KY Life and Health State Exam
What are prerequisites to reinstating a life insurance policy that has NOT been surrendered for its cash surrender value?
Payment in premiums in arrears, with interest, evidence of insurability, and a written application
Under the medical expense policy, the provision that addresses to whom the insurer must pay benefits is called:
Payment of Claim
A rider that is normally associated with a Juvenile Life policy is called a
Payor benefit
Discounted fees for the patient is a characteristic of
Preferred Provider Organizations (PPO)
Medicare Part A does not cover:
Private rooms
Which Nonforfeiture Option continues a build-up of cash value?
Reduced Paid-Up
If the licensee has paid all or part of commissions paid on insurance premiums to a person not licensed in this state, the Commissioner may:
Revoke the license of the Producer
Any licensee who has had his/her license suspended or revoked can request an emergency hearing within 60 days of the date of the order. Within how many days must the department conducted the hearing?
10 days
The required free-look period for a life insurance policy in Kentucky is ____ days
10 days
When the commissioner holds an administrative hearing, ____ days notice must be given
10 days
upon receipt of proof of loss from a claimant, a life or health insurer must begin any necessary investigation within:
15 days
The renewal period for a producer's license is:
2 years
Lapsed individual life insurance may be reinstated at any time within
3 years
What is the MINIMUM number of days for the Grace Period provision for policies that are paid for on an annual basis?
31 days
How long do most states allow insurance company to delay the payment of cash surrender under the Delayed Payment provision?
6 months
What is the maximum rate that can be charged on a policy loan?
8%
Which is more restrictive, accidental means or accidental bodily injury?
Accidental means
What error commonly occurs on applications and for which the incontestable clause does NOT apply?
Age
What kind of policy provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule?
Decreasing term policy
Which contract permits the remaining partners to buy-out the interest of a disabled business partner?
Disability Buy-Sell
What feature does Universal Life insurance offer?
Flexible premiums and flexible face amount
Which type of provider is known for stressing preventative medical care?
Health Maintenance Organizations (HMO's)
Which approach predicts an individual's earning potential and determines how much of that amount would be devoted to dependents?
Human life value approach
What is Nonforfeiture value in life insurance?
In whole insurance policies, they are benefits that accrue to the insured when the policy lapses from nonpayment of premium. Usually either an amount of paid-up term life insurance or a cash surrender value
Who can terminate an agents appointment?
Insurer
What is designed to protect against impaired or insolvent insurers?
Kentucky Life & Health Guaranty Association
Life insurance written to cover a need for a specified period of time at the lowest premium is called
Level term insurance
Which license does NOT require continuing education?
Limited lines of authority-- credit, crop, and travel
In order for a company to run smoothly all of the following are true:
Make products available for those who desire insurance, collect premiums, file notice of appointment with the insurance department
A life insurance policy that fails the 7-Pay Test is considered to be a
Modified Endowment Contract
What 3 things are life insurance premiums based on?
Mortality factor/rate, interest factor, expense factor
A method of life insurance planning which identifies the needs of an individual and the individual's dependents is the
Needs analysis
What is a participating life insurance policy?
One in which the policyowner receives dividends deriving from the company's divisible surplus
How is a Preferred Provider Organization (PPO) less restrictive than a Health Maintenance Organization (HMO)?
PPO's normally provide more physicians to choose from
How do partial disability benefits differ from total disability benefits?
Partial disability benefits start when the insured returns to work
What policy is provided by the Federal Government and provides Group Life Insurance for full time members of the Armed Forces?
Servicemembers' Group Life Insurance (SGLI)
What helps to reduce or avoid adverse selection?
Sound underwriting
What does a life insurance policy guarantee to the stated beneficiary upon the death of the insured?
Specified amount of money
Surrendering a whole life insurance policy means you are cancelling the policy. Instead of your beneficiaries receiving the death benefit, you as the policyholder will receive the cash value your whole life insurance policy has built up over time.
Surrendering a whole life insurance policy means you are cancelling the policy. Instead of your beneficiaries receiving the death benefit, you as the policyholder will receive the cash value your whole life insurance policy has built up over time.
How much will be taxable if a policyowner, age 55, relinquishes a Universal Life policy?
Taxes are owed on the amount of cash value that exceeds the premiums paid
What makes a policy loan possible?
The Policy loan provision
What happens to annuity when annuitant dies and annuity has not been fully paid out?
The beneficiary will receive the death benefit in full and as a one-time LUMP SUM
Which health insurance policy provision specifies the health care services a policy will provide?
The insuring clause
According to Kentucky Law, every insurance policy must contain all given choices, EXCEPT: - the risks insured against -names of the parties to the contract -the state where the insured was born -the benefits payable
The state where the insured was born
True statements regarding the federal income tax treatment of life insurance:
The total cash surrender value is NOT taxable, cash dividends are normally not taxed, premiums are normally not tax deductible, proceeds are received tax-free if there is a named beneficiary
When must insurable interest exist for a life insurance contract to be valid?
Time of application
How are dividends from a participating life insurance policy normally treated?
Typically NOT subject to Federal income taxes
Risk
Uncertainty of loss
Benefit limits in a Disability Income policy are calculate based on:
a percentage of the insured's earnings
Pure Risk
a risk that presents the chance of loss but no opportunity for gain
If a Life Insurance policy is deemed by the IRS to be a Modified Endowment Contract (MEC), the policy will
lose certain tax advantages
**When proof of loss has been furnished, periodic benefit payments must be made not less frequently than
monthly
What does it mean when major medical policy provides first dollar coverage?
no deductible, where the insurer assumes payment once an insurable event occurs
An application submitted to an insurer that includes the initial premium is considered a(n):
offer
Primary support for Medicare part a comes from
payroll taxes
A signed statement of good health would be collected by a life producer at the time of:
policy delivery
A provision in a life insurance policy that pays the policyowner an amount but does not surpass the guaranteed cash value is called the:
policy loan provision
Medicare Supplement policies are designed to:
provide coverage for expenses not covered. by Medicare
What is the purpose of the Elimination Period in a health insurance policy?
serves as a time-based deductible in a health insurance policy
A new employee must _____________________ during the open enrollment period
sign an enrollment card
The premium for business overhead insurance is a
tax-deductible business expense
****Employer-paid premiums for employee group health insurance are generally
tax-deductible for employer, and neither tax-deductible nor taxable to the employee
The interest earned on the cash value of an individually-owned annuity is considered to be
tax-deferred
The interest earned on the cash value of an individually-owned annuity is considered to be:
tax-deferred
Dividends paid on a whole life policy are
tax-exempt
In life insurance, the needs approach is used mostly to establish:
how much life insurance a client should apply for
The first portion of a covered Major Medical insurance expense that the insured is required to pay is called the:
initial deductible
Total disability benefits are paid when an insured
is unable to work
The ________ maximum for inpatient psychiatric care under Part A Medicare is 190 days
lifetime
Which policy has a death benefit that adjusts periodically and is written for a specific period of time?
Decreasing term
Medicare-
for individual 65 and older, or anyone with a disability
What is to be expected of a Modified Life policy?
An eventual change in premium payments
The person accepting the offering the
An offeree
The producer offering the rebate is
An offeror
What is the period when the accumulated value in an annuity is paid out?
Annuitization phase
When does a Probationary Period provision become effective in a health insurance contract?
At the policy's inception
What best describes disability buy-sell insurance policies?
Benefits are typically tax-free
Business overhead expense insurance vs Disability Buy-Sell Plan
Business overhead expense insurance= designed to REIMBURSE a business for overhead expenses Disability Buy-Sell plan= designed to assist in the SALE of a business
What is a Business Disability Buy-Sell policy designed to assist in?
Business owner becoming disabled
What does Medicare Part A cover?
Care provided in a hospice care, skilled nursing facility, inpatient care
What may the Commissioner issue, evidencing the authority of an insurer to transact insurance in this state?
Certificate of Authority
What type of license must a company have in order to conduct business in Kentucky?
Certificate of authority
A section 1035 Exchange is not permitted for an exchange of an
annuity for a life insurance policy
What is the automatic premium load provision designed to do?
avoid a policy lapse
Medicaid is funded by
both states and federal government
A Health Reimbursement Arrangement (HRA) MUST be established:
by the employer
Example of replacement:
canceling a term life policy to buy a whole life policy
Annuitization can be described as
converting a cash value into periodic income
In a family plan, a child born after issuance of the policy will require
coverage begins immediately at birth. no additional premiums. must add newborn to policy at 31 days though
3 types of agent authority
express, implied, apparent
The reason for backdating a policy is:
to obtain a premium rate based on an earlier age
When is the face amount paid under a Joint Life and Survivor policy?
upon death of the last insured