Texas Health & Life

Tax Considerations for Group Medical

Deductible for Employer, Benefits not Taxable

Tax Considerations for Group Medicare Supplement

Deductible for employer, Not taxable

Tax Considerations for Group LTC

Deductible for employer, benefits not taxable

Tax Considerations for Group Disability Income

Deductible for employer, benefits taxable

Tax Considerations for Business Overhead Expense (BOE)

Deductible for employer, taxable

HSAs

Deductible, Not taxable when used for medical expenses

HRAs

Deductible, not taxable

Tax Considerations for MSAs

Deductible, not taxable when used for medical expenses, taxable when taken out at end of year

What is the purpose of a disclosure statement in life insurance policies?

Explain features and benefits of a proposed policy

Husband and wife incur expenses that are attributed to a single Major Medical Insurance Deductible, what kind of policy do they have?

Family

What factors are taken into account when calculating residual disability benefits?

Present earnings and earning prior to disability

When must an applicant be notified of HIV testing?

Prior to performance of the test

Legal Actions

Provision limits the time in which a claimant may seek recovery from an insurer under a policy, must wait 60 days but not later than 3 years

What is the time of payment of claims?

Provision specifies that claims are to be paid immediately upon written proof of loss

Time Limit on Certain Defenses

Similar to the incontestability provision found in life insurance policies

What does the application of 'Contract of Adhesion' mean?

Since the insured doesn't participate in preparing the contract, any ambiguities would be resolved in favor of the insured

What is the notice of claim?

Spells out the insured's duty to provide the insurer with reasonable notice in event of a loss, notice required within 20 days or asap

What policy would not offer a policy loan option?

Term life, term life policies do not have cash value

Who determines the eligibility and contribution limits in a HRA?

The Employer determines both

Who sets the annual contribution limit of a Dependent Care FSA?

The IRS

Which entity can legally bind coverage?

The Insurer

What constitutes an entire contract?

The health insurance policy, signed application, and attached riders and amendments

With adjustable life, the owner can change all but what?

The insured

If an applicant submits initial premium w/ an app, which constitutes acceptance?

Underwriter approves the application

Waiver of Premium

Usually included with guaranteed renewable and noncancellable disability income policies. Provides that in the event of permanent and total disability, premiums will be waived for the duration of the disability.

What is consideration?

Value offered by the insured to insurer and vice versa

In insurance, an offer is usually made when?

When the application is submitted

When an insured terminates membership in insured group, can convert to:

Whole life without proof of insurability

After a loss occurs, the claimant must submit proof of loss when?

Within 90 days or the loss or asap, but not to exceed one year

Upon receipt of a claim, what must a company supply?

Would provide claim forms to the insured

Within what number of days must a hearing be held for a request for a review of a cease and desist order?

10 days after receiving a request

Who must participate in a noncontributory group policy?

100% of eligible employees must participate

Of the 30 hours of CE, how many must cover ethics and/or consumer protection?

2

What is the purest form of term insurance?

ART, annually renewable term. Death benefit remains level, and the policy may be guaranteed to be renewable each year without proof of insurability

After reinstatement, what is the coverage for accidents and sicknesses?

Accidents will be covered immediately, sickness covered after 10 days

Who is responsible if an applicant does not receive his/her policy?

Agent

How long does an insurer have to contest fraudulent misstatements made in health insurance application?

As long as the policy is in force. No other statement or misstatement made in the app will be used to deny a claim after in force for 2 years.

What are nonforfeiture options?

Cash surrender, extended term, and reduced paid up

What rider allows the couple to insure a child for a limited time?

Children's term rider

What can the agent give an applicant if they are given a complete app and initial premium?

Conditional receipt

What is the contract provision that allows the insurer to nonrenew health coverage if certain events occur?

Conditionally renewable

What is the difference between conditionally and optionally renewable?

Conditionally renewable may be cancelled for specific conditions, but optionally renewable do not specify a condition or reason for cancellation

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

Guaranteed

Which of the following is NOT correct concerning taxation of disability income benefits?

If paid by individual, premiums are tax deductible

What is a carry-over provision?

If the insured did not incur sufficient medical costs during the year to meet the deductible, any medical expenses incurred during the last 3 months may be carried to the next year, offsetting the total deductible costs for that year.

What rider would not increase the premium for a policy owner?

Impairment rider, since this rider excludes a preexisting condition, it would reduce benefits and would not increase the premium.

What is a Guaranteed Insurability Rider?

Included at the time of application which allows the insured to increase the amount of insurance without proving evidence of insurability.

How are group medical and dental benefits received (taxed) by the employee?

Income tax free

What type of insurance would be used for a Return of Premium Rider?

Increasing term

What will be assumed according to the "Common Disaster Clause"?

It will be assumed that the primary beneficiary died first

What label must be present on an illustration of a life insurance policy?

Life insurance illustration

What is another name for a substandard risk classification?

Rated, premium is 'rated-up'

How are benefits of Medical Expense Insurance received (tax)

Received income tax free

What needs to be found on the first page of a medicare supp policy?

Renewal or Continuation Provision

What portion of the contract explains cancellation rights?

Renewal provision

Texas Dept of Ins complain reports do not have to feature what item

Resident state of claimants

Which provision states the insurer's right to change premium amounts?

Continuation provision

How many does should a Medicare supplement 'free-look' provision be?

30 days

How many hours must an agent complete every renewal period?

30 hours

Within how many days must an insured notify the insurer of a child's birth?

31 days

To qualify for conversion from a group life policy to an individual policy of the same coverage, how many years must a person have been insured?

5 years

What does the policy owner sell during a viatical sale?

A percentage of the policy's face value

What are contracts of adhesion?

Insurance policies written by the insurer and submitted on a 'take it or leave it' basis

What is the insuring clause?

Lists the insured, insurance company, what kind of losses are covered, and how much the losses would be compensated

What is the insuring Clause?

Located on the first page of the policy, simply a general statement that identifies the basic agreement between the insurance company and insured. Identifies the insure and insurance company and what loss is covered

How does a disability income benefit rider pay?

Monthly premium waiver and monthly income

The reduction of premium option uses the dividend to reduce what?

Next year's premium

Are Flexible Spending Accounts eligible for carry over?

No

Tax Considerations for Individual Medical

Not Deductible, Not Taxable

Tax Considerations for Individual Medicare Supplement

Not deductible, Not taxable

Tax Considerations for Individual Disability Income

Not deductible, benefits not taxable

Tax Considerations for Buy-Sell

Not deductible, not taxable

Tax Considerations for FSAs

Not deductible, not taxable

Tax Considerations for Key Person

Not deductible, not taxable

What is the Consideration Clause?

On first page of policy, makes it clear that both parties to the contract must give some valuable consideration

An insurer can decide not to renew an Optionally Renewable policy when?

On premium due dates

Insurance contracts are unilateral in nature, what does that mean?

Only one party makes a promise

An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use?

Paid-up option

Regarding Consideration Clause, which would be considered consideration on the part of the applicant for insurance?

Payment of premium. The two types of consideration on the part of an insurance applicant are payment of premiums and representations on the application.

What is a Payor Benefit Rider?

Pays the premium if the payor is diabled or dies

What is the probationary period?

Period of time after a policy is in effect before claims arising out of an illness are covered.

Tax Considerations for Individual Long-Term Care

Premiums not Deductible, benefits not taxable