Missed Terms Life & Health

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT

Conditions are part of the policy structure. Consideration is an essential part of a contract.

Paul is a producer in Michigan and wants to become a producer in Minnesota. The Department will waive certain examination requirements, provided that Michigan would waive these same requirements if a Minnesota producer sought licensure in Michigan. What term is used to describe this phenomenon?

"Reciprocity" occurs when the state in which the person resides accords the same privilege to residents of Minnesota.

A Universal Life Insurance policy is best described as a/an

A universal policy has two components: an insurance component and a cash account. The insurance component (or the death protection) of a universal life policy is always annual renewable term insurance.

Which of the following statements is NOT true concerning Medicaid?

It consists of 3 parts: Part A: hospitalization, Part B: doctor's services, Part C: disability income. 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.

What is the purpose of a conditional receipt?

It is intended to provide coverage on a date earlier than the date of the issuance of the policy. Coverage commences on the date of the application or the date of a medical examination, whichever is later, on the condition that the applicant is determined to be insurable at the rate applied for.

An insured purchased a noncancellable health insurance policy 1 year ago. Which of the following circumstances would NOT be a reason for the insurance company to cancel the policy?

The insured is in an accident and incurs a large claim. The company may not cancel coverage due to covered claims. All the rest are allowable reasons for an insurer to terminate the contract.

All of the following benefits are available under Social Security EXCEPT

Welfare benefits.

After an insurance company examination, the Commissioner or the examiner appointed by the Commissioner must file a written report of the examination within

The report relating to the examination must be filed no later than 60 days after the examination is completed.

For what period of time is an insurance license issued in Minnesota?

The Commissioner may stagger the implementation of the 24-month licensing program so that approximately one-half of the licenses will expire on October 31 of each even-numbered year and the other half expire on October 31 of each odd-numbered year.

The Commissioner must examine the affairs and conditions of every insurer licensed in the State not less frequently than

The Commissioner must examine the affairs and conditions of all domestic insurers at least once every 5 years.

A participating insurance policy may do which of the following?

A participating insurance policy will pay dividends to the owner based upon actual mortality cost, interest earned and costs.

Which of the following is true regarding inpatient hospital care for HMO members?

Care can be provided outside of the service area. The HMO provides the member with inpatient hospital care, in or out of the service area. The services may be limited for treatment of mental, emotional or nervous disorders, including alcohol or drug rehabilitation or treatment.

Which of the following is NOT an exclusion in medical expense insurance policies?

Coverage for dependents Most medical expense policies will not cover expenses for dental care, self-inflicted injuries, or injuries incurred as a result of military service (among other exclusions). Most policies include coverage for dependents.

Which of the following is NOT covered under Plan A in Medigap insurance?

The Medicare Part A deductible Medicare Supplement Plan A provides the core, or basic, benefits established by law. All of the above are part of the basic benefits, except for the Medicare Part A deductible, which is a benefit offered through nine other plans.

Which provision states that the insurance company must pay Medical Expense claims immediately?

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.

What is the maximum fine for rebates in this state?

Any company or individual violating provisions on rebating will be punished by a fine of at least $60, but not more than $200.

An insured has endured multiple surgeries and hospitalizations for an illness during the summer months. Her insurer no longer bills her for medical expenses. What term best describes the condition she has met?

A "stop-loss limit" is a specified dollar amount beyond which the insured no longer participates in the sharing of expenses.

In the Executive Bonus plan, who is the owner of the policy, and who pays the premium?

Executive buys the policy and pays the premium, and the employer reimburses the executive for cost (or pays a bonus in the amount of the premium). Since the executive is receiving compensation, the amount paid by the employer would be considered taxable income.

Occasional visits by which of the following medical professionals will NOT be covered under LTC's home health care?

Attending physician Home health care is care provided in one's home and could include occasional visits to the person's home by registered nurses, licensed practical nurses, licensed vocational nurses, or community-based organizations like hospice. Home health care might include physical therapy and some custodial care such as meal preparations.

Once an individual has successfully passed a licensing exam, for how many year(s) are the results valid?

Results for an exam in this state are considered valid for 3 years from the date of the examination. A successfully passed exam in the line of authority applied for is a qualification for an individual to be licensed.

Prior to purchasing a Medigap policy, a person must be enrolled in which of the following?

To buy a Medigap policy, the applicant must generally have both Medicare Part A and Part B.

When a group Medicare Supplement policy is terminated by the policyholder and not replaced, the issuer must offer each certificate holder

When a group policy is terminated and not replaced, certificate holders must be offered an individual policy.

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.

Concerning Medicare Part B, which statement is INCORRECT?

It is fully funded by Social Security taxes (FICA). Part B is funded by monthly premiums and from the general revenues of the federal government.

Which of the following is TRUE about nonforfeiture values?

Nonforfeiture values are required by state law to be included in the policy, and cannot be altered by the policyowner. A table showing the nonforfeiture values for the next 20 years must be included in the policy.

Which of the following is NOT correct with regards to the death proceeds of a life insurance policy?

The insured's creditors may claim the proceeds from the life insurance policy of the deceased insured. The beneficiary of a life insurance policy or annuity is entitled to its proceed against the creditors of the insured.

A life insurance policy does not have a war clause. If the insured is killed during a time of war, what will the beneficiary receive from the policy?

War or Military Service Clause specifically excludes or limits the insurer's liability for losses caused by war or active military service. If a life insurance policy does not have that exclusion, the benefits are paid to the beneficiary, as if the insured died of any other cause.

An employee insured under a group health policy is injured in a car wreck while performing her duties for her employer. This results in a long hospitalization period. Which of the following is true?

Because the employee's injuries were work related, the group health policy would not respond. The insured would have to rely on worker's compensation for coverage.

Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to

The insured. Payments for loss of life benefits are to be made to the designated beneficiary. If no beneficiary has been named, payment proceeds are to be paid to the deceased insured's estate. Claims other than death benefits are to be paid to the insured or the insured's estate, unless otherwise assigned by the insured.

Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?

Universal Life Option A (Level Death Benefit option) policy must maintain a specified "corridor" or gap between the cash value and the death benefit, as required by the IRS. If this corridor is not maintained, the policy is no longer defined as life insurance for tax purposes, and consequently loses most of the tax advantages that have been associated with life insurance.

Under workers compensation, which of the following benefits are NOT included?

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

Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to an insured is

If a claim involves disability income benefits, the policy must pay those benefits not less frequently than monthly. In all other cases, the company may specify the time period of 45 or 60 days for payment of claims.

In Minnesota, an HMO must hold a certificate of authority granted by

The Commissioner must grant a certificate of authority before an HMO can operate in the state.

The initial amount of credit life insurance cannot exceed

The initial amount of credit life insurance cannot exceed the amount of the debt.