Life & Health Insurance Exam Life and Health Insurance Assessment 2 — Questions and Answers
Question 1: Under the Health Insurance Portability and Accountability Act (HIPAA), a pre-existing condition exclusion period for group health insurance is limited to a maximum of:
- 6 months
- 12 months (Correct answer)
- 18 months
- 24 months
Correct answer: 12 months
HIPAA limits pre-existing condition exclusion periods to 12 months (18 months for late enrollees) in group health plans.
Question 2: A whole life insurance policy's cash value grows on a:
- Variable rate tied to the stock market
- Fixed tax-deferred basis (Correct answer)
- Taxable basis each year
- Rate set annually by the state
Correct answer: Fixed tax-deferred basis
Whole life cash value accumulates on a tax-deferred basis at a guaranteed fixed rate set by the insurer.
Question 3: Which provision in a life insurance policy allows the policyowner to recover the full premium paid if the insured dies within a specified period?
- Waiver of premium
- Return of premium rider (Correct answer)
- Accidental death benefit
- Guaranteed insurability rider
Correct answer: Return of premium rider
A return of premium rider pays back all premiums paid if the insured dies within the rider's specified term period.
Question 4: A Medicare Supplement (Medigap) policy is designed to:
- Replace Medicare entirely for seniors
- Cover costs not paid by Original Medicare (Correct answer)
- Provide prescription drug coverage only
- Offer dental and vision benefits
Correct answer: Cover costs not paid by Original Medicare
Medigap policies fill in the gaps of Original Medicare, covering cost-sharing items like deductibles, copayments, and coinsurance.
Question 5: Under a disability income policy, the elimination period functions similarly to:
- A beneficiary designation
- A deductible in time (Correct answer)
- A grace period
- A conversion privilege
Correct answer: A deductible in time
The elimination (waiting) period is the time after disability onset before benefits begin, analogous to a time-based deductible.
Question 6: Which type of annuity provides income payments that cannot outlive the annuitant?
- Fixed period annuity
- Life annuity (straight life) (Correct answer)
- Joint and survivor annuity
- Deferred annuity
Correct answer: Life annuity (straight life)
A straight life (life-only) annuity pays income for the annuitant's entire lifetime, ceasing at death, ensuring payments never outlast the person.
Question 7: An insurance producer who misrepresents a policy's terms to induce a prospect to lapse an existing policy is guilty of:
- Churning
- Twisting (Correct answer)
- Rebating
- Defamation
Correct answer: Twisting
Twisting involves misrepresenting a policy's provisions to persuade someone to replace an existing policy, which is illegal in all states.
Life & Health Insurance Exam Life and Health Insurance Assessment 2
Under the Health Insurance Portability and Accountability Act (HIPAA), a pre-existing condition exclusion period for group health insurance is limited to a maximum of: