Questions answered incorrectly on Comp. Exam

COBRA is a federal law requiring employers with _____ or more employees to provide the option of continuing the employee's existing health coverage for dependents for up to _____ months following qualifying events. A 20, 36 B 25, 45 C 20, 18 D 15, 36

A 20, 36

Managed Health Care attempts to contain costs by controlling the behavior of participants in all of the following ways, except: A Controlled Provider Access B Preventive Care C Partial Case Management D Copayments and/or coinsurance

C Partial Case Management It's actually called Comprehensive Case Management, not Partial

Which of the following traditional whole life policies has the highest first-year annual premium, all other factors being equal? A 20-pay life B 40-pay life C 30-pay life D 10-pay life

D 10-pay life The shorter the premium paying period, the higher the premium. A Limited Pay Life policy of 10 years would have a higher premium than a 20-pay, 30-pay, or 40-pay life policy.

When the cash value account of a universal life policy reaches zero, the policyowner must make a premium payment or: A The policy becomes void B The reduced paid-up nonforfeiture option is automatically exercised C The policy goes into the grace period D The policy is lapsed

C The policy goes into the grace period When the cash value account reaches zero, it has actually made its last premium payment, at that time it has entered the grace period. At the end of the grace period, if no premium payment has been made, the policy then lapses.

Ashley wanted to establish her company benefit plan so that it could cover her individual health insurance premiums and out-of-pocket expenses without group insurance or loss of unused benefits. After some research, she established a: A HSAs B FSAs C MSAs D HRAs

D HRAs A self-employed entrepreneur may establish an HRA without also establishing an HDHP.

Concerning PPOs, which is a true statement? A The insured has a financial incentive to use providers who have agreed to predetermined reimbursements for medical services rendered B PPOs are typically not for profit C The insured may only utilize providers contracted with the insurer D PPOs provide all services at one location

A The insured has a financial incentive to use providers who have agreed to predetermined reimbursements for medical services rendered PPOs cover out-of-network providers, but the financial incentive of lower out-of-pocket cost is intended to encourage the use of in-network providers, who have agreed to accept the PPO's reimbursements as payment in full.

Any transaction in which a new life policy or annuity is to be purchased, and the producer knows, or should know, that existing contract(s) will be: lapsed, forfeited, surrendered, terminated, reduced in value, amended with a reduction in benefit or term, have a reduced cash value, or is subjected to borrowing, is best known as a __________. A Re-entry B Replacement C Reissuance D Conversion

B Replacement

An insurer marketing life insurance policies must notify the Commissioner whether the policy is marketed with an illustration when: A The policy is an annuity B The policy is a group life policy C The policy is a variable life policy D The policy is a credit life policy

B The policy is a group life policy Credit life, variable life, and annuities are exempt from the requirement of notifying the Commissioner whether the policy marketed with or without an illustration.

Which of the following is false with regard to coverage for newborn children? A A newborn child is covered from the date of birth for 60 days after birth B Coverage for a newborn includes coverage of injury or sickness C Coverage for a newborn includes coverage of injury or sickness including the necessary care and treatment of medically diagnosed congenital defects and birth abnormalities D Coverage for a newborn child begins 60 days after birth

D Coverage for a newborn child begins 60 days after birth

Which of the following lines of insurance is subject to rate regulations? A Credit life B Group accident and sickness insurance C Ocean marine D Workers' Compensation

A Credit life Rate regulations apply to credit life insurance.

Which of the following is false regarding the Buyer's Guide and Policy Summary requirements? A The Policy Summary must disclose the name and address of the insurer and agent B If the policy contains at least a 10-day Free-Look or Right to Examine, then the Buyer's Guide and Policy Summary are not required C The Policy Summary is a basic illustration for an insurer's policy forms which describes the elements of the policy D A Policy Summary and Buyer's Guide must be provided to a prospective insured upon request

B If the policy contains at least a 10-day Free-Look or Right to Examine, then the Buyer's Guide and Policy Summary are not required

Which of the following statements regarding the taxation of personally owned health insurance is false? A Premiums paid for personally-owned disability insurance policies are not tax-deductible B Premiums are never deductible if benefits are received tax-free C Medical expense insurance benefits are received tax-free D The same person may receive long-term care insurance benefits tax free, and deduct long-term care insurance premiums in the same tax year

B Premiums are never deductible if benefits are received tax-free Premiums may be deductible if tax-free benefits are paid. It depends on the personally-owned policy.

All of the following types of qualified plans provide an employee with a retirement benefit based on the value of the employee's account at retirement, except: A SEP-IRA B 403(b) C Defined Benefit D 401(k)

C Defined Benefit A defined benefit plan's retirement check is usually based on the length of time the employee was with the firm and his/her highest salary. The employer takes on the investment risk.

In Disability Income underwriting, the single most important rating factor from an underwriting standpoint is the applicant's: A Finances B Health C Gender D Occupation

D Occupation

When are dividend payments received by a policyholder fully taxable? A When all the premiums paid in have been fully recovered B When the policy's benefits have increased more than 20% C When the cash value of the policy first exceeds the gross premiums paid in to the policy D When the policyowner has adjusted gross income in excess of $200,000

A When all the premiums paid in have been fully recovered Policy dividends become taxable only after all premiums paid in have been recovered. Subsequent dividend payments become fully taxable as income.

The _________ gives the owner of a variable annuity the ability to withdraw a maximum percentage of the annuity value until the initial investment amount has been recouped. A Group annuity B Retirement income annuity C Guaranteed minimum withdrawal benefit D Joint and survivor annuity benefit

C Guaranteed minimum withdrawal benefit The guaranteed minimum withdrawal benefit provides variable annuity owners with a measure of protection against loss, without requiring them to annuitize.

Paul is the insured and policyowner. Paul named Danny and Kayla as co-primary beneficiaries of Paul's $400,000 policy. Danny and Kayla each have 3 children. Danny dies, then Paul dies, so Kayla is entitled to receive $____________. A $100,000 B $200,000 C $400,000 D $300,000

C $400,000 Since only one of the co-primary beneficiaries is alive at the time the insured dies, then they are entitled to the entire policy proceeds, regardless of how many children either of them had.

All of the following are characteristics of a 401(k) plan, except: A Employers must match employee contributions B Employees can elect to defer some of their salary into the plan on a pre-tax basis C Typical investment choices for 401(k)s include mutual funds D Earnings on the investments grow tax deferred

A Employers must match employee contributions

In order to sell Long-Term Care policies, intermediaries must: A Complete 8 hours of LTC and Medicare training, with 2 hours being Wisconsin-specific information B Pay a license fee C Complete 8 hours of LTC and ethics training, with 2 hours being Wisconsin-specific information D Complete 8 hours of LTC and Medicaid training, with 2 hours being Wisconsin-specific information

D Complete 8 hours of LTC and Medicaid training, with 2 hours being Wisconsin-specific information

All of the following are characteristics of Ordinary Whole Life Insurance, except: A The policy pays the face value if the insured dies before age 100 B Premiums are designed to be paid throughout the life of the insured C Premiums remain uniform D If insured lives to age 100, the total amount of premium paid over the lifetime of the insured is returned to the policyowner

D If insured lives to age 100, the total amount of premium paid over the lifetime of the insured is returned to the policyowner If the insured lives to age 100, the face amount of the policy is paid to the owner of the policy. At age 100 the cash value equals the face value.

Which of the following statements is true with regard to diabetes coverage? A Coverage for treatment of diabetes does not include diabetic self-management education programs B Coverage for treatment of diabetes does not include insulin infusion pumps C Coverage for treatment of diabetes does not include prescription medication D Prescription medication coverage for the treatment of diabetes is not available under a Medicare supplement policy

D Prescription medication coverage for the treatment of diabetes is not available under a Medicare supplement policy Coverage for treatment of diabetes must include diabetic self-management education programs, prescription medication, insulin infusion pumps and all other equipment and supplies, used in the treatment of diabetes.

David withdrew the money from his tax-deductible Traditional IRA and reinvested it 90 days later in another IRA. Which of the following statements is true regarding this transaction? A The distribution from the former IRA is fully taxable B The funds in the new IRA will not accumulate on a tax-deferred basis C This type of transaction is prohibited D The distribution from the former IRA is not taxable

A The distribution from the former IRA is fully taxable The distribution from the former IRA is fully taxable, as the transaction was not completed within the 60-day rollover window to avoid any taxes and penalties.

Which of the following Annuities would potentially be the most negatively impacted by the overall stock market falling in value? A Variable B Market adjusted annuity C Indexed D Fixed

A Variable In order to achieve the goal of wealth accumulation and offsetting the effects of inflation most if not all of a Variable Annuity separate account investments are based off of the stock market. None of the other annuities would lose value if the stock market 'crashed'.

If a father were to add a Child Rider to a policy to cover his children, when would coverage become effective for a newborn? A At 1 year of age B At 14 or 15 weeks of age C At 14 or 15 days of age D At birth

C At 14 or 15 days of age Children born after the rider is issued are covered automatically after 14 or 15 days, depending on the insurer, at no additional premium.

PPO plans pay providers based on a: A Reimbursement basis B Prepaid basis determined by a primary care physician C Discounted fee for service negotiated in advance D Flat benefit determined by geographical region

C Discounted fee for service negotiated in advance The organizers and the providers agree upon medical service charges that are generally less than the providers would charge patients not associated with the PPO. Unlike most HMO arrangements the providers are paid on a fee-for-service basis rather than receiving a flat monthly amount.

Policies covering vision care services must provide coverage for vision care services or procedures provided by an optometrist, if the policy provides coverage for these services by: A A hospital B A PPO C An HMO D Another health care provider

D Another health care provider Policies covering vision care services must provide coverage for vision care services or procedures provided by an optometrist, if the policy provides coverage for these services by another health care provider.

Which of the following is not a standard or requirement for an illustration? A The assumed dates of payment receipt and benefit pay-out must be identified B Illustrations may show benefits in graphic form C The surrender value must be identified D Guaranteed elements must be labeled as such, but non-guaranteed elements need not be labeled

D Guaranteed elements must be labeled as such, but non-guaranteed elements need not be labeled Any non-guaranteed elements must be clearly labeled as non-guaranteed. Guaranteed values must also be labeled.

Which of the following is true regarding pre-existing conditions in group health insurance policies? A A pre-existing condition that existed 6 months prior to policy effective date may be excluded for up to 12 months B A pre-existing condition that existed 9 months prior to policy effective date may be excluded for up to 12 months C A pre-existing condition that existed 12 months prior to policy effective date may be excluded for up to 6 months D A pre-existing condition that existed 12 months prior to policy effective date may be excluded for up to 24 months

A A pre-existing condition that existed 6 months prior to policy effective date may be excluded for up to 12 months

A long-term care policy typically provides daily benefits? A For 2 years, 5 years, to age 65 or lifetime B As long as the income lasts C For the life of the insured regardless of the stated benefit period D Up to age 65

A For 2 years, 5 years, to age 65 or lifetime Long-term care daily benefits are paid for a specified number of years, to a certain age, such as age 65, or for the life of the insured. The benefit period is stated in the policy.

Which of the following types of policies is subject to the replacement requirements? A Individual major medical B Individual dental expense C Group major medical D Accident only

A Individual major medical Dental expense, accident only, group policies (except Medicare supplement) and limited policies are exempt from the replacement requirements.

Home Health Care benefits under a LTC Policy may be limited or excluded by: A Limiting benefits to services provided by Medicare-certified providers B Requiring a need for care in a nursing home C Requiring the existence of an acute condition D Excluding benefits for conditions caused by war or acts of war

D Excluding benefits for conditions caused by war or acts of war

What is the primary incentive for a third party to acquire a life insurance policy from a terminally ill insured? A To create a secondary market for existing in-force life insurance policies B To perform an act of charity C To help those in desperate need D To profit at the time of claim

D To profit at the time of claim To profit at the time of claim The third party, the viatical settlement provider, is expecting to profit as the new policyowner at the time of claim. The insured is provided with tax-exempt discounted value during the terminal illness, relinquishing all ownership rights to the buyer.

The two categories of Group Disability Income policies are: A Sickness or Accidental B Long-Term and Short-Term C Partial and Residual D Medicare and Social Security

B Long-Term and Short-Term Disability Income policies are characterized as being Long-Term or Short-Term.

Who or what restricts the insurer's underwriting criteria for group policies? A The Federal Insurance Office (FIO) B The employees union C State and Federal Laws D The National Association of Insurance Commissioners (NAIC)

C State and Federal Laws

Which of the following statements is false with respect to standards for long-term care insurance? A A LTC policy must provide a lifetime maximum limit of no more than 365 days B A LTC policy must provide a fixed daily benefit limit of not less than 50% of the highest limit of daily benefits C A LTC policy must provide coverage for convalescent and custodial care and care for chronic conditions and terminal illness D A LTC policy must provide coverage regardless of whether care is medically necessary

A A LTC policy must provide a lifetime maximum limit of no more than 365 days

Which of the following is correct pertaining to underwriting a group health policy? A Premiums are generally re-evaluated annually and may be based upon prior claims B All participants are always eligible immediately C The average age of the group is not taken into consideration D Group insurance cannot be based upon community experience

A Premiums are generally re-evaluated annually and may be based upon prior claims Typically, large group policies are reevaluated annually on the basis of claims. This is known as 'experience rated,' and the prior year's claims will be a significant factor in establishing the next year's premiums, and could result in non-renewal, if permitted. Smaller groups may be 'community rated,' and evaluated in comparison to similar-sized groups. In all cases, the average age of the group is a premium consideration.

At the time of her retirement at age 62, Jolene chose a Life Income Payment Option to have her annuity distributed. Five years later, when her health declines, she needs the distribution to be increased. How is this accomplished? A She cannot change the distribution once commenced B By adding a disability income rider C By adding an increase of benefits rider D By adding a Cost of Living Rider

A She cannot change the distribution once commenced The selection of a lifetime annuity payment option is critical because once chosen it typically may not be changed. An alternative to annuitization is a 'systematic withdrawal plan' that allows the amount of withdrawal to be changed in the future. It is not a lifetime income guarantee, and the payments will end when the last dollar of cash value is taken.

All of the following are true regarding changes or modifications to insurance policies, except: A They can be taken care of by the producer B They must be approved by the policyowner C They must be signed-off by an executive officer of the insurer D They must be in writing

A They can be taken care of by the producer

All of the following regarding policy loans are true, except: A The policy loan is not taxable so long as the policy remains in force B Policy loans cannot exceed the amount in the cash value C Policy loans are taxable if the policy remains in effect and the amount borrowed exceeds the premiums paid D The interest on a policy loan is not deductible

C Policy loans are taxable if the policy remains in effect and the amount borrowed exceeds the premiums paid

The minimum participation requirements or minimum employer contribution requirements for group health insurance may be increased: A Each premium due date B Once every 6 months C Each renewal date D One time during a calendar year

D One time during a calendar year The minimum participation requirements or minimum employer contribution requirements for group health insurance may be increased only one time during a calendar year.

Which of the following is not a type of hazard for insurance underwriting purposes? A Incidental B Physical C Moral D Morale

A Incidental For insurance underwriting purposes, the three categories of hazards are physical, moral, and morale.

All of the following are TRUE regarding a Variable Annuity, except: A Premiums paid during the accumulation period are invested into a separate account(s) B The contract owner bears the investment risk and receives the return actually earned on invested assets, less any charges assessed by the insurer and investment managers C The number of annuity units received upon annuitization, and the unit value, remain level D Upon annuitization, accumulation units are converted into annuity units, which generate income based on the value of the units

C The number of annuity units received upon annuitization, and the unit value, remain level With Variable Annuities, upon annuitization, the number of units remains level, but the unit values fluctuate based upon the separate account(s) selected.

Steve Borden, a kindergarten teacher, was in a boating accident and lost both legs. Although he will continue to teach, his disability policy pays full benefits because of this provision: A Partial Disability B Presumptive Disability C Residual Disability D Total Disability

B Presumptive Disability Presumptive Disability is where a loss is presumed to be total and permanent due to loss of sight, hearing, speech or loss of two limbs.

All of the following statements are true, except: A Coverage of appropriate and necessary immunizations must be provided from birth to the age of 6 years, for a dependent who is a child of the insured B A policy which provides coverage of only certain specified prescription drugs must develop a process through which a physician can obtain an individual patient exception for coverage of a prescription drug not routinely covered by the plan C Coverage must be provided for hospital or ambulatory surgery center charges and anesthesia provided, in conjunction with dental care that is provided to a covered individual in a hospital or ambulatory surgery center and who is a child over the age of 5 D If a policy provides coverage of any emergency medical services, coverage must include emergency medical services that are needed to evaluate or stabilize an emergency medical condition

C Coverage must be provided for hospital or ambulatory surgery center charges and anesthesia provided, in conjunction with dental care that is provided to a covered individual in a hospital or ambulatory surgery center and who is a child over the age of 5

Which of the following statements is false concerning payment of claims? A A claim is overdue if not paid within 30 days after the insurer receives written notice and the amount of a covered loss B Overdue claim payments must include simple interest of 12% per year C A property and casualty claim is not subject to the 30-day requirement for payment of claim D If written notice of the partial amount of a claim is provided to the insurer, the insurer may require the total amount of the claim to be provided before the 30-day requirement for payment of claim begins

D If written notice of the partial amount of a claim is provided to the insurer, the insurer may require the total amount of the claim to be provided before the 30-day requirement for payment of claim begins If written notice of the partial amount of a claim is provided to the insurer, the partial amount is overdue if not paid within 30 days.