Washington Life & Health Insurance License, Practice Exams

Under RCW 48.43.005, the term "enrollee" is used synonymously with:

1. applicant
2. dependent
3. provider
4. covered person ✓

Why: RCW 48.43.005(15) defines "covered person" or "enrollee" as a person covered by a health plan, including a subscriber, policyholder, or beneficiary.

Under RCW 48.05.030, before transacting insurance in this state an insurer generally must hold:

1. A surplus line broker license from the commissioner
2. A certificate of authority issued by the commissioner ✓
3. A National Association of Insurance Commissioners permit
4. A resident producer appointment from its home state

Why: RCW 48.05.030 provides that no insurer shall transact insurance in this state other than as authorized by a certificate of authority issued by the commissioner and then in force.

Under RCW 48.30.300, all of the following are prohibited as unfair discrimination EXCEPT:

1. declining to renew a policy because the applicant is unmarried
2. reducing benefits payable solely because of the insured's disability
3. fair distinctions backed by substantiated risk statistics ✓
4. excluding coverage terms based on the insured's sexual orientation

Why: RCW 48.30.300(2) permits fair discrimination on the basis of sex, marital status, or disability when bona fide statistical differences in risk or exposure have been substantiated.

With respect to any one life, the guaranty association's coverage for life insurance death benefits may not exceed:

1. $100,000
2. $500,000 ✓
3. $300,000
4. $1,000,000

Why: RCW 48.32A.025(3) limits the association to five hundred thousand dollars in life insurance death benefits with respect to one life.

A retiree takes a distribution from a traditional (qualified) 401(k). The distribution is:

1. Fully taxable as ordinary income ✓
2. Completely income-tax-free
3. Taxed only on the growth portion
4. Subject to capital-gains rates only

Why: Pre-tax qualified plan distributions are fully taxable as ordinary income when received.

Under RCW 48.24.030, group life insurance on a dependent family member may not exceed:

1. The amount on the life of the insured employee or member ✓
2. Fifty percent of the employee's own coverage amount
3. The amount elected individually by the employee
4. Five thousand dollars for any one family member

Why: RCW 48.24.030(1) provides that insurance on the life of any one family member, including a spouse, may not be in excess of the amount on the life of the insured employee or member.

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

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

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.

Under RCW 48.23.030, the minimum grace period a Washington life policy must allow for payment of a premium after the first is:

1. One month, but not less than 30 days ✓
2. A flat 20 days from the due date
3. A flat 45 days from the due date
4. Seven days after written notice

Why: RCW 48.23.030 (Grace period) requires a grace period of one month, but not less than thirty days, during which the policy stays in force.

When adjusting benefits for a misstated age, RCW 48.23.060 bases the amount on the insurer's rate:

1. In effect at the date of issue ✓
2. In effect at the date of death
3. Averaged over the policy term
4. Filed in the current rate manual

Why: RCW 48.23.060 measures the adjusted benefit by what the premium would have purchased at the correct age according to the insurer's rate at date of issue.

Under RCW 48.30.140, which act by an insurance producer is prohibited as an unlawful rebate?

1. Paying a licensed producer commission on that producer's own risks
2. Giving the insured a premium reduction not provided for in the policy ✓
3. Allowing a marine insured a customary discount above the commission
4. Charging every applicant the filed premium approved by the commissioner

Why: RCW 48.30.140(1) bars offering any reduction of premium not expressly provided for in the policy; commissions on one's own risks and customary marine discounts are express exceptions under subsections (2) and (3).

Under RCW 48.43.035, a carrier may cancel or nonrenew a group health plan for all of the following EXCEPT:

1. A covered person materially breaching the health plan
2. The enrollee developing a costly medical condition ✓
3. Fraud committed by covered persons against the carrier
4. Nonpayment of premium by the group

Why: RCW 48.43.035(3) permits cancellation or nonrenewal only for specified reasons such as nonpayment, fraud, or material breach; a member's development of a costly health condition is not a permitted ground.

An applicant overstates her health on an application for a health care service contract. Under RCW 48.80.030, the false claim act:

1. treats this as a class C felony claim
2. requires the prosecutor to notify regulators
3. imposes a separate offense per statement
4. does not apply to application statements ✓

Why: RCW 48.80.030(7) states the section does not apply to statements made on an application for coverage under a health care service contract or similar coverage.

Which annuity payout option pays the highest monthly income but stops at the annuitant's death with nothing to beneficiaries?

1. Life with a fixed period certain
2. Life only (straight life) ✓
3. Joint and survivor
4. Installment refund

Why: Life-only (straight life) pays the most because payments cease at death with no survivor or refund feature.

A graded-premium whole life policy charges premiums that:

1. Start low and increase for a period, then level off ✓
2. Stay exactly the same for the entire life of the policy
3. Are invested in equity sub-accounts chosen by the policyowner each year
4. Decrease every year until the coverage is fully paid up

Why: Graded-premium whole life begins with low premiums that rise over an initial period before leveling, easing early affordability.

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

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

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.

An example of an unfair claims settlement practice is:

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

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

The standard notice of claim provision requires written notice of claim to be given to the insurer within how many days after the occurrence or commencement of a covered loss (or as soon as reasonably possible thereafter)?

1. 10 days
2. 20 days ✓
3. 30 days
4. 60 days

Why: RCW 48.20.082 (Notice of claim) requires written notice within twenty days after the occurrence or commencement of loss, or as soon thereafter as reasonably possible.

A newly formed prepaid group practice wants to market itself using the initials "HMO." Under RCW 48.46.040 it may lawfully do so only if it:

1. operates on a per capita prepayment basis in this state
2. files its solicitation documents and rate schedules first
3. holds a certificate of registration or is federally certified ✓
4. contracts with enough providers to serve all its enrollees

Why: RCW 48.46.040 bars use of "health maintenance organization" or "HMO" by any entity not issued a certificate of registration, except an HMO federally certified under Public Law 93-222.

An insurer organized under the laws of Germany seeks to do business in Washington. Under RCW 48.05.010, it is classified as:

1. An alien insurer ✓
2. A foreign insurer
3. A domestic insurer
4. A reciprocal insurer

Why: RCW 48.05.010 defines an alien insurer as one formed under the laws of a nation other than the United States.

After Nadia's individual disability policy is reinstated, she develops an illness. Under the reinstatement provision, the reinstated policy covers loss from sickness only if the sickness begins:

1. More than 10 days after reinstatement ✓
2. On or after the reinstatement date itself
3. More than 30 days after reinstatement
4. More than 45 days after reinstatement

Why: RCW 48.20.072 (Reinstatement) covers sickness only if it begins more than ten days after the date of reinstatement.

Under RCW 48.01.040, how does the Washington insurance code define 'insurance'?

1. A contract to indemnify another or pay a set sum on determinable contingencies ✓
2. Any pooling of member funds to cover shared commercial fishing vessel losses
3. A promise to provide professional legal services in exchange for periodic dues
4. A written wager on a future event in which neither party bears any actual risk

Why: RCW 48.01.040 defines insurance as a contract whereby one undertakes to indemnify another or pay a specified amount upon determinable contingencies.

RCW 48.30.150 prohibits offering all of the following as an inducement to insurance EXCEPT:

1. shares of stock or other securities, or rights to them
2. a reduced fee for extra services permitted by the commissioner ✓
3. a special advisory board contract promising special returns
4. merchandise exceeding $100 in aggregate value in twelve months

Why: RCW 48.30.150 bars stock, special advisory board contracts, and prizes/merchandise over $100; RCW 48.30.157 lets the commissioner permit reasonable reduced-fee arrangements for extra services notwithstanding that section.

A survivorship (second-to-die) life policy pays the death benefit when:

1. The first insured dies
2. The second insured dies ✓
3. Either insured becomes disabled
4. The policy is surrendered

Why: Survivorship pays at the second death; it is common in estate planning to fund estate taxes.

Under RCW 48.05.010, a 'foreign' insurer is one formed under the laws of:

1. A nation other than the United States of America
2. This state, under the domestic insurer statutes
3. Any jurisdiction while it operates without authority
4. A U.S. state or territory other than this one, or D.C. ✓

Why: RCW 48.05.010 defines a foreign insurer as one formed under the laws of the United States, of a state or territory other than this state, or of the District of Columbia.

A waiver of premium provision in a long-term care policy:

1. Stops premium payments while the insured is receiving covered benefits ✓
2. Refunds every premium the insured has paid once they reach the age of eighty
3. Cancels the policy automatically after the first claim
4. Lowers the premium each year the insured stays healthy

Why: LTC waiver of premium suspends premium payments while the insured is confined or receiving qualifying benefits.

Under a Section 162 executive bonus plan, the employer:

1. Pays a bonus equal to the premium, which the employee owns and is taxed on ✓
2. Owns the policy and keeps all of the cash value for corporate purposes
3. Borrows against the executive's personal policy to fund operations
4. Defers the executive's salary into a nonqualified retirement account

Why: The employer pays a deductible bonus equal to the premium; the employee owns the policy and reports the bonus as taxable income.

Each of the following is an express exception to the two-year incontestable clause under RCW 48.23.050 EXCEPT:

1. Nonpayment of premiums
2. Disability benefit provisions
3. Accidental death provisions
4. Suicide within the first year ✓

Why: RCW 48.23.050 excepts nonpayment of premiums and, at the insurer's option, disability and accidental-death provisions; it lists no suicide exception.