Free Arizona Insurance Practice Test

An HSA can only be opened if the individual is enrolled in a qualified High Deductible Health Plan (HDHP). HSA contributions are tax-deductible, grow tax-free, and are tax-free when used for qualified medical expenses. Unused funds roll over year to year.

The Affordable Care Act prohibits health insurers in the individual and small group markets from denying coverage or charging higher premiums based on an applicant's pre-existing medical conditions. This is a core consumer protection of the ACA.

Key person insurance is owned by and payable to the business. It compensates the business for the financial impact of losing a key employee — the death benefit helps cover costs like recruiting/training a replacement and lost revenue during the transition period.

Misrepresentation is an intentional unfair trade practice — making false, misleading, or deceptive statements about insurance products to induce someone to buy. It includes misrepresenting policy benefits, terms, dividends, or the insurer's financial stability.

Underwriters may use an investigative consumer report (interviews with associates about character/lifestyle) and the Medical Information Bureau (MIB) report. Under FCRA, applicants must be notified that such reports may be obtained.

The guaranteed insurability rider lets the insured buy additional coverage at future option dates (e.g., marriage, birth of child, specified birthdays) without a new medical exam, regardless of health changes.

Medicare eligibility begins at age 65 for most Americans. It is also available to individuals under 65 who have received Social Security Disability Insurance (SSDI) for 24 months, or who have ALS or end-stage renal disease (ESRD).

A life policy becomes a Modified Endowment Contract when cumulative premiums paid in the first seven years exceed the IRS seven-pay limit. A modified premium schedule, a seven-year limited-payment plan that stays within the limit, or simply taking a policy loan does not by itself create a Modified Endowment Contract.

Churning occurs when a producer uses the cash value or dividends from a client's existing policy to fund a new policy — primarily to earn a new commission rather than to benefit the client. It is an unfair trade practice prohibited by Arizona law.

COBRA (Consolidated Omnibus Budget Reconciliation Act) allows qualified employees and dependents to continue group health coverage for up to 18 months (longer in some cases) after qualifying events. The individual pays the full premium (employer + employee share) plus up to a 2 percent administrative fee.

In the ACA marketplace metal tiers, Bronze plans have the lowest monthly premiums but the highest deductibles and out-of-pocket costs. Platinum plans have the highest premiums but lowest cost-sharing. Bronze is best for healthy individuals who rarely need care.

Medicaid is a joint federal-state program providing health coverage to eligible low-income individuals and families, people with disabilities, and others. Eligibility is based on income and assets, not age. Each state administers its own Medicaid program within federal guidelines.

A named perils policy covers only the perils explicitly listed (e.g., fire, theft, windstorm). If the cause of loss is not on the list, there is no coverage. This is more restrictive than an open perils policy.

A surety bond is a three-party agreement: the principal (who must perform), the obligee (who requires the bond and is protected), and the surety (who guarantees the principal's performance). If the principal fails, the surety pays the obligee but can seek reimbursement from the principal.

Under the traditional contributory negligence doctrine, any fault by the plaintiff bars all recovery. Most states now use comparative negligence instead, which apportions damages by fault percentage.

Comprehensive coverage pays for damage to the insured's vehicle from causes OTHER than collision: theft, vandalism, fire, flood, hail, falling objects, and animal strikes. It is subject to a deductible.

Permanent Partial Disability (PPD) benefits compensate workers who have a permanent impairment but can still work in some capacity. The benefit is often calculated using a schedule of injuries or a percentage of total disability.

EPLI covers the employer against employment-related claims by employees — wrongful termination, discrimination, harassment, retaliation, and failure to promote. These exposures are excluded by the standard CGL.

Products-completed operations covers liability for bodily injury or property damage that occurs AFTER the product has been sold/distributed or the work has been completed. For example, a contractor's completed renovation causes a leak that damages a customer's belongings.

Under FCRA, when an insurer takes adverse action based on information in a consumer/credit report, it must notify the applicant and provide the name and contact information of the reporting agency so the consumer can review and dispute the report.

Arizona requires insurers to offer uninsured motorist coverage at limits equal to the liability limits. The insured may reject this coverage, but the rejection must be in writing. If no rejection is signed, UM coverage is automatically included.

Arizona (ARS 28-4135) penalizes uninsured driving with fines, suspension of the driver's license, and suspension of the vehicle registration. The driver must provide proof of insurance to reinstate.

A claims-made policy covers claims first reported during the policy period, regardless of when the incident occurred (subject to a retroactive date). An occurrence policy, by contrast, covers events that occur during the policy period.

Arizona requires licensees to notify DIFI of a change of address (and certain other changes, such as a change of legal name) within 30 days. Keeping current contact information on file is a standard licensing obligation.