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AL Life and Health state exam simulator -1
Questions with Detailed Verified Answers
(100% Correct Answers) /Already Graded
A+
When does “adverse selection” exist?
a.) when an insurer’s stock portfolio under performs
b.) When the risks accepted for insurance has a LOWER likelihood of
experiencing loss than an average group
c.) When the risks accepted for insurance has a HIGHER likelihood of
experiencing loss than an average group
d.) When total premiums exceed total claims for a calendar year
Ans: when the risks accepted for insurance has a HIGHER likelihood of experiencing loss than
an average group
In Alabama, an insurance company incorporated and licensed to do business in
this state is called:
a.) a non admitted company
b.) an alien company
c.) a domestic company
d.) a foreign company
Ans: a domestic company
In regards to a life insurance policy or an annuity contract, all statements made
on the application are considered to be:
a.) guaranteed
b.) warranties
c.) representations
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d.) irrevocable
Ans: representations
Bob has an insurance policy that allows him to keep the policy in force until the
next premium is due plus 30 days thereafter. Bob’s policy:
a.) is considered a modified endowment contract
b.) must build cash valve
c.) contains a grace period
d.) must only be offered by mutual insurers
Ans: contains a grace period
An insurance company licensed to solicit insurance in a specific state is called:
a.) an admitted company
b.) a domestic company
c.) a foreign company
d.) an alien company
Ans: an admitted company
The commissioner of insurance may NOT do which of the following?
a.) issue insurance licenses to qualified individuals
b.) organize, supervise, and administer the insurance department
c.) change insurance laws
d.) enforce Alabama’s insurance code
Ans: change insurance laws
The Long Term Care Partnership program is designed to allow seniors to:
a.) purchase a long-term care policy regardless of insurability
b.) receive a tax credit to offset the cost of a long-term care policy
c.) shelter assets from the spend-down requirements of Medicaid
d.) lie in a nursing home with their spouse
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Ans: shelter assets from the spend-down requirements of Medicaid
When Renewable Term Insurance:
a.) the premium decreases at renewal
b.) the face amount increases at renewal
c.) proof of insurability is needed for renewal
d.) the premium increase at renewal
Ans: the premium increase at renewal
Alabama’s continuing education law states that an insurance producer must
report how many classroom hours every two years?
a.) 20
b.) 24
c.) 28
d.) 32
Ans: 24
At certain ages or dates, an insured can increase the stated benefit (within limits)
under their disability income policy, regardless of health. Which policy rider
BEST describes this?
a.) cost of living adjustment
b.) future income options
c.) rehabilitation option
d.) social security adjustment
Ans: future income options
At what age is an insured for life insurance considered statistically “dead”?
a.) 60
b.) 65
c.) 75
d.) 100
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Ans: 100
Under a health maintenance organization (HMO), service providers are paid a
fixed monthly fee for each member. This concept is called:
a.) self-insurance
b.) capitation
c.) free-for-service
d.) open panel
Ans: capitation
Under Alabama’s annuity disclosure regulation, the disclosures must be mailed to
the applicant within __ business days if the application is taken over the
telephone.
a.) 4
b.) 5
c.) 6
d.) 7
Ans: 5
The aviation exclusion:
a.) excludes coverage for any aviation passenger older than a limiting age
b.) excludes coverage when the insured is riding in any kind of air travel
c.) excludes coverage when the insured is riding in certain kinds of air travel
d.) excludes coverage for any employee in the aviation industry
Ans: excludes coverage when the insured is riding in certain kinds of air travel
A husband and wife purchases a life insurance policy that covers both of them.
The policy paid nothing when the husband died. Two years later, the wife dies
and a death benefit is paid to the beneficiary. Which type of policy is this?
a.) survivorship life policy
b.) joint life policy
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c.) renewable life policy
d.) adjustable life policy
Ans: survivorship life policy
What does renewable term guarantee?
a.) the right to convert to permanent coverage
b.) the insured’s level premium
c.) the insured’s insurability
d.) the right to borrow against the cash value
Ans: the insured’s insurability
How are employer-paid premiums for employee group health insurance
normally treated for tax purposes?
a.) non-tax deductible to the employer/nontaxable to the employee
b.) tax deductible to the employer/nontaxable to the employee
c.) tax deductible to the employer/taxable to the employee
d.) non-tax deductible to the employer/taxable to the employee
Ans: tax deductible to the employer/nontaxable to the employee
Medicare is NOT available to a(n):
a.) 50-year old receiving Social Security Disability income benefits for 5 years
b.) 80-year old Medicaid recipient
c.) 61-year old Medicaid recipient
d.) 40-year old with chronic kidney disease
Ans: 61-year old Medicaid recipient
Insurance policies issued by companies which allow their policyowners to
participate in the favorable experience of the company through payment of
dividends are known as:
a.) contributory policies
b.) non-contributory policies
