Life and Health Practice Exam #1 XCEL

Life insurance policies can be standalone policies or can also contain what addition to the policy to provide additional coverage? A. A rider B. An additional coverage amendment C. A life term endorsement D. Life insurance policies are standard and not open to additional forms of coverage

A: A rider. A rider is a provision which provides additional benefits and can be added to a life insurance policy to better tailor the policy to the needs of the Insured. Riders cost additional premium due to the increased coverage. Some examples of riders include the Accelerated Death Benefit Rider and the Other Insured Option Rider.

The federal government pays about what percentage of all Medicaid expenses? a. 50% b. 75% C. 60% d. 100%

C: 60%. The federal government will cover approximately 60% of all expenses covered by Medicaid. While the federal government is the financial contributor to Medicaid, each individual state is required to administer its own Medicaid program.

What two parts of Medicare health insurance are offered by private companies that have been approved by Medicare? a. Parts A and C b. Parts B and C c. Parts C and D d. Parts A and D

C: Parts C and D. Parts C and D of the Medicare health care coverage plans are offered by private companies. These private companies have Medicare approval to offer coverage. Part C is the Medicare Advantage Plan, which provides both Parts A and B plan benefits. Part D of Medicare provides prescription drug coverage.

Jen has a critical illness plan in addition to her life insurance policy. Is Jen subject to a list of network doctors which she must stick to in order for coverage to apply? a. Yes, in all cases b. No, there are no network restrictions c. No, unless endorsed d. Yes, unless Jen wishes to pay extra co-pays, she must stick to in-network doctors.

. B: No, there are no network restrictions. Under a critical illness plan, there are no network restrictions for which doctors or hospital Jen needs to use. This type of freedom with doctors and hospitals helps Jen cut down on costs if she were to need to use a doctor outside of her primary plan's network.

Brent injured his shoulder shoveling snow and required surgery. Brent was out of work for a month and when he returned, his shoulder was still not physically back to 100%. What term is given to the state of Brent's injury since returning to work? a. Remaining injury b. Residual Disability c. Residual Injury d. Remaining Disability

117. B: Residual Disability. Brent was suffering from a residual disability when he returned to work. His original injury was still effecting him physical but not to the extent of being totally disabled and unable to work. Another term used to describe Brent's status is a partial disability.

Margaret and Matthew have been married for ten years. Each year, the couple files their income taxes as "married and filing jointly." Combined, Margaret and Matthew's annual income is $31,000. Are Margaret and Matthew required to pay taxes on social security? a. Yes, due to their filing jointly on their income taxes b. No, due to their filing jointly on their income taxes c. Yes, due to they make over the minimum income requirement d. No, due to they make less than the minimum income requirement

120. D: No, due to the fact that they make less than the minimum income requirement Margaret and Matthew make less income combined than the minimum limit andrefore, are not required to pay social security tax. The minimum income requirement for married couples who file jointly is $32,000. Any couple filing jointly who makes over $32,000 annually will be required to pay social security tax.

What clause may be part of a Traditional Whole Life Insurance Policy that would allow for the Insured to request coverage be cancelled? a. The Cancellation Clause b. The Buy-Out Clause C. The Cash Surrender Clause d. The insured Buy-Out Clause

26. C: Surrender Clause. The Cash Surrender Clause found in Traditional Whole Life Insurance Policies allows Insureds to request cancellation of their policy. The Insured would receive the amount of premium he or she had already paid towards the policy in return.

All of the following regarding a Flexible Spending Account are false EXCEPT: a. It can cover child care expenses under the medical accounts b. It can cover medical expenses under the child care expense account c. There is no time frame in which a Flexible Spending Account's cash must be used d. Flexible Spending Account's cash must be used within a specified time period

50. D: Flexible Spending Accounts must be used within specified time period. Most Flex Spending Accounts allow the account holder up to a year to use the tax free money in their Flex Spending Accounts. If you do not use your money in your account, you cannot transfer it to another year, but rather, you will lose that money.

Margaret is 84 years of age and is suffering from Dementia. Margaret's doctor strongly suggested to her family that they place her into a nursing home to receive around-the-clock care. What part of Medicare may be used to help pay for Margaret's nursing home care? a. Part A b. Part B C. Part C d. Part D

55. A: Part A. Part A of Medicare can cover a patient's stay in a nursing home. This form of Medicare can also provide coverage for hospice, hospital stays and possibly, home care. Part A is one of four parts that make up the federally sponsored Medicare health care coverage.

Under Managed Care Plans, how often are providers required to pay a fee? a. Once a month b. Once a quarter c. Once a year d. A one-time fee when they feel like it

71. A: Once a month. Managed Care Health Plans consists of an organization negotiating benefits with a network of providers. The Insured received discounted out-of-pocket costs for using providers offered within the network of which the insurance provider is a part. The providers are required to pay a monthly fee to remain in the network of recommended service providers.

A contributory group life insurance policy is one in which an employer contributes to the total cost of the policy for their employees. In order for the employer to be able to purchase a contributory group life insurance policy, how many of their employees must be signed up for the plan? a. 75% b. 50% c. 25% d. 100%

A: 75%. 75% of the company's employees must be enrolled in the health care plan in order for the employer to apply for a contributory group life insurance plan. The employer will pay a portion of the cost to have the insurance policy for the company.

Decreasing Term Life Insurance is one type of life insurance policy available to potential insureds. What is an example of an insured to whom a Decreasing Term Life Insurance policy is marketed? a. A 60-year-old whose grown children have moved out of the house and has the home almost paid off b. A 27-year-old newlywed couple C. A single 40-year-old d. A 45-year-old who just purchased a second house

A: A 60-year-old whose grown children have moved out of the house and has the home almost paid off. A Decreasing Term Life Insurance policy is designed to protect an Insured whose general needs are decreasing as the person ages. A 60 year old who is close to having no mortgage payment and has no dependents is ideal for this type of policy.

Jillian submitted a request to her health insurance carrier to renew her current policy. The health insurance carrier released a notice stating that Jillian's policy could be renewed but she had to first provide a new application and copy of a physician statement. The notice that Jillian's health insurance carrier sent is known as what? a. A Conditional Renewal b. An Intent to Renew C. A Renewal Application d. A Renewal Notice Requirement

A: A Conditional Renewal. Jillian's health insurance carrier sent out a notice that the renewal would be processed but there was a condition that needed to be met. Conditional Notices, much like non-renewal notices, must be sent only for State approved reasons and according to the State approved time frame.

Under which type of insurance plan can an insured defer taxes until retirement? a. A non-qualified retirement plan b. A tax deferent retirement plan C. A tax benefit trust retirement plan d. A qualified retirement plan

A: A non-qualified retirement plan. A non-qualified retirement plan is appealing to many potential policyholders as it allows for taxes to be deferred until after retirement. This comes as a savings to many as the age of most retirees puts them into a lower tax bracket, compared to insureds of typical working age.

What expenses, of the following types, can be decreased through the use of a flexible spending account? a. Eligible medical expenses b. Car expenses C. Business attire expenses d. Vacation expenses

A: Eligible medical expenses. A flexible spending account is an employer administered benefit which can help reduce the cost of child care and eligible medical care expenses. An example of using flexible spending for eligible medical care would be an insured applying their flexible spending account towards the costs of co-pays or prescription medicines.

All of the following are subject to the laws of HIPAA regarding patient confidentiality, EXCEPT: a. Employers b. Dentist c. IT workers servicing a hospital d. Medical records storage workers

A: Employers. Although HIPAA prohibits many parties to sharing patient knowledge, this law does not apply to the patient's employer. Other parties which may not fall under the HIPAA law include life insurance companies, many school districts, workers compensation insurance carriers, and law enforcement agencies.

What type of disease is covered under Medicare benefits despite the age of the patient? a. End-Stage Renal Disease b. Celiac's Disease C. Skin Cancer d. Dementia

A: End-Stage Renal Disease. Medicare will provide coverage for patients suffering from End Stage Renal Disease despite what age they are. This disease involves permanent kidney failure. The patient will require dialysis and in some cases, a transplant.

How does a Hospital Indemnity Plan pay out its benefits to the insured? a. In a lump sum for the Insured to use as they choose b. By reimbursing the Insured each time they submit a receipt from a covered expense c. In a lump sum payment to the doctor's office the insured is most seen at d. By issuing a "debit card" to be used whenever the Insured needs

A: In a lump sum for the Insured to use as he or she chooses. A hospital indemnity plan gives the Insured a lump sum cash payout to use for all covered expenses, however the Insured chooses. This payout can be used for expenses such as the emergency room, outpatient surgery, transportation costs, etc.

Theresa was researching the best type of life insurance policy to suite her needs. She would like the lifelong coverage provide by a Traditional Whole Life Insurance Policy but does not want to have to continue to pay premiums for the rest of her life. What type of policy might best suite this want of Theresa? a. Limited-Pay Life Insurance b. Adjustable Life Insurance c. Limited Source Life Insurance d. Adjustable Traditional Whole Life Insurance

A: Limited-Pay Life Insurance. A Limited-Pay Life Insurance Policy would meet Theresa's need of wanting coverage for her entire life and of not having to pay for this coverage for the whole life of the policy. The carrier will note the time frame the Insured must make payments for, usually over 10, 15 or 20 years.

Can COBRA decline coverage due to a pre-existing condition? a. No, COBRA does not decline due to a pre-exiting condition b. Yes, COBRA will always decline if a pre-existing condition is present c. Yes, COBRA may decline depending on the pre-existing condition d. No, but COBRA may decline household members with pre-existing conditions

A: NO, COBRA does not decline due to a pre-exiting condition. COBRA is a health care plan that continues an employer-sponsor plan regardless of if the policyholder has a known pre-existing condition. This coverage is temporary coverage and the policyholder, not the former employer, are responsible for premiums due.

Erin has a standard life insurance policy through her local insurance agent. Once her policy approaches its expiration date, will Erin's agent automatically renew her coverage for another year? a. No, Erin would need to apply for an additional term b. Yes, Erin's insurance would renew each year c. Yes, but for an increase in premium each year the policy renews d. No, there are currently no life insurance plans available for automatic renewal due to the medical exam requirement

A: No, Erin would need to apply for an additional term. A standard life insurance plan is only written for the term for which it is being purchased. For coverage to renew after the policy expires, the Insured would need to reapply. The Insured will also be required to take a medical exam as part of the renewal application process.

If an insured has a Modified Endowment Contract, is the death payout benefit subject to income tax? a. No, in all cases b. Yes, in all cases c. No, unless it is endorsed d. Yes, unless the insured dies of accidental death

A: No, in all cases. An insured having a modified endowment contract benefits from knowing his or her beneficiary will not be required to pay income tax on the payout from the policy. The modified endowment contract acts the same as an annuity in terms of taxes.

Under an Adjustable Life Policy, does the insurance carrier need to cancel a policy if the Insured has a life change? a. No, the policy can be adjusted if the Insured wishes, but the carrier will not enforce a change in limits or a cancellation b. Yes, in all situations, the policy must be cancelled and rewritten c. Yes, the policy must be cancelled if the Insured will not adjust the policy limits in the event of a life change d. No, the carrier will not force a cancellation unless the Insured has a job change

A: No, the policy can be adjusted if the Insured wishes, but the carrier will not enforce a change in limits or a cancellation. An Adjustable Life Policy allows the Insured flexibility of changing limits, premium payments and length of the policy, due to a life change. The Insured can make these changes without fear of the insurance carrier cancelling the policy or forcing limit changes on the Insured.

Under the guaranteed insurability rider, can the insured purchase any additional amount of coverage he or she needs on the dates the policy allows for additional coverage to be purchased? a. No, there is an option amount specified by the policy which is the maximum amount of extra coverage the insured is eligible to purchase b. Yes, the Insured can purchase any amount of coverage they wish c. No, the insured can only purchase up to 50% of the current policy limits d. Yes, if the insured can provide evidence of insurability

A: No, there is an option amount specified by the policy which is the maximum amount of extra coverage the insured is eligible to purchase. The guaranteed insurability rider specifies what day the Insured can purchase additional coverage as well as the maximum amount, or option amount, he or she is eligible to purchase. The Insured may buy less than this option amount but never exceed the option amount nor can he stack amounts to be purchased at the next date available for coverage to be purchased.

Regina is an 87 year old who lives financially off of her social security benefits after having worked for over thirty years. How often does Regina receive benefits from her Social Security? a. On a monthly basis b. By a lump sum c. Once every six months d. Once a year

A: On a monthly basis. Social Security Benefits are paid to eligible individuals on a monthly basis. The benefits are paid to retired employees or their surviving spouses. Regina paid into her social security benefits over the thirty years she was employed.

What parts of the Medicare health insurance plan must an insured have in order to purchase Medicare Supplement Insurance coverage? a. Part A and B b. Parts B and D c. Parts A and C d. Parts B and C

A: Parts A and B. Insureds must have Parts A and B of Medicare plans in order to be eligible to purchase Medicare Supplement Insurance coverage. You cannot purchase Medicare Supplement Insurance coverage if you have a current Medicare Advantage Plan in force at the same time the Medigap coverage would begin.

All of the following are conditions that must be met before an Insurer has to pay out according to a health insurance policy EXCEPT: a. Proof of residency b. Proof of loss c. Proof of insurable interest d. Premium payments paid up to date

A: Proof of residency. An insurance contract is conditional in nature, meaning that all conditions on the Insured's end must be met or fulfilled before an Insurer is required to pay. Conditions include premium payments being up to date, proof of loss and proof of insurable interest.

What provision, found on some life insurance policies, gives the Insured control over how the cash payments will be issued while the policy is in force? a. Settlement options b. Cash payment options c. Dividend options d. Beneficiary options

A: Settlement options. The settlement options provision found in health insurance policies will give the insured some ownership or control over how the payments are made while the policy is active. Some of the Insured's options are a lump sum payment, scheduled payments and collecting only interest.

What type of life insurance policy is bought with the insured knowing that, in the future, he or she will transfer ownership of the policy to a third party? a. Stranger-Owned Life Insurance b. Third Party Life Insurance c. Stranger Invested Life Insurance d. Third Party Invested Life Insurance

A: Stranger-Owned Life Insurance. Stranger-Owned Life Insurance, or STOLI, is a type of life insurance in which a third party purchases a policyholder's existing life insurance policy. This third party, most likely an investor, seeks to profit off the policy once the original policyholder passes away.

Not providing a cash value account for retirement and not providing permanent insurance protection are two disadvantages of what type of life insurance policy? a. Term life insurance b. Traditional life insurance c. Whole life insurance d. Annual renewable term

A: Term life insurance. Term life insurance may be sufficient enough coverage for certain insureds, but it does come with two disadvantages. These two disadvantages include not providing a cash value account for retirement purposes and not providing a permanent source of protection as life insurance. Term insurance is for a temporary means of insurance and is not sufficient as a long term retirement planning tool.

All of the following are examples of permanent life insurance policies EXCEPT: a. Term life insurance b. Interest-sensitive whole life c. Universal life d. Traditional whole life

A: Term life. Interest-sensitive, universal life and traditional whole life insurance policies are all examples of permanent life insurance policies. A term life insurance policy is a temporary means of protection but not meant to cover the life of the insured.

In 1970, an Act was passed to give citizens more ownership of their credit. What was this act known as? a. The Fair Credit Reporting Act b. The Citizen's Right to Fair Credit Act c. The 1970 Fair Credit Score Act d. The 1970 Credit Security Act

A: The Fair Credit Reporting Act. The Fair Credit Reporting Act was passed in 1970 to provide protection against credit fraud. Citizens were now allowed to access their credit report, which gave them ownership in their credit history. The act intended this access to help citizens catch fraud before it ruined their credit score.

Of the following, what is a requirement for a completed application for a life insurance policy? a. The Insured's signature b. The Insured's verified weight c. Physician's statement d. Proof of residency

A: The Insured's signature. The insured's signature on the application is a required part of the life insurance application process. A physician statement, proof of residency and weight verification may be a requirement for some carriers but is not a requirement across the board.

In a contract of adhesion, what party does not have the right to negotiate terms of the contract? a. The Insured b. The Insurer c. The Reinsurer d. Both the Insured and the Insurer

A: The Insured. The Insured is the party that is not afforded the ability to negotiate in a contract of adhesion. An insurance policy is an example of a contract of adhesion as the potential insured can accept the contract or the policy will not be written.

A Cancelable Insurance policy is designed to protect what party in an insurance contract? a. The Insurer b. The Insured c. A third party d. The reinsurer

A: The Insurer. A cancelable policy protects the insurer by allowing cancelation of a policy when the risk becomes outside his or her risk appetite. The insurer must, however, follow State specific guidelines for what reasons the insurer can cancel, how the insurer must notify the insured, and what time frame the insurer needs to follow when notifying the Insured.

Under a Term Life-Critical Illness plan, how are the plan's benefits paid out in the event of the Insured's death? a. The family of the Insured will receive a term life benefit b. The family will receive the critical illness benefit c. The policy will pay out half of the benefit to the family and the other half will be paid back to the insurer if the critical illness benefit is not used d. The family will receive a whole life benefit payout minus a deduction for income tax

A: The family of the Insured will receive a term life benefit. Under a Term-Life Critical Illness plan, the family will receive a term life benefit in the event the Insured dies. Under this same plan, had the insured suffered a critical illness, the insured would have received a critical illness benefit.

Which party to an insurance contract is responsible for payments due after the coinsurance and deductible amounts are satisfied? a. The insurer b. The insured c. Cost is split equally among the insurer and insured d. Cost is split 60% to the insurer and 40% to the insured

A: The insurer. The insurer is responsible for the cost after the insured has met the deductible and co-insurance requirements. The insurer is responsible to pay the amount due up to the policy limit. The insurer may try to make the insured pay for any cost the insurer deems to be above what are reasonable or usual costs.

Insurance is a contract between two parties spelled out in a document known as the insurance policy. What three clauses are found on the first page of every insurance policy? a. The insuring clause, free-look clause and the consideration clause b. The insuring clause, free-look clause and the reinstatement clause c. The free-look clause, the reinstatement clause and the cancellation clause d. The consideration clause, the free-look clause and the cancellation clause

A: The insuring clause, free-look clause and the consideration clause. The insuring clause, free look clause and the consideration clause can be found on the front page of every life insurance policy. These clauses are found on the first page because they are important resources that each insured needs to know to understand the coverage.

What is one benefit of an annual renewable term life insurance policy? a. The policy will automatically renew each year b. The premium stays the same each year the policy is renewed c. The insurance carrier can never deny the insured from renewing each year d. There is no age limit for an insured who wishes to purchase this type of policy

A: The policy will automatically renew each year. An annual renewable term life insurance policy is appealing to those insureds who want to ensure they have coverage for years to come. This type of policy can renew each year up until the age specified on the policy and for a premium that increases as the Insured ages. Most insurance carriers allow for Insureds to renew up to the age of 65.

Under the accidental death benefit rider, how long does the benefit typically extend after the accident occurs? a. Up to a year b. Up to 3 years c. The accident and death both must occur during the policy period d. There is no time frame after the accident for the benefits to apply if the insured passes away as a result of the accident

A: Up to a year. If a life insurance policy contains the accidental death benefit rider and the Insured sustains an accident, the resulting death from the accident must occur in a time frame outlined by the policy for the benefit to apply, Typically a policy will state the death must occur up to a year after the accident for the beneficiary to collect from the policy,

What is the insurance term for charges that do not exceed the pre-determined fee usually associated with specific medical services in a specific geographic area? a. Usual, customary, and reasonable charges b. Reasonable and mandatory charges c. Customary and reasonable charges d. Mandatory and usual charges

A: Usual, customary, and reasonable charges. Insurance companies generally consider as covered medical expenses, those that are usual, customer and within reason. The services must meet these three criteria to be covered under the majority of insurance policies. The intent is that an insurance carrier is not paying for services or procedures which are not medically necessary and are not above and beyond what the policy holder needs in terms of medical care.

Henry owns a mid-sized manufacturing company. He was shopping around for different types of retirement plans to offer his employees. What type of retirement plan is best for attracting good employees? a. A Non-Qualified Retirement Plan b. A Qualified Retirement Plan C. A Buy-out Retirement Plan d. A Retention Retirement Plan

B: A Qualified Retirement Plan. A qualified retirement plan is attractive to potential employees as it will allow an employee to have a percentage of his or her pay go directly into the plan. This will allow the employee to reduce taxable income each year. Tax breaks are also given to the employers who contribute to the plans.

Investors who are still conservative, but willing to take on a little more risk than a Fixed Annuity, may be interested in what type of investment? a. A Constant Annuity b. A Variable Annuity C. An Amended Fixed Annuity d. A Mid-Market Account

B: A Variable Annuity. A Variable Annuity is appealing to investors who are conservative with their money but willing to take less guaranteed return on the premium than a Fixed Annuity. The premium return is guaranteed still with a Variable Annuity but lower, as some money is invested in securities which have the potential to make the owner additional money.

Increasing Term Life Insurance is one type of life insurance policy available to potential insureds. What is an example of an insured to whom an Increasing Term Life Insurance policy is marketed? a. An elderly couple moving into an assisted living facility b. A newly married couple C. A person approaching retirement age d. A teenager getting ready for college

B: A newly married couple. An Increasing Term Life Insurance policy may be ideal for insureds who do not want to spend a lot of money on premium but do want the flexibility of having their insurance policy change to fit the needs of their growing family. This type of policy states set times of when the Insured can increase limits on the policy to keep up with inflation rates as well. These times are usually on an annual basis.

Lisa was experiencing severe pain in her jaw and her friends encouraged her to see a specialist as this issue was only getting worse. Lisa called a specialist in the area, but the specialist said he could not see Lisa without getting what type of notice from her primary dentist? a. You never need approval to see a specialist regardless of your insurance b. A pre-certification due to her insurance carrier's requirements C. A pre-visit approval notice d. A documentation that the primary dentist could not fix her mouth issue and that she needed specialized care

B: A pre-certification due to her insurance carrier's requirements. Some insurance plans require the policyholder to obtain a pre-certification letter, or "pre-cert", before he or she can see a specialist. The intent of this notice is that the policyholder will first see his or her primary care provider for services before seeking more specialized care, which is typically much more expensive for all parties.

An insured is diagnosed with a terminal illness and is in need of extensive medical care. What rider, if attached to their life insurance policy, would help the insured pay for the necessary medical expenses? a. Term Rider b. Accelerated Death Benefit Rider c. Medically Necessary Rider d. Other Insured Rider

B: Accelerate Death Benefit Rider. If an accelerate death rider is attached to a life insurance policy and the insured becomes terminally ill, the insured is allowed a payout to pay for medical expenses. The remaining amount left in the policy would go to the beneficiary after the Insured passes away.

Which type of life insurance policy allows the Insured the flexibility of being able to amend the premiums due, the coverage amounts and the length of their policy? a. A Flex-Account Policy b. An Adjustable Life Policy C. An Account Adjustable Policy d. A Flexible Benefits Policy

B: An Adjustable Life Policy. An Adjustable Life Policy is very appealing to many potential insureds due to its flexibility. Job or life changes may lead an insured to want different limits, different premium amounts or even a change in the length of the life insurance policy. An Adjustable Life Policy will allow the insured to adjust his or her policy to match life or job changes.

Why is term life insurance sometimes referred to as "pure" insurance? a. Because it has a financial investment value b. Because it has no financial investment value c. Because a large portion of premium is collected to pay the insurance company's operational costs d. Because very little of the premium is used to pay for coverage

B: Because it has no financial investment value. Term life insurance, sometimes called "pure" insurance, has no financial investment value. The premium paid for term life policies is applied primarily for coverage. Term life insurance does not provide for significant premium amounts collected to be used for the operational costs of the insurance company writing the risk.

Why do insurance carriers work to closely monitor life insurance policies to avoid Stranger. Owned Life Insurance policies? a. Because they are illegal in all cases b. Because the third party has no insurable interest in the policy and therefore should not benefit from the policy C. Because they promote fraud d. Insurance carriers, on the contrary, actually encourage Stranger-Owned Life Insurance policies

B: Because the third party has no insurable interest in the policy and therefore should not benefit from the policy. Insurance carriers do not encourage Stranger-Owned Life Insurance policies as these policies are purchased with the intent of a third party, who has no insurable interest, profiting off of someone else's life insurance policy. Policies may be sold to individual investors or even groups of investors who lump policies together to re-sell and make an even larger profit.

Name one important benefit of having a whole life insurance policy. a. The premiums decrease over time b. Cash value accrues over time c. If you borrow money from the policy, you do not have to pay back the amount borrowed d. The Insured receives a discount if he or she renews the policy earlier than the expiration date

B: Cash value accrues over time. Whole life insurance policies have the benefit of cash value accruing over the life of the policy. This benefit is not found on term life policies. Whole life insurance policies also have a set premium that will remain the same over the life of the policy.

Victor was just notified that he was being laid off from the company for which he has worked for the past 15 years. Victor was most concerned about losing his health insurance benefits provided through his company. What type of health insurance policy should Victor consider until he is able to find a new job? a. Medicare b. COBRA c. Medicaid d. Medicare Advantage Plan

B: Cobra. Victor should look into obtaining a health insurance policy through COBRA. COBRA is health care coverage that temporarily extends your employer-sponsored health care plan. The Insured is responsible for the monthly premium fees.

George has a life insurance policy through ABC Insurance. George's primary beneficiary listed on the policy is his sister Margaret and his secondary beneficiary listed is his brother Frank. George passed away in March of natural causes and a month later Margaret also passed away due to natural causes. George's policy paid out to Frank and technically viewed Margaret as passing before George due to what clause included in George's life insurance policy? a. Primary beneficiary death clause b. Common disaster clause c. Common illness clause d. Secondary beneficiary clause

B: Common disaster clause. The common disaster clause attached to some life insurance plans states that the primary beneficiary must live past a specified time period after the insured's death to qualify for benefits (or their estate qualify). Because Margaret passed away within a month of George's death, the insurance carrier paid out the benefits to Frank as the secondary beneficiary.

Trent was scheduled for his 6 month dental cleaning next week. He called the office ahead of time to see how much his payment would be for the visit. The receptionist told Trent he would be responsible for $30 at this visit. Trent's $30 payment is known as what type of payment? a. Dental service payment b. Copayment c. Insurance reimbursement d. Patient payment

B: Copayment. Trent's $30 bill is known as a copayment. An insured may be responsible for a copayment at each doctor or dentist visit he or she schedules. The remaining bill from the visit is submitted to the insurance company to fulfill.

If an Insured is solely looking for a policy to cover the remaining cost of his or her mortgage in the event of death, what type of insurance policy should he or she obtain? a. Variable annuity b. Decreasing term insurance c. Level premium insurance d. Convertible term insurance

B: Decreasing term insurance. Decreasing term life insurance is a type of life insurance plan designed to cover an item or piece of property the costs of which decrease over time. The cost of having a mortgage decreases over time, and the remaining costs of a mortgage left after an insured's death can be covered by a standard life insurance policy.

What type of qualified retirement plans will provide the employees a guaranteed payout amount? a. Defined Contribution b. Defined Benefit c. Both Defined Contribution and Defined Benefit d. Neither Defined Contribution or Defined Benefit

B: Defined Benefit. The defined benefit type of a qualified retirement plan will give the Insured, or employee, a guaranteed payout amount. An example of a defined benefit plan is the traditional pension plan provided by employers.

Brenda was starting a new job, and part of the hiring process consisted of selecting an optional Life Insurance plan. While Brenda knew the policy was optional, she felt pressure from her office to select a policy. After her policy was issued, Brenda was talking to a local agent and realized there was a much better plan available which she should have purchased. What provision would need to be on Brenda's original policy to cancel without be penalized? a. Grace Period Provision b. Free-Look Provision C. Trial Run Provision d. There is always a penalty when the Insured cancels due to wanting a different policy.

B: Free-Look Provision. A free-look provision allows the Insured the ability to cancel their policy within a specified period of time after the start of the policy. The Insured will receive back all of the premiums already paid for the term if cancelled during the free-look provision period.

All of the following are non-forfeiture options available on some insurance policies EXCEPT: a. Cash surrender option b. Increased paid-up option c. Extended term option d. Reduced paid-up option

B: Increased paid-up option. Examples of non-forfeiture options included on some insurance policies include reduced paid-up option, cash surrender option, and extended term option. These three options provide the insured with choices on how cash values will be paid out if the policy is surrendered.

What type of life insurance policy can guarantee that each year the policy is renewed, the premium will never change? a. Annual Renewable Term b. Level Premium Term c. Universal Variable d. Definite Life

B: Level Premium Term. A level premium term life insurance policy guarantees that the premium the Insured pays the first year will remain the same as long as the Insured renews the policy. A level premium policy also has the benefit of terms offered in 5-, 10, 15-year, etc. increments.

Does a critical illness plan pay out its benefits in a lump sum or spread it's payments out over a specified time period? a. Spread out over 3 years b. One lump sum C. Spread out over 2 years d. Spread out over a year

B: Lump sum. A critical illness policy pays out its benefits in a lump sum in the event of the policyholder's death. The amount of coverage is selected at the time the policy is first purchased and is paid out to the beneficiary listed on the policy.

Under a Hospital Indemnity Plan, all of the following expenses may be covered EXCEPT: a. Childcare while the Insured is sick b. Missed work income c. Transportation to required hospital or doctor visits d. Co-pays

B: Missed work income. A Hospital Indemnity Plan can help an insured pay for necessary extra expenses that may not be covered by the insured's primary policies. These extra expenses may include childcare while sick, transportation expenses due to hospital or doctor visits and deductibles and co-pays.

Terrence was in the market for a life insurance plan. He wanted a policy which would benefit his son, Trent, after Terrence's death. Terrence also did not need a plan in which he would take money from during the policy term. What type of policy might meet Terrence's needs? a. A Modified Benefit Contract b. A Modified Endowment Contract C. A Modified Tax Beneficiary Contract d. A Modified Term Policy

B: Modified Endowment Contract. Terrence may be interested in a Modified Endowment Contract to best suit his needs. This type of policy invests the premium paid as the premium is not set aside for future cash loans. The Modified Endowment Contract also would allow Trent to take his payout after Terrence's death without being taxed.

Peter was a mortgage lender for ABC Mortgage Company. He was collecting information about the Smith's to put together a pre-approval statement required by their realtor. Peter knew that Mrs. Smith had some outstanding medical bills but he was not sure of the amount or what for. Peter called Mrs. Smith's physician's statement to ask for a copy of Mrs. Smith billing statement. Is the office staff allowed to give Peter this information? a. Yes, because it is being used for a specific purpose b. No, because billing information is protected by HIPAA c. No, because billing information is protected by COBRA d. No, because billing information is protected by Patient's First Law

B: No, because billing information is protected by HIPAA. HIPAA is a federal law that protects a patient's rights, including their billing information. Any billing information must be requested by the patient themselves and not a third party looking for documentation.

Carol was diagnosed with Diabetes and told she would need multiple medical supplies each week to administer her required medicine. Under what part of Medicare might these medical supplies be covered? a. Part A b. Part B C. Part C d. Part D

B: Part B. Part B of Medicare health insurance coverage provides coverage for approved medical supplies, as well as approved preventative services, outpatient care and physician services. Part B is also known as the Medical Insurance part of Medicare.

Rodger is a married 65 year old who also has 2 children still living in his household. Rodger purchased a Medicare Supplement Insurance policy to cover his personal needs. This Medigap policy covers which members of Rodger's household? a. Rodger and his wife b. Rodger c. Rodger and both his children d. Rodger, his wife and both his children

B: Rodger. Under a Medicare Supplement Insurance policy, there can only be one insured. This policy does not extend to other family members including a spouse. If Rodger's wife wanted a Medigap policy she would need to apply for her own, separate policy.

Each life insurance policy will state the maximum amount the policy will pay out to the beneficiary. What part of the life insurance policy would the insured be able to find this pay out amount listed? a. The Declarations b. The Insuring Agreement c. The Conditions d. The application

B: The Insuring Agreement. The Insuring Agreement is the section of the life insurance policy which will specify the maximum pay out amount due to the beneficiary in the event of the Insured's death. The Insuring Agreement will also specify the beneficiary of the policy.

How can an insured save money on premium with a whole life insurance policy as opposed to other insurance policies available? a. The insured can select lower rates b. The insured can pay premiums only to be applied to the insurance component of the policy c. The insured can select a shorter policy period d. The insured can submit to a medical exam each year

B: The insured can pay premiums only to be applied to the insurance component of the policy. A whole life policy is separated into two parts - the cash value account and the death benefit. To save money, the insured can select the premium paid to only apply to the death benefit, but then he or she will not have a large cash value account from which to withdraw, if needed.

All of the following are benefits of a renewable term life insurance policy EXCEPT: a. The insured can automatically renew his or her policy after the term is over b. The policy is typically more expensive than an annual renewable term life insurance policy c. The insured is able to renew even if he or she has experienced health issues since the policy was first issued d. The policy is written in terms longer than the usual annual policy

B: The policy is typically more expensive than an annual renewable term life insurance policy. Renewable term insurance policies are policies written for longer terms, 5 to 20 years, as opposed to the annual renewable term life insurance policy. This policy is also able to be renewed even in the event the insured suffers from health issues. This policy is typically more expensive due to the length of time coverage is in force and due to the fact that the policy renews insureds who may have had health issues that were not known when the policy first was written. Due to the nature of a renewable term insurance policy, it is typically more expensive than an annual renewable term insurance policy.

The consideration clause is found on the front page of every life insurance policy. What information does the consideration clause give to the Insured? a. The date the policy will end. b. The premium payment amounts c. The reasons they policy will cancel d. The exposures which are not covered by the policy

B: The premium payment amounts. The consideration clause will specify the amount of each payment as well as when each premium payment is due. The clause is an important source of information for the policyholder due to the fact that if he or she misses a payment, the policy could face cancellation.

An insurance policy is a written contract between two parties. Is an insurance policy a unilateral or a bilateral contract? a. Bilateral b. Unilateral c. It will depend on the specific policy d. It will depend on the claim submitted

B: Unilateral. An insurance contract is unilateral in nature. The Insured pays a premium to the insurance carrier with the promise that the carrier will pay for covered losses during the policy period. If the Insured has fulfilled his or her part by paying for the policy premiums, the insurer could be held for breach of contract if the insured does not reimburse for covered losses.

The accelerated death benefit is an important benefit to have as it provides protection in the event a policyholder becomes terminally ill. The value of the policy is usually limited to what percentage if the accelerated death benefit is used? a. 50% b. 60% c. 75% d. 90%

C: 75%. The value of a life insurance policy is typically limited to 75% if the accelerated death benefit is used. This is just the usual policy limit as each carrier has his or her own percentage to which they are limited, and it is not the same for all life insurance policies available.

What type of contract will specify the method of determining the price to buy part of a business as well as oversees the transfer of the business? a. A Business Buy-out Agreement b. A Business Sell Agreement C. A Buy-sell Agreement d. A Business Transfer Agreement

C: A Buy-sell Agreement. A buy-sell agreement is a contract that facilitates the sale of the part of a business owned by an estate of a deceased business owner. This contact dictates how the price of this sale will be determined and oversees the transfer in ownership of the business.

What type of investment opportunity guarantees a fixed payment to the owner of the investment? a. A Variable Annuity b. A Constant Annuity C. A Fixed Annuity d. A Deferred Annuity

C: A Fixed Annuity. A Fixed Annuity is appealing to the most conservative investors. This type of investment guarantees a fixed amount of premium return for the life of the investment. A Fixed Annuity generally ends when the invested owner is deceased.

Utmost Good Faith, unilateral, conditional and adhesion are all characteristics of what? a. An application process b. A claims investigation c. An insurance policy d. An insurance endorsement

C: An insurance policy. An insurance policy is a contract between two parties with similar characteristics of Utmost Good Faith, unilateral, adhesion and conditional in nature. These characteristics are unique to an insurance policy compared to other types of contracts.

Why is it important for a life insurance applicant, who has young children, to arrange a legal representative to manage the payouts in the event of the applicant's death? a. Because the law requires a legal representative b. Because the insurance carrier will deny the payout if there is no legal representative C. Because if the applicant does not name a legal representative, the court system will assign a property guardian d. It is not necessary to appoint a legal representative as the children will automatically receive a lump sum benefit

C: Because if the applicant does not name a legal representative, the court system will assign a property guardian. If the court has to assign a legal representative, the children's estate will incur court fees, attorney fees, and any other fees associated with sorting out the policy's benefits. These fees would be avoided if the parents had named a legal representative to handle the estate and children's payout from the policy.

Stop-loss coverage is a way to prevent employers from being responsible for excessive costs associated with their employee's medical bills. Does stop-loss coverage limit costs for an individual employee or does it limit costs for all employees as a group? a. The individual employee b. All of the employees as a group limit c. Both a limit for individual employees and all employees as a group limit d. There is no limit for the amount of medical costs an employer may be responsible for

C: Both a limit for individual employees and all employees as a group limit. Stop-loss coverage is for self-insured employers to help somewhat control their expenses for employee medical bills. The coverage can place a limit on a per-employee basis or as a group limit for all employees as a whole.

Term life insurance policies offer what type of provision that allows the policy to be renewed despite a decline in the Insured's health? a. Renewable Guarantee Provision b. Renewable Provision c. Conversion Privilege d. Guaranteed Provision

C: Conversion Privilege. The conversion privilege is a provision usually found on term life insurance policies. This provision provides a guarantee to the Insured that his or her policy will be renewed and the Insured also has the option of switching policies despite a change in health. The Insured is also not subject to a physical examination before renewing or switching policies.

Medicare is a form of health care insurance regulated by what brand of government? a. State b. Local c. Federal d. Private corporations funded by State taxes

C: Federal. Medicare is a federally regulated form of health insurance that targets specific groups of people. Medicare was designed to help those citizens 65 years of age or older, children with disabilities and patients suffering from End-Stage Renal Disease.

Physicians, nursing homes, companies that work with medical record keeping, dentists and IT specialists for hospitals must all abide by what law to protect patient safety and confidentiality? a. Patient Care Act b. Patient Security Act с. НІРАА d. COBRA

C: HIPAA. HIPPA is a federal law enacted to protect patients from having their private records or general health knowledge shared by anyone other than those who are treating the patient. This law not only prohibits the doctors or physicians themselves from sharing patient records, but also applies to any hospital or building staff member who has access to the patient or their records.

Tereasa has a life insurance policy and lists her sister as the beneficiary in the event of Teresa's death. A couple years later Teresa gave birth to a baby girl and wanted to transfer her policy over to her daughter. If Teresa fails to notify her insurance carrier of the change in beneficiaries, will the carrier still recognize her daughter as the new beneficiary in the event of Teresa's death? a. Yes, in all cases b. Yes, but they will need written approval from Teresa's sister C. No, the insurance company would recognize the original beneficiary listed on the policy d. No, Teresa would have needed a notarized letter confirming the change.

C: No, the insurance company would recognize the original beneficiary listed on the policy. Teresa must inform her insurance carrier of the change in order for her daughter to be recognized as the beneficiary. An insurance policy is a contract, and any changes must be communicated among all parties.

Why should an Insured make sure he or she has a new insurance policy confirmed before notifying the current insurance carrier that he or she wishes to cancel? a. An Insured always needs proof of coverage before cancelling a current policy b. An Insured will avoid being penalized if he can prove he has other coverage secured when cancelling the current term c. In the unfortunate event that he or she becomes sick or develops a condition that could be considered a "pre-existing condition" and declined coverage from potential insurance carriers d. There is no real benefit to having a new policy secured before cancelling your current policy

C: In the unfortunate event that they become sick or develop a condition that could be considered a "pre-existing condition" and coverage is declined from potential insurance carriers. If an insured does not have replacement coverage at the time of cancelling the current policy and develops a condition or illness before he or she get new coverage secured, he or she risk being without insurance coverage. A new potential insurer could classify the condition or illness as a pre existing condition and pre-existing conditions are often not covered by insurance. The carrier could exclude medical care with regard to this condition, charge extremely high premiums or decline to write the policy altogether.

What provision found in life insurance policies will prevent an insurance company from denying a claim during a specified time period? a. No Contest Period b. Free Period c. Incontestable Clause d. No Contest Clause

C: Incontestable Clause. The incontestable clause is a provision found in life insurance policies that prohibits the insurance company from denying a claim during a specific time period. If the insured is, however, found guilty of intent to murder, or of impersonation or if the insured does not have an insurable interest, the incontestable clause is void.

What type of potential policy holders may purchase a Modified Endowment Contract? a. Individuals who want little investment opportunity b. Individuals who do not care about the tax benefits C. Individuals who do not intend to withdraw from the policy before the policy ends d. Individuals who intend to withdraw from the policy before the policy ends

C: Individuals who do not intend to withdraw from the policy before the policy ends. A modified endowment contract is not suited for those potential policyholders who wish to withdraw from their policy during the policy term. Also, individuals who are concerned with the taxation would be suited for a modified endowment contract, as they are not subject to income tax at the time the death benefit is paid.

A Variable Life insurance policy allows Insureds the option of using their premium dollars and doing what with the premium dollars? a. Whatever the Insured chooses to do with the money b. Purchase higher limits c. Invest the money d. Variable Life policies do not allow for premium dollars to be used elsewhere

C: Invest the money. A Variable Life insurance policy allows the insured to take money used for premium and use the money for investments. This type of policy is generally the most expensive, but the beneficiary is awarded permanent protection.

What health care insurance plan provides coverage when the insured travels outside of the United States? a. All parts of Medicare coverage b. Part A of Medicare coverage c. Medicare Supplement Insurance coverage d. Part C of Medicare coverage

C: Medicare Supplement Insurance coverage. Medicare Supplement Insurance coverage is an important supplemental policy to purchase for Insured's who regularly travel outside of the United State. The original Medicare policy on its own will not provide medical care outside of the United States.

Medicare is a great source of health care protection for millions of people. Medicare, however, does not assist in covering co-pays or deductibles. What may an Insured with Medicare purchase to offset the costs of co-payments and deductibles? a. Medicaid b. Medicare plus an HMO policy c. Medicare Supplement Insurance d. Medicare plus a PPO policy

C: Medicare Supplement Insurance. Medicare Supplement Insurance, also known as Medigap, can help offset the cost of coinsurance, co-payments or deductibles. Medicare Supplement is sold by private insurance companies and serves to supplement your original Medicare policy.

What provision may be found on a life insurance policy that will increase the payout amount if the Insured's death is cause by a specified accident? a. Multiple Payout b. Accidental Death Increase c. Multiple Indemnity d. Accidental Payout Benefit

C: Multiple Indemnity. Multiple indemnity is a provision found on some life insurance policies that will state that if an Insured is killed by a specific type of accident, the payout amount will be increased. The increase in payout is usually stated in the form of a percentage, such as 100% or 200% increase over the original payout amount.

Under a Preferred Provider Organization (PPO) Plan, is a policyholder required to only see a physician listed on his or her carrier's network of preferred providers? a. Yes, in all cases b. Yes, unless the policyholder pays upfront for an endorsement to his or her health insurance policy c. No, but the policyholder will have to pay a higher co-pay, deductible or co-insurance amount d. No, under a PPO, the policyholder can see whichever physician he or she chooses

C: No, but they will have to pay a higher co-pay, deductible or co-insurance amount. Under a PPO plan, the plan provider provides all policyholders with a list of approved physicians, or "in network physicians". If the policyholder does not wish to see a physician included on this list, he or she may see another physician but will be responsible for a greater co-payment at the time of visit.

Dorothy had a term life insurance policy through ABC Insurance Company. Dorothy forgot to renew her policy in June and passed away suddenly in October. Would Dorothy's term life policy pay out cash to the beneficiaries listed on her policy? a. Yes, the policy extends until death b. Yes, because it was within a year of the policy ending c. No, term life insurance is temporary coverage d. No, term life insurance only provides coverage in the form of bonds and not cash payouts

C: No, term life insurance is temporary coverage. Term life insurance is also known as temporary insurance because it only applies while coverage is in force. Because Dorothy did not renew her policy, her life insurance coverage ended the day her policy expired.

Long-Term Care Insurance plans exclude all of the following EXCEPT: a. Medical care provided by a family member b. Free health services C. Services needed after a suicide attempt d. All services provided outside of the United States, with no exceptions

D: All services provided outside of the United States, with no exceptions. Long-term Care Health Insurance plans generally do exclude services outside of the United States but some do provide international benefits. The Long-Term plans do exclude care by a family member, free health services and services needed after a suicide attempt.

Under the guaranteed insurability rider, can the Insured purchase additional coverage at any time during the policy? a. Yes, the Insured can purchase additional coverage whenever b. No, this rider prevents additional coverage from being purchased c. No, the policy will outline specific dates in which additional coverage can be purchased d. Yes, but only for specific limits

C: No, the policy will outline specific dates in which additional coverage can be purchased. The guaranteed insurability rider can be added to a life insurance policy for an additional fee. This rider allows the Insured to purchase additional coverage in the future but only on dates specified in the policy. The Insured is also not required to provide evidence of insurance when purchasing additional coverage if this rider is present.

A Payor Benefit Rider is usually found attached to what type of life insurance policy? a. This rider is attached to all Whole Life policies b. This rider is attached to all Term Life policies c. Policies written for Insured's under 18 years of age d. Policies for households with young children

C: Policies written for Insured's under 18 years of age. The payor benefit rider is usually attached to an insured's policy if the insured is under the age of 18. The rider protects this child, in the event that their parents pass away or becomes disabled before the insured is legally an adult, by waiving the remaining premium due.

All of the following are advantages of term life insurance EXCEPT: a. Covers the full amount of insurance you selected b. Can provide a lump sum for your beneficiaries c. Provides a cash value account for retirement d. Can cover the Insured's final expenses

C: Provides a cash value account for retirement. Term life insurance has many advantages including covering the full amount of insurance selected on the policy, providing a lump sum for the beneficiaries listed on the policy and covering the Insured's final expenses. One of the disadvantages of term life insurance is that this type of policy does not provide a cash value for retirement.

Although each state has different rules regarding waiting periods, what is the general waiting period for coverage to apply under a Hospital Indemnity Policy for childbirth? a. No waiting period b. Three months c. Ten months d. One year

C: Ten months. Under a Hospital Indemnity Policy, there is generally a ten-month waiting period for childbirth and pregnancy. This waiting period is to avoid adverse selection, where only those pregnant or planning an immediate pregnancy would purchase this type of coverage.

Yolanda has an insurance policy through ABC Insurance. Her policy states that Yolanda's medical bills must reach $1,500 before ABC will begin paying for covered medical bills. The amount of $1,500 is known as what, in insurance terms? a. The copayment b. The insured payment c. The deductible d. The premium due

C: The deductible. The deductible is the amount stated on the insurance policy that the insured is responsible for paying for covered medical expenses before the insurance company will take over payments. Deductible payments may be different on the same policy if the insured selects to see an approved health care provider as compared to a health care provide who is out of the insurance carrier's network

When does a whole life policy end? a. On the policy expiration date b. When the Insured turns 65 years of age C. When the policy holder passes away d. After a 20-year term

C: When the policy holder passes away. A whole life insurance policy remains with an Insured until he or she passes away. This policy does not have a fixed termination date. The face value of the whole life policy will be paid to the beneficiary when the insured is deceased.

Randy is a single, 28 year old who works forty hours a week at an Insurance Agency. Randy's annual income is $42,500. Will Randy be subject to Social Security tax? a. Yes, due to his age b. No, due to his age c. Yes, due to the fact that he makes over the minimum income requirement d. No, due to the fact that he does not make the minimum income requirement

C: Yes, because he makes over the minimum income requirement. Randy makes $42,500 annually, which makes him subject to social security tax. The minimum income requirement is $25,000 for this tax. Any individual who makes less than $25,000 will avoid having to pay the social security tax out of their paychecks.

Is a spouse eligible to be named as an insured on an individual's life insurance policy? A. Yes, the spouse is automatically insured B. No, the spouse would need their own policy C. Yes, through the Spouse Coverage Option D. Yes, if the Other Insured Option Rider is attached

D. Yes, if the Other Insured Option Rider is attached. This rider is limited in that only immediate family members are eligible.

Keeping in mind the HIPAA law, under what scenario would a patient's records be allowed to be shared? a. A financial representative looking for billing information b. A potential employer as part of their background check c. A patient's son who is requesting the information without the patient's consent d. A police officer who is investigating an incident involving the injured patient

D: A police officer who is investigating an incident involving the injured patient. Under the HIPAA law, there are specific circumstances where a patient's information may be given out. Cases include a family member identified by the insured as having rights to the records, when the protection of the public may be required or if records are needed by a police officer investigating a crime in which the patient was involved.

All of the following are ways to determine what risk classification a potential policyholder fits in EXCEPT: a. Call an agent b. Meet with a local agent C. Submit a quote request online d. A policyholder can name their own risk category

D: A policyholder can name his or her own risk category. A policyholder can find out which risk classification he or she falls in by contacting the local agent Contact can be through phone call, agency visit or visiting the agent's website for a quote. The agent or carrier must confirm the risk classification to get an accurate quote.

Annuities are a means of investment to secure a cash flow once the individual reaches retirement. Are annuities paid out over a specified period of time or as long as the individual is living? a. As long as the individual who purchased the annuity is living b. Over a specified period of time c. As long as the spouse of the owner of the annuity is living d. Both options are available - over a specified period of time or as long as the annuity owner or their spouse is living

D: Both options are available - over a specified period of time or as long as the annuity owner or their spouse is living. Annuities are a great conservative investment option to secure cash flow after retirement. Annuities may be set to pay out over rest of the annuity owner's lifetime, as long as the spouse is living or according to a time frame specified by the policy.

Of the following, what is covered under Medigap policies? a. Vision Care b. Hearing Aids c. Long-term care d. Co-payments

D: Co-payments. A Medicare Supplement Insurance Policy, or Medigap policy, provides coverage for co-payments, deductibles and coinsurance. A Medigap policy does not provide coverage for vision care, hearing aids, dental care, or long-term care.

14. Julie was 23 years of age and starting her first job where benefits were offered by her employer. Julie was a little overwhelmed by the different types of life insurance policies offered and was worried she may become locked into a policy that really does not suit her needs. What type of life insurance policy might Julie want to purchase for now? a. Decreasing Term Insurance b. Universal Variable c. Level Premium Term d. Convertible Term Insurance

D: Convertible Term Insurance. Julie would probably want to select a convertible term insurance policy due to her uncertainty of what type of insurance policy is best for her. This type of policy will allow her to select a term insurance policy but then convert the policy into another type of policy that Julie's carrier offers, as her needs change.

What type of insurance policy is generally not a good idea to purchase due to the inflation rate, which affects all individuals in society? a. Traditional life b. Level premium insurance c. Convertible term insurance d. Decreasing term insurance

D: Decreasing term insurance. A decreasing term life insurance plan allows the policy holder's premium to remain the same each year, but the cash benefits available decrease. This type of policy is not meant to cover an insured's general life insurance needs, as these needs increase over time due to economic inflation rates.

Chris was in the process of looking for a life insurance policy. He is young and able to take some risks with his investment. One of Chris' hobbies is to follow the stock market and invest where he sees potentially good stock options. Keeping in mind Chris' stock market hobby, what type of life insurance policy might Chris look to purchase? a. Indexed Universal Life b. Equity-Indexed Term Life c. Indexed Term Life d. Equity-Indexed Universal Life

D: Equity-Indexed Universal Life. An equity-indexed universal life insurance policy is a policy that guarantees a minimum fixed interest rate but also contained the potential for growth through indexed returns. This type of policy is usually less expensive than a variable life insurance policy.

Grant and Leslie were new parents to a little boy. They were researching day cares in the area and quickly realizing how expensive it would be to send their son to day care. Which employer offered benefit would help Grant and Leslie save some money while paying their son's day care bill? a. Day Care Benefit b. Child Care Benefit C. Children Account Assistant Benefit d. Flexible Spending Account

D: Flexible Spending Account. Grant and Leslie could ask their employer if they offer a flexible spending account. A flexible spending account is a way to have money taken from your paycheck pretax and used directly towards your day care bill. Grant and Leslie would save their money from being taxed and instead have the money set aside for their son's day care bill.

All of the following may raise the premium of a life insurance policy EXCEPT: a. The age of the applicant b. If the applicant smokes c. If the applicant has a pre-existing condition d. If the applicant was not a US born citizen

D: If the application was not a US-born citizen. A life insurance policy's rate may be increased if the applicant smokes, is past a specific age range or has a pre-existing condition. Each of these factors takes into account a possible reduced life expectancy as compared to a healthy, middle aged applicant and therefore, charges a higher rate.

Robert and Catherine were first time parents to their newborn daughter. Robert and Catherine wanted to purchase life insurance for their daughter as a lifelong gift to her. The parents wanted to make sure the policy would last the lifetime of their daughter and also wanted a policy whose premium would never increase. What type of policy might Robert and Catherine's insurance agent sell them? a. Term Life Insurance b. Equity-term Universal Life Insurance c. Equity-term Whole Life Insurance d. Interest-sensitive Whole Life Insurance

D: Interest-sensitive Whole Life Insurance. Robert and Catherine's insurance agent would most likely offer them an Interest-sensitive Whole Life Insurance policy. This type of policy best suits individuals who need the policy for a lifetime and not on a temporary basis. Robert and Catherine will be able to rely on a fixed premium amount as well as knowing despite possible health changes, their daughter will always have a life insurance policy in force.

Irene was in need of cash to pay for some unexpected medical bills. Irene asked her agent if she was able to borrow from her whole life insurance policy. What would Irene's agent request of her before approving she could borrow from her insurance policy? a. A documented list of all medical procedures that the money was going towards b. A signed application from Irene to present for approval by the office manager C. An insured cannot borrow against his or her whole life insurance plan d. Irene's agent may not need anything from Irene as there is no approval requirement to borrow against your own whole life policy

D: Irene's agent may not need anything from Irene as there is no approval requirement to borrow against your own whole life policy. A significant benefit of a whole life insurance policy is that the insured can borrow against his or her own policy with no fear of being denied by the insurance carrier. There is also no set approval process for an insured who wishes to borrow from their whole life insurance policy.

What type of life insurance policy is intended to provide coverage in the event that a person vital to a company suddenly passes away? a. Prime Employee Coverage b. Executive Coverage C. Primary Contributory Life Insurance d. Key Person Life Insurance

D: Key Person Life Insurance. Key Person Life Insurance is insurance purchase by a company or corporation to provide coverage in the unfortunate case that a key member of their company passes away. This type of coverage is to provide stability and reassurance to both other employees in the company and the clients with which they have a business relationship.

Preferred, Standard Plus, Preferred Smoker, and Substandard are all different risk classifications of what type of insurance policy? a. Property and Casualty b. Workers Compensation C. Automobile d. Life

D: Life. Substandard, Standard, Standard Smoker, Preferred, Preferred Smoker, and Preferred Plus are some of the many types of risk classifications assigned to potential life insurance policy holders. Each risk classification helps determine the rate for each policy and the coverage options available to each potential policyholder.

Under a Guaranteed Renewable Policy, while the Insured is guaranteed that coverage will be renewed, is the Insured also guaranteed that the premiums will remain the same? a. Yes, in all cases b. Yes, if the policy is paid in full upfront c. No, the premium is guaranteed to increase each year d. No, the premium is subject to change based on claims or other factors which occurred during the current policy term.

D: No, the premium is subject to change based on claims or other factors which occurred during the current policy term. While a guaranteed renewable policy is great for an insured because it guarantees coverage each year, the price the Insured pays for this coverage is not guaranteed. An illness or medical condition arising during a term may call for the Insurer to increase the premium payments that are due to offset the increase in medical expenses the Insured will now require.

Every state has different rules regarding waiting periods for a Hospital Indemnity Policy. What is the general waiting period for coverage to apply for donating an organ? a. No waiting period b. Five months c. Nine months d. One year

D: One year. There is a one-year waiting period under a Hospital Indemnity Policy for a person needing an organ transplant. The waiting period is to prevent those who know they have a transplant in the near future from purchasing a policy for solely that reason.

What part of Medicare adds on prescription drug coverage to the original plan? a. Part A b. Part B c. Part 6 d. Part D

D: Part D. Part D of the Medicare health plans adds prescription drug coverage to the original Medicare plan. It may also add prescription drug coverage to some Medicare Private-Fee-For Service Plans, some Medicare Cost Plans, as well as some Medicare Medical Savings Account Plans.

Traditional Whole Life Insurance policies are meant to last the entire life of the Insured. What is the duty of the Insured to ensure the policy does not cancel earlier than intended? a. Pay the entire policy upfront b. Submit yearly medical exams signed by a physician C. Submit yearly medical exams as well as pay each premium payment due on time d. Pay each premium payment due on time

D: Pay each premium payment due on time. Traditional Whole Life Insurance Policies are meant to last the life of the Insured, but the insured has the responsibility of paying each premium due to ensure the coverage continues. Upon the Insured's death, the beneficiary will receive the policy's benefits.

Life insurance is designed to protect an Insured in all the following ways EXCEPT: a. Pay off home mortgage b. Security for family members c. Estate Planning d. Provide easily accessible cash if needed

D: Provide easily accessible cash if needed. Life insurance policies are written to protect the Insured and their families in the event of the policy holder's death. The life insurance policy provides financial security for the family, helps with estate planning, can be used as a retirement savings in some cases and can also provide protection for your mortgage. Some life insurance policies can allow for access to cash, but many do not and this is not the intent of most policies as well.

When a person becomes disables or develops a disability, the person is often susceptible to additional health issues related to the disability. What provision helps protect the individual who has a disability which is not just a one-time illness? a. Disability Provision b. Disability Occurrence Provision c. Recurrent Illness Provision d. Recurrent Disability Provision

D: Recurrent Disability. Recurrent disability provision will waive the elimination period if a disability occurs which is related to or caused by a disability the Insured has already incurred. The disability and the recurrent disability have to have occurred within a specified time frame, usually six months.

Irene has just purchased a life insurance policy through ABC Insurance Company. She was reading her policy to make sure she knew when each payment was due and the amount of each payment due. In what section of her policy would Irene find this information? a. The Insuring Agreement b. The Declarations c. The Conditions d. The Consideration Clause

D: The Consideration Clause. The Consideration Clause of the policy will state exactly what Irene owes for each payment and when each payment is due. This section is important for each policy holder to read in order to avoid a late payment, which could cause the policy to cancel.

Noncancelable policy law is designed to protect what party in an insurance contract? a. The Insurer b. A third party C. The reinsurer d. The Insured

D: The Insured. A noncancelable policy is a policy that provides protection for the Insured. This type of policy guarantees to the Insured that the policy will be renewed each year despite illness or accident. The Insured however is responsible to make sure all premiums are paid on time for coverage to renew.

Under the critical illness benefit plan, is there a waiting period before a benefit can be paid out for the disease of cancer? a. No, there is no waiting period b. Yes, 90 days in all states c. No, unless endorsed d. Yes, in all states except for three

D: Yes, in all states except for three. Under the critical illness benefit, there is a 90-day waiting period from when the policy starts and cancer is first diagnosed. This waiting period is required by all states except for Virginia, Maryland and Illinois. This benefit will be paid out in a lump sum.

Kristy was recently laid off from the company she worked for over the past twenty years. Kristy was very upset and also worried about her health and life insurance policies. Kristy has always had a Hospital Indemnity Plan and wished to continue to have one. Can she still carry a Hospital Indemnity Plan even if Kristy is no longer employed? a. No, this plan is only for employed individuals b. Yes, but only for 30 days past her last employment date c. Yes, but only for up to a year past her last employment date d. Yes, this plan is available regardless of a person's employment status

D: Yes, this plan is available regardless of a person's employment status. To have a Hospital Indemnity Plan, you do not need to be currently employed. A potential policy holder only needs to pay each premium as it is due and be under the age of 70. The policy does not guarantee a renewal after the age of 70 is reached.