Free Practice Questions for Insurance Licensing Ok-Life-Accident-and-Health-or-Sickness-Producer Exam

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.

Term life insuranceprovides coverage for a specific period (e.g., 10, 20 years) at a lower premium cost than whole life insurance, making it ideal for individuals needing maximum death benefit protection but unable to afford the higher premiums of permanent insurance. Unlike whole life, term life does not accumulate cash value or allow policy loans.

Option A: Incorrect. Borrowing against policy values requires cash value, available in whole life, not term life.

Option B: Incorrect. Cash value accumulation is a feature of whole life, not term life.

Option C: Correct. Term life is appropriate for maximum protection at a lower cost when permanent insurance premiums are unaffordable.

Option D: Incorrect. Term life is not permanent insurance; whole life provides permanent coverage.

This question falls under the Prometric content outline section on “Life Products,” which covers the suitability of term versus whole life 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.

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.

Twistingis the unethical practice of using misrepresentation or incomplete information to persuade an insured to terminate an existing policy and purchase a new one, often to the insured’s detriment. It is prohibited under Oklahoma’s Unfair Trade Practices Act (Title 36 O.S. § 1204). This differs fromchurning(replacing policies for commission without benefit to the insured) orrebating(offering inducements to purchase).

Option A: Correct. Twisting involves misrepresentation to induce policy replacement.

Option B: Incorrect. Subrogation is the insurer’s right to recover payments from a third party.

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

Option D: Incorrect. Churning involves excessive policy replacements for commissions, not necessarily misrepresentation.

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

Oklahoma regulations (O.A.C. 365:10-3-16) provide afree-look periodfor life insurance or annuity replacement policies, allowing the policyowner to return the policy for afull refund of premiumwithin20 daysfrom receipt. This extended period for replacements (compared to 10 days for non-replacement policies) ensures consumers can review the new policy and compare it to the replaced one.

Option A: Incorrect. 3 days is too short for the free-look period.

Option B: Incorrect. 7 days is not the required timeframe.

Option C: Incorrect. 14 days is shorter than the replacement free-look period.

Option D: Correct. The free-look period for replacement policies is 20 days.

Afalse financial statementin the context of insurance refers to a misrepresentation of an insurer’s financial condition, such as falsely claiming insolvency or bankruptcy, which is prohibited under Oklahoma’s Unfair Trade Practices Act (Title 36 O.S. § 1204). This can mislead consumers and harm the insurer’s reputation. Option B directly involves a false claim about an insurer’s financial status.

Option A: Incorrect. An untrue advertisement about another producer is defamation or misrepresentation, not a financial statement.

Option B: Correct. Posting false information about an insurer’s bankruptcy is a false financial statement, violating Oklahoma law.

Option C: Incorrect. Flyers about a criminal past are defamatory but not related to financial statements.

Option D: Incorrect. Hateful postcards are unprofessional but do not constitute a false financial statement.

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

Health Maintenance Organizations (HMOs) focus on preventive and essential medical care within a network.Adult routine eye examinationsare often excluded from HMO coverage, as they are considered non-essential or covered under separate vision plans. Other services like emergency care, physical exams, and surgeries are typically covered, as per Oklahoma’s managed care regulations (Title 36 O.S. § 652 et seq.).

Option A: Incorrect. Out-of-area emergency services are generally covered by HMOs.

Option B: Correct. Adult routine eye examinations are often excluded or require separate coverage.

Option C: Incorrect. Physical examinations are typically covered as preventive care.

Option D: Incorrect. In-patient surgeries are covered as essential medical services.

Theunpaid premium Uniform Optional Provisionin health insurance policies, as recognized in Oklahoma (Title 36 O.S. § 4405), allows the insurer to deduct any unpaid premiums from a claim payment if a claim becomes payable while premiums are overdue. This ensures the policy remains in force and the claim is paid, net of the owed premium.

Option A: Incorrect. The claim is not denied; the premium is deducted from the payment.

Option B: Incorrect. The policy is not cancelled; the unpaid premium is addressed via the claim.

Option C: Correct. The unpaid premium is deducted from the claim payment.

Option D: Incorrect. The claim is not delayed; the premium is settled with the claim payment.

This question falls under the Prometric content outline section on “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers health insurance policy provisions.

According to IRS guidelines (Publication 525), disability benefits from a group policy paid for by the employer are consideredtaxable incometo the employee because the premiums were not included in the employee’s taxable income. If the employee paid the premiums with after-tax dollars, the benefits would be tax-free.

Option A: Incorrect. Benefits are taxable if the employer paid the premiums.

Option B: Incorrect. Disability benefits are not deductible from gross income.

Option C: Correct. The benefits are taxable income.

Option D: Incorrect. Benefits are subject to income tax, not just Social Security or FUTA taxes.