Missed Questions

If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant

With the policy. If a life insurance policy contains a free-look period of at least 10 days, the buyer's guide can be delivered with the policy. If it doesn't, the buyer's guide must be delivered prior to accepting the initial premium.

if licensee does not earn 24 hours of CE

license will be suspended for 90 days

deferred annuity is surrendered before th eannuitization period

owner will receive the surrender value of the annuity

If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined?

If a deferred annuity is surrendered prematurely, a surrender charge is imposed. The charge is generally a percentage that reduces over time until it ends.

Which of the following is an example of a limited-pay life policy? Life Paid-up at Age 65

Limited Pay Whole Life premiums are all paid by the time the insured reaches age 65. The policy endows when the insured turns 100. It is the premium paying period that is limited, not the maturity.

After a back injury, an insured is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive?

Monthly premium waiver and monthly income

When an employee is still employed upon reaching age 65 and eligible for Medicare, which of the following is the employee's option?

Remain on the group health insurance plan and defer eligibility for Medicare until retirement

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?

18 months

Which of the following types of agent authority is also called "perceived authority"?

Apparent

According to OBRA, what is the minimum number of employees required to constitute a large group?

100

A temporary license in this state is valid for a maximum of

180 days

When is the insurability conditional receipt given?

When the premium is paid at the time of application

Which of the following terms is used to name the nontaxed return of unused premiums? emiums is called a dividend. Dividends are not considered to be income for tax purposes, since they are the return of unused premiums.

Dividend premiums is called a dividend. Dividends are not considered to be income for tax purposes, since they are the return of unused premiums.

Under most dental plans, what limitations are posed for denture replacement? ANo limitations BOnly the initial dentures are covered. COnce every 5 years DOnce every 10 years Correct! Most dental plans limit coverage for repeated procedures. Dentures can only be replaced once every five years.

Most dental plans limit coverage for repeated procedures. Dentures can only be replaced once every five years.

In a noncontributory health insurance plan, what percentage of eligible employees must participate in the plan before the plan can become effective? A100% B75% C50% D25%

One hundred percent of eligible employees must participate in a non-contributory health insurance plan for the plan to become effective.

Which clause allows both the insured and dentist to know in advance which benefits will be paid? AFixed Rate BPrecertification CPreadmission DAdvanced Benefit Notification

Precertification The Predetermination of Benefits Clause, also known as "precertification" and "prior authorization", allows both the insured and dentist to know in advance which benefits will be paid. This clause is found in most dental plans.

In Medicare prescription drug plans, step therapy refers to AFormulary tiers. BTypes of benefits. CA type of rehabilitative service. DPrior authorization.

Step therapy is a type of prior authorization. In most cases, Medicare requires the insured to first try a certain, less expensive drug on the plan's Formulary that has been proven effective for most people with the same condition before the insured can move up a "step" to a more expensive drug.

A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?

automatic premium loan

According to the entire contract provision, what document must be made part of the insurance policy?

An insurance contract must contain a copy of the original application.

Which of the following is NOT applied toward the deductible under a nonscheduled plan? AGingivitis treatment BAnnual dental exam CRoot canal DWisdom tooth extraction

Annual Dental Exam Under nonscheduled plans, routine examinations and preventative care generally do not apply toward the deductible.

An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of ATwisting. BControlled business. CRebating. DCoercion.

When producers give or promise anything of value that is not specified in the policy, they are guilty of rebating.

What is the maximum age for qualifying for a catastrophic plan?

30

What is a material misrepresentation?

A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

Within what time period after completing prelicensing education must an applicant file a certificate of education completion with the Commissioner? A30 days B90 days C12 months D2 years

Incorrect! The applicant must file a certificate of completion of the prelicensing courses taken to prove that the courses were not taken more than 12 months before the Commissioner received the application.

Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within

90 days of a loss.

All of the following are true regarding rebates EXCEPT ADividends are not considered to be rebates. BRebates are allowed if it's in the best interest of the client. CRebates are only allowed if specifically stated in the policy. DRebating can be anything of economic value, given as an inducement to buy.

A rebate is an illegal act which involves returning something of value to the client as an inducement to buy, such as the commission. Rebates are only allowed if specifically stated in the policy. Insurance dividends are not considered rebates as the IRS considers it as a return of overpaid premium.

In health insurance, if a doctor charges $50 more than what the insurance company considers usual, customary and reasonable, the extra cost AIs not covered. BMust be covered by the insurer. CCounts toward deductible. DCounts toward coinsurance.

An insurance company will pay the usual, reasonable, or customary amount for a given procedure based upon the average charge for that procedure.

Term associated with the exclusion ratio

Annuity payments

When must an IRA be completely distributed when a beneficiary is not named? December 31 of the year that contains the fifth anniversary of the owner's death.

December 31 of the year that contains the fifth anniversary of the owner's death. If the owner dies before distributions have begun, the entire interest must be distributed in full on or before December 31 of the calendar year that contains the fifth anniversary of the owner's death, unless the owner named a beneficiary.

Which of the following terms is used to name the nontaxed return of unused premiums?

Dividend The return of unused premiums is called a dividend. Dividends are not considered to be income for tax purposes, since they are the return of unused premiums

The interest earned on policy dividends is

Dividends are a return of unused premiums on which the insured has already paid taxes. Any interest earned is taxable as ordinary income.

If an annuitant dies before annuitization occurs, what will the beneficiary receive?

Either the amount paid into plan or cash value WHICHEVER IS GREATER If an annuitant dies before annuitization, the beneficiary will receive either the amount paid into the plan or the cash value of the plan, whichever is greater.

Which of the following policies is characterized by a provision where the premiums are lower in the early years of the policy and increase over time to a point where they become level for the remainder of the policy?

Graded premium whole life

As it pertains to group health insurance, COBRA stipulates that

Group coverage must be extended for terminated employees up to a certain period of time at the former employee's expense.

Group plans usually specify the benefits based on a percentage of the worker's income.

Group long-term plans provide monthly benefits usually limited to 60% of the individual's income.

In this state, a temporary license may be issued for any of the following reasons EXCEPT AA producer's disability. BA producer's time in the military service. CA producer's retirement. DThe death of a producer.

Incorrect! A temporary license is not available for a producer's retirement.

If a licensee does not earn 24 hours of Continuing Education by the license review date, the license will be suspended for up to how many days? A30 days B60 days C90 days D120 days

Incorrect! If a licensee fails to earn 24 hours of CE by the required review date, the license will be suspended for up to 90 days.

Which of the following individuals could qualify for a temporary insurance license? AThe designee of a producer that is called to active service with the Navy BA deceased producer's brother who is employed by the Department of Insurance CA retired producer DAn employee of a deceased producer

Incorrect! The Commissioner may furnish a temporary license to the designee of a producer who has been called to active service with the United States Armed Forces.

Medical information bureau

MIB reports contain previous insurance information. Insurers may not refuse to accept an application solely due to information in an MIB report. MIB information is reported to underwriters in coded form.

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

Option B Under Option B the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases. At any point in time, the total death benefit will always be equal to the face amount of the policy plus the current amount of cash value.

A guaranteed renewable health insurance policy allows the

Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class.

All of the following are examples of risk retention EXCEPT

Premiums

Which act amended the National Labor Relations Act?

Taft-Hartley The Taft-Hartley Act is federal legislation which amended the National Labor Relations Act. This act, among other things, prohibits employers from making direct contributions to unions for employee benefits, but allows employee contributions to be paid to a separate benefit trust managed by the union.

What is the goal of the HMO? AProviding free health services BLimiting the deductibles and coinsurance to reduce costs CProviding health services close to home DEarly detection through regular checkups

The goal of the HMO is early detection so members are encouraged to participate in regular checkups. In this way the HMO hopes to catch disease in its earliest stages when treatment has the greatest chance for success.

An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy? A7 days B10 days C31 days D60 days

The grace period is 7 days if the premium is paid weekly, 10 days if paid monthly, and 31 days for all other modes.

Which of the following determines whether disability insurance benefits are taxed? AIf the total of benefits paid meets the minimum state taxation standard BWhether the premiums were tax deductible CState statutes DContract provisions

The taxation status of benefits is often determined by whether the premium has been tax deducted.

Julie must have orthodontic work performed on her incisors. Which type of service would this be called, under a nonscheduled plan? AMinor service BRepair service CMajor service DBasic service

There are two types of services under nonscheduled plans: basic and major. Basic services include treatments such as fillings, oral surgery, periodontics, and endodontics, while major services include treatments such as inlays, crowns, dentures and orthodontics.

Under workers compensation, which of the following benefits are NOT included? ALegal benefits BMedical and rehabilitation benefits CIncome benefits DDeath benefits

Under Workers Compensation, medical and rehabilitation benefits, income benefits, and death benefits are all included.

Under which plan does preventative dental treatment not apply toward the deductible? AFocused BProvisional CLimited DNonscheduled

Under nonscheduled plans, routine examinations and preventative care generally do not apply toward the deductible.

What would a physician utilize if he/she wanted to know if a treatment is covered under an insured's plan and at what rate it will be paid? AComprehensive review BSupplementary chart CProspective review DConcurrent review

Under the prospective review or precertification provision, the physician can submit claim information prior to providing treatment to know in advance if the procedure is covered under the insured's plan and at what rate it will be paid.

Employer health plans must provide primary coverage for individuals with end-stage renal disease before Medicare becomes primary for how many months?

Under the terms of the insurability conditional receipt, the insurance coverage becomes effective as of the date of the receipt, provided the application is approved. This receipt is generally provided to the applicant when the initial premium is paid at the time of application.

Can an individual who belongs to a POS plan use an out-of-network physician?

Yes, and they may use any preferred physician, even if not part of the HMO

What method is used to determine the taxable portion of each annuity payment?

the exclusion ratio The ratio of the total investment in that contract to the expected return is developed to determine the portion of the annuity payment that will be taxable and nontaxable.

What happens if a deferred annuity is surrendered before the annuitization period?

the owner will receive the surrender value of the annuity If a deferred annuity is surrendered prior to annuitization, the surrender value of the annuity is guaranteed according to the nonforfeiture provision.

Which of the following best describes annually renewable term insurance? It is level term insurance.

Annually renewable term is a form of level term insurance that offers the most insurance at the lowest cost.

How long does an insurer have to contest fraudulent misstatements made in a health insurance application? AThree years after the effective policy date BAs long as the policy is in force COne year after the effective policy date DTwo years after the effective policy date Incorrect! Fraudulent misstatements can be contested at any time.

As long as the policy is in force

How many eligible employees must be included in a contributory plan? A75% B90% C100% D50%

At least 75% percent of eligible employees can be included in a contributory plan. Both the employees and the employer contribute to premium payments.

HIPAA applies to groups of AAt least 10. BAt least 100. CMore than 2, fewer than 50. D2 or more.

Correct! HIPAA applies to groups of two or more.

In the event of a divorce, which of the following would allow a divorcee to continue receiving group health coverage under an insured spouse's plan for an additional 36 months? ACOBRA BMSA CHIPAA DSocial Security

Dependents of employees are eligible to receive group health insurance under the employee's plan. If the employee and the dependent become legally separated or divorced, or if the employee dies, the dependent will be eligible for COBRA benefits for up to 36 months.

According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to

Guaranteed Surrender Value The nonforfeiture law stipulates that a deferred annuity must have a guaranteed surrender value that is available if the owner decides to surrender the annuity prior to annuitization.

Most LTC plans have which of the following features? ANo elimination period BVariable premiums COpen enrollment DGuaranteed renewability

Incorrect! The benefit amount payable under most LTC policies is usually a specific amount per day, and some policies pay the actual charge incurred per day. Most LTC policies are also guaranteed renewable; however, insurers do have the right to increase the premiums.

Within how many days does a licensee have to inform the Commissioner of a change of address? A15 B30 C45 D60

Incorrect! A licensee must inform the Commissioner of a change of legal name or address within 30 days of the change.

According to the Time Limit on Certain Defenses provision, non-fraudulent misstatements made on the health insurance application may not be used to deny a claim after the policy has been in force for A6 months. B1 year. C2 years. D3 years.

Incorrect! In Michigan, the time limit for certain defenses is 3 years.

Which of the following is NOT applied toward the deductible under a nonscheduled plan? AWisdom tooth extraction BGingivitis treatment CAnnual dental exam DRoot canal

Incorrect! Under nonscheduled plans, routine examinations and preventative care generally do not apply toward the deductible.

Which of the following is TRUE about the 10-day free-look period in a Life Insurance policy?

It begins when the policy is delivered The 10-day free-look provision is a mandatory provision that allows the insured to examine a policy, and if dissatisfied for any reason, return the policy for a full refund of any premiums paid.

A new employee who meets HIPAA eligibility requirements must be issued health coverage on what basis?

Guaranteed

How much is an agent's appointment fee? A$100 B$5 C$500 D$1

Incorrect! Each agent must pay a $5 appointment fee to the Commissioner.

Under most dental plans, what limitations are posed for denture replacement?

Once every 5 years

In a group policy, who is issued a certificate of insurance?

The individual insured The individuals covered under a group insurance contract are issued certificates of insurance. The certificate tells what is covered in the policy, how to file a claim, how long the coverage will last, and how to convert the policy to an individual policy.

Which of the following is true regarding a market value adjusted annuity?

The owner is guaranteed a fixed interest rate for a specific period of time.

Which of the following is NOT considered to be a basic service, under a nonscheduled plan? AFillings BDentures CEndodontics DOral surgery

There are two types of services under nonscheduled plans: basic and major. Basic services include treatments such as fillings, oral surgery, periodontics, and endodontics, while major services include treatments such as inlays, crowns, dentures and orthodontics.

The paid-up addition option uses the dividend

To purchase a smaller amount of the same type of insurance as the original policy.

Under the Physical Exam and Autopsy provision, how many times can an insurer have the insured examined, at its own expense, while a claim is pending?

Unlimited Incorrect! The Physical Exam and Autopsy provision allows the insurer to examine the insured as much as is reasonably necessary while the claim is being processed, provided that the insurer pays the expenses.

An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a Traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer?

$10,000, no tax consequence During an IRA direct transfer (or direct rollover), the full amount gets reinvested from one plan to the other.

Within what time period after completing prelicensing education must an applicant file a certificate of education completion with the Commissioner?

12 monthjs

Employer health plans must provide primary coverage for individuals with end-stage renal disease before Medicare becomes primary for how many months?

30 months

The insured's health policy only pays for medical costs related to accidents. Which of the following types of policies does the insured have?

Accident-only policies cover medical benefits related to an accident. Medical conditions related to sickness are not covered.

An applicant for a Counselor's license in Michigan must possess all of the following EXCEPT AA license to practice law. BA good business reputation and good moral character. CA reasonable understanding of the Michigan insurance code DA reasonable understanding of the provisions, terms, and conditions of the type of insurance he/she wishes to counsel.

Incorrect! An applicant for a counselor's license must possess a reasonable understanding of the provisions, terms, and conditions of the type of insurance he/she wishes to counsel, as well as a reasonable understanding of the Michigan insurance code and possess a good business reputation and good moral character.

The following areas are regulated by the Insurance Department EXCEPT AInsurer financial requirements. BPolicyowner rights and disclosures. CProducer commission schedules. DProducer regulations and testing requirements.

Incorrect! Commissions are set by a schedule or negotiation between the producer and the insurance company. The Insurance Department regulations are to protect the insurance-buying public.

An employee insured under a group health plan has been paying $25 monthly premium for his group health coverage. The employer has been contributing $75, for the total monthly cost of $100. If the employee leaves the company, what would be his maximum monthly premium for COBRA coverage? A$100 B$102 C$25 D$25.50

Incorrect! The employer is permitted to collect a premium from the terminated employee at a rate of no more than 102% of the individual's group premium rate (in this scenario, 102% of $100 total premium is $102). The 2% charge is to cover the employer's administrative costs.

Which of the following statements about the reinstatement provision is true?

It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated. plus interest

An insured is involved in a car accident. In addition to general, less serious injuries, he permanently loses the use of his leg and is rendered completely blind. The blindness improves a month later. To what extent will he receive Presumptive Disability benefits?

Presumptive Disability plans offer full benefits for specified conditions. These policies typically require the loss of use of at least two limbs, total and permanent blindness, or loss of speech or hearing. Benefits are paid, even if the insured is able to work. Because the insured's blindness was only temporary and the loss of use in only 1 leg, he does not qualify for presumptive disability benefits.

Under which provision can a physician submit claim information prior to providing treatment? AAnticipatory Treatment BSuspended Treatment CProspective Review DConcurrent Review

Under the prospective review or precertification provision, the physician can submit claim information prior to providing treatment to know in advance if the procedure is covered under the insured's plan and at what rate it will be paid.

An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act? AIllegal until endorsed by the Guaranty Association BLegal, provided that the other insurers are paid royalties for the usage of their names CIllegal under any circumstances DLegal, provided that the information can be verified

When a company criticizes the financial situation of another company with the intention of injuring that company, it has committed an illegal trade practice called defamation.

When must insurable interest exist in a life insurance policy?

at the time of application

group disability income insurance

benefits are usually short term waiting period starts at the onset fo the injury or sickn es

An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receive as a settlement?

$200,000 The beneficiary would most likely receive twice the face value of the policy, since his fatal injuries were caused by an accident and he died within the 90-day benefit limit stipulated in most policies.

How is the Insurance Guaranty Association funded?

Guaranty Association is funded by its members: all authorized insurers are required to contribute to a fund to provide for the payment of claims for insolvent insurers.

If a firm has between 2 and 50 employees that are actively engaged in business during the preceding calendar year, what is its classification? APartnership BParticipating plan CAssociation DSmall employer

Small employer means any person, firm, corporation, partnership or association that is actively engaged in business that during the preceding calendar year, employed at least 2, but not more than 50 eligible employees, the majority of whom were employed within the state.

What is the purpose of COBRA? ATo provide coverage for the dependents BTo provide health coverage for people with low income CTo protect the insureds against insolvent insurers DTo provide continuation of coverage for terminated employees

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires any employer with 20 or more employees to extend group health coverage to terminated employees and their families after a qualifying event.

A dental plan that provides coverage based upon a specified maximum scheduled amount for each procedure and pays on a 'first dollar' basis with no deductible or coinsurance is a ABasic or scheduled plan. BCombination plan. CComprehensive plan. DNonscheduled plan.

The basic or scheduled dental plan pays a scheduled amount which is typically below usual, customary and reasonable dental charges, causing the employees to bear a share of the cost of the procedure.

An insured does not have to pay coinsurance or deductibles on a full-series mouth x-ray, but does have to pay a deductible to get his cavities filled. Which dental plan does he have? ALimited BProcedure-based CScheduled DNonscheduled

Incorrect! Diagnostic and preventative services are generally not subject to coinsurance or deductibles in nonscheduled plans, but basic and major services are.

Which of the following is NOT a feature of a guaranteed renewable provision?

Guaranteed renewable provision has all the same features that the noncancellable provision does, with the exception that the insurer can increase the policy premium on the policy anniversary date. However, the premiums can only be increased on a class basis, not on an individual policy.

OBRA requires which disease to be covered by an employer for 30 months before Medicare becomes the primary mode of coverage? ALeukemia BEnd-stage heart failure CEnd-stage renal failure DBlack lung

Incorrect! OBRA requires end-stage kidney (renal) failure to be covered by an employer for 30 months before Medicare becomes the primary mode of coverage.

The provision in a health insurance policy that ensures that the insurer cannot refer to any document that is not contained in the contract is the ATime limit on certain defenses clause. BIncontestability clause. CLegal action against us clause. DEntire contract clause. Incorrect! Entire contract is a mandatory provision that is required by law.

Incorrect! Entire contract is a mandatory provision that is required by law.

What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 Months Most insurers impose a 6-month waiting period from the time of disability until the first premium is waived.

Which of the following is INCORRECT concerning taxation of disability income benefits? AIf the insured paid the premiums, any disability income benefits are tax-free. BIf the benefits are for a permanent loss, the benefits paid to the employee are not taxable. CIf paid by the individual, the premiums are tax deductible. DIf the employer paid the premiums, income benefits are taxable to the insured as ordinary income.

If an individual purchases his or her own disability insurance with before-tax dollars, any benefits paid are tax free, but the premium is not tax deductible. If an employer pays the premium, the employer may deduct the premium as a business expense. Any benefits paid to an employee are taxable, unless it is for the permanent loss of a body part, or loss of use of a body part.

What percentage of individually-owned disability income benefits is taxable? A0% B50% C100% DAmount paid by insured

Incorrect! Premiums are paid with after tax dollars. Benefits are not income taxable.

Which health insurance provision describes the insured's right to cancel coverage? ARenewal provision BPolicy duration provision CInsuring clause DCancellation provision

Incorrect! Renewability provisions are included in each health insurance contract and outlines both the insurer's and insured's right to cancel or renew coverage. This is considered to be a very important provision required by HIPAA, the federal Health Insurance Portability and Accountability Act of 1996.

A dental plan that provides coverage based upon a specified maximum scheduled amount for each procedure and pays on a 'first dollar' basis with no deductible or coinsurance is a ANonscheduled plan. BBasic or scheduled plan. CCombination plan. DComprehensive plan.

The basic or scheduled dental plan pays a scheduled amount which is typically below usual, customary and reasonable dental charges, causing the employees to bear a share of the cost of the procedure.

Combination plans are comprised of two types of plan features: basic and AExpanded. BLimited. CComprehensive. DScheduled.

Incorrect! Combination plans combine features of the two main types of dental plans: scheduled (basic) and nonscheduled (comprehensive).

Which of the following is considered a qualifying event under COBRA? AMarriage BRelocation CPromotion DDivorce

Other qualifying events include the voluntary termination of employment; an employee's change from full time to part time; or the death of the employee.

An insured's long-term care policy is scheduled to pay a fixed amount of coverage of $120 per day. The long-term care facility only charged $100 per day. How much will the insurance company pay?

120 a day doesnt matter about the cost of care

Which of the following best describes annually renewable term insurance?

Annually renewable term is a form of level term insurance that offers the most insurance at the lowest cost.

Which of the following could be used when a corporation, association, partnership, or limited liability partnership acts as a producer? AMutual Company BBusiness Entity CNatural Group DStock Company

Business entity means a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity.

What required provision protects against unintentional lapse of the policy?

Grace period The grace period is the period of time after the premium due date that the policyowner has to pay the premium before the policy lapses (usually 30 or 31 days). The purpose of the grace period provision is to protect the policyholder against an unintentional lapse of the policy.

The gatekeeper of an HMO helps ADetermine which doctors can participate in an HMO plan. BControl specialist costs. CDetermine who will be allowed to enroll in an HMO program. DPrevent double coverage.

Initially the member chooses a primary care physician, or gatekeeper. If the member needs the attention of a specialist, the primary care physician must refer the member. This helps keep the member away from the higher priced specialists unless it is truly necessary.

Which type of service under a nonscheduled plan typically has large deductibles and pays around 50% for the services provided? ABasic service BMinor service CRepair service DMajor service

Major services under nonscheduled plans, which cover treatments such as inlays, crowns, dentures and orthodontics, either have large deductibles or the insured pays 50% of the costs.

Which of the following long-term care benefits would provide coverage for care for functionally impaired adults on a less than 24-hour basis? AHome health care BAdult day care CResidential care DAssisted living

Incorrect! Adult day care is designed for those who require assistance with various ADLs on a daily basis, but not around the clock. Custodial care is usually the only service provided by adult day care facilities.

Licensees who are currently licensed, and have recently become residents of the state of Michigan may not have to complete any prelicensing education. To qualify for this exemption, they must apply to become resident licensees within a few days of establishing a legal residence within how many days? A30 days B60 days C7 days D90 days

Incorrect! In this situation, a licensee would have to apply for a resident's license within 90 days.

In order for costs to be covered under a dental plan, what is the minimum interval that must pass between routine dental exams? A9 months B1 year C3 months D6 months

Most dental plans limit coverage for repeated procedures. In order for costs to be covered by an insurer, at least 6 months must pass between routine dental exams.

An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay?

50% tax on the amount not distributed as required When immediate annuities are used to pay IRA benefits, distributions must begin no later than age 70½ in order for the annuitant to avoid penalties. The penalty is 50% of the shortfall from the required annual amount.

In which of the following situations is it legal to limit coverage based on marital status? AIt is never legal to limit coverage based on marital status. BExcessive number of divorces, as defined by the Insurance Code CLegal separation during the application process DDivorce within the last six months of applying for insurance

Availability of insurance benefits or coverage may not be denied based on sex or marital status. Marital status may be considered for the purpose of defining persons eligible for dependent benefits.

Which of the following is NOT true of basic medical expense plans? ALow dollar limits BCoverage for catastrophic medical expenses CNo deductibles DFirst-dollar coverage

Basic medical expense plans were characterized by first-dollar coverage (no deductible) and low dollar limits, which meant they afforded no protection to an individual or family against catastrophic medical expenses that could be financially disastrous.

Which is true regarding HMO coverage? AIt is divided by state. BHMOs provide nationwide coverage. CIt is divided into geographic territories. DIt is divided based on the average tax bracket of a family.

HMOs offer services to those living within specific geographic boundaries that may be formed by county lines or city limits. If one lives within the boundaries, they are eligible to belong to the HMO, but if they do not live within the boundaries, they are ineligible.

A new employee who meets HIPAA eligibility requirements must be issued health coverage on what basis? ANondiscriminatory BIndemnity CGuaranteed DNoncancellable

If a new employee is eligible, under HIPAA regulations, the new employer must offer coverage on a guaranteed issue basis.

A temporary license in this state is valid for a maximum of A30 days. B60 days. C90 days. D180 days.

Incorrect! A temporary license may be issued for up to 180 days.

Which of the following entities has the authority to make changes to an insurance policy? AInsurer's executive officer BDepartment of Insurance CBroker DProducer

Incorrect! Only an executive officer of the company, not an agent, has authority to make any changes to the policy. The insurer must have the insured's written agreement to the change.

An insured is involved in a car accident. In addition to general, less serious injuries, he permanently loses the use of his leg and is rendered completely blind. The blindness improves a month later. To what extent will he receive Presumptive Disability benefits? APartial benefits BFull benefits until the blindness lifts CNo benefits DFull benefits

Incorrect! Presumptive Disability plans offer full benefits for specified conditions. These policies typically require the loss of use of at least two limbs, total and permanent blindness, or loss of speech or hearing. Benefits are paid, even if the insured is able to work. Because the insured's blindness was only temporary and the loss of use in only 1 leg, he does not qualify for presumptive disability benefits.

A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy

Required a premium increase each renewal.

What limits the amount that a policyowner may borrow from a whole life insurance policy?

Cash Value The amount available to the policyowner for a loan is the policy's cash value. If there are any outstanding loans, that amount will be reduced by the amount of the unpaid loans and interest.

An insured has medical insurance coverage through 2 different providers, both covering the same expenses on an expense-incurred basis. Neither company knows in advance that the insured has coverage through any other insurers. The insured submits a claim to both insurers. How should the claim be handled?

In the event that an insured is covered on an expense-incurred basis for the same expenses under multiple insurers and the insurers are not informed about the other sources of coverage before the loss, proportionate shares of the claims should be paid.

In which of the following cases would an "any occupation" disability income policy pay the benefits? AThe insured's family has unexpected expenses due to the insured's disability. BThe insured is unable to perform any jobs in the field related to the insured's education and experience. CThe insured is unable to perform the duties of his or her specific occupation. DThe insured changes jobs and is injured as a result of a more hazardous occupation.

Incorrect! A policy that has an "any occupation" provision will only provide benefits when the insured is unable to perform any of the duties of the occupation for which they are suited by reason of education, training, or experience.

Under HIPAA, which of the following is INCORRECT regarding eligibility requirements for conversion to an individual policy? AThe gap of coverage for eligibility is a period of 63 or less days. BAn individual who was previously covered by group health insurance for 6 months is eligible. CAn individual who has used up COBRA continuation coverage is eligible. DAn individual who doesn't qualify for Medicare may be eligible.

Incorrect! All of these eligibility requirements are correct, except an individual who was previously covered for at least 6 months. HIPAA requires that the individual have a previous continuous creditable health coverage for at least 18 months.

Who is the beneficiary in a credit health policy? AThe Federal Government BThe lending institution CThe insurer DThe estate of the borrower

Incorrect! Creditor group, also called credit life and health insurance is a specialized use of group life and group health insurance. It protects the lending institution from losing money as the result of a borrower's death or disability. Generally the borrower is the premium payor, but the lending institution is the beneficiary of the policy.

Which of the following would be a qualifying event as it relates to COBRA? AEligibility for coverage under another group plan BEligibility for Medicare CTermination of employment due to downsizing DTermination of employment for stealing

Incorrect! Employee qualifying events include the termination of employment for reasons other than for misconduct; dependents' qualifying events include the death of the employee, divorce or legal separation.

An association could buy group insurance for its members if it meets all of the following requirements EXCEPT AHas a constitution and by-laws. BHolds annual meetings. CIs contributory. DHas at least 50 members.

All of the above characteristics would make an association group eligible for buying group insurance, except the group must have at least 100 members.

Which of the following will vary the length of the grace period in health insurance policies? AThe length of time the insured has been insured BThe term of the policy CThe mode of the premium payment DThe length of any elimination period

C The mode of the premium payment Incorrect! The grace period is 7 days on a policy with a weekly premium mode; 10 days if a monthly premium mode; 31 days on other premium modes.

An insured receives an annual life insurance dividend check. What term best describes this arrangement?

Cash Option The cash option allows an insurer to send the policyholder an annual, nontaxable dividend check.

Regarding long-term care coverage, as the elimination period gets shorter, the premium AGets lower. BGets higher. CRemains constant. DPremiums are not based on elimination periods.

Incorrect! LTC policies also define the benefit period for how long coverage applies, after the elimination period. The benefit period is usually 2 to 5 years, with a few policies offering lifetime coverage. Obviously the longer the benefit period, the higher the premium will be; and the shorter the elimination period, the higher the premium will be.

Which of the following statements is NOT true concerning Medicaid? AIt consists of 3 parts: Part A: hospitalization, Part B: doctor's services, Part C: disability income. BIt is a state program. CIt is funded by state and federal taxes. DIt is intended to provide medical assistance for certain categories of people who are needy.

Incorrect! Medicaid is a state program funded by state and federal taxes that provide medical care for the needy. Parts A-C are part of Medicare.

In Medicare prescription drug plans, step therapy refers to ATypes of benefits. BA type of rehabilitative service. CPrior authorization. DFormulary tiers.

Incorrect! Step therapy is a type of prior authorization. In most cases, Medicare requires the insured to first try a certain, less expensive drug on the plan's Formulary that has been proven effective for most people with the same condition before the insured can move up a "step" to a more expensive drug.

Which act amended the National Labor Relations Act? ATaft-Hartley BERISA CADEA DMET

Incorrect! The Taft-Hartley Act is federal legislation which amended the National Labor Relations Act. This act, among other things, prohibits employers from making direct contributions to unions for employee benefits, but allows employee contributions to be paid to a separate benefit trust managed by the union.

In individual health insurance coverage, the insurer must cover a newborn from the moment of birth, and if additional premium payment is required, allow how many days for payment? AWithin 10 calendar days BWithin 15 working days CWithin 31 days of birth DWithin a reasonable period of time

Incorrect! The insured must notify the insurer of a newly born dependent, and if additional payment is required, pay within 31 days.

Which of the following is NOT considered to be a basic service, under a nonscheduled plan? AOral surgery BFillings CDentures DEndodontics

Incorrect! There are two types of services under nonscheduled plans: basic and major. Basic services include treatments such as fillings, oral surgery, periodontics, and endodontics, while major services include treatments such as inlays, crowns, dentures and orthodontics.

Which provision states that the insurance company must pay Medical Expense claims immediately? ARelation of Earnings to Insurance BTime of Payment of Claims CPayment of Claims DLegal Actions The Time Payment of Claims provision requires that claims will be paid immediately upon receipt of proofs of loss except for periodic payments, which are to be paid as specified in the policy.

Time of Payment of Claims The Time Payment of Claims provision requires that claims will be paid immediately upon receipt of proofs of loss except for periodic payments, which are to be paid as specified in the policy.

All of the following statements describe a MEWA EXCEPT AMEWA employers retain full responsibility for any unpaid claims. BMEWAs can be self-insured. CMEWAs are groups of at least 3 employers. DMEWAs can be sponsored by insurance companies.

Correct! MEWAs are groups of at least 2 employers who pool their risks to self-insure. MEWAs can be sponsored by an insurance company, an independent administrator, or another group established to provide group benefits for participants.

When an insurance agency published an advertising brochure, it emphasized the company's financial stability and sound business practices. In reality, its financial health is terrible, and the company will soon have to file for bankruptcy. Which of the following terms best describes the advertisement? ADefamation BTwisting CRebating DFalse financial statement

Incorrect! False financial statements are made when insurance companies attempt to hide their financial troubles from the public and government officials.

A 55-year-old employee has worked part-time for his new employer for 3 months now, but has not been offered health insurance. What factor has limited the employee's eligibility? AThe total amount of time worked for the company BAge CIncome DNumber of hours worked per week

Incorrect! In order to be eligible for group health insurance through an employer, an employee must typically work full-time and must have devoted one to three months of service. In this case, the employee has been with the employer long enough, but he does not work enough hours per week.

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? A$0 B$500 C$1,000 D$2,000

Once the primary insurer has paid the full available benefit, the secondary insurer will cover what the first company will not pay, such as deductibles and coinsurance. The insured will, then, be reimbursed for out-of-pocket costs.

Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called? AMisrepresentation BAdverse selection CDiscrimination DLaw of large numbers

Permitting individuals of the same class to be charged a different rate for the same insurance is the unfair trade practice of discrimination.

An insured misstated her age on an application for an individual health insurance policy. The insurance company found the mistake after the contestable period had expired. The insurance company will take which of the following actions regarding any claim that has been issued? AAdjust the claim benefit to reflect the insured's true age BDeny any claims and cancel the policy CDeny paying a claim based on misrepresentation DPay the full amount of a claim because the contestable period has ended

The Misstatement of Age provision says that if a client has misstated her age, whether intentional or unintentional, they will adjust the benefit being paid. It doesn't matter when the mistake was found.

How does a member of an HMO see a specialist? AHMOs do not cover specialists. BThe member is allowed to choose his or her own specialist. CThe primary care physician refers the member. DThe insurer chooses the specialist.

Incorrect! In order for the member to get to see a specialist, the primary care physician must refer the member. If the member feels that the specialist should be treating him or her but is unable to get the referral from the primary care physician, the member might consider changing primary care physicians. In some HMOs there is a financial cost to the primary care physician for referring a patient to a more expensive specialist.

Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insured for full disability benefits. Which disability policy provision does this describe? AResidual disability BPresumptive disability CDismemberment disability DPartial disability

Presumptive disability is a provision that is found in most disability income policies which specifies the conditions that will automatically qualify the insured for full disability benefits.