Life & Health ✨
estate
a person's net worth
the term insurance includes all of the following (by mail or any other means):
* solicitation * negotiations * sale (effectuation of a contract of insurance) * advising an individual concerning by coverage or claims
all of the following statements concerning workers compensation are correct EXCEPT
A worker receives benefits only if the work related injury was not his/her fault.
A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits?
Immediate annuity
The two types of assignments are
absolute and collateral
group health insurance is characterized by all of the following except
adverse selection
An insurer is attempting to determine the insurability of an applicant and decides to obtain medical information from several different sources. Which entity must be notified of the investigation?
applicant
decline risk
applicants who are rejected
which of the following provisions is mandatory for health insurance policies
Physical examination and autopsy
If the annuitant dies during the accumulation period, who will receive the annuity benefits?
beneficiary
occupational coverage
benefits for illness, injury or disability resulting from accidents or sicknesses that occur on or off the job
which of the following must be included in all life insurance advertisements?
identity of the actual insurer
A man purchased a $90,000 annuity with a single premium, and began receiving payments 2 months after that. What type of annuity is it?
immediate
what are the benefits of workers compensation?
- medical benefits - income benefits - death benefits - rehabilitation benefits
which of the following is a feature of a variable annuity?
Benefit payment amounts are not guaranteed.
which of the following is NOT true regarding workers compensation?
Benefits are offered by the insurer.
which of the following best describes the aleatory nature of an insurance contract
Exchange of unequal values
primary, secondary payor
For individuals eligible for Medicare coverage who continue to work, the employer's health plan would be primary coverage while Medicare would be secondary coverage
Issue age policy premiums increase in response to which of the following factors?
Increased benefits
Who makes up the Medical Information Bureau?
Insurers
which of the following is true regarding the annuity period
It may last for the lifetime of the annuitant
which of the following statements about a suicide clause in a life insurance policy is TRUE?
Suicide is excluded for a specific period of years and covered thereafter.
All of the following are true of an annuity owner except
The owner must be the party to receive benefits.
all of the following are true of key person insurance except
The plan is funded by permanent insurance only
an insurer receives an annual life insurance dividend check. what term best describes this arrangement?
cash option allows an insurer to send the policyholder an annual, no taxable dividend check.
life insurance
coverage on human lives
An individual has just borrowed $10,000 from his bank on a 5 year installment loan requiring monthly payments. What type of life insurance policy would be best suited for this situation?
Decreasing term
what is the effective date of coverage?
if the premium is not paid with the application, the agent must obtain the premium and a statement of continued good health at the time of policy delivery.
which of the following is an example of a produce being involved in an unfair trade practice of rebating?
telling a client that his first premium will be waived if he purchases the insurance policy today
an agent discovers his newest client was result of a referral. to show his thanks to the referring customer, the agent could
thank the customer!
Face Amount
the amount of benefit stated in the life insurance policy
the following are all causes for the insurance commissioner to suspend or imposed conditions upon the continuance of an agents license EXCEPT
the applicant has been shown to be a poor personal credit risk
principle
the face value of the policy
a health insurance policy lapses but is reinstated within an acceptable timeframe. how soon from the reinstatement date will coverage for accidents become effective?
immediately
tax deferred
income that is not subject to taxes immediately but that will later be subject to taxes.
What do individuals use to transfer their risk of loss to a larger group?
insurance
tax deductible
reduces taxable income, resulting in lower tax liability
disclosure
revealed information to help someone make an intelligent and educated decision
commissioner
the head of the state department
an agent receives an emergency cease and desist order for chronically misrepresenting his insurance policies. the agent knows that he did not commit the violations stated in the emergency cease and desist order. he wants to contest the charges in a court hearing which of the following is true?
the hearing must be held within 10 days of receiving a request, unless both parties agree to a later date.
which of the following is NOT covered under Plan A in medigap insurance?
the medicare part A deductible
an insurance agent wants for a client to replace her current annuities plan with another one. he presents the new one in an incomplete and dishonest way, which makes the new contract seem far more appealing than the original one. the policy owner ends up surrendering her original contract and replacing it with a new one. which term best describes what the agent did?
twisting
what type of misrepresentation persuaded an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
twisting
an applicant properly notifies her insurer of a straightforward claim, but the insurer waits an exceedingly long time to process it. which of the below terms best describes the behavior of the insurer?
unfair claims settlement practice
If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?
unilateral
Conditional Receipt
used only when the applicant submits a prepaid application
Rollover
withdrawal of the money from one qualified plan and placing it into another plan
all of the following individuals may qualify for medicare health insurance benefits EXCEPT
• a retired person age 50
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?
Mutual
Misrepresentation
false, misleading, or deceptive statements about policy terms or benefits
what are the state mandatory coverages for individual insurance?
* new born children of the insured - covered from the moment of birth * drug and alcohol addiction treatment
once a person meets the stringent requirements for disability benefits under social security, how lone is the waiting period before any benefits will be paid?
5 months
what does the commissioner of insurance do?
* regulates insurance carriers and issues insurance licenses * does not write laws * examines all authorized insurers
what are the required provisions for individual life insurance?
same as the NAIC mandatory and optional provisions
in all health care plans under the Affordable Care Act (ACA), how many essential benefit categories are there?
10
which of the following is NOT required to be stated in the outline of coverage provided with a long-term care policy?
Basic information about supplementary policies
Rebating
Offering benefits or services not specified in the policy
an insured purchased a noncancellable health insurance policy 1 year ago. Which of the following circumstances would NOT be a reason for the insurance company to cancel the policy?
The insured is in an accident and incurs a large claim
Total Disability
defined differently under different policies
Unfair Discrimination
discrimination in rates, premiums charged, or benefits
which of the following best describes an insurance company that has been formed under the laws of this state
domestic
what statements best describes the free look provision
it allows the insured to return the policy within 10 days for a full refund of premiums if dissatisfied for any reason
what are the four elements of an insurance contract?
• Agreement (offer and acceptance) • consideration • competent parties • legal purpose
what are the life insurance policy comparison methods?
* interest - adjusted net cost method: time value of money * comparative interest rate method: rate of return
what are the types of licenses?
* individuals; resident and nonresident * temporary license- valid for 90 days; issued to maintain the existing business
company regulations
* certificate of authority * domestic/ foreign/ alien - location of incorporation * ownership: stock or mutual *avoid unfair trade practice or unfair claims settlements
credit life
* creditor is the owner and the beneficiary * borrowed pays the premium
certificate of insurance for group coverage
* evidence of coverage * must be given to all insureds
Required Provisions
* free- look period - 15 calendar days * grace period - one month * policy loans - after 3 full years in cash value policies * backdating - 6 months * legal action - within 2 years after loss * payment of claims - within 2 months of the claim
According to the Entire Contract provision, a policy must contain
A copy of the original application for insurance
which entity has the authority to grant a temporary life insurance agents license
Commissioner of Insurance only
What report includes information regarding a person's credit, character, reputation, & habits?
Consumer Report
a waiver of premium provision may be included with which kind of health insurance policy?
Disability Income
which of the following is not true regarding a certificate of authority?
It is issued to group insurance participants.
What describes the specific information about a policy?
Policy Summary
The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?
Reduction of Premium
Federal Fair Credit Reporting Act
Regulates consumer reports
when would a misrepresentation on an insurance application be considered fraud ?
When it is intentional and material
In a replacement situation, all of the following must be considered EXCEPT
assets
the classification "small employer" means any person or firm that during the preceding year employed how many employees?
at least 2 no more than 50
managed care
attempts to contain coste by controlling participant behavior
the commissioner has the full power and authority to do all of the following except
draft insurance laws
rescind
remove or cancel
an insured purchased a 15-year level term life insurance policy with a face amount of $100,000. the policy contained an accidental death rider, offering a double indemnity benefit. the insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. what amount would his beneficiary receive as settlement?
$200,000 the beneficiary would most likely receive twice the face value of the policy, since his fatal injuries were caused by an accident and he died within the 90-day benefit limit stipulated in most policies.
During partial withdrawal from a universal life policy, which portion will be taxed?
Interest
If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to
charge a higher premium.
Insured
person covered by the insurance policy; may or may not be the policy owner
What is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process?
Buyer's Guide
If a change needs to be made to the application for insurance, the agent may do all of the following except? -Erase the incorrect answer & record the correct answer. -Draw a line through the first answer, record the correct answer, & have the applicant initial the change. -Note on the application the reason for the change. -Destroy the application & complete a new one.
Erase the incorrect answer & record the correct answer.
Which Universal Life option has a gradually increasing cash value & a level death benefit?
Option A
What is the primary source of information used for insurance underwriting?
The Application
upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. what does this mean?
The beneficiary will only receive payments of the interest earned on the death benefit.
Contracts that are prepared by one party & submitted to another party on a "take it or leave it" basis are classified as
contracts of adhesion.
Who must pay for the cost of a medical examination required in the process of underwriting?
insurer
Earned Income
salary, wages, or commissions; but not income from investments, unemployment benefits, and similar sources of income.
insurer (principal)
the company who issues an insurance policy
Attained Age
the insured's age at the time the policy is issued or renewed
who bears the investment risk on whole life?
the insurer
Mode
the more frequently premium is paid, the higher the premium.
all of the following benefits are available under social security except?
welfare benefits
owners rights
* Designate and change a beneficiary * Make other changes without beneficiary consent
for how many days of skilled nursing facility care will medicare pay benefits?
100
which of the following is a feature of a disability buyout plan
A lump-sum benefit payment option
which type of care is NOT covered by medicare?
long term care
what are the 3 types of risks?
- standard - substandard - preferred
what is the purpose of insurance
- transfers the risk of loss from an individual to an insurer. - based on principle of indemnity
A producer agent must do all of the following except? -Disclose commissions earned from the sale of the policy. -Explain the policy provisions, riders, & exclusions. -Collect any premium due. -Explain the rating procedures if the policy is rated differently than applied for.
Disclose commissions earned from the sale of the policy.
An insurer received a report regarding a potential insured that includes the insured's financial status, hobbies, & habits. What type of report is that?
Inspection Report
Which of the following is a risk classification used by underwriters for life insurance? -Poor -Normal -Excellent -Standard
Standard
lapse
policy termination due to nonpayment of premium
Policyowner
the person entitled to exercise the rights and privileges in the policy
Which policy component decreases in decreasing term insurance?
Face amount
If an applicant for a life insurance policy & person to be insured by the policy are 2 different people, the underwriter would be concerned about:
Whether an insurable interest exists between the individuals.
beneficiary
a person who receives the benefits of an insurance policy.
what type of insurance would be used for a return of premium rider?
increasing term insurance. When added to a whole life policy it provides that at death prior to a given age, not only is the original face amount payable, but also all premiums previously paid are payable to the beneficiary.
the premium of a survivorship life policy compared with that of a joint life policy would be
lower
Standard Risk
person who is entitled to an insurance protection without extra special restrictions - average risk people
Vesting
the right of a participant in a retirement plan to retain part or all of the benefits
All of the following are duties & responsibilities of producers at the time of application except? -Change any incorrect statement on the application by personally initialing next to the corrected statement. -Explain the nature & type of any receipt the producer is giving to the applicant. -Probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information. -Check to make sure there are no unanswered questions on the application.
Change any incorrect statement on the application by personally initialing next to the corrected statement.
Which nonforfeiture option has the highest amount of insurance protection?
Extended term
Which of the following information about the applicant is not included on Part 1 of the application for insurance? -Occupation -Marital status -Medical background -Gender
Medical background
An agent tries to sell insurance over the phone to an applicant who appears to be confused, but is eventually able to give enough information for the application to be competed. After the policy was issued, the agent talked to the insured's family, & they explained that the insured was recovering from a surgery & might have been under the influence of medication at the time of application. What could happen?
The policy may be voided if it can be proven that the applicant was not capable of making a buying decision at the time of application.
In the underwriting process, it was determined that the applicant for life insurance is in poor health & has some dangerous habits. Which of the following is true concerning the policy premium? -The applicant's habits & health do not affect the premiums. -It will likely be lower because the applicant is a preferred risk. -It will likely be higher because the applicant is a substandard risk. -It will likely be the average premium issued to standard risks.
It will likely be higher because the applicant is a substandard risk.
What is the term for the fee a policy owner must pay to the insurance company to maintain coverage?
Premium
if an insurance company offers Medicare supplement policies, it must offer which of the following plans?
plan A
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the
Other-insured rider
an individual purchased a $100,000 joint life policy on himself and his wife. Eight years later, he died in a automobile accident. How much will his wife receive from the policy?
$100,000
what is the minimum percentage of a licensee's total volume of premiums in a calendar year that must come from business other than controlled business?
25%
the Patient Protection and Affordable Care Act mandates that insurers provide coverage for dependent children up to age of
26
to comply with fair credit reporting act, when must a producer notify an applicant that a credit report may be requested?
At the time of application
Buyer's Guide
A booklet that describes insurance policies and concepts, and provides general information to help an applicant make an informed decision.
which of the following individuals will be eligible for coverage on the Health Insurance Marketplace?
A permanent resident lawfully present in the U.S.
replacement
A practice of terminating an existing policy or letting it lapse, and obtaining a new one.
which of the following is TRUE about credit life insurance?
Creditor is the policyowner.
when an insured purchased her disability income policy, she misstated her age to the agent. she told the agent that she was 30 years old, when in fact, she was 37. if the policy contains the optional misstatement of age provision
Amounts payable under the policy will reflect the insured's correct age.
warranty
An absolutely true statement upon which the validity of the insurance policy depends.
All of the following are examples of third-party ownership of a life insurance policy EXCEPT?
An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan.
in Texas, how is the commissioner of insurance placed in office?
Appointed by the Governor for a term of 2 years
When must the policy summary for a life insurance policy be delivered to the policy owner?
At the time of policy delivery
An insured's premium increases as a result of her age. Which type of policy does she have?
Attained age
to be eligible for tax credits under the ACA, individuals must have income that is what percent of the Federal Poverty Level?
Between 100% and 400%
a small hardware store owner is involved in a car accident that renders him totally disabled for half a year. which type of insurance would help him pay for expenses of the company during the time of his disability
Business overhead expense policy
what document is required for an insurance company to transact insurance?
Certificate of Authority
what is an important feature of a dental expense insurance plan that is NOT typically found in a medical expense insurance plan?
Diagnostic and preventive care
In the Executive Bonus plan, who is the owner of the policy, and who pays the premium?
Executive is the owner and the Executive pays the premium.
At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called
Guaranteed insurability
Which of the following would be required to obtain a certificate of authority
HMO
which of the following statements is CORRECT concerning the relationship between medicare and HMOs?
HMOs may oh for services not covered by medicare
which of the following statements is correct concerning the relationship between medicare and HMOs?
HMOs may pay for services not covered by medicare
Preferred Risk
Individuals who meet certain requirements and qualify for lower premiums than the standard risk
what two elements are necessary for a life insurance contract to have a legal purpose?
Insurable interest and consent
What do individuals use to transfer their risk of loss to a larger group?
Insurance
which of the following is correct about a group health insurance policy?
It cannot exclude newborn children from coverage.
in a group health policy, a probationary period is intended for people who
Join the group after the effective date
which of the following documents must be provided to the policy owner or applicant during policy replacement?
Notice Regarding Replacement
During replacement of life insurance, a replacing insurer must do which of the following?
Obtain a list of all life insurance policies that will be replaced
in long term care insurance, what type of care is provided with intermediate care?
Occasional nursing or rehabilitative care
what is another name for social security benefits?
Old-Age, Survivors, and Disability Insurance
a participating insurance policy may do which of the following?
Pay dividends to the policyowner
which of the following applies to partial disability benefits?
Payment is limited to a certain period of time
with respect to the consideration clause, which of the following would be considered consideration on the part of the applicant for insurance?
Payment of premium
Regarding the taxation of Business Overhead policies,
Premiums are deductible, benefits are taxed.
which of the following is correct concerning the taxation of premiums in a key person life insurance policy
Premiums are not tax deductible as a business expense.
Residual Disability
Provides benefits for loss of income when person returns to work after a total. disability, but cannot yet work at a pre- disability level
an insured pays $1,200 annually for her life insurance premium. the insured applies this years $300 worth of accumulated dividends to the next years premium, thus reducing it to $900. what option does this describe?
Reduction of Premium
An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this?
Reinstatement provision
A policy owner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policy owner should have her husband named as the
Revocable beneficiary
which of the following statements concerning a simplified employee pension plan (SEP) is incorrect?
SEPs are suitable for large companies
Equity Indexed Annuities
Seek higher returns
which of the following best details the underwriting process for life insurance?
Selection, classification, and rating of risked
Methods used to pay the death benefits to a beneficiary upon the insured's death are called
Settlement options
A provision found in insurance policies which prevents the insured from collecting twice for the same loss is called
Subrogation
The transfer of an insured's right to seek damages from a negligent party to the insurer is found in which of the following clauses?
Subrogation
which of the following types of risk will result in the highest premium
Substandard risk
approved amount
The amount Medicare determines to be reasonable for a service that is covered under part B of Medicare.
Actual Charge
The amount a physician or supplier actually bills for a particular service or supply.
Under the ACA, health insurance can no longer be underwritten based on which of the following factors?
The applicant's health condition
excess charge
The difference between the Medicare approved amount for a service or supply and the actual charge.
An employee insured under a group health policy is injured in a car wreck while performing her duties for her employer. This results in a long hospitalization period. Which of the following is true?
The group plan will not pay because the employee was injured at work.
Partial Disability
The inability to perform one or more work duties of a person's own occupation, or inability to work full-time.
an insured purchased a noncancellable health insurance policy 1 year ago. which of the following circumstances would NOT be a reason for the insurance company to cancel the policy?
The insured is in an accident and incurs a large claim
an insured purchased a noncancellable health insurance policy, 1 year ago. which of the following circumstances would NOT be a reason for the insurance company to cancel the policy?
The insured is in an accident and incurs a large claim
which is true about a spouse term rider?
The rider is usually level term insurance
which of the following is not true of life settlements
The seller must be terminally ill
An agent explains the details of a life insurance policy to a client. The agent does not realize, however, that the state has recently rewritten two of the provisions. As a result, the agent inadvertently misrepresents the policy, making it more attractive than it really is. What best describes this situation?
There is no misconduct
which of the following is true regarding optional benefits with long term care policies
They are available for an additional premium
which of the following statements is true concerning irrevocable beneficiaries
They can be changed only with the written consent of that beneficiary.
which of the following is true regarding Medicare supplement policies?
They must be guaranteed renewable
Why should the producer personally delivery the policy when the first premium has already been paid?
To help the insured understand all aspects of the contract.
what is the purpose of key person insurance
To minimize the risk of financial loss caused by the death of a key employee
a policyowner has a health insurance policy with his wife listed as the primary beneficiary. he would like to change the primary beneficiary to his sister. which of the following is true?
Unless the policy designated the current beneficiary as irrevocable, the policyowner can make the change at any time.
When is controlled business legal?
When the commissions from controlled business do not exceed the aggregate commissions on all the other business (specific limits may vary from state to state)
all of the following qualify for medicare part A except
anyone who is willing to pay a premium
In a group health policy, a probationary period is intended for people
Who joined the group after the effective date.
Affordable Care Act
a federal law that mandates increased preventive, educational, and community-based health care services, and that established the health insurance marketplace to make health coverage available to any uninsured individuals
when the policy owner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?
a fixed amount
cash value
a policy's savings element or living benefit
surrender
early termination of a policy by the policyowner
An insured is covered under 2 group health plans - under his own and his spouse's. He had suffered a loss of $2,000. After the insured paid the total of $500 in deductibles and coinsurance, the primary insurer covered $1,500 of medical expenses. What amount, if any, would be paid by the secondary insurer?
$500
L has a major medical policy with a $500 deductible and 80/20 coinsurance. L is hospitalized and sustains a $2,500 loss. What is the maximum amount that L will have to pay?
$900 (deductible + 20% of the bill after the deductible [20% of $2,000])
Medicaid
- medical care for those whose income and resources are insufficient - federal and state aid
The premium charged for exercising the Guaranteed Insurability Rider is based upon the insured's
Attained age
all of the following are duties and responsibilities of producers at the time of application except
Change any incorrect statement on the application by personally initialing next to the corrected statement.
All of the following information about the applicant is identified in the General Information section of a life insurance application except? -Gender. -Occupation. -Education. -Age.
Education.
a married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. which policy is that?
Joint Life Policy
activities of daily living
The basic activities a person usually accomplishes during a normal day, such as eating, dressing, and bathing.
claimant
a person who submits a claim for payment of benefits
when transacting business in this state an insurer formed under the laws of another country is known as a/an
alien insurer
Regarding a PPO, which of the following is correct when selecting a primary care physician?
all of the above are correct
according to the provisions of the Patient Protection and Affordable Care Act, all of the following are required preventive care services EXCEPT
cervical cancer exams for all women starting at age 40
alexander has a policy with his ex wife as its beneficiary. what provision allows him to chan her the beneficiary to his new wife?
change of beneficiary
Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to
insured
All advertisements are the responsibility of the
insurer
which of the following entities can legally bind coverage
insurer
In the event of loss, after a notice of claim is submitted to the insurer, who is responsible for providing claims forms and to which party?
insurer and insured
which of the following entities has the authority to make changes to an insurance policy?
insurer's executive officer
Medicare Part B
offered to anyone who's enrolled in part A coverage: - doctor services - outpatient hospital services - home health visits - other medicare and health services - prescription drugs (limited coverage) - outpatient treatment of mental illness - yearly "wellness" visit
where in the long term care policy must the insurer state the renewal provision?
on the first page
Nonoccupational Coverage
only covers claims that result from accidents or sicknesses occurring off the job
health insurance contracts are unilateral. what does that mean?
only one party makes a legally enforceable promise
if a person is compensated for a testimonial in an advertisement which of the following statements should be included in the advertisement?
paid endorsement
The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive?
$100,000
an insured purchased a 15 year level term life insurance policy with a face amount of $100,000. the policy contained an accidental death rider, offering a double indemnity benefit. the insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. what amount would his beneficiary receive as a settlement
$200,000
nonforfeiture law
* guarantees benefits that cannot be forfeited (lost) by the policyowner * 3 minimum nonforfeiture options: reduced paid-up, extended term, and shortened benefit period.
Medicare
- A federal program of health insurance for persons 65 years of age and older - have been entitled to social security disability income benefits for 2 years - have a permanent kidney failure
Workers Compensation
- A form of insurance paid by the employer providing cash benefits to workers injured or disabled in the course of employment. - suffer a work related injury or sickness - covered occupation
an insured purchased a monthly premium of $100 for her health insurance. what would be the duration of the grace period under her policy?
10 days
how long is the grace period in group policies?
31 days
what percentage of continuing education hours must be in a classroom setting?
50%
when delivering a policy, which of the following is an agent's responsibility?
Collect payment at time of delivery (if payment has not already been collected)
which of the following provisions states the insurers right to change premium amounts
Continuation Provisiona
which of the following is NOT an exclusion in medical expense insurance policies?
Coverage for dependents
Items stipulated in the contract that the insurer will not provide coverage for are found in the
Exclusions
in order for an insured under Medicare Part A to receive benefits for care in a skilled nursing facility, which of the following conditions must be met?
The insured must have first been hospitalized for 3 consecutive days.
all of the following statements concerning the use of life insurance as an executive bonus are correct except
The policy is owned by the company
which of the following CANNOT be included along with illustrations used to sell life insurance?
Vanishing premium information
A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of
coercion
forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as
coercion
the provision that provides for the sharing of expenses between the insured and the insurance company is
coinsurance
moral turpitude
conduct that is contrary to community standards of justice, honesty, and good morals
which of the following statements disability insurance policy ?
is renewable at the insured's option to a specified age
Children's riders attached to whole life policies are usually issued as what type of insurance?
term
cease and desist
to stop or discontinue
what are the elements of a legal contract?
• agreement • consideration • competent parties • legal purpose
an advertisement must accurately represent which of the following?
* in insurer's assets * the insurers corporate structure * the insurer's financial standing
insurance guaranty association
* nonprofit * protects insureds against insolvent insurers * funded by member insurers * pays up to specified limits
Medicare Part D "donut hole"
- prescription drug benefit - optional coverage through private prescription plans that contract with medicare
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?
Authorized or admitted
A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?
Automatic premium loan
A man is injured while robbing a convenience store. How does his major medical policy handle the payment of his claim?
Claim is denied if his policy contains the Illegal Occupation provision
the provision that states that both the printed contract and a copy of the application form the contract between the policyowner and the insurer is called the
Entire Contract
a guaranteed renewable disability insurance policy
Is renewable at the insureds option to a specified age
Carriers
Organizations that process claims that are submitted by doctors and suppliers under Medicare
Intermediaries
Organizations that process inpatient and outpatient claims on individuals by hospitals, skilled nursing facilities, home health agencies, hospices and certain other providers of health services.
a rider attached to a life insurance policy that provides coverage on the insureds family members is called the
Other-insured rider
all of the following are true regarding rebates EXCEPT
Rebates are allowed if it's in the best interest of the client.
An agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of?
Rebating
which of the following is NOT covered under plan A in medigap insurance?
The Medicare Part A deductible
a husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouses coverage. if of one of them incurs hospital expenses, how will those expenses likely be paid?
The benefits will be coordinated
which of the following is NOT a feature of a guaranteed renewable provision?
The insurer can increase the policy premium on an individual basis
which of the following is true regarding elimination periods and the cost of coverage
The longer the elimination period, the lower the cost of coverage
all of the following are true of key person insurance EXCEPT
The plan is funded by permanent insurance only.
all of the following are true regarding the guaranteed insurability rider except
This rider is available to all insureds with no additional premium.
What is the purpose of the buyer's guide?
To allow the consumer to compare the costs of different policies.
The purpose of managed care health insurance plans is to
To control health insurance claims expenses
what is the purpose of coinsurance provisions
To help the insurance company to prevent overutilization of the policy
what is the purpose of insurance guaranty associations?
To protect policyowners, insureds and beneficiaries from financial losses caused by insolvent insurers
which of the following would best describe total disability?
a persons ability to work is significantly reduced or eliminated for the rest of her/his life
What is a trial close?
a questioning process to see how the prospect feels at a certain time
A typical Accidental Death & Dismemberment policy covers all of the following losses EXCEPT
a. Limb. b. Life. **c. Income. d. Eyesight.
in reference to the standard medicare supplement benefit plans, what does the term standard mean?
all providers will have the same coverage options and conditions for each plan
the insurer's are allowed to disclose the HIV-related test result to all of the following EXCEPT
another insurer
fraud
any misrepresentation of a material fact, made know king and with the intent to deceive ; an act of deceit or cheating
Pretax contribution
contribution made before federal and/or state taxes are deducted from earnings.
the purpose of managed care jálate insurance plans is to
control health insurance claims expenses
which of the following is a specific dollar amount or a percentage of the cost of care that must be paid by an HMO member?
copayment
what is the main difference between coinsurance and copayment?
copayment is the set dollar amount.
which of the following is used to compare the cost of one life insurance policy against another in order to guide prospective purchases to policies that are competitively priced?
cost comparison methods
A partnership buy-sell agreement in which each partner purchases insurance on the life of each of the other partners is called a
cross purchase plan
if the insured has the right to keep a long-term care insurance policy in force by making timely premium payments, and the insurer may not make any change to the policy or decline to renew it, the policy is
guaranteed renewable
any inducement offered to the insured in the sale of an insurance policy that at is not specified in the policy is an unlawful practice known as
rebating
which of the following insurers are owned by stockholders?
stock
taxable
subject to taxation, payable to state and federal government
hospice care is intended for
terminally ill
which of the following statements regarding the Change of Beneficiaries Provision is false?
the policy owner has the right to change beneficiaries in any case
which of the following is the best reason to purchase life insurance rather than annuities
to create an estate
what is the purpose of the life insurance guaranty association
to help protect policy owners and beneficiaries against financial loss caused by the insolvency of an insurance company
eligibility for affordable care act
* must be a U.S. citizen or national or be lawfully present in the united states * must live in the united states * cannot be currently incarcerated
Maintenance and duration of license
* must be renewed every 2 years * can be reinstated within a short period of time after lapse * continuing education - must be completed every reporting period * disciplinary actions: - suspension, revocation or refusal to renew license - cease and desist order - monetary penalties
viatical settlements
* third party contracts * viator receives a percentage of the policy's face amount * may be rescinded within 15 days of the payment
The usage of words or symbols that are similar to what entity is prohibited in life insurance advertisements?
federal government
Defamation
maliciously critical statements about a person or company.
exempt
not subject to an obligation
all of the following are covered by part A of medicare EXCEPT
physicians and surgeons services
An agent licensed in Texas is moving to kansas. which of the following applies?
the agent has 30 days to notify the department of insurance of the new address
Who is the owner and who is the beneficiary on a Key Person Life Insurance Policy?
the employer is the owner and beneficiary
What is the purpose of a conditional receipt?
It is intended to provide coverage on a date earlier than the date of the issuance of the policy.
Gross Income
a person's income before taxes or other deductions
deferred
postpone until a future time
An agent & the applicant for a life insurance policy fill out & sign the application. However, the applicant does not wish to give the agent the initial premium, & no conditional receipt is issued. When will coverage begin?
When the agent delivers the policy, collects the initial premium, & the applicant completes an acceptable Statement of Good Health.
The term "illustration" in a life insurance policy refers to:
A presentation of non-guaranteed elements of a policy.
FIFO (first in, first out)
principle under which it is assumed that the funds paid into the policy first will be paid out first.
Which of the following policies would have an IRS required corridor or gap between the cash value & the death benefit? -Universal Life - Option A -Universal Life - Option B -Equity Indexed Universal Life -Variable Universal Life
Universal Life - Option A
If an insurer issued a policy based on the application that had unanswered questions, which of the following will be true? -The policy will be void. -The insurer may deny coverage later, because of the information missing on the application. -The application will be interpreted as if the insurer waived its right to have an answer on the application. -The policy will be interpreted as if the insured did not have an answer to the question.
The application will be interpreted as if the insurer waived its right to have an answer on the application.
which of the following is true regarding the annuity period?
It may last for the lifetime of the annuitant
insurers are classified according to their domicile. what are the 3 types of insurers?
domestic, foreign, alien
illustration
means a presentation or depiction that includes non guaranteed elements of a life insurance policy over a period of years.
Mode
the more frequently premium is paid; the higher the premium
group life
* termination and conversion rules * policy provisions: - incontestability period - 2 years - grace period - 31 days - misstatement of age - insurer ageists premium and benefits
group life insurance is a single policy written to provide coverage to members of a group. which of the following statements concerning group life is correct?
100% participation of members is required in noncontributory plans.
The Insurance Commissioner may examine the affairs of any insurer as often as necessary, but not less frequently than once every
5 years
If the insured under a disability income insurance policy changes to a more hazardous occupation after the policy has been issued, and a claim is filed, the insurance company should do which of the following?
Adjust the benefit in accordance with the increased risk.
An insured in a group policy has misstated his age on the insurance application. As a result, the insurer will most likely
Adjust the premium
How can a new physician be added to the PPO's approved list?
Agree to follow the PPO standards and charge the appropriate fees.
The full premium was submitted with the application for life insurance, & the policy was issued 2 weeks later as requested. When does the policy coverage become effective?
As off the application date.
the insurance policy, together with the policy application and any added riders form what is known as
Entire Contract
an applicant is denied insurance because of information found on a consumer report. which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?
Fair Credit Reporting Act
under the privacy rule for HIPAA, protected information includes all individually identifiable health information
Held or transmitted in any form
which of the following describes taxation of individual disability income insurance premiums and benefits?
Premiums are not tax deductible, and benefits are not taxable.
What would help prevent a universal life policy from lapsing?
Target premium
which of the following is NOT covered under Plan A in medigap insurance?
The Medicare Part A deductible
limiting charge
The maximum amount a physician may charge a medicare beneficiary for a covered service if the physician does not accept assignment
An absolute assignment is a:
a permanent transfer of ownership rights
Applicant/Proposed insured
a person applying for insurance
The provision in a health insurance policy that the insurer cannot refer to any document that is not contained in the contract is the
entire contract clause
When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer?
foreign
What provision in a life insurance policy extends coverage beyond the premium due date?
grace period
The provision which prevents the insured from bringing any legal action against the company for at least 60 days after proof of loss is known as
legal actions
If a dental plan is integrated, it is combined with what type of plan?
medical
Twisting
misleading comparison of policies to persuade ins ted to cancel it switch policies
Under the Accidental Death and Dismemberment (AD&D) coverage, what type of benefit will be paid to the beneficiary in the event of the insured's accidental death?
principal sum
Subrogation
process by which an insurer seeks recovery of the amount paid to the insured from a third party who amy gave caused the loss
according to the state nonforfeiture law for life insurance policies, insurers must offer at least one of the following nonforfeiture options EXCEPT
reduction of premium
In terms of parties to a contract, which does not describe competent party
the person must have completed secondary education
all of the following statements concerning the use of life insurance an an executive bonus are correct EXCEPT?
the policy is owned by the company
what is the purpose of the life insurance guaranty association?
to help protect policy owners and beneficiaries against financial loss caused by the insolvency of an insurance company
a medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographic area is known as
usual, customary, and reasonable
agent regulation
* only one license of the same type is allowed per agent * must be licensed in the line of authority for which the agent transacts insurance. * avoid unfair trade practices
an individual covered under a group life insurance policy may convert the policy to any of the following EXCEPT
15 year level term
testimonials
statements or endorsements made by clients based on their experience with products or services
within how many days must an insured notify the insurer of a child's birth and pay any required fees?
31 days
a deductible is
a specified dollar amount that the insured must pay first before the insurance company will pay the policy benefits
Upon policy delivery, the producer may be required to obtain any of the following except? -Payment of premium. -Delivery receipt. -Signed waiver of premium. -Statement of good health.
Signed waiver of premium.
indemnity
a principle of reimbursement on which insurance is based; in the event of loss, an insurer reimburses the beneficiaries for the loss
who bears the investment risk on variable life?
the policy owner
premium
A specific sum of money paid by the insured to the insurance company in exchange for financial protection against loss.
what are the contract characteristics?
• adhesion - one party prepares the contract, the other party must accept it as is. • aleatory - exchange of unequal amounts. • conditional - certain conditions must be met. • unilateral - only one of the parties to the contract is legally bound to do anything.
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. What insurance principle has the insured violated?
Consideration
beneficiary
a person who receives the benefits of an insurance policy
LIFO (last in, first out)
principle applied to asset management in life insurance products, under which it is assumed that the funds paid into the policy last will be paid out first.
What is a definition of a unilateral contract?
One-sided; only one party makes an enforceable promise.
the dividend option in which the policy owner uses dividends to purchase a term policy for one year is referred to as the
One-year term option.
Substandard Risk
applicants are not acceptable at standard rates because of physical condition, personal or family history of disease, occupation, or dangerous habits.
what are the 3 key factors for life insurance?
- morality - interest - expense
The insured is also the policy owner of a whole life policy. What age must the insured attain in order to receive the policy's face amount?
100
The term "fixed" in a fixed annuity refers to all of the following EXCEPT
death benefit
When Y applied for insurance & paid the initial premium on Aug 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than standard. Y was killed in an automobile accident on Aug 22, before the policy was issued. In this case, the insurance company will
issue the policy anyway & pay the face value to the beneficiary.
Which of the following would be considered a non-medical insurance application? -An application submitted with the Agent's Report. -Any application for life insurance. -An application on which the medical information is completed by the applicant & the agent only. -An application that does not ask any questions about the applicant's medical history.
An application on which the medical information is completed by the applicant & the agent only.
social security benefits
- OASDI- old age, survivors, and cdisability insurance - provides disability income benefits - individuals must meet proper insured status, def of disability, and waiting period requirements
Coordination of Benefits (COB)
- avoid duplication of benefit payments and over insurance when an individual is covered under multiple group health insurance plans - established primary plan
what are the 5 basic characteristics of managed care plans?
- controlled access to providers - comprehensive case management - preventive care - risk sharing - high quality care
what are the requirements to qualify for disability benefits?
- individuals must have earned 40 work credits, 20 of which were earned in the 10 years before the disability - 5-month waiting period - benefits based on PIA
Medicare Part C (Medicare Advantage)
- requires enrollment in parts A & B - provided by an approved health maintenance organization or preferred provider organization
Medicare Part A (Hospital Insurance)
- when an individual first becomes eligible for medicare (starting 3 months before turning 65 & ending 3 months after 65 birthday) - general enrollment period- between jan 1- march 31st each year - special enrollment period - at any time during the year of the individual or her/his spouse is still employed and covered under a group health plan coverage: - impatient hospital care - skilled nursing facility - home health care - hospice care
a license may NOT be denied, suspended, or revoked if the licensee
submits and unsigned policy application
an employee is injured in a construction accident, rendering him unable to work for a year. which of the following plans would provide him with medical expense coverage and income assistance?
workers compensation
Insurance is the transfer of
risk.
how long is the incontestability period in group life insurance policies issued in Texas?
2 years
an insured has medicare part D coverage. upon reaching the initial benefit limit, what percentage of the prescription drug cost is the insured responsible for paying?
25%
the commissioner of insurance issues a cease and desist order to an agent. if the agent wishes to contest the charges in court, how many days after the order was issued does the agent have to make the request?
30 days
how long must producer maintain records of continuing education course completion
4 years
the insurance commissioner may examine the affairs of any insurer as often as necessary, but not less frequently than once every
5 years
a hospital indemnity policy will pay
A benefit for each day the insured is in a hospital.
which of the following does the Insuring Clause NOT specify?
A list of available doctors
which of the following is not required to be stated in the outline of coverage provided with a long term care policy
Basic information about supplementary policies
which of the following statements regarding business overhead expense policies is NOT true
Benefits are usually limited to six months.
Insurers may change which of the following on a guaranteed renewable health insurance policy?
Rates by class
An insured is hospitalized with a back injury. Upon checking his disability income policy, he learns that he will not be eligible for benefits for at least 30 days. This indicates that his policy is written with a 30-day
Elimination period
The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT
The insured's age at death
which of the following is NOT required on an illustration used in the sale of a life insurance policy?
The name of the primary and secondary beneficiaries
which provision states that the insurance company must pay Medical Expense claims immediately?
Time of Payment of Claims
Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under an accident and health policy must contain
a statement that is sufficiently clear to identify the insured and the nature of the claim
which of the following provisions states the insurer's right to change premium amounts?
continuation provision
dependent children benefits
eligible dependents - coverage may not be terminated if child is incapable of self support due to physical or mental handicap
if an insured is not required to pay a deductible, what kind of coverage does he/she have?
first dollar
which of following entities is not an insurer but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization
fraternal benefit society
all of the following are mandatory life insurance policy provisions except
policy backdating
If the Commissioner/Superintendent finds a licensee engaging in an unfair method of competition or an unfair practice, what order will be issued?
Cease and desist order
which of the following will vary the length of the grace period in health insurance policies?
The mode of the premium payment
which of the following definitions would make it easier to qualify for total disability benefits?
The more liberal "own occupation"
which of the following is not true of life settlements?
The seller must be terminally ill
which of the following entities is not an insurer b an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization?
fraternal benefit society
how long is a newborn covered without notification to the insurer?
from the moment of birth, and the insurer must be notified within 31 days
an insurer devises an intimidation strategy in order to corner a large portion of the insurance market. which of the following describes this practice?
illegal
which of the following occupations would NOT directly help to qualify someone for the office of Commissioner of Insurance?
insurance agent
a guaranteed renewable health insurance policy allows the
policyholder to renew the policy to stated age, with the company having the right to increase premiums on the entire class.
company Y had 20 employees on that staff last year. Which of the following terms most precisely labels the company's group insurance classification?
small employer
which of the following terms describes the specified dollar amount behind which the insured no longer participates in the sharing of expenses?
stop-loss limit
an insurer advertises a health policy that is covered by the life and health insurance guaranty association. he advertisement includes a short list of benefits and approximate rates. the end of the advertisement includes statement that protection is provided by the guaranty association. which of the following is true?
mentioning the Guaranty Association in advertisements is considered to be unfair trade practice?
Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to an insured is
monthly
in an individual long term care insurance plan, the insured is able to deduct the premiums from taxes. what income taxation will be imposed on the benefits received?
no tax
if a person is compensated for a testimonial in an advertisement, which of the following statements should be included in be advertisement?
paid endorsement
all of the following are mandatory life insurance policy provisions EXCEPT
policy backdating
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?
$2,500
When is the earliest a policy may go into effect?
When the application is signed & a check is given to the agent.
nonprofit organization
an organization that uses its surplus to fulfill its purpose instead of distributing the surplus to its owners or members.
Policy endowment
maturity date
agents ( producers) report
provides agents personal observations concerning the proposed insured
An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin 2 years after the annuity was purchased. What type of annuity is it?
Deferred