Final Exam PA Life, Health and Accident

Karen is a producer who has obtained personal information about a client without having a legitimate reason to do so. Under the McCarran-Ferguson Act, what is the minimum penalty for this?

$10,000

Payment of Claims

A provision that specifies to whom claims payments are to be made. Payments for loss of life are to be made to the designated beneficiary if no beneficiary payments are made to the estate

Maria is a Preferred Provider Organization (PPO) subscriber and received care from an out-of-network provider. Which of the following is the likely result?

Care is covered

An employee under a group insurance policy has the right to name a beneficiary

Convert to an individual policy in the event of employment termination

Viatical Settlement brokers are permitted to do all of the following things EXCEPT

Make the first transaction up to 30 days before approved for the license

Which of the following decisions would a Heath Savings Account (HSA) owner NOT be able to make?

The amount contributed to the employer

Time of Payment of Claims

The time of payment of claims provision provides for immediate payment of the claim after the insurer receives notification and proof of loss. This prevents insurance companies from delaying claim payments.

Settlement Options

Where the ways in which the proceeds can be paid out or settled are explained.

If the insurance department determines that the issuance of a temporary producer license serves in the publics best interest, the license may be issued to

an executor of a deceased producer's estate

An example of a presumptive disability would be

deafness

A policyholder has a major medical plan with a 80%/20% coinsurance and a deductible of $75. If the insured has previously met her deductible and receives a bill for $175, how much will the insurer pay?

$140 the insurance company pays 80% of $175

All of the following are included as a part of a contract in the entire contract provision EXPECT the?

Change made by the producer

Phil is shopping for an annuity that guarantees he CANNOT outlive the benefits. Which of these benefit options would he choose?

Guaranteed lifetime withdrawal benefit

Which type of plan would be most appropriate for an individual on Medicare and is concerned that Medicare will NOT pay for charges exceeding the approved amount?

Medicare Supplement Plan F

Which of the following is a violation of PA insurance law?

Offering insurance contracts through unlicensed entities

Change of Beneficiary

The insured, as policy owner, may change the beneficiary designation at any time unless a beneficiary has been named irrevocably.

Pat owns a 20-pay life policy with a paid-up dividend option. Which of the following statements is true?

The policy may be paid up early by using policy dividends

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

Universal Life

Cancellation

-Though prohibited in a number of states, the provision of cancellation gives the company the right to cancel the policy at any time with 45 days written notice to the insured -The notice must also be given when the insurer refuses to renew a policy or change the premium rates -If the cancellation is for nonpayment of premium the insurer must give 10 days written notice to the insured, unless the premiums are due monthly or more frequently -The cancellation provision also allows the insured to cancel the policy any time after the policy's original term has expired by notifying the insurer in writing.

Every Pennsylvania insurer, upon receiving notification of a claim, must acknowledge receipt of the notice within

10 days

Frank is shopping for a disability income policy. Which of the following would have the HIGHEST premium?

14 day waiting period / 10 year benefit period

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

15 days

Written notice for a health claim must be given to the insurer ___ days after the occurrence of the loss.

20 days

Within how many days must a producer report to the commissioner any charges made against them?

30 days

In an accident and heath plans, premiums paid less frequent than monthly require a minimum grace period of at least

31 days

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

60 days

In an employer sponsored contributory group disability income plan the employer pays 60% of the premium and each employee pays 40% of the premium. Any income benefits paid are taxed to the employee at?

60%

What percentage of a participants income are group long-term disability benefit amounts typically limited too?

60%

Consideration Clause

A policyowner must pay a premium in exchange for the insurer's promise to pay benefits. A policyowner's consideration consists of completing the application and paying the initial premium. The amount and frequency of premium payments are contained in the consideration clause.

Physical Exam and Autopsy

A provision that allows an insurer, at its own expense, to have an insured physically examined when a claim is pending or to have an autopsy performed where not prohibited by law.

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

Accidental bodily injury provision

The term which describes the fact that both parties of a contract may NOT receive the same value is referred to as

Aleatory

The waiver of premium does NOT include which provision?

All future premiums are waived if the insured recovers from the disability

What is the nonforfeiture value of an annuity before annuitization?

All premiums paid, plus interest, minus any withdrawals and surrender charges

Automatic Premium Loans

Allows the insurer to automatically use the policy cash value to pay an overdue premium. There is no cost for this provision.

Conformity with State Statutes

Any policy provision that is in conflict with state statutes in the state where the insured lives at the time the policy is issued is automatically amended to conform with the minimum statutory requirements of that state

The entire contract includes the actual policy and the

Application

With a scheduled dental policy, how are covered expenses paid?

Benefits are limited to a specific maximum dollar amount per procedure

An example of a tax qualified retirement plan would be an?

Defined contribution plan

Owner's Rights Provision

Defines the person who may name and change beneficiaries, select options available under the policy, and receive any financial benefits from the policy.

Notice of Claim

Describes the policy owner's obligation to notify the insurance company of a claim in a reasonable amount of time typically 20 days.

In a group heath care, what is the purpose of the coordination of benefits provision?

Determines what is paid by the primary and secondary insurers in the event of a claim

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

Employer

Hazard

Events or conditions that increase the likelihood of an insured's loss

Under a non-qualified annuity, interest is taxed after the

Exclusion ratio has been calculated

Which of these annuities require premium payments that vary from year to year?

Flexible Premium Deferred Annuity

Premium mode is a term used to describe the?

Frequency of the premium payment

Tom has a home health care benefit and is confined to his home. Which of these benefits is NOT typically covered?

Full time nursing care

How are annuities given favorable tax treatment?

Gains are taxed at distribution

Which of these typically authorize treatment from a specialist?

Gatekeeper

A master contract and certificate of coverage can be found in which type of policy?

Group

Which of the following is considered to be an event or condition that increases the probability of an insured's loss?

Hazard

Which approach predicts a person's earning potential and determines how much of that amount would be devoted to dependents?

Human life value approach

Misstatement of Age or Sex Clause

If the insured's age or sex is misstated, the amount payable is the amount that the premiums paid would have purchased at the correct age and sex

Unpaid Premiums

If there is an unpaid premium at the time a claim becomes payable, the amount of the premium is to be deducted from the sum payable to the insured or beneficiary.

When a producer offers something of value in return for the purchase of an insurance policy, which prohibited sales practice has been committed?

Inducement

Which settlement option involves having the proceeds remain with the insurer and earnings paid on a monthly basis to the beneficiary?

Interest only

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

Juvenile insurance

The time limit for filing claim disputes is addressed in which provision of an accident and health policy?

Legal Actions

Which contract element is insurable interest a component of?

Legal Purpose

Discretionary Period

Limits the way a court can review a claim denial and makes it difficult for the court to conduct a fair review of the claim some states have enacted laws the prohibit discretionary provision because they are designed to protect the insurance policy.

A beneficiary has just received a claim payment for a life insurance policy. Which of the following is TRUE regarding the federal income tax liability owed?

NO federal income tax is owed on the life insurance proceeds

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

Optional renewability clause

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

Permanent partial disability

Reinstatement Provision

Permits the policy owner to reinstate a policy that has lapsed as long as the policy owner can provide of insurability and pays back all the premiums, outstanding loans, and interest. Most states allow reinstatement up to 3 years after the policy has lapsed

Which of these factors is NOT taken into consideration when determining the cost of a long-term care policy?

Personal Income

Policy Loan Provision

Policies that have cash value also have policy loan and withdrawal provisions. These policies must begin to build cash value after a certain number of years in most states 3 years. These loans with interest cannot exceed the guaranteed cash value or the policy will no longer be in force. The policy owner has the right to the policy's cash value. Policy loans are NOT taxable. Any loans with interest due at the time of death will be deducted from the insured's policy proceeds.

Variable life insurance and Universal life insurance are very similar. Which of these features are held exclusively by variable life insurance?

Policy owner has the right to select the investment which will provide the greatest return

Which of these describes the result of a modified endowment contract that failed to meet the seven pay test?

Pre Death distributions are typically taxable

Andy the annuitant dies before the annuity start date. Which of the following is a TRUE statement?

Premiums paid plus interest earned is returned to the beneficiary

All of the following are functions of an insuring clause EXCEPT

Primarily describes the free-look period

Which of the following is NOT a type of Medicare Advantage Plan?

Social Security disability income (SSDI)

A nonparticipating company is sometimes called an?

Stock insurer

Kristi purchases an annuity that will pay her husband an income for 15 years. If he dies, this income will become payable to their children for the remainder of the period. Kristi has what kind of annuity?

Temporary annuity certain

Which of these statements regarding the annuitant is CORRECT?

The annuitants life expectancy determines the annuity payments

Which of these is NOT a characteristic of the Accelerated death benefit option?

The benefit can be offered as a rider at a specific extra cost or may be at no cost

Incontestable Clause

The clause in life insurance contract that prohibits the insurer from questioning the validity of the contract after a certain period of time has elapsed.

Temporary Annuity Certain

The company guarantees that payments will be made for a specified number of years. Since the income is guaranteed, if the annuitant dies before receiving payments for the full specified period of time, the annuitant's beneficiary will receive the payments for the remaining number of years

Karissa purchases a 10-year level term life insurance policy that has a death benefit of $200,000 which of these statements is true?

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

Legal Actions

The insured cannot take legal action against the company in a claim dispute until 60 days from the time the insured submits proof of loss. Provides the insurer adequate time to research a claim.

An insured under a Major Medical expense plan with a zero deductible and 80/20 coinsurance provision files a $1,000 claim. How much of this claim is the insured responsible for?

The insured is only responsible for 20% of the claim so the insured only pays $200

Insuring Clause

The insurer's basic promise to pay specified benefits to a designated person in the event of a covered loss. The purpose is to specify the scope and limits of the coverage provided.

Under a life insurance policy, what does the insuring clause state?

The insures obligation to pay a death benefit upon an approved death claim

Collateral Assignment

The partial and temporary transfer of rights to another person or entity. Collateral assignments are usually intended for securing a loan with a creditor. Assigned for a debt. If the insured dies, the creditor is entitled to be reimbursed out the benefit proceeds for the amount owed. The beneficiary is entitled to any excess of the policy proceeds.

Grace Period

The period of time policyowners are allowed to pay an overdue premium during which the policy remains in force usually 30 days. If the insured dies during the grace period of a life insurance policy before paying the required annual premium, the beneficiary will receive the face amount of the policy less any required premiums.

Free Look

The policy owner is permitted a certain number of days once the policy is delivered to look over the policy and return it for a refund of all premiums paid.

A life insurance illustration showing future premiums being paid out of non guaranteed value must disclose that

The policy owner may need to resume premium payments depending on actual results

Change of Occupation

The provision also allows the insurer to reduce the maximum benefit payable under the policy if the insured switches to a more hazardous occupation or to reduce the premium rate charged if the insured changes to a less hazardous occupation

Assignment Clause or Provisions

The right to transfer policy rights to another person or entity. The new owner is known as the assignee.

Proof of Loss

The statement that an insured must give an insurance company to show that a loss actually occurred, after the loss occurs, or after the company becomes liable for periodic payments, the claimant has 90 days in which to submit a proof of loss. Insurance companies cannot pay you if there is no proof of loss.

Entire Contract

This includes the actual policy and application. The entire contract provision stipulates that the policy and a copy of the application, along with any riders or amendments, constitute the entire contract. No statements made before the contract was written can be used to alter the contract. Neither the insurer nor the insured may change policy provisions once the policy is in effect without both parties agreeing to it and the change being affixed to the contract.

When an insurance company consistently fails to provide reasonable explanations for the denial of a claim this is called?

Unfair claim settlement

Craig submits a $500 claim for medical expenses. With a past due premium of $100, the insurer pays $400. Which of the Uniform Optional Provisions covers this situation?

Unpaid Premium

A securities license is required for a life insurance producer to sell

Variable life insurance

Absolute Assignment

When the assignee receives full control of the policy and rights to the policy benefits from the current policy owner. The transfer is complete and irrevocable, and the assignee receives full control over the policy and full rights to its benefits.

Loans obtained by a policy-owner against the cash value of a life insurance policy

Would not be treatable as taxable income

The commissioner has the right and duty to

audit insurer financial reports and conduct market studies

A permanent life insurance policy where the policy owner pays premiums for a specified number of years is called an?

limited pay policy

A whole life insurance policy accumulates cash value that becomes

the policy loan which the insured may borrow against

Claim Forms

• It is the company's responsibility to supply a claim form to an insured within 15 days after receiving notice of claim • If the insurance company fails to send out the claim forms within the time period required by the provision, the insured should submit the claim in any form, which must be accepted by the company as adequate proof of loss