Guarantee Exam
part c
-Medicare Advantage members do not need to purchase a Medicare supplement -provides managed care
who has authority to make changes to an existing policy
only an executive officer of the company
Which of the following will NOT be included in the buyer's guide?
specific information about the policy
two individuals of the same age, health status, and life expectancy apply for individual insurance coverage. When policies are issued by the same insurer, the premium rates are different based on the insured's race. What practice does this describe?
unfair discrimination
All of the following health insurance disability benefits are income tax free EXCEPT
key-person disability benefits
Which statement best describes agreement as it relates to insurance contracts?
one party accepts the exact terms of the other party's offer
The elimination period in a disability income policy is better known as
The period of time an insured must wait after the onset of an illness or injury before benefits begin
When comparing a Joint Life Policy in 2 individual life policies of the same amount on the same insureds, which condition is true?
joint life has a lower premium than the total of the two individual policies
Buy-Sell Agreement
a legal agreement by an attorney specifies how business will pas between owners when one dies or becomes disables provide a large lump-sum benefit to buy out the business rather than monthly benefits
Because of an injury, an insured has been unable to work for 7 months. When his life insurance premium came due, he was unable to pay, yet the policy remained in force. The policy includes
waiver of premium rider *waiver of premium rider causes the insurer to waive future premiums if the premium payor is disabled
Point of Service (POS)
- combination of HMO and PPO plans -the employees do not have to be locked into one plan or make a choice between the two plans - a different choice can be made every time a need arises for medical services - "open-ended HMOs"
which of the following is a permissible reason for an insurance company to contest payment of a claim based on statements in the application?
the application contains material misstatements
Who does spendthrift clause in a life insurance policy protect?
the beneficiary
Which of the following is true regarding taxation of accelerated benefits paid under a life insurance policy?
they are received tax free
every Medicare supplement policy must have a Notice to Buyer on the front page that states which of the following
This policy may not cover all of your medical expenses
A retail shop owner is insured under a business overhead expense policy that pays a maximum monthly benefit of $2,500. His actual monthly expenses are $3,000. If the owner becomes disabled, the monthly benefit payable under his policy will be
$2,500
If the Interest settlement option is selected, then:
the interest paid is subject to taxes
what does endodontics cover
root canals
how many excess continuing educational credit hours may a licensee carry forward from one licensing period to the next?
24
if a business want s to make sure it will be able to cover losses due to the disabilty of its top emplooyee, the busienss should get which type of insurance?
BOE
the benefits for group disability plans are based on
a % of the worker's income
which of the following could reduce the amount of the death benefit
failure to pay a policy loan
which of the following bears the investment risk in a variable insurance policy
policyowner
guaranteeing future dividends is
misrepresentation
what includes bridgework
prosthodontics
If a terminated employee dies within the grace period of his or her employer provided group life policy without converting, then:
the full death benefit will be paid to beneficiary
Entire contract includes all of the following except
a buyer's guide * entire contract: policy, a copy of application, any riders or amendments
activities of daily living in LTC policies
eating and dressing
All of the following information needs to be included on an application for life insurance except:
health insurance polices in force
all of the following are true of annually renewable term insurance EXCEPT
proof of insurability must be provided at each renewal
in contrasting stock insurers with mutual insurers, which statements is true?
stock insurers are owned by the shareholders and issue nonparticipating policies
An Equity Indexed Annuity will grow based upon
stock market increase in value
all of the following must sign an application for health insurance except the
insurer
What does the term reciprocity mean?
a situation in which two parties provide the same help or advantages to each other
when life insurance proceeds are used to pay inheritance taxes and federal estate taxes, it is known as:
estate conservation
if agent follows terms and rules of contract, he exercises
express authority
What does an annuity protect the annuitant against?
living longer than expected
All have in common is: PPO, HMO, POP
types of providers and plans
All of the following are reasons for group insurance termination for dependents EXCEPT
the dependent reaches age 21
Darryl is involved in auto accident with another motorist. Darryl was at fault. Darryl was injured and hospitalized for 2 months. The other motorist suffered $15,000 of medical expense as a result of the accident. Darryl's disability Income Policy will pay
Darryl's loss of income
medical expense claims often paid on a:
fee-for-service basis
Who can request changes in premium payments, face value, loans, and policy plans?
policyowner
Binders are used in:
property and casualty insurance
Term used to be called Medicare + Choice Plans
Medicare Advantage Plans
A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will
Continue to increase *The new policy continues to build up it's own cash value and will remain in force until the insured's death or maturity
Annuities are often used as:
Life insurance settlement options
An insurer wants to create a brochure to advertise its company, so a professional advertiser is hired to create and print the material. Several months after the publication of the brochure, a client threatens to sue the insurer for false advertising b/c of misleading information included in the brochure. Who is legally responsible for the false material?
The insurer
What is the minimum age to apply for a resident producer's license in this state?
18
When an agent delivered an insurance policy to the insured, he collected the initial premium, as well as a document verifying that the insured had not had any injuries or illness since the application date. What is this document called
insuring agreement
under the mandatory uniform provision "Notice of Claim" written notice of a claim must be submitted to the insurer within what time parameters
20 days
If a producer changes his or her residential address, the Insurance Department must be notified of the change within how many days?
30
Dennis has a cavity filled. His insurer covers his claim up to a predetermined amount, which is indicated by a fee schedule. Which type of plan does he have?
nonscheduled
Which of the following is NOT an indicator of a competent party?
business profession *competent parties to contract must be legal age, be mentally competent, have a clear understanding of the contract, and must not be under the influence of drugs or alcohol
how much can a specified (dread) disease policy pay for?
$3,500
part b
-covers doctors -partially funded by premiums, -premiums, coinsurance, and deductible set annually
Health Maintenance Organization (HMO)
A prepaid medical service plan in which specified medical service providers contract with the HMO to provide services. The focus of the HMO is preventive medicine.
All of the following is true regarding a producer's fiduciary responsibilities EXCEPT
NOT TRUE: Producers may commingle personal funds with company funds.
two most common qualified individual retirement plans:
Trad. IRA & Roth IRAs
Chronically ill
a person is unable to perform at LEAST 2 activities of daily living that requires supervision
What covers treatment of periodontics
gum problems
Which of the following best describes pure life annuity?
It provides the highest monthly benefits. The pure life annuity, also known as Life Only or Straight Life, pays the most since it only guarantees to pay for the rest of one's life without a minimum guarantee
what is the latest point at which an Outline of Coverage may be presented?
at the time of policy delivery
an IRA contribution may be made from which of the following
cash
In an employer group health insurance plan, the covered employee receives
certificate of insurance
An insured and his spouse recently had a child. Which of the following riders would allow the couple to insure the child for a limited period of time at a specified amount?
children term riders
A lender who conditions approval of a loan on the condition that the borrower purchase insurance from that lended may be guilty of
coercion
Which of the following is NOT a Medicaid qualifer?
income level
prepaid plan
provide medical and hospital benefits in the form of service rather than dollars -providers compensated regularly whether or not they provide service, but no additional compensation is provided when services is rendered
NOT true regarding term health coverage
the owner may renew the policy for a specified time
Which of the following statements concerning the Medical Information Bureau is correct?
The medical information bureau assists underwriters in evaluating and classifying risks.
At what point would an automatic premium loan be generated?
following the grace period
Among people in the same class and life expectancy, which of the following factors can be used to influence premium rates?
occupation
On a 20 pay life
the cash value = face amount at maturity
A specified disease policy would cover?
cancer or heart disease
what type of risk is likely to receive a premium discount?
preferred risk
If an employee elects to continue group coverage under COBRA, then:
the employee may still convert to an individual policy without the physical exam when COBRA coverage ends
The OBRA requires that large group health plans with 100 employees or more must provide primary coverage for nonretired, disabled individuals under what maximum age?
65
Adverse Selection
The tendency of risks with higher probability of loss to purchase and maintain insurance more often than the risks who present lower probability.
When agents, brokers, or solicitors handle premiums for an insurer, they are acting in which capacity
as a fiduciary
Which of the following statements is true of a combination dental plan
it is a combination of a scheduled and nonscheduled dental plan
Which of the following is true regarding pure life annuity settlement option?
it provides the highest monthly benefit
a rated policy is one issued to a ...
substandard risk with dangerous hobbies or health problems
Rollover
tax free distribution of cash from one retirement plan to another -IRA rollovers must be completed within60 days from the time the money is taken out of the first plan
an employee may enroll in an employer's group health plan when he/she initially becomes eligible without proof of insurability. Should he/she enroll at another time, evidence of insurability is required EXCEPT at
the annual open enrollment period
An agent who knowingly misrepresents material information for the purpose of inducing an insured to lapse, forfeit, change or surrender a life insurance policy or annuity has committed an illegal practice known as
twisting
Which health insurance provision ensures that multiple policies that provide the same benefits on an expense-incurred basis pay a proportionate share of a claim?
insurance with Other Insurers
An insurance company that is owned by the policyholders is called a
mutual insurer
the reduction of premium option uses the dividend to reduce
next year's premium
A person holds a temporary producer's license because he is the designee of a producer who has been called to active military duty. What is the maximum amount of time that will license will last?
180 days
When filling out an application for insurance, the applicant makes a mistake. If a fresh application were not available, what could the applicant do to properly correct the mistake?
Nothing. A fresh application must be obtained.
Where are premiums from fixed annuities invested?
general account
Under HIPAA portability, which of the following are NOT protected under required benefits?
groups of one or more
an insured has an individual disability income policy with a 30 day elimination period. He becomes disabled on June 1st for 15 days. When will he collect on his disability income payments?
he won't collect anything
Common Disaster Clause
-presumed primary beneficiary died first, so proceeds paid to either contingent beneficiary or insured's death
Under what circumstances will the contingent beneficiary receive the death benefit?
If the primary beneficiary dies before the insured
If an insured dies, and it is discovered that the insured misstated his/her age or gender, the life of the insurance company
adjust the back premium for the proper age or gender
if an insured dies, and is discovered that the insured misstated age or gender, the life insurance company will
adjust the db to what the premium would have purchased at the actual age or gender
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?
extended term
not true about deferred annuity:
income payments begin within one year from date of purchase *deferred annuity payments begin after one year after contract purchased
What is the maximum dollar limit that applies to rollovers from one qualified plan to another
$0; there is none
Managed care includes medical services provided by
HMO, PPOs, POS
Family Term Rider
Spouse Term + Children's Term provides level term life insurance benefits covering the spouse and all of the children in the family
example of physical hazard
diabetes
BOE policy
reimburses small business owners for overhead expenses while business owner is totally disabled
the contingent benefit on lapse will be triggered when an insurer increases an insured's premium rates to a certain level, and the policy subsequently lapses within
120 days
A core Medicare supplement policy (plan a) will cover all of the following EXCEPT
Part A Deductible
A producer's licnese must be renewed
every 2 years
An applicant may challenge information discovered as a result of an investigative consumer report under which of the following Acts?
fair credit reporting act
Can whole life be converted term?
no, but term can be converted to whole
considering the terms of liquidity, how would the policyowner use today's cash values in a life insurance policy?
use it for emergency expenses
When an insured reinstated his major medical policy, he was involved in an accident that required hospitalization. When would this accident be covered upon reinstatement of the policy?
immeidately
what is covered under restorative care
filling, inlays, and crowns
life vs. viatical settlements
viatical settlements are still used for persons who are terminally ill, most states regulate policies that are sold to a 3rd party for compensation under the term Life Settlements -the seller (policyowner) could have a life expectances of more than one year
When an insured terminates membership in the insured group, the insured can convert to
whole life w/out proof of insurability
A life insurance beneficiary who elects to take proceeds payable upon death of the insured over a period of time has selected:
fixed period settlement option
Which of the following actions does NOT constitute false advertising?
stating that dividends are not guaranteed
Treatment of gum disease is known as
periodontics
survivorship life insurance commonly used in:
estate planning so death benefit of the policy can be sued to pay estate taxes when due
Major Medical Insurance (Indemnity Plans)
- no prepaids -high maiximum limits -blanket coverage -deductible paid in front; annually -cost shared after meeting deductible
Postpartum Coverage
-at least one home health care visit w/in 48 hours after discharge when discharge occurs earlier than prescribed times -coverage of minimum of 48 hours of inpatient care following a normal vaginal delivery and 96 hours of inpatient care following a delivery
how many days is the free-look period in this state
10
How long is a newborn covered notification to the insurer?
31 days
Preferred Provider Organization (PPO)
An organization of medical professionals and hospitals who provide services to an insurance company's clients for a set fee.
While completing a life insurance application the applicant realizes that she should have answered an earlier question differently. What should the agent do to make the necessary change?
Cross out the incorrect information, write in the correct answer, and have the applicant initial the change
In a variable life insurance policy, all of the following assets are held in the insurance company's general account EXCEPT
Face amount reserves
Insureds have the right to do which of the following if they have NOT received the proper claim forms within 15 days of their notice to the insurer of a covered loss under a major medical policy?
Submit the description in their own words on a plain sheet of paper
All of the following are characteristics of group health insurance plans EXCEPT
The parties that hold a group health insurance contract are the employees and the employer
what is a life settlement contract
a contract between the life insurance policyowner and a 3rd party
Viatical Settlement
allow someone living with a life-threatening condition to sell their existing life insurance policy & use the proceeds when they are most needed, before their death - used for the terminally ill
A loss resulting from which of the following would qualify for the accidental death rider coverage?
an automobile accident
Which of the following is NOT an example of the company's location of incorporation?
authorized
During policy solicitation, an insurer exaggerates the financial condition of one its competitors, and makes it sounds worse that it is. This is an example of an unfair trade practices of
defamation
during policy solicitation, an insurer exaggerates financial condition of one of its competitors, and makes sound worse that it is. This is an example of
defamation
all of the following are features of a health insurance plan purchased on the health insurance marketplace except
dollar limits on essential benefits
All statements are true an Ordinary (Straight) Life policy EXCEPT
false: it does not have a guaranteed death benefit true: builds cash value, funded by level premium, if insured lives to age 100, the policy matures, and face amount is paid to the insured
To purchase insurance, the policyowner must face the possibility of losing money or something of value in the event of loss. What is this concept called.
insruable interest
Which of the following terms refers to solicitation, negotiation, effectuation or advising related to an insurance contract?
insurable transaction
Which of the following is the primary source of information that an insurer uses to evaluate an insured's risk for life insurance?
insurance application
What type of settlement should be selected for estate conservation purposes?
interest only settlement option
Which of the following is provided by skilled medical personnel to those who need occasional medical assistance or rehabilitative care?
intermediate care
if it appears that a person has violated an insurance law, the Commissioner would
issue a cease and desist order
term used for the cause of a loss
peril
Annuities Certain limit the amount paid by the annuity to a certain fixed
period or fixed amount
Which of the following must be listed by producers during replacement?
policies still in force and policies sold during the past 5 years
What is the difference between a straight life policy and a 20-pay whole life policy?
premium payment period
All of the following are true about key-person insurance except
premiums are not tax deductible as a business expense
the purpose of the fair credit reporting act is to
protect consumers against the circulation of inaccurate or obsolete personal or financial information
An annuity would normally be purchased by an individual who wants to
provide income for retirement
an insured purchased a health insurance policy with a renewability clause that states the policy is "guaranteed renewable." This means that as long as the required premiums are paid, the policy will continue until the insured
reaches age 65
What type of insurer uses a formal sharing agreement?
reciprocal insurer *When insurance is obtained via a reciprocal insurer, the insureds are sharing the risk of loss with other subscribers of that reciprocal
which of the following is a requirement for replacement of health policies?
the old policy must stay in force until the new policy is issued
All of the following are true of the survivorship life policy except
the premium is based on the age of each income
Which of the following is True regarding premium in a 10-year level premium policy?
the premium will remain level for 10 years
What effect will the long-term care (LTC) rider have on the death benefit of a life insurance policy if LTC benefits were paid to the insured?
reduce the DB
If an insured purchases an insurance policy with a large deductible, what risk management technique is the insured exercising?
retention
When acting as a field underwriter, a producer is
seeking credible information about an applicant for health insurance
If an annuity has a guaranteed minimum interest rate, this means
the interest rate will never drop below the guaranteed minimum
Benefits for a Disability Income policy are based on which of the following?
-based upon an insured's actual earnings received from their occupation and maximum benefits are generally limited to a percentage of their gross salary or wages. - Most long-term disability income policies provide benefits until the insured reaches the age of 65.
According to the Time Limit on Certain Defenses provision, no statement or misstatement (except fraudulent misstatements) made in the application at the time of issue will be used to deny a claim after the policy has been in force for
3 years
An isnrued's hospital policy states taht it will pay him a flat fee of $75 per day for each day he is hospitalized. The policy pay benefits on wht basis
indeminty
what happens to the copy of the application for health insurance once the policy is issued
it becomes part of the entire contract
All of the following are true regarded key person disability income insurance EXCEPT
Key person disability income pays periodic income benefits to business when a key employee is disabled
max civil penalty of the insurance code:
$5,000
Children's Term Rider
Allows children of the insured (natural, adopted, or stepchildren) to be added to coverage for a limited period of time for a specified amount. term insurance & usually expires when minor is 18 or 21 provide minor option of converting to permanent policy w/out evidence of insurability based on an average number of children provide temporary life insurance coverage on all children of the family for one premium
Refusing to pay claims without conducting a reasonable investigation is an example of what?
An unfair claims practice
Criteria to convert from group to individual policy:
- 18 months of continuous creditable health coverage -covered under a group plan in most recent insurance -used up any COBRA or state continuation coverage -not eligible for Medicare or Medicaid -not have any other health insurance -apply for individual health insurance w/in 63 days of losing prior coverage
Medicare part a
-provides hospital insurance - only pays up to 190 days of inpatient psychiatric hospital service during beneficiary's lifetime - covers a skilled nursing facility up to 100 days in each benefit pd -covers skilled nursing facility care after a 3-day minimum hospital stay, but not custodial care in a nursing home - covers hospitals
In a viatical settlement, a person is considered "terminally ill" if he is not expected to live longer than
24 months
an agent's first-year commission CANNOT exceed what percentage of the renewal commission for servicing a Medicare Supplement policy in its second year?
200%
Which of the following best describes a rebate?
A producer returning part of her commission to her client, as an inducement to buy
Which of the following elements of an insurance contract requires payment of premium?
Consideration
An insured's flexible premium is invested into a separate account. What type of insurance product did he purchase?
variable universal life
A person has a history of DUIs. To his insurer, this presents what type of hazard?
morale
The owner of a deferred annuity pays $100 in premium one month, and$130 the next month. Which of the following terms best describes this premium payment arrangement?
flexible premium
Which of the following employee benefits essentially provides the employee with a wage increase and directs that wage increase to be spent on a life insurance policy?
executive bonus
if individual violates provisions of Fair Credit Reporting act, the max penalty is:
$2,500
In health insurance, what is coinsurance?
The % of the cost of service that the insured and insurer share
A stock insurer is defined as an insurer
owned by stockholders
examples of third party policy ownership
- key person & partnership insurance - a policy written on life of a spouse or minor child
An individual has a $200,000 convertible term life insurance policy. If he chooses, he can
Convert to a whole life policy for the same face amount without proof of insurability
which source of underwriting information includes information on applicant's character, general reputation, personal habits, and mode of living?
Investigative consumer report
answers to questions in an insurance application are called representations and, as such, they are
believed to be true to the best of the applicant's knowledge
If a person qualifies for Social Security disability benefits after the 5 months elimination period, when will benefits begin?
benefits begin at the beginning of the 6th month and are not retroactive to the beginning of the disabilty
An adjustable life policy can assume the form of
either term or permanent insurance
Which of the following types of insurance products would be appropriate for an individual with a low income and high insurance needs
term insurance
whose responsibility is to ensure that the application for health insurance is complete and accurate?
the agent's
Who determines if particular group of employees can be excluded from group health coverage?
the employer
Medicare for individuals except
those who low income and low assets
fee-for-service
where providers receive a payment for billed charges for each service provided
which type of policies perform function of cash accumulation
whole life
If the policy summary for a life insurance policy is not given when the application is taken, when must the policy summary be given to the policyowner?
within 20 days fo polcy issue
An agent tells an insured that if he replaces his current insurance policy with a newer one, his dividends will be higher and his premiums will be slightly lower. The policy, however, would not offer either one of these things. What type of misrepresentation is being committed?
Replacement
under the conditions for payment form, an insurer require all of the following to be met in order to pay accelerated death benefits EXCEPT
a probationary period of no more than one year
HMO members pay a small fee when they see their primary care physician. This fee is called a
coinsurance
which of the following is not a personal use of life insurance?
an individual buys insurance to fund a buy-sell agreement
an elimination (waiting) period may NOT have to be satisfied for a disability in which of the following?
An insured suffers a relapse of a prior disability within 6 months of the initial covered disability
Under the Conditions for Payment Form, an insurer may require all of the following conditions to be met in order to pay accelerated death benefits EXCEPT
a probationary period of no more than one year
Which of the following are characteristics of term life insurance?
Coverage to age 100, cash value, and high premiums
In the event an insurance policy does not satisfy the regulatory standards of an insured's home state, which of the following provisions would amend the policy to meet the state standards?
conformity with state statutes
The policyowner specifies that interest only will be paid annually to the surviving spouse, with the principal to be paid to their children when they reach a certain age or at the death of the surviving spouse. This is an example of ________.
interest only option *when the insurance company retains the policy proceeds & pays the interest on the proceeds to the recipient (beneficiary) at regular intervals
if the interest ONLY settlement option is selected, then:
interest payments (taxable) will vary, but beneficiary may withdraw the principal at any time
How does insurance distribute the financial consequences of individual losses?
it transfers the risk to all persons insured
How are premiums determined?
based on the mortality (death) rate + company expenses - interest earned on company investments
Which of the following is guaranteed under a variable whole life insurance policy?
minimum death benefit
Who makes up the Medical Information Bureau?
insurance companies
An insurer can decide not to renew an optionally renewable policy
on premium due dates
If an insured decides to reduce the coinsurance amount on her major medical insurance, what can the insured expect?
a higher deductible
Which of the following is true regarding a joint life annuity?
The payments stop at the first death
A disability income policy has a waiting period of 7 days. If the insured is disabled for 15 days, how many days of benefits will the policy pay?
15 days
To be acceptable to insurance companies, what percentage of eligible employees must be enrolled under a contributory group health insurance plan?
75%
A married couple purchase a life insurance policy on their newborn baby. They are concerned about what would happen to the policy if wither one of them were unable to continue making the premium payments due to death or disability. Which policy rider should their agent recommend?
payor benefit
if a life insurance company uses HIV testing as a part of its underwriting, when must an applicant be notified of the procedure?
prior to performance of the test
What is it called when a doctor accepts the Medicare approved amount
consent
If an individual willfully violates provision of the Fair Credit Reporting Act, what is the maximum civil penalty?
$5,000
Which of the following would be required to become licensed as an insurance producer?
a customer service representative who solicits no more than one policy a year
Which of the following best describes the difference between joint life and joint survivor annuity payment options?
in joint life option, the benefits stop after the 1st death
disability benefits are calculated based on
the application contains material misstatements
Which of the following provisions gives an employee the right to exchange group insurance for an individual policy within a certain number of days from termination of employment?
conversion policy
Which risk classification is representative of the majority of people in a certain age group and with similar lifestyles?
standard
What is the only difference between blanket insurance and group health insurance?
Only difference is that the insured members in Blanket Policy are not named. Policy is designed for groups where the membership changes frequently.
which of the following types of insurance is investment based, has a level fixed premium, and a nonguaranteed cash value
variable whole life *combo of decreasing term and investment fund
An employee dies having 6 quarters of coverage during the previous 13 quarter period. What status of coverage does the employee have under social security?
currently insured *also known as partially insured; qualify for certain benefits
In the event one of two business partners becomes disabled and unable to work, what type of arrangement would help the nondisabled partner to buy the disabled partner's business interest?
disability buy-sell *typically written to cover partners or corporate officers of a closely held business. The policies provides funds for the business to purchase the business interest of a disabled partner
Regarding health insurance, all of the following are tax-deductible EXCEPT
employer paid group Long-Term Care
Premiums collected on behalf of the insurance company by an agent will be held in what capacity?
fiduciary
An insured wants to cancel her health insurance policy. Which portion of the contract would explain cancellation rights?
renewability provision *included in each health insurance contract and outlines both the insurer's and insured's right to cancel or renew coverage
which of the following policies would not offer a policy loan option?
term life
a married couple wants to include the entire family in their whole life policy under one rider. Which of the following riders will help them achieve that goal?
family term
during the accumulation phase of a fixed annuity, the annuitant's interest rate is based on a minimum rate as specified in the contract, or the current interest rate, whichever is
higher
who determines if a particular group of employees can be excluded from a group health coverage?
the employer
How long is the grace period for an individual life policy?
1 month
When life insurance proceeds are used to pay inheritance taxes and federal estate taxes, it is known as
life settlement
a trustee-to-trustee rollover eliminates...
the withholding tax requirement
Key Person Disability
• Covers the potential loss of business income and the expense of hiring and training a replacement for a key person • Business owns the contract, pays premium, and is the beneficiary
The needs approach to calculating the amount of life insurance needed is based on
predicted needs of a family after the premature death of the insured
Which source of underwriting information includes information on an applicant's character, gender reputation, personal habits, and mode of living?
Agent's Report
Once an insurer receives a claim, within how many days must the insurer provide claim forms to the insured?
10 working days
Which of the following would be TRUE of both the fixed-period and fixed-amount settlement options?
Both guarantee that the principal and interest will be fully paid out
A licensee who has moved to PA from out of state must provide which of the following before becoming licensed as a resident in this state
proof of licensing or a letter of clearance from the previous home state
A viatical settlement is a transaction outside the life insurance company where the owner sells the life insurance policy for which of the following?
The face amount of the policy
Not excluded from coverage in individual health insurance policy:
mental illness
dividends received on participating life insurance polices are
not taxable b/c they are return on unused premium
which of the following Medicare parts provide prescription drugs benefits?
part d
when is someone fully insured?
-receive Social Security retirement, premium-free Medicare Part A, and survivor benefits -have 40 quarters of coverage
An individual is approaching retirement age and is concerned about having proper coverage should he have to be placed in a LTC facility. His agent told him that LTC policies would provide necessary coverage at all of the following levels EXCEPT
acute *acute care is provided by Medical Insurance
Your client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this policyowner select?
joint and survivor ; payments continue until the death of the last beneficiary
which statement best describes agreement as it relates to insurance contracts?
one party accepts the exact terms of the other party's offer
Which of the following terms relates to disability income insurance?
residual benefit
An underwriter is reviewing an applicant with an extensive medical history. Which of the following would give the underwriter a better understanding of how the applicant has been treated for various illnesses.
Attending physcian's statement
Which of the following individuals would be a likely candidate to purchase a deferred annuity?
someone who wants to grow retirement funds tax deferred
Which of the following best defines the unfair trade practice of rebating?
offering an inducement of something of value not specified in the policy
An insurer must notify the consumer in writing that an investigative consumer report has been requested, within how many days of the initial request?
3 days
If a retirement plan or annuity is "qualified", this means
it satisfies IRS requirements for favorable tax treatment
The OBRA requires
large group health plans must provide primary coverage for disabled individuals under age 65 who are not retired
For which of the following reasons may group coverage NOT be discontinued?
move outside of the service area
An employee is insured by a group major medical plan that is provided through her employer. The employer contributes 75% of the premium and the employee contributes the remaining 25%. If the insured received a benefit from this policy in the amount of $1000, how much of this benefit would be taxed as income
$0
The Commissioner of Insurance is appointed by which authority?
governor
Which of the following is correct statement about annuities
often used as life insurance settlemetns liquidate an estate over a perod of time single premium immediate annuities often purchased with a lump sum upon retirement deferred annuities purchased by making periodic payments over a period of time waive surrender charges for death or disability equity indexed annuities have little puchasing power (inflation)risk sicne rate of return is based on stock fixed annuties pay interest rate, backed by insurer's general account, gurantee a fixed rate of return IRA may be funded with annuities deferred anuuites may be used to fund IRA
An agent received some inaccurate information, and, as a result, he publicly misstated the financial condition of another entity 12 times over a period of 3 months. IF this face is revealed, the agent may face a fine up to
$10,000
An insurance agent visits a potential client and explains various types of policies. The customer displays a lack of interest, so the agent guarantees higher dividends than he knows would be possible. Which term describes what the agent has done?
misrepresenation
What type of an interest rate is guaranteed in universal life policies?
current interest rate?
An individual acted as an exclusive general agent even though she was not licensed to do so. Since this offense occurred over a period of 60 days., what is the maximum penalty she faces?
$60,000 and a third degree misdemeanor fine of up to 1000 for each day of offense
coverage can NEVER begin unless...
the premium has been paid.
What is the purpose of the surrender charge in a deferred annuity?
to compensate the company for loss of investment value
Why was the human life value approach created?
to establish what a family would lose in income upon the death of the sol or chief income provider
An agent tells an insured that if he replaces his current insurance policy with anew one, his dividends will be higher and his premiums will be slightly lower. The policy, however, would not offer either one of these things. What type of misrepresentation is being committed?
twisting
define estate conservation
when life insurance used to pay estate taxes
An employee becomes ineligible for group coverage b/c of termination of employment, must exercise extension of benefits under COBRA within
within 60 days
Spendthirft Clause
- A clause that prevents the debtors of a beneficiary from collecting the benefits before he/she receives them - beneficiary does not have the right to select a different settlement option and not allowed to assign or borrow any of the proceeds
part d
-must be enrolled in medicare Part a or in pts a and B -prescription drug insurance
A person holds a temporary producer's license b/c he is the designee of a producer who has been called to active military duty. What is the maximum amount of time that the license will last?
180 days
In the event of lapse, long term care insurance policies should include a provision that provides for reinstatement of coverage. This option is available within
5 months of termination
which provision may be added to a permanent life policy, at no cost, that insures that the policy will not lapse so long as there is cash value?
Automatic Premium Loan option
all of the following are used to keep costs down for dental insurance EXCEPT
FALSE: limitation on the # of teeth that may be treated in a given year * there is no limitation on the number of teeth that may be treated
variable life insurance is regulated by all of the following entities except
SEC Registration
Which of the following best defines the Probationary Period in group health policies?
a specified period of time that a person joining a group has to wait before becoming eligible for coverage
only 20 days after policy issue, insured injured from rock climbing:
both deductible and coinsurance payments will be required
a limited health insurance policy that will pay a lump sum to an insured diagnosed with a heart attack, stroke, or renal failure is known as
critical illness insurance
An applicant completes an application for a disability policy and pays the initial premium. The producer gives the applicant a conditional receipt. Insurance coverage for the applicant will be effective when
the insurance company accepts the risk
Who is the annuity owner?
the insurer
A new homebuyer wants to purchase a life insurance policy. that would protect his family against losing the home, should he die before the mortgage was paid. The most inexpensive type of policy that would accomplish this need would be
decreasing term * decreasing terms means the face amount decreases at the same rate as the principal amount of the mortgage
all of the following are true regarding the federal fair credit reporting act except
false: reports may be sent to anyone who requests one TRUE: a). insurers are not required to give customers a copy of the report b). It applies to credit reports ordered in connection with insurance, banking, and employment c).the customer must be notified if adverse action is taken as a result of a report
Agents (producers) are also known as
field underwriters
an annuity owner receives the same guaranteed payment every month. What type of annuity is it?
fixed *fixed annuities guarantees minimum amount of interest
J is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did J choose?
fixed amount
The needs approach does not consider:
future earnings
slipper floors, reckless driving, or providing false information are examples of
hazards
all of the following are features of catastrophic plans EXCEPT
high premiums
The Fair Credit Reporting Act, all of the following statements are true except
if an applicant is declined for an insurance policy, he or she has no right to know what was in the report
according to the fair credit reporting act, not true:
if applicant declined for insurance policy, she has not right to know what is in the report
With a conditionally renewable policy, the premiums are more likely to be
increased
which rider provides payment of part of the policy death benefit if insured is diagnosed with terminal illness that will result in death within 2 years
living needs rider
what is the purpose of the gatekeeper in an HMO?
making sure that patients do not go to physicians outside of the HMO's region
Agents may be found guilty of defamation if they make a false statement that is intended to?
maliciously criticize another insurance company
Define terminally ill
means a condition (illness or sickness) that can reasonably be expected to result in death within 24 months
cash value guarantees in a whole life policy are called
nonforfeiture values *b/c permanent life insurance policies have cash values, there are certain guarantees that are built into the policy that cannot be forfeited by the policyowners
if an insured is injured while committing an illegal act and his health policy contains the illegal occupation provision, what % of the claim will be paid?
nothing
When may HIV-related test results be provided to the MIB?
only if individual is not identified
Which of the following is a provision found in life insurance polices?
reinstatement *the only policy provision; the rest are policy riders
health insurance rates may be based upon all of the following except
religion
not true in fair credit reporting act is:
reports may be sent to anyone who request one
a whole life policy that will generate immediate cash value is a
single premium policy
if an applicant's health is poorer than that of an average applicant, the policy may be issued
substandard
If the insured/owner of a life policy does not designate a settlement option prior to death, then:
the beneficiary may choose whichever option s/he wants. Most choose cash, which is not taxable
