Life & Health Insurance

An insured purchases a disability income policy w/ a 90 day elimination period. If a disability lasts 100 days, the insured would be entitled to receive benefits for _____ days.

A. 10

For life and health insurance, insurable interest must exist at the time of:

A. Application

Which of the following is NOT required to sign a completed application?

A. Beneficiary Only the applicant, insured (or guardian if a minor), and the producer's signatures are all required in an application for insurance.

If a premium is paid at the time of application and the policy is issued as applied, legal delivery occurs at the time of:

A. Issuance of the policy

All of the following are characteristics of dental insurance plans, except:

A. Orthodontic care is covered immediately following the effective date of the policy.

All of the following are policy requirements of a Medicare Supplement policy, except:

A. a 10-day free look period

Which of these modes would result in the insured paying the least amount per year for life insurance?

A. annual The more frequently the premiums are paid, the more expensive the mode of payment.

In a guaranteed renewable policy, the premiums may:

A. be increased for all similarly classified insureds based on age

The purpose of a respite care benefit in a long-term care policy is to:

A. give a primary caregiver a break

When the employer pays some or all of the cost of health insurance for its employees, the benefits paid to each employee are _______.

A. not taxable to the employee

To qualify for SS disability, an individual must be unable to:

A. perform any substantial gainful activity

A high deductible health plan is a:

B. Health plan which requires the insured to absorb a relatively high deductible in exchange for a significantly reduced premium.

An advantage of key person life insurance is to:

B. Provide the owner of the policy with funds to recruit and train a replacement employee upon the death of an employee who contributes substantially to the success of a company.

Which of the following is excluded from coverage under Medicare Part B?

B. acupuncture

All of the following are considered Activities of Daily Living (ADLs), except:

B. cooking

The insurer's promise to pay benefits is expressly stated in the:

B. insuring clause

All of the following statements regarding sources of underwriting are correct, except:

B. the applicant may be denied coverage based solely on the MIB report This report is used as an alert for the insurer to gather additional info and to help detect fraud.

Which one of the following is the primary source of underwriting info?

C. Application

Dividend options do not include which of the following choices?

C. Lifetime income

A characteristic of a fixed annuity is that the:

C. Monthly income benefits are fixed and level

Managed health care plans generally refer to covered persons as _____ .

C. Subscribers

The time period that must elapse after a loss before benefits are payable under a policy is the:

D. Elimination or waiting period

A "level term" policy means that the _____ remains the same throughout the entire policy period.

D. Face Amount The death benefit/face amount of insurance remains level throughout the term of the policy. Term policies do not have cash value or loan value.

A medicare beneficiary enrolled in a Medicare Advantage plan (part C) may have any of these other insurance plans, except:

Medicare supplement

A policyowner who wishes to maintain all rights in the policy should designate a(n):

D. Revocable beneficiary An irrevocable beneficiary would have to provide consent for certain changes to a policy. Primary, secondary, & tertiary beneficiaries can be named as either revocable or irrevocable.

What is the primary advantage to the policyowner in the reinstatement of a life insurance policy?

D. The PO continues to enjoy the benefits that were provided in the original policy, including the original premium

In noncontributory group health plans, how many eligible employees must be covered by the plan?

A. 100% It is only 75% for a contributory group health plan.

How much time after a qualifying event has occurred and notice is given of their right to continue insurance does an employee or dependent have to elect continuation of the group health plan under COBRA?

A. 60 days

Under the legal actions provision, the insured cannot take legal action against the insurer for at least:

A. 60 days after providing proof of loss

Which of the following is not a feature of term life insurance?

A. Cash Value Term life insurance has no cash value and is often referred to as providing pure protection. Compared to the same face amount of whole life insurance, term will cost less.

Which of the following is a characteristic of a contributory plan?

A. Eligible employees pay a portion of the premium Contributory plans require at least 75% participation and non-contributory plans require 100% participation.

An insurance company would most likely use an impairment rider in which of the following situations?

A. G is looking to a obtain health insurance policy, but is concerned about a current heart condition. An impairment rider excludes coverage for a specific ailment or condition that otherwise would be covered, so the applicant is still able to obtain coverage for other health care needs.

The insuring agreement in a life insurance policy states the:

A. Insurance company is obligated to pay the policy proceeds upon presentation of valid proof of the death of the insured which occurred while the policy is in force.

C paid $20k in premiums into a $100k universal life insurance policy. The accumulated cash value was $35k when C received a cash withdrawal of $30k. How much of the cash withdrawal was taxable?

B. $10k Because off that being interest earned on top of the $20k

The "time limit on certain defenses" generally terminates the insurance company's right to void a claim that is not based on a fraudulent statement for more than ______ years.

B. 2

A typical hospital indemnity insurance plan provides payment of benefits in which of the following ways?

B. A daily benefit based on a stated dollar amount paid to the insured w/o regard to the actual medical expenses.

A(n) ________ is issued to the sponsor of the group, and employees receive an outline of coverage or other summary of benefits, which offers info about the plan's major benefits and principal exclusions.

B. Master Policy

Which of these statements best describes the difference between the "any" and "own" occupation definitions?

B. an own occupation definition is less restrictive because it is easier to qualify for benefits.

Which of the following is not an example of a cost containment measure?

B. replacement

An individual is covered under an individual disability income policy with a 90-day waiver of premium provision and a $100 monthly premium. If the insured becomes disabled due to a serious illness and is unable to work for 6 months, which of the following statements will apply?

B. the insured is responsible for paying the premiums for 3 months and will then receive a $300 refund and premiums are no longer payable for the remainder of the disability.

Which of the following is not an allowable exclusion in a LTC policy?

C. Alzheimer's disease

When an employee is terminated, COBRA provides for the continuation of:

C. Health insurance at the employee's expense for up to 18 months And 36 months for their dependents

Which of the following is not a core benefit in a Medicare Supplement policy?

C. coverage for up to 365 days of long-term care expenses after three days of hospitalization.

All of the following are correct regarding employer group health insurance eligibility requirements and benefits, except:

C. employees can enroll at any time w/o restrictions

In an LTC policy, inflation protection:

C. must be offered

A policy is issued based on an insured's age of 40. After a disability occurs, the insurer discovers that the age was understated and the insured was actually 45 years old at the time of application. The insurer will most likely:

C. reduce the benefit based on what the premiums paid would have purchased at the correct age

Which of the following statements regarding reinstatement of a health insurance policy is NOT correct?

C. the insurer must approve the reinstatement app within 45 days of submission or it will assumed to be rejected It would actually automatically be reinstated not rejected

If an incomplete application is accepted by the underwriter and a policy is issued w/o requesting the missing info, which of the following statements applies?

C. the insurer waives its right to contest a claim based on the incomplete application

An application for insurance is completed and submitted to an insurance company. In order for coverage to be effective immediately, all of the following conditions must be met, except:

C. the policy is issued at a higher risk than the standard risk applied for. In order for it to be: no medical exam is required, conditional receipt is issued, and premium is submitted with application.

Which of the following is a state-mandated benefit?

C. workers' compensation

Info form a 3rd party collected by the insurance company in the application for insurance and during underwriting of the policy may be subject to the jurisdiction of which of the following?

D. Fair Credit Reporting Act

Regarding the tax treatment of a qualified LTC policy, which of the following statements is correct?

D. LTC benefits are not taxable

All disability policies cover ______ disabilities, which are those occurring outside work.

D. Nonoccupational

Social Security monthly retirement benefits are determined using a formula that calculates which of the following?

D. PIA (Primary Insurance Amount) To be eligible for SS benefits and be considered fully insured, a worker must have earned 40 credits.

Medicaid differs from Medicare in that it is:

D. a federal-state medical assistance program providing health care benefits for low income persons

The employees of a corporation must each pay a portion of the premium for their group insurance. This means they are members of a _______.

D. contributory group plan

All of the following statements regarding a Modified Endowment Contract are correct, except:

D. if a policy is deemed a MEC, the owner has 7 years to receive a refund of excess premiums and remove the MEC status. A policy that does not pass the 7-Pay Test will be deemed a MEC for the life of the contract. A policy can avoid that if the policyowner receives a refund of excess premiums by the insurer within 60 days of the end of he contract year.

An application for health insurance is completed by a producer and signed by the applicant. The applicant remembers info that needs to be added to the application before being submitted to the insurer and contacts the producer, who has returned to the office. Which of the following statements is correct?

D. the producer must meet with the applicant in person to update the info and have the applicant initial the changes.

A long-term care policy provides benefits in each of the following settings, except:

D. therapeutic care in an acute care hospital

HMOs usually require patients to select a _____ as the person who will oversee and direct their basic health care in most cases.

A. Primary Care Physician

When comparing life insurance to an annuity, an annuity:

A. Protects against the annuitant living too long Annuities do this by providing a stream of income the annuitant cant outlive. Annuities do not provide tax-free payments or guarantee a death benefit. Annuities liquidate an estate and life insurance creates an estate.

A ______ policy has a death benefit that will increase or decrease over time based on the performance of the separate account, provides a guaranteed minimum death benefit, offers a choice of subaccounts in which cash value may be allocated, and has a fixed premium.

A. Variable life Only VL has all of these characteristics. VUL does not have a guaranteed minimum death benefit. Neither IL nor UL permits permits allocation of cash value in a separate account.

If a premium is not paid at the time of application, the producer will obtain which of the following at the time of policy delivery?

A. signed statement of good health

If a premium is submitted w/ the application and a conditional receipt is issued, coverage is effective:

A. the date of application, or date of a completed medical exam if required, whichever is later, as long as the policy would have been issued as applied for

Which of the following sources of insurability alerts members about an insurance applicant's previous claim info?

B. MIB

Which of the following terms best describes the max length of time that disability income benefits will be paid to the disabled insured?

B. benefit period

A group disability plan is issued on a contributory basis and the employer pays 80% of the premium. If an employee is eligible to receive a weekly benefit of $1,000, how much is taxable?

C. $800

An insured is covered under a major medical plan with a $500 deductible that has not been paid and 80/20 coinsurance requirement. A minor injury is suffered and the total covered cost for treatment is $1,500. How much will the insurance company cover?

C. $800

Original Medicare consists of which of the following?

C. Medicare Part A & B

Which of the following is not a characteristic of Medicare Part D?

C. These plans are funded by the federal gov The part D beneficiary must pay a monthly premium, annual deductible, and either a copayment or coinsurance. Plans can be switched annually. Part D is offered and funded by private insurers.

In an employer-sponsored group life insurance plan, the employee's description of benefits is referred to as the:

A. Certificate of Insurance

Which of these annuity distribution options promises the largest possible payment to a single annuitant?

A. Life income only This is because the insurer has no risk of paying income to a beneficiary.

A disability that is presumed to result from the same or a related cause of prior disability is a _____.

A. Recurrent disability

A Second to Die policy would be the most appropriate recommendation for which of the following?

A. a husband & wife concerned about paying estate taxes after they have died

A flexible premium deferred annuity permits all of the following, except:

A. a lump sum payment can be used to purchase the annuity. These arent funded that way.

Which of the following statements is correct regarding an employer's ability to deduct the premiums it pays for an employee's life insurance benefit?

A. premiums are deductible as long as the business does not derive a direct benefit from the policy.

Which of the following is not true about life insurance applications?

B. Confidential communication between the agent and insurer A copy of the application will be included as part of the policy, and is therefore not confidential.

To be eligible for a Medicare supplement policy, an individual must be:

B. Enrolled in Medicare Parts A & B An individual is eligible at age 65 or older, and is not required to be receiving SS disability. An individual cannot be covered under a Medicare Advantage Plan (Part C) to be eligible for a Medicare supplement plan

The grace period in a life insurance policy is typically 31 days and provides for the:

B. payment of the premium to be received after its due date w/o penalty or lapse in coverage.

The elimination period in a disability income insurance policy:

B. serves as a time deductible before benefits are payable

All of the following statements are correct regarding an annuity, except:

C. An immediate annuity must start providing income within 3 years of the first premium payment. It has to within 1 year of the first premium payment.

A buy-sell agreement:

C. Assures the continuation of the business by providing benefits to the surviving business partners to buyout a business partner's interest in the event one of them dies unexpectedly.

An insured took out a disability income policy while working in a low hazardous occupation. When filing a claim for disability income benefits, the insurance company discovered the insured changed jobs 2 years prior to the loss. If the new job would have been classified as more hazardous, the insurance company will most likely:

C. reduce the benefit to an amount the actual premium paid would have purchased under the proper job classification.

Policy loan provisions include all of the following, except:

C. the death benefit of a policy is automatically reduced when a loan is requested.

A federal regulation called the ______ protects consumer privacy.

D. Fair Credit Reporting Act (FCRA) The FCRA protects consumer privacy by ensuring that data collected by companies on a person is confidential, accurate, relevant, and used for a proper purpose.

A producer provided a conditional receipt to an applicant on May 5 at the time of an application based on a standard risk. The insurer required a routine medical exam, which was completed on May 15. The policy was issued based on a substandard risk on May 20 and the producer delivered the policy on May 22. The effective date of coverage is:

D. May 22 Since the policy was not issued as applied for, coverage is not effective until the producer delivers the policy on May 22 and explains the changes in coverage or increased premium due to a substandard risk. The applicant must accept the counteroffer.

All of the following are potential risks of replacement of an individual health or disability insurance policy, except:

B. Coverage due to an accident will be restricted for 30 days after the effective date of the policy.

A business overhead expense policy, as a form of disability insurance, provides payments for all of the following, except:

B. Owner's income

The face amount of insurance is also referred to as the:

B. Policy proceeds It's also called the death benefit.

A viatical settlement is an agreement between a third party and a(n) ______.

B. Policyowner insuring the life of a terminally ill insured with 2 years or less life expectancy.

Interest only, life income with period certain, lump sum, and life income only are all forms of which of these life insurance policy options?

B. Settlement options These are how a beneficiary can be paid

A warranty is defined as which of the following?

B. Statement in the application that is guaranteed to be true If later discovered to be false, the contract may be voided.

J is named in a policy as the individual who is entitled to receive the policy proceeds upon the death of T. Which of the following statements best applies to this scenario?

B. T is the insured in the policy and J is the named beneficiary The owner of the policy is not specified in the example and could be either J or T.

Which of the following products requires a producer to obtain a securities registration in addition to an insurance license in order to solicit?

B. Variable Universal Life All Variable products are subject to SEC regulation and can onlu be sold by individuals with a life insurance license and a FINRA (securities) registration.

Which of the following is excluded from coverage under Medicare Part A?

B. custodial nursing care

All of the following are differences between a PPO plan and an HMO, except:

B. it is a managed care plan

When an individual pays the full cost of individual disability income insurance, the disabled insured's benefit will be _______.

B. nontaxable in full, regardless of the employee's wage

When a disability buyout is funded by the partners, the premiums are:

B. not deductible and the value of the benefit is not taxable as income

A flexible spending account can only be opened if:

B. offered through and employer-established benefit plan

Which of the following is an insurance company that is organized under the laws of another state within the US?

C. Foreign

The incontestability clause states that after 2 years the:

C. Insurer will not refuse to pay a death claim based on misinformation in the original application for insurance.

All of the following are individual underwriting factors, except:

C. Marital Status The actual factors are: age, gender, tobacco use, occupation & hobbies, physical condition, moral hazard/financial hazard, health history, foreign travel/residence, other insurance, and plan applied for.

In an employer-sponsored group life insurance plan, the employee has control over which of the following?

C. Naming a beneficiary

Which party to a health insurance contract is responsible for making the premium payments?

C. Policyowner

A contingent beneficiary has the right to:

C. Receive the policy proceeds if the primary beneficiary predeceases the insured. A contingent beneficiary has no interest in the policy proceeds if there is a surviving primary beneficiary. Contingent & primary beneficiaries do not share the death benefit. Only an irrevocable primary beneficiary has the right to interfere w/ certain of the owner's rights in a life insurance policy.

All of the following are characteristics of a variable annuity, except:

C. The separate account provides for a guaranteed minimum return In a variable annuity: premiums made into the annuity purchase accumulation points, designed to protect against inflation, and each month the payment will increase, decrease, or remain the same as before based on the actual return as compared to the assumed interest rate (AIR).

Which rider waives the cost of insurance and expenses if an insured becomes disabled?

C. Waiver of Monthly Deduction The payor benefit rider will waive premiums if the owner of a policy (not the insured) becomes disabled; a return of premium rider will pay a refund of premiums if the insured is still living when the policy expires; and the accelerated death benefit rider will provide benefits if the insured is terminally ill.

A life insurance policy is being applied for on Z's life. In order for the contract to be valid, all of the following have an insurable interest and could be the owner of the policy, except:

C. Z's neighbor Because a neighbor wouldnt have insurable interest.

Basic health plans provide "first dollar" coverage, which means:

C. benefits are payable starting w/ the first dollar of expenses incurred up to a stated maximum benefit and without a deductible

Which of the following distributions in a life insurance policy is taxable?

C. interest paid on a death benefit settlement option Policy loans, cash dividends, and withdrawal of cost basis are not subject to taxation. Interest paid as part of the death benefit settlement option is taxed as ordinary income.

To fund an HSA, an individual must:

C. purchase a high deductible health plan

A policy is applied for on Sept. 2, accepted as an insurable risk on September 20, mailed to the producer on Sept. 22, and delivered by the producer in-person to the policyowner on Sept. 25. The free look begins Sept. ____.

D. 25

A contract that is designed to accumulate value over time with the intent to provide a stream of income over the lifetime of an individual is called ________.

D. An annuity

All of the following factors are used to determine the monthly benefit payment of an annuity, except:

D. Annuitant's medical history The monthly annuity payment is based on several factors, including the accumulated value, interest rate, age & gender of annuitant and the payment option selected. Since there are no insurability requirements, the annuitant's medical history is not a factor.

A _______ insurance company is owned by its policyholders.

D. Mutual

HIPAA's privacy rules are implemented to:

D. Protect the privacy of all individually identifiable health info

A long-term care rider

D. Provides up to 100% of the policy benefits if the insured qualifies for benefits as specified in the rider but will reduce the amount of death benefit protection based on the amount paid under the rider.

Which of the following are characteristics of universal life insurance policies?

D. Two death benefit options, an adjustable death benefit and flexible premiums. Two death benefits options are a key characteristic of all forms of universal life insurance. All UL policies permit the policyowner to make changes in both the amount and timing of premium payments, including making no payments at all providing flexible premiums, and the death benefit may be increased or decreased in accordance with the terms and provisions of the policy.

Which of the following benefits, if payable to an eligible employee, is considered to be primary to all other plans?

D. Workers' compensation

All of the following are characteristics of group disability income plans, except:

D. benefits are based on a % of the employee's income at the time the policy was issued.

All of the following are characteristics of a qualified retirement plan, except:

D. employers in private industry are required to establish pension plans. QRPs receive favorable tax treatment, such as deductible to the employer, pre-tax or deductible premiums to the employee, and waived penalties for listed situations. ERISA is a federal law that sets minimum standards for employers who establish pension plans in private industry, but does not require employers to establish a plan.

Newborn children are covered under medical expense plans beginning ______.

D. immediately at birth and for at least 31 days

Each of the following is an element of a legal contract, EXCEPT:

D. indemnity Elements of a legal contract include: competent parties, legal purpose, agreement (offer & acceptance), & consideration.

The terms "usual, customary, and reasonable" refer to which of the following?

D. the avg charge for a medical procedure, treatment, or service in a defined geographical area.

A producer is explaining the concept of limited-pay life insurance to a 40-year-old client. When comparing a straight life policy with a 10-pay life policy, which of the following statements is correct?

D. the cash value in a straight life policy will accumulate at a slower rate than the cash value in a 10-pay life. Both policies will endow at age 100. neither a straight life or 10-pay life policy has immediate cash value.

An insured covered under a $1 million accidental death and dismemberment policy is involved in an accident that resulted in the loss of both legs 3 days after the accident. Following a lengthy hospital stay, her losses included $300k in medical bills, $100k in hospital expenses, and $10k in loss of income due to her inability to work. Which of the following is payable from the AD&D policy?

D. the principal sum of $1M for double dismemberment