Ohio Life & Health Insurance License, Practice Exams

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

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

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

Under Ohio law, after a life insurer has received how many annual premiums is the company estopped from defending a claim on any ground other than fraud (except as to age) for errors or misstatements in the application?

1. Three annual premiums ✓
2. Two annual premiums
3. One annual premium
4. Five annual premiums

Why: After receiving three annual premiums, all companies are estopped from defending on any ground other than fraud, except as to age.

An agent dates a new whole life policy to take effect one year before the application to lower the premium based on a younger age. Under Ohio law, this back-dating is prohibited to a date more than how long before the application was made if it reduces the premium?

1. More than six months before the application ✓
2. More than three months before the application
3. More than one year before the application
4. More than thirty days before the application

Why: Section 3915.13 prohibits issuing a policy to take effect more than six months before the application if that reduces the premium based on age.

Under Ohio law, what fraud-prevention warning must appear on all insurance applications and claim forms issued by an insurer?

1. A statement that premiums are non-refundable after the free-look period
2. A warning that any person who submits an application or files a claim with intent to defraud, containing a false or deceptive statement, is guilty of insurance fraud ✓
3. A notice that the policy is governed exclusively by federal law
4. A disclaimer that the insurer is not a member of the guaranty association unless an exception clearly applies for the coverage that is in force according to the insurer's rules

Why: Section 3999.21(B) requires applications and claim forms to clearly contain a warning that any person who, with intent to defraud or knowing he is facilitating a fraud, submits an application or files a claim containing a false or deceptive statement is guilty of insurance fraud.

Which dividend option purchases small amounts of additional paid-up insurance?

1. Cash
2. Reduction of premium
3. Paid-up additions ✓
4. Accumulate at interest

Why: Paid-up additions use dividends to buy small single-premium amounts of permanent insurance, increasing both death benefit and cash value.

The agent's report attached to a life insurance application is:

1. The agent's confidential observations, which are not part of the contract ✓
2. A legally binding warranty made by the proposed insured
3. The medical history section the applicant completes personally
4. A required disclosure that must be given to the applicant at delivery

Why: The agent's report conveys the producer's observations to the underwriter; it is not part of the entire contract and is not shown to the applicant.

For purposes of group sickness and accident insurance, § 3923.12 defines such insurance as covering any group of how many or more employees, members, or other persons?

1. Two or more ✓
2. Five or more
3. Ten or more
4. Twenty-five or more

Why: Section 3923.12(A) defines group sickness and accident insurance as covering any group of two or more employees, members, or other persons.

The distinction between accident and sickness coverage is that an 'accident' involves:

1. A sudden, unforeseen injury, while sickness involves illness or disease ✓
2. Only injuries that occur while the insured is at the workplace
3. A condition that develops gradually over a long period of time
4. Any loss the insured experiences, whether expected or not

Why: Accident coverage applies to sudden, unforeseen injuries; sickness coverage applies to illness or disease, and many policies cover both.

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.

How may an insurer satisfy Ohio's requirement to place the fraud warning on an application or claim form?

1. By reading the warning aloud to the applicant at the point of sale
2. By including the warning on an attached addendum that meets the statute's requirements ✓
3. By posting the warning only on the insurer's website
4. By referencing the warning in the policy's general conditions section in most situations

Why: Section 3999.21(C) allows an insurer to comply by including the warning on an addendum attached to the application or claim form, provided the addendum satisfies the statutory requirements.

Current assumption (interest-sensitive) whole life differs from traditional whole life because its premiums and cash values:

1. Adjust with current interest and mortality experience ✓
2. Are fixed by contract and can never be changed for the life of the policy
3. Are invested entirely in equity sub-accounts selected by the policyowner
4. Decrease automatically each year until the policy becomes paid up

Why: Current assumption whole life uses current interest and mortality assumptions, so premiums and cash values can be redetermined periodically.

Under the 'paid-up additions' dividend option, dividends are used to:

1. Buy small amounts of additional paid-up whole life coverage ✓
2. Reduce the premium due on the next policy anniversary date
3. Pay the policyowner the dividend directly in cash each year
4. Purchase one-year term insurance equal to the cash value

Why: Paid-up additions use dividends to buy single-premium whole life, increasing both death benefit and cash value with no new underwriting.

Federal law (IRC 101(j)) generally requires that, for employer-owned life insurance death proceeds to remain tax-free, the employer must:

1. Notify the employee and obtain consent before issue ✓
2. Pay the employee a cash bonus equal to the death benefit
3. Limit the coverage to highly compensated executives only
4. Surrender the policy if the employee ever changes jobs

Why: For employer-owned (COLI/BOLI) policies, the insured employee must be notified and consent in writing before issue, or the death benefit above basis becomes taxable.

An Ohio long-term care policy may not provide coverage that is structured to:

1. Include personal care services outside an acute care hospital unless an exception clearly applies for the coverage that is in force according to the insurer's rules
2. Provide coverage for skilled nursing care only or significantly more coverage for skilled care in a facility than for lower levels of care ✓
3. Pay benefits on an indemnity basis
4. Offer an inflation protection option

Why: Section 3923.44(B)(3) prohibits a policy that provides skilled nursing care only or significantly more coverage for skilled care in a facility than for lower levels of care.

An employee's spouse loses group coverage because the couple divorces. The maximum COBRA continuation period is:

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

Why: Divorce is a qualifying event that allows the affected dependent up to 36 months of COBRA continuation.

The elimination period in a disability income policy functions as:

1. A time deductible the insured must wait through before benefits begin ✓
2. A dollar deductible subtracted from each monthly benefit check
3. The maximum number of years benefits will ever be paid
4. A grace period during which overdue premiums may be paid

Why: The elimination (waiting) period is a 'time deductible'; a longer elimination period lowers the premium because the insurer pays for fewer short claims.

Annuitization differs from a systematic withdrawal because annuitization:

1. Converts the account into a guaranteed stream of income payments ✓
2. Lets the owner take any amount at any time with no schedule at all
3. Always returns the full account value in one immediate lump sum
4. Permanently freezes the account so no further access is possible

Why: Annuitization exchanges the accumulated value for a guaranteed income stream; systematic withdrawal keeps the account and takes flexible amounts.

In computing minimum nonforfeiture amounts for an Ohio individual deferred annuity, the statute allows an annual contract charge of:

1. Fifty dollars ✓
2. Twenty-five dollars
3. One hundred dollars
4. Ten dollars

Why: Section 3915.073(D)(1)(a)(ii) permits an annual contract charge of fifty dollars in determining the minimum nonforfeiture amount.

A health insurer pays a clinic owner a per-patient cash kickback for steering insured patients to the clinic for covered services. Under Ohio law, the owner's first offense is graded as what?

1. A minor misdemeanor
2. A felony of the fifth degree ✓
3. A felony of the third degree
4. A non-criminal regulatory violation

Why: Section 3999.22(B) prohibits knowingly soliciting, offering, paying, or receiving a kickback, bribe, or rebate for referring an individual for health care services reimbursable by a health care insurer, and (D) grades a first offense as a felony of the fifth degree.

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

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

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

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

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

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

Under § 3901.21(T)(3), which of the following is a 'health status-related factor' that may not be the sole reason for terminating or failing to renew an individual's health coverage?

1. The insured's failure to pay premium
2. Genetic information ✓
3. The insured's relocation outside the service area
4. The insured's voluntary lapse of the policy

Why: Section 3901.21(T)(3) lists health status-related factors including health status, medical condition, claims experience, receipt of health care, medical history, genetic information, evidence of insurability, and disability.

For how long must an Ohio HIC keep copies of complaints and responses, including related medical records, available for the superintendent's inspection?

1. One year from the date the complaint is resolved
2. Two years from the date the complaint is received
3. Three years ✓
4. Seven years from the date of the written response

Why: Section 1751.19(C)(1) requires copies of complaints and responses, including medical records related to them, to be available to the superintendent for inspection for three years.

Under § 3923.24(B), after the two-year period following the child's attainment of the limiting age, how often may the insurer require proof of continued incapacity and dependency of a disabled dependent?

1. At any time and as often as the insurer chooses
2. Not more frequently than annually ✓
3. Not more frequently than once every five years
4. Never again after the initial proof

Why: Section 3923.24(B) permits the insurer to require such proof, upon request, but not more frequently than annually after the two-year period following the child's attainment of the limiting age.

A variable life insurance policy typically guarantees:

1. A minimum death benefit regardless of separate-account performance ✓
2. A fixed cash value that can never decline in any market
3. A level premium that is invested entirely in government bonds
4. That the policy can never become a modified endowment contract

Why: Variable life guarantees a minimum death benefit, but the cash value (and any benefit above the minimum) varies with the separate accounts the owner directs.

Which contract provision is expressly PROHIBITED between an Ohio HIC and a provider under section 1751.13?

1. A provision setting forth procedures for resolving disputes arising out of the contract
2. A provision that directly or indirectly offers an inducement to reduce or limit medically necessary services ✓
3. A provision requiring the provider to maintain adequate professional liability insurance
4. A provision requiring the provider to observe and promote the rights of enrollees as patients

Why: Section 1751.13(D)(1)(a) prohibits any provision that directly or indirectly offers an inducement to the provider to reduce or limit medically necessary health care services to a covered enrollee.

The optional 'misstatement of age' provision in a health policy provides that, if the insured's age was misstated, the benefits will be:

1. Adjusted to what the premium paid would have purchased at the correct age ✓
2. Forfeited entirely, with all premiums refunded to the policyowner
3. Paid in full, because age never affects a health insurance claim
4. Doubled to compensate the insured for the company's filing error

Why: Benefits are adjusted to the amount the premium actually paid would have bought at the correct age, rather than voiding coverage.