17 Free South Carolina Life & Health Practice Questions: Accident and Sickness Concepts and Field Underwriting (2026)

Question 1 (Chapter 6)

Under South Carolina law and standard disability income policy provisions, when is a subsequent disability period considered a recurrence of the original disability rather than a new claim?

• A) If it occurs within 30 days of returning to full duty and is due to the same or related cause.
• B) If it occurs within 6 months of returning to work and is due to the same injury or sickness.
• C) Only if the insured has not received any benefits for the original disability period.
• D) If the insured has not worked more than 10 days since the original disability began.

Question 2 (Chapter 6)

A South Carolina producer is completing an application for accident and sickness insurance. Which action best demonstrates compliance with HIPAA privacy regulations and the Fair Credit Reporting Act (FCRA) during the application process?

• A) Informing the applicant that their medical information may be shared with the insurer's marketing affiliates for promotional offers.
• B) Storing the completed application in an unlocked file cabinet in the producer's home office for convenience.
• C) Using the applicant's credit score to determine premium rates without disclosure, as permitted under South Carolina state law.
• D) Obtaining the applicant's written authorization to obtain an MIB report and explaining how their personal information will be used, with access limited to underwriting purposes.

Question 3 (Chapter 6)

In South Carolina, which of the following scenarios best establishes a valid insurable interest for an individual purchasing accident and sickness insurance on another person?

• A) A distant cousin purchasing a policy on a relative they rarely see or communicate with.
• B) A friend purchasing a policy on another friend solely because they believe it is a good investment.
• C) A neighbor purchasing a policy on another neighbor's child without the parent's knowledge or consent.
• D) A business partner purchasing disability income insurance on the other partner, whose death or disability would cause financial harm to the business.

Question 4 (Chapter 6)

In the context of managed care plans, which feature is most characteristic of a Health Maintenance Organization (HMO) as opposed to a Preferred Provider Organization (PPO)?

• A) The ability to see any provider, in-network or out-of-network, without a referral and still receive partial reimbursement.
• B) Requirement to select a primary care physician (PCP) who provides referrals for specialist care.
• C) Higher premiums but lower out-of-pocket costs for out-of-network services.
• D) No requirement for pre-authorization of any medical services.

Question 5 (Chapter 6)

Under South Carolina law, which of the following statements is true regarding the taxation of employer-paid premiums for group disability income insurance and the resulting benefits received by employees?

• A) Employer-paid premiums are tax-deductible for the employer, but benefits received by employees are taxable as ordinary income.
• B) Employer-paid premiums are tax-deductible for the employer, and benefits received by employees are tax-free.
• C) Employer-paid premiums are not tax-deductible for the employer, and benefits received by employees are taxable as ordinary income.
• D) Employer-paid premiums are not tax-deductible for the employer, and benefits received by employees are tax-free.

Question 6 (Chapter 6)

A South Carolina resident has an individual disability income policy. They become disabled and begin receiving benefits. Which of the following actions by the insurer would most likely violate the policy's guaranteed renewable provision?

• A) Increasing the premium due to the insured's change in occupation to a more hazardous job.
• B) Canceling the policy because the insured made a misrepresentation on the original application.
• C) Adding an exclusion for the specific condition that caused the disability.
• D) Refusing to renew the policy at the end of the term because the insured has filed a claim.

Question 7 (Chapter 6)

A South Carolina resident applies for an individual disability income policy. The producer notices the applicant frequently participates in high-risk activities like rock climbing. What is the producer's responsibility regarding this information during field underwriting?

• A) Omit the information to avoid prejudicing the insurer's decision.
• B) Inform the applicant that such activities automatically disqualify them from coverage.
• C) Advise the applicant to stop the activities before applying, as the insurer will not ask about them.
• D) Accurately record the information on the application as it is material to the risk being underwritten.

Question 8 (Chapter 6)

A South Carolina resident has a disability income policy with a 90-day elimination period. They become disabled and are unable to work. On which day after the onset of disability would benefits typically begin, assuming the condition continues?

• A) Day 1
• B) Day 90
• C) Day 91
• D) Day 180

Question 9 (Chapter 6)

A South Carolina producer is completing an accident and sickness insurance application for a client who discloses they are currently receiving Social Security Disability Insurance (SSDI) benefits. What is the producer's responsibility regarding this information during field underwriting?

• A) Inform the client that SSDI benefits automatically disqualify them from purchasing private disability income insurance.
• B) Advise the client to terminate their SSDI benefits before applying for private coverage to avoid coordination of benefits issues.
• C) Disclose the SSDI receipt to the insurer as it is relevant medical and financial information affecting risk assessment.
• D) Omit this information from the application to prevent potential discrimination based on disability status.

Question 10 (Chapter 6)

A producer in South Carolina is explaining the tax treatment of disability income benefits to a client. Which statement is accurate regarding individual disability income insurance premiums and benefits?

• A) Premiums are tax-deductible, and benefits are received tax-free.
• B) Premiums are paid with pre-tax dollars through a cafeteria plan, and benefits are fully taxable.
• C) Both premiums and benefits are always taxable as ordinary income.
• D) Premiums are paid with after-tax dollars, and benefits are received tax-free.

Question 11 (Chapter 6)

In the context of health insurance coordination of benefits, what is the primary purpose of a 'nonduplication of benefits' provision?

• A) To allow the insured to receive payments from multiple policies exceeding 100% of actual medical expenses.
• B) To designate which policy pays first when the insured is covered under more than one plan.
• C) To eliminate the need for subrogation when a third party is liable for the injury.
• D) To ensure that the total benefits paid by all insurance policies do not exceed 100% of the allowable expenses.

Question 12 (Chapter 6)

A South Carolina producer delivers an individual accident and sickness policy to a client. The policy includes a 10-day free look provision as required by South Carolina law. The producer hands the policy to the client and says, 'You have 10 days to review this. If you don't want it, just throw it away.' Which required action has the producer failed to perform?

• A) Obtain a signed delivery receipt acknowledging the free look period start date.
• B) Explain the free look provision and the procedure for returning the policy for a full refund.
• C) Collect the first modal premium payment at the time of delivery.
• D) Provide a copy of the application to the insured at delivery.

Question 13 (Chapter 6)

A South Carolina producer is explaining the 'aleatory' characteristic of an insurance contract to a client purchasing an accident and sickness policy. Which statement accurately describes this characteristic?

• A) The contract is prepared by the insurer and the insured must accept it as written, with no negotiation of terms.
• B) Only the insurer makes a legally enforceable promise to pay benefits if a covered loss occurs.
• C) The values exchanged by the parties are unequal and depend on an uncertain future event.
• D) The contract is conditional on the insured performing certain duties, such as paying premiums and providing proof of loss.

Question 14 (Chapter 6)

A South Carolina producer collects the initial premium from an applicant for an accident and sickness policy and issues a conditional receipt. The applicant completes a medical exam two days later. The insurer's underwriter approves the application at standard rates five days after the exam. When does coverage become effective under the conditional receipt?

• A) The date the application was signed.
• B) The date the initial premium was collected.
• C) The date the medical exam was completed.
• D) The date the underwriter approved the application.

Question 15 (Chapter 6)

A South Carolina producer is completing an accident and sickness insurance application with a client who discloses they are currently receiving workers' compensation benefits for a repetitive stress injury. The client asks if this will affect their new policy. Which statement accurately describes the producer's responsibility and the likely policy outcome?

• A) The producer should advise the client to omit the workers' compensation claim from the application to avoid a rating or exclusion.
• B) The producer must accurately record the workers' compensation claim on the application; the insurer will likely apply an exclusion rider for the specific condition or related conditions.
• C) The producer should inform the client that workers' compensation benefits are irrelevant to individual disability income underwriting and need not be disclosed.
• D) The producer must decline to submit the application because any applicant receiving workers' compensation is automatically uninsurable for disability income coverage.

Question 16 (Chapter 6)

A South Carolina resident is injured in an automobile accident caused by a negligent third party. The resident's health insurer pays $30,000 in medical benefits under a policy that includes a subrogation clause. The resident later settles with the third party's auto insurer for $120,000, which includes compensation for medical expenses, lost wages, and pain and suffering. The health insurer asserts a subrogation right. Which statement is accurate under South Carolina law?

• A) The health insurer is entitled to recover the full $30,000 from the settlement proceeds, regardless of whether the insured has been made whole.
• B) The health insurer's subrogation right is limited to the portion of the settlement specifically allocated to medical expenses.
• C) The health insurer cannot assert subrogation because South Carolina follows the 'made whole' doctrine, which requires the insured to be fully compensated before the insurer recovers.
• D) The health insurer can recover only if the settlement agreement explicitly states that a portion is for medical expenses.

Question 17 (Chapter 6)

A South Carolina producer is explaining the tax treatment of disability income benefits to a client who pays premiums with after-tax dollars for an individual policy. The client becomes disabled and begins receiving monthly benefits. Which statement is correct regarding the federal income tax treatment of these benefits?

• A) The benefits are fully taxable as ordinary income because the policy provides disability coverage.
• B) The benefits are partially taxable based on the ratio of employer contributions to total premiums paid.
• C) The benefits are received income tax-free because the premiums were paid with after-tax dollars.
• D) The benefits are taxable only if they exceed the insured's pre-disability income.