Study question

All of the following are true regarding key person disability income insurance EXCEPT a)The employee is the insured. b)Premiums are tax deductible as a business expense. c)The employer receives the benefits if the key person is disabled. d)The employer pays the premiums.

B In key person disability insurance, the contract is owned by the business, the premium is paid by the business, and the business is the beneficiary. The key person is the insured, and the business must have the key person's consent to be insured in writing.

If a producer is found to have committed unfair trade practices or fraud, the Commissioner has the authority to do all of the following EXCEPT a)Refuse to renew the producer's license. b)Sentence the producer to jail time. c)Levy a civil penalty against the producer. d)Place the producer on probation.

B A producer who is found to have committed an unfair trade practice or fraud may be placed on probation, have their license suspended, revoked, or nonrenewed, or may have a civil penalty levied against them.

Which of the following persons is required to hold a producer license? a)A person who administers employee benefits b)A person who negotiates insurance contracts c)A person who only takes messages related to claims d)A person who creates insurance advertisements

B Persons who perform clerical tasks that are not related to soliciting or negotiating insurance contracts are not required to be licensed. Anyone who solicits, negotiates or sell insurance must be licensed as a producer.

If a producer is found to have committed unfair trade practices or fraud, the Commissioner has the authority to do all of the following EXCEPT a)Place the producer on probation. b)Refuse to renew the producer's license. c)Sentence the producer to jail time. d)Levy a civil penalty against the producer.

C A producer who is found to have committed an unfair trade practice or fraud may be placed on probation, have their license suspended, revoked, or nonrenewed, or may have a civil penalty levied against them.

How soon from the submission of a notice of claim must an insurer acknowledge the receipt of the notice? a)10 days b)20 days c)30 days d)60 days

C Once a notice of claim is submitted to the insurer, the insurer must acknowledge the receipt within 30 days.

A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will

Continue to increase

What is the purpose of COBRA? a)To provide coverage for the dependents b)To provide health coverage for people with low income c)To protect the insureds against insolvent insurers d)To provide continuation of coverage for terminated employees

D The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires any employer with 20 or more employees to extend group health coverage to terminated employees and their families after a qualifying event.

An individual receives a lump-sum inheritance. He'd like to use the money to create a lifetime income since he'll be retiring soon. He purchases an annuity and wishes to receive payments beginning in 2 months. What did he buy?

Single premium immediate annuity

As a condition for renewal of their licenses, how many hours of continuing education are required for all resident and nonresident insurance producers? a)10 b)20 c)24 d)12

c Twenty four hours of continuing education are required every 2 years as a condition for renewal of license.

A life insurance policy does not have a war clause. If the insured is killed during a time of war, what will the beneficiary receive from the policy? a)A refund of premiums b)Nothing, since the insured was killed as a result of a war c)The full death benefit d)The policy's cash value

C War or Military Service Clause specifically excludes or limits the insurer's liability for losses caused by war or active military service. If a life insurance policy does not have that exclusion, the benefits are paid to the beneficiary, as if the insured died of any other cause.

Insurance producers licensed in another state who move to Tennessee may apply for a resident license, as long as they do so within how many days of obtaining legal residence? a)30 days b)60 days c)90 days d)180 days

C. A person who moves to Tennessee from another state, and who was a licensed producer in the previous state, must make application within 90 days of establishing residency in order to avoid having to take the examination.

Which of the following would be an example of an insurer participating in the unfair trade practice of discrimination?

Charging the insured higher premiums based on her race.

The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the a)Incontestability clause. b)Consideration clause. c)Probationary period. d)Insuring clause.

D The insuring clause is a provision on the first page of the policy that states the coverage and when it applies.

The provision that sets forth the basic agreement between the pay insurer and the insured and states the insurer's promise to pay the death benefit upon the insured's death is called the

Insuring clause

As it pertains to group health insurance, COBRA stipulates that a)Retiring employees must be allowed to convert their group coverage to individual policies. b)Terminated employees must be allowed to convert their group coverage to individual policies. c)Group coverage must be extended for terminated employees up to a certain period of time at the employer's expense. d)Group coverage must be extended for terminated employees up to a certain period of time at the former employee's expense.

D COBRA requires employers with 20 or more employees to continue group medical insurance for terminated workers and dependents for up to 18 months to 36 months. The employee can be required to pay up to 102% of the coverage's premium.

The Medical Information Bureau (MIB) was created to protect a)Insurance departments from lawsuits by policyowners. b)Insureds from unreasonable underwriting requirements by the insurance companies. c)Medical examiners that perform insurance physical examinations. d)Insurance companies from adverse selection by high risk persons.

D The MIB makes information available to underwriters to assist them in the underwriting process. It is a nonprofit trade organization which receives adverse medical information from insurance companies and maintains confidential medical impairment information on individuals.

An insurance producer license may be renewed if the producer has paid the applicable fees, submitted the renewal form to the Commissioner, and a)Passed the required renewal examination. b)Completed continuing education requirements. c)Claimed residence in the State of Tennessee. d)Met all sales goals of the appointing insurer.

B An insurance producer's license will be renewed provided he or she has paid the fees, submitted the renewal form, and completed continuing education requirements.

All of the following are unfair claims settlement practices EXCEPT a)Failing to acknowledge and act promptly with respect to claims arising under insurance policies. b)Offering substantially more than the amounts ultimately recovered in actions brought by insureds. c)Attempting to settle claims on the basis of an application which was altered without notice to or knowledge of the insured. d)Misrepresenting pertinent facts or insurance policy provisions relating to coverage's at issue.

B Offering more than the amounts ultimately recovered in actions brought by insureds is not an unfair claims settlement practice.