Ohio Life & Health Insurance License, Practice Exams

A collateral assignment of a life insurance policy transfers:

1. The right to change the insured named in the contract
2. Some rights temporarily to a lender as security for a loan ✓
3. The death benefit to the state's insurance guaranty fund
4. Complete and permanent ownership of the policy to another person

Why: A collateral assignment is a partial, temporary transfer; the lender is entitled only to the amount of the debt, with the balance going to the named beneficiary.

Credit life insurance is typically written as:

1. A variable policy whose benefit rises and falls with interest rates
2. Whole life insurance with a growing cash value that the borrower may freely access at any time
3. Decreasing term equal to the outstanding loan balance, payable to the creditor ✓
4. Level term naming the borrower's family as the primary beneficiary

Why: Credit life is decreasing term tied to the loan balance; if the borrower dies, it pays the remaining debt to the creditor.

If an Ohio long-term care policy conditions eligibility for noninstitutional benefits on prior receipt of institutional care, the policy may not require a prior institutional stay of more than:

1. Three days
2. Ten days
3. Thirty days ✓
4. Sixty days

Why: Section 3923.44(E)(2)(a) provides such a policy shall not require a prior institutional stay of more than thirty days.

A 60-year-old annuity owner withdraws $5,000 of gain. Because the owner is past 59½, the withdrawal is:

1. Ordinary income, with no 10% penalty ✓
2. Tax-free as a return of premium
3. Subject to the 10% penalty anyway
4. Taxed at capital-gains rates

Why: After 59½ the 10% premature-distribution penalty no longer applies; the gain is still ordinary income.

Under federal COBRA, continuation coverage after termination of employment or a reduction in hours is generally available for up to:

1. 6 months
2. 12 months
3. 18 months ✓
4. 36 months

Why: COBRA provides up to 18 months following termination or reduced hours (36 months for certain other qualifying events).

Under Ohio's prohibited-provisions statute, a life policy may NOT limit the time within which an action may be commenced after the cause of action accrues to less than:

1. Three years
2. One year
3. Five years ✓
4. Two years

Why: Section 3915.09(B) prohibits a provision limiting to less than five years the time to commence an action after the cause accrues.

In a variable annuity, accumulation units measure the contract's value:

1. During the pay-in phase before income payments begin ✓
2. Only after the contract has been fully annuitized into a stream of income
3. While the annuitant is receiving level, guaranteed monthly income payments
4. According to a fixed interest rate the insurer declares anew each year

Why: Accumulation units track value during the accumulation phase; annuity units are used during the payout phase.

In which annuity does the owner bear the investment risk, with values held in separate accounts?

1. Single-premium deferred fixed annuity
2. Fixed annuity
3. Immediate fixed annuity
4. Variable annuity ✓

Why: A variable annuity's value depends on separate-account performance; the owner bears investment risk, and a securities license is required to sell it.

A critical illness (specified disease) policy pays:

1. A monthly income for life once the insured turns sixty-five
2. Only the funeral and burial costs after the insured's death
3. Reimbursement for every routine medical expense the insured incurs
4. A lump-sum benefit upon diagnosis of a covered condition such as cancer ✓

Why: Critical illness coverage pays a lump sum when the insured is diagnosed with a covered condition (heart attack, stroke, cancer, etc.).

Under section 1753.14, once an HIC makes a determination in favor of a standing referral to a specialist, how soon must the referral itself be made?

1. Within one business day after the determination
2. Within thirty days after the determination
3. Within ten business days after the determination
4. Within four business days after the determination ✓

Why: Section 1753.14(D) requires that, once a favorable determination is made, the referral be made within four business days, except for rare or unusual conditions for which appropriate specialists are limited.

A producer offers a prospect free airline tickets, not part of the policy, to induce the purchase. This is:

1. A permissible marketing gift
2. Rebating ✓
3. Defamation
4. Twisting

Why: Offering an inducement not specified in the policy to persuade a purchase is rebating, prohibited in most states.

Under § 3901.99(B), a person who violates an insurance law for which no penalty is otherwise provided in the Revised Code is subject to what maximum penalty?

1. A fine of not more than one hundred thousand dollars, imprisonment of not more than one full year, or both
2. A fine of not more than twenty-five thousand dollars, imprisonment of not more than six months, or both ✓
3. A felony of the fifth degree, with no fine authorized
4. A fine of not more than five hundred dollars for each day the violation continues

Why: Section 3901.99(B) provides that a person who violates an insurance law for which no penalty is otherwise provided shall be fined not more than twenty-five thousand dollars, imprisoned not more than six months, or both.

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.

The period during which an annuity owner pays premiums and the contract grows is the:

1. Elimination period
2. Accumulation period ✓
3. Probationary period
4. Annuitization period

Why: During the accumulation period money is paid in and grows tax-deferred; the annuitization (payout) period is when income payments are made.

'Churning' as an unfair practice refers to:

1. Mixing a client's premium funds with the producer's own money
2. Replacing a policy within the same insurer through misrepresentation ✓
3. Refusing to renew a policy after the insured files a large claim
4. Charging higher premiums to applicants with poor health histories

Why: Churning is using misrepresentation to replace a policy with another from the same insurer to generate new commissions; twisting involves different insurers.

A Medicare Special Enrollment Period (SEP) without penalty is available to a person who:

1. Simply forgot to sign up during their initial enrollment window
2. Has decided to drop Medicare entirely and rely on Medicaid
3. Delayed Part B because of active employer group coverage past age 65 ✓
4. Wishes to switch from one Medigap letter plan to a different one

Why: Those who kept employer group coverage (their own or a spouse's) past 65 may enroll later during a SEP without a late penalty.

A person whose Ohio license was revoked wishes to be licensed again. How must the person proceed under § 3905.16?

1. Wait for the superintendent to reissue the license after five years
2. File a reinstatement form and pay the renewal fee; no examination or records check is required again
3. Apply as a new agent and satisfy all requirements, including a criminal records check if applicable ✓
4. Pay a reinstatement penalty and resume selling immediately

Why: § 3905.16(B)(2) requires the person to apply as a new agent and satisfy all requirements, including a criminal records check if applicable.

Under Ohio's immunity statute, what defines a 'fraudulent insurance act'?

1. An insurer's good-faith denial of a disputed claim after investigation
2. A policyholder's failure to pay a renewal premium before the grace period ends
3. Knowingly and with intent to defraud presenting a written statement, in support of an application or claim, that the person knows contains materially false information ✓
4. Any clerical or transcription error that appears on an insurance application, whether or not the person signing it knew of the mistake, because the statute places an accuracy duty on the signer

Why: Section 3999.31(A)(1) defines a 'fraudulent insurance act' as an act by a person who, knowingly and with intent to defraud, presents a written statement supporting an application or claim that the person knows contains materially false information material thereto.

As defined in § 3905.01, which best describes 'home state' for an insurance agent?

1. The state or territory where the agent maintains the principal place of residence or business and is licensed to act as an agent ✓
2. The state in which the agent was born and first obtained a license, which remains the home state for the life of that license regardless of any later move
3. The state in which the insurer that appoints the agent for the largest share of the agent's business is domiciled, determined each year from commission records
4. Whichever state charges the lowest nonresident licensing fee, as elected by the agent at each renewal

Why: § 3905.01(C) defines 'home state' as the state or territory where the agent maintains principal residence or business and is licensed as an agent.

Before a resident individual may take the written license examination, how many hours of approved insurance education must be completed for each line of authority (absent a qualifying degree or designation)?

1. Ten hours
2. Forty hours
3. Twenty-four hours
4. Twenty hours ✓

Why: § 3905.04(C)(1)(c) requires twenty hours of approved insurance education study for each line, unless the applicant has a qualifying degree or professional designation.

A bank conditions a borrower's loan approval on the borrower buying the required property insurance from the bank's own affiliated insurer. Under § 3901.211(A)(1), this is:

1. Permitted, because a lender that holds a security interest in the property may name the insurer that must issue the coverage protecting that collateral until the loan is repaid
2. Permitted for flood and hazard coverage, for which division (A)(1) lets the lender name the carrier that must issue the required policy on the mortgaged premises
3. Prohibited — a person may not require, as a condition precedent to lending, that the borrower negotiate a policy through a particular insurer or agent ✓
4. Permitted so long as the affiliated insurer's rates are no higher than the quotes the borrower can obtain from unaffiliated carriers for the same coverage

Why: Section 3901.211(A)(1) prohibits requiring, as a condition precedent to lending money or extending credit, that the borrower negotiate any policy through a particular insurer, group, or agent.

Distributions from a qualified annuity (funded with pre-tax dollars) are:

1. Entirely income-tax-free in all circumstances
2. Taxed only on the portion above the cost basis
3. Fully taxable as ordinary income when received ✓
4. Subject to capital-gains rates on the whole amount

Why: Because a qualified annuity has no after-tax cost basis, the entire distribution is taxable as ordinary income; required minimum distributions also apply.

A probationary period in a disability or health policy is a span after issue during which:

1. No premium is due from the newly insured policyowner
2. Losses from sickness are not yet covered ✓
3. Benefits are automatically paid without any proof of loss
4. The insurer may cancel the policy for any reason at all

Why: The probationary period is an initial waiting span (often for sickness, not accidents) before certain new claims become payable.

A resident-license applicant seeking the variable life-variable annuity line of authority must include which item in the application?

1. A surety bond in the amount of ten thousand dollars
2. Proof of three years of prior life insurance sales
3. A copy of the prospectus for each variable product the applicant intends to sell
4. The applicant's individual central registration depository number ✓

Why: § 3905.05(A) requires a variable life-variable annuity applicant to include the individual central registration depository number.

How often must the superintendent examine each domestic insurer's condition and compliance under Ohio law?

1. At least once each calendar quarter
2. At least once every three years, with deferral possible up to five years ✓
3. Only when a consumer complaint is filed, or when the annual statement shows a drop in surplus
4. Once at the time of licensing, with no later examination

Why: Section 3901.07(B)(3) requires the superintendent to examine each domestic insurer at least once every three years, though the examination may be deferred for a longer period not to exceed five years.

Under Ohio law, using a policy name or title that misrepresents the true nature of the policy is:

1. Allowed for nonparticipating policies
2. Allowed if the name is trademarked
3. Prohibited as a form of misrepresentation ✓
4. Required to be filed but otherwise permitted

Why: Section 3911.23 prohibits using any name or title of a policy or class of policies which misrepresents the true nature thereof.

Modified whole life insurance is characterized by:

1. A lower premium for an initial period, then a higher level premium for life ✓
2. A premium that is higher in the first years and then drops sharply
3. Premiums that fluctuate yearly based on the insurer's investment returns
4. Coverage that decreases steadily until it reaches zero at age 65

Why: Modified whole life charges a reduced premium for the first few years, then a higher level premium for the remainder of life.

The USA PATRIOT Act and related rules require insurers selling cash-value products to:

1. Obtain FBI clearance for each new applicant
2. Report every policy sold directly to the IRS
3. Maintain an anti-money-laundering (AML) program ✓
4. Refuse coverage to anyone who pays by cash

Why: Insurers offering products with cash value or investment features must have AML programs, including customer identification and suspicious-activity reporting.

For each individual participating in a governmental retirement plan under IRC section 401, 403(b), or 457 and covered by an unallocated annuity contract, the aggregate guaranty limit is:

1. $100,000
2. $500,000
3. $5,000,000, as provided under the applicable section
4. $250,000 in present value annuity benefits ✓

Why: Section 3956.04(D)(2)(b) limits coverage to two hundred fifty thousand dollars, in the aggregate, in present value annuity benefits for each such participating individual.

Which of the following can satisfy the prerequisite to sit for the Ohio agent license examination instead of completing the hours of insurance education?

1. A bachelor's or associate's degree in insurance from an accredited institution ✓
2. A high school diploma combined with six months of employment in an insurance agency
3. Twelve months of supervised sales experience documented by the appointing insurer
4. A letter of recommendation signed by an appointing insurer

Why: § 3905.04(C)(1)(a) allows a bachelor's or associate's degree in insurance from an accredited institution as an alternative to the study hours.

Medicare Part C (Medicare Advantage) plans:

1. Are available exclusively to people under age 65 with disabilities
2. Replace the need to ever enroll in Original Medicare at all
3. Are private plans that bundle Part A and B coverage, often with drugs ✓
4. Pay only for inpatient hospital stays and nothing else

Why: Medicare Advantage (Part C) is offered by private insurers and combines Part A and B benefits, frequently including Part D drug coverage.

Under § 3901.221, when must the person subject to the cease-and-desist order begin to comply with it?

1. Only after the final order confirming it issues
2. Thirty days after the order is mailed
3. Immediately upon receipt of notice of the order ✓
4. After the hearing is concluded

Why: Section 3901.221 provides that the person shall comply with the order immediately upon receipt of notice of the order.

Ohio's broad rebating prohibition in section 3911.20 does NOT prohibit which of the following?

1. An agent sharing part of the first-year commission with an unlicensed prospect as an inducement for that prospect to sign the application
2. Giving a prospect shares of the insurer's own stock, without charge, as an inducement to purchase a life insurance policy from the company
3. Promising to lend money to a prospect as consideration for buying a policy
4. A company issuing nonparticipating insurance paying bonuses to policyholders out of surplus accumulated from nonparticipating insurance ✓

Why: Section 3911.20 expressly does not prohibit a nonparticipating-insurance company from paying bonuses or abating premiums out of nonparticipating surplus.

Under § 3923.04(F), if the insurer does not furnish claim forms within fifteen days after notice of claim, what is the consequence for the claimant?

1. The claim is barred from consideration until the insurer eventually supplies the proper forms, and the policy's period for filing proofs is tolled in the meantime
2. The claimant is deemed to have complied with the proof-of-loss requirement by submitting timely written proof of the occurrence, character, and extent of loss ✓
3. The claim becomes automatically payable in full at the maximum benefit stated in the policy without any proof of loss, and the insurer forfeits its right to investigate the occurrence
4. The claimant must wait an additional thirty days after the fifteen-day period expires before any written proof of loss may be submitted to the insurer for consideration

Why: Section 3923.04(F) deems the claimant to have complied with proof-of-loss requirements by submitting, within the policy's time for filing proofs, written proof of the occurrence, character, and extent of the loss.

Under § 3901.21(F) and (M), the prohibition on 'unfair discrimination' among individuals of the same class draws what distinction between life and non-life policies?

1. Division (F) covers policies other than life insurance and applies the 'essentially the same hazard' test, while division (M) covers life insurance and annuities under the 'equal expectation of life' test
2. Only life insurance and annuities are protected; rating for accident and health coverage is left to the insurer's judgment
3. Both divisions reach only the premium rate charged, so an insurer may vary benefits, dividends, or other contract terms among individuals of the same class as long as the rate itself is uniform
4. Division (F) covers life insurance and annuities (same class, equal expectation of life), while division (M) covers policies other than life insurance (same class, essentially the same hazard) ✓

Why: Section 3901.21(F) addresses unfair discrimination among individuals of the same class and equal expectation of life for life insurance and annuities, while division (M) addresses individuals of the same class and essentially the same hazard for insurance other than life.

A bank tells a borrower the loan will be approved only if they buy the lender's insurance. This unfair practice is:

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

Why: Using economic force — conditioning a loan on buying particular insurance — is coercion.

A reciprocal insurer is:

1. An unincorporated group of members who insure each other through an attorney-in-fact ✓
2. A federal chartering agency that licenses insurers under the McCarran-Ferguson Act
3. A stock company whose shareholders elect the board and receive taxable dividends
4. A fraternal benefit society organized in lodges that sells only to its own members

Why: A reciprocal is an unincorporated association whose subscribers exchange insurance among themselves, managed by an attorney-in-fact.

The 'physical exam and autopsy' provision allows the insurer to:

1. Cancel the policy if the insured ever changes treating physicians
2. Examine the insured at its own expense while a claim is pending ✓
3. Deny any claim if the insured refuses a free annual wellness check
4. Require an autopsy in every state regardless of the local law

Why: During a pending claim the insurer may, at its own expense, examine the insured and (where not prohibited by law) require an autopsy.

Under COBRA, the maximum continuation period for an employee who loses coverage due to termination or reduced hours is generally:

1. 18 months ✓
2. 36 months
3. 12 months
4. 60 months

Why: Termination or reduced hours allows 18 months of COBRA continuation; events like divorce, death, or a child aging out allow up to 36 months.

An alien insurer is one that is:

1. Incorporated in this state
2. Incorporated outside the United States ✓
3. Incorporated in another U.S. state
4. Not licensed in any state

Why: Alien = incorporated in another country; domestic = this state; foreign = another U.S. state.

A modern whole life policy 'matures' (endows) when the:

1. Policyowner first takes a loan against the cash value
2. Insured makes the final scheduled premium payment
3. The policy has been continuously in force for a period of exactly twenty full years
4. Insured reaches the maturity age and the cash value equals the face amount ✓

Why: At the maturity age (commonly 121, formerly 100), the cash value equals the face amount and the policy endows, paying the face to a living insured.

A 'change of plan' provision in a life policy lets the owner:

1. Draw part of the death benefit while still living
2. Name a different insured under the contract
3. Exchange the policy for a different plan of insurance ✓
4. Skip premium payments during a period of financial hardship without lapsing

Why: A change-of-plan provision permits converting to another policy plan (e.g., term to whole life), with premium and possibly evidence adjustments.

A lender conditions approval of a customer's loan on the customer buying a life insurance policy from a particular agent. Under Ohio's rebate/inducement statute, this requirement is:

1. Permitted if the lender gives the borrower written notice of the requirement at closing
2. Prohibited as an unlawful inducement tied to a loan ✓
3. Permitted, because credit transactions are exempt
4. Permitted only for decreasing term coverage

Why: Section 3911.20 prohibits requiring, as a condition of granting a loan, that a borrower acquire life or accident-and-health insurance from any particular company, agent, or person.

An Ohio long-term care policy has been in force for fourteen months when the insurer discovers a misrepresentation. The insurer may rescind the policy or deny the claim only if it demonstrates the insured misrepresented facts that were:

1. Both material to the offer of coverage and pertaining to the condition for which the insured sought benefits ✓
2. Disclosed to the agent but omitted from the written application
3. Knowingly and intentionally false as to the insured's health, the showing required for any policy however long it has been in force
4. Material to the offer of coverage, with no requirement that the facts relate to the condition for which benefits are claimed

Why: Section 3923.441(A)(2) governs policies in force at least six months but less than two years, requiring the misrepresented facts be both material to the offer and pertaining to the condition for which benefits are sought.

What is the stated purpose of the Ohio Life and Health Insurance Guaranty Association chapter?

1. To regulate the investment portfolios of member insurers so that each one holds admitted assets exceeding its policy reserves at every quarterly statement date filed with the superintendent
2. To set the premium rates that member insurers may charge for life and health coverage sold in this state, so that no member can price itself into an insolvency the other members must fund
3. To protect, subject to limitations, persons against failure of contractual obligations due to the impairment or insolvency of the member insurer that issued the policies ✓
4. To license the agents who sell covered policies in this state and to discipline those whose sales practices contribute to the impairment or insolvency of a member insurer

Why: Section 3956.03 states the purpose is to protect specified persons, subject to limitations, against failure in the performance of contractual obligations due to impairment or insolvency of the issuing member insurer.

Under a conditional receipt given with a life application and the initial premium, coverage takes effect:

1. Only after the policy has been in force a full year
2. As of the application/exam date if the applicant is insurable ✓
3. Only when the issued policy is physically delivered
4. At whatever future date the soliciting agent approves it

Why: A conditional receipt provides coverage retroactive to the application/exam date if the applicant proves insurable, provided premium accompanied the application.

Which premium payment mode generally produces the lowest total annual cost?

1. Semiannual
2. Monthly
3. Annual ✓
4. Quarterly

Why: Paying annually avoids the loading/carrying charges added to more frequent payment modes.

An applicant for disability income earns $100,000. The insurer offers a benefit replacing about 60% of income to:

1. Preserve the incentive to return to work ✓
2. Guarantee the insurer a profit
3. Match the insured's exact monthly expenses
4. Comply with a federal maximum benefit law

Why: DI benefits are capped below full income (and are tax-free when individually paid) so the insured keeps an incentive to recover.

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.

Maria submits a fire-loss claim with falsified receipts; the false portion of the claim totals $9,000. Under Ohio law, what is the grading of her insurance fraud offense?

1. A felony of the fifth degree
2. A misdemeanor of the first degree
3. A felony of the third degree
4. A felony of the fourth degree ✓

Why: Section 2913.47(C) grades insurance fraud as a felony of the fourth degree when the false or deceptive claim is $7,500 or more but less than $150,000. $9,000 falls in that range.

Under § 3901.21(B), an advertisement, announcement, or statement placed before the public with respect to the business of insurance is an unfair act when it is:

1. Distributed by mail rather than in person
2. Targeted at commercial buyers
3. Untrue, deceptive, or misleading ✓
4. Lengthy or technical in nature

Why: Section 3901.21(B) prohibits making, publishing, disseminating, or circulating an advertisement, announcement, or statement about the business of insurance which is untrue, deceptive, or misleading.

Variable universal life (VUL) insurance combines:

1. Flexible premiums with policyowner-directed separate-account investments ✓
2. Decreasing term coverage with a built-in cost-of-living adjustment
3. Group coverage that requires no individual evidence of insurability
4. A fixed level premium with a guaranteed minimum cash value at all times

Why: VUL merges universal life's premium and death-benefit flexibility with variable separate accounts; the owner bears the investment risk.

An individual pays for their own disability policy with after-tax dollars and later collects benefits. Those benefits are:

1. Subject to a 10% early-distribution penalty
2. Fully taxable as ordinary income
3. Taxed at long-term capital-gains rates
4. Received income-tax-free ✓

Why: Benefits from a policy the insured paid for with after-tax dollars are received tax-free.

For how long may a temporary insurance agent license remain in force under Ohio Rev. Code § 3905.09?

1. Until the next scheduled license renewal date for that line of authority
2. A period not to exceed one hundred eighty days ✓
3. A period not to exceed ninety days, renewable once for good cause
4. A period not to exceed one year

Why: § 3905.09(B) limits a temporary license to a period not to exceed one hundred eighty days.

The cash value in a permanent life insurance policy accumulates:

1. As taxable income each year
2. Tax-free with no conditions
3. Only when dividends are paid
4. Tax-deferred ✓

Why: Cash value grows tax-deferred while the policy is in force.

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.

A joint and survivor annuity continues payments:

1. To the couple's children after both annuitants die
2. As long as either annuitant is still living ✓
3. Only until the first of the two annuitants dies
4. For a fixed ten-year period regardless of survival

Why: A joint and survivor annuity pays as long as either annuitant lives (often reducing to a percentage for the survivor).

For administration and assessment, the guaranty association maintains which accounts?

1. A property account and a casualty account, each assessed separately by line
2. The life insurance and annuity account and the health account ✓
3. A separate account for each member insurer, funded by that insurer's own premiums
4. A single combined account covering life, health, and annuity obligations alike

Why: Section 3956.06(A) provides the association maintains two accounts: the life insurance and annuity account (with life, annuity, and unallocated annuity subaccounts) and the health account.

Under section 1751.18, an HIC is prohibited from canceling or failing to renew a subscriber's coverage because of which of the following?

1. The subscriber's intentional misrepresentation of a material fact
2. Any health status-related factor in relation to the subscriber ✓
3. The subscriber's commission of fraud under the terms of the coverage
4. The subscriber's failure to pay the required periodic premium

Why: Section 1751.18(A)(1) prohibits cancellation or nonrenewal because of any health status-related factor. By contrast, division (B) permits cancellation for fraud or intentional misrepresentation.

In a whole life policy, the 'net amount at risk' is the:

1. Difference between the death benefit and the cash value ✓
2. Cash value remaining after a policy loan is repaid
3. Total of all premiums the policyowner has paid to date
4. Portion of the premium used to cover the insurer's expenses

Why: The net amount at risk is the death benefit minus the accumulated cash value; it shrinks over time as the cash value grows toward the face amount.

A provision allowing a terminally ill insured to receive part of the death benefit while still living is the:

1. An accelerated (living) death benefit for the terminally ill ✓
2. An automatic premium loan against the death benefit, used by the terminally ill to keep the policy in force while living
3. A reinstatement putting a lapsed policy back in force after proof of insurability
4. A coordination-of-benefits offset

Why: The accelerated death benefit lets a terminally or chronically ill insured access part of the face amount before death; the remainder goes to beneficiaries.

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.

A claim is contested based on an applicant's answer to an interrogatory. Under Ohio law, that answer will NOT bar recovery unless it is clearly proved to be all of the following EXCEPT:

1. Made by an applicant who was a minor at the time ✓
2. Made without the agent's or company's knowledge of its falsity
3. Willfully false and fraudulently made
4. Material and an inducement to issue the policy

Why: The statute requires proof the answer was willfully false, fraudulently made, material, an inducement, that but for it the policy would not have issued, and that the agent/company had no knowledge of the falsity. Minority is not a listed element.

For a life insurance policy, insurable interest must exist:

1. Continuously throughout the policy
2. At the time of the insured's death
3. Only if the beneficiary is a relative
4. At the time of application ✓

Why: For life insurance, insurable interest must exist at the inception of the contract (time of application); it need not exist at the time of loss.

If an annuitant dies during the accumulation phase of a deferred annuity, the contract typically pays the beneficiary:

1. Nothing, because annuities have no death benefit before payout
2. At least the premiums paid (or current value, if greater) ✓
3. Triple the account value as a guaranteed accidental death bonus
4. Only the surrender value after deducting all future charges

Why: Most deferred annuities guarantee the beneficiary the greater of premiums paid or current account value if the owner dies before annuitization.

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.

Survivorship (second-to-die) life insurance is most commonly used to:

1. Fund a child's future college costs through the policy's accumulated cash value
2. Provide estate liquidity after the second insured dies ✓
3. Replace the income of a sole wage earner who has several young children at home
4. Cover a short-term business loan that must be fully repaid within five years

Why: It pays at the second death and is widely used to fund estate taxes and costs.

For group term life insurance, the cost of employer-provided coverage exceeding $50,000 is:

1. Taxed only when the employee eventually leaves the company
2. Exempt from tax because all group life is a tax-free benefit
3. Imputed as taxable income to the covered employee ✓
4. Fully deductible by the employee on their personal return

Why: Employees are taxed (imputed income, via IRS Table I) on the cost of employer-paid group term coverage above $50,000.

An annuitant has a $60,000 cost basis and a $120,000 expected return. Of each $12,000 annual payment, the taxable portion is:

1. $6,000 ✓
2. $3,000
3. $12,000
4. $0

Why: Exclusion ratio = 60,000/120,000 = 50%; $6,000 of each $12,000 payment is excluded and $6,000 is taxable.

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.

An insured can perform some but not all job duties and returns to work part-time at reduced pay. The benefit that responds is:

1. Waiver of premium, which only suspends the premium obligation
2. Residual or partial disability benefit ✓
3. Presumptive total disability benefit
4. The accidental death benefit rider

Why: Residual/partial disability pays a reduced benefit when the insured can work partially or at reduced earnings.

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.

Megan pays a monthly premium to Buckeye Health Plan and her employment is the basis for her family's eligibility to enroll. Under the Ohio HIC Law, Megan is best described as the:

1. Primary care provider
2. Enrollee
3. Subscriber ✓
4. Authorized person

Why: Section 1751.01(BB) defines a 'subscriber' as a person responsible for making payments to an HIC, or an enrollee whose employment or other status is the basis of eligibility for enrollment.

A split-dollar life insurance arrangement is best described as:

1. A policy split equally among several unrelated business partners at death
2. A term policy divided into two smaller policies for tax purposes
3. An annuity that pays half of its income to two different beneficiaries
4. A plan in which an employer and employee share the policy's costs and benefits ✓

Why: In split-dollar, the employer and employee share premium costs and policy benefits under an agreement.

Under § 3901.221, how must notice of a cease-and-desist order be delivered to the person subject to it?

1. By publication once a week for three consecutive weeks in a newspaper of general circulation
2. By ordinary first-class mail addressed to the person's last known place of business in this state
3. By personal service by the sheriff of the county in which the person resides, and by no other means
4. By certified mail, return receipt requested, or served as provided in section 3901.04 ✓

Why: Section 3901.221 requires the notice to be mailed by certified mail, return receipt requested, or served in any manner provided in section 3901.04, immediately after issuance.

Under Ohio law, an individual or group sickness and accident policy that makes family coverage available must cover adopted children of the insured on what basis?

1. At a surcharged premium rate
2. On the same basis as other dependents ✓
3. Only after a one-year waiting period
4. Only if adopted before age two

Why: Section 3923.40 requires a policy that makes family coverage available to cover adopted children of the insured on the SAME BASIS as other dependents, subject to section 3924.51.

Social Security disability benefits use a strict definition: the inability to engage in:

1. The specific occupation the insured personally held immediately before the disability began
2. Any work the insured personally finds enjoyable
3. Physical labor, though desk work is still expected
4. Any substantial gainful activity due to a medically determinable impairment ✓

Why: SSDI requires inability to perform any substantial gainful activity (not just one's own occupation), expected to last at least 12 months or result in death.