KS Life & Health Exam Flashcards

Q: Does Kansas require pre-licensing education for a life and health license?

No. Kansas has no mandatory pre-licensing education requirement -- candidates may register directly for exam 12-KS-05 through Pearson VUE. Kansas does, however, require a unique tax clearance certificate from the Kansas Department of Revenue before the license is issued, plus fingerprint-based state and FBI background checks.

Q: How many questions are on the Kansas Life & Health exam and what is the passing score?

The combined Life, Accident & Health exam (12-KS-05) delivers 154 total questions -- 140 scored plus 14 unscored pretest items -- within a 150-minute time limit, with a 70% passing score. Single-line Life or Accident & Health exams each deliver 100 total questions (84 scored + 16 pretest).

Q: What continuing education does Kansas require after licensing?

Kansas resident producers must complete 18 hours of continuing education every 2 years, including 3 hours of ethics. Excess hours do not carry over to the next term, and renewal is biennial, tied to the producer's birth year (an even birth year renews in even years).

Q: What is the Kansas life insurance free-look period?

Under K.A.R. 40-2-15, buyers of an individual life policy get at least 10 days from policy delivery to return it for a full premium refund. Kansas long-term care policies carry a longer 30-day free look.

Q: What does the Kansas Life & Health Insurance Guaranty Association (KLHIGA) cover?

KLHIGA pays covered claims if a member insurer becomes insolvent, up to $300,000 in life death benefits, $100,000 in life cash surrender value, $250,000 in annuity value, and $500,000 in major medical benefits, capped at an aggregate $300,000 per individual across all lines with one insurer. Producers may never use KLHIGA protection as a sales inducement.

Q: What happens if a candidate fails the Kansas licensing exam?

Kansas candidates who fail must wait at least 7 days before retaking the exam, with a new exam fee due for each attempt through Pearson VUE. There is no limit on the number of retakes allowed.

Question 1

Risk (Pure vs. Speculative)

Accepted Answer

Risk is uncertainty of financial loss. Insurance covers only PURE risk (chance of loss or no loss, never a gain -- e.g., death, illness, fire). Speculative risk (chance of loss OR gain, e.g., gambling, investing) is never insurable.

Question 2

Insurable Interest (Life Insurance)

Accepted Answer

A financial or emotional interest in the continued life of the insured, required at the TIME OF APPLICATION (not at death). A person has unlimited insurable interest in their own life; interest in another requires a close family or financial relationship.

Question 3

Principle of Indemnity

Accepted Answer

Insurance restores the insured to the same financial position held before a loss -- no profit from a claim. Applies fully to property/casualty and reimbursement-type health coverage; life insurance is a VALUED contract that pays a stated face amount regardless of actual financial loss.

Question 4

Adverse Selection

Accepted Answer

The tendency of higher-risk individuals to seek or continue insurance at a greater rate than average-risk individuals, since they expect to benefit more. Underwriting exists specifically to identify and control adverse selection.

Question 5

Law of Large Numbers

Accepted Answer

The statistical principle that the larger the number of similar exposure units (insured individuals) pooled together, the more accurately actual losses will match predicted losses. It is the actuarial foundation for setting fair, adequate premiums.

Question 6

Term Life Insurance

Accepted Answer

Provides pure death-benefit protection for a specified period (e.g., 10, 20, 30 years) with no cash value. Lowest initial premium of any life product. May be level, increasing, or decreasing, and often renewable or convertible to permanent coverage.

Question 7

Whole Life Insurance

Accepted Answer

Permanent coverage with a level premium for life, a guaranteed cash value, and a guaranteed level death benefit. Cash value grows tax-deferred and is available as a policy loan; the policy endows (cash value equals face amount) at the contract's maturity age.

Question 8

Universal Life Insurance

Accepted Answer

Flexible-premium permanent insurance that unbundles cost of insurance, expenses, and an interest-crediting cash account. Death Benefit Option A is level (face amount only); Option B is increasing (face amount plus cash value).

Question 9

Variable Life / Variable Universal Life

Accepted Answer

Permanent life insurance whose cash value is invested in separate-account subaccounts chosen by the owner. Cash value and (for VUL) death benefit fluctuate with investment performance; because it is a security, selling it requires a FINRA securities registration in addition to a life license.

Question 10

Nonforfeiture Options

Accepted Answer

The three ways a policyowner can use accumulated cash value if premiums stop: (1) cash surrender value, (2) reduced paid-up insurance (lower face, coverage for life), or (3) extended term insurance (full face, coverage for a limited time).

Question 11

Dividend Options (Participating Policies)

Accepted Answer

On participating whole life policies, dividends may be taken as: cash, reduce premium, accumulate at interest, buy paid-up additions, or purchase one-year term insurance. Dividends are a return of overpaid premium and are NOT guaranteed or generally taxable.

Question 12

Life Insurance Settlement Options

Accepted Answer

How death proceeds are paid to a beneficiary: lump sum, interest only, fixed period, fixed amount, or life income (straight life, life with period certain, or joint and survivor). Life income options guarantee payments for the payee's lifetime.

Question 13

Common Life Insurance Riders

Accepted Answer

Waiver of Premium keeps the policy in force with no premium due during the insured's total disability. Accelerated (Living) Benefit advances part of the death benefit for a terminal or chronic illness. Guaranteed Insurability allows buying additional coverage at set ages without new proof of insurability.

Question 14

Beneficiary Designations

Accepted Answer

Primary beneficiary receives proceeds first; contingent beneficiary receives them if the primary predeceases the insured. Revocable designations can be changed anytime by the owner; irrevocable designations require the beneficiary's consent to change. Per stirpes passes a deceased beneficiary's share to their heirs; per capita splits it among surviving beneficiaries.

Question 15

Entire Contract Provision & Misstatement of Age or Sex

Accepted Answer

The Entire Contract provision states the policy plus the attached application form the complete agreement -- no outside statements can modify it. The Misstatement of Age or Sex provision never voids a policy; instead the insurer adjusts the death benefit to what the premium paid would have purchased at the correct age or sex.

Question 16

Fixed Annuity

Accepted Answer

Pays a guaranteed minimum interest rate on premiums; the insurer bears the investment risk. Principal and a minimum return are guaranteed, making it a low-risk, insurance-regulated (not securities) product.

Question 17

Variable Annuity

Accepted Answer

Premiums are invested in separate-account subaccounts chosen by the owner; account value and payout fluctuate with market performance, so the OWNER bears the investment risk. It is a security -- selling it requires a FINRA registration plus a life/annuity license.

Question 18

Fixed-Indexed Annuity

Accepted Answer

Credits interest based on the performance of an external index (e.g., S&P 500) subject to a cap, participation rate, or spread, with a guaranteed floor (commonly 0%) protecting principal from index losses. Regulated as insurance, not a security.

Question 19

Accumulation Phase vs. Annuitization (Payout) Phase

Accepted Answer

Accumulation phase: premiums grow tax-deferred before income begins. Annuitization phase: the contract converts accumulated value into a stream of income payments under a chosen payout option; once annuitized, the decision is generally irrevocable.

Question 20

Annuity Payout (Settlement) Options

Accepted Answer

Life income (payments for the annuitant's lifetime, highest per-payment amount), life income with period certain (guarantees a minimum payment period to a beneficiary), joint and survivor (continues to a second annuitant), and fixed period or fixed amount (payments for a set time or set dollar amount).

Question 21

Annuity Surrender Charge & Free Withdrawal

Accepted Answer

A declining penalty (often starting near 7-8% and dropping over several years) charged for withdrawing more than the contract's free-withdrawal amount (commonly about 10% of value per year) during the surrender period -- a key concern when evaluating an annuity replacement.

Question 22

Medical Expense Insurance

Accepted Answer

Reimburses or pays providers for the cost of medical care -- hospital, surgical, and physician's expense coverage, often bundled today into comprehensive major medical plans that combine a deductible, coinsurance, and an out-of-pocket maximum.

Question 23

Disability Income Insurance

Accepted Answer

Replaces a portion of earned income when the insured cannot work due to sickness or injury. Key features: the elimination period (waiting period before benefits start, acting like a time deductible) and the definition of disability -- own-occupation (cannot do their own job) vs. any-occupation (cannot do any job suited to training).

Question 24

HMO (Health Maintenance Organization)

Accepted Answer

Managed-care plan requiring enrollees to use in-network providers and select a primary care physician (PCP) who acts as a gatekeeper and issues referrals to specialists. Typically the lowest cost with the least flexibility of the major plan types.

Question 25

PPO (Preferred Provider Organization)

Accepted Answer

Managed-care plan offering both in-network and out-of-network coverage (out-of-network costs more) with no PCP gatekeeper and no referral required to see a specialist. More flexible and generally more expensive than an HMO.

Question 26

POS (Point-of-Service) Plan

Accepted Answer

A hybrid managed-care plan combining HMO and PPO features: it requires a PCP and referrals like an HMO but allows out-of-network care at a higher cost like a PPO.

Question 27

ACA Essential Health Benefits & Guaranteed Issue

Accepted Answer

The Affordable Care Act requires individual and small-group plans to cover 10 essential health benefit categories (e.g., hospitalization, maternity, prescription drugs, mental health) and prohibits denying coverage or charging more for pre-existing conditions. Guaranteed issue means insurers must accept all applicants during open/special enrollment regardless of health.

Question 28

Medicare Parts A, B, C, D

Accepted Answer

Part A: hospital insurance (inpatient care). Part B: medical insurance (outpatient/physician services), funded partly by premiums. Part C (Medicare Advantage): private plans that replace Original Medicare A/B. Part D: prescription drug coverage.

Question 29

Medicaid

Accepted Answer

A joint federal-state, means-tested public assistance program providing health coverage to eligible low-income individuals and families. Eligibility and specific benefits vary by state; unlike Medicare, it is not based on age or work history.

Question 30

HSA (Health Savings Account)

Accepted Answer

A tax-advantaged savings account available only to individuals enrolled in a qualifying High Deductible Health Plan (HDHP). Offers a triple tax advantage: contributions are tax-deductible, growth is tax-deferred, and withdrawals for qualified medical expenses are tax-free. Unused funds roll over year to year and stay with the owner.

Question 31

COBRA Continuation Coverage

Accepted Answer

Federal law (employers with 20+ employees) allowing a qualified beneficiary to continue group health coverage after a qualifying event (job loss, reduced hours, divorce, death) for up to 18 months (employee) or 29/36 months in certain circumstances, at the beneficiary's own cost plus up to a 2% administrative fee.

Question 32

Taxation of Life Insurance Death Proceeds

Accepted Answer

Death benefits paid in a lump sum to a named beneficiary are generally received income-tax-free under IRC Section 101(a). If proceeds are left with the insurer and paid out over time, the principal remains tax-free but any INTEREST earned is taxable as ordinary income.

Question 33

Modified Endowment Contract (MEC)

Accepted Answer

A life policy that fails the IRS 7-pay test by having premiums paid in too quickly relative to the death benefit. MEC withdrawals and loans are taxed LIFO (gain out first) as ordinary income, with a 10% IRS penalty on the taxable portion if withdrawn before age 59 1/2. The death benefit itself is still generally income-tax-free.

Question 34

Qualified Retirement Plans

Accepted Answer

Employer retirement plans (e.g., 401(k), pension) that meet IRS requirements under ERISA for favorable tax treatment: employer/employee contributions are tax-deductible, growth is tax-deferred, and the plan must not discriminate in favor of highly compensated employees. Withdrawals are taxed as ordinary income.

Question 35

Traditional IRA vs. Roth IRA Taxation

Accepted Answer

Traditional IRA: contributions may be tax-deductible, growth is tax-deferred, and withdrawals are taxed as ordinary income; RMDs are required starting at age 73. Roth IRA: contributions are made with after-tax dollars, but qualified withdrawals (including growth) are completely tax-free, and there are no lifetime RMDs for the original owner.

Question 36

Kansas Insurance Department (KID) & the Commissioner

Accepted Answer

KID, headquartered in Topeka, enforces Chapter 40 of the Kansas Statutes Annotated (K.S.A.) and regulates all insurance sold in Kansas. Kansas is one of only 11 states where the Insurance Commissioner is ELECTED by voters (not appointed by the Governor), serving a 4-year term.

Question 37

Kansas Combined Life, Accident & Health Exam (12-KS-05)

Accepted Answer

Delivered by Pearson VUE: 154 total questions (140 scored + 14 unscored pretest), 150-minute (2.5-hour) time limit, 70% passing score. Kansas has NO mandatory pre-licensing education requirement -- candidates may schedule the exam directly.

Question 38

Kansas Producer Continuing Education (CE)

Accepted Answer

Kansas resident producers must complete 18 total CE hours every 2 years, including 3 hours of ethics. Excess hours do NOT carry over to the next term, and a course cannot be repeated for credit within the same term. Renewal is biennial, keyed to the producer's birth year (even birth year renews in even years).

Question 39

Kansas Tax Clearance & Producer Fiduciary Duty

Accepted Answer

Kansas uniquely requires a tax clearance certificate from the Kansas Department of Revenue before a resident license is issued, in addition to fingerprint-based state and FBI background checks. Once licensed, premiums collected are trust funds under K.S.A. 40-247 -- commingling with personal or operating funds is prohibited even if the client is later made whole.

Question 40

Kansas Life Insurance Free-Look (Right to Return)

Accepted Answer

Under K.A.R. 40-2-15, the buyer of an individual life policy has at least 10 days from DELIVERY (not application or issue) to return the policy for a full 100% premium refund. This differs from the 30-day free look required on Kansas long-term care policies.

Question 41

Kansas Grace Period, Incontestability & Suicide Clause

Accepted Answer

Kansas life policies require a grace period of at least 31 days (coverage stays in force; an unpaid premium is deducted from a death claim). The incontestability period is capped at 2 years from issue, and the suicide exclusion is also capped at 2 years (inside that window, only premiums paid are refunded).

Question 42

Kansas Replacement Regulation (K.A.R. 40-2-12)

Accepted Answer

Requires a signed replacement notice comparing old vs. new coverage, notice to the existing insurer (which gets a roughly 20-day conservation window), and disclosure that a fresh 2-year incontestability/suicide period restarts. Borrowing MORE than 25% of an existing policy's loan value to fund a new premium also triggers replacement rules.

Question 43

Kansas Annuity Best-Interest Standard

Accepted Answer

Kansas adopted the NAIC Suitability in Annuity Transactions Model with its 2020 best-interest amendment, requiring producers to satisfy four obligations before recommending an annuity: care, disclosure, conflict-of-interest avoidance, and documentation, based on a documented consumer profile.

Question 44

Kansas Health & Long-Term Care Free-Look Periods

Accepted Answer

Individual accident-and-health policies carry a 10-day free look from delivery. Long-term care (LTC) policies carry a longer 30-day free look and must be guaranteed renewable; the insurer must OFFER (not automatically include) inflation protection and a nonforfeiture benefit, which the applicant may decline in writing.

Question 45

Kansas Medigap Open Enrollment Period

Accepted Answer

A one-time, 6-month guaranteed-issue window beginning the first month a person is both age 65+ and enrolled in Medicare Part B -- no health questions, no denial, no surcharge. Plans C and F are closed to anyone newly eligible for Medicare on or after January 1, 2020; Plan G is the top comprehensive option for those buyers.

Question 46

Kansas Uniform Individual Accident & Sickness Provisions

Accepted Answer

Grace period is mode-dependent: 7 days (weekly premium), 10 days (monthly), or 31 days (annual/other). Notice of claim is due within 20 days of loss, and proof of loss within 90 days. Legal action on a claim cannot be brought sooner than 60 days or later than 3 years after proof of loss.

Question 47

Kansas Unfair Trade Practices Act (K.S.A. 40-2401 et seq.)

Accepted Answer

Bans unfair methods of competition and deceptive acts, including rebating (any inducement not stated in the policy -- policy dividends and nominal-value items like a $25 pen are exceptions), twisting (misrepresentation to induce replacement), and churning (repeated same-insurer replacement to harvest new commissions).

Question 48

Kansas Unfair Claim Settlement Practices (K.S.A. 40-2404(9))

Accepted Answer

Prohibited acts -- such as failing to promptly investigate or acknowledge claims, or making lowball offers to force litigation -- violate the statute only when committed WITH SUCH FREQUENCY as to indicate a general business practice; a single isolated mistake is not itself a UTPA violation.

Question 49

Kansas Life & Health Insurance Guaranty Association (KLHIGA) Limits

Accepted Answer

Created in 1972 under K.S.A. 40-3001 et seq. to pay covered claims when a member insurer becomes insolvent. Per-person caps: $300,000 life death benefit, $100,000 life cash surrender value, $250,000 annuity value, $500,000 major medical -- with an overall $300,000 aggregate cap per individual across all coverages with one insolvent insurer.

Question 50

KLHIGA Advertising Prohibition (K.S.A. 40-3019)

Accepted Answer

Producers and insurers may NOT use the existence of the Kansas Guaranty Association to sell, solicit, or induce an insurance purchase, or imply coverage is as safe as an FDIC-insured bank deposit. Producers may only give accurate information if a consumer asks unprompted; a required Notice of Protection is still delivered with each new policy.

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