Insurance final review
Following a covered loss, the Time Payment of Claims Provision requires that an insurance company pay disability income benefits no less frequently than A. Monthly B. Semi-annually C. Annually D. Weekly
A. Monthly This mandatory provision establishes that disability income benefits be paid no less frequently than monthly.
A Medicare supplement plan must have at least which of the following renewal provisions? A. Nonrenewable B. Noncancellable C. Guaranteed renewable D. Conditionally renewable
C. Guaranteed renewable Medicare supplements must be at least guaranteed renewable.
Who would be the insured in business disability insurance? A. The insurer B. The employer C. Key employees D. All employees
C. Key employees A business purchases disability insurance on its key employees to protect it from loss when the employee becomes disabled.
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 fact is revealed, the agent may face a fine up to A. $10,000 B. $12,000 C. $1,000 D. The agent will not be fined due to the unintentional violation.
A. $10,000 Making false statements as to the financial condition of another entity may result in fine of up to $1,000 for each unintentional violation, not to exceed $10,000 in a 6 month 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 A. Twisting B. Fraud C. Concealment D. Misrepresentation
A. Twisting This is the definition of twisting, which is an unfair trade practice
Under the mandatory uniform provision Legal Actions, an insured is prevented from bringing a suit against the insurer to recover on a health policy prior to A. One year after the occurrence of a disability B. 30 days after the loss C. 60 days after written proof of loss has been submitted D. 90 days after written proof of loss has been submitted
C. 60 days after written proof of loss has been submitted The insured must wait 60 days, but no later than 3 years after proof of loss, before legal action can be brought against the company.
An individual is approaching retirement age and is concerned about having proper coverage should he have to be placed in a Long-Term Care (LTC) facility. His agent told him that LTC policies would provide necessary coverage at all of the following levels EXCEPT A. Intermediate B. Skilled C. Acute D. Custodial
C. Acute Acute care is provided by Medical Insurance
Which statement below is INCORRECT regarding the type of term insurance that fits best with the applicant's needs? A. Applicants wishing to pay off a mortgage should they suffer a premature death might buy a decreasing term plan. B. Employers looking to provide cost effective group life insurance for their employees may choose annual renewable term C. Applicants who may require a larger death benefit in the future should buy convertible term insurance. D. Applicant concerned with the increasing cost of living should purchase increasing term.
C. Applicants who may require a larger death benefit in the future should buy convertible term insurance. Convertible term convert to a cash value policy with the same death benefit but at a higher premium.
An insured recently received his major medical insurance policy. Only 20 days after the policy issue, while recreational rock climbing, the insured suffered a fall that required hospitalization, surgery and physical therapy to repair his broken leg. Which of the following is true? A. The plan will not cover the expenses because the elimination period B. Only the surgery is covered under the plan C. Both a deductible and coinsurance payments will be required. D. The plan will not cover the expenses due to the hazardous avocation
C. Both a deductible and coinsurance payments will be required. Major medical plans have blanket coverage, and high maximum limits but require both a deductible and coinsurance after the claim is submitted. Accidents are covered without an elimination or waiting period
When an annuity is used to provide savings for the education expenses, a Last In First Out (LIFO) arrangement is used. What is the last money to go into an annuity? A. Cost basis B. Premium C. Interest D. Tax refund
C. Interest Money comes out of a deferred annuity on a Last In First Out (LIFO) basis. Since the last thing into the annuity was interest, the withdrawals will be income taxable until all interest is gone and cost basis is reached.
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 the policy in the amount of $1,000, how much of this benefit would be taxed as income? A. $1,000 B. $750 C. $250 D. $0
D. $0 Group medical and dental expense benefits are received income tax free by the employee.
Where are premiums from a fixed annuities invested? A. A variable annuity B. A hedge fund C. A separate account D. A general account
D. General account A fixed annuity is characterized by a general account into which the purchase payments (premiums) are invested
Contributions to Roth IRAs are A. Tax deductible B. Always subject to a 6% tax penalty C. Paid with pre-tax dollars D. Not tax deductible
D. Not tax deductible Contributions to Roth IRAs are not deductible, and excess contributions are subject to a 6% tax penalty
Slippery floors, reckless driving, or providing false information are examples of A. Hazards B. Pure risks C. Causes of loss D. Perils
A. Hazards A hazard is any factor that increases the likelihood that a loss may occur. Provided are examples of physical hazard, moral hazard and morale hazard.
If a person qualifies for Social Security disability benefits after the 5 month elimination period, when will benefits begin? A. A lump-sum of benefits will be paid at begin at the beginning of the 6th month which are retroactive to the beginning of the disability B. Benefits begin at the beginning of the 6th month and are not retroactive to the beginning of the disability C. Benefits begin at the beginning of the 6th month and are retroactive to the beginning of the disability D. Benefits begin after the 6th month and are retroactive to the beginning of the disability
B. Benefits begin at the beginning of the 6th month and are not retroactive to the beginning of the disability The elimination period for Social Security disability benefits is 5 months. Benefits begin at the beginning of the 6th month and are not retroactive to the beginning of the disability.
All of the following health insurance disability benefits are income tax free EXCEPT A. Employer-paid group disability B. Employee-paid group disability C. Key-person disability benefits D. Personally-owned individual disability insurance
A. Employer-paid group disability Employer-paid group disability benefits are income taxable.
A core Medicare supplement policy (Plan A) will cover all of the following expenses EXCEPT A. Part A deductible B. The first 3 pints C. 20% of Part B coinsurance amounts for Medicare-approved services D. Part A coinsurance
A. Part A deductible Plan A is the core benefits only and does not include coverage for Part A deductibles.
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 A. 31 days of termination B. 5 months of termination C. 6 months of termination D. 1 year of termination
B. 5 months of termination This option is available within 5 months of termination
The party that sells a life insurance policy in order to effectuate a viatical settlement contract is called the A. Broker B. Viator C. Ceding party D. Seller
B. Viator Viatical settlement providers are the people/entities who enter into or effectuate a viatical settlement contract, other than the viator. The viator is the person who sells the insurance policy to the provider.
Which of the following does NOT need to be included on the first page of a Medicare supplement policy? A. Continuation provision B. The company rights to change premiums based on the policyholder's age C. Premium rates D. Renewal provision
C. Premium rates Medicare supplement policies must include a renewal or continuation provision that is appropriately captioned and on the first page of the policy. It must include any reservation by the insurance company of the right to change premiums and any automatic renewal premium increases based on the policyholder's age (attained age policies)
A disability income policy has a waiting period of 7 days. If insured is disabled for 15 days, how many days of benefits will the policy pay? A. 7 days B. 8 days C. 15 days D. 22 days
B. 8 days The waiting period or elimination period is the time an insured must wait between the onset of an accident or illness and when benefits start being paid. An insured with a 7-day waiting period who was off work for 15 days would only have 8 days of coverage.
Under the mandatory uniform provision Proof of Loss, the claimant must submit proof of loss within what time period after the loss? A. 60 days B. 90 days C. Two years D. 30 days
B. 90 days The Proof of Loss provision the time within which the insured may file a written proof of loss. A proof of loss must be filed within 90 days of loss or, in the case of a continuing loss, within 90 days after the end a period for which the insurer is liable.
How long is a newborn covered without notification to the insurer? A. From the time labor has begun, and the insurer must be notified within 31 days B. From the moment of birth, and the insurer must be notified within 90 days C. A newborn is not covered without notification to the insurer. D. From the moment of birth, and the insurer must be notified within 31 days
D. From the moment of birth, and the insurer must be notified within 31 days A newborn covered without notification to the insurer from the moment of birth. The insured must notify the insurer within 31 days of birth.
Under which of the following conditions would life insurance proceeds be taxable by the federal government? A. If collaterally assigned to a lender B. If taken as a lump sum C. If paid to the policyowner D. If there is a transfer for value
D. If there is a transfer for value If life insurance proceeds are collected in a lump-sum payment, they are generally not subject to federal taxation. If the benefit payment results in a transfer for value (if the policy is sold to another person), it may not be exempt from taxation. Transfer for value rules do not apply when a policy is collaterally assigned to a lender.
Which of the following is NOT true regarding a noncancellable policy? A. Insurer can increase the premium above what is stated in the policy if claims experience is greater than expected. B. Insurer cannot cancel the policy. C. The guarantee to renew coverage usually only applies until the insured reaches age 65 D. Insured has the unilateral right to renew the policy for the life of the contract, and may discontinue paying premiums to cancel it.
A. Insurer can increase the premium above what is stated in the policy if claims experience is greater than expected. The insurance company cannot cancel a noncancellable policy, nor can the premium be increased beyond what is stated in the policy. The insured has the unilateral right to renew the policy for the life of the contract, but, in effect may cancel the policy at any time by discontinuing premium payments.
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? A. Submit the description in their own words on a plain sheet of paper B. Be reimbursed an copayment or deductible on the claim C. Demand full payment immediately for the claim. D. Speak with a claims adjuster or another representative from the insurance company.
A. Submit the description in their own words on a plain sheet of paper. Insureds have the right to submit the description in their own words on a plain sheet of paper if a proper form is not supplied. This is a mandatory provision in all individual health insurance policies.
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? A. Medical exam B. Attending Physician's Statement C. MIB report D. Policy application
B. Attending Physicians Statement An Attending Physicians Statement (APS) is the best way for an underwriter to evaluate an insured's medical history. The report includes past diagnosis, treatments, length of recovery time, and prognoses.
Who acts on behalf of the principal? A. Insurer B. Insured C. The state D. Agent
D. Agent An agent acts on behalf of the principal, who is the entity that the agent represents in contractual agreements with third parties.
In whole life insurance, when is the policy cash value scheduled to equal the face amount? A. By the policy's 10th year B. When the insured paid up all policy loans C. It depends on the type of whole life purchased D. At the insured's age 100
D. At the insured's age 100 The cash value, created by the accumulation of premium, is scheduled to equal the face amount of the policy when the insured reaches age 100 and is paid out to the policyowner.
Which of the following is NOT true of the agents implied authority? A. It is assumed by the agent in order to transact the business of insurance B. It is incidental to express authority C. It is given to an agent by the insurance compony that is not specifically communicated D. It is specifically stated in the contract
D. It is specifically stated in the contract Implied authority is authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal. Implied authority is incidental t express authority since not every single detail of an agent's authority can be spelled out in the written contract.
An individual covered under a group Dental Expense plan needs to have bridgework done. Bridgework is covered as A. Endodontics B. Periodontics C. Orthodontics D. Prosthodontics
D. Prosthodontics Prosthodontics is bridgework, periodontics is treatment of gun problems, endodontics covers root canals, and orthodontics covers braces
All of the following statements about mutual insurance companies are correct EXCEPT A. Policy dividends issued by mutual companies are guaranteed and not taxable B Dividends allow policyholders to share in a mutual companies divisible surplus C. Dividends are a return of unused premiums D. Mutual companies issue policies referred to as participating.
A. Policy dividends issued by mutual companies are guaranteed and not taxable. Insurance policy dividends are not guaranteed and are not taxable.
When may HIV-related test results be provided to the MIB? A. When given authorization by the patient B. Only when the test results are negative C. Only if the individual is not identified D. Under all circumstances
C. Only if the individual is not identified Insurance companies must maintain strict confidentiality regarding HIV-related test results or diagnoses. Test results may not be provided to the MIB if the individual is identified.
What is it called when a doctor accepts the Medicare approved amount? A. Verification B. Acceptance C. Assignment D. Consent
C. Assignment Assignment is when the doctor agrees to accept the Medicare approved amount.
When an insured terminates membership in the insured group, the insured can convert to A. Term with proof of insurability B. Whole life without proof of insurabiity C. Whole life with proof of insurability D. Term without proof of insurability
B. Whole life without proof of insurability When a member terminates membership in a group, he or she can convert to whole life without proof of insurability
An individual receives a lump-sum inheritance. He'd like to use the money to create a lifetime income since he'll be retiring soon. He purchases an annuity and wishes to receive payment beginning in 2 months. What did he buy? A. Single Premium Deferred Annuity B. Single Premium Immediate Annuity C. Flexible Premium Deferred Annuity D. Flexible Premium Immediate Annuity
B. Single Premium Immediate Annuity Any annuitization in 12 months or less from the effective date is an immediate annuity. A single premium annuity involves depositing one premium payment.
All of the following statements about indexed whole life insurance are correct except A. The cash value depends on the performance of the equity index B. The death benefit is not guaranteed C. The premium is fixed D. There is a guaranteed mimimim interest rate
B. The death benefit is not guaranteed Under this type of policy, the premium is fixed, and the death benefit is guaranteed.
An agreement that is enforceable by law is known as what kind of contract? A. Unilateral B. Legal C. Conditional D. Adhesion
B. Legal Contracts that contain all of the essential elements required by the state are enforceable in a court of law. Because insurance policies meet these requirements, they are enforceable as legal contracts.
What type of an interest rate is guaranteed in universal life policies? A. Current interest rate B. Contract interest rate C. Nominal interest rate D. Adjustable interest rate
B. Contract interest rate The insurer guarantees a contract interest rate. A current interest rate is not guaranteed in the contract and my be higher because of current market conditions.
Who determines if a particular group of employees can be excluded from group health coverage? A. The insurer B. The employer C. The employee union D. The Department of Insurance
B. The employer The employer can legally exclude a particular group of employees from the eligible class employees. The employer can also specify how many hours considered full time, an whether both salaried and hourly employees will be covered.
Which of the following is a requirement of health policies? A. Replacements in health insurance are not allowed B. The old policy must be cancelled before the new policy can be issued C. The old policy must stay in force until the new policy is issued D. Policies must overlap to cover pre-existing conditions
C. The old policy must stay in force until the new policy is issued. The agent must make sure that the current policy is not cancelled before the new policy is issued.
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? A. Payor rider B. Guaranteed insurability rider C. Spouse term rider D. Children's term rider
D. Children's term rider The children's term rider allows children to be added to coverage for a limited period of time for a specified amount.
Regarding health insurance, all of the following are tax-deductible EXCEPT A. Employer paid group Accidental Death and Dismemberment B. Employee paid group disability income C. Employer paid group health insurance D. Employer paid group Long-Term Care
B. Employee paid group disability income When the employer pays for group premiums, they are tax-deductible to the employer. When the employee pays for a portion of the group disability premiums, they are not tax-deductible to the employee.
All of the following are true regarding the federal Fair Credit Reporting Act EXCEPT A. The customer must be notified if adverse action is taken as a result of a report B. Reports may be sent to anyone who requests one C. Insurers are not required to give customers a copy of the report D. It applies to credit reports ordered in connection with insurance, banking and employment.
B. Reports may be sent to anyone who requests one. Credit reports may only be ordered by those involved in insurance underwriting, bank loans or employment, so they cannot be ordered by just anyone. If adverse action is taken, an insurer must tell the insured which credit reporting agencey furnished the report, but the insurer does not have to furnish a copy of it. If a report is wrong, there are procedures to get it corrected without the need of filing a lawsuit (litigation)
A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will A. Reduce to the pre-surrender value B. Continue to increase C. Remain the same D. Decrease over time
B. Continue to increase The new policy continues to build its own cash value and will remain in force until the insured's death or maturity.
A married couple purchase a life insurance policy on their newborn baby. They are concerned about what would happen to the policy if either one of them were unable to continue making the premium payments due to death or disability. Which policy rider should their agent recommend? A. Automatic premium loan B. Waiver of premium C. Payor benefit D. Guaranteed insurability
C. Payor benefit Payor rider provides protection to the insured minors. If the life insurance is for a child and the parent paying the premiums dies or becomes disabled, the insurance company will waive the premium until the chid reaches a predetermined age, such as 18 or 21.
An adjustable life policy can assume the form of A. Only permanent insurance B. Either term insurance or permanent insurance C. Neither term insurance nor permanent insurance D. Only term inurance
B. Either term insurance or permanent insurance Adjustable life was developed in an effort to provide the policyowner with the best of both worlds (term and permanent coverage). An adjustable life policy can assume the form of either term insurance or permanent insurance.
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? A. $60,000 and a second degree misdemeanor B. $600,000 and a third degree misdemeanor C. $600,000 and a second degree misdemeanor D. $60,000 and a third degree misdemeanor
D. $60,000 and a third degree misdemeanor In Pennsylvania, acting as a manager or exclusive general agent- without proper licensing- is punishable by a third degree misdemeanor charge and a fine of up to $1,000 for each day of their offense.
Every Medicare supplement policy must have a Notice to Buyer on the front page that states which of the following? A. You may not own more than three Medicare supplement policies B. The premium on the policy may increase on a class basis C. This policy may not cover all of your medical expenses D. This policy does not always change with Medicare provisions
C. This policy may not cover all of your medical expenses Every Medicare supplement policy must display on the front page "Notice to buyer: This policy may not cover all of your medical expenses"
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 A. Accidental death and dismemberment B. Hospital confinement indemnity C. Dread disease insurance D. Critical illness insurance
D. Critical illness insurance Critical illness coverage pays the insured a lump sum upon the diagnosis of a critical illness, unlike dread disease coverage, which pays only a specified amount per day if the insured is hospitalized due to a dread disease, such as cancer
Wagering on a sporting event is known as what type of risk? A. Speculative B. Calculated C. Simple D. Pure
A. Speculative With a speculative risk a chance to win or a chance to lose exists. Speculative risks are not insurable.
An agent delivers a policy to an applicant, who pays the initial premium but refuses to submit a statement of good health. Which of the following terms best describes what the applicant has violated? A. Consideration B. Representation C. Adhesion D. Contractual Agreement
A. Consideration The binding force in any contract is consideration. Consideration on the part of the insured is the payment of premiums and the health representations made in the applications. Consideration on the part of the insurer is the promise to pay in the event of loss.
All of the following are reasons for group insurance termination for dependents EXCEPT A. The dependent reaches age 21 B. The dependent fails to meet definition of a department C. The end of the last period for which the employee has made the required premium for dependent coverage passes D. The overall maximum benefit for major medical benefits is received.
A. The dependent reaches age 21 Generally coverage will terminate for a dependent on the earliest date in which one of the following situations occurs: The dependent fails to meet the definition of a dependent; the date the overall maximum benefit for major medical benefits is received; or the end of the last period for which the employee has made the required premium for dependent coverage passes.
How does insurance distribute the financial consequences of individual losses? A. It transfers the risk to all persons insured. B. It retains the financial consequences. C. It transfers the risk to associates of the insured D. It transfers the risk to a small number of persons insured.
A. It transfers the risk to all persons insured Insurance is the transfer of the possibility of a loss (risk) to an insurance compony, which in turn spreads the coasts of unexpected losses to many individuals.
An elimination (waiting) period may NOT have to be satisfied for a disability in which of the following? A. An insured suffers a relapse of prior disability within 6-months of the initial covered disability. B. An insured suffered the disability from the results of active duty with the US armed forces. C. An insured is disabled from a work-related accident D. An insured contract an incurable disease.
A. An insured suffers a relapse of prior disability within 6-months of the initial covered disability. An insured suffering a relapse from the same disability within a 6-month period will be covered as a continuation of the prior disability.
Which of the following would be TRUE of both the fixed-period and fixed-amount settlement options? A. Both guarantee that the principal and interest will be fully paid out. B. The amount of payments is based on the recipient's life expectancy C. The size of installments decreases after a certain period of time D. Both guarantee payments for the life of the beneficiary
A. Both guarantee that the principal and interest will be fully paid out Neither the fixed-period nor fixed amount settlement options guarantee income for the life of the beneficiary; however, they both guarantee that the entire principal and interest will be distributed.
Which of the following best describes the difference between joint life and joint survivor annuity payment options? A. In joint life option, the benefits stop after the first death B. Joint life covers two or more annuitants C. Joint and survivor is a life contingency option. D. Joint and survivor pays out a smaller benefit.
A. In joint life option, the benefits stop after the first death. Both Joint Life and Joint and Survivor options provide an income for 2 or more recipients; however, under the joint life option, the benefits stop after the first death. Joint and Survivor option guarantees an income that none of the recipients can outlive; however, the benefit may be reduced after the first death.
How many excess continuing education credit hours may a licensee carrt forward from one licensing period to the next? A. None B. 6 C. 12 D. 24
D. 24 A licensee may carry forward a maximum of 24 excess continuing education credit hours from one licensing period to the next.
A person recieves his Medicare supplement policy and is not satisfied with the provisions. He can return the policy for a full refund if he does so within how many days? A. 10 B. 15 C. 20 D. 30
D. 30 All Medicare supplement policies must contain a 30-day free-look period where the insured may return the policy for a complete refund for any reason
In the event of a lapse, long term care insurance policies should include a provision that provides for reinstatement of coverage. This option is available within A. 6 months of termination B. 1 year of termination C. 31 days of termination D. 5 months of termination
D. 5 months of termination This option is available within 5 months of termination.
According to the Time Limit on Certian 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 A. 3 years B. 5 years C. 7 years D. 2 years
A. 3 years
An agent is hand delivering an insurance policy to a policyowner. What must the agent obtain to complete the transaction? A. A signed delivery recipt B. A conditional recipt C. A statement of good health D. An agent's report
A. A signed delivery receipt When an individual policy or annuity is delivered by hand to the policy owner, a delivery receipt must be signed. The receipt will be in duplicate and state the date the contract was received.
Life insurance can provide which of the following? A. Survivor protection B. Protection in case we live too long C. Creation of a future liability D. Liquidation of ones estate
A. Survivor protection Life insurance provides the dollars to protect the dependents (survivors) of a deceased insured.
An applicant completes an application for a disability policy and pays the initial premium. The producer give the applicant a conditional receipt. Insurance coverage for the applicant will become effective when A. The insurance company accepts the risk B. The insurance compony requests a medical examination C. The applicant signs the conditional receipt. D. The producer delivers the policy
A. The insurance company accepts the risk If the initial premium is paid when the application is submitted, coverage becomes effective when the insurer approves the application.
Under a long-term care policy, the commission or other compensation provided for a minimum of 5 subsequent years CANNOT exceed what percentage of the renewal premium? A. 20% B. 10% C. 15% D. 5%
B. 10% Under a long-term care policy, the commission or other compensation provided for a minimum of 5 subsequent years cannot exceed 10% of the renewal premium.
A self-employed mechanic operates his own shop. He is considering purchasing health insurance that would protect him financially in the event of a serious sickness or accident. He feels that he can handle any small health care expenses. What type of policy would likely meet this person's needs? A. Dread disease B. Major Medical C. Comprehensive Major Medical D. Basic Hospital
B. Major Medical Major Medical has high maximum limits, copayments, blanket coverage and a deductible.
The reduction of premium option uses the dividend to reduce A. The premium on any other policy owned by the policyowner B. Next years premium C. The year's premium D. The previous year's premium
B. Next year's premium With the reduction of premium option, the insurer uses the dividend to reduce the next years premium.
Cash Value guarantees in a whole life policy are called A. Dividends B. Nonforfeiture values C. Living Benefits D. Cash Loans
B. Nonforfeiture values Because permanent life insurance policies have cash values, there are certain guarantees that are built into the policy that cannot be forfeited by the policyowner. These guarantees (known as nonforfeiture values) are required by state law to be included in the policy. A table showing the nonforfeiture values must be included in the policy for a minimum period of 20 years. The policyowner has options as to how to exercise nonforfeiture values.
A stock insurer is defined as an insurer A. That issues health care coverage for farm animals B. Owned by its stockholders C. Owned by its policyowners D. That invests at least 20% of its premium income in the stock market
B. Owned by its stockholders A stock insurance company is owned by its stockholders who contribute the capital. Any profits of the company are paid to the stockholders are dividends on their stock. If the compony loses money, the stockholders suffer the financial losses by a reduction of the value of the stock and the absence of dividends paid.
An applicant for a disability insurance policy has a heart condition of which they are unaware and therefore they answer no to the question pertaining to the heart problems on their application. Their answer is considered to be a A. Fraudulent answer B. Representation C. Warranty D. Concealment
B. Representation In regards to insurance applications, representations are statements believed to be true to the best of ones knowledge, but they are not guaranteed to be true.
Who does the spendthrift clause in a life insurance policy protect? A. The creditors B. The beneficiary C. The insured D. The policyowner
B. The beneficiary The spendthrift clause states that the death benefit to the name beneficiary is protected from the creditors of the insured or the beneficiary.
Ed is covered under a health provided by his employer. He was told that his insurance would pay the majority of the covered expenses if he would choose to see a provider in his plan's list. If Ed chose to be treated by a provider who was not on the list, his portion of the bill would be greater. Ed is covered under a/an A. Coordinated Plan B. HMO group plan C. Limited health plan D. Preferred Provider Plan
D. Preferred Provider Plan Under a preferred provider plan, the insurer has contracted with certain providers to provide services at a certain rate. If an insured chooses to be treated by another provider who does not have a contract with them, the coinsurance rate could be reduced, with the insured paying a higher percentage of the charges.
Which of the following is a provision found in life insurance policies? A. Return of premium B. Guaranteed insurability C. Payor benefit D. Reinstatement
D. Reinstatement Reinstatement is the only policy provision; the rest are policy riders
Carlos's health policy insurance policy pays benefits according to a list which indicates the amount the is payable under each type of covered treatment or procedure. Carlos's policy provides benefits on a A. Reimbursement basis B. Service basis C. Cash basis D. Scheduled Basis
D. Scheduled Basis This type of payment covers the coast of treatment, not to exceed the maximum shown in the schedule.