Chapter 11: Texas Statutes and Rules Pertinent to Life Insurance

A brain surgeon has an accident and develops tremors in her right arm. Which disability income policy definition of total disability will cover for all her loses?

"Own occupation"- less restrictive than other definitions

A noncontributory group disability income plan has a 30 day waiting period and offers benefits of $2,000 a month. If an employee is unable to work for 7 months due to covered disability, the employee will recieve-

$12,000, all of which is taxable

An insured is covered under 2 group health plans - under his own and his spouse's. He had suffered a loss of $2,000. After the insured paid the total of $500 in deductibles and coinsurance, the primary insurer covered $1,500 of medical expenses. What amount, if any, would be paid by the secondary insurer?

$500

What percentage of individually- owned disability income benefits is taxabke?

0%

For group medical and dental expense insurance, what percentage of premium paid by the employer is deductible as a business expense?

100%

Viatical settlements may be rescinding within what time period after the viator receives the proceeds?

15 days

An individual covered under a group life insurance policy may convert the policy to any of the following except

15- year level term

Conversion to an individual whole life policy is permitted without evidence of insurability within how many days of termination of employement?

31 days

How long are grace periods in group policies?

31 days

When a disabled dependent child reaches the age limit for coverage, how long does the policyowner have to provide proof of dependency in order for the dependent to remain covered under the policy?

31 days

Unreimbursed Medical Expenses paid for the insured may be claimed as deductions if the expenses exceed what percentage of the adjusted gross income?

7.5%

All of the following statements are correct regarding credit life insurance except

Benefits are paid to the beneficiary

Workers compensation benefits are regulated by which entity?

State government

Which of the following is not true regarding partial disability?

This is a form of insurance that covers part time workers.

How long is incontestability in group life policies issued in Texas?

Two years

A policy owner has a health insurance policy with his wife listed as the primary beneficiary. He would like to change the primary beneficiary to his sister. Which of the following is true?

Unless policy is designed as irrevocable, the policy owner can change at any time.

Which characteristic does not describe managed care?

Unlimited access to providers

Workers compensation insurance covers a worker's medical expenses resulting from work related or injuries and covers loss of income from

Work- related disabilities

An employee is injured in a construction accident, rendering him unable to work for a year. Which of the following plans would provide him with medical expense coverage and income assistance?

Workers compensation

Is it illegal for an insurance company to advertise that it is the leader of the financial industry and therefore pays the most claims each year?

Yes; advertisements must not mislead the public in terms of financial standing.

If a policy owner surrenders his life insurance policy that has been in force for 5 years within 60 days after the premium due date, what will the insurer be required to pay?

A cash surrender value

Which of the following would best describe total disability?

A person's ability to work is significantly reduced or eliminated for the rest of his/her life.

All of the following statements concerning workers compensation are correct EXCEPT

A worker receives benefits only of the work related injury was his/ her fault.

An insured in a group policy has misstated his age on the insurance application. As a result, the insurer will most likely

Adjust the premium

Alexander has a policy with his ex wife as a beneficiary. What provision allows him to change allows him to change the beneficiary to his new wife.

Change of beneficiary

The purpose of managed health care plan is to

Control health insurance claim expenses

Which of the following would be the beneficiary in credit life insurance?

Creditor

Group disability income insurance premiums paid by the employer are

Deductible by the employer as an ordinary business expense.

Which of the following statements about occupational vs. nonoccupational is true?

Disability insurance can be written as occupational or nonoccupational

The usage of words or symbols that are similar to what entity is prohibited in life insurance advertisements?

Federal government

Which of the following premium modes would result in the highest annual cost for an insurance policy?

Monthly

During replacement of life insurance, a replacing insurer must do which of the following?

Obtain a list of all life insurance policies that will be replaced

If a person is compensated for testimonial in an advertisement, which of the following statements should be included in the advertisement?

Paid endorsement

All of the following are mandatory life insurance provisions except

Policy backdating

Which of the following describes taxation of individual disability income insurance premiums and benefits?

Premiums are not tax deductible, and benefits are not deductible

Which of the following is correct regarding the taxation of group medical expense premiums and benefits?

Premiums are tax deductible and benefits are not taxed.

According to the state nonforfeiture law for life insurance policies, insurers must offer at least one of the following nonforfeiture options except

Reduction of premium

A policy owner names five of his children as beneficiaries and his wife a contingent one. If the policy owner and one of his kids dies who gets the money?

The remaining 4 primary beneficiaries

Under what condition would an employee's group medical benefits be exempt from income taxes?

An employees group medical benefits are generally exempt from taxation from income

Which statement accurately describes the change of beneficiary provision?

Any policy that has a death benefit must also have a change of beneficiary provision.

All of the following information must be disclosed to the viator prior to the execution of a viatical settlement contract except

Availability of stranger originated life insurance (STOLI)

What type of insurance is sold to small business owners that must meet overhead expenses such as rent or utilities following a disability?

Business overhead expenses

The initial amount of credit life insurance may not exceed

The amount to be repaid under the contract

A husband and wife are insured under group health plans at their own places of employment, and as dependents under their spouses coverage. If one of them incurs hospital expenses. If one of them incurs hospital expenses, how will those expenses likely be paid?

The benefits will be cordinated.

Which of the following is true regarding the insurance amount in a credit life policy?

The creditor can only insure the debtor for the amount owed

An employee insured under a group health policy is injured in a car wreck while performing her duties for her employer. This results in a long hospitalization period. Which of the following is true?

The group plan will not pay because the employee was injured at work.

Which of the following is not required on an illustration used in the sale of a life insurance polivy?

The name of the primary and secondary beneficiaries

Which of the following is used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced?

Cost comparison methods

The type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called

Credit life

Which of the following is not allowed in credit life insurance?

Creditor requiring that a debtor buys insurance from a certain insurer

When possible, what should insurers strive to eliminate from illustrations?

Footnotes and caveats

What provision in a life insurance policy states that the application is considered part of the contract?

Grace period

All advertisements are the responsibility of the

Insurer

The mode of premium payment

Is defined as the frequency and the amount of the premium payment.

Which of the following is correct regarding credit life insurance?

It insures the life of a debtor.

Under compensation, which of the following benefits are not included?

Legal benefits

A worker's health insurance policy dictates which doctors she is allowed to see. Her health providers share an assumed risk for their patients and encourage preventive care. What best describes the health system that the woman is using?

Manages care

The coverage provided by a disability income policy that does not pay benefits for losses occurring as the result of the insured's employment is called

Nonoccupational coverage

Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?

Replacement rule

Disability income policies can provide coverage for a loss of income when returning to work only part-time after recovering from total disability. What is the benefit that is based on the insured's loss of earnings after recovery from a disability?

Residual disability

Disability income policies can provide coverage for a loss of income when returning to work only part time after recovering from total disability. What is the benefit that is based on the insured's loss of earnings after recovery from a disability?

Residual disbability

A provision found in insurance policies which prevents the insured from collecting twice for the same loss is called

Subrogation