Final Exam 3

A written agreement to provide a Life Insurance Policy holder immediate cash in exchange for the sale and transfer of a Life Insurance Policy is a

Viatical Settlement

An insured MUST submit a proof of loss on a health insurance claim within how many days after the date of loss?

180

Under the North Carolina insurance code, an insurance company must pay death benefits for suicide if the policy has been in force for a MINIMUM of

2 years

Under the Affordable Care Act (ACA), health coverage is provided for dependents up to the age of:

26

Under a Group Health Insurance Policy, continuation shall be available only to an employee who has been insured immediately prior to the date of termination for a period of AT LEAST

3 months

AT LEAST how many days before the effective date of a rate increase must an insurer provide written notice to individual accident and health policyowners?

30

According to the Information and Privacy Protection Act, when access to recorded personal information is requested following an adverse underwriting decision, the insurer must make the information available within how many business days?

30

A Whole Life Insurance Policy endows when the:

Cash value equals the death benefit

Whose life is covered on a life insurance policy that contains a payor benefit clause?

Child

A qualified profit-sharing plan is designed to:

allow employees to participate in the profits of the company

An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the:

applicant's physician

In order to establish a Health Reimbursement Arrangement (HRA), it MUST:

be established by the employer

One of the stated purposes of the Life and Health Insurance Guaranty Association is to

assist in the prevention of insurer insolvencies

What is issued to each employee of an employer health plan?

certificate

D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?

level term

A Limited-Pay Life policy has:

premium payments limited to a specified number of years

The Coordination of Benefits provision:

prevents an insured covered by two health plans from making a profit on a covered loss

A(n) ______ Life policy offers the owner investment in products such as money-market funds, long-term bonds and equities.

variable

Approved premium rates for group health insurance shall be guaranteed by the insurer for an initial period of not LESS than how many months?

12

Every insurance agent/broker MUST maintain all records, books, and documents for insurance transactions for a period of not less than

5 years

What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan?

50%

If a health insurance claim is not promptly paid, legal action may be taken against the insurer after

60 days from the date proof of loss is furnished

Eligible employees must be added to group health coverage NO LATER than how many days after their first day of employment?

90

An agent who sells an individual life insurance policy in North Carolina MUST deliver to the policyowner

A Policy Summary and Buyer's Guide

Which of the following is NOT included in an annuity contract?

AD&D rider

A policy loan is made possible by which of these life insurance policy features?

Cash value provision

S is covered by a whole life policy. Which insurance product can cover his children?

Child term rider

For which of the following expenses does a Basic Hospital policy pay?

Hospital room and board

Which health policy clause specifies the amount of benefits to be paid?

Insuring

Which of these is NOT a type of agent authority?

Principal

When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n):

exclusion

An insured owns an individual Disability Income policy with a 30-day Elimination Period for sickness and accidents and a monthly indemnity benefit of $500. If the insured is disabled for 3 1/2 months, what is the MAXIMUM amount he would receive for an approved claim?

$1,250

The policyholder has how many days to return an Accident/Health Insurance Policy and receive a full refund on premiums?

10

A person is required to be AT LEAST how old before he or she is licensed as an agent in North Carolina?

18

If after satisfactory proof of loss, an insurer fails or refuses to pay death proceeds, the insurer must pay interest on the proceeds after how many days?

30

In health insurance policies, a waiver of premium provision keeps the coverage in force without premium payments:

After an insured has become totally disabled as defined in the policy

Before a life insurance policy is issued, which of these components of the contract is required?

Applicant's signature on application

When an insured changes to a more hazardous occupation, which disability policy provision allows an insurer to adjust policy benefits and rates?

Change of occupation provision

Before a Health Policy is issued or delivered, the form, classification or risks, and premium rates MUST be filed with the

Commissioner of Insurance

Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability?

Conversion privilege

B is a teacher who was injured in a car accident and cannot work. She is now receiving monthly benefits as a result of this accident. Which type of policy does B have?

Disability Income

S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase?

Equity index insurance

A Fraternal Benefit Society has each of the following characteristics EXCEPT

Exists for profit

Which of the following provisions specifies how long a policyowner's health coverage will remain in effect if the policyowner does not pay the premium when it is due?

Grace Period

S wants to open a tax-exempt Health Savings Account. To qualify for this type of account, Federal law dictates that S must be enrolled in a:

High-deductible health plan

Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted?

If Tom's employment is terminated, 20% of the funds would be forfeited

How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy?

If the primary beneficiary dies before the insured

Which of these retirement plans can be started by an employee, even if another plan is in existence?

Individual Retirement Account (IRA)

Which of the following requires that an applicant for an individual Health Policy be notified of an investigation into his personal character, general reputation, and mode of living?

Insurance Information and Privacy Protection Act

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

Which of the following claims are typically excluded from Medical expense policies?

Intentionally self-inflicted injuries

A policyowner would like to change the beneficiary on an Accidental Death and Dismemberment (AD&D) insurance policy and make the change permanent. Which type of designation would fulfill this need?

Irrevocable

A policyowner's rights are limited under which beneficiary designation?

Irrevocable

Which of the following combination plans is designed to protect an insured from an unpaid mortgage balance upon premature death?

Joint life

Which of the following statements BEST describes how a policy that uses the "accidental bodily injury" definition of an accident differs from one that uses the "accidental means" definition?

Less restrictive A policy that uses the "accidental bodily injury" definition of an accident is less restrictive than the one that uses the "accidental means" definition.

Companies in North Carolina may transact solicitations for insurance ONLY through

Licensed Agents

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?

Life Income

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 health insurance coverages is BEST suited for meeting the expenses of catastrophic illness?

Major Medical

Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation?

Policy was returned within the free-look period, premium will be fully refunded (begins when its delivered)

Which of these options can an individual use their medical flexible spending account to pay for?

Prescription Drugs

An insured covered by Accidental Death and Dismemberment (AD&D) insurance has just died. What will happen if the primary beneficiary had already died before the insured and contingent beneficiary?

Proceeds will go to the contingent beneficiary

Which of these Nonforfeiture Options continue a build-up of cash value?

Reduced Paid-Up

Which type of policy pays benefits to a policyholder covered under a Hospital Expense policy?

Reimbursement

Which of the following terms is defined as any transaction in which new life insurance or a new annuity is to be purchased and existing life insurance or annuity is to be terminated or discontinued?

Replacement

Which statement regarding the Change of Beneficiary provision is true?

The policyowner can change the beneficiary

W gave W's age as 50 when W purchased a Life policy. At the time of W's death seven years later, the company discovered W's true age at issue had been 59. What would the normal procedure be under the misstatement of age provision in regard to the payment of the death claim?

The proceeds would be reduced based on whatever the premium would have been if purchased at age 59

The Common Disaster clause provides that if both the insured and the sole named beneficiary were to die in a common accident, which of the following is true?

This clause provides the payment of proceeds to the insured's estate

A Business Overhead Expense policy would cover which of the following if a business owner becomes disabled?

Utilities and office rent

Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?

Variable Life

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

In order to maintain a North Carolina agent license, an individual MUST

complete 24 hours of continuing education every 2 years

K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used?

conditional

Additional coverage can be added to a Whole Life policy by adding a(n):

decreasing term rider

Circulation of any oral or written statement or any pamphlet, circular, article, or literature that is false or maliciously critical of or derogatory to the financial condition of an insurer is known as

defamation

Under a trustee group life policy, who would be eligible for a certificate of coverage?

employee

The Rules Governing Life Insurance and Annuity Replacements define replacement as

exchanging an existing policy for a new policy

When L applies for a Health Insurance Policy, L unintentionally fails to list a previous visit to a cardiologist. If the insurance company contests the policy, it MUST do so within 2 years

from the date of issue

The Life and Health Insurance Guaranty Association is

funded by admitted insurance companies through assessments

A vacancy that occurs during the North Carolina Commissioner of Insurance's term of office MUST be filled by the

governor

To be licensed as an accident and health insurance agent in North Carolina, the applicant MUST

have successfully completed at least 20 hours of instruction approved by the Commissioner of Insurance

Continuation of coverage of a group Hospital, Surgical, and Major Medical Policy MUST include

hospital expenses

In life insurance, the needs approach is used mostly to establish:

how much life insurance a client should apply for

The Insurance Information and Privacy Protection Act is designed to limit or direct the information collection activities of all of the following EXCEPT

insurance regulators

An insurance broker in North Carolina is a representative of the

insured

The PRIMARY purpose of the life insurance replacement regulation is to protect the

interests of policyowners

Which of the following is NOT a limited benefit plan?

life insurance policies

Pre-hospitalization authorization is considered an example of:

managed care

Rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The widow qualifies for the:

marital deduction

Every Group Health Policy providing benefits for chemical dependency treatments must include, for the life of the contract, a

minimum benefit of $16,000

If a company accepts a renewal premium payment that would extend coverage beyond the policy's MAXIMUM age limit, the company

must continue the coverage to the end of the period of time for which the premium was accepted

If an insurance company issues a Disability Income policy that it cannot cancel or for which it cannot increase premiums, the type of renewability that best desribes this policy is called:

noncancellable

If an insurer has been notified by the Commissioner of Insurance that an individual Health Policy form does not comply with the state's laws, the insurer may

not issue the form in connection with any new application

All of the following actions are considered rebating EXCEPT

sharing commissions with other licensed and appointed agents

A temporary license is issued by the Commissioner of Insurance to allow

the personal representative of a deceased agent to provide service to existing policyowners

A level premium indicates:

the premium is fixed for the entire duration of the contract

An example of an unfair claims settlement practice is

turning down a claim without providing the basis of denial