learn as you go Q's & A's

the authority granted to an agent through the agent's contract is referred to as

express authority express powers are written into the contract between the insurer and the agent

in disability income insurance, the own occupation definition of disability applies

for the first 2 years of a disability the own occupation definition of disability usually applies to the first 24 months after a loss

According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following?

guaranteed surrender value the nonforfeiture law stipulates that a deferred annuity must have a guaranteed surrender value that is available if the owner decides to surrender the annuity prior to annuitization

under which of the following circumstances can financial institutions share insurance coverage information with third parties, for the purpose of soliciting the purchase of insurance

if a consumer does not sign and return the notice of disclosure within 30 days financial institutions are prohibited from sharing insurance coverage information with a third party for the purpose of selling or soliciting the purchase of insurance. however, if notice is given, and the customer does not sign and return such a form within 30 days, such information may be shared

which of the following does a producer NOT have the authority to do?

issue policies an insurance producer sells, solicits, or negotiates contracts of insurance

which of the following is excluded in dental insurance plan?

lost dentures

an individual's tendency to be dishonest would be indicative of a

moral hazard an applicant that is dishonest in completing an application for insurance or submitting fraudulent claims would be deemed a moral hazard and could be uninsurable from an underwriting standpoint

all of the following would be considered an insurance transaction except

obtaining an insurance license an insurance transaction means the carrying on of business in insurance, which could include the solicitation of a policy, advising, negotiation, or inducement related to coverage or claims. obtaining an insurance license is a prerequisite to transacting insurance

when benefits are paid directly to the insured under a health insurance policy, the policy provides benefits on what type of basis?

reimbursement the insured is responsible to pay the provider, and the policy reimburses the insured for covered expenses

which of the following insurers are owned by stockholders?

stock only stock insurance companies are owned and controlled by stockholders

a husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouse's coverage. if one of them incurs hospital expenses, how will those expenses likely be paid?

the benefits will be coordinated benefits will be coordinated when individuals are covered under two or more health plans

an insured stops making payments on a loan taken from his cash value policy. what will most likely happen?

the policy will terminate when the loan amount with interest equals or exceeds the cash value in most policies, failure to pay back a loan will result in termination of the policy if the total amount of the loan and accrued interest equals the cash value

in an adjustable life policy all of the following can be changed by the policyowner except

the type of investment

which of the following is true regarding benefits paid to disabled employees?

they may be subject to taxation if the premium was paid by the employer any portion of the benefit paid for and deducted by the employer will be considered taxable income to the employee

When is the insurability conditional receipt given?

when the premium is paid at the time of application under the term of the insurability conditional receipt, the insurance coverage becomes effective as of the date of the receipt, provided the application is approved. this receipt is generally provided to the applicant when the initial premium is paid at the time of application

If an applicant for a life insurance policy and the potential insured are two different people, what would be the underwriter's main concern?

whether an insurable interest exists between the individuals an insurable interest must exist at the time the policy is issued. some relationships are automatically presumed to qualify as an insurable interest, ex; spouses, parents, children, and certain business relationships

what is the civil penalty for violating a cease and desist order of the Commissioner

$10,000

a producer licenses in Pennsylvania must notify the Insurance Department of any change of address in his or her residence or business address within how many days

30 every producer licensed in Pennsylvania must notify the Insurance Department in writing, within 30 days, of any change of address in his or her residence or business address. the producer must also notify all the entities for which the producer holds an appointment

an insurer may provide commissions to an agent for the sale of a long-term care policy only if the first year commission is not greater than what percentage of the first year premium?

50% an insurer may provide commissions or other compensating to an agent or broker for the sale of a long-term care policy only if the first year commission is not greater than 50% of the first year premium

what is the waiting period on a waiver of premium rider in life insurance policies

6 months most insurers impose a 6-month waiting period from the time of disability until the first premium is waived

A Straight Life policy has what type of premium?

A level annual premium for the life of the insured straight life policies charge a level annual premium for the lifetime of the insured and provide a level, guaranteed death benefit

Employer contributions made to a qualified plan

Are subject to vesting requirements qualified plans must have a vesting requirement

the gatekeeper of an HMO helps

Control specialist costs initially the member chooses a primary care physician, or gatekeeper. if the member needs the attention of a specialist, the primary care physician must refer the member. this helps keep the member away from the higher priced specialists unless it is truly necessary

which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation?

Human life value approach (HLVA) human life value approach is determined by the loss of income that would result with the death of the insured, after making adjustments for expenses, inflation, etc

insurers are required to keep records. when may the Department examine these records?

at any time the Department may conduct an exam when it sees fit

all of the following apply to short-term disability plans except

both group and individual plans are renewable short-term disability plans are not renewable

all of the following statements concerning medicaid are correct except

medicaid is a state funded program that provides health care to persons over age 65 only it is government funded (both state and federal) program designed to provide health care to poor people of all ages

which type of medicare policy required insureds to use specific healthcare providers and hospitals (network providers), except in emergency situations?

medicare SELECT medicare SELECT policies require insureds to use specific healthcare providers and hospitals, except in emergency situations. in return, the insured pays lower premium amounts

which of the following includes information regarding a person's credit, character, reputation, and habits?

consumer report they include written and/or oral information regarding a consumer's credit, character, reputation, and habits collected by a reporting agency from employment records, credit reports, and other public sources

all of the following could be considered rebates if offered to an insured in the sale of insurance except

dividends from a mutual insurer dividends paid to a policyholders of a mutual insurer are not considered to be a rebate because the policy specifies that they might be paid

for a retirement plan to be qualified, it must be designed for the benefit of

employees qualified plans are designed for the exclusive benefit of the employees and their beneficiaries

which of the following is an example of an unfair claims settlement practice?

failure to promptly settle a claim when liability has been clearly established after a claim has been adjusted and is found to be covered under the policy, the insurer must pay the claim upon receipt of a signed proof of loss

which is true about the cash surrender nonforfeiture option?

funds exceeding the premium paid are taxable as ordinary income the insurers surrender the policy at its current cash value. only an excess of value is taxable as income. once the policyholder opts for cash surrender, the policy is immediately inactive

the automatic premium loan provision is activated at the end of the

grace period provided there is sufficient cash value in the policy, this provision triggers a loan at the end of the grace period to keep a policy in force

a new employee who meets a HIPAA eligibility requirements must be issued health coverage on what basis?

guaranteed if a new employee is eligible, under HIPAA regulations, the new employer must offer coverage on a guaranteed issue basis

an individual purchased a life insurance policy on his life naming his wife as primary beneficiary, and their daughter as contingent beneficiary. under what circumstances could the daughter collect the death benefit?

if the primary beneficiary predeceases the insured the contingent beneficiary would need to outlive the insured and primary beneficiary

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?

implied implied authority is not written in the agent's contract but is required in order for the agent to conduct business. implied authority exists because not every single detail of an agent's authority can be written in a contract

all of the following statements are true of a combination dental plan except

it is also know as the superimposed plan a combination plan is basically a combination of the scheduled and nonscheduled plan. the combination plan covers diagnostic and preventative services on the usual, customary and reasonable basis but uses a fee schedule for other dental services

which of the following is usually true of a participating life insurance policy?

it pays dividends to policyowners participating is a term used to refer to any insurance policy that distributes its dividends by cash payments, reduced premiums, unit of paid-up life insurance, a savings program, or by the purchase of term insurance

if a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a

joint life annuity joint life annuity settlement option pays benefits to two or more annuitants, but stops upon the death of the first

which of the following is an example of a limited-pay life policy?

life paid-up at age 65 limited pay whole life premiums are all paid by the time the insured reaches age 65. the policy endows when the insured turns 100. it is the premium paying period that is limit, not the maturity

a licensed producer moving to Pennsylvania may become licensed as a resident if the producer submits a completed application within how many days of establishing residence in Pennsylvania with proof of licensing from their prior home state?

90 non resident producers may become resident producers if they submit a completed application within 90 days of establishing residence in Pennsylvania with proof of licensing from their prior home state

a licensed producer moving to PA may becomes licensed as a resident if the producer submits a completed application within how many days of establishing residence in PA with proof of licensing from their prior home state?

90 days nonresident producers may become resident producers if they submit a completed application within 90 days of establishing residence in PA with proof of licensing from their prior home state

In underwriting a substandard risk, which of the following is INCORRECT?

a discounted premium would be charged a substandard risk is one below the insurer's standard or average risk guidelines. an individual can be rated as substandard for any number of reasons; poor health, dangerous occupation, or dangerous avocations. some substandard risks are rejected outright, while others will be accepted for coverage at a higher premium

which of the following losses will be covered by a group medical expense policy?

a pre-existing condition pre-existing conditions can no longer be excluded from coverage by individual or group medical expense policies. all the other examples are exclusions from coverage

An insured carries health insurance with two different providers and is covered on an expense incurred basis. He has an appendectomy and files the claims to both insurers. Neither company is notified in advance that the insurer has other coverage. What should each insurer pay?

a proportionate amount in the event that an insured is covered on an expense-incurred basis for the same expenses under multiple insurers and the insurers are not informed about the other sources of coverage before the loss, proportionate shares of the claims should be paid

what documentation grants express authority to an agent

agents contract with the principal

when an annuity is written, whose life expectancy is taken into account?

annuitant the annuitant receives payments from an annuity and is the person whose life expectancy is considered when writing the contract. the annuitant and annuity owner are often the same person but do not have to be

an individual applied for a life insurance policy on jan. 10th. the policy was issued on jan 31st; however, because the insured's agent was on vacation at that time, the policy was not delivered until feb 8th. after reading through the policy provisions, the insured decided to return the policy to the insurer. when would the insured need to return the policy for a refund of premium

by feb 18th, or within 10 days of policy delivery the 10 free-look period begins when the policy is delivered

An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision?

common disaster under the uniform simultaneous death law, common disaster provision, the law will assume that the primary beneficiary dies first in a common disaster as long as the beneficiary dies within this specified period of time following the death of the insured (usually 30 days). this provides that the proceeds will be paid to either the contingent beneficiary or the insureds estate if no contingent beneficiary is designated

an individuals tendency to be dishonest would be indicative of a

moral hazard an applicant that is dishonest in completing an application for insurance or submitting fraudulent claims would be deemed a moral hazard and could be uninsurable from an underwriting standpoint

how often may a viatical settlement provider contact an insured regarding the insured's health status if the insured's life expectancy is more than one year?

once every 3 months the viatical settlement provider may contact an insured to request information regarding the insured's health status. the contacts cannot be made more often than every 3 months if the insured has a life expectancy of more than one year.

a rider attached to a life insurance policy that provides coverage on the insured's family members is called the

other-insured rider the other-insured's rider is useful in providing insurance for more than one family member. the type of insurance offered by this rider is usually term insurance, with the right to convert to permanent insurance

what is the major difference between a stock company and a mutual company?

ownership mutual companies are owned by policyholders, while stock companies are owner by stockholders

an insured has a life insurance policy from a participating company and receives quarterly dividends. he has instructed the company to apply the policy dividends to increase the death benefit. the dividend option that the insured has chosen is called

paid-up addition when this option is selected, the annual dividend acts as a single premium each year to buy additional amounts of insurance, based on the insured's currently attained age

a medical insurance plan in which the health care provider is paid a regular fixed amount for providing care to the insured and does not receive additional amounts of compensation dependent upon the procedure performed is called

prepaid loan under a prepaid plan, the health care providers are paid for services in advance, whether or not any services are provided. the amount paid to the provider based upon the projected annual cost as determined by the provider

a medical insurance plan in which the health care provider is paid a regular fixed amount for providing care to the insured and does not receive additional amounts of compensation dependent upon the procedure performed is called

prepaid plan under a prepaid plan, the health care providers are paid for services in advance, whether or not any services are provided. the amount paid to the provider is based upon the projected annual cost as determined by the provider

under a disability income policy, the insurer does not pay a monthly benefit that is equal to the insured's previous income. the reason for paying a benefit amount that is less than the insured's income is to

prevent overutilization and malingering the insurer wants the insured to have a financial incentive to return to work

which of the following licensees is classified as a representative of the insurance company and not allowed to represent an insured or claimant?

producer all of the above are deemed to be representatives of the insured or claimant, except a producer. a producer is always classified as a representative of the insurance company for who they transact insurance

the insurance company underwriter could find information concerning the personal activities and character of an applicant from which of the following reports?

producer's report the agent communicates their observation concerning an applicant in the producer's report

a medicare select policy does all of the following except

prohibit payment for regularly covered services if provided by non-network providers a medicare select policy issued in this state must not restrict payment for covered services provided by non-network providers if the services are for symptoms requiring emergency care and it is not reasonable to obtain such services through a network provider.

a person steps off a street car and trips and breaks his ankle. they type of injury can be described as

sudden and unforeseen accidental bodily injury is an unforeseen and unintended injury that resulted from an accident rather than a sickness

all of the following coverages are usually included under a dental insurance plan except

teeth whitening diagnostic care and preventative care are both included in a dental insurance plan, including oral surgery, routine examinations, and braces or other appliances

in a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment?

the annuitant will receive the higher of either the guaranteed minimum rate or current rate with a fixed annuity, the insurer invests the principal and gives the annuitant a guaranteed interest rate based on a minimum rate specified in the annuity, or current interest rate, whichever is higher

what type of information is NOT included in a certificate of insurance

the cost the company is paying for monthly premiums the individuals covered under the insurance contract are issued certificates of insurance. the certificate tells what is covered in the policy, how to file a claim, how long the coverage will last, and how to convert the policy to an individual policy

the policyowner of an adjustable life policy wants to increase the death benefit. which of the following statements is correct regarding this change?

the death benefit can be increased by providing evidence of insurability the policyowner (insured0 would need to prove insurability for the amount of the increase

which of the following is not true regarding a variable universal life policy?

the death benefit is fixed in a variable universal life policy, the death benefit is adjustable, and the cash values are not guaranteed. while the death benefit may decrease and increase, it cannot go below a guaranteed minimum face amount

which of the following factors does an insurer use the most to determine the extent of disability benefits that it will promise in a contract?

the insureds income the amount of disability benefits that will be offered to an insured is stated in the policy. it is usually limited to a percentage of the insured's income in order to prevent over-insurance

all of the following are true regarding a decreasing term policy except

the payable premium amount steadily declines throughout the duration of the contract premiums remain level with a decreasing term policy; only the face amount decreases

which of the following best describes what the annuity period is?

the period of time during which accumulated money is converted into income payments the annuity period is the time during which accumulated money is converted into an income stream