is referred to as:

Subrogation
Reasonable expectations
Insurable interest
Adhesion
Reasonable expectations

The Arizona Life and Disability Insurance Guaranty Fund protects an insured in the event of?

high inflation
disability
unemployment
the insurer’s insolvency
the insurer’s insolvency

The ACA (Affordable Care Act) must ensure a sufficient choice of __ in the marketplace:

producers
exclusions
requirements
providers
providers

A licensee or applicant who is ordered into active military service may request that the license or application be placed on inactive status by sending the department a:

copy of the service orders
written statement
fee for inactive status
copy of military identification
written statement

Which of the following statements BEST describes employer contributions for employer provided health insurance?

Employer is given tax credits for contributions paid
Employee can deduct contributions by the employer
Employer contributions are deductible
Employer contributions are taxable to the employee
Employer contributions are deductible

Which of the following statements BEST describes the HIPAA portability rules for an individual who changes from one group medical plan to another?

-Reduces or eliminates any pre-existing conditions excluded under the new plan
-Requires that an employer pays for health coverage
-Reduces or eliminates the deductible under the new plan
-Allows the employee to convert to individual coverage
-Reduces or eliminates any pre-existing conditions excluded under the new plan

Greg had recently been terminated from his job that covered him for group life insurance. How long does he have to convert his coverage to an individual policy?

14 days
21 days
30 days
31 days
31 days

When does the owner’s contractual rights begin under an individual annuity contract?

Time of purchase
When the benefit period begins
When the accumulation period ends
After free-look period expires
Time of purchase

Which of these must be disclosed in a universal life policy?

O Maximum coverage that can be purchased
O The policy’s surrender charges
O The commissions earned from the sale of the policy
O The producer’s license expiration date
O The policy’s surrender charges

The refusal of doing business with an individual or business is called a(n)

O act of intimidation
O act of coercion
O boycott
O misrepresentation
O boycott

An insurance policy may be issued with a preferred insurance premium in all of these situations EXCEPT:

O good credit history
O living in a rural area
O good health history
O being a nonsmoker
O living in a rural area

Which of these is NOT a factor during the health insurance underwriting process?

O Current residence
O Physical condition
O Occupation
O Former residence
O Former residence

A(n) __ agent is an insurance agent who represents only ONE insurance company.
O exclusive
O captive
O domestic
O inclusive
O captive

Which of the following statements about universal life insurance is NOT true?

O Death benefit can be increased
O Premiums are flexible
O Universal life insurance normally has a minimum guaranteed cash value for duration of the policy
O The cash value interest rate must equal or exceed a guaranteed minimum value
O Universal life insurance normally has a minimum guaranteed cash value for duration of the policy

Which statement best defines what a Policy Title means on an insurance policy?

-Every policy must have a title on the face and on the back of the policy, briefly describing the policy
-Every policy must have a title on the face of the policy, briefly describing any exclusions
-Every policy must have a title on the back of the policy, briefly describing any premiums
-Every policy must have a title on the face and on the back of the policy, briefly describing contact information
-Every policy must have a title on the face and on the back of the policy, briefly describing the policy

A retired couple would like to maximize the income derived from their combined life savings and have it payable until they both die. Which annuity would be their best choice?

Fixed annuity
Survivorship annuity
Joint life annuity
Joint and survivor annuity
Joint and survivor annuity

Which of the following combinations best describe a universal life insurance policy?

-A mutual fund and an endowment policy
-A term insurance policy and a whole life policy
-A modified endowment policy and an annual term insurance policy
-A flexible premium deposit fund and a monthly renewable term insurance policy
-A flexible premium deposit fund and a monthly renewable term insurance policy

Which of the following can be used to avoid the mandatory withholding tax on qualified plan distributions?

Qualified plan waiver
Trustee-to-trustee transfer
Conduit IRA
1035 exchange
Conduit IRA

Which of the following types of risk is insurable?

Pure
Speculative
Operational
Physical
Pure

An insured, age 67, is covered under a disability income policy. What will the insurer normally require in order for the insured to continue coverage?

-The insured must submit to a physical examination on an annual basis
-The insured must be actively at work for a specified number of hours per week
-The insured must remain in the same occupation
-The insured must continue working for the same employer
-The insured must be actively at work for a specified number of hours per week

Which benefit is normally payable to a life insurance policyowner when the insured’s life expectancy has been severely limited?

Reduced paid-up option
Accelerated (living) benefit
Return of Premium benefit
Extended term option
Accelerated (living) benefit

What happens to the death benefit of a life insurance policy if the insured elects a partial payment from the accelerated (living) benefit provision?

None will be given
Increased
Reduced
No change
Reduced

Which of these procedures is NOT designed for ambulatory care centers?

O Inpatient surgery
O Vaccinations
O Outpatient surgery
O Physical examinations
O Inpatient surgery

A “premature” distribution from a modified endowment contract (MEC) incurs a penalty tax of?

O 5%
O 10%
O 17.5%
O 20%
O 10%

All of these statements concerning group credit life insurance are false EXCEPT:

O Cash value loans are allowable
O Dividends can reduce the premium payments
O The face amount and premiums are flexible
O The face amount is based on the outstanding loan balance
O The face amount is based on the outstanding loan balance

During an annuity’s liquidation phase, the annuitant normally:

O receives nothing
O receives benefit payments at regular intervals
O can borrow against the cash value
O can increase the premium payout period
O receives benefit payments at regular intervals

Which of these would NOT be a valid reason to add the waiver of premium rider to a life insurance policy?

O Prevents a policy from lapsing in the event of total disability
O Premiums waived by the insurer do not have to be repaid by the policyowner
O Policy’s cash value would still increase as policy premiums are being waived
O It allows a policy loan to cover premium payments if the policyowner becomes totally disabled
O It allows a policy loan to cover premium payments if the policyowner becomes totally disabled