Life and Health Insurance UT

A man bought an individual health insurance policy for himself. Which of the following roles does he now legally have?

Both subscriber and insured: Insureds are persons covered by health insurance and who receive benefits. Subscribers are people whose name the contract is issued.

Because of the history of cancer in a family, someone purchases a policy that specifically covers the expense of treating cancer. This type of policy would be classified as what type of policy?

Dread Disease Policy This is a limited policy that is written to specifically cover cancer expenses.

True of Qualified plans:

It has a tax benefit for both employer and employee. Approved by the IRS, which then gives both the employer and the employee benefits in deductibility of contributions and tax deferral of growth.

Which of the following is true about the premium on the children's rider in a life insurance policy?

It remains the same no matter how many children are added to the policy

If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age, What type of policy is this?

Jumping juvenile policy: provide a low face amount in the early years and then increase, usually by 5 times the amount, when the insured reached an age specified in the policy.

If a health care plan has characteristics of an HMO and PO, what type of plan is it?

Point of service plans are a combination of HMOs and PPOs

Which of the following does a life insurance producer have the authority to do?

Receive an application Property and casualty producers can usually bind coverage for their clients. Life and health producers, however, are authorized to solicit, receive, and forward applications for insurance companies, but they generally do not have authority to bind coverage or to alter or modify coverage.

A producers license lapsed. How soon after this lapse can his license be reinstated?

1 year

Own occupation:

2 years

How many eligible employees must be included in a contributory plan?

75%

All of the following qualify for Medicare Part A EXCEPT

Anyone who is at the end stage of renal disease Anyone who is over 65, not covered by Social Security, and is willing to pay premium. Anyone that qualifies through Social Security. For Medicare Part A, a person must be age 65 or otherwise qualify.

At what point must an outline of coverage be delivered?

At the time of application or upon the delivery of the policy.

Which of the following provisions in annuity contracts allow the owner to surrender the annuity if interest rates drop to a specified level?

Bail-out

An insured has a life insurance policy with a face amount of $500. He pays a premium each week to the agent who sold him the policy. What kind of policy does the insured have?

Industrial life. An industrial life insurance policy is written on an individual basis in small amounts. Usually with a face amount of less than $1000, with premium payable weekly or monthly. As a general rule, these policies are written non medically.

The annuity owner dies while the annuity is still in the accumulation stage, which of the following is true?

The beneficiary will receive the greater of the money aid into the annuity or cash value. If the annuity dies during the accumulation period, the beneficiary receives benefits from the annuity: either the amount paid into the plan or the cash value, whichever is greater.

What phase begins after a new policy is delivered?

The free look period: 10 days

An accident and health policy must provide an adoptive indemnity benefit if...

the insured has coverage for maternity benefits at the time of adoption. The insurance policy must provide an adoptive indemnity benefit if a child is placed for adoption within 90 days of birth.

What is true concerning insurable interest as it applies to life insurance?

Business partners have an insurable interest in each other A husband or wife has an insurable interest in their spouse An individual has an insurable interest in his or her own life.

Which of the following would be considered an exception to the National do not call list?

Calls for which the consumer has given prior written consent Calls for which are not commercial or do not include unsolicited advertisements Calls by or on behalf of tax exempt nonprofit organizations

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 to this situation?

Decreasing term: This policies face amount decreases as the amount of debt is reduced.

J is covered under 2 group health insurance plans, his own and his wifes. After a loss, he submitted a claim to both plans. After 30 days, the plans still have not agreed on the order of the benefits to be paid. Which of the following needs to happen immediately?

Each plan must pay the benefit in equal shares.

OBRA requires which disease to be covered by an employer for the 30 months before Medicare becomes the primary mode of coverage?

End-stage renal failure OBRA requires end stage kidney (renal) failure to be covered by an employer for 30 months before medicare becomes the primary mode of coverage.

Both universal life and variable universal life have a

Flexible premium. The premium can increase or decrease dependent upon what the policy owner chooses, so long as there is enough value in the policy to fun the death benefit.

Which of the following methods of calculation the amount of life insurance needed takes into account the insured wages, years until retirement, and inflation?

Human life value approach This approach is determined by the loss of income that would result with the death of the insured, after making adjustments for expenses, inflation, etc.

Which of the following cases would a credit disability policy be issued?

If an individual is in debt to a specific creditor, payments will be made for him/her until they return to work.

What is the penalty for IRA distributions that are below the required minimum for the year?

If there are no distributions at the required age, or the distributions are not large enough, the penalty is 50% of the shortfall from the required annual amount.

Annuities can be used to fund which of the following?

Retirement plans: Since annuities are a popular means to provide retirement income, they are often used to fund qualified retirement plans.

A 35 year old spouse of the insured collects early distributions from her husbands retirement plan as a result of a divorce settlement. What penalties, if any, will she have to pay?

She will not have t ay any penalties in this specific circumstance. Under normal circumstances, a 10% penalty tax is imposed on distributions made before the age of 59 and a half. There are exceptional circumstances, however, that are exempt from the penalty tax,including distributions made as a result of a divorce decree.

What is true about Straight life policies?

Straight life policies charge a level annual premium throughout the insureds lifetime and provide a level, guaranteed death benefit. the face value of the policy is paid to the insured at age 100 it usually develops cash value by the end of the third policy year it has the lowest annual premium of the three type of whole life policies.

Which of the following is called the "second-to-die" policy?

Survivorship life or last survivor policy

Which of the following is true regarding METs?

They allow small employers an opportunity to band together to purchase less expensive insurance. Those small employers who cannot qualify for group health insurance band together for the purpose of buying insurance.

All of the following statements are true regarding installments for a fixed amount:

This option pays a specific amount until the funds are exhausted. The annuitant may select how big the payments will be. Value of the account and future earnings will determine the time period fro the benefits. Installments for a fixed amount option has no life contingencies. A specific amount will be paid until funds are exhausted whether or not the annuitant is living.

An insurance company forwards fixed annuity premiums to their general account, where the money is invested. The guaranteed minimum interest is set at 2.5%. During an economic downswing, the investments only drew 2%. What interest rate will the insurer pay to its policyholders?

2.5% Insurance companies promise guaranteed minimums on the fixed annuities. This means that if the investments draw less than that, the company will have to pay those promised minimums anyways. If they make more than the promised guaranteed rate, the company will pay that excess.

Every small employer carrier shall, as a condition of transacting business in this state with small employers, actively offer to small employers at least how many benefit plans?

2: One plan offered by each small employer carrier shall be a basic health benefit plan, and one shall be a standard health benefit plan.

If an accident and health insurance policy provides coverage for any members of the policyholders family, the policy must provide benefits on the same basis to an adoptive child beginning from the moment of birth, if placement for the adoption occurs within...

30 days of child's birth In this case, the policy must provide benefits on the same basis to an adopted child from the moment of birth, if placement for adoption occurs within 30 days of the child's birth.

Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium?

Automatic premium loan: This provision is not required, but is commonly added with a cash value at no additional charge. This is a special type of loan that prevents the unintentional lapse of policy due to nonpayment of the premium.

When must an IRA be completely distributed when a beneficiary is not named?

December 31 of the year that contains the fifth anniversary of the owners death.

Employer contributions made to a qualified plan

are subject to vesting requirements Qualified plans MUST have a vesting requirement.

All of the following statements describe a MEWA:

can be sponsored by insurance companies employers retain full responsibility for unpaid claims can be self insured

An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of

concealment. This is the withholding of information that will result in an imprecise underwriting decision.

The Omnibus Budget Reconciliation Act of 1990 requires that large health group plans must provide coverage for disabled individuals under

age 65 who are not retired

What is a foreign insurer?

an insurer with a home office in another state. Domestic=insurers home office is in this state Alien=insures home office is in a different country

which of the following describes taxation of individual disability income insurance premiums and benefits?

premiums are not tax deductible and benefits are not taxable.

The following are characteristics and services of an HMO plan

providing free annual checkups encouraging early treatment providing care on an outpatient basis

All of these are usually covered under a dental insurance plan

routine examinations braces and applications oral surgery

Traditional IRA contributions are

tax deductible

During the accumulation period in a non qualified annuity, what are the tax consequences of a withdrawal?

taxable interest with be withdrawn first and the 10% penalty will be imposed if under age 59 and a half When money is withdrawn during the accumulation phase, the amounts are taxed on a last in first out basis (LIFO), therefore all taxes will be taxable until the owners cost basis is reached.

Where would Long-term care services be rendered?

A nursing home or one's own home

Stranger oriented life insurance policies are in direct opposition to the principle of:

Insurable interest: Because the purchaser of the stranger-oriented life insurance policy doesn't know the insured, or have any interest in the insureds longevity, STOLI policies violate the principle of insurable interest.

What do individuals use to transfer their risk of loss to a larger group?

Insurance

What is the main purpose of the Seven-pay test?

It determines if the insurance policy is a MEC. (modified endowment contract) The seven pay-test determines whether an insurance policy is 'over-funded' or if its a modified endowment contract. In other words, the cumulative premiums aid during the first 7 years of a policy must not exceed the total amount of net level premiums that would be required to pay the policy up using

Cost Containment would cover:

Special hospital bed Tylenol Morphine

How long is the free look period?

The free-look period is 10 days and begins when the policy is delivered.

What is the advantage of reinstating a policy instead of applying for a new one?

The original age is used for premium determination

In a life settlement contract, whom does the life settlement broker represent?

The owner of the policy, or the policyowner

In a group life insurance policy, the employer may select all of the following

The premium payor The type of insurance The amount of insurance They cannot select the beneficiary, the employees must be able to select a beneficiary.

Producers will be deemed to be using their license primarily to write controlled business if, during any 12 month period...

The total premiums on controlled business exceeds the total premiums on all other businesses written.

The authority granted to an agent through the agents contract is referred to as

express authority

If there is a primary and contingent beneficiary, when would the contingent beneficiary be able to collect the death benefit?

if the primary beneficiary predeceases the insured. the contingent beneficiary would need to outlive both the primary beneficiary and the insured.

Key person disability income policy:

income may be used to find a replacement premiums are not deductible to the business it is typically written to protect the company in the event the key employee becomes disabled and is unable to work

Within how many of requesting an investigative consumer report must the insurer notify the consumer in writing that the report will be obtained?

within 3 days of the date the report was requested

What is correct about Medicare?

The program is divided into four parts (A-D) A: hospital expenses B: covers doctor expenses C: allows people to receive all of their health care services through available provider organizations D: for prescription drug coverage

What is true concerning adding a children's rider to an insureds permanent life insurance policy?

it is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age

In health insurance, if a doctor charges 50$ more than what the insurance compnay considers usual, customary and reasonable, the extra cost is

not covered

Death benefits payable to a beneficiary under a life insurance policy are generally:

not subject to income taxation by the federal government. When premiums are paid with after tax dollars, the death benefit is usually not subject to federal income taxation.

The coordination benefits provision in Utah requires that both primary and secondary plans pay the benefit in equal shares if the plans cannot agree on the order of payment within how many days after receiving the claim information?

30 days: If plans cannot agree on the order of benefits within 30days of the receipt of all necessary claim information, these plans will immediately pay the claim in equal shares. However, in these instances, no plan will be required to pay more than its policy limits.

What is true regarding installments for a fixed period annuity settlement option?

payments are not guaranteed for life insurer determines the amount for each payment it will pay the benefit for only a designated period of time