Chapter Exam Practice Qs

Pierre is covered by his employer's group major medical plan. His employer pays for 75% of the premium and he pays for 25%. How much would a $10,000 benefit be taxable as income under this plan?

$0 Benefits that fall under a major medical plan are considered to be a reimbursement for a loss, and is not taxable as income

Kim has health insurance with a deductible of $500 and an 80/20 coinsurance. How much will she pay if she incurs a loss of $1,500?

$700 In this situation, the insured will pay $500 deductible plus $200 coinsurance = $700.

Under a 10-year vesting schedule, what percentage of employer contributions must be vested after 10 years of service?

100%

An insurer must furnish to a claimant forms for filing proof of loss within ___ days upon receiving a notice of claim.

15

How long must a policy be in force before an insurer is prohibited from denying claims based on missed statements made on the health policy application?

2 years

Any changes in background information that occur after a producer application has been submitted or a license has been issued MUST be reported to the Insurance Commissioner within

30 days

How long must life agents keep their transaction records?

5 years

A Roth Aire owner must be at least what age in order to make tax free income withdraws?

59 1/2 and earned the account for a minimum of five years

A roll over from a traditional IRA to another IRA must be done within ______ days to avoid tax consequences

60

What percentage of a participates income our group long-term disability benefit amount is typically limited to?

60

Within how many days must a traditional IRA be rolled over to another IRA to avoid tax consequences?

60

Ron has a new employer and wishes to enroll in the company's group health plan. In determining whether his pre-existing health condition applies, Ron cannot have more than a ___ day gap without previous health insurance.

63

A Modified Endowment Contract (MEC) is best described as

A life insurance contract which accumulates cash values higher than the IRS will allow

All of these are valid options for an Adjustable Life Policy EXCEPT The policy's premium can be increased or decreased The policy's death benefit can be increased or decreased A nonforfeiture option can be used to increase the death benefit The policy's protection period can be modified

A nonforfeiture option can be used to increase the death benefit

What is an insurance broker according to California insurance code?

A person compensated for transacting insurance on behalf of another person with an insurer

Under a disability income policy, which provision would be payable if the cause of an injury is unexpected and accidental?

Accidental bodily injury provision

What does the term coinsurance refer to?

After the deductible is satisfied, the percentage paid by the insured for the remaining covered expenses

Which of the following does coordination of benefits allow

Allows the secondary payor to reduce their benefit payments so no more than 100% of the claim is paid

Which of the following is ineligible to participate in a section 125 plan?

An S-Corp Owner with a greater than 2% share

According to PPACA, what is a health benefits exchange?

An entity to which individuals and small businesses can have access to affordable health coverage

Uninsured has a health plan that pays established amounts in accordance with a list of injuries, surgical procedures or other losses this list is called a

Benefit schedule

Which type of business insurance is meant to cover the costs of continuing to do business while the owner is disabled?

Business overhead expense policy

Bob and Tom are partners in a business. If one of them were to die, which of the following would guarantee a market for each of their share of the business?

Buy-Sell agreement

Where must you specifically reside to qualify for MRMIP?

California

Which disability policy provision would address any concerns of the value of the benefits decreasing overtime?

Cost of living benefit

All of the following are qualifications for establishing a health savings account (HSA) except

Enrolled in a health plan with a prescription drug benefit

Peter has a policy where 80% to 90% of the premium is invested in traditional fixed income securities and the remainder of the premium is invested in contracts tied to a stipulated stock index. What kind of policy is this? Modified Endowment Contract Current assumptive whole life Credit life insurance Equity index whole life

Equity index whole life

What does the word level in level term describe?

Face amount

Tom has a home healthcare benefit and is confined to his home. Which of these benefits is not typically covered?

Full time nursing

All of the following plans allow for employee contributions to be taken on a pretax basis except

Health reimbursement arrangement plan

What is an insurance solicitor authorized to do?

Help an agent or broker sell insurance

Which of the following is not included under a health benefit plan?

Hospital indemnity plan

Who does a life settlement broker represent?

Individual wanting to sell their life policy to a third party

An insurance policy issued in California maybe called a comprehensive long-term care insurance policy if benefits are provided for

Institutional nursing facilities and home care

Which of the following is not protected under the California life and health guarantee association?

Insurers

Which of the following types of deductibles would apply a single deductible to both medical and dental insurance coverage

Integrated deductible

Which of the following is not a primary objective of insurance regulation?

Interpret policy provisions

Which of the following statements regarding group disability income insurance is true?

It provides benefits for nonoccupational illnesses and injuries

Without a Section 125 Plan in place, what would happen to an employee's payroll contribution to an HSA?

It would be considered taxable income to the employee

Which type of life insurance is normally associated with a Payor Benefit Rider?

Juvenile insurance

What type of license is required for an individual who charges a fee to review an insured's existing life insurance policy?

Life and disability analyst

Low frequency diseases can be exclusively covered by what kind of health insurance policies?

Limited policies

Which of these would not be considered a presumptive disability?

Loss of a leg or arm

Which of the following typically does not provide a form of managed care?

Major medical indemnity plan

Which of the following is considered to be a point of service plan?

Managed care plan

People with low income can be provided with medical assistance through which program?

Medi-Cal

What is the difference between Medicare and Medicaid?

Medicare is for the elderly; Medicaid is for the poor.

What would be an expense factor in an insurance program?

Mortality costs

When an insured has a major medical plan with first dollar coverage, how does this impact the benefits paid

No deductible payment is required

What is required after life agent sells an insurance policy to an applicant without being appointed by the insurer?

Notice of appointment must be submitted to the Commissioner

A clause that allows an insurer the right to terminate coverage any anniversary date is called an

Optional renewability clause

Joe is a Medicare participant who receives his benefits through a managed health care plan. Which Medicare plan does he have?

Part C

Presumptive Disability

Permanent disability due to total loss of sight, hearing, speech or use of 2 + limbs; benefits paid even while continuing to work.

Which type of disability would be less than total impairment and equal to permanent impairment?

Permanent partial disability

Section 125 plan

Plan authorized by the Revenue Act of 1978 that allows employees to set aside pretax funds for medical expenses they plan to incur during the calendar year. See also flexible spending account (FSA).

Which of the following would evidence ownership in a participating health insurance contract?

Policy ownership

Under a Modified Endowment Contract, what are the likely tax consequences?

Pre-death distributions will become taxable

Coordination of benefits regulation applies to all of the following plans except

Preferred provider organization plan

Claims payable to a Disability Income insured, even when the insured can continue to work, are the result of a

Presumptive disability

How are survivorship life insurance policies helpful in estate planning?

Provide funds to help pay taxes

What is the primary feature of a viatical settlement?

Reduced death benefit prepayment

Which of the following are the premium payments for a universal life policy not used for?

Separate account investments

Health insurance involves two perils, accident and ______.

Sickness

An insurer has the right to recover payment made to the insured from the negligent party. These rights are called

Subrogation

Which type of multiple protection policy pays on the death of the last person?

Survivorship life policy

What are residual disability income insurance payments based on?

The amount of the insured's income is reduced by the disability

Frank is shopping for a disability income policy which of the following have the highest premium?

The disability income policy with the lowest waiting period and the longest benefit period.

Krissa purchases a 10-year level term life insurance policy that has a death benefit of $200,000. Which of these statements is true? The policy automatically converts to whole life after the 10-year period The face amount will remain constant and the premium will increase over the 10-year period The premium will remain constant and the face amount will increase over the 10-year period The face amount and premium will remain constant over the 10-year period

The face amount and premium will remain constant over the 10-year period

What is a corridor in relation to a universal life insurance policy?

The gap between the total death benefit and the policy's cash value

Which of these statements is not true concerning Rea current disabilities?

The insured continues coverage after new illumination.

A life insurance policy that contains a guaranteed interest rate with the chance to earn a rate that is higher than the guaranteed rate is called

Universal Life

A life insurance policy that is subject to a contract interest rate is referred to as

Universal Life

A partial surrender is allowed in which of the following life policies?

Universal Life

Reggie purchased a life insurance policy with a face amount of $500,000. After 15 years, the cash value has accumulated to $100,000 and the policy's face amount has become $600,000. Which type of life insurance policy is this?

Universal Life

Which type of life insurance offers flexible premiums, a flexible death benefit, and the choice of how the cash value will be invested?

Variable universal policy

All of these statements concerning whole life insurance are false except

When a whole life policy is surrendered, income taxes may be owed

Which of these would be the best example of a limited pay life insurance policy?

Whole life policy with premiums paid up after 20 years

How is a health provider reimbursed if they do NOT have an agreement in place with the insurance company?

With a usual, customary, and reasonable fee

Major medical insurance will typically cover medical expenses that result from

a negative reaction to prescribed medication

Where would policy proceeds be paid if both the insured and primary beneficiary were killed in the same accident? primary beneficiary's estate contingent beneficiary insured's estate children of the insured

contingent beneficiary

An example of a presumptive disability would be

deafness

Which of these is not subject to income taxation under a Modified Endowment Contract (MEC)?

death benefit

An example of a tax qualified retirement plan would be a

defined contribution plan

Manuel is considered to be a disabled person as defined by the Americans with Disabilities Act (ADA). As such, he is unable to perform any of the following life activities EXCEPT

driving

All of these are characteristics of a major medical expense policy except

elimination periods

Under the Health Insurance Portability and Accountability Act (HIPAA), the employee's new Group Health Plan will verify Creditable Coverage so that the

employee's waiting period for coverage of a preexisting condition can be reduced under the new employer's health plan

Which of the following would be considered a possible applicant in contract policyholder for group health benefits

employer

A life insurance policy that pays the face amount if the insured survives to a specified period of time is called

endowment insurance

What is created after policy proceeds are obtained in a lump sum and then immediately invested?

estate

The waiting period for a disability insurance policy

excludes payments for a short-term illness or injury

A group disability income plan that pays tax free benefits to covered employees is considered

fully contributory

Index whole life insurance contains a securities component that acts as a(n) hedge against inflation premium stabilizer means to lowering taxes on earnings incentive to purchase more coverage

hedge against inflation

Reasonably necessary acts that an agent must perform for carrying out his/her expressly authorized duties are covered by an agent's

implied authority

When a decreasing term policy is purchased, it contains a decreasing death benefit and increasing premiums level premiums decreasing premiums variable premiums

level premiums

A limited payment whole life policy provides

lifetime protection

A permanent life insurance policy where the policyowner pays premiums for a specified number of years is called a(n)

limited pay policy

All _____ policies must be guaranteed renewable.

long term care

The election of COBRA for continuation of health coverage will

maintain the same coverage and increase premium

Group health plans may deny participation based upon the

member' part-time employment status

Tara the producer is delivering a specified disease insurance policy to a new policyowner. Upon delivery, she may be expected to collect all of the following EXCEPT a(n)

modified application with a new signature

Disabled workers are covered under Workers' Compensation medical expense benefits for how long?

no limit

Disability income plans which require that the insurer can never change or alter premium rates are usually considered

noncancellable

A representation may be altered or withdrawn

only before the insurance is in effect

An interest-sensitive life insurance policyowner may be able to withdraw the policy's cash value interest free. The provision that allows this is called

partial surrender

Who is the individual paid on a fee-for-service basis?

provider

An example of elective cosmetic surgery would be

removing excess fat from an insured's waistline

Under the subrogation clause, legal action can be taken by the insurer against the

responsible third party

Typically, Long-Term Disability benefits are coordinated with which benefit plan?

social security

Anyone employed in California to assist an insurance agent in transacting insurance is called an insurance

solicitor

The type of policy which pays on the death of the last person is called

survivorship life

Justin is receiving disability income benefits from a group policy paid for by his employer. How are these benefits treated for tax purposes?

taxable income

Continued coverage under COBRA would be provided to a(n)

terminated employee

Pre-death distributions from a modified endowment contract (MEC) receive different tax treatment than other life insurance policies because

the MEC tends to be an investment vehicle

A Medicare supplement basic benefit is

the first 3 pints of blood per year

A disability elimination period is best described as a

time deductible

A policyowner can receive an immediate payment before the insured dies by using a(n) viatical settlement contract buy-sell arrangement adhesion agreement spendthrift plan

viatical settlement contract

Shawn, Mike, and Dave are brothers who have a $100,000 "first to die" joint life policy covering all three of their lives. If Mike dies first, the policy proceeds will no longer provide insurance protection will go to Mike's estate will be divided by probate will not be paid until the last brother dies

will no longer provide insurance protection