Question 1
To price a medical-expense product, an insurer must estimate the expected frequency and severity of sickness and disability claims. The pricing concept the insurer needs is:
Show answer & explanation
Correct answer: B - Morbidity
10 exam-style questions with answers and explanations, straight from our 1,030-question bank. Tap an answer to check yourself. When you're ready, take the scored version in the free practice test.
The ARLH exam has 110 questions and runs 2 hours 30 minutes.
These 10 free ARLH questions are organized by exam domain, so you can see how each part of the Arkansas Life & Health Insurance Producer Exam blueprint is tested. Reveal the answer and explanation under each question.
To price a medical-expense product, an insurer must estimate the expected frequency and severity of sickness and disability claims. The pricing concept the insurer needs is:
Correct answer: B - Morbidity
A family's projected needs are $25,000 for final expenses, $175,000 for debt, $300,000 for income replacement, and $80,000 for education. Available offsets are $50,000 in liquid assets and $100,000 of existing usable life insurance. Select the additional face amount indicated by the needs approach.
Correct answer: A - $430,000
A guaranteed-renewable individual health policy remains in force to age 65 if premiums are paid. After one insured develops a costly chronic illness, which action remains permissible at renewal?
Correct answer: C - Raise premiums uniformly for the entire insured class
An indexed universal life segment records a 12% index gain. The contract applies an 80% participation rate, then a 7% cap, and has a 0% floor. Ignoring any spread, choose the correct crediting-and-value pairing.
Correct answer: A - 7%; policy charges may still reduce account value
After an Arkansas individual health policy lapses, the insurer accepts the overdue premium without requiring a reinstatement application. The insured is injured in an accident the next day and develops an unrelated sickness eight days later. Identify the covered loss or losses.
Correct answer: A - The accident, but not the sickness
After paying premiums on a whole life policy for 14 years, an owner can no longer continue premiums. She wants coverage to remain permanent and accepts a smaller death benefit. Which nonforfeiture option best meets her objective?
Correct answer: B - Reduced paid-up insurance
A provider bills $15,000 for an in-network procedure, but the plan's allowed amount is $12,000. The insured has $1,000 of deductible remaining, and the plan pays 80% after the deductible. No copay applies, and balance billing is prohibited. Calculate the insured's total responsibility.
Correct answer: B - $3,200
A 52-year-old takes a policy loan from a life contract classified as a modified endowment contract. The contract's gain exceeds the loan amount, and no federal penalty exception applies. How is this loan generally taxed?
Correct answer: D - As a gain-first taxable distribution, generally with the 10% additional tax
At an Arkansas insurance fair, a producer gives every visitor a branded flashlight costing $85 wholesale, regardless of purchase. The producer also promises an $85 grocery gift card only to anyone who buys a policy. Which assessment is correct?
Correct answer: C - The flashlight may fit the advertising-token exception; the gift card is rebating
While traveling, an Arkansas HMO member experiences an apparent emergency. The nearest emergency department is outside the network, and prior authorization is not practicable. What coverage rule governs the claim?
Correct answer: D - The HMO cannot deny solely because prior authorization was impracticable
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