Life and Health Insurance ExamFX

An insured's long-term care policy is scheduled to pay a fixed amount of coverage of $120 per day. The long-term care facility only charged a $100 per day. How much will the insurance company pay?

$120 a day. Most LTC policies will pay the benefit amount in a specific fixed dollar amount per day, regardless of the actual cost of care.

An insured pays a MONTHLY premium of $100 for her health insurance. What would be the duration of the grace period under her policy?

10 days

COBRA Act applies to only employers with how many employees?

20 or more employees.

The president of a manufacturing company has offered one of the company's officers a special individual annuity plan that is unavailable to lower-echelon employees. This plan would be funded with before-tax corporate dollars, and it does not meet government approval standards. This annuity plan is...

A nonqualified annuity plan.

What is a material misrepresentation?

A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company.

What kind of LTC benefit would provide coverage for care for functionally impaired adults on a less than 24-hour basis?

Adult Day Care

Which of the following best describes fixed-period settlement option?

Both the principal and interest will be liquidated over a selected period of time.

A life insurance policy used to fund an agreement that contractually establishes the intent of someone to purchase a business upon the insured business owner's death is a

Buy-sell agreement.

Kevin and Nancy are married; Kevin is the primary breadwinner and has a health insurance policy that covers both him and his wife. Nancy has an illness that requires significant medical attention. Kevin and Nancy decided to legally separate, which means that Nancy will no longer be eligible for health insurance coverage under Kevin. What would be Nancy's best option?

COBRA

Who does the secondary notice provision protect?

Elderly Insureds

What must an agent receive in order to sell variable life insurance policies?

FINRA registration.

An insured is involved in an accident that renders him permanently deaf, although he does not sustain any other major injuries. The insured is still able to perform his current job. To what extent will he receive Presumptive Disability benefits?

Full benefits.

What kind of policy issues certificates of insurance to insureds?

Group Insurance.

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a

Guaranteed Insurability rider

What rider does NOT increase the premium for a policyowner?

Impairment rider

What is the purpose of a conditional receipt?

It is intended to provide coverage on a date earlier than the date of the issuance of the policy.

Which of the following statements is TRUE about a policy assignment?

It transfers rights of ownership from the owner to another person.

Applications to an insurer must include...

License identification number of the agent, Name of the Insurer, and Name of the Agent.

In a replacement situation the agent must consider what?

Limitations, Exclusions, and Benefits.

Which program expands individual public assistance programs for people with insufficient income and resources?

Medicaid

An application for a health insurance policy returns a completed application to her agent, along with a check for the first premium. She receives a conditional receipt two weeks later. What has the insurer done by this point?

Neither approved the application nor issued the policy.

In an individual LTC insurance plan, the insured is able to deduct the premiums from taxes. What income taxation will be imposed on the benefits received?

No Tax

What is a mandatory provision for health insurance policies?

Physical examination and autopsy.

Who must have insurable interest in the insured?

Policyowner

When would paying premium be tax deductible?

Premiums paid by an employer on a $30,000 group term life insurance plan for employees. (Because it would be considered a business expense.)

Characteristics of Business Overhead Expense policies are...

Premiums paid for BOE are tax-deductible / Any Benefits received are taxable as income to the business / Leased equipment expenses are covered by the plan.

Required provisions of a health insurance policy are...

Proof-of-loss forms must be sent to the insured within 15 days of notice of claim / A grace period of 31 days is found in an annual pay policy / The entire contract clause means the signed application, policy, endorsements, and attachments constitute the entire contract.

An insured loses her left arm in an accident that is covered by her Accidental Death and Dismemberment policy. What kind of benefit will she most likely receive from this policy?

The capital amount in a lump sum.

Characteristics of Universal Life policy are...

The insurance company reserves the right to adjust the mortality charges and-or interest rate / The cash account accumulates on a tax-deferred basis / Universal Life is a combination of term insurance and a separate savings account joined in a single contract.

What is the Annuity period?

The period of time during which accumulated money is converted into income payments.

In a life settlement contract, whom does the life settlement broker represent?

The policyowner

Under the Physical Exam and Autopsy provision, how many times can an insurer have the insured examined, provided that the insurer pays the expense, while a claim is pending?

Unlimited.

Individuals covered by group life insurance do not receive a policy, but receive...

a certificate of insurance from the master policy.

Whole life policies offer

level premium based on the issue age, guaranteed level death benefit, cash value that is scheduled to equal the face amount at the insured's age 100, and living benefits which include policy loans.

Money borrowed from the cash value is

not taxable

The paid-up addition option uses the dividend to

purchase a smaller amount of the same type of insurance as the original policy.

In a family deductible, expenses for two or more family members can...

satisfy a common deductible in a given year, regardless of the amount of expenses incurred by other family members.

Hospice provides ...

short-term, continuous care in a home-like setting to terminally-ill people with life expectancies of 6 months or less.

In insurance, an offer is usually made when

the application is submitted.

The longer the elimination period...

the lower the cost of coverage.

In coinsurance, the larger the percentage that is paid by the insured...

the lower the required premium will be.

In a reinstated policy, to protect the insurer against adverse selection, losses resulting from sickness are covered only if...

the sickness occurs at least 10 days after the reinstatement date.

How soon following the occurrence of a covered loss must an insured submit written proof-of-such loss to the insurance company?

within 90 days or as soon as reasonably possible, but not to exceed 1 year.

An employee will be taxed on the cost of group life insurance paid by the employer if the amount of coverage exceeds...

$50,000

Ray has an individual major medical policy that requires a coinsurance payment. Ray vey rarely visits his physician and would prefer to pay the lowest premium possible. Which coinsurance agreement would be best for Ray?

50/50

How long is an open enrollment period for Medicare supplement policies?

6 months.

Premiums paid weekly have a grace period of

7 days

Violations of state insurance regulations would be...

Agent charging his clients consulting fees, in addition to the premium / Agent collecting premiums due on policies and depositing the funds into his own personal account / Agent uses his license to write only insurance for himself and his immediate family.

Who can make a fully deductible contribution to a traditional IRA?

An individual not covered by an employer-sponsored plan who has earned income.

All other factors being equal, the least expensive first-year premium payment is found in...

Annually Renewable Term.

Terms for the period of time during which an annuitant or the beneficiary receives income?

Annuitization period, Liquidation period, and Pay-out period.

What is the maximum period of time during which an insurer may contest fraudulent misstatements made in a health insurance application?

As long as the policy is in force.

The premium charged for exercising the Guaranteed Insurability Rider is based upon the insured's...

Attained age.

What document describes an insured's medical history, including diagnoses and treatments?

Attending Physicians Statement

A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?

Automatic Premium Loan

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require what elements?

Consideration, Legal Purpose, Offer and Acceptance

Five distinguishing features of managed care are

Controlled access to providers, Comprehensive case management, risk sharing, preventive care, and high-quality care.

The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the

Entire contract

A husband and wife both incur expenses that are attributed to a single major medical insurance deductible. What type of insurance do they have?

Family

What entity can legally bind coverage?

Insurer

Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to an insured is

Monthly

Bethany studies in England for a semester. While she is there, she is involved in a train accident that leaves her disabled. If Bethany owns a general disability policy, what will be the extent of benefits that she receives?

None

An applicant is discussing his options for Medicare supplement coverage with his agent. The applicant is 65 years old and has just enrolled in Medicare Part A and Part B. What is the insurance company obligated to do?

Offer the supplement policy on a guaranteed issue basis.

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

Other-insured rider

An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do?

Pay a reduced death benefit.

Which provision would prevent an insurance company from paying a reimbursement claim to someone other than the policyowner?

Payment of Claims

An insured wants to name her husband as the beneficiary of her health policy. She also wishes to retain all of the rights of ownership. The insured should have her husband named as what type of beneficiary?

Revocable

Methods used to pay the death benefits to a beneficiary upon the insured's death are called

Settlement Options.

Which type of life insurance policy generates immediate cash value?

Single Premium

What is the best way to change an application?

Start over with a fresh application.

What describes the specified dollar amount beyond which the insured no longer participates in the sharing of expenses?

Stop-loss limit

The legal process that gives the insurer, after payment of a loss, the right to seek recovery from a third party that was responsible for the loss is known as

Subrogation

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as...

Survivor Protection.

In Branch Agency Licensing....

The Agent in charge must be licensed.

Who examines the books and records of insurance companies in Florida?

The Chief Financial Officer.

Who must pay for the cost of a medical examination required in the process of underwriting?

The Insurer

An insured dies or loses sight in both eyes and is covered by their Accidental Death and Dismemberment policy. What kind of benefit will they most likely receive from this policy?

The Principal amount in a lump sum.

What entities regulate variable life policies

The SEC, The Insurance Department, and the Federal government.

Insurers usually do not reimburse claimants for 100% of income lost due to disability. What is the reason for insurer limitations on coverage amounts?

To provide an incentive for the insured to return to work.

Long-Term Care policies require that in addition to the applicant at least one person must be designated in the policy. What is the role of that designated person?

To receive notice of policy lapse or termination.

An insurer can change interest on outstanding policy loans.

True

A medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographic area is known as

Usual, Customary, and Reasonable

General disability policies do not cover losses caused by...

War, military service, intentionally self-inflicted injuries, overseas residence, or injuries suffered while committing or attempting to commit a felony.

When may an insurance company use suicide as a defense against paying a death claim?

When death occurs within a specified period of time after the policy was issued.

The "elimination period" is...

a period of days which must expire after the onset of an illness or occurrence of an accident before benefits will be payable.

In the paid-up addition option, the dividends are used to purchase what kind of policy?

a single premium policy in addition to the face amount of the permanent policy.

The Impairment rider excludes

a specified condition from coverage, therefore, reducing benefits. An insurance company will not charge extra for a rider that reduces benefits.

The incontestability clause prevents...

an insurer from denying a claim due to statements in an application after the policy has been in force for 2 years. However, it does not apply to statements relating to age, sex, and identity.

Policy loans can be repaid

at any time, including surrender and death.

The accelerated benefits provision will provide for an early payment of the death benefit when the insured...

becomes terminally ill.

The gatekeeper of an HMO helps...

control specialists costs.

In a Universal Life Policy, any premium amounts not required to pay for mortality and expenses...

create the cash account.

Most medical expense policies will not cover...

expenses for dental care, self-inflicted injuries, or injuries incurred as a result of military service.

Regarding whole life policy, the policyowner...

is entitled to policy loans.