Indiana Life & Health Insurance License, Practice Exams

Under IC 27-1-15.6-12, the civil penalty the commissioner may impose on a producer ranges from:

1. $100 to $5,000 per violation
2. $50 to $25,000 per violation
3. $500 to $50,000 per violation
4. $50 to $10,000 per violation ✓

Why: IC 27-1-15.6-12(f) authorizes a civil penalty of not less than fifty dollars ($50) and not more than ten thousand dollars ($10,000) — therefore $50 to $10,000.

Under IC 27-1-17-2, a foreign or alien insurer admitted to do business in Indiana has:

1. Greater rights than a domestic company of the same class
2. No right to write casualty lines of insurance in Indiana
3. The same, not greater, rights as a domestic company ✓
4. Rights limited to assuming reinsurance from domestic insurers

Why: IC 27-1-17-2 gives an admitted foreign/alien insurer the same but no greater rights and privileges than a domestic company — therefore equal, not greater.

A 401(k) plan is a qualified plan that primarily allows employees to:

1. Withdraw funds before age 59 1/2 with no tax or penalty
2. Contribute after-tax dollars only, with no employer match
3. Defer part of their salary on a pre-tax basis, often with an employer match ✓
4. Receive a guaranteed monthly pension based on years of service, not contributions

Why: A 401(k) is a defined-contribution plan funded by pre-tax salary deferrals (Roth option aside), commonly with an employer match.

A 66-year-old just enrolled in Part B applies for a Medigap policy two months later. The insurer must:

1. Offer only its most comprehensive plan, at the highest premium
2. Decline the application, since Medigap open enrollment closed at age 65
3. Require a health questionnaire and an attending physician statement
4. Issue any offered plan on a guaranteed-issue basis ✓

Why: Within the 6-month Medigap open enrollment period (age 65 + Part B), coverage is guaranteed issue regardless of health.

Under the 'one-year term' (fifth) dividend option, the dividend is used to:

1. Permanently convert the policy into an extended-term form
2. Purchase one year of term insurance, often equal to the cash value ✓
3. Reduce the policy's death benefit for the following policy year
4. Surrender the policy and take its full cash value in cash

Why: The one-year term option buys a year of term coverage (commonly equal to the cash value), increasing the total death benefit for that year.

Under IC 27-4-1-4.5, which of the following is an unfair claim settlement practice?

1. Paying a clear claim promptly after proof of loss
2. Explaining the basis for a denial in writing
3. Acknowledging communications about claims promptly
4. Refusing to pay without investigating ✓

Why: IC 27-4-1-4.5(4) lists refusing to pay claims without conducting a reasonable investigation as an unfair claim settlement practice — therefore refusing to pay without investigating.

In the application process, the producer often acts as the 'field underwriter,' meaning they:

1. Approve and pay death claims for the insurer
2. Audit the insurer's annual financial statement and certify the adequacy of its policy reserves to the state
3. Gather information and make an initial assessment of the risk ✓
4. Set the final rate class, approve the application for issue, and calculate the reserve the insurer must hold

Why: As field underwriter the producer collects accurate information and screens obvious risks before formal underwriting.

An Indiana member insurer received $2,000,000 in Indiana premiums for the assessment base year. Under IC 27-8-8-6, the maximum assessment in one calendar year for that account is:

1. $20,000
2. $40,000 ✓
3. $100,000
4. $200,000

Why: IC 27-8-8-6(i) caps annual assessments per account at two percent (2%) of the insurer's Indiana premiums for the base year. 2% of $2,000,000 = $40,000.

A prospect asks where covered LTC services are provided. Under IC 27-8-12-5, LTC insurance covers services provided in a setting other than what?

1. A private residence
2. An acute care hospital wing ✓
3. An assisted living center
4. An adult day program

Why: IC 27-8-12-5(a) defines LTC services as provided in a setting other than an acute care wing of a hospital — therefore an acute care hospital wing.

State guaranty association protection may NOT be:

1. Used by producers as a selling point in advertising ✓
2. Subject to statutory coverage limits
3. Available to policyholders of an insolvent insurer
4. Funded by assessments on member insurers

Why: Using guaranty fund protection to induce a sale is prohibited; the fund exists to protect policyholders of insolvent insurers, within limits.

A 'Social Insurance Supplement' (SIS) rider stops paying once the insured:

1. Recovers fully from the disabling condition
2. Begins receiving the expected Social Security benefit ✓
3. Returns to any form of part-time employment
4. Reaches the policy's stated benefit maximum age

Why: An SIS rider supplements income while Social Security is not yet payable; it reduces or stops once Social Security benefits begin.

Under 760 IAC 1-24, the Life Insurance Buyer's Guide is designed primarily to:

1. help consumers shop for life insurance ✓
2. disclose the agent's full commission schedule
3. list the insurer's investments
4. guarantee policy performance

Why: 760 IAC 1-24's Buyer's Guide is intended to help a prospective purchaser shop for and save money on life insurance — therefore to help consumers shop.

A client wants a guaranteed income they cannot outlive, accepting that payments stop at death with nothing to heirs. The option offering the highest payment is:

1. Life with 20-year period certain
2. Joint and survivor annuity
3. Straight life (pure life) annuity ✓
4. Installment refund annuity

Why: Pure life pays the most because payments cease at death with no refund or survivor benefit; the other options pay less to protect a beneficiary.

An insured with a $4,000 monthly benefit suffers a residual disability causing a 50% loss of income. The residual benefit is about:

1. $2,000 ✓
2. $4,000
3. $1,000
4. $0

Why: Residual benefits are proportional to income lost: 50% income loss × $4,000 = $2,000.

An investor with no relationship to the insured arranges and funds a policy intending to profit from the death benefit. This is:

1. An ordinary collateral assignment of the policy to a secured lender
2. A key person arrangement, valid because the investor funds the premiums
3. Stranger-originated life insurance (STOLI), which is illegal ✓
4. A viatical settlement, permitted once the insured is terminally ill

Why: STOLI lacks insurable interest and is illegal; policies must be founded on a genuine insurable interest at inception.

A policy has a 60-day elimination period and a $4,500 monthly benefit. If the insured is disabled for 10 months, the approximate total paid is:

1. $36,000 ✓
2. $45,000
3. $27,000
4. $40,500

Why: The first ~2 months (60-day elimination) pay nothing; 8 months × $4,500 = $36,000.

An Indiana employer buys a group life policy on its employees. Under IC 27-1-12-37, the policy must generally insure employees for the benefit of:

1. the employer itself
2. persons other than the employer ✓
3. the insurer's own corporate shareholders
4. the policy's issuing agent

Why: IC 27-1-12-37(1) requires an employer group policy to insure employees for the benefit of persons other than the employer — therefore beneficiaries other than the employer.

Under IC 27-4-1-5, when the commissioner believes a person is committing an unfair or deceptive act defined in section 4, the commissioner shall serve:

1. A final cease and desist order effective on service
2. A civil penalty assessment payable before any hearing
3. A statement of charges and notice of hearing ✓
4. An order revoking the person's license without a hearing

Why: IC 27-4-1-5(a) requires serving a statement of the charges and written notice of a hearing — therefore charges plus hearing notice.

Under IC 27-1-15.7-2, CE credit for an approved classroom ethics course may not exceed how many hours in a renewal period?

1. One (1) hour
2. Two (2) hours
3. Three (3) hours
4. Four (4) hours ✓

Why: IC 27-1-15.7-2(k) limits classroom ethics-course credit to not more than four (4) hours in a renewal period — therefore four hours.

Under IC 27-8-26-5, in determining insurability for health coverage an insurer may NOT do which of the following?

1. Ask about the applicant's current medications
2. Order the applicant's genetic testing ✓
3. Ask about hospital stays in the past five years
4. Verify the applicant's date of birth

Why: IC 27-8-26-5(1) prohibits requiring an individual to submit to genetic screening or testing — therefore ordering the applicant's genetic testing.

Under IC 27-1-15.6-17, a producer must report an administrative action taken in another jurisdiction within:

1. Fifteen (15) days of final disposition
2. Thirty (30) days of final disposition ✓
3. Sixty (60) days of final disposition
4. Ninety (90) days of final disposition

Why: IC 27-1-15.6-17(a) requires the report not more than thirty (30) days after final disposition of the matter — therefore thirty days.

A contingent (secondary) beneficiary receives the death benefit:

1. Immediately and jointly alongside the primary beneficiary at death
2. In all cases, regardless of whether the primary beneficiary is living
3. Only if the primary beneficiary dies before the insured ✓
4. Only after a probate court has approved the overall distribution

Why: The contingent beneficiary is paid only if no primary beneficiary is living when the insured dies.

Under IC 27-1-17-2, a foreign or alien insurer may not be admitted to transact a kind of insurance in Indiana that:

1. Exceeds ten million dollars in annual written premium
2. A domestic company is not permitted to transact ✓
3. Is normally placed with surplus lines carriers
4. Is not transacted in its home state

Why: IC 27-1-17-2 bars admitting a foreign/alien insurer for a kind of business a domestic company may not transact — therefore that limit.

A statement on an application that is believed true to the best of the applicant's knowledge is a:

1. Concealment
2. Waiver
3. Warranty
4. Representation ✓

Why: A representation is believed true to the applicant's best knowledge; a warranty is guaranteed to be literally true. Most life applications are treated as representations.

A life insurance policy that fails the federal '7-pay test' is classified as a Modified Endowment Contract (MEC), meaning:

1. Premiums paid into the policy become deductible on the owner's tax return
2. Lifetime distributions are taxed on a LIFO basis with a possible penalty ✓
3. All future death benefits paid to beneficiaries become fully taxable
4. The policy immediately loses its cash value and reverts to term coverage

Why: A MEC keeps a tax-free death benefit, but living distributions are taxed gains-first (LIFO) with a 10% penalty before 59½.

Under the ACA (Section 1302), which set correctly lists the marketplace metal tiers from lowest to highest actuarial value?

1. Copper, Silver, Gold, Tin
2. Bronze, Gold, Silver, Steel
3. Tin, Bronze, Silver, Gold
4. Bronze, Silver, Gold, Platinum ✓

Why: ACA Section 1302(d) sets metal tiers at 60/70/80/90% actuarial value: Bronze, Silver, Gold, Platinum — therefore Bronze, Silver, Gold, Platinum.

An insurer routinely appeals arbitration awards favoring insureds to pressure them into smaller settlements. Under IC 27-4-1-4.5 this is:

1. A prohibited claims practice ✓
2. A lawful appellate right
3. A permitted cost control
4. An approved dispute method

Why: IC 27-4-1-4.5(11) prohibits a known policy of appealing arbitration awards favoring insureds to compel smaller settlements — therefore a prohibited claims practice.

A '20-pay whole life' policy:

1. Requires premium payments every year for the insured's entire lifetime
2. Is paid up after twenty years of premiums but covers the insured for life ✓
3. Provides level coverage for exactly twenty years, then terminates
4. Builds no cash value at all because the premium period ends early

Why: Limited-pay whole life concentrates premiums into a set period (here 20 years) while coverage lasts for life.

Medicare Part A is premium-free for a beneficiary who:

1. Enrolled in a private Medicare Advantage plan during the annual open enrollment window
2. Has about 40 quarters of Medicare-covered employment ✓
3. Bought a Medicare Supplement policy within six months of turning age sixty-five
4. Has reached full Social Security retirement age but is still working full time

Why: Most people qualify for premium-free Part A by having about 40 quarters (10 years) of Medicare-covered employment (their own or a spouse's).

Which settlement option pays the beneficiary an income that cannot be outlived?

1. Fixed period
2. Interest only
3. Fixed amount
4. Life income ✓

Why: A life income settlement option pays for the beneficiary's lifetime, regardless of how long they live.

Under IC 27-1-17-7, the directors of an alien insurance company may appoint trustees, approved by the commissioner, to:

1. Manage the company's foreign operations
2. Elect the board of directors
3. Audit the company each year
4. Hold funds in trust for U.S. policyholders ✓

Why: IC 27-1-17-7 lets an alien company appoint approved trustees to hold funds and assets in trust for U.S. policyholders and creditors — therefore that purpose.

A client wants to move funds from an old annuity into an LTC insurance policy tax-free. Under Section 1035, this is:

1. Treated as a full surrender, with the gain taxed as ordinary income
2. Allowed only when the receiving contract is a term life policy
3. Barred, because an annuity may be exchanged only for another annuity
4. Permitted (annuity-to-LTC is a valid 1035 exchange) ✓

Why: Section 1035 permits tax-free exchanges from an annuity to a qualified long-term care policy.

A worker enrolled in a qualified high-deductible plan opens an HSA. Contributions are:

1. Taxed when contributed and again when withdrawn for care
2. Tax-deductible, and qualified withdrawals are tax-free ✓
3. Never deductible, though qualified withdrawals come out tax-free
4. Made with after-tax dollars, like a Roth, with tax-free withdrawals

Why: HSAs offer a triple tax advantage: deductible contributions, tax-deferred growth, and tax-free qualified withdrawals.

Under IC 27-1-15.6-12, when a producer's license is 'permanently revoked,' the former licensee:

1. May never reapply for a license ✓
2. May reapply after five (5) years
3. May reapply after ten (10) years
4. May reapply once penalties are paid

Why: IC 27-1-15.6-12(a) defines permanent revocation to mean the license is never reinstated and the former licensee may not submit a new application — therefore never reapply.

A policyowner stops paying premiums and elects to keep a smaller amount of fully paid-up permanent coverage. This is the ____ option.

1. extended term
2. automatic premium loan
3. reduced paid-up ✓
4. cash surrender

Why: Reduced paid-up uses the cash value to buy a smaller, fully paid-up permanent policy with no further premiums.

A business owner is disabled. A business overhead expense (BOE) policy will reimburse:

1. The cost to buy out the owner's business interest
2. Lost business profits the firm would have earned
3. The owner's personal household living expenses
4. Rent, utilities, and employee salaries ✓

Why: BOE covers continuing business operating expenses (not the owner's salary or lost profit) during the owner's disability.

Which permanent policy features flexible premiums and an adjustable death benefit?

1. Level term
2. Universal life ✓
3. Whole life
4. Single-premium whole life

Why: Universal life allows the owner to vary premium payments and adjust the death benefit (subject to underwriting); cash value earns a declared interest rate.

An applicant who smokes a pack of cigarettes daily will most likely be classified as:

1. A preferred risk
2. A standard risk with no adjustment
3. An automatically declined risk
4. A substandard (rated) risk ✓

Why: Tobacco use raises mortality risk, typically placing the applicant in a substandard/rated class with a higher premium.

Under IC 27-1-12-43, an individual life insurance policy must allow the policyholder to return the policy for a full refund within how many days after receipt?

1. Twenty (20) days
2. Fifteen (15) days
3. Ten (10) days ✓
4. Thirty (30) days

Why: IC 27-1-12-43(b) requires a provision allowing return of the policy within ten (10) days after receipt for a full refund — therefore 10 days.

During the free-look period, a life insurance policyowner has the right to:

1. Borrow the entire cash value with no interest ever charged
2. Switch insurers while keeping the original issue-age rates
3. Increase the death benefit without any further underwriting
4. Return the policy and receive a refund of the premium paid ✓

Why: The free-look (right to examine) period lets the owner return the policy for a full refund of premium within the stated number of days after delivery.

Under IC 27-4-1-4, giving a customer something of value not specified in the policy as an inducement to buy is:

1. Rebating ✓
2. Twisting
3. Defaming
4. Coercing

Why: IC 27-4-1-4(a)(8) defines rebating as giving a valuable consideration or inducement not specified in the contract — therefore rebating.

An insured and the primary beneficiary die together in a car accident, and the order of death cannot be determined. Under the common disaster clause, the proceeds go to:

1. The insurer, which retains the proceeds as an unclaimed death benefit
2. The primary beneficiary's own named contingent payee
3. The contingent beneficiary (or the insured's estate) ✓
4. The primary beneficiary's estate, since that beneficiary was alive when the policy was issued

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

'Controlled business' refers to insurance a producer writes:

1. Only after passing a market conduct exam
2. Through a fraternal benefit society that operates on a lodge system for its members
3. For large commercial clients in another state under a nonresident producer license
4. Mainly on themselves, their family, or their own business ✓

Why: Controlled business is coverage on the producer's own interests; states limit it so licenses aren't obtained merely to self-deal.

Under IC 27-4-1-4, circulating a false statement derogatory to an insurer's financial condition is:

1. Rebating
2. Boycott
3. Defamation ✓
4. Coercion

Why: IC 27-4-1-4(a)(3) defines defamation as circulating a false or maliciously critical statement derogatory to an insurer's financial condition calculated to injure — therefore defamation.

A Social Insurance Supplement (SIS) rider on a disability policy pays a benefit:

1. As a permanent addition paid on top of the insured's full Social Security check
2. Only once Social Security has approved the claim and the first federal check arrives
3. Only to insureds with no Social Security work credits, since others are covered federally
4. When the insured is disabled but Social Security benefits are not yet payable ✓

Why: An SIS rider supplements income when the insured is disabled but Social Security disability is denied or not yet being paid.

Under IC 27-4-1-4.5, failing to adopt reasonable standards for the prompt investigation of claims is:

1. Allowed if claims are complex
2. A prohibited settlement practice ✓
3. Required only for large claims
4. Left to insurer discretion

Why: IC 27-4-1-4.5(3) makes failing to adopt and implement reasonable standards for prompt investigation of claims an unfair claim settlement practice — therefore prohibited.

An endowment policy is distinguished by the fact that it:

1. Pays the face amount at a set maturity date if the insured is still living ✓
2. Decreases its face amount steadily over the policy's term
3. Provides only temporary coverage that expires with no value
4. Invests the entire premium in the insurer's separate investment accounts chosen by the owner

Why: An endowment pays the face amount either at the insured's death or upon reaching the maturity date while living; modern tax rules limit their use.

A worker is injured on the job and cannot work. Under a nonoccupational disability policy, the claim is:

1. Not covered, because on-the-job injuries fall under workers' compensation ✓
2. Covered in full at the stated monthly benefit, since the policy is 24-hour coverage
3. Covered once a 90-day elimination period runs from the injury date
4. Covered at 60% of the normal benefit to coordinate with the state fund

Why: Nonoccupational coverage excludes work-related injuries (handled by workers' compensation); occupational/24-hour coverage applies on or off the job.

Under IC 27-8-19.8-3, in the viatical settlements chapter 'insured' refers to an individual whose life is the subject of insurance under:

1. An annuity contract issued by a life insurer
2. A health insurance policy covering the individual
3. A life insurance policy or contract ✓
4. A viatical settlement broker agreement

Why: IC 27-8-19.8-3 defines 'insured' as an individual whose life is the subject of insurance under a life insurance policy or contract — therefore that answer.

Under the 'three-year rule,' if an insured gives away a life insurance policy but dies within three years, the proceeds are:

1. Treated as fully tax-free regardless of the timing of the gift
2. Pulled back into the insured's taxable estate ✓
3. Forfeited entirely back to the issuing insurance company
4. Taxed as ordinary income to the person who received the gift

Why: If an insured transfers a policy and dies within three years, the death proceeds are included in the gross estate for federal estate-tax purposes.

Under IC 27-8-5-2, the text of an individual accident and sickness policy must be printed in lightface type no smaller than what size?

1. Eight (8) point
2. Twelve (12) point
3. Ten (10) point ✓
4. Six (6) point

Why: IC 27-8-5-2(a)(4) requires uniform lightface type not less than ten (10) point — therefore 10-point is the minimum.

An HMO member sees an out-of-network specialist for a non-emergency without a referral. The plan typically:

1. Pays 80% after the deductible
2. Pays the full billed amount anyway
3. Pays only the specialist's travel costs
4. Pays nothing for that out-of-network visit ✓

Why: HMOs generally cover only in-network, referred care; non-emergency out-of-network care without a referral is not covered.

A disability buy-sell policy is designed to:

1. Fund the buyout of a disabled owner's business interest ✓
2. Pay the business's monthly rent and employee payroll expenses
3. Cover the medical bills of an owner injured on the job
4. Replace the disabled owner's personal salary and living costs

Why: Disability buy-sell provides funds for the remaining owners to purchase the business interest of an owner who becomes totally disabled.

Under IC 27-1-15.6-13, an insurer or producer may not pay a commission for selling insurance to a person who:

1. Works outside Indiana but is licensed there
2. Is a nonresident holding an Indiana license
3. Is required to be licensed but is not ✓
4. Sells fewer than five (5) policies

Why: IC 27-1-15.6-13(a) prohibits paying consideration to a person required to be licensed under the chapter who is not licensed — therefore an unlicensed person who must be licensed.

Under IC 27-1-15.6-15, an insurer terminating a producer for a section 12 reason must notify the commissioner within:

1. Fifteen (15) days
2. Thirty (30) days ✓
3. Sixty (60) days
4. Ten (10) days

Why: IC 27-1-15.6-15 requires the insurer to notify the commissioner within thirty (30) days of the effective termination date when the reason is a section 12 ground.

Under IC 27-1-15.6-6, a business entity applying for a producer license must:

1. Maintain a fifty-thousand-dollar surety bond payable to the commissioner for the benefit of Indiana consumers
2. Employ only Indiana resident producers at each location from which it solicits insurance
3. Designate a licensed producer responsible for compliance ✓
4. Register each owner directly with FINRA

Why: IC 27-1-15.6-6 requires a business entity to designate a licensed individual producer responsible for the entity's compliance with insurance laws.

An example of an unfair claims settlement practice is:

1. Failing to act promptly and in good faith to settle a clear claim ✓
2. Paying a valid claim immediately upon receiving acceptable proof
3. Investigating a suspicious claim before issuing any payment on it
4. Requesting a properly completed proof of loss before paying a claim

Why: Unfair claims practices include not acting promptly, failing to attempt good-faith settlement of clear claims, and compelling litigation by underpaying.

An irrevocable life insurance trust (ILIT) is used primarily to:

1. Keep life insurance proceeds out of the insured's taxable estate ✓
2. Allow the insured to freely change the policy's terms at any time
3. Convert the death benefit into a currently deductible expense
4. Guarantee the policy's cash value against any market loss

Why: An ILIT owns the policy so the proceeds are excluded from the insured's gross estate; because it is irrevocable, the insured gives up control.

An Indiana producer's flyer states, 'Your annuity is protected by the state Guaranty Association if the insurer fails.' Under IC 27-8-8-18, this statement is:

1. permitted if the insurer is solvent
2. required disclosure at point of sale
3. prohibited use of the Association in solicitation ✓
4. permitted with the commissioner's written approval

Why: IC 27-8-8-18(a) prohibits using the existence of the Association to sell, solicit, or induce the purchase of insurance — therefore it is a prohibited use in solicitation.

In a variable life insurance policy, the investment risk on the cash value is borne by:

1. The producer who originally sold the policy contract
2. The state insurance guaranty association at all times
3. The insurance company, which guarantees the cash value in full
4. The policyowner ✓

Why: In variable life the cash value is held in separate accounts the owner directs, so the policyowner assumes the investment risk (a minimum death benefit is usually guaranteed).

An Indiana employer wants to insure an employee's life. Under IC 27-1-12-17.1, the employee is deemed to consent if, after written notice, the employee does not object within:

1. Fifteen (15) days
2. Thirty (30) days ✓
3. Sixty (60) days
4. Ten (10) days

Why: IC 27-1-12-17.1(d) deems consent given if the employee receives written notice of the coverage and does not object within thirty (30) days of receipt — therefore 30 days.

Life insurance is generally a 'valued' (not indemnity) contract because it pays:

1. A benefit reduced by other coverage in force
2. Nothing unless the beneficiary documents expenses
3. Only the actual financial loss the family proves
4. A stated face amount, not the measured economic loss ✓

Why: Life insurance pays the agreed face amount regardless of proven loss; medical expense insurance instead indemnifies actual costs.

A producer makes untrue statements in a public advertisement about a policy's benefits. This is:

1. False advertising, an unfair trade practice ✓
2. Unfair discrimination in policy benefits
3. Twisting, because the statements induce a policy exchange
4. Permissible puffery, since opinions about benefits are not statements of fact

Why: Untrue or misleading advertising about insurance is the unfair practice of false advertising/misrepresentation.

Under IC 27-1-1-2, the insurance commissioner must give bond for the faithful performance of duties in what sum?

1. Ten thousand dollars ($10,000)
2. Twenty thousand dollars ($20,000)
3. One hundred thousand dollars ($100,000)
4. Fifty thousand dollars ($50,000) ✓

Why: IC 27-1-1-2 requires the commissioner to give bond in the sum of fifty thousand dollars ($50,000), with surety approved by the governor.

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.

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.

Money left in a typical health flexible spending account (FSA) at year-end is:

1. Always rolled over indefinitely with no limit
2. Transferred automatically into the employee's HSA
3. Generally forfeited under the use-it-or-lose-it rule ✓
4. Paid out to the employee as taxable cash

Why: FSAs are generally use-it-or-lose-it, though plans may allow a limited carryover or grace period.

Which of the following is a ground for license action under IC 27-1-15.6-12?

1. Earning commissions above a cap
2. Having been convicted of a felony ✓
3. Selling for multiple insurers
4. Advertising through social media

Why: IC 27-1-15.6-12(b)(6) lists having been convicted of a felony as a cause for license action — therefore a felony conviction.

A person under age 65 qualifies for Medicare immediately (no 24-month wait) if they have:

1. Reached full retirement age early
2. Enrolled in a Medigap policy
3. Any pre-existing chronic condition
4. End-stage renal disease or ALS ✓

Why: ESRD (with conditions) and ALS confer Medicare eligibility without the 24-month disability waiting period.

The National Association of Insurance Commissioners (NAIC) primarily:

1. Sets and enforces nationwide insurance premium rates
2. Directly licenses every insurance producer in the United States
3. Develops model laws and standards that states may choose to adopt ✓
4. Pays claims when an insurance company becomes insolvent

Why: The NAIC is a coordinating body of state regulators that drafts model laws and promotes uniformity; it has no direct regulatory authority of its own.

Under IC 27-1-15.7-3, after a licensee files a CE extension request, the license:

1. Is automatically suspended until the hours are filed
2. Lapses until the renewal fee is paid in full
3. Expires on the scheduled renewal date
4. Remains in effect pending decision ✓

Why: IC 27-1-15.7-3(c) provides that the license remains in effect until the commissioner makes a decision on the request — therefore it stays in effect.

Under IC 27-8-8-2, which person qualifies as a 'resident' entitled to Association protection on the coverage date?

1. An individual who resides in Indiana ✓
2. A policyholder who formerly lived in Indiana
3. Any beneficiary named in the policy
4. A nonresident who bought the policy in Indiana

Why: IC 27-8-8-2(bb) defines a resident as an individual who resides in Indiana on the applicable coverage date (or a non-individual with its principal place of business in Indiana) — therefore the individual residing in Indiana.

A PPO member chooses an out-of-network provider. Compared with in-network care, the member will usually pay:

1. Exactly the same as in-network care
2. More in cost-sharing, but still receive some coverage ✓
3. A flat $5 copay regardless of the charge
4. Nothing, because PPOs never cover out-of-network care

Why: PPOs allow out-of-network care at higher cost-sharing; coverage continues but at a less favorable level.

Under IC 27-1-12.3-2, no change in an adjustable policy loan interest rate will be made if the change would be less than what amount?

1. One percent (1%)
2. Two percent (2%)
3. One-half percent (1/2%) ✓
4. One-quarter percent (1/4%)

Why: IC 27-1-12.3-2 provides no change is made if it is less than one-half percent (1/2%) — therefore small fluctuations under 1/2% are ignored.

A life policy has a two-year suicide clause. The insured dies by suicide in the third policy year. The insurer:

1. Pays the full death benefit ✓
2. Denies the claim and keeps the premiums
3. Pays one half of the policy's face amount
4. Refunds only the premiums that were paid

Why: Because the suicide occurred after the two-year period, the death is treated as any other and the full benefit is paid.

A 'bonus' annuity credits an extra percentage to the premium up front but usually comes with:

1. No surrender charges at all
2. Immediate tax-free withdrawals
3. A longer surrender-charge period ✓
4. A guaranteed doubling of the account

Why: Bonus annuities add an upfront credit but typically offset it with longer or higher surrender charges and sometimes lower base rates.

A Medicare Supplement (Medigap) policy must provide a free-look period of at least:

1. 30 days ✓
2. 10 days
3. 24 hours
4. 6 months

Why: Medicare Supplement policies carry a 30-day free-look, longer than the typical 10-day individual health free-look.