Long-term Care Basics
A top producer, who represents only one company, has a long-term care insurance first-year lapse ratio that increased significantly from one year to the next. This fact may indicate: Excessive insurer claim rejections. Unsuitable sales. Churning. A decline in the economy.
Unsuitable sales.
Which of the following is NOT the mission of the NAIC? Write and enact legislation Improve state regulation of insurance Protect the public interest Promote competitive markets
Write and enact legislation
When referring to an activity of daily living, the term "transferring" means: Receiving nourishment intravenously. Moving in or out of bed, wheelchair or chair. Walking from one place to another. Traveling by car.
Moving in or out of bed, wheelchair or chair.
Which of the following would be the best long-term care facility choice for a person who needs the most specialized care? Nursing Home Home health care Assisted living Hospice
Nursing Home
Which of the following statements regarding replacement of long-term care (LTC) coverage is correct? An individually-purchased LTC policy may not be replaced by a group LTC certificate of insurance. The replacement policy may not contain a new waiting period if that has already been satisfied in the existing policy. Replacement of an LTC policy for an insured over 70 years of age is a violation of the Unfair Competition statute. If the existing LTC policy has been in force for more than 1 year, new pre-existing condition limitations are permitted.
The replacement policy may not contain a new waiting period if that has already been satisfied in the existing policy.
If an insurer is suspected of filing inadequate rate increases on a regular basis, the state Department of Insurance may prohibit the insurer from filing rates and marketing coverages for how many years? 1 year 2 Years 5 Years 10 Years
5 Years
Which of the following prospects is likely to have the lowest long-term care insurance premium? A 47-year-old cancer survivor a 50-year-old with a history of diabetes A 63-year-old with no health problems A 55-year-old with heart problems
A 63-year-old with no health problems
A long-term care insurance prospect is considering whether to purchase the inflation protection provision or not. Which of the following is true regarding the inflation protection provision? The inflation provision shortens the elimination period The benefits will be lower every year without it Simple interest increases benefits faster than compounded interest Benefit increases do not guarantee actual services fully paid
Benefit increases do not guarantee actual services fully paid
An employee who plans to retire in 3 years is concerned that his employer's group long-term care plan will not cover his needs when he retires. What feature would improve his benefits immediately? Accelerated Payment Conversion Inflation protection Buy-up
Buy-up
A husband has one long-term care plan and his wife has another. The husband's plan pays indemnity of $150 per day and the wife's plan pays 50% of the daily rate. If they are both in a care facility that charges $250 per day, how much per day will they pay out of their own pocket after the elimination period? $100 $125 $200 $225
$225
Which of the following income brackets makes an individual LEAST likely to require a long-term care policy? $25,000 - $50,000 $50,000 - $99,000 $100,000 - $999,999 $1 million and up
$25,000 - $50,000
For personal long-term care insurance, premiums are deductible to the extent they exceed: 10% of adjusted gross income As an income tax credit 20% of adjusted gross income 7.5% of adjusted gross income
10% of adjusted gross income
What is the maximum allowed period of time for an insurer to pay on a clean claim? 90 Days 10 Days 30 Days 45 Days
30 Days
Which of the following would NOT be allowed membership in the NAIC? A government official from a territorial province An elected Commissioner for an individual state An appointed Commissioner for an individual state A federal official
A federal official
When insurers determine the premium rates for long-term care policies, they take into consideration all of the following factors EXCEPT: Adverse selection Net valuation for renewals years. Reserve amounts Losses
Adverse selection
The long-term care insurance outline of coverage includes all of the following EXCEPT: Advertising material. Policy premium. Policy provisions. Guaranteed renewal statement.
Advertising material.
All of the following are permitted exclusions in LTC partnership policies EXCEPT: Pre-existing conditions Nervous diseases Alzheimer's disease Benefits available under a long-term care policy
Alzheimer's disease
Which of the following is considered a field underwriter? An insurer An adjuster An underwriter An agent
An agent
A long-term care policyowner owns a spacious home that needs routine maintenance that he is unable to do. Even though he is mobile, shopping has become difficult because he no longer drives and often does not have transportation. Just managing his prescriptions is a chore. What kind of facility might he consider at this time? Adult day care Home health care Assisted living Skilled nursing
Assisted living
With a generalized approach to the long-term care insurance rider, which of the following is true? Benefits increase with inflation Benefits are paid from cash surrender values Benefits do not affect the face amount of the life insurance policy Two policies are written
Benefits do not affect the face amount of the life insurance policy
Which of the following does NOT describe hospice care? It provides care to people with life expectancies of 1 to 2 years. It provides continuous care. It provides care in a home-like setting. It provides care to terminally-ill people.
It provides care to people with life expectancies of 1 to 2 years.
Which of the following describes the difference between care coordination benefits and custodial care benefits? Care coordination benefits cover supervisor costs for custodial care givers. Custodial care arranges for advanced medical services while care coordination keeps recipients from receiving conflicting care. Custodial care decides where care is provided while care coordination determines how the care is provided. Care coordination benefits cover costs of general care planners, while custodial care benefits cover the costs of people who assist the disabled person with personal care.
Care coordination benefits cover costs of general care planners, while custodial care benefits cover the costs of people who assist the disabled person with personal care.
Which of the following will qualify as an exceptional increase in policy premium rates? Changes in laws that affect all insurers of similar products Changes caused by the insured's health status Adjustments based on the insurer's investment performance Cost of living adjustments
Changes in laws that affect all insurers of similar products
Which of the following would automatically qualify a person for long-term care benefits? Prior hospitalization Inability to perform any number of activites of daily living (ADLs) A physical impairment or disability Cognitive impairment such as Alzheimer's disease
Cognitive impairment such as Alzheimer's disease
An insured took out a long-term care insurance policy 5 years ago and recently suffered a heart attack. Now in recovery, he is concerned that his policy will be canceled, just when he needs long-term care. Which of the following is true? No elimination period applies to this condition Coverage will continue as long as premiums are paid Premiums will increase due to a health rating Rates will increase on a policy anniversary
Coverage will continue as long as premiums are paid
Which of the following is an advantage of owning an individual policy over a group plan for a long-term care insurance prospect? A master contract Lower cost Custom benefits Portability
Custom benefits
Due to an economic downturn, an employer had to cease operations, and, along with the closure, terminate the group long-term care policy. An uninsurable older worker, who has been insured for several years, is worried that long-term care coverage will not be available. Which of the following is true? The worker must qualify for an individual policy. The group policy can be reinstated with a minimum number of former employees. Equivalent coverage must be offered. Coverage will lapse in 60 days.
Equivalent coverage must be offered
To qualify under the Partnership Program, a policy must include all the following provisions EXCEPT: Services of care coordinator. Exclusions of pre-existing conditions Inflation protection Protection against unintentional policy lapse
Exclusions of pre-existing conditions
To qualify under the Partnership Program, a policy must include all of the following provisions EXCEPT: Protection against unintentional policy lapse. Services of a care coordinator. Exclusions of pre-existing conditions. Inflation protection.
Exclusions of pre-existing conditions.
All of the following are factors that point to an increasing need for long-term care insurance EXCEPT: Medicare and Medicaid benefits are inadequate. Better health care. Family and friends are not reliable More people are reaching retirement age.
Family and friends are not reliable
Medicare falls under which of the following categories for funding long-term care needs? Social Security Long-term care insurance Government programs Personal assets
Government programs
All of the following factors will increase a prospect's long-term care insurance premium EXCEPT: Adding inflation protection Increasing daily benefit Increasing elimination period Increasing benefit period
Increasing elimination period
To determine whether or not long-term care policies can be considered similar policy forms, they are classified as all of the following EXCEPT: Noninstitutional Comprehensive Independent Institutional
Independent
An applicant for a long-term care policy is concerned about the rising costs of future services. The applicant should select which of the following options as a solution? Waiver of premium Guaranteed purchase option Return of benefit option Inflation protection
Inflation protection
As a field underwriter, an agent is responsible for all of the following tasks EXCEPT: Issue the policy that is requested. Help prevent adverse selection Solicit business that will fall within the insurer's underwriting guidelines Obtain appropriate signatures on the application for insurance
Issue the policy that is requested.
Mark has a long-term care insurance policy for 17 years. He is now 81 years old and has serious health problems. The company would like to cancel the policy. What are the company's options? Exercise the nonforfeiture benefits Cancel the policy upon 30 days notice Nonrenew the policy as of the annual renewal date Keep the policy in force as long as premiums are paid
Keep the policy in force as long as premiums are paid
Which of the following does NOT represent an intangible factor a person might face when confronted with the need for long-term care? Loss of family Loss of independence Loss of assets Depression
Loss of family
The purpose of long-term care insurance is to: Maintain a functional level for living. Cover medical deductibles. Provide supplemental care after surgery. Treat medical conditions.
Maintain a functional level for living.
An insured has a tax-qualified long-term care contract. To receive tax-qualified benefits, the insured must have all of the following EXCEPT: Measured reasoning impairment. Certification by a health care professional. Medical necessity. Inability to perform 2 or more activities of daily living (ADLs).
Medical necessity.
Which of the following is voluntary coverage and requires a monthly premium? Medicare Part A Medicare Part B All Medicare parts Medicaid
Medicare Part B
Doug decided to retire at age 62. When he applied for Social Security Retirement Benefits, he discovered: Medicare coverage was not available until the month of his 65th birthday. Medicare coverage varies from state to state. Medicare Part A and Part B were provided automatically without charge. Medicare Part A was provided without charge, but Part B required a premium.
Medicare coverage was not available until the month of his 65th birthday.
Which of the following statements is correct? Care needed because of aging is covered by Medicare. Medicare does not pay for nursing home care in any case. Medicare will cover nursing home care if it is part of the treatment for a covered illness. Care needed because of aging is covered by Medicare but not by Medicare supplements.
Medicare will cover nursing home care if it is part of the treatment for a covered illness.
An individual, age 51, has a qualified long-term care policy. He works for an employer and his adjusted gross income is $40,000. His monthly LTC policy premium is $100, and he does not itemize deductions. How much can this individual deduct from his taxable income? $1,060 None $3,000 $1,200
None
In 1996, upon retirement age at 65, a retired executive purchased a long-term care insurance policy. Now the executive is receiving benefits. What taxes are due? Normal income taxes None Benefits are taxable above the cost basis Benefits above 7.5% of adjusted gross income are taxable
None
An insured purchases a long-term care policy and pays extra to assure that if he is ever unable to make the premium payment, a portion of the benefits will be preserved. Which option has the insured purchased? Guaranteed purchase option Restoration of benefit Nonforfeiture option Bed reservation
Nonforfeiture option
When does Medicare cover nursing home care? Only if the deductible has been met Only for those age 80 and older Medicare covers all nursing home care for eligible policyholders Only if it is part of treatment for a covered illness or injury
Only if it is part of treatment for a covered illness or injury
The Medical Information Bureau (MIB) helps insurers compare medical information they have collected on a potential insured with the information received from which of the following? Doctors. Hospitals. Insured. Other insurers.
Other insurers.
An insured's family member discovers a stack of unopened mail with a long-term care insurance lapse notice that is 4 months old. In addition to overdue premiums, what is the insurer likely to require for reinstatement? The plan cannot be reinstated. Interest on premiums Proof of capacity to perform ADLs. Physician's note.
Physician's note.
For the purposes of life insurance underwriting, a 35-year-old male who was in excellent physical condition with no known medical problems would most likely be classified as a: Preferred risk Standard risk Substandard risk Rated Risk
Preferred risk
Which of the following can change when a long-term care policy is replaced? Coverage for fewer insureds New elimination period Pre-existing condition coverage Premium
Premium
The agent is known as the "Field Underwriter" because of the information he/she gathers for the insurer. This helps the insurer: Comply with state law. Keep expenses down by not hiring separate agents and field underwriters. Reduce the number of staff underwriters. Preselect applicants that would present the lowest risk of loss for the insurer.
Preselect applicants that would present the lowest risk of loss for the insurer.
For applicants of higher amounts of coverage, or if the application raised additional questions concerning the prospective applicant's health, the underwriter may require all of the following for additional information EXCEPT: Paramedical report. Attending Physicians' report. Medical examination. Recent prescription usage.
Recent prescription usage.
An insured's injury required 3 months in a nursing home. The insured was released, but just 2 weeks later, had to return to the nursing home for the same condition. Which of the following provisions addresses this situation? Elimination Reinstatement Exclusions Recurrent
Recurrent
Funding for the first Partnership Program was provided by the: Benton Foundation Robert Wood Johnson Foundation NAIC Department of Commerce
Robert Wood Johnson Foundation
When developing a long-term care needs calculation worksheet, which of the following needs to be considered as an individual's assets? House mortgage Taxes Credit card balances Stocks and bonds
Stocks and bonds
A long-term care insurance prospect is comparing a tax-qualified plan with a nonqualified plan. All of the following would be considered advantages for nonqualified plans EXCEPT: No health care profession certification needed. Tax deductibility. No ADL restriction. No limitation on benefits.
Tax deductibility.
A group long-term care insurance plan was terminated by the employer. The insurer converted the employee's plan, but reduced the benefits and the premium. Which of the following is most likely true? The employee is covered by another policy at the time of conversion Converted plans are offered at the insurer's discretion Benefits and premiums are always reduced during conversion The insurer violated conversion provisions for LTC policies
The employee is covered by another policy at the time of conversion
All of the following are advantages for group long-term care insurance EXCEPT: The employer retains employees because they lose coverage if they move to another employer. More choices for benefit periods and other benefits may be available. Employees may not be able to purchase coverage for extended family members. Group policies are not subject to medical requirements.
The employer retains employees because they lose coverage if they move to another employer.
When an insured chooses the indemnity method of benefit payment, the insurer will pay: The amount of the actual expenses incurred. The fixed benefit amount, regardless of the actual charge. 100% of the usual and reasonable daily rate. 80% of the usual and reasonable daily rate.
The fixed benefit amount, regardless of the actual charge.
Which of the following is a reason for using activities of daily living as a trigger for long-term care benefits? These are not covered under Medicare The inability to perform these activities makes independent living impossible These activities are not convenient Others can help or perform these activities more efficiently
The inability to perform these activities makes independent living impossible
Who must develop and maintain standards for long-term care insurance client suitability? The Commissioner The NAIC The insurance company The agent who sells long-term policies
The insurance company
All of the following are provisions of a tax qualified long-term policy EXCEPT: Care is expected to last for at least 90 days. The patient needs substantial assistance with at least 2 of the ADLs. The taxpayer must be self-employed. Benefit triggers are sever cognitive impairment or inability to perform at least 2 of the activities of daily living.
The taxpayer must be self-employed.
Which of the following is a legitimate reason for a company to contest payment of a claim based on statements in the application? They believe that the application is factual. They believe that the application contains misleading information. They believe that the individual died too soon after applying for the policy. They don't want to pay the death benefit because they've already paid the expected amount of death benefits this year.
They believe that the application contains misleading information.