Life & Health Practice Questions

An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a Traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer?

$10,000, no tax consequence

How many days of skilled nursing facility care will Medicare pay for?

100 days. (fully for 20 days, then subject to daily dect day 21-100, no cov after 100 days)

Within what period of time are UNINTENTIONAL misrepresentations grounds for contestability of a policy?

2 years.

Following an injury, a PO covered under Medicare Parts A&B was treated by her PCP on an outpatient basis. How much of her doctor's bill was she required to pay out-of-pocket?

20% of covered charges above the deductible (after deductible, part B will pay 80% of covered expenses)

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?

5 days

How long must an insurer maintain advertisements used in the sale of life insurance?

5 years

In order for a life insurance policy with graded death benefits to be issued to someone over 76, the first year DB must be at least what percentage of the total face amount on the policy?

50%

For how long is an insurance company allowed to defer policy loan request?

6 months (excluding loan request to pay policy premiums)

At what age may an individual make withdrawals from an HSA for nonhealth purposes without being penalized?

65

What is the required number of participants in a contributory group plan?

75%

Maximum policy loan interest rate in MO?

8%

How is emergency care covered for a member of an HMO?

A member of an HMO can receive care in or out of the service area, but care is preferred in the service area.

No insurance policy form can be issued, delivered, or used in this state unless it has been

Approved by the Department of Insurance

The two types of assignments are

Absolute and Collateral

A statement that accurately describes the Change of Benefits provision

Any policy that has a DB must also have a Change of Beneficiary provision.

When an agent makes a mistake on the application and then corrects his mistake by physically entering the necessary information, who must then initial the change?

Applicant

An agent is ready to deliver a policy to an applicant but has not yet received payment. Upon delivery, the agent collects the applicant's premium check, answers any questions the applicant may have, and then leaves. What did he forget to do?

Ask her to sign a statement of good health

What document describes an Insured's medical history, including diagnoses and treatments?

Attending Physician's Statement (APS)

In comparison to a policy that uses the accidental means definition, a policy that uses the accidental bodily injury definition would provide a coverage that is

Broader in General

A small hardware store owner is involved in a car accident that renders him totally disabled for half a year. Which type of insurance would help him pay for expenses of the company during the time of his disability?

Business Overhead Expense policy

Eligibility requirement for all Social Security Disability Income benefits?

Have attained fully insured status

Three Basic Coverages for medical expense insurance?

Hospital, Surgical, Medical

When an insurer offers services like preadmission testing, 2nd opinions, and preventative care, which term would best apply?

Case Management Provision

An insured receives an annual life insurance dividend check. What term best describers this arrangement?

Cash Option

The act of trying to discourage a policyholder from dropping his/her existing policy is called

Conservation effort

In a relative value system of determining coverage for a given procedure, what term describes the total amount payable per point?

Conversion factor

Truth regarding taxation of dividends in participating policies?

Dividends are not taxable (dividends are a return of unused premium)

If an annuitant dies before annuitization occurs what will the beneficiary receive?

Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount.

An insured is hospitalized with a back injury. Upon checking his disability income policy, he learns that he will not be eligible for benefits for at least 30 days. This indicates that his policy is written with a 30-day

Elimination Period

The HMO Act of 1973 required employers to offer an HMO plan as an alternative to regular health plans if the company had more than 25 employees. How has this plan since changed?

Employers are no longer forced to offer HMO plans.

TRUE regarding LTC insurance?

Every policy must offer nonforfeiture benefits to the applicant.

What does "level" refer to

Face amounts

As it pertains to group health insurance, COBRA stipulates that

Group coverage must be extended for terminated employees up to a certain period of time at the former employee's expense.

Which type of a hospital policy pays a fixed amount each day that the insured is in a hospital?

Indemnity

An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is this?

Inspection Report

In the event of a loss, after a notice of claim is submitted to the insurer, who is responsible for providing claims forms and to which party?

Insurer to the insured *Insurer must provided claims forms

Settlement option known as straight life?

Life Income

Example of a limited-pay life policy

Life Paid-up at Age 65 (premium paying period is limited, not the maturity)

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

Limited Pay Whole life

the Corridor deductible drives its name from the fact that is is applied between the basic coverage and the

Major Medical Coverage

A LTC insurance shopper's guide must be provided in the format developed by the

NAIC (National Association of Insurance Commissioners)

An applicant for a health insurance policy returns a completed application to her agent, along with a check for the first premium. She receives a conditional receipt two weeks later. What has the insurer done by this point?

Neither approved the application nor issued the policy.

An insured is involved in a car accident. He permanently loses the use of his leg and rendered completely blind. The blindness improves a month later. To what extend will the insured receive Presumptive Disability benefits?

No benefits ( requires loss of use of at least two limbs, total and perm blindness, or loss of speech or hearing)

which term would make it easier to qualify for total disability benefits?

the more liberal "own occupation"

What describes specific information about a policy?

Policy Summary

Which rule would apply if an agent knowns an applicant is going to cash in an old policy and use the funds to purchase new insurance?

Replacement rule

What two terms are associated directly with the way annuity is funded?

Single Payment or Periodic Payment

Which special policies covers unusual risks that are NOT normally included under AD&D coverage?

Special Risk Policy

An insured who has an Accidental Death and Dismemberment policy loses her left arm in an accident. What type of benefit will she most likely receive from this policy?

The Capital Amount in a lump sum (Capital Amt= % of Principal)

What would provide an underwriter with information concerning an applicant's health history?

The Medical Information Bureau

An employee becomes insured under a PPO plan provided by his employer. If the insured decides to go to a physician who is not a PPO provider, which of the following will happen?

The PPO will pay reduced benefits

An employee becomes insured under a PPO plan provided by his employer. If the insured decides to go to a physician who is not a PPO provider, what will happen?

The PPO will pay reduced benefits.

Roll-over of unused balances in an HRA?

The account allows roll-over of unused balances at the end of the year at the EMPLOYER'S discretion.

What is necessary in order to be eligible to receive benefits from a LTC policy?

The insured must be unable to perform some activities of daily living.

When a life ins policy was issued, the PO designated a Primary and Contingent beneficiary. Primary and Insured died together (idk who first). Who receives the DB?

The insured's contingent beneficiary. (to the insured's estate if there is none)

All of the following are requirements of a life insurance illustrations (differentiate, only as approved, identify non-g values) EXCEPT

They must be part of the contract (must clearly state that it is NOT part of the contract)

What is the purpose of the insurability provision in group life policies issued in this state?

To allow the insurer to require proof of insurability from individual insured

What is the purpose of coinsurance provisions?

To help the insurance company to prevent overutilization of the policy

Which policy would have an IRS required corridor or gap between the cash value and the death benefit?

Universal Life- Option A

A medical expense policy that establishes the amt of benefit pd based upon charges within the standard range of fees normally charged for a procedure by similar doc in similar area is known as

Usual, customary and reasonable

Which is a key distinction between variable whole life and variable universal life products?

Variable whole life has a guaranteed death benefit.

The rider in a whole life policy that allows the company to forgo collecting premium if the insured is disabled is called

Waiver of Premium

Third-party owner ship -grandson, key employee, absolute assignment EXECPT

an insured borrows money form the bank and makes a COLLATERAL ASSIGNMENT of a part of the DB to secure the loan (collateral does not transfer ownership)

In order to conduct an examination of an admitted insurance company in MO, the Director may

issue subpoenas and administer oaths to anyone on any matter that is relevant.

In a group health policy, a probationary period is for people who

join the group after the effective date

Who is eligible to establish a Keogh retirement plan?

self-employed individuals and their employees. NOT the president and employee of a family corporation.