life & health missed test questions

What are the 4 elements of an insurance contract?

agreement, consideration, competent parties and legal purpose

The stop-loss amount major medical policy is the maximum amount the insured pays out of pocket before the insurance company provides coverage at _____________%

100%

If a long-term care policy has a fixed coverage of $120 per day, but the facility's rate is only $100 per day, how much will the insurance company pay?

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

In conjunction with the Health Benefit plan committee, small employers must offer at least the following two choices to employees: 1. ________________________ 2. _______________________

1. Basic health benefit plan, and 2. Standard health benefit plan

An association must have at least ____________ members before buying group insurance

100

What is the penalty for using HSA funds for a nonqualified distribution?

20% . This is not the same as the 10% early withdrawal penalty

In order to attain currently insured status under Social Security, how many credits must the worker have earned in the last 13 quarters?

6 credits

A life insurance policy can be backdated for a maximum period of _______________ months

6 months

What is the maximum period of coverage under Oregon state continuation rules for group health insurance?

6 months

Under COBRA, when a covered individual gets divorced or separated, they must notify the insurance company within _____________ days so they can provide notification and information regarding continuation of coverage within 14 days.

60 days. This is considered a qualifying event

Notice of a hearing for a cease and desist order must be given at least how many days in advance?

7

At least ___________ percent of eligible employees must be included in a contributory plan

75%

Why would an underwriter request an MIB Report for life or health insurance?

A Medical Information Bureau report provides a method for insurance companies to compare the medical information collected on a potential insurer against information from other insureds.

What does a class designation refer to?

A class designation refers to the policy owner's choice of beneficiary designation option. The two different classes are per stirpes and per capita.

A straight life policy has what type of premium?

A level annual premium for the life of the insured

What is the amount a physician or supplier bills for a particular service or supply called?

Actual charge

what is a warranty in insurance?

An absolutely true statement upon which the validity of the insurance contract is based

When is the Outline of Coverage delivered?

At the time of application or upon delivery of the policy

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?

Authorized or admitted

The HMO provides benefits in the form of ______________ rather than in the form of ____________________________.

HMO benefits are in the form of services rather than in the form of reimbursement.

Which type of policy would have a higher premium; Joint life or survivorship life?

Joint Life would have a higher premium because it is generally a shorter policy

What are the three basic types of term coverage available?

Level, increasing, and decreasing. This is based on how the face amount; or death benefit, changes during the policy term

The form of life annuity that pays benefits throughout the lifetime of the annuitant and also guarantees payment for a minimum number of years is called ___________________

Life Income with period certain. If the annuitant dies before the end of the period, the beneficiary will receive the same payments for the remainder of the period

what are the five characteristics of an ideally insurable risk?

Loss must be 1. due to chance, 2 definite and measurable, 3 statistically predictable, 4 not catastrophic, and 6 coverage cannot be mandatory

Would the premium in a survivorship life policy be higher, or lower than the premium in a joint life policy?

Lower, since the survivorship policy will pay out longer

What does MIB stand for?

Medical Information Bureau. A non-profit trade organization owned by member insurance companies

What is another name for a Medicare Supplement plan?

Medigap

What is a "MEWA"?

Multiple Employer Welfare Associations are groups of at least 2 employers who pool their risks to self-insure and can be sponsored by an insurance company, an independent administrator, or another group established to provide group benefits

What does MEWA stand for?

Multiple Employer Welfare Associations. They are groups of at least 2 employers that pool theirs risks in order to self-insure.

Medicare SELECT is a Medicare supplement policy that operates similar to an HMO to provide benefits when the insured seeks treatment within a specific __________________________

Network of providers.

Can a group needing low-cost life insurance own life insurance?

No - groups purchasing life insurance must be formed for a reason other than purchasing insurance

Can an HMO provide inpatient hospital care only inside the service area?

No. An HMO will provide a member with inpatient hospital care in, or out of the service area.

Can an annuity be used to create an estate?

No. Annuities are used to liquidate an estate. A life insurance policy creates an immediate estate.

Can a corporation or entity be the annuitant?

No. The annuitant must be a natural person. The Owner of may be a corporation, but it cannot be the annuitant if it is.

Can a Medicare SELECT issuer sell a policy to individuals with a primary resident outside of the issuer's service area?

Not currently; no

Under the Uniform Optional Provisions, the insurance company can change the premiums based on a change in _________________________

Occupation

What is a compulsory program?

One in which participation is mandatory.

Is Medicare Part B compulsory or elective?

Part B is elective, however requires a monthly premium to be paid

Which annuity settlement option would result in the highest monthly income payment

Pure life, also known as life-only or straight life. This option ceases at the annuitant's death and does not provide for any beneficiary

Risk ________________ is the planned assumption of risk by an insured through the use of deductibles, co-payments, or self-insurance

Retention. The purpose of retention is to reduce expenses, increase control of claim settlements, and to fund for losses that cannot be insured

What are some examples of risk retention?

Self-insurance, deductibles, and co==payments

Whose life expectancy is taken into account when an annuity is written; the Owner or the Annuitant?

The Annuitant. They could both be the same, but are not required to be

How many pints of blood does a Medicare Supplement plan cover?

The first 3 pints that are not covered under Medicare

In an agent/insurer relationship, who is considered the principal?

The insurer

How are the premiums on an annually renewable term life policy structured? increasing? decreasing? level?

The premiums on an annually renewable term policy increase annually according to the attained age, as the probability of death increases.

True or False. Distributions on a 401k plan are subject to a 20% withholding tax

True

True or False. Long-term care premium payments are included in the total amount of medical expenses that are eligible for tax deduction when the total exceeds 10% of the taxpayer's adjusted gross income.

True

True or False. Medicare Part A is automatically provided when an individual qualifies for Social Security benefits at age 65

True

True or false: In a beneficiary class designation, the beneficiaries are not identified by name. The proceeds are distributed based on a per stirpes or per capita designation.

True

True or False. Distributions from an MEC; or Modified Endowment Contract are subject to a 10% penalty if made before age 59 1/2

True.

True or False: When partners buy policies on each other to cover the business in the event an owner dies or becomes disabled, this buy-sell agreement can be done with the purchase of any form of life insurance.

True. However, joint-life is used most commonly.

True or False. An Annually renewable term policy is considered the purest form of term insurance.

True. It I considered a type of "level" term insurance. The death benefit remains level, and the policy may be guaranteed renewable each year without proof of insurability.

True or False: Medicare has a "blood deductible"

True. Medicare does not cover the first 3 pints of blood needed. The insured would need a Medigap; or Medicare Supplement plan

What is a Whole Life policy cash value converted to under an extended term nonforfeiture option?

Under an extended term nonforfeiture option, the Whole Life policy cash value is converted to term insurance for the Same Face Amount as the former policy

The illustration regulations apply to all individual and group policies except: individual and group annuities, individual life policies with death benefits below $10,000, and these types of life ______________, _________________ and ___________________

Variable life, credit life, and group term life are also excluded from the illustration regulation requirements

In forming an insurance contract, when does an acceptance usually occur?

When the insurer approves a prepaid application

Can an insurer change the wording of optional policy provisions?

Yes, as long as the change does not adversely affect the policy holder

The premiums for both Joint Life and Survivorship Life; or Second-to-die, are based on _________________________

a joint average age.

The definition of a small employer applies to any person or entity who employs at least ___________, but not more than ______________ employees

at least 2, but not more than 50

In addition to providing income for retirement and estate liquidation, annuities can be used to accumulate funds for ________________

college education

In the state of Oregon, group health policies must contain a provision that allows employees to continue coverage for a maximum of _______________ after the date that coverage would have ended. This is only available to employees who have been insured continuously under the policy during the ____________ period ending on the date of termination.

continue coverage for a maximum of 6 months, providing they have been insured continuously for the 3 months prior to the date of termination

If the policy owner has neglected to select a nonforfeiture option. the insurer will automatically implement the ______________________ option in the event of termination of the original policy

extended term is automatically selected by the insurer if the policy holder did not choose a nonforfeiture option. The Extended Term option coverts the former permanent policy to a temporary term policy for the same face amount.

What are the two different interest rates in a Universal life policy called?

guaranteed rate; or contract interest rate, and the current interest rate

what two elements are necessary for a life insurance policy?

insurable interest and consent

Insurance companies may require a ________________________ number of participants to be insured under a group life insurance plan

minimum

What are the strategies used by underwriters to prevent adverse selection?

restriction of coverage, refusal to accept a risk, and accepting a risk at a higher rate

Major medical policy premiums vary depending on the amount of the deductible, the coinsurance percentage, the __________________ amount and the maximum amount of the benefit. The average age of the group is not a consideration

stop-loss amount