Exam PSI Part 3

If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age, what type of policy is this?a)Limited pay whole life policyb)Modified life insurance policyc)Single premium policyd)Jumping juvenile policy

)Jumping juvenile policy While many policies provide a level death benefit, Jumping Juvenile policies provide a low face amount in the early years and then increase, usually by 5 times the amount, when the insured reaches an age specified in the policy (usually age 21).

13? All of the following statements are correct regarding credit life insurance EXCEPT 1. Benefits are paid to the borrower's beneficiary. 2. The amount of insurance permissible is limited per borrower. 3. Premiums are usually paid by the borrower. 4. Benefits are paid to the creditor.

1. Benefits are paid to the borrower's beneficiary.

38 Who is protected by a Temporary Insuring Agreement? 1. The applicant and the insurer 2. The policy beneficiary 3. Only the insurer 4. Only the applicant

1. The applicant and the insurer

What is the period of coverage for events such as death or divorce under COBRA? . 31 days2. 12 months3. 36 months4. 60 days

36 month

Which of the following is a short-term annuity that limits the amounts paid to a specific fixed period or until a specific fixed amount is liquidated? Variable annuityb)Annuity certainc)Fixed annuityd)Refund life Annuity certain option allows the annuitant to select the time period or the amount of the benefits to be paid out. Under the installments for a fixed period, distribution begins on a specific date and stops on a specific date.

Annuity certain

8? If a Medicare insured uses a non-participating in Medicare physician, he or she may be asked to sign a private contract. Which of the following conditions will NOT apply when the insured signs a private contract with the provider? 1. Medicare supplement policy will not pay for the services. 2. The provider must tell the insured if he/she has opted out of or been excluded from the Medicare program. 3. The insured has to pay all the charges. 4. Claims should be submitted to Medicare

Claims should be submitted to Medicare.

A life insurance policy can be delivered by all of the following means, EXCEPTa)First class mail with a delivery receipt.b)Personal delivery by a trained employee of the insurer, with a delivery receipt.c)Certified mail.d)Priority mail.

Priority mail. Acceptable methods of delivery include Registered or Certified Mail, Personal Delivery with a signed, written delivery receipt, 1st Class Mail with a signed written Delivery Receipt, or any reasonable means determined by the Commissioner. Priority mail does not establish an exact date of delivery or to whom it was delivered, and personally delivering the policy needs to be done by a properly licensed representative who can answer questions.

All of the following are reasons an insurer or an insured would have the right to rescind a policy EXCEPTa)The amount of paid claims exceeds the premiums paid.b)The violation of a material warranty.c)When concealment is unintentional.d)An intentional omission in determining if a warranty is false.

The amount of paid claims exceeds the premiums paid. The injured party has the right to rescind the contract whenever there is a violation of a material warranty, intentional or unintentional concealment, or intentional or fraudulent omissions. The amount of paid claims would not rescind the policy.

Which of the following is NOT covered by Health Maintenance Organizations (HMOs)? a)Elective services b)Immunizations c)Routine physicals d)Well-baby care HMOs emphasize preventive health care as a method of reducing medical expenses by early detection of health problems before they may require more costly treatment.

a)Elective services

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client? a)Limited pay whole life b)Interest-sensitive whole life c)Life annuity with period certain d)Increasing term Premium payments will cease at her age 65, but coverage will continue to her death or age 100.

a)Limited pay whole life

Which renewability provision are you most likely to see on a travel accident policy?a)Period of timeb)Noncancellablec)Optionally renewabled)Conditionally renewable The Period of Time (Term) provision means that the policy will only last a certain period of time and cannot be renewed. It will be cancelled at the end of the term for which it was purchased. A travel accident only policy will only provide coverage during the dates the insured is traveling.

period of time

. To be eligible under HIPAA regulations, for how long should an individual converting to an individual health plan have been covered under the previous group plan?a)5 yearsb)12 monthsc)63 daysd)18 months Under HIPAA regulations, to be eligible to convert health insurance coverage from a group plan to an individual policy, the insured must have 18 months of continuous creditable health coverage.

18 month

64 What type of group rating do the Blue Cross and Blue Shield organizations use as a factor in developing the rates to be charged? 1. Individual rating 2. Experience rating 3. District rating 4. Community rating

2. Experience rating

The Commissioner may, without hearing, suspend an agent's license for all of the following reasons EXCEPT a)Revocation of another professional license. b)Failure to properly identify the insured true risk. c)Committing a felony. d)Denial of a previous application for another professional license. Identifying the insured's true risk is part of the underwriter's responsibility, not the agent's.

b)Failure to properly identify the insured true risk.

The Department of Insurance contacts an agent about a claim that was settled two months ago. Within what timeframe must the agent issue a complete response? a)10 days b)15 days c)21 days d)31 days If the Department contacts an agent regarding a claim, the agent must respond completely within 21 days.

c)21 days

The Commissioner may, without hearing, suspend an agent's license for all of the following reasons EXCEPT 1. Revocation of another professional license. 2. Failure to properly identify the insured true risk. 3. Committing a felony. 4. Denial of a previous application for another professional license

2. Failure to properly identify the insured true risk.

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? 1. Option A 2. Option B 3. Corridor option 4. Variable option

2. Option B

Who is the owner and who is the beneficiary on a Key Person Life Insurance policy? 1. The key employee is the owner and beneficiary. 2. The key employee is the owner and the employer is the beneficiary. 3. The employer is the owner and beneficiary. 4. The employer is the owner and the key employee is the beneficiary.

3. The employer is the owner and beneficiary.

Installing deadbolt locks on the doors of a home is an example of which method of handling risk? 1. Avoidance 2. Transfer 3. Self-insurance 4. Reduction

4. Reduction

Under the Fair Credit Reporting Act, if a consumer challenges the accuracy of the information contained in a consumer or investigative report, the reporting agency must 1. Defend the report if the agency feels it is accurate. 2. Change the report. 3. Send an actual certified copy of the entire report to the consumer. 4. Respond to the consumer's complaint.

4. Respond to the consumer's complaint.

The insurance policy, together with the policy application and any added riders form what is known as a(n) Contract of adhesion.b)Blanket policy.c)Entire contract.d)Certificate of coverage. When a policy is issued, a copy of the application, any riders and amendments are attached to the back of the policy and become part of the entire contract.

Entire contract

The rider that may be added to a Disability Income policy that allows for an increase in the benefit amount under certain conditions is called a)Double Indemnity. b)Residual Benefits. c)Cost of Living (COLA). d)Waiver of Premium.

c) COLA The purchasing power of fixed disability benefits may be eroded due to inflation and increases in the cost of living. This rider is used to protect against these trends by increasing the monthly benefits automatically once the insured has been receiving benefits for 12 months, if the cost of living increases .

A noncontributory group disability income plan has a 30-day elimination period and offers benefits of $2,000 a month. If an employee is unable to work for 7 months due to a covered disability, the employee will receive 'a)$14,000, all of which is taxable.' b)$12,000, none of which is taxable. c)$12,000, all of which is taxable. d)$14,000, none of which is taxable.

c)$12,000, all of which is taxable. In noncontributory group health plans, the employer pays the entire cost, so the income benefits are included in the employee's gross income and taxed as ordinary income.

What is the benefit of choosing extended term as a nonforfeiture option? a)It allows for coverage to continue beyond maturity date .b)It can be converted to a fixed annuity. c)It has the highest amount of insurance protection. d)It matures at age 100.

c)It has the highest amount of insurance protection. Under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy. The duration of the new term coverage lasts for as long a period as the amount of cash value will purchase.

Which nonforfeiture option provides coverage for the longest period of time?a)Paid-up option b)Accumulated at interest c)Reduced paid-up d)Extended term The reduced paid-up nonforfeiture option would provide protection until the insured reaches 100, but the face amount is reduced to what the cash would buy.

c)Reduced paid-up

What is the advantage of reinstating a policy instead of applying for a new one? a)Proof of insurability is not required. b)The face amount can be increased. c)The cash values have gained interest while the policy was lapsed. d)The original age is used for premium determination.

d)The original age is used for premium determination. The reinstatement provision allows the policyowner an opportunity to put a lapsed policy back in force, subject to proving continued insurability. If the policyowner elects to reinstate the policy, as opposed to purchasing a new policy, the reinstated policy is restored to its original status.

66. Company A enters into a reinsurance agreement with Company B, where Company B reinsures Company A's policies. Which of the following is true?a)Company A is the facultative insurer, and Company B is the primary insurer.b)Company A is the primary insurer, and Company B is the reinsurer.c)Company A is the reinsurer, and Company B is the primary insurer.d)Company A is the primary insurer, and Company B is the facultative insurer.

Company A is the primary insurer, and Company B is the reinsurer. The company that reinsures policies is called a "reinsurer," while the company who requests for its policies to be reinsured is called the "primary insurer."

Which of the following is true regarding a market value adjusted annuity?a)There are no penalties for a premature surrender of the annuity. b)It provides a level benefit payment. c)The owner is guaranteed a fixed interest rate for a specific period of time. d)The insurer bears all the market risk of changing interest rates.

c)The owner is guaranteed a fixed interest rate for a specific period of time. Under a market value adjusted (modified guaranteed) annuity, the insurer guarantees a competitive interest rate for a specific period (the longer the period, the better the guaranteed rate). At the end of the period, the owner has the option of taking the accumulated value or reinvesting the values at a new interest rate.

A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change? a) Value Adjustment Rider b)Return of Premium Rider c)Inflation Rider d)Cost of Living Rider

d)Cost of Living Rider The Cost of Living rider annually adjusts the policy's face value in accordance with the national rate of inflation or deflation. This rider adjusts the face amount of the policy to correspond with the rate of inflation, in order to keep the initial value of the policy constant over time.

Which of the following riders added to a life insurance policy can pay part of the death benefit to the insured to cover expenses incurred in a nursing or convalescent home? a) Accidental death b)Guaranteed insurability c)Payor benefit d)Long-term care Long-term care rider provides for the payment of part of the death benefit (called accelerated benefits) in order to take care of the insured's health care expenses, which are incurred in a nursing or convalescent home.

d)Long-term care

A Medicare SELECT policy does all of the following EXCEPT a)Make full and fair disclosure in writing of the pros, restrs, and limits of the Medicare SELECT policy to each appl b)Provide payme for full cover under the policy for covered services not ava through net providers. c)Provide for cont of coverage in the event that Medicare SELECT policies are discontinued due to the failure of the Medicare SELECT program. d)Prohibit payment for regularly covered services if provided by non-network prov

d)Prohibit payment for regularly covered services if provided by non-network providers.