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All of the following are true of the Key Person disability income policy EXCEPT

Benefits are considered taxable income to the business. b) Premiums are not deductible to the business. c) It is typically written to cover key employees in the event they become disabled and are unable to work. d) The income may be used to find a replacement for the key employee. Key person disability benefits are not considered taxable income to the business.

What is an important feature of a dental expense insurance plan that is NOT typically found in a medical expense insurance plan?

Dental expense insurance is a form of medical expense health insurance that covers the treatment, care and prevention of dental disease and injury to the insured's teeth. An important feature of a dental insurance plan which is typically not found in a medical expense insurance plan is the inclusion of diagnostic and preventive care (teeth cleaning, fluoride treatment, etc.).

Which of the following is true regarding taxation of dividends in participating policies?

Dividends are not considered to be income for tax purposes, since they are the return of unused premiums. The interest earned on the dividends, however, is subject to taxation as ordinary income.

n an HMO, a Primary Care Physician is called a

Gatekeeper. A subscriber in a HMO plan selects, or is given, a primary care physician. All of that subscribers health care is directed through that physician in terms of what treatment is given, and whether or not the subscriber is to be referred to a specialist for treatment of certain medically necessary procedures.

Which of the following riders would NOT increase the premium for a policyowner?

The impairment rider excludes a specified condition from coverage, therefore, reducing benefits. An insurance company will not charge extra for a rider that reduces benefits.

. Within how many days must an insured notify the insurer of a child's birth and pay any required fees?

xas insurance law specifies the insurer be notified within 31 days of the birth of a dependent child.

Which of the following is NOT covered under a long-term care policy?

Acute care in a hospital A long-term care policy may provide coverage for home health care, adult day care, hospice care or respite care. Acute care is not covered under a long-term care policy

An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?

It is illegal to participate in any boycott, coercion, or intimidation that is intended to restrict fair trade or create a monopoly.

How many consecutive months of coverage (other than in an acute care unit of a hospital) must LTC insurance provide in this state?

Long-term care policies, which can be marketed in the form of individual policies, group policies, or as riders to life insurance policies, provide coverage for individuals who are no longer able to live an independent lifestyle and require living assistance at home or in a nursing home facility. They must provide coverage for at least 12 consecutive months in a setting other than an acute care unit of a hospital.

Which of the following statements is TRUE concerning the Accidental Death Rider?

The Accidental Death Rider pays 2 or 3 times the face amount if death is the result of an accident as defined in the policy and occurs within 90 days of such an accident.

Which of the following does the Insuring Clause NOT specify?

The Insuring Clause lists the insured, the insurance company, what kind of losses are covered, and for how much the losses would be compensated A list of available doctors

Long-term care coverage may be available as any of the following options EXCEPT

a) Endorsement to a health policy. Group long-term care. Individual long-term care. Endorsement to a life policy. Long-term care insurance policies may be purchased on an individual or group basis, or as an endorsement to a life insurance policy.

Which of the following is true regarding Medicare supplement policies?

Each Medicare supplement policy must be at least guaranteed renewable.

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.

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?

The business cannot take a tax deduction for the expense of the premium. However, if the key employee dies, the benefits paid to the business are usually received tax free.

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

The insurer can increase the policy premium on an individual basis. 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.

The insuring clause of a disability policy usually states all of the following EXCEPT

The method of premium payment. The insuring clause, usually on the first page of the policy, is the general statement that defines the insurance agreement and identifies the insured and the insurance company and states what kind of loss (peril) is covered.

Issue age policy premiums increase in response to which of the following factors?

The premiums of issue age policies can only increase in response to an increase in benefits.

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?

$100 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.

In a basic expense policy, after the limits of the basic policy are exhausted, the insured must pay what kind of deductible?

The basic expense policy will provide coverage on a first-dollar basis (no deductible). After the limits of the basic policy are exhausted, the insured must pay a corridor deductible before the major medical coverage will pay benefits. The corridor deductible derives its name from the fact that it is applied between the basic coverage and the major medical coverage.

The Commissioner of Insurance issues a Cease and Desist Order and immediately receives a request for the charges to be reviewed in a hearing. Within what number of days must the hearing be held?

a) 10 If the recipient of a Cease and Desist Order wants to contest or review the charges in court, the request must be made within 30 days of the order. After the Commissioner receives the request, a hearing must occur within 10 days.

All of the following are dividend options EXCEPT

a) Fixed-period installments. b) Accumulated at interest c) Reduction of premium. d) Paid-up additions. Fixed-period installments is a settlement option, and not one of the dividend options.

Which of the following is an example of liquidity in a life insurance contract?

iquidity in life insurance refers to availability of cash to the insured. Some life insurance policies offer cash values that can be borrowed at any time and used for immediate needs.

An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?

mutual Funds not paid out after paying claims and other operating costs are returned to the policyowners in the form of a dividend. If all funds are paid out, no dividends are paid.

Under the Accidental Death and Dismemberment (AD&D) coverage, what type of benefit will be paid to the beneficiary in the event of the insured's accidental death?

Accidental Death and Dismemberment coverage only pays for accidental losses and is thus considered a pure form of accident insurance. The principal sum is paid for accidental death. In case of loss of sight or accidental dismemberment, a percentage of that principal sum will be paid by the policy, often referred to as the capital sum.

An insured is covered by a disability income policy that contains an accidental means clause. The insured exits a bus by jumping down the steps and breaks an ankle. What coverage will apply?

An accidental means clause states that if the insured meant to do whatever caused their injury, no coverage applies since the resulting injury should have been foreseen.

Which two terms are associated directly with the way an annuity is funded?

Annuities are characterized by how they can be paid for: either a single payment (lump sum) or through periodic payments in which the premiums are paid in installments over a period of time. Periodic payment annuities can be either level, in which the annuitant/owner pays a fixed installment, or the payments can be flexible, in which the amount and frequency of each installment varies.

All of the following statements concerning Accidental Death and Dismemberment coverage are correct EXCEPT

Dismemberment benefits are paid for certain disabilities that are presumed to be total and permanent. Accidental death and dismemberment insurance is considered to be limited coverage. c) Death benefits are paid only if death occurs within 24 hours of an accident. Accidental death benefits are paid only if death results from accidental bodily injury as defined in the policy. Under an Accidental Death and Dismemberment insurance policy, the death benefit will be paid if the accidental death occurs within 90 days of the accident, not 24 hours.

A guaranteed renewable disability insurance policy

Guaranteed renewable means that the insured has the right to keep the policy until a specific age; however, while the insurer cannot increase the rates on an individual basis, the insurer can increase the rates for all insureds by class.

Which of the following is NOT covered under Basic Hospital Expense Coverage?

Hospital expense policies cover hospital room and board, and miscellaneous hospital expenses, such as lab and x-ray charges, medicines, use of operating room and supplies, while the insured is confined in a hospital.

A husband and wife both incur expenses that are attributed to a single major medical insurance deductible. Which type of policy do they have?

In a family deductible, expenses for two or more family members can satisfy a common deductible in a given year, regardless of the amount of expenses incurred by other family members.

What is the best way to change an application?

Most companies require that the app be filled out in ink. The agent might make a mistake when filling out the app or the applicant might answer a question incorrectly and want to change it. There are two ways to correct an application. The first and best is to simply start over with a fresh application. If that is not practical, draw a line through the incorrect answer and insert the correct one. The applicant must initial the correct answer.

Which of the following factors determines the amount of each installment paid in a Life Income Option arrangement?

Recipient's life expectancy and amount of principal The recipient's life expectancy and the amount of principal determine the amount of each installment paid in the Life Income Option arrangement.

Which of the following is called a "second-to-die" policy?

Survivorship life (also referred to as "second-to-die" or "last survivor" policy) is much the same as joint life in that it insures two or more lives for a premium that is based on a joint age.

In a survivorship life policy, when does the insurer pay the death benefit?

Survivorship life pays on the last death rather than upon the first death.

. What is the advantage of reinstating a policy instead of applying for a new one?

The reinstatement provision allows the policyowner an opportunity to put a lapsed policy back in force, subject to proving continued insurability. If the policyowner elects to reinstate the policy, as opposed to purchasing a new policy, the reinstated policy is restored to its original status.

Insured Z's health insurance policy year begins in January. His policy contains a carry-over provision. In November, he has a small claim which is less than his deductible. Which of the following is true?

Under the 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 three months may be carried forward to the next year, offsetting the total deductible costs for that year

After filing a claim, an insured tells the insurer that there is more than one insurance policy in force. That insurer sets aside the claim until it hears what the other company will pay. The insurer's action will be classified as

Unfair settlement practices include refusing or delaying a settlement solely because there is other insurance available to partially or entirely satisfy the claim loss. The claimant who has a right to recover from more than one insurer has the right to choose the coverage from which to recover and the order in which payment is to be made.

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.

The term "fixed" in a fixed annuity refers to all of the following EXCEPT

a) Death benefit b) Guaranteed rate of interest c) Equal annuity payments d) Amount and length of payments A fixed annuity is fixed in the sense that it provides a guaranteed minimum rate of interest and income payments that do not vary from one to the next. The company also guarantees the specified dollar amount for each payment and the length of the payout period. Annuities do not provide a death benefit.

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 a $100 per day. How much will the insurance company pay?

$120 a day Most LTC policies will pay the benefit amount in a specific fixed dollar amount per day, regardless of the actual cost of care.

Which of the following is true regarding the insurance amount in a credit life policy?

) Creditor can only insure the debtor for the amount owed. Credit life insurance cannot pay out more than the balance of the debt, so that there is no financial incentive for the death of the insured.

Which of the following would be an example of a limited accident and health insurance policy?

A dread disease policy Limited risk policies cover specific illness or accidents.

Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years?

A policy summary usually includes all the listed information, and must be delivered along with a new policy.

Which of the following is the closest term to an authorized insurer?

Admitted Insurers who meet the state's financial requirements and are approved to transact business in the state are considered authorized or admitted into the state as a legal insurer.

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?

As of the application date If the full premium was submitted with the application and the policy was issued as requested, the policy coverage effective date would generally coincide with the date of application.

HMOs that contract with outside physicians to provide health care service to their subscribers compensate those providers on a

Capitation basis HMOs generally pay the provider a fixed amount per subscriber in exchange for the medical services agreed upon, called a capitation basis.

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?

Consideration is something of value that each party gives to the other. The consideration on the part of the insured is the payment of premium and the representations made in the application.

An agent holds an insurance license in the state of Kansas and would like to transact insurance in Texas. The agent became licensed before written examinations were required. Therefore, the agent has not actually passed any kind of examination. Which of the following is true?

If a currently-licensed, foreign agent obtained an insurance license before written examinations were required, and if the agent seeks to transact insurance in Texas, the written examination requirement will be waived.

The Commissioner of Insurance issues a Cease and Desist Order to an agent. If the agent wishes to contest the charges in court, how many days after the order was issued does the agent have to make the request?

If the recipient of a Cease and Desist Order wants to contest or review the charges in court, the request must be made within 30 days of the order.

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

Increasing Term The Return of Premium Rider is achieved by using increasing term insurance. When added to a whole life policy it provides that at death prior to a given age, not only is the original face amount payable, but also all premiums previously paid are payable to the beneficiary.

When possible, what should insurers strive to eliminate from illustrations?

Insurers will, as often as possible, eliminate the use of footnotes and caveats and define terms used in the illustration in language that would be understood by a typical person within the segment of the public to which the illustration is directed.

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

Limited pay whole life Premium payments will cease at her age 65, but coverage will continue to her death or age 100.

Which of the following programs expands individual public assistance programs for people with insufficient income and resources?

Medicaid is a "needs" tested program administered by the states to provide assistance to persons who are not able to provide for themselves.

During a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant. This describes

Misrepresentation. Making false or misleading statements with the intent to defraud another is misrepresentation.

Which of the following entities has the authority to make changes to an insurance policy?

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.

Which of the following is considered a qualifying event under COBRA?

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. divorce

A participating insurance policy may do which of the following?

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

Which of the following is NOT provided by an HMO?

Reimbursement Traditionally the insurance companies have provided the financing while the doctors and hospitals have provided the care. The HMO concept is unique in that the HMO provides both the financing and the patient care for its members. The HMO provides benefits in the form of services rather than in the form of reimbursement for the services of the physician or hospital.

What is the purpose of settlement options?

Settlement options are methods used to pay the death benefits to a beneficiary upon the insured's death, or to pay the endowment benefit if the insured lives to the endowment date.

What is another name for social security benefits?

Social security benefits are also known as Old Age, Survivors, and Disability Insurance (OASDI).

Premiums paid by self-employed sole proprietors or partners for medical expense insurance are

Sole proprietors and partners may deduct 100% of the cost of a medical expense plan provided to them and their families because they are considered self-employed individuals, not employees.

The legal process that gives the insurer, after payment of a loss, the right to seek recovery from a third party that was responsible for the loss is known as

Subrogation is a provision found in most insurance policies that gives the insurer, after payment of a loss caused by a third party, the insured's rights to recovery against that third party. The insurer's rights are only to the extent of the loss payment.

All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?

Survivorship Life is much the same as joint life in that it insures two or more lives for a premium that is based on a joint age. The major difference is that survivorship life pays on the last death rather than upon the first death. Since the death benefit is not paid until the last death, the joint life expectancy in a sense is extended, resulting in a lower premium than that which is typically charged for joint life.

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?

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.

The Affordable Care Act requires all U.S. citizens and legal residents to have qualifying health care coverage. This is known as

The individual mandate. The Affordable Care Act requires all U.S. citizens and legal residents to have qualifying health care coverage. This is known as the individual mandate. If the individual does not have qualifying health care, a tax penalty will be assessed, based on the individual's taxable income, number of dependents, and joint filing status

The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT

The insured's age at death will not be considered, but the longer the life expectancy of the recipient, the lower the payments will be.

An agent is in the process of replacing the insured's current health insurance policy with a new one. Which of the following would be a proper action?

The old policy should stay in force until the new policy is issued.

What is the benefit of choosing extended term as a nonforfeiture option?

Under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy. The duration of the new term coverage lasts for as long a period as the amount of cash value will purchase. It has the highest amount of insurance protection.

When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to

When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used by the insurer as a single premium to purchase a completely paid up permanent policy that has a reduced face amount from that of the former policy.

Under the ACA, health insurance can no longer be underwritten based on which of the following factors?

When health insurers set their premium rates, they are only permitted to base those rates on 4 standards: geographic rating area, family composition, age, and tobacco use.

Which nonforfeiture option provides coverage for the longest period of time?

Which nonforfeiture option provides coverage for the longest period of time?

A man purchased a $90,000 annuity with a single premium, and began receiving payments 2 months after that. What type of annuity is it?

With an immediate annuity, distribution starts within 1 year of purchase.

Which of the following is NOT true regarding uniform mandatory provisions concerning claims?

a) If the insured is 2 years late in filing a proof of loss, the claim can be denied. An insured must notify the insurer of a claim on forms prescribed by the insurer. c) If the insured is several days late in filing proof of loss form, the claim cannot be denied if the insured can show good cause. d) The insured is customarily required to give notice of claim within 20 days. If forms are not furnished, written proof of the occurrence, nature of the loss, and extent of loss must be submitted to the insurer.

What is NOT a benefit of a POS plan?

a) It allows the employee to use a doctor not covered under the HMO. b) With the Point-Of-Service plan the employees do not have to make a decision between the HMO or PPO plans that lock them in. ----It allows guaranteed acceptance of all applicants. d) It allows the employee to use an HMO provided doctor. A different choice can be made every time a need arises for medical services.

Which of the following is NOT a possible penalty for a violation of the Insurance Code?

a) Payment of restitution b) A cease and desist order A fine up to $100,000 d) An administrative penalty In addition to the suspension or revocation of a license, the Commissioner may impose any of all of the following penalties: issue a cease and desist order; order the payment of an administrative penalty; and order the licensee to make restitution. The penalty for a violation may not exceed $25,000.

Underwriting a group health insurance plan that is paid for by the employer requires all of the following EXCEPT

a) The plan is based on other than individual selection. b) All eligible employees must be covered. c) Coverage for plan participants is uniform. Individual members of the group may select the level of benefits for their own coverage. In group health insurance, all individuals are covered under the master policy for the same coverages.

What type of information is NOT included in a certificate of insurance?

a) The procedures for filing a claim b) The length of coverage The cost the company is paying for monthly premiums d) The policy benefits and exclusions The individuals covered under the 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.

All of the following statements apply to temporary licenses EXCEPT

a) They are valid up to 90 days. They may be renewed. c) They require 40 hours of license training. d) They may be issued without a written examination. Temporary licenses may be granted up to 90 days without examination to applicants who complete a 40 hour training course before applying for the license or within 14 days after applying for the license. A temporary license cannot be renewed.

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then

tax-free Should a key person die, the benefit is treated as a reimbursement to the business for loss of services from that key person.

. If an insurance company offers Medicare supplement policies, it must offer which of the following plans?

A An insurance company must make available to each applicant a policy form offering the basic core benefits (Plan A) if it will offer any Medicare Supplement policies. An insurance company does not have to issue all or any of the plans B through N.

Where in the long-term care policy must the insurer state the renewal provision?

A renewal provision must be captioned and appear on the first page of the pol

An agent explains the details of a life insurance policy to a client. The agent does not realize, however, that the state has recently rewritten two of the provisions. As a result, the agent inadvertently misrepresents the policy, making it more attractive than it really is. What best describes this situation?

Although the agent misrepresented the insurance policy, in order to be charged with conducting a deceptive claim settlement, the agent would have had to misrepresent knowingly and/or chronically.

In a disability policy, the probationary period refers to the time

During which illness-related disabilities are excluded from coverage. The probationary period limits coverage on new policies for certain illness-related conditions.

When a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount

Equal to the original policy for as long a period of time that the cash values will purchase. With this option, the cash value is used as a single premium to purchase the SAME face amount as the original policy for as long a period of time as the cash will buy at the insured's current age.

Which of the following is TRUE regarding the accumulation period of an annuity?

It is a period during which the payments into the annuity grow tax deferred. The "accumulation period" is the period of time over which the annuitant makes payments (premiums) into an annuity. This is the period of time during which the payments earn interest and grow tax deferred.

In which Medicare supplemental policies are the core benefits found?

The benefits in Plan A are considered to be core benefits and must be included in the other types. Therefore, all types contain the core benefits offered by Plan A.

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

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.

All other factors being equal, the least expensive first-year premium payment is found in

Annually renewable term is the purest form of term insurance. The death benefit remains level, but the premium increases each year with the insured's attained age. In decreasing policies, while the face amount decreases, the premium remains constant throughout the life of the contracts. In level term and increasing term policies, the premium also remains level for the term of the policy. Therefore, in the other types of level policies, the first-year premium would not be different from any other year.

A Health insurance policy lapses but is reinstated within an acceptable timeframe. How soon from the reinstatement date will coverage for accidents become effective?

Coverage for accidents is immediate when reinstatement occurs, but coverage for sickness may have a waiting period of about 10 days

Which of the following types of insurance policies is most commonly used in credit life insurance?

Credit insurance is a special type of coverage written to insure the life of the debtor and pay off the balance of a loan in the event of the death of the debtor. It is usually written as decreasing term insurance.

Equity indexed annuities

Equity Indexed Annuities are not securities, but they invest on a relatively aggressive basis to aim for higher returns. Like a fixed annuity the Equity Indexed Annuity has a guaranteed minimum interest rate. The current interest rate that is actually credited is often tied to a familiar index like the Standard and Poor's 500.

An agent is ready to deliver a policy to an applicant but has not yet received payment. Upon delivery, the agent collects the applicant's premium check, answers any questions the applicant may have, and then leaves. What did he forget to do?

If the premium is not collected until the policy is delivered, the agent must receive a statement of good health, which acknowledges that the insured's health status has not changed since the policy was approved.

An insured has a primary group health plan and an excess plan, each covering losses up to $10,000. The insured suffered a loss of $15,000. Disregarding any copayments or deductibles, how much will the excess plan pay?

Once the primary plan has paid its full promised benefit, the insured submits the claim to the secondary, or excess, provider for any additional benefits payable. 5000

Which of the following answers does NOT describe the principal goal of a Preferred Provider Organization?

Provide medical services only from physicians in the network b) Provide the subscriber a choice of physicians c) Provide the subscriber a choice of hospitals d) Provide medical services at a reduced cost A Preferred Provider Organization attempts to provide subscribers with a choice of health care provider while effecting some cost-savings by contracting with providers for such services.

Life income joint and survivor settlement option guarantees

The Life Income Joint and Survivor option guarantees an income for two or more recipients for the duration of their lives. Most contracts stipulate that the surviving partner will receive a reduced payment after the other dies, although some will continue to pay the same amount. There is no guarantee that all the life insurance proceeds will be paid out.

Which of the following individuals is eligible for a Health Savings Account?

To be eligible for a Health Savings Account, an individual must be covered by a High Deductible Health Plan (HDHP), must not be covered by other health insurance except for specific injury, accident, disability, dental care, vision care, or long-term care insurance, must not be eligible for Medicare, and can't be claimed as a dependent on someone else's tax return.

Which of the following best describes fixed-period settlement option?

Under the fixed-period option (also called period certain), a specified period of years is selected, and equal installments are paid to the recipient. Both the principal and interest are liquidated together over the selected period of time.

The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?

With the interest-only option, the insurance company retains the policy proceeds and pays interest on the proceeds to the recipient (beneficiary) at regular intervals.

Which of the following is NOT the consideration in a policy?

Consideration is something of value that is transferred between the two parties to form a legal contract. The application given to a prospective insured

Which of the following best describes what the annuity period is?

The period of time during which accumulated money is converted into income payments The annuity period is the time during which accumulated money is converted into an income stream.

If an HMO policy is cancelled for nonpayment of the amounts due under the contract, how long of a notice must the insurer give the insured?

When a policy is cancelled for nonpayment of premium, the insurer is required to provide a 30-day written notice to the insured

Who bears all of the investment risk in a fixed annuity?

Fixed annuities guarantee a minimum amount of interest to be credited to the purchase payment. Income payments do not vary from one payment to the next. The insurance company can afford to make guarantees because the money of a fixed annuity is placed in the general account of the insurance company, which is part of its investment portfolio. The company makes conservative enough investments to insure a guaranteed rate to the annuity owners.

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?

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. 500

In order for an insured under Medicare Part A to receive benefits for care in a skilled nursing facility, which of the following conditions must be met?

Part A covers the cost of care in a skilled nursing facility as long as the patient was first hospitalized for 3 consecutive days, and the services are medically necessary and only up to amounts deemed.

All of the following are considered unfair or deceptive acts in connection with the sale of insurance EXCEPT

a) Delaying a settlement because there is other insurance that will satisfy any portion of the loss. b) Lacking standards for the investigation of an insured's claims. c) Attempting to settle a claim in which liability is clear. d) Stating facts or provisions in a way that misrepresents the true nature of the policy. Misrepresenting the nature of a policy, delaying a settlement solely because there is a another policy that may pay part of the loss, and lacking standards for the investigation of an insured's claim are considered unfair or deceptive acts.

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

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. Attending physician

The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE?

If the annuitant dies during the accumulation period, the beneficiary receives benefits from the annuity: either the amount paid into the plan or the cash value, whichever is greater.

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.

Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors?

Life Expectancy is an important concept in life settlement contracts. It refers to a calculation based on the average number of months the insured is projected to live due to medical history and mortality factors (an arithmetic mean).

Which of the following special policies covers unusual risks that are NOT normally included under Accidental Death and Dismemberment coverage?

The Special Risk Policy will cover unusual types of risks that are not normally covered under AD&D policies. It covers only the specific hazard or risk identified in the policy, such as a racecar driver test-driving a new car.

Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?

The life income with period certain option guarantees payments for the life of the recipient and also specifies a guaranteed period of continued payments. If the recipient should die during this period, the payments would continue to a designated beneficiary for the remainder of the period.

An HMO subscriber no longer meets plan eligibility requirements. When can the insurer cancel coverage?

HMO coverage can be cancelled for failure to meet eligibility requirements. Coverage may be cancelled immediately.

Who is a third-party owner?

Third-party owner is a legal term used to identify an individual or entity that is not an insured under the contract, but that has a legally enforceable right under it. A policyowner who is not the insured

All of the following are differences between individual and group health insurance EXCEPT

a) In individual policies, the individual selects coverage options, while in a group plan all employees are covered for the same coverage which is chosen by the employer. b) Individual coverage can be written on an occupational or nonoccupational basis; group plans cover only nonoccupational. c) Individual policies are renewable at the option of the insured, while group usually terminates when the individual leaves the group. Individual insurance does not require medical examinations, while group insurance does require medical examinations. In individual coverage, policies are issued based upon individual underwriting. In group plan, everyone is covered for the same coverage and there is no individual underwriting selection.

In insurance, an offer is usually made when

In insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy.

Which of the following statements is NOT correct concerning the COBRA Act of 1985?

It applies only to employers with 20 or more employees that maintain group health insurance plans for employees. COBRA stands for Consolidated Omnibus Budget Reconciliation Act. It covers terminated employees and/or their dependents for up to 36 months after a qualifying event. -----It requires all employers, regardless of the number or age of employees, to provide extended group health coverage.

A health insurance policy that pays a lump sum if the insured suffers a heart attack or stroke is known as

Critical illness. A critical illness policy covers multiple illnesses, such as heart attack, stroke, renal failure, and pays a lump-sum benefit to the insured upon the diagnosis (and survival) of any of the illnesses covered by the policy.

What are the 2 types of Flexible Spending Accounts?

There are 2 types of Flexible Spending Accounts: a Health Care Account for out-of-pocket health care expenses, and a Dependent Care Account to help pay for dependent care expenses which make it possible for an employee and his or her spouse, if applicable, to work.

Credit Life insurance

nsures the life of a debtor Credit insurance is a special type of coverage written to insure the life of the debtor and pay off the balance of a loan in the event of the death of the debtor.

Which of the following provisions is mandatory for health insurance policies?

physical examination and autopsy is a mandatory provision required by law.

Who can make a fully deductible contribution to a traditional IRA?

An individual not covered by an employer-sponsored plan who has earned income Individuals who are not covered by an employer-sponsored plan may deduct the full amount of their IRA contributions regardless of their income level.

Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium?

Automatic premium loan provision is not required, but is commonly added to contracts with a cash value at no additional charge. This is a special type of loan that prevents the unintentional lapse of a policy due to nonpayment of the premium.

A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?

If the payor (usually a parent or guardian) becomes disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age, such as 21.

Which of the following riders is often used in business life insurance policies when the policyowner needs to change the insured under the policy?

Substitute insured rider The substitute insured rider, or change of insured rider, allows the policyowner to change the insured listed under the policy, subject to insurability. This rider is often used in business life insurance policies.

The Insurance Commissioner may examine the affairs of any insurer as often as necessary, but not less frequently than once every

The Insurance Commissioner must examine each insurer at least once every 5 years.

The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE?

The beneficiary will receive the greater of the money paid into the annuity or the cash value. If the annuitant dies during the accumulation period, the beneficiary receives benefits from the annuity: either the amount paid into the plan or the cash value, whichever is greater.

What is the purpose of the buyer's guide?

The buyer's guide provides generic information about life insurance policies and allows the consumer to compare the costs of different policies. The policy summary provides specific information about the issued policy, as well as the insurer's information.

In a Disability Income policy, all of the following are considered presumptive disabilities EXCEPT

The definition of a presumptive disability varies by company, but generally includes a total loss of sight, speech, hearing or the use of any two limbs.

Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option?

The size of each installment determines the length of time that benefits are received under the Fixed Amount settlement option. It logically follows that larger installments translate into shorter benefit periods.

COBRA applies to employers with at least

Under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), any employer with 20 or more employees must extend group health coverage to terminated employees and their families.

All of the following are true regarding insurance policy loans EXCEPT

a) The policy will terminate if the loan plus interest equals or exceeds the cash value of the policy. b) Policyowners can borrow up to the full amount of their whole life policy's cash value. Policy loans can be made on policies that do not accumulate cash value. d) The amount of the outstanding loan and interest will be deducted from the policy proceeds when the insured dies. The policy loan option is only found in policies that contain cash value.

Which of the following is INCORRECT concerning Medicaid?

a) It pays for hospital care, outpatient care, and laboratory and X-ray services. b) The federal government provides about 56 cents for every Medicaid dollar spent. c) It is solely a federally administered program. d) It provides medical assistance to low-income people who cannot otherwise provide for themselves. Medicaid is assistance program for persons with insufficient income and/or resources to pay for health care. States administer the program that is financed by federal and state funds.

Which type of a hospital policy pays a fixed amount each day that the insured is in a hospital?

A Hospital Indemnity policy pays a fixed amount each day the insured is hospitalized, unrelated to medical expenses.

A temporary license holder can receive a commission from a sale made to all of the following EXCEPT

A temporary license holder sale to a family member or an individual the temporary license holder has an employment or business relationship with will not pay commission.

In Texas, the Commissioner of Insurance is

Appointed by the Governor. The Commissioner is appointed to office by the Governor, with the advice and consent of the Senate, for a 2-year period. The Commissioner's appointment ends on February 1 of each odd numbered year.

The equity in an equity index annuity is linked to

Equity indexed annuities are not securities, but they invest on a relatively aggressive basis to aim for higher returns. Like a fixed annuity, the equity indexed annuity has a guaranteed minimum interest rate. The current interest rate that is actually credited is often tied to a familiar index like the Standard and Poor's 500

In long-term care insurance, what type of care is provided with intermediate care?

Intermediate care is nursing and rehabilitative care provided by medical personnel for stable conditions that require assistance on a less frequent basis than skilled care.

Which of the following is correct about a group health insurance policy?

It cannot exclude newborn children from coverage. All individual and group health insurance policies and contracts that provide coverage for a child of the insured must provide coverage for newborn children, from the moment of birth.

In a life settlement contract, whom does the life settlement broker represent?

Life Settlement Broker is a person who, for compensation, solicits, negotiates, or offers to negotiate a life settlement contract. Life settlement brokers represent only the policyowners.

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as

Life insurance can provide the funds necessary for the survivors of the insured to be able to maintain their lifestyle in the event of the insured's death. This is known as survivor protection.

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report

Must be informed of the source of the report. Under the Fair Credit Reporting Act, if an insurance policy is declined or modified because of information contained in a consumer report, the consumer must be advised and provided with the name and address of the reporting agency.

What is the major difference between a stock company and a mutual company?

Mutual companies are owned by policyholders, while stock companies are owned by stockholders

The automatic premium loan provision is activated at the end of the

Provided there is sufficient cash value in the policy, this provision triggers a loan at the end of the grace period to keep a policy in force.

twisting

Twisting is an illegal act, in which an agent misrepresents the terms of an insurance or annuities contract or draws incomplete comparisons, in a way that would compel the insured to surrender the contract for the new one.

All of the following statements about equity index annuities are correct EXCEPT

a) The annuitant receives a fixed amount of return.%%% b) They have a guaranteed minimum interest rate. c) The interest rate is tied to an index such as the Standard & Poor's 500. d) They invest on a more aggressive basis aiming for higher returns. Equity indexed annuities have a guaranteed minimum interest rate, so while they are aggressive in nature, the annuitant will not have to worry about receiving less than what the minimum interest rate would yield.

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT

a) The employer pays a bonus to a selected employee to fund the policy. b) It is considered a nonqualified employee benefit. c) The policy is owned by the company.kdfh d) Any type of insurance policy may be used. The policy is owned by the employee.