Life Insurance Exam
What is considered to be a characteristic of a Conditionally Renewable Health Insurance policy?
Premiums may increase at time of renewal
What should an insured do if the insurer does not send claims forms within the time period set forth in a health policy's Claims Forms provision?
Submit the claim in any form
Which of the following is the reimbursement of benefits for the treatment of a beneficiary's injuries caused by a third party?
Subrogation
Which of the following statements about the classification of applicants is INCORRECT?
Substandard applicants are never declined by underwriters
J, an Accidental Death and Dismemberment (AD&D) policy holder, dies after injuries sustained in an accident. J's age as stated on the application five years ago was found to be understated by ten years. Which of the following actions will the insurance company take?
The insurer will adjust the benefit to what the premiums paid would have purchased at the insured's actual age
An insurer cannot deny a claim unless
There is reasonable explanation of the claim
Upon request, when must the Colorado Supplement to the Summary of Benefits and Coverage Form be provided?
Within 7 business days
The Commissioner may issue an emergency cease and desist order without a hearing for all of the following circumstances EXCEPT
Writing controlled business
What is Medicare?
a hospital and medical expense insurance program
A fiduciary responsibility is defined as
a relationship of special trust and confidence when a person is entrusted with another's funds
Which of the following is the MOST important factor when deciding how much Disability Income coverage an applicant should purchase?
applicant's monthly income
Group/voluntary long-term care policy premiums are typically deducted from the employee's income and
are less costly compared to individual log term care coverage
When may the Commissioner conduct an examination of an insurance company?
as often as deemed necessary
In order to establish a Health Reimbursement Arrangement (HRA), it MUST:
be established by the employer
Medicaid was designed to assist individuals who are:
below a specific income limit
Accidental Death coverage is provided to commercial airline passengers in which of the following types of policies?
blanket accident policy
Which of the following statements BEST defines usual, customary, and reasonable (UCR) charges?
the maximum amount considered eligible for reimbursement by an insurance company under a health plan
Which of the following policy provisions prohibits an insurance company from incorporating external documents into an insurance policy?
Entire contract
From what authority derives the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained on an applicant?
Fair Credit Reporting Act
Which Federal law allows an insurer to obtain an inspection report on a potential insured?
Fair Credit Reporting Act
Bryce purchased a disability income policy with a rider that guarantees him the option of purchasing additional amounts of coverage at predetermined times without requiring to provide evidence of insurability. What kind of rider is this?
Guaranteed insurability rider
Which type of provider is known for stressing preventative medical care?
Health Maintenance Organizations (HMO's)
A 66 year-old is covered under a group health plan while employed with a business that has 40 employees. If she injures herself while walking in the park, what coverage would be considered primary?
Her group health plan
All accident and health policies issued in Colorado that provide major medical services must offer policyholders the opportunity to purchase
Home health care coverage
When may the Commissioner issue an emergency cease and desist order?
If there is suspicion of an unauthorized person engaging in insurance business without being licensed
T owns an Accident & Health policy and notifies her insurance company that she has chosen a less hazardous occupation. Under the Change of Occupation provision, which of the following actions may her insurance company take?
Increase her policy's coverage amount
Information obtained from a phone conversation to the proposed insured can be found in which of these reports?
Inspection report
Which of the following is NOT a required provision for an accident and health policy?
Insurance with other insurers
What is the initial requirement for an insured to become eligible for benefits under the Waiver of Premium provision?
Insured must be under a physician's care
In Colorado, which of the following is true regarding the commingling of an insured's funds with the funds of the producer?
It is never okay
T has Disability Income policy that pays a monthly benefit of $5000. If T becomes partially disabled, what can he likely expect?
Less than $5000 per month benefit regardless of cause; a covered partial disability will typically result in less than $5,000 per month regardless of the nature of the disability
In Major Medical Expense policies, what is the intent of a Stop Loss provision?
Limit's an insured's out-of-pocket medical expenses
An insurance company would MOST likely pay benefits under an Accidental Death and Dismemberment policy for which of the following losses?
Loss of eyesight due to an accidental injury
Which of the following individual health insurance policies will provide the broadest protection?
Major Medical
The health insurance program which is administered by each state and funded by both the federal and state governments is called:
Medicaid
According to the Time Payment of Claims provision, the insurer must pay Disability Income benefits no less frequently than which of the following options?
Monthly
What type of renewability guarantees premium rates and renewability?
Noncancellable
Which of the following BEST describes a short-term medical expense policy?
Nonrenewable
Which statement is true regarding a minor beneficiary?
Normally, a guardian is required to be appointed in the beneficiary clause of the contract
As a condition to be approved for a loan, a creditor may require the borrower to
Obtain an insurance policy through an insurer of the borrower's preference
The provision that defines to whom the insurer will pay benefits to is called:
Payment of Claims
Which of these is considered a mandatory provision?
Payment of Claims
Which of the following statements about a Guaranteed Renewable Health Insurance policy is CORRECT?
Premiums normally increase at time of renewal
What is the purpose of the Time of Payment of Claims provision?
Prevent the insurance company from delaying claim payments
The Legal Actions provision of an insurance contract is designed to do all of the following, EXCEPT:
Protect the producer
When an insured has the same disability within a specified time period and the insurance company provides the same benefits without a new waiting period, the second disability is covered under which of the following benefits?
Recurrent disability
Which type of policy pays benefits to a policyholder covered under a Hospital Expense policy?
Reimbursement
K failed to pay a renewal premium within the time granted by the insurer. K then sends in a payment which the insurer subsequently accepts. Which policy provision specifies that coverage may be restored in this situation?
Reinstatement
In Colorado, all of the following are considered unfair trade practices EXCEPT
Replacement
The policy provision that entitles the insurer to establish conditions the insured must meet while a claim is pending is:
Time Limit on Certain Defenses-- this provision limits the period during which an insurer can deny a claim based on a misstatement made by the insured
The guarantee of insurability option provides a long-term care policyowner the ability to:
buy additional coverage at a later date
P is a Major Medical policyowner who is hospitalized as a result of injuries sustained from participating in a carjacking. How will the insurer most likely handle this claim?
claim will be denied
Major Medical policies typically:
contain an deductible and coinsurance
The reason for a business having a Business Overhead Expense Disability Plan is to cover:
fixed business expenses
Paying insurance premiums on a more frequent basis will cause the policy to have
higher premiums
Which of these do NOT constitute policy delivery?
policy issued with a rating
With Optionally Renewable Health policies, the insurer may:
review the policy annually and determine whether or not to renew it
The insuring clause
states the scope of limits and coverage
The USA Patriot Act was signed in to law as a response to
the 9/11 terrorist attacks
If a producer is found to be writing primarily controlled business,
the Commissioner will not renew the license
The Consideration clause of an insurance contract includes:
the schedule and amounts of premium payments
Which of the following is an example of defamation?
A brochure including an untrue statement regarding a competitor's ability to pay claims
Which of the following medical expenses does Cancer insurance NOT cover?
Arthritis
Which of the following is NOT required to be disclosed to an applicant for health insurance?
Any contingent compensation received
Any changes made on an insurance application requires the initials of whom?
Applicant
Who is NOT required to sign a health insurance application?
Beneficiary
According to the Colorado Fraud Statute, all of the following must contain a warning against insurance fraud EXCEPT
Certificates of authority
Which of the following documents are NOT required to mention the Colorado Fraud Statute?
Certificates of authority
N has a Major Medical policy that only pays a portion of N's medical expenses. N is responsible for paying the remaining balance. This provision is known as:
Coinsurance
Which of the following organizations would make reimbursement payments directly to the insured individual for covered medical expenditures?
Commercial insurer
Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy?
Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company
P is self-employed and owns an Individual Disability Income policy. He becomes totally disabled on June 1 and receives $2,000 a month for the next 10 months. How much of this income is subject to federal income tax?
$0-- disability income benefits that derive from an individual policy which was paid entirely by the policy owner is not subject to federal income tax
A Hospital/Surgical Expense policy was purchased for a family of four in March of 2013. The policy was issued with a $500 deductible and a limit of four deductibles per calendar year. Two claims were paid in September 2013, each incurring medical expenses in excess of the deductible. Two additional claims were filed in 2014, each in excess of the deductible amount as well. What would be this family's out-of-pocket medical expenses for 2013?
$1000
An insured covered by a group Major Medical plan is hospitalized after sustaining injuries that resulted from an automobile accident. Assuming the plan had a $1,000 deductible and an 80/20 Coinsurance clause, how much will the INSURED be responsible to pay with $11,000 in covered medical expenses?
$3,000 (1,000 deductible + 20% of the remaining bill)
An producer who violates a cease and desist order may, after a hearing, be fined up to
$500
An insured pays premiums on an annual basis for an individual health insurance policy. What is the MINIMUM number of days for the Grace Period provision?
31
T is receiving $3,000/month from a Disability Income policy in which T's employer had paid the premiums. How are the $3,000 benefit payments taxable?
Benefits are taxable to T--> when a disability income insurance plan is paid for entirely by the employer, the premiums are deductible to the employer. The benefits, in turn, are taxable to the recipients
The difference between group insurance and blanket health policies is:
Blanket health policies do not issue certificates
Which of these circumstances is a Business Disability Buy-Sell policy designed to help in the sale of a business?
Business owner becoming disabled
Which of the following is a duty of the Commissioner?
Reviewing and approving license applications
N is covered under an individual Disability policy with a 30-day Elimination period and a monthly benefit of $500. N is totally disabled for 3 1/2 months. N's total benefit received on this claim is:
$1250--> After the 30-day elimination period has been satisfied, the total benefit paid on this claim is $1250 (500+500+250)
An individual has a Major Medical policy with a $5,000 deductible and an 80/20 Coinsurance clause. How much will the INSURED have to pay if a total of $15,000 in covered medical expenses are incurred?
$7000 (5000+20% of the remaining bill)
What is the maximum Social Security Disability benefit amount an insured can receive?
100% of the insured's Primary Insurance Amount
An insurer must provide an insured with claim forms within __ days after receiving notice of a loss
15
An insured must notify an insurer of a medical claim within how many days after an accident?
20
An insurer that terminates a producer's appointment must inform the Commissioner within how many days?
30 days
How long is the typical free look period for Long Term care insurance policies?
30 days
S is employed by a large corporation that provides group health coverage for its employees and their dependents. If S dies, the company must allow his surviving spouse and dependents to continue their group health coverage for a maximum of how many months under COBRA regulations?
36
A producer must remit premiums to the insurer within _____ days after receipt.
45 days
M's insurance company denied a reinstatement application for her lapsed health insurance policy. The company did not notify M of this denial. How many days from the reinstatement application date does the insurance company have to notify M of the denial before the policy will be automatically placed back in force?
45 days
Which of the following is CORRECT regarding a producer's fiduciary responsibility with client's funds?
A producer may never commingle personal funds with funds paid by or to a client
Which of the following statements describes what an Accident and Health policyowner may NOT do?
Adjust the premium payments
Under which of the following circumstances will the benefits under COBRA continuation coverage end?
All group health plans are terminated by the employer
An insurance company receives E's application for an individual health policy. E did not complete all of the medical history questions because she could not remember the exact dates. E signed the policy and submitted it to the insurance company anyway. A few weeks later, E suffers a heart attack and is hospitalized without completing the medical history questions and paying the initial premium. E is not insured. Which of the following clauses details the conditions that E did not meet?
Consideration clause
Which of the following consists of an offer, acceptance, and consideration?
Contract
Circulation of a maliciously critical statement about an insurer's financial condition meant to damage the insurer's reputation or business is called
Defamation
In Colorado, what is required to be covered in individual and group medical expense policies?
Diabetes
What type of policy would only provide coverage for specific types of illnesses (cancer, stroke, etc)?
Dread disease insurance
M becomes disabled and is unable to work for six months. M dies soon after from complications arising from this disability. M has a Disability Income policy that pays $2,000 a month. Which of the following statements BEST describes what is owed to her estate?
Earned, but unpaid benefits
Which health policy clause stipulates that an insurance company must attach a copy of the application to the policy to ensure that it is part of the contract?
Entire contract
Ultimately, who is responsible for a producer-generated advertisement?
Insurer
An insurance company normally has 2 years to contest information provided on an accident and health application. This 2 year period begins on the date that the:
Insurer dates the policy
Which health policy clause specifies the amount of benefits to be paid?
Insuring
The primary difference between the Colorado Partnership LTC policy and other LTC policies is
Medicaid asset protection
A producer license may be suspended or revoked if the producer is found to be engaging in
Misrepresentation
T files a claim on his Accident and Health policy after being treated for an illness. The insurance company believes that T misrepresented his actual health on the initial insurance application and is, therefore, disputing the claim's validity. The provision that limits the time period during which the company may dispute a claim's validity is called:
Time limit on certain defenses-- limits the time during which the insurance company may challenge the validity of an insurance claim on the basis of a misstatement made on the insured's application
In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?
Unilateral
The provision in a health insurance policy that suspends premiums being paid to the insurer while the insured is disabled is called the:
Waiver of Premium
What type of rider would be added to an Accident and Health policy if the policyowner wants to ensure the policy will continue if he/she ever becomes totally disabled?
Waiver of premium rider
A Disability Income policyowner recently submitted a claim for a chronic neck problem that has now resulted in total disability. The original neck injury occurred before the application was taken 5 years prior. The neck injury was never disclosed to the insurer at the time of application. How will the insurer handle this claim?
claim will be paid and coverage will remain in force
The situation in which a group of physicians are salaried employees and conduct business in an HMO facility is called a(n):
closed panel
All of the following are considered a form of advertisement EXCEPT
communication or materials used within an insurer's own organization
K applies for a health insurance policy on herself and submits the initial premium with the application. She is given a receipt by the producer stating that coverage begins immediately if the application is approved. What kind of receipt was used?
conditional
A producer that only sells insurance to family members is said to be engaging in
controlled business
Which of the following is an example of a misrepresentation?
describing a universal life policy as a security
Which of the following does Social Security NOT provide benefits for?
dismemberment
Health insurance benefits NOT covered due to an act of war are:
excluded by the insurer in the contract provisions
An insurer can deny a claim under a long-term care insurance policy for any material misrepresentation made by the insured if it has been in effect for
fewer than six months
Which of the following offers an insurance applicant the right to review the contract and receive a full refund?
free-look period
M completes an application for health insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect, EXCEPT:
free-look period has expired
With Disability Income insurance, an insurance company may limit the monthly benefit amount a prospective policy holder may obtain because of the insured's:
gross income at the time of purchase
K has a health policy that must be renewed by the insurer and the premiums can only be increased if applied to the entire class of insureds. This type of policy is considered:
guaranteed renewable
An insurer receives proof of loss for an acceptable medical expense claim under an Individual Health Insurance Policy. Under the Time of Payment of Claims provision, the insurer MUST pay the benefits:
immediately
When determining the monthly benefit amount for a Disability Income policy, the factor that limits the amount a prospective insured may purchase is:
income
When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have:
insurable interest in the proposed insured
Which information is NOT included in the Colorado Supplement to the Summary of Benefits and Coverage form?
insurer's prior year financials
The clause identifying which losses resulting from an accident or sickness are insured by the policy is called the:
insuring clause
When a claim has been denied, the insurer must
issue a statement to the policy owner explaining the coverage, provision, or laws on which denial was based
Pre-hospitalization authorization is considered an example of:
managed care
Which type of plan normally includes hospice benefits?
managed care plans
Which of these factors do NOT play a role in the underwriting of a health insurance policy?
marital status
A verbal or written statement which misleads a policy's features, benefits, or coverage is considered
misrepresentation
Periodic health claim payments MUST be made at least:
monthly
The Notice of Claims provision requires a policyowner to:
notify an insurer of a claim within a specified time
Which of the following coverage exclusions or limitations is permitted under a long-term care policy issued in Colorado?
preexisting conditions
If an insurer is authorized to conduct business in another state and wishes to conduct business in Colorado, it must
receive a certificate of authority from Colorado
If a producer is going to deposit any premium into a bank account prior to remitting the funds to the insurer, he/she must use a
separate insurance trust account
A health insurer may exclude medical coverage for any claims that result from
skydiving
In regards to maternity care, which of the following is not required to be covered in the State of Colorado?
standard newborn circumcision
In regards to maternity care, which of the following is not required to be covered in the state of Colorado?
standard newborn circumcision
T files a claim on his Accident and Health policy after being treated for an illness. The insurance company believes that T misrepresented his actual health on the initial insurance application and is, therefore, disputing the claim's validity. The provision that limits the time period during which the company may dispute a claim's validity is called:
time limit on certain defenses
A Business Disability Buyout plan policy is designed:
to pay benefits to the corporation or other shareholders
According to the Time Limit of Certain Defenses provision in an Individual Health Insurance Policy, nonfraudulent misstatements first become incontestable:
two years from the date of the policy was issued
The part of a life insurance policy guaranteed to be true is called a(n):
warranty
When must insurable interest be present in order for a life insurance policy to be valid?
when the application is made