Insurance Final Questions
Errors & Omissions are most likely to occur during:
A replacement
In life insurance, insurable interest must be present at the time of:
Application
Richard is thinking about transferring some of the ownership rights of his policy to his brother Randy. What term is used for this type of transfer?
Assignment
What type of policy allows an insurer to cancel a policy if certain circumstances stated in the contract happen?
Conditionally renewable
A life insurance policy with graded death benefits must be offered on what basis?
Guaranteed
Long-term care plans are written as:
Guaranteed renewable
What right of renewability guarantees insurability, but does not guarantee premiums?
Guaranteed renewable
The most common plan used with an HSA is:
HDHP
Services paid on Capitation basis (prepaid per person)
HMO
Cindy has a new medical plan that provides both health care services and health care insurance. She is covered by:
HMO (Health Maintenance Organization)
When the producer delivers the policy to the applicant, he needs to do all of the following EXCEPT:
Issue the applicant a conditional receipt.
A written examination tests the individual's knowledge of:
The duties and responsibilities of an insurance producer
The insurer has a maximum of how many days after receiving notice of a claim to provide claims forms?
15 days
After receiving notice of a claim, the insurer has a maximum of how many days to provide claims forms?
15 years
What is the minimum age to become a licensed producer in Missouri? `
18
A health carrier that offers managed care plans must establish a grievance review process for its managed care plans of how many levels?
2
How many days does an insured have to file a notice of claim?
20 days
At what age would a qualified retirement plan distribution be premature?
59 1/2
In Missouri, what is the maximum policy loan interest rate for life insurance policies?
8%
How many days does an insured have to provide proof of loss?
90 days
Sue's hospital bill is $4,500. Her major medical policy has a $500 deductible and then it pays 80% of the remaining bill. The policy also has a maximum out-of-pocket of $2,000. How much of the total bill will the insurance company pay?
$3,200- The bill is $4,500. Subtract $500 for the deductible. The company will pay 80% of the balance, which is .80 x $4,000 = $3,200.
Tyler owns a major medical policy with 70/30 coinsurance and a $3,000 deductible. If he submits a claim for $20,000, how much will he pay?
$8,100 (He'll pay $8,100. The math works out $20,000 - $3,000 = $17,000. Then $17,000 x .30 = $5,100. Then add the $3,000 deductible with the $5,100 coinsurance ($3,000 + $5,100= $8,100).
What is the suicide exclusion period for life insurance policies in Missouri?
1 year
Through what age are children covered for Child Health Supervision Services?
12 years
How many days does an insurer have to provide claims forms after a notice of claim?
15 days
A decreasing term life policy would be the most appropriate for:
A 41 year old lawyer who wants a policy to pay his mortgage if he dies
What is the minimum valuation standard for offering universal life insurance policies in Missouri?
Commissioners Reserve Valuation Method
What are the two most common adjustments made during a month with a universal life insurance policy?
Cost of death protection deducted and current interest rate credited
If James has an increasing term policy, which of the following must increase?
Death Benefit
Jeff and Mike own an architect firm with 20 employees and worry about the company if one of them becomes permanently disabled. What type of policy should they buy?
Disability Buy out
Paul has a basic medical policy. It will pay for:
Doctor Visits
Dylan is looking at buying an equity-indexed life policy; it will likely be tied to:
Dow Jones Industrial Average
What guarantees Jason the right to question the source and validity of consumer information used to rate a policy?
Fair credit reporting act
Embezzlement would show a lack of what kind of trust?
Fiduciary
Becky is a 31 years old and knows she needs to start a retirement plan. She currently works in a bakery and is worried about how inflation would affect her retirement plan. Which annuity would be a good fit for her needs
Flexible premium deferred annuity
Which of the following statements is correct when pertaining to coordination of benefits by a group long-term disability plan with Social Security?
Group and Social Security benefits pay a combined maximum limit.
Over-funded life insurance policies where the proceeds are subject to taxation are called:
MECs
A program that includes prehospitalization authorization is an example of:
Managed Care
The entity in Missouri that protects consumers from insolvent insurers is the:
Missouri Life and Health Insurance Guaranty Association
How are dividends treated for tax purposes?
Never taxed
Which of the following is the only legally-based, recognized cause for canceling a spouse's Medicare supplement coverage if it has been established that no material misrepresentation exists?
Non-payment (Medicare supplement policy cannot provide for termination of a spouse's coverage for any reason other than nonpayment of the premium or be canceled or not renewed solely on grounds of the deterioration of health.)
Barbara allows her comprehensive major medical plan to lapse. If her policy is reinstated on March 20th and she contracts mononucleosis on March 29th, what benefits will she receive?
None
Before a blanket policy is actually sold to students of a school or college, the student or their parent/guardian must be:
Notified
How frequently must the Director examine insurers' financial condition?
Once every 5 years
Samson has a policy that allows the insurer to cancel the policy at any date specified in the contract, and to raise his premiums. Which type of policy is it?
Optionally Renewable (An optionally renewable policy allows the insurance company to cancel the policy for any reason, on dates set in the contract. The insurer can also increase the premiums.
Which of the following offers the broadest service area and broadest selection of providers?
PPO
A POS (Point od Service) plan is a combination of:
PPO & HMO
What part of the policy directs the insurer on the recipients of benefits?
Payment of Claims provision
Are policy loans taxable?
Policy loans are not taxable as income because they are regarded as a debt against the policy.
Providing incentives or inducements not mentioned in an insurance contract is known as:
Rebating
The benefit that encourages the disabled policy owner to try to return to work is:
Recurrent disability (The recurrent disability provision encourages a person with a disability to try and go back to work. It specifies a certain number of days that a recurrence of the disability is considered a continuation, not a new disability. Therefore it does not have a new elimination period.)
Dylan tells the insurer to keep the dividend and apply it to his next premium. He is using which dividend option?
Reduction of Premium
Jamie has a renewable term policy. Which of the following is not an incorrect statement about this type of policy.
Renewability is the insurer's option - is the only correct statement.
What is a transaction in which a new policy or contract is to be purchased if an existing policy or contract has been lapsed, forfeited, or surrendered?
Replacement
When Jason filled out his application his statements had to be ______________ to be considered legal.
Representations
What are the minimum participation requirements for a small employer group health plan for 3 or less employees?
Requires 100% of eligible employees
The beneficiary designation that allows the policy to be changed without the beneficiary's consent
Revocable
Which of the following factors does not influence the amount that an individual receives as monthly income under Social Security?
Sex
The producer realizes that the prospective client omitted information about a prior illness. What should the producer do?
Tell the prospective client that a claim might be rejected later due to the omission.
Jeff has limited financial resources, but finds himself in a position where he needs a good deal of protection. A __________would probably best suit his needs at this time.
Term policy
An Accident and Health policy contains a Consideration clause which states:
That the applicant pays the initial premium
Who must sign the notice regarding replacement?
The applicant and the producer
The life insurance rider that pays the face amount plus the total premiums paid into the policy is known as:
The return of premium rider pays the total amount of premiums paid into the policy as long as the insured dies within a certain time period specified in the policy. The death benefit is comprised of the face amount plus the total premiums paid into the policy.
How does the IRS treat disability income benefits when the employer pays the policy premiums?
They are fully taxable. (Disability income benefits from an employer-paid group policy are fully taxable.
In most Disability Income policies, the Elimination Period applies:
To each disability separately.
What contract term means only one party to a contract's promises are legally enforceable?
Unilateral
To determine the coverage and benefits to pay for a surgery based on what is considered fair and common for an area is:
Usual, reasonable, and customary
Which of the following is subject to replacement regulations?
Whole life insurance
Does a loan on the cash value of a life insurance policy accrue interest, and if so, how is the interest handled?
Yes, the interest can be paid annually, or added to the loan.
Which could be used to prevent a lapse in the payment of life insurance premiums?
automatic prem loan
Which type of life policy would best suit someone who retires in good health with a large amount of cash, whose investment goals are conservative?
single premium whole life
The fact that the application is part of the policy is stated in:
the entire contract
Investment risk is completely taken by the policyowner is what type policy?
variable universal