Final Exam Practice

Which NAIC rule regarding Health Insurance "coordination of benefits" determines whether a plan is primary or secondary for a dependent child covered by both parents' benefit plans when the parents live together and one parent's plan covers the parent as an active employee and the other parent's plan covers the parent as a retired or laid off employee.

"Active/ Inactive" Rule

As regards "twisting" and "churning" which, if any, of the following statements are correct?

Both statements are correct

_______________________Insurance pays a stated amount to offset the loss of revenue if the business owners, partners, or key employees become disabled.

Business Overhead Expense (BOE)

All individual Long Term Care policies must be issued as either "guaranteed renewable" or __________.

"non-cancellable"

What is "third party" ownership of a life insurance policy?

"third party" ownership is when the insured is not the policyowner

The insured has $10,000 of medical expenses and his Major Medical Expense policy has a $500 deductible and a 80% coinsurance provision. $10,000 Medical Expenses$ 500 Deductible absorbed by the insured$ 7,600 paid by insurance company ($10,000 - $500) X 80%What coinsurance amount is the insured is responsible for?

$1,900

Peggy White is 55 years old and the rate per thousand for Peggy is $8. Peggy is purchasing a $250,000 face value policy. What is the annual cost of her level term life insurance policy?

$2,000.

Acme Insurance Company has been determined to be "insolvent" by the Department of Financial Services. What is the maximum amount FLAHIGA will pay for any one insured's medical expenses (Health Insurance policy)?

$500,000

Jill Insured has a $100,000 Whole Life policy with an outstanding loan of $8,000. Her monthly payment of $150 has not been paid but Jill is still within her thirty (30) day grace period. How much will Jill's beneficiary be paid?

$91,850

Florida mandates that Health Insurance Companies provide at least a ___day period when a consumer can "free look" their Health Insurance policy. This means that the policy can be returned to the insurance company within the first ___ days of it being delivered, and the insurance company is required to refund all premiums.

10 day

Medicare Advantage participants receive ___% of the coverage of Medicare.

100

Small employer carriers must issue all small employer health benefit plans on a guaranteed-issue basis to all employers with 2 to __ employees.

2 to 50

Employees and members must be offered a converted health insurance policy if a group health insurance policy has been terminated. Converted policy premiums may not exceed ____% of the OIR standard rate.

200%

Small Employer Health Insurance plans must have an initial enrollment period of at least ___ days and an annual enrollment of at least ___ days.

30

Group Life Insurance plans are required to allow a terminated employee to convert their group coverage to an individual plan within ___ days of the employee's termination.

31

Legal Actions provision requires an insured to wait until ___ days after filing a proof of loss with the insurance company before any formal legal action can be taken against the insurer.

60 days

What documents must be provided to a Life Insurance applicant when the applicant has paid the initial premium with their Life Insurance application. (choose all that apply)

A Buyer's Guide and Policy Summary

Which of the following is/are true regarding warranties and representations. (choose as many as apply)

A)a warranty is a statement made by the insured that is absolutely guaranteed by the insured to be trueB)representations are statement made by the insured that are absolutely guaranteed by the insured to be true

Fraud is knowingly ______________ any false material statement. (choose all that apply)

A)publishingB)circulatingC)disseminatingD)making

Which of the following, if any, of the following statements are correct regarding qualified and non-qualified plans? (choose all that apply)

A)qualified plans meet certain federal requirements and receive favorable tax treatment C)non-qualified plans do not meet federal requirements and are not eligible for favorable tax treatment

Which of the following are correct regarding a lapse of a Long-Term Care Insurance policy? (choose as many as apply)

A. LTC policies must contain a minimum 30 day grace period. B)LTC applications include a secondary addressee option if the applicant chooses to list one. D)LTC reinstatement eligibility for non-payment of premium include payment within five months and demonstration that the failure to pay was due to the insured's cognitive impairment.

Ambiguities in insurance contracts are ruled in favor of the insured (the non-drafting party) by the courts. In as much, insurance contracts are considered to be "contracts of _______________".

Adhesion

Which of the following "free-look" periods are correct? (choose all that apply)

Annuities 21-day free-look period Medicare Supplements 30-day free-look period Health Insurance 10-day free-look period Long Term Care 30-day free-look period Life Insurance 14-day free-look period

______ requires employers with 20 or more employees to offer group medical expense coverage for terminated workers, their spouses, divorced spouse, and dependent children.

COBRA

The Florida Health Insurance Coverage Continuation Act extends health insurance to employees of small employers and dependents if

COBRA benefits are not available

The ___________ Period is the time frame that must be surpassed before a compensable disability income benefit is paid or payable; the longer the period the cheaper the policy.

Elimination Period

Which of the following are required of an insurance company/agent selling Medicare Supplements? (choose all that apply)

Establish marketing procedures to ensure that any comparison of policies by its agents or other producers will be fair and accurate. Make every reasonable effort to identify whether a prospective applicant for Medicare supplement insurance is already insured. Provide a Buyer's Guide to the insured at the time of application. Provide a Medicare Supplement "outline of coverage" to the applicant at the time of application.

Which of the following statements are correct regarding "grandfathered" Health Insurance Plans? (choose all that apply)

Grandfathered Health plans do not have to meet all of the requirements of the Patient Protection and Affordable Care Act. The plans can be either group or individual and they must have had enrolled insureds on or before March 23, 2010 and have continuously covered someone since that time. Plans that are not grandfathered are subject to all of the Patient Protection and Affordable Care Act requirements.

Which Disability Income Insurance rider allows the insured to purchase additional amounts of insurance without evidence of insurability at the time of the addition.

Guaranteed Insurability Insurance Rider

High Deductible Health Care Plans are normally paired with which types of Accounts. (choose all that apply)

Health Savings Accounts (HSA) or Flexible Spending Accounts (FSA).

Applicants who pay their premium with their life insurance applications are entitled to a receipt. Which receipt type is the most generous regarding coverage for the insured?

binding receipt

This clause state specifically what the insurance policy will pay for.

Insuring Clause

he Office of Financial Regulation has regulatory oversight for Florida's financial service providers. The OFR has two key objectives. The first Key Objective is to promote a safe and sound financial marketplace. What is the Office of Financial Regulations second Key Objective?

Key Objective #1 - to promote a safe and sound financial marketplace. Key Objective #2 - to contribute to Florida's growth with effective regulation of the financial services industry.

These types of policies have level premiums that are payable for a certain period of time. Thereafter the insurance policy remains in effect to the insured's age of 100 but premiums are no longer due.

Limited Pay Whole Life policies

Florida's Long-term Care Partnership Program permits an insured who has purchased Long-Term Care to offset the Medicaid eligible benefit that would or could have been payable by ____________by the amount paid by the LTC policy

Medicaid

Medicare supplement insurance may not be sold if the insured is eligible for Medicaid and a Medicare supplement may not duplicate benefits provided by ________.

Medicaid

Which of the following, if any, of the following statements regarding insurable interest are correct? Statement I. Insurable interest must exist on the life of the insured by the applicant when applying for a life insurance policy. Statement II. Insurable interest must exist on the life of the insured by the policyowner at the time of a life insurance claim.

Neither

All small employer carriers must file all forms with the _______________________.

Office of Insurance Regulation.

Which risk classification is eligible for the lowest rates life insurance rates based upon favorable health, vocation, and avocation criteria?

Preferred

What do we call the transaction between an insurance company which cedes a portion of its excess loss exposure or catastrophic loss exposure to another specialty insurance company that insures those exposures for insurers?

Reinsurance

The ___________________ rider in a term life insurance policy pays to the policy owner all premiums paid to the insurance company if the insured lives to the end of the term.

Return of Premium (ROP)

___________________ are owned by shareholders who elect a board of directors which oversees the management of the company and which underwrite a broad category of insurance.

Stock Insurance Companies

This policy provision keeps a policy in force even if the insured is unable or unwilling to make premium payments.

The Automatic Premium Loan Provision

All of the following are rights of a life insurance policy's policyholder EXCEPT?

The designation of policy beneficiaries and any beneficiary changes. Selection of the death benefit payment option(s). The right to receive policy dividends and the dividend payment option.

Which provision permits an insurer to refuse any claims payment or benefit to the insured if the insured's claim stems from the insured's involvement in the commission of a felony.

The Illegal Occupation

The ______________ provision entitles an insurance company to periodic reasonable exams during the process of a claim.

The Physical Exam and Autopsy

Group dental and vision coverage may be on either a: (choose all that apply)

UCR (usual, customary, and reasonable) basis or on a scheduled fee/procedure basis.

Which annuities provide an opportunity to hedge their returns to out-pace inflation? (choose all that apply)

Variable annuities and indexed annuities

_________________ are policy addendums that specifically exclude an underlying condition.

Waivers for Impairments

Jamco Industries (a small privately-held corporation) has purchased insurance on the lives of Jamco's owners. Which business usage of/for life insurance is represented by the purchase?

business interruption

Jill Insured has a policy which is "cancellable". The insurance company has the contractual option to cancel the policy but any cancellation is limited to...

a formal written notice of the cancellation

A Medicare supplement policy must indemnify against losses resulting from sickness on the same basis as losses resulting from __________.

accidents

The Guaranteed Insurability Rider allows the insured to purchase specific amounts of __________insurance at specific intervals without the need to demonstrate insurability.

additional

What can an agent do to avoid inappropriate life insurance policy replacements? (choose all that apply)

agents should maintain close contact with their clients agents should educate clients about their policies and how they are right for their needs agents should ask their clients to call if they ever consider replacing any policy

Jill Insured has made her first monthly payment on her new Disability Income policy and is sadly disabled the following month. The insurance company is obligated to pay a monthly disability payment until Jill turns sixty-five. In this example Jill Insured would have made one small payment and the insurer would have to pay thousands and thousands of dollars over the entire term of the policy. This is an example of a _________ contract.

aleatory

Cancer, dread disease, hospital indemnity, short-term medical, and accident insurance benefit payments:

are paid directly to the insured

Jill Insured is sixty-six years old and has her sister Betty listed on her policy as a "Secondary Addressee". What benefit is there to Jill by listing Betty as a "Secondary Address"?

by listing Betty as Secondary Addressee Jill has the benefit of having Betty placed on formal notice of any pending lapse due to Jill's non-payment of premium

A __________ is the specified dollar amount that an HMO subscriber must pay for certain covered health care services.

co-payment

Which of the following are requirements for an agent to maintain their license? (choose all that apply

complete continuing education of 24 hours every two years respond to the department within 20 days once a consumer complaint has been filed place the department on notice within 30 days if the licensee has a material change

Insurance contracts are ____________ contracts. Both the insured and insurance company are required to "perform" or meet duties or obligations under the insurance contact.

conditional

What are the tax consequences for the beneficiary of either an individual or group life insurance death benefit?

death benefits received from individual or group life insurance are generally received "tax-free"

Betty Buckle has purchased a $100,000 face amount 10-year term policy which will pay $100,000 if the insured dies in the first year; $90,000 in the second year; $80,000 if she dies in the third year and so on and so on.

decreasing term

Which provision in an insurance contract which states that the entire agreement between the insured and the insurer is contained in the contract.

entire contract provision

The Relation of Earnings to Insurance provision comes into play when an insured's disability income payments from all sources exceed the insureds income at the time of the disability thenthe insurance company is only required to pay a prorated portion of benefit.

excess premiums are paid back to the insured

Select from below all unfair claims practices.

failing to adopt and implement standards for the proper investigation of claims misrepresenting pertinent facts or insurance policy provisions relating to coverage at issue failing to acknowledge and act promptly upon communications with respect to claims

A variable policy's cash values are held in separate accounts which contain can contain all but which of the following

fine art collection

Florida mandates that Health Insurance Companies provide at least a ten (10) day period when a consumer can "_____ look" their Health Insurance policy.

free

Small Employer plans must disclose provisions regarding the renewability of the plan and all plans must be offered and issued on a ________________ basis.

guaranteed-issue

Which of the following is a not a common policy exclusions?

injury or illness

The payor provision rider provides for waiver of premiums if the adult premium payor of a _________ insurance policy should die or, with some policies, become totally disabled.

juvenile

Basic Surgical Expense Plans cover the cost of surgery on a "reasonable and customary approach" basis the policy pays up to the amount per procedure that is reasonable and customary in the ________ where the surgery was performed.

location

A Medicare supplement insurer ______ deny an application for a Medicare supplement policy because of an eligible applicant's claims experience.

may not

Which of the following statements regarding "Certificates of Coverage" are correct. (choose as many as apply)

must furnish a certificate to the policyholder for delivery to each employee or member. The certificate shall contain the group number and state the essential features of the insurance coverage.

What is the minimum number of lives required to be eligible for a group life insurance policy?

ne or more is the correct answer; there is no minimum number of lives required to be eligible for a group life insurance policy in Florida.

Attorney Joe Insured was involved in a serious automobile accident and is no longer capable of working in his law practice. If he is capable of teaching would he meet the "any occupation" definition of being disabled?

no, he would not meet the "any occupation" definition because Joe is capable of teaching

Which term rider can be used to cover an insured's children in her whole life policy?

other than the insured

joe Insured is eligible to receive policy dividends. He wants to use his dividends to obtain additional coverage which options might Joe select? (choose all that apply)

paid-up additions and use dividends to purchase one-year term insurance

The Free-Look provision permits an insured to review a new health insurance policy for up to ___ days with the ability to return the policy to the insurance company for a full refund.

ten (10) days

When an insured makes a payment on her Universal Life policy a portion of the payment pays the mortality cost; a portion pays for insurance company administrative cost; and the balance goes into the policy's ______________.

policy's cash value

Which if any of the following are correct regarding the taxation of Disability Income premium payments and benefits received. (choose as many as apply)

premiums paid by individuals are not tax deductible by the individual benefits paid by individual Disability Income policies are received by the insured on a tax free basis premiums paid by employers are tax deductible by employers benefits paid by group Disability Income policies are received by an individual are taxable to the individual

All of the following typical reinstatement provision requirements EXCEPT?

proof of financial responsibility

Policy replacement in recent years has been under great scrutiny because the motivation behind the replacement has not always been in the insured's best interest. All but which of the following are considered a policy replacement?

purchasing insurance for a cross-sell plan

Each application is required to be signed by the proposed insured, the policyowner (if different), and the agent who sold the application. Changes on the application can be made by correcting the information with the applicant's initials beside any change made.Statements made in Life Insurance applications are _____________ of the insured and are implied to be true to the best of the applicant's knowledge.

representation

The state requires funds held in trust on behalf of insureds and insurance companies to be held in a ___________________.

separate account.

Hospice benefits are covered under Medicare Part A for terminally ill patients; eligibility requires a doctor to certify the patient has a _______ month or less life expectancy.

seven

Which of the following are Social Security benefits? (choose all that apply)

survivor death benefits, a $255 lump-sum death benefit, disability income benefits, and retirement benefits.

All but which of the following are included in a Health Insurance outline of coverage?

the cost of the Health Insurance policy

Joe Insured applied for insurance but did not submit a payment with the application. The insurance company required a medical exam and Joe was approved for the applied for life insurance thirty days after the date on the application. Since Joe did not tender a premium payment with the application it is imperative that his agent deliver the policy in a timely fashion.

the date of policy delivery to Joe and premium remittance by Joe to the company or the company's agent

Jill Insured has a policy which is "guaranteed renewable". The insurance company has the option to cancel the policy but any cancellation is limited to...

the insured's attained age specified in the policy such as age 60 or age 65

When an insurance company pays a benefit to or on behalf of the insured for medical care AND there is a third party responsible for the insured's injury, illness, or sickness which provision states that any rights of recovery the insured had against the responsible party are transferred to the insurance company?

the subrogation provision

Life Insurance presentations are required to represent cash flows taking into account the _____________________.

the time value of money

To determine Long-Term Care services eligibility an insured must be unable to perform at least ___ Activities of Daily Living.

two

An insurance policy is a ____________ contract because only the insurer is obligated to perform (e.g. pay a death benefit); conversely the insured is not obligated to do anything including making premium payments.

unilateral