Ok-Life-Accident-and-Health-or-Sickness-Producer Exam Dumps - Oklahoma Life, Accident, and Health or Sickness Producer Exam

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.

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.

Disability income insurance policies are designed to replace a portion of the insured’s income if they become disabled and unable to work. These policiesmost often pay benefits in the form of periodic income, typically monthly, to provide ongoing financial support during the disability period, as outlined in Oklahoma’s health insurance regulations (Title 36 O.S. § 4405). Lump sum payments or annuities are less common and usually associated with other types of coverage.

Option A: Incorrect. Annuities provide retirement income, not disability benefits.

Option B: Correct. Disability policies typically pay periodic (e.g., monthly) income.

Option C: Incorrect. Lump sum reimbursements are rare in disability policies; periodic payments are standard.

Option D: Incorrect. Lump sum payments based on projected income are not typical for disability insurance.

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.

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.

Afraternal benefit society, as defined in Oklahoma’s Insurance Code (Title 36 O.S. § 2711), is an incorporated organization without capital stock, operating on a lodge system with a representative form of government, and providing insurance benefits solely for its members and their beneficiaries. Unlike commercial insurers, fraternal benefit societies arenot-for-profitentities, making “for profit” an incorrect characteristic.

Option A: Incorrect (is a characteristic). Fraternal benefit societies are incorporated entities.

Option B: Incorrect (is a characteristic). They operate without capital stock, distinguishing them from stock insurers.

Option C: Correct (is not a characteristic). Fraternal benefit societies are not-for-profit, not for-profit organizations.

Option D: Incorrect (is a characteristic). They exist solely for the benefit of their members.

This question aligns with the Prometric content outline under “State Insurance Statutes, Rules, and Regulations,” which covers types of insurers, including fraternal benefit societies.