Aper cause deductiblemeans the insured pays a $100 deductible for each separate medical condition or cause of treatment. The insured visits the doctor three times for injuries, each costing $200. Assuming each visit is for adifferent injury(to calculate the minimum amount, we consider the maximum number of deductibles), the insured pays a $100 deductible per visit (3 visits × $100 = $300). If the policy includes coinsurance (not specified but common in major medical policies), additional costs may apply, but the question asks for theminimum amount, which is the total deductibles for three separate causes.

Calculation:

Visit 1: $100 deductible (first injury).

Visit 2: $100 deductible (second injury).

Visit 3: $100 deductible (third injury).

Total: $100 × 3 = $300.

If all visits were for the same injury, only one $100 deductible would apply, but the question implies separate causes to reach the minimum of $300.

Option A: Incorrect. $100 assumes one deductible for a single cause, not three visits.

Option B: Incorrect. $200 does not account for three separate deductibles.

Option C: Correct. $300 reflects a $100 deductible for each of three separate injuries.

Option D: Incorrect. $500 exceeds the minimum, possibly including coinsurance not specified.

Apreexisting conditionis defined in health insurance as a medical condition for which advice, diagnosis, care, or treatment was recommended or received within a specified period (commonly 6 months) before the effective date of coverage. In Oklahoma, group health insurance policies often include provisions limiting or excluding coverage for preexisting conditions for a certain period, as regulated by federal and state laws, including the Health Insurance Portability and Accountability Act (HIPAA).

Option A: Incorrect. An elimination period is the waiting period before benefits begin, typically in disability or long-term care policies, not related to preexisting conditions.

Option B: Incorrect. An affiliation period is a waiting period for late enrollees in HMOs under HIPAA, not tied to medical conditions.

Option C: Incorrect. A diagnosed condition is not a standard insurance term; it does not specifically denote the timeframe of prior treatment like a preexisting condition.

Option D: Correct. A preexisting condition matches the definition provided, as per Oklahoma and federal regulations.

This question aligns with the Prometric content outline under “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers health insurance exclusions and limitations.

A life insurance policyowner has several rights, including assigning or transferring the policy (e.g., through absolute or collateral assignment), borrowing against the cash value (in policies with cash value), and selecting or changing the beneficiary, as outlined in Oklahoma’s Insurance Code (Title 36 O.S. § 4001 et seq.). However, anabsolute assignmenttransfers all ownership rights to the assignee, and the original policyowner cannot unilaterally revoke it without the assignee’s consent, as it is a complete transfer of ownership.

Option A: Incorrect (is a right). The policyowner can assign or transfer the policy to another party.

Option B: Incorrect (is a right). The policyowner can borrow against the cash value in policies like whole life or universal life.

Option C: Incorrect (is a right). The policyowner can select and change the beneficiary unless restricted (e.g., irrevocable beneficiary).

Option D: Correct (is not a right). An absolute assignment cannot be revoked by the original policyowner without the assignee’s agreement.

This question aligns with the Prometric content outline under “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers policyowner rights and assignments.

Aviatical settlementallows a terminally ill insured to sell their life insurance policy to a third party for a lump sum, typically less than the death benefit, to access funds during their lifetime. The primary and most attractive feature for the insured is receiving areduced prepayment of the death benefit, providing immediate cash for medical or personal needs, as regulated in Oklahoma (Title 36 O.S. § 4055.1 et seq.).

Option A: Incorrect. Viatical settlements do not involve discounted premiums; the policy is sold.

Option B: Correct. The reduced prepayment of the death benefit is the main benefit for the insured.

Option C: Incorrect. Policy assignment is a mechanism, not the primary feature.

Option D: Incorrect. Guaranteed renewability is unrelated to viatical settlements.

This question falls under the Prometric content outline section on “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers viatical settlements.

Key person insuranceis a life or disability insurance policy purchased by a business to protect against financial loss due to the death or disability of a critical employee or officer (e.g., a CEO or top salesperson). The business is the policyowner and beneficiary, receiving the death benefit or disability payments to offset lost earnings or replacement costs.

Option A: Incorrect. Business continuation life typically refers to buy-sell agreements, not key person coverage.

Option B: Incorrect. Business overhead insurance covers ongoing business expenses during an owner’s disability, not key employees.

Option C: Correct. Key person insurance indemnifies a firm for losses due to a key employee’s death or disability.

Option D: Incorrect. Employee welfare plans focus on employee benefits, not indemnifying the firm for losses.

This question aligns with the Prometric content outline under “Life Products,” which covers business insurance products.

Acancelablehealth insurance policy allows the insurer to cancel the policy at any time during the term with proper notice, typically for reasons like non-payment or fraud, as permitted under Oklahoma’s regulations (Title 36 O.S. § 4405). Other policy types, like optionally renewable (insurer can refuse renewal at term end), conditionally renewable (renewal subject to conditions), or term (fixed duration), do not typically allow mid-term cancellation.

Option A: Incorrect. Optionally renewable policies can be non-renewed at term end, not cancelled mid-term.

Option B: Incorrect. Term policies (life or health) run for a fixed period and are not typically cancelled mid-term.

Option C: Incorrect. Conditionally renewable policies restrict renewal, not mid-term cancellation.

Option D: Correct. A cancelable policy allows mid-term cancellation by the insurer.

TheFair Credit Reporting Act (FCRA)(15 U.S.C. § 1681) defines aconsumer reportas information communicated by a consumer reporting agency that bears on a consumer’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living, used to determine eligibility for credit, insurance, or employment. This is relevant in insurance underwriting for consumer reports.

Option A: Incorrect. Information among related entities is not a consumer report.

Option B: Incorrect. Transaction reports between the consumer and the reporter are excluded from the FCRA definition.

Option C: Correct. A consumer report includes information on credit standing and personal characteristics from a reporting agency.

Option D: Incorrect. Credit card authorizations are not consumer reports under FCRA.

Thecoordination of benefits (COB)provision, regulated in Oklahoma (O.A.C. 365:10-5-4), prevents overinsurance by establishing which group health plan isprimary(pays first) and which issecondary(pays remaining covered expenses) when an insured is covered by multiple plans. This ensures claims are paid efficiently without exceeding the total expense. While COB includes rules for dependent children (e.g., the “birthday rule”), its primary purpose is broader, covering all dual-coverage scenarios.

Option A: Incorrect. COB focuses on payment allocation, not ensuring treatment.

Option B: Correct. COB determines payment responsibilities between primary and secondary insurers.

Option C: Incorrect. Determining dependent coverage is a subset of COB, not its primary purpose.

Option D: Incorrect. COB does not protect secondary insurers from paying; it defines their payment role.

The Oklahoma Unfair Claims Settlement Practices Act, under Title 36 O.S. § 1250.5, defines practices that constitute unfair or deceptive acts in the settlement of insurance claims. Knowingly misrepresenting pertinent facts or policy provisions related to coverage to a claimant is explicitly listed as an unfair practice, as it misleads policyholders and undermines fair claim handling.

Option A: Correct. Misrepresenting facts or policy provisions is an unfair claims settlement practice under Oklahoma law.

Option B: Incorrect. There is no specific 45-day requirement to interview parties in the Act; timelines relate to acknowledging or settling claims.

Option C: Incorrect. Maintaining an audit trail is a best practice but not explicitly an unfair claims settlement practice.

Option D: Incorrect. Incomplete policy notes are not specifically cited as an unfair practice under the Act.

This question aligns with the Prometric content outline under “State Insurance Statutes, Rules, and Regulations,” which covers unfair claims practices.

Precertification(or preauthorization) is a process where the insurer reviews and approves certain medical treatments or procedures before they are provided, ensuring they are medically necessary and covered.Concurrent reviewoccurs during the treatment, monitoring ongoing care (e.g., hospital stays) to ensure continued necessity. The primary difference is timing: precertification happens before treatment, while concurrent review happens during treatment.

Option A: Incorrect. Both precertification and concurrent review are cost containment measures, so this is not unique to precertification.

Option B: Incorrect. Both processes involve review by the insurance company.

Option C: Incorrect. Neither typically requires patient consent beyond agreeing to the policy terms.

Option D: Correct. Precertification occurs before treatment, distinguishing it from concurrent review.

This question aligns with the Prometric content outline under “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers health insurance utilization management.

Under Oklahoma law (Title 36 O.S. § 4107), individuals covered by a group life insurance policy have the right to designate a beneficiary and, upon termination of employment or group membership, the right toconvertthe group coverage to an individual life insurance policy without evidence of insurability, typically within 31 days. This conversion right ensures continued coverage.

Option A: Incorrect. Group life policies typically do not have cash surrender value for individual insureds.

Option B: Incorrect. Converting premiums to a different policy is not a standard right.

Option C: Incorrect. Remaining insured after termination requires COBRA (for health) or conversion, not automatic continuation.

Option D: Correct. The insured has the right to convert to an individual policy upon termination.

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

In a whole life insurance policy, thepayment periodrefers to the duration over which premiums are paid (e.g., until age 100, or a limited period like 20 years). A shorter payment period (e.g., 10-pay or 20-pay whole life) requires higher annual premiums because the total cost of the policy is compressed into fewer payments, while a longer payment period (e.g., until age 100) spreads the cost, resulting in lower annual premiums.

Option A: Incorrect. The payment period directly affects the annual premium amount.

Option B: Incorrect. A shorter payment period increases, not decreases, the annual premium.

Option C: Correct. A shorter payment period results in a higher annual premium due to the condensed payment schedule.

Option D: Incorrect. A longer payment period typically lowers the annual premium, not increases it.

This question aligns with the Prometric content outline under “Life Products,” which covers whole life insurance premium structures.

Aninsuredis the person covered by an accident and health insurance policy and entitled to reimbursement for covered health care expenses, as defined in Oklahoma’s Insurance Code (Title 36 O.S. § 4401). The insured (or their assignee, e.g., a provider) receives benefits for services like medical treatments or hospital stays.

Option A: Incorrect. An insurer is the company issuing the policy, not receiving reimbursement.

Option B: Correct. The insured is entitled to reimbursement for covered health care expenses.

Option C: Incorrect. A practitioner provides services, not receives policy reimbursements.

Option D: Incorrect. A PPO is a network of providers, not an individual entitled to benefits.

Medicare Advantage (Part C)plans are private health plans approved by Medicare, includingPPOs,HMOs, andPFFSplans, which provide an alternative to Original Medicare.Social Security Disability Income (SSDI)is a federal program providing income support for disabled individuals, not a Medicare Advantage plan.

Option A: Incorrect. PPO plans are a type of Medicare Advantage plan.

Option B: Incorrect. HMO plans are a type of Medicare Advantage plan.

Option C: Incorrect. PFFS plans are a type of Medicare Advantage plan.

Option D: Correct. SSDI is not a Medicare Advantage plan; it is a disability income program.

This question aligns with the Prometric content outline under “Medicare,” which covers Medicare Advantage plans.

Under Title 36 O.S. § 1435.13, the Oklahoma Insurance Commissioner may take disciplinary action against a licensee for causes such as fraud, providing false information on a license application, or failing to comply with state laws, including tax obligations. However, a misdemeanor conviction does not automatically warrant license action unless it involves a crime of moral turpitude (e.g., fraud, theft) or is directly related to insurance activities.

Option A: Incorrect (is a cause). Admitting to fraud is grounds for license suspension or revocation.

Option B: Incorrect (is a cause). Providing misleading or untrue information on a license application is a violation.

Option C: Correct (is the exception). A misdemeanor conviction alone, without specific relevance to insurance or moral turpitude, is not typically grounds for license action.

Option D: Incorrect (is a cause). Failing to pay state taxes can lead to disciplinary action as a violation of state law.

This question is part of the Prometric content outline under “State Insurance Statutes, Rules, and Regulations,” which covers licensing disciplinary actions.

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.

Credit and accident disability insuranceis designed to make loan payments or pay off a loan balance if the insured becomes disabled due to an accident or sickness, ensuring financial obligations are met. This is a specialized product in Oklahoma (Title 36 O.S. § 4101 et seq.).

Option A: Incorrect. Income replacement is the purpose of disability income insurance, not credit disability.

Option B: Correct. The plan helps pay off a loan during disability.

Option C: Incorrect. Paying medical or dental premiums is not the purpose of credit disability insurance.

Option D: Incorrect. Legal actions are unrelated to credit disability plans.

Under Oklahoma’s Insurance Code (Title 36 O.S. § 1435.2),transacting insuranceincludes activities such as soliciting or selling insurance, engaging in preliminary negotiations for insurance contracts, and delivering insurance contracts or collecting premiums.Gathering prospective buyer information(e.g., lead generation) is not considered transacting insurance unless it involves direct solicitation or negotiation.

Option A: Incorrect (is transacting). Selling insurance is a core part of transacting insurance.

Option B: Incorrect (is transacting). Preliminary negotiations are included in transacting insurance.

Option C: Incorrect (is transacting). Delivering insurance contracts is part of transacting insurance.

Option D: Correct (is not transacting). Gathering prospective buyer information alone does not constitute transacting insurance.

This question falls under the Prometric content outline section on “State Insurance Statutes, Rules, and Regulations,” which covers the definition of transacting insurance.

Afield underwriter, typically an insurance producer, gathers initial information from applicants to assess their insurability and ensure the application is accurate and complete. A main task is ensuring the accuracy and completeness of an individual’s medical information, as this is critical for the insurer’s underwriting decision. Field underwriters do not approve policies or edit reports to guarantee approval; they facilitate the process by providing reliable data.

Option A: Incorrect. Editing reports to ensure approval is unethical and not a field underwriter’s role.

Option B: Incorrect. Approving policies is the role of the insurer’s underwriting department, not the field underwriter.

Option C: Correct. Ensuring accuracy and completeness of medical information is a key task of a field underwriter.

Option D: Incorrect. Obtaining an MIB report is typically done by the insurer, not the field underwriter.

This question aligns with the Prometric content outline under “Underwriting,” which covers the role of field underwriters.

TheOklahoma Life and Health Insurance Guaranty Association, established under Title 36 O.S. § 2025 et seq., protects policyowners of admitted insurers in Oklahoma if the insurer becomesfinancially insolvent. The association provides coverage up to statutory limits (e.g., $300,000 for life insurance death benefits, $100,000 for cash value) to ensure policyholders receive benefits despite the insurer’s insolvency.

Option A: Incorrect. A merger with a foreign insurer does not trigger Guaranty Association protection unless it leads to insolvency.

Option B: Correct. The Guaranty Association protects policyowners when an admitted insurer becomes financially insolvent.

Option C: Incorrect. Failure to meet capital surplus requirements may lead to regulatory action but does not directly trigger Guaranty Association coverage.

Option D: Incorrect. Depleting loss reserves is a financial issue but not the specific condition for Guaranty Association intervention, which requires insolvency.

This question falls under the Prometric content outline section on “State Insurance Statutes, Rules, and Regulations,” which includes knowledge of the Guaranty Association.

Ajoint life policy(first-to-die) covers both spouses under a single contract and pays the death benefit upon thefirst spouse’s death, as defined in Oklahoma’s life insurance regulations (Title 36 O.S. § 4002). This is often used for financial protection needs like mortgages.

Option A: Incorrect. “Dual capacity” is not a standard life insurance term.

Option B: Incorrect. Family term covers dependents but is not specific to first-to-die spousal coverage.

Option C: Incorrect. Whole life is a permanent policy type, not inherently joint.

Option D: Correct. A joint life policy pays on the first spouse’s death.

An individual insurance application typically requires signatures from theapplicant(the person applying for the policy), theinsured(if different from the applicant, e.g., a parent applying for a child), and theproducer(to certify the information provided). Theinsurerdoes not sign the application, as their acceptance is indicated by issuing the policy, per Oklahoma’s insurance application processes (Title 36 O.S. § 1435.2).

Option A: Incorrect. The applicant’s signature is required to confirm the application details.

Option B: Incorrect. The insured’s signature is required if they are not the applicant.

Option C: Incorrect. The producer’s signature is required to verify the application process.

Option D: Correct. The insurer’s signature is not required on the application.

This question falls under the Prometric content outline section on “Underwriting,” which covers application requirements.

Analien insurer, as defined in Oklahoma’s Insurance Code (Title 36 O.S. § 105), is an insurance company formed under the laws of a country other than the United States. This distinguishes it from domestic insurers (formed in Oklahoma) and foreign insurers (formed in another U.S. state).

Option A: Incorrect. An insurer formed in Oklahoma is a domestic insurer.

Option B: Incorrect. An insurer formed in another U.S. state is a foreign insurer.

Option C: Correct. An alien insurer is formed under the laws of a foreign country.

Option D: Incorrect. Geographic proximity is irrelevant; the distinction is based on legal formation.

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

Under Oklahoma law (Title 36 O.S. § 4105), for group life insurance, the insurer issues amaster policyto the group policyowner (e.g., employer). Each insured individual receives acertificate of insurance, which summarizes the coverage provided under the master policy but is not a separate policy itself.

Option A: Incorrect. An individual policy is not issued; the master policy covers the group.

Option B: Correct. A certificate is issued to each insured person under a group life policy.

Option C: Incorrect. An application is part of the enrollment process, not issued to insureds.

Option D: Incorrect. A rider modifies a policy, not issued to insured individuals.

This question aligns with the Prometric content outline under “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers group life insurance provisions.

Anaccelerated death benefit (ADB)provision, regulated in Oklahoma (Title 36 O.S. § 4051), allows an insured with aterminal illness(typically with a life expectancy of 12–24 months) to receive a portion of the life insurance death benefit before death. This provides funds for medical or personal expenses during the insured’s lifetime.

Option A: Incorrect. Disability may trigger other riders (e.g., waiver of premium), not ADB.

Option B: Correct. A terminal illness qualifies for accelerated death benefits.

Option C: Incorrect. Reaching retirement age does not trigger ADB.

Option D: Incorrect. A dependent’s illness is not a qualifying condition for ADB.

This question falls under the Prometric content outline section on “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers accelerated death benefits.

In insurance, a contract is effective when there is mutual consideration, offer, acceptance, and a meeting of the minds. For a health insurance contract, this occurs when the insured pays the initial premium (consideration from the insured) and the insurer issues the policy as applied for (acceptance by the insurer), as outlined in Oklahoma’s Insurance Code (Title 36 O.S. § 4401). The policy becomes binding at this point, assuming all other conditions (e.g., underwriting approval) are met.

Option A: Incorrect. Providing services occurs during claims, not when the contract is effective.

Option B: Incorrect. Paying the premium alone is not sufficient without policy issuance.

Option C: Correct. The contract is effective when the premium is paid and the policy is issued as applied for.

Option D: Incorrect. Signing by both parties is not typically required; issuance and premium payment suffice.

This question aligns with the Prometric content outline under “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers contract formation in health insurance.

In Health Maintenance Organizations (HMOs), thegatekeeper strategyinvolves a primary care physician (PCP) who coordinates patient care and provides referrals to specialists. This ensures that care is managed efficiently and only necessary specialist visits are authorized, aligning with the HMO’s cost-containment model.

Option A: Incorrect. Refusing coverage for preexisting conditions is unrelated to the gatekeeper role and is regulated by HIPAA, not HMO strategy.

Option B: Correct. The gatekeeper strategy requires referrals from a PCP to see specialists, a hallmark of HMO plans.

Option C: Incorrect. HMOs encourage preventive care, not preventing service use, to manage costs.

Option D: Incorrect. Supplemental services at additional cost are not part of the gatekeeper strategy.

This question falls under the Prometric content outline section on “Health Providers and Products,” which covers HMO structures and strategies.

A whole life insurance policy is a type of permanent life insurance that provides coverage for the insured’s entire life, as long as premiums are paid. It typically includes a level premium, a guaranteed death benefit, and a cash value component that accumulates over time. There is no regulatory requirement in Oklahoma or standard insurance practice that mandates a minimum face amount of $1,000 for whole life policies, making this statement incorrect.

Option A: Correct (as the exception). Whole life policies do not require a $1,000 minimum face amount; insurers set minimums based on their underwriting guidelines, often higher.

Option B: Incorrect (describes whole life). Whole life provides lifelong coverage, as per its definition.

Option C: Incorrect (describes whole life). Premiums are typically payable until death or age 100, depending on the policy.

Option D: Incorrect (describes whole life). While whole life provides a death benefit, it also accumulates cash value, but the phrasing “death benefit only” is misleading as it implies no cash value, which is not the exception here.

This question aligns with the Prometric content outline under “Life Products,” which covers the characteristics of whole life insurance.

In Oklahoma, asmall group health insurance planis defined under Title 36 O.S. § 6512 as coverage for employers with2 to 50 employees, aligning with federal standards under the Affordable Care Act (ACA). Companies with more than 50 employees are considered large groups and subject to different regulations.

Option A: Incorrect. 2 employees is the minimum for a small group plan, not the maximum.

Option B: Incorrect. 10 employees is below the maximum limit.

Option C: Incorrect. 40 employees is within the small group range.

Option D: Correct. A company with more than 50 employees is not eligible for a small group plan.

Thegrace periodin life and health insurance policies, as mandated by Oklahoma law (Title 36 O.S. § 4005 for life, § 4405 for health), is a period (typically 31 days) after a premium due date during which the policy remains in force, protecting the policyowner from an unintentional lapse. If the insured dies during the grace period, the death benefit is payable, minus any overdue premiums.

Option A: Incorrect. The period after premium payment but before policy issuance is the underwriting or application phase, not the grace period.

Option B: Incorrect. This is similar to Option A and does not describe the grace period.

Option C: Incorrect. The time between death and benefit payment is the claim processing period, not the grace period.

Option D: Correct. The grace period protects against unintentional policy lapse due to late premium payment.

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

TheConsolidated Omnibus Budget Reconciliation Act (COBRA), as regulated under federal law (29 U.S.C. § 1161 et seq.), requires employers with20 or more employeesto offer continuation of group health insurance coverage to employees and their dependents after certain qualifying events (e.g., termination of employment). This applies to private-sector employers and is enforced in Oklahoma.

Option A: Correct. COBRA applies to employers with 20 or more employees.

Option B: Incorrect. 30 employees is not the threshold.

Option C: Incorrect. 31 employees is not the specific requirement.

Option D: Incorrect. 50 employees is unrelated to COBRA’s threshold.

This question aligns with the Prometric content outline under “State Insurance Statutes, Rules, and Regulations,” which covers federal laws like COBRA.

In group medical insurance, themaster policyis the single contract issued to the employer or group sponsor (e.g., a trust or association) that outlines the terms, conditions, and coverage for the entire group. Individual employees receivecertificates of insurance, which summarize their coverage under the master policy but are not the contract itself.

Option A: Correct. The master policy is the contract issued to the employer for group medical insurance.

Option B: Incorrect. “Employer policy” is not a standard insurance term.

Option C: Incorrect. A certificate policy refers to the document given to individuals, not the group contract.

Option D: Incorrect. “Conglomerate policy” is not a recognized term in insurance.

This question falls under the Prometric content outline section on “Health Providers and Products,” which covers group health insurance structures.

A stranger-owned life insurance (STOLI) policy involves an arrangement where a person or entity without an insurable interest in the insured initiates or procures a life insurance policy, typically for the purpose of financial gain. Oklahoma insurance regulations strictly prohibit such practices, as they violate the principle of insurable interest, which requires the policyowner to have a legitimate financial or emotional stake in the insured’s life.

The Oklahoma Life, Accident, and Health or Sickness Producer Study Guide defines STOLI as "an act, practice, or arrangement where a life insurance policy is procured at or prior to issuance for the benefit of a person who does not have an insurable interest in the insured, often involving third-party investors." This is distinct from a life settlement (option A), which involves the sale of an existing policy, or a settlement option (option B), which refers to payout methods. A financial transaction (option C) is too vague to apply. Thus, option D is correct.

Backdatinga life insurance policy involves setting the policy’s effective date earlier than the current date, often to secure a lower premium based on the insured’s younger age at the earlier date. This requires the policyowner to pay premiums for the backdated period, as permitted under Oklahoma insurance practices (Title 36 O.S. § 4001 et seq.).

Option A: Incorrect. Reinstating a lapsed policy involves restoring coverage after a lapse, not changing the effective date.

Option B: Incorrect. Excluding preexisting conditions applies to health insurance, not backdating life insurance.

Option C: Incorrect. Accepting late premiums relates to the grace period, not backdating.

Option D: Correct. Backdating makes the policy effective on an earlier date.

Ordinary life insurance, synonymous with whole life insurance, is a level premium permanent insurance product that accumulates a cash value (or reserve) over time. By design, the cash value grows and, at the policy’s maturity (typically age 100 or 121, depending on the policy), equals the face amount of the policy, at which point the policy endows (pays out the face amount to the policyowner if the insured is still alive).

Option A: Correct. The cash value (reserve) in a whole life policy eventually equals the face amount at maturity.

Option B: Incorrect. Dividends are paid only in participating policies, not all whole life policies, and are not guaranteed.

Option C: Incorrect. The cash value continues to earn interest or grow, typically at a guaranteed rate, until maturity.

Option D: Incorrect. There are no mandatory cash value distributions; policyowners can choose to access the cash value.

This question aligns with the Prometric content outline under “Life Products,” which covers the cash value accumulation in whole life insurance.

Accidental death insurance(or accidental death and dismemberment, AD&D) covers death resulting from accidental bodily injury, independent of illness or intentional acts.Drowningis an example of an accidental cause of death typically covered under such policies. Exclusions often include death from illness, infections, or self-inflicted injuries, as outlined in standard policy provisions.

Option A: Incorrect. Terminal illness is a natural cause, not covered by accidental death insurance.

Option B: Correct. Drowning is an accidental cause of death, covered by AD&D policies.

Option C: Incorrect. Infections are typically excluded as they are not accidental injuries.

Option D: Incorrect. Self-inflicted wounds are intentional and excluded from coverage.

This question falls under the Prometric content outline section on “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers accidental death coverage.

Underwriters use various sources to assess an applicant’s risk, including the application, Medical Information Bureau (MIB) reports, consumer reports, medical questionnaires, attending physician statements (APS), and physical examinations, as permitted under Oklahoma’s underwriting practices (Title 36 O.S. § 1204). However,genetic testingis generally restricted or prohibited for life and health insurance underwriting due to federal and state laws, such as the Genetic Information Nondiscrimination Act (GINA) of 2008, which limits the use of genetic information in health insurance decisions.

Option A: Incorrect. Medical questionnaires are a standard underwriting tool.

Option B: Incorrect. Attending physician statements provide medical history and are commonly used.

Option C: Incorrect. Physical examinations are often required for underwriting.

Option D: Correct. Genetic testing is typically not allowed for underwriting due to legal restrictions.

In Oklahoma, aninsurance produceris the term defined by law for an individual or entity licensed to sell, solicit, or negotiate insurance contracts. This is outlined in the Oklahoma Insurance Code, which requires producers to obtain a license to engage in these activities for life, accident, and health or sickness insurance.

Option A: Incorrect. An insurance adjuster investigates and settles claims, not negotiates the sale of insurance.

Option B: Correct. An insurance producer is the licensed individual who negotiates the sale of insurance, as defined by Oklahoma law.

Option C: Incorrect. An insurance appraiser evaluates property damage for claims, not related to selling insurance.

Option D: Incorrect. An insurance underwriter assesses risk and determines policy issuance, not sells insurance.

This question falls under the Prometric content outline section on “Licensing,” which includes knowledge of licensing requirements and definitions.

For individuals aged 65 or older who are still working and covered by an employer’s group health plan, Medicare’s role depends on the employer’s size. For employers with fewer than 20 employees (as in this case with 18 employees), Medicare is typically theprimary payer, and the group health plan is secondary. However, if the individual is actively working and enrolled in the group plan, the group plan is primary, and Medicare acts as thesecondary payer, covering claims not fully paid by the group plan, as per Medicare Secondary Payer (MSP) rules.

Option A: Incorrect. The group health plan is primary for active employees, not Medicare.

Option B: Correct. Medicare acts as the secondary insurer, paying claims not fully covered by the group plan.

Option C: Incorrect. Medicare does cover claims as a secondary payer, not denying them to prevent overinsurance.

Option D: Incorrect. Medicare does not require cancellation of group insurance; individuals can maintain both.

This question aligns with the Prometric content outline under “Medicare,” which covers Medicare’s coordination with group health plans.

According to IRS guidelines (Publication 502), premiums paid by an individual for personally owneddisability income insurancearenot tax deductibleas medical expenses or otherwise, unlike certain health insurance premiums. However, benefits received from such policies are generally tax-free if the insured paid the premiums with after-tax dollars.

Option A: Correct. Premiums for personally owned disability insurance are not tax deductible.

Option B: Incorrect. Premiums are not deductible for disability income insurance.

Option C: Incorrect. There is no partial deduction for these premiums.

Option D: Incorrect. Tax deferral applies to certain investment products, not disability premiums.

A deliberate lie by an insured to obtain a lower premium constitutesfraud, defined in Oklahoma’s Insurance Code (Title 36 O.S. § 1204) as an intentional misrepresentation of material facts to deceive the insurer. Fraud can lead to policy rescission or legal penalties.

Option A: Incorrect. Omission is failing to disclose information, not actively lying.

Option B: Correct. A deliberate lie to lower premiums is fraud.

Option C: Incorrect. Concealment is withholding material information, not providing false information.

Option D: Incorrect. Aleatory refers to the uncertain nature of insurance contracts, not misrepresentation.

Term life insuranceprovides coverage for a specific period (e.g., 10, 20 years) and does not accumulate cash value, unlikepermanent life insurance(e.g., whole life), which provides lifelong coverage with cash value. Term policies may be renewable, but this is not automatic unless specified, and premium payment periods are shorter than permanent policies (Title 36 O.S. § 4002).

Option A: Incorrect. Term life accumulates no cash value, not a smaller amount.

Option B: Incorrect. Term life has a shorter premium payment period than permanent life.

Option C: Correct. Term life remains in force for a specific period, unlike lifelong permanent coverage.

Option D: Incorrect. Renewal is not automatic; it depends on the policy’s terms.

Per IRS Publication 502,Long-Term Care (LTC) insurance premiumsare considered qualified medical expenses and may be tax deductible if the taxpayer’s total medical expenses exceed 10% of their adjusted gross income (AGI), subject to age-based limits on the deductible amount. Premiums for disability income insurance (group or personal) and accidental death and dismemberment (AD&D) insurance are not deductible as medical expenses, as they do not directly relate to medical care.

Option A: Correct. LTC insurance premiums are deductible as medical expenses, subject to limits.

Option B: Incorrect. Group disability insurance premiums are not deductible as medical expenses.

Option C: Incorrect. Personal disability income insurance premiums are not deductible.

Option D: Incorrect. AD&D insurance premiums are not deductible as medical expenses.