Insurance - Ch 14

In North Carolina, how many days' notice must health insurers provide prior to the effective date of a rate increase?

45 days - Insurers must notify an insured at least 45 days before the effective date of a rate increase. Rates must be effective for at least 12 months before it may be increased.

The pre-existing condition exclusion period on a health policy issued in North Carolina may not exceed:

1 year - A health policy's pre-existing condition exclusion period may not exceed 1 year, and time spent toward any pre-existing condition exclusion period under previous coverage must be credited toward the current policy.

To be issued in North Carolina, an individual life policy must be incontestable after being in force for _____ years from the issue date.

2 - To be issued in North Carolina, an individual life policy must be incontestable after being in force for 2 years from the issue date.

North Carolina law requires health insurers to give policyowners how many days' notice before nonrenewing a group health policy?

45 days - Insurers must provide at least 45 days' notice before nonrenewing a group health policy. The same notice requirement is true for changing rates on group health policies.

When purchasing life insurance in North Carolina, which of the following has an insurable interest in the other?

A business partner in another partner of the same business - Business partners have insurable interests in each other. Employees do not generally have insurable interests in their employer or in each other, but an employer may have an insurable interest in an employee, if notice is given.

The Insurance Commissioner is:

Elected every 4 years

To obtain an insurance license, a person must complete at least _____ hours of prelicensing education for each license sought.

20

If a policy owner forfeits a life insurance policy issued in North Carolina, they may still recover under the policy for how many years from the unpaid premium's due date?

3 years - A person may recover under a forfeited policy for 3 years from the unpaid premium's due date.

A North Carolina employee whose group health coverage is terminated is entitled to convert coverage to an individual policy. To convert coverage, the employee must send an application and first premium to the insurer within:

31 days after the date continued coverage terminates - To convert a terminated group policy to an individual policy, the employee must notify the insurer within 31 days after the date continued coverage terminates. If the employee were continuing coverage, notice must be sent within 60 days after the termination of coverage under the group policy.

Which of the following is NOT an acceptable grace period for late premium payments for policies issued in North Carolina?

61 days for annual premiums - The 31-day grace period applies to all policies with premium payment schedules other than weekly or monthly (including quarterly). Premiums may be 7 days late for weekly premiums and 10 days late for monthly premiums.

Agent R holds a North Carolina nonresident insurance license when they move to North Carolina. To continue being licensed, R must apply for resident licensure within:

90 days of establishing legal residence - If a nonresident licensee moves to North Carolina and wants licensure in this state, they must apply for resident licensure within 90 days of establishing legal residence.

North Carolina has established all of the following rules regarding PPOs, except:

A PPO may make exclusive contracts with health care providers so that they don't sign up with other PPOs - A PPO may not make exclusive contracts with health care providers. The Commissioner has 90 to disapprove a PPO contract. Providers have 30 days to request contracts with a new PPO. The relationship between a preferred provider and an insurer must be reported to the Commissioner annually.

It would be considered twisting for an insurer to:

Willfully misrepresent or incompletely compare the terms of an insurance policy to induce the policyholder to replace it - Twisting is giving prospects misleading information or comparisons about an insurance policy in order to sell them a replacement policy. The other choices describe prohibited practices, but they are not examples of twisting.

To be issued in North Carolina, an individual life policy must provide a full refund of all premiums paid if the insured dies by suicide within the first:

2 years - To be issued in North Carolina, an individual life policy must provide a full refund of all premiums paid if the insured dies by suicide within the first 2 years.

To be issued in North Carolina, an individual life policy must have a grace period of ______ days.

31

All of the following are required coverages for health policies issued in North Carolina, except:

Birth defects other than cleft palate - Coverage of birth defects must include cleft palate, but any other birth defect is an optional coverage for children.

In North Carolina, requirements for group health policies state that:

If a group policy is replaced within 15 days of being terminated, the replacing insurer must cover everyone covered under the policy being replaced - If a group policy is terminated then replaced within 15 days, the new policy must cover everyone covered under the old policy. An association group must have at least 500 members, and a creditor group must receive 100 new debtors yearly. Credit policies must allow insurers to require evidence of individual insurability if fewer than 75% of new debtors become insured. An employer group must cover all employees, not just executives.

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

The plan denies a claim because the services were performed by a registered nurse - A plan man not deny a claim if services were performed by a registered nurse or physician's assistant. A plan may require the use of network providers to obtain benefits, or to obtain a higher level of benefits. It may also require certification of a disability claim by a licensed medical professional, and it may not deny or decrease benefits for treatment provided by a duly licensed chiropractor.

N has a health policy in North Carolina that requires an additional premium in order for the policy to cover N's newborn. If N does not enroll the child or pay the additional premium, how long will the newborn be covered?

For 30 days, starting from the date of birth

General regulations for life and health insurance in North Carolina allow all of the following, except:

Group life and group health policies may define accidental injury to imply accidental means - Group life, accident and health, and annuity policies are required to define accidental injury to imply accidental results, meaning only the injury is unintended and unforeseen.

Which of the following disclosures is prohibited under the Insurance Information and Privacy Protection Act of North Carolina?

Information about an individual in connection with an insurance transaction - It is prohibited to disclose personal information about an individual in connection with an insurance transaction, but there are many exceptions.

The Commissioner of Insurance may suspend, place on probation, revoke, or refuse to renew a license for all of the following reasons, except:

Knowingly accepting business from an appropriately licensed broker

When a life insurance policy issued in North Carolina is being replaced, the replacing insurer must allow the policyowner a right to return the policy within:

30 days - The replacing insurer must allow the policyowner a right to return the policy within 30 days of policy delivery, with an unconditional full refund of all premiums paid.

Following a complaint's final disposition, each insurer or its agents in North Carolina must maintain a record of all written complaints for at least how many years?

5 - Each insurer or its agents must maintain a record of all written complaints for at least 5 years after the complaint's final disposition or, for domestic companies, until the Commissioner adopts a final report of a general examination that contains a review of these records, whichever is later.

According to North Carolina's Insurance Information and Privacy Protection Act, an adverse underwriting decision for an individual insurance policy would include any of the following, except:

Policy rescission - For individually written coverage, the rescission of a policy, termination of a policy on a statewide basis, or a declination of coverage because it is not available on a statewide basis are examples of decisions that are not adverse underwriting decisions.

Amounts necessary to pay claims covered by the North Carolina Insurance Guaranty Association come from:

Assessments of the member insurers - The Guaranty Association collects funds for claims through assessments of member insurers, proportional to the net direct written premiums of the previous year.

Life insurers in North Carolina must provide a Buyer's Guide and policy summary to the applicant:

Prior to accepting the applicant's initial premium - A Buyer's Guide and policy summary must be provided to all prospective purchasers prior to accepting the applicant's initial premium deposit and any other time at the purchaser's request.

All of the following are unfair claims settlement practices, except:

Promptly explaining, based on applicable provisions or laws, a claim's denial - Failing to promptly explain, based on applicable provisions or laws, a claim's denial is an unfair claims settlement practice.

An insurer is writing a conversion policy for a group health plan issued in North Carolina. If the insurer wants to offer basic and major medical plans under a single policy, it must provide all of the following deductible options, except:

$250 - To offer an alternative plan that includes both basic and major medical plans under one policy, the insurer must provide deductible options of $100, $500, and $1,000.

If a licensee changes their residential or email address, they must notify the Commissioner in writing within how many days?

10 - A licensee must notify the Commissioner in writing within 10 days of a change in residential or email address or of being convicted of a crime other than an auto misdemeanor.

L receives a health policy issued in North Carolina, but is not satisfied with it. L has the right to return the policy within:

10 days - A health policy must contain a 10-day free look period, with a full premium refund if the policy is returned.

An employee in North Carolina was covered by a group health policy for 12 consecutive months, but coverage terminated because the employee left the job. The employee has a right to continue the policy by electing coverage and paying the first premium within how many days after termination of coverage under the group policy?

60 - A group health policy must provide that an employee who has been covered for at least 3 consecutive months, and whose coverage is terminated because of termination of employment or termination in a class eligible for coverage (and not for nonpayment of premium), may continue coverage for self, eligible spouse, and dependents by electing coverage and paying the first premium within 60 days after termination of coverage under the group policy.

Health policies issued in North Carolina must cover all of the following breast cancer screenings, except:

An annual mammogram for a woman who is 45 years old - Annual mammograms are covered beginning at age 50. One baseline mammogram will be covered for women age 35 through 39, and a biennial mammogram will be covered for women age 40 through 49. Screenings done on the recommendation of a physician will always be covered.

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

E has submitted a claim for $500,000 of medical expenses when GHI Insurance becomes insolvent - The Association will cover medical claims against an insolvent insurer up to $500,000. Self-insurance and nonguaranteed benefits are not covered, nor are claims for which the insolvent insurer would not have been liable (a claim under O's life insurance is not valid until O dies).

The grievance review process for an insurer in North Carolina must meet all of the following regulations, except:

First- and second-level grievance reviews require the insured's attendance - The insured's attendance at the grievance review is never required, and the insurer may bar the insured from attending a first-level review. Unfavorable decisions must include the qualifications of the people reviewing the grievance, the evidence on which the decision was based, and notice of assistance from Health Insurance Smart KC. Second-level grievance reviews are used for utilization review decision appeals and for anyone dissatisfied with a first-level grievance review.

Offering a premium discount not specifically included in the policy is called:

Rebating - Rebating is offering any rebate, discount of premium, advantage, or valuable consideration not specified in the policy, but does not include a bonus, reduction in premium for mailing premium, and readjusting group rates based on claims experience.

The Commissioner may revoke an agent's license for all of the following reasons, except:

Reporting a crime from another jurisdiction to the Commissioner - If an agent is prosecuted for a crime in any jurisdiction, they are required to report it to the Commissioner within 30 days after the initial court appearance, and if the agent is subsequently convicted, they must deliver notice within 10 days of the conviction. The other answer options are grounds for license revocation.

All of the following are general duties of the Commissioner, except:

Selling contracts of insurance - The Commissioner does not sell insurance. The Commissioner administers and enforces the state's insurance laws, including issuing licenses to agents and reporting violations of the law to the attorney general.

A health insurer in North Carolina 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 health insurer must give insured employees who pay for coverage through payroll deduction at least 15 days' notice before cancelling an employer's group policy for nonpayment of premium.

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

15 - A person must be at least 15 years of age to enter into an insurance contract or an annuity. Minors age 15 and older will have the same ownership rights under the policy as any person who is at least 18 years old.

An insurer in North Carolina must provide an application within ______ days to a health policy's owner who requests to reinstate or renew the policy.

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.

All of the following statements regarding the Life and Health Insurance Guaranty Association of North Carolina are correct, except:

Agents may advertise the existence of the Association to encourage someone to purchase a policy - Agents may not advertise the existence of the Association to induce someone to purchase insurance. However, when a policy is delivered, the insurer must include a summary document describing the purposes and limitations of the Association.

In North Carolina, an insurer's responsibilities for utilization reviews include all of the following, except:

Utilization reviews must be overseen by the accounting department - An insurer is required to have qualified medical professionals oversee its utilization reviews. A reviewer may request only information that is necessary to certify health care services. For retrospective reviews, notice of noncertification must be provided within 5 business days, and determinations of prospective or concurrent reviews must be provided within 3 business days. Insurers must disclose utilization review procedures to insureds.

How long must a North Carolina life insurer keep a policy summary used during solicitation?

3 years after last use - Each insurer's home or main office must maintain a copy of each document approved for use during life insurance solicitation for 3 years following the date of its last authorized use.

When renewing a policy issued in North Carolina, a privacy information notice does not need to be provided to the insured if a notice meeting the requirements was provided within the previous ______ months.

24 - No notice is required if a privacy information notice has been provided to the insured within the previous 24 months.

If a policyowner forfeits a life insurance policy issued in North Carolina, they may still recover under the policy for how many years from the unpaid premium's due date?

3 years

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

30 days - 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. Insurers must give a copy of the notice to the producer within 15 days of notifying the Commissioner.

A temporary license may be issued to an individual for up to how long?

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

Each life agent licensee must obtain how many insurance continuing education credits during each biennial compliance period?

24 - 24 credit hours are required, including 3 credits obtained by completing an ethics course.

Agent U sells an insurance policy on behalf of an unauthorized insurer, despite knowing that the insurer is unauthorized in North Carolina. When the policyholder submits a claim, the insurer only pays for a portion of it. Agent U is subject to all of the following consequences, except:

Agent U is jointly liable with the unauthorized insurer to pay the remainder of the claim - Anyone who transacts insurance for an unauthorized insurer is strictly liable for any unpaid claim. Knowingly placing insurance with an unauthorized insurer is a Class H felony, and unknowingly doing so is a Class 1 misdemeanor, with both instances making the agent subject to license suspension, probation, revocation, or nonrenewal.

Agent B obtains a license to sell life insurance in North Carolina. In order to act as an agent for a life insurer, what does Agent B need from the insurer?

An appointment - To act as an agent in North Carolina, a person must obtain a license for the kinds of insurance for which the person intends to act as an agent and, if acting for an insurer, an appointment from the insurer.

All of the following are duties of the Commissioner of Insurance of North Carolina, except:

Creating insurance laws to protect the public - While the Commissioner of Insurance can establish rules and regulations necessary to fulfill North Carolina insurance laws, they cannot make insurance laws, which is the responsibility of the state legislature.

During a solicitation for life insurance in North Carolina, Agent X gives a presentation comparing two policies. Agent X's presentation must follow all of the following rules, except:

Guaranteed and nonguaranteed benefits are not required to be shown separately

If a licensee fails to complete continuing education requirements, they are subject to all of the following, except:

If the license is not reinstated within 4 months, the licensee is only required to pass the licensing examination to reinstate it - Licensees whose license has lapsed due to incomplete CE requirements may reinstate their license within 4 months by completing CE requirements and paying an administrative fee. After those 4 months, licensees must complete both the prelicensing education requirement and the licensing exam requirement.

According to North Carolina law, all of the following general regulations of life insurance are correct, except:

Life policy proceeds are not protected from creditors - Other than cases of fraud, life policy proceeds are protected from creditors in order to protect the rights of beneficiaries. As part of the prohibition against survivorship funds, individual life policies must name the individuals whose death will initiate benefit payments. Proof of loss may be supplied by the attending physician or a certified copy of the death certificate.

All of the following are standard provisions of an individual life insurance policy issued in North Carolina, except:

The grace period for late payment of premiums is 45 days - The grace period for late payment of premiums is 31 days, during which the policy remains in force. A policy is incontestable after being in force for 2 years from the issue date. The policy must specify the method for adjusting premiums, benefits, or both to correct a misstatement of age or gender on the application. A lapsed policy may be reinstated within 5 years by providing evidence of insurability and by paying all overdue premiums, indebtedness, and interest.

Health insurers in North Carolina are not liable for losses sustained as a result of:

The insured's being intoxicated - Except for the necessary treatment of chemical dependency, accident and health insurers are not liable for losses sustained as a consequence of the insured being intoxicated or under the influence. Insurers may not limit, restrict, or deny coverage specifically for mental or nervous disorders or for the necessary treatment of diabetes.

P wants to reinstate their health policy issued in North Carolina, and submits a reinstatement application and the required premium. According to the policy's reinstatement provision, if the insurer does not send notice of approval or denial of the application, the policy will be reinstated how many days after the insurer receives the premium?

45

All of the following are unfair trade practices in insurance, except:

Offering any rebate, discount of premium, advantage, or valuable consideration specified in the policy

As part of North Carolina's ethical standards, insurance professionals must do all of the following when dealing with the public, except:

Require policyholders to use specific service providers

Each insurer's home or main office must maintain a copy of each document approved for use during life insurance solicitation for 3 years following the date of its last authorized use.

3 years after last use - Each insurer's home or main office must maintain a copy of each document approved for use during life insurance solicitation for 3 years following the date of its last authorized use.

In North Carolina, a violation of the Privacy Protection Act is punishable by all of the following, except:

$100,000 fine - A fine up to $50,000 may be imposed if multiple violations occur with such frequency that it is considered a general business practice.

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

An agency clerk who maintains records for agents - Administrative, managerial, or clerical employees of insurance producers do not require an agent license as long as they do not receive commissions from policies written or sold in the state. An individual licensed in another state is required to get a nonresident license before selling insurance in North Carolina. An individual representing purchasers requires a broker's license.

Which of the following actions would NOT result in a misdemeanor penalty in North Carolina?

An insurance agency employee embezzles $500 from the agency - Any embezzlement is a felony: Class H if under $100,000, and Class C if $100,000 or more. The other actions would result in a misdemeanor.

All of the following scenarios are examples of unfair discrimination, except:

An insurer charges an individual a higher rate for a health policy based on sound actuarial principles - Rate differentials are not unfairly discriminatory if they are based on sound actuarial principles.

In order for an insurer in North Carolina to use health insurance forms and rates, the forms and rates must be filed with the Commissioner:

Before use, subject to Commissioner approval or a waiting period of 90 days

An insurance professional who represents the insured is a:

Broker - An insurance broker is a person who places insurance with an authorized insurer that has not appointed the person, and is deemed to represent an insured.

Which of the following is a requirement for continuation coverage under a group health policy issued in North Carolina?

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

The Commissioner has the power to do all of the following, except:

Issue a restraining order to stop law violations, but only if criminal charges are filed - The Commissioner must apply to the appropriate court, and the court will issue a restraining order requiring that any violation cease and desist, even if criminal charges have not been filed. If there is evidence to charge a person with a criminal violation, the Commissioner may arrest with a warrant or cause the person to be arrested.