chapter 8

Basic Coverage Plans - There are 3 basic coverage plans:

Plan A Plan B Plan C

A fiduciary of a group plan may not:

Terminate a group health or group life policy by failing to pay premiums Terminate a group health plan by failing to fund the plan Willfully fail to give all insureds at least 45 days' notice before terminating a group contract

Biennial Compliance Period

The 24-month period during which an agent or adjuster must comply with continuing education requirements.

The insurer must give the producer a copy of the termination notice within

15 days after notifying the Commissioner of the termination.

How long must an insurer keep a Policy Summary?

3 years after last use

If a nonresident licensee moves to North Carolina and desires licensure in this state, he/she must apply for resident licensure within ______ days of establishing legal residence.

90

Ethics Course

A continuing education course that deals with usage and customs among members of the insurance profession involving their moral and professional duties toward one another, toward clients, toward insureds, and toward insurers.

Adjuster

A person who investigates health, property, or casualty insurance claims.

Which of the following individuals does not require an insurance agent's license in North Carolina?

An agency clerk who maintains records for agents

Notice of Appointment and Fees

An appointing insurer must file, in a format approved by the Commissioner, a notice of appointment within 30 days of appointing an agent, or within 15 days after the first insurance application is submitted, and must pay the appointment fees as required by the commissioner. The insurer must submit a renewal fee for each appointed agent, when required, by line of insurance.

Adverse Underwriting Decisions

And adverse underwriting decision includes declining coverage, terminating coverage, charging a higher rate, or declining to make an application.

A person applying for a life and health agent license is exempt from the exam if he/she is a

Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC), Life Underwriter Training Council Fellow (LUTCF), or Fellow of Life Management Institute (FLMI).

Plan A covers:

Daily hospital expenses for up to 70 days Miscellaneous hospital expenses for up to 10 times the daily hospital expenses Surgical expenses, up to $800

Ethical Standards

Every insurance professional, when dealing with the public, must identify himself/herself and his/her occupation, carry his/her license for display upon request, and deal fairly and honorably.

An insurer, agent, or broker must not:

Excess Premiums Rebates Charges for Related Services

Compliance Year

The second year of the biennial compliance period

A health policy's preexisting condition exclusion period may not exceed _____, and time spent toward any preexisting condition exclusion period under previous coverage must be credited toward the current policy.

1 year

A health policy must contain a _____-day free look period with a full premium refund if the policy is returned.

10

Each insurer or its agents must maintain a record of all written complaints for at least

5 years after the complaint's final disposition

Disinterested Third Party

A person not concerned, with respect to possible gain or loss, in the result of a pending course final examination.

Broker

A person who places insurance with an authorized insurer that has not appointed the person. A broker is deemed to represent an insured.

Coordination of Benefits with Medicaid

An employee health policy may not limit or exclude coverage to an insured because he/she is entitled to Medicaid benefits. Medicaid may not be required to pay first; it is the payor of last resort.

Twisting

An insurer may not willfully misrepresent, or incompletely compare, the terms, conditions, or benefits of any insurance policy to induce a policyholder to replace an existing policy.

Which of the following is covered by the Life and Health Insurance Guaranty Association?

E has submitted a claim for $500,000 of medical expenses when GHI Insurance becomes insolvent

Cease and Desist Orders

If the court finds that any insurance statute is under violation, it shall issue an order requiring that such activities cease and desist.

Offsets Against Provider Reimbursement

No insurer or health insurance contract provision may offset or reverse a payment made to a medical services provider unless the payment is required to be paid under Workers' Compensation.

Which of the following would be a violation of a health plan policyholder's right to choose the provider of service?

The plan denies a claim because the services were performed by a registered nurse

Nonresident Agent License

To get a nonresident agent license, a person must be currently licensed and in good standing as a resident agent in his/her home state

Pretext Interviews

an interview whereby a person, in an attempt to obtain information about a natural person, performs one or more of the following acts: Pretends to be someone he is not Pretends to represent a person he is not in fact representing Misrepresents the true purpose of the interview Refuses to identify himself upon reques

A health insurer must give insured employees who pay for coverage through payroll deduction at least _____ days' notice before cancelling an employer's group policy for nonpayment of premium.

15

A person must be at least ______ years of age to enter into an insurance contract or an annuity.

15

An insurer must provide an application within

15 days, upon request, to a health policy's owner who intends to reinstate or renew the policy.

A health policy must contain a time limit on certain defenses of _____ years from the date of issue.

2

How much time does an insurer have to notify the Commissioner after an agent's appointment is terminated?

30 days

An employee whose group health coverage is terminated is entitled to convert coverage to an individual policy covering self, spouse, and dependents who were covered on the group coverage's termination date by notifying the insurer within ______ days after the date continued coverage terminates.

31

Every person holding a life, accident, and health insurance license must complete every two years:

4 credit hours, including 3 credit hours of ethics training

A health policy is considered reinstated when the insurer accepts the premium or, if the insurer does not deny reinstatement, ______ days after the insurer receives the premium, whichever occurs first.

45

Franchise Health Policy

A policy against death, injury, disability, or sickness that covers: At least 5 employees, if issued to a business entity or governmental body At least 10 members, if issued to a professional association or labor union

Termination of Appointment

An insurer that terminates a producer's appointment must notify the Commissioner within 30 days after the termination's effective date. The notice must state the cause for termination if the cause is also ground for license suspension, probation, revocation, or nonrenewal.

Insolvency

Any person working in or for the insurance business must notify the Commissioner if he knows or has reason to believe that an insurance entity licensed by the Commissioner is financially impaired.

Which of the following is a requirement for continuation co

Continuation of coverage lasts up to 18 months, so long as the (former) employee pays premiums

A health policy providing benefits for children must:

Cover a newborn, adopted, or foster child for 30 days from the date of birth, adoption, or placement, respectively; the child's parent may continue coverage after the first 30 days by enrolling the child and by paying any additional premium due Cover birth defects Allow for continuation of coverage for a child who has reached the limiting age but is handicapped and dependent on the insured (proof of incapacity must be provided to the insurer within 31 days of the child's attainment of limiting age)

The following are unfair trade practices specific to life and health insurance:

Failure to give each prospective life or health policyowner a Buyer's Guide and a Policy Summary. (See Regulations of Life Insurance Solicitation - General Rules Relating to Solicitation in this chapter for an exception.) Violating a replacement regulation. An insurer or producer doing this must provide a Notice of Replacement and, for the replacement policy, either a summary or a disclosure document. The producer may be fined, subject to license suspension or revocation, required to forfeit commissions or other compensation from a transaction in which a violation occurred, or any combination of these.

Penalty

If the value of the item obtained is greater than $100,000 the violation will be a Class C Felony and if less than $100,000 the violation will be a Class H Felony.

Plan C covers everything under Plan A, except that:

Maximum daily hospital expenses are 50% of the maximums under Plan A Maximum surgical expenses are $400

Plan B covers everything under Plan A, except that:

Maximum daily hospital expenses are 75% of the maximums under Plan A Maximum surgical expenses are $600

Limited Lines Insurance

Motor vehicle physical damage and title insurance, or any other kind of insurance that the Commissioner considers necessary to recognize as such.

To be issued a group health policy, an association:

Must have at least 500 members Must be in existence for at least 5 years May not be organized for the purpose of getting insurance

Coverage for Cancer - A health policy must cover:

Screening for cervical cancer Screening for breast cancer Reconstructive breast surgery after a mastectomy Screening for prostate cancer

A credit policy issued to a creditor must:

State the names of all of the debtors covered under the policy Receive at least 100 new debtors yearly Allow the insurer to require evidence of individual insurability if less than 75% of new debtors become insured

Temporary Agent License

The Commissioner may issue a temporary license, without regard to education, experience, or exam requirements, for up to 180 days

Which of the following is considered "twisting"?

Willfully misrepresenting or incompletely comparing the terms of an insurance policy to induce the policyholder to replace it

Life and Health Insurance Guaranty Association

protects residents, who have rights under a contract providing benefits of life or health or both, against financial loss due to insurer impairment or insolvency