Insurance Licensing Ok-Life-Accident-and-Health-or-Sickness-Producer Oklahoma Life, Accident, and Health or Sickness Producer Exam Exam Practice Test

Aper cause deductiblemeans the insured pays a $100 deductible for each separate medical condition or cause of treatment. The insured visits the doctor three times for injuries, each costing $200. Assuming each visit is for adifferent injury(to calculate the minimum amount, we consider the maximum number of deductibles), the insured pays a $100 deductible per visit (3 visits × $100 = $300). If the policy includes coinsurance (not specified but common in major medical policies), additional costs may apply, but the question asks for theminimum amount, which is the total deductibles for three separate causes.

Calculation:

Visit 1: $100 deductible (first injury).

Visit 2: $100 deductible (second injury).

Visit 3: $100 deductible (third injury).

Total: $100 × 3 = $300.

If all visits were for the same injury, only one $100 deductible would apply, but the question implies separate causes to reach the minimum of $300.

Option A: Incorrect. $100 assumes one deductible for a single cause, not three visits.

Option B: Incorrect. $200 does not account for three separate deductibles.

Option C: Correct. $300 reflects a $100 deductible for each of three separate injuries.

Option D: Incorrect. $500 exceeds the minimum, possibly including coinsurance not specified.

In Health Maintenance Organizations (HMOs), thegatekeeper strategyinvolves a primary care physician (PCP) who coordinates patient care and provides referrals to specialists. This ensures that care is managed efficiently and only necessary specialist visits are authorized, aligning with the HMO’s cost-containment model.

Option A: Incorrect. Refusing coverage for preexisting conditions is unrelated to the gatekeeper role and is regulated by HIPAA, not HMO strategy.

Option B: Correct. The gatekeeper strategy requires referrals from a PCP to see specialists, a hallmark of HMO plans.

Option C: Incorrect. HMOs encourage preventive care, not preventing service use, to manage costs.

Option D: Incorrect. Supplemental services at additional cost are not part of the gatekeeper strategy.

This question falls under the Prometric content outline section on “Health Providers and Products,” which covers HMO structures and strategies.

Under Oklahoma’s Insurance Code (Title 36 O.S. § 309.2), the Oklahoma Insurance Commissioner is required to examine the financial condition ofdomestic insurersat least once every5 yearsto ensure solvency and compliance with state regulations. More frequent examinations may occur if issues arise, but 5 years is the minimum requirement.

Option A: Incorrect. 2 years is too frequent for the minimum requirement.

Option B: Incorrect. 4 years is not the specified interval.

Option C: Correct. Examinations are required at least every 5 years.

Option D: Incorrect. 6 years exceeds the required frequency.

The clerical error provision in group health insurance policies is designed to protect employees from losing coverage due to administrative mistakes made by the employer or insurer. According to Oklahoma insurance regulations and standard group health insurance practices, if a clerical error results in an employee not being enrolled, the provision allows the error to be corrected by retroactively enrolling the employee, provided any past due premiums are paid. This ensures the employee is insured as if the error had not occurred, covering any claims that would have been eligible during the period of the error.

The Oklahoma Life, Accident, and Health or Sickness Producer Study Guide specifies that under the clerical error provision, "an employee who was eligible for coverage but was not enrolled due to an administrative error can be retroactively enrolled upon correction of the error, with coverage effective from the original eligibility date, provided all required premiums are paid." This aligns with option C, which states the employee will be allowed to submit an enrollment form and all past due premiums, and will be retroactively insured.

Ordinary life insurance, often synonymous with whole life insurance, is a type of permanent life insurance that provides coverage for the insured’s entire life, as long as premiums are paid. It typically includes a level premium, a guaranteed death benefit, and a cash value component that grows over time. It is designed to offer permanent protection with some flexibility, such as the ability to borrow against the cash value or adjust premiums in certain policies (e.g., universal life).

Option A: Incorrect. This describes term life insurance, which provides temporary protection during income-earning years. Ordinary life insurance is permanent, and cash values are not specifically “payable” during non-earning periods but can be accessed.

Option B: Incorrect. Ordinary life is not an endowment policy (which matures at a specific age) or tied directly to income levels. It is a whole life policy with level premiums.

Option C: Correct. Ordinary life insurance provides permanent protection and some flexibility (e.g., cash value loans, dividend options in participating policies) with premiums that are generally lower than other permanent products like limited-pay whole life.

Option D: Incorrect. Ordinary life is not temporary; it provides lifelong coverage. While it accumulates cash value, the protection is permanent, not limited to the policyowner’s life expectancy.

This question is part of the Prometric content outline under “Life Products,” focusing on the characteristics of ordinary (whole) life insurance.

In Oklahoma’s Insurance Code (Title 36 O.S. § 105), aforeign insureris defined as an insurance company formed under the laws of another U.S. state or territory. This distinguishes it from adomestic insurer(formed in Oklahoma) and analien insurer(formed in a foreign country).

Option A: Incorrect. An insurer formed in Oklahoma is a domestic insurer.

Option B: Incorrect. An insurer from a foreign country is an alien insurer.

Option C: Correct. A foreign insurer is formed under the laws of another U.S. state or government.

Option D: Incorrect. Geographic proximity is irrelevant; the definition is based on legal formation.

This question aligns with the Prometric content outline under “State Insurance Statutes, Rules, and Regulations,” which covers insurer classifications.

In Oklahoma, asmall group health insurance planis defined under Title 36 O.S. § 6512 as coverage for employers with2 to 50 employees, aligning with federal standards under the Affordable Care Act (ACA). Companies with more than 50 employees are considered large groups and subject to different regulations.

Option A: Incorrect. 2 employees is the minimum for a small group plan, not the maximum.

Option B: Incorrect. 10 employees is below the maximum limit.

Option C: Incorrect. 40 employees is within the small group range.

Option D: Correct. A company with more than 50 employees is not eligible for a small group plan.

Afixed annuityprovides guaranteed, stable payments to the annuitant, but a key disadvantage is that the fixed payments may losepurchasing powerover time due to inflation, reducing their real value. This is a concern for long-term annuitants, as noted in Oklahoma’s annuity regulations (Title 36 O.S. § 4002).

Option A: Incorrect. Variable securities apply to variable annuities, not fixed annuities.

Option B: Incorrect. Fixed annuities guarantee a specific benefit amount.

Option C: Correct. Inflation can decrease the purchasing power of fixed payments.

Option D: Incorrect. Payment duration depends on the annuity type (e.g., life annuity), not a 2-year limit.

Settlement options for life insurance or annuity policies determine how proceeds are paid to beneficiaries or annuitants. Common options includefixed period(payments over a set time),pure life income(payments for the annuitant’s lifetime), andlife income with period certain(payments for life with a guaranteed minimum period), as outlined in Oklahoma’s regulations (Title 36 O.S. § 4001 et seq.).Asset withdrawalis not a standard settlement option; it may refer to accessing funds but not a formal payout method.

Option A: Incorrect. Fixed period is a standard settlement option.

Option B: Incorrect. Pure life income is a standard settlement option.

Option C: Correct. Asset withdrawal is not a recognized settlement option.

Option D: Incorrect. Life income with period certain is a standard settlement option.

Anaccelerated death benefit (ADB)provision allows an insured to receive a portion of the life insurance death benefit before death under specific conditions, such as aterminal illness. Theterminal illness settlement benefitis a form of ADB, providing funds for medical or personal needs, as regulated in Oklahoma (Title 36 O.S. § 4051).

Option A: Incorrect. A home care benefit relates to long-term care, not ADB.

Option B: Incorrect. A nonforfeiture extended term benefit is a policy lapse option, not an ADB.

Option C: Correct. A terminal illness settlement benefit is a type of accelerated death benefit.

Option D: Incorrect. A cost of living benefit adjusts benefits for inflation, not an ADB.

Long-Term Care (LTC) policies cover services for individuals with chronic conditions or disabilities, such as assistance with activities of daily living. Oklahoma regulations (Title 36 O.S. § 4426.1) allow LTC policies to exclude coverage for conditions like alcoholism or drug addiction, acts of war (especially military service), and self-inflicted injuries, as these are considered high-risk or intentional. However,Alzheimer’s diseaseis a core condition typically covered by LTC policies, as it is a common cause of long-term care needs.

Option A: Incorrect (excluded). Alcoholism or drug addiction is often excluded unless treatment is completed.

Option B: Incorrect (excluded). Acts of war, especially in military service, are standard exclusions.

Option C: Incorrect (excluded). Self-inflicted injuries are excluded as intentional acts.

Option D: Correct (not excluded). Alzheimer’s disease is typically covered by LTC policies.

Under Oklahoma insurance regulations (Title 36 O.S. § 1204 and O.A.C. 365:10-3-10), insurers are responsible for ensuring that all advertising materials comply with state laws, including maintaining control over thecontent and formto prevent misleading or deceptive practices. This includes ensuring advertisements are truthful, not disparaging, and compliant with regulatory standards.

Option A: Correct. Insurers must control the content and form of advertising to ensure compliance.

Option B: Incorrect. The cost of delivery is not a regulatory responsibility of insurers.

Option C: Incorrect. The cost of production is an internal business matter, not a regulatory requirement.

Option D: Incorrect. Communications between agents are not directly related to advertising content control.

This question is part of the Prometric content outline under “State Insurance Statutes, Rules, and Regulations,” which covers advertising regulations.

Major medical insuranceis designed to cover significant healthcare expenses, particularly those related to hospitalization, surgeries, and other high-cost medical services. It focuses on providing comprehensive coverage for catastrophic or major medical events, as opposed to routine or preventive care, which may be covered to a lesser extent or through separate plans.

Option A: Incorrect. Preventive care is often included but is not the primary focus of major medical insurance.

Option B: Incorrect. Using in-network facilities reduces costs but is a feature of managed care plans, not the core focus of major medical insurance.

Option C: Correct. The focus of major medical insurance is covering hospitalization and other major expenses.

Option D: Incorrect. Providing care to the needy is associated with programs like Medicaid, not private major medical insurance.

This question falls under the Prometric content outline section on “Health Providers and Products,” which covers the characteristics of major medical insurance.

Arideris an endorsement or amendment to an insurance policy that modifies its clauses, provisions, or coverage. Riders can add, remove, or alter benefits, such as adding coverage for a specific condition or family members in life or health insurance policies. The term is standard in Oklahoma insurance law and practice.

Option A: Incorrect. An attachment is not a specific insurance term for policy modifications.

Option B: Incorrect. A supplement may refer to additional coverage but is not the standard term for policy endorsements.

Option C: Correct. A rider is an endorsement that modifies policy provisions.

Option D: Incorrect. “Add-on” is not a formal insurance term for policy modifications.

This question aligns with the Prometric content outline under “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers policy endorsements.

Oklahoma requires insurance producers and adjusters to complete24 hours of continuing education (CE)every 2 years for license renewal, including 3 hours of ethics and 2 hours of legislative updates, as specified in Title 36 O.S. § 1435.29 and O.A.C. 365:25-3-1.

Option A: Incorrect. 12 hours annually is not the requirement.

Option B: Incorrect. 18 hours every 2 years is insufficient.

Option C: Correct. 24 hours every 2 years is the CE requirement.

Option D: Incorrect. 26 hours every 3 years is not the standard.

Anextension of benefitsprovision in health insurance allows a policyholder to continue receiving benefits for a covered condition (e.g., disability or hospitalization) after the policy terminates, typically if the condition began while the policy was in force. This is a standard provision in group and individual health insurance policies in Oklahoma, ensuring continuity of care for specific circumstances.

Option A: Incorrect. A qualifying event relates to COBRA or other continuation coverage triggers, not post-termination benefits.

Option B: Incorrect. Duration of coverage refers to the policy term, not benefits after termination.

Option C: Correct. Extension of benefits allows benefits to continue after policy termination.

Option D: Incorrect. A notification statement is unrelated to benefit continuation.

This question aligns with the Prometric content outline under “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers health insurance benefit provisions.

Under Oklahoma’s Insurance Code (Title 36 O.S. § 1435.2),transacting insuranceincludes activities such as soliciting or selling insurance, engaging in preliminary negotiations for insurance contracts, and delivering insurance contracts or collecting premiums.Gathering prospective buyer information(e.g., lead generation) is not considered transacting insurance unless it involves direct solicitation or negotiation.

Option A: Incorrect (is transacting). Selling insurance is a core part of transacting insurance.

Option B: Incorrect (is transacting). Preliminary negotiations are included in transacting insurance.

Option C: Incorrect (is transacting). Delivering insurance contracts is part of transacting insurance.

Option D: Correct (is not transacting). Gathering prospective buyer information alone does not constitute transacting insurance.

This question falls under the Prometric content outline section on “State Insurance Statutes, Rules, and Regulations,” which covers the definition of transacting insurance.

In Oklahoma, aninsurance produceris the term defined by law for an individual or entity licensed to sell, solicit, or negotiate insurance contracts. This is outlined in the Oklahoma Insurance Code, which requires producers to obtain a license to engage in these activities for life, accident, and health or sickness insurance.

Option A: Incorrect. An insurance adjuster investigates and settles claims, not negotiates the sale of insurance.

Option B: Correct. An insurance producer is the licensed individual who negotiates the sale of insurance, as defined by Oklahoma law.

Option C: Incorrect. An insurance appraiser evaluates property damage for claims, not related to selling insurance.

Option D: Incorrect. An insurance underwriter assesses risk and determines policy issuance, not sells insurance.

This question falls under the Prometric content outline section on “Licensing,” which includes knowledge of licensing requirements and definitions.

Acancelablehealth insurance policy allows the insurer to cancel the policy at any time during the term with proper notice, typically for reasons like non-payment or fraud, as permitted under Oklahoma’s regulations (Title 36 O.S. § 4405). Other policy types, like optionally renewable (insurer can refuse renewal at term end), conditionally renewable (renewal subject to conditions), or term (fixed duration), do not typically allow mid-term cancellation.

Option A: Incorrect. Optionally renewable policies can be non-renewed at term end, not cancelled mid-term.

Option B: Incorrect. Term policies (life or health) run for a fixed period and are not typically cancelled mid-term.

Option C: Incorrect. Conditionally renewable policies restrict renewal, not mid-term cancellation.

Option D: Correct. A cancelable policy allows mid-term cancellation by the insurer.

Thecoordination of benefits (COB)provision, regulated in Oklahoma (O.A.C. 365:10-5-4), prevents overinsurance by establishing which group health plan isprimary(pays first) and which issecondary(pays remaining covered expenses) when an insured is covered by multiple plans. This ensures claims are paid efficiently without exceeding the total expense. While COB includes rules for dependent children (e.g., the “birthday rule”), its primary purpose is broader, covering all dual-coverage scenarios.

Option A: Incorrect. COB focuses on payment allocation, not ensuring treatment.

Option B: Correct. COB determines payment responsibilities between primary and secondary insurers.

Option C: Incorrect. Determining dependent coverage is a subset of COB, not its primary purpose.

Option D: Incorrect. COB does not protect secondary insurers from paying; it defines their payment role.

In insurance underwriting, individuals are classified based on their risk profile. Asubstandard riskis an applicant who, due to health issues, hazardous habits (e.g., smoking), or high-risk occupations (e.g., stunt performer), cannot be insured at standard rates. These individuals may be offered coverage at higher premiums or with exclusions, as outlined in standard underwriting practices and Oklahoma’s regulations (Title 36 O.S. § 1204).

Option A: Incorrect. “Rating risk” is not a standard underwriting term.

Option B: Incorrect. A standard risk qualifies for standard rates with average risk.

Option C: Incorrect. A preferred risk qualifies for lower-than-standard rates due to low risk.

Option D: Correct. A substandard risk is not acceptable at standard rates due to higher risk factors.

This question aligns with the Prometric content outline under “Underwriting,” which covers risk classification.

To become a resident insurance producer or adjuster in Oklahoma, as outlined in Title 36 O.S. § 1435.7 and § 1435.8, an applicant must: be at least 18 years old, be of good personal and business reputation (demonstrating trustworthiness and competency), successfully pass the required licensing examination, and be a resident of Oklahoma or intend to become one. However, there is no specific requirement to have lived in Oklahoma for 6 months or more prior to applying; residency is established by maintaining a principal place of residence or business in the state at the time of application.

Option A: Correct (not a requirement). Living in Oklahoma for 6 months or more is not explicitly required; residency status is sufficient.

Option B: Incorrect (is a requirement). Passing the licensing exam is mandatory.

Option C: Incorrect (is a requirement). Applicants must be at least 18 years old.

Option D: Incorrect (is a requirement). Good personal and business reputation is required.

Underwriters use various sources to assess an applicant’s risk, including the application, Medical Information Bureau (MIB) reports, consumer reports, medical questionnaires, attending physician statements (APS), and physical examinations, as permitted under Oklahoma’s underwriting practices (Title 36 O.S. § 1204). However,genetic testingis generally restricted or prohibited for life and health insurance underwriting due to federal and state laws, such as the Genetic Information Nondiscrimination Act (GINA) of 2008, which limits the use of genetic information in health insurance decisions.

Option A: Incorrect. Medical questionnaires are a standard underwriting tool.

Option B: Incorrect. Attending physician statements provide medical history and are commonly used.

Option C: Incorrect. Physical examinations are often required for underwriting.

Option D: Correct. Genetic testing is typically not allowed for underwriting due to legal restrictions.

Analien insurer, as defined in Oklahoma’s Insurance Code (Title 36 O.S. § 105), is an insurance company formed under the laws of a country other than the United States. This distinguishes it from domestic insurers (formed in Oklahoma) and foreign insurers (formed in another U.S. state).

Option A: Incorrect. An insurer formed in Oklahoma is a domestic insurer.

Option B: Incorrect. An insurer formed in another U.S. state is a foreign insurer.

Option C: Correct. An alien insurer is formed under the laws of a foreign country.

Option D: Incorrect. Geographic proximity is irrelevant; the distinction is based on legal formation.

This question is part of the Prometric content outline under “State Insurance Statutes, Rules, and Regulations,” which covers insurer classifications.

Permanent life insurance policies with a cash value (e.g., whole life, universal life) allow policyholders to take loans against the cash value. According to IRS guidelines and standard insurance principles, policy loans are not considered taxable income because they are treated as a debt against the policy’s cash value, not as income. However, if the policy lapses or is surrendered with an outstanding loan, the loan amount exceeding the policy’s basis may become taxable.

Option A: Incorrect. Policy loans do not accelerate benefits (e.g., death benefits or living benefits); they reduce the cash value and death benefit until repaid.

Option B: Correct. Policy loan proceeds are not treated as taxable income, as they are a loan against the policy’s cash value.

Option C: Incorrect. Policy loans are not subject to Federal estate tax unless the policy’s death benefit is included in the estate, which is unrelated to the loan itself.

Option D: Incorrect. Interest on policy loans is not nontaxable; it is charged by the insurer and does not generate income for the policyholder.

This question falls under the Prometric content outline section on “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which includes knowledge of policy loans and their tax implications.

Disability income insurance policies are designed to replace a portion of the insured’s income if they become disabled and unable to work. These policiesmost often pay benefits in the form of periodic income, typically monthly, to provide ongoing financial support during the disability period, as outlined in Oklahoma’s health insurance regulations (Title 36 O.S. § 4405). Lump sum payments or annuities are less common and usually associated with other types of coverage.

Option A: Incorrect. Annuities provide retirement income, not disability benefits.

Option B: Correct. Disability policies typically pay periodic (e.g., monthly) income.

Option C: Incorrect. Lump sum reimbursements are rare in disability policies; periodic payments are standard.

Option D: Incorrect. Lump sum payments based on projected income are not typical for disability insurance.

Suitabilityin long-term care (LTC) insurance involves assessing an individual’s financial situation, health needs, and goals to determine the appropriate coverage, ensuring the policy meets their needs without being unaffordable or excessive. Oklahoma regulations (O.A.C. 365:10-5-40) emphasize suitability to protect consumers from inappropriate LTC products.

Option A: Incorrect. Coinsurance is a cost-sharing mechanism, not about determining coverage.

Option B: Correct. Suitability ensures the LTC policy is appropriate for the individual’s needs.

Option C: Incorrect. Contestability relates to the insurer’s ability to contest claims, not coverage selection.

Option D: Incorrect. Accountability is not a term for determining coverage appropriateness.

Theguaranteed insurability riderallows the insured to purchase additional life insurance at specified dates or life events (e.g., marriage, childbirth) without proving insurability, ensuring coverage despite health changes. This is a standard rider in Oklahoma (Title 36 O.S. § 4001 et seq.).

Option A: Incorrect. Guaranteed renewability applies to policy renewals, not additional coverage.

Option B: Correct. The guaranteed insurability rider allows additional insurance without underwriting.

Option C: Incorrect. A cost of living rider adjusts benefits for inflation, not additional coverage.

Option D: Incorrect. A disability income rider provides income replacement, not additional insurance.

Twistingis the unethical practice of using misrepresentation or incomplete information to persuade an insured to replace an existing policy with a new one, often to their detriment. It is prohibited under Oklahoma’s Unfair Trade Practices Act (Title 36 O.S. § 1204) to protect consumers from deceptive sales practices.

Option A: Incorrect. Rebating involves offering a portion of the premium or other inducements to purchase insurance.

Option B: Correct. Twisting involves misrepresenting benefits to induce policy replacement.

Option C: Incorrect. Defamation is making false statements harming someone’s reputation, not policy replacement.

Option D: Incorrect. Forfeiting is not a term related to policy replacement practices.

This question aligns with the Prometric content outline under “State Insurance Statutes, Rules, and Regulations,” which covers unfair trade practices.

Alevel term-to-age-65 life insurance policyprovides a fixed death benefit until the insured reaches age 65, as long as premiums are paid. Since Jim purchased a $200,000 policy at age 35 and dies at age 50 (before age 65), the full death benefit of $200,000 is payable, assuming the policy is in force.

Option A: Incorrect. $50,000 is not the policy’s face amount.

Option B: Incorrect. $100,000 is not the policy’s face amount.

Option C: Incorrect. $150,000 is not the policy’s face amount.

Option D: Correct. The $200,000 death benefit is paid, as it is a level term policy.

This question falls under the Prometric content outline section on “Life Products,” which covers term life insurance benefits.

In life and health insurance policies with family or dependent coverage riders, Oklahoma insurance regulations typically allow a 31-day period for the insured to notify the insurer of a newly-born child to add them to the policy for continued coverage. This aligns with standard provisions for automatic coverage of newborns, which often provide temporary coverage from birth (e.g., for 31 days) before requiring formal notification and premium adjustment to maintain coverage.

Option A: Correct. The insured has 31 days to notify the insurer to add a newly-born child, consistent with standard policy provisions and Oklahoma regulations.

Option B: Incorrect. 30 days is not the standard timeframe in Oklahoma for this purpose.

Option C: Incorrect. 21 days is too short and not aligned with typical insurance provisions.

Option D: Incorrect. 14 days is insufficient for the notification period in most policies.

This question is part of the Prometric content outline under “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers dependent coverage and policy provisions.

Whole life insurance policies accumulate cash value over time, which policyowners can borrow against. Typically, cash value begins to accrue immediately, but sufficient value for a loan is often available after1 year, depending on the policy’s terms and premium payments. Oklahoma law (Title 36 O.S. § 4029) requires nonforfeiture benefits, including access to cash value, but does not specify a minimum time; insurer practices generally allow loans after 1 year when cash value is meaningful.

Option A: Incorrect. Policyowners can borrow against cash value once it accumulates.

Option B: Correct. Loans are typically available after 1 year, as cash value is sufficient.

Option C: Incorrect. 2 years is not a standard requirement; loans are often available sooner.

Option D: Incorrect. 3 years is excessive; most policies allow loans earlier.

This question falls under the Prometric content outline section on “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers cash value loans.

The elimination period in an individual disability insurance policy is the waiting period between the onset of a disability and the time when benefit payments begin. It is essentially a deductible in time, during which the insured must be disabled before receiving benefits. This period can range from 30 days to several months, depending on the policy, and is designed to reduce premiums by excluding short-term disabilities.

Option A: Incorrect. The length of time benefits are paid is determined by the benefit period, not the elimination period.

Option B: Correct. The elimination period is the amount of time the insured must wait after becoming disabled before benefits are paid.

Option C: Incorrect. The point when benefits are exhausted is related to the benefit period or policy limits, not the elimination period.

Option D: Incorrect. The elimination period does not apply after the policy is discontinued; it applies at the start of a disability claim.

This question aligns with the Prometric content outline under “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which includes knowledge of disability insurance provisions.

Aparticipating whole life insurance policyissued by a mutual insurer allows policyholders to receive areturn of divisible surplusin the form of dividends, which reflect the insurer’s excess profits. This is a feature of mutual insurers, as defined in Oklahoma’s regulations (Title 36 O.S. § 4002). Limited pay, continuous premium, and straight whole life policies do not inherently include dividends.

Option A: Incorrect. Limited pay whole life has a shorter premium payment period, not necessarily dividends.

Option B: Correct. A participating whole life policy provides dividends from surplus.

Option C: Incorrect. Continuous premium whole life refers to lifelong premium payments, not dividends.

Option D: Incorrect. Straight whole life is a general term, not specific to dividends.

Anaccelerated death benefit (ADB)provision, regulated in Oklahoma (Title 36 O.S. § 4051), allows an insured with aterminal illness(typically with a life expectancy of 12–24 months) to receive a portion of the life insurance death benefit before death. This provides funds for medical or personal expenses during the insured’s lifetime.

Option A: Incorrect. Disability may trigger other riders (e.g., waiver of premium), not ADB.

Option B: Correct. A terminal illness qualifies for accelerated death benefits.

Option C: Incorrect. Reaching retirement age does not trigger ADB.

Option D: Incorrect. A dependent’s illness is not a qualifying condition for ADB.

This question falls under the Prometric content outline section on “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers accelerated death benefits.

Theentire contract provision, as required by Oklahoma law (Title 36 O.S. § 4001 for life insurance, § 4405 for health), states that the insurance policy, along with any attached applications and endorsements, constitutes the entire contract between the insurer and policyowner. This ensures that no external documents can alter the agreement unless attached at issuance.

Option A: Incorrect. A certificate is issued to individuals under a group policy, not the entire contract.

Option B: Incorrect. A policy summary is a disclosure document, not part of the contract itself.

Option C: Correct. The entire contract provision includes the policy and attached application.

Option D: Incorrect. The application is part of the contract but not the provision itself.

This question aligns with the Prometric content outline under “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers mandatory policy provisions.

Theincontestable clause, mandated in Oklahoma (Title 36 O.S. § 4004), states that a life insurance policy cannot be contested by the insurer after it has been in force for2 yearsduring the insured’s lifetime, except for non-payment of premiums. This limits the insurer’s ability to deny claims based on application misstatements after this period.

Option A: Correct. The contestable period is 2 years.

Option B: Incorrect. 3 years exceeds the standard period.

Option C: Incorrect. 4 years is not the required timeframe.

Option D: Incorrect. 5 years is too long for the contestable period.

To calculate the insured’s payment:

Deductible: The insured pays the first $1,000 of the $5,000 procedure cost.

Remaining cost: $5,000 - $1,000 = $4,000.

Coinsurance: The policy has 80/20 coinsurance, so the insurer pays 80% ($3,200) and the insured pays 20% ($800) of the $4,000.

Total paid by insured: $1,000 (deductible) + $800 (coinsurance) = $1,800.

Out-of-pocket maximum: The policy’s $3,000 out-of-pocket maximum caps the insured’s total payments. Since $1,800 is less than $3,000, the insured pays $1,800. However, the question asks for the total paid “towards the $5,000,” and the out-of-pocket maximum of $3,000 suggests a cap on total liability for covered expenses. In this context, the correct interpretation is that the insured’s payment is capped at the out-of-pocket maximum if applicable, but standard calculation yields $1,800, and the answer options suggest a possible intent for the maximum.

Upon review, the correct calculation yields $1,800 (Option C), but the out-of-pocket maximum of $3,000 (Option B) may be the intended answer if the question implies the maximum liability. Given the standard insurance calculation,Option C ($1,800)is mathematically correct, butOption B ($3,000)aligns with the out-of-pocket maximum as a potential cap. Since the calculation is clear, we selectC.

Corrected Answer: C

Explanation of Calculation:

Deductible: $1,000.

Coinsurance: 20% of $4,000 = $800.

Total: $1,000 + $800 = $1,800.

The out-of-pocket maximum ($3,000) is not reached, so the insured pays $1,800.

Option A: Incorrect. The insured does not pay the full $5,000 due to insurer contributions.

Option B: Incorrect. The $3,000 out-of-pocket maximum is not reached; the calculated payment is $1,800.

Option C: Correct. The insured pays $1,800 based on the deductible and coinsurance.

Option D: Incorrect. The $1,000 deductible alone does not account for coinsurance.

This question aligns with the Prometric content outline under “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers health insurance cost-sharing provisions.

Per IRS Publication 502,Long-Term Care (LTC) insurance premiumsare considered qualified medical expenses and may be tax deductible if the taxpayer’s total medical expenses exceed 10% of their adjusted gross income (AGI), subject to age-based limits on the deductible amount. Premiums for disability income insurance (group or personal) and accidental death and dismemberment (AD&D) insurance are not deductible as medical expenses, as they do not directly relate to medical care.

Option A: Correct. LTC insurance premiums are deductible as medical expenses, subject to limits.

Option B: Incorrect. Group disability insurance premiums are not deductible as medical expenses.

Option C: Incorrect. Personal disability income insurance premiums are not deductible.

Option D: Incorrect. AD&D insurance premiums are not deductible as medical expenses.

In group health insurance, the employer or group sponsor receives themaster policy, while employees covered under the plan are issued acertificate of insurance, which summarizes their coverage but is not the policy itself, as per Oklahoma’s regulations (Title 36 O.S. § 6060.3).

Option A: Incorrect. Employees do not receive individual policies; the employer holds the master policy.

Option B: Incorrect. The contract is the master policy, not issued to employees.

Option C: Incorrect. “Covenant” is not an insurance term.

Option D: Correct. Employees receive a certificate of insurance.

Oklahoma law (Title 36 O.S. § 6060.9), aligned with the federal Newborns’ and Mothers’ Health Protection Act (NMHPA), requires health benefit plans providing maternity coverage to offer postpartum home care for mothers and newborns if childbirth occurs at home and the mother is discharged within48 hoursfor a vaginal delivery (or 96 hours for a cesarean section).

Option A: Incorrect. 24 hours is too short for required postpartum home care.

Option B: Correct. Postpartum home care is required if discharged within 48 hours for vaginal delivery.

Option C: Incorrect. 72 hours is not the standard timeframe.

Option D: Incorrect. 96 hours applies to cesarean deliveries, not vaginal.

Under Oklahoma’s Insurance Code (Title 36 O.S. § 1435.13), a producer who knowingly and willfully makes a fraudulent statement on an insurance application faces disciplinary actions, includingsuspension,revocation, orcensureof their license, as well as potential fines or criminal penalties.Discriminationis not a disciplinary action; it refers to unfair treatment and is unrelated to fraud penalties.

Option A: Incorrect (is a penalty). Suspension of the license is a possible consequence.

Option B: Incorrect (is a penalty). Revocation of the license is a possible consequence.

Option C: Correct (is not a penalty). Discrimination is not a disciplinary action for fraud.

Option D: Incorrect (is a penalty). Censure is a formal reprimand and a possible consequence.

Aviatical settlementallows a terminally ill insured to sell their life insurance policy to a third party for a lump sum, typically less than the death benefit, to access funds during their lifetime. The primary and most attractive feature for the insured is receiving areduced prepayment of the death benefit, providing immediate cash for medical or personal needs, as regulated in Oklahoma (Title 36 O.S. § 4055.1 et seq.).

Option A: Incorrect. Viatical settlements do not involve discounted premiums; the policy is sold.

Option B: Correct. The reduced prepayment of the death benefit is the main benefit for the insured.

Option C: Incorrect. Policy assignment is a mechanism, not the primary feature.

Option D: Incorrect. Guaranteed renewability is unrelated to viatical settlements.

This question falls under the Prometric content outline section on “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers viatical settlements.

In Oklahoma, an insurance producer license is required for activities defined astransacting insurance, which includes selling, soliciting, or negotiating insurance contracts (Title 36 O.S. § 1435.2).Providing referrals(e.g., passing along contact information without discussing insurance products) does not constitute transacting insurance and does not require a license, provided no compensation is tied to the sale.

Option A: Correct. Providing referrals does not require a license if it avoids solicitation or negotiation.

Option B: Incorrect. Selling insurance requires a producer license.

Option C: Incorrect. Negotiating insurance requires a producer license.

Option D: Incorrect. Soliciting insurance requires a producer license.

Apreexisting conditionis defined in health insurance as a medical condition for which advice, diagnosis, care, or treatment was recommended or received within a specified period (commonly 6 months) before the effective date of coverage. In Oklahoma, group health insurance policies often include provisions limiting or excluding coverage for preexisting conditions for a certain period, as regulated by federal and state laws, including the Health Insurance Portability and Accountability Act (HIPAA).

Option A: Incorrect. An elimination period is the waiting period before benefits begin, typically in disability or long-term care policies, not related to preexisting conditions.

Option B: Incorrect. An affiliation period is a waiting period for late enrollees in HMOs under HIPAA, not tied to medical conditions.

Option C: Incorrect. A diagnosed condition is not a standard insurance term; it does not specifically denote the timeframe of prior treatment like a preexisting condition.

Option D: Correct. A preexisting condition matches the definition provided, as per Oklahoma and federal regulations.

This question aligns with the Prometric content outline under “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers health insurance exclusions and limitations.

Medicare Part A covers skilled nursing facility (SNF) care for up to100 daysper benefit period, provided the patient meets eligibility criteria (e.g., a prior 3-day hospital stay and need for skilled care). Beyond 100 days, no benefits are provided, as outlined in CMS guidelines and Oklahoma’s Medicare supplement regulations (Title 36 O.S. § 6217).

Option A: Incorrect. 30 days is too short; coverage extends to 100 days.

Option B: Incorrect. 60 days is within the coverage period but not the limit.

Option C: Correct. No benefits are provided beyond 100 days in an SNF.

Option D: Incorrect. 180 days exceeds Medicare’s SNF coverage limit.