Connecticut Life & Health Insurance License, Practice Exams

What inflation protection option must an insurer offer a long-term care applicant under R.C.S.A. 38a-501-20(a)?

1. One no less favourable than annual simple increases of at least three per cent, or a right to increase benefit levels every five years on evidence of insurability satisfactory to the insurer.
2. One no less favourable than annual compounding of at least five per cent, a periodic right to raise benefits without evidence of insurability, or a percentage of actual charges with no maximum. ✓
3. One that increases the daily benefit each year by the change in the consumer price index, with no option to decline the increase once the policy has been issued.
4. One no less favourable than annual compound increases of at least five per cent, offered only to applicants aged under seventy-five at the date of the application.

Why: R.C.S.A. 38a-501-20(a): the insurer shall offer each applicant, at the time of purchase, the option to purchase a policy with an inflation protection feature no less favourable than one of the following: (1) benefit levels increasing annually compounded at a rate not less than five per cent; (2) a guaranteed right periodically to increase benefit levels without evidence of insurability or health status so long as the option for the previous period has not been declined, the additional benefit being at least the difference between the existing benefit and that benefit compounded annually at five per cent; or (3) coverage of a specified percentage of actual or reasonable charges without a maximum specified indemnity amount or limit.

How do 38a-1(8), (18) and (21) define FOREIGN COUNTRY, STATE and UNITED STATES?

1. A foreign country is any jurisdiction outside the fifty states; a state is any of the fifty states of the United States; the United States means the United States of America and the District of Columbia, but not its territories, possessions or the Commonwealth of Puerto Rico.
2. A foreign country is any jurisdiction not in a state, district or territory of the United States; a state is any state, district or territory of it; the United States means the USA, its territories and possessions, Puerto Rico and the District of Columbia. ✓
3. A foreign country is any jurisdiction whose insurance supervisor is not a member of the NAIC; a state is any state or district of the United States; the United States means the United States of America together with any jurisdiction subject to its laws.
4. A foreign country is any jurisdiction other than this state; a state is any state, district or territory of the United States, including this state; the United States means the United States of America, its territories and the Commonwealth of Puerto Rico.

Why: 38a-1(8): foreign country means any jurisdiction not in any state, district or territory of the United States. 38a-1(18): state means any state, district, or territory of the United States. 38a-1(21): United States means the United States of America, its territories and possessions, the Commonwealth of Puerto Rico and the District of Columbia.

Under a term insurance 're-entry' option, the insured can obtain lower 'select' renewal rates by:

1. Automatically renewing without any proof of good health
2. Converting the policy to whole life at the original age
3. Paying a single lump-sum premium for the entire new term
4. Providing new evidence of insurability at the end of the term ✓

Why: Re-entry term lets an insured requalify with fresh evidence of insurability for lower select rates; without requalifying, higher rates apply.

A guaranteed insurability rider lets the insured:

1. Skip premium payments during any year of financial hardship
2. Convert the policy into an annuity with a guaranteed income for life
3. Cancel the policy at any time and recover all premiums paid
4. Buy more coverage at set dates without proving insurability ✓

Why: The guaranteed insurability option permits purchasing additional coverage at specified ages or events with no new evidence of medical insurability.

A key feature of convertible term insurance is that it can be changed to a permanent policy:

1. Only if the insured becomes totally disabled first
2. Only after a new medical exam confirms insurability
3. Only during the first policy year
4. Without providing evidence of insurability ✓

Why: Convertible term can be converted to permanent coverage without evidence of insurability.

A client wants the chance for higher returns and accepts market risk on the annuity's value. The best fit is a:

1. Immediate fixed annuity
2. Bank certificate of deposit
3. Variable annuity ✓
4. Fixed annuity

Why: A variable annuity invests in separate accounts where the owner bears market risk and reward; a fixed annuity guarantees a set return.

A Medicare beneficiary delayed Part D for three years without other creditable drug coverage. The result is:

1. A one-time penalty collected at the first prescription fill
2. A permanent late-enrollment surcharge added to the Part D premium ✓
3. No consequence, because Part D enrollment is voluntary
4. A permanent bar from enrolling in any Part D drug plan

Why: Going without creditable coverage adds a permanent late-enrollment surcharge to the Part D premium.

A life policy that fails the IRS 7-pay test becomes a Modified Endowment Contract (MEC), meaning lifetime distributions are:

1. Taxed gains-first (LIFO), with a possible pre-59½ penalty ✓
2. Free of income tax, though the full cash value is pulled into the estate
3. Tax-free in every case, with no 10% penalty
4. Treated as a return of basis first, with gains taxed only after basis is recovered

Why: Once a contract is a MEC, withdrawals/loans are taxed on gains first (LIFO) and a 10% penalty may apply before 59½.

In the case of LIFE, HEALTH OR DISABILITY insurance, what counts as an ADVERSE UNDERWRITING DECISION under 38a-976(1)(A)?

1. An offer to insure at higher than standard rates, as well as a declination or termination of coverage and an agent's failure to apply to an insurer the agent represents when the applicant asked for it. ✓
2. Any rating of the applicant other than the insurer's most favourable preferred class, as well as a declination or termination of coverage and any requirement of a medical examination not asked of every applicant.
3. The placement of the risk with a residual market mechanism or an insurer specialising in substandard risks, as well as a declination or termination of coverage or a change from a preferred to a standard rate programme.
4. An offer to insure with an exclusion rider attached, as well as a declination of coverage, the termination of an individual policy form on a class basis, and the rescission of a policy for misrepresentation.

Why: 38a-976(1)(A)(iv): in the case of a life, health or disability insurance coverage, an offer to insure at higher than standard rates is an adverse underwriting decision; (i) and (ii) add a declination or termination of coverage and an agent's failure to apply to a specific insurer the agent represents when the applicant requested it. The residual market and rate programme limbs in (iii) are the property and casualty ones.

A two-tier annuity is one in which the contract has:

1. Two named annuitants, both of whom must survive for the income payments to continue
2. Two declared interest rates, one for new deposits and one for older money, that the owner switches between each year
3. A higher value if annuitized and a lower value if surrendered for cash ✓
4. A death benefit equal to twice the account value if the owner dies during the accumulation period

Why: A two-tier annuity credits a higher value when the owner annuitizes and a lower value on cash surrender, incentivizing annuitization.

What does R.C.S.A. 38a-819-25(D) require about the NAME or TITLE given to a life insurance policy in an advertisement?

1. The name or title must be the generic name of the policy, being a short title descriptive of the premium and benefit patterns of the policy or rider.
2. The name or title must include the words “life insurance”, unless it is accompanied by other language clearly indicating that it is life insurance. ✓
3. The name or title must be the one under which the policy form was approved by the commissioner, and no marketing name may be used in an advertisement.
4. The name or title must not include the words “plan”, “programme” or “fund”, which imply that the contract is an investment rather than insurance.

Why: R.C.S.A. 38a-819-25(D): an advertisement shall not use as the name or title of a life insurance policy any phrase which does not include the words 'life insurance' unless accompanied by other language clearly indicating it is life insurance. Subsection (E) separately requires the advertisement to describe the type of policy prominently.

A rider that keeps a policy in force by waiving premiums during a qualifying total disability is the:

1. Guaranteed insurability rider
2. Waiver of premium rider ✓
3. Accidental death benefit rider
4. Cost-of-living rider

Why: Waiver of premium waives premiums after an elimination period while the insured is totally disabled, keeping coverage in force.

What must a decision disapproving a policy form contain, and what grounds does R.C.S.A. 38a-430-3(d) give for disapproval?

1. It must specify the sections of the policy at fault and the amendments required; the grounds are that the form does not comply with the law or is not in the public interest as the commissioner sees it.
2. It must specify the reason; the grounds are that the form does not comply with law, or contains provisions that are unfair or deceptive or encourage misrepresentation of the policy. ✓
3. It must be accompanied by a notice of the insurer's right to a hearing within thirty days; the grounds are that the form is contrary to law or that its premium rates are inadequate or excessive.
4. It must specify the reason for disapproval; the grounds are that the form fails the Flesch reading ease test or is not state specific in its language.

Why: R.C.S.A. 38a-430-3(d): the commissioner shall issue a decision disapproving the use of any such form if it does not comply with the requirements of law, or if it contains a provision or provisions which are unfair or deceptive or which encourage misrepresentation of the policy, and any such decision shall specify the reason for disapproval. Approved forms are labelled 'Approved' with the name and signature of the staff member and the date, under subsection (e).

In an equity-indexed annuity, the 'cap rate' is the:

1. Maximum interest rate credited even if the index rises more ✓
2. Share of the index gain that the insurer credits to the contract
3. Guaranteed minimum rate credited when the index loses value in a year
4. Fee deducted on surrender in year one

Why: The cap is the ceiling on credited interest; the participation rate sets the share of the gain and the floor sets the minimum.

A 'future increase option' (guaranteed insurability) rider on a disability policy lets the insured:

1. Shorten the elimination period after each year the policy is held
2. Add a spouse to the policy at any time with no additional premium
3. Increase the benefit amount later without proving insurability again ✓
4. Receive an automatic refund of premiums if never disabled

Why: This rider allows scheduled increases in the monthly benefit (as income rises) without new evidence of medical insurability.

A $1,000 covered expense is submitted to two health plans. The primary plan pays $800. Under coordination of benefits, the secondary plan typically pays:

1. $200 ✓
2. $800
3. $1,000
4. $0

Why: COB limits total payment to 100% of the expense; the secondary plan pays the remaining $200, not a duplicate benefit.

A tax-sheltered annuity (TSA / 403(b)) is available to employees of:

1. Only for-profit corporations listed on a stock exchange
2. Public schools and certain tax-exempt nonprofit organizations ✓
3. Any employer, with no limits on annual contribution amounts
4. Federal agencies exclusively, in place of Social Security

Why: 403(b) tax-sheltered annuities are for employees of public schools and 501(c)(3) tax-exempt organizations; contributions are pre-tax and grow tax-deferred.

Financial underwriting of a life insurance application ensures that:

1. Confirm through an MIB search that the applicant holds no in-force coverage with any other insurer
2. The amount of coverage is justified by the applicant's financial situation ✓
3. Guarantee that premiums will be paid on schedule throughout the entire premium-paying period
4. A paramedical exam and blood profile were completed

Why: Financial underwriting confirms the requested amount is reasonable relative to income, net worth, or the economic loss being insured.

The plan of operation may delegate the association's powers and duties. To whom, on what conditions, and with what exceptions, under 38a-867(d)?

1. To any third-party administrator licensed in this state, with the approval of the commissioner alone, provided the administrator is bonded in an amount the commissioner fixes; no power may be delegated that involves the payment of a covered claim.
2. To the National Organization of Life and Health Insurance Guaranty Associations without further approval, provided the delegation is recorded in the plan of operation and reported to the commissioner annually.
3. To a corporation or organisation doing similar work in two or more states, approved by the board and the commissioner, and only where its protection is not substantially less favourable; 38a-865(k)(3) and 38a-866 stay. ✓
4. To a corporation performing similar functions in another state, with the approval of the board alone, provided the delegation may be revoked at will; only the assessment power under section 38a-866 may not be delegated.

Why: 38a-867(d): the plan may provide that any or all powers and duties of the association, EXCEPT those under 38a-865(k)(3) and section 38a-866, are delegated to a corporation, association or other organisation performing similar functions in two or more states; the delegation takes effect only with the approval of both the board of directors and the commissioner, and may be made only to a body which extends protection not substantially less favourable and effective than the chapter provides.

Which occupations does 38a-769(a) require to apply to the commissioner for a licence, as distinct from the producer licence governed by chapter 701a?

1. Public adjuster, casualty adjuster, motor vehicle physical damage appraiser, certified insurance consultant and surplus lines broker, plus any other insurance-related occupation needing a licence. ✓
2. Third-party administrator, pharmacy benefits manager, preferred provider network and medical discount plan organisation, and any other insurance-related entity for which the commissioner has by regulation deemed a licence necessary.
3. Life settlement provider, life settlement broker, reinsurance intermediary and rental company, and any other insurance-related occupation for which the commissioner has adopted a licensing regulation.
4. Insurance producer, fraternal agent, surety bail bond agent and limited lines travel insurance producer, together with any occupation for which the commissioner deems a licence necessary.

Why: 38a-769(a): the section governs a person desiring to act as a public adjuster, casualty adjuster, motor vehicle physical damage appraiser, certified insurance consultant or surplus lines broker, or to engage in any insurance-related occupation for which a license is deemed necessary by the commissioner, OTHER THAN an occupation as an insurance producer. Subsection (j) then applies subsections (b) to (i) to producers as well.

Within what period must an insurer act on a written request to correct, amend or delete recorded personal information, and what are its two options under 38a-984(a)?

1. Twenty-one business days; either correct, amend or delete the disputed portion, or notify the individual of the refusal and of the right to a hearing before the commissioner.
2. Thirty business days; either correct, amend or delete the disputed portion, or notify the individual of the refusal, the reasons for it and the right to file a statement. ✓
3. Thirty calendar days; either correct, amend or delete the disputed portion, or refer the dispute to the institutional source that supplied the information for its decision.
4. Sixty business days; either correct, amend or delete the disputed portion, or notify the individual of the refusal, the reasons for it and the right to bring an action for equitable relief.

Why: 38a-984(a): not later than thirty business days from receipt of a written request the insurer, agent or insurance-support organization shall (1) correct, amend or delete the portion of the recorded personal information in dispute, or (2) notify the individual of its refusal, the reasons for the refusal, and the individual's right to file a statement under subsection (c).

In a variable annuity, the contract value is measured in accumulation units during the pay-in phase and in ___ during the payout phase.

1. Annuity units ✓
2. Guaranteed dollars
3. Surrender shares
4. Mortality credits

Why: During accumulation the value is tracked in accumulation units; at annuitization it converts to a fixed number of annuity units whose dollar value varies.

How does 38a-476(a)(3) define a PREEXISTING CONDITIONS PROVISION, and what two things does it exclude from being treated as a preexisting condition?

1. A provision limiting or excluding benefits for a condition because it was present before coverage began, whether or not advice, diagnosis, care or treatment was had; genetic information without a diagnosis, and pregnancy, are excluded. ✓
2. A provision limiting or excluding benefits for a condition for which the insured received medical advice, diagnosis, care or treatment in the six months before the effective date; genetic information and mental health conditions are excluded.
3. A provision excluding benefits for a condition present before the effective date of coverage for a period not exceeding twelve months; pregnancy and any congenital anomaly of a dependent child are excluded.
4. A provision limiting benefits for a condition disclosed in the application; genetic information is excluded in every case, and pregnancy is excluded unless complications of pregnancy arise.

Why: 38a-476(a)(3): preexisting conditions provision means a policy provision that limits or excludes benefits relating to a condition based on the fact that the condition was present before the effective date of coverage, whether or not any medical advice, diagnosis, care or treatment was recommended or received before such effective date; genetic information shall not be treated as a condition in the absence of a diagnosis of the condition related to that information, and pregnancy shall not be considered a preexisting condition.

An applicant who regularly scuba dives in caves is most likely to be:

1. Declined outright, as no insurer covers a hazardous hobby
2. Charged a higher (rated) premium or have the avocation excluded ✓
3. Required to buy an annuity rather than life insurance
4. Offered the preferred rate class, since diving is a sport

Why: Hazardous avocations increase risk; insurers respond with a rating, an exclusion rider, or a higher premium.

A policy has an accidental death benefit (double indemnity) rider. The insured dies of a heart attack. The beneficiary receives:

1. Double the face amount, since the rider doubles every death claim
2. The face amount only, with no doubling ✓
3. Only the accumulated cash value
4. Face amount tripled by the rider

Why: Double indemnity pays an additional amount only for accidental death; death from illness pays the regular face amount.

Federal telemarketing (do-not-call) rules require that insurers and producers:

1. Not call numbers listed on the national Do-Not-Call Registry ✓
2. Restrict all prospecting to postal mail, since live calls are banned
3. Place a follow-up call to every listed prospect at least once each month
4. Record every sales call and file the recordings with the state insurance department

Why: Telemarketers must scrub against the national Do-Not-Call Registry and honor opt-outs.

A withdrawal of gain from a nonqualified deferred annuity before age 59½ generally triggers:

1. Tax-free treatment because annuities are always exempt
2. A flat 20% capital-gains tax on the entire account value
3. Loss of the contract and forfeiture of all principal paid in
4. A 10% IRS penalty plus ordinary income tax on the gain ✓

Why: Premature distributions of annuity gain before 59½ incur a 10% penalty plus ordinary income tax; nonqualified annuity earnings come out LIFO (gain first).

Group life insurance is most commonly written as:

1. A single-premium endowment that is paid up at issue
2. Annually renewable term that renews each year ✓
3. Decreasing term tied to a mortgage balance
4. A paid-up whole life policy with no premiums

Why: Employer group life is typically annually renewable term; individual evidence of insurability is usually not required up to a guaranteed-issue limit.

How do 38a-702a(4), (11) and (12) define a producer's HOME STATE and LIMITED LINES INSURANCE?

1. Home state is the state in which the producer maintains the principal place of residence, whether or not the producer is licensed there, a producer whose business is conducted elsewhere being a nonresident of that other state; limited lines insurance is credit insurance, travel insurance and any line for which the commissioner issues a limited lines producer licence.
2. Home state is the state in which the producer was first licensed as an insurance producer, whatever the producer's later place of residence or business may be; limited lines insurance is credit insurance and travel insurance only, the commissioner having no power to recognise any further line as limited lines insurance, whatever the needs of reciprocity with other states.
3. Home state is any state or territory of the United States, including the District of Columbia, in which the producer maintains the principal place of residence or principal place of business and is licensed as a producer; limited lines insurance is credit insurance and travel insurance, or any other line the commissioner deems necessary to recognise for 38a-702g. ✓
4. Home state is any state or territory of the United States, including the District of Columbia, in which the producer maintains the principal place of residence or principal place of business, whether or not licensed there; limited lines insurance is credit insurance and travel insurance, or any other line the commissioner deems necessary to recognise for the purpose of section 38a-702g.

Why: 38a-702a(4) defines home state as any state or territory of the United States, including the District of Columbia, in which an insurance producer maintains the producer's principal place of residence or principal place of business AND is licensed to act as an insurance producer. The licensing limb is part of the definition, which is why the version saying 'whether or not licensed there' is wrong. 38a-702a(11) defines limited lines insurance as credit insurance and travel insurance, or any other line of insurance that the commissioner deems necessary to recognize for the purpose of complying with section 38a-702g, and 38a-702a(12) defines a limited lines producer as a person authorized by the commissioner to sell, solicit or negotiate limited lines insurance.

If an employee pays the entire premium for an individual disability income policy with after-tax dollars, the disability benefits received are:

1. Taxed as a long-term capital gain in the year received
2. Fully taxable as ordinary income when paid
3. Subject to a flat federal excise tax on each payment
4. Received income-tax-free ✓

Why: When the insured pays premiums with after-tax dollars, DI benefits are tax-free; if the employer pays the premium, the benefits are taxable.

A candidate studying an older Connecticut outline finds a reference to 38a-831 on solicitation of insurance. What is its present status?

1. It remains in force and prohibits solicitation by an unlicensed person.
2. It was recodified as 38a-832 and now governs communications to claimants.
3. It was repealed, effective 1 October 1999. ✓
4. It was suspended pending the adoption of regulations that have not yet been made.

Why: The chapter records that SECTION 38a-831 IS REPEALED, EFFECTIVE OCTOBER 1, 1999. It is a dead section and nothing in this bank rests on it. It is worth knowing because study material that predates the repeal still cites it, and 38a-832 - which does exist - addresses a different subject entirely.

Medicare Part A 'lifetime reserve days' are:

1. Unlimited days of fully covered skilled nursing facility care
2. 60 extra hospital days usable once over the beneficiary's lifetime ✓
3. Days the beneficiary may transfer to a spouse or dependent
4. Renewed automatically at the start of every new benefit period

Why: After 90 days in a benefit period, a beneficiary may draw on 60 lifetime reserve days (with higher coinsurance); once used, they are not replaced.

A deductible 'carryover' provision in a major medical plan allows expenses incurred in the last months of the year to:

1. Be refunded in full to the insured at year end
2. Double the plan's annual out-of-pocket maximum amount
3. Apply toward the next year's deductible ✓
4. Permanently eliminate the deductible for all future years

Why: A carryover provision lets eligible expenses from the final months (often the last three) count toward the following year's deductible.

A 'life income with period certain' settlement option guarantees:

1. Payments that continue jointly for two named annuitants for life
2. The single largest possible payment, but nothing after the payee dies
3. A lump-sum distribution of the entire proceeds at the payee's request
4. Income for life, with a minimum number of years paid to a beneficiary ✓

Why: Life income with period certain pays for the payee's life but guarantees payments for at least a stated period; a beneficiary receives the remainder if the payee dies early.

A person automatically receives Medicare Part A and Part B at 65 (no separate sign-up) if they:

1. Are already receiving Social Security benefits ✓
2. Have earned the 40 quarters of Medicare-covered work credit
3. Delay their Social Security claim past age 65
4. Are covered only by a state Medicaid program

Why: Those already drawing Social Security are enrolled automatically in Parts A and B at 65; others must actively enroll.

R.C.S.A. 38a-819-35 defines the two LIFE INSURANCE COST INDEXES. How does the Net Payment Cost Index differ from the Surrender Cost Index?

1. It is calculated in the same manner except that the annual premium is set at the maximum the insurer may charge.
2. It is calculated in the same manner except that dividends are accumulated at three per cent rather than five per cent.
3. It is calculated in the same manner except that it is shown for twenty years only, and never for ten years.
4. It is calculated in the same manner except that the cash surrender value and any terminal dividend are set at zero. ✓

Why: R.C.S.A. 38a-819-35(F)(2): the Life Insurance Net Payment Cost Index is calculated in the same manner as the comparable Life Insurance Cost Index except that the cash surrender value and any terminal dividend are set at zero.

R.C.S.A. 38a-505-7(G) lists the only permitted exclusions by type of illness, accident, treatment or condition. Which of these is on the list?

1. Any injury sustained while the insured was a passenger in a private motor vehicle driven by another person.
2. Any sickness caused by the insured's use of tobacco products, whatever the duration or level of use.
3. Any sickness first diagnosed after the insured has reached the age of sixty-five, whatever its cause.
4. Pre-existing conditions or diseases, except for congenital anomalies of a covered dependent child. ✓

Why: R.C.S.A. 38a-505-7(G)(1): the permitted exclusions include pre-existing conditions or diseases, except for congenital anomalies of a covered dependent child; the list also covers mental or emotional disorders, alcoholism and drug addiction except as 38a-488a provides, pregnancy except complications, war and related risks, suicide and self-inflicted injury with an exception for the listed health coverages, aviation, inter-scholastic sports for short-term renewable policies, cosmetic surgery excluding reconstructive surgery, government and no-fault benefits, dental care, eye glasses and hearing aids, rest cures and custodial care, and territorial limitations. Nothing on the list permits an exclusion for injuries sustained as a passenger in a motor vehicle, for sickness caused by tobacco use, or by the age at which a sickness is first diagnosed.

A married couple's policy transfers the death benefit to the surviving spouse. For estate tax, this transfer:

1. Counts against the annual gift exclusion
2. Qualifies for the unlimited marital deduction ✓
3. Is fully taxable in the deceased's estate
4. Triggers the transfer-for-value rule

Why: Transfers to a surviving citizen spouse qualify for the unlimited marital deduction and pass free of federal estate tax.

A 'market conduct' examination by regulators reviews an insurer's:

1. Reinsurance treaties alone
2. Sales, underwriting, and claims practices ✓
3. Investment portfolio yields and reserve adequacy
4. Executive compensation and board minutes

Why: Market conduct exams assess how an insurer treats consumers — marketing, underwriting, policyholder service, and claims handling.

Pension maximization is a strategy in which a retiree:

1. Takes the larger single-life pension and buys life insurance to protect the spouse ✓
2. Delays starting the pension indefinitely in order to keep earning additional years of service credit
3. Withdraws the entire pension as a lump sum, drops all coverage, and self-insures the survivor need
4. Always elects the reduced joint-and-survivor pension on the view that it is the safest possible choice

Why: Pension max takes the higher single-life payout and uses life insurance to provide for the surviving spouse, instead of accepting a smaller joint-and-survivor benefit.

Which contracts does 38a-440(a) put OUTSIDE the annuity nonforfeiture requirements?

1. Reinsurance and group annuities of every kind, including those funding individual retirement accounts and annuities, together with any contract delivered in this state through an agent of the issuing company.
2. Individual deferred annuities issued to persons aged sixty-five or over, immediate annuities and structured settlement annuities, together with any contract issued under a governmental retirement plan.
3. Reinsurance, employer or employee-organisation group annuities under a retirement or deferred compensation plan other than individual retirement plans, premium deposit funds, variable, investment, immediate, contingent deferred and reversionary annuities, and deferred annuities after payments begin. It also excludes contracts delivered outside this state. ✓
4. Reinsurance, variable annuities and investment annuities only; all other annuity contracts delivered or issued for delivery in this state fall within the nonforfeiture requirements.

Why: 38a-440(a): the section does not apply to reinsurance, a group annuity purchased under a retirement plan or plan of deferred compensation established by an employer or employee organisation (other than a plan providing individual retirement accounts or annuities under Section 408 of the Internal Revenue Code), a premium deposit fund, a variable annuity, an investment annuity, an immediate annuity, a contingent deferred annuity, any deferred annuity contract after annuity payments have commenced, or a reversionary annuity, nor to a contract delivered outside this state through an agent or other representative of the issuing company.

38a-771(a)(4) requires notice of a change that is peculiar to a firm or business entity licensee. What change?

1. A change in the ownership of more than ten per cent of the entity's voting stock, or in the identity of any partner, member or manager named in its licence application.
2. A change in the licensed insurance producer responsible for the entity's compliance with this state's insurance laws, rules and regulations, as stated in its application. ✓
3. A change in the trade name under which the entity conducts insurance business in this state, whether or not the entity's own legal name has also changed.
4. A change in the entity's designated agent for service of process in this state, or in the address at which that agent may be served with process.

Why: 38a-771(a)(4): notice must be given in writing not later than thirty days after any change in the licensed insurance producer responsible for ensuring compliance by the firm, partnership, association or corporation with the insurance laws, rules and regulations of this state, as stated in its licence application.

In a fixed annuity, the investment risk is borne by:

1. The annuitant, whose sub-accounts rise and fall with the market
2. The insurer, which guarantees a minimum interest rate ✓
3. A federal guaranty fund backing annuity values
4. The selling producer, under the agency contract

Why: A fixed annuity guarantees principal and a minimum interest rate, so the insurer bears the investment risk.

Where NO action is commenced, how is interest on the proceeds computed under 38a-452(b), and from when does it run?

1. Annually at the rate set out in section 37-3a, commencing on the date the insurer receives due proof of death or of maturity, to the date of payment, and added to the total sum paid to the beneficiary.
2. Daily at the rate the insurer currently pays on proceeds left under the interest settlement option, from no later than ten days after the death or maturity to payment, and added to the sum paid. ✓
3. Daily at the rate the insurer currently pays on proceeds left under the interest settlement option, commencing thirty days after the insurer receives due proof of death, to the date of payment.
4. Daily at the rate of fifteen per cent per annum, commencing no later than ten days after the death or maturity, to the date of payment, and added to the total sum paid.

Why: 38a-452(b): where no action has been commenced, interest on the principal sum paid to the beneficiary or policyholder shall be computed daily at the rate of interest currently paid by the insurer on proceeds left under the interest settlement option, commencing no later than ten days after the date of death of the insured or annuitant, or no later than ten days after the date of maturity of an endowment contract, to the date of payment, and shall be added to and be a part of the total sum paid.

What must an AGENT list under R.C.S.A. 38a-501-22(b)?

1. Any other long-term care policies the agent has sold to the applicant in the past three years, whether or not those policies remain in force at the date of the application.
2. Any commission the agent will receive on the new policy and on any policy the agent previously sold to the applicant that is being replaced by it.
3. Any other health insurance policies the agent has sold to the applicant: those still in force, and those sold in the past five years that are no longer in force. ✓
4. Any other insurer the agent represents that offers long-term care insurance, so that the applicant may compare the available policies before applying.

Why: R.C.S.A. 38a-501-22(b): agents shall list any other health insurance policies they have sold to the applicant, listing (1) policies sold which are still in force and (2) policies sold in the past five years which are no longer in force.

At the end of a specified guarantee period under a modified guaranteed life insurance policy, what option must the policy owner have under R.C.S.A. 38a-433-26(a)(5)?

1. The option of surrendering the policy free of any market value adjustment, or of continuing it for a further period of the same length.
2. The option of converting to a fixed benefit general account policy on the same premium basis without evidence of insurability.
3. A guarantee period of not more than five years, or one running to the end of the coverage period if shorter. ✓
4. The option of a guarantee period of not more than ten years, or of leaving the values unguaranteed in the separate account.

Why: R.C.S.A. 38a-433-26(a)(5): at the end of any specified guarantee period the policy owner may select a new guarantee period, and at those times must have the option of selecting a guarantee period of not more than five years, or a guarantee period that runs to the end of the coverage period, if shorter.

A SIMPLE IRA retirement plan is intended for:

1. Government workers not covered by Social Security, who defer pay through a 457(b) plan instead
2. Small employers, with employee salary deferrals and an employer match ✓
3. Self-employed individuals who have no employees at all other than a spouse on the payroll
4. Large corporations with thousands of unionized employees

Why: A SIMPLE IRA is for small employers (generally up to 100 employees) and combines employee salary-reduction contributions with required employer contributions.

R.C.S.A. 38a-819-6(A)(3) deals with the wording used to describe a limitation, exception or reduction. What does it require, and what example does it give of the vice?

1. The wording must appear in type at least as large as that used for the benefits; printing the exceptions in a footnote in smaller type than the benefits they qualify is the vice the subsection identifies.
2. The wording must repeat the policy's own language exactly; paraphrasing an exception in the advertiser's own words, however fairly, is the vice the subsection identifies and forbids.
3. The wording must fairly and accurately describe the negative features; calling a waiting period a “benefit builder”, or saying “even pre-existing conditions are covered after two years”, is the vice. ✓
4. The wording must appear immediately after the description of the benefit affected; placing the exceptions at the end of the advertisement, away from the benefits, is the vice identified.

Why: R.C.S.A. 38a-819-6(A)(3): an advertisement shall not contain descriptions of a policy limitation, exception or reduction worded in a positive manner to imply that it is a benefit, such as describing a waiting period as a 'benefit builder' or stating 'even pre-existing conditions are covered after two years'; the words used shall fairly and accurately describe the negative features.

What does 38a-41(b) require the commissioner to do by regulation?

1. Specify the minimum capital and surplus a company must maintain for each line of insurance it is authorised to write in this state.
2. Specify the accounting standards on which a company's statement of financial condition shall be prepared and the date to which it shall be made up.
3. Specify the information and evidence a company seeking to obtain or renew a licence shall submit and the requirements it shall comply with. ✓
4. Specify the grounds on which the commissioner may suspend, revoke or refuse to renew a licence and the procedure at any hearing on such action.

Why: 38a-41(b): the commissioner shall adopt regulations specifying the information and evidence that an insurance company or health care center desiring to obtain or renew a license shall submit and the requirements with which it shall comply.

What does R.C.S.A. 38a-495-4(b) forbid a Medicare supplement policy from using, and for what purpose?

1. Riders, to add benefits that duplicate those Medicare provides to the insured under Parts A and B of the federal programme.
2. Endorsements, to reduce benefits after issue without the written acceptance of the policyholder to whom the policy was issued.
3. Waivers, to exclude, limit or reduce coverage for specifically named or described preexisting diseases or conditions. ✓
4. Applications, to elicit information about the applicant's health where the policy is issued during the open enrolment period.

Why: R.C.S.A. 38a-495-4(b): no Medicare supplement policy may use waivers to exclude, limit or reduce coverage or benefits for specifically named or described preexisting diseases or physical conditions.

A tax-qualified long-term care policy that meets federal standards generally offers:

1. Coverage only for care delivered in a skilled nursing facility
2. Tax-free benefits and premiums that may be deductible within limits ✓
3. A guaranteed cash refund of all premiums at the insured's death
4. Benefits that are always fully taxable as ordinary income

Why: Tax-qualified LTC policies (under HIPAA standards) pay benefits income-tax-free (within per-diem limits) and allow a limited premium deduction.

R.C.S.A. 38a-782a-9(b) prescribes what an advertisement for an approved course must contain. Which item is required?

1. The statement “This course has been submitted to the Insurance Commissioner for continuing education approval”.
2. The name of every approved instructor who may deliver the course and the professional designations each of them holds.
3. The statement “Approved by the State of Connecticut Insurance Department for insurance producer continuing education credit”. ✓
4. The date of the commissioner's approval of the course and the date on which that approval is due for recertification.

Why: R.C.S.A. 38a-782a-9(b): the advertising shall include (1) the sponsor name and course title; (2) the statement 'Approved by the State of Connecticut Insurance Department for insurance producer continuing education credit'; (3) the number of approved credit hours; (4) the type of licensee for whom the course would be most applicable; and (5) all fees and associated expenses. Subsection (a) forbids advertising a course as approved before written approval is granted.

An employee is injured on the job and needs medical care and wage replacement. The coverage that responds is:

1. Workers' compensation ✓
2. Medicare Part B
3. A Medicare Supplement policy
4. An individual disability income policy only

Why: Workers' compensation is the state-mandated, no-fault coverage for job-related injuries and occupational disease.

Joint life (first-to-die) insurance pays the death benefit:

1. In equal installments to each surviving insured person
2. Upon the first death among the insureds covered ✓
3. When both insureds covered by the policy have died
4. Only if the insureds die within thirty days of each other

Why: Joint (first-to-die) life pays at the first death of the covered insureds; survivorship (second-to-die) pays at the second death.

An owner surrenders a policy with a $22,000 cash value after paying $15,000 in premiums. The taxable gain is:

1. $7,000 ✓
2. $22,000
3. $15,000
4. $0

Why: Gain over basis is taxable: $22,000 − $15,000 = $7,000 of ordinary income.

The federal Genetic Information Nondiscrimination Act (GINA) generally restricts the use of genetic information in:

1. Health insurance and employment decisions ✓
2. Setting state automobile insurance premium rates
3. Property and casualty insurance underwriting only
4. Determining eligibility for federal student loans

Why: GINA limits how genetic information may be used in health coverage and employment, prohibiting discrimination based on genetic test results.

Telemedicine benefits in a health plan allow members to:

1. Receive only in-person care at a designated network hospital
2. Purchase prescription medications at a government-set price
3. Consult a provider remotely using phone or video technology ✓
4. Bypass all deductibles and copayments for every service

Why: Telemedicine lets members access care remotely via phone or video, often at lower cost and with greater convenience for routine issues.

R.C.S.A. 38a-782a-5(b)(2) excludes several skills courses from approval. Which computer-related teaching is nevertheless capable of approval?

1. Training in the insurer's own policy administration system, where the producer writes business for that insurer.
2. Training in spreadsheet and database software, where the producer uses it to keep the records the department may audit.
3. Training in the use of electronic rate and form filing systems operated by the department under section 38a-8(e).
4. Computer-based needs analysis, or computer solutions to risk management that relate to insurance customers. ✓

Why: R.C.S.A. 38a-782a-5(b)(2)(C): courses in the use of computer software or equipment are not approved EXCEPT in computer-based needs analysis or computer solutions to risk management that relate to insurance customers. Courses relating only to an individual insurer's organisational procedures and internal policies are excluded by subdivision (3).

How does 38a-976(15) define an INVESTIGATIVE CONSUMER REPORT, and how does that differ from a consumer report?

1. It is a report prepared by an insurance-support organisation rather than a consumer reporting agency, and covers the individual's insurance claims history as well as credit standing, character and general reputation.
2. It is a report that includes medical record information obtained from a medical-care institution or medical professional, as distinct from a consumer report, which is confined to credit and financial information.
3. A consumer report, or part of one, in which information about the individual's character, reputation, personal characteristics or mode of living is obtained through personal interviews with neighbours, friends, associates or acquaintances. ✓
4. It is a report prepared at the insurer's request rather than assembled in advance, and covers any matter bearing on the individual's credit worthiness, credit standing, credit capacity or mode of living.

Why: 38a-976(15): investigative consumer report means a consumer report or portion thereof in which information about an individual's character, general reputation, personal characteristics or mode of living is obtained through personal interviews with the person's neighbors, friends, associates, acquaintances or others who may have such knowledge. The personal interview is what distinguishes it from the consumer report defined in subdivision (6).

What is the Connecticut Insurance Guaranty Association, and who belongs to it?

1. A state agency within the Insurance Department, funded by an annual appropriation and staffed by employees of the department assigned to it by the commissioner from time to time.
2. A nonprofit unincorporated legal entity created by 38a-839, membership of which every member insurer must keep as a condition of its authority to transact insurance in this state. ✓
3. A voluntary association of admitted insurers, membership being open to any insurer writing the covered lines that chooses to contribute to the assessments levied under the plan of operation.
4. A private corporation chartered by special act of the General Assembly, whose shareholders are the domestic insurers writing property and casualty business within this state at the time of its formation.

Why: 38a-839 creates A NONPROFIT UNINCORPORATED LEGAL ENTITY TO BE KNOWN AS THE CONNECTICUT INSURANCE GUARANTY ASSOCIATION, and provides that ALL INSURERS DEFINED AS MEMBER INSURERS IN SECTION 38a-838 SHALL BE MEMBERS OF SAID ASSOCIATION AS A CONDITION OF THEIR AUTHORITY TO TRANSACT INSURANCE IN THIS STATE. Membership is compulsory, not elective, and the association is not a state agency.

A settlement option that continues income to two people until the second one dies is the:

1. Life income option
2. Interest-only option
3. Joint and survivor option ✓
4. Fixed-period option

Why: The joint and survivor option pays as long as either of two people is alive.

A client exchanges an existing cash-value life insurance policy directly for an annuity contract. Under IRC Section 1035, this is:

1. Taxed only on the cash value
2. A tax-free exchange ✓
3. An illegal transaction
4. A fully taxable surrender

Why: A life-to-annuity exchange qualifies for tax-free treatment under Section 1035 (an annuity-to-life exchange would not).

How does 38a-1(3) define ANNUITIES, and what does the definition expressly exclude?

1. All agreements to make periodical payments where the making or continuance of the payments, or their amount, depends on the continuance of human life or is for a specified term of years; life policy payments are excluded. ✓
2. All agreements to make periodical payments for the lifetime of the annuitant, whether the payments begin at once or at a future date; payments for a specified term of years are excluded, being instalment contracts rather than annuities.
3. All agreements under which an insurer accepts a single premium and pays it back with interest over a period exceeding one year; payments made under a policy of life insurance or an endowment contract are excluded from the definition.
4. All agreements to make periodical payments that depend on the continuance of human life, including the settlement options of a life insurance policy; payments for a fixed term independent of life are excluded.

Why: 38a-1(3): annuities means all agreements to make periodical payments where the making or continuance of all or some of the series of the payments, or the amount of the payment, is dependent upon the continuance of human life or is for a specified term of years; this definition does not apply to payments made under a policy of life insurance.

An employee leaving a group life plan may convert to an individual policy:

1. Only after at least five years of continuous group service
2. At the group's experience-rated premium for the rest of life
3. Without evidence of insurability, generally within thirty-one days ✓
4. Only after passing a new medical exam at the insured's expense

Why: The conversion privilege lets a departing employee convert to individual coverage without evidence of insurability, typically within 31 days.

Who bears the cost of the transcript of a hearing arising from a producer's failure to complete the continuing education requirements, under R.C.S.A. 38a-782a-17?

1. The Insurance Department in every case.
2. The producer's appointing insurer.
3. The producer or sponsor concerned. ✓
4. The party against whom the decision goes.

Why: R.C.S.A. 38a-782a-17: the cost for the transcript of any hearing resulting from the failure of a producer to successfully complete the continuing education requirements, or requested by a producer or sponsor aggrieved by a decision of the commissioner concerning a violation of the regulation, shall be borne by the producer or sponsor.

An insurer incorporated in another U.S. state but doing business in this state is a(n) ____ insurer.

1. Foreign ✓
2. Alien
3. Admitted
4. Domestic

Why: Domestic = incorporated in this state; foreign = another state; alien = another country.

Beyond the documents filed, what must an applicant for a company licence DEMONSTRATE under 38a-41(a)?

1. An orderly pattern of growth in its marketing territories in the region, except for a newly formed health care center, expertise in marketing and servicing the lines it wants to write, and an ability to settle claims continuously and promptly. ✓
2. An orderly pattern of growth in premium volume over the preceding five years, expertise in marketing and servicing the lines it desires to write, and an ability to meet the risk-based capital requirements of its domiciliary state at all times.
3. A plan of operation for each line of insurance it desires to write, an ability to provide continuous and timely claims settlement, and the appointment of at least one resident producer for each county in this state.
4. An orderly pattern of growth in its marketing territories, expertise in underwriting the lines it desires to write, and an ability to settle claims through an adjuster licensed in this state under section 38a-792.

Why: 38a-41(a): an applicant shall demonstrate an orderly pattern of growth in its marketing territories in the geographic region, with the exception of a newly formed health care center, and an expertise in marketing and servicing the lines of insurance or the health care center business it desires to write; it shall submit evidence of its ability to provide continuous and timely claims settlement.

An insured and the sole primary beneficiary die in the same crash, order of death unknown. Under the Uniform Simultaneous Death Act, proceeds go to:

1. The contingent beneficiary or the insured's estate ✓
2. Whoever was pronounced dead first at the scene
3. The insurer, as unclaimed property
4. The primary beneficiary's own heirs, through that beneficiary's estate

Why: The Act presumes the insured survived the beneficiary, so the proceeds pass to the contingent beneficiary or the insured's estate.

The difference between a copayment and coinsurance is that a copayment is:

1. The total amount the insured pays before any benefits begin
2. A fixed dollar amount paid at the time of a covered service ✓
3. The yearly cap on what the insured can pay out of pocket
4. A percentage of the covered charge the insured shares with the plan

Why: A copay is a set dollar amount per service; coinsurance is a percentage of the charge shared after the deductible.

Naming a qualified charity as the owner and beneficiary of a life insurance policy may allow the donor to:

1. Take an income-tax deduction for the gift of the policy and premiums ✓
2. Avoid ever paying any premiums on the donated policy at all
3. Exclude the policy's eventual proceeds from the charity's own income
4. Continue to control and borrow against the policy's full cash value

Why: Donating ownership of a policy to a charity can produce an income-tax deduction; the donor gives up control of the policy.

A beneficiary receives a $250,000 life insurance death benefit as a lump sum. For federal income tax, the beneficiary:

1. Owes tax only on amounts over $100,000
2. Owes no income tax on the death benefit ✓
3. Owes capital-gains tax on the full amount
4. Owes ordinary income tax on the full death benefit

Why: Life insurance death benefits paid as a lump sum are generally received income-tax-free.

How does 38a-564(4)(A) define a SMALL EMPLOYER on and after 1 January 2025?

1. An employer that employed an average of at least two but not more than fifty employees on business days during the preceding calendar year and employs at least two employees on the first day of the plan year.
2. An employer that employed an average of at least one but not more than one hundred employees on business days during the preceding calendar year and employs at least one employee on the first day of the plan year.
3. An employer that employed an average of at least one but not more than fifty employees on business days during the preceding calendar year and employs at least one employee on the first day of the plan year. ✓
4. An employer that employed an average of at least one but not more than twenty-five employees during the preceding calendar year, whatever its workforce on the first day of the plan year.

Why: 38a-564(4)(A)(iii): on and after January 1, 2025, small employer means an employer that employed an average of at least one but not more than fifty employees on business days during the preceding calendar year and employs at least one employee on the first day of the group health insurance plan year. Between 1 January 2016 and 1 January 2025 the upper figure was one hundred. A sole proprietorship employing only the sole proprietor or that person's spouse is not a small employer.

A vision care plan most commonly covers:

1. Eye exams, lenses, frames, and contact lenses ✓
2. Long-term care provided in an assisted-living facility
3. Inpatient surgery for any unrelated medical condition
4. Prescription drugs for chronic systemic illnesses

Why: Vision plans cover routine eye exams and corrective eyewear (lenses, frames, contacts), usually on a scheduled-benefit basis.

Medicare Part A would help pay for which of the following?

1. A routine outpatient physician office visit
2. A covered inpatient hospital stay ✓
3. Long-term custodial care in a nursing home
4. A self-administered prescription filled at a pharmacy

Why: Part A covers inpatient hospital, skilled nursing, hospice, and some home health; physician visits are Part B and drugs are Part D.

How is the length of a person's coverage measured for the longer/shorter length of coverage rule, under R.C.S.A. 38a-480-5(a)(3)?

1. From the claimant's first date of coverage under that plan, or if unavailable, from when the claimant first joined the group; two plans count as one if eligibility under the second began within twenty-four hours of the first ending. ✓
2. From the date the claimant's current certificate was issued, a change in the amount or scope of benefits or in the administrator starting a new plan for the purposes of this rule.
3. From the first day of the plan year in which the claim arises, two plans being treated as separate whenever the insurer or administrator of the plan has changed.
4. From the claimant's first date of coverage under any plan of the same employer, periods of coverage under different employers being aggregated for this purpose.

Why: R.C.S.A. 38a-480-5(a)(3): to determine the length of time a person has been covered, two plans are treated as one if the claimant was eligible under the second within 24 hours after the first ended, so the start of a new plan does not include a change in the amount or scope of benefits, a change in the entity administering them, or a change from one type of plan to another; the length of coverage is measured from the claimant's first date of coverage under that plan, or from the date the claimant first became a member of the group if that date is not readily available.

What is the association's overall cap on benefits under 38a-860(g)(1)?

1. The benefits may in no event exceed the contractual obligations for which the insurer is liable, the dollar limits applying only where the insurer has been placed under an order of liquidation.
2. The lesser of the contractual obligations for which the insurer is or would have been liable were it not impaired, and the dollar limits set out in the subsection. ✓
3. The benefits may in no event exceed the dollar limits set out in the subsection, whether or not the insurer's own contractual obligation was smaller than those limits at the date of impairment.
4. The benefits may in no event exceed the reserves the insurer should have established for the covered policies, calculated as at the date of the order of rehabilitation or liquidation.

Why: 38a-860(g): the benefits for which the association may become liable shall in no event exceed the LESSER of (1) the contractual obligations for which the insurer is liable or would have been liable if it were not an impaired insurer, or (2) the dollar limits that follow.

Renewable term insurance lets the owner renew at the end of each term:

1. Only until the insured reaches age 40, when renewal rights end
2. Without evidence of insurability, at a premium that rises each term ✓
3. At the premium fixed at issue, which stays level for the insured's lifetime
4. Only after a fresh medical exam at each renewal date

Why: Renewability guarantees renewal without proving insurability, though the premium rises with age.