Health and Life insurance study guide
Pamela is an employee of Acme Plumbing and is covered under their group health policy. At age 37 she was diagnosed with stage 5 CKD (chronic kidney disease). How will her expenses for this disease be handled?
First 30 months her group policy, after that Medicare
Joseph is getting ready to retire. He has had a whole life policy for many a few years. He wants to take the cash value from his life policy and buy an annuity. All of the following are annuity purchase premium payment choices EXCEPT:
Fixed premium
How much does it cost for a consumer's guide to long-term care insurance in Kentucky?
Free
Various riders and provisions affect how, when and how much the insured received in benefits. The _____________ limits income benefits based on the insured's income for the past two years.
Future increase option (FIO)
All of the following statements regarding test taking strategies are TRUE EXCEPT:
If you do not know an answer to a question, leave it blank so it does not adversely effect your score.
A health insurance contract may be any of the following types of contracts EXCEPT:
A valued contract
Which of the following is usually sold as a cost-of-living rider to another policy?
Increasing Term
How much is the maximum contribution for a defined contribution plan in 2015?
$53,000
Matthew had to go to the emergency room for an x-ray. The hospital submitted a claim to his insurance carrier - and they paid the hospital's fee for an x-ray. What type of plan does Matthew have?
Indemnity
An individual applying for an agent license must be at least __ years of age.
18
Insurance contract are unique because they contain all of the following characteristics EXCEPT:
Ambiguity in a contract of adhesion
An insurer must deliver the policy summary for long-term care no later than _______.
At the time of policy delivery
Frank is covered under his local Blue Cross and Blue Shield plan. All of the following are true about Blue Cross and Blue Shield plans Except:
Both are exempt from insurance regulations
Donald has completed an application for a new health insurance policy at his prospect's home. He collects the initial premium and returns to his office. Before sending the application to the home office, Donald should:
Complete the agent's report with signature
Which of the following best describes an insurer that is a charitable organization providing insurance only to its members
Fraternal benefit society
All of the following are potential participants in an annuity contract EXCEPT:
Investment adviser
Major Medical expense insurance is:
Is designed to provide significant yearly and lifetime maximums for catastrophic coverage
Most annuities have two phases. Each of the phases serves a distinctly different purpose. Which of the following best describes the annuity period.
It is the period when the contract owner pays premiums.
Another type of universal life policy is called the equity indexed life policy. This policy is:
Linked to something like the S&P 500
Solomon Huebner fostered the idea of human life value. In the case of health insurance, the insured is protected against all of the following EXCEPT:
Living too long
By what date must business entities with licenses issued in even-numbered years renew their license?
March 31st on even-numbered years
Individuals may purchase Long Term Care Benefits from all of the following sources EXCEPT:
Medicare Part B
Any of the following is considered advertising for a health insurance company EXCEPT
Morbidity Tables
Which of the following is not a common use for annuities?
Pay legal fees
All long-term care policies are guaranteed renewable. Some long-term policies are called noncancellable. Which of the following is true about a noncancellable policy.
Policy cannot be cancelled as long as premiums are paid
All of the following are considered moral hazards EXCEPT:
Poor credit history
Gloria chose the prescription drug coverage as one of the options on her group policy. Which of the following is a benefit of a prescription drug policy?
Prescriptions are for a set, lower price
The entire contract clause is a provision that states that the policy and a copy of the application constitute the entire contract between the insurance company and the insured. What is the purpose of the entire contract clause?
Provides assurance that all necessary policy documents are in the policyholder's possession
Mr. Berryfield is employed and plans to work for 10 more years. He is considering a Roth IRA to save for his retirement. All of the following are true statements about Roth IRAs EXCEPT:
Qualified distributions must occur after 10 years and only upon death of the individual.
A benefit that is a percentage of the total disability benefit - for a period of disability - is called:
Recurrent disability
Mr. Frankston is concerned about the rising cost of health insurance premiums for the group health plan he provides for his employees. His accountant has calculated the premiums he pays vs. the claims his employees receive and finds that he might benefit by accepting some of the risk directly by his company. He wants to avoid premium taxes and minimize administrative expense. He will most likely find this type of plan through a:
TPA arrangement
Annuities are taxed on an exclusion ratio in which the portion of annual payment that is principal is ________ and the portion that is interest is ___________.
Tax free, taxed as income
Because annuities are commonly sold by life insurance companies, the annuity company is most often a private company. Which of the following is usually the owner of the annuity?
The annuitant
What of the following is not a potential outcome to the benefits of the annuity if the annuitant dies before the start of the annuity payments?
The company could return the aggregate, net premiums paid, and a portion of the interest earned.
Which of the following is true about immediate annuities?
The do not have an accumulation period.
Which of the following questions might an applicant might find on an insurance application?
The insurance application may ask an applicant if he or she has tested positive for HIV
All of the following correctly describe the law of large numbers EXCEPT:
The law of large numbers provides the best data when groups consist of dissimilar risks
One of the mandatory clauses for a health policy is "The Entire Contract Provision". This clause states:
The policy along with all attached riders and endorsements and other papers constitutes the entire contract between the policyholder and the company
Universal life was developed from whole life and they have the same two components - cash value and death protection. All of the statements are true about universal life policies EXCEPT:
The policyowner can increase or decrease the death benefit during the policy term.
Beneficiaries on a life insurance policy can be designated in several different categories. Which of the following statements is not true about a revocable beneficiary on a life insurance policy?
The policyowner cannot change the beneficiary without their knowledge.
Oliver breaks his leg while on a skiing trip. When he returns home he contacts his agent to purchase a major medical policy. Oliver files a claim for the treatment on his broken leg, and the claim is declined. The claim is denied due to:
The pre-existing clause
There are certain benefits of whole life policies. Which of the following is not a benefit of a whole life policy?
The premium payment period could extend beyond the insured's earning years.
Once the insurer had looked at the facts pertaining to a life insurance applicant, the insurer will categorize the risk and calculate premiums based on:
The risk classification and mortality, interest earnings and expenses
Usually the applicant, the insured and the owner of the policy are all the same person. As the owner of a life policy, the insured can expect which of the following?
To receive dividends when paid, To choose the premium mode, To designate the beneficiary
Any of the following will have an insurable interest in the insured EXCEPT:
Two friends who want to help the other person out in the event one dies.
The practice of using misrepresentation to induce a policyholder to replace a policy issued by the insurer the producer represents is called:
churning.
All of the following acts are considered unfair trade practices EXCEPT:
replacement.
To an attempt to prevent individuals intending to commit suicide from purchasing life insurance, insurance companies now include a suicide clause in all policies. What is the length of time that the suicide clause is in effect?
2 years
The commissioner may issue a temporary license for a maximum period of ___ days without requiring an examination or prelicensing course of study.
180
A Medicare Supplement policy is issued with a "Free Look" period. This is usually a minimum of:
30 days
Identify the correct answer below that completes the following statement: ______ of an approved prelicensing education course is required for Life and Health licenses.
40 hours
Which of the following is a CODA plan?
401(k)
John has been disabled for three years. He has been released to come back to work on a part-time basis. His policy contains a partial disability provision. If he qualifies for that benefit, he will receive what percent of his pre-disability wage from disability benefits in addition to his part time salary?
50%, but the total wage may not exceed his pre-disability wage
A ___________ is issued making the insurance company liable from the date of the application. The coverage last for a specific time period - usually 30 - 60 days.
Binding receipt
Jack is seeking long term care coverage. He is thorough and will consider all viable options. Jack can expect to buy long term care coverage from all of the following except:
A benefit under Part A of Medicare after he reaches age 65
Kurt is playing soccer for the Cosmos. They have taken out an insurance policy to cover their players during practice and games. This kind of policy is called:
A blanket policy
A contract that heavily restricts one party while leaving the other free (as some standard form printed contracts), and implies inequality in bargaining power is:
A contract of adhesion
Group insurance plans have certain characteristics and provisions. Which of the following is a standard group insurance provision?
A copy of the application must be provided to each insured.
Cost sharing is required under Medicare Part B. All Part B covered services have a deductible and copay percentage. All of the following are true statements about Medicare Part B EXCEPT:
A deductible must be met for each expense
COBRA allows the following to occur EXCEPT:
A dependent child may extend coverage beyond age 26 if he/she is a full time student
Riders covering additional insureds can be added to life policies. These riders usually cover more than one family member. A popular form of this is the children's rider. This rider is not_____________________.
A family rider
Policies routinely exclude certain risks. These exclusions are detailed in the policy. Which of the following would be such an exclusion?
A military pilot dies flying a fighter plane, A stunt rider dies trying to leap 25 buses on a motorcycle, A medic dies in a war zone
Ken has a policy that will never build cash value, and it will terminate automatically when he reaches age 65. Ken owns:
A term life plan
James has been diagnosed with terminal cancer. In order for James to maintain a reasonable quality of life, he must undergo very expensive treatment, not fully covered by medical insurance. James should check his life insurance policy to determine if he has this feature:
Accelerated death benefit
A peril is an exposure to the risk of injury, damage or loss. Karl is ridding his bike home from school when a dog jumps up at him and knocks both him and the bike to the ground. He breaks his wrist and must go to the hospital. This kind of peril is considered -
Accidental
Insurers are not liable for any loss sustained or contracted in consequence of the insured's being intoxicated, or under the influence of any narcotic or hallucinogenic unless ________________.
Administered on the advice of a physician
An example of an unfair claim settlement practice would include:
Advising a claimant of the possibility that, should the claimant reject a settlement offer, an arbitration award might be less than the offer.
Ken has a medical plan through his employer that provides a schedule of benefits and payment allowances for those benefits in his employee group certificate booklet. Ken most likely in enrolled in a:
Basic Surgical Expense Plan
Medicare Part A provides a benefit for skilled nursing care after a hospital stay. In order to qualify for the skilled nursing benefit, the patient must do all of the following EXCEPT:
Be limited to 20 days of custodial care
Shelly has an injury that is covered on her long-term disability policy. She incurred the injury at work. How will her claim be handled by the insurer?
Benefits will be reduced
Carla has just completed her application for health insurance. She reads the comments in her conditional receipt and it refers to her statements being "representations". Which of the following is correct?
Carla should be very careful, since she could be fined if any of the statements she made prove to be fraudulent
Which of the following will trigger a taxable event in regard to a 1035 transfer?
Changing the ownership of a plan
Which of the following is the method for rating group insurance premiums based on the actual or projected costs of insureds in a particular geographic location based on the age, gender, and occupation of the insureds?
Community rating
Which of the following types of policies combine multiple benefits and provides a broader range of coverage?
Comprehensive Major Medical
A flexible spending account is a benefit offered by Julia's employment. Before she elects this option she should do all of the following EXCEPT
Consider any Medical claims she will incur this year that will not be reimbursed by insurance
A health policy will be issued with an outline of coverage. All of the following will be listed in the outline of coverage EXCEPT:
Contractual governing provisions
Some applicants want to have flexibility in their insurance policies. An adjustable life insurance policy offers the policyowner the opportunity to make changes without having to complete a new application and/or replace one policy with another. Which of the following would result in a premium increase?
Converting a term policy to a whole life policy with the same face value
A number of personal and family needs can be fulfilled by life insurance. Which of the following would be a common use of the proceeds from a life insurance policy?
Creation of an estate when the insured dies, Funds for funeral expenses, Income for survivors of the insured
Alexandra is looking at her options as she considers purchasing life insurance. All of the following are types of whole life policies EXCEPT:
Credit
All Medicare Supplement plans may provide benefits for all of the following EXCEPT:
Deductible for Part B
Insurance companies offer programs to quell the fear that some people have of losing their investment if they were to die after only receiving a few payments from their annuity. All of the following fall into this category EXCEPT:
Deferred annuity
Claudia has named her husband Mike as a revocable beneficiary on her life policy. She is aware that as the policyowner, she can change the beneficiary at any time. She cannot however change the beneficiary by -_______________________.
Designating the change of beneficiary in her will.
Marci has a disabling illness. She is recuperating at home. She has a policy that is providing her income during her recuperation. What type of policy does she most likely have?
Disability income policy
James is gathering his tax information for his tax preparer. James is aware that certain medical expenses may qualify for a tax deduction, depending on his individual situation. James can use all of the following out of pocket expenses to see if he qualifies for a medical deduction EXCEPT
Disability insurance premium
Which of the following statements regarding the maintenance of records is false?
Every individual licensed in Kentucky as its home state must maintain a principal place of business in Kentucky
Which of the following is the method for rating group insurance premiums based on the prior claim history of the group?
Experience rating
Joe and Margaret are trying to determine how benefits will be paid on Joe's life insurance policy when he dies, or the policy matures. There are a variety of settlement options to choose from. Which of the following is not a settlement option?
Extended term option
Which of the following acts and practices is NOT prohibited?
Fair marketing procedures
Randy is a very healthy guy. He is a hot air balloon pilot and races jet boats for a hobby. His job involves high risk as well because he is involved the roofing business. How will his hobbies and his employment affect his ability to purchase life insurance?
He will be able to purchase life insurance but his premiums will be higher
Bruce works as Supervisor and he also is one of his team that does pipe fitting. Bruce is interested in applying for disability coverage. In what occupational class will the underwriter place him for rating?
He will be rated as a pipe fitter, since that is the most hazardous occupation Bruce performs.
Which of the following statements regarding the claims process is true?
If a claim remains unresolved for over 60 days from receipt of proof of loss, the insurer must provide a written explanation for the delay
According to the Fair Credit Reporting Act, consumer reports can have which of the following information?
Information concerning an individual's character
Michelle has filed her tax return for the previous tax year. She had significant medical expenses that were not reimbursed by insurance and they exceeded the 10% threshold on her adjusted gross income and she itemized the deductions. After her taxes were filed she received a check from the insurance company that reimbursed her for some of the expenses she deducted. What is the tax situation for these benefits?
Michelle should file an amended return, since reimbursed medical expenses do not count toward the 10% threshold
The Acme Plumbing Company is looking at providing group life insurance for its employees. There are significant benefits of a group plan. Which of the following is not a characteristics of a group life insurance plan?
Minimum participation standards
Which of the following premium methods will most likely cause the insured to pay the most premium over the life of his/her policy?
Monthly statement
An insurance company whose main responsibility is to make money for its policyholders is called a:
Mutual insurance company
The N.A.I.C. proposes many pieces of model legislation in order to help standardize policy wordings, regulations and required benefits. The initials NAIC stand for:
National Association of Insurance Commissioners
Melissa is filing her tax return and wants to know what percentage of the benefits she received from her health insurance company - after she had an accident - are taxable. The answer is:
None
An application consists of all of the following Except:
Part IV, the insurer's report
_________ is the possibility of a loss occurring.
Risk.
An annuity can be used to provide income after retirement. An annuity contract provides for which of the following?
Safe retirement income tool, Forced savings account, Payments for a fixed period or a lifetime.
An example of presumptive disability might be any of the following EXCEPT:
Severance of a hand
Mrs. Johnson's life policy lapsed when she was not able to pay the premiums. She now wants to reinstate the policy. What will be required for her to reinstate her policy?
She must bring any outstanding loans current, Back premiums must be paid, She may have to provide proof of insurability
Which of the following benefits are to be included in Medicare supplement plans?
Skilled Nursing Facility Care
There are several types of whole life insurance including - participating, non- participating, economatic, limited pay, and single premium. Not all companies offer all types of policies. All of the following statements pertain to limited-pay and single premium EXCEPT:
The premiums are generally less because the insurance company receives their money up front.
Gladys has become permanently and totally disabled. She has a waiver of premium rider on her insurance policy. Which of the following is true about his coverage?
There is usually a waiting period for the benefit to kick in.
The Olsens knew that setting up a minor as the beneficiary to their life insurance could be problematic. Which of the following is an option that would help them in adequately protect their minor child?
They could set up a trust
One of the key features of any disability plan is the definition of what is required to be considered disabled. Mark is shopping for disability coverage. Which of the following offers him the most liberal definition of disability?
Unable to perform the duties of the insured's occupation
Limited and comprehensive are two classes of insurance. Which of the following is not an example of a limited policy?
Universal life
All of the following are mandatory provisions for health policies EXCEPT:
Waiver of Premium
The Medicare Part D "coverage gap" occurs:
When the individual pays 65% of all generic prescription drug costs
Licensees will inform the commissioner in writing in a format acceptable to the commissioner of any change in addresses or legal name:
Within 30 days of the change
Circulation of a maliciously critical statement about any insurer's financial condition to injure the insurer is called:
defamation.