License Exam Things to Study
Sole proprietors can deduct...
100 percent of the premiums paid for health insurance policy, and benefit payments are tax free
A health insurance policy with a grandfather status under the ACA can exclude coverage for preexisting conditions for...
12 to 18 months
The maximum family limit for Social Security retirement and survivors' benefits is generally in the range of...
150 percent to 175 percent of the worker's PIA
If a small employer insurer decides to terminate all small employer health benefit plans it issues in Texas, it must notify the Texas commissioner and all affected employers of its intent to do so at least at least...
180 days before it ends coverage
The notice of claim provision requires that the insured notify the insurer within...
20 days after the insured has a covered loss.
Individual long-term care policies are usually available to applicants between the ages of
40 and 85
If an insurer plans to discontinue a group health insurance plan, it must notify the employer of its intent to do so at least how many days in advance?
90 days
What is the maximum benefit period for Medicare part A?
90 days
What is the difference between a representation and a warranty in an insurance contract?
A representation is believed to be true, while a warranty is guaranteed to be true
How are benefits taxed to the employee under group disability plans?
Benefits paid to the employee are taxable income to the employee
Which rider attached to a life insurance policy provides income if you get disabled?
Disability income benefit rider
How are dividends taxed with life insurance?
Dividends are never taxable
How do exchanges work through the Section 1035 exchange?
Each policy, annuity, and life insurance must be exchanged with another that matches the description. For example, non-qualified annuity for a non-qualified annuity
True or False: An insurable interest must exist at all times with life insurance
False
True or False: ERISA guarantees immediate processing of claims in an employer sponsored health care plan
False
True or False: Methods that the federal government uses to encourage employer-provided health care coverage include Individual retirement accounts (IRA'S)
False
True or False: Patients receive funds directly from Medicade
False
True or False: Pre-existing conditions are treated the same by individual and group plans.
False
True or False: Reinstatement is an optional provision in health insurance policies
False
True or False: Under an employer's prepaid dental plan, employees pay a co-payment for diagnostic and preventative services
False
True or False: Viatical settlements are a type of health insurance
False
If an annuity requires only that each premium deposit be above a certain minimum amount, what type of annuity is this?
Flexible premium deferred annuity
To qualify for and get the favorable tax treatment given to life insurance, a universal life insurance policy must meet which of the following tests?
Guideline Premium Test
Are renewable term premiums higher or lower than nonrenewable term life premiums?
Higher
An agent acting on behalf of an insurance company even though these acts are not specified in the agent's contract with the company but are necessary to carry out the company's express authority, exercises what kind of authority?
Implied authority
For estate tax purposes, what is the value of any life insurance policy a person owns at his or her death?
It is generally includible in the valuation of his or her estate.
Who usually offers credit life insurance in connection with a transaction?
Lender
Are weekly payments common for ordinary (straight) whole life insurance policy premiums:
No
How are key person disability policies taxed?
Premiums are not deductible. However, benefits are not taxable
How are business overhead expense policies taxed?
Premiums are tax deductible. However, benefits are taxable
The entire contract provision specifies that all statements the policyowner makes in the application are considered which of the following?
Representations
An insurance agent thinks an applicant's habits and personal character should be examined which is impossible through the application alone. What should the agent use to explain his concerns to the underwriters?
The agent's report
What best describes the tax treatment of fixed annuity death benefit payments?
The beneficiary must pay taxes on any amount he or she receives that exceeds the sum of the premiums paid into the contract
With regard to fixed deferred annuities, which of the following is a key factor in determining the percentage of monthly annuity payment that will be subject to tax?
The expected return
True or False: A policy loan may not be available until the policy has been in force for several years.
True
True or False: Medicare Part A's home health care benefit covers part-time and intermittent skilled care.
True
To be eligible to make contributions to a traditional IRA, what must you do/be?
Under 70 and earn income NOT including social security benefits, disability benefits, or pensions
Under which of the following annuities are the premiums and contract values invested in the insurers "separate accounts" instead of its general account?
Variable annuities
What is the difference between "per stirpes" and "per capita" designations?
With per stirpes, shares are passed down to children but with per capita, children don't get anything. Per capita = No children
For people retired and over 65 who would like to sell their policies...
a LIFE SETTLEMENT is best suited for them
Legal delivery of a policy requires that...
agent must personally deliver and explain the policy to the client
Under a traditional split-dollar arrangement, what does the employer typically receive when the insured employee dies?
an amount equal to the policy's cash value
When qualifying for Medicaid, the concept of "spending down" assets means that...
an applicant must almost exhaust his or her savings
An insurable interest must exist between the ________________ at the time the life insurance contract is created.
applicant and the insured
Policy loans under traditional whole life insurance plans can be...
as high as 100 percent of the cash value
Before revoking an insurer's certificate of authority in Texas, the TDI commissioner must first give the insurer notice of...
at least 10 days
If a person starts receiving social security retirement benefits before reaching full retirement age (FRA)...
benefits will be temporarily reduced until the worker attains FRA
How many employees does HIPAA typically define the small employer market as having?
business with 2 to 50 employees
For group life insurance tax purposes, the employer...
can deduct its premiums as a business expense, but employees cannot deduct their premium contributions
Guaranteed renewable plans state that the insurer...
can increase premium rates by the same class of insureds and can only cancel the policy if the insured fails to pay the premium
A noncancellable plan states that the insurer...
cannot change the policy or cancel it unless the insured stops paying premiums
If you get in an accident and the health insurance company pays double the normal benefits because of it, what type of rider does the insured have?
double indemnity rider
In an absolute assignment, policyowners...
give or sell full rights under the policy to an assignee, who now becomes the policyowner
The premium that a policyowner pays for a periodic premium life insurance policy is called
gross level premium
Limited payment life policy premiums are generally higher or lower than whole life policy premiums?
higher
The 10% penalty tax for withdrawing from deferred annuities before age 59 is only applied to...
interest earnings
From an insured's perspective, only occupation...
is preferred because it is easier to qualify for
Experience rating for group health insurance is usually applied to...
large groups
Life insurance settlement options with a life contingency are generally called:
life income settlement options
The death benefit amount under a children's term rider may be...
limited to a specified amount and/or a small percentage of the base policy's face amount
An employee who is covered under a non-contributory defined contribution plan in which the employer contributes a specified percentage of salary into each plan participant's account each year is covered under a...
money purchase plan
Are insurable risks catastrophic?
no
Are lump sum cash payments one of the settlement options for annuities?
no
Do agents have to help write an applicant's insurance policy?
no
Do major benefit plans cover cosmetic surgery?
no
Does medicare cover massage therapy?
no
Does whole life insurance include Renewability as a characteristic?
no
Is Taxable and tax deferred insurance one of the broad classifications of life insurance?
no
Is qualified insurance one of the standard categories of life insurance?
no
Is the the death benefit payable to an insured's beneficiary under an AD&D policy taxed?
no
Is accumulate at interest an option for nonforteiture life insurance?
no, Life insurance policies commonly contain three nonforfeiture options: cash surrender, extended term insurance, and reduced paid-up insurance.
Do group short term disability plans generally cover occupational disabilities or non occupational disabilities?
non occupational disabilitiies
In modern disability income insurance policies with a noncancelable renewability provision, the policy is noncancelable...
only until the insured reaches age 65 or, more commonly today, his or her Social Security full retirement age
The actual amount credited to an indexed annuity depends on the...
participation rate and the rate cap
Under Blue Cross Blue Shield, the insurer...
pays the health-care service provider directly without requiring the insured to provide a claim form
How are disability buy-out policies taxed?
premiums are not tax deductible. However, benefits are not taxable
Under the paid-up additions policy dividend option, policy dividends are used to...
purchase a small unit of paid-up permanent life insurance
The federal risk retention act of 1986 applies to...
self-insuring businesses
How long is the Medicare enrollment period?
seven months, ending three months after 65th birthday
What type of coverage would be appropriate for a round-trip travel accident policy at the airport?
specified accident coverage
What does HIPAA guarantee?
that all insurance companies that sell individual health insurance plans must offer them to eligible people who have lost their group coverage, regardless of their health
For a life insurance contract to be enforceable, who must be legally competent?
the applicant and the insurer
What is the primary source of underwriting information?
the application
Settlement options with life contingency are those that are based on...
the beneficiary's lifespan
If an insured is chronically ill and under long term care insurance, how much of the benefit is taxable income?
the benefit is not taxed
Regarding defined benefit retirement plans, when the plan participant retires...
the employer typically uses plan funds to buy an annuity
The term "Indemnify" refers to...
the health insurance's goal to return the insured to the financial position he or she was in before a covered loss
Under third party ownership or when another person owns an insurance contract...
the insured person HAS NO RIGHTS
Who is the primary care physician (PCP) in a managed care plan?
the insured's physician who controls access to specialists
How are interest-only life settlement options usually paid?
the insurer pays the proceeds, either in a lump sum or under one of the other settlement options.
Disability buy out policies typically give policyowners...
the option to receive benefits in a lump sum payment.
The entire contract provision states that the contract consists of...
the policy, attached riders, and endorsements
In cases where the insured and policyowner are different...
third party ownership exists
The typical guaranteed insurability rider lets policyholders buy additional insurance how often?
three year intervals
True or false: All potential plan participants must have the same waiting period, regardless of their health conditions
true
Since basic medical expense policies typically cover hospital related expenses, it would not be a good choice for someone who...
visits the doctor often
If a health savings account holder takes money out of the fund but does not use it to cover medical costs, the withdrawal...
will be subject to ordinary income taxes and a 20% penalty tax
Does Federal law does assure the continuation of group health insurance coverage under the same insurer?
yes
Not being able to substantiate your income to an underwriter's satisfaction suggests that...
you cannot afford the premium