PLAHI - Pennsylvania Life Accident and Health Insurance Exam

Question 1: A Pennsylvania applicant wants to buy life insurance on a business associate to whom she is not related, and the underwriter asks what relationship the Commonwealth requires between them before the contract may be issued. Which of the following describes that requirement?

A shared residence in Pennsylvania

A written waiver from the beneficiary

A lawful economic interest in the insured

A blood relationship of any degree

Question 2: A Pennsylvania corporation wants to insure the lives of two of its officers and one key employee, naming itself as owner and beneficiary under each of those contracts. Which of the following conditions does Pennsylvania attach to insurance of that kind?

The insured's prior written consent

Approval from the Insurance Commissioner

A minimum of five years of service

A matching policy on every employee

Question 3: A Pennsylvania man buys a policy on his own life and names a close friend as beneficiary, and the friend has no financial stake in his survival. The insurer questions whether the designation is valid. Which of the following describes the result?

The designation fails for lack of interest

The friend must prove economic dependence

The policy is void from the beginning

The designation is valid without any interest

Question 4: A widow in Bethlehem uses life insurance proceeds to pay her late husband's final medical bills and the federal estate tax due, so that the family farm does not have to be sold quickly. Which of the following uses is illustrated?

Liquidity for settlement costs

Human life value replacement

Executive compensation planning

Buy-sell agreement funding

Question 5: A producer in Lancaster calculates a client's coverage need by projecting the income the client would have earned to retirement and discounting it to present value, without listing the family's specific obligations. Which of the following approaches has the producer used?

The needs approach

The estate conservation approach

The capital retention approach

The human life value approach

Question 6: Two partners who own a Pittsburgh machine shop each buy a policy on the other's life, so the survivor will have the cash to purchase the deceased partner's share from the estate. Which of the following arrangements have they created?

An entity purchase agreement

A deferred compensation plan

A cross purchase buy-sell agreement

A key person insurance plan

Question 7: A Harrisburg employer pays the premium on a permanent policy owned personally by its chief engineer, and the premium amount is reported as taxable income to that engineer each year. Which of the following arrangements does this describe?

An executive bonus plan

A key person policy

A group life plan

A split dollar buy-sell agreement

Question 8: A Pennsylvania policyowner with a chronic illness sells her life policy to a company that pays her a discounted lump sum and becomes the new owner. Which of the following describes her role and the licensure the buyer needs?

She is the broker; no license required

She is the provider; a producer license

She is the viator; provider licensure required

She is the beneficiary; adjuster licensure required

Question 9: A Pennsylvania viatical settlement provider is preparing the required disclosures for a prospective viator in Erie who is considering selling her life policy. Which of the following states the latest point at which Pennsylvania requires those disclosures to be delivered?

Within ten days after funding

At the time the policy is transferred

Only if the viator requests them

No later than the application signing date

Question 10: A producer explains to a Scranton client exactly what Pennsylvania requires a viatical settlement provider to disclose in writing before the client agrees to sell her life policy. Which of the following items belongs on that list of required disclosures?

The buyer's internal rate of return

The names of the eventual investors

That proceeds may affect Medicaid eligibility

The insurer's current financial rating

Question 11: A Pennsylvania viator signs a viatical settlement contract and, a short time afterward, has serious second thoughts. Which of the following correctly states the unconditional rescission rights the Commonwealth gives her, measured from the contract and from her receipt of the proceeds?

No rescission after the contract signing

Ten days from contract only

Thirty days from proceeds only

Thirty days from contract, fifteen from proceeds

Question 12: A Pennsylvania buyer compares two life contracts offered by different companies. One pays annual dividends representing a return of excess premium, and the other never pays any dividend at all. Which of the following correctly labels these two contracts?

Fixed and variable

Group and individual

Participating and nonparticipating

Permanent and term

Question 13: An insurer holds the assets backing its guaranteed fixed products in one account and the assets backing its variable contracts in another, insulated from the general obligations of the company. Which of the following names the second account?

The reserve account

The separate account

The surplus account

The escrow account

Question 14: An actuary in Philadelphia explains that three elements drive the cost of a life insurance policy: the expected rate of death among insureds, the earnings the insurer expects on invested premium, and the cost of running the company. Which of the following names them?

Mortality, interest, and expense

Morbidity, inflation, and reserves

Persistency, lapse, and surrender

Underwriting, reinsurance, and retention

Question 15: A client in Allentown asks whether paying her life premium once a year rather than monthly will change what she pays over twelve months. Which of the following correctly describes the effect of premium mode on total annual cost?

Monthly payment produces the lowest total

Annual payment produces the lowest total

All modes cost exactly the same

Quarterly payment produces the lowest total

Question 16: A producer in Bethel Park tells prospects that they should feel secure buying from any Pennsylvania insurer because the state guaranty association stands behind every policy sold here. Which of the following describes that sales approach under Pennsylvania law?

A prohibited use of the association

Permitted if the statement is accurate

Required as a consumer disclosure

Permitted only in written advertising

Question 17: A Pennsylvania life insurer becomes insolvent, and a resident policyowner asks what the Life and Health Insurance Guaranty Association will cover on her individual life policy. Which of the following states the death benefit limit the association applies per insured life?

One hundred thousand dollars

Two hundred fifty thousand dollars

Five hundred thousand dollars

Three hundred thousand dollars

Question 18: An applicant in York pays the initial premium when she signs the application and receives a document stating that coverage begins on the later of the application date or the completion of any required medical examination. Which of the following has the producer given her?

A binding receipt

A conditional receipt

A statement of good health

A policy delivery receipt

Question 19: An underwriter in Pittsburgh reviews a coded report from the industry-supported organization that collects impairment information reported to it by member insurers. Which of the following correctly describes the proper use of that report in the underwriting decision?

It may replace the application entirely

It may be shared with other applicants

It may be obtained without any notice

It may not solely justify a denial

Question 20: An underwriter reviews three Pennsylvania applicants: one with excellent health and family history, one with entirely average characteristics, and one with a condition that raises expected mortality. Which of the following correctly names the three classifications applied, in that order?

Declined, preferred, and standard

Standard, declined, and preferred

Preferred, standard, and substandard

Substandard, preferred, and standard

PLAHI Pennsylvania Life Accident and Health Insurance Exam - Set 3 - Part 1